-----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, DQEReDq151A//Jipzuzgk36BuIbTOcra23MTWevi+k41ix72YSJkXtK20505wybP Qen07lIc+vHibK/rJvDO3g== 0000948572-03-000067.txt : 20031107 0000948572-03-000067.hdr.sgml : 20031107 20031107113759 ACCESSION NUMBER: 0000948572-03-000067 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030930 ITEM INFORMATION: FILED AS OF DATE: 20031107 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: 03984056 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 b8k093003.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): November 5, 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 November 5, 2003, The Hartford Financial Services Group, Inc. released its Investor Financial Supplement (the "IFS") relating to its financial results for the quarter ended September 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: November 7, 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 OMMITTED] THE HARTFORD INVESTOR FINANCIAL SUPPLEMENT SEPTEMBER 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 November 3, 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 Group, 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 U.S. 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 TABLE OF CONTENTS
Basis of Presentation ......................................................................... i CONSOLIDATED Consolidated Financial Results ................................................................ C-1 Operating Results by Segment .................................................................. C-2 Consolidating Statements of Operations Third Quarter Ended September 30, 2003 and 2002 ............................................. C-3 Nine Months Ended September 30, 2003 and 2002 ............................................... C-4 Consolidating Balance Sheets As of September 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 As of June 30, 2003 ......................................................................... 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 Third Quarter Ended September 30, 2003 ...................................................... PC-3 Nine Months Ended September 30, 2003 ........................................................ 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 Operating Results ............................................................ 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 Development - A&E .......................... PC-18 Unpaid Claims and Claim Adjustment Expense Reserve Rollforward Third Quarter Ended September 30, 2003 ...................................................... PC-19 Nine Months Ended September 30, 2003 ........................................................ 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 As of September 30, 2003 .................................................................... I-11
INDEX OF SELECTED ITEMS 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 this measure to enhance investor understanding of the financial performance of the Company's operating businesses by eliminating the effect of the 2003 asbestos reserve addition which relates solely to legacy businesses. 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, 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 performance measure is useful to investors as it reflects current trends in the Company's sale of property and casualty insurance products. Earned premiums is the most directly comparable GAAP measure. o The Hartford, along with others in the life insurance industry, uses underwriting ratios as measures of the group benefits segment's performance. The loss ratio is the ratio of total benefits and claims excluding buyouts to total premiums and other considerations excluding buyout premiums. The expense ratio is the ratio of other insurance expenses (including amortization of deferred acquisition costs and present value of future profits) to total premiums and other considerations excluding buyout premiums. The combined ratio is the sum of the loss ratio and the expense ratio. 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 immediately preceding 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 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 Property and Casualty includes North American and Other Operations. North American includes the combined underwriting results of the Business Insurance, Personal Lines, Specialty Commercial and Reinsurance segments. Other Operations includes the combined underwriting results of certain property and casualty insurance operations that have discontinued writing new business and the Company's asbestos and environmental exposures. Property & Casualty includes the combined underwriting results of North American and Other Operations along with income and expense items not directly allocated to the Company's property and casualty segments, such as net investment income, net realized capital gains and losses, other expenses (including interest) and income taxes. 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 Property & Casualty. o Certain reclassifications have been made to the prior periods to conform to the September 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 vice versa. - i -
THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATED FINANCIAL RESULTS 3Q 4Q 1Q 2Q 3Q HIGHLIGHTS 2002 2002 2003 2003 2003 --------- --------- -------- --------- --------- Net income (loss) [1] $ 265 $ 258 $ (1,395) $ 507 $ 343 Operating income (loss) [1] $ 365 $ 301 $ (1,361) $ 340 $ 335 Impact of 2003 asbestos reserve addition $ - $ - $ (1,701) $ - $ - Operating income before impact of 2003 asbestos reserve addition $ 365 $ 301 $ 340 $ 340 $ 335 Total revenues $ 4,085 $ 4,280 $ 4,331 $ 4,682 $ 4,947 Total assets $175,824 $181,975 $188,657 $207,801 $211,365 Total assets under management [2] $191,055 $198,608 $205,223 $227,437 $232,115 - ----------------------------------------------------------------------------------------------------------------------------- PER SHARE AND SHARES DATA Basic earnings (loss) per share [1] Net income (loss) $ 1.06 $ 1.01 $ (5.46) $ 1.89 $ 1.21 Operating income (loss) $ 1.47 $ 1.18 $ (5.33) $ 1.26 $ 1.19 Operating income before impact of 2003 asbestos reserve addition $ 1.47 $ 1.18 $ 1.33 $ 1.26 $ 1.19 Diluted earnings (loss) per share [1] [3] Net income (loss) $ 1.06 $ 1.01 $ (5.46) $ 1.88 $ 1.20 Operating income (loss) $ 1.46 $ 1.17 $ (5.33) $ 1.26 $ 1.18 Operating income before impact of 2003 asbestos reserve addition [4] $ 1.46 $ 1.17 $ 1.33 $ 1.26 $ 1.18 Weighted average common shares outstanding (basic) 248.9 255.2 255.4 268.8 282.5 Weighted average common shares outstanding and dilutive potential common shares (diluted) [3] 250.5 256.3 255.4 270.2 284.8 Common shares outstanding 255.0 255.2 255.4 282.2 282.7 Book value (including AOCI) $ 42.91 $ 42.06 $ 36.97 $ 40.75 $ 40.13 Book value (excluding AOCI) $ 36.99 $ 37.77 $ 32.05 $ 34.34 $ 35.33 - ----------------------------------------------------------------------------------------------------------------------------- FINANCIAL RATIOS ROE (net income (loss) last 12 months to equity including AOCI) [5] 9.0% 10.1% (7.4%) (3.5%) (2.6%) ROE (operating income (loss) last 12 months to equity excluding AOCI) [5] 13.9% 13.8% (4.8%) (3.8%) (4.0%) 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] 13.9% 13.8% 13.9% 14.5% 13.6% Debt to capitalization incl. AOCI 29.9% 29.0% 31.7% 30.9% 31.2% Investment yield, after-tax 4.1% 4.3% 4.2% 4.0% 3.9% North American Property & Casualty GAAP combined ratio 98.7 100.0 97.7 99.7 99.2 - ----------------------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ----------------------------- HIGHLIGHTS CHANGE CHANGE 2002 2003 CHANGE ------- -------- -------- -------- ---------- Net income (loss) [1] 29% (32%) $ 742 $ (545) NM Operating income (loss) [1] (8%) (1%) $ 949 $ (686) NM Impact of 2003 asbestos reserve addition - - $ - $(1,701) - Operating income before impact of 2003 asbestos reserve addition (8%) (1%) $ 949 $ 1,015 7% Total revenues 21% 6% $12,137 $13,960 15% Total assets 20% 2% Total assets under management [2] 21% 2% - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE AND SHARES DATA Basic earnings (loss) per share [1] Net income (loss) 14% (36%) $ 3.00 $ (2.03) NM Operating income (loss) (19%) (6%) $ 3.84 $ (2.55) NM Operating income before impact of 2003 asbestos reserve addition (19%) (6%) $ 3.84 $ 3.77 (2%) Diluted earnings (loss) per share [1] [3] Net income (loss) 13% (36%) $ 2.96 $ (2.03) NM Operating income (loss) (19%) (6%) $ 3.79 $ (2.55) NM Operating income before impact of 2003 asbestos reserve addition [4] (19%) (6%) $ 3.79 $ 3.75 (1%) Weighted average common shares outstanding (basic) 33.6 sh 13.7 sh 247.4 268.9 21.5 sh Weighted average common shares outstanding and dilutive potential common shares (diluted) [3] 34.3 sh 14.6 sh 250.3 268.9 18.6 sh Common shares outstanding 27.7 sh 0.5 sh 255.0 282.7 27.7 sh Book value (including AOCI) (6%) (2%) Book value (excluding AOCI) (4%) 3% - ------------------------------------------------------------------------------------------------------------------------------- FINANCIAL RATIOS ROE (net income (loss) last 12 months to equity including AOCI) [5] (11.6) 0.9 ROE (operating income (loss) last 12 months to equity excluding AOCI) [5] (17.9) (0.2) 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] (0.3) (0.9) Debt to capitalization incl. AOCI 1.3 0.3 Investment yield, after-tax (0.2) (0.1) 4.2% 4.1% (0.1) North American Property & Casualty GAAP combined ratio (0.5) 0.5 99.8 98.9 0.9 - ------------------------------------------------------------------------------------------------------------------------------- [1] The quarter and nine months ended September 30, 2003 include $40 of after-tax expense related to the settlement of the Bancorp Services, LLC litigation dispute. The quarter ended June 30, 2003 and the nine months ended September 30, 2003 include $30 and the quarter and nine months ended September 30, 2002 include $76 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 and the nine months ended September 30, 2003 include $27, after-tax, of severance charges in Property & Casualty. The nine months ended September 30, 2002 includes $11 of after-tax expense in Life related to the Bancorp Services, LLC litigation dispute 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 nine months ended September 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 nine months ended September 30, 2003 diluted earnings per share. In the absence of the net loss, 256.1 and 270.4 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 nine months ended September 30, 2003, respectively. [4] Calculated using weighted average common shares outstanding and dilutive potential common shares of 256.1 and 270.4 for the quarter ended March 31, 2003 and the nine months ended September 30, 2003, respectively. [5] The quarter ended September 30, 2002 excludes the $440 loss related to September 11, 2001. [6] The quarters ended June 30, 2003 and September 30, 2003 exclude 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.
C-1
THE HARTFORD FINANCIAL SERVICES GROUP, INC. OPERATING RESULTS BY SEGMENT 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 ------- -------- -------- ------ ------- LIFE Individual Annuity $ 76 $ 78 $ 71 $ 93 $ 98 Other Investment Products 24 19 27 27 31 ------------------------------------------------------------------------------------------------------------- Total Investment Products 100 97 98 120 129 Individual Life 33 34 32 34 36 Group Benefits 34 36 34 35 38 Corporate Owned Life Insurance 10 12 10 9 10 Other (21) (12) (17) (17) (11) ------------------------------------------------------------------------------------------------------------- Life, before Bancorp litigation and tax related items 156 167 157 181 202 Bancorp litigation - - - - (40) Tax related items 76 - - 30 - ------------------------------------------------------------------------------------------------------------- TOTAL LIFE 232 167 157 211 162 ============================================================================================================= PROPERTY & CASUALTY North American Underwriting Results Business Insurance 21 27 (12) 42 20 Personal Lines (13) 2 52 3 37 Specialty Commercial 3 (24) - (4) (50) Reinsurance (4) (42) (19) (76) (10) ------------------------------------------------------------------------------------------------------------- Total North American underwriting results 7 (37) 21 (35) (3) Other Operations underwriting results (42) (35) (29) (12) (12) ------------------------------------------------------------------------------------------------------------- Total Property & Casualty underwriting results (35) (72) (8) (47) (15) Net investment income 262 288 285 291 302 Net servicing and other income 4 8 3 3 9 Other expenses (68) (56) (40) (38) (42) Income tax expense (24) (26) (49) (40) (61) - ----------------------------------------------------------------------------------------------------------------- Property & Casualty, before 2003 asbestos reserve addition and severance charges 139 142 191 169 193 2003 asbestos reserve addition - - (1,701) - - Severance charges - - - (27) - - ----------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY 139 142 (1,510) 142 193 ================================================================================================================= CORPORATE (6) (8) (8) (13) (20) ================================================================================================================= Operating income, before 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges 289 301 340 337 375 - ----------------------------------------------------------------------------------------------------------------- 2003 asbestos reserve addition - - (1,701) - - Bancorp litigation - - - - (40) Tax related items 76 - - 30 - Severance charges - - - (27) - - ----------------------------------------------------------------------------------------------------------------- Operating income (loss) 365 301 (1,361) 340 335 Net realized capital gains (losses), after-tax (100) (43) (34) 167 8 - ----------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ 265 $ 258 $(1,395) $ 507 $ 343 ================================================================================================================= PER SHARE DATA Diluted earnings (loss) per share Operating income, before 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 1.15 $ 1.17 $ 1.33 $ 1.25 $ 1.32 Net income (loss) $ 1.06 $ 1.01 $(5.46) $ 1.88 $ 1.20 ================================================================================================================= YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER --------------------------- CHANGE CHANGE 2002 2003 CHANGE --------- -------- -------- -------- -------- LIFE Individual Annuity 29% 5% $ 255 $ 262 3% Other Investment Products 29% 15% 80 85 6% ------------------------------------------------------------------------------------------------------------------- Total Investment Products 29% 8% 335 347 4% Individual Life 9% 6% 99 102 3% Group Benefits 12% 9% 92 107 16% Corporate Owned Life Insurance - 11% 31 29 (6%) Other 48% 35% (36) (45) (25%) ------------------------------------------------------------------------------------------------------------------- Life, before Bancorp litigation and tax related items 29% 12% 521 540 4% Bancorp litigation - - (11) (40) NM Tax related items (100%) (100%) 76 30 (61%) ------------------------------------------------------------------------------------------------------------------- TOTAL LIFE (30%) (23%) 586 530 (10%) =================================================================================================================== PROPERTY & CASUALTY North American Underwriting Results Business Insurance (5%) (52%) 17 50 194% Personal Lines NM NM (48) 92 NM Specialty Commercial NM NM 1 (54) NM Reinsurance (150%) 87% (17) (105) NM ------------------------------------------------------------------------------------------------------------------- Total North American underwriting results NM 91% (47) (17) 64% Other Operations underwriting results 71% - (129) (53) 59% ------------------------------------------------------------------------------------------------------------------- Total Property & Casualty underwriting results 57% 68% (176) (70) 60% Net investment income 15% 4% 787 878 12% Net servicing and other income 125% NM 7 15 114% Other expenses 38% (11%) (162) (120) 26% Income tax expense (154%) (53%) (75) (150) (100%) - ----------------------------------------------------------------------------------------------------------------------- Property & Casualty, before 2003 asbestos reserve addition and severance charges 39% 14% 381 553 45% 2003 asbestos reserve addition - - - (1,701) - Severance charges - 100% - (27) - - ----------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY 39% 36% 381 (1,175) NM ======================================================================================================================= CORPORATE NM (54%) (18) (41) (128%) ======================================================================================================================= Operating income, before 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges 30% 11% 884 1,052 19% - ----------------------------------------------------------------------------------------------------------------------- 2003 asbestos reserve addition - - - (1,701) - Bancorp litigation - - (11) (40) NM Tax related items (100%) (100%) 76 30 (61%) Severance charges - 100% - (27) - - ----------------------------------------------------------------------------------------------------------------------- Operating income (loss) (8%) (1%) 949 (686) NM Net realized capital gains (losses), after-tax NM (95%) (207) 141 NM - ----------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) 29% (32%) $ 742 $ (545) NM ======================================================================================================================= PER SHARE DATA Diluted earnings (loss) per share Operating income, before 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges 15% 6% $ 3.53 $ 3.89 10% Net income (loss) 13% (36%) $ 2.96 $ (2.03) NM =======================================================================================================================
C-2 THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING STATEMENTS OF OPERATIONS THIRD QUARTER ENDED SEPTEMBER 30, 2003 AND 2002 LIFE PROPERTY & CASUALTY --------------------------- ----------------------------- 2003 2002 CHANGE 2003 2002 CHANGE -------- -------- ---------- ---------- -------- ---------- Earned premiums $ 981 $ 667 47% $ 2,268 $ 2,107 8% Fee income 716 627 14% - - - Net investment income 518 462 12% 302 262 15% Other revenues 35 27 30% 110 88 25% Net realized capital gains (losses) (2) (118) 98% 14 (42) NM - ---------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 2,248 1,665 35% 2,694 2,415 12% Benefits, claims and claim adjustment expenses [1] 1,375 1,050 31% 1,622 1,505 8% Amortization of deferred policy acquisition costs and present value of future profits 202 163 24% 431 405 6% Insurance operating costs and expenses 379 335 13% 230 232 (1%) Other expenses [2] 94 34 176% 143 152 (6%) - ---------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 2,050 1,582 30% 2,426 2,294 6% INCOME (LOSS) BEFORE INCOME TAXES 198 83 139% 268 121 121% Income tax expense (benefit) 37 (78) NM 66 11 NM - ---------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [3] 161 161 - 202 110 84% Net realized capital gains (losses), after-tax (1) (71) 99% 9 (29) NM - ---------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [3] $ 162 $ 232 (30%) $ 193 $ 139 39% - ---------------------------------------------------------------------------------------------------------------------- CORPORATE CONSOLIDATED -------------------------- ---------------------------- 2003 2002 CHANGE 2003 2002 CHANGE --------- -------- ---------- --------- -------- -------- Earned premiums $ - $ - - $ 3,249 $ 2,774 17% Fee income - - - 716 627 14% Net investment income 5 5 - 825 729 13% Other revenues - - - 145 115 26% Net realized capital gains (losses) - - - 12 (160) NM - --------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 5 5 - 4,947 4,085 21% Benefits, claims and claim adjustment expenses [1] 1 2 (50%) 2,998 2,557 17% Amortization of deferred policy acquisition costs and present value of future profits - - - 633 568 11% Insurance operating costs and expenses - - - 609 567 7% Other expenses [2] 34 13 162% 271 199 36% - --------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 35 15 133% 4,511 3,891 16% INCOME (LOSS) BEFORE INCOME TAXES (30) (10) NM 436 194 125% Income tax expense (benefit) (10) (4) (150%) 93 (71) NM - --------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [3] (20) (6) NM 343 265 29% Net realized capital gains (losses), after-tax - - - 8 (100) NM - --------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [3] $ (20) $ (6) NM $ 335 $ 365 (8%) - --------------------------------------------------------------------------------------------------------------------- [1] Before-tax catastrophe losses for Property & Casualty were $77 for 2003 and $24 for 2002. [2] Life includes $62 in 2003 of before-tax expense related to the settlement of the Bancorp litigation dispute. [3] Life includes $40 in 2003 of after-tax expense related to the settlement of the Bancorp litigation dispute. Life includes $76 in 2002 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 $51 for 2003 and $16 for 2002.
C-3
THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING STATEMENTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 LIFE PROPERTY & CASUALTY ------------------------------------- --------------------------------------- 2003 2002 CHANGE 2003 2002 CHANGE ----------- ----------- ----------- ------------ ----------- ----------- Earned premiums $ 2,370 $ 2,040 16% $ 6,540 $ 5,960 10% Fee income 1,989 1,961 1% - - - Net investment income 1,538 1,360 13% 878 787 12% Other revenues 99 91 9% 318 257 24% Net realized capital gains (losses) - (253) 100% 216 (80) NM - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 5,996 5,199 15% 7,952 6,924 15% Benefits, claims and claim adjustment expenses [1] 3,544 3,135 13% 7,324 4,315 70% Amortization of deferred policy acquisition costs and present value of future profits 540 486 11% 1,214 1,210 - Insurance operating costs and expenses 1,125 1,050 7% 676 611 11% Other expenses [2] 159 114 39% 464 412 13% - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 5,368 4,785 12% 9,678 6,548 48% INCOME (LOSS) BEFORE INCOME TAXES 628 414 52% (1,726) 376 NM Income tax expense (benefit) 98 (18) NM (692) 48 NM - ----------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [3] 530 432 23% (1,034) 328 NM Net realized capital gains (losses), after-tax - (154) 100% 141 (53) NM - ----------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [3] $ 530 $ 586 (10%) $ (1,175) $ 381 NM - ----------------------------------------------------------------------------------------------------------------------------------- CORPORATE CONSOLIDATED -------------------------------------- ------------------------------------- 2003 2002 CHANGE 2003 2002 CHANGE ----------- ---------- ----------- ---------- ----------- ----------- Earned premiums $ - $ - - $ 8,910 $ 8,000 11% Fee income - - - 1,989 1,961 1% Net investment income 15 14 7% 2,431 2,161 12% Other revenues (3) - - 414 348 19% Net realized capital gains (losses) - - - 216 (333) NM - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 12 14 (14%) 13,960 12,137 15% Benefits, claims and claim adjustment expenses [1] 4 5 (20%) 10,872 7,455 46% Amortization of deferred policy acquisition costs and present value of future profits - - - 1,754 1,696 3% Insurance operating costs and expenses - - - 1,801 1,661 8% Other expenses [2] 70 37 89% 693 563 23% - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 74 42 76% 15,120 11,375 33% INCOME (LOSS) BEFORE INCOME TAXES (62) (28) (121%) (1,160) 762 NM Income tax expense (benefit) (21) (10) (110%) (615) 20 NM - ---------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [3] (41) (18) (128%) (545) 742 NM Net realized capital gains (losses), after-tax - - - 141 (207) NM - ---------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [3] $ (41) $ (18) (128%) $ (686) $ 949 NM - ---------------------------------------------------------------------------------------------------------------------------------- [1] Property & Casualty includes $2,604 in 2003 of before-tax impact of asbestos reserve addition. Before-tax catastrophe losses for Property & Casualty were $233 and $92 for 2003 and 2002, respectively. [2] Property & Casualty includes $41 in 2003 of before-tax severance charges. Life includes $62 in 2003 and $17 in 2002 of before-tax expense related to the Bancorp litigation dispute. [3] Property & Casualty includes $1,701 in 2003 of after-tax impact of the 2003 asbestos reserve addition and $27 in 2003 of after-tax severance charges. Property & Casualty includes after-tax catastrophe losses of $152 and $60 in 2003 and 2002, respectively. Life includes $40 in 2003 of after-tax expense related to settlement of the Bancorp litigation dispute. Life includes $30 in 2003 and $76 in 2002 of tax benefit related to the favorable treatment of certain tax items arising during the 1996-2002 tax years. Life includes $11 in 2002 of after-tax expense related to the Bancorp litigation dispute and $8 after-tax benefit in Life's September 11 Terrorist Attack exposure.
C-4
THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING BALANCE SHEETS AS OF SEPTEMBER 30, 2003 AND DECEMBER 31, 2002 LIFE PROPERTY & CASUALTY ------------------------------- -------------------------------- SEPT. 30, DEC. 31, SEPT. 30, DEC. 31, 2003 2002 CHANGE 2003 2002 CHANGE ---------- ---------- -------- --------- ------------ --------- Investments Fixed maturities, available-for-sale, at fair value $35,237 $ 29,377 20% $23,565 $ 19,446 21% Equity securities, available for sale, at fair value 424 458 (7%) 215 459 (53%) Policy loans, at outstanding balance 2,533 2,934 (14%) - - - Other investments 891 1,122 (21%) 644 668 (4%) - ---------------------------------------------------------------------------------------------------------------------------- Total investments 39,085 33,891 15% 24,424 20,573 19% Cash 293 179 64% 203 198 3% Premiums receivable and agents' balances 205 208 (1%) 2,626 2,403 9% Reinsurance recoverables 686 796 (14%) 5,529 4,231 31% Deferred policy acquisition costs and present value of future profits 6,265 5,758 9% 981 930 5% Deferred income taxes (479) (274) (75%) 1,136 610 86% Goodwill 796 796 - 152 153 (1%) Other assets 1,177 1,362 (14%) 2,050 2,031 1% Separate account assets 125,110 107,078 17% - - - - ---------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $173,138 $149,794 16% $37,101 $ 31,129 19% - ---------------------------------------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $ 9,362 $ 8,583 9% $21,444 $ 17,091 25% Other policy funds and benefits payable 26,241 23,957 10% - - - Unearned premiums 63 54 17% 4,504 3,942 14% Debt 1,355 1,125 20% 1,484 1,164 27% Trust preferred securities 450 450 - 517 1,023 (49%) Other liabilities 4,150 2,858 45% 3,513 2,939 20% Separate account liabilities 125,110 107,078 17% - - - - ---------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 166,731 144,105 16% 31,462 26,159 20% - ---------------------------------------------------------------------------------------------------------------------------- Equity excluding AOCI, net of tax 5,458 4,980 10% 4,899 4,262 15% AOCI, net of tax 949 709 34% 740 708 5% - ---------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 6,407 5,689 13% 5,639 4,970 13% - ---------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $173,138 $149,794 16% $37,101 $ 31,129 19% - ---------------------------------------------------------------------------------------------------------------------------- CORPORATE CONSOLIDATED --------------------------- ------------------------------- SEPT. 30, DEC. 31, SEPT. 30, DEC. 31, 2003 2002 CHANGE 2003 2002 CHANGE -------- -------- --------- ---------- ---------- -------- Investments Fixed maturities, available-for-sale, at fair value $ 107 $ 66 62% $ 58,909 $ 48,889 20% Equity securities, available for sale, at fair value - - - 639 917 (30%) Policy loans, at outstanding balance - - - 2,533 2,934 (14%) Other investments 4 - - 1,539 1,790 (14%) - ------------------------------------------------------------------------------------------------------------------------ Total investments 111 66 68% 63,620 54,530 17% Cash - - - 496 377 32% Premiums receivable and agents' balances - - - 2,831 2,611 8% Reinsurance recoverables - - - 6,215 5,027 24% Deferred policy acquisition costs and present value of future profits 1 1 - 7,247 6,689 8% Deferred income taxes 231 209 11% 888 545 63% Goodwill 772 772 - 1,720 1,721 - Other assets 11 4 175% 3,238 3,397 (5%) Separate account assets - - - 125,110 107,078 17% - ------------------------------------------------------------------------------------------------------------------------ TOTAL ASSETS $1,126 $1,052 7% $ 211,365 $ 181,975 16% - ------------------------------------------------------------------------------------------------------------------------ Future policy benefits, unpaid claims and claim adjustment expenses $ (11) $ (16) 31% $ 30,795 $ 25,658 20% Other policy funds and benefits payable (1) (1) - 26,240 23,956 10% Unearned premiums (7) (7) - 4,560 3,989 14% Debt 1,336 622 115% 4,175 2,911 43% Trust preferred securities (5) (5) - 962 1,468 (34%) Other liabilities 516 384 34% 8,179 6,181 32% Separate account liabilities - - - 125,110 107,078 17% - ------------------------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES 1,828 977 87% 200,021 171,241 17% - ------------------------------------------------------------------------------------------------------------------------ Equity excluding AOCI, net of tax (370) 398 NM 9,987 9,640 4% AOCI, net of tax (332) (323) (3%) 1,357 1,094 24% - ------------------------------------------------------------------------------------------------------------------------ TOTAL STOCKHOLDERS' EQUITY (702) 75 NM 11,344 10,734 6% - ------------------------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,126 $1,052 7% $ 211,365 $ 181,975 16% - ------------------------------------------------------------------------------------------------------------------------
C-5
THE HARTFORD FINANCIAL SERVICES GROUP, INC. CAPITAL STRUCTURE 3Q 4Q 1Q 2Q 2002 2002 2003 2003 ----------- ----------- ---------- ----------- DEBT Short-term debt (includes current maturities of long-term debt) $ 615 $ 315 $ 315 $ 514 Long-term debt 2,595 2,596 2,596 3,337 -------------------------------------------------------------------------------------------------------------------------------- TOTAL DEBT EXCLUDING TRUST PREFERRED SECURITIES 3,210 2,911 2,911 3,851 Trust preferred securities 1,461 1,468 1,469 1,296 -------------------------------------------------------------------------------------------------------------------------------- TOTAL DEBT INCLUDING TRUST PREFERRED SECURITIES $ 4,671 $ 4,379 $ 4,380 $ 5,147 - ---------------------------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Equity excluding AOCI, net of tax $ 9,433 $ 9,640 $ 8,185 $ 9,692 AOCI, net of tax 1,510 1,094 1,257 1,807 -------------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY $10,943 $10,734 $ 9,442 $11,499 - ---------------------------------------------------------------------------------------------------------------------------------- CAPITALIZATION TOTAL CAPITALIZATION INCLUDING AOCI, NET OF TAX $15,614 $15,113 $13,822 $16,646 TOTAL CAPITALIZATION EXCLUDING AOCI, NET OF TAX $14,104 $14,019 $12,565 $14,839 - ---------------------------------------------------------------------------------------------------------------------------------- FINANCIAL RATIOS DEBT (INCLUDING TRUST PREFERRED SECURITIES) TO EQUITY INCLUDING AOCI 42.7% 40.8% 46.4% 44.8% Debt (excluding Trust Preferred Securities) to equity excluding AOCI 34.0% 30.2% 35.6% 39.7% DEBT (INCLUDING TRUST PREFERRED SECURITIES) TO CAPITALIZATION INCLUDING AOCI 29.9% 29.0% 31.7% 30.9% Debt (excluding Trust Preferred Securities) to capitalization excluding AOCI 22.8% 20.8% 23.2% 26.0% - ---------------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR SEQUENTIAL 3Q QUARTER QUARTER 2003 CHANGE CHANGE ----------- ----------- ----------- DEBT Short-term debt (includes current maturities of long-term debt) $ 515 (16%) - Long-term debt 3,660 41% 10% ------------------------------------------------------------------------------------------------------------------- TOTAL DEBT EXCLUDING TRUST PREFERRED SECURITIES 4,175 30% 8% Trust preferred securities 962 (34%) (26%) ------------------------------------------------------------------------------------------------------------------- TOTAL DEBT INCLUDING TRUST PREFERRED SECURITIES $ 5,137 10% - - --------------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Equity excluding AOCI, net of tax $ 9,987 6% 3% AOCI, net of tax 1,357 (10%) (25%) ------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY $11,344 4% (1%) - --------------------------------------------------------------------------------------------------------------------- CAPITALIZATION TOTAL CAPITALIZATION INCLUDING AOCI, NET OF TAX $16,481 6% (1%) TOTAL CAPITALIZATION EXCLUDING AOCI, NET OF TAX $15,124 7% 2% - --------------------------------------------------------------------------------------------------------------------- FINANCIAL RATIOS DEBT (INCLUDING TRUST PREFERRED SECURITIES) TO EQUITY INCLUDING AOCI 45.3% 2.6 0.5 Debt (excluding Trust Preferred Securities) to equity excluding AOCI 41.8% 7.8 2.1 DEBT (INCLUDING TRUST PREFERRED SECURITIES) TO CAPITALIZATION INCLUDING AOCI 31.2% 1.3 0.3 Debt (excluding Trust Preferred Securities) to capitalization excluding AOCI 27.6% 4.8 1.6 - ---------------------------------------------------------------------------------------------------------------------
C-6
THE HARTFORD FINANCIAL SERVICES GROUP, INC. ACCUMULATED OTHER COMPREHENSIVE INCOME PROPERTY & LIFE CASUALTY CORPORATE CONSOLIDATED --------------- --------------- --------------- --------------- AS OF SEPTEMBER 30, 2003 Fixed maturities unrealized gain $ 924 $ 811 $ 20 $ 1,755 Equities unrealized gain 20 18 - 38 Net deferred gain on cash-flow hedging instruments 47 - - 47 ----------------------------------------------------------------------------------------------------------------------------- Total unrealized gain 991 829 20 1,840 Foreign currency translation adjustments (42) (58) - (100) Minimum pension liability adjustment - (31) (352) (383) ----------------------------------------------------------------------------------------------------------------------------- TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) $ 949 $ 740 $ (332) $ 1,357 ----------------------------------------------------------------------------------------------------------------------------- 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 3Q 4Q 1Q 2Q 2002 2002 2003 2003 ---------- ---------- ---------- ---------- Numerator: Net income (loss) $ 265 $ 258 $(1,395) $ 507 Net realized capital gains (losses), after-tax (100) (43) (34) 167 ---------------------------------------------------------------------------------------------------------------------- Operating income (loss) 365 301 (1,361) 340 Impact of 2003 asbestos reserve addition - - (1,701) - ---------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 365 $ 301 $ 340 $ 340 Denominator: Weighted average common shares outstanding (basic) 248.9 255.2 255.4 268.8 Dilutive effect of options 1.6 1.1 - 1.4 ---------------------------------------------------------------------------------------------------------------------- Weighted average common shares outstanding and dilutive potential common shares (diluted) [1] 250.5 256.3 255.4 270.2 Basic earnings (loss) per share Net income (loss) $ 1.06 $ 1.01 $ (5.46) $ 1.89 Net realized capital gains (losses), after-tax (0.41) (0.17) (0.13) 0.63 ---------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.47 1.18 (5.33) 1.26 Impact of 2003 asbestos reserve addition - - (6.66) - ---------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 1.47 $ 1.18 $ 1.33 $ 1.26 Diluted earnings (loss) per share [1] Net income (loss) $ 1.06 $ 1.01 $ (5.46) $ 1.88 Net realized capital gains (losses), after-tax (0.40) (0.16) (0.13) 0.62 ---------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.46 1.17 (5.33) 1.26 Impact of 2003 asbestos reserve addition - - (6.66) - ---------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition [2] $ 1.46 $ 1.17 $ 1.33 $ 1.26 - ------------------------------------------------------------------------------------------------------------------------- NINE MONTHS ENDED SEPTEMBER 30, 3Q -------------------------- 2003 2002 2003 ---------- ------------- ---------- Numerator: Net income (loss) $ 343 $ 742 $ (545) Net realized capital gains (losses), after-tax 8 (207) 141 ---------------------------------------------------------------------------------------------------------------- Operating income (loss) 335 949 (686) Impact of 2003 asbestos reserve addition - - (1,701) ---------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 335 $ 949 $1,015 Denominator: Weighted average common shares outstanding (basic) 282.5 247.4 268.9 Dilutive effect of options 2.3 2.9 - ---------------------------------------------------------------------------------------------------------------- Weighted average common shares outstanding and dilutive potential common shares (diluted) [1] 284.8 250.3 268.9 Basic earnings (loss) per share Net income (loss) $ 1.21 $ 3.00 $(2.03) Net realized capital gains (losses), after-tax 0.02 (0.84) 0.52 ---------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.19 3.84 (2.55) Impact of 2003 asbestos reserve addition - - (6.32) ---------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 1.19 $ 3.84 $ 3.77 Diluted earnings (loss) per share [1] Net income (loss) $ 1.20 $ 2.96 $(2.03) Net realized capital gains (losses), after-tax 0.02 (0.83) 0.52 ---------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.18 3.79 (2.55) Impact of 2003 asbestos reserve addition - - (6.30) ---------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition [2] $ 1.18 $ 3.79 $ 3.75 - ------------------------------------------------------------------------------------------------------------------- [1] As a result of the antidilutive impact from the net loss in the quarter ended March 31, 2003 and the nine months ended September 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 nine months ended September 30, 2003 diluted earnings per share. In the absence of the net loss, 256.1 and 270.4 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 nine months ended September 30, 2003, respectively. [2] Calculated using weighted average common shares outstanding and dilutive potential common shares of 256.1 and 270.4 for the quarter ended March 31, 2003 and the nine months ended September 30, 2003, respectively.
C-8 LIFE
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE FINANCIAL HIGHLIGHTS 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 ---------- ---------- ---------- ---------- ---------- REVENUES Investment Products Individual Annuity $ 379 $ 386 $ 385 $ 430 $ 454 Other Investment Products 382 384 388 447 728 ------------------------------------------------------------------------------------------------------------------------------ Total Investment Products 761 770 773 877 1,182 Individual Life 239 238 244 240 249 Group Benefits 645 639 667 638 663 Corporate Owned Life Insurance 145 141 127 126 117 Other (125) (52) (25) 81 37 ------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES $ 1,665 $ 1,736 $ 1,786 $ 1,962 $ 2,248 - --------------------------------------------------------------------------------------------------------------------------------- OPERATING RESULTS BY SEGMENT Investment Products Individual Annuity $ 76 $ 78 $ 71 $ 93 $ 98 Other Investment Products 24 19 27 27 31 ------------------------------------------------------------------------------------------------------------------------------ Total Investment Products 100 97 98 120 129 Individual Life 33 34 32 34 36 Group Benefits 34 36 34 35 38 Corporate Owned Life Insurance 10 12 10 9 10 Other (21) (12) (17) (17) (11) ------------------------------------------------------------------------------------------------------------------------------ OPERATING INCOME, BEFORE BANCORP LITIGATION AND TAX RELATED ITEMS 156 167 157 181 202 ------------------------------------------------------------------------------------------------------------------------------ Bancorp litigation - - - - (40) Tax related items 76 - - 30 - ------------------------------------------------------------------------------------------------------------------------------ OPERATING INCOME $ 232 $ 167 $ 157 $ 211 $ 162 ------------------------------------------------------------------------------------------------------------------------------ Net realized capital gains (losses), after-tax (71) (42) (31) 32 (1) ------------------------------------------------------------------------------------------------------------------------------ NET INCOME $ 161 $ 125 $ 126 $ 243 $ 161 ------------------------------------------------------------------------------------------------------------------------------ ROE (net income last 12 months to equity including AOCI) 11.0% 10.8% 9.8% 11.4% 10.9% ROE (operating income last 12 months to equity excluding AOCI) 16.9% 16.0% 15.2% 15.4% 13.6% Assets under management $ 157,495 $ 165,115 $ 168,173 $ 187,636 $ 192,038 DAC capitalization $ 342 $ 386 $ 441 DAC amortization $ 163 $ 175 $ 202 DAC and PVFP assets $ 5,904 $ 5,927 $ 6,265 Statutory net loss (YTD) $ (137) Statutory surplus $ 3,019 $ 3,007 $ 3,503 - --------------------------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ---------------------------- CHANGE CHANGE 2002 2003 CHANGE ---------- --------- --------- -------- ------- REVENUES Investment Products Individual Annuity 20% 6% $ 1,153 $ 1,269 10% Other Investment Products 91% 63% 1,184 1,563 32% -------------------------------------------------------------------------------------------------------------------- Total Investment Products 55% 35% 2,337 2,832 21% Individual Life 4% 4% 720 733 2% Group Benefits 3% 4% 1,943 1,968 1% Corporate Owned Life Insurance (19%) (7%) 451 370 (18%) Other NM (54%) (252) 93 NM -------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 35% 15% $ 5,199 $ 5,996 15% - ----------------------------------------------------------------------------------------------------------------------- OPERATING RESULTS BY SEGMENT Investment Products Individual Annuity 29% 5% $ 255 $ 262 3% Other Investment Products 29% 15% 80 85 6% -------------------------------------------------------------------------------------------------------------------- Total Investment Products 29% 8% 335 347 4% Individual Life 9% 6% 99 102 3% Group Benefits 12% 9% 92 107 16% Corporate Owned Life Insurance - 11% 31 29 (6%) Other 48% 35% (36) (45) (25%) -------------------------------------------------------------------------------------------------------------------- OPERATING INCOME, BEFORE BANCORP LITIGATION AND TAX RELATED ITEMS 29% 12% 521 540 4% -------------------------------------------------------------------------------------------------------------------- Bancorp litigation - - (11) (40) NM Tax related items (100%) (100%) 76 30 (61%) -------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (30%) (23%) $ 586 $ 530 (10%) -------------------------------------------------------------------------------------------------------------------- Net realized capital gains (losses), after-tax 99% NM (154) - 100% -------------------------------------------------------------------------------------------------------------------- NET INCOME - (34%) $ 432 $ 530 23% -------------------------------------------------------------------------------------------------------------------- ROE (net income last 12 months to equity including AOCI) (0.1) (0.5) ROE (operating income last 12 months to equity excluding AOCI) (3.3) (1.8) Assets under management 22% 2% DAC capitalization 14% DAC amortization 15% DAC and PVFP assets 6% Statutory net loss (YTD) Statutory surplus - -----------------------------------------------------------------------------------------------------------------------
L-1
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE OPERATING RESULTS 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 ---------- ---------- ---------- ---------- ---------- REVENUES Earned premiums $ 667 $ 657 $ 683 $ 706 $ 981 Fee income 627 616 617 656 716 Net investment income 462 498 507 513 518 Other revenues 27 29 27 37 35 Net realized capital gains (losses) (118) (64) (48) 50 (2) ----------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 1,665 1,736 1,786 1,962 2,248 - --------------------------------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES Benefits, claims, and claim adjustment expenses 1,050 1,023 1,083 1,086 1,375 Amortization of deferred policy acquisition costs and present value of future profits 163 142 163 175 202 Insurance operating costs and expenses 335 388 351 395 379 Other expenses [1] 34 30 33 32 94 ----------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 1,582 1,583 1,630 1,688 2,050 - --------------------------------------------------------------------------------------------------------------------- NET INCOME INCOME BEFORE INCOME TAXES 83 153 156 274 198 Income tax expense (benefit) [2] (78) 28 30 31 37 ----------------------------------------------------------------------------------------------------------------- NET INCOME 161 125 126 243 161 Net realized capital gains (losses), after-tax (71) (42) (31) 32 (1) ----------------------------------------------------------------------------------------------------------------- OPERATING INCOME [2] [3] $ 232 $ 167 $ 157 $ 211 $ 162 - --------------------------------------------------------------------------------------------------------------------- Effective tax rate - net income [2] (94.0%) 18.3% 19.2% 11.3% 18.7% Effective tax rate - operating income [2] (15.4%) 23.0% 23.0% 5.8% 19.0% - --------------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER --------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ---------- ---------- -------- REVENUES Earned premiums 47% 39% $ 2,040 $ 2,370 16% Fee income 14% 9% 1,961 1,989 1% Net investment income 12% 1% 1,360 1,538 13% Other revenues 30% (5%) 91 99 9% Net realized capital gains (losses) 98% NM (253) - 100% ------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 35% 15% 5,199 5,996 15% - ----------------------------------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES Benefits, claims, and claim adjustment expenses 31% 27% 3,135 3,544 13% Amortization of deferred policy acquisition costs and present value of future profits 24% 15% 486 540 11% Insurance operating costs and expenses 13% (4%) 1,050 1,125 7% Other expenses [1] 176% 194% 114 159 39% ------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 30% 21% 4,785 5,368 12% - ----------------------------------------------------------------------------------------------------------------------- NET INCOME INCOME BEFORE INCOME TAXES 139% (28%) 414 628 52% Income tax expense (benefit) [2] NM 19% (18) 98 NM ------------------------------------------------------------------------------------------------------------------- NET INCOME - (34%) 432 530 23% Net realized capital gains (losses), after-tax 99% NM (154) - 100% ------------------------------------------------------------------------------------------------------------------- OPERATING INCOME [2] [3] (30%) (23%) $ 586 $ 530 (10%) - ----------------------------------------------------------------------------------------------------------------------- Effective tax rate - net income [2] NM 7.4 (4.3%) 15.6% NM Effective tax rate - operating income [2] NM 13.2 12.1% 15.6% 3.5 - ----------------------------------------------------------------------------------------------------------------------- [1] The third quarter and nine months ended September 30, 2003 include $62 of before-tax expense related to the Bancorp litigation dispute. [2] 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. [3] The third quarter and nine months ended September 30, 2003 include $40 of after-tax expense related to the Bancorp litigation dispute.
L-2
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE TOTAL ASSETS UNDER MANAGEMENT/JAPAN DATA 3Q 4Q 1Q 2Q TOTAL ASSETS UNDER MANAGEMENT 2002 2002 2003 2003 -------------- -------------- -------------- -------------- Assets General account $ 41,870 $ 42,716 $ 45,060 $ 47,218 Separate account 101,533 107,078 108,068 122,556 ----------------------------------------------------------------------------------------------------------- TOTAL ASSETS 143,403 149,794 153,128 169,774 Mutual fund assets 14,092 15,321 15,045 17,862 ----------------------------------------------------------------------------------------------------------- TOTAL ASSETS UNDER MANAGEMENT $ 157,495 $ 165,115 $ 168,173 $ 187,636 - -------------------------------------------------------------------------------------------------------------- JAPAN SALES Yen(Y) (Y) 35,284 (Y) 92,153 (Y) 83,068 (Y) 71,408 U.S.$ $ 295 $ 757 $ 700 $ 600 ------------------------------------------------------------------ ACCOUNT VALUE Yen(Y) (Y) 120,692 (Y) 204,556 (Y) 273,880 (Y) 373,611 U.S.$ $ 991 $ 1,722 $ 2,319 $ 3,119 - -------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR SEQUENTIAL 3Q QUARTER QUARTER TOTAL ASSETS UNDER MANAGEMENT 2003 CHANGE CHANGE -------------- ------------- --------- Assets General account $ 48,028 15% 2% Separate account 125,110 23% 2% ------------------------------------------------------------------------------------ TOTAL ASSETS 173,138 21% 2% Mutual fund assets 18,900 34% 6% ------------------------------------------------------------------------------------ TOTAL ASSETS UNDER MANAGEMENT $ 192,038 22% 2% - --------------------------------------------------------------------------------------- JAPAN SALES Yen(Y) (Y) 149,326 NM 109% U.S.$ $ 1,276 NM 113% -------------------------------------------- ACCOUNT VALUE Yen(Y) (Y) 535,180 NM 43% U.S.$ $ 4,800 NM 54% - ---------------------------------------------------------------------------------------
L-3
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE CONSOLIDATED BALANCE SHEETS 3Q 4Q 1Q 2Q 2002 2002 2003 2003 ------------------ ------------------ ----------------- ----------------- Investments Fixed maturities, available-for-sale, at fair value $ 28,539 $ 29,377 $ 31,676 $ 34,060 Equity securities, available for sale, at fair value 374 458 410 452 Policy loans, at outstanding balance 2,980 2,934 2,876 2,889 Other investments 1,359 1,122 1,071 937 - --------------------------------------------------------------------------------------------------------------------------------- Total investments 33,252 33,891 36,033 38,338 Cash 194 179 289 190 Premiums receivable and agents' balances 198 208 191 192 Reinsurance recoverables 701 796 865 797 Deferred policy acquisition costs and present value of future profits 5,904 5,758 5,904 5,927 Deferred income taxes (361) (274) (347) (562) Goodwill 796 796 796 796 Other assets 1,186 1,362 1,329 1,540 Separate account assets 101,533 107,078 108,068 122,556 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 143,403 $ 149,794 $153,128 $169,774 - --------------------------------------------------------------------------------------------------------------------------------- Future policy benefits $ 8,424 $ 8,583 $ 8,735 $ 8,928 Other policyholder funds and benefits payable 23,259 23,957 25,252 26,255 Unearned premiums 55 54 52 51 Long-term debt 1,050 1,125 1,125 1,275 Trust preferred securities 450 450 450 450 Other liabilities 2,995 2,858 3,555 3,762 Separate account liabilities 101,533 107,078 108,068 122,556 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 137,766 144,105 147,237 163,277 Equity excluding AOCI, net of tax 4,796 4,980 5,089 5,314 AOCI, net of tax 841 709 802 1,183 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 5,637 5,689 5,891 6,497 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 143,403 $ 149,794 $153,128 $169,774 - --------------------------------------------------------------------------------------------------------------------------------- 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 3Q QUARTER QUARTER 2003 CHANGE CHANGE ----------------- ----------- ----------- Investments Fixed maturities, available-for-sale, at fair value $ 35,237 23% 3% Equity securities, available for sale, at fair value 424 13% (6%) Policy loans, at outstanding balance 2,533 (15%) (12%) Other investments 891 (34%) (5%) - -------------------------------------------------------------------------------------------------- Total investments 39,085 18% 2% Cash 293 51% 54% Premiums receivable and agents' balances 205 4% 7% Reinsurance recoverables 686 (2%) (14%) Deferred policy acquisition costs and present value of future profits 6,265 6% 6% Deferred income taxes (479) (33%) 15% Goodwill 796 - - Other assets 1,177 (1%) (24%) Separate account assets 125,110 23% 2% - -------------------------------------------------------------------------------------------------- TOTAL ASSETS $173,138 21% 2% - -------------------------------------------------------------------------------------------------- Future policy benefits $ 9,362 11% 5% Other policyholder funds and benefits payable 26,241 13% - Unearned premiums 63 15% 24% Long-term debt 1,355 29% 6% Trust preferred securities 450 - - Other liabilities 4,150 39% 10% Separate account liabilities 125,110 23% 2% - -------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 166,731 21% 2% Equity excluding AOCI, net of tax 5,458 14% 3% AOCI, net of tax 949 13% (20%) - -------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 6,407 14% (1%) - -------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $173,138 21% 2% - -------------------------------------------------------------------------------------------------- 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 ------------ ------------ ----------- ------------ 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 - -------------------------------------------------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------------------------------------------------- Adjustments to unrealized gains and losses on securities available-for-sale and other 298 119 162 - Balance excluding adjustments to unrealized gains and losses on ------------------------------------------------------ securities available-for-sale and other 4,112 343 1,788 45 Capitalization 256 41 57 6 Amortization - Deferred Acquisition Costs (119) (20) (39) (4) Amortization - Present Value of Future Profits (6) - (3) - Amortization - Realized Capital Gains - - - - ------------------------------------------------------ Balance, September 30, 2003 4,243 364 1,803 47 Adjustments to unrealized gains and losses on securities available-for-sale and other (234) (103) (142) - - -------------------------------------------------------------------------------------------------------------------------- BALANCE, SEPTEMBER 30, 2003 INCLUDING ADJUSTMENTS TO UNREALIZED GAINS AND LOSSES ON SECURITIES AVAILABLE-FOR-SALE AND OTHER $ 4,009 $ 261 $ 1,661 $ 47 - -------------------------------------------------------------------------------------------------------------------------- CORPORATE OWNED LIFE OTHER INSURANCE JAPAN LIFE TOTAL ------------ ------------ ----------- ------------ 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 - ------------------------------------------------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------------------------------- Adjustments to unrealized gains and losses on securities available-for-sale and other - - - 579 Balance excluding adjustments to unrealized gains and losses on------------------------------------------------------ securities available-for-sale and other 13 197 8 6,506 Capitalization - 81 - 441 Amortization - Deferred Acquisition Costs - (11) - (193) Amortization - Present Value of Future Profits - - - (9) Amortization - Realized Capital Gains - - (1) (1) ------------------------------------------------------ Balance, September 30, 2003 13 267 7 6,744 Adjustments to unrealized gains and losses on securities available-for-sale and other - - - (479) - ------------------------------------------------------------------------------------------------------------------------- BALANCE, SEPTEMBER 30, 2003 INCLUDING ADJUSTMENTS TO UNREALIZED GAINS AND LOSSES ON SECURITIES AVAILABLE-FOR-SALE AND OTHER $ 13 $ 267 $ 7 $ 6,265 - -------------------------------------------------------------------------------------------------------------------------
L-5 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE REINSURANCE RECOVERABLE ANALYSIS AS OF JUNE 30, 2003 STATUTORY RESERVE CREDIT AND AMOUNTS RECOVERABLE Gross statutory reinsurance reserve credit $ 1,763 Liability for reinsurance in unauthorized companies (3) -------------------------------------------------------------------------- Net statutory reinsurance reserve credit $ 1,760 -------------------------------------------------------------------------- Statutory amounts recoverable from reinsurers $ 174 -------------------------------------------------------------------------- The top ten reinsurers represent $1,638, or 85%, of the total statutory reserve credit and amounts recoverable. o 18% of this amount is with reinsurers rated "A++" by A.M. Best at October 20, 2003. o 21% of this amount is with reinsurers rated "A+" by A.M. Best at October 20, 2003. o 46% of this amount is with reinsurers rated "A" by A.M. Best at October 20, 2003. o 6% of this amount is with reinsurers rated "A-" by A.M. Best at October 20, 2003. o 9% of this amount is with reinsurers rated "B+" by A.M. Best at October 20, 2003. L-6
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE STATUTORY SURPLUS TO GAAP STOCKHOLDERS' EQUITY RECONCILIATION JUNE 30, 2003 DECEMBER 31, 2002 -------------------------- -------------------------- Statutory Capital and Surplus $ 3,503 $ 3,019 GAAP Adjustments Investment in subsidiaries (1,988) (1,769) Deferred policy acquisition costs 5,927 5,758 Deferred taxes (741) (445) Benefit reserves (3,241) (2,887) Unrealized gains on investments, net of impairments 2,286 1,334 AVR and IMR 393 200 Goodwill 527 559 Other, net (169) (80) - ----------------------------------------------------------------------------------------------------------------------------- GAAP STOCKHOLDERS' EQUITY $ 6,497 $ 5,689 - -----------------------------------------------------------------------------------------------------------------------------
L-7
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS INCOME STATEMENTS - INDIVIDUAL ANNUITY 3Q 4Q 1Q 2Q 3Q Revenues 2002 2002 2003 2003 2003 --------- -------- -------- -------- --------- Premiums and other considerations Variable annuity and life fees $ 235 $ 233 $ 231 $ 259 $ 296 Other fees 44 40 38 33 28 ---------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 279 273 269 292 324 Gross MVA/MGLI spread income 22 25 22 27 30 Investment expenses (2) (2) (2) (2) (1) ---------------------------------------------------------------------------------------------------------- NET GUARANTEED SEPARATE ACCOUNT INCOME 20 23 20 25 29 Direct premiums 26 21 28 30 20 Reinsurance premiums (28) (28) (37) (32) (29) ---------------------------------------------------------------------------------------------------------- Total premiums and other considerations 297 289 280 315 344 NET INVESTMENT INCOME Gross investment income on G/A assets 102 116 122 131 131 Investment expenses (1) (1) (1) (1) (1) ---------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 101 115 121 130 130 Net investment income on assigned capital 13 14 14 16 16 Charge for invested capital (32) (32) (30) (31) (36) ---------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 82 97 105 115 110 ---------------------------------------------------------------------------------------------------------- TOTAL REVENUES 379 386 385 430 454 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 17 16 17 14 12 Other contract benefits 25 28 28 26 21 Change in reserve 11 5 12 16 10 Interest credited on G/A assets 65 75 78 84 85 ---------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 118 124 135 140 128 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 178 232 230 281 286 Operating expenses 50 50 45 49 46 Premium taxes, licenses and fees 3 3 4 3 3 Other miscellaneous expenses 3 2 2 1 2 ---------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 234 287 281 334 337 Deferred policy acquisition costs (155) (205) (205) (250) (256) ---------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 79 82 76 84 81 Amortization of deferred policy acquisition costs and present value of future pofits 89 84 87 101 125 ---------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 286 290 298 325 334 Income before income tax expense 93 96 87 105 120 Income tax expense (benefit) 17 18 16 (7) 22 ---------------------------------------------------------------------------------------------------------- NET INCOME $ 76 $ 78 $ 71 $ 112 $ 98 ---------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ----------------------------- Revenues CHANGE CHANGE 2002 2003 CHANGE --------- --------- -------- -------- ------- Premiums and other considerations Variable annuity and life fees 26% 14% $ 778 $ 786 1% Other fees (36%) (15%) 117 99 (15%) ------------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 16% 11% 895 885 (1%) Gross MVA/MGLI spread income 36% 11% 76 79 4% Investment expenses 50% 50% (5) (5) - ------------------------------------------------------------------------------------------------------------- NET GUARANTEED SEPARATE ACCOUNT INCOME 45% 16% 71 74 4% Direct premiums (23%) (33%) 66 78 18% Reinsurance premiums (4%) 9% (85) (98) (15%) ------------------------------------------------------------------------------------------------------------- Total premiums and other considerations 16% 9% 947 939 (1%) NET INVESTMENT INCOME Gross investment income on G/A assets 28% - 268 384 43% Investment expenses - - (2) (3) (50%) ------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 29% - 266 381 43% Net investment income on assigned capital 23% - 42 46 10% Charge for invested capital (13%) (16%) (102) (97) 5% ------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 34% (4%) 206 330 60% ------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 20% 6% 1,153 1,269 10% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits (29%) (14%) 33 43 30% Other contract benefits (16%) (19%) 70 75 7% Change in reserve (9%) (38%) 24 38 58% Interest credited on G/A assets 31% 1% 184 247 34% ------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 8% (9%) 311 403 30% OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 61% 2% 552 797 44% Operating expenses (8%) (6%) 145 140 (3%) Premium taxes, licenses and fees - - 8 10 25% Other miscellaneous expenses (33%) 100% 7 5 (29%) ------------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 44% 1% 712 952 34% Deferred policy acquisition costs (65%) (2%) (477) (711) (49%) ------------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 3% (4%) 235 241 3% Amortization of deferred policy acquisition costs and present value of future pofits 40% 24% 286 313 9% ------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 17% 3% 832 957 15% Income before income tax expense 29% 14% 321 312 (3%) Income tax expense (benefit) 29% NM 66 31 (53%) ------------------------------------------------------------------------------------------------------------- NET INCOME 29% (13%) $ 255 $ 281 10% -------------------------------------------------------------------------------------------------------------
L-8
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS INCOME STATEMENTS - OTHER 3Q 4Q 1Q 2Q 3Q REVENUES 2002 2002 2003 2003 2003 --------- ---------- --------- --------- ---------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ 16 $ 15 $ 16 $ 18 $ 21 Other fees 70 67 68 76 85 --------------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 86 82 84 94 106 Direct premiums 99 98 100 145 402 Reinsurance premiums (1) - - - - --------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 184 180 184 239 508 NET INVESTMENT INCOME Gross investment income on G/A assets 196 202 201 205 216 Investment expenses (3) (3) (3) (3) (3) --------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 193 199 198 202 213 Net investment income on assigned capital 5 5 5 6 6 Charge for invested capital - - 1 - 1 --------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 198 204 204 208 220 --------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 382 384 388 447 728 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Other contract benefits 71 71 73 72 74 Change in reserve 86 86 85 133 392 Interest credited on G/A assets 93 105 101 106 113 --------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 250 262 259 311 579 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 53 51 52 63 67 Operating expenses 50 53 47 52 57 Other miscellaneous expenses 3 1 3 2 1 --------------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 106 105 102 117 125 Deferred policy acquisition costs (28) (28) (34) (40) (41) --------------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 78 77 68 77 84 Amortization of deferred policy acquisition costs and present value of future profits 19 18 22 20 20 --------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 347 357 349 408 683 INCOME BEFORE INCOME TAX EXPENSE 35 27 39 39 45 Income tax expense 11 8 12 10 14 --------------------------------------------------------------------------------------------------------------- NET INCOME $ 24 $ 19 $ 27 $ 29 $ 31 --------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------ REVENUES CHANGE CHANGE 2002 2003 CHANGE --------- --------- ---------- --------- ------ PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees 31% 17% $ 50 $ 55 10% Other fees 21% 12% 237 229 (3%) --------------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 23% 13% 287 284 (1%) Direct premiums nm 177% 326 647 98% Reinsurance premiums 100% - (1) - 100% --------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 176% 113% 612 931 52% NET INVESTMENT INCOME Gross investment income on G/A assets 10% 5% 567 622 10% Investment expenses - - (8) (9) (13%) --------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 10% 5% 559 613 10% Net investment income on assigned capital 20% - 15 17 13% Charge for invested capital - - (2) 2 NM --------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 11% 6% 572 632 10% --------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 91% 63% 1,184 1,563 32% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Other contract benefits 4% 3% 219 219 - Change in reserve NM 195% 266 610 129% Interest credited on G/A assets 22% 7% 272 320 18% --------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 132% 86% 757 1,149 52% OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 26% 6% 192 182 (5%) Operating expenses 14% 10% 146 156 7% Other miscellaneous expenses (67%) (50%) 6 6 - --------------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 18% 7% 344 344 - Deferred policy acquisition costs (46%) (2%) (90) (115) (28%) --------------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 8% 9% 254 229 (10%) Amortization of deferred policy acquisition costs and present value of future profits 5% - 56 62 11% --------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 97% 67% 1,067 1,440 35% INCOME BEFORE INCOME TAX EXPENSE 29% 15% 117 123 5% Income tax expense 27% 40% 37 36 (3%) --------------------------------------------------------------------------------------------------------------- NET INCOME 29% 7% $ 80 $ 87 9% ---------------------------------------------------------------------------------------------------------------
L-9
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - SALES/OTHER DEPOSITS 3Q 4Q 1Q 2Q 3Q SALES 2002 2002 2003 2003 2003 ----------- ----------- ----------- ----------- ----------- INDIVIDUAL ANNUITY Broker-dealer $ 1,703 $ 2,544 $ 2,521 $ 3,003 $ 2,853 Banks 846 1,030 980 1,305 1,464 --------------------------------------------------------------------------------------------------------- TOTAL SALES BY DISTRIBUTION $ 2,549 $ 3,574 $ 3,501 $ 4,308 $ 4,317 --------------------------------------------------------------------------------------------------------- Variable $ 2,397 $ 3,479 $ 3,437 $ 4,206 $ 3,954 Fixed MVA/other 152 95 64 102 363 --------------------------------------------------------------------------------------------------------- TOTAL SALES BY PRODUCT $ 2,549 $ 3,574 $ 3,501 $ 4,308 $ 4,317 --------------------------------------------------------------------------------------------------------- RETAIL MUTUAL FUNDS $ 945 $ 832 $ 848 $ 1,151 $ 1,138 CORPORATE Annuity $ 234 $ 346 $ 179 $ 276 $ 337 Mutual funds 2 1 3 - - --------------------------------------------------------------------------------------------------------- TOTAL CORPORATE $ 236 $ 347 $ 182 $ 276 $ 337 --------------------------------------------------------------------------------------------------------- GOVERNMENTAL Annuity $ 165 $ 51 $ 77 $ 104 $ 345 Mutual funds - - 8 8 9 --------------------------------------------------------------------------------------------------------- TOTAL GOVERNMENTAL $ 165 $ 51 $ 85 $ 112 $ 354 --------------------------------------------------------------------------------------------------------- INSTITUTIONAL Structured settlements $ 113 $ 183 $ 144 $ 180 $ 172 Terminal funding 43 39 9 52 308 Mutual funds 12 11 16 47 55 GIC/other 347 166 164 809 351 --------------------------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL $ 515 $ 399 $ 333 $ 1,088 $ 886 --------------------------------------------------------------------------------------------------------- 529 COLLEGE SAVINGS/SPECIALTY PRODUCTS/OTHER $ 27 $ 30 $ 36 $ 49 $ 56 ----------------------------------------------------------------------------------------------------------- SALES & OTHER DEPOSITS INDIVIDUAL ANNUITY Variable $ 2,397 $ 3,479 $ 3,437 $ 4,206 $ 3,954 Fixed MVA/other 186 150 140 191 452 --------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY 2,583 3,629 3,577 4,397 4,406 --------------------------------------------------------------------------------------------------------- RETAIL MUTUAL FUNDS 945 832 848 1,151 1,138 CORPORATE Annuity 325 295 396 327 409 Mutual funds 4 5 45 52 55 --------------------------------------------------------------------------------------------------------- TOTAL CORPORATE 329 300 441 379 464 --------------------------------------------------------------------------------------------------------- GOVERNMENTAL Annuity 369 191 234 274 520 Mutual funds 43 2 8 8 9 --------------------------------------------------------------------------------------------------------- TOTAL GOVERNMENTAL 412 193 242 282 529 --------------------------------------------------------------------------------------------------------- INSTITUTIONAL Structured settlements 106 133 155 142 161 Terminal funding 44 38 9 53 304 Mutual funds 12 11 16 47 55 GIC/Other 305 64 168 931 334 --------------------------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL 467 246 348 1,173 854 --------------------------------------------------------------------------------------------------------- 529 COLLEGE SAVINGS/SPECIALTY PRODUCTS/OTHER $ 27 $ 30 $ 36 $ 49 $ 56 ----------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS $ 4,763 $ 5,230 $ 5,492 $ 7,431 $ 7,447 - ------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------------ SALES CHANGE CHANGE 2002 2003 CHANGE ------------ ----------- ----------- ----------- ----------- INDIVIDUAL ANNUITY Broker-dealer 68% (5%) $ 5,190 $ 8,377 61% Banks 73% 12% 2,872 3,749 31% ------------------------------------------------------------------------------------------------------------ TOTAL SALES BY DISTRIBUTION 69% - $ 8,062 $ 12,126 50% ------------------------------------------------------------------------------------------------------------ Variable 65% (6%) $ 6,869 $ 11,597 69% Fixed MVA/other 139% NM 1,193 529 (56%) ------------------------------------------------------------------------------------------------------------ TOTAL SALES BY PRODUCT 69% - $ 8,062 $ 12,126 50% ------------------------------------------------------------------------------------------------------------ RETAIL MUTUAL FUNDS 20% (1%) $ 3,946 $ 3,137 (21%) CORPORATE Annuity 44% 22% $ 655 $ 792 21% Mutual funds (100%) - 3 3 - ------------------------------------------------------------------------------------------------------------ TOTAL CORPORATE 43% 22% $ 658 $ 795 21% ------------------------------------------------------------------------------------------------------------ GOVERNMENTAL Annuity 109% NM $ 287 $ 526 83% Mutual funds - 13% - 25 - ------------------------------------------------------------------------------------------------------------ TOTAL GOVERNMENTAL 115% NM $ 287 $ 551 92% ------------------------------------------------------------------------------------------------------------ INSTITUTIONAL Structured settlements 52% (4%) $ 333 $ 496 49% Terminal funding NM NM 105 369 NM Mutual funds NM 17% 36 118 NM GIC/other 1% (57%) 1,116 1,324 19% ------------------------------------------------------------------------------------------------------------ TOTAL INSTITUTIONAL 72% (19%) $ 1,590 $ 2,307 45% ------------------------------------------------------------------------------------------------------------ 529 COLLEGE SAVINGS/SPECIALTY PRODUCTS/OTHER 107% 14% $ 64 $ 141 120% -------------------------------------------------------------------------------------------------------------- SALES & OTHER DEPOSITS INDIVIDUAL ANNUITY Variable 65% (6%) $ 6,869 $ 11,597 69% Fixed MVA/other 143% 137% 1,295 783 (40%) ------------------------------------------------------------------------------------------------------------ TOTAL INDIVIDUAL ANNUITY 71% - 8,164 12,380 52% ------------------------------------------------------------------------------------------------------------ RETAIL MUTUAL FUNDS 20% (1%) 3,946 3,137 (21%) CORPORATE Annuity 26% 25% 949 1,132 19% Mutual funds NM 6% 63 152 141% ------------------------------------------------------------------------------------------------------------ TOTAL CORPORATE 41% 22% 1,012 1,284 27% ------------------------------------------------------------------------------------------------------------ GOVERNMENTAL Annuity 41% 90% 814 1,028 26% Mutual funds (79%) 13% 43 25 (42%) ------------------------------------------------------------------------------------------------------------ TOTAL GOVERNMENTAL 28% 88% 857 1,053 23% ------------------------------------------------------------------------------------------------------------ INSTITUTIONAL Structured settlements 52% 13% 365 458 25% Terminal funding NM NM 106 366 NM Mutual funds NM 17% 36 118 NM GIC/Other 10% (64%) 983 1,433 46% ------------------------------------------------------------------------------------------------------------ TOTAL INSTITUTIONAL 83% (27%) 1,490 2,375 59% ------------------------------------------------------------------------------------------------------------ 529 COLLEGE SAVINGS/SPECIALTY PRODUCTS/OTHER 107% 14% $ 64 $ 141 120% -------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS 56% - $ 15,533 $ 20,370 31% - ----------------------------------------------------------------------------------------------------------------
L-10
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - ASSETS UNDER MANAGEMENT 3Q 4Q 1Q 2Q 2002 2002 2003 2003 --------------- -------------- -------------- --------------- INDIVIDUAL ANNUITY General account $ 7,569 $ 8,583 $ 9,523 $ 9,899 Guaranteed separate account 9,684 9,721 9,747 9,685 Non-guaranteed separate account 52,878 56,604 55,379 64,751 ----------------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY $ 70,131 $ 74,908 $ 74,649 $ 84,335 - -------------------------------------------------------------------------------------------------------------------------- OTHER INVESTMENT PRODUCTS General account $ 11,906 $ 11,913 $ 12,350 $ 13,178 Guaranteed separate account 429 417 407 401 Non-guaranteed separate account 7,033 7,591 7,617 9,156 ----------------------------------------------------------------------------------------------------------------------- TOTAL OTHER INVESTMENT PRODUCTS $ 19,368 $ 19,921 $ 20,374 $ 22,735 - -------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS General account $ 19,475 $ 20,496 $ 21,873 $ 23,077 Guaranteed separate account 10,113 10,138 10,154 10,086 Non-guaranteed separate account 59,911 64,195 62,996 73,907 ----------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS $ 89,499 $ 94,829 $ 95,023 $ 107,070 - -------------------------------------------------------------------------------------------------------------------------- BY PRODUCT INDIVIDUAL ANNUITY Individual Variable Annuities General account $ 6,704 $ 7,702 $ 8,620 $ 8,959 Separate account 52,914 56,641 55,427 64,789 ------------------------------------------------------------------------------------------------------------------- Total individual variable annuities 59,618 64,343 64,047 73,748 Fixed MVA & other individual annuities 10,513 10,565 10,602 10,587 --------------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY 70,131 74,908 74,649 84,335 --------------------------------------------------------------------------------------------------------------------- CORPORATE - ANNUITY 2,759 2,972 3,212 3,700 GOVERNMENTAL - ANNUITY 6,890 7,211 7,199 7,811 INSTITUTIONAL Structured settlements 2,588 2,686 2,838 2,979 Terminal funding 1,944 1,978 1,975 2,047 Other 1,702 1,741 1,681 2,151 GIC 3,485 3,333 3,469 4,047 --------------------------------------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL 9,719 9,738 9,963 11,224 --------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS ACCOUNT VALUE 89,499 94,829 95,023 107,070 SPECIALTY PRODUCTS/OTHER - SEGREGATED ASSETS - - 7 20 MUTUAL FUND ASSETS Retail mutual fund assets 12,967 14,079 13,742 16,290 Corporate mutual fund assets 361 393 394 471 Governmental mutual fund assets 604 642 609 684 Specialty product/other mutual fund assets - - 84 104 Institutional mutual fund assets 107 120 108 166 529 College Savings Plan assets 53 87 108 147 --------------------------------------------------------------------------------------------------------------------- TOTAL MUTUAL FUND ASSETS 14,092 15,321 15,045 17,862 --------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS ASSETS UNDER MANAGEMENT $ 103,591 $ 110,150 $ 110,075 $ 124,952 - -------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR SEQUENTIAL 3Q QUARTER QUARTER 2003 CHANGE CHANGE --------------- -------------- ------------ INDIVIDUAL ANNUITY General account $ 9,796 29% (1%) Guaranteed separate account 9,996 3% 3% Non-guaranteed separate account 68,719 30% 6% ---------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY $ 88,511 26% 5% - ------------------------------------------------------------------------------------------------------- OTHER INVESTMENT PRODUCTS General account $ 14,084 18% 7% Guaranteed separate account 367 (14%) (8%) Non-guaranteed separate account 9,814 40% 7% ---------------------------------------------------------------------------------------------------- TOTAL OTHER INVESTMENT PRODUCTS $ 24,265 25% 7% - ------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS General account $ 23,880 23% 3% Guaranteed separate account 10,363 2% 3% Non-guaranteed separate account 78,533 31% 6% ---------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS $ 112,776 26% 5% - ------------------------------------------------------------------------------------------------------- BY PRODUCT INDIVIDUAL ANNUITY Individual Variable Annuities General account $ 8,816 32% (2%) Separate account 68,756 30% 6% ------------------------------------------------------------------------------------------------ Total individual variable annuities 77,572 30% 5% Fixed MVA & other individual annuities 10,939 4% 3% -------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY 88,511 26% 5% -------------------------------------------------------------------------------------------------- CORPORATE - ANNUITY 4,044 47% 9% GOVERNMENTAL - ANNUITY 8,319 21% 7% INSTITUTIONAL Structured settlements 3,140 21% 5% Terminal funding 2,333 20% 14% Other 2,168 27% 1% GIC 4,261 22% 5% -------------------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL 11,902 22% 6% -------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS ACCOUNT VALUE 112,776 26% 5% SPECIALTY PRODUCTS/OTHER - SEGREGATED ASSETS 30 - 50% MUTUAL FUND ASSETS Retail mutual fund assets 17,208 33% 6% Corporate mutual fund assets 502 39% 7% Governmental mutual fund assets 695 15% 2% Specialty product/other mutual fund assets 122 - 17% Institutional mutual fund assets 196 83% 18% 529 College Savings Plan assets 177 NM 20% -------------------------------------------------------------------------------------------------- TOTAL MUTUAL FUND ASSETS 18,900 34% 6% -------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS ASSETS UNDER MANAGEMENT $ 131,706 27% 5% - -------------------------------------------------------------------------------------------------------
L-11
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - INDIVIDUAL ANNUITY- ACCOUNT VALUE ROLLFORWARD [1] 3Q 4Q 1Q 2002 2002 2003 ----------- ------------ ------------ VARIABLE ANNUITIES Beginning balance $ 67,712 $ 59,618 $ 64,343 Sales/premiums/other deposits 2,397 3,479 3,437 Surrenders (1,957) (1,859) (1,800) Death benefits/annuitizations/other (265) (249) (307) Net exchanges (4) 11 8 ---------------------------------------------------------------------------------------------------------------------- Net Flows 171 1,382 1,338 Change in market value/change in reserve/interest credited (8,265) 3,343 (1,634) ---------------------------------------------------------------------------------------------------------------------- ENDING BALANCE $ 59,618 $ 64,343 $ 64,047 - --------------------------------------------------------------------------------------------------------------------------- FIXED MVA AND OTHER Beginning balance $ 10,413 $ 10,513 $ 10,565 Sales/premiums/other deposits 186 150 140 Surrenders (142) (163) (152) Death benefits/annuitizations/other (95) (92) (99) Net exchanges 9 (10) (7) ---------------------------------------------------------------------------------------------------------------------- Net Flows (42) (115) (118) Change in market value/change in reserve/interest credited 142 167 155 ---------------------------------------------------------------------------------------------------------------------- ENDING BALANCE $ 10,513 $ 10,565 $ 10,602 - --------------------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY Beginning balance $ 78,125 $ 70,131 $ 74,908 Sales/premiums/other deposits 2,583 3,629 3,577 Surrenders (2,099) (2,022) (1,952) Death benefits/annuitizations/other (360) (341) (406) Net exchanges 5 1 1 ---------------------------------------------------------------------------------------------------------------------- Net Flows 129 1,267 1,220 Change in market value/change in reserve/interest credited (8,123) 3,510 (1,479) ---------------------------------------------------------------------------------------------------------------------- ENDING BALANCE $ 70,131 $ 74,908 $ 74,649 - --------------------------------------------------------------------------------------------------------------------------- 2Q 3Q 2003 2003 ------------ --------------- VARIABLE ANNUITIES Beginning balance $ 64,047 $ 73,748 Sales/premiums/other deposits 4,206 3,954 Surrenders (1,467) (1,427) Death benefits/annuitizations/other (297) (270) Net exchanges 23 11 ------------------------------------------------------------------------------------------------------------- Net Flows 2,465 2,268 Change in market value/change in reserve/interest credited 7,236 1,556 ------------------------------------------------------------------------------------------------------------- ENDING BALANCE $ 73,748 $ 77,572 - ------------------------------------------------------------------------------------------------------------------ FIXED MVA AND OTHER Beginning balance $ 10,602 $ 10,587 Sales/premiums/other deposits 191 452 Surrenders (239) (149) Death benefits/annuitizations/other (113) (98) Net exchanges (21) (11) ------------------------------------------------------------------------------------------------------------- Net Flows (182) 194 Change in market value/change in reserve/interest credited 167 158 ------------------------------------------------------------------------------------------------------------- -- ENDING BALANCE $ 10,587 $ 10,939 - ------------------------------------------------------------------------------------------------------------------ TOTAL INDIVIDUAL ANNUITY Beginning balance $ 74,649 $ 84,335 Sales/premiums/other deposits 4,397 4,406 Surrenders (1,706) (1,576) Death benefits/annuitizations/other (410) (368) Net exchanges 2 - ------------------------------------------------------------------------------------------------------------- Net Flows 2,283 2,462 Change in market value/change in reserve/interest credited 7,403 1,714 ------------------------------------------------------------------------------------------------------------- ENDING BALANCE $ 84,335 $ 88,511 - ------------------------------------------------------------------------------------------------------------------ [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] 3Q 4Q 1Q 2002 2002 2003 ------------ ------------ ------------ OTHER INVESTMENT PRODUCTS ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) BEGINNING BALANCE $ 19,511 $ 19,368 $ 19,921 Sales/premiums/other deposits 1,149 721 962 Surrenders (409) (595) (348) Death benefits/annuitizations/other (129) (128) (122) ------------------------------------------------------------------------------------------------- Net flows 611 (2) 492 Change in market value/change in reserve/interest credited (754) 555 (39) ------------------------------------------------------------------------------------------------- ENDING BALANCE $ 19,368 $ 19,921 $ 20,374 - ------------------------------------------------------------------------------------------------------------------------------- RETAIL MUTUAL FUNDS Asset Rollforward Beginning balance $ 14,922 $ 12,967 $ 14,079 New sales 945 832 848 Redemptions (809) (705) (716) ------------------------------------------------------------------------------------------------- Net sales 136 127 132 Change in market value (2,087) 935 (469) Other (4) 50 - ------------------------------------------------------------------------------------------------- ENDING BALANCE $ 12,967 $ 14,079 $ 13,742 - ------------------------------------------------------------------------------------------------------------------------------- 2Q 3Q 2003 2003 ----------- ----------- OTHER INVESTMENT PRODUCTS ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) Beginning balance $ 20,374 $22,735 Sales/premiums/other deposits 1,727 1,728 Surrenders (411) (406) Death benefits/annuitizations/other (115) (115) ------------------------------------------------------------------------------------ Net flows 1,201 1,207 Change in market value/change in reserve/interest credited 1,160 323 ------------------------------------------------------------------------------------ ENDING BALANCE $ 22,735 $24,265 - ------------------------------------------------------------------------------------------------------------------ RETAIL MUTUAL FUNDS Asset Rollforward Beginning balance $ 13,742 $16,290 New sales 1,151 1,138 Redemptions (615) (654) ------------------------------------------------------------------------------------ Net sales 536 484 Change in market value 2,012 444 Other - (10) ------------------------------------------------------------------------------------ ENDING BALANCE $ 16,290 $17,208 - ------------------------------------------------------------------------------------------------------------------ [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 AS OF SEPTEMBER 30, 2003 ------------------------------------------------------------ ACCOUNT NET AMT % OF NAR RETAINED BREAKDOWN OF VARIABLE ANNUITY ACCOUNT VALUE BY GMDB TYPE VALUE AT RISK REINSURED NAR -------------- -------------- --------------------------- Maximum anniversary value (MAV) [1] MAV only $ 58,187 $ 13,389 87% $ 1,776 with 5% rollup [2] 4,081 904 81% 176 with Earnings Protection Benefit Rider (EPB) 2,405 104 61% 40 with 5% rollup & EPB 1,356 114 83% 20 ------------------------------------------------------------------------------------------------------------------------------ Total MAV 66,029 14,511 86% 2,011 Asset Protection Benefit (APB) [3] 2,491 12 40% 7 Ratchet [4] (5 years) 47 7 82% 1 Reset [5] (5-7 years) 8,591 1,657 - 1,656 Return of Premium [6]/Other 414 13 - 13 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL $ 77,572 $ 16,200 77% $ 3,689 - ----------------------------------------------------------------------------------------------------------------------------------- AS OF AS OF AS OF AS OF AS OF SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, OTHER DATA 2002 2002 2003 2003 2003 ----------------- ------------- ------------- ----------- ------------ S&P 500 Index Value at end of period 815.28 879.82 848.18 974.50 995.97 Total account value $ 59,618 $ 64,343 $ 64,047 $ 73,748 $ 77,572 Net amount at risk (NAR) 25,905 22,387 23,587 17,375 16,200 Retained net amount at risk 4,871 4,063 4,423 3,767 3,689 GMDB net statutory reserve [7] 366 267 286 233 205 Present value of retained guaranteed death benefits 184 159 191 183 176 95% Confidence interval of present value of retained guaranteed death benefits (91 - 378) (86 - 349) (108-396) (121 - 387) (110 - 368) - ---------------------------------------------------------------------------------------------------------------------------------- Embedded value of variable annuity in-force business [8] Value of in-force $ 2,258 $ 2,510 $ 2,332 $ 2,545 $ 2,492 Cost of capital (248) (284) (281) (339) (350) - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL EMBEDDED VALUE $ 2,010 $ 2,226 $ 2,051 $ 2,206 $ 2,142 - ---------------------------------------------------------------------------------------------------------------------------------- [1] 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). [2] 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. [3] 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). [4] 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). [5] Reset: the death benefit is the greatest of current account value, net premiums paid and the most recent five to seven year anniversary account value before age 80 (adjusted for withdrawals). [6] Return of premium: the death benefit is the greater of current account value and net premiums paid. [7] No equivalent GAAP reserve is held by the Company. [8] 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.
L-14
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE INCOME STATEMENTS 3Q 4Q 1Q 2Q 3Q REVENUES 2002 2002 2003 2003 2003 -------- -------- --------- --------- -------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ 9 $ 10 $ 9 $ 11 $ 11 Cost of insurance charges 104 105 106 107 108 Other fees 62 60 64 64 69 ------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 175 175 179 182 188 Gross MVA/MGLI spread income 3 2 3 2 2 ------------------------------------------------------------------------------------------------------- NET GUARANTEED SEPARATE ACCOUNT INCOME 3 2 3 2 2 Direct premiums 14 15 14 15 15 Net reinsurance premiums (17) (18) (18) (21) (19) ------------------------------------------------------------------------------------------------------- NET PREMIUMS (3) (3) (4) (6) (4) ------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 175 174 178 178 186 NET INVESTMENT INCOME Gross FAS 97 investment income on G/A assets 61 59 62 58 59 Gross FAS 60 investment income on G/A assets 11 12 11 11 11 ------------------------------------------------------------------------------------------------------- GROSS INVESTMENT INCOME ON G/A ASSETS 72 71 73 69 70 Investment expenses (1) (1) (1) - (1) ------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 71 70 72 69 69 Net investment income on assigned capital 3 4 4 3 4 Charge for invested capital (10) (10) (10) (10) (10) ------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 64 64 66 62 63 ------------------------------------------------------------------------------------------------------- TOTAL REVENUES 239 238 244 240 249 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 50 61 61 55 62 Other contract benefits 7 5 5 6 6 Change in reserve (1) - - (2) - Interest credited on G/A assets 48 47 46 49 49 ------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 104 113 112 108 117 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 37 45 37 37 40 Operating expenses 45 48 44 47 47 Premium taxes, licenses and fees 8 7 8 7 7 Dividends to policyholders 1 - 1 - 1 ------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 91 100 90 91 95 Deferred policy acquisition costs (54) (57) (51) (52) (57) ------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 37 43 39 39 38 Amortization of deferred policy acquisition costs and present value of future profits 49 32 46 43 42 ------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 190 188 197 190 197 INCOME BEFORE INCOME TAX EXPENSE 49 50 47 50 52 Income tax expense 16 16 15 14 16 ------------------------------------------------------------------------------------------------------- NET INCOME $ 33 $ 34 $ 32 $ 36 $ 36 ------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ---------------------------- REVENUES CHANGE CHANGE 2002 2003 CHANGE --------- -------- -------- -------- -------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees 22% - $ 31 $ 31 - Cost of insurance charges 4% 1% 310 321 4% Other fees 11% 8% 179 197 10% ------------------------------------------------------------------------------------------------------------ TOTAL FEE INCOME 7% 3% 520 549 6% Gross MVA/MGLI spread income (33%) - 8 7 (13%) ------------------------------------------------------------------------------------------------------------ NET GUARANTEED SEPARATE ACCOUNT INCOME (33%) - 8 7 (13%) Direct premiums 7% - 41 44 7% Net reinsurance premiums (12%) 10% (46) (58) (26%) ------------------------------------------------------------------------------------------------------------ NET PREMIUMS (33%) 33% (5) (14) (180%) ------------------------------------------------------------------------------------------------------------ TOTAL PREMIUMS AND OTHER CONSIDERATIONS 6% 4% 523 542 4% NET INVESTMENT INCOME Gross FAS 97 investment income on G/A assets (3%) 2% 185 179 (3%) Gross FAS 60 investment income on G/A assets - - 32 33 3% ------------------------------------------------------------------------------------------------------------ GROSS INVESTMENT INCOME ON G/A ASSETS (3%) 1% 217 212 (2%) Investment expenses - - (2) (2) - ------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME ON G/A ASSETS (3%) - 215 210 (2%) Net investment income on assigned capital 33% 33% 11 11 - Charge for invested capital - - (29) (30) (3%) ------------------------------------------------------------------------------------------------------------ TOTAL NET INVESTMENT INCOME (2%) 2% 197 191 (3%) ------------------------------------------------------------------------------------------------------------ TOTAL REVENUES 4% 4% 720 733 2% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 24% 13% 171 178 4% Other contract benefits (14%) - 18 17 (6%) Change in reserve 100% 100% (8) (2) 75% Interest credited on G/A assets 2% - 149 144 (3%) ------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND CLAIMS 13% 8% 330 337 2% OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 8% 8% 128 114 (11%) Operating expenses 4% - 137 138 1% Premium taxes, licenses and fees (13%) - 24 22 (8%) Dividends to policyholders - - 3 2 (33%) ------------------------------------------------------------------------------------------------------------ SUBTOTAL - EXPENSES BEFORE DEFERRAL 4% 4% 292 276 (5%) Deferred policy acquisition costs (6%) (10%) (176) (160) 9% ------------------------------------------------------------------------------------------------------------ TOTAL OTHER INSURANCE EXPENSE 3% (3%) 116 116 - Amortization of deferred policy acquisition costs and present value of future profits (14%) (2%) 128 131 2% ------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND EXPENSES 4% 4% 574 584 2% Income before income tax expense 6% 4% 146 149 2% Income tax expense - 14% 47 45 (4%) ------------------------------------------------------------------------------------------------------------ NET INCOME 9% - $ 99 $ 104 5% ------------------------------------------------------------------------------------------------------------
L-15
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE SUPPLEMENTAL DATA 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 ------------- ------------ ------------- ------------ ------------- SALES BY DISTRIBUTION Wirehouse/regional broker-dealer/banks $ 17 $ 22 $ 15 $ 18 $ 28 Independent broker-dealer/WFS 13 12 13 11 12 Life professional/other 7 14 11 8 10 ---------------------------------------------------------------------------------------------------------------------- TOTAL SALES BY DISTRIBUTION $ 37 $ 48 $ 39 $ 37 $ 50 - --------------------------------------------------------------------------------------------------------------------------- SALES BY PRODUCT Variable life $ 30 $ 36 $ 26 $ 23 $ 26 Universal life 5 9 11 11 21 Term life/other 2 3 2 3 3 ---------------------------------------------------------------------------------------------------------------------- TOTAL SALES BY PRODUCT $ 37 $ 48 $ 39 $ 37 $ 50 - --------------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE General account $ 3,639 $ 3,658 $ 3,682 $ 3,722 $ 3,770 Separate account 3,721 3,899 3,901 4,344 4,477 ---------------------------------------------------------------------------------------------------------------------- TOTAL ACCOUNT VALUE $ 7,360 $ 7,557 $ 7,583 $ 8,066 $ 8,247 - --------------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE BY PRODUCT Variable life $ 3,458 $ 3,648 $ 3,673 $ 4,141 $ 4,284 Universal life/interest sensitive whole life 3,146 3,139 3,144 3,166 3,213 Modified guaranteed life 683 680 677 671 661 Other 73 90 89 88 89 ---------------------------------------------------------------------------------------------------------------------- TOTAL ACCOUNT VALUE BY PRODUCT $ 7,360 $ 7,557 $ 7,583 $ 8,066 $ 8,247 - --------------------------------------------------------------------------------------------------------------------------- LIFE INSURANCE IN FORCE Variable life $ 65,797 $ 66,715 $ 66,631 $ 66,518 $ 66,561 Universal life/interest sensitive whole life 38,743 38,457 38,098 37,935 37,990 Term life 19,393 20,312 21,115 21,895 22,754 Modified guaranteed life 961 947 933 918 896 Other 244 249 252 254 261 ---------------------------------------------------------------------------------------------------------------------- TOTAL LIFE INSURANCE IN FORCE $ 125,138 $ 126,680 $ 127,029 $ 127,520 $ 128,462 - --------------------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------------------ CHANGE CHANGE 2002 2003 CHANGE ------------- ---------------- ------------- ------------- ------------ SALES BY DISTRIBUTION Wirehouse/regional broker-dealer/banks 65% 56% $ 55 $ 61 11% Independent broker-dealer/WFS (8%) 9% 44 36 (18%) Life professional/other 43% 25% 26 29 12% ----------------------------------------------------------------------------------------------------------------------- TOTAL SALES BY DISTRIBUTION 35% 35% $ 125 $ 126 1% - ---------------------------------------------------------------------------------------------------------------------------- SALES BY PRODUCT Variable life (13%) 13% $ 105 $ 75 (29%) Universal life NM 91% 13 43 NM Term life/other 50% - 7 8 14% ----------------------------------------------------------------------------------------------------------------------- TOTAL SALES BY PRODUCT 35% 35% $ 125 $ 126 1% - ---------------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE General account 4% 1% Separate account 20% 3% ----------------------------------------------------------------------------------------------------------------------- TOTAL ACCOUNT VALUE 12% 2% - ---------------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE BY PRODUCT Variable life 24% 3% Universal life/interest sensitive whole life 2% 1% Modified guaranteed life (3%) (1%) Other 22% 1% ----------------------------------------------------------------------------------------------------------------------- TOTAL ACCOUNT VALUE BY PRODUCT 12% 2% - ---------------------------------------------------------------------------------------------------------------------------- LIFE INSURANCE IN FORCE Variable life 1% - Universal life/interest sensitive whole life (2%) - Term life 17% 4% Modified guaranteed life (7%) (2%) Other 7% 3% ----------------------------------------------------------------------------------------------------------------------- TOTAL LIFE INSURANCE IN FORCE 3% 1% - ----------------------------------------------------------------------------------------------------------------------------
L-16
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE ACCOUNT VALUE ROLLFORWARD 3Q 4Q 1Q 2002 2002 2003 ---------------- ---------------- ---------------- VARIABLE LIFE BEGINNING BALANCE $ 3,760 $ 3,458 $ 3,648 First year & single premiums 91 94 78 Renewal premiums 117 135 133 -------------------------------------------------------------------------------------------- Premiums and deposits 208 229 211 Change in market value/interest credited (369) 127 (35) Surrenders (45) (65) (52) Death benefits/policy fees (98) (105) (104) Net exchanges 2 4 5 -------------------------------------------------------------------------------------------- ENDING BALANCE $ 3,458 $ 3,648 $ 3,673 - ----------------------------------------------------------------------------------------------------------------- OTHER [1] BEGINNING BALANCE $ 3,875 $ 3,902 $ 3,909 First year & single premiums 8 12 13 Renewal premiums 111 90 86 -------------------------------------------------------------------------------------------- Premiums and deposits 119 102 99 Change in market value/interest credited 50 52 49 Surrenders (54) (55) (54) Death benefits/policy fees (86) (88) (88) Net exchanges (2) (4) (5) -------------------------------------------------------------------------------------------- ENDING BALANCE $ 3,902 $ 3,909 $ 3,910 - ----------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL LIFE BEGINNING BALANCE $ 7,635 $ 7,360 $ 7,557 First year & single premiums 99 106 91 Renewal premiums 228 225 219 -------------------------------------------------------------------------------------------- Premiums and deposits 327 331 310 Change in market value/interest credited (319) 179 14 Surrenders (99) (120) (106) Death benefits/policy fees (184) (193) (192) Net exchanges - - - -------------------------------------------------------------------------------------------- ENDING BALANCE $ 7,360 $ 7,557 $ 7,583 - ----------------------------------------------------------------------------------------------------------------- 2Q 3Q 2003 2003 --------------- --------------- VARIABLE LIFE BEGINNING BALANCE $ 3,673 $ 4,141 First year & single premiums 69 65 Renewal premiums 125 121 --------------------------------------------------------------------------- Premiums and deposits 194 186 Change in market value/interest credited 437 119 Surrenders (60) (64) Death benefits/policy fees (107) (103) Net exchanges 4 5 --------------------------------------------------------------------------- ENDING BALANCE $ 4,141 $ 4,284 - ------------------------------------------------------------------------------------------------ OTHER [1] BEGINNING BALANCE $ 3,910 $ 3,925 First year & single premiums 20 59 Renewal premiums 83 86 --------------------------------------------------------------------------- Premiums and deposits 103 145 Change in market value/interest credited 52 50 Surrenders (48) (62) Death benefits/policy fees (88) (90) Net exchanges (4) (5) --------------------------------------------------------------------------- ENDING BALANCE $ 3,925 $ 3,963 - ------------------------------------------------------------------------------------------------ TOTAL INDIVIDUAL LIFE BEGINNING BALANCE $ 7,583 $ 8,066 First year & single premiums 89 124 Renewal premiums 208 207 --------------------------------------------------------------------------- Premiums and deposits 297 331 Change in market value/interest credited 489 169 Surrenders (108) (126) Death benefits/policy fees (195) (193) Net exchanges - - --------------------------------------------------------------------------- ENDING BALANCE $ 8,066 $ 8,247 - ------------------------------------------------------------------------------------------------ [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 3Q 4Q 1Q 2Q 3Q REVENUES 2002 2002 2003 2003 2003 -------- -------- -------- -------- -------- PREMIUMS AND OTHER CONSIDERATIONS ASO fees $ 6 $ 4 $ 6 $ 4 $ 4 Other fees - - - - 1 ------------------------------------------------------------------------------------------------------------ TOTAL FEE INCOME 6 4 6 4 5 Direct premiums 572 576 569 569 582 Net reinsurance premiums 4 (7) 27 - 10 ------------------------------------------------------------------------------------------------------------ NET PREMIUMS 576 569 596 569 592 ------------------------------------------------------------------------------------------------------------ TOTAL PREMIUMS AND OTHER CONSIDERATIONS 582 573 602 573 597 NET INVESTMENT INCOME Gross FAS 60 investment income on G/A assets 53 58 56 56 57 ------------------------------------------------------------------------------------------------------------ GROSS INVESTMENT INCOME ON G/A ASSETS 53 58 56 56 57 Investment expenses (1) (1) (1) - (1) ------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME ON G/A ASSETS 52 57 55 56 56 Net investment income on assigned capital 11 9 10 9 10 ------------------------------------------------------------------------------------------------------------ TOTAL NET INVESTMENT INCOME 63 66 65 65 66 ------------------------------------------------------------------------------------------------------------ TOTAL REVENUES 645 639 667 638 663 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 155 161 175 172 167 Other contract benefits 243 267 261 251 262 Change in reserve 73 19 53 28 43 ------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND CLAIMS 471 447 489 451 472 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 54 61 58 59 61 Operating expenses 68 74 69 72 70 Premium taxes, licenses and fees 11 10 12 11 12 Other miscellaneous expenses - (1) (1) - - ------------------------------------------------------------------------------------------------------------ SUBTOTAL - EXPENSES BEFORE DEFERRAL 133 144 138 142 143 Deferred policy acquisition costs (6) (5) (7) (4) (6) ------------------------------------------------------------------------------------------------------------ TOTAL OTHER INSURANCE EXPENSE 127 139 131 138 137 Amortization of deferred policy acquisition cost and present value of future profits 4 6 4 5 4 ------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND EXPENSES 602 592 624 594 613 Income before income tax expense 43 47 43 44 50 Income tax expense 9 11 9 9 12 ------------------------------------------------------------------------------------------------------------ NET INCOME $ 34 $ 36 $ 34 $ 35 $ 38 ------------------------------------------------------------------------------------------------------------ YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ---------------------------- REVENUES CHANGE CHANGE 2002 2003 CHANGE --------- --------- -------- -------- --------- PREMIUMS AND OTHER CONSIDERATIONS ASO fees (33%) - $ 15 $ 14 (7%) Other fees - - - 1 - -------------------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME (17%) 25% 15 15 - Direct premiums 2% 2% 1,742 1,720 (1%) Net reinsurance premiums 150% - (3) 37 NM -------------------------------------------------------------------------------------------------------------------- NET PREMIUMS 3% 4% 1,739 1,757 1% -------------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 3% 4% 1,754 1,772 1% NET INVESTMENT INCOME Gross FAS 60 investment income on G/A assets 8% 2% 161 169 5% -------------------------------------------------------------------------------------------------------------------- GROSS INVESTMENT INCOME ON G/A ASSETS 8% 2% 161 169 5% Investment expenses - - (2) (2) - -------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 8% - 159 167 5% Net investment income on assigned capital (9%) 11% 30 29 (3%) -------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 5% 2% 189 196 4% -------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 3% 4% 1,943 1,968 1% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 8% (3%) 483 514 6% Other contract benefits 8% 4% 769 774 1% Change in reserve (41%) 54% 179 124 (31%) -------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS - 5% 1,431 1,412 (1%) OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 13% 3% 169 178 5% Operating expenses 3% (3%) 203 211 4% Premium taxes, licenses and fees 9% 9% 32 35 9% Other miscellaneous expenses - - - (1) - -------------------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 8% 1% 404 423 5% Deferred policy acquisition costs - (50%) (19) (17) 11% -------------------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSE 8% (1%) 385 406 5% Amortization of deferred policy acquisition cost and present value of future profits - (20%) 11 13 18% -------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 2% 3% 1,827 1,831 - Income before income tax expense 16% 14% 116 137 18% Income tax expense 33% 33% 24 30 25% -------------------------------------------------------------------------------------------------------------------- NET INCOME 12% 9% $ 92 $ 107 16% --------------------------------------------------------------------------------------------------------------------
L-18
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE GROUP BENEFITS SUPPLEMENTAL DATA 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 ----------- ----------- ----------- ----------- ----------- PREMIUMS Fully Insured - Ongoing Premiums Group disability $ 237 $ 232 $ 243 $ 237 $ 243 Group life 240 240 243 240 249 Other 93 90 82 91 89 --------------------------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING PREMIUMS 570 562 568 568 581 --------------------------------------------------------------------------------------------------------------- Total buyouts [1] 6 7 28 1 11 ------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS 576 569 596 569 592 Group disability - premium equivalents [2] 63 55 50 51 50 ------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND PREMIUM EQUIVALENT CLAIMS $ 639 $ 624 $ 646 $ 620 $ 642 - ------------------------------------------------------------------------------------------------------------------------------ SALES (GROSS FULLY INSURED - ONGOING SALES ANNUALIZED Group disability $ 36 $ 28 $ 103 $ 51 $ 32 NEW PREMIUMS) Group life 33 25 89 30 38 Other 19 12 30 11 30 --------------------------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING SALES 88 65 222 92 100 --------------------------------------------------------------------------------------------------------------- Total buyouts [1] 7 7 26 3 11 ------------------------------------------------------------------------------------------------------------- TOTAL SALES 95 72 248 95 111 Group disability premium equivalents [2] 4 2 24 4 6 ------------------------------------------------------------------------------------------------------------- TOTAL SALES AND PREMIUM EQUIVALENTS $ 99 $ 74 $ 272 $ 99 $ 117 - ------------------------------------------------------------------------------------------------------------------------------ RATIOS [3] Loss Ratio 80.7% 77.7% 80.3% 78.7% 78.7% Expense Ratio 22.7% 25.6% 23.5% 25.0% 24.1% Combined Ratio 103.5% 103.4% 103.8% 103.7% 102.7% - ------------------------------------------------------------------------------------------------------------------------------ GAAP RESERVES Group disability $ 2,479 $ 2,489 $ 2,516 $ 2,538 $ 2,552 Group life 758 765 799 803 822 Other 195 201 186 188 212 ---------------------------------------------------------------------------------------------------------------- TOTAL GAAP RESERVES $ 3,432 $ 3,455 $ 3,501 $ 3,529 $ 3,586 - ------------------------------------------------------------------------------------------------------------------------------ YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------------ CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ----------- ----------- ----------- PREMIUMS Fully Insured - Ongoing Premiums Group disability 3% 3% $ 729 $ 723 (1%) Group life 4% 4% 725 732 1% Other (4%) (2%) 279 262 (6%) --------------------------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING PREMIUMS 2% 2% 1,733 1,717 (1%) --------------------------------------------------------------------------------------------------------------- Total buyouts [1] 83% NM 6 40 NM ------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS 3% 4% 1,739 1,757 1% Group disability - premium equivalents [2] (21%) (2%) 177 151 (15%) ------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND PREMIUM EQUIVALENT CLAIMS - 4% $ 1,916 $ 1,908 - - ------------------------------------------------------------------------------------------------------------------------------ SALES (GROSS FULLY INSURED - ONGOING SALES ANNUALIZED Group disability (11%) (37%) $ 190 $ 186 (2%) NEW PREMIUMS) Group life 15% 27% 259 157 (39%) Other 58% 173% 83 71 (14%) --------------------------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING SALES 14% 9% 532 414 (22%) --------------------------------------------------------------------------------------------------------------- Total buyouts [1] 57% NM 7 40 NM ------------------------------------------------------------------------------------------------------------- TOTAL SALES 17% 17% 539 454 (16%) Group disability premium equivalents [2] 50% 50% 59 34 (42%) ------------------------------------------------------------------------------------------------------------- TOTAL SALES AND PREMIUM EQUIVALENTS 18% 18% $ 598 $ 488 (18%) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS [3] Loss Ratio 81.5% 79.2% Expense Ratio 22.7% 24.2% Combined Ratio 104.2% 103.4% - ------------------------------------------------------------------------------------------------------------------------------ GAAP RESERVES Group disability 3% 1% Group life 8% 2% Other 9% 13% ---------------------------------------------------------------------------------------------------------------- TOTAL GAAP RESERVES 4% 2% - ------------------------------------------------------------------------------------------------------------------------------ [1] Takeover of open claim liabilities and other non-recurring premium amounts. [2] Administrative services only (ASO) fees and claims under claim management agreements. [3] Ratios calculated excluding the effects of buyout premiums.
L-19 PROPERTY & CASUALTY
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY FINANCIAL HIGHLIGHTS 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 --------- -------- --------- -------- --------- GAAP TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Written premiums $ 2,205 $ 2,137 $ 2,447 $ 2,134 $ 2,318 Earned premiums 2,107 2,154 2,166 2,106 2,268 Business Insurance 21 27 (12) 42 20 Personal Lines (13) 2 52 3 37 Specialty Commercial 3 (24) - (4) (50) Reinsurance (4) (42) (19) (76) (10) ---------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN UNDERWRITING RESULTS 7 (37) 21 (35) (3) Other Operations (42) (35) (2,633) (12) (12) ---------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS $ (35) $ (72) $(2,612) $ (47) $ (15) GAAP NORTH AMERICAN UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 59.1 59.6 58.9 60.6 59.8 ---------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 10.9 11.4 12.1 11.9 11.6 Expenses 28.0 28.3 26.2 26.7 27.5 ---------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 38.9 39.6 38.4 38.7 39.0 ---------------------------------------------------------------------------------------------------------------------- Policyholder dividends 0.7 0.8 0.4 0.5 0.4 ---------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 98.7 100.0 97.7 99.7 99.2 - --------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 1.1 0.8 2.6 4.7 3.4 - --------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 97.5 99.2 95.1 95.0 95.8 - --------------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY &CASUALTY INCOME AND ROE Net income $ 110 $ 141 $(1,513) $ 277 $ 202 Operating income 139 142 (1,510) 142 193 Impact of 2003 asbestos reserve addition and severance charges - - (1,701) (27) - Operating income before impact of 2003 asbestos reserve addition and severance charges 139 142 191 169 193 Net income ROE (last 12 months income-equity AOCI) 8.3% 10.4% (31.0%) (19.9%) (17.1%) Operating income ROE (last 12 months income-equity x-AOCI) 12.6% 13.1% (33.9%) (25.4%) (22.8%) Operating income ROE (last 12 months income-equity x-AOCI) excluding the impact of the 2003 asbestos reserve addition and severance charges 12.6% 13.1% 14.4% 15.0% 15.3% - --------------------------------------------------------------------------------------------------------------------------- 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 NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ----------------------------- CHANGE CHANGE 2002 2003 CHANGE --------- ---------- --------- --------- ------- GAAP TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Written premiums 5% 9% $ 6,447 $ 6,899 7% Earned premiums 8% 8% 5,960 6,540 10% Business Insurance (5%) (52%) 17 50 194% Personal Lines NM NM (48) 92 NM Specialty Commercial NM NM 1 (54) NM Reinsurance (150%) 87% (17) (105) NM -------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN UNDERWRITING RESULTS NM 91% (47) (17) 64% Other Operations 71% - (129) (2,657) NM -------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS 57% 68% $ (176) $(2,674) NM GAAP NORTH AMERICAN UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES (0.7) 0.8 59.6 59.7 (0.1) -------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses (0.7) 0.3 11.2 11.9 (0.7) Expenses 0.5 (0.8) 28.3 26.8 1.5 -------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES (0.1) (0.3) 39.5 38.7 0.8 -------------------------------------------------------------------------------------------------------------------- Policyholder dividends 0.3 0.1 0.7 0.4 0.3 -------------------------------------------------------------------------------------------------------------------- COMBINED RATIO (0.5) 0.5 99.8 98.9 0.9 - ------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio (2.3) 1.3 1.6 3.6 (2.0) - ------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 1.7 (0.8) 98.2 95.3 2.9 - ------------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY &CASUALTY INCOME AND ROE Net income 84% (27%) $ 328 $(1,034) NM Operating income 39% 36% 381 (1,175) NM Impact of 2003 asbestos reserve addition and severance charges - 100% - (1,728) - Operating income before impact of 2003 asbestos reserve addition and severance charges 39% 14% 381 553 45% Net income ROE (last 12 months income-equity AOCI) NM 2.8 Operating income ROE (last 12 months income-equity x-AOCI) NM 2.6 Operating income ROE (last 12 months income-equity x-AOCI) excluding the impact of the 2003 asbestos reserve addition and severance charges 2.7 0.3 - ------------------------------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY ----------------------------- SEP. 30, DEC. 31, 2003 2002 CHANGE --------- --------- ------- Selected Financial Data - ----------------------- Hartford Fire Pool adjusted statutory surplus $ 5,416 $ 4,600 18% Hartford Fire Pool premium to adjusted surplus ratio 1.6 1.8 (0.2) Hartford Fire Pool statutory net income $ (603) $ 4,794 NM - -------------------------------------------------------------------------------------------------------------------------
PC-1
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OPERATING RESULTS 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 -------- --------- -------- --------- -------- GAAP TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Written premiums $ 2,205 $ 2,137 $ 2,447 $ 2,134 $ 2,318 Change in reserve 98 (17) 281 28 50 ---------------------------------------------------------------------------------------------------------------------------- Earned premiums 2,107 2,154 2,166 2,106 2,268 Loss and loss adjustment expenses 1,505 1,555 1,557 1,541 1,622 Underwriting expenses 603 617 578 562 630 Dividends to policyholders 14 17 10 9 10 Other adjustments 20 37 29 41 21 ---------------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS (35) (72) (8) (47) (15) Net servicing income 4 8 3 3 9 Net investment income 262 288 285 291 302 Other expenses (68) (56) (40) (38) (42) Income tax expense (24) (26) (49) (40) (61) ---------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME, BEFORE IMPACT OF 2003 ASBESTOS RESERVE ADDITION AND SEVERANCE CHARGES 139 142 191 169 193 2003 asbestos reserve addition - - (1,701) - - Severance charges - - - (27) - ---------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) 139 142 (1,510) 142 193 Net realized capital gains (losses), after tax (29) (1) (3) 135 9 ---------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ 110 $ 141 $(1,513) $ 277 $ 202 ---------------------------------------------------------------------------------------------------------------------------- Total Property & Casualty effective tax rate - net income 7.6% 15.0% NM 26.3% 24.2% Total Property & Casualty effective tax rate - operating income 15.1% 15.1% NM 15.7% 23.6% ---------------------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER --------------------------- CHANGE CHANGE 2002 2003 CHANGE ---------- --------- -------- -------- ------- GAAP TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Written premiums 5% 9% $ 6,447 $ 6,899 7% Change in reserve (49%) 79% 487 359 (26%) ------------------------------------------------------------------------------------------------------------------------------- Earned premiums 8% 8% 5,960 6,540 10% Loss and loss adjustment expenses 8% 5% 4,315 4,720 9% Underwriting expenses 4% 12% 1,721 1,770 3% Dividends to policyholders (29%) 11% 40 29 (28%) Other adjustments 5% (49%) 60 91 52% ------------------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS 57% 68% (176) (70) 60% Net servicing income 125% NM 7 15 114% Net investment income 15% 4% 787 878 12% Other expenses 38% (11%) (162) (120) 26% Income tax expense (154%) (53%) (75) (150) (100%) ------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME, BEFORE IMPACT OF 2003 ASBESTOS RESERVE ADDITION AND SEVERANCE CHARGES 39% 14% 381 553 45% 2003 asbestos reserve addition - - - (1,701) - Severance charges - 100% - (27) - ------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) 39% 36% 381 (1,175) NM Net realized capital gains (losses), after tax NM (93%) (53) 141 NM ------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) 84% (27%) $ 328 $(1,034) NM ------------------------------------------------------------------------------------------------------------------------------- Total Property & Casualty effective tax rate - net income 16.6 NM 12.4% NM NM Total Property & Casualty effective tax rate - operating income 8.5 NM 16.4% NM NM -------------------------------------------------------------------------------------------------------------------------------
PC-2
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY NORTH AMERICAN CONSOLIDATING UNDERWRITING RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2003 NORTH AMERICAN BUSINESS PERSONAL SPECIALTY BEFORE INSURANCE LINES COMMERCIAL REINSURANCE ---------- ---------- --------------------------- GAAP UNDERWRITING RESULTS Written premiums $ 987 $ 845 $ 469 $ 2,301 Change in reserve 40 40 35 115 ------------------------------------------------------------------------------------------------------------- Earned premiums 947 805 434 2,186 Loss and loss adjustment expenses 595 583 366 1,544 Underwriting expenses 310 182 112 604 Dividends to policyholders 8 - 2 10 Other adjustments 14 3 4 21 ------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ 20 $ 37 $ (50) $ 7 - ------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 50.6 61.4 72.6 58.9 ------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 12.4 11.0 11.7 11.8 Expenses 32.7 22.6 25.9 27.6 ------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 45.1 33.6 37.6 39.4 ------------------------------------------------------------------------------------------------------------- Policyholder dividends 0.8 - 0.6 0.4 ------------------------------------------------------------------------------------------------------------- Combined ratio 96.4 95.1 110.7 98.8 - ------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 3.2 4.2 2.5 3.4 - ------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 93.3 90.8 108.2 95.3 - ------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN NORTH BEFORE REINSURANCE REINSURANCE AMERICAN 2003 VS 2002 ------------- ----------- ------------------- GAAP UNDERWRITING RESULTS Written premiums $ 19 $ 2,320 13% Change in reserve (63) 52 (3%) ------------------------------------------------------------------------------------ ------------------- Earned premiums 82 2,268 14% Loss and loss adjustment expenses 73 1,617 16% Underwriting expenses 19 623 13% Dividends to policyholders - 10 (29%) Other adjustments - 21 5% ------------------------------------------------------------------------------------ ------------------- UNDERWRITING RESULTS $ (10) $ (3) (36%) - ------------------------------------------------------------------------------------------ ------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 82.0 59.8 (0.7) ------------------------------------------------------------------------------------ ------------------- Loss adjustment expenses 5.8 11.6 (0.5) Expenses 23.5 27.5 0.4 ------------------------------------------------------------------------------------ ------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 29.3 39.0 (0.1) ------------------------------------------------------------------------------------ ------------------- Policyholder dividends - 0.4 0.4 ------------------------------------------------------------------------------------ ------------------- COMBINED RATIO 111.3 99.2 (0.5) - ------------------------------------------------------------------------------------------ ------------------- Catastrophe ratio 3.0 3.4 (2.3) - ------------------------------------------------------------------------------------------ ------------------- COMBINED RATIO BEFORE CATASTROPHES 108.2 95.8 1.9 - ------------------------------------------------------------------------------------------ -------------------
PC-3
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY NORTH AMERICAN CONSOLIDATING UNDERWRITING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 NORTH AMERICAN BUSINESS PERSONAL SPECIALTY BEFORE INSURANCE LINES COMMERCIAL REINSURANCE ---------- ---------- ------------ ------------- GAAP UNDERWRITING RESULTS Written premiums $ 2,951 $ 2,469 $ 1,274 $ 6,694 Change in reserve 227 107 130 464 ------------------------------------------------------------------------------------------------------------ Earned premiums 2,724 2,362 1,144 6,230 Loss and loss adjustment expenses 1,754 1,725 871 4,350 Underwriting expenses 857 533 282 1,672 Dividends to policyholders 22 - 7 29 Other adjustments 41 12 38 91 ------------------------------------------------------------------------------------------------------------ UNDERWRITING RESULTS $ 50 $ 92 $ (54) $ 88 - ------------------------------------------------------------------------------------------------------------------ GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 51.7 61.8 63.7 57.8 ------------------------------------------------------------------------------------------------------------ Loss adjustment expenses 12.7 11.2 12.4 12.1 Expenses 31.4 22.6 24.7 26.8 ------------------------------------------------------------------------------------------------------------ EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 44.2 33.8 37.1 38.9 ------------------------------------------------------------------------------------------------------------ Policyholder dividends 0.8 - 0.7 0.5 ------------------------------------------------------------------------------------------------------------ COMBINED RATIO 96.7 95.6 101.5 97.1 - ------------------------------------------------------------------------------------------------------------------ Catastrophe ratio 3.4 4.6 2.0 3.6 - ------------------------------------------------------------------------------------------------------------------ COMBINED RATIO BEFORE CATASTROPHES 93.3 91.0 99.5 93.5 - ------------------------------------------------------------------------------------------------------------------ NORTH AMERICAN NORTH BEFORE REINSURANCE REINSURANCE AMERICAN 2003 VS 2002 ------------- ----------- ------------------- GAAP UNDERWRITING RESULTS Written premiums $ 194 $ 6,888 14% Change in reserve (102) 362 (1%) ----------------------------------------------------------------------------------- ------------------- Earned premiums 296 6,526 16% Loss and loss adjustment expenses 324 4,674 15% Underwriting expenses 77 1,749 9% Dividends to policyholders - 29 (28%) Other adjustments - 91 52% ----------------------------------------------------------------------------------- ------------------- UNDERWRITING RESULTS $ (105) $ (17) NM - ----------------------------------------------------------------------------------------- ------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 101.5 59.7 0.7 ----------------------------------------------------------------------------------- ------------------- Loss adjustment expenses 7.5 11.9 (0.3) Expenses 26.2 26.8 1.6 ----------------------------------------------------------------------------------- ------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 33.8 38.7 1.3 ----------------------------------------------------------------------------------- ------------------- Policyholder dividends - 0.4 0.3 ----------------------------------------------------------------------------------- ------------------- COMBINED RATIO 135.2 98.9 2.3 - ----------------------------------------------------------------------------------------- ------------------- Catastrophe ratio 2.8 3.6 (2.0) - ----------------------------------------------------------------------------------------- ------------------- COMBINED RATIO BEFORE CATASTROPHES 132.4 95.3 4.3 - ----------------------------------------------------------------------------------------- -------------------
PC-4
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY BUSINESS INSURANCE UNDERWRITING RESULTS 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 ---------- --------- --------- ---------- --------- GAAP UNDERWRITING RESULTS Written premiums $ 867 $ 885 $ 990 $ 974 $ 987 Change in reserve 72 52 110 77 40 ------------------------------------------------------------------------------------------------------------------ Earned premiums 795 833 880 897 947 Loss and loss adjustment expenses 489 510 598 561 595 Underwriting expenses 260 271 268 279 310 Dividends to policyholders 13 13 7 7 8 Other adjustments 12 12 19 8 14 ------------------------------------------------------------------------------------------------------------------ UNDERWRITING RESULTS $ 21 $ 27 $ (12) $ 42 $ 20 - ------------------------------------------------------------------------------------------------------------------------ GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 50.1 48.2 55.0 49.8 50.6 ------------------------------------------------------------------------------------------------------------------ Loss adjustment expenses 11.5 13.0 12.9 12.8 12.4 Expenses 32.7 32.6 30.5 31.0 32.7 ------------------------------------------------------------------------------------------------------------------ EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 44.2 45.6 43.4 43.8 45.1 ------------------------------------------------------------------------------------------------------------------ Policyholder dividends 1.6 1.6 0.8 0.8 0.8 ------------------------------------------------------------------------------------------------------------------ COMBINED RATIO 95.9 95.4 99.2 94.4 96.4 - ------------------------------------------------------------------------------------------------------------------------ Catastrophe ratio 0.7 0.4 4.6 2.5 3.2 - ------------------------------------------------------------------------------------------------------------------------ COMBINED RATIO BEFORE CATASTROPHES 95.2 95.0 94.6 91.9 93.3 - ------------------------------------------------------------------------------------------------------------------------ YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------- CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- ---------- ---------- --------- GAAP UNDERWRITING RESULTS Written premiums 14% 1% $ 2,527 $ 2,951 17% Change in reserve (44%) (48%) 234 227 (3%) --------------------------------------------------------------------------------------------------------------------- Earned premiums 19% 6% 2,293 2,724 19% Loss and loss adjustment expenses 22% 6% 1,452 1,754 21% Underwriting expenses 19% 11% 751 857 14% Dividends to policyholders (38%) 14% 35 22 (37%) Other adjustments 17% 75% 38 41 8% --------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS (5%) (52%) $ 17 $ 50 194% - --------------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES (0.5) (0.8) 51.6 51.7 (0.1) --------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses (0.9) 0.4 11.7 12.7 (1.0) Expenses - (1.7) 32.7 31.4 1.3 --------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES (0.9) (1.3) 44.4 44.2 0.2 --------------------------------------------------------------------------------------------------------------------- Policyholder dividends 0.8 - 1.5 0.8 0.7 --------------------------------------------------------------------------------------------------------------------- COMBINED RATIO (0.5) (2.0) 97.6 96.7 0.9 - --------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio (2.5) (0.7) 0.9 3.4 (2.5) - --------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 1.9 (1.4) 96.7 93.3 3.4 - ---------------------------------------------------------------------------------------------------------------------------
PC-5
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY BUSINESS INSURANCE WRITTEN AND EARNED PREMIUMS 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 ---------- ---------- ---------- ---------- ------------ WRITTEN PREMIUMS [1] Small Commercial $ 418 $ 440 $ 480 $ 459 $ 454 Middle Market 449 445 510 515 533 - ------------------------------------------------------------------------------------------------------------------ TOTAL $ 867 $ 885 $ 990 $ 974 $ 987 EARNED PREMIUMS [1] Small Commercial $ 391 $ 413 $ 430 $ 442 $ 449 Middle Market 404 420 450 455 498 - ------------------------------------------------------------------------------------------------------------------ TOTAL $ 795 $ 833 $ 880 $ 897 $ 947 - ------------------------------------------------------------------------------------------------------------------ YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER -------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ---------- ---------- -------- WRITTEN PREMIUMS [1] Small Commercial 9% (1%) $ 1,238 $ 1,393 13% Middle Market 19% 3% 1,289 1,558 21% - ------------------------------------------------------------------------------------------------------------------ TOTAL 14% 1% $ 2,527 $ 2,951 17% EARNED PREMIUMS [1] Small Commercial 15% 2% $ 1,142 $ 1,321 16% Middle Market 23% 9% 1,151 1,403 22% - ------------------------------------------------------------------------------------------------------------------ TOTAL 19% 6% $ 2,293 $ 2,724 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 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 --------- --------- ---------- --------- --------- GAAP UNDERWRITING RESULTS Written premiums $ 779 $ 756 $ 770 $ 854 $ 845 Change in reserve 21 (10) (2) 69 40 --------------------------------------------------------------------------------------------------------------------- Earned premiums 758 766 772 785 805 Loss and loss adjustment expenses 594 584 540 602 583 Underwriting expenses 173 176 176 175 182 Dividends to policyholders - - - - - Other adjustments 4 4 4 5 3 --------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ (13) $ 2 $ 52 $ 3 $ 37 - --------------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 67.0 64.8 58.4 65.6 61.4 --------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 11.1 11.4 11.3 11.3 11.0 Expenses 23.0 22.9 23.0 22.2 22.6 --------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 34.1 34.3 34.2 33.5 33.6 --------------------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - --------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 101.1 99.2 92.7 99.0 95.1 - --------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 1.9 1.0 1.4 8.2 4.2 - --------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 99.3 98.1 91.3 90.8 90.8 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- GAAP COMBINED RATIO Automobile 101.2 104.6 96.1 98.0 95.9 Homeowners 100.7 80.6 80.8 102.9 92.1 --------------------------------------------------------------------------------------------------------------------- TOTAL 101.1 99.2 92.7 99.0 95.1 - --------------------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------ CHANGE CHANGE 2002 2003 CHANGE ----------- ---------- --------- --------- -------- GAAP UNDERWRITING RESULTS Written premiums 8% (1%) $ 2,294 $ 2,469 8% Change in reserve 90% (42%) 76 107 41% -------------------------------------------------------------------------------------------------------------------------- Earned premiums 6% 3% 2,218 2,362 6% Loss and loss adjustment expenses (2%) (3%) 1,735 1,725 (1%) Underwriting expenses 5% 4% 520 533 2% Dividends to policyholders - - - - - Other adjustments (25%) (40%) 11 12 9% -------------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS NM NM $ (48) $ 92 NM - -------------------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 5.6 4.2 66.5 61.8 4.7 -------------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 0.1 0.3 11.7 11.2 0.5 Expenses 0.4 (0.4) 23.5 22.6 0.9 -------------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 0.5 (0.1) 35.2 33.8 1.4 -------------------------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - -------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 6.0 3.9 101.7 95.6 6.1 - -------------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio (2.3) 4.0 3.0 4.6 (1.6) - -------------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 8.5 - 98.7 91.0 7.7 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- GAAP COMBINED RATIO Automobile 5.3 2.1 102.6 96.7 5.9 Homeowners 8.6 10.8 98.5 91.9 6.6 -------------------------------------------------------------------------------------------------------------------------- TOTAL 6.0 3.9 101.7 95.6 6.1 - --------------------------------------------------------------------------------------------------------------------------------
PC-7
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY PERSONAL LINES WRITTEN AND EARNED PREMIUMS 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 --------- --------- ---------- --------- ---------- BUSINESS UNIT WRITTEN PREMIUMS [1] AARP $ 479 $ 455 $ 475 $ 550 $ 537 Other Affinity 43 42 42 36 35 Agency 194 197 186 201 212 Omni 63 62 67 67 61 -------------------------------------------------------------------------------------------------------- TOTAL $ 779 $ 756 $ 770 $ 854 $ 845 EARNED PREMIUMS [1] AARP $ 446 $ 457 $ 466 $ 481 $ 499 Other Affinity 48 45 44 41 40 Agency 201 200 199 198 202 Omni 63 64 63 65 64 -------------------------------------------------------------------------------------------------------- TOTAL $ 758 $ 766 $ 772 $ 785 $ 805 - -------------------------------------------------------------------------------------------------------------- PRODUCT LINE WRITTEN PREMIUMS [1] Automobile $ 587 $ 578 $ 609 $ 656 $ 632 Homeowners 192 178 161 198 213 -------------------------------------------------------------------------------------------------------- TOTAL $ 779 $ 756 $ 770 $ 854 $ 845 EARNED PREMIUMS [1] Automobile $ 591 $ 594 $ 598 $ 610 $ 620 Homeowners 167 172 174 175 185 -------------------------------------------------------------------------------------------------------- TOTAL $ 758 $ 766 $ 772 $ 785 $ 805 - -------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------ CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- --------- --------- -------- BUSINESS UNIT WRITTEN PREMIUMS [1] AARP 12% (2%) $ 1,400 $ 1,562 12% Other Affinity (19%) (3%) 137 113 (18%) Agency 9% 5% 559 599 7% Omni (3%) (9%) 198 195 (2%) ---------------------------------------------------------------------------------------------------------- TOTAL 8% (1%) $ 2,294 $ 2,469 8% EARNED PREMIUMS [1] AARP 12% 4% $ 1,290 $ 1,446 12% Other Affinity (17%) (2%) 147 125 (15%) Agency - 2% 594 599 1% Omni 2% (2%) 187 192 3% ---------------------------------------------------------------------------------------------------------- TOTAL 6% 3% $ 2,218 $ 2,362 6% - ---------------------------------------------------------------------------------------------------------------- PRODUCT LINE WRITTEN PREMIUMS [1] Automobile 8% (4%) $ 1,774 $ 1,897 7% Homeowners 11% 8% 520 572 10% ---------------------------------------------------------------------------------------------------------- TOTAL 8% (1%) $ 2,294 $ 2,469 8% EARNED PREMIUMS [1] Automobile 5% 2% $ 1,732 $ 1,828 6% Homeowners 11% 6% 486 534 10% ---------------------------------------------------------------------------------------------------------- TOTAL 6% 3% $ 2,218 $ 2,362 6% - ---------------------------------------------------------------------------------------------------------------- [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 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 --------- --------- ---------- --------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 383 $ 334 $ 406 $ 399 $ 469 Change in reserve 26 (18) 51 44 35 -------------------------------------------------------------------------------------------------------- Earned premiums 357 352 355 355 434 Loss and loss adjustment expenses 247 252 265 240 366 Underwriting expenses 102 102 82 88 112 Dividends to policyholders 1 4 3 2 2 Other adjustments 4 18 5 29 4 -------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ 3 $ (24) $ - $ (4) $ (50) - -------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 57.8 61.0 60.3 56.4 72.6 -------------------------------------------------------------------------------------------------------- Loss adjustment expenses 11.4 10.4 14.9 10.7 11.7 Expenses 28.1 29.1 22.6 25.3 25.9 -------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 39.6 39.5 37.4 36.0 37.6 -------------------------------------------------------------------------------------------------------- Policyholder dividends 0.5 1.0 0.7 0.7 0.6 -------------------------------------------------------------------------------------------------------- COMBINED RATIO 97.8 101.5 98.4 93.2 110.7 - -------------------------------------------------------------------------------------------------------------- Catastrophe ratio 0.5 1.0 0.9 2.5 2.5 - -------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 97.4 100.5 97.5 90.7 108.2 - -------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------ CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- --------- --------- -------- GAAP UNDERWRITING RESULTS Written premiums 22% 18% $ 1,028 $ 1,274 24% Change in reserve 35% (20%) 158 130 (18%) ------------------------------------------------------------------------------------------------------------ Earned premiums 22% 22% 870 1,144 31% Loss and loss adjustment expenses 48% 53% 597 871 46% Underwriting expenses 10% 27% 256 282 10% Dividends to policyholders 100% - 5 7 40% Other adjustments - (86%) 11 38 NM ------------------------------------------------------------------------------------------------------------ UNDERWRITING RESULTS NM NM $ 1 $ (54) NM - ------------------------------------------------------------------------------------------------------------------ GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES (14.8) (16.2) 56.2 63.7 (7.5) ------------------------------------------------------------------------------------------------------------ Loss adjustment expenses (0.3) (1.0) 12.4 12.4 - Expenses 2.2 (0.6) 29.4 24.7 4.7 ------------------------------------------------------------------------------------------------------------ EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 2.0 (1.6) 41.8 37.1 4.7 ------------------------------------------------------------------------------------------------------------ Policyholder dividends (0.1) 0.1 0.6 0.7 (0.1) ------------------------------------------------------------------------------------------------------------ COMBINED RATIO (12.9) (17.5) 98.6 101.5 (2.9) - ------------------------------------------------------------------------------------------------------------------ Catastrophe ratio (2.0) - 0.3 2.0 (1.7) - ------------------------------------------------------------------------------------------------------------------ COMBINED RATIO BEFORE CATASTROPHES (10.8) (17.5) 98.3 99.5 (1.2) - ------------------------------------------------------------------------------------------------------------------
PC-9
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY SPECIALTY COMMERCIAL WRITTEN AND EARNED PREMIUMS 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 ---------- --------- --------- ---------- --------- WRITTEN PREMIUMS [1] Property $ 139 $ 70 $ 97 $ 116 $ 147 Casualty 156 128 187 149 179 Bond 43 38 45 36 42 Professional Liability 71 75 65 78 93 Other (26) 23 12 20 8 -------------------------------------------------------------------------------------------------------- TOTAL $ 383 $ 334 $ 406 $ 399 $ 469 EARNED PREMIUMS [1] Property $ 118 $ 95 $ 89 $ 96 $ 140 Casualty 141 145 148 141 165 Bond 39 38 42 35 33 Professional Liability 57 55 64 72 77 Other 2 19 12 11 19 -------------------------------------------------------------------------------------------------------- TOTAL $ 357 $ 352 $ 355 $ 355 $ 434 - ---------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------ CHANGE CHANGE 2002 2003 CHANGE ---------- ----------- ---------- ---------- -------- WRITTEN PREMIUMS [1] Property 6% 27% $ 335 $ 360 7% Casualty 15% 20% 428 515 20% Bond (2%) 17% 119 123 3% Professional Liability 31% 19% 164 236 44% Other NM (60%) (18) 40 NM ---------------------------------------------------------------------------------------------------------- TOTAL 22% 18% $ 1,028 $ 1,274 24% EARNED PREMIUMS [1] Property 19% 46% $ 251 $ 325 29% Casualty 17% 17% 353 454 29% Bond (15%) (6%) 110 110 - Professional Liability 35% 7% 145 213 47% Other NM 73% 11 42 NM ---------------------------------------------------------------------------------------------------------- TOTAL 22% 22% $ 870 $ 1,144 31% - ------------------------------------------------------------------------------------------------------------ [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 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 --------- --------- ---------- --------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 167 $ 153 $ 274 $ (99) $ 19 Change in reserve (11) (39) 123 (162) (63) --------------------------------------------------------------------------------------------------------- Earned premiums 178 192 151 63 82 Loss and loss adjustment expenses 132 175 129 122 73 Underwriting expenses 50 56 40 18 19 Dividends to policyholders - - - - - Other adjustments - 3 1 (1) - --------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS [1] $ (4) $ (42) $ (19) $ (76) $ (10) - --------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 68.3 85.5 80.5 178.8 82.0 --------------------------------------------------------------------------------------------------------- Loss adjustment expenses 6.2 5.6 5.6 14.5 5.8 Expenses 27.6 29.5 26.4 29.4 23.5 --------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 33.8 35.1 32.0 44.0 29.3 --------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - --------------------------------------------------------------------------------------------------------- COMBINED RATIO 102.2 120.6 112.5 222.8 111.3 - --------------------------------------------------------------------------------------------------------------- Catastrophe ratio 1.2 0.7 1.5 5.6 3.0 - --------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 101.0 119.9 111.0 217.1 108.2 - --------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------ CHANGE CHANGE 2002 2003 CHANGE ------------ ---------- --------- --------- -------- GAAP UNDERWRITING RESULTS Written premiums (89%) NM $ 550 $ 194 (65%) Change in reserve NM 61% 29 (102) NM ----------------------------------------------------------------------------------------------------------- Earned premiums (54%) 30% 521 296 (43%) Loss and loss adjustment expenses (45%) (40%) 394 324 (18%) Underwriting expenses (62%) 6% 144 77 (47%) Dividends to policyholders - - - - - Other adjustments - 100% - - - ----------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS [1] (150%) 87% $ (17) $ (105) NM - ----------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES (13.7) 96.8 71.0 101.5 (30.5) ----------------------------------------------------------------------------------------------------------- Loss adjustment expenses 0.4 8.7 4.7 7.5 (2.8) Expenses 4.1 5.9 27.5 26.2 1.3 ----------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 4.5 14.7 32.2 33.8 (1.6) ----------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - ----------------------------------------------------------------------------------------------------------- COMBINED RATIO (9.1) 111.5 103.2 135.2 (32.0) - ----------------------------------------------------------------------------------------------------------------- Catastrophe ratio (1.8) 2.6 0.7 2.8 (2.1) - ----------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES (7.2) 108.9 102.5 132.4 (29.9) - ----------------------------------------------------------------------------------------------------------------- [1] Underwriting results for the quarter 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 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 --------- ---------- --------- --------- ---------- WRITTEN PREMIUMS [1] Traditional Reinsurance $ 162 $ 150 $ 240 $ (101) $ 17 Alternative Risk Transfer (ART) 5 3 34 2 2 -------------------------------------------------------------------------------------------------------- TOTAL $ 167 $ 153 $ 274 $ (99) $ 19 EARNED PREMIUMS [1] Traditional Reinsurance $ 155 $ 171 $ 135 $ 56 $ 70 Alternative Risk Transfer (ART) 23 21 16 7 12 -------------------------------------------------------------------------------------------------------- TOTAL $ 178 $ 192 $ 151 $ 63 $ 82 - ----------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------- CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- ---------- --------- --------- WRITTEN PREMIUMS [1] Traditional Reinsurance (90%) NM $ 468 $ 156 (67%) Alternative Risk Transfer (ART) (60%) - 82 38 (54%) ----------------------------------------------------------------------------------------------------------- TOTAL (89%) NM $ 550 $ 194 (65%) EARNED PREMIUMS [1] Traditional Reinsurance (55%) 25% $ 450 $ 261 (42%) Alternative Risk Transfer (ART) (48%) 71% 71 35 (51%) ----------------------------------------------------------------------------------------------------------- TOTAL (54%) 30% $ 521 $ 296 (43%) - -------------------------------------------------------------------------------------------------------------- [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) 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 -------------- --------------- -------------- --------------- ------------- WRITTEN PRICE INCREASES Business Insurance 18% 16% 13% 10% 9% Personal Lines Automobile 9% 11% 10% 8% 6% Personal Lines Homeowners 14% 17% 14% 14% 14% PREMIUM RETENTION Business Insurance 90% 89% 90% 89% 85% Personal Lines Automobile 88% 91% 90% 94% 91% Personal Lines Homeowners 100% 101% 103% 103% 101% NEW BUSINESS % TO NET WRITTEN PREMIUM Business Insurance 27% 26% 26% 27% 25% Personal Lines Automobile 15% 13% 13% 13% 15% Personal Lines Homeowners 11% 10% 8% 10% 11%
PC-13
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY STATUTORY SURPLUS TO GAAP STOCKHOLDERS' EQUITY RECONCILIATION JUNE 30, 2003 DECEMBER 31, 2002 --------------------- --------------------- Statutory Capital and Surplus $ 4,986 $ 4,871 GAAP Adjustments Investment in subsidiaries/Capital contributions (1,627) (1,543) Goodwill 153 153 Non-admitted assets/Statutory reserves 565 1,398 Deferred policy acquisition costs 987 930 Unrealized gains on investments, net of impairments 1,002 673 Deferred taxes 236 (138) Benefit reserves (170) (194) Consolidation/Corporate eliminations (325) (785) Other, net (264) (395) - ----------------------------------------------------------------------------------------------------------------------------- GAAP Stockholders' Equity $ 5,543 $ 4,970 - -----------------------------------------------------------------------------------------------------------------------------
PC-14
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OTHER OPERATIONS 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 --------- ---------- --------- ---------- --------- GAAP UNDERWRITING RESULTS Written premiums $ 9 $ 9 $ 7 $ 6 $ (2) Change in reserve (10) (2) (1) - (2) --------------------------------------------------------------------------------------------------------- Earned premiums 19 11 8 6 - Loss and loss adjustment expenses 43 34 2,629 16 5 Underwriting expenses 18 12 12 2 7 --------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ (42) $ (35) $(2,633) $ (12) $ (12) --------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------ CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- ---------- ---------- -------- GAAP UNDERWRITING RESULTS Written premiums NM NM $ 48 $ 11 (77%) Change in reserve 80% - (10) (3) 70% --------------------------------------------------------------------------------------------------------- Earned premiums (100%) (100%) 58 14 (76%) Loss and loss adjustment expenses (88%) (69%) 137 2,650 NM Underwriting expenses (61%) NM 50 21 (58%) --------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS 71% - $ (129) $(2,657) NM ---------------------------------------------------------------------------------------------------------
PC-15
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OTHER OPERATIONS CLAIMS AND CLAIMS ADJUSTMENT EXPENSES FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2003 ASBESTOS ENVIRONMENTAL ALL OTHER [1] TOTAL --------------- ------------------- ---------------- ---------------- Beginning liability - net $ 3,639 $ 536 $ 1,242 $ 5,417 Claims and claim adjustment expenses incurred [2] 2 3 3 8 Claims and claim adjustment expenses paid 40 22 50 112 - -------------------------------------------------------------------------------------------------------------------------------- ENDING LIABILITY - NET [3] [4] [5] $ 3,601 $ 517 $ 1,195 $ 5,313 - -------------------------------------------------------------------------------------------------------------------------------- FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 Beginning liability - net $ 1,118 $ 591 $ 1,250 $ 2,959 Claims and claim adjustment expenses incurred 2,609 7 42 2,658 Claims and claim adjustment expenses paid 126 81 97 304 - -------------------------------------------------------------------------------------------------------------------------------- ENDING LIABILITY - NET [3] [4] [5] $ 3,601 $ 517 $ 1,195 $ 5,313 - -------------------------------------------------------------------------------------------------------------------------------- [1] Includes unallocated loss adjustment expense reserves. [2] The asbestos claims and claim adjustment expenses incurred for the third quarter ended September 30, 2003 related to the unwinding of the discount on certain reserves. [3] Ending liabilities include asbestos and environmental reserves reported in North American Property & Casualty of $13 and $10, respectively, as of September 30, 2003 and of $14 and $10, respectively, as of December 31, 2002. [4] Gross of reinsurance, asbestos and environmental reserves were $5,768 and $594, respectively, as of September 30, 2003 and $1,994 and $682, respectively, as of December 31, 2002. [5] As of September 30, 2003, the one year and average three year net paid amounts for asbestos claims are $171 and $119, respectively, resulting in one year and three year net survival ratios of 21.1 and 30.2 years, respectively. Net survival ratio is quotient of the carried reserves dividend 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 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 THIRD QUARTER ENDED SEPTEMBER 30, 2003 LOSS & LAE LOSS & LAE LOSS & LAE LOSS & LAE ---------------- ----------------- ----------------- ----------------- Gross Direct $ 65 $ 3 $ 25 $ 3 Assumed - Domestic 8 - 4 - London Market 8 - 3 - - ---------------------------------------------------------------------------------------------------------------------------------- Total 81 3 32 3 Ceded (41) (1) (10) - - ---------------------------------------------------------------------------------------------------------------------------------- NET $ 40 $ 2 $ 22 $ 3 - ---------------------------------------------------------------------------------------------------------------------------------- FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 Gross Direct $ 160 $ 3,030 $ 76 $ 10 Assumed - Domestic 27 585 10 (3) London Market 17 363 9 - - ---------------------------------------------------------------------------------------------------------------------------------- Total 204 3,978 95 7 Ceded (78) (1,369) (14) - - ---------------------------------------------------------------------------------------------------------------------------------- NET $ 126 $ 2,609 $ 81 $ 7 - ----------------------------------------------------------------------------------------------------------------------------------
PC-18
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY CASUALTY UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD QUARTER ENDED SEPTEMBER 30, 2003 ----------------------------------------------------------------- BUSINESS PERSONAL SPECIALTY INSURANCE LINES COMMERCIAL REINSURANCE -------------- ------------- ---------------- ---------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 7/1/03 - GROSS $ 5,057 $ 1,721 $ 4,675 $ 1,611 Reinsurance and other recoverables 400 45 1,690 385 - ---------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 7/1/03 - NET 4,657 1,676 2,985 1,226 Add: Provision for unpaid claims and claim adjustment expenses 595 583 366 73 Less: Payments 416 551 236 68 - ---------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 9/30/03 - NET 4,836 1,708 3,115 1,231 Reinsurance and other recoverables 429 44 1,800 411 - ---------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 9/30/03 - GROSS $ 5,265 $ 1,752 $ 4,915 $ 1,642 - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- Earned premiums $ 947 $ 805 $ 434 $ 82 GAAP combined ratio 96.4 95.1 110.7 111.3 Loss and loss expense paid ratio 44.1 68.6 54.6 82.1 Loss and loss expense incurred ratio 63.0 72.5 84.3 87.8 Catastrophe ratio 3.2 4.2 2.5 3.0 Prior accident year development (pts.) - - 10.4 - Prior accident year development ($) - - $ 45 - - ---------------------------------------------------------------------------------------------------------------- QUARTER ENDED SEPTEMBER 30, 2003 --------------------------------------------- OTHER TOTAL NAPC OPERATIONS P&C ------------- -------------- -------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 7/1/03 - GROSS $13,064 $ 8,004 $ 21,068 Reinsurance and other recoverables 2,520 2,612 5,132 - -------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 7/1/03 - NET 10,544 5,392 15,936 Add: Provision for unpaid claims and claim adjustment expenses 1,617 5 1,622 Less: Payments 1,271 107 1,378 - -------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 9/30/03 - NET 10,890 5,290 16,180 Reinsurance and other recoverables 2,684 2,580 5,264 - -------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 9/30/03 - GROSS $ 13,574 $ 7,870 $ 21,444 - -------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------- Earned premiums $ 2,268 $ - $ 2,268 GAAP combined ratio 99.2 Loss and loss expense paid ratio 56.2 Loss and loss expense incurred ratio 71.3 Catastrophe ratio 3.4 Prior accident year development (pts.) 2.0 Prior accident year development ($) $ 45 - --------------------------------------------------------------------------------------------
PC-19
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY CASUALTY UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD YEAR TO DATE ENDED SEPTEMBER 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 1,754 1,725 871 324 Less: Payments 1,296 1,660 715 319 - --------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 9/30/03 - NET 4,836 1,708 3,115 1,231 Reinsurance and other recoverables 429 44 1,800 411 - --------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 9/30/03 - GROSS $ 5,265 $ 1,752 $ 4,915 $ 1,642 - --------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------- Earned premiums $ 2,724 $ 2,362 $ 1,144 $ 296 GAAP combined ratio 96.7 95.6 101.5 135.2 Loss and loss expense paid ratio 47.6 70.2 62.6 107.6 Loss and loss expense incurred ratio 64.4 73.0 76.1 109.0 Catastrophe ratio 3.4 4.6 2.0 2.8 Prior accident year development (pts.) [1] - - 3.9 31.7 Prior accident year development ($) [1] - - $ 45 $ 94 - --------------------------------------------------------------------------------------------------------------- YEAR TO DATE ENDED SEPTEMBER 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 4,674 2,650 7,324 Less: Payments 3,990 295 4,285 - ------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 9/30/03 - NET 10,890 5,290 16,180 Reinsurance and other recoverables 2,684 2,580 5,264 - ------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 9/30/03 - GROSS $ 13,574 $ 7,870 $ 21,444 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Earned premiums $ 6,526 $ 14 $ 6,540 GAAP combined ratio 98.9 Loss and loss expense paid ratio 61.2 Loss and loss expense incurred ratio 71.6 Catastrophe ratio 3.6 Prior accident year development (pts.) [1] 2.1 Prior accident year development ($) [1] $ 139 - ------------------------------------------------------------------------------------------- [1] In addition to prior year loss reserve development of $94, Reinsurance had $10 of earned premiums in 2003 that related to exposure periods prior to 2003.
PC-20
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY REINSURANCE RECOVERABLE ANALYSIS September 30, December 31, 2003 2002 ------------------ --------------- GROSS REINSURANCE RECOVERABLES [1] Paid Loss and Loss Adjustment Expense $ 517 $ 512 Unpaid Loss and Loss Adjustment Expense 5,476 3,930 -------------------------------------------------------------------------------------------- Subtotal Gross Reinsurance Recoverables 5,993 4,442 Less: Allowance for Uncollectable Reinsurance (464) (211) -------------------------------------------------------------------------------------------- NET PROPERTY & CASUALTY REINSURANCE RECOVERABLES $ 5,529 $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 AND CASUALTY CONSOLIDATED INCOME STATEMENTS 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 ---------- ---------- --------- ---------- --------- Earned premiums $ 2,107 $ 2,154 $ 2,166 $ 2,106 $ 2,268 Net investment income 262 288 285 291 302 Other revenues 88 99 95 113 110 Net realized capital gains (losses) (42) (3) (5) 207 14 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 2,415 2,538 2,541 2,717 2,694 Benefits, claims and claim adjustment expenses [1] 1,505 1,555 4,161 1,541 1,622 Amortization of deferred policy acquisition costs 405 403 401 382 431 Insurance operating costs and expenses 232 268 216 230 230 Other expenses [3] 152 147 132 189 143 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 2,294 2,373 4,910 2,342 2,426 Income (loss) before income taxes 121 165 (2,369) 375 268 Income tax expense (benefit) 11 24 (856) 98 66 - ------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [2] 110 141 (1,513) 277 202 Less: Net realized capital gains (losses), after-tax (29) (1) (3) 135 9 - ------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [2] [3] $ 139 $ 142 $(1,510) $ 142 $ 193 Total Property & Casualty effective tax rate - net income 7.6% 15.0% NM 26.3% 24.2% Total Property & Casualty effective tax rate - operating income 15.1% 15.1% NM 15.7% 23.6% - ------------------------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ------------------------------ CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- ---------- ---------- -------- Earned premiums 8% 8% $ 5,960 $ 6,540 10% Net investment income 15% 4% 787 878 12% Other revenues 25% (3%) 257 318 24% Net realized capital gains (losses) NM (93%) (80) 216 NM - --------------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 12% (1%) 6,924 7,952 15% Benefits, claims and claim adjustment expenses [1] 8% 5% 4,315 7,324 70% Amortization of deferred policy acquisition costs 6% 13% 1,210 1,214 - Insurance operating costs and expenses (1%) - 611 676 11% Other expenses [3] (6%) (24%) 412 464 13% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 6% 4% 6,548 9,678 48% Income (loss) before income taxes 121% (29%) 376 (1,726) NM Income tax expense (benefit) NM (33%) 48 (692) NM - --------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [2] 84% (27%) 328 (1,034) NM Less: Net realized capital gains (losses), after-tax NM (93%) (53) 141 NM - --------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [2] [3] 39% 36% $ 381 $(1,175) NM Total Property & Casualty effective tax rate - net income 16.6 NM 12.4% NM NM Total Property & Casualty effective tax rate - operating income 8.5 NM 16.4% NM NM - --------------------------------------------------------------------------------------------------------------------------------- [1] The quarter ended March 31, 2003 includes the before-tax impact of 2003 asbestos reserve addition of $2,604. [2] The quarter ended March 31, 2003 includes the after-tax impact of 2003 asbestos reserve addition of $1,701. [3] The quarter ended June 30, 2003 includes severance costs of $41 before-tax and $27 after-tax.
PC-22
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY CASUALTY CONSOLIDATED BALANCE SHEETS 3Q 4Q 1Q 2Q 2002 2002 2003 2003 ----------- ---------- ----------- ----------- Investments Fixed maturities, available for sale, at fair value $18,899 $19,446 $20,384 $22,820 Equity securities, available for sale, at fair value 611 459 209 219 Other investments 692 668 636 556 ----------------------------------------------------------------------------------------------------------- Total investments 20,202 20,573 21,229 23,595 Cash 219 198 366 239 Premiums receivable and agents' balances 2,715 2,403 2,521 2,630 Reinsurance recoverables 4,345 4,231 5,635 5,396 Deferred policy acquisition costs 948 930 994 987 Deferred income tax 622 610 1,408 1,107 Goodwill 154 153 153 153 Other assets 1,770 2,031 2,167 2,664 ----------------------------------------------------------------------------------------------------------- TOTAL ASSETS $30,975 $31,129 $34,473 $36,771 ----------------------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $17,067 $17,091 $21,212 $21,068 Unearned premiums 3,925 3,942 4,246 4,410 Debt 1,164 1,164 1,164 1,164 Trust preferred securities 1,016 1,023 1,024 851 Other liabilities 2,993 2,939 3,383 3,735 ----------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 26,165 26,159 31,029 31,228 ----------------------------------------------------------------------------------------------------------- Equity, x-AOCI, net of tax 4,172 4,262 2,663 4,590 AOCI, net of tax 638 708 781 953 ----------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 4,810 4,970 3,444 5,543 ----------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $30,975 $31,129 $34,473 $36,771 - ---------------------------------------------------------------------------------------------------------------- Full Year Hartford Fire NAIC RBC 390% YEAR OVER YEAR SEQUENTIAL 3Q QUARTER QUARTER 2003 CHANGE CHANGE ----------- ------------ ------------ Investments Fixed maturities, available for sale, at fair value $23,565 25% 3% Equity securities, available for sale, at fair value 215 (65%) (2%) Other investments 644 (7%) 16% ----------------------------------------------------------------------------------------------- Total investments 24,424 21% 4% Cash 203 (7%) (15%) Premiums receivable and agents' balances 2,626 (3%) - Reinsurance recoverables 5,529 27% 2% Deferred policy acquisition costs 981 3% (1%) Deferred income tax 1,136 83% 3% Goodwill 152 (1%) (1%) Other assets 2,050 16% (23%) ----------------------------------------------------------------------------------------------- TOTAL ASSETS $37,101 20% 1% ----------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $21,444 26% 2% Unearned premiums 4,504 15% 2% Debt 1,484 27% 27% Trust preferred securities 517 (49%) (39%) Other liabilities 3,513 17% (6%) ----------------------------------------------------------------------------------------------- TOTAL LIABILITIES 31,462 20% 1% ----------------------------------------------------------------------------------------------- Equity, x-AOCI, net of tax 4,899 17% 7% AOCI, net of tax 740 16% (22%) ----------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 5,639 17% 2% ----------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $37,101 20% 1% - ---------------------------------------------------------------------------------------------------- Full Year Hartford Fire NAIC RBC
PC-23 INVESTMENTS
THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL ACCOUNT INVESTMENT EARNINGS BEFORE-TAX CONSOLIDATED 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 --------- --------- --------- ---------- ---------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 513 $ 532 $ 538 $ 565 $ 580 Tax-exempt 132 132 133 130 122 - --------------------------------------------------------------------------------------------------------------------- Total fixed maturities 645 664 671 695 702 Equities 8 9 8 7 7 Mortgage loans 7 10 9 9 9 Real estate 1 - 1 1 - Policy loans 61 58 58 54 51 Limited partnerships (16) 26 12 11 22 Other 33 37 48 44 44 - --------------------------------------------------------------------------------------------------------------------- Subtotal 739 804 807 821 835 Less investment expense 10 12 11 11 10 - --------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME $ 729 $ 792 $796 $ 810 $ 825 - --------------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax 5.9% 6.1% 6.0% 5.8% 5.6% Investment yield, after-tax 4.1% 4.3% 4.2% 4.0% 3.9% NET REALIZED CAPITAL GAIN/(LOSS) Fixed maturities $ (143) $ (27) $ (9) $ 250 $ - Equities (18) (45) (49) (5) 5 Mortgage loans - - - - - Real estate 3 (1) - - - Other [2] (2) 6 5 12 7 - --------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $ (160) $ (67) $(53) $ 257 $ 12 - --------------------------------------------------------------------------------------------------------------------- Gross gains on sale [2] $ 92 $ 148 $ 137 $ 303 $ 132 Gross losses on sale (82) (93) (107) (24) (80) Impairments (175) (126) (89) (27) (29) Other net gain/(loss) [3] [4] 5 4 6 5 (11) - --------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $ (160) $ (67) $(53) $ 257 $ 12 - --------------------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER --------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------ ------------ --------- ------------ -------- NET INVESTMENT INCOME Fixed maturities [1] Taxable 13% 3% $ 1,455 $ 1,683 16% Tax-exempt (8%) (6%) 391 385 (2%) - -------------------------------------------------------------------------------------------------------------------------------- Total fixed maturities 9% 1% 1,846 2,068 12% Equities (13%) - 27 22 (19%) Mortgage loans 29% - 21 27 29% Real estate (100%) (100%) 2 2 - Policy loans (16%) (6%) 196 163 (17%) Limited partnerships NM 100% 8 45 NM Other 33% - 92 136 48% - -------------------------------------------------------------------------------------------------------------------------------- Subtotal 13% 2% 2,192 2,463 12% Less investment expense - 9% 31 32 (3%) - -------------------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 13% 2% $ 2,161 $ 2,431 12% - -------------------------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax (0.3) (0.2) 5.9% 5.8% (0.1) Investment yield, after-tax (0.2) (0.1) 4.2% 4.1% (0.1) NET REALIZED CAPITAL GAIN/(LOSS) Fixed maturities 100% (100%) $ (350) $ 241 NM Equities NM NM 3 (49) NM Mortgage loans - - - - - Real estate (100%) - 3 - (100%) Other [2] NM (42%) 11 24 118% - -------------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) NM (95%) $ (333) $ 216 NM - -------------------------------------------------------------------------------------------------------------------------------- Gross gains on sale [2] 43% (56%) $ 309 $ 572 85% Gross losses on sale 2% NM (200) (211) (6%) Impairments 83% (7%) (453) (145) 68% Other net gain/(loss) [3] [4] NM NM 11 - (100%) - -------------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) NM (95%) $ (333) $ 216 NM - -------------------------------------------------------------------------------------------------------------------------------- [1] Includes income on short-term bonds. [2] Includes a gain of $23 associated with the sale of Trumbull Associates, LLC. [3] Primarily consists of changes in fair value and hedge ineffectiveness on derivative instruments. [4] Includes the net GMWB derivative activity, which was a loss of less than $1 for the third quarter and nine months ended September 30, 2003.
I-1
THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL ACCOUNT INVESTMENT EARNINGS BEFORE-TAX LIFE 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 ---------- --------- --------- --------- -------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 362 $ 370 $ 379 $ 392 $ 396 Tax-exempt 24 25 25 25 24 - -------------------------------------------------------------------------------------------- Total fixed maturities 386 395 404 417 420 Equities 4 5 5 5 4 Mortgage loans 5 6 5 5 6 Real estate - - - - - Policy loans 61 58 58 54 51 Limited partnerships (11) 14 8 7 11 Other 22 26 33 31 31 - -------------------------------------------------------------------------------------------- Subtotal 467 504 513 519 523 Less investment expense 5 6 6 6 5 - -------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME $ 462 $ 498 $507 $513 $518 - -------------------------------------------------------------------------------------------- Investment yield, pre-tax 6.0% 6.2% 6.1% 5.9% 5.7% Investment yield, after-tax 4.0% 4.1% 4.1% 3.9% 3.8% NET REALIZED CAPITAL GAIN/(LOSS) Fixed maturities $ (93) $ (69) $ (31) $ 52 $ 3 Equities (17) (3) (26) (3) 5 Mortgage loans - - - - - Real estate - - - - - Other (8) 8 9 1 (10) - -------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) (118) $ (64) $ (48) $50 $ (2) - -------------------------------------------------------------------------------------------- Gross gains on sale $ 44 $ 57 $ 57 $ 91 $ 61 Gross losses on sale (28) (37) (47) (17) (31) Impairments (132) (89) (67) (17) (27) Other net gain/(loss) [2] [3] (2) 5 9 (7) (5) - -------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $ (118) $ (64) $ (48) $50 $ (2) - -------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ---------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ------------ ----------- -------- NET INVESTMENT INCOME Fixed maturities [1] Taxable 9% 1% $ 1,024 $ 1,167 14% Tax-exempt - (4%) 66 74 12% - --------------------------------------------------------------------------------------------------------- Total fixed maturities 9% 1% 1,090 1,241 14% Equities - (20%) 14 14 - Mortgage loans 20% 20% 16 16 - Real estate - - - - - Policy loans (16%) (6%) 196 163 (17%) Limited partnerships NM 57% (8) 26 NM Other 41% - 67 95 42% - --------------------------------------------------------------------------------------------------------- Subtotal 12% 1% 1,375 1,555 13% Less investment expense - 17% 15 17 (13%) - --------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 12% 1% $ 1,360 $1,538 13% - --------------------------------------------------------------------------------------------------------- Investment yield, pre-tax (0.3) (0.2) 6.1% 5.9% (0.2) Investment yield, after-tax (0.2) (0.1) 4.1% 4.0% (0.1) NET REALIZED CAPITAL GAIN/(LOSS) Fixed maturities NM (94%) $ (226) $ 24 NM Equities NM NM (19) (24) (26%) Mortgage loans - - - - - Real estate - - - - - Other (25%) NM (8) - 100% - --------------------------------------------------------------------------------------------------------- - TOTAL NET REALIZED CAPITAL GAIN/(LOSS) 98% NM $(253) $ - 100% - --------------------------------------------------------------------------------------------------------- Gross gains on sale 39% (33%) $ 118 $ 209 77% Gross losses on sale (11%) (82%) (75) (95) (27%) Impairments 80% (59%) (291) (111) 62% Other net gain/(loss) [2] [3] (150%) 29% (5) (3) 40% - --------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) 98% NM $(253) $ - 100% - --------------------------------------------------------------------------------------------------------- [1] Includes income on short-term bonds. [2] Primarily consists of changes in fair value and hedge ineffectiveness on derivative instruments. [3] Includes the net GMWB derivative activity, which was a loss of less than $1 for the third quarter and nine months ended September 30, 2003.
I-2
THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL ACCOUNT INVESTMENT EARNINGS BEFORE-TAX PROPERTY & CASUALTY 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 --------- ---------- --------- -------- --------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 150 $ 161 $ 159 $ 171 $ 184 Tax-exempt 108 107 108 105 98 - -------------------------------------------------------------------------------------------------------- Total fixed maturities 258 268 267 276 282 Equities 4 4 3 2 3 Mortgage loans 2 4 4 4 3 Real estate 1 - 1 1 - Policy loans - - - - - Limited partnerships (5) 12 4 4 11 Other 7 6 11 9 8 - -------------------------------------------------------------------------------------------------------- Subtotal 267 294 290 296 307 Less investment expense 5 6 5 5 5 - -------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME $ 262 $ 288 $285 $291 $302 - -------------------------------------------------------------------------------------------------------- Investment yield, pre-tax 5.6% 6.1% 5.8% 5.5% 5.4% Investment yield, after-tax 4.4% 4.6% 4.5% 4.2% 4.0% NET REALIZED CAPITAL GAIN/(LOSS) Fixed maturities $ (50) $ 42 $ 22 $ 198 $ (3) Equities (1) (42) (23) (2) - Mortgage loans - - - - - Real estate 3 (1) - - - Other [2] 6 (2) (4) 11 17 - -------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $(42) $ (3) $ (5) $207 $ 14 - -------------------------------------------------------------------------------------------------------- Gross gains on sale [2] $ 48 $ 91 $ 80 $ 212 $ 71 Gross losses on sale (54) (56) (60) (7) (49) Impairments (43) (37) (22) (10) (2) Other net gain/(loss) [3] 7 (1) (3) 12 (6) - -------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) $(42) $ (3) $ (5) $207 $ 14 - -------------------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER --------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ------------ ---------- ---------- --------- NET INVESTMENT INCOME Fixed maturities [1] Taxable 23% 8% $ 430 $ 514 20% Tax-exempt (9%) (7%) 325 311 (4%) - --------------------------------------------------------------------------------------------------------------------- Total fixed maturities 9% 2% 755 825 9% Equities (25%) 50% 13 8 (38%) Mortgage loans 50% (25%) 5 11 120% Real estate (100%) (100%) 2 2 - Policy loans - - - - - Limited partnerships NM 175% 16 19 19% Other 14% (11%) 12 28 133% - --------------------------------------------------------------------------------------------------------------------- Subtotal 15% 4% 803 893 11% Less investment expense - - 16 15 6% - --------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 15% 4% $ 787 $ 878 12% - --------------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax (0.2) (0.1) 5.7% 5.5% (0.2) Investment yield, after-tax (0.4) (0.2) 4.5% 4.2% (0.3) NET REALIZED CAPITAL GAIN/(LOSS) Fixed maturities 94% NM $ (124) $ 217 NM Equities 100% 100% 22 (25) NM Mortgage loans - - - - - Real estate (100%) - 3 - (100%) Other [2] 183% 55% 19 24 26% - --------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) NM (93%) $ (80) $ 216 NM - --------------------------------------------------------------------------------------------------------------------- Gross gains on sale [2] 48% (67%) $ 191 $ 363 90% Gross losses on sale 9% NM (125) (116) 7% Impairments 95% 80% (162) (34) 79% Other net gain/(loss) [3] NM NM 16 3 (81%) - --------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAIN/(LOSS) NM (93%) $ (80) $ 216 NM - --------------------------------------------------------------------------------------------------------------------- [1] Includes income on short-term bonds. [2] Includes a gain of $23 associated with the sale of Trumbull Associates, LLC. [3] 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 3Q 4Q 1Q 2Q 3Q 2002 2002 2003 2003 2003 -------- ---------- --------- --------- --------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 1 $ 1 $ - $ 2 $ - - ----------------------------------------------------------------------------------------------- Total fixed maturities 1 1 - 2 - Other [2] 4 5 4 4 5 - ----------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME $ 5 $ 6 $ 4 $ 6 $ 5 - ----------------------------------------------------------------------------------------------- YEAR OVER NINE MONTHS ENDED YEAR SEQUENTIAL SEPTEMBER 30, QUARTER QUARTER ---------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------ ------------ ---------- ---------- ----------- NET INVESTMENT INCOME Fixed maturities [1] Taxable (100%) (100%) $ 1 $ 2 100% - ------------------------------------------------------------------------------------------------------------- Total fixed maturities (100%) (100%) 1 2 100% Other [2] 25% 25% 13 13 - - ------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME - (17%) $ 14 $ 15 7% - ------------------------------------------------------------------------------------------------------------- [1] Includes income on short-term bonds. [2] In connection with the HLI Repurchase, the carrying value of the purchased fixed maturity investments was adjusted to fair market value as of the date of the repurchase. The amortization of the adjustment to the fixed maturity investments' carrying values is reported in Corporate's net investment income.
I-4
THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS CONSOLIDATED - GENERAL AND GUARANTEED SEPARATE ACCOUNT 3Q 4Q 1Q 2002 2002 2003 ------------------------ ----------------------- ----------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ---------- ------------ ---------- ----------- ---------- ----------- Fixed maturities, at fair value [1] $ 59,187 90.2% $ 59,974 90.9% $ 63,363 91.9% Equity securities, at fair value 1,031 1.6% 962 1.4% 661 1.0% Policy loans, at outstanding balance 2,980 4.5% 2,934 4.4% 2,876 4.2% Real estate/Mortgage loans, at cost 554 0.8% 578 0.9% 636 0.9% Limited partnerships, at fair value 1,195 1.9% 936 1.5% 799 1.2% Other investments [2] 683 1.0% 616 0.9% 577 0.8% - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 65,630 100.0% $ 66,000 100.0% $ 68,912 100.0% - ----------------------------------------------------------------------------------------------------------------------------------- Total general account investments 54,101 82.4% 54,530 82.6% 57,328 83.2% Total guaranteed separate account investments 11,529 17.6% 11,470 17.4% 11,584 16.8% - ----------------------------------------------------------------------------------------------------------------------------------- HIMCO managed third party accounts $ 1,139 $ 1,312 $ 1,521 - ----------------------------------------------------------------------------------------------------------------------------------- Asset-backed securities ("ABS") $ 5,937 10.0% $ 6,091 10.1% $ 5,985 9.4% Commercial mortgage-backed securities ("CMBS") 7,465 12.6% 7,561 12.6% 8,469 13.4% Collateralized mortgage obligation ("CMO") 1,138 1.9% 952 1.6% 1,079 1.7% Corporate 24,791 41.9% 26,534 44.2% 28,298 44.7% Government/Government agencies - Foreign 1,664 2.8% 1,934 3.2% 2,049 3.2% Government/Government agencies - U.S. 659 1.1% 817 1.4% 910 1.4% Mortgage-backed securities ("MBS") - agency 2,825 4.8% 2,818 4.7% 2,426 3.8% Municipal - taxable 167 0.3% 166 0.3% 164 0.3% Municipal - tax-exempt 10,952 18.5% 10,846 18.1% 10,814 17.1% Redeemable preferred stock 103 0.2% 102 0.2% 103 0.2% Short-term [1] 3,486 5.9% 2,153 3.6% 3,066 4.8% - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 59,187 100.0% $ 59,974 100.0% $ 63,363 100.0% - ----------------------------------------------------------------------------------------------------------------------------------- Total general account fixed maturities 48,085 81.2% 48,889 81.5% 52,126 82.3% Total guaranteed separate account fixed maturities 11,102 18.8% 11,085 18.5% 11,237 17.7% - ----------------------------------------------------------------------------------------------------------------------------------- AAA $ 13,962 23.6% $ 14,358 24.0% $ 14,999 23.7% AA 7,628 12.9% 7,784 13.0% 7,778 12.3% A 15,519 26.2% 16,034 26.7% 16,690 26.3% BBB 11,493 19.4% 12,121 20.2% 13,306 21.0% Government 4,398 7.4% 4,397 7.3% 4,260 6.7% BB & below 2,701 4.6% 3,127 5.2% 3,264 5.2% Short-term [1] 3,486 5.9% 2,153 3.6% 3,066 4.8% - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 59,187 100.0% $ 59,974 100.0% $ 63,363 100.0% - ----------------------------------------------------------------------------------------------------------------------------------- 2Q 3Q 2003 2003 ------------------------ ------------------------ AMOUNT PERCENT AMOUNT PERCENT ---------- ------------ ---------- ------------ Fixed maturities, at fair value [1] $ 68,676 92.8% $ 70,587 93.5% Equity securities, at fair value 712 0.9% 677 0.9% Policy loans, at outstanding balance 2,889 3.9% 2,533 3.4% Real estate/Mortgage loans, at cost 732 1.0% 797 1.1% Limited partnerships, at fair value 482 0.7% 444 0.5% Other investments [2] 545 0.7% 465 0.6% - -------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 74,036 100.0% $ 75,503 100.0% - -------------------------------------------------------------------------------------------------------- Total general account investments 62,190 84.0% 63,620 84.3% Total guaranteed separate account investments 11,846 16.0% 11,883 15.7% - -------------------------------------------------------------------------------------------------------- HIMCO managed third party accounts $ 1,774 $ 1,850 - -------------------------------------------------------------------------------------------------------- Asset-backed securities ("ABS") $ 6,266 9.1% $ 6,546 9.3% Commercial mortgage-backed securities ("CMBS") 9,774 14.2% 10,017 14.2% Collateralized mortgage obligation ("CMO") 1,091 1.6% 1,047 1.5% Corporate 30,844 44.9% 31,508 44.6% Government/Government agencies - Foreign 2,174 3.2% 1,530 2.2% Government/Government agencies - U.S. 1,433 2.1% 1,072 1.5% Mortgage-backed securities ("MBS") - agency 2,198 3.2% 3,078 4.4% Municipal - taxable 414 0.6% 458 0.6% Municipal - tax-exempt 10,592 15.4% 10,191 14.4% Redeemable preferred stock 103 0.1% 81 0.1% Short-term [1] 3,787 5.6% 5,059 7.2% - -------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 68,676 100.0% $ 70,587 100.0% - -------------------------------------------------------------------------------------------------------- Total general account fixed maturities 57,137 83.2% 58,909 83.5% Total guaranteed separate account fixed maturities 11,539 16.8% 11,678 16.5% - -------------------------------------------------------------------------------------------------------- AAA $ 16,140 23.6% $ 15,490 21.9% AA 7,710 11.2% 7,583 10.7% A 17,877 26.0% 18,200 25.8% BBB 14,991 21.8% 15,536 22.0% Government 4,614 6.7% 5,146 7.3% BB & below 3,557 5.2% 3,573 5.1% Short-term [1] 3,787 5.5% 5,059 7.2% - -------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 68,676 100.0% $ 70,587 100.0% - -------------------------------------------------------------------------------------------------------- [1] 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. September 30, 2003 includes $107 reflected in Corporate. [2] September 30, 2003 includes $4 reflected in Corporate.
I-5
THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS LIFE - GENERAL AND GUARANTEED SEPARATE ACCOUNT 3Q 4Q 1Q 2002 2002 2003 ------------------------- -------------------------- ------------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ------------ ----------- ------------ ------------ ------------ ----------- Fixed maturities, at fair value $ 39,641 88.5% $ 40,462 89.2% $ 42,913 90.1% Equity securities, at fair value 420 0.9% 503 1.1% 452 1.0% Policy loans, at outstanding balance 2,980 6.7% 2,934 6.5% 2,876 6.0% Real estate/Mortgage loans, at cost 441 1.0% 447 1.0% 486 1.0% Limited partnerships, at fair value 785 1.8% 574 1.3% 481 1.0% Other investments 514 1.1% 441 0.9% 409 0.9% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 44,781 100.0% $ 45,361 100.0% $ 47,617 100.0% - --------------------------------------------------------------------------------------------------------------------------------- Total general account investments 33,252 74.3% 33,891 74.7% 36,033 75.7% Total guaranteed separate account investments 11,529 25.7% 11,470 25.3% 11,584 24.3% - --------------------------------------------------------------------------------------------------------------------------------- ABS $ 5,200 13.1% $ 5,360 13.3% $ 5,297 12.3% CMBS 5,828 14.7% 5,988 14.8% 6,923 16.1% CMO 1,040 2.6% 903 2.2% 1,024 2.4% Corporate 19,978 50.4% 21,075 52.1% 22,452 52.3% Government/Government agencies - Foreign 830 2.1% 846 2.1% 881 2.0% Government/Government agencies - U.S. 593 1.5% 693 1.7% 733 1.7% MBS - agency 2,236 5.6% 2,296 5.7% 1,955 4.6% Municipal - taxable 115 0.3% 114 0.3% 110 0.3% Municipal - tax-exempt 2,021 5.1% 2,000 4.9% 2,004 4.7% Redeemable preferred stock 34 0.1% 34 0.1% 34 0.1% Short-term 1,766 4.5% 1,153 2.8% 1,500 3.5% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 39,641 100.0% $ 40,462 100.0% $ 42,913 100.0% - --------------------------------------------------------------------------------------------------------------------------------- Total general account fixed maturities 28,539 72.0% 29,377 72.6% 31,676 73.8% Total guaranteed separate account fixed maturities 11,102 28.0% 11,085 27.4% 11,237 26.2% - --------------------------------------------------------------------------------------------------------------------------------- AAA $ 6,736 17.0% $ 6,960 17.2% $ 7,475 17.4% AA 4,196 10.6% 4,396 10.9% 4,487 10.5% A 12,262 30.9% 12,467 30.8% 13,069 30.5% BBB 9,205 23.2% 9,665 23.9% 10,608 24.7% Government 3,685 9.3% 3,737 9.2% 3,582 8.3% BB & below 1,791 4.5% 2,084 5.2% 2,192 5.1% Short-term 1,766 4.5% 1,153 2.8% 1,500 3.5% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 39,641 100.0% $ 40,462 100.0% $ 42,913 100.0% - --------------------------------------------------------------------------------------------------------------------------------- 2Q 3Q 2003 2003 -------------------------- -------------------------- AMOUNT PERCENT AMOUNT PERCENT ------------ ------------ ------------- ------------ Fixed maturities, at fair value $ 45,599 90.8% $ 46,915 92.0% Equity securities, at fair value 493 1.0% 462 0.9% Policy loans, at outstanding balance 2,889 5.8% 2,533 5.0% Real estate/Mortgage loans, at cost 555 1.1% 544 1.1% Limited partnerships, at fair value 279 0.6% 251 0.5% Other investments 369 0.7% 263 0.5% - --------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 50,184 100.0% $ 50,968 100.0% - --------------------------------------------------------------------------------------------------------- Total general account investments 38,338 76.4% 39,085 76.7% Total guaranteed separate account investments 11,846 23.6% 11,883 23.3% - --------------------------------------------------------------------------------------------------------- ABS $ 5,471 12.0% $ 5,411 11.5% CMBS 7,553 16.6% 7,704 16.4% CMO 1,057 2.3% 998 2.1% Corporate 23,788 52.1% 23,790 50.8% Government/Government agencies - Foreign 952 2.1% 657 1.4% Government/Government agencies - U.S. 728 1.6% 943 2.0% MBS - agency 1,686 3.7% 2,080 4.4% Municipal - taxable 244 0.5% 270 0.6% Municipal - tax-exempt 2,051 4.5% 2,027 4.3% Redeemable preferred stock 34 0.1% 33 0.1% Short-term 2,035 4.5% 3,002 6.4% - --------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 45,599 100.0% $ 46,915 100.0% - --------------------------------------------------------------------------------------------------------- Total general account fixed maturities 34,060 74.7% 35,237 75.1% Total guaranteed separate account fixed maturities 11,539 25.3% 11,678 24.9% - --------------------------------------------------------------------------------------------------------- AAA $ 7,968 17.5% $ 7,783 16.6% AA 4,341 9.5% 4,323 9.2% A 13,693 30.0% 13,630 29.1% BBB 11,841 26.0% 11,889 25.3% Government 3,376 7.4% 3,975 8.5% BB & below 2,345 5.1% 2,313 4.9% Short-term 2,035 4.5% 3,002 6.4% - --------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 45,599 100.0% $ 46,915 100.0% - ---------------------------------------------------------------------------------------------------------
I-6
THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS PROPERTY & CASUALTY - GENERAL ACCOUNT 3Q 4Q 1Q 2002 2002 2003 ----------------------- ------------------------- ------------------------ AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ------------ --------- -------------- --------- ------------- --------- Fixed maturities, at fair value $ 18,899 93.5% $ 19,446 94.5% $ 20,384 96.0% Equity securities, at fair value 611 3.0% 459 2.2% 209 1.0% Policy loans, at outstanding balance - - - - - - Real estate/Mortgage loans, at cost 113 0.6% 131 0.7% 150 0.7% Limited partnerships, at fair value 410 2.1% 362 1.8% 318 1.5% Other investments 169 0.8% 175 0.8% 168 0.8% - ---------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 20,202 100.0% $ 20,573 100.0% $ 21,229 100.0% - ---------------------------------------------------------------------------------------------------------------------- ABS $ 737 3.9% $ 731 3.8% $ 688 3.4% CMBS 1,637 8.7% 1,573 8.1% 1,546 7.6% CMO 98 0.5% 49 0.3% 55 0.3% Corporate 4,813 25.5% 5,459 28.0% 5,846 28.6% Government/Government agencies - Foreign 834 4.4% 1,088 5.6% 1,168 5.7% Government/Government agencies - U.S. 66 0.3% 124 0.6% 177 0.9% MBS - agency 589 3.1% 522 2.7% 471 2.3% Municipal - taxable 52 0.3% 52 0.3% 54 0.3% Municipal - tax-exempt 8,931 47.2% 8,846 45.5% 8,810 43.2% Redeemable preferred stock 69 0.4% 68 0.3% 69 0.3% Short-term 1,073 5.7% 934 4.8% 1,500 7.4% - ---------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 18,899 100.0% $ 19,446 100.0% $ 20,384 100.0% - ---------------------------------------------------------------------------------------------------------------------- AAA $ 7,226 38.2% $ 7,398 38.1% $ 7,524 36.9% AA 3,432 18.2% 3,388 17.4% 3,291 16.1% A 3,257 17.2% 3,567 18.3% 3,621 17.8% BBB 2,288 12.1% 2,456 12.6% 2,698 13.2% Government 713 3.8% 660 3.4% 678 3.3% BB & below 910 4.8% 1,043 5.4% 1,072 5.3% Short-term 1,073 5.7% 934 4.8% 1,500 7.4% - ---------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 18,899 100.0% $ 19,446 100.0% $ 20,384 100.0% - ---------------------------------------------------------------------------------------------------------------------- 2Q 3Q 2003 2003 ------------------------ ------------------------ AMOUNT PERCENT AMOUNT PERCENT ------------- --------- ------------- --------- Fixed maturities, at fair value $ 22,820 96.7% $ 23,565 96.5% Equity securities, at fair value 219 0.9% 215 0.9% Policy loans, at outstanding balance - - - - Real estate/Mortgage loans, at cost 177 0.8% 253 1.0% Limited partnerships, at fair value 203 0.9% 193 0.8% Other investments 176 0.7% 198 0.8% - ------------------------------------------------------------------------------------------ TOTAL INVESTMENTS $23,595 100.0% $24,424 100.0% - ------------------------------------------------------------------------------------------ ABS $ 795 3.5% $ 1,135 4.8% CMBS 2,221 9.7% 2,313 9.8% CMO 34 0.1% 49 0.2% Corporate 7,056 31.0% 7,718 32.9% Government/Government agencies - Foreign 1,222 5.4% 873 3.7% Government/Government agencies - U.S. 705 3.1% 129 0.5% MBS - agency 512 2.2% 998 4.2% Municipal - taxable 170 0.7% 188 0.8% Municipal - tax-exempt 8,541 37.4% 8,164 34.6% Redeemable preferred stock 69 0.3% 48 0.2% Short-term 1,495 6.6% 1,950 8.3% - ------------------------------------------------------------------------------------------ TOTAL FIXED MATURITIES $22,820 100.0% $23,565 100.0% - ------------------------------------------------------------------------------------------ AAA $ 8,172 35.8% $ 7,707 32.7% AA 3,369 14.8% 3,260 13.8% A 4,184 18.3% 4,570 19.4% BBB 3,150 13.8% 3,647 15.5% Government 1,238 5.4% 1,171 5.0% BB & below 1,212 5.3% 1,260 5.3% Short-term 1,495 6.6% 1,950 8.3% - ------------------------------------------------------------------------------------------ TOTAL FIXED MATURITIES $22,820 100.0% $23,565 100.0% - ------------------------------------------------------------------------------------------
I-7
THE HARTFORD FINANCIAL SERVICES GROUP, INC. UNREALIZED LOSS AGING CONSOLIDATED - GENERAL AND GUARANTEED SEPARATE ACCOUNT [1] SEPTEMBER 30, 2003 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS --------------- -------------- -------------- TOTAL SECURITIES Three months or less $ 5,806 $ 5,670 $ (136) Greater than three months to six months 597 572 (25) Greater than six months to nine months 312 299 (13) Greater than nine months to twelve months 387 357 (30) Greater than twelve months 2,037 1,849 (188) - -------------------------------------------------------------------------------------------- TOTAL $ 9,139 $ 8,747 $ (392) - -------------------------------------------------------------------------------------------- BIG [2] AND EQUITY SECURITIES Three months or less $ 401 $ 386 $ (15) Greater than three months to six months 144 133 (11) Greater than six months to nine months 77 73 (4) Greater than nine months to twelve months 86 76 (10) Greater than twelve months 460 383 (77) - -------------------------------------------------------------------------------------------- TOTAL $ 1,168 $ 1,051 $ (117) - -------------------------------------------------------------------------------------------- DECEMBER 31, 2002 ----------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS --------------- -------------- -------------- TOTAL SECURITIES 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 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 September 30, 2003, fixed maturities represented $382, or 97%, of the Company's total unrealized loss. There were no fixed maturities as of September 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 September 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 SEPTEMBER 30, 2003 ---------------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS ---------------- ---------------- ---------------- TOTAL SECURITIES Three months or less $ 2,956 $ 2,890 $ (66) Greater than three months to six months 398 381 (17) Greater than six months to nine months 263 253 (10) Greater than nine months to twelve months 335 309 (26) Greater than twelve months 1,816 1,655 (161) - ------------------------------------------------------------------------------------------------------- TOTAL $ 5,768 $ 5,488 $ (280) - ------------------------------------------------------------------------------------------------------- BIG AND EQUITY SECURITIES Three months or less $ 245 $ 234 $ (11) Greater than three months to six months 82 75 (7) Greater than six months to nine months 58 56 (2) Greater than nine months to twelve months 65 56 (9) Greater than twelve months 391 324 (67) - ------------------------------------------------------------------------------------------------------- TOTAL $ 841 $ 745 $ (96) - ------------------------------------------------------------------------------------------------------- DECEMBER 31, 2002 ---------------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS ---------------- ---------------- ---------------- TOTAL SECURITIES 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 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 SEPTEMBER 30, 2003 ---------------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS ---------------- ---------------- ---------------- TOTAL SECURITIES Three months or less $ 2,850 $ 2,780 $ (70) Greater than three months to six months 199 191 (8) Greater than six months to nine months 49 46 (3) Greater than nine months to twelve months 52 48 (4) Greater than twelve months 221 194 (27) - ------------------------------------------------------------------------------------------------------- TOTAL $ 3,371 $ 3,259 $ (112) - ------------------------------------------------------------------------------------------------------- BIG AND EQUITY SECURITIES Three months or less $ 156 $ 152 $ (4) Greater than three months to six months 62 58 (4) Greater than six months to nine months 19 17 (2) Greater than nine months to twelve months 21 20 (1) Greater than twelve months 69 59 (10) - ------------------------------------------------------------------------------------------------------- TOTAL $ 327 $ 306 $ (21) - ------------------------------------------------------------------------------------------------------- DECEMBER 31, 2002 ---------------------------------------------------- AMORTIZED UNREALIZED COST FAIR VALUE LOSS ---------------- ---------------- ---------------- TOTAL SECURITIES 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 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 SEPTEMBER 30, 2003 TOP TEN CORPORATE FIXED MATURITY EXPOSURES BY SECTOR LIFE --------------------- PERCENT OF TOTAL INVESTED FAIR VALUE ASSETS --------------------- Financial services $ 5,589 11.0% Technology and communications 3,802 7.3% Basic industry 2,886 5.7% Consumer non cyclical 3,025 5.9% Consumer cyclical 2,229 4.4% Utilities 2,064 4.1% Energy 1,581 3.1% Capital goods 1,410 2.8% Transportation 653 1.3% Other 551 1.1% - ------------------------------------------------------- TOTAL $23,790 46.7% - ------------------------------------------------------- P&C -------------------- PERCENT OF TOTAL INVESTED FAIR VALUE ASSETS --------------------- Financial services $ 2,069 8.5% Technology and communications 1,293 5.3% Basic industry 896 3.7% Consumer non cyclical 756 3.1% Consumer cyclical 715 2.9% Utilities 831 3.4% Energy 508 2.1% Capital goods 407 1.7% Transportation 140 0.5% Other 103 0.4% - ------------------------------------------------------ TOTAL $ 7,718 31.6% - ------------------------------------------------------ CONSOLIDATED --------------------- PERCENT OF TOTAL INVESTED FAIR VALUE ASSETS --------------------- Financial services $ 7,658 10.1% Technology and communications 5,095 6.7% Basic industry 3,782 5.0% Consumer non cyclical 3,781 5.0% Consumer cyclical 2,944 3.9% Utilities 2,895 3.8% Energy 2,089 2.8% Capital goods 1,817 2.4% Transportation 793 1.1% Other 654 0.9% - ------------------------------------------------------ TOTAL $31,508 41.7% - ------------------------------------------------------ TOP TEN EXPOSURES BY ISSUER [1] LIFE --------------------- PERCENT OF TOTAL INVESTED FAIR VALUE ASSETS --------------------- Capital One Master Trust $ 209 0.5% British Telecommunications PLC 185 0.4% American Express Credit Acct Master Trust 184 0.4% Citibank Credit Card Issuance Trust 184 0.4% DaimlerChrysler AG 179 0.4% Ford Motor Company 178 0.3% Citigroup Incorporated 178 0.3% General Motors Corporation 175 0.3% Credit Suisse Group 170 0.3% Comcast Corporation 169 0.3% - ------------------------------------------------------- TOTAL $ 1,811 3.6% - ------------------------------------------------------- P&C --------------------- PERCENT OF TOTAL INVESTED FAIR VALUE ASSETS --------------------- State of California $ 239 0.9% State of Illinois 204 0.8% State of Massachusetts 165 0.7% New York City, NY 161 0.7% JP Morgan Chase & Company 153 0.6% UBS AG 140 0.6% New Jersey Transportation Trust Fund, NJ 129 0.5% State of New York 116 0.5% Chicago, IL 113 0.5% Barclays Bank PLC 104 0.4% - ------------------------------------------------------- TOTAL $ 1,524 6.2% - ------------------------------------------------------- CONSOLIDATED --------------------- PERCENT OF TOTAL INVESTED FAIR VALUE ASSETS --------------------- State of California $ 342 0.5% State of Illinois 273 0.4% General Motors Corporation 269 0.4% JP Morgan Chase & Company 261 0.3% Ford Motor Company 252 0.3% Citigroup Incorporated 248 0.3% Capital One Master Trust 244 0.3% UBS AG 234 0.3% Comcast Corporation 233 0.3% DaimlerChrysler AG 230 0.3% - ------------------------------------------------------- TOTAL $ 2,586 3.4% - ------------------------------------------------------- [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 -----END PRIVACY-ENHANCED MESSAGE-----