The Hartford 2010 Annual Report Download - page 136

F-8
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 holding company for insurance and financial service subsidiaries that provide
investment products and life and property and casualty insurance to both individual and business customers in the United States
(collectively, “The Hartford” or the “Company”). Also, The Hartford continues to administer business previously sold in Japan and the
U.K.
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 required
to consolidate. Entities in which the Company has significant influence over the operating and financing decisions but are not required
to consolidate are reported using the equity method. 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; evaluation of other-than-temporary impairments on available-for-sale securities and valuation allowances on investments;
living benefits required to be fair valued; goodwill impairment; valuation of investments and derivative instruments; pension and other
postretirement benefit obligations; valuation allowance on deferred tax assets and contingencies relating to corporate litigation and
regulatory matters. Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the
worldwide debt or equity markets could have a material impact on the Consolidated Financial Statements.
Reclassifications
Certain reclassifications have been made to prior year financial information to conform to the current year presentation.