The Hartford 2008 Annual Report Download - page 371

Table of Contents
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Earnings per Share (continued)
Under the treasury stock method for the equity units, the number of shares of common stock used in calculating diluted
earnings per share is increased by the excess, if any, of the number of shares issuable upon settlement of the purchase
contracts, over the number of shares that could be purchased by The Hartford in the market using the proceeds received
upon settlement. The number of issuable shares was based on the average market price for the last 20 trading days of the
period. The number of shares purchased was based on the average market price during the entire period. Upon settlement of
the purchase contracts associated with the Company’s equity units, the associated common shares were added to the
Company’s issued and outstanding shares. For further discussion of the Company’s equity units offerings, see Note 15.
3. Segment Information
The Hartford is organized into two major operations: Life and Property & Casualty, each containing reporting segments.
Within the Life and Property & Casualty operations, The Hartford conducts business principally in eleven reporting
segments. Corporate primarily includes the Company’s debt financing and related interest expense, as well as other capital
raising activities and purchase accounting adjustments.
Life
Life’s business is conducted by Hartford Life, Inc. (“Hartford Life” or “Life”), an indirect subsidiary of The Hartford,
headquartered in Simsbury, Connecticut, and is a financial services and insurance organization. Life is organized into four
groups which are comprised of six reporting segments: The Retail Products Group (“Retail”) and Individual Life segments
make up the Individual Markets Groups. The Retirement Plans and Group Benefits segments make up the Employer
Markets Group. The International and Institutional Solutions Group (“Institutional”) segments each make up their own
group.
Retail offers individual variable and fixed market value adjusted (“MVA”) annuities, retail mutual funds, 529 college
savings plans, Canadian and offshore investment products.
Individual Life sells a variety of life insurance products, including variable universal life, universal life, interest sensitive
whole life and term life.
Retirement Plans provides products and services to corporations pursuant to Section 401(k) and products and services to
municipalities and not-for-profit organizations under Section 457 and 403(b) of the IRS code. Retirement Plans also offers
mutual funds to institutional investors.
Group Benefits provides individual members of employer groups, associations, affinity groups and financial institutions
with group life, accident and disability coverage, along with other products and services, including voluntary benefits, and
group retiree health.
International, which has operations located in Japan, Brazil, Ireland and the United Kingdom, provides investments,
retirement savings and other insurance and savings products to individuals and groups outside the United States and Canada.
Institutional primarily offers institutional liability products, including stable value products, structured settlements and
institutional annuities (primarily terminal funding cases), as well as variable Private Placement Life Insurance (“PPLI”)
owned by corporations and high net worth individuals. Institutional also offers mutual funds to institutional investors.
Furthermore, Institutional offers additional individual products including structured settlements, single premium immediate
annuities and longevity assurance.
Life includes within its Other segment its leveraged PPLI product line of business; corporate items not directly allocated to
any of its reportable operating segments; intersegment eliminations and the mark-to-mark adjustment for the International
variable annuity assets that are classified as equity securities held for trading reported in net investment income and the
related change in interest credited reported as a component of benefits, losses and loss adjustment expenses.
Life charges direct operating expenses to the appropriate segment and allocates the majority of indirect expenses to the
segments based on an intercompany expense arrangement. Inter-segment revenues primarily occur between Life’s Other
category and the reporting segments. These amounts primarily include interest income on allocated surplus and interest
charges on excess separate account surplus.
The accounting policies of the reporting segments are the same as those described in the summary of significant accounting
policies in Note 1. Life evaluates performance of its segments based on revenues, net income and the segment’s return on
allocated capital. Each reporting segment is allocated corporate surplus as needed to support its business.
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009