The Hartford 2008 Annual Report Download - page 415

The Company also assumes credit
risk through total return and
credit index swaps which
reference a specific index or
collateral portfolio. The
maximum potential future
exposure to the Company for the
credit index swaps is the
notional value and for the total
return swaps is the cash
collateral associated with the
transaction, which has
termination triggers that limit
investment losses. The Company
had no exposure to such
contracts at December 31, 2008.
As of December 31, 2007, the
maximum potential future
exposure to the Company from
such contracts was $1,558,
before-tax.
Credit default swaps that purchase
credit protection
The Company enters into credit
default swap agreements in
which the Company reduces
credit risk to an individual
entity. These contracts require
the Company to pay a derivative
counterparty a periodic fee in
exchange for compensation from
the counterparty should a credit
event occur on the part of the
referenced security issuer. The
Company enters into these
agreements as an efficient means
to reduce credit exposure to
specified issuers or sectors. 3,668 5,166 340 81 302 84
Credit default swaps in offsetting
positions
The Company enters into credit
default swap agreements to
terminate existing credit default
swaps, thereby offsetting the
changes in value of the original
swap going forward. 2,626 — (11) — — —
F-54
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009