The Hartford 2010 Annual Report Download - page 68
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68
After-tax margin
After-tax margin is a key indicator of overall profitability for the Life Insurance and Group Benefits reporting segments as a significant
portion of their earnings are a result of the net margin from losses incurred on earned premiums, fees and other considerations.
2010 2009 2008
Life Insurance
After-tax margin 16.6% 3.1% (1.8%)
Effect of net realized gains (losses), net of tax and DAC on after-tax margin 0.9% (6.0%) (13.0%)
Effect of DAC Unlock on after-tax margin 1.4% (4.3%) (2.6%)
After-tax margin, excluding realized gains (losses) and DAC Unlock 14.3% 13.4% 13.8%
Group Benefits
After-tax margin (excluding buyouts) 3.9% 4.2% (0.1%)
Effect of net realized gains (losses), net of tax on after-tax margin 0.5% (1.5%) (7.3%)
After-tax margin (excluding buyouts), excluding realized gains (losses) 3.4% 5.7% 7.2%
Year ended December 31, 2010 compared to year ended December 31, 2009
• Life Insurance’ s after-tax margin, excluding realized gains (losses) and DAC Unlock, increase was primarily due to lower DAC
amortization, favorable operating expenses and investment margin, partially offset by higher mortality.
• Group Benefits’ after-tax margin (excluding buyouts), excluding realized gains (losses), decrease was primarily due to a higher loss
ratio from unfavorable morbidity driven by lower claim terminations on disability business.
Year ended December 31, 2009 compared to year ended December 31, 2008
• Life Insurance’ s after-tax margin, excluding realized gains (losses) and DAC Unlock, decrease was primarily due to a higher DAC
amortization, partially offset by a lower effective rate and lower operating expenses.
• Group Benefits after-tax margin (excluding buyouts), excluding realized gains (losses), decrease was primarily due to the
unfavorable loss ratio that resulted from unfavorable morbidity experience, which was primarily due to unfavorable reserve
development from the 2008 incurral loss year and higher new incurred long-term disability claims in 2009.