The Hartford 2007 Annual Report Download - page 170

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Equity Markets
For a discussion of the potential impact of the equity markets on capital and liquidity, see the Capital Markets Risk Management section
under “Market Risk”.
Ratings
Ratings are an important factor in establishing the competitive position in the insurance and financial services marketplace. There can
be no assurance that the Company's ratings will continue for any given period of time or that they will not be changed. In the event the
Company's ratings are downgraded, the level of revenues or the persistency of the Company's business may be adversely impacted.
On June 25, 2007, A.M. Best Co. upgraded the issuer credit ratings to “a” from “a-” and the senior debt ratings to “a” from “a-” of The
Hartford Financial Services Group, Inc. and Hartford Life, Inc. In addition, the commercial paper rating of The Hartford Financial
Services Group, Inc. was upgraded to AMB-1 from AMB-2. Concurrently, A.M. Best has affirmed the financial strength rating of A+
(Superior) and the issuer credit ratings of "aa-" of the Company’ s insurance subsidiaries. The outlook for all ratings is stable.
The following table summarizes The Hartford’ s significant member companies’ financial ratings from the major independent rating
organizations as of February 15, 2008.
Insurance Financial Strength Ratings: A.M. Best Fitch Standard & Poor’s Moody’s
Hartford Fire Insurance Company A+ AA AA- Aa3
Hartford Life Insurance Company A+ AA AA- Aa3
Hartford Life and Accident Insurance Company A+ AA AA- Aa3
Hartford Life and Annuity Insurance Company A+ AA AA- Aa3
Hartford Life Insurance KK (Japan) — — AA- —
Hartford Life Limited (Ireland) — — AA- —
Other Ratings:
The Hartford Financial Services Group, Inc.:
Senior debt
Commercial paper
a
AMB-1
A
F1
A
A-1
A2
P-1
Hartford Life, Inc.:
Senior debt a A A A2
Hartford Life Insurance Company:
Short term rating — — A-1+ P-1
Consumer notes a+ AA- AA- A1
These ratings are not a recommendation to buy or hold any of The Hartford’ s securities and they may be revised or revoked at any time
at the sole discretion of the rating organization.
The agencies consider many factors in determining the final rating of an insurance company. One consideration is the relative level of
statutory surplus necessary to support the business written. Statutory surplus represents the capital of the insurance company reported in
accordance with accounting practices prescribed by the applicable state insurance department.
The table below sets forth statutory surplus for the Company’ s insurance companies.
2007 2006
Life Operations $ 5,786 $4,733
Japan Life Operations 1,620 1,380
Property & Casualty Operations 8,509 8,230
Total $ 15,915 $14,343
Risk-based Capital
The National Association of Insurance Commissioners (“NAIC”) has regulations establishing minimum capitalization requirements
based on risk-based capital (“RBC”) formulas for both life and property and casualty companies. The requirements consist of formulas,
which identify companies that are undercapitalized and require specific regulatory actions. The RBC formula for life companies
establishes capital requirements relating to insurance, business, asset and interest rate risks and effective for 2005, it addresses the
equity, interest rate and expense recovery risks associated with variable annuities and group annuities that contain death benefits or
certain living benefit. RBC is calculated for property and casualty companies after adjusting capital for certain underwriting, asset,
credit and off-balance sheet risks. As of December 31, 2007, each of The Hartford’ s insurance subsidiaries within Life and Ongoing
Property & Casualty had more than sufficient capital to meet the NAIC’ s minimum RBC requirements.