The Hartford 2010 Annual Report Download - page 139

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-11
1. Basis of Presentation and Accounting Policies (continued)
Other Policyholder Funds and Benefits Payable
Other policyholder funds and benefits payable consist of universal life-type contracts and investment contracts.
Universal life-type contracts consist of fixed and variable annuities, 401(k), certain governmental annuities, private placement life
insurance (“PPLI”), variable universal life insurance, universal life insurance and interest sensitive whole life insurance. The liability
for universal life-type contracts is equal to the balance that accrues to the benefit of the policyholders as of the financial statement date
(commonly referred to as the account value), including credited interest, amounts that have been assessed to compensate the Company
for services to be performed over future periods, and any amounts previously assessed against policyholders that are refundable on
termination of the contract.
Investment contracts consist of institutional and governmental products, without life contingencies, including funding agreements,
certain structured settlements and guaranteed investment contracts. The liability for investment contracts is equal to the balance that
accrues to the benefit of the contract holder as of the financial statement date, which includes the accumulation of deposits plus credited
interest, less withdrawals and amounts assessed through the financial statement date. Contract holder funds include funding agreements
held by Variable Interest Entities issuing medium-term notes.
Foreign Currency Translation
Foreign currency translation gains and losses are reflected in stockholders’ equity as a component of accumulated other comprehensive
income (loss). The Company’ s foreign subsidiaries’ balance sheet accounts are translated at the exchange rates in effect at each year
end and income statement accounts are translated at the average rates of exchange prevailing during the year. The national currencies of
the international operations are generally their functional currencies.
Mutual Funds
The Company maintains a retail mutual fund operation, whereby the Company, through wholly-owned subsidiaries, provides investment
management and administrative services to The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc. (collectively,
“mutual funds”), consisting of 52 mutual funds, as of December 31, 2010. The Company charges fees to these mutual funds, which are
recorded as revenue by the Company. These mutual funds are registered with the Securities and Exchange Commission (“SEC”) under
the Investment Company Act of 1940.
The mutual funds are owned by the shareholders of those funds and not by the Company. As such, the mutual fund assets and liabilities
and related investment returns are not reflected in the Company’ s Consolidated Financial Statements since they are not assets, liabilities
and operations of the Company.