The Hartford 2007 Annual Report Download - page 166

166
Sources of Liquidity
Shelf Registrations
On April 11, 2007, The Hartford filed an automatic shelf registration statement (Registration No. 333-142044) for the potential offering
and sale of debt and equity securities with the Securities and Exchange Commission. The registration statement allows for the following
types of securities to be offered: (i) debt securities, preferred stock, common stock, depositary shares, warrants, stock purchase
contracts, stock purchase units and junior subordinated deferrable interest debentures of the Company, and (ii) preferred securities of
any of one or more capital trusts organized by The Hartford (“The Hartford Trusts”). The Company may enter into guarantees with
respect to the preferred securities of any of The Hartford Trusts. In that The Hartford is a well-known seasoned issuer, as defined in
Rule 405 under the Securities Act of 1933, the registration statement went effective immediately upon filing and The Hartford may offer
and sell an unlimited amount of securities under the registration statement during the three-year life of the shelf.
Contingent Capital Facility
On February 12, 2007, The Hartford entered into a put option agreement (the “Put Option Agreement”) with Glen Meadow ABC Trust,
a Delaware statutory trust (the “ABC Trust”), and LaSalle Bank National Association, as put option calculation agent. The Put Option
Agreement provides The Hartford with the right to require the ABC Trust, at any time and from time to time, to purchase The Hartford’ s
junior subordinated notes (the “Notes”) in a maximum aggregate principal amount not to exceed $500. Under the Put Option
Agreement, The Hartford will pay the ABC Trust premiums on a periodic basis, calculated with respect to the aggregate principal
amount of Notes that The Hartford had the right to put to the ABC Trust for such period. The Hartford has agreed to reimburse the
ABC Trust for certain fees and ordinary expenses. The Company holds a variable interest in the ABC Trust where the Company is not
the primary beneficiary. As a result, the Company did not consolidate the Trust, as they did not meet the consolidation requirements
under FIN 46(R).
Commercial Paper, Revolving Credit Facility and Line of Credit
The table below details the Company’ s short-term debt programs and the applicable balances outstanding.
Maximum Available As of Outstanding As of
Effective Expiration December 31,
December 31,
Description Date Date 2007 2006
2007 2006
Commercial Paper
The Hartford 11/10/86 N/A $ 2,000 $ 2,000 $ 373 $ 299
HLI [1] 2/7/97 N/A — 250 — —
Total commercial paper 2,000 2,250 373 299
Revolving Credit Facility
5-year revolving credit facility 8/9/07 8/9/12 2,000 1,600 — —
Line of Credit
Life Japan Operations [2] 9/18/02 1/5/09 45 42 — —
Total Commercial Paper, Revolving Credit Facility
and Line of Credit $ 4,045 $ 3,892 $ 373 $ 299
[1] In January 2007, the commercial paper program of HLI was terminated.
[2] As of December 31, 2007 and 2006, the Company’s Japanese operation line of credit in yen was ¥5 billion.
In August 2007, The Hartford amended and restated its existing credit facility. The revolving credit facility provides for up to $2.0
billion of unsecured credit. Of the total availability under the revolving credit facility, up to $100 is available to support letters of credit
issued on behalf of The Hartford or other subsidiaries of The Hartford. Under the revolving credit facility, the Company must maintain
a minimum level of consolidated net worth. In addition, the Company must not exceed a maximum ratio of debt to capitalization.
Quarterly, the Company certifies compliance with the financial covenants for the syndicate of participating financial institutions. As of
December 31, 2007, the Company was in compliance with all such covenants.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
The Company does not have any off-balance sheet arrangements that are reasonably likely to have a material effect on the financial
condition, results of operations, liquidity, or capital resources of the Company, except for the contingent capital facility described above
and the following:
• The Company has unfunded commitments to purchase investments in limited partnerships, mortgage and construction loans of
about $1.6 billion as disclosed in Note 12 of Notes to Consolidated Financial Statements.