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upon rate and notional amount, and for certain transactions there will also be an upfront premium payment. The second

party, who assumes credit exposure, will typically only make a payment if there is a credit event and such payment will be

equal to the notional value of the swap contract less the value of the referenced security issuer’s debt obligation. A credit

event is generally defined as default on contractually obligated interest or principal payments or bankruptcy of the

referenced entity.

Credit index swaps and total return swaps involve the periodic exchange of payments with other parties, at specified

intervals, calculated using the agreed upon index and notional principal amounts. Generally, no cash or principal payments

are exchanged at the inception of the contract.

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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009