The Hartford 2010 Annual Report Download - page 58

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As of December 31, 2010, the Company had goodwill allocated to the following reporting units:
Segment
Goodwill
Goodwill in
Corporate and Other Total
Hartford Financial Products within Property & Casualty Commercial $ 30 $ — $ 30
Group Benefits — 138 138
Consumer Markets 119 — 119
Individual Life within Life Insurance 224 118 342
Retirement Plans 87 69 156
Mutual Funds 159 92 251
Federal Trust Corporation within Corporate and Other — 15 15
Total $ 619 $ 432 $ 1,051
As of December 31, 2009, the Company had goodwill allocated to the following reporting units:
Segment
Goodwill
Goodwill in Corporate
and Other
Total
Hartford Financial Products within Property & Casualty Commercial $ 30 $ — $ 30
Group Benefits — 138 138
Consumer Markets 119 — 119
Individual Life within Life Insurance 224 118 342
Retirement Plans 87 69 156
Mutual Funds 159 92 251
Federal Trust Corporation within Corporate and Other — 168 168
Total $ 619 $ 585 $ 1,204
The Company completed its annual goodwill assessment for the Federal Trust Corporation 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 Federal Trust Corporation reporting unit, as of January 1, 2010, which resulted in no write-downs of goodwill
in 2010. 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 fair value of the Individual Life reporting unit within Life Insurance is based on
discounted cash flows using earnings projections on in force business and future business growth. There could be a positive or negative
impact on the result of step one in future periods if actual earnings or business growth assumptions emerge differently than those used in
determining fair value for the first step of the annual goodwill impairment test.
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. Consumer
Markets passed the first step of its annual impairment test with a significant margin while the Hartford Financial Products reporting unit
within Property & Casualty Commercial passed the first step of its annual impairment test with less than a 5% margin. The fair value of
the Hartford Financial Products reporting unit is based on discounted cash flows using earnings projections on existing business and
future business growth. To the extent that actual earnings or business growth assumptions emerge differently than those used in
determining fair value for the first step of the annual goodwill impairment test, it could have a positive or negative impact on the results
of step one in future periods.
See Note 8 of the Notes to Consolidated Financial Statements for information on the results of goodwill impairment tests performed in
2009 and 2008.