The Hartford 2012 Annual Report Download - page 104

Table of Contents
Many policyholders with a GMDB also have a GMWB in the U.S. or GMIB in Japan. Policyholders that have a product that offer both guarantees can only
receive the GMDB or the GMIB benefit in Japan or the GMDB or GMWB in the U.S. The GMDB NAR disclosed in the tables above is a point in time
measurement and assumes that all participants utilize the GMDB benefit on that measurement date. For additional information on the Company's GMDB
liability, see Note 10 of the Notes to Consolidated Financial Statements.
The Company expects to incur these payments in the future only if the policyholder has an “in the money” GMWB at their death or their account value is
reduced to a specified level, through contractually permitted withdrawals and/or market declines. If the account value is reduced to the specified level, the
contract holder will receive an annuity equal to the guaranteed remaining benefit (“GRB”). For the Company’s “life-time” GMWB products, this annuity can
continue beyond the GRB. As the account value fluctuates with equity market returns on a daily basis and the “life-time” GMWB payments can exceed the
GRB, the ultimate amount to be paid by the Company, if any, is uncertain and could be significantly more or less than the Company’s current carried
liability. For additional information on the Company’s GMWB liability, see Note 5 of the Notes to Consolidated Financial Statements.
For GMIB contracts, in general, the policyholder has the right to elect to annuitize benefits, beginning (for certain products) on the tenth or fifteenth
anniversary year of contract commencement, receive lump sum payment of the then current account value, or remain in the variable sub-account. For GMIB
contracts, if the policyholder makes the election, the policyholder is entitled to receive the original investment value over a 10- to 15- year annuitization period.
A small percentage of the contracts will first become eligible to elect annuitization beginning in 2013. The remainder of the contracts will first become eligible to
elect annuitization from 2014 to 2022. Because policyholders have various contractual rights to defer their annuitization election, the period over which
annuitization election can take place is subject to policyholder behavior and therefore indeterminate. In addition, upon annuitization the contractholder
surrenders access to the account value and the account value is transferred to the Company’s general account where it is invested and the additional investment
proceeds are used towards payment of the original investment value. If the original investment value exceeds the account value upon annuitization then the
contract is “in the money”. As of December 31, 2012, 73% of retained NAR is reinsured to an affiliate of The Hartford. For additional information on the
Company’s GMIB liability, see Note 10 of the Notes to Consolidated Financial Statements.
The following table represents the timing of account values eligible for annuitization under the Japan GMIB as well as the NAR. The account values reflect
100% annuitization at the earliest point allowed by the contract and no adjustments for future market returns and policyholder behaviors. Future market
returns, changes in the value of the Japanese yen and policyholder behaviors will impact account values eligible for annuitization in the years presented.
 
($ in billions)  
2013 $0.3 $ —
2014 4.3 0.2
2015 7.1 0.8
2016 2.3 0.4
2017 2.7 0.5
2018 & beyond [2] 6.5 0.9
   
[1] Excludes certain non-GMIB living benefits of $2.8 billion of account value and $0.5 billion of NAR.
[2] In 2018 & beyond, $2.5 billion of the $6.5 billion is associated with account value that is eligible in 2021.
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