The Hartford 2008 Annual Report Download - page 134

Table of Contents
Profitability
Management evaluates the rates of return various businesses can provide as an input in determining where additional capital
should be invested to increase net income and shareholder returns. The Company uses the return on assets for the individual
annuity business for evaluating profitability. In Group Benefits and Individual Life, after-tax margin is a key indicator of
overall profitability.
Ratios 2008 2007 2006
Retail
Individual annuity return on assets (“ROA”) (133.5) bps 58.9 bps 39.9 bps
Effect of net realized gains (losses), net of tax and DAC
on ROA [1] (96.5) bps (13.3) bps (7.4) bps
Effect of DAC Unlock on ROA [3] (68.0) bps 15.6 bps (6.0) bps
ROA excluding realized gains (losses) and DAC Unlock 31.0 bps 56.6 bps 53.3 bps
Individual Life
After-tax margin (4.7%) 16.0% 13.3%
Effect of net realized gains (losses), net of tax and DAC
on after-tax margin [1] (13.1%) (1.3%) (1.5%)
Effect of DAC Unlock on after-tax margin [3] (4.7%) 1.4% (1.6%)
After-tax margin excluding realized gains (losses) and
DAC Unlock 13.1% 15.9% 16.4%
Retirement Plans
Retirement ROA (47.9) bps 22.9 bps 44.7 bps
Effect of net realized gains (losses), net of tax and DAC
on ROA [1] (51.5) bps (10.5) bps (3.1) bps
Effect of DAC Unlock on ROA [3] (15.0) bps (3.4) bps 8.9 bps
ROA excluding realized gains (losses) and DAC Unlock 18.6 bps 36.8 bps 38.9 bps
Group Benefits
After-tax margin (excluding buyouts) (0.1%) 6.7% 6.6%
Effect of net realized gains (losses), net of tax on after-tax
margin (excluding buyouts) [1] (7.3%) (0.4%) (0.1%)
After-tax margin (excluding buyouts) excluding realized
gains (losses) 7.2% 7.1% 6.7%
International – Japan
International – Japan ROA (72.9) bps 73.4 bps 87.7 bps
Effect of net realized gains (losses) excluding net periodic
settlements, net of tax and DAC on ROA [1] [2] (65.1) bps (8.1) bps (5.6) bps
Effect of DAC Unlock on ROA [3] (31.9) bps 6.4 bps 18.5 bps
ROA excluding realized gains (losses) and DAC Unlock 24.1 bps 75.1 bps 74.8 bps
Institutional
Institutional ROA (83.3) bps 3.0 bps 16.6 bps
Effect of net realized gains (losses), net of tax and DAC
on ROA [1] (85.0) bps (21.5) bps (5.1) bps
Effect of DAC Unlock on ROA [3] — bps 0.2 bps — bps
ROA excluding realized gains (losses) and DAC Unlock 1.7 bps 24.3 bps 21.7 bps
[1] See “Realized Capital Gains and Losses by Segment” table within the Life Section of the MD&A.
[2] Included in the net realized capital gain (losses) are amounts that represent the net periodic accruals on currency rate
swaps used in the risk management of Japan fixed annuity products.
[3] See Unlock and Sensitivity Analysis within the Critical Accounting Estimates section of the MD&A.
Year ended December 31, 2008 compared to year ended December 31, 2007
• The decrease in Individual Annuity’s ROA, excluding realized gains (losses) and the effect of the DAC Unlock, reflects
the write-off of goodwill of $274 after-tax, or 19.4 bps; lower limited partnership and other alternative investment
income; and the net effect of lower fees.
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009