The Hartford 2008 Annual Report Download - page 149

Table of Contents
RETIREMENT PLANS
Operating Summary 2008 2007 2006
Fee income and other $ 334 $ 238 $ 193
Earned premiums 4 4 19
Net investment income 342 355 326
Net realized capital losses (272) (41) (16)
Total revenues 408 556 522
Benefits, losses and loss adjustment expenses 271 249 250
Insurance operating costs and other expenses 335 170 136
Amortization of deferred policy acquisition costs and present value of
future profits 91 58 (4)
Total benefits, losses and expenses 697 477 382
Income (loss) before income taxes (289) 79 140
Income tax expense (benefit) (132) 18 39
Net income (loss) $ (157) $ 61 $ 101
Assets Under Management 2008 2007 2006
403(b)/457 account values $ 10,242 $ 12,363 $ 11,540
401(k) account values 11,956 14,731 12,035
Total account values [1] 22,198 27,094 23,575
403(b)/457 mutual fund assets under management [2] 99 26 —
401(k) mutual fund assets under management [3] 14,739 1,428 1,140
Total mutual fund assets under management 14,838 1,454 1,140
Total assets under management $ 37,036 $ 28,548 $ 24,715
Total assets under administration – 401(k) [4] $ 5,122 $ — $ —
[1] Includes policyholder balances for investment contracts and reserves for future policy benefits for insurance contracts.
[2] In 2007, Life began selling mutual fund based products in the 403(b) market.
[3] During the year ended December 31, 2008, Life acquired the rights to service mutual fund assets from Sun Life
Retirement Services, Inc., and Princeton Retirement Group.
[4] During the year ended December 31, 2008, Life acquired the rights to service assets under administration (“AUA”)
from Princeton Retirement Group. Servicing revenues from AUA are based on the number of plan participants and do
not vary directly with asset levels. As such, they are not included in AUM upon which asset based returns are
calculated.
The Retirement Plans segment primarily offers customized wealth creation and financial protection for corporate,
government and tax-exempt employers through its two business units, 403(b)/457 and 401(k).
Year ended December 31, 2008 compared to the year ended December 31, 2007
Net income in Retirement Plans decreased due to higher net realized capital losses, the DAC Unlock in 2008 as compared to
2007 and increased operating expenses partially offset by growth in fee income. For further discussion of net realized capital
losses, see Realized Capital Gains and Losses by Segment table under Life’s Operating section of the MD&A. For further
discussion of the 2008 and 2007 Unlocks see Critical Accounting Estimates section of the MD&A. The following other
factors contributed to the changes in net income:
Fee income and other • Fee income and other increased primarily due to $109 of fees earned on assets relating to
the acquisitions in the first quarter of 2008. Offsetting this increase was lower annuity fees
driven by lower average account values as a result of market depreciation of $7.3 billion,
partially offset by positive net flows of $2.4 billion over the past four quarters.
Net investment income • Net investment income declined due to a decrease in the returns from limited partnership
and other alternative investment income of $33, partially offset by growth in general
account assets.
Insurance operating
costs and other
expenses
• Insurance operating costs and other expenses increased primarily attributable to operating
expenses associated with the acquired businesses. Also contributing to higher insurance
operating costs were higher trail commissions resulting from an aging portfolio and higher
service and technology costs.
•
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009