The Hartford 2015 Annual Report Download - page 116

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CAPITAL RESOURCES AND LIQUIDITY
The following section discusses the overall financial strength of The Hartford and its insurance operations including their ability to
generate cash flows from each of their business segments, borrow funds at competitive rates and raise new capital to meet operating and
growth needs over the next twelve months.
Liquidity Requirements and Sources of Capital
The Hartford Financial Services Group, Inc. (Holding Company)
The liquidity requirements of the holding company of The Hartford Financial Services Group, Inc. (“HFSG Holding Company”) have
been and will continue to be met by HFSG Holding Company’s fixed maturities, short-term investments and cash, and dividends from its
subsidiaries, principally its insurance operations, as well as the issuance of common stock, debt or other capital securities and
borrowings from its credit facilities, as needed.
As of December 31, 2015, HFSG Holding Company held fixed maturities, short-term investments and cash of $1.7 billion. Expected
liquidity requirements of the HFSG Holding Company for the next twelve months include payment of 5.5% senior notes of $275 at
maturity in October 2016, interest payments on debt of approximately $330 and common stockholder dividends, subject to discretion of
the Board of Directors, of approximately $335.
The Hartford has an intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company
and certain affiliates of up to $2.0 billion for liquidity and other general corporate purposes. The Connecticut Insurance Department
("CTDOI") granted approval for certain affiliated insurance companies that are parties to the agreement to treat receivables from a
parent, including the HFSG Holding Company, as admitted assets for statutory accounting purposes. As of December 31, 2015, there
were no amounts outstanding from the HFSG holding company.
Equity
In July 2015, the Board of Directors approved a $1.6 billion increase in and extension of the Company's authorized equity repurchase
program, bringing the total authorization for equity repurchases to $4.375 billion for the period January 1, 2014 through December 31,
2016, with $1.3 billion remaining as of December 31, 2015. Any repurchase of shares under the equity repurchase program is dependent
on market conditions and other factors.
During the year ended December 31, 2015, the Company repurchased 28.4 million common shares for $1,250. During the period
January 1, 2016 through February 24, 2016, the Company repurchased 5.3 million common shares for $211.
Debt
On March 30, 2015, the Company repaid its $289, 4.0% senior notes at maturity. On May 27, 2015, the Company redeemed for cash the
entire $296 aggregate principal amount outstanding of 4.0% senior notes due October 15, 2017 for $317 including a make-whole
premium. On November 2, 2015, the Company repaid its $167, 7.3% senior notes at maturity. The Company funded the maturities of
the 4.0% and 7.3% senior notes along with the redemption of the 4.0% senior notes with cash on hand. In addition, the Company plans
to repay $275 of 5.5% senior notes due October 2016 upon maturity.
In July 2015, the Board of Directors authorized the extension of the existing debt capital management program, bringing the total
authorization for debt management to $1.431 billion for the period January 1, 2014 through December 31, 2016. In addition to the
payment of the maturing debt of $275, under the program the Company expects to use the remaining authorization of approximately
$180 for other debt capital management actions during 2016. Any debt capital management actions are dependent on market conditions
and other factors. For further information regarding debt, see Note 11 - Debt of Notes to Consolidated Financial Statements.
Intercompany Liquidity Agreements
On January 29, 2015 Hartford Insurance Company of the Midwest, an indirect wholly-owned subsidiary of the Company, issued a
Revolving Note (the "Note") in the principal amount of $58 to Hartford Fire Insurance Company, a subsidiary of the Company, under the
intercompany liquidity agreement. The Note matured on March 31, 2015.
Dividends
On February 25, 2016, The Hartford’s Board of Directors declared a quarterly dividend of $0.21 per common share payable
on April 1, 2016 to common shareholders of record as of March 7, 2016. There are no current restrictions on the HFSG Holding
Company's ability to pay dividends to its shareholders. For a discussion of restrictions on dividends to the HFSG Holding Company
from its insurance subsidiaries, see "Dividends from Insurance Subsidiaries" below. For a discussion of potential restrictions on the
HFSG Holding Company's ability to pay dividends, see Part I, Item 1A, — Risk Factors for the risk factor "Our ability to declare and
pay dividends is subject to limitations" .