The Hartford 2010 Annual Report Download - page 26

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Investment and Savings Plan ERISA and Shareholder Securities Class Action Litigation – In November and December 2008, following
a decline in the share price of the Company’ s common stock, seven putative class action lawsuits were filed in the United States District
Court for the District of Connecticut on behalf of certain participants in the Company’ s Investment and Savings Plan (the “Plan”), which
offers the Company’ s common stock as one of many investment options. These lawsuits have been consolidated, and a consolidated
amended class-action complaint was filed on March 23, 2009, alleging that the Company and certain of its officers and employees
violated ERISA by allowing the Plan’ s participants to invest in the Company’ s common stock and by failing to disclose to the Plan’ s
participants information about the Company’ s financial condition. The lawsuit seeks restitution or damages for losses arising from the
investment of the Plan’ s assets in the Company’ s common stock during the period from December 10, 2007 to the present. In January
2010, the district court denied the Company’ s motion to dismiss the consolidated amended complaint. In February 2011, the parties
reached an agreement in principle to settle on a class basis for an immaterial amount. The settlement is contingent upon the execution of
a final settlement agreement and preliminary and final court approval.
The Company and certain of its present or former officers are defendants in a putative securities class action lawsuit filed in the United
States District Court for the Southern District of New York in March 2010. The operative complaint, filed in October 2010, is brought
on behalf of persons who acquired Hartford common stock during the period of July 28, 2008 through February 5, 2009, and alleges that
the defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, by making false or misleading statements
during the alleged class period about the Company’ s valuation of certain asset-backed securities and its effect on the Company’ s capital
position. The Company disputes the allegations and has moved to dismiss the complaint.
Fair Credit Reporting Act Class Action – In February 2007, the United States District Court for the District of Oregon gave final
approval of the Company’ s settlement of a lawsuit brought on behalf of a class of homeowners and automobile policy holders alleging
that the Company willfully violated the Fair Credit Reporting Act by failing to send appropriate notices to new customers whose initial
rates were higher than they would have been had the customer had a more favorable credit report. The Company paid approximately
$84.3 to eligible claimants and their counsel in connection with the settlement, and sought reimbursement from the Company’ s Excess
Professional Liability Insurance Program for the portion of the settlement in excess of the Company’ s $10 self-insured retention.
Certain insurance carriers participating in that program disputed coverage for the settlement, and one of the excess insurers commenced
an arbitration that resulted in an award in the Company’ s favor and payments to the Company of approximately $30.1, thereby
exhausting the primary and first-layer excess policies. In June 2009, the second-layer excess carriers commenced an arbitration to
resolve the dispute over coverage for the remainder of the amounts paid by the Company. The arbitration hearing is scheduled for May
2011. Management believes it is probable that the Company’ s coverage position ultimately will be sustained.
Mutual Funds Litigation - In October 2010, a derivative action was brought on behalf of six Hartford retail mutual funds in the United
States District Court for the District of Delaware, alleging that Hartford Investment Financial Services, LLC received excessive advisory
and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the Investment Company Act of 1940. Plaintiff
seeks to rescind the investment management agreements and distribution plans between the Company and the six mutual funds and to
recover the total fees charged thereunder or, in the alternative, to recover any improper compensation the Company received. The
Company disputes the allegations and has moved to dismiss the complaint.
Structured Settlement Class Action - In October 2005, a putative nationwide class action was filed in the United States District Court for
the District of Connecticut against the Company and several of its subsidiaries on behalf of persons who had asserted claims against an
insured of a Hartford property & casualty insurance company that resulted in a settlement in which some or all of the settlement amount
was structured to afford a schedule of future payments of specified amounts funded by an annuity from a Hartford life insurance
company (“Structured Settlements”). The operative complaint alleged that since 1997 the Company deprived the settling claimants of
the value of their damages recoveries by secretly deducting 15% of the annuity premium of every Structured Settlement to cover
brokers’ commissions, other fees and costs, taxes, and a profit for the annuity provider, and asserted claims under the Racketeer
Influenced and Corrupt Organizations Act (“RICO”) and state law. The district court certified a class for the RICO and fraud claims in
March 2009, and the Company’ s petition to the United States Court of Appeals for the Second Circuit for permission to file an
interlocutory appeal of the class-certification ruling was denied in October 2009. In April 2010, the parties reached an agreement in
principle to settle on a nationwide class basis, under which the Company would pay $72.5 in exchange for a full release and dismissal of
the litigation. The $72.5 was accrued in the first quarter of 2010. The settlement received final court approval in September 2010 and
was paid in the third quarter of 2010.
Asbestos and Environmental Claims – As discussed in Item 7, Management’ s Discussion and Analysis of Financial Condition and
Results of Operations under the caption “Reserving for Asbestos and Environmental Claims within Other Operations,” The Hartford
continues to receive asbestos and environmental claims that involve significant uncertainty regarding policy coverage issues. Regarding
these claims, The Hartford continually reviews its overall reserve levels and reinsurance coverages, as well as the methodologies it uses
to estimate its exposures. Because of the significant uncertainties that limit the ability of insurers and reinsurers to estimate the ultimate
reserves necessary for unpaid losses and related expenses, particularly those related to asbestos, the ultimate liabilities may exceed the
currently recorded reserves. Any such additional liability cannot be reasonably estimated now but could be material to The Hartford’ s
consolidated operating results, financial condition and liquidity.
Item 4. (Removed and Reserved)