The Hartford 2011 Annual Report Download - page 226

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-91
19. Sale of Assets, Joint Venture and Subsidiary
Servicing Agreement of Hartford Life Private Placement LLC
On November 22, 2011, the Company entered into an agreement with Philadelphia Financial Group, Inc. (“Philadelphia Financial”)
whereby Philadelphia Financial will acquire certain assets that are used to administer the Company’ s private placement life insurance
(“PPLI”) businesses currently administered by Hartford Life Private Placement, LLC (“HLPP”), a subsidiary of the Company. The PPLI
business administered by HLPP includes life insurance owned by banks, corporations and high net worth individuals, and group annuity
policies. The transaction is expected to close in the second quarter of 2012, subject to regulatory approvals and closing conditions. Upon
closing, Philadelphia Financial and the Company will enter into a servicing agreement whereby Philadelphia Financial will service the
PPLI businesses administered by HLPP. The Company will retain certain corporate functions associated with this business as well as
the mortality risk on the insurance policies. Under the terms of the transaction, Philadelphia Financial will receive certain future income
from the policies and pay the Company $118 at closing, resulting in an estimated deferred gain between $65 and $75 after-tax, which
will be amortized over the estimated life of the underlying insurance policies. The actual amount may be different. The deferred gain is
not expected to have a material impact on the Company’ s results of operations in future periods. The assets and liabilities of the PPLI
business are included in the Life Other Operations segment.
Sale of Joint Venture Interest in ICATU Hartford Seguros, S.A.
On November 23, 2009, the Company entered into a Share Purchase Agreement to sell its joint venture interest in ICATU Hartford
Seguros, S.A. ("IHS"), its Brazilian insurance operation, to its partner, ICATU Holding S.A., for $135. The transaction closed in 2010,
and the Company received cash proceeds of $130, which was net of capital gains tax withheld of $5. The investment in IHS was
reported as an equity method investment in Other assets. As a result of the Share Purchase Agreement, the Company recorded in 2009,
an asset impairment charge, net of unrealized capital gains and foreign currency translation adjustments, in net realized capital losses of
$44, after-tax.
Sale of First State Management Group
On March 31, 2009, the Company sold First State Management Group, Inc. (“FSMG”), its core excess and surplus lines property
business, to Beazley Group PLC (“Beazley”) for $27, resulting in a gain on sale of $12, after-tax. Included in the sale was
approximately $4 in net assets of FSMG. The net assets sold to Beazley did not include invested assets, unearned premium or deferred
policy acquisition costs related to the in-force book of business. Rather, the in-force book of business was ceded to Beazley under a
separate reinsurance agreement, whereby the Company ceded $26 of unearned premium, net of $10 in ceding commission. Under the
terms of the purchase and sale agreement, the Company continues to be obligated for all losses and loss adjustment expenses incurred
on or before March 31, 2009. The retained net loss and loss adjustment expense reserves totaled $66 and $87 as of December 31, 2011
and 2010, respectively.
See Note 20 for sale of subsidiaries that met the criteria for discontinued operations.