The Hartford 2011 Annual Report Download - page 207

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-72
14. Debt (continued)
Long-Term Debt Maturities
The following table reflects the Company’ s long-term debt maturities.
2012
$
—
2013
320
2014
200
2015
500
2016
300
Thereafter
5,500
Shelf Registrations
On August 4, 2010, The Hartford filed with the Securities and Exchange Commission (the “SEC”) an automatic shelf registration
statement (Registration No. 333-168532) for the potential offering and sale of debt and equity securities. The registration statement
allows for the following types of securities to be offered: debt securities, junior subordinated debt securities, preferred stock, common
stock, depositary shares, warrants, stock purchase contracts, and stock purchase units. In that The Hartford is a well-known seasoned
issuer, as defined in Rule 405 under the Securities Act of 1933, the registration statement went effective immediately upon filing and
The Hartford may offer and sell an unlimited amount of securities under the registration statement during the three-year life of the
registration statement.
Contingent Capital Facility
The Hartford is party to a put option agreement that provides The Hartford with the right to require the Glen Meadow ABC Trust, a
Delaware statutory trust, at any time and from time to time, to purchase The Hartford’ s junior subordinated notes in a maximum
aggregate principal amount not to exceed $500. Under the Put Option Agreement, The Hartford will pay the Glen Meadow ABC Trust
premiums on a periodic basis, calculated with respect to the aggregate principal amount of Notes that The Hartford had the right to put
to the Glen Meadow ABC Trust for such period. The Hartford has agreed to reimburse the Glen Meadow ABC Trust for certain fees
and ordinary expenses. The Company holds a variable interest in the Glen Meadow ABC Trust where the Company is not the primary
beneficiary. As a result, the Company did not consolidate the Glen Meadow ABC Trust. As of December 31, 2011, The Hartford has
not exercised its right to require Glen Meadow ABC Trust to purchase the Notes. As a result, the Notes remain a source of capital for
the HFSG Holding Company.
Commercial Paper and Revolving Credit Facility
The table below details the Company’ s short-term debt programs and the applicable balances outstanding.
Maximum Available As of
Outstanding As of
Effective
Expiration
December 31,
December 31,
Description
Date
Date
2011
2010
2011
2010
Commercial Paper
The Hartford
11/10/86
N/A
$
2,000
$
2,000
$
—
$
—
Revolving Credit Facility
5-year revolving credit facility
8/9/07
8/9/12
1,900
1,900
—
—
Total Commercial Paper and Revolving
Credit Facility $ 3,900 $ 3,900 $ — $ —
While the Company’ s maximum borrowings available under its commercial paper program are $2.0 billion, the Company is dependent
upon market conditions to access short-term financing through the issuance of commercial paper to investors. As of December 31,
2011, the Company has no commercial paper outstanding.
In January 2012, the Company entered into a senior unsecured revolving credit facility (the “Credit Facility”) that provides for
borrowing capacity up to $1.75 billion (which is available in U.S. dollars, and in Euro, Sterling, Canadian dollars and Japanese Yen)
through January 6, 2016 and terminated its $1.9 billion unsecured revolving credit facility due August 9, 2012. As of December 31,
2011, the Company was in compliance with all financial covenants under the terminated credit facility.
Of the total availability under the Credit Facility, up to $250 is available to support letters of credit issued on behalf of the Company or
subsidiaries of the Company. Under the Credit Facility, the Company must maintain a minimum level of consolidated net worth of $16
billion. The minimum level of consolidated net worth, as defined, will be adjusted, upon the adoption of new DAC guidance, see Note
1, in the first quarter of 2012, by the lesser of approximately $1.0 billion, after-tax representing 70% of the adoption-related estimated
DAC charge or $1.7 billion. The definition of consolidated net worth under the terms of the Credit Facility, excludes AOCI and
includes the Company’ s outstanding junior subordinated debentures and perpetual preferred securities, net of discount. In addition, the
Company’ s maximum ratio of consolidated total debt to consolidated total capitalization is 35%, and the ratio of consolidated total debt
of subsidiaries to consolidated total capitalization is limited to 10%. The Company will certify compliance with the financial covenants
for the syndicate of participating financial institutions on a quarterly basis.
The Hartford’ s Japan operations also maintain two lines of credit in support of the subsidiary operations. Both lines of credit are in the
amount of $65, or ¥5 billion, and individually have expiration dates of September 30, 2012 and January 3, 2013.