The Hartford 2013 Annual Report Download - page 87

87
CORPORATE
Results of Operations
Operating Summary 2013 2012 2011
Earned premiums $ — $ — $ —
Fee income [1] 11 167 209
Net investment income 27 31 23
Net realized capital gains (losses) (89) 125 (96)
Other revenue 1 1 —
Total revenues (50) 324 136
Benefits, losses and loss adjustment expenses — — (3)
Insurance operating costs and other expenses 78 365 202
Loss on extinguishment of debt 213 910 —
Reinsurance loss on disposition 69 118 —
Interest expense 397 457 508
Total benefits, losses and expenses 757 1,850 707
Loss from continuing operations before income taxes (807)(1,526) (571)
Income tax benefit (252)(517) (201)
Loss from continuing operations, net of tax (555)(1,009) (370)
Loss from discontinued operations, net of tax [2] — — (64)
Net loss $ (555) $ (1,009) $ (434)
[1] Fee income includes the income associated with the sales of non-proprietary insurance products in the Company’s broker-dealer subsidiaries that
has an offsetting commission expense in insurance operating costs and other expenses.
[2] Represents the loss from operations and sale of Federal Trust Corporation. For additional information, see Note 20 Discontinued Operations of
Notes to Consolidated Financial Statements.
Year ended December 31, 2013 compared to the year ended December 31, 2012
Net loss, as compared to the prior year period, decreased in 2013 primarily due to decreases in insurance operating costs and other
expenses, the reinsurance loss on disposition, the loss on extinguishment of debt and interest expense. The net loss in 2013 was partially
driven by net realized capital losses due to higher long-term interest rates and global credit hedging losses due to increases in the equity
market as compared with net realized capital gains in 2012.
Insurance operating costs and other expenses decreased due to a benefit of $57, before tax, for an insurance recovery from the
Company's insurers for past legal expenses associated with closed litigation and a benefit of $19, before tax, from the resolution of items
under the Company's spin-off agreement with its former parent company. Restructuring costs, included in Corporate insurance operating
costs and other expenses and related to the implementation of certain strategic initiatives, decreased to $64 in 2013 from $121 in 2012.
The reinsurance loss on disposition of $69 in 2013 consisted of the write-off of all of the goodwill held in Corporate allocated to the
Retirement Plans business sold in 2013. The reinsurance loss on disposition of $118 in 2012 consisted of an impairment of goodwill
related to the Individual Life business sold in 2013. For additional information regarding goodwill, see Note 9 - Goodwill of Notes to
Consolidated Financial Statements.
In 2013, the Company repurchased approximately $800 of senior notes at a premium to the face amount of the then outstanding debt. In
2012, the Company repurchased all outstanding 10% fixed-to-floating rate junior subordinated debentures due 2068 with a $1.75 billion
aggregate principal amount held by Allianz. Loss on extinguishment of debt consists of the premium associated with repurchasing the
debentures at an amount greater than the face amount, the write-off of the unamortized discount and debt issuance and other costs related
to the repurchase transactions. For additional information regarding debt, see Note 13 - Debt of Notes to Consolidated Financial
Statements.
For a reconciliation of the tax provision at the U.S. Federal statutory rate to the provision (benefit) for income taxes, see Note 14 - Income
Taxes of Notes to Consolidated Financial Statements.