The Hartford 2007 Annual Report Download - page 60
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60
average invested assets base, an increase in interest rates and a change in asset mix (e.g. greater investment in mortgage loans and
limited partnerships). The increase in average invested assets base, as compared to the prior year, was primarily due to positive
operating cash flows, investment contract sales such as retail and institutional notes, and universal life-type product sales.
• Net realized capital losses were larger in the year ended December 31, 2006 compared to 2005 primarily due to rising interest rates.
Components of the increased realized losses included increased other than temporary impairments (see the Other-Than-Temporary
Impairments discussion within Investment Results for more information on the increase in impairments), losses on non-qualifying
derivatives and net losses on sales of investments.
• During 2006, the Company achieved favorable settlements in several cases brought against the Company by policyholders
regarding their purchase of broad-based leveraged corporate owned life insurance ("leveraged COLI") policies in the early to mid-
1990s. The Company ceased offering this product in 1996. Based on the favorable outcome of these cases, together with the
Company's current assessment of the few remaining leveraged COLI cases, the Company reduced its estimate of the ultimate cost
of these cases during 2006. This reserve reduction, recorded in insurance operating costs and other expenses, resulted in an after-
tax benefit of $34.
• During 2005, the Company recorded an after-tax expense of $46, related to the termination of a provision of an agreement with a
mutual fund distribution partner of the Company’ s retail mutual funds.
• Life recorded an after-tax charge of $102 in 2005 to establish reserves for regulatory matters for investigations related to market
timing by the SEC and New York Attorney General’ s Office, directed brokerage by the SEC, and single premium group annuities
by the New York Attorney General’s Office and the Connecticut Attorney General’ s Office.