The Hartford 2008 Annual Report Download - page 74

Table of Contents
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(Dollar amounts in millions, except for per share data, unless otherwise stated)
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) addresses the
financial condition of The Hartford Financial Services Group, Inc. and its subsidiaries (collectively, “The Hartford” or the
“Company”) as of December 31, 2008, compared with December 31, 2007, and its results of operations for each of the three
years in the period ended December 31, 2008. This discussion should be read in conjunction with the Consolidated Financial
Statements and related Notes beginning on page F-1. Certain reclassifications have been made to prior year financial
information to conform to the current year presentation.
Certain of the statements contained herein are forward-looking statements. These forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include estimates and
assumptions related to economic, competitive and legislative developments. These forward-looking statements are subject to
change and uncertainty which are, in many instances, beyond the Company’s control and have been made based upon
management’s expectations and beliefs concerning future developments and their potential effect upon the Company. There
can be no assurance that future developments will be in accordance with management’s expectations or that the effect of
future developments on The Hartford will be those anticipated by management. Actual results could differ materially from
those expected by the Company, depending on the outcome of various factors, including, but not limited to, those set forth in
Part II, Item 1A, Risk Factors. These important risks and uncertainties include, without limitation, uncertainties related to
the depth and duration of the current recession and related financial crisis, and the impact of these volatile market conditions
on, among other things, our investment portfolio, liabilities from variable annuity products and capital position; the success
of our efforts to preserve capital and reduce risk, and the costs and charges associated therewith; our ability to participate in
programs under the Emergency Economic Stabilization Act of 2008 and similar initiatives and the terms of such
participation; changes in financial and capital markets, including changes in interest rates, credit spreads, equity prices and
foreign exchange rates; the inability to effectively mitigate the impact of equity market volatility on the Company’s financial
position and results of operations arising from obligations under annuity product guarantees; the amount of statutory capital
that the Company has, changes to the statutory reserves and/or risk based capital requirements, and the Company’s ability to
hold sufficient statutory capital to maintain financial strength and credit ratings; risks related to the Company’s potential
participation in the U.S. Treasury’s Capital Purchase Program; a downgrade in the Company’s financial strength or credit
ratings; the potential for differing interpretations of the methodologies, estimations and assumptions that underlie the
valuation of the Company’s financial instruments that could result in changes to investment valuations; the subjective
determinations that underlie the Company’s evaluation of other-than-temporary impairments on available-for-sale securities;
losses due to nonperformance or defaults by others; the availability of our commercial paper program; the potential for
acceleration of DAC amortization; the potential for an impairment of our goodwill; the difficulty in predicting the
Company’s potential exposure for asbestos and environmental claims; the possible occurrence of terrorist attacks; the
response of reinsurance companies under reinsurance contracts and the availability, pricing and adequacy of reinsurance to
protect the Company against losses; the possibility of unfavorable loss development; the incidence and severity of
catastrophes, both natural and man-made; stronger than anticipated competitive activity; unfavorable judicial or legislative
developments; the potential effect of domestic and foreign regulatory developments, including those which could increase
the Company’s business costs and required capital levels; the Company’s ability to distribute its products through
distribution channels, both current and future; the uncertain effects of emerging claim and coverage issues; the ability of the
Company’s subsidiaries to pay dividends to the Company; the Company’s ability to adequately price its property and
casualty policies; the ability to recover the Company’s systems and information in the event of a disaster or other
unanticipated event; potential for difficulties arising from outsourcing relationships; potential changes in federal or state tax
laws, including changes impacting the availability of the separate account dividend received deduction; the Company’s
ability to protect its intellectual property and defend against claims of infringement; and other factors described in such
forward-looking statements.
INDEX
Overview 41
Critical Accounting Estimates 41
Consolidated Results of Operations 62
Life 70
Retail 80
Individual Life 83
Retirement Plans 85
Group Benefits 87
International 89
Institutional 91
Other 93
Property & Casualty 94
Total Property & Casualty 123
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009