The Hartford 2013 Annual Report Download - page 125

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Liquidity requirements that are unable to be funded by Property & Casualty Operation’s short-term investments would be satisfied with
current operating funds, including premiums received or through the sale of invested assets. A sale of invested assets could result in
realized losses.
Life Operations
Life Operations’ total general account contractholder obligations are supported by $49 billion of cash and total general account invested
assets, excluding equity securities, trading, which includes a significant short-term investment position to meet liquidity needs.
As of December 31, 2013, Life Operations’ fixed maturities, short-term investments, and cash are summarized as follows:
Fixed maturities $ 37,432
Short-term investments 2,211
Cash 1,237
Less: Derivative collateral 1,251
Less: Cash associated with Japan variable annuities 281
Total $ 39,348
Capital resources available to fund liquidity, upon contractholder surrender, are a function of the legal entity in which the liquidity
requirement resides. Generally, obligations of Group Benefits will be funded by Hartford Life and Accident Insurance Company.
Obligations of Talcott Resolution will generally be funded by Hartford Life Insurance Company and Hartford Life and Annuity
Insurance Company, while obligations of the Company’s international annuity subsidiaries will generally be funded by Hartford Life
Insurance KK. Contractholder obligations of the former Retirement Plans business were funded by Hartford Life Insurance Company
and of the former Individual Life business were funded by both Hartford Life Insurance Company and Hartford Life and Annuity
Insurance Company. See Note 2 - Business Dispositions of Notes to the Consolidated Financial Statements as to the sale of the
Retirement Plans and Individual Life businesses and related transfer of invested assets in January 2013.
Hartford Life Insurance Company (“HLIC”), an indirect wholly owned subsidiary, became a member of the Federal Home Loan Bank of
Boston (“FHLBB”) in May 2011. Membership allows HLIC access to collateralized advances, which may be used to support various
spread-based business and enhance liquidity management. [The Connecticut Department of Insurance (“CTDOI”) will permit HLIC to
pledge up to $1.25 billion in qualifying assets to secure FHLBB advances for 2014]. The amount of advances that can be taken are
dependent on the asset types pledged to secure the advances. The pledge limit is recalculated annually based on statutory admitted assets
and capital and surplus. HLIC would need to seek the prior approval of the CTDOI if there were a desire to exceed these limits. As of
December 31, 2013, HLIC had no advances outstanding under the FHLBB facility.
As of
Contractholder Obligations December 31, 2013
Total Life contractholder obligations $ 219,402
Less: Separate account assets [1] 140,886
Less: International statutory separate accounts [1] 19,734
General account contractholder obligations $ 58,782
Composition of General Account Contractholder Obligations
Contracts without a surrender provision and/or fixed payout dates [2] $ 24,625
U.S. Fixed MVA annuities and Other [3] 10,142
International Fixed MVA annuities [3] 1,514
Guaranteed investment contracts (“GIC”) [4] 31
Other [5] 22,470
General account contractholder obligations $ 58,782
[1] In the event customers elect to surrender separate account assets or international statutory separate accounts, Life Operations will use the
proceeds from the sale of the assets to fund the surrender, and Life Operations’ liquidity position will not be impacted. In many instances Life
Operations will receive a percentage of the surrender amount as compensation for early surrender (surrender charge), increasing Life
Operations’ liquidity position. In addition, a surrender of variable annuity separate account or general account assets (see below) will
decrease Life Operations’ obligation for payments on guaranteed living and death benefits.
[2] Relates to contracts such as payout annuities or institutional notes, other than guaranteed investment products with an MVA feature
(discussed below) or surrenders of term life, group benefit contracts or death and living benefit reserves for which surrenders will have no
current effect on Life Operations’ liquidity requirements.