The Hartford 2007 Annual Report Download - page 245

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-68
14. Debt (continued)
Consumer Notes
Institutional Solutions Group began issuing Consumer Notes through its Retail Investor Notes Program in September 2006. A
Consumer Note is an investment product distributed through broker-dealers directly to retail investors as medium-term, publicly traded
fixed or floating rate, or a combination of fixed and floating rate, notes. In addition, discount notes, amortizing notes and indexed notes
may also be offered and issued. Consumer Notes are part of the Company’ s spread-based business and proceeds are used to purchase
investment products, primarily fixed rate bonds. Proceeds are not used for general operating purposes. Consumer Notes are offered
weekly with maturities up to 30 years and varying interest rates and may include a call provision. Certain Consumer Notes may be
redeemed by the holder in the event of death. Redemptions are subject to certain limitations, including calendar year aggregate and
individual limits equal to the greater of $1 or 1% of the aggregate principal amount of the notes and $250 thousand per individual,
respectively. Derivative instruments will be utilized to hedge the Company’ s exposure to interest rate risk in accordance with
Company policy.
As of December 31, 2007 and 2006, $809 and $258 of consumer notes had been issued. These notes have interest rates ranging from
4.75% to 6.25% for fixed notes and for variable notes, either consumer price index plus 157 basis points to 267 basis points, or indexed
to the S&P 500, Dow Jones Industrials or the Nikkei 225. The aggregate maturities of consumer notes are as follows: $222 in 2008,
$494 in 2009, $34 in 2010, $19 in 2011 and $40 thereafter. For 2007 and 2006, interest credited to holders of Consumer Notes was $11
and $2, respectively.
15. Stockholders’ Equity
Common Stock
The Hartford’ s Board of Directors has authorized the Company to repurchase up to $2 billion of its securities. For the year ended
December 31, 2007, The Hartford repurchased $1.2 billion of its common stock (12.9 million shares) under this program. The
Company’s repurchase authorization permits purchases of common stock, which may be in the open market or through privately
negotiated transactions. The Company also may enter into derivative transactions to facilitate future repurchases of common stock.
The timing of any future repurchases will be dependent upon several factors, including the market price of the Company’ s securities,
the Company’ s capital position, consideration of the effect of any repurchases on the Company’ s financial strength or credit ratings,
and other corporate considerations. The repurchase program may be modified, extended or terminated by the Board of Directors at any
time.
In 2006, the Company issued approximately 12.1 million and 5.7 million shares of common stock in connection with the settlement of
purchase contracts originally issued in 2003 and 2002, respectively, as components of our equity units, see Note 14.
Preferred Stock
The Company has 50,000,000 shares of preferred stock authorized, none of which have been issued.