The Hartford 2010 Annual Report Download - page 188

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-60
8. Goodwill and Other Intangible Assets
Goodwill
Accounting Policy
Goodwill represents the excess of costs over the fair value of net assets acquired. Goodwill is not amortized but is reviewed for
impairment at least annually or more frequently if events occur or circumstances change that would indicate that a triggering event has
occurred. The goodwill impairment test follows a two step process. In the first step, the fair value of a reporting unit is compared to its
carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for
purposes of measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and
liabilities of the reporting unit to determine an implied goodwill value. This allocation is similar to a purchase price allocation
performed in purchase accounting. If the carrying amount of the reporting unit goodwill exceeds the implied goodwill value, an
impairment loss shall be recognized in an amount equal to that excess.
Results
The Hartford has changed its reporting segments effective for 2010 reporting with no changes to reporting units. Accordingly, the
goodwill by segment data for prior reporting periods has been adjusted to reflect the new reporting segments. See Note 3 for further
description of the changes to the reporting segments. The carrying amount of goodwill allocated to reporting segments as of December
31 is shown below.
December 31, 2010 December 31, 2009
Gross
Accumulated
Impairments
Carrying
Value Gross
Accumulated
Impairments
Carrying
Value
Commercial Markets
Property & Casualty Commercial $ 30 $ — $ 30 $ 30 $ — $ 30
Total Commercial Markets 30 — 30 30 — 30
Consumer Markets 119 — 119 119 — 119
Wealth Management
Global Annuity 422 (422) –– 422 (422) ––
Life Insurance 224 –– 224 224 –– 224
Retirement Plans 87 — 87 87 — 87
Mutual Funds 159 — 159 159 — 159
Total Wealth Management 892 (422) 470 892 (422) 470
Corporate and Other 940 (508) 432 940 (355) 585
Total Goodwill $ 1,981 $ (930) $ 1,051 $ 1,981 $ (777) $1,204
The Company completed its annual goodwill assessment for the Federal Trust Corporation (“FTC”) reporting unit within Corporate and
Other during the second quarter of 2010, resulting in a goodwill impairment of $153, pre-tax.
The Company completed its annual goodwill assessment for the individual reporting units within Wealth Management and Corporate
and Other, except for the FTC reporting unit, as of January 1, 2010, which resulted in no write-downs of goodwill in 2010. Goodwill
within Corporate and Other is primarily attributed to the Company’ s “buy-back” of Hartford Life, Inc. in 2000 and was allocated to each
of Hartford Life's reporting units based on the reporting units' fair value of in-force business. Although this goodwill was allocated to
each reporting unit, it is held in Corporate and Other for segment reporting. The reporting units passed the first step of their annual
impairment tests with a significant margin with the exception of the Individual Life reporting unit within Life Insurance. Individual Life
completed the second step of the annual goodwill impairment test resulting in an implied goodwill value that was in excess of its
carrying value. Even though the fair value of the reporting unit was lower than its carrying value, the implied level of goodwill in
Individual Life exceeded the carrying amount of goodwill. In the implied purchase accounting required by the step two goodwill
impairment test, the implied present value of future profits was substantially lower than that of the DAC asset removed in purchase
accounting. A higher discount rate was used for calculating the present value of future profits as compared to that used for calculating
the present value of estimated gross profits for DAC. As a result, in the implied purchase accounting, implied goodwill exceeded the
carrying amount of goodwill.
The annual goodwill assessment for the reporting units within Property & Casualty Commercial and Consumer Markets was completed
during the fourth quarter of 2010, which resulted in no write-downs of goodwill for the year ended December 31, 2010.