The Hartford 2009 Annual Report Download - page 195
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-46
5. Investments and Derivative Instruments (continued)
For the year ended December 31, 2009 and 2008, the Company had before-tax gains of $1 and $198, respectively, related to net
reclassifications from AOCI to earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were
no longer probable of occurring. For the year ended December 31, 2007, the Company had no net reclassifications from AOCI to
earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring.
Fair Value Hedges
For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative, as well as the
offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. The Company includes the
gain or loss on the derivative in the same line item as the offsetting loss or gain on the hedged item. All components of each
derivative’ s gain or loss were included in the assessment of hedge effectiveness.
The Company recognized in income gains (losses) representing the ineffective portion of all fair value hedges as follows:
Derivatives in Fair Value Hedging Relationships
Gain (Loss) Recognized in Income [1]
2009 2008 2007
Derivative
Hedged
Item Derivative
Hedged
Item Derivative
Hedged
Item
Interest rate swaps
Net realized capital gains (losses) $ 72 $ (68) $ (138) $ 130 $ (103) $ 99
Benefits, losses and loss adjustment expenses (37) 40 25 (18) 32 (28)
Foreign currency swaps
Net realized capital gains (losses) 51 (51) (124) 124 25 (25)
Benefits, losses and loss adjustment expenses 2 (2) 42 (42) 9 (9)
Total $ 88 $ (81) $ (195) $ 194 $ (37) $ 37
[1] The amounts presented do not include the periodic net coupon settlements of the derivative or the coupon income (expense) related to the hedged
item. The net of the amounts presented represents the ineffective portion of the hedge.