The Hartford 2008 Annual Report Download - page 136

Table of Contents
• The Group Benefit increase in after-tax margin was primarily due to the favorable expense ratio.
• International-Japan ROA, excluding realized gains (losses) and the effect of the DAC Unlock, declined due to lower
earned fees as a result of declining account values, lower surrender fees due to a reduction in lapses and an increase in
the DAC amortization rate due to lower actual gross profits, as well as the accelerated DAC amortization associated
with the 3 Win trigger.
• The decrease in Institutional’s ROA, excluding realized gains (losses), is primarily due to a decline in limited
partnership and other alternative investment income. The decrease is also due to unfavorable mortality and lower yields
on fixed maturity investments.
Year ended December 31, 2007 compared to year ended December 31, 2006
• The increase in Individual Annuity’s ROA, excluding realized gains (losses) and DAC Unlock, was primarily due to
increased net investment income on allocated capital and an increase in limited partnership and other alternative
investment income. This was partially offset by an increase in the effective tax rate as a result of revisions in the
estimates of the separate account DRD and FTC.
• Individual Life’s decrease in after-tax margin, excluding realized gains (losses) and DAC Unlock, was primarily due to
unfavorable mortality experience.
• The decrease in Retirement Plan’s ROA, excluding realized gains (losses) and DAC Unlock, was primarily due to a
shift in product mix resulting in lower fees as a percent of assets.
• The increase in Institutional’s ROA, excluding realized gains (losses) and DAC Unlock, was primarily due to an
increase in limited partnership and other alternative investment income and increased net investment income on
allocated capital.
• The increase in the Group Benefits after-tax margin, excluding buyouts, excluding realized gains (losses), was due to
an improvement in the loss ratio, partially offset by higher DAC amortization.
Life Operating Summary 2008 2007 2006
Earned premiums $ 5,165 $ 5,123 $ 4,590
Fee income 5,118 5,420 4,726
Net investment income (loss)
Securities available-for-sale and other 3,045 3,497 3,184
Equity securities held for trading [1] (10,340) 145 1,824
Total net investment income (loss) (7,295) 3,642 5,008
Net realized capital losses (4,138) (819) (260)
Total revenues [2] (1,150) 13,366 14,064
Benefits, losses and loss adjustment expenses 7,381 7,002 6,216
Benefits, losses and loss adjustment expenses — returns credited on
International variable annuities [1] (10,340) 145 1,824
Amortization of deferred policy acquisition costs and present value
of future profits 2,176 884 1,452
Goodwill impairment 422 — —
Insurance operating costs and other expenses 3,300 3,230 2,708
Total benefits, losses and expenses 2,939 11,261 12,200
Income (loss) before income taxes (4,089) 2,105 1,864
Income (loss) tax expense (benefit) (1,646) 547 423
Net income (loss) [3] $ (2,443) $ 1,558 $ 1,441
[1] Net investment income includes investment income and mark-to-market effects of equity securities, held for trading,
supporting the international variable annuity business, which are classified in net investment income with
corresponding amounts credited to policyholders.
[2] The transition impact related to the SFAS 157 adoption was a reduction in revenues of $650 for the year ended
December 31, 2008. For further discussion of the SFAS 157 transition impact, refer to Note 4 of the Notes to the
Consolidated Financial Statements.
[3] The transition impact related to the SFAS 157 adoption was a reduction in net income of $220 for the year ended
December 31, 2008. For further discussion of the SFAS 157 transition impact, refer to Note 4 of the Notes to the
Consolidated Financial Statements.
Year ended December 31, 2008 compared to the year ended December 31, 2007
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009