The Hartford 2007 Annual Report Download - page 29

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commissions to the broker defendants to steer business to the insurance company defendants. The district court has dismissed the
Sherman Act and RICO claims in both complaints for failure to state a claim and has granted the defendants’ motions for summary
judgment on the ERISA claims in the group-benefits products complaint. The district court further has declined to exercise
supplemental jurisdiction over the state law claims, has dismissed those state law claims without prejudice, and has closed both cases.
The plaintiffs have appealed the dismissal of the Sherman Act, RICO and ERISA claims.
The Company is also a defendant in two consolidated securities actions and two consolidated derivative actions filed in the United
States District Court for the District of Connecticut. The consolidated securities actions assert claims on behalf of a putative class of
shareholders alleging that the Company and certain of its executive officers violated Section 10(b) of the Securities Exchange Act of
1934 and Rule 10b-5 by failing to disclose to the investing public that The Hartford’ s business and growth was predicated on the
unlawful activity alleged in the New York Attorney General’ s complaint against Marsh. The consolidated derivative actions, brought
by shareholders on behalf of the Company against its directors and an additional executive officer, allege that the defendants knew
adverse non-public information about the activities alleged in the Marsh complaint and concealed and misappropriated that information
to make profitable stock trades in violation of their duties to the Company. In July 2006, the district court granted defendants’ motion
to dismiss the consolidated securities actions. The plaintiffs have appealed that decision. Defendants filed a motion to dismiss the
consolidated derivative actions in May 2005, and the plaintiffs have agreed to stay further proceedings until after the resolution of the
appeal from the dismissal of the securities action.
In September 2007, the Ohio Attorney General filed a civil action in Ohio state court alleging that certain insurance companies,
including The Hartford, conspired with Marsh in violation of Ohio’ s antitrust statute. The Company has moved to dismiss the case.
Fair Credit Reporting Act Class Action – In February 2007, the United States District Court for the District of Oregon gave final
approval of the Company’ s settlement of a lawsuit brought on behalf of a class of homeowners and automobile policy holders alleging
that the Company willfully violated the Fair Credit Reporting Act by failing to send appropriate notices to new customers whose initial
rates were higher than they would have been had the customer had a more favorable credit report. The settlement was made on a claim-
in, nationwide-class basis and required eligible class members to return valid claim forms postmarked no later than June 28, 2007. The
Company has paid $86.5 to eligible claimants in connection with the settlement. Some additional payments to claimants may be
required to fully satisfy the Company’ s obligations under the settlement, but management estimates that any such payments will not
exceed $1. The Company has sought reimbursement from the Company’ s Excess Professional Liability Insurance Program for the
portion of the settlement in excess of the Company’ s $10 self-insured retention. Certain insurance carriers participating in that program
have disputed coverage for the settlement, and one of the excess insurers has commenced an arbitration to resolve the dispute.
Management believes it is probable that the Company’ s coverage position ultimately will be sustained. In 2006, the Company accrued
$10, the amount of the self-insured retention, which reflects the amount that management believes to be the Company’ s ultimate
liability under the settlement net of insurance.
Call-Center Patent Litigation – In June 2007, the holder of twenty-one patents related to automated call flow processes, Ronald A. Katz
Technology Licensing, LP (“Katz”), brought an action against the Company and various of its subsidiaries in the United States District
Court for the Southern District of New York. The action alleges that the Company’ s call centers use automated processes that willfully
infringe the Katz patents. Katz previously has brought similar patent-infringement actions against a wide range of other companies,
none of which has reached a final adjudication of the merits of the plaintiff’s claims, but many of which have resulted in settlements
under which the defendants agreed to pay licensing fees. The case has been transferred to a multidistrict litigation in the United States
District Court for the Central District of California, which is currently presiding over other Katz patent cases. The Company disputes
the allegations and intends to defend this action vigorously.
Asbestos and Environmental Claims – As discussed in Item 7, Management’ s Discussion and Analysis of Financial Condition and
Results of Operations under the caption “Other Operations (Including Asbestos and Environmental Claims)”, The Hartford continues
to receive asbestos and environmental claims that involve significant uncertainty regarding policy coverage issues. Regarding these
claims, The Hartford continually reviews its overall reserve levels and reinsurance coverages, as well as the methodologies it uses to
estimate its exposures. Because of the significant uncertainties that limit the ability of insurers and reinsurers to estimate the ultimate
reserves necessary for unpaid losses and related expenses, particularly those related to asbestos, the ultimate liabilities may exceed the
currently recorded reserves. Any such additional liability cannot be reasonably estimated now but could be material to The Hartford’ s
consolidated operating results, financial condition and liquidity.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders of The Hartford Financial Services Group, Inc. during the fourth quarter of 2007.