The Hartford 2008 Annual Report Download - page 258

Table of Contents
Life
The primary investment objective of Life’s general account is to maximize economic value within acceptable risk
parameters, including the management of the interest rate sensitivity of invested assets, while generating sufficient after-tax
income to support policyholder and corporate obligations, as discussed in the Capital Markets Risk Management section of
the MD&A under “Market Risk — Life”.
The following table identifies the invested assets by type held in the general account.
Composition of Invested Assets
December 31, 2008 December 31, 2007
Amount Percent Amount Percent
Fixed maturities, available-for-sale, at fair
value $ 45,182 71.3% $ 52,542 82.6%
Equity securities, available-for-sale, at fair
value 711 1.1% 1,284 2.0%
Mortgage loans, at amortized cost [1] 5,684 9.0% 4,739 7.5%
Policy loans, at outstanding balance 2,208 3.5% 2,061 3.2%
Limited partnerships and other alternative
investments [2] 1,129 1.8% 1,306 2.1%
Short-term investments 6,937 11.0% 1,158 1.8%
Other investments [3] 1,473 2.3% 534 0.8%
Total investments excl. equity securities,
held for trading 63,324 100.0% 63,624 100.0%
Equity securities, held for trading, at fair
value [4] 30,820 36,182
Total investments $ 94,144 $ 99,806
[1] Consist of commercial and agricultural loans.
[2] Includes a real estate joint venture.
[3] Primarily relates to derivative instruments.
[4] These assets primarily support the International variable annuity business. Changes in these balances are also
reflected in the respective liabilities.
Total investments decreased $5.7 billion since December 31, 2007 primarily as a result of a decline in value of equity
securities, held for trading, and increased unrealized losses on available-for-sale securities due to credit spread widening,
offset by positive operating cash flows. The decline in value in equity securities, held for trading, was due to negative
market performance of the underlying investment funds supporting the Japanese variable annuity product and policyholder
transfers from the accumulation to the annuitization phase of the contract. These losses were partially offset by gains
resulting from translation as the Yen strengthened compared to the U.S. dollar. In addition, Life increased its investment in
short-term securities in preparation for funding liability outflows and to maintain higher than average liquidity while waiting
for market and asset valuations to stabilize. Mortgage loans increased due to diversification opportunities.
Limited partnerships and other alternative investments decreased by $177 during 2008. Life continuously evaluates its
allocation to limited partnerships and other alternative investments and has taken steps to reduce its exposure to hedge funds,
most of which will occur in 2009. In addition, HIMCO does not expect significant additions to limited partnerships and
other alternative investments in 2009 except for unfunded commitments. HIMCO closely monitors the impact of these
investments in relationship to the overall investment portfolio and the consolidated balance sheets.
The following table summarizes Life’s limited partnerships and other alternative investments.
Composition of Limited Partnerships and Other Alternative Investments
December 31, 2008 December 31, 2007
Amount Percent Amount Percent
Hedge funds [1] $ 273 24.2% $ 506 38.7%
Mortgage and real estate [2] 259 22.9% 309 23.7%
Mezzanine debt [3] 95 8.4% 72 5.5%
Private equity and other [4] 502 44.5% 419 32.1%
Total $ 1,129 100.0% $ 1,306 100.0%
[1]
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009