-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kg1bDgGImkLz2y6Px9HQF8nnfbg7JToH/2cM5nrcQUYy5bm+BU8OHySOHksonsBQ gXHW+X4/01rLie/iU0mDLA== 0000948572-03-000057.txt : 20030903 0000948572-03-000057.hdr.sgml : 20030903 20030811150048 ACCESSION NUMBER: 0000948572-03-000057 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030806 ITEM INFORMATION: FILED AS OF DATE: 20030811 DATE AS OF CHANGE: 20030903 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARTFORD FINANCIAL SERVICES GROUP INC/DE CENTRAL INDEX KEY: 0000874766 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 133317783 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13958 FILM NUMBER: 03834302 BUSINESS ADDRESS: STREET 1: HARTFORD PLZ CITY: HARTFORD STATE: CT ZIP: 06115 BUSINESS PHONE: 8605475000 MAIL ADDRESS: STREET 1: HARTFORD PLAZA T-15 CITY: HARTFORD STATE: CT ZIP: 06115 FORMER COMPANY: FORMER CONFORMED NAME: ITT HARTFORD GROUP INC /DE DATE OF NAME CHANGE: 19930328 8-K 1 b8k063003.txt THE HARTFORD FINANCIAL SERVICES GROUP, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 6, 2003 --------------- THE HARTFORD FINANCIAL SERVICES GROUP, INC. ------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 001-13958 13-3317783 - ---------------------------- ------------ -------------------- (State or other jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) The Hartford Financial Services Group, Inc. Hartford Plaza Hartford, Connecticut 06115-1900 --------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (860) 547-5000 ---------------------- Item 12. Results of Operations and Financial Condition. On August 6, 2003, The Hartford Financial Services Group, Inc. released its Investor Financial Supplement (the "IFS") relating to its financial results for the quarter ended June 30, 2003. A copy of the IFS is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. As provided in General Instruction B.6 of Form 8-K, the information and exhibit contained in this Form 8-K shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE HARTFORD FINANCIAL SERVICES GROUP, INC. Date: August 6, 2003 By: /s/ NEAL S. WOLIN ------------------------------------------------ Name: Neal S. Wolin Title: Executive Vice President and General Counsel EX-99 3 exh99_1.txt THE HARTFORD FINANCIAL SERVICES GROUP, INC. [GRAPHIC OMITTED] THE HARTFORD INVESTOR FINANCIAL SUPPLEMENT JUNE 30, 2003 - OFC - THE HARTFORD FINANCIAL SERVICES GROUP, INC. Address: 690 Asylum Avenue Hartford, CT 06115 Internet address: http://www.thehartford.com Contacts: Hans Miller Senior Vice President Planning, Development and Investor Relations Phone (860) 547-2751 Mike Lesperance Assistant Vice President Investor Relations Phone (860) 547-6781 Marcia Dietrich Executive Assistant Investor Relations Phone (860) 547-2537
- ------------------------------------------------------------------------------------------------------------- As of August 4, 2003 A.M. BEST FITCH STANDARD & POOR'S MOODY'S INSURANCE FINANCIAL STRENGTH RATINGS: Hartford Fire A+ AA AA- Aa3 Hartford Life Insurance Company A+ AA AA- Aa3 Hartford Life & Accident A+ AA AA- Aa3 Hartford Life & Annuity A+ AA AA- Aa3 OTHER RATINGS: The Hartford Financial Services Group, Inc.: Senior debt a- A A- A3 Commercial paper AMB-2 F1 A-2 P-2 Hartford Life, Inc.: Senior debt a- A A- A3 Commercial paper -- F1 A-2 P-2 - -------------------------------------------------------------------------------------------------------------
TRANSFER AGENT The Bank of New York Shareholder Relations Department - 12W P.O. Box 11258 Church Street Station New York, NY 10286 1 (800)-524-4458 COMMON STOCK Common stock of The Hartford Financial Services, Inc. is traded on the New York Stock Exchange under the symbol "HIG". This report is for information purposes only. It should be read in conjunction with documents filed by The Hartford Financial Services Group, Inc. with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. - IFC -
THE HARTFORD FINANCIAL SERVICES GROUP, INC. INVESTOR FINANCIAL SUPPLEMENT CONTENTS Basis of Presentation .................................................. i CONSOLIDATED Consolidated Financial Results ......................................... C-1 Operating Results by Segment ........................................... C-2 Consolidating Statements of Operations Second Quarter Ended June 30, 2003 and 2002 .......................... C-3 Six Months Ended June 30, 2003 and 2002 .............................. C-4 Consolidating Balance Sheets As of June 30, 2003 and December 31, 2002 ............................ C-5 Capital Structure ...................................................... C-6 Accumulated Other Comprehensive Income ................................. C-7 Computation of Basic and Diluted Earnings (Loss) Per Share ............. C-8 LIFE Financial Highlights ................................................... L-1 Operating Results ...................................................... L-2 Total Assets Under Management/Japan Data ............................... L-3 Consolidated Balance Sheets ............................................ L-4 Deferred Policy Acquisition Costs and Present Value of Future Profits .. L-5 Reinsurance Recoverable Analysis ....................................... L-6 Statutory Surplus to GAAP Stockholders' Equity Reconciliation .......... L-7 Investment Products Income Statements Individual Annuity ................................................. L-8 Other .............................................................. L-9 Supplemental Data Sales/Other Deposits ............................................... L-10 Assets Under Management ............................................ L-11 Individual Annuity - Account Value Rollforward ..................... L-12 Other - Account Value and Asset Rollforward ........................ L-13 Guaranteed Minimum Death Benefits .................................. L-14 Individual Life Income Statements .................................................... L-15 Supplemental Data .................................................... L-16 Account Value Rollforward ............................................ L-17 Group Benefits Income Statements .................................................... L-18 Supplemental Data .................................................... L-19 PROPERTY & Financial Highlights ...................................................... PC-1 CASUALTY Operating Results ......................................................... PC-2 North American Consolidating Underwriting Results Second Quarter Ended June 30, 2003 and 2002 ............................. PC-3 Six Months Ended June 30, 2003 and 2002 ................................. PC-4 Business Insurance Underwriting Results ................................. PC-5 Business Insurance Written and Earned Premiums ......................... PC-6 Personal Lines Underwriting Results ....................................... PC-7 Personal Lines Written and Earned Premiums ................................ PC-8 Specialty Commercial Underwriting Results ................................. PC-9 Specialty Commercial Written and Earned Premiums .......................... PC-10 Reinsurance Underwriting Results .......................................... PC-11 Reinsurance Written and Earned Premiums ................................... PC-12 Statistical Premium Information (Year over Year) .......................... PC-13 Statutory Surplus to GAAP Stockholders' Equity Reconciliation ............. PC-14 Other Operations .......................................................... PC-15 Other Operations Claims and Claim Adjustment Expenses ..................... PC-16 Summary of Gross Asbestos Reserves ........................................ PC-17 Paid and Incurred Loss and Loss Adjustment Expense ("LAE") Development - A&E PC-18 Unpaid Claims and Claim Adjustment Expense Reserve Rollforward Second Quarter Ended June 30, 2003 and 2002 ............................. PC-19 Six Months Ended June 30, 2003 and 2002 ................................. PC-20 Reinsurance Recoverable Analysis .......................................... PC-21 Consolidated Income Statements ............................................ PC-22 Consolidated Balance Sheets ............................................... PC-23 INVESTMENTS General Account - Investment Earnings Before-tax Consolidated ............................................................ I-1 Life .................................................................... I-2 Property & Casualty ..................................................... I-3 Corporate ............................................................... I-4 Composition of Invested Assets Consolidated - General and Guaranteed Separate Account .................. I-5 Life - General and Guaranteed Separate Account .......................... I-6 Property & Casualty - General Account ................................... I-7 Unrealized Loss Aging Consolidated - General and Guaranteed Separate Account .................. I-8 Life - General and Guaranteed Separate Account .......................... I-9 Property & Casualty - General Account ................................... I-10 General and Guaranteed Separate Account - Invested Asset Exposures ........ I-11 Index of Selected Items ................................................... ii
THE HARTFORD FINANCIAL SERVICES GROUP, INC. BASIS OF PRESENTATION DEFINITIONS AND PRESENTATION - ---------------------------- o All amounts are in millions, except for per share and ratio information. o Operating income is a non-GAAP measure representing net income, before the after-tax effect of net realized capital gains and losses. The Company believes that operating income provides investors with a valuable measure of the performance of the Company's ongoing businesses because it excludes the effect of realized capital gains and losses, which tend to be highly variable. Net income is the most directly comparable GAAP measure. o The Company has included the non-GAAP measure operating income, before the impact of the 2003 asbestos reserve addition, in these materials. The Company has provided these measures to enhance investor understanding of the financial performance of the Company's operating businesses by eliminating the effect of the 2003 asbestos reserve addition. Net income is the most directly comparable GAAP measure. o Certain operating and statistical measures have been incorporated herein to provide supplemental data that indicate trends in The Hartford's current business. These measures include sales, account value rollforward, insurance in-force and written premiums. Written premiums is a non-GAAP measure and represents the amount of premiums charged for policies issued in a fiscal period. Management believes that this forward-looking performance measure is useful to investors as it provides a better understanding of the underlying trends in the Company's current business. Earned premiums is the most directly comparable GAAP measure. o The Hartford, along with others in the property and casualty insurance industry, uses underwriting ratios as measures of performance. The loss ratio is the ratio of claims expense (exclusive of claim adjustment expenses) to earned premiums. The loss adjustment expense ratio represents the ratio of claim adjustment expenses to earned premiums. The expense ratio is the ratio of underwriting expenses (amortization of deferred policy acquisition costs, as well as other underwriting expenses, excluding bad debts expense) to earned premiums. The policyholder dividend ratio is the ratio of policyholder dividends to earned premiums. The combined ratio is the sum of the loss ratio, the loss adjustment expense ratio, the expense ratio and the policyholder dividend ratio. These ratios are relative measurements that describe the related cost of losses and expenses for every $100 of earned premiums. A combined ratio below 100 demonstrates underwriting profit; a combined ratio above 100 demonstrates underwriting loss. The "catastrophe ratio" (a component of the loss ratio) represents the ratio of catastrophe losses to earned premiums. o Premium renewal retention is defined as renewal premium written in the current period divided by new and renewal premium written in the prior period. o Trust preferred securities represent company obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures. o Accumulated other comprehensive income ("AOCI") represents unrealized gain (loss) on securities, net of tax; net gain (loss) on cash-flow hedging instruments, net of tax; foreign currency translation adjustments, net of tax; and minimum pension liability adjustment, net of tax. o Assets under management is an internal performance measure used by the Company because a significant portion of the Company's revenues are based upon asset values. These revenues increase or decrease with a rise or fall, correspondingly, in the level of assets under management. o Investment yield, before- or after-tax, is calculated by dividing before- or after-tax, respectively, annualized net investment income (excluding net realized capital gains (losses)) by average invested assets at cost (fixed maturities at amortized cost). o Book value (including AOCI) is calculated by dividing equity including AOCI, net of tax, by common shares outstanding. Book value (excluding AOCI) is calculated by dividing equity excluding AOCI, net of tax, by common shares outstanding. o Property & Casualty includes North American and Other Operations. North American includes the combined underwriting results of the Business Insurance, Personal Lines, Specialty Commercial and Reinsurance underwriting segments along with income and expense items not directly allocated to these segments, such as net investment income, net realized capital gains and losses, other expenses (including interest) and income taxes. Other Operations includes certain property and casualty insurance operations which have discontinued writing new business and claims related to asbestos and environmental exposures. o Life is organized into four reportable operating segments: Investment Products, Individual Life, Group Benefits and Corporate Owned Life Insurance ("COLI"). Life also includes in an Other category its international operations, which are located primarily in Japan and Brazil; realized capital gains and losses; corporate items not directly allocated to any of its reportable operating segments, principally interest expense; and intersegment eliminations. o Corporate includes the capital raising and purchase accounting adjustment activities related to the June 27, 2000 acquisition of all of the outstanding shares of Hartford Life, Inc. ("HLI") that the Company did not already own, as well as capital that has not been allocated to the Company's insurance subsidiaries. o Net realized capital gains and losses are not allocated to the segment level within Life and North American. o Certain reclassifications have been made to the prior periods to conform to the June 30, 2003 presentation. o NM - Not meaningful, increases or decreases greater than 200%, or changes from a net gain to a net loss position, or visa versa. - i -
THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATED FINANCIAL RESULTS 2Q 3Q 4Q 1Q 2Q HIGHLIGHTS 2002 2002 2002 2003 2003 --------- -------- -------- -------- -------- Net income (loss) [1] $ 185 $ 265 $ 258 $ (1,395) $ 507 Operating income (loss) [1] $ 291 $ 365 $ 301 $ (1,361) $ 340 Impact of 2003 asbestos reserve addition $ - $ - $ - $ (1,701) $ - Operating income before impact of 2003 asbestos reserve addition $ 291 $ 365 $ 301 $ 340 $ 340 Total revenues $ 3,992 $ 4,085 $ 4,280 $ 4,331 $ 4,682 Total assets $179,937 $175,824 $181,975 $188,657 $207,801 Total assets under management [2] $197,084 $191,055 $198,608 $205,223 $227,437 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE AND SHARES DATA Basic earnings (loss) per share [1] Net income (loss) $ 0.75 $ 1.06 $ 1.01 $ (5.46) $ 1.89 Operating income (loss) $ 1.18 $ 1.47 $ 1.18 $ (5.33) $ 1.26 Operating income before impact of 2003 asbestos reserve addition $ 1.18 $ 1.47 $ 1.18 $ 1.33 $ 1.26 Diluted earnings (loss) per share [1] [3] Net income (loss) $ 0.74 $ 1.06 $ 1.01 $ (5.46) $ 1.88 Operating income (loss) $ 1.16 $ 1.46 $ 1.17 $ (5.33) $ 1.26 Operating income before impact of 2003 asbestos reserve addition [4] $ 1.16 $ 1.46 $ 1.17 $ 1.33 $ 1.26 Weighted average common shares outstanding (basic) 247.4 248.9 255.2 255.4 268.8 Weighted average common shares outstanding and dilutive potential common shares (diluted) [3] 250.7 250.5 256.3 255.4 270.2 Common shares outstanding 247.6 255.0 255.2 255.4 282.2 Book value (including AOCI) $ 39.00 $ 42.91 $ 42.06 $ 36.97 $ 40.75 Book value (excluding AOCI) $ 36.06 $ 36.99 $ 37.77 $ 32.05 $ 34.34 - ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL RATIOS ROE (net income (loss) last 12 months to equity including AOCI) [5] 10.6% 9.0% 10.1% (7.4%) (3.5%) ROE (operating income (loss) last 12 months to equity excluding AOCI) [5] 14.5% 13.9% 13.8% (4.8%) (3.8%) ROE before impact of 2003 asbestos reserve addition (operating income before impact of 2003 asbestos reserve addition last 12 months to equity excluding AOCI) [5] [6] 14.5% 13.9% 13.8% 13.9% 14.5% Debt (incl. Trust Preferred Securities) to capitalization incl. AOCI 29.3% 29.9% 29.0% 31.7% 30.9% Investment yield, after-tax 4.4% 4.1% 4.3% 4.2% 4.0% North American Property & Casualty GAAP combined ratio 100.5 98.7 100.0 97.7 99.7 - ------------------------------------------------------------------------------------------------------------------------------ YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER --------------------------- HIGHLIGHTS CHANGE CHANGE 2002 2003 CHANGE --------- --------- --------- -------- ------- Net income (loss) [1] 174% NM $ 477 $ (888) NM Operating income (loss) [1] 17% NM $ 584 $ (1,021) NM Impact of 2003 asbestos reserve addition - 100% $ - $ (1,701) - Operating income before impact of 2003 asbestos reserve addition 17% - $ 584 $ 680 16% Total revenues 17% 8% $ 8,052 $ 9,013 12% Total assets 15% 10% Total assets under management [2] 15% 11% - ---------------------------------------------------------------------------------------------------------------------------------- PER SHARE AND SHARES DATA Basic earnings (loss) per share [1] Net income (loss) 152% NM $ 1.93 $ (3.39) NM Operating income (loss) 7% NM $ 2.37 $ (3.90) NM Operating income before impact of 2003 asbestos reserve addition 7% (5%) $ 2.37 $ 2.59 9% Diluted earnings (loss) per share [1] [3] Net income (loss) 154% NM $ 1.91 $ (3.39) NM Operating income (loss) 9% NM $ 2.33 $ (3.90) NM Operating income before impact of 2003 asbestos reserve addition [4] 9% (5%) $ 2.33 $ 2.58 11% Weighted average common shares outstanding (basic) 21.4 sh 13.4 sh 246.7 262.1 15.4 sh Weighted average common shares outstanding and dilutive potential common shares (diluted) [3] 19.5 sh 14.8 sh 250.2 262.1 11.9 sh Common shares outstanding 34.6 sh 26.8 sh 247.6 282.2 34.6 sh Book value (including AOCI) 4% 10% Book value (excluding AOCI) (5%) 7% - ---------------------------------------------------------------------------------------------------------------------------------- FINANCIAL RATIOS ROE (net income (loss) last 12 months to equity including AOCI) [5] (14.1) 3.9 ROE (operating income (loss) last 12 months to equity excluding AOCI) [5] (18.3) 1.0 ROE before impact of 2003 asbestos reserve addition (operating income before impact of 2003 asbestos reserve addition last 12 months to equity excluding AOCI) [5] [6] - 0.6 Debt (incl. Trust Preferred Securities) to capitalization incl. AOCI 1.6 (0.8) Investment yield, after-tax (0.4) (0.2) 4.3% 4.1% (0.2) North American Property & Casualty GAAP combined ratio 0.8 (2.0) 100.4 98.7 1.7 - ---------------------------------------------------------------------------------------------------------------------------------- [1] The quarters ended September 30, 2002 and June 30, 2003 include $76 and $30, respectively, of tax benefit in Life primarily related to the favorable treatment of certain tax items arising during the 1996-2002 tax years. The quarter ended June 30, 2003 includes $27, after-tax, of severance charges in Property & Casualty. The six months ended June 30, 2002 includes the earnings impacts of the $11 after-tax expense in Life related to Bancorp Services, LLC litigation and the $8 after-tax benefit in Life's September 11 Terrorist Attack exposure. [2] Includes mutual fund assets (see page L-3) and third party assets managed by HIMCO (see page I-5). [3] As a result of the antidilutive impact from the net loss in the quarter ended March 31, 2003 and the six months ended June 30, 2003, The Hartford is required by generally accepted accounting principles to use basic weighted average shares in the calculation of the quarter ended March 31, 2003 and the six months ended June 30, 2003 diluted earnings per share. In the absence of the net loss, 256.1 and 263.1 weighted average common shares outstanding and dilutive potential common shares would have been used in the calculation for the quarter ended March 31, 2003 and the six months ended June 30, 2003, respectively. [4] Calculated using weighted average common shares outstanding and dilutive potential common shares of 256.1 and 263.1 for the quarter ended March 31, 2003 and the six months ended June 30, 2003, respectively. [5] The quarter ended June 30, 2002 excludes the $440 loss related to September 11, 2001. [6] The quarter ended June 30, 2003 excludes the earnings impact of the 2003 asbestos reserve addition. The quarter ended March 31, 2003 excludes the earnings and equity impacts of the 2003 asbestos reserve addition.
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THE HARTFORD FINANCIAL SERVICES GROUP, INC. OPERATING RESULTS BY SEGMENT 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 -------- ------- -------- -------- ------- LIFE Individual Annuity $ 89 $ 76 $ 78 $ 71 $ 91 Other Investment Products 29 24 19 27 29 ----------------------------------------------------------------------------------------------------------- Total Investment Products 118 100 97 98 120 Individual Life 35 33 34 32 34 Group Benefits 30 34 36 34 35 Corporate Owned Life Insurance 10 10 12 10 9 Other (16) (21) (12) (17) (17) ----------------------------------------------------------------------------------------------------------- Life, before tax related items 177 156 167 157 181 Tax related items - 76 - - 30 ----------------------------------------------------------------------------------------------------------- TOTAL LIFE 177 232 167 157 211 =========================================================================================================== PROPERTY & CASUALTY North American Underwriting Results Business Insurance (8) 21 27 (12) 42 Personal Lines (24) (13) 2 52 3 Specialty Commercial 8 3 (24) - (4) Reinsurance (9) (4) (42) (19) (76) ----------------------------------------------------------------------------------------------------------- Underwriting results (33) 7 (37) 21 (35) Net investment income 234 225 252 243 257 Net servicing and other income 1 4 8 3 3 Other expenses (58) (75) (59) (45) (37) Income tax expense (25) (23) (24) (45) (32) - --------------------------------------------------------------------------------------------------------------- North American, before severance charges 119 138 140 177 156 Severance charges - - - - (27) ----------------------------------------------------------------------------------------------------------- Total North American 119 138 140 177 129 Other Operations, before 2003 asbestos reserve addition 1 1 2 14 13 - --------------------------------------------------------------------------------------------------------------- Property & Casualty, before 2003 asbestos reserve addition 120 139 142 191 142 2003 asbestos reserve addition - - - (1,701) - - --------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY 120 139 142 (1,510) 142 CORPORATE (6) (6) (8) (8) (13) - --------------------------------------------------------------------------------------------------------------- Operating income, before 2003 asbestos reserve addition, tax related items and severance charges 291 289 301 340 337 2003 asbestos reserve addition - - - (1,701) - Tax related items - 76 - - 30 Severance charges - - - - (27) - --------------------------------------------------------------------------------------------------------------- Operating income (loss) 291 365 301 (1,361) 340 Net realized capital gains (losses), after-tax (106) (100) (43) (34) 167 - --------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ 185 $ 265 $ 258 $(1,395) $ 507 =============================================================================================================== YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER -------------------------- CHANGE CHANGE 2002 2003 CHANGE --------- --------- -------- ------- ------- LIFE Individual Annuity 2% 28% $ 179 $ 162 (9%) Other Investment Products - 7% 56 56 - ----------------------------------------------------------------------------------------------------------- Total Investment Products 2% 22% 235 218 (7%) Individual Life (3%) 6% 66 66 - Group Benefits 17% 3% 58 69 19% Corporate Owned Life Insurance (10%) (10%) 10 19 90% Other (6%) - (15) (34) (127%) ----------------------------------------------------------------------------------------------------------- Life, before tax related items 2% 15% 354 338 (5%) Tax related items - - - 30 - ----------------------------------------------------------------------------------------------------------- TOTAL LIFE 19% 34% 354 368 4% =========================================================================================================== PROPERTY & CASUALTY North American Underwriting Results Business Insurance NM NM (4) 30 NM Personal Lines NM (94%) (35) 55 NM Specialty Commercial NM - (2) (4) (100%) Reinsurance NM NM (13) (95) NM ----------------------------------------------------------------------------------------------------------- Underwriting results (6%) NM (54) (14) 74% Net investment income 10% 6% 451 500 11% Net servicing and other income NM - 3 6 100% Other expenses 36% 18% (109) (82) 25% Income tax expense (28%) 29% (50) (77) (54%) - --------------------------------------------------------------------------------------------------------------- North American, before severance charges 31% (12%) 241 333 38% Severance charges - - - (27) - ----------------------------------------------------------------------------------------------------------- Total North American 8% (27%) 241 306 27% Other Operations, before 2003 asbestos reserve addition NM (7%) 1 27 NM - --------------------------------------------------------------------------------------------------------------- Property & Casualty, before 2003 asbestos reserve addition 18% (26%) 242 333 38% 2003 asbestos reserve addition - 100% - (1,701) - - --------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY 18% NM 242 (1,368) NM CORPORATE (117%) (63%) (12) (21) (75%) - --------------------------------------------------------------------------------------------------------------- Operating income, before 2003 asbestos reserve addition, tax related items and severance charges 16% (1%) 584 677 16% 2003 asbestos reserve addition - 100% - (1,701) - Tax related items - - - 30 - Severance charges - - - (27) - - --------------------------------------------------------------------------------------------------------------- Operating income (loss) 17% NM 584 (1,021) NM Net realized capital gains (losses), after-tax NM NM (107) 133 NM - --------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) 174% NM $ 477 $ (888) NM ===============================================================================================================
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THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING STATEMENTS OF OPERATIONS SECOND QUARTER ENDED JUNE 30, 2003 AND 2002 LIFE PROPERTY & CASUALTY -------------------------- --------------------------- 2003 2002 CHANGE 2003 2002 CHANGE ---- ---- ------ ---- ---- ------ Earned premiums $ 706 $ 664 6% $ 2,106 $ 1,976 7% Fee income 656 672 (2%) - - - Net investment income 513 450 14% 291 271 7% Other revenues 37 32 16% 113 88 28% Net realized capital gains (losses) 50 (120) NM 207 (46) NM - -------------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 1,962 1,698 16% 2,717 2,289 19% Benefits, claims and claim adjustment expenses [1] 1,086 1,028 6% 1,541 1,452 6% Amortization of deferred policy acquisition costs and present value of future profits 175 171 2% 382 402 (5%) Insurance operating costs and expenses 395 358 10% 230 202 14% Other expenses [2] 32 32 - 189 134 41% - -------------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 1,688 1,589 6% 2,342 2,190 7% INCOME (LOSS) BEFORE INCOME TAXES 274 109 151% 375 99 NM Income tax expense (benefit) 31 8 NM 98 9 NM - -------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [3] 243 101 141% 277 90 NM Net realized capital gains (losses), after-tax 32 (76) NM 135 (30) NM - -------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [3] $ 211 $ 177 19% $ 142 $ 120 18% - -------------------------------------------------------------------------------------------------------------------------------- CORPORATE CONSOLIDATED ------------------------- -------------------------- 2003 2002 CHANGE 2003 2002 CHANGE ---- ---- ------ ---- ---- ------ Earned premiums $ - $ - - $ 2,812 $ 2,640 7% Fee income - - - 656 672 (2%) Net investment income 6 5 20% 810 726 12% Other revenues (3) - - 147 120 23% Net realized capital gains (losses) - - - 257 (166) NM - ------------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 3 5 (40%) 4,682 3,992 17% Benefits, claims and claim adjustment expenses [1] 2 2 - 2,629 2,482 6% Amortization of deferred policy acquisition costs and present value of future profits - - - 557 573 (3%) Insurance operating costs and expenses - - - 625 560 12% Other expenses [2] 21 11 91% 242 177 37% - ------------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 23 13 77% 4,053 3,792 7% INCOME (LOSS) BEFORE INCOME TAXES (20) (8) (150%) 629 200 NM Income tax expense (benefit) (7) (2) NM 122 15 NM - ------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [3] (13) (6) (117%) 507 185 174% Net realized capital gains (losses), after-tax - - - 167 (106) NM - ------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [3] $ (13) $ (6) (117%) $ 340 $ 291 17% - ------------------------------------------------------------------------------------------------------------------------------- [1] Before-tax catastrophe losses for Property & Casualty were $100 for 2003 and $48 for 2002. [2] Includes before-tax severance charges for Property & Casualty of $41 in 2003. [3] Life includes $30 in 2003 of tax benefit related to the favorable treatment of certain tax items arising during the 1996-2002 tax years. Property & Casualty includes after-tax catastrophe losses of $64 for 2003 and $31 for 2002 and after-tax severance charges of $27 in 2003.
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THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING STATEMENTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 AND 2002 LIFE PROPERTY & CASUALTY -------------------------- ---------------------------- 2003 2002 CHANGE 2003 2002 CHANGE ---- ---- ------ ---- ---- ------ Earned premiums $ 1,389 $ 1,373 1% $ 4,272 $ 3,853 11% Fee income 1,273 1,334 (5%) - - - Net investment income 1,020 898 14% 576 525 10% Other revenues 64 64 - 208 169 23% Net realized capital gains (losses) 2 (135) NM 202 (38) NM - ------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 3,748 3,534 6% 5,258 4,509 17% Benefits, claims and claim adjustment expenses [1] 2,169 2,085 4% 5,702 2,810 103% Amortization of deferred policy acquisition costs and present value of future profits 338 323 5% 783 805 (3%) Insurance operating costs and expenses 746 715 4% 446 379 18% Other expenses [2] 65 80 (19%) 321 260 23% - ------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 3,318 3,203 4% 7,252 4,254 70% INCOME (LOSS) BEFORE INCOME TAXES 430 331 30% (1,994) 255 NM Income tax expense (benefit) 61 60 2% (758) 37 NM - ------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [3] 369 271 36% (1,236) 218 NM Net realized capital gains (losses), after-tax 1 (83) NM 132 (24) NM - ------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [3] $ 368 $ 354 4% $(1,368) $ 242 NM - ------------------------------------------------------------------------------------------------------------------------- CORPORATE CONSOLIDATED ------------------------- --------------------------- 2003 2002 CHANGE 2003 2002 CHANGE ---- ---- ------ ---- ---- ------ Earned premiums $ - $ - - $ 5,661 $ 5,226 8% Fee income - - - 1,273 1,334 (5%) Net investment income 10 9 11% 1,606 1,432 12% Other revenues (3) - - 269 233 15% Net realized capital gains (losses) - - - 204 (173) NM - ------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES 7 9 (22%) 9,013 8,052 12% Benefits, claims and claim adjustment expenses [1] 3 3 - 7,874 4,898 61% Amortization of deferred policy acquisition costs and present value of future profits - - - 1,121 1,128 (1%) Insurance operating costs and expenses - - - 1,192 1,094 9% Other expenses [2] 36 24 50% 422 364 16% - ------------------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND EXPENSES 39 27 44% 10,609 7,484 42% INCOME (LOSS) BEFORE INCOME TAXES (32) (18) (78%) (1,596) 568 NM Income tax expense (benefit) (11) (6) (83%) (708) 91 NM - ------------------------------------------------------------------------------------------------------------------------ NET INCOME (LOSS) [3] (21) (12) (75%) (888) 477 NM Net realized capital gains (losses), after-tax - - - 133 (107) NM - ------------------------------------------------------------------------------------------------------------------------ OPERATING INCOME (LOSS) [3] $ (21) $ (12) (75%) $(1,021) $ 584 NM - ------------------------------------------------------------------------------------------------------------------------ [1] 2003 includes before-tax impact of asbestos reserve addition of $2,604 in Property & Casualty. Before-tax catastrophe losses for Property & Casualty were $156 and $68 for 2003 and 2002, respectively. [2] 2003 includes before-tax severance charges of $41 in Property & Casualty. [3] 2003 includes after-tax impact of asbestos reserve addition of $1,701 and after-tax severance charges of $27 in Property & Casualty. Property & Casualty includes incurred after-tax catastrophe losses of $101 and $44 in 2003 and 2002, respectively. Life includes $30 in 2003 of tax benefit related to the favorable treatment of certain tax items arising during the 1996-2002 tax years. For the six months ended June 30, 2002, includes $11 after-tax expense reflected in Life related to Bancorp Services LLC litigation and $8 after-tax benefit in Life's September 11 Terrorist Attack exposure.
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THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING BALANCE SHEETS LIFE PROPERTY & CASUALTY --------------------------------- -------------------------------- JUN. 30, DEC. 31, JUN. 30, DEC. 31, 2003 2002 CHANGE 2003 2002 CHANGE ---------- ---------- --------- ---------- ---------- --------- Investments Fixed maturities, available for sale, at fair value $ 34,060 $ 29,377 16% $22,820 $ 19,446 17% Equity securities, available for sale, at fair value 452 458 (1%) 219 459 (52%) Policy loans, at outstanding balance 2,889 2,934 (2%) - - - Other investments 937 1,122 (16%) 556 668 (17%) - --------------------------------------------------------------------------------------------------------------------------------- Total investments 38,338 33,891 13% 23,595 20,573 15% Cash 190 179 6% 239 198 21% Premiums receivable and agents' balances 192 208 (8%) 2,630 2,403 9% Reinsurance recoverables 797 796 - 5,396 4,231 28% Deferred policy acquisition costs and present value of future profits 5,927 5,758 3% 987 930 6% Deferred income taxes (562) (274) (105%) 1,107 610 81% Goodwill 796 796 - 153 153 - Other assets 1,540 1,362 13% 2,664 2,031 31% Separate account assets 122,556 107,078 14% - - - - --------------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 169,774 $149,794 13% $36,771 $ 31,129 18% - --------------------------------------------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $ 8,928 $ 8,583 4% $21,068 $ 17,091 23% Other policy funds and benefits payable 26,255 23,957 10% - - - Unearned premiums 51 54 (6%) 4,410 3,942 12% Debt 1,275 1,125 13% 1,164 1,164 - Trust preferred securities 450 450 - 851 1,023 (17%) Other liabilities 3,762 2,858 32% 3,735 2,939 27% Separate account liabilities 122,556 107,078 14% - - - - --------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 163,277 144,105 13% 31,228 26,159 19% - --------------------------------------------------------------------------------------------------------------------------------- Equity excluding AOCI, net of tax 5,314 4,980 7% 4,590 4,262 8% AOCI, net of tax 1,183 709 67% 953 708 35% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 6,497 5,689 14% 5,543 4,970 12% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 169,774 $149,794 13% $36,771 $ 31,129 18% - --------------------------------------------------------------------------------------------------------------------------------- CORPORATE CONSOLIDATED ----------------------------- -------------------------------- JUN. 30, DEC. 31, JUN. 30, DEC. 31, 2003 2002 CHANGE 2003 2002 CHANGE --------- --------- -------- ---------- ---------- -------- Investments Fixed maturities, available for sale, at fair value $ 257 $ 66 NM $ 57,137 $ 48,889 17% Equity securities, available for sale, at fair value - - - 671 917 (27%) Policy loans, at outstanding balance - - - 2,889 2,934 (2%) Other investments - - - 1,493 1,790 (17%) - --------------------------------------------------------------------------------------------------------------------------------- Total investments 257 66 NM 62,190 54,530 14% Cash - - - 429 377 14% Premiums receivable and agents' balances - - - 2,822 2,611 8% Reinsurance recoverables - - - 6,193 5,027 23% Deferred policy acquisition costs and present value of future profits 1 1 - 6,915 6,689 3% Deferred income taxes 220 209 5% 765 545 40% Goodwill 772 772 - 1,721 1,721 - Other assets 6 4 50% 4,210 3,397 24% Separate account assets - - - 122,556 107,078 14% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 1,256 $ 1,052 19% $207,801 $181,975 14% - --------------------------------------------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $ (13) $ (16) 19% $ 29,983 $ 25,658 17% Other policy funds and benefits payable (1) (1) - 26,254 23,956 10% Unearned premiums (7) (7) - 4,454 3,989 12% Debt 1,412 622 127% 3,851 2,911 32% Trust preferred securities (5) (5) - 1,296 1,468 (12%) Other liabilities 411 384 7% 7,908 6,181 28% Separate account liabilities - - - 122,556 107,078 14% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 1,797 977 84% 196,302 171,241 15% - --------------------------------------------------------------------------------------------------------------------------------- Equity excluding AOCI, net of tax (212) 398 NM 9,692 9,640 1% AOCI, net of tax (329) (323) (2%) 1,807 1,094 65% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY (541) 75 NM 11,499 10,734 7% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,256 $ 1,052 19% $207,801 $181,975 14% - ---------------------------------------------------------------------------------------------------------------------------------
C-5
THE HARTFORD FINANCIAL SERVICES GROUP, INC. CAPITAL STRUCTURE 2Q 3Q 4Q 1Q 2002 2002 2002 2003 ----------- ----------- ---------- ---------- DEBT Short-term debt (includes current maturities of long-term debt) $ 615 $ 615 $ 315 $ 315 Long-term debt 1,965 2,595 2,596 2,596 ------------------------------------------------------------------------------------------------------------------------------- TOTAL DEBT 2,580 3,210 2,911 2,911 Trust preferred securities 1,429 1,461 1,468 1,469 ------------------------------------------------------------------------------------------------------------------------------- TOTAL DEBT INCLUDING TRUST PREFERRED SECURITIES $ 4,009 $ 4,671 $ 4,379 $ 4,380 - ----------------------------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Equity excluding AOCI, net of tax $ 8,928 $ 9,433 $ 9,640 $ 8,185 AOCI, net of tax 728 1,510 1,094 1,257 ------------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY $ 9,656 $10,943 $10,734 $ 9,442 - ----------------------------------------------------------------------------------------------------------------------------------- CAPITALIZATION TOTAL CAPITALIZATION INCLUDING AOCI, NET OF TAX $13,665 $15,614 $15,113 $13,822 TOTAL CAPITALIZATION EXCLUDING AOCI, NET OF TAX $12,937 $14,104 $14,019 $12,565 - ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL RATIOS DEBT (INCLUDING TRUST PREFERRED SECURITIES) TO EQUITY INCLUDING AOCI 41.5% 42.7% 40.8% 46.4% Debt (excluding Trust Preferred Securities) to equity excluding AOCI 28.9% 34.0% 30.2% 35.6% DEBT (INCLUDING TRUST PREFERRED SECURITIES) TO CAPITALIZATION INCLUDING AOCI 29.3% 29.9% 29.0% 31.7% Debt (excluding Trust Preferred Securities) to capitalization excluding AOCI 19.9% 22.8% 20.8% 23.2% - ----------------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR SEQUENTIAL 2Q QUARTER QUARTER 2003 CHANGE CHANGE ----------- ----------- ----------- DEBT Short-term debt (includes current maturities of long-term debt) $ 514 (16%) 63% Long-term debt 3,337 70% 29% --------------------------------------------------------------------------------------------------------------------- TOTAL DEBT 3,851 49% 32% Trust preferred securities 1,296 (9%) (12%) --------------------------------------------------------------------------------------------------------------------- TOTAL DEBT INCLUDING TRUST PREFERRED SECURITIES $ 5,147 28% 18% - ------------------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Equity excluding AOCI, net of tax $ 9,692 9% 18% AOCI, net of tax 1,807 148% 44% --------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY $11,499 19% 22% - ------------------------------------------------------------------------------------------------------------------------- CAPITALIZATION TOTAL CAPITALIZATION INCLUDING AOCI, NET OF TAX $16,646 22% 20% TOTAL CAPITALIZATION EXCLUDING AOCI, NET OF TAX $14,839 15% 18% - ------------------------------------------------------------------------------------------------------------------------- FINANCIAL RATIOS DEBT (INCLUDING TRUST PREFERRED SECURITIES) TO EQUITY INCLUDING AOCI 44.8% 3.3 (1.6) Debt (excluding Trust Preferred Securities) to equity excluding AOCI 39.7% 10.8 4.1 DEBT (INCLUDING TRUST PREFERRED SECURITIES) TO CAPITALIZATION INCLUDING AOCI 30.9% 1.6 (0.8) Debt (excluding Trust Preferred Securities) to capitalization excluding AOCI 26.0% 6.1 2.8 - -------------------------------------------------------------------------------------------------------------------------
C-6
THE HARTFORD FINANCIAL SERVICES GROUP, INC. ACCUMULATED OTHER COMPREHENSIVE INCOME PROPERTY & LIFE CASUALTY CORPORATE CONSOLIDATED -------------- ------------- ------------- --------------- AS OF JUNE 30, 2003 Fixed maturities unrealized gain $ 1,114 $ 1,002 $ 23 $ 2,139 Equities unrealized gain 17 20 - 37 Net deferred gain on cash-flow hedging instruments 90 - - 90 --------------------------------------------------------------------------------------------------------------------------- Total unrealized gain 1,221 1,022 23 2,266 Foreign currency translation adjustments (38) (38) - (76) Minimum pension liability adjustment - (31) (352) (383) --------------------------------------------------------------------------------------------------------------------------- TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) $ 1,183 $ 953 $ (329) $ 1,807 AS OF DECEMBER 31, 2002 Fixed maturities unrealized gain $ 637 $ 791 $ 29 $ 1,457 Equities unrealized gain (loss) (16) 3 - (13) Net deferred gain on cash-flow hedging instruments 126 2 - 128 --------------------------------------------------------------------------------------------------------------------------- Total unrealized gain 747 796 29 1,572 Foreign currency translation adjustments (38) (57) - (95) Minimum pension liability adjustment - (31) (352) (383) --------------------------------------------------------------------------------------------------------------------------- TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) $ 709 $ 708 $ (323) $ 1,094
C-7
THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE 2Q 3Q 4Q 1Q 2002 2002 2002 2003 ------------ ----------- ----------- ----------- Numerator: Net income (loss) $ 185 $ 265 $ 258 $(1,395) Net realized capital gains (losses), after-tax (106) (100) (43) (34) ----------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 291 365 301 (1,361) Impact of 2003 asbestos reserve addition - - - (1,701) ----------------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 291 $ 365 $ 301 $ 340 Denominator: Weighted average common shares outstanding (basic) 247.4 248.9 255.2 255.4 Dilutive effect of options 3.3 1.6 1.1 - ----------------------------------------------------------------------------------------------------------------------------- Weighted average common shares outstanding and dilutive potential common shares (diluted) [1] 250.7 250.5 256.3 255.4 Basic earnings (loss) per share Net income (loss) $ 0.75 $ 1.06 $ 1.01 $ (5.46) Net realized capital gains (losses), after-tax (0.43) (0.41) (0.17) (0.13) ----------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.18 1.47 1.18 (5.33) Impact of 2003 asbestos reserve addition - - - (6.66) ----------------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 1.18 $ 1.47 $ 1.18 $ 1.33 Diluted earnings (loss) per share [1] Net income (loss) $ 0.74 $ 1.06 $ 1.01 $ (5.46) Net realized capital gains (losses), after-tax (0.42) (0.40) (0.16) (0.13) ----------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.16 1.46 1.17 (5.33) Impact of 2003 asbestos reserve addition - - - (6.66) ----------------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition [2] $ 1.16 $ 1.46 $ 1.17 $ 1.33 - ---------------------------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED JUNE 30, 2Q ------------------------- 2003 2002 2003 ----------- ----------- ------------ Numerator: Net income (loss) $ 507 $ 477 $ (888) Net realized capital gains (losses), after-tax 167 (107) 133 --------------------------------------------------------------------------------------------------------------------- Operating income (loss) 340 584 (1,021) Impact of 2003 asbestos reserve addition - - (1,701) --------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 340 $ 584 $ 680 Denominator: Weighted average common shares outstanding (basic) 268.8 246.7 262.1 Dilutive effect of options 1.4 3.5 - --------------------------------------------------------------------------------------------------------------------- Weighted average common shares outstanding and dilutive potential common shares (diluted) [1] 270.2 250.2 262.1 Basic earnings (loss) per share Net income (loss) $ 1.89 $ 1.93 $ (3.39) Net realized capital gains (losses), after-tax 0.63 (0.44) 0.51 --------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.26 2.37 (3.90) Impact of 2003 asbestos reserve addition - - (6.49) --------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 1.26 $ 2.37 $ 2.59 Diluted earnings (loss) per share [1] Net income (loss) $ 1.88 $ 1.91 $ (3.39) Net realized capital gains (losses), after-tax 0.62 (0.42) 0.51 --------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.26 2.33 (3.90) Impact of 2003 asbestos reserve addition - - (6.48) --------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition [2] $ 1.26 $ 2.33 $ 2.58 - -------------------------------------------------------------------------------------------------------------------------- [1] As a result of the antidilutive impact from the net loss in the quarter ended March 31, 2003 and the six months ended June 30, 2003, The Hartford is required by generally accepted accounting principles to use basic weighted average common shares in the calculation of the quarter ended March 31, 2003 and the six months ended June 30, 2003 diluted earnings per share. In the absence of the net loss, 256.1 and 263.1 weighted average common shares outstanding and dilutive potential common shares would have been used in the calculation for the quarter ended March 31, 2003 and the six months ended June 30, 2003, respectively. [2] Calculated using weighted average common shares outstanding and dilutive potential common shares of 256.1 and 263.1 for the quarter ended March 31, 2003 and the six months ended June 30, 2003, respectively.
C-8 LIFE
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE FINANCIAL HIGHLIGHTS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ----------- ----------- ---------- ---------- ---------- REVENUES Investment Products Individual Annuity $ 391 $ 379 $ 386 $ 385 $ 430 Other Investment Products 375 382 384 388 447 --------------------------------------------------------------------------------------------------------------------------- Total Investment Products 766 761 770 773 877 Individual Life 249 239 238 244 240 Group Benefits 654 645 639 667 638 Corporate Owned Life Insurance 146 145 141 127 126 Other (117) (125) (52) (25) 81 --------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES $ 1,698 $ 1,665 $ 1,736 $ 1,786 $ 1,962 - ------------------------------------------------------------------------------------------------------------------------------- NET INCOME Investment Products Individual Annuity $ 89 $ 76 $ 78 $ 71 $ 112 Other Investment Products 29 24 19 27 29 --------------------------------------------------------------------------------------------------------------------------- Total Investment Products 118 100 97 98 141 Individual Life 35 33 34 32 36 Group Benefits 30 34 36 34 35 Corporate Owned Life Insurance 10 10 12 10 9 Other (92) (16) (54) (48) 22 --------------------------------------------------------------------------------------------------------------------------- NET INCOME 101 161 125 126 243 Net realized capital gains (losses), after-tax (76) (71) (42) (31) 32 --------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME $ 177 $ 232 $ 167 $ 157 $ 211 - ------------------------------------------------------------------------------------------------------------------------------- ROE (net income last 12 months to equity including AOCI) [1] 14.9% 11.0% 10.8% 9.8% 11.4% ROE (operating income last 12 months to equity excluding AOCI) [1] 19.2% 16.9% 16.0% 15.2% 15.4% Assets under management $ 165,422 $ 157,495 $ 165,115 $ 168,173 $ 187,636 DAC capitalization $ 342 $ 386 DAC amortization $ 163 $ 175 DAC and PVFP assets $ 5,904 $ 5,927 Statutory net loss (YTD) $ (137) Statutory surplus $ 3,019 $ 3,007 $ 3,503 - ------------------------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ------------------------------ CHANGE CHANGE 2002 2003 CHANGE ---------- ----------- ---------- --------- ------- REVENUES Investment Products Individual Annuity 10% 12% $ 774 $ 815 5% Other Investment Products 19% 15% 802 835 4% -------------------------------------------------------------------------------------------------------------------------- Total Investment Products 14% 13% 1,576 1,650 5% Individual Life (4%) (2%) 481 484 1% Group Benefits (2%) (4%) 1,298 1,305 1% Corporate Owned Life Insurance (14%) (1%) 306 253 (17%) Other NM NM (127) 56 NM -------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 16% 10% $ 3,534 $ 3,748 6% - ------------------------------------------------------------------------------------------------------------------------------ NET INCOME Investment Products Individual Annuity 26% 58% $ 179 $ 183 2% Other Investment Products - 7% 56 56 - -------------------------------------------------------------------------------------------------------------------------- Total Investment Products 19% 44% 235 239 2% Individual Life 3% 13% 66 68 3% Group Benefits 17% 3% 58 69 19% Corporate Owned Life Insurance (10%) (10%) 10 19 90% Other NM NM (98) (26) 73% -------------------------------------------------------------------------------------------------------------------------- NET INCOME 141% 93% 271 369 36% Net realized capital gains (losses), after-tax NM NM (83) 1 NM -------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME 19% 34% $ 354 $ 368 4% - ------------------------------------------------------------------------------------------------------------------------------ ROE (net income last 12 months to equity including AOCI) [1] (3.5) 1.6 ROE (operating income last 12 months to equity excluding AOCI) [1] (3.8) 0.2 Assets under management 13% 12% DAC capitalization 13% DAC amortization 7% DAC and PVFP assets - Statutory net loss (YTD) Statutory surplus 16% - ------------------------------------------------------------------------------------------------------------------------------ [1] The quarter ended June 30, 2002 excludes the $20 loss related to September 11.
L-1
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE OPERATING RESULTS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 --------- ---------- --------- --------- ---------- REVENUES Earned premiums $ 664 $ 667 $ 657 $ 683 $ 706 Fee income 672 627 616 617 656 Net investment income 450 462 498 507 513 Other revenues 32 27 29 27 37 Net realized capital gains (losses) (120) (118) (64) (48) 50 -------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 1,698 1,665 1,736 1,786 1,962 - ------------------------------------------------------------------------------------------------------------------ BENEFITS AND EXPENSES Benefits, claims, and claim adjustment expenses 1,028 1,050 1,023 1,083 1,086 Amortization of deferred policy acquisition costs and present value of future profits 171 163 142 163 175 Insurance operating costs and expenses 358 335 388 351 395 Other expenses 32 34 30 33 32 -------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 1,589 1,582 1,583 1,630 1,688 - ------------------------------------------------------------------------------------------------------------------ NET INCOME INCOME BEFORE INCOME TAXES 109 83 153 156 274 Income tax expense (benefit) [1] 8 (78) 28 30 31 -------------------------------------------------------------------------------------------------------------- NET INCOME 101 161 125 126 243 Net realized capital gains (losses), after-tax (76) (71) (42) (31) 32 -------------------------------------------------------------------------------------------------------------- OPERATING INCOME [1] $ 177 $ 232 $ 167 $ 157 $ 211 - ------------------------------------------------------------------------------------------------------------------ Effective tax rate - net income [1] 7.3% (94.0%) 18.3% 19.2% 11.3% Effective tax rate - operating income [1] 22.7% (15.4%) 23.0% 23.0% 5.8% - ------------------------------------------------------------------------------------------------------------------ YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ------------------------------ CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- ---------- --------- ------- REVENUES Earned premiums 6% 3% $ 1,373 $ 1,389 1% Fee income (2%) 6% 1,334 1,273 (5%) Net investment income 14% 1% 898 1,020 14% Other revenues 16% 37% 64 64 - Net realized capital gains (losses) NM NM (135) 2 NM ----------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 16% 10% 3,534 3,748 6% - --------------------------------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES Benefits, claims, and claim adjustment expenses 6% - 2,085 2,169 4% Amortization of deferred policy acquisition costs and present value of future profits 2% 7% 323 338 5% Insurance operating costs and expenses 10% 13% 715 746 4% Other expenses - (3%) 80 65 (19%) ----------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 6% 4% 3,203 3,318 4% - --------------------------------------------------------------------------------------------------------------------- NET INCOME INCOME BEFORE INCOME TAXES 151% 76% 331 430 30% Income tax expense (benefit) [1] NM 3% 60 61 2% ----------------------------------------------------------------------------------------------------------------- NET INCOME 141% 93% 271 369 36% Net realized capital gains (losses), after-tax NM NM (83) 1 NM ----------------------------------------------------------------------------------------------------------------- OPERATING INCOME [1] 19% 34% $ 354 $ 368 4% - --------------------------------------------------------------------------------------------------------------------- Effective tax rate - net income [1] 4.0 (7.9) 18.1% 14.2% (3.9) Effective tax rate - operating income [1] (16.9) (17.2) 24.0% 14.0% (10.0) - --------------------------------------------------------------------------------------------------------------------- [1] The quarters ended September 30, 2002 and June 30, 2003 include $76 and $30, respectively, of tax benefit primarily related to the favorable treatment of certain tax items arising during the 1996-2002 tax years.
L-2
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE TOTAL ASSETS UNDER MANAGEMENT/JAPAN DATA 2Q 3Q 4Q 1Q TOTAL ASSETS UNDER MANAGEMENT 2002 2002 2002 2003 --------------- --------------- -------------- -------------- Assets General account $ 39,029 $ 41,870 $ 42,716 $ 45,060 Separate account 110,177 101,533 107,078 108,068 ------------------------------------------------------------------------------------------------------------------ TOTAL ASSETS 149,206 143,403 149,794 153,128 Mutual fund assets 16,216 14,092 15,321 15,045 ------------------------------------------------------------------------------------------------------------------ TOTAL ASSETS UNDER MANAGEMENT $ 165,422 $ 157,495 $ 165,115 $ 168,173 - ----------------------------------------------------------------------------------------------------------------------- JAPAN SALES Yen(Y) (Y) 30,399 (Y) 35,284 (Y) 92,153 (Y) 83,068 U.S.$ $ 241 $ 295 $ 757 $ 700 ---------------------------------------------------------------------- ACCOUNT VALUE Yen(Y) (Y) 95,182 (Y) 120,692 (Y) 204,556 (Y) 273,880 U.S.$ $ 796 $ 991 $ 1,722 $ 2,319 - ----------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR SEQUENTIAL 2Q QUARTER QUARTER TOTAL ASSETS UNDER MANAGEMENT 2003 CHANGE CHANGE --------------- -------------- -------------- Assets General account $ 47,218 21% 5% Separate account 122,556 11% 13% ---------------------------------------------------------------------------------------------- TOTAL ASSETS 169,774 14% 11% Mutual fund assets 17,862 10% 19% ---------------------------------------------------------------------------------------------- TOTAL ASSETS UNDER MANAGEMENT $ 187,636 13% 12% - --------------------------------------------------------------------------------------------------- JAPAN SALES Yen(Y) (Y) 71,408 135% (14%) U.S.$ $ 600 149% (14%) ---------------------------------------------------- ACCOUNT VALUE Yen(Y) (Y) 373,611 NM 36% U.S.$ $ 3,119 NM 34% - ---------------------------------------------------------------------------------------------------
L-3
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE CONSOLIDATED BALANCE SHEETS 2Q 3Q 4Q 2002 2002 2002 ------------------- ------------------- ------------------ Investments Fixed maturities, available for sale, at fair value $ 25,549 $ 28,539 $ 29,377 Equity securities, available for sale, at fair value 416 374 458 Policy loans, at outstanding balance 3,204 2,980 2,934 Other investments 1,227 1,359 1,122 - ------------------------------------------------------------------------------------------------------------------- Total investments 30,396 33,252 33,891 Cash 118 194 179 Premiums receivable and agents' balances 208 198 208 Reinsurance recoverables 706 701 796 Deferred policy acquisition costs and present value of future profits 5,801 5,904 5,758 Deferred income taxes (204) (361) (274) Goodwill 796 796 796 Other assets 1,208 1,186 1,362 Separate account assets 110,177 101,533 107,078 - ------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 149,206 $ 143,403 $ 149,794 - ------------------------------------------------------------------------------------------------------------------- Future policy benefits $ 8,274 $ 8,424 $ 8,583 Other policyholder funds and benefits payable 21,434 23,259 23,957 Unearned premiums 55 55 54 Long-term debt 1,050 1,050 1,125 Trust preferred securities 450 450 450 Other liabilities 2,811 2,995 2,858 Separate account liabilities 110,177 101,533 107,078 - ------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 144,251 137,766 144,105 Equity excluding AOCI, net of tax 4,652 4,796 4,980 AOCI, net of tax 303 841 709 - ------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 4,955 5,637 5,689 - ------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 149,206 $ 143,403 $ 149,794 - ------------------------------------------------------------------------------------------------------------------- Hartford Life and Accident Insurance Company NAIC RBC 262% Hartford Life Insurance Company NAIC RBC 328% Hartford Life and Annuity Insurance Company NAIC RBC 343% - ------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR SEQUENTIAL 1Q 2Q QUARTER QUARTER 2003 2003 CHANGE CHANGE ----------------- ------------------ ------------ ------------ Investments Fixed maturities, available for sale, at fair value $ 31,676 $ 34,060 33% 8% Equity securities, available for sale, at fair value 410 452 9% 10% Policy loans, at outstanding balance 2,876 2,889 (10%) - Other investments 1,071 937 (24%) (13%) - ----------------------------------------------------------------------------------------------------------------------- Total investments 36,033 38,338 26% 6% Cash 289 190 61% (34%) Premiums receivable and agents' balances 191 192 (8%) 1% Reinsurance recoverables 865 797 13% (8%) Deferred policy acquisition costs and present value of future profits 5,904 5,927 2% - Deferred income taxes (347) (562) (175%) (62%) Goodwill 796 796 - - Other assets 1,329 1,540 27% 16% Separate account assets 108,068 122,556 11% 13% - ----------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 153,128 $ 169,774 14% 11% - ----------------------------------------------------------------------------------------------------------------------- Future policy benefits $ 8,735 $ 8,928 8% 2% Other policyholder funds and benefits payable 25,252 26,255 22% 4% Unearned premiums 52 51 (7%) (2%) Long-term debt 1,125 1,275 21% 13% Trust preferred securities 450 450 - - Other liabilities 3,555 3,762 34% 6% Separate account liabilities 108,068 122,556 11% 13% - ----------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 147,237 163,277 13% 11% Equity excluding AOCI, net of tax 5,089 5,314 14% 4% AOCI, net of tax 802 1,183 NM 48% - ----------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 5,891 6,497 31% 10% - ----------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 153,128 $ 169,774 14% 11% - ----------------------------------------------------------------------------------------------------------------------- Hartford Life and Accident Insurance Company NAIC RBC Hartford Life Insurance Company NAIC RBC Hartford Life and Annuity Insurance Company NAIC RBC - -----------------------------------------------------------------------------------------------------------------------
L-4
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE DEFERRED POLICY ACQUISITION COSTS and PRESENT VALUE OF FUTURE PROFITS OTHER INDIVIDUAL INVESTMENT INDIVIDUAL GROUP ANNUITY PRODUCTS LIFE BENEFITS ----------- ----------- ------------ ------------ Quarter Ended June 30, 2003 - --------------------------- Balance, March 31, 2003 $ 3,791 $ 231 $ 1,651 $ 46 Adjustments to unrealized gains and losses on securities available-for-sale and other 172 92 128 - ---------------------------------------------------- Balance excluding adjustments to unrealized gains and losses on securities available-for-sale and other $ 3,963 $ 323 $ 1,779 $ 46 Capitalization 250 40 52 4 Amortization - Deferred Acquisition Costs (98) (20) (37) (5) Amortization - Present Value of Future Profits (3) - (6) - Amortization - Realized Capital Gains - - - - ---------------------------------------------------- Balance, June 30, 2003 $ 4,112 $ 343 $ 1,788 $ 45 Adjustments to unrealized gains and losses on securities available-for-sale and other (298) (119) (162) - - --------------------------------------------------------------------------------------------------------------------------- Balance, June 30, 2003 including adjustments to unrealized gains and losses on securities available-for-sale and other $ 3,814 $ 224 $ 1,626 $ 45 - --------------------------------------------------------------------------------------------------------------------------- Quarter Ended March 31, 2003 - ---------------------------- Balance, December 31, 2002 $ 3,691 $ 226 $ 1,656 $ 43 Adjustments to unrealized gains and losses on securities available-for-sale and other 154 85 118 - ---------------------------------------------------- Balance excluding adjustments to unrealized gains and losses on securities available-for-sale and other $ 3,845 $ 311 $ 1,774 $ 43 Capitalization 205 34 51 7 Amortization - Deferred Acquisition Costs (84) (22) (40) (4) Amortization - Present Value of Future Profits (3) - (6) - Amortization - Realized Capital Gains - - - - ---------------------------------------------------- Balance, March 31, 2003 $ 3,963 $ 323 $ 1,779 $ 46 Adjustments to unrealized gains and losses on securities available-for-sale and other (172) (92) (128) - - --------------------------------------------------------------------------------------------------------------------------- Balance, March 31, 2003 including adjustments to unrealized gains and losses on securities available-for-sale and other $ 3,791 $ 231 $ 1,651 $ 46 - --------------------------------------------------------------------------------------------------------------------------- CORPORATE OWNED LIFE OTHER INSURANCE JAPAN LIFE TOTAL ------------ ------------ ------------ ------------ Quarter Ended June 30, 2003 - --------------------------- Balance, March 31, 2003 $ 13 $ 163 $ 9 $ 5,904 Adjustments to unrealized gains and losses on securities available-for-sale and other - - - 392 ------------------------------------------------------ Balance excluding adjustments to unrealized gains and losses on securities available-for-sale and other $ 13 $ 163 $ 9 $ 6,296 Capitalization - 40 - 386 Amortization - Deferred Acquisition Costs - (6) - (166) Amortization - Present Value of Future Profits - - - (9) Amortization - Realized Capital Gains - - (1) (1) ------------------------------------------------------ Balance, June 30, 2003 $ 13 $ 197 $ 8 $ 6,506 Adjustments to unrealized gains and losses on securities available-for-sale and other - - - (579) - ---------------------------------------------------------------------------------------------------------------------------- Balance, June 30, 2003 including adjustments to unrealized gains and losses on securities available-for-sale and other $ 13 $ 197 $ 8 $ 5,927 - ---------------------------------------------------------------------------------------------------------------------------- Quarter Ended March 31, 2003 - ---------------------------- Balance, December 31, 2002 $ 12 $ 123 $ 7 $ 5,758 Adjustments to unrealized gains and losses on securities available-for-sale and other - - - 357 ------------------------------------------------------ Balance excluding adjustments to unrealized gains and losses on securities available-for-sale and other $ 12 $ 123 $ 7 $ 6,115 Capitalization 1 44 - 342 Amortization - Deferred Acquisition Costs - (4) - (154) Amortization - Present Value of Future Profits - - - (9) Amortization - Realized Capital Gains - - 2 2 ------------------------------------------------------ Balance, March 31, 2003 $ 13 $ 163 $ 9 $ 6,296 Adjustments to unrealized gains and losses on securities available-for-sale and other - - - (392) - ---------------------------------------------------------------------------------------------------------------------------- Balance, March 31, 2003 including adjustments to unrealized gains and losses on securities available-for-sale and other $ 13 $ 163 $ 9 $ 5,904 - ----------------------------------------------------------------------------------------------------------------------------
L-5
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE REINSURANCE RECOVERABLE ANALYSIS AS OF MARCH 31, 2003 STATUTORY RESERVE CREDIT AND AMOUNTS RECOVERABLE Gross statutory reinsurance reserve credit $ 2,142 Liability for reinsurance in unauthorized companies (79) --------------------------------------------------------------------------------------------------------------------------- Net statutory reinsurance reserve credit $ 2,063 --------------------------------------------------------------------------------------------------------------------------- Statutory amounts recoverable from reinsurers $ 181 ---------------------------------------------------------------------------------------------------------------------------
The top ten reinsurers represent $1,857, or 83%, of the total statutory reserve credit and amounts recoverable. o 15% of this amount is with reinsurers rated "A++" by A.M. Best at July 22, 2003. o 19% of this amount is with reinsurers rated "A+" by A.M. Best at July 22, 2003 o 48% of this amount is with reinsurers rated "A" by A.M. Best at July 22, 2003 o 3% of this amount is with reinsurers rated "A-" by A.M. Best at July 22, 2003 o 13% of this amount is with reinsurers rated "B" by A.M. Best at July 22, 2003 o 2% of this amount is with reinsurers not rated by A.M. Best at July 22, 2003 L-6
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE STATUTORY SURPLUS TO GAAP STOCKHOLDERS' EQUITY RECONCILIATION MARCH 31, 2003 DECEMBER 31, 2002 -------------- ----------------- Statutory Capital and Surplus $ 3,007 $ 3,019 GAAP Adjustments Investment in subsidiaries (1,808) (1,769) Deferred policy acquisition costs 5,904 5,758 Deferred taxes (539) (445) Benefit reserves (2,981) (2,887) Unrealized gains on investments, net of impairments 1,505 1,334 AVR and IMR 306 200 Goodwill 522 559 Other, net (25) (80) - ------------------------------------------------------------------------------------------------------------------------------- GAAP Stockholders' Equity $ 5,891 $ 5,689 - -------------------------------------------------------------------------------------------------------------------------------
L-7
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS INCOME STATEMENTS - INDIVIDUAL ANNUITY 2Q 3Q 4Q 1Q 2Q REVENUES 2002 2002 2002 2003 2003 ------- -------- ------- -------- ------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ 270 $ 235 $ 233 $ 231 $ 259 Other fees 40 44 40 38 33 ---------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 310 279 273 269 292 Gross MVA/MGLI spread income 27 22 25 22 27 Investment expenses (2) (2) (2) (2) (2) ---------------------------------------------------------------------------------------------------- NET GUARANTEED SEPARATE ACCOUNT INCOME 25 20 23 20 25 DIRECT PREMIUMS 21 26 21 28 30 REINSURANCE PREMIUMS (29) (28) (28) (37) (32) ---------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 327 297 289 280 315 NET INVESTMENT INCOME Gross investment income on G/A assets 85 102 116 122 131 Investment expenses (1) (1) (1) (1) (1) ---------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 84 101 115 121 130 Net investment income on assigned capital 15 13 14 14 16 Charge for invested capital (35) (32) (32) (30) (31) ---------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 64 82 97 105 115 ---------------------------------------------------------------------------------------------------- TOTAL REVENUES 391 379 386 385 430 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 9 17 16 17 14 Other contract benefits 24 25 28 28 26 Change in reserve 7 11 5 12 16 Interest credited on G/A assets 60 65 75 78 84 ---------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 100 118 124 135 140 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 185 178 232 230 281 Operating expenses 47 50 50 45 49 Premium taxes, licenses and fees 3 3 3 4 3 Other miscellaneous expenses 2 3 2 2 1 ---------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 237 234 287 281 334 Deferred policy acquisition costs (159) (155) (205) (205) (250) ---------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 78 79 82 76 84 Amortization of deferred policy acquisition costs and present value of future profits 100 89 84 87 101 ---------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 278 286 290 298 325 INCOME BEFORE INCOME TAX EXPENSE 113 93 96 87 105 Income tax expense (benefit) 24 17 18 16 (7) ---------------------------------------------------------------------------------------------------- NET INCOME $ 89 $ 76 $ 78 $ 71 $ 112 ---------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER -------------------------- REVENUES CHANGE CHANGE 2002 2003 CHANGE ---------- ----------- ------- -------- ------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees (4%) 12% $ 543 $ 490 (10%) Other fees (18%) (13%) 73 71 (3%) ------------------------------------------------------------------------------------------------------------ TOTAL FEE INCOME (6%) 9% 616 561 (9%) Gross MVA/MGLI spread income - 23% 54 49 (9%) Investment expenses - - (3) (4) (33%) ------------------------------------------------------------------------------------------------------------ NET GUARANTEED SEPARATE ACCOUNT INCOME - 25% 51 45 (12%) DIRECT PREMIUMS 43% 7% 40 58 45% REINSURANCE PREMIUMS (10%) 14% (57) (69) (21%) ------------------------------------------------------------------------------------------------------------ TOTAL PREMIUMS AND OTHER CONSIDERATIONS (4%) 13% 650 595 (8%) NET INVESTMENT INCOME Gross investment income on G/A assets 54% 7% 166 253 52% Investment expenses - - (1) (2) (100%) ------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME ON G/A ASSETS 55% 7% 165 251 52% Net investment income on assigned capital 7% 14% 29 30 3% Charge for invested capital 11% (3%) (70) (61) 13% ------------------------------------------------------------------------------------------------------------ TOTAL NET INVESTMENT INCOME 80% 10% 124 220 77% ------------------------------------------------------------------------------------------------------------ TOTAL REVENUES 10% 12% 774 815 5% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 56% (18%) 16 31 94% Other contract benefits 8% (7%) 45 54 20% Change in reserve 129% 33% 13 28 115% Interest credited on G/A assets 40% 8% 119 162 36% ------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND CLAIMS 40% 4% 193 275 42% OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 52% 22% 374 511 37% Operating expenses 4% 9% 95 94 (1%) Premium taxes, licenses and fees - (25%) 5 7 40% Other miscellaneous expenses (50%) (50%) 4 3 (25%) ------------------------------------------------------------------------------------------------------------ SUBTOTAL - EXPENSES BEFORE DEFERRAL 41% 19% 478 615 29% Deferred policy acquisition costs (57%) (22%) (322) (455) (41%) ------------------------------------------------------------------------------------------------------------ TOTAL OTHER INSURANCE EXPENSE 8% 11% 156 160 3% Amortization of deferred policy acquisition costs and present value of future profits 1% 16% 197 188 (5%) ------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND EXPENSES 17% 9% 546 623 14% INCOME BEFORE INCOME TAX EXPENSE (7%) 21% 228 192 (16%) Income tax expense (benefit) NM NM 49 9 (82%) ------------------------------------------------------------------------------------------------------------ NET INCOME 26% 58% $ 179 $ 183 2% ------------------------------------------------------------------------------------------------------------
L-8
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS INCOME STATEMENTS - OTHER 2Q 3Q 4Q 1Q 2Q REVENUES 2002 2002 2002 2003 2003 --------- -------- -------- --------- -------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ 17 $ 16 $ 15 $ 16 $ 18 Other fees 84 70 67 68 76 ---------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 101 86 82 84 94 DIRECT PREMIUMS 86 99 98 100 145 REINSURANCE PREMIUMS - (1) - - - ---------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 187 184 180 184 239 NET INVESTMENT INCOME Gross investment income on G/A assets 187 196 202 201 205 Investment expenses (3) (3) (3) (3) (3) ---------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 184 193 199 198 202 Net investment income on assigned capital 5 5 5 5 6 Charge for invested capital (1) - - 1 - ---------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 188 198 204 204 208 ---------------------------------------------------------------------------------------------------------- TOTAL REVENUES 375 382 384 388 447 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Other contract benefits 77 71 71 73 72 Change in reserve 59 86 86 85 133 Interest credited on G/A assets 91 93 105 101 106 ---------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 227 250 262 259 311 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 66 53 51 52 63 Operating expenses 48 50 53 47 52 Other miscellaneous expenses 2 3 1 3 2 ---------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 116 106 105 102 117 Deferred policy acquisition costs (30) (28) (28) (34) (40) ---------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 86 78 77 68 77 Amortization of deferred policy acquisition costs and present value of future profits 20 19 18 22 20 ---------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 333 347 357 349 408 INCOME BEFORE INCOME TAX EXPENSE 42 35 27 39 39 Income tax expense 13 11 8 12 10 ---------------------------------------------------------------------------------------------------------- NET INCOME $ 29 $ 24 $ 19 $ 27 $ 29 ---------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ------------------------------ REVENUES CHANGE CHANGE 2002 2003 CHANGE --------- -------- -------- --------- --------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees 6% 13% $ 34 $ 34 - Other fees (10%) 12% 167 144 (14%) -------------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME (7%) 12% 201 178 (11%) DIRECT PREMIUMS 69% 45% 227 245 8% REINSURANCE PREMIUMS - - - - - -------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 28% 30% 428 423 (1%) NET INVESTMENT INCOME Gross investment income on G/A assets 10% 2% 371 406 9% Investment expenses - - (5) (6) (20%) -------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 10% 2% 366 400 9% Net investment income on assigned capital 20% 20% 10 11 10% Charge for invested capital 100% (100%) (2) 1 NM -------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 11% 2% 374 412 10% -------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 19% 15% 802 835 4% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Other contract benefits (6%) (1%) 148 145 (2%) Change in reserve 125% 56% 180 218 21% Interest credited on G/A assets 16% 5% 179 207 16% -------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 37% 20% 507 570 12% OTHER INSURANCE EXPENSES Commissions & wholesaling expenses (5%) 21% 139 115 (17%) Operating expenses 8% 11% 96 99 3% Other miscellaneous expenses - (33%) 3 5 67% -------------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 1% 15% 238 219 (8%) Deferred policy acquisition costs (33%) (18%) (62) (74) (19%) -------------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE (10%) 13% 176 145 (18%) Amortization of deferred policy acquisition costs and present value of future profits - (9%) 37 42 14% -------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 23% 17% 720 757 5% INCOME BEFORE INCOME TAX EXPENSE (7%) - 82 78 (5%) Income tax expense (23%) (17%) 26 22 (15%) -------------------------------------------------------------------------------------------------------------- NET INCOME - 7% $ 56 $ 56 - --------------------------------------------------------------------------------------------------------------
L-9
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - SALES/OTHER DEPOSITS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ----------- ----------- ----------- ----------- ---------- SALES INDIVIDUAL ANNUITY Broker-dealer $ 1,761 $ 1,703 $ 2,544 $ 2,521 $ 3,003 Banks 979 846 1,030 980 1,305 ------------------------------------------------------------------------------------------------------- TOTAL SALES BY DISTRIBUTION $ 2,740 $ 2,549 $ 3,574 $ 3,501 $ 4,308 ------------------------------------------------------------------------------------------------------- Variable $ 2,308 $ 2,397 $ 3,479 $ 3,437 $ 4,206 Fixed MVA/other 432 152 95 64 102 ------------------------------------------------------------------------------------------------------- TOTAL SALES BY PRODUCT $ 2,740 $ 2,549 $ 3,574 $ 3,501 $ 4,308 ------------------------------------------------------------------------------------------------------- RETAIL MUTUAL FUNDS $ 1,406 $ 945 $ 832 $ 848 $ 1,151 CORPORATE Annuity $ 277 $ 234 $ 346 $ 179 $ 276 Mutual funds 1 2 1 3 - ------------------------------------------------------------------------------------------------------- TOTAL CORPORATE $ 278 $ 236 $ 347 $ 182 $ 276 ------------------------------------------------------------------------------------------------------- GOVERNMENTAL Annuity $ 69 $ 165 $ 51 $ 77 $ 104 Mutual funds - - - 8 8 ------------------------------------------------------------------------------------------------------- TOTAL GOVERNMENTAL $ 69 $ 165 $ 51 $ 85 $ 112 ------------------------------------------------------------------------------------------------------- INSTITUTIONAL Structured settlements $ 132 $ 113 $ 183 $ 144 $ 180 Terminal funding 15 43 39 9 52 Mutual funds 13 12 11 16 47 GIC/other 524 347 166 164 809 ------------------------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL $ 684 $ 515 $ 399 $ 333 $ 1,088 ------------------------------------------------------------------------------------------------------- 529 COLLEGE SAVINGS PLANS AND OTHER PRODUCTS $ 31 $ 27 $ 30 $ 36 $ 49 - ------------------------------------------------------------------------------------------------------------- SALES & OTHER DEPOSITS INDIVIDUAL ANNUITY Variable $ 2,308 $ 2,397 $ 3,479 $ 3,437 $ 4,206 Fixed MVA/other 467 186 150 140 191 ------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY 2,775 2,583 3,629 3,577 4,397 ------------------------------------------------------------------------------------------------------- RETAIL MUTUAL FUNDS 1,406 945 832 848 1,151 CORPORATE Annuity 257 325 295 396 327 Mutual funds 36 4 5 45 52 ------------------------------------------------------------------------------------------------------- TOTAL CORPORATE 293 329 300 441 379 ------------------------------------------------------------------------------------------------------- GOVERNMENTAL Annuity 246 369 191 234 274 Mutual funds - 43 2 8 8 ------------------------------------------------------------------------------------------------------- TOTAL GOVERNMENTAL 246 412 193 242 282 ------------------------------------------------------------------------------------------------------- INSTITUTIONAL Structured settlements 116 106 133 155 142 Terminal funding 19 44 38 9 53 Mutual funds 13 12 11 16 47 GIC/Other 528 305 64 168 931 ------------------------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL 676 467 246 348 1,173 ------------------------------------------------------------------------------------------------------- 529 COLLEGE SAVINGS PLANS AND OTHER PRODUCTS 31 27 30 36 49 --------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS $ 5,427 $ 4,763 $ 5,230 $ 5,492 $ 7,431 - ------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ----------------------------------- SALES CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ----------- ----------- ----------- INDIVIDUAL ANNUITY Broker-dealer 71% 19% $ 3,487 $ 5,524 58% Banks 33% 33% 2,026 2,285 13% ------------------------------------------------------------------------------------------------------------ TOTAL SALES BY DISTRIBUTION 57% 23% $ 5,513 $ 7,809 42% ------------------------------------------------------------------------------------------------------------ Variable 82% 22% $ 4,472 $ 7,643 71% Fixed MVA/other (76%) 59% 1,041 166 (84%) ------------------------------------------------------------------------------------------------------------ TOTAL SALES BY PRODUCT 57% 23% $ 5,513 $ 7,809 42% ------------------------------------------------------------------------------------------------------------ RETAIL MUTUAL FUNDS (18%) 36% $ 3,001 $ 1,999 (33%) CORPORATE Annuity - 54% $ 421 $ 455 8% Mutual funds (100%) (100%) 1 3 200% ------------------------------------------------------------------------------------------------------------ TOTAL CORPORATE (1%) 52% $ 422 $ 458 9% ------------------------------------------------------------------------------------------------------------ GOVERNMENTAL Annuity 51% 35% $ 122 $ 181 48% Mutual funds NM - - 16 NM ------------------------------------------------------------------------------------------------------------ TOTAL GOVERNMENTAL 62% 32% $ 122 $ 197 61% ------------------------------------------------------------------------------------------------------------ INSTITUTIONAL Structured settlements 36% 25% $ 220 $ 324 47% Terminal funding NM NM 62 61 (2%) Mutual funds NM 194% 24 63 163% GIC/other 54% NM 769 973 27% ------------------------------------------------------------------------------------------------------------ TOTAL INSTITUTIONAL 59% NM $ 1,075 $ 1,421 32% ------------------------------------------------------------------------------------------------------------ 529 COLLEGE SAVINGS PLANS AND OTHER PRODUCTS 58% 36% $ 37 $ 85 130% - ------------------------------------------------------------------------------------------------------------------ SALES & OTHER DEPOSITS INDIVIDUAL ANNUITY Variable 82% 22% $ 4,472 $ 7,643 71% Fixed MVA/other (59%) 36% 1,109 331 (70%) ------------------------------------------------------------------------------------------------------------ TOTAL INDIVIDUAL ANNUITY 58% 23% 5,581 7,974 43% ------------------------------------------------------------------------------------------------------------ RETAIL MUTUAL FUNDS (18%) 36% 3,001 1,999 (33%) CORPORATE Annuity 27% (17%) 624 723 16% Mutual funds 44% 16% 59 97 64% ------------------------------------------------------------------------------------------------------------ TOTAL CORPORATE 29% (14%) 683 820 20% ------------------------------------------------------------------------------------------------------------ GOVERNMENTAL Annuity 11% 17% 445 508 14% Mutual funds NM - - 16 NM ------------------------------------------------------------------------------------------------------------ TOTAL GOVERNMENTAL 15% 17% 445 524 18% ------------------------------------------------------------------------------------------------------------ INSTITUTIONAL Structured settlements 22% (8%) 259 297 15% Terminal funding 179% NM 62 62 - Mutual funds NM 194% 24 63 163% GIC/Other 76% NM 678 1,099 62% ------------------------------------------------------------------------------------------------------------ TOTAL INSTITUTIONAL 74% NM 1,023 1,521 49% ------------------------------------------------------------------------------------------------------------ 529 COLLEGE SAVINGS PLANS AND OTHER PRODUCTS 58% 36% 37 85 130% -------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS 37% 35% $ 10,770 $ 12,923 20% - ------------------------------------------------------------------------------------------------------------------
L-10
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - ASSETS UNDER MANAGEMENT 2Q 3Q 4Q 1Q 2002 2002 2002 2003 ----------- ------------- ----------- ----------- INDIVIDUAL ANNUITY General account $ 5,985 $ 7,569 $ 8,583 $ 9,523 Guaranteed separate account 9,562 9,684 9,721 9,747 Non-guaranteed separate account 62,578 52,878 56,604 55,379 -------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY $ 78,125 $ 70,131 $ 74,908 $ 74,649 - ----------------------------------------------------------------------------------------------------------------- OTHER INVESTMENT PRODUCTS General account $ 11,233 $ 11,906 $ 11,913 $ 12,350 Guaranteed separate account 408 429 417 407 Non-guaranteed separate account 7,870 7,033 7,591 7,617 -------------------------------------------------------------------------------------------------------- TOTAL OTHER INVESTMENT PRODUCTS $ 19,511 $ 19,368 $ 19,921 $ 20,374 - ----------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS General account $ 17,218 $ 19,475 $ 20,496 $ 21,873 Guaranteed separate account 9,970 10,113 10,138 10,154 Non-guaranteed separate account 70,448 59,911 64,195 62,996 -------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS $ 97,636 $ 89,499 $ 94,829 $ 95,023 - ----------------------------------------------------------------------------------------------------------------- BY PRODUCT INDIVIDUAL ANNUITY Individual Variable Annuities General account $ 5,127 $ 6,704 $ 7,702 $ 8,620 Separate account 62,585 52,914 56,641 55,427 ----------------------------------------------------------------------------------------------------- Total individual variable annuities 67,712 59,618 64,343 64,047 Fixed MVA & other individual annuities 10,413 10,513 10,565 10,602 ------------------------------------------------------------------------------------------------------ TOTAL INDIVIDUAL ANNUITY 78,125 70,131 74,908 74,649 ------------------------------------------------------------------------------------------------------ CORPORATE - ANNUITY 2,751 2,759 2,972 3,212 GOVERNMENTAL - ANNUITY 7,298 6,890 7,211 7,199 INSTITUTIONAL Structured settlements 2,485 2,588 2,686 2,838 Terminal funding 1,899 1,944 1,978 1,975 Other 1,869 1,702 1,741 1,681 GIC 3,209 3,485 3,333 3,469 ------------------------------------------------------------------------------------------------------ TOTAL INSTITUTIONAL 9,462 9,719 9,738 9,963 ------------------------------------------------------------------------------------------------------ TOTAL INVESTMENT PRODUCTS ACCOUNT VALUE 97,636 89,499 94,829 95,023 SPECIALTY PRODUCTS/OTHER - SEGREGATED ASSETS - - - 7 MUTUAL FUND ASSETS Retail mutual fund assets 14,922 12,967 14,079 13,742 Corporate mutual fund assets 416 361 393 394 Governmental mutual fund assets 693 604 642 609 Specialty product/other mutual fund assets - - - 84 Institutional mutual fund assets 151 107 120 108 529 College Savings Plan assets 34 53 87 108 ------------------------------------------------------------------------------------------------------ TOTAL MUTUAL FUND ASSETS 16,216 14,092 15,321 15,045 ------------------------------------------------------------------------------------------------------ TOTAL INVESTMENT PRODUCTS ASSETS UNDER MANAGEMENT $113,852 $ 103,591 $110,150 $110,075 - ----------------------------------------------------------------------------------------------------------------- Year Over Year Sequential 2Q Quarter Quarter 2003 Change Change ---------- ----------- ----------- INDIVIDUAL ANNUITY General account $ 9,899 65% 4% Guaranteed separate account 9,685 1% (1%) Non-guaranteed separate account 64,751 3% 17% ------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY $ 84,335 8% 13% - ---------------------------------------------------------------------------------------------------- OTHER INVESTMENT PRODUCTS General account $ 13,178 17% 7% Guaranteed separate account 401 (2%) (1%) Non-guaranteed separate account 9,156 16% 20% ------------------------------------------------------------------------------------------- TOTAL OTHER INVESTMENT PRODUCTS $ 22,735 17% 12% - ---------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS General account $ 23,077 34% 6% Guaranteed separate account 10,086 1% (1%) Non-guaranteed separate account 73,907 5% 17% ------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS $107,070 10% 13% - ---------------------------------------------------------------------------------------------------- BY PRODUCT INDIVIDUAL ANNUITY Individual Variable Annuities General account $ 8,959 75% 4% Separate account 64,789 4% 17% ---------------------------------------------------------------------------------------- Total individual variable annuities 73,748 9% 15% Fixed MVA & other individual annuities 10,587 2% - ----------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY 84,335 8% 13% ----------------------------------------------------------------------------------------- CORPORATE - ANNUITY 3,700 34% 15% GOVERNMENTAL - ANNUITY 7,811 7% 9% INSTITUTIONAL Structured settlements 2,979 20% 5% Terminal funding 2,047 8% 4% Other 2,151 15% 28% GIC 4,047 26% 17% ----------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL 11,224 19% 13% ----------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS ACCOUNT VALUE 107,070 10% 13% SPECIALTY PRODUCTS/OTHER - SEGREGATED ASSETS 20 NM 186% MUTUAL FUND ASSETS Retail mutual fund assets 16,290 9% 19% Corporate mutual fund assets 471 13% 20% Governmental mutual fund assets 684 (1%) 12% Specialty product/other mutual fund assets 104 NM 24% Institutional mutual fund assets 166 10% 54% 529 College Savings Plan assets 147 NM 36% ----------------------------------------------------------------------------------------- TOTAL MUTUAL FUND ASSETS 17,862 10% 19% ----------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS ASSETS UNDER MANAGEMENT $124,952 10% 14% - 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L-11
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - INDIVIDUAL ANNUITY- ACCOUNT VALUE ROLLFORWARD [1] 2Q 3Q 4Q 2002 2002 2002 -------------- ------------- -------------- VARIABLE ANNUITIES BEGINNING BALANCE $ 75,044 $ 67,712 $ 59,618 Sales/premiums/other deposits 2,308 2,397 3,479 Change in market value/change in reserve/interest credited (7,564) (8,265) 3,343 Surrenders (1,773) (1,957) (1,859) Death benefits/annuitizations/other (292) (265) (249) Net exchanges (11) (4) 11 --------------------------------------------------------------------------------------------------------------------------- ENDING BALANCE $ 67,712 $ 59,618 $ 64,343 - -------------------------------------------------------------------------------------------------------------------------------- FIXED MVA AND OTHER BEGINNING BALANCE $ 10,080 $ 10,413 $ 10,513 Sales/premiums/other deposits 467 186 150 Change in market value/change in reserve/interest credited 139 142 167 Surrenders (188) (142) (163) Death benefits/annuitizations/other (99) (95) (92) Net exchanges 14 9 (10) --------------------------------------------------------------------------------------------------------------------------- ENDING BALANCE $ 10,413 $ 10,513 $ 10,565 - -------------------------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY BEGINNING BALANCE $ 85,124 $ 78,125 $ 70,131 Sales/premiums/other deposits 2,775 2,583 3,629 Change in market value/change in reserve/interest credited (7,425) (8,123) 3,510 Surrenders (1,961) (2,099) (2,022) Death benefits/annuitizations/other (391) (360) (341) Net exchanges 3 5 1 --------------------------------------------------------------------------------------------------------------------------- ENDING BALANCE $ 78,125 $ 70,131 $ 74,908 - -------------------------------------------------------------------------------------------------------------------------------- 1Q 2Q 2003 2003 -------------- -------------- VARIABLE ANNUITIES BEGINNING BALANCE $ 64,343 $ 64,047 Sales/premiums/other deposits 3,437 4,206 Change in market value/change in reserve/interest credited (1,634) 7,236 Surrenders (1,800) (1,467) Death benefits/annuitizations/other (307) (297) Net exchanges 8 23 ------------------------------------------------------------------------------------------------------------ ENDING BALANCE $ 64,047 $ 73,748 - ----------------------------------------------------------------------------------------------------------------- FIXED MVA AND OTHER BEGINNING BALANCE $ 10,565 $ 10,602 Sales/premiums/other deposits 140 191 Change in market value/change in reserve/interest credited 155 167 Surrenders (152) (239) Death benefits/annuitizations/other (99) (113) Net exchanges (7) (21) ------------------------------------------------------------------------------------------------------------ ENDING BALANCE $ 10,602 $ 10,587 - ----------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY BEGINNING BALANCE $ 74,908 $ 74,649 Sales/premiums/other deposits 3,577 4,397 Change in market value/change in reserve/interest credited (1,479) 7,403 Surrenders (1,952) (1,706) Death benefits/annuitizations/other (406) (410) Net exchanges 1 2 ------------------------------------------------------------------------------------------------------------ ENDING BALANCE $ 74,649 $ 84,335 - ----------------------------------------------------------------------------------------------------------------- [1] Account value includes policyholder balances for investment contracts and reserves for future policy benefits for insurance contracts.
L-12
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - OTHER - ACCOUNT VALUE AND ASSET ROLLFORWARD [1] 2Q 3Q 4Q 2002 2002 2002 ------------- ------------- -------------- OTHER INVESTMENT PRODUCTS ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) BEGINNING BALANCE $ 19,894 $ 19,511 $ 19,368 Sales/premiums/other deposits 1,166 1,149 721 Change in market value/change in reserve/interest credited (670) (754) 555 Surrenders (743) (409) (595) Death benefits/annuitizations/other (136) (129) (128) ---------------------------------------------------------------------------------------------------- ENDING BALANCE $ 19,511 $ 19,368 $ 19,921 - ---------------------------------------------------------------------------------------------------------------------------------- RETAIL MUTUAL FUNDS ASSET ROLLFORWARD BEGINNING BALANCE $ 16,225 $ 14,922 $ 12,967 New sales 1,406 945 832 Redemptions (727) (809) (705) ---------------------------------------------------------------------------------------------------- Net sales 679 136 127 Change in market value (1,982) (2,087) 935 Other - (4) 50 ---------------------------------------------------------------------------------------------------- ENDING BALANCE $ 14,922 $ 12,967 $ 14,079 - ---------------------------------------------------------------------------------------------------------------------------------- 1Q 2Q 2003 2003 -------------- -------------- OTHER INVESTMENT PRODUCTS ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) BEGINNING BALANCE $ 19,921 $ 20,374 Sales/premiums/other deposits 962 1,727 Change in market value/change in reserve/interest credited (39) 1,160 Surrenders (348) (411) Death benefits/annuitizations/other (122) (115) --------------------------------------------------------------------------------------- ENDING BALANCE $ 20,374 $ 22,735 - --------------------------------------------------------------------------------------------------------------------- RETAIL MUTUAL FUNDS ASSET ROLLFORWARD BEGINNING BALANCE $ 14,079 $ 13,742 New sales 848 1,151 Redemptions (716) (615) --------------------------------------------------------------------------------------- Net sales 132 536 Change in market value (469) 2,012 Other - - --------------------------------------------------------------------------------------- ENDING BALANCE $ 13,742 $ 16,290 - --------------------------------------------------------------------------------------------------------------------- [1] Account value includes policyholder balances for investment contracts and reserves for future policy benefits for insurance contracts.
L-13
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - GUARANTEED MINIMUM DEATH BENEFITS [1] AS OF JUNE 30, 2003 ------------------------------ ACCOUNT NET AMT VALUE AT RISK ----------- -------------- Maximum anniversary value (MAV) [2] BREAKDOWN OF VARIABLE MAV only $ 57,203 $ 14,357 ANNUITY ACCOUNT VALUE with 5% rollup [3] 3,773 930 BY GMDB TYPE with Earnings Protection Benefit Rider (EPB) 2,007 126 with 5% rollup & EPB 1,303 120 ------------------------------------------------------------------------------------ Total MAV 64,286 15,533 Asset Protection Benefit (APB) [4] 309 3 Ratchet [5] (5-7 years) 7,485 1,689 Reset [6] (5-7 years) 1,250 135 Return of Premium [7]/Other 418 15 --------------------------------------------------------------------------------------- TOTAL $ 73,748 $ 17,375 - ---------------------------------------------------------------------------------------------------------------- AS OF JUNE 30, 2003 ----------------------------- % OF NAR RETAINED REINSURED NAR ------------ ------------ Maximum anniversary value (MAV) [2] BREAKDOWN OF VARIABLE MAV only 88% $ 1,705 ANNUITY ACCOUNT VALUE with 5% rollup [3] 82% 164 BY GMDB TYPE with Earnings Protection Benefit Rider (EPB) 64% 45 with 5% rollup & EPB 83% 21 ----------------------------------------------------------------------------------- Total MAV 88% 1,935 Asset Protection Benefit (APB) [4] 40% 2 Ratchet [5] (5-7 years) - 1,681 Reset [6] (5-7 years) 1% 134 Return of Premium [7]/Other - 15 -------------------------------------------------------------------------------------- TOTAL 78% $ 3,767 - --------------------------------------------------------------------------------------------------------------- AS OF AS OF SEPTEMBER 30, DECEMBER 31, OTHER DATA 2002 2002 ----------- -------------- o S&P 500 Index Value at end of period 815.28 879.82 o Total Account Value $ 59,618 $ 64,343 o Net Amount at risk 25,905 22,387 o Retained net amount at risk 4,871 4,063 o GMDB net statutory reserve [8] 366 267 o Present value of retained guaranteed death benefits 184 159 o 95% Confidence interval of present value of retained guaranteed death benefits (91 - 378) (86 - 349) ------------------------------------------------------------------------------------------ o Embedded value of variable annuity in-force business [1] Value of in-force $ 2,258 $ 2,510 Cost of capital (248) (284) ------------------------------------------------------------------------------------------ TOTAL EMBEDDED VALUE $ 2,010 $ 2,226 - ---------------------------------------------------------------------------------------------------------------- AS OF AS OF MARCH 31, JUNE 30, OTHER DATA 2003 2003 ------------ ------------ o S&P 500 Index Value at end of period 848.18 974.50 o Total Account Value $ 64,047 $ 73,748 o Net Amount at risk 23,587 17,375 o Retained net amount at risk 4,423 3,767 o GMDB net statutory reserve [8] 286 233 o Present value of retained guaranteed death benefits 191 183 o 95% Confidence interval of present value of retained guaranteed death benefits (108 - 396) (121 - 387) ----------------------------------------------------------------------------------------- o Embedded value of variable annuity in-force business [1] Value of in-force $ 2,332 $ 2,545 Cost of capital (281) (339) ----------------------------------------------------------------------------------------- TOTAL EMBEDDED VALUE $ 2,051 $ 2,206 - --------------------------------------------------------------------------------------------------------------- [1] Significant Assumptions: (a) 9.25% cost of capital, (b) 9% separate account appreciation (c) 35% Effective tax rate. Excludes the value of statutory surplus required to support the in-force business. [2] MAV: the death benefit is the greatest of current account value, net premiums paid and the highest account value on any anniversary before age 80 (adjusted for withdrawals). [3] Rollup: the death benefit is the greatest of current account value, net premium paid and premiums (adjusted for withdrawals) accumulated at generally 5% simple interest up to the earlier of age 80 or 100% of adjusted premiums. [4] APB: the death benefit is the greater of current account value or current account value plus 25% times the greater of net premiums and MAV (each adjusted for premiums in the past 12 months). [5] Ratchet: the death benefit is the greatest of current account value, net premiums paid and the highest account value on any specified anniversary before age 85 (adjusted for withdrawals). [6] Reset: the death benefit is the greatest of current account value, net premiums paid and the most recent five or seven year anniversary account value before age 80 (adjusted for withdrawals). [7] Return of premium: the death benefit is the greater of current account value and net premiums paid. [8] No equivalent GAAP reserve is held by the Company.
L-14
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE INCOME STATEMENTS 2Q 3Q 4Q 1Q 2Q REVENUES 2002 2002 2002 2003 2003 -------- -------- -------- ------- ------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ 11 $ 9 $ 10 $ 9 $ 11 Cost of insurance charges 103 104 105 106 107 Other fees 64 62 60 64 64 --------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 178 175 175 179 182 Gross MVA/MGLI spread income 2 3 2 3 2 --------------------------------------------------------------------------------------------------- NET GUARANTEED SEPARATE ACCOUNT INCOME 2 3 2 3 2 Direct premiums 14 14 15 14 15 Net reinsurance premiums (15) (17) (18) (18) (21) --------------------------------------------------------------------------------------------------- NET PREMIUMS (1) (3) (3) (4) (6) --------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 179 175 174 178 178 NET INVESTMENT INCOME Gross FAS 97 investment income on G/A assets 63 61 59 62 58 Gross FAS 60 investment income on G/A assets 13 11 12 11 11 --------------------------------------------------------------------------------------------------- GROSS INVESTMENT INCOME ON G/A ASSETS 76 72 71 73 69 Investment expenses - (1) (1) (1) - --------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 76 71 70 72 69 Net investment income on assigned capital 4 3 4 4 3 Charge for invested capital (10) (10) (10) (10) (10) --------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 70 64 64 66 62 --------------------------------------------------------------------------------------------------- TOTAL REVENUES 249 239 238 244 240 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 57 50 61 61 55 Other contract benefits 7 7 5 5 6 Change in reserve (4) (1) - - (2) Interest credited on G/A assets 52 48 47 46 49 --------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 112 104 113 112 108 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 43 37 45 37 37 Operating expenses 48 45 48 44 47 Premium taxes, licenses and fees 8 8 7 8 7 Dividends to policyholders 1 1 - 1 - --------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 100 91 100 90 91 Deferred policy acquisition costs (60) (54) (57) (51) (52) --------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 40 37 43 39 39 Amortization of deferred policy acquisition costs and present value of future profits 46 49 32 46 43 --------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 198 190 188 197 190 INCOME BEFORE INCOME TAX EXPENSE 51 49 50 47 50 Income tax expense 16 16 16 15 14 --------------------------------------------------------------------------------------------------- NET INCOME $ 35 $ 33 $ 34 $ 32 $ 36 --------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ------------------------- REVENUES CHANGE CHANGE 2002 2003 CHANGE ----------------------------- ------- ------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees - 22% $ 22 $ 20 (9%) Cost of insurance charges 4% 1% 206 213 3% Other fees - - 117 128 9% -------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 2% 2% 345 361 5% Gross MVA/MGLI spread income - (33%) 5 5 - -------------------------------------------------------------------------------------------------------- NET GUARANTEED SEPARATE ACCOUNT INCOME - (33%) 5 5 - Direct premiums 7% 7% 27 29 7% Net reinsurance premiums (40%) (17%) (29) (39) (34%) -------------------------------------------------------------------------------------------------------- NET PREMIUMS NM (50%) (2) (10) NM -------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS (1%) - 348 356 2% NET INVESTMENT INCOME Gross FAS 97 investment income on G/A assets (8%) (6%) 124 120 (3%) Gross FAS 60 investment income on G/A assets (15%) - 21 22 5% -------------------------------------------------------------------------------------------------------- GROSS INVESTMENT INCOME ON G/A ASSETS (9%) (5%) 145 142 (2%) Investment expenses - 100% (1) (1) - -------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS (9%) (4%) 144 141 (2%) Net investment income on assigned capital (25%) (25%) 8 7 (13%) Charge for invested capital - - (19) (20) (5%) -------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME (11%) (6%) 133 128 (4%) -------------------------------------------------------------------------------------------------------- TOTAL REVENUES (4%) (2%) 481 484 1% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits (4%) (10%) 121 116 (4%) Other contract benefits (14%) 20% 11 11 - Change in reserve 50% NM (7) (2) 71% Interest credited on G/A assets (6%) 7% 101 95 (6%) -------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS (4%) (4%) 226 220 (3%) OTHER INSURANCE EXPENSES Commissions & wholesaling expenses (14%) - 91 74 (19%) Operating expenses (2%) 7% 92 91 (1%) Premium taxes, licenses and fees (13%) (13%) 16 15 (6%) Dividends to policyholders (100%) (100%) 2 1 (50%) -------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL (9%) 1% 201 181 (10%) Deferred policy acquisition costs 13% (2%) (122) (103) 16% -------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE (3%) - 79 78 (1%) Amortization of deferred policy acquisition costs and present value of future profits (7%) (7%) 79 89 13% -------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES (4%) (4%) 384 387 1% INCOME BEFORE INCOME TAX EXPENSE (2%) 6% 97 97 - Income tax expense (13%) (7%) 31 29 (6%) -------------------------------------------------------------------------------------------------------- NET INCOME 3% 13% $ 66 $ 68 3% --------------------------------------------------------------------------------------------------------
L-15
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE SUPPLEMENTAL DATA 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 --------------- --------------- --------------- --------------- --------------- SALES BY DISTRIBUTION Wirehouse/regional broker-dealer/banks $ 22 $ 17 $ 22 $ 15 $ 18 Independent broker-dealer/WFS 15 13 12 13 11 Life professional/other 7 7 14 11 8 ------------------------------------------------------------------------------------------------------------------------------ TOTAL SALES BY DISTRIBUTION $ 44 $ 37 $ 48 $ 39 $ 37 - ----------------------------------------------------------------------------------------------------------------------------------- SALES BY PRODUCT Variable life $ 37 $ 30 $ 36 $ 26 $ 23 Universal life 5 5 9 11 11 Term life/other 2 2 3 2 3 ------------------------------------------------------------------------------------------------------------------------------ TOTAL SALES BY PRODUCT $ 44 $ 37 $ 48 $ 39 $ 37 - ----------------------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE General account $ 3,600 $ 3,639 $ 3,658 $ 3,682 $ 3,722 Separate account 4,035 3,721 3,899 3,901 4,344 ------------------------------------------------------------------------------------------------------------------------------ TOTAL ACCOUNT VALUE $ 7,635 $ 7,360 $ 7,557 $ 7,583 $ 8,066 - ----------------------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE BY PRODUCT Variable life $ 3,760 $ 3,458 $ 3,648 $ 3,673 $ 4,141 Universal life/interest sensitive whole life 3,097 3,146 3,139 3,144 3,166 Modified guaranteed life 685 683 680 677 671 Other 93 73 90 89 88 ------------------------------------------------------------------------------------------------------------------------------ TOTAL ACCOUNT VALUE BY PRODUCT $ 7,635 $ 7,360 $ 7,557 $ 7,583 $ 8,066 - ----------------------------------------------------------------------------------------------------------------------------------- LIFE INSURANCE IN FORCE Variable life $ 64,930 $ 65,797 $ 66,715 $ 66,631 $ 66,518 Universal life/interest sensitive whole life 39,118 38,743 38,457 38,098 37,935 Term life 18,636 19,393 20,312 21,115 21,895 Modified guaranteed life 977 961 947 933 918 Other 235 244 249 252 254 ------------------------------------------------------------------------------------------------------------------------------ TOTAL LIFE INSURANCE IN FORCE $123,896 $125,138 $126,680 $127,029 $127,520 - ----------------------------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER --------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------- ------------- ---------- ----------- -------- SALES BY DISTRIBUTION Wirehouse/regional broker-dealer/banks (18%) 20% $ 38 $ 33 (13%) Independent broker-dealer/WFS (27%) (15%) 31 24 (23%) Life professional/other 14% (27%) 19 19 - ----------------------------------------------------------------------------------------------------------------- TOTAL SALES BY DISTRIBUTION (16%) (5%) $ 88 $ 76 (14%) - ---------------------------------------------------------------------------------------------------------------------- SALES BY PRODUCT Variable life (38%) (12%) $ 75 $ 49 (35%) Universal life 120% - 8 22 175% Term life/other 50% 50% 5 5 - ----------------------------------------------------------------------------------------------------------------- TOTAL SALES BY PRODUCT (16%) (5%) $ 88 $ 76 (14%) - ---------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE General account 3% 1% Separate account 8% 11% ----------------------------------------------------------------------------------------------------------------- TOTAL ACCOUNT VALUE 6% 6% - ---------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE BY PRODUCT Variable life 10% 13% Universal life/interest sensitive whole life 2% 1% Modified guaranteed life (2%) (1%) Other (5%) (1%) ----------------------------------------------------------------------------------------------------------------- TOTAL ACCOUNT VALUE BY PRODUCT 6% 6% - ---------------------------------------------------------------------------------------------------------------------- LIFE INSURANCE IN FORCE Variable life 2% - Universal life/interest sensitive whole life (3%) - Term life 17% 4% Modified guaranteed life (6%) (2%) Other 8% 1% ----------------------------------------------------------------------------------------------------------------- TOTAL LIFE INSURANCE IN FORCE 3% - - ----------------------------------------------------------------------------------------------------------------------
L-16
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE ACCOUNT VALUE ROLLFORWARD 2Q 3Q 4Q 2002 2002 2002 --------------- --------------- --------------- VARIABLE LIFE BEGINNING BALANCE $ 4,119 $ 3,760 $ 3,458 First year & single premiums 103 91 94 Renewal premiums 120 117 135 -------------------------------------------------------------------------------------------- Premiums and deposits 223 208 229 Change in market value/interest credited (428) (369) 127 Surrenders (58) (45) (65) Death benefits/policy fees (101) (98) (105) Net exchanges 5 2 4 -------------------------------------------------------------------------------------------- ENDING BALANCE $ 3,760 $ 3,458 $ 3,648 - ----------------------------------------------------------------------------------------------------------------- OTHER [1] BEGINNING BALANCE $ 3,864 $ 3,875 $ 3,902 First year & single premiums 9 8 12 Renewal premiums 84 111 90 -------------------------------------------------------------------------------------------- Premiums and deposits 93 119 102 Change in market value/interest credited 58 50 52 Surrenders (49) (54) (55) Death benefits/policy fees (86) (86) (88) Net exchanges (5) (2) (4) -------------------------------------------------------------------------------------------- ENDING BALANCE $ 3,875 $ 3,902 $ 3,909 - ----------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL LIFE BEGINNING BALANCE $ 7,983 $ 7,635 $ 7,360 First year & single premiums 112 99 106 Renewal premiums 204 228 225 -------------------------------------------------------------------------------------------- Premiums and deposits 316 327 331 Change in market value/interest credited (370) (319) 179 Surrenders (107) (99) (120) Death benefits/policy fees (187) (184) (193) Net exchanges - - - -------------------------------------------------------------------------------------------- ENDING BALANCE $ 7,635 $ 7,360 $ 7,557 - ----------------------------------------------------------------------------------------------------------------- 1Q 2Q 2003 2003 --------------- ---------------- VARIABLE LIFE BEGINNING BALANCE $ 3,648 $ 3,673 First year & single premiums 78 69 Renewal premiums 133 125 ----------------------------------------------------------------------------- Premiums and deposits 211 194 Change in market value/interest credited (35) 437 Surrenders (52) (60) Death benefits/policy fees (104) (107) Net exchanges 5 4 ----------------------------------------------------------------------------- ENDING BALANCE $ 3,673 $ 4,141 - -------------------------------------------------------------------------------------------------- OTHER [1] BEGINNING BALANCE $ 3,909 $ 3,910 First year & single premiums 13 20 Renewal premiums 86 83 ----------------------------------------------------------------------------- Premiums and deposits 99 103 Change in market value/interest credited 49 52 Surrenders (54) (48) Death benefits/policy fees (88) (88) Net exchanges (5) (4) ----------------------------------------------------------------------------- ENDING BALANCE $ 3,910 $ 3,925 - -------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL LIFE BEGINNING BALANCE $ 7,557 $ 7,583 First year & single premiums 91 89 Renewal premiums 219 208 ----------------------------------------------------------------------------- Premiums and deposits 310 297 Change in market value/interest credited 14 489 Surrenders (106) (108) Death benefits/policy fees (192) (195) Net exchanges - - ----------------------------------------------------------------------------- ENDING BALANCE $ 7,583 $ 8,066 - -------------------------------------------------------------------------------------------------- [1] Includes Universal Life, Interest Sensitive Whole Life, Modified Guaranteed Life Insurance and other.
L-17
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE GROUP BENEFITS INCOME STATEMENTS 2Q 3Q 4Q 1Q 2Q REVENUES 2002 2002 2002 2003 2003 -------- -------- -------- -------- -------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ - $ - $ - $ - $ - ASO fees 4 6 4 6 4 Other fees - - - - - --------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 4 6 4 6 4 Direct premiums 591 572 576 569 569 Net reinsurance premiums (5) 4 (7) 27 - --------------------------------------------------------------------------------------------------- NET PREMIUMS 586 576 569 596 569 --------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 590 582 573 602 573 NET INVESTMENT INCOME Gross FAS 60 investment income on G/A assets 54 53 58 56 56 --------------------------------------------------------------------------------------------------- GROSS INVESTMENT INCOME ON G/A ASSETS 54 53 58 56 56 Investment expenses - (1) (1) (1) - --------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 54 52 57 55 56 Net investment income on assigned capital 10 11 9 10 9 --------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 64 63 66 65 65 --------------------------------------------------------------------------------------------------- TOTAL REVENUES 654 645 639 667 638 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 173 155 161 175 172 Other contract benefits 269 243 267 261 251 Change in reserve 44 73 19 53 28 --------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 486 471 447 489 451 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 55 54 61 58 59 Operating expenses 68 68 74 69 72 Premium taxes, licenses and fees 11 11 10 12 11 Other miscellaneous expenses - - (1) (1) - --------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 134 133 144 138 142 Deferred policy acquisition costs (7) (6) (5) (7) (4) --------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 127 127 139 131 138 Amortization of deferred policy acquisition costs and present value of future profits 3 4 6 4 5 --------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 616 602 592 624 594 INCOME BEFORE INCOME TAX EXPENSE 38 43 47 43 44 Income tax expense 8 9 11 9 9 --------------------------------------------------------------------------------------------------- NET INCOME $ 30 $ 34 $ 36 $ 34 $ 35 --------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ------------------------ REVENUES CHANGE CHANGE 2002 2003 CHANGE --------- --------- -------- -------- ------ PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees - - $ - $ - - ASO fees - (33%) 9 10 11% Other fees - - - - - --------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME - (33%) 9 10 11% Direct premiums (4%) - 1,170 1,138 (3%) Net reinsurance premiums 100% (100%) (7) 27 NM --------------------------------------------------------------------------------------------------------- NET PREMIUMS (3%) (5%) 1,163 1,165 - --------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS (3%) (5%) 1,172 1,175 - NET INVESTMENT INCOME Gross FAS 60 investment income on G/A assets 4% - 108 112 4% --------------------------------------------------------------------------------------------------------- GROSS INVESTMENT INCOME ON G/A ASSETS 4% - 108 112 4% Investment expenses - 100% (1) (1) - --------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 4% 2% 107 111 4% Net investment income on assigned capital (10%) (10%) 19 19 - --------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 2% - 126 130 3% --------------------------------------------------------------------------------------------------------- TOTAL REVENUES (2%) (4%) 1,298 1,305 1% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits (1%) (2%) 328 347 6% Other contract benefits (7%) (4%) 526 512 (3%) Change in reserve (36%) (47%) 106 81 (24%) --------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS (7%) (8%) 960 940 (2%) OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 7% 2% 115 117 2% Operating expenses 6% 4% 135 141 4% Premium taxes, licenses and fees - (8%) 21 23 10% Other miscellaneous expenses - 100% - (1) NM --------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 6% 3% 271 280 3% Deferred policy acquisition costs 43% 43% (13) (11) 15% --------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 9% 5% 258 269 4% Amortization of deferred policy acquisition costs and present value of future profits 67% 25% 7 9 29% --------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES (4%) (5%) 1,225 1,218 (1%) INCOME BEFORE INCOME TAX EXPENSE 16% 2% 73 87 19% Income tax expense 13% - 15 18 20% --------------------------------------------------------------------------------------------------------- NET INCOME 17% 3% $ 58 $ 69 19% ---------------------------------------------------------------------------------------------------------
L-18
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE GROUP BENEFITS SUPPLEMENTAL DATA 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 -------- --------- -------- -------- --------- PREMIUMS FULLY INSURED - ONGOING PREMIUMS Group disability $ 249 $ 237 $ 232 $ 243 $ 237 Group life 252 240 240 243 240 Other 85 93 90 82 91 ----------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING PREMIUMS 586 570 562 568 568 ----------------------------------------------------------------------------------------------- Total buyouts [1] - 6 7 28 1 ---------------------------------------------------------------------------------------------- TOTAL PREMIUMS 586 576 569 596 569 Group disability - premium equivalents [2] 57 63 55 50 51 ---------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND PREMIUM EQUIVALENT CLAIMS $ 643 $ 639 $ 624 $ 646 $ 620 - --------------------------------------------------------------------------------------------------------------- SALES (GROSS FULLY INSURED - ONGOING SALES ANNUALIZED Group disability $ 41 $ 36 $ 28 $ 103 $ 51 NEW PREMIUMS) Group life 33 33 25 89 30 Other 16 19 12 30 11 ----------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING SALES 90 88 65 222 92 ----------------------------------------------------------------------------------------------- Total buyouts [1] - 7 7 26 3 ---------------------------------------------------------------------------------------------- TOTAL SALES 90 95 72 248 95 Group disability premium equivalents [2] 9 4 2 24 4 ---------------------------------------------------------------------------------------------- TOTAL SALES AND PREMIUM EQUIVALENTS $ 99 $ 99 $ 74 $ 272 $ 99 - --------------------------------------------------------------------------------------------------------------- LOSS RATIO LOSS RATIO EXCLUDING BUYOUTS (TOTAL PREMIUMS AND OTHER CONSIDERATIONS EXCLUDING BUYOUT PREMIUMS TO TOTAL BENEFITS AND CLAIMS EXCLUDING BUYOUTS) 82.4% 80.7% 77.7% 80.3% 78.7% - --------------------------------------------------------------------------------------------------------------- GAAP RESERVES Group disability $ 2,443 $ 2,479 $ 2,489 $ 2,516 $ 2,538 Group life 734 758 765 799 803 Other 188 195 201 186 188 ------------------------------------------------------------------------------------------------- TOTAL GAAP RESERVES $ 3,365 $ 3,432 $ 3,455 $ 3,501 $ 3,529 - --------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ---------------------------- CHANGE CHANGE 2002 2003 CHANGE --------- -------- -------- -------- --------- PREMIUMS FULLY INSURED - ONGOING PREMIUMS Group disability (5%) (2%) $ 492 $ 480 (2%) Group life (5%) (1%) 485 483 - Other 7% 11% 186 173 (7%) ---------------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING PREMIUMS (3%) - 1,163 1,136 (2%) ---------------------------------------------------------------------------------------------------- Total buyouts [1] N/A (96%) - 29 NM --------------------------------------------------------------------------------------------------- TOTAL PREMIUMS (3%) (5%) 1,163 1,165 - Group disability - premium equivalents [2] (11%) 2% 114 101 (11%) --------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND PREMIUM EQUIVALENT CLAIMS (4%) (4%) $ 1,277 $ 1,266 (1%) - -------------------------------------------------------------------------------------------------------------------- SALES (GROSS FULLY INSURED - ONGOING SALES ANNUALIZED Group disability 24% (50%) $ 154 $ 154 - NEW PREMIUMS) Group life (9%) (66%) 226 119 (47%) Other (31%) (63%) 64 41 (36%) ---------------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING SALES 2% (59%) 444 314 (29%) ---------------------------------------------------------------------------------------------------- Total buyouts [1] N/A (88%) - 29 NM --------------------------------------------------------------------------------------------------- TOTAL SALES 6% (62%) 444 343 (23%) Group disability premium equivalents [2] (56%) (83%) 55 28 (49%) --------------------------------------------------------------------------------------------------- TOTAL SALES AND PREMIUM EQUIVALENTS - (64%) $ 499 $ 371 (26%) - -------------------------------------------------------------------------------------------------------------------- LOSS RATIO LOSS RATIO EXCLUDING BUYOUTS (TOTAL PREMIUMS AND OTHER CONSIDERATIONS EXCLUDING BUYOUT PREMIUMS TO TOTAL BENEFITS AND CLAIMS EXCLUDING BUYOUTS) (3.7) (1.6) 81.9% 79.5% (2.4) - -------------------------------------------------------------------------------------------------------------------- GAAP RESERVES Group disability 4% 1% Group life 9% 1% Other - 1% ------------------------------------------------------------------------------------------------------ TOTAL GAAP RESERVES 5% 1% - -------------------------------------------------------------------------------------------------------------------- [1] Takeover of open claim liabilities and other non-recurring premium amounts. [2] Administrative services only (ASO) fees and claims under claim management agreements.
L-19 PROPERTY & CASUALTY
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY FINANCIAL HIGHLIGHTS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 -------- -------- -------- -------- -------- NORTH AMERICAN UNDERWRITING RESULTS Written premiums $ 2,138 $ 2,196 $ 2,128 $ 2,440 $ 2,128 Earned premiums 1,955 2,088 2,143 2,158 2,100 Business Insurance (8) 21 27 (12) 42 Personal Lines (24) (13) 2 52 3 Specialty Commercial 8 3 (24) - (4) Reinsurance (9) (4) (42) (19) (76) ------------------------------------------------------------------------------------------------------------------------ UNDERWRITING RESULTS $ (33) $ 7 $ (37) $ 21 $ (35) - ----------------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 60.6 59.1 59.6 58.9 60.6 ------------------------------------------------------------------------------------------------------------------------ Loss adjustment expenses 11.1 10.9 11.4 12.1 11.9 Expenses 28.0 28.0 28.3 26.2 26.7 ------------------------------------------------------------------------------------------------------------------------ EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 39.1 38.9 39.6 38.4 38.7 ------------------------------------------------------------------------------------------------------------------------ Policyholder dividends 0.9 0.7 0.8 0.4 0.5 ------------------------------------------------------------------------------------------------------------------------ COMBINED RATIO 100.5 98.7 100.0 97.7 99.7 - ----------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 2.5 1.1 0.8 2.6 4.7 - ----------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 98.0 97.5 99.2 95.1 95.0 - ----------------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN INCOME AND ROE Net income $ 101 $ 119 $ 135 $ 168 $ 229 Operating income [1] 119 138 140 177 129 PROPERTY & CASUALTY INCOME AND ROE Net income $ 90 $ 110 $ 141 $(1,513) $ 277 Operating income [2] 120 139 142 (1,510) 142 Impact of 2003 asbestos reserve addition - - - (1,701) - Operating income before impact of 2003 asbestos reserve addition 120 139 142 191 142 Net income ROE (last 12 months income-equity AOCI) [3] 7.8% 8.3% 10.4% (31.0%) (19.9%) Operating income ROE (last 12 months income-equity x-AOCI) [3] 11.4% 12.6% 13.1% (33.9%) (25.4%) Operating income ROE (last 12 months income-equity x-AOCI) excluding the impact of the 2003 asbestos reserve addition [2] [3] 11.4% 12.6% 13.1% 14.4% 14.4% - ----------------------------------------------------------------------------------------------------------------------------- SELECTED FINANCIAL DATA Hartford Fire Pool adjusted statutory surplus Hartford Fire Pool premium to adjusted surplus ratio Hartford Fire Pool statutory net income - ----------------------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ---------------------------- CHANGE CHANGE 2002 2003 CHANGE --------- --------- -------- -------- -------- NORTH AMERICAN UNDERWRITING RESULTS Written premiums - (13%) $ 4,203 $ 4,568 9% Earned premiums 7% (3%) 3,814 4,258 12% Business Insurance NM NM (4) 30 NM Personal Lines NM (94%) (35) 55 NM Specialty Commercial NM - (2) (4) (100%) Reinsurance NM NM (13) (95) NM ------------------------------------------------------------------------------------------------------------------------------ UNDERWRITING RESULTS (6%) NM $ (54) $ (14) 74% - ----------------------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES - (1.7) 59.9 59.7 0.2 ------------------------------------------------------------------------------------------------------------------------------ Loss adjustment expenses (0.8) 0.2 11.3 12.0 (0.7) Expenses 1.3 (0.5) 28.5 26.5 2.0 ------------------------------------------------------------------------------------------------------------------------------ EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 0.4 (0.3) 39.8 38.5 1.3 ------------------------------------------------------------------------------------------------------------------------------ Policyholder dividends 0.4 (0.1) 0.7 0.5 0.2 ------------------------------------------------------------------------------------------------------------------------------ COMBINED RATIO 0.8 (2.0) 100.4 98.7 1.7 - ----------------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio (2.2) (2.1) 1.8 3.7 (1.9) - ----------------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 3.0 0.1 98.6 95.0 3.6 - ----------------------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN INCOME AND ROE Net income 127% 36% $ 228 $ 397 74% Operating income [1] 8% (27%) 241 306 27% PROPERTY & CASUALTY INCOME AND ROE Net income NM NM $ 218 $(1,236) NM Operating income [2] 18% NM 242 (1,368) NM Impact of 2003 asbestos reserve addition - 100% - (1,701) - Operating income before impact of 2003 asbestos reserve addition 18% (26%) 242 333 38% Net income ROE (last 12 months income-equity AOCI) [3] NM 11.1 Operating income ROE (last 12 months income-equity x-AOCI) [3] NM 8.5 Operating income ROE (last 12 months income-equity x-AOCI) excluding the impact of the 2003 asbestos reserve addition [2] [3] 3.0 - - ----------------------------------------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY ---------------------------- JUNE 30, DEC. 31, 2003 2002 CHANGE -------- -------- -------- SELECTED FINANCIAL DATA Hartford Fire Pool adjusted statutory surplus 4,815 4,600 5% Hartford Fire Pool premium to adjusted surplus ratio 1.8 1.8 - Hartford Fire Pool statutory net income (966) 4,794 NM - ----------------------------------------------------------------------------------------------------------------------------------- [1] North American operating income before severance costs of $27, after-tax, is $156 for the quarter ended June 30, 2003. [2] Property & Casualty operating income before severance costs of $27, after-tax, is $169, with a corresponding ROE of 15.0% for the quarter ended June 30, 2003. [3] The quarter ended June 30, 2002 excludes the $420 earnings impact related to September 11, 2001.
PC-1
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OPERATING RESULTS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 --------- --------- --------- --------- --------- GAAP NORTH AMERICAN UNDERWRITING RESULTS Written premiums $ 2,138 $ 2,196 $ 2,128 $ 2,440 $ 2,128 Change in reserve 183 108 (15) 282 28 ----------------------------------------------------------------------------------------------------------------------------- Earned premiums 1,955 2,088 2,143 2,158 2,100 Loss and loss adjustment expenses 1,401 1,462 1,521 1,532 1,525 Underwriting expenses 546 585 605 566 560 Dividends to policyholders 17 14 17 10 9 Other adjustments 24 20 37 29 41 ----------------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS [1] (33) 7 (37) 21 (35) Net servicing income 1 4 8 3 3 Net investment income 234 225 252 243 257 Net realized capital gains (losses) (28) (28) (7) (15) 155 Other expenses [2] (58) (75) (59) (45) (78) ----------------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 116 133 157 207 302 Income tax expense 15 14 22 39 73 ----------------------------------------------------------------------------------------------------------------------------- NET INCOME 101 119 135 168 229 Less: Net realized capital gains (losses), after-tax (18) (19) (5) (9) 100 ----------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME [1] [2] $ 119 $ 138 $ 140 $ 177 $ 129 - ---------------------------------------------------------------------------------------------------------------------------------- OTHER OPERATIONS NET INCOME (LOSS) $ (11) $ (9) $ 6 $(1,681) $ 48 OPERATING INCOME (LOSS) $ 1 $ 1 $ 2 $(1,687) $ 13 IMPACT OF 2003 ASBESTOS RESERVE ADDITION $ - $ - $ - $(1,701) $ - OPERATING INCOME BEFORE IMPACT OF 2003 ASBESTOS RESERVE ADDITION $ 1 $ 1 $ 2 $ 14 $ 13 - ---------------------------------------------------------------------------------------------------------------------------------- P&C NET INCOME (LOSS) $ 90 $ 110 $ 141 $(1,513) $ 277 OPERATING INCOME (LOSS) [2] $ 120 $ 139 $ 142 $(1,510) $ 142 IMPACT OF 2003 ASBESTOS RESERVE ADDITION $ - $ - $ - $(1,701) $ - OPERATING INCOME BEFORE IMPACT OF 2003 ASBESTOS RESERVE ADDITION [1] $ 120 $ 139 $ 142 $ 191 $ 142 - ---------------------------------------------------------------------------------------------------------------------------------- North American effective tax rate - net income 12.5% 10.4% 14.2% 18.9% 24.2% North American effective tax rate - operating income 16.8% 14.8% 15.0% 19.9% 12.9% - ---------------------------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER --------------------------- CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- --------- --------- ------ GAAP NORTH AMERICAN UNDERWRITING RESULTS Written premiums - (13%) $ 4,203 $ 4,568 9% Change in reserve (85%) (90%) 389 310 (20%) ---------------------------------------------------------------------------------------------------------------------------- Earned premiums 7% (3%) 3,814 4,258 12% Loss and loss adjustment expenses 9% - 2,716 3,057 13% Underwriting expenses 3% (1%) 1,086 1,126 4% Dividends to policyholders (47%) (10%) 26 19 (27%) Other adjustments 71% 41% 40 70 75% ---------------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS [1] (6%) NM (54) (14) 74% Net servicing income NM - 3 6 100% Net investment income 10% 6% 451 500 11% Net realized capital gains (losses) NM NM (21) 140 NM Other expenses [2] (34%) (73%) (109) (123) (13%) ---------------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 160% 46% 270 509 89% Income tax expense NM 87% 42 112 167% ---------------------------------------------------------------------------------------------------------------------------- NET INCOME 127% 36% 228 397 74% Less: Net realized capital gains (losses), after-tax NM NM (13) 91 NM ---------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME [1] [2] 8% (27%) $ 241 $ 306 27% - --------------------------------------------------------------------------------------------------------------------------------- OTHER OPERATIONS NET INCOME (LOSS) NM NM $ (10) $(1,633) NM OPERATING INCOME (LOSS) NM NM $ 1 $(1,674) NM IMPACT OF 2003 ASBESTOS RESERVE ADDITION - 100% $ - $(1,701) - OPERATING INCOME BEFORE IMPACT OF 2003 ASBESTOS RESERVE ADDITION NM (7%) $ 1 $ 27 NM - --------------------------------------------------------------------------------------------------------------------------------- P&C NET INCOME (LOSS) NM NM $ 218 $(1,236) NM OPERATING INCOME (LOSS) [2] 18% NM $ 242 $(1,368) NM IMPACT OF 2003 ASBESTOS RESERVE ADDITION - 100% $ - $(1,701) - OPERATING INCOME BEFORE IMPACT OF 2003 ASBESTOS RESERVE ADDITION [1] 18% (26%) $ 242 $ 333 38% - --------------------------------------------------------------------------------------------------------------------------------- North American effective tax rate - net income 11.7 5.3 15.5% 22.0% 6.5 North American effective tax rate - operating income (3.9) (7.0) 16.9% 17.1% 0.2 - --------------------------------------------------------------------------------------------------------------------------------- [1] Underwriting results for the quarter and six months ended June 30, 2003 were negatively impacted by $7 and operating income was positively impacted by $5 related to the Endurance transaction. [2] The quarter and six months ended June 30, 2003 includes severance costs of $41, before-tax, and $27, after-tax.
PC-2
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY NORTH AMERICAN CONSOLIDATING UNDERWRITING RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2003 NORTH AMERICAN BUSINESS PERSONAL SPECIALTY BEFORE INSURANCE LINES COMMERCIAL REINSURANCE ----------- ----------- ------------------------------ GAAP UNDERWRITING RESULTS Written premiums $ 974 $ 854 $ 399 $ 2,227 Change in reserve 77 69 44 190 ------------------------------------------------------------------------------------------------------------- Earned premiums 897 785 355 2,037 Loss and loss adjustment expenses 561 602 240 1,403 Underwriting expenses 279 175 88 542 Dividends to policyholders 7 - 2 9 Other adjustments 8 5 29 42 ---------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ 42 $ 3 $ (4) $ 41 - ------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 49.8 65.6 56.4 57.0 ------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 12.8 11.3 10.7 11.9 Expenses 31.0 22.2 25.3 26.6 ------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 43.8 33.5 36.0 38.5 ------------------------------------------------------------------------------------------------------------- Policyholder dividends 0.8 - 0.7 0.5 ------------------------------------------------------------------------------------------------------------- COMBINED RATIO 94.4 99.0 93.2 96.0 - ------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 2.5 8.2 2.5 4.7 - ------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 91.9 90.8 90.7 91.3 - ------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN NORTH BEFORE REINSURANCE REINSURANCE AMERICAN 2003 VS 2002 -------------- ------------ -------------------- GAAP UNDERWRITING RESULTS Written premiums $ (99) $ 2,128 13% Change in reserve (162) 28 2% ----------------------------------------------------------------------------------- -------------------- Earned premiums 63 2,100 14% Loss and loss adjustment expenses 122 1,525 10% Underwriting expenses 18 560 9% Dividends to policyholders - 9 (47%) Other adjustments (1) 41 75% -------------------------------------------------------------------------------- -------------------- UNDERWRITING RESULTS $ (76) $ (35) NM - ----------------------------------------------------------------------------------------- -------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 178.8 60.6 2.4 ----------------------------------------------------------------------------------- -------------------- Loss adjustment expenses 14.5 11.9 - Expenses 29.4 26.7 1.2 ----------------------------------------------------------------------------------- -------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 44.0 38.7 1.2 ----------------------------------------------------------------------------------- -------------------- Policyholder dividends - 0.5 0.4 ----------------------------------------------------------------------------------- -------------------- COMBINED RATIO 222.8 99.7 4.1 - ----------------------------------------------------------------------------------------- -------------------- Catastrophe ratio 5.6 4.7 (2.1) - ----------------------------------------------------------------------------------------- -------------------- COMBINED RATIO BEFORE CATASTROPHES 217.1 95.0 6.2 - ----------------------------------------------------------------------------------------- --------------------
PC-3
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY NORTH AMERICAN CONSOLIDATING UNDERWRITING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2003 NORTH AMERICAN BUSINESS PERSONAL SPECIALTY BEFORE INSURANCE LINES COMMERCIAL REINSURANCE ----------- ----------- ------------- --------------- GAAP UNDERWRITING RESULTS Written premiums $ 1,964 $ 1,624 $ 805 $ 4,393 Change in reserve 187 67 95 349 ------------------------------------------------------------------------------------------------------------- Earned premiums 1,777 1,557 710 4,044 Loss and loss adjustment expenses 1,159 1,142 505 2,806 Underwriting expenses 547 351 170 1,068 Dividends to policyholders 14 - 5 19 Other adjustments 27 9 34 70 ---------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ 30 $ 55 $ (4) $ 81 - ------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 52.3 62.0 58.3 57.1 ------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 12.9 11.3 12.8 12.2 Expenses 30.8 22.6 23.9 26.4 ------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 43.6 33.9 36.7 38.7 ------------------------------------------------------------------------------------------------------------- Policyholder dividends 0.8 - 0.7 0.5 ------------------------------------------------------------------------------------------------------------- COMBINED RATIO 96.8 95.9 95.8 96.3 - ------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 3.5 4.8 1.7 3.7 - ------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 93.3 91.1 94.1 92.6 - ------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN NORTH BEFORE REINSURANCE REINSURANCE AMERICAN 2003 VS 2002 -------------- ------------ -------------------- GAAP UNDERWRITING RESULTS Written premiums $ 175 $ 4,568 15% Change in reserve (39) 310 - ----------------------------------------------------------------------------------- -------------------- Earned premiums 214 4,258 17% Loss and loss adjustment expenses 251 3,057 14% Underwriting expenses 58 1,126 8% Dividends to policyholders - 19 (27%) Other adjustments - 70 75% -------------------------------------------------------------------------------- -------------------- UNDERWRITING RESULTS $ (95) $ (14) NM - ----------------------------------------------------------------------------------------- -------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 109.0 59.7 1.5 ----------------------------------------------------------------------------------- -------------------- Loss adjustment expenses 8.2 12.0 (0.1) Expenses 27.3 26.5 2.2 ----------------------------------------------------------------------------------- -------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 35.5 38.5 2.0 ----------------------------------------------------------------------------------- -------------------- Policyholder dividends - 0.5 0.2 ----------------------------------------------------------------------------------- -------------------- COMBINED RATIO 144.5 98.7 3.7 - ----------------------------------------------------------------------------------------- -------------------- Catastrophe ratio 2.7 3.7 (1.8) - ----------------------------------------------------------------------------------------- -------------------- COMBINED RATIO BEFORE CATASTROPHES 141.8 95.0 5.5 - ----------------------------------------------------------------------------------------- --------------------
PC-4
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY BUSINESS INSURANCE UNDERWRITING RESULTS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ---------- ---------- ---------- ---------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 835 $ 867 $ 885 $ 990 $ 974 Change in reserve 69 72 52 110 77 ------------------------------------------------------------------------------------------------------------ Earned premiums 766 795 833 880 897 Loss and loss adjustment expenses 497 489 510 598 561 Underwriting expenses 247 260 271 268 279 Dividends to policyholders 15 13 13 7 7 Other adjustments 15 12 12 19 8 ---------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ (8) $ 21 $ 27 $ (12) $ 42 - ------------------------------------------------------------------------------------------------------------------ GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 53.3 50.1 48.2 55.0 49.8 ------------------------------------------------------------------------------------------------------------ Loss adjustment expenses 11.5 11.5 13.0 12.9 12.8 Expenses 32.2 32.7 32.6 30.5 31.0 ------------------------------------------------------------------------------------------------------------ EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 43.7 44.2 45.6 43.4 43.8 ------------------------------------------------------------------------------------------------------------ Policyholder dividends 2.0 1.6 1.6 0.8 0.8 ------------------------------------------------------------------------------------------------------------ COMBINED RATIO 99.0 95.9 95.4 99.2 94.4 - ------------------------------------------------------------------------------------------------------------------ Catastrophe ratio 1.3 0.7 0.4 4.6 2.5 - ------------------------------------------------------------------------------------------------------------------ COMBINED RATIO BEFORE CATASTROPHES 97.7 95.2 95.0 94.6 91.9 - ------------------------------------------------------------------------------------------------------------------ YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ----------- ---------- ------- GAAP UNDERWRITING RESULTS Written premiums 17% (2%) $ 1,660 $ 1,964 18% Change in reserve 12% (30%) 162 187 15% ------------------------------------------------------------------------------------------------------------------ Earned premiums 17% 2% 1,498 1,777 19% Loss and loss adjustment expenses 13% (6%) 963 1,159 20% Underwriting expenses 13% 4% 491 547 11% Dividends to policyholders (53%) - 22 14 (36%) Other adjustments (47%) (58%) 26 27 4% ---------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS NM NM $ (4) $ 30 NM - ------------------------------------------------------------------------------------------------------------------------ GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 3.5 5.2 52.5 52.3 0.2 ------------------------------------------------------------------------------------------------------------------ Loss adjustment expenses (1.3) 0.1 11.8 12.9 (1.1) Expenses 1.2 (0.5) 32.8 30.8 2.0 ------------------------------------------------------------------------------------------------------------------ EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES (0.1) (0.4) 44.6 43.6 1.0 ------------------------------------------------------------------------------------------------------------------ Policyholder dividends 1.2 - 1.5 0.8 0.7 ------------------------------------------------------------------------------------------------------------------ COMBINED RATIO 4.6 4.8 98.5 96.8 1.7 - ------------------------------------------------------------------------------------------------------------------------ Catastrophe ratio (1.2) 2.1 1.0 3.5 (2.5) - ------------------------------------------------------------------------------------------------------------------------ COMBINED RATIO BEFORE CATASTROPHES 5.8 2.7 97.5 93.3 4.2 - ------------------------------------------------------------------------------------------------------------------------
PC-5
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY BUSINESS INSURANCE WRITTEN AND EARNED PREMIUMS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ----------- ---------- ----------- ----------- ----------- WRITTEN PREMIUMS [1] Small Commercial $ 412 $ 418 $ 440 $ 480 $ 459 Middle Market 423 449 445 510 515 - --------------------------------------------------------------------------------------- TOTAL $ 835 $ 867 $ 885 $ 990 $ 974 EARNED PREMIUMS [1] Small Commercial $ 382 $ 391 $ 413 $ 430 $ 442 Middle Market 384 404 420 450 455 - --------------------------------------------------------------------------------------- TOTAL $ 766 $ 795 $ 833 $ 880 $ 897 - --------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ----------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------ ----------- ----------- ----------- ---------- WRITTEN PREMIUMS [1] Small Commercial 11% (4%) $ 820 $ 939 15% Middle Market 22% 1% 840 1,025 22% - ------------------------------------------------------------------------------------------ TOTAL 17% (2%) $ 1,660 $ 1,964 18% EARNED PREMIUMS [1] Small Commercial 16% 3% $ 751 $ 872 16% Middle Market 18% 1% 747 905 21% - ------------------------------------------------------------------------------------------ TOTAL 17% 2% $ 1,498 $ 1,777 19% - ------------------------------------------------------------------------------------------ [1] The difference between written premiums and earned premiums is attributable to the change in unearned premium reserve.
PC-6
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY PERSONAL LINES UNDERWRITING RESULTS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ---------- ---------- --------- ---------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 789 $ 779 $ 756 $ 770 $ 854 Change in reserve 47 21 (10) (2) 69 ------------------------------------------------------------------------------------------------------------- Earned premiums 742 758 766 772 785 Loss and loss adjustment expenses 591 594 584 540 602 Underwriting expenses 171 173 176 176 175 Dividends to policyholders - - - - - Other adjustments 4 4 4 4 5 ----------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ (24) $ (13) $ 2 $ 52 $ 3 - ------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 67.5 67.0 64.8 58.4 65.6 ------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 12.2 11.1 11.4 11.3 11.3 Expenses 23.0 23.0 22.9 23.0 22.2 ------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 35.2 34.1 34.3 34.2 33.5 ------------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - ------------------------------------------------------------------------------------------------------------- COMBINED RATIO 102.7 101.1 99.2 92.7 99.0 - ------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 4.8 1.9 1.0 1.4 8.2 - ------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 97.9 99.3 98.1 91.3 90.8 - ------------------------------------------------------------------------------------------------------------------- GAAP COMBINED RATIO Automobile 102.9 101.2 104.6 96.1 98.0 Homeowners 102.0 100.7 80.6 80.8 102.9 ------------------------------------------------------------------------------------------------------------- TOTAL 102.7 101.1 99.2 92.7 99.0 - ------------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER -------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ---------- ---------- ---------- --------- GAAP UNDERWRITING RESULTS Written premiums 8% 11% $ 1,515 $ 1,624 7% Change in reserve 47% NM 55 67 22% ------------------------------------------------------------------------------------------------------------------ Earned premiums 6% 2% 1,460 1,557 7% Loss and loss adjustment expenses 2% 11% 1,141 1,142 - Underwriting expenses 2% (1%) 347 351 1% Dividends to policyholders - - - - - Other adjustments 25% 25% 7 9 29% ---------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS NM (94%) $ (35) $ 55 NM - ------------------------------------------------------------------------------------------------------------------------ GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 1.9 (7.2) 66.2 62.0 4.2 ------------------------------------------------------------------------------------------------------------------ Loss adjustment expenses 0.9 - 12.0 11.3 0.7 Expenses 0.8 0.8 23.7 22.6 1.1 ------------------------------------------------------------------------------------------------------------------ EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 1.7 0.7 35.7 33.9 1.8 ------------------------------------------------------------------------------------------------------------------ Policyholder dividends - - - - - ------------------------------------------------------------------------------------------------------------------ COMBINED RATIO 3.7 (6.3) 102.0 95.9 6.1 - ------------------------------------------------------------------------------------------------------------------------ Catastrophe ratio (3.4) (6.8) 3.5 4.8 (1.3) - ------------------------------------------------------------------------------------------------------------------------ COMBINED RATIO BEFORE CATASTROPHES 7.1 0.5 98.4 91.1 7.3 - ------------------------------------------------------------------------------------------------------------------------ GAAP COMBINED RATIO Automobile 4.9 (1.9) 103.2 97.0 6.2 Homeowners (0.9) (22.1) 97.4 91.9 5.5 ------------------------------------------------------------------------------------------------------------------ TOTAL 3.7 (6.3) 102.0 95.9 6.1 - ------------------------------------------------------------------------------------------------------------------------
PC-7
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY PERSONAL LINES WRITTEN AND EARNED PREMIUMS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 -------- -------- -------- -------- -------- BUSINESS UNIT WRITTEN PREMIUMS [1] AARP $ 494 $ 479 $ 455 $ 475 $ 550 Other Affinity 45 43 42 42 36 Agency 250 257 259 253 268 ------------------------------------------------------------------------ TOTAL $ 789 $ 779 $ 756 $ 770 $ 854 EARNED PREMIUMS [1] AARP $ 431 $ 446 $ 457 $ 466 $ 481 Other Affinity 49 48 45 44 41 Agency 262 264 264 262 263 ------------------------------------------------------------------------ TOTAL $ 742 $ 758 $ 766 $ 772 $ 785 - ------------------------------------------------------------------------------ PRODUCT LINE WRITTEN PREMIUMS [1] Automobile $ 604 $ 587 $ 578 $ 609 $ 656 Homeowners 185 192 178 161 198 ------------------------------------------------------------------------ TOTAL $ 789 $ 779 $ 756 $ 770 $ 854 EARNED PREMIUMS [1] Automobile $ 578 $ 591 $ 594 $ 598 $ 610 Homeowners 164 167 172 174 175 ------------------------------------------------------------------------ TOTAL $ 742 $ 758 $ 766 $ 772 $ 785 - ------------------------------------------------------------------------------ YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER --------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ---------- ---------- --------- BUSINESS UNIT WRITTEN PREMIUMS [1] AARP 11% 16% $ 921 $ 1,025 11% Other Affinity (20%) (14%) 94 78 (17%) Agency 7% 6% 500 521 4% ------------------------------------------------------------------------------------- TOTAL 8% 11% $ 1,515 $ 1,624 7% EARNED PREMIUMS [1] AARP 12% 3% $ 844 $ 947 12% Other Affinity (16%) (7%) 99 85 (14%) Agency - - 517 525 2% ------------------------------------------------------------------------------------- TOTAL 6% 2% $ 1,460 $ 1,557 7% - ------------------------------------------------------------------------------------------- PRODUCT LINE WRITTEN PREMIUMS [1] Automobile 9% 8% $ 1,187 $ 1,265 7% Homeowners 7% 23% 328 359 9% ------------------------------------------------------------------------------------- TOTAL 8% 11% $ 1,515 $ 1,624 7% EARNED PREMIUMS [1] Automobile 6% 2% $ 1,141 $ 1,208 6% Homeowners 7% 1% 319 349 9% ------------------------------------------------------------------------------------- TOTAL 6% 2% $ 1,460 $ 1,557 7% - ------------------------------------------------------------------------------------------- [1] The difference between written premiums and earned premiums is attributable to the change in unearned premium reserve.
PC-8
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY SPECIALTY COMMERCIAL UNDERWRITING RESULTS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ---------- ---------- ---------- ---------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 345 $ 383 $ 334 $ 406 $ 399 Change in reserve 70 26 (18) 51 44 ----------------------------------------------------------------------------------------------------------- Earned premiums 275 357 352 355 355 Loss and loss adjustment expenses 182 247 252 265 240 Underwriting expenses 78 102 102 82 88 Dividends to policyholders 2 1 4 3 2 Other adjustments 5 4 18 5 29 --------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ 8 $ 3 $ (24) $ - $ (4) - ----------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 54.7 57.8 61.0 60.3 56.4 ----------------------------------------------------------------------------------------------------------- Loss adjustment expenses 12.2 11.4 10.4 14.9 10.7 Expenses 28.4 28.1 29.1 22.6 25.3 ----------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 40.6 39.6 39.5 37.4 36.0 ----------------------------------------------------------------------------------------------------------- Policyholder dividends 0.6 0.5 1.0 0.7 0.7 ----------------------------------------------------------------------------------------------------------- COMBINED RATIO 96.0 97.8 101.5 98.4 93.2 - ----------------------------------------------------------------------------------------------------------------- Catastrophe ratio 0.3 0.5 1.0 0.9 2.5 - ----------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 95.7 97.4 100.5 97.5 90.7 - ----------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER --------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ---------- ---------- --------- GAAP UNDERWRITING RESULTS Written premiums 16% (2%) $ 645 $ 805 25% Change in reserve (37%) (14%) 132 95 (28%) -------------------------------------------------------------------------------------------------------------------- Earned premiums 29% - 513 710 38% Loss and loss adjustment expenses 32% (9%) 350 505 44% Underwriting expenses 13% 7% 154 170 10% Dividends to policyholders - (33%) 4 5 25% Other adjustments NM NM 7 34 NM ------------------------------------------------------------------------------------------------------------------ UNDERWRITING RESULTS NM - $ (2) $ (4) (100%) - -------------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES (1.7) 3.9 55.1 58.3 (3.2) -------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 1.5 4.2 13.1 12.8 0.3 Expenses 3.1 (2.7) 30.3 23.9 6.4 -------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 4.6 1.4 43.4 36.7 6.7 -------------------------------------------------------------------------------------------------------------------- Policyholder dividends (0.1) - 0.7 0.7 - -------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 2.8 5.2 99.1 95.8 3.3 - -------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio (2.2) (1.6) 0.1 1.7 (1.6) - -------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 5.0 6.8 99.0 94.1 4.9 - --------------------------------------------------------------------------------------------------------------------------
PC-9
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY SPECIALTY COMMERCIAL 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ----------- ---------- ----------- ----------- ----------- WRITTEN PREMIUMS [1] Property $ 105 $ 139 $ 70 $ 97 $ 116 Casualty 147 156 128 187 149 Bond 40 43 38 45 36 Professional Liability 50 71 75 65 78 Other 3 (26) 23 12 20 - -------------------------------------------------------------------------------------- TOTAL $ 345 $ 383 $ 334 $ 406 $ 399 EARNED PREMIUMS [1] Property $ 73 $ 118 $ 95 $ 89 $ 96 Casualty 115 141 145 148 141 Bond 36 39 38 42 35 Professional Liability 47 57 55 64 72 Other 4 2 19 12 11 - -------------------------------------------------------------------------------------- TOTAL $ 275 $ 357 $ 352 $ 355 $ 355 - -------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ---------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------ ----------- ----------- ----------- --------- WRITTEN PREMIUMS [1] Property 10% 20% $ 196 $ 213 9% Casualty 1% (20%) 272 336 24% Bond (10%) (20%) 76 81 7% Professional Liability 56% 20% 93 143 54% Other NM 67% 8 32 NM - ------------------------------------------------------------------------------------------- TOTAL 16% (2%) $ 645 $ 805 25% EARNED PREMIUMS [1] Property 32% 8% $ 133 $ 185 39% Casualty 23% (5%) 212 289 36% Bond (3%) (17%) 71 77 8% Professional Liability 53% 13% 88 136 55% Other 175% (8%) 9 23 156% - ------------------------------------------------------------------------------------------- TOTAL 29% - $ 513 $ 710 38% - ------------------------------------------------------------------------------------------- [1] The difference between written premiums and earned premiums is attributable to the change in unearned premium reserve.
PC-10
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY REINSURANCE UNDERWRITING RESULTS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ---------- ---------- ---------- ---------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 169 $ 167 $ 153 $ 274 $ (99) Change in reserve (3) (11) (39) 123 (162) --------------------------------------------------------------------------------------------------------- Earned premiums 172 178 192 151 63 Loss and loss adjustment expenses 131 132 175 129 122 Underwriting expenses 50 50 56 40 18 Dividends to policyholders - - - - - Other adjustments - - 3 1 (1) ------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS [1] $ (9) $ (4) $ (42) $ (19) $ (76) - --------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 72.5 68.3 85.5 80.5 178.8 --------------------------------------------------------------------------------------------------------- Loss adjustment expenses 2.8 6.2 5.6 5.6 14.5 Expenses 29.7 27.6 29.5 26.4 29.4 --------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 32.5 33.8 35.1 32.0 44.0 --------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - --------------------------------------------------------------------------------------------------------- COMBINED RATIO 105.0 102.2 120.6 112.5 222.8 - --------------------------------------------------------------------------------------------------------------- Catastrophe ratio 1.3 1.2 0.7 1.5 5.6 - --------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 103.7 101.0 119.9 111.0 217.1 - --------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER --------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ---------- ---------- --------- GAAP UNDERWRITING RESULTS Written premiums NM NM $ 383 $ 175 (54%) Change in reserve NM NM 40 (39) NM ---------------------------------------------------------------------------------------------------------------- Earned premiums (63%) (58%) 343 214 (38%) Loss and loss adjustment expenses (7%) (5%) 262 251 (4%) Underwriting expenses (64%) (55%) 94 58 (38%) Dividends to policyholders - - - - - Other adjustments - NM - - - -------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS [1] NM NM $ (13) $ (95) NM - ---------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES (106.3) (98.3) 72.4 109.0 (36.6) ---------------------------------------------------------------------------------------------------------------- Loss adjustment expenses (11.7) (8.9) 3.9 8.2 (4.3) Expenses 0.3 (3.0) 27.4 27.3 0.1 ---------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES (11.5) (12.0) 31.3 35.5 (4.2) ---------------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - ---------------------------------------------------------------------------------------------------------------- COMBINED RATIO (117.8) (110.3) 103.7 144.5 (40.8) - ---------------------------------------------------------------------------------------------------------------------- Catastrophe ratio (4.3) (4.1) 0.4 2.7 (2.3) - ---------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES (113.4) (106.1) 103.3 141.8 (38.5) - ---------------------------------------------------------------------------------------------------------------------- [1] Underwriting results for the quarter and six months ended June 30, 2003 were negatively impacted by $59 of prior year reserve strengthening and $7 related to the Endurance transaction.
PC-11
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY REINSURANCE WRITTEN AND EARNED PREMIUMS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ----------- ---------- ----------- ----------- ----------- WRITTEN PREMIUMS [1] Traditional Reinsurance $ 157 $ 162 $ 150 $ 240 $ (101) Alternative Risk Transfer (ART) 12 5 3 34 2 - ----------------------------------------------------------------------------------------------- TOTAL $ 169 $ 167 $ 153 $ 274 $ (99) EARNED PREMIUMS [1] Traditional Reinsurance $ 150 $ 155 $ 171 $ 135 $ 56 Alternative Risk Transfer (ART) 22 23 21 16 7 - ----------------------------------------------------------------------------------------------- TOTAL $ 172 $ 178 $ 192 $ 151 $ 63 - ----------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ---------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------ ----------- ----------- ----------- --------- WRITTEN PREMIUMS [1] Traditional Reinsurance NM NM $ 306 $ 139 (55%) Alternative Risk Transfer (ART) (83%) (94%) 77 36 (53%) - --------------------------------------------------------------------------------------------------- TOTAL NM NM $ 383 $ 175 (54%) EARNED PREMIUMS [1] Traditional Reinsurance (63%) (59%) $ 295 $ 191 (35%) Alternative Risk Transfer (ART) (68%) (56%) 48 23 (52%) - --------------------------------------------------------------------------------------------------- TOTAL (63%) (58%) $ 343 $ 214 (38%) - --------------------------------------------------------------------------------------------------- [1] The difference between written premiums and earned premiums is attributable to the change in unearned premium reserve.
PC-12 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR) 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ------- ------ ------ ------ ----- WRITTEN PRICE INCREASES Business Insurance 18% 18% 16% 13% 10% Personal Lines Automobile 7% 9% 11% 10% 8% Personal Lines Homeowners 12% 14% 17% 14% 14% PREMIUM RETENTION Business Insurance 87% 90% 89% 90% 89% Personal Lines Automobile 86% 88% 91% 90% 94% Personal Lines Homeowners 98% 100% 101% 103% 103% NEW BUSINESS % TO NET WRITTEN PREMIUM Business Insurance 26% 27% 26% 26% 27% Personal Lines Automobile 17% 15% 13% 13% 13% Personal Lines Homeowners 11% 11% 10% 8% 10% PC-13
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY STATUTORY SURPLUS TO GAAP STOCKHOLDERS' EQUITY RECONCILIATION MARCH 31, 2003 DECEMBER 31, 2002 -------------- ----------------- Statutory Capital and Surplus $ 3,185 $ 4,871 GAAP Adjustments Investment in subsidiaries/Capital contributions (1,674) (1,543) Non-admitted assets/Statutory reserves 639 1,398 Deferred policy acquisition costs 994 930 Unrealized gains on investments, net of impairments 845 673 Deferred taxes 606 (138) Benefit reserves (251) (194) Consolidation/Corporate eliminations (930) (785) Other, net 30 (242) - ------------------------------------------------------------------------------------------------ GAAP Stockholders' Equity $ 3,444 $ 4,970 - ------------------------------------------------------------------------------------------------
PC-14
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OTHER OPERATIONS OPERATING RESULTS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ---------- ---------- ---------- ---------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 21 $ 9 $ 9 $ 7 $ 6 Change in reserve - (10) (2) (1) - -------------------------------------------------------------------------------------------------------------------- Earned premiums 21 19 11 8 6 Loss and loss adjustment expenses 51 43 34 2,629 16 Underwriting expenses 17 18 12 12 2 Dividends to policyholders - - - - - Other adjustments - - - - - -------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS (47) (42) (35) (2,633) (12) Net investment income 37 37 36 42 34 Net realized capital gains (losses) (18) (14) 4 10 52 Other income (expenses) 11 7 3 5 (1) -------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE INCOME TAXES (17) (12) 8 (2,576) 73 Income tax expense (benefit) (6) (3) 2 (895) 25 -------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) (11) (9) 6 (1,681) 48 Less: Net realized capital gains (losses), after-tax (12) (10) 4 6 35 -------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) $ 1 $ 1 $ 2 $(1,687) $ 13 - -------------------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER -------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ---------- ---------- -------- GAAP UNDERWRITING RESULTS Written premiums (71%) (14%) $ 39 $ 13 (67%) Change in reserve - 100% - (1) - -------------------------------------------------------------------------------------------------------------------------- Earned premiums (71%) (25%) 39 14 (64%) Loss and loss adjustment expenses (69%) (99%) 94 2,645 NM Underwriting expenses (88%) (83%) 32 14 (56%) Dividends to policyholders - - - - - Other adjustments - - - - - -------------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS 74% 100% (87) (2,645) NM Net investment income (8%) (19%) 74 76 3% Net realized capital gains (losses) NM NM (17) 62 NM Other income (expenses) NM NM 15 4 (73%) -------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE INCOME TAXES NM NM (15) (2,503) NM Income tax expense (benefit) NM NM (5) (870) NM -------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) NM NM (10) (1,633) NM Less: Net realized capital gains (losses), after-tax NM NM (11) 41 NM -------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) NM NM $ 1 $(1,674) NM - --------------------------------------------------------------------------------------------------------------------------------
PC-15
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OTHER OPERATIONS CLAIMS AND CLAIM ADJUSTMENT EXPENSES FOR THE SECOND QUARTER ENDED JUNE 30, 2003 ASBESTOS ENVIRONMENTAL ALL OTHER [1] TOTAL ------------ ------------------- ---------------- ------------ Beginning liability - net $ 3,685 $ 559 $ 1,245 $ 5,489 Claims and claim adjustment expenses incurred 3 3 14 20 Claims and claim adjustment expenses paid 49 26 17 92 - ----------------------------------------------------------------------------------------------------------------------------- ENDING LIABILITY - NET [2] [3] $ 3,639 [4] $ 536 $ 1,242 $ 5,417 - ----------------------------------------------------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED JUNE 30, 2003 Beginning liability - net $ 1,118 $ 591 $ 1,250 $ 2,959 Claims and claim adjustment expenses incurred 2,607 4 39 2,650 Claims and claim adjustment expenses paid 86 59 47 192 - ----------------------------------------------------------------------------------------------------------------------------- ENDING LIABILITY - NET [2] [3] [4] $ 3,639 [4] $ 536 $ 1,242 $ 5,417 - ----------------------------------------------------------------------------------------------------------------------------- [1] Includes unallocated loss adjustment expense reserves. [2] Ending liabilities include asbestos and environmental reserves reported in North American Property & Casualty of $15 and $10, respectively, as of June 30, 2003 and of $14 and $10, respectively, as of December 31, 2002. [3] Gross of reinsurance, asbestos and environmental reserves were $5,846 and $623, respectively, as of June 30, 2003 and $1,994 and $682, respectively, as of December 31, 2002. [4] As of June 30, 2003, the one year and average three year net paid amounts for asbestos claims are $164 and $111, respectively, resulting in one year and three year net survival ratios of 22.1 and 32.7 years, respectively. Net survival ratio is the quotient of the carried reserves divided by the average annual payment amount and is an indication of the number of years that the carried reserve would last (i.e. survive) if the future annual claim payments were consistent with the calculated historical average.
PC-16
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY SUMMARY OF GROSS ASBESTOS RESERVES FOR THE FIRST QUARTER ENDED MARCH 31, 2003 ------------------------------------------------------------------ % OF NUMBER OF ALL TIME TOTAL ASBESTOS ALL TIME ACCOUNTS PAID RESERVES RESERVES ULTIMATE ------------ ---------- ----------- ----------- ---------- Major asbestos defendants Structured settlements (includes 2 Wellington accounts) 5 $ 203 $ 289 5% $ 492 Wellington (direct only) 31 612 316 5% 928 Other major asbestos defendants 29 150 449 8% 599 No known policies (includes 3 Wellington accounts) 5 - - - - Accounts with future exposure > $2.5 127 288 1,474 25% 1,762 Accounts with future exposure < $2.5 826 292 124 2% 416 Unallocated IBNR - - 1,810 30% 1,810 - ---------------------------------------------------------------------------------------------------------------------------------- Total direct [3] 1,545 4,462 75% 6,007 Assumed reinsurance 506 907 15% 1,413 London market 333 596 10% 929 - ---------------------------------------------------------------------------------------------------------------------------------- Subtotal [3] 2,384 5,965 100% 8,349 First quarter 2003 payments 63 (63) - - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL GROSS ASBESTOS RESERVES $2,447 $5,902 $8,349 - ---------------------------------------------------------------------------------------------------------------------------------- 3 YEAR GROSS 3 YEAR TOTAL SURVIVAL PAID LOSSES RATIO [1] [2] ------------- -------------- (IN YEARS) Major asbestos defendants Structured settlements (includes 2 Wellington accounts) $ 86 10.1 Wellington (direct only) 250 3.8 Other major asbestos defendants 41 32.5 No known policies (includes 3 Wellington accounts) - - Accounts with future exposure > $2.5 104 42.7 Accounts with future exposure < $2.5 18 20.3 Unallocated IBNR - - - ----------------------------------------------------------------------------------------------------- Total direct [3] 567 23.6 Assumed reinsurance 140 19.4 London market 75 23.8 - ----------------------------------------------------------------------------------------------------- Subtotal [3] $ 782 22.9 First quarter 2003 payments - ----------------------------------------------------------------------------------------------------- TOTAL GROSS ASBESTOS RESERVES - ----------------------------------------------------------------------------------------------------- [1] Survival ratio provides an estimate of the number of years that reserves would be available at the current average claim payment rate. This is a gross three year survival ratio calculated by dividing gross reserves by the average three year paid losses. (December 31, 2002 survival ratios adjusted to reflect the March 31, 2003 reserve addition.) [2] The one year gross paid amount for total asbestos claims is $308 resulting in a one year gross survival ratio of 19.2 years. [3] Three year total paid losses include payments of $68 on closed claims (not presented by category).
- ---------------------------------------------------------------------------------------------------------------------------- RECONCILIATION OF GROSS ASBESTOS RESERVE FOR CEDED REINSURANCE Total gross asbestos reserves $5,902 Original ceded reinsurance (4,155) ----------- ORIGINAL NET 1,747 Add: Known settlements, commutations and known insolvencies 1,649 Provision for future unrecoverable reinsurance 289 ----------- TOTAL ENDING NET ASBESTOS RESERVES $3,685 - ----------------------------------------------------------------------------------------------------------------------------
PC-17
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY PAID AND INCURRED LOSS AND LOSS ADJUSTMENT EXPENSE ("LAE") DEVELOPMENT - ASBESTOS AND ENVIRONMENTAL ASBESTOS ENVIRONMENTAL ------------------------------------- ------------------------------------- PAID INCURRED PAID INCURRED FOR THE SECOND QUARTER ENDED JUNE 30, 2003 LOSS & LAE LOSS & LAE LOSS & LAE LOSS & LAE ----------------- ----------------- ----------------- ----------------- Gross Direct $ 40 $ 4 $ 8 $ 3 Assumed - Domestic 16 - 3 - London Market 4 - 4 - - ---------------------------------------------------------------------------------------------------------------------------------- Total 60 4 15 3 Ceded (11) (1) 11 - - ---------------------------------------------------------------------------------------------------------------------------------- NET $ 49 $ 3 $ 26 $ 3 - ---------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED JUNE 30, 2003 Gross Direct $ 95 $ 3,027 $ 51 $ 4 Assumed - Domestic 19 585 6 - London Market 9 363 6 - - ---------------------------------------------------------------------------------------------------------------------------------- Total 123 3,975 63 4 Ceded (37) (1,368) (4) - - ---------------------------------------------------------------------------------------------------------------------------------- NET $ 86 $ 2,607 $ 59 $ 4 - ----------------------------------------------------------------------------------------------------------------------------------
PC-18
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD QUARTER ENDED JUNE 30, 2003 ----------------------------------------------------------------- BUSINESS PERSONAL SPECIALTY INSURANCE LINES COMMERCIAL REINSURANCE ------------- -------------- ---------------- ---------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 4/1/03 - GROSS $ 4,922 $ 1,700 $ 5,022 $ 1,617 Reinsurance and other recoverables 388 48 2,007 373 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 4/1/03 - NET 4,534 1,652 3,015 1,244 Add: Provision for unpaid claims and claim adjustment expenses 561 602 240 122 Less: Payments 438 578 270 140 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 6/30/03 - NET 4,657 1,676 2,985 1,226 Reinsurance and other recoverables 400 45 1,690 385 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 6/30/03 - GROSS $ 5,057 $ 1,721 $ 4,675 $ 1,611 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- Earned premiums $ 897 $ 785 $ 355 $ 63 GAAP combined ratio 94.4 99.0 93.2 222.8 Loss and loss expense paid ratio 48.9 73.6 75.9 223.7 Loss and loss expense incurred ratio 62.6 76.8 67.2 193.3 Catastrophe ratio 2.5 8.2 2.5 5.6 Prior accident year development (pts.) - - - 95.1 - -------------------------------------------------------------------------------------------------------------------------------- QUARTER ENDED JUNE 30, 2003 ---------------------------------------------- OTHER TOTAL NAPC OPERATIONS P&C ------------- -------------- ------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 4/1/03 - GROSS $13,261 $ 7,951 $ 21,212 Reinsurance and other recoverables 2,816 2,485 5,301 - ------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 4/1/03 - NET 10,445 5,466 15,911 Add: Provision for unpaid claims and claim adjustment expenses 1,525 16 1,541 Less: Payments 1,426 90 1,516 - ------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 6/30/03 - NET 10,544 5,392 15,936 Reinsurance and other recoverables 2,520 2,612 5,132 - ------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 6/30/03 - GROSS $ 13,064 $ 8,004 $ 21,068 - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- Earned premiums $ 2,100 $ 6 $ 2,106 GAAP combined ratio 99.7 Loss and loss expense paid ratio 67.9 Loss and loss expense incurred ratio 72.5 Catastrophe ratio 4.7 Prior accident year development (pts.) 2.8 - -------------------------------------------------------------------------------------------------------------
PC-19
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD YEAR TO DATE ENDED JUNE 30, 2003 ------------------------------------------------------------------ BUSINESS PERSONAL SPECIALTY INSURANCE LINES COMMERCIAL REINSURANCE -------------- -------------- ---------------- ---------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 1/1/03 - GROSS $ 4,744 $ 1,692 $ 4,957 $ 1,614 Reinsurance and other recoverables 366 49 1,998 388 - ----------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 1/1/03 - NET 4,378 1,643 2,959 1,226 Add: Provision for unpaid claims and claim adjustment expenses 1,159 1,142 505 251 Less: Payments 880 1,109 479 251 - ----------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 6/30/03 - NET 4,657 1,676 2,985 1,226 Reinsurance and other recoverables 400 45 1,690 385 - ----------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 6/30/03 - GROSS $ 5,057 $ 1,721 $ 4,675 $ 1,611 - ----------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- Earned premiums $ 1,777 $ 1,557 $ 710 $ 214 GAAP combined ratio 96.8 95.9 95.8 144.5 Loss and loss expense paid ratio 49.5 71.1 67.5 117.5 Loss and loss expense incurred ratio 65.2 73.3 71.1 117.3 Catastrophe ratio 3.5 4.8 1.7 2.7 Prior accident year development (pts.) [1] - - - 44.0 - ----------------------------------------------------------------------------------------------------------------- YEAR TO DATE ENDED JUNE 30, 2003 --------------------------------------------- OTHER TOTAL NAPC OPERATIONS P&C -------------- -------------- ------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 1/1/03 - GROSS $13,007 $ 4,084 $ 17,091 Reinsurance and other recoverables 2,801 1,149 3,950 - ---------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 1/1/03 - NET 10,206 2,935 13,141 Add: Provision for unpaid claims and claim adjustment expenses 3,057 2,645 5,702 Less: Payments 2,719 188 2,907 - ---------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 6/30/03 - NET 10,544 5,392 15,936 Reinsurance and other recoverables 2,520 2,612 5,132 - ---------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 6/30/03 - GROSS $ 13,064 $ 8,004 $ 21,068 - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- Earned premiums $ 4,258 $ 14 $ 4,272 GAAP combined ratio 98.7 Loss and loss expense paid ratio 63.8 Loss and loss expense incurred ratio 71.8 Catastrophe ratio 3.7 Prior accident year development (pts.) [1] 2.2 - ---------------------------------------------------------------------------------------------- [1] Reinsurance excludes prior accident year premium adjustment of $(10).
PC-20
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY REINSURANCE RECOVERABLE ANALYSIS June 30, December 31, 2003 2002 --------------- --------------- GROSS REINSURANCE RECOVERABLES [1] Paid Loss and Loss Adjustment Expense $ 470 $ 512 Unpaid Loss and Loss Adjustment Expense 5,394 3,930 ------------------------------------------------------------------------------------------ Subtotal Gross Reinsurance Recoverables 5,864 4,442 Less: Allowance for Uncollectable Reinsurance (468) (211) ------------------------------------------------------------------------------------------ NET PROPERTY & CASUALTY REINSURANCE RECOVERABLES $ 5,396 $ 4,231 DISTRIBUTION OF NET RECOVERABLE % of % of Rated Amount Total Companies --------------------------------------------- Net Property & Casualty Reinsurance Recoverables $ 4,231 Less: Mandatory (Assigned Risk) Pools (494) ------------------------------------------------------------------------------------------ NET P&C REINSURANCE RECOVERABLE EXCLUDING MANDATORY POOLS $ 3,737 - ----------------------------------------------------------------------------------------------- Rated A- (Excellent) or better by A.M. Best [2] $ 2,454 65.7% 91.1% Other Rated by A.M. Best [3] 239 6.4% 8.9% ------------------------------------------------------------------------------------------------------------------------ Total Rated Companies 2,693 72.1% 100.0% Equitas Reinsurance Limited 322 8.6% Voluntary Pools 225 6.0% Captives 48 1.3% Other Not Rated Companies [3] 449 12.0% --------------------------------------------------------------------------------------------------------- Total $ 3,737 100.0% - -------------------------------------------------------------------------------------------------------------- [1] Net of commutations, settlements and known insolvencies. [2] Based on A.M. Best ratings as of December 31, 2002. [3] No single company is greater than 1% of total.
PC-21
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY CONSOLIDATED INCOME STATEMENTS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ---------- ---------- ---------- ----------- ---------- Earned premiums $ 1,976 $ 2,107 $ 2,154 $ 2,166 $ 2,106 Net investment income 271 262 288 285 291 Other revenues 88 88 99 95 113 Net realized capital gains (losses) (46) (42) (3) (5) 207 - -------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 2,289 2,415 2,538 2,541 2,717 Benefits, claims and claim adjustment expenses [1] 1,452 1,505 1,555 4,161 1,541 Amortization of deferred policy acquisition costs 402 405 403 401 382 Insurance operating costs and expenses 202 232 268 216 230 Other expenses [3] 134 152 147 132 189 - -------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 2,190 2,294 2,373 4,910 2,342 INCOME (LOSS) BEFORE INCOME TAXES 99 121 165 (2,369) 375 Income tax expense (benefit) 9 11 24 (856) 98 - -------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [2] 90 110 141 (1,513) 277 Less: Net realized capital gains (losses), after-tax (30) (29) (1) (3) 135 - -------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [2] [3] $ 120 $ 139 $ 142 $(1,510) $ 142 P&C effective tax rate - net income 9.1% 7.6% 15.0% NM 26.3% P&C effective tax rate - operating income 17.2% 15.1% 15.1% NM 15.7% - -------------------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER -------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ---------- ----------- --------- Earned premiums 7% (3%) $ 3,853 $ 4,272 11% Net investment income 7% 2% 525 576 10% Other revenues 28% 19% 169 208 23% Net realized capital gains (losses) NM NM (38) 202 NM - -------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 19% 7% 4,509 5,258 17% Benefits, claims and claim adjustment expenses [1] 6% (63%) 2,810 5,702 103% Amortization of deferred policy acquisition costs (5%) (5%) 805 783 (3%) Insurance operating costs and expenses 14% 6% 379 446 18% Other expenses [3] 41% 43% 260 321 23% - -------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 7% (52%) 4,254 7,252 70% INCOME (LOSS) BEFORE INCOME TAXES NM NM 255 (1,994) NM Income tax expense (benefit) NM NM 37 (758) NM - -------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [2] NM NM 218 (1,236) NM Less: Net realized capital gains (losses), after-tax NM NM (24) 132 NM - -------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [2] [3] 18% NM $ 242 $(1,368) NM P&C effective tax rate - net income 17.2 NM 14.6% NM NM P&C effective tax rate - operating income (1.5) NM 17.2% NM NM - -------------------------------------------------------------------------------------------------------------------- [1] The quarter ended March 31, 2003 and six months ended June 30, 2003 include before-tax impact of 2003 asbestos reserve addition of $2,604. [2] The quarter ended March 31, 2003 and six months ended June 30, 2003 include after-tax impact of 2003 asbestos reserve addition of $1,701. [3] The quarter and six months ended June 30, 2003 include severance costs of $41, before-tax, and $27, after-tax.
PC-22
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY CONSOLIDATED BALANCE SHEETS 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ---------- ---------- ---------- ----------- ----------- Investments Fixed maturities, available for sale, at fair value $17,433 $18,899 $19,446 $20,384 $22,820 Equity securities, available for sale, at fair value 738 611 459 209 219 Other investments 763 692 668 636 556 --------------------------------------------------------------------------------------------------------------------- Total investments 18,934 20,202 20,573 21,229 23,595 Cash 201 219 198 366 239 Premiums receivable and agents' balances 2,751 2,715 2,403 2,521 2,630 Reinsurance recoverables 4,461 4,345 4,231 5,635 5,396 Deferred policy acquisition costs and present value of future profits 920 948 930 994 987 Deferred income taxes 655 622 610 1,408 1,107 Goodwill 154 154 153 153 153 Other assets 1,859 1,770 2,031 2,167 2,664 --------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $29,935 $30,975 $31,129 $34,473 $36,771 --------------------------------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $17,064 $17,067 $17,091 $21,212 $21,068 Unearned premiums 3,792 3,925 3,942 4,246 4,410 Debt 1,014 1,164 1,164 1,164 1,164 Trust preferred securities 984 1,016 1,023 1,024 851 Other liabilities 2,729 2,993 2,939 3,383 3,735 --------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 25,583 26,165 26,159 31,029 31,228 --------------------------------------------------------------------------------------------------------------------- Equity excluding AOCI, net of tax 3,961 4,172 4,262 2,663 4,590 AOCI, net of tax 391 638 708 781 953 --------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 4,352 4,810 4,970 3,444 5,543 --------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $29,935 $30,975 $31,129 $34,473 $36,771 - -------------------------------------------------------------------------------------------------------------------------- Full Year Hartford Fire NAIC RBC 390% - -------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR SEQUENTIAL QUARTER QUARTER CHANGE CHANGE ----------- ----------- Investments Fixed maturities, available for sale, at fair value 31% 12% Equity securities, available for sale, at fair value (70%) 5% Other investments (27%) (13%) ---------------------------------------------------------------------------------- Total investments 25% 11% Cash 19% (35%) Premiums receivable and agents' balances (4%) 4% Reinsurance recoverables 21% (4%) Deferred policy acquisition costs and present value of future profits 7% (1%) Deferred income taxes 69% (21%) Goodwill (1%) - Other assets 43% 23% ---------------------------------------------------------------------------------- TOTAL ASSETS 23% 7% ---------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses 23% (1%) Unearned premiums 16% 4% Debt 15% - Trust preferred securities (14%) (17%) Other liabilities 37% 10% ---------------------------------------------------------------------------------- TOTAL LIABILITIES 22% 1% ---------------------------------------------------------------------------------- Equity excluding AOCI, net of tax 16% 72% AOCI, net of tax 144% 22% ---------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 27% 61% ---------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 23% 7% - --------------------------------------------------------------------------------------- Full Year Hartford Fire NAIC RBC - ---------------------------------------------------------------------------------------
PC-23 INVESTMENTS
THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL ACCOUNT INVESTMENT EARNINGS BEFORE-TAX CONSOLIDATED 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ---------- ---------- ---------- ---------- --------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 482 $ 513 $ 532 $ 538 $ 565 Tax-exempt 130 132 132 133 130 - --------------------------------------------------------------------------------------------------- Total fixed maturities 612 645 664 671 695 Equities 9 8 9 8 7 Mortgage loans 6 7 10 9 9 Real estate 1 1 - 1 1 Policy loans 68 61 58 58 54 Limited partnerships 9 (16) 26 12 11 Other 31 33 37 48 44 - --------------------------------------------------------------------------------------------------- Subtotal 736 739 804 807 821 Less investment expense 10 10 12 11 11 - --------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME $ 726 $ 729 $792 $ 796 $ 810 - --------------------------------------------------------------------------------------------------- Investment yield, pre-tax 6.2% 5.9% 6.1% 6.0% 5.8% Investment yield, after-tax 4.4% 4.1% 4.3% 4.2% 4.0% NET REALIZED CAPITAL GAIN/(LOSS) Fixed Maturities $ (181) $ (143) $ (27) $ (9) $ 250 Equities - (18) (45) (49) (5) Mortgage loans - - - - - Real estate - 3 (1) - - Policy loans - - - - - Other 15 (2) 6 5 12 - --------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $ (166) $ (160) $(67) $ (53) $ 257 - --------------------------------------------------------------------------------------------------- Gross gains on sale $ 118 $ 92 $ 148 $ 137 $ 303 Gross losses on sale (55) (82) (93) (107) (24) Impairments (236) (175) (126) (89) (27) Other net gain/(loss)[2] 7 5 4 6 5 - --------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $ (166) $ (160) $(67) $ (53) $ 257 - --------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ---------------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------ ------------- ------------ ------------ ------------ NET INVESTMENT INCOME Fixed maturities [1] Taxable 17% 5% $ 942 $ 1,103 17% Tax-exempt - (2%) 259 263 2% - ----------------------------------------------------------------------------------------------------------------------- Total fixed maturities 14% 4% 1,201 1,366 14% Equities (22%) (13%) 19 15 (21%) Mortgage loans 50% - 14 18 29% Real estate - - 1 2 100% Policy loans (21%) (7%) 135 112 (17%) Limited partnerships 22% (8%) 24 23 (4%) Other 42% (8%) 59 92 56% - ----------------------------------------------------------------------------------------------------------------------- Subtotal 12% 2% 1,453 1,628 12% Less investment expense (10%) - 21 22 (5%) - ----------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 12% 2% $ 1,432 $ 1,606 12% - ----------------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax (0.4) (0.2) 6.1% 5.9% (0.2) Investment yield, after-tax (0.4) (0.2) 4.3% 4.1% (0.2) NET REALIZED CAPITAL GAIN/(LOSS) Fixed Maturities NM NM $ (207) $ 241 NM Equities NM 90% 21 (54) NM Mortgage loans - - - - - Real estate - - - - - Policy loans - - - - - Other (20%) 140% 13 17 31% - ----------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) NM NM $ (173) $ 204 NM - ----------------------------------------------------------------------------------------------------------------------- Gross gains on sale 157% 121% $ 217 $ 440 103% Gross losses on sale 56% 78% (118) (131) (11%) Impairments 89% 70% (278) (116) 58% Other net gain/(loss)[2] (29%) (17%) 6 11 83% - ----------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) NM NM $ (173) $ 204 NM - ----------------------------------------------------------------------------------------------------------------------- [1] Includes income on short-term bonds. [2] Primarily consists of changes in fair value and hedge ineffectiveness on derivative instruments.
I-1
THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL ACCOUNT INVESTMENT EARNINGS BEFORE-TAX LIFE 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 ---------- ---------- --------- --------- --------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 338 $ 362 $ 370 $ 379 $ 392 Tax-exempt 21 24 25 25 25 - ----------------------------------------------------------------------------------------------------- Total fixed maturities 359 386 395 404 417 Equities 4 4 5 5 5 Mortgage loans 5 5 6 5 5 Real estate - - - - - Policy loans 68 61 58 58 54 Limited partnerships (5) (11) 14 8 7 Other 24 22 26 33 31 - ----------------------------------------------------------------------------------------------------- Subtotal 455 467 504 513 519 Less investment expense 5 5 6 6 6 - ----------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME $ 450 $462 $498 $507 $513 - ----------------------------------------------------------------------------------------------------- Investment yield, pre-tax 6.2% 6.0% 6.2% 6.1% 5.9% Investment yield, after-tax 4.1% 4.0% 4.1% 4.1% 3.9% NET REALIZED CAPITAL GAIN/(LOSS) Fixed Maturities $ (124) $ (93) $ (69) $ (31) $ 52 Equities 1 (17) (3) (26) (3) Mortgage loans - - - - - Real estate - - - - - Policy loans - - - - - Other 3 (8) 8 9 1 - ----------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $ (120) $(118) $(64) $(48) $ 50 - ----------------------------------------------------------------------------------------------------- Gross gains on sale $ 37 $ 44 $ 57 $ 57 $ 91 Gross losses on sale (10) (28) (37) (47) (17) Impairments (144) (132) (89) (67) (17) Other net gain/(loss)[2] (3) (2) 5 9 (7) - ----------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $ (120) $(118) $(64) $(48) $ 50 - ----------------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER -------------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------- ------------ ------------ ----------- ----------- NET INVESTMENT INCOME Fixed maturities [1] Taxable 16% 3% $ 662 $ 771 16% Tax-exempt 19% - 42 50 19% - --------------------------------------------------------------------------------------------------------------------- Total fixed maturities 16% 3% 704 821 17% Equities 25% - 10 10 - Mortgage loans - - 11 10 (9%) Real estate - - - - - Policy loans (21%) (7%) 135 112 (17%) Limited partnerships NM (13%) 3 15 NM Other 29% (6%) 45 64 42% - --------------------------------------------------------------------------------------------------------------------- Subtotal 14% 1% 908 1,032 14% Less investment expense (20%) - 10 12 (20%) - --------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 14% 1% $ 898 $ 1,020 14% - --------------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax (0.3) (0.2) 6.2% 6.0% (0.2) Investment yield, after-tax (0.2) (0.2) 4.1% 4.0% (0.1) NET REALIZED CAPITAL GAIN/(LOSS) Fixed Maturities NM NM $ (133) $ 21 NM Equities NM 88% (2) (29) NM Mortgage loans - - - - - Real estate - - - - - Policy loans - - - - - Other (67%) (89%) - 10 NM - --------------------------------------------------------------------------------------------------------------------- - TOTAL NET REALIZED CAPITAL GAIN/(LOSS) NM NM $ (135) $ 2 NM - --------------------------------------------------------------------------------------------------------------------- Gross gains on sale 146% 60% $ 74 $ 148 100% Gross losses on sale (70%) 64% (47) (64) (36%) Impairments 88% 75% (159) (84) 47% Other net gain/(loss)[2] (133%) NM (3) 2 NM - --------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) NM NM $ (135) $ 2 NM - --------------------------------------------------------------------------------------------------------------------- [1] Includes income on short-term bonds. [2] Primarily consists of changes in fair value and hedge ineffectiveness on derivative instruments.
I-2
THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL ACCOUNT INVESTMENT EARNINGS BEFORE-TAX PROPERTY & CASUALTY 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 --------- ---------- --------- --------- --------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 144 $ 150 $ 161 $ 159 $ 171 Tax-exempt 109 108 107 108 105 - --------------------------------------------------------------------------------------------- Total fixed maturities 253 258 268 267 276 Equities 5 4 4 3 2 Mortgage loans 1 2 4 4 4 Real estate 1 1 - 1 1 Policy loans - - - - - Limited partnerships 14 (5) 12 4 4 Other 2 7 6 11 9 - --------------------------------------------------------------------------------------------- Subtotal 276 267 294 290 296 Less investment expense 5 5 6 5 5 - --------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME $ 271 $ 262 $288 $285 $291 - --------------------------------------------------------------------------------------------- Investment yield, pre-tax 6.0% 5.6% 6.1% 5.8% 5.5% Investment yield, after-tax 4.7% 4.4% 4.6% 4.5% 4.2% NET REALIZED CAPITAL GAIN/(LOSS) Fixed Maturities $ (57) $ (50) $ 42 $ 22 $ 198 Equities (1) (1) (42) (23) (2) Mortgage loans - - - - - Real estate - 3 (1) - - Policy loans - - - - - Other 12 6 (2) (4) 11 - --------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $(46) $ (42) $ (3) $ (5) $207 - --------------------------------------------------------------------------------------------- Gross gains on sale $ 81 $ 48 $ 91 $ 80 $ 212 Gross losses on sale (45) (54) (56) (60) (7) Impairments (92) (43) (37) (22) (10) Other net gain/(loss)[2] 10 7 (1) (3) 12 - --------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $(46) $ (42) $ (3) $ (5) $207 - --------------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ----------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------- ------------- ----------- ----------- ---------- NET INVESTMENT INCOME Fixed maturities [1] Taxable 19% 8% $ 280 $ 330 18% Tax-exempt (4%) (3%) 217 213 (2%) - -------------------------------------------------------------------------------------------------------------- Total fixed maturities 9% 3% 497 543 9% Equities (60%) (33%) 9 5 (44%) Mortgage loans NM - 3 8 167% Real estate - - 1 2 100% Policy loans - - - - - Limited partnerships (71%) - 21 8 (62%) Other NM (18%) 5 20 NM - -------------------------------------------------------------------------------------------------------------- Subtotal 7% 2% 536 586 9% Less investment expense - - 11 10 (9%) - -------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 7% 2% $ 525 $ 576 10% - -------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax (0.5) (0.3) 5.9% 5.6% (0.3) Investment yield, after-tax (0.5) (0.3) 4.6% 4.2% (0.4) NET REALIZED CAPITAL GAIN/(LOSS) Fixed Maturities NM NM $ (74) $ 220 NM Equities (100%) 91% 23 (25) NM Mortgage loans - - - - - Real estate - - - - - Policy loans - - - - - Other (8%) NM 13 7 (46%) - -------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) NM NM $ (38) $ 202 NM - -------------------------------------------------------------------------------------------------------------- Gross gains on sale 162% 165% $ 143 $ 292 104% Gross losses on sale 84% 88% (71) (67) 6% Impairments 89% 55% (119) (32) 73% Other net gain/(loss)[2] 20% NM 9 9 0% - -------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) NM NM $ (38) $ 202 NM - -------------------------------------------------------------------------------------------------------------- [1] Includes income on short-term bonds. [2] Primarily consists of changes in fair value and hedge ineffectiveness on derivative instruments.
I-3
THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL ACCOUNT INVESTMENT EARNINGS BEFORE-TAX CORPORATE 2Q 3Q 4Q 1Q 2Q 2002 2002 2002 2003 2003 --------- ---------- --------- ---------- --------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ - $ 1 $ 1 $ - $ 2 - ------------------------------------------------------------------------------------- Total fixed Maturities - 1 1 - 2 Other 5 4 5 4 4 - ------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME $ 5 $ 5 $ 6 $ 4 $ 6 - ------------------------------------------------------------------------------------- YEAR OVER SIX MONTHS ENDED YEAR SEQUENTIAL JUNE 30, QUARTER QUARTER ------------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------- ------------- ---------- ----------- ------------ NET INVESTMENT INCOME Fixed maturities [1] Taxable NM NM $ - $ 2 NM - ------------------------------------------------------------------------------------------------------ Total fixed Maturities NM NM - 2 NM Other (20%) - 9 8 (11%) - ------------------------------------------------------------------------------------------------------ TOTAL NET INVESTMENT INCOME 20% 50% $ 9 $ 10 11% - ------------------------------------------------------------------------------------------------------ [1] Includes income on short-term bonds.
I-4
THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS CONSOLIDATED - GENERAL AND GUARANTEED SEPARATE ACCOUNT 2Q 3Q 4Q 2002 2002 2002 --------------------- --------------------- --------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ---------- ---------- ---------- ---------- ---------- ---------- Fixed maturities, at fair value [1] [2] $ 53,680 89.0% $ 59,187 90.2% $ 59,974 90.9% Equity securities, at fair value 1,200 2.0% 1,031 1.6% 962 1.4% Policy loans, at outstanding balance 3,204 5.3% 2,980 4.5% 2,934 4.4% Real estate/Mortgage loans, at cost 508 0.8% 554 0.8% 578 0.9% Other investments 1,748 2.9% 1,878 2.9% 1,552 2.4% - ------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS $ 60,340 100.0% $ 65,630 100.0% $ 66,000 100.0% - ------------------------------------------------------------------------------------------------------------------------ Total general account investments 49,332 81.8% 54,101 82.4% 54,530 82.6% Total guaranteed separate account investments 11,008 18.2% 11,529 17.6% 11,470 17.4% - ------------------------------------------------------------------------------------------------------------------------ HIMCO managed third party accounts $ 931 $ 1,139 $ 1,312 - ------------------------------------------------------------------------------------------------------------------------ Corporate $ 23,182 43.2% $ 24,791 41.9% $ 26,534 44.2% CMO [1] 983 1.8% 1,138 1.9% 952 1.6% Municipal - tax-exempt 10,502 19.6% 10,952 18.5% 10,846 18.1% Gov't/Gov't agencies - U.S. 842 1.6% 659 1.1% 817 1.4% ABS 5,723 10.7% 5,937 10.0% 6,091 10.1% Gov't/Gov't agencies - Foreign 1,354 2.5% 1,664 2.8% 1,934 3.2% MBS - agency 2,337 4.3% 2,825 4.8% 2,818 4.7% Commercial MBS 6,291 11.7% 7,465 12.6% 7,561 12.6% Municipal - taxable 163 0.3% 167 0.3% 166 0.3% Redeemable preferred stock 102 0.2% 103 0.2% 102 0.2% Short-term [2] 2,201 4.1% 3,486 5.9% 2,153 3.6% - ------------------------------------------------------------------------------------------------------------------------ TOTAL FIXED MATURITIES $ 53,680 100.0% $ 59,187 100.0% $ 59,974 100.0% - ------------------------------------------------------------------------------------------------------------------------ Total general account fixed maturities 42,984 80.1% 48,085 81.2% 48,889 81.5% Total guaranteed separate account fixed maturities 10,696 19.9% 11,102 18.8% 11,085 18.5% - ------------------------------------------------------------------------------------------------------------------------ AAA $ 12,325 23.0% $ 13,962 23.6% $ 14,358 24.0% AA 7,120 13.3% 7,628 12.9% 7,784 13.0% A 14,677 27.3% 15,519 26.2% 16,034 26.7% BBB 10,861 20.2% 11,493 19.4% 12,121 20.2% Government [1] 3,897 7.3% 4,398 7.4% 4,397 7.3% BB & below 2,599 4.8% 2,701 4.6% 3,127 5.2% Short-term [2] 2,201 4.1% 3,486 5.9% 2,153 3.6% - ------------------------------------------------------------------------------------------------------------------------ TOTAL FIXED MATURITIES $ 53,680 100.0% $ 59,187 100.0% $ 59,974 100.0% - ------------------------------------------------------------------------------------------------------------------------ 1Q 2Q 2003 2003 --------------------- --------------------- AMOUNT PERCENT AMOUNT PERCENT ---------- ---------- ---------- ---------- Fixed maturities, at fair value [1] [2] $ 63,363 91.9% $ 68,676 92.8% Equity securities, at fair value 661 1.0% 712 0.9% Policy loans, at outstanding balance 2,876 4.2% 2,889 3.9% Real estate/Mortgage loans, at cost 636 0.9% 732 1.0% Other investments 1,376 2.0% 1,027 1.4% - -------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 68,912 100.0% $ 74,036 100.0% - -------------------------------------------------------------------------------------------------- Total general account investments 57,328 83.2% 62,190 84.0% Total guaranteed separate account investments 11,584 16.8% 11,846 16.0% - -------------------------------------------------------------------------------------------------- HIMCO managed third party accounts $ 1,521 $ 1,774 - -------------------------------------------------------------------------------------------------- Corporate $ 28,298 44.7% $ 30,844 44.9% CMO [1] 1,079 1.7% 1,091 1.6% Municipal - tax-exempt 10,814 17.1% 10,592 15.4% Gov't/Gov't agencies - U.S. 910 1.4% 1,433 2.1% ABS 5,985 9.4% 6,266 9.1% Gov't/Gov't agencies - Foreign 2,049 3.2% 2,174 3.2% MBS - agency 2,426 3.8% 2,198 3.2% Commercial MBS 8,469 13.4% 9,774 14.2% Municipal - taxable 164 0.3% 414 0.6% Redeemable preferred stock 103 0.2% 103 0.1% Short-term [2] 3,066 4.8% 3,787 5.6% - -------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 63,363 100.0% $ 68,676 100.0% - -------------------------------------------------------------------------------------------------- Total general account fixed maturities 52,126 82.3% 57,137 83.2% Total guaranteed separate account fixed maturities 11,237 17.7% 11,539 16.8% - -------------------------------------------------------------------------------------------------- AAA $ 14,999 23.7% $ 16,140 23.6% AA 7,778 12.3% 7,710 11.2% A 16,690 26.3% 17,877 26.0% BBB 13,306 21.0% 14,991 21.8% Government [1] 4,260 6.7% 4,614 6.7% BB & below 3,264 5.2% 3,557 5.2% Short-term [2] 3,066 4.8% 3,787 5.5% - -------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 63,363 100.0% $ 68,676 100.0% - -------------------------------------------------------------------------------------------------- [1] June 30, 2002 includes $2 reflected in Corporate. [2] September 30, 2002 includes $647 reflected in Corporate. December 31, 2002 and March 31, 2003 include $66 reflected in Corporate. June 30, 2003 includes $257 reflected in Corporate.
I-5
THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS LIFE - GENERAL AND GUARANTEED SEPARATE ACCOUNT 2Q 3Q 4Q 2002 2002 2002 ------------------------ ----------------------- ----------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ------------ ----------- ----------- ----------- ----------- ----------- Fixed maturities, at fair value $ 36,245 87.6% $ 39,641 88.5% $ 40,462 89.2% Equity securities, at fair value 462 1.1% 420 0.9% 503 1.1% Policy loans, at outstanding balance 3,204 7.7% 2,980 6.7% 2,934 6.5% Real estate/Mortgage loans, at cost 422 1.0% 441 1.0% 447 1.0% Other investments 1,071 2.6% 1,299 2.9% 1,015 2.2% - --------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 41,404 100.0% $ 44,781 100.0% $ 45,361 100.0% - --------------------------------------------------------------------------------------------------------------------------- Total general account investments 30,396 73.4% 33,252 74.3% 33,891 74.7% Total guaranteed separate account investments 11,008 26.6% 11,529 25.7% 11,470 25.3% - --------------------------------------------------------------------------------------------------------------------------- Corporate $ 18,649 51.4% $ 19,978 50.4% $ 21,075 52.1% CMO 846 2.3% 1,040 2.6% 903 2.2% Municipal - tax-exempt 1,843 5.1% 2,021 5.1% 2,000 4.9% Gov't/Gov't agencies - U.S. 772 2.1% 593 1.5% 693 1.7% ABS 5,023 13.9% 5,200 13.1% 5,360 13.3% Gov't/Gov't agencies - Foreign 681 1.9% 830 2.1% 846 2.1% MBS - agency 1,842 5.1% 2,236 5.6% 2,296 5.7% Commercial MBS 4,960 13.7% 5,828 14.7% 5,988 14.8% Municipal - taxable 113 0.3% 115 0.3% 114 0.3% Redeemable preferred stock 33 0.1% 34 0.1% 34 0.1% Short-term 1,483 4.1% 1,766 4.5% 1,153 2.8% - --------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 36,245 100.0% $ 39,641 100.0% $ 40,462 100.0% - --------------------------------------------------------------------------------------------------------------------------- Total general account fixed maturities 25,549 70.5% 28,539 72.0% 29,377 72.6% Total guaranteed separate account fixed maturities 10,696 29.5% 11,102 28.0% 11,085 27.4% - --------------------------------------------------------------------------------------------------------------------------- AAA $ 5,664 15.6% $ 6,736 17.0% $ 6,960 17.2% AA 3,949 10.9% 4,196 10.6% 4,396 10.9% A 11,589 32.0% 12,262 30.9% 12,467 30.8% BBB 8,693 24.0% 9,205 23.2% 9,665 23.9% Government 3,247 8.9% 3,685 9.3% 3,737 9.2% BB & below 1,620 4.5% 1,791 4.5% 2,084 5.2% Short-term 1,483 4.1% 1,766 4.5% 1,153 2.8% - --------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 36,245 100.0% $ 39,641 100.0% $ 40,462 100.0% - --------------------------------------------------------------------------------------------------------------------------- 1Q 2Q 2003 2003 ------------------------ ------------------------ AMOUNT PERCENT AMOUNT PERCENT ------------ ----------- ------------ ----------- Fixed maturities, at fair value $ 42,913 90.1% $ 45,599 90.8% Equity securities, at fair value 452 1.0% 493 1.0% Policy loans, at outstanding balance 2,876 6.0% 2,889 5.8% Real estate/Mortgage loans, at cost 486 1.0% 555 1.1% Other investments 890 1.9% 648 1.3% - ---------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 47,617 100.0% $ 50,184 100.0% - ---------------------------------------------------------------------------------------------------- Total general account investments 36,033 75.7% 38,338 76.4% Total guaranteed separate account investments 11,584 24.3% 11,846 23.6% - ---------------------------------------------------------------------------------------------------- Corporate $ 22,452 52.3% $ 23,788 52.1% CMO 1,024 2.4% 1,057 2.3% Municipal - tax-exempt 2,004 4.7% 2,051 4.5% Gov't/Gov't agencies - U.S. 733 1.7% 728 1.6% ABS 5,297 12.3% 5,471 12.0% Gov't/Gov't agencies - Foreign 881 2.0% 952 2.1% MBS - agency 1,955 4.6% 1,686 3.7% Commercial MBS 6,923 16.1% 7,553 16.6% Municipal - taxable 110 0.3% 244 0.5% Redeemable preferred stock 34 0.1% 34 0.1% Short-term 1,500 3.5% 2,035 4.5% - ---------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 42,913 100.0% $ 45,599 100.0% - ---------------------------------------------------------------------------------------------------- Total general account fixed maturities 31,676 73.8% 34,060 74.7% Total guaranteed separate account fixed maturities 11,237 26.2% 11,539 25.3% - ---------------------------------------------------------------------------------------------------- AAA $ 7,475 17.4% $ 7,968 17.5% AA 4,487 10.5% 4,341 9.5% A 13,069 30.5% 13,693 30.0% BBB 10,608 24.7% 11,841 26.0% Government 3,582 8.3% 3,376 7.4% BB & below 2,192 5.1% 2,345 5.1% Short-term 1,500 3.5% 2,035 4.5% - ---------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 42,913 100.0% $ 45,599 100.0% - ----------------------------------------------------------------------------------------------------
I-6
THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS PROPERTY & CASUALTY - GENERAL ACCOUNT 2Q 3Q 4Q 2002 2002 2002 ------------------------- -------------------------- ------------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ------------ ------------ ------------- ------------ ------------- ----------- Fixed maturities, at fair value $ 17,433 92.1% $ 18,899 93.5% $ 19,446 94.5% Equity securities, at fair value 738 3.9% 611 3.0% 459 2.2% Policy loans, at outstanding balance - - - - - - Real estate/Mortgage loans, at cost 86 0.4% 113 0.6% 131 0.7% Other investments 677 3.6% 579 2.9% 537 2.6% - ---------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 18,934 100.0% $ 20,202 100.0% $ 20,573 100.0% - ---------------------------------------------------------------------------------------------------------------------------- Corporate $ 4,533 26.0% $ 4,813 25.5% $ 5,459 28.0% CMO 135 0.8% 98 0.5% 49 0.3% Municipal - tax-exempt 8,659 49.7% 8,931 47.2% 8,846 45.5% Gov't/Gov't agencies - U.S. 70 0.4% 66 0.3% 124 0.6% ABS 700 4.0% 737 3.9% 731 3.8% Gov't/Gov't agencies - Foreign 673 3.9% 834 4.4% 1,088 5.6% MBS - agency 495 2.8% 589 3.1% 522 2.7% Commercial MBS 1,331 7.6% 1,637 8.7% 1,573 8.1% Municipal - taxable 50 0.3% 52 0.3% 52 0.3% Redeemable preferred stock 69 0.4% 69 0.4% 68 0.3% Short-term 718 4.1% 1,073 5.7% 934 4.8% - ---------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 17,433 100.0% $ 18,899 100.0% $ 19,446 100.0% - ---------------------------------------------------------------------------------------------------------------------------- AAA $ 6,661 38.2% $ 7,226 38.2% $ 7,398 38.1% AA 3,171 18.2% 3,432 18.2% 3,388 17.4% A 3,088 17.7% 3,257 17.2% 3,567 18.3% BBB 2,168 12.5% 2,288 12.1% 2,456 12.6% Government 648 3.7% 713 3.8% 660 3.4% BB & below 979 5.6% 910 4.8% 1,043 5.4% Short-term 718 4.1% 1,073 5.7% 934 4.8% - ---------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 17,433 100.0% $ 18,899 100.0% $ 19,446 100.0% - ---------------------------------------------------------------------------------------------------------------------------- 1Q 2Q 2003 2003 ------------------------ ------------------------ AMOUNT PERCENT AMOUNT PERCENT ------------ ----------- ------------ ----------- Fixed maturities, at fair value $ 20,384 96.0% $ 22,820 96.7% Equity securities, at fair value 209 1.0% 219 0.9% Policy loans, at outstanding balance - - - - Real estate/Mortgage loans, at cost 150 0.7% 177 0.8% Other investments 486 2.3% 379 1.6% - ----------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $21,229 100.0% $23,595 100.0% - ----------------------------------------------------------------------------------------------- Corporate $ 5,846 28.6% $ 7,056 31.0% CMO 55 0.3% 34 0.1% Municipal - tax-exempt 8,810 43.2% 8,541 37.4% Gov't/Gov't agencies - U.S. 177 0.9% 705 3.1% ABS 688 3.4% 795 3.5% Gov't/Gov't agencies - Foreign 1,168 5.7% 1,222 5.4% MBS - agency 471 2.3% 512 2.2% Commercial MBS 1,546 7.6% 2,221 9.7% Municipal - taxable 54 0.3% 170 0.7% Redeemable preferred stock 69 0.3% 69 0.3% Short-term 1,500 7.4% 1,495 6.6% - ----------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $20,384 100.0% $22,820 100.0% - ----------------------------------------------------------------------------------------------- AAA $ 7,524 36.9% $ 8,172 35.8% AA 3,291 16.1% 3,369 14.8% A 3,621 17.8% 4,184 18.3% BBB 2,698 13.2% 3,150 13.8% Government 678 3.3% 1,238 5.4% BB & below 1,072 5.3% 1,212 5.3% Short-term 1,500 7.4% 1,495 6.6% - ----------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $20,384 100.0% $22,820 100.0% - -----------------------------------------------------------------------------------------------
I-7
THE HARTFORD FINANCIAL SERVICES GROUP, INC. UNREALIZED LOSS AGING CONSOLIDATED - GENERAL AND GUARANTEED SEPARATE ACCOUNT [1] TOTAL SECURITIES JUNE 30, 2003 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - --------------------------------------------------------------------------------------------------- Three months or less $ 4,672 $ 4,606 $ (66) Greater than three months to six months 479 454 (25) Greater than six months to nine months 617 575 (42) Greater than nine months to twelve months 394 371 (23) Greater than twelve months 2,516 2,299 (217) - --------------------------------------------------------------------------------------------------- TOTAL $ 8,678 $ 8,305 $ (373) - --------------------------------------------------------------------------------------------------- BIG [2] AND EQUITY SECURITIES JUNE 30, 2003 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - --------------------------------------------------------------------------------------------------- Three months or less $ 334 $ 318 $ (16) Greater than three months to six months 86 75 (11) Greater than six months to nine months 108 91 (17) Greater than nine months to twelve months 12 5 (7) Greater than twelve months 448 373 (75) - --------------------------------------------------------------------------------------------------- TOTAL $ 988 $ 862 $ (126) - --------------------------------------------------------------------------------------------------- TOTAL SECURITIES DECEMBER 31, 2002 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - --------------------------------------------------------------------------------------------------- Three months or less $ 2,042 $ 1,949 $ (93) Greater than three months to six months 1,542 1,463 (79) Greater than six months to nine months 703 611 (92) Greater than nine months to twelve months 1,820 1,719 (101) Greater than twelve months 2,351 2,103 (248) - --------------------------------------------------------------------------------------------------- TOTAL $ 8,458 $ 7,845 $ (613) - --------------------------------------------------------------------------------------------------- BIG [2] AND EQUITY SECURITIES DECEMBER 31, 2002 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - --------------------------------------------------------------------------------------------------- Three months or less $ 274 $ 229 $ (45) Greater than three months to six months 308 267 (41) Greater than six months to nine months 266 213 (53) Greater than nine months to twelve months 576 515 (61) Greater than twelve months 610 517 (93) - --------------------------------------------------------------------------------------------------- TOTAL $ 2,034 $ 1,741 $ (293) - --------------------------------------------------------------------------------------------------- [1] As of June 30, 2003, fixed maturities represented $360, or 97%, of the Company's total unrealized loss. There were no fixed maturities as of June 30, 2003 with a fair value less than 80% of the security's amortized cost basis for six continuous months other than certain asset-backed and commercial mortgage-backed securities. Other than temporary impairments for certain asset-backed and commercial mortgage-backed securities are recognized if the fair value of the security is less than its carrying amount and there has been a decrease in the present value of the expected cash flows since the last reporting period. There were no asset-backed or commercial mortgage-backed securities included in the tables above, as of June 30, 2003 and December 31, 2002, for which management's best estimate of future cash flows adversely changed during the reporting period. For a detailed discussion of the other than temporary impairment criteria see "Valuation of Investments and Derivative Instruments" included in the Critical Accounting Estimates section of the Management's Discussion & Analysis and in Note 1(g) of Notes to Consolidated Financial Statements, both of which are included in The Hartford's 2002 Form 10-K Annual Report. [2] Represents below investment grade ("BIG") securities
I-8
THE HARTFORD FINANCIAL SERVICES GROUP, INC. UNREALIZED LOSS AGING LIFE - GENERAL AND GUARANTEED SEPARATE ACCOUNT TOTAL SECURITIES JUNE 30, 2003 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - --------------------------------------------------------------------------------------------------- Three months or less $ 2,465 $ 2,426 $ (39) Greater than three months to six months 418 399 (19) Greater than six months to nine months 538 501 (37) Greater than nine months to twelve months 370 348 (22) Greater than twelve months 1,977 1,791 (186) - --------------------------------------------------------------------------------------------------- TOTAL $ 5,768 $ 5,465 $ (303) - --------------------------------------------------------------------------------------------------- BIG AND EQUITY SECURITIES JUNE 30, 2003 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - --------------------------------------------------------------------------------------------------- Three months or less $ 195 $ 185 $ (10) Greater than three months to six months 60 53 (7) Greater than six months to nine months 83 67 (16) Greater than nine months to twelve months 12 5 (7) Greater than twelve months 372 306 (66) - --------------------------------------------------------------------------------------------------- TOTAL $ 722 $ 616 $ (106) - --------------------------------------------------------------------------------------------------- TOTAL SECURITIES DECEMBER 31, 2002 --------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - --------------------------------------------------------------------------------------------------- Three months or less $ 1,532 $ 1,459 $ (73) Greater than three months to six months 1,294 1,239 (55) Greater than six months to nine months 568 508 (60) Greater than nine months to twelve months 1,334 1,264 (70) Greater than twelve months 2,135 1,927 (208) - --------------------------------------------------------------------------------------------------- TOTAL $ 6,863 $ 6,397 $ (466) - --------------------------------------------------------------------------------------------------- BIG AND EQUITY SECURITIES DECEMBER 31, 2002 --------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - --------------------------------------------------------------------------------------------------- Three months or less $ 162 $ 130 $ (32) Greater than three months to six months 208 185 (23) Greater than six months to nine months 175 145 (30) Greater than nine months to twelve months 330 293 (37) Greater than twelve months 501 431 (70) - --------------------------------------------------------------------------------------------------- TOTAL $ 1,376 $ 1,184 $ (192) - ---------------------------------------------------------------------------------------------------
I-9
THE HARTFORD FINANCIAL SERVICES GROUP, INC. UNREALIZED LOSS AGING PROPERTY & CASUALTY - GENERAL ACCOUNT TOTAL SECURITIES JUNE 30, 2003 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - ------------------------------------------------------------------------------------------------------ Three months or less $ 2,207 $ 2,180 $ (27) Greater than three months to six months 61 55 (6) Greater than six months to nine months 79 74 (5) Greater than nine months to twelve months 24 23 (1) Greater than twelve months 539 508 (31) - ------------------------------------------------------------------------------------------------------ TOTAL $ 2,910 $ 2,840 $ (70) - ------------------------------------------------------------------------------------------------------ BIG AND EQUITY SECURITIES JUNE 30, 2003 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - ------------------------------------------------------------------------------------------------------ Three months or less $ 139 $ 133 $ (6) Greater than three months to six months 26 22 (4) Greater than six months to nine months 25 24 (1) Greater than nine months to twelve months - - - Greater than twelve months 76 67 (9) - ------------------------------------------------------------------------------------------------------ TOTAL $ 266 $ 246 $ (20) - ------------------------------------------------------------------------------------------------------ TOTAL SECURITIES DECEMBER 31, 2002 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - ------------------------------------------------------------------------------------------------------ Three months or less $ 510 $ 490 $ (20) Greater than three months to six months 248 224 (24) Greater than six months to nine months 135 103 (32) Greater than nine months to twelve months 486 455 (31) Greater than twelve months 216 176 (40) - ------------------------------------------------------------------------------------------------------ TOTAL $ 1,595 $ 1,448 $ (147) - ------------------------------------------------------------------------------------------------------ BIG AND EQUITY SECURITIES DECEMBER 31, 2002 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS - ------------------------------------------------------------------------------------------------------ Three months or less $ 112 $ 99 $ (13) Greater than three months to six months 100 82 (18) Greater than six months to nine months 91 68 (23) Greater than nine months to twelve months 246 222 (24) Greater than twelve months 109 86 (23) - ------------------------------------------------------------------------------------------------------ TOTAL $ 658 $ 557 $ (101) - ------------------------------------------------------------------------------------------------------
I-10 THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL AND GUARANTEED SEPARATE ACCOUNT INVESTED ASSET EXPOSURES AS OF JUNE 30, 2003 TOP TEN CORPORATE FIXED MATURITY EXPOSURES BY SECTOR LIFE ------------------------ Percent of Total Invested Fair Value Assets ------------------------ Financial services $ 5,883 11.7% Technology and Communications 3,836 7.6% Basic industry 2,913 5.8% Consumer non cyclical 3,000 6.0% Utilities 2,127 4.2% Consumer cyclical 1,910 3.8% Energy 1,644 3.3% Capital goods 1,251 2.5% Transportation 661 1.3% Other 563 1.2% - ----------------------------------------------------------- TOTAL $23,788 47.4% - ----------------------------------------------------------- TOP TEN EXPOSURES BY ISSUER [1] LIFE ------------------------ Percent of Total Invested Fair Value Assets ------------------------ Capital One Master Trust $ 211 0.4% Ford Motor Company 196 0.4% British Telecommunications PLC 190 0.4% ConocoPhillips 187 0.4% American Express Credit Account Master 185 0.4% DaimlerChrysler AG 181 0.4% Citibank Credit Card Issuance Trust 176 0.4% Credit Suisse Group 173 0.3% General Motors Corporation 170 0.3% Comcast Corporation 170 0.3% - ----------------------------------------------------------- TOTAL $ 1,839 3.7% - ----------------------------------------------------------- [1] Excludes U.S. government and government agency backed securities. TOP TEN CORPORATE FIXED MATURITY EXPOSURES BY SECTOR P&C ------------------------ Percent of Total Invested Fair Value Assets ------------------------ Financial services $ 2,023 8.6% Technology and Communications 1,121 4.8% Basic industry 974 4.1% Consumer non cyclical 656 2.8% Utilities 703 3.0% Consumer cyclical 522 2.2% Energy 472 2.0% Capital goods 361 1.5% Transportation 139 0.6% Other 85 0.3% - -------------------------------------------------------- TOTAL $ 7,056 29.9% - -------------------------------------------------------- TOP TEN EXPOSURES BY ISSUER [1] P&C ------------------------ Percent of Total Invested Fair Value Assets ------------------------ State of California $ 262 1.1% State of Illinois 198 0.8% State of Massachusetts 182 0.8% New York City, NY 181 0.8% United Kingdom, Sovereign 170 0.7% France, Sovereign 131 0.6% State of Pennsylvania 130 0.6% State of New York 123 0.5% New Jersey Transportation Trust Fund, NJ 121 0.5% JP Morgan Chase & Co. 115 0.4% - -------------------------------------------------------- TOTAL $ 1,613 6.8% - -------------------------------------------------------- [1] Excludes U.S. government and government agency backed securities. TOP TEN CORPORATE FIXED MATURITY EXPOSURES BY SECTOR CONSOLIDATED ------------------------ Percent of Total Invested Fair Value Assets ------------------------ Financial services $ 7,906 10.7% Technology and Communications 4,957 6.7% Basic industry 3,887 5.3% Consumer non cyclical 3,656 4.9% Utilities 2,830 3.8% Consumer cyclical 2,432 3.3% Energy 2,116 2.9% Capital goods 1,612 2.2% Transportation 800 1.1% Other 648 0.8% - ------------------------------------------------------- TOTAL $ 30,844 41.7% - ------------------------------------------------------- TOP TEN EXPOSURES BY ISSUER [1] CONSOLIDATED ------------------------ Percent of Total Invested Fair Value Assets ------------------------ State of California $ 356 0.5% Ford Motor Company 278 0.4% State of Illinois 266 0.4% General Motors Corporation 262 0.4% Capital One Master Trust 245 0.3% State of Massachusetts 244 0.3% Comcast Corporation 236 0.3% DaimlerChrysler AG 230 0.3% France Telecom 225 0.3% Germany Bundes Obligation 214 0.3% - ------------------------------------------------------- TOTAL $ 2,556 3.5% - ------------------------------------------------------- [1] Excludes U.S. government and government agency backed securities. I-11 THE HARTFORD FINANCIAL SERVICES GROUP, INC. INDEX OF SELECTED ITEMS TOPIC PAGE(S) - ------------------------------------------------ -------------- A&E Gross and Net Paid and Incurred Losses PC-18 Acc. Other Comprehensive Income, Net of Tax Detail C-7 Adjusted Statutory Surplus - Hartford Fire Pool PC-1 Aging of Unrealized Losses I-8-10 Allowance for Uncollectible Insurance - P&C PC-21 Assets Under Management - Consolidated, Life C-1, L-1, 3, 11 Book Value C-1 Catastrophe Ratio PC-1 Claims and Claim Adjustment Expenses Incurred - A&E PC-18 Claims and Claim Adjustment Expenses Paid - A&E PC-18 Combined Ratio - GAAP - All P&C Segments PC-3-5, 7, 9, 11 DAC Capitalization and Amortization - Life L-1, L-5 Debt Ratios C-1, C-6 Effective Tax Rates - Life, P&C L-2, PC-2, 22 Embedded Value of Variable Annuity In-Force L-14 Fixed Maturity Ratings Categories I-5-7 Gross Loss & LAE Reserves - P&C PC-19-20 Gross Realized Gains/Losses on Sales I-1-3 Impairments I-1-3 Investment Yields C-1, I-1-3 Issuer Exposures I-11 Japan Sales and Account Values L-3 Life Insurance in Force L-16 Loss and Loss Expense Incurred Ratio PC-3-5, 7, 9, 11 Loss and Loss Expense Paid Ratio PC-19-20 TOPIC PAGE(S) - --------------------------------------------------- -------------- Loss Ratio - Group Benefits L-19 Maximum Anniversary Value L-14 Minimum Pension Liability C-7 Net Amount at Risk - GMDB L-14 Net Loss & LAE Reserves - P&C PC-19-20 New Business Percentage to Net Written Premium PC-13 Premium Retention - P&C PC-13 Premium to Adjusted Surplus Ratio - Hartford Fire Pool PC-1 Prior Accident Year Development PC-19-20 Ratchet - GMDB L-14 Ratings Information - HIG INSIDE COVER RBC - (NAIC - Life, P&C) L-4, PC-23 Reinsurance Recoverables Exposure By Category - Life, P&C L-6, PC-21 Reset - GMDB L-14 Return of Premium/Other - GMDB L-14 Return on Equity - Consolidated, Life, P&C C-1, L-1, PC-1 Sales - Life L-10, 16, 19 Sector Exposures I-11 Statutory Income and Surplus - Life, P&C L-1, PC-1 Statutory Reserve Credit and Amounts Recoverable - Life L-6 Statutory to GAAP Adjustments - Life, P&C L-7, PC-14 Surrenders - Life Account Values L-12-13, 17 Survival Ratio PC-17 Weighted Average Shares C-1 Written P&C Pricing PC-13 ii -----END PRIVACY-ENHANCED MESSAGE-----