The Hartford 2011 Annual Report Download - page 88
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88
Year ended December 31, 2010 compared to the year ended December 31, 2009
Retirement Plans’ net income in 2010 compared to a net loss in 2009 was primarily due to significant improvements in net realized
capital losses, as well as higher net investment income and improvements in the equity markets which resulted in an Unlock benefit in
2010 as compared to an Unlock charge in 2009 and continued market value appreciation in AUM which resulted in increased fee
income and other.
Net realized capital losses were lower in 2010 compared to 2009 due to lower losses from impairments, derivatives, and trading losses
compared to 2009.
Net investment income increased in 2010 compared to 2009 primarily due to the improved performance from limited partnerships and
other alternative investments and higher average general account invested assets compared to 2009. Correspondingly, the improvements
in performance on limited partnerships and other alternative investments drove an increase in the net investment spread of 33 bps,
partially offset by lower returns on fixed maturity securities. Net investment spread also improved due to lower crediting rates of 8 bps.
The Unlock benefit was $18, after-tax, in 2010 as compared to an Unlock charge of $56, after-tax, in 2009. The benefit in 2010 was
primarily due to assumption changes based on actual experience and to a lesser extent from the market performance variance to
expectations for the year ended December 31, 2010, while 2009’ s charge was primarily the result assumption changes based on actual
experience and equity market performance significantly below expectations. The Unlock primarily resulted in a decrease to
amortization of DAC. For further discussion of the Unlock see the Critical Accounting Estimates within the MD&A.
Fee income and other increased primarily due to increases in asset based fees on higher average account values resulting from
improvements in equity markets and increased net flows.
Retirement Plans’ effective tax rate differs from the statutory rate of 35% primarily due to permanent differences for the separate
account DRD. For further discussion, see Note 13 of the Notes to Consolidated Financial Statements.