The Hartford 2015 Annual Report Download - page 182

Table of Contents THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. Investments and Derivative Instruments (continued)
F-51
Consolidated VIEs
The following table presents the carrying value of assets and liabilities and the maximum exposure to loss relating to the VIEs for which
the Company is the primary beneficiary. Creditors have no recourse against the Company in the event of default by these VIEs nor does
the Company have any implied or unfunded commitments to these VIEs. The Company’s financial or other support provided to these
VIEs is limited to its collateral or investment management services and original investment.
December 31, 2015 December 31, 2014
Total
Assets Total Liabilities [1]
Maximum
Exposure to
Loss [2] Total Assets Total Liabilities [1]
Maximum
Exposure to
Loss [2]
CDOs [3] $ 5 $ 5 $ — $ 5 $ 5 $ —
Investment funds [4] 159 7 151 238 — 243
Limited partnerships and other alternative
investments 2 — 2 3 1 2
Total $ 166 $ 12 $ 153 $ 246 $ 6 $ 245
[1] Included in other liabilities in the Company’s Consolidated Balance Sheets.
[2] The maximum exposure to loss represents the maximum loss amount that the Company could recognize as a reduction in net investment income or
as a realized capital loss and is the cost basis of the Company’s investment.
[3] Total assets included in cash in the Company’s Consolidated Balance Sheets.
[4] Total assets included in fixed maturities, FVO, short-term investments, equity, AFS, and cash in the Company's Consolidated Balance Sheets.
CDOs represent structured investment vehicles for which the Company has a controlling financial interest as it provides collateral
management services, earns a fee for those services and also holds investments in the securities issued by these vehicles. Investment
funds represent fixed income funds for which the Company has management and control of the investments, which is the activity that
most significantly impacts its economic performance. Limited partnerships and other alternative impairments represent one hedge fund
of funds in which the Company holds a majority interest in the fund as an investment.
Non-Consolidated VIEs
The Company, through normal investment activities, makes passive investments in structured securities issued by VIEs for which the
Company is not the manager which are included in ABS, CDOs, CMBS and RMBS in the AFS securities table and fixed maturities,
FVO, in the Company’s Consolidated Balance Sheets. The Company has not provided financial or other support with respect to these
investments other than its original investment. For these investments, the Company determined it is not the primary beneficiary due to
the relative size of the Company’s investment in comparison to the principal amount of the structured securities issued by the VIEs, the
level of credit subordination which reduces the Company’s obligation to absorb losses or right to receive benefits and the Company’s
inability to direct the activities that most significantly impact the economic performance of the VIEs. The Company’s maximum
exposure to loss on these investments is limited to the amount of the Company’s investment.
In addition, the Company holds a significant variable interest for one VIE for which it is not the primary beneficiary and, therefore, was
not consolidated on the Company’s Consolidated Balance Sheets. This VIE represents the facility that has been held by the Company
since February 2007 and for which the Company has no implied or unfunded commitments. Assets and liabilities recorded for the
facility were $7 and $8, respectively, as of December 31, 2015, and $12 and $14, respectively, as of December 31, 2014. Additionally,
the Company has a maximum exposure to loss of $3 and $3, respectively, as of December 31, 2015 and 2014, which represents the
issuance costs that were incurred to establish the facility. The Company does not have a controlling financial interest as it does not
manage the assets of the facility nor does it have the obligation to absorb losses or the right to receive benefits that could potentially be
significant to the facility, as the asset manager has significant variable interest in the vehicle. The Company’s financial or other support
provided to the facility is limited to providing ongoing support to cover the facility’s operating expenses. For further information on the
facility, see Note 11 - Debt of Notes to Consolidated Financial Statements.