The Hartford 2008 Annual Report Download - page 343

Table of Contents
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in millions, except for per share data, unless otherwise stated)
1. Basis of Presentation and Accounting Policies
Basis of Presentation
The Hartford Financial Services Group, Inc. is a financial holding company for a group of subsidiaries that provide
investment products and life and property and casualty insurance to both individual and business customers in the United
States and internationally (collectively, “The Hartford” or the “Company”).
The consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the
United States of America (“U.S. GAAP”), which differ materially from the accounting practices prescribed by various
insurance regulatory authorities.
Consolidation
The consolidated financial statements include the accounts of The Hartford Financial Services Group, Inc., companies in
which the Company directly or indirectly has a controlling financial interest and those variable interest entities in which the
Company is the primary beneficiary. The Company determines if it is the primary beneficiary using both qualitative and
quantitative analyses. Entities in which The Hartford does not have a controlling financial interest but in which the Company
has significant influence over the operating and financing decisions are reported using the equity method. All material
intercompany transactions and balances between The Hartford and its subsidiaries and affiliates have been eliminated. For
further discussions on variable interest entities see Note 5.
Use of Estimates
The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
The most significant estimates include those used in determining property and casualty reserves, net of reinsurance; life
estimated gross profits used in the valuation and amortization of assets and liabilities associated with variable annuity and
other universal life-type contracts; living benefits required to be fair valued; valuation of investments and derivative
instruments; evaluation of other-than-temporary impairments on available-for-sale securities; pension and other
postretirement benefit obligations; contingencies relating to corporate litigation and regulatory matters; and goodwill
impairment.
Reclassifications
Certain reclassifications have been made to prior year financial information to conform to the current year presentation
Adoption of New Accounting Standards
Amendments to the Impairment Guidance of EITF Issue No. 99-20
In January 2009, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) No. EITF
99-20-1, “Amendments to the Impairment Guidance of EITF Issue No. 99-20,” (“FSP EITF 99-20-1”). The FSP amends the
impairment guidance of Emerging Issues Task Force (“EITF”) Issue No. 99-20, “Recognition of Interest Income and
Impairment of Purchased Beneficial Interest and Beneficial Interest that Continue to Be Held by a Transferor in Securitized
Financial Assets,” by removing the exclusive reliance upon market participant assumptions about future cash flows when
evaluating impairment of securities within its scope. FSP EITF 99-20-1 requires companies to follow the impairment
guidance in Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt
and Equity Securities” (“SFAS 115”), which permits the use of reasonable management judgment of the probability that the
holder will be unable to collect all amounts due. The FSP is effective prospectively for interim and annual reporting periods
ending after December 15, 2008. The Company adopted the FSP on December 31, 2008 and the adoption did not have a
material effect on the Company’s consolidated financial statements.
F-7
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009