The Hartford 2008 Annual Report Download - page 159

Table of Contents
Year ended December 31, 2007 compared to the year ended December 31, 2006
Net income in Institutional decreased for the year ended December 31, 2007 primarily due to increased realized capital
losses of $151 as compared to 2006. For further discussion, see Realized Capital Gains and Losses by Segment table under
Life’s Operating Section of the MD&A. Offsetting the impact of realized capital losses, Institutional’s net income increased
driven by higher assets under management, combined with increased returns on general account assets, primarily due to
limited partnership and other alternative investment income. The following other factors contributed to the changes in
income:
Fee income and other • Fee income increased for the year ended December 31, 2007 primarily due to higher
Mutual Fund and PPLI assets under management on net flows and change in market
appreciation of $5.8 billion and $2.1 billion, respectively, during the year. In addition,
PPLI collects front-end loads recorded in fee income, offset by corresponding premium
taxes reported in insurance operating costs and other expenses. During the year ended
December 31, 2007, PPLI had deposits of $5.2 billion, which resulted in an increase in
fee income due to front-end loads of $107.
Earned premiums • Earned premiums increased for the year ended December 31, 2007 primarily as a result
of increased structured settlement life contingent sales, and one large terminal funding
life contingent case sold in the third quarter. This increase in earned premiums was offset
by a corresponding increase in benefits, losses and loss adjustment expenses.
Net investment income • Net investment income increased due to higher assets under management resulting from
positive net flows of $1.5 billion during the year, and higher returns on limited
partnerships and other alternative investments. Net flows were favorable primarily as a
result of the Company’s funding agreement backed Investor Notes program.
Benefits, losses and loss
adjustment expenses
• Benefits, losses and loss adjustment expenses increased as compared to the comparable
prior year period primarily due to higher assets under management, in addition to one
large terminal funding life contingent case sold in the third quarter of 2007.
Insurance operating
costs and other
expenses
• Insurance operating costs and other expenses increased due to greater premium tax,
driven by increased PPLI deposits.
Income tax expense
(benefit)
• The change in income taxes was due to lower income before income taxes primarily
driven by the increase in realized capital losses.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009