EX-99 3 exh99_1.txt THE HARTFORD FINANCIAL SERVICES GROUP, INC. [GRAPHIC OMMITTED] THE HARTFORD INVESTOR FINANCIAL SUPPLEMENT DECEMBER 31, 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 January 28, 2004 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 - 12E 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. THE HARTFORD FINANCIAL SERVICES GROUP, INC. INVESTOR FINANCIAL SUPPLEMENT TABLE OF CONTENTS
Basis of Presentation ........................................................ i, ii CONSOLIDATED Consolidated Financial Results ............................................... C-1 Operating Results by Segment ................................................. C-2 Consolidating Statements of Operations Fourth Quarter Ended December 31, 2003 and 2002 ............................ C-3 Year Ended December 31, 2003 and 2002 ...................................... C-4 Consolidating Balance Sheets As of December 31, 2003 and 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 September 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 Fourth Quarter Ended December 31, 2003 ..................................... PC-3 Year Ended December 31, 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 Fourth Quarter Ended December 31, 2003 ..................................... PC-19 Year Ended December 31, 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 December 31, 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 In the fourth quarter of 2003, The Hartford changed its reporting of earned income on non-qualifying derivatives. Earned income from periodic net coupon settlements on derivatives that do not qualify for hedge accounting under Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", previously reported in net investment income, have been included in net realized capital gains and losses. The reclassification has been made to prior periods presented. o On December 31, 2003, the Company acquired the group life and accident, and short-term and long-term disability businesses of CNA Financial Corporation. Accordingly, there was no impact to the Company's results of operations for the year ended December 31, 2003. o Operating income is a non-GAAP measure representing net income, before the after-tax effect of net realized capital gains and losses other than periodic net coupon settlements on non-qualifying derivatives. 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 those realized capital gains and losses that tend to be highly variable from period to period. 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 The Company has included the non-GAAP measure operating income, before the impact of the 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges, in its presentation of operating results by segment. 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 Bancorp litigation, tax related items and severance charges because these items either are non-recurring or are highly variable from period to period. 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 debt 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. - i - THE HARTFORD FINANCIAL SERVICES GROUP, INC. BASIS OF PRESENTATION (CONT.) DEFINITIONS AND PRESENTATION (CONTINUED) ---------------------------------------- o Premium renewal retention is defined as renewal premium written in the current period divided by premium written in the immediately preceding period. o The Company adopted the provisions of FASB Interpretation No. 46 "Consolidation of Variable Interest Entities (revised December 2003), an interpretation of ARB No. 51", in the fourth quarter of 2003. Regarding the Company's presentation of trust preferred securities, the trust preferred securities were deconsolidated and simultaneously an equivalent note payable representing the junior subordinated debentures was recognized as debt. 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 per share (including AOCI) is calculated by dividing equity including AOCI, net of tax, by common shares outstanding. Book value per share (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; net realized capital gains and losses other than periodic net coupon settlements on non-qualifying derivatives; corporate items not directly allocated to any of its reportable operating segments, principally interest expense; and intersegment eliminations. Periodic net coupon settlements on non-qualifying derivatives are reflected in the revenue section of each applicable segment in net realized capital gains and losses. 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 Certain reclassifications have been made to the prior periods to conform to the December 31, 2003 presentation. o NM - Not meaningful means increases or decreases greater than 200%, or changes from a net gain to a net loss position, or vice versa. - ii -
THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATED FINANCIAL RESULTS 4Q 1Q 2Q 3Q 4Q HIGHLIGHTS 2002 2003 2003 2003 2003 --------- ----------- ----------- ---------- ----------- Net income (loss) [1] $ 258 $ (1,395) $ 507 $ 343 $ 454 Operating income (loss) [1] $ 301 $ (1,361) $ 340 $ 335 $ 433 Impact of 2003 asbestos reserve addition $ - $ (1,701) $ - $ - $ - Operating income before impact of 2003 asbestos reserve addition $ 301 $ 340 $ 340 $ 335 $ 433 Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 301 $ 340 $ 337 $ 375 $ 433 Total revenues $ 4,280 $ 4,331 $ 4,682 $ 4,947 $ 4,773 Total assets $181,975 $188,657 $207,801 $211,365 $225,853 Total assets under management [2] $198,608 $205,223 $227,437 $232,115 $250,368 ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE AND SHARES DATA Basic earnings (loss) per share [1] Net income (loss) $ 1.01 $ (5.46) $ 1.89 $ 1.21 $ 1.60 Operating income (loss) $ 1.18 $ (5.33) $ 1.26 $ 1.19 $ 1.53 Operating income before impact of 2003 asbestos reserve addition $ 1.18 $ 1.33 $ 1.26 $ 1.19 $ 1.53 Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 1.18 $ 1.33 $ 1.25 $ 1.33 $ 1.53 Diluted earnings (loss) per share [1] [3] Net income (loss) $ 1.01 $ (5.46) $ 1.88 $ 1.20 $ 1.59 Operating income (loss) $ 1.17 $ (5.33) $ 1.26 $ 1.18 $ 1.52 Operating income before impact of 2003 asbestos reserve addition [4] $ 1.17 $ 1.33 $ 1.26 $ 1.18 $ 1.52 Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [4] $ 1.17 $ 1.33 $ 1.25 $ 1.32 $ 1.52 Weighted average common shares outstanding (basic) 255.2 255.4 268.8 282.5 283.0 Weighted average common shares outstanding and dilutive potential common shares (diluted) [3] 256.3 255.4 270.2 284.8 285.6 Common shares outstanding 255.2 255.4 282.2 282.7 283.4 Book value per share (including AOCI) $ 42.06 $ 36.97 $ 40.75 $ 40.13 $ 41.07 Book value per share (excluding AOCI) $ 37.77 $ 32.05 $ 34.34 $ 35.33 $ 36.67 ----------------------------------------------------------------------------------------------------------------------------------- FINANCIAL RATIOS ROE (net income (loss) last 12 months to equity including AOCI) 10.1% (7.4%) (3.5%) (2.6%) (0.8%) ROE (operating income (loss) last 12 months to equity excluding AOCI) 13.8% (4.8%) (3.8%) (4.0%) (2.5%) 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] 13.8% 13.9% 14.5% 13.6% 14.5% Debt to capitalization including AOCI 29.0% 31.7% 30.9% 31.2% 32.7% Investment yield, after-tax 4.3% 4.2% 4.0% 3.9% 3.9% North American Property & Casualty GAAP combined ratio 100.0 97.7 99.7 99.2 95.6 ----------------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ----------------------------------- HIGHLIGHTS CHANGE CHANGE 2002 2003 CHANGE -------- -------- ---------- ----------- ----------- Net income (loss) [1] 76% 32% $ 1,000 $ (91) NM Operating income (loss) [1] 44% 29% $ 1,250 $ (253) NM Impact of 2003 asbestos reserve addition - - $ - $(1,701) - Operating income before impact of 2003 asbestos reserve addition 44% 29% $ 1,250 $ 1,448 16% Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges 44% 15% $ 1,185 $ 1,485 25% Total revenues 12% (4%) $ 16,417 $ 18,733 14% Total assets 24% 7% Total assets under management [2] 26% 8% ------------------------------------------------------------------------------------------------------------------------------ PER SHARE AND SHARES DATA Basic earnings (loss) per share [1] Net income (loss) 58% 32% $ 4.01 $ (0.33) NM Operating income (loss) 30% 29% $ 5.01 $ (0.93) NM Operating income before impact of 2003 asbestos reserve addition 30% 29% $ 5.01 $ 5.32 6% Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges 30% 15% $ 4.75 $ 5.45 15% Diluted earnings (loss) per share [1] [3] Net income (loss) 57% 33% $ 3.97 $ (0.33) NM Operating income (loss) 30% 29% $ 4.96 $ (0.93) NM Operating income before impact of 2003 asbestos reserve addition [4] 30% 29% $ 4.96 $ 5.28 6% Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [4] 30% 15% $ 4.71 $ 5.42 15% Weighted average common shares outstanding (basic) 27.8 sh 0.5 sh 249.4 272.4 23.0 sh Weighted average common shares outstanding and dilutive potential common shares (diluted) [3] 29.3 sh 0.8 sh 251.8 272.4 20.6 sh Common shares outstanding 28.2 sh 0.7 sh 255.2 283.4 28.2 sh Book value per share (including AOCI) (2%) 2% Book value per share (excluding AOCI) (3%) 4% ------------------------------------------------------------------------------------------------------------------------------ FINANCIAL RATIOS ROE (net income (loss) last 12 months to equity including AOCI) (10.9) 1.8 ROE (operating income (loss) last 12 months to equity excluding AOCI) (16.3) 1.5 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] 0.7 0.9 Debt to capitalization including AOCI 3.7 1.5 Investment yield, after-tax (0.4) - 4.3% 4.1% (0.2) North American Property & Casualty GAAP combined ratio 4.4 3.6 99.8 98.0 1.8 ------------------------------------------------------------------------------------------------------------------------------ [1] The quarter ended September 30, 2003 and the year ended December 31, 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 year ended December 31, 2003 include $30 and the year ended December 31, 2002 includes $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 year ended December 31, 2003 include $27, after-tax, of severance charges in Property & Casualty. The year ended December 31, 2002 includes $11 of after-tax expense in Life related to the Bancorp Services, LLC litigation dispute. [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 year ended December 31, 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 year ended December 31, 2003 diluted earnings per share. In the absence of the net loss, 256.1 and 274.2 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 year ended December 31, 2003, respectively. [4] Calculated using weighted average common shares outstanding and dilutive potential common shares of 256.1 and 274.2 for the quarter ended March 31, 2003 and the year ended December 31, 2003, respectively. [5] The quarter ended March 31, 2003 excludes the earnings and equity impacts of the 2003 asbestos reserve addition.
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THE HARTFORD FINANCIAL SERVICES GROUP, INC. OPERATING RESULTS BY SEGMENT 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ------- ------- ------- ------ --------- LIFE [1] Individual Annuity $ 78 $ 71 $ 93 $ 98 $ 111 Other Investment Products 19 27 27 31 31 -------------------------------------------------------------------------------------------------------------------------- Total Investment Products 97 98 120 129 142 Individual Life 34 32 34 36 41 Group Benefits 36 34 35 38 41 Corporate Owned Life Insurance 12 10 9 10 10 Other (12) (17) (17) (11) (4) -------------------------------------------------------------------------------------------------------------------------- Life, before Bancorp litigation and tax related items 167 157 181 202 230 Bancorp litigation - - - (40) - Tax related items - - 30 - - -------------------------------------------------------------------------------------------------------------------------- TOTAL LIFE [2] 167 157 211 162 230 -------------------------------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY North American Underwriting Results Business Insurance 27 (12) 42 20 51 Personal Lines 2 52 3 37 25 Specialty Commercial (24) - (4) (50) 25 Reinsurance (42) (19) (76) (10) (20) -------------------------------------------------------------------------------------------------------------------------- Total North American underwriting results (37) 21 (35) (3) 81 Other Operations underwriting results (35) (29) (12) (12) (59) -------------------------------------------------------------------------------------------------------------------------- Total Property & Casualty underwriting results (72) (8) (47) (15) 22 Net investment income [3] 284 281 286 297 308 Periodic net coupon settlements on non-qualifying derivatives, before-tax 4 4 5 5 4 Net servicing and other income (loss) 8 3 3 9 (7) Other expenses (56) (40) (38) (42) (44) Income tax expense (26) (49) (40) (61) (72) ------------------------------------------------------------------------------------------------------------------------------ Property & Casualty, before 2003 asbestos reserve addition and severance charges 142 191 169 193 211 2003 asbestos reserve addition - (1,701) - - - Severance charges - - (27) - - ------------------------------------------------------------------------------------------------------------------------------ TOTAL PROPERTY & CASUALTY [2] 142 (1,510) 142 193 211 ------------------------------------------------------------------------------------------------------------------------------ CORPORATE (8) (8) (13) (20) (8) ------------------------------------------------------------------------------------------------------------------------------ Operating income, before 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [2] 301 340 337 375 433 ------------------------------------------------------------------------------------------------------------------------------ 2003 asbestos reserve addition - (1,701) - - - Bancorp litigation - - - (40) - Tax related items - - 30 - - Severance charges - - (27) - - ------------------------------------------------------------------------------------------------------------------------------ Operating income (loss) [2] 301 (1,361) 340 335 433 Add: Net realized capital gains (losses), after-tax [2] [3] (38) (29) 176 15 29 Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax [2] 5 5 9 7 8 ------------------------------------------------------------------------------------------------------------------------------ NET INCOME (LOSS) $ 258 $(1,395) $ 507 $ 343 $ 454 ------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA Diluted earnings (loss) per share Operating income, before 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 1.17 $ 1.33 $ 1.25 $ 1.32 $ 1.52 Net income (loss) $ 1.01 $(5.46) $ 1.88 $ 1.20 $ 1.59 ------------------------------------------------------------------------------------------------------------------------------ YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ----------------------- CHANGE CHANGE 2002 2003 CHANGE -------- -------- ------- -------- ------- LIFE [1] Individual Annuity 42% 13% $ 333 $ 373 12% Other Investment Products 63% - 99 116 17% ------------------------------------------------------------------------------------------------------------------------------- Total Investment Products 46% 10% 432 489 13% Individual Life 21% 14% 133 143 8% Group Benefits 14% 8% 128 148 16% Corporate Owned Life Insurance (17%) - 43 39 (9%) Other 67% 64% (48) (49) (2%) ------------------------------------------------------------------------------------------------------------------------------- Life, before Bancorp litigation and tax related items 38% 14% 688 770 12% Bancorp litigation - 100% (11) (40) NM Tax related items - - 76 30 (61%) ------------------------------------------------------------------------------------------------------------------------------- TOTAL LIFE [2] 38% 42% 753 760 1% ------------------------------------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY North American Underwriting Results Business Insurance 89% 155% 44 101 130% Personal Lines NM (32%) (46) 117 NM Specialty Commercial NM NM (23) (29) (26%) Reinsurance 52% (100%) (59) (125) (112%) ------------------------------------------------------------------------------------------------------------------------------- Total North American underwriting results NM NM (84) 64 NM Other Operations underwriting results (69%) NM (164) (112) 32% ------------------------------------------------------------------------------------------------------------------------------- Total Property & Casualty underwriting results NM NM (248) (48) 81% Net investment income [3] 8% 4% 1,060 1,172 11% Periodic net coupon settlements on non-qualifying derivatives, before-tax - (20%) 15 18 20% Net servicing and other income (loss) NM NM 15 8 (47%) Other expenses 21% (5%) (218) (164) 25% Income tax expense (177%) (18%) (101) (222) (120%) ----------------------------------------------------------------------------------------------------------------------------------- Property & Casualty, before 2003 asbestos reserve addition and severance charges 49% 9% 523 764 46% 2003 asbestos reserve addition - - - (1,701) - Severance charges - - - (27) - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY [2] 49% 9% 523 (964) NM ----------------------------------------------------------------------------------------------------------------------------------- CORPORATE - 60% (26) (49) (88%) ----------------------------------------------------------------------------------------------------------------------------------- Operating income, before 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [2] 44% 15% 1,185 1,485 25% ----------------------------------------------------------------------------------------------------------------------------------- 2003 asbestos reserve addition - - - (1,701) - Bancorp litigation - 100% (11) (40) NM Tax related items - - 76 30 (61%) Severance charges - - - (27) - ----------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) [2] 44% 29% 1,250 (253) NM Add: Net realized capital gains (losses), after-tax [2] [3] NM 93% (234) 191 NM Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax [2] 60% 14% 16 29 81% ----------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) 76% 32% $1,000 $ (91) NM ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA Diluted earnings (loss) per share Operating income, before 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges 30% 15% $ 4.71 $ 5.42 15% Net income (loss) 57% 33% $ 3.97 $ (0.33) NM ----------------------------------------------------------------------------------------------------------------------------------- [1] Life allocates the net realized gains and losses from periodic net coupon settlements on non-qualifying derivatives to its segments. [2] Operating income includes the effect of periodic net coupon settlements on non-qualifying derivatives, after-tax. For GAAP reporting, such effects are included in net realized capital gains and losses. [3] Prior periods reflect reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses).
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THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING STATEMENTS OF OPERATIONS FOURTH QUARTER ENDED DECEMBER 31, 2003 AND 2002 LIFE PROPERTY & CASUALTY ------------------------------ ------------------------------- 2003 2002 CHANGE 2003 2002 CHANGE --------- --------- -------- ---------- --------- -------- Earned premiums $ 716 $ 657 9% $ 2,265 $ 2,154 5% Fee income 771 616 25% - - - Net investment income [1] 522 493 6% 308 284 8% Other revenues 32 29 10% 110 99 11% Net realized capital gains (losses) [1] 21 (59) NM 23 1 NM -------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 2,062 1,736 19% 2,706 2,538 7% Benefits, claims and claim adjustment expenses 1,072 1,023 5% 1,602 1,555 3% Amortization of deferred policy acquisition costs and present value of future profits 229 142 61% 428 403 6% Insurance operating costs and expenses 410 388 6% 213 268 (21%) Other expenses 30 30 - 161 147 10% -------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 1,741 1,583 10% 2,404 2,373 1% INCOME (LOSS) BEFORE INCOME TAXES 321 153 110% 302 165 83% Income tax expense (benefit) 82 28 193% 79 24 NM -------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) 239 125 91% 223 141 58% Less: Net realized capital gains (losses), after-tax [1] 14 (39) NM 15 1 NM Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] 5 3 67% 3 2 50% -------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [2] $ 230 $ 167 38% $ 211 $ 142 49% -------------------------------------------------------------------------------------------------------------------------- CORPORATE CONSOLIDATED -------------------------------- ------------------------------ 2003 2002 CHANGE 2003 2002 CHANGE ----------- --------- -------- ----------- -------- -------- Earned premiums $ - $ - - $ 2,981 $ 2,811 6% Fee income - - - 771 616 25% Net investment income [1] 5 6 (17%) 835 783 7% Other revenues - - - 142 128 11% Net realized capital gains (losses) [1] - - - 44 (58) NM ------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES 5 6 (17%) 4,773 4,280 12% Benefits, claims and claim adjustment expenses 2 1 100% 2,676 2,579 4% Amortization of deferred policy acquisition costs and present value of future profits - - - 657 545 21% Insurance operating costs and expenses - - - 623 656 (5%) Other expenses 16 17 (6%) 207 194 7% ------------------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND EXPENSES 18 18 - 4,163 3,974 5% INCOME (LOSS) BEFORE INCOME TAXES (13) (12) (8%) 610 306 99% Income tax expense (benefit) (5) (4) (25%) 156 48 NM ------------------------------------------------------------------------------------------------------------------------ NET INCOME (LOSS) (8) (8) - 454 258 76% Less: Net realized capital gains (losses), after-tax [1] - - - 29 (38) NM Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] - - - 8 5 60% ------------------------------------------------------------------------------------------------------------------------ OPERATING INCOME (LOSS) [2] $ (8) $ (8) - $ 433 $ 301 44% ------------------------------------------------------------------------------------------------------------------------ [1] Prior periods reflect reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses). [2] Operating income includes the effect of periodic net coupon settlements on non-qualifying derivatives, after-tax. For GAAP reporting, such effects are included in net realized capital gains and losses.
C-3
THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2003 AND 2002 LIFE PROPERTY & CASUALTY ------------------------------ --------------------------------- 2003 2002 CHANGE 2003 2002 CHANGE --------- -------- --------- ----------- --------- --------- Earned premiums $ 3,086 $ 2,697 14% $ 8,805 $ 8,114 9% Fee income 2,760 2,577 7% - - - Net investment income [1] 2,041 1,849 10% 1,172 1,060 11% Other revenues 131 120 9% 428 356 20% Net realized capital gains (losses) [1] 40 (308) NM 253 (68) NM -------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 8,058 6,935 16% 10,658 9,462 13% Benefits, claims and claim adjustment expenses [2] 4,616 4,158 11% 8,926 5,870 52% Amortization of deferred policy acquisition costs and present value of future profits 769 628 22% 1,642 1,613 2% Insurance operating costs and expenses 1,535 1,438 7% 889 879 1% Other expenses [3] 189 144 31% 625 559 12% -------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 7,109 6,368 12% 12,082 8,921 35% INCOME (LOSS) BEFORE INCOME TAXES 949 567 67% (1,424) 541 NM Income tax expense (benefit) 180 10 NM (613) 72 NM -------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [4] 769 557 38% (811) 469 NM Less: Net realized capital gains (losses), after-tax [1] 26 (190) NM 165 (44) NM Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] 17 6 183% 12 10 20% -------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [4] [5] $ 760 $ 753 1% $ (964) $ 523 NM -------------------------------------------------------------------------------------------------------------------------- CORPORATE CONSOLIDATED ------------------------------ ------------------------------- 2003 2002 CHANGE 2003 2002 CHANGE --------- --------- -------- ---------- ---------- ------- Earned premiums $ - $ - - $ 11,891 $ 10,811 10% Fee income - - - 2,760 2,577 7% Net investment income [1] 20 20 - 3,233 2,929 10% Other revenues (3) - - 556 476 17% Net realized capital gains (losses) [1] - - - 293 (376) NM ------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 17 20 (15%) 18,733 16,417 14% Benefits, claims and claim adjustment expenses [2] 6 6 - 13,548 10,034 35% Amortization of deferred policy acquisition costs and present value of future profits - - - 2,411 2,241 8% Insurance operating costs and expenses - - - 2,424 2,317 5% Other expenses [3] 86 54 59% 900 757 19% ------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 92 60 53% 19,283 15,349 26% INCOME (LOSS) BEFORE INCOME TAXES (75) (40) (88%) (550) 1,068 NM Income tax expense (benefit) (26) (14) (86%) (459) 68 NM ------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [4] (49) (26) (88%) (91) 1,000 NM Less: Net realized capital gains (losses), after-tax [1] - - - 191 (234) NM Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] - - - 29 16 81% ------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [4] [5] $ (49) $ (26) (88%) $ (253) $ 1,250 NM ------------------------------------------------------------------------------------------------------------------------- [1] Prior periods reflect reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses). [2] Property & Casualty includes $2,604 in 2003 of before-tax impact of asbestos reserve addition. [3] 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. [4] 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. 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. [5] Operating income includes the effect of periodic net coupon settlements on non-qualifying derivatives, after-tax. For GAAP reporting, such effects are included in net realized capital gains and losses.
C-4
THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 2003 AND 2002 LIFE PROPERTY & CASUALTY ----------------------------------- ----------------------------------- DEC. 31, DEC. 31, DEC. 31, DEC. 31, 2003 2002 CHANGE 2003 2002 CHANGE ------------ ------------ -------- ------------ ------------ -------- Investments Fixed maturities, available-for-sale, at fair value $ 37,462 $ 29,377 28% $ 23,715 $ 19,446 22% Equity securities, available-for-sale, at fair value 357 458 (22%) 208 459 (55%) Policy loans, at outstanding balance 2,512 2,934 (14%) - - - Other investments 823 1,122 (27%) 682 668 2% ----------------------------------------------------------------------------------------------------------------------------------- Total investments 41,154 33,891 21% 24,605 20,573 20% Cash 265 179 48% 197 198 (1%) Premiums receivable and agents' balances 335 208 61% 2,750 2,403 14% Reinsurance recoverables 604 796 (24%) 5,354 4,231 27% Deferred policy acquisition costs and present value of future profits 6,623 5,758 15% 975 930 5% Deferred income taxes (486) (274) (77%) 1,101 610 80% Goodwill 796 796 - 152 153 (1%) Other assets 1,668 1,362 22% 2,025 2,031 - Separate account assets 136,633 107,078 28% - - - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $187,592 $149,794 25% $ 37,159 $ 31,129 19% ----------------------------------------------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $ 11,411 $ 8,583 33% $ 21,715 $ 17,091 27% Other policyholder funds and benefits payable 26,186 23,957 9% - - - Unearned premiums 58 54 7% 4,372 3,942 11% Debt [1] 1,805 1,575 15% 1,993 2,187 (9%) Other liabilities 4,440 2,858 55% 3,285 2,939 12% Separate account liabilities 136,633 107,078 28% - - - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 180,533 144,105 25% 31,365 26,159 20% ----------------------------------------------------------------------------------------------------------------------------------- Equity excluding AOCI, net of tax 6,198 4,980 24% 5,087 4,262 19% AOCI, net of tax 861 709 21% 707 708 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 7,059 5,689 24% 5,794 4,970 17% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $187,592 $149,794 25% $ 37,159 $ 31,129 19% ----------------------------------------------------------------------------------------------------------------------------------- CORPORATE CONSOLIDATED ----------------------------------- ------------------------------------ DEC. 31, DEC. 31, DEC. 31, DEC. 31, 2003 2002 CHANGE 2003 2002 CHANGE ------------ ------------ -------- ------------ ------------ --------- Investments Fixed maturities, available-for-sale, at fair value $ 86 $ 66 30% $ 61,263 $ 48,889 25% Equity securities, available-for-sale, at fair value - - - 565 917 (38%) Policy loans, at outstanding balance - - - 2,512 2,934 (14%) Other investments 2 - - 1,507 1,790 (16%) ----------------------------------------------------------------------------------------------------------------------------------- Total investments 88 66 33% 65,847 54,530 21% Cash - - - 462 377 23% Premiums receivable and agents' balances - - - 3,085 2,611 18% Reinsurance recoverables - - - 5,958 5,027 19% Deferred policy acquisition costs and present value of future profits 1 1 - 7,599 6,689 14% Deferred income taxes 230 209 10% 845 545 55% Goodwill 772 772 - 1,720 1,721 - Other assets 11 4 175% 3,704 3,397 9% Separate account assets - - - 136,633 107,078 28% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 1,102 $ 1,052 5% $225,853 $181,975 24% ----------------------------------------------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $ (9) $ (16) 44% $ 33,117 $ 25,658 29% Other policyholder funds and benefits payable (1) (1) - 26,185 23,956 9% Unearned premiums (7) (7) - 4,423 3,989 11% Debt [1] 1,865 617 NM 5,663 4,379 29% Other liabilities 468 384 22% 8,193 6,181 33% Separate account liabilities - - - 136,633 107,078 28% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 2,316 977 137% 214,214 171,241 25% ----------------------------------------------------------------------------------------------------------------------------------- Equity excluding AOCI, net of tax (892) 398 NM 10,393 9,640 8% AOCI, net of tax (322) (323) - 1,246 1,094 14% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY (1,214) 75 NM 11,639 10,734 8% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,102 $ 1,052 5% $225,853 $181,975 24% ----------------------------------------------------------------------------------------------------------------------------------- [1] Includes junior subordinated debentures.
C-5
THE HARTFORD FINANCIAL SERVICES GROUP, INC. CAPITAL STRUCTURE 4Q 1Q 2Q 3Q 2002 2003 2003 2003 ---------- ---------- ---------- ---------- DEBT Short-term debt (includes current maturities of long-term debt) $ 315 $ 315 $ 514 $ 515 Long-term debt 2,596 2,596 3,337 3,660 -------------------------------------------------------------------------------------------------------------------------------- TOTAL DEBT EXCLUDING JUNIOR SUBORDINATED DEBENTURES 2,911 2,911 3,851 4,175 Junior subordinated debentures 1,468 1,469 1,296 962 -------------------------------------------------------------------------------------------------------------------------------- TOTAL DEBT INCLUDING JUNIOR SUBORDINATED DEBENTURES $ 4,379 $ 4,380 $ 5,147 $ 5,137 ---------------------------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Equity excluding AOCI, net of tax $ 9,640 $ 8,185 $ 9,692 $ 9,987 AOCI, net of tax 1,094 1,257 1,807 1,357 -------------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY $ 10,734 $ 9,442 $ 11,499 $ 11,344 ---------------------------------------------------------------------------------------------------------------------------------- CAPITALIZATION TOTAL CAPITALIZATION INCLUDING AOCI, NET OF TAX $ 15,113 $ 13,822 $ 16,646 $ 16,481 TOTAL CAPITALIZATION EXCLUDING AOCI, NET OF TAX $ 14,019 $ 12,565 $ 14,839 $ 15,124 ---------------------------------------------------------------------------------------------------------------------------------- FINANCIAL RATIOS DEBT (INCLUDING JUNIOR SUBORDINATED DEBENTURES) TO EQUITY INCLUDING AOCI 40.8% 46.4% 44.8% 45.3% Debt (excluding junior subordinated debentures) to equity excluding AOCI 30.2% 35.6% 39.7% 41.8% DEBT (INCLUDING JUNIOR SUBORDINATED DEBENTURES) TO CAPITALIZATION INCLUDING AOCI 29.0% 31.7% 30.9% 31.2% Debt (excluding junior subordinated debentures) to capitalization excluding AOCI 20.8% 23.2% 26.0% 27.6% ---------------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR SEQUENTIAL 4Q QUARTER QUARTER 2003 CHANGE CHANGE ---------- ---------- ---------- DEBT Short-term debt (includes current maturities of long-term debt) $ 1,050 NM 104% Long-term debt 3,661 41% - ---------------------------------------------------------------------------------------------------------------------- TOTAL DEBT EXCLUDING JUNIOR SUBORDINATED DEBENTURES 4,711 62% 13% Junior subordinated debentures 952 (35%) (1%) ---------------------------------------------------------------------------------------------------------------------- TOTAL DEBT INCLUDING JUNIOR SUBORDINATED DEBENTURES $ 5,663 29% 10% ------------------------------------------------------------------------------------------------------------------------ STOCKHOLDERS' EQUITY Equity excluding AOCI, net of tax $ 10,393 8% 4% AOCI, net of tax 1,246 14% (8%) ---------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY $ 11,639 8% 3% ------------------------------------------------------------------------------------------------------------------------ CAPITALIZATION TOTAL CAPITALIZATION INCLUDING AOCI, NET OF TAX $ 17,302 14% 5% TOTAL CAPITALIZATION EXCLUDING AOCI, NET OF TAX $ 16,056 15% 6% ------------------------------------------------------------------------------------------------------------------------ FINANCIAL RATIOS DEBT (INCLUDING JUNIOR SUBORDINATED DEBENTURES) TO EQUITY INCLUDING AOCI 48.7% 7.9 3.4 Debt (excluding junior subordinated debentures) to equity excluding AOCI 45.3% 15.1 3.5 DEBT (INCLUDING JUNIOR SUBORDINATED DEBENTURES) TO CAPITALIZATION INCLUDING AOCI 32.7% 3.7 1.5 Debt (excluding junior subordinated debentures) to capitalization excluding AOCI 29.3% 8.5 1.7 ------------------------------------------------------------------------------------------------------------------------
C-6
THE HARTFORD FINANCIAL SERVICES GROUP, INC. ACCUMULATED OTHER COMPREHENSIVE INCOME PROPERTY & LIFE CASUALTY CORPORATE CONSOLIDATED --------- ------------ ------------ ----------------- AS OF DECEMBER 31, 2003 Fixed maturities unrealized gain $ 914 $ 793 $ 17 $ 1,724 Equities unrealized gain 14 26 - 40 Net deferred loss on cash-flow hedging instruments (25) (17) - (42) ------------------------------------------------------------------------------------------------------------------ Total unrealized gain 903 802 17 1,722 Foreign currency translation adjustments (42) (59) - (101) Minimum pension liability adjustment - (36) (339) (375) ------------------------------------------------------------------------------------------------------------------ TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) $ 861 $ 707 $ (322) $ 1,246 ------------------------------------------------------------------------------------------------------------------ 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 4Q 1Q 2Q 3Q 2002 2003 2003 2003 --------- --------- -------- --------- Numerator: Net income (loss) $ 258 $(1,395) $ 507 $ 343 Less: Net realized capital gains (losses), after-tax (38) (29) 176 15 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 5 5 9 7 -------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 301 (1,361) 340 335 Impact of 2003 asbestos reserve addition - (1,701) - - -------------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 301 $ 340 $ 340 $ 335 Operating income before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 301 $ 340 $ 337 $ 375 Denominator: Weighted average common shares outstanding (basic) 255.2 255.4 268.8 282.5 Dilutive effect of options 1.1 - 1.4 2.3 -------------------------------------------------------------------------------------------------------------------------- Weighted average common shares outstanding and dilutive potential common shares (diluted) [1] 256.3 255.4 270.2 284.8 Basic earnings (loss) per share Net income (loss) $ 1.01 $(5.46) $ 1.89 $ 1.21 Less: Net realized capital gains (losses), after-tax (0.15) (0.11) 0.66 0.05 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 0.02 0.02 0.03 0.03 -------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.18 (5.33) 1.26 1.19 Impact of 2003 asbestos reserve addition - (6.66) - - -------------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 1.18 $ 1.33 $ 1.26 $ 1.19 Operating income before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 1.18 $ 1.33 $ 1.25 $ 1.33 Diluted earnings (loss) per share [1] Net income (loss) $ 1.01 $(5.46) $ 1.88 $ 1.20 Less: Net realized capital gains (losses), after-tax (0.15) (0.11) 0.65 0.05 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 0.01 0.02 0.03 0.03 -------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.17 (5.33) 1.26 1.18 Impact of 2003 asbestos reserve addition - (6.66) - - -------------------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition [2] $ 1.17 $ 1.33 $ 1.26 $ 1.18 Operating income before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 1.17 $ 1.33 $ 1.25 $ 1.32 -------------------------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 4Q ---------------------- 2003 2002 2003 --------- ------------ -------- Numerator: Net income (loss) $ 454 $ 1,000 $ (91) Less: Net realized capital gains (losses), after-tax 29 (234) 191 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 8 16 29 ---------------------------------------------------------------------------------------------------------------- Operating income (loss) 433 1,250 (253) Impact of 2003 asbestos reserve addition - - (1,701) ---------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 433 $ 1,250 $1,448 Operating income before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 433 $ 1,185 $1,485 Denominator: Weighted average common shares outstanding (basic) 283.0 249.4 272.4 Dilutive effect of options 2.6 2.4 - ---------------------------------------------------------------------------------------------------------------- Weighted average common shares outstanding and dilutive potential common shares (diluted) [1] 285.6 251.8 272.4 Basic earnings (loss) per share Net income (loss) $ 1.60 $ 4.01 $(0.33) Less: Net realized capital gains (losses), after-tax 0.10 (0.94) 0.70 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 0.03 0.06 0.10 ---------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.53 5.01 (0.93) Impact of 2003 asbestos reserve addition - - (6.25) ---------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition $ 1.53 $ 5.01 $ 5.32 Operating income before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 1.53 $ 4.75 $ 5.45 Diluted earnings (loss) per share [1] Net income (loss) $ 1.59 $ 3.97 $(0.33) Less: Net realized capital gains (losses), after-tax 0.10 (0.93) 0.70 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 0.03 0.06 0.10 ---------------------------------------------------------------------------------------------------------------- Operating income (loss) 1.52 4.96 (0.93) Impact of 2003 asbestos reserve addition - - (6.21) ---------------------------------------------------------------------------------------------------------------- Operating income before impact of 2003 asbestos reserve addition [2] $ 1.52 $ 4.96 $ 5.28 Operating income before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 1.52 $ 4.71 $ 5.42 ---------------------------------------------------------------------------------------------------------------- [1] As a result of the antidilutive impact from the net loss in the quarter ended March 31, 2003 and the year ended December 31, 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 year ended December 31, 2003 diluted earnings per share. In the absence of the net loss, 256.1 and 274.2 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 year ended December 31, 2003, respectively. [2] Calculated using weighted average common shares outstanding and dilutive potential common shares of 256.1 and 274.2 for the quarter ended March 31, 2003 and the year ended December 31, 2003, respectively.
C-8 LIFE
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE FINANCIAL HIGHLIGHTS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ----------- ----------- ---------- ----------- ---------- REVENUES Investment Products Individual Annuity $ 386 $ 385 $ 430 $ 454 $ 481 Other Investment Products 384 388 447 728 495 ---------------------------------------------------------------------------------------------------------------------------- Total Investment Products 770 773 877 1,182 976 Individual Life 238 244 240 249 249 Group Benefits 639 667 638 663 656 Corporate Owned Life Insurance 141 127 126 117 113 Other (52) (25) 81 37 68 ---------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES $ 1,736 $1,786 $1,962 $2,248 $ 2,062 --------------------------------------------------------------------------------------------------------------------------------- OPERATING RESULTS BY SEGMENT Investment Products Individual Annuity $ 78 $ 71 $ 93 $ 98 $ 111 Other Investment Products 19 27 27 31 31 ---------------------------------------------------------------------------------------------------------------------------- Total Investment Products 97 98 120 129 142 Individual Life 34 32 34 36 41 Group Benefits 36 34 35 38 41 Corporate Owned Life Insurance 12 10 9 10 10 Other (12) (17) (17) (11) (4) ---------------------------------------------------------------------------------------------------------------------------- Operating income, before Bancorp litigation and tax related items 167 157 181 202 230 Bancorp litigation - - - (40) - Tax related items - - 30 - - ---------------------------------------------------------------------------------------------------------------------------- Operating income 167 157 211 162 230 ---------------------------------------------------------------------------------------------------------------------------- Add: Net realized capital (losses) gains, after-tax [1] (39) (29) 38 3 14 Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] 3 2 6 4 5 ---------------------------------------------------------------------------------------------------------------------------- NET INCOME $ 125 $ 126 $ 243 $ 161 $ 239 --------------------------------------------------------------------------------------------------------------------------------- ROE (net income last 12 twelve months to equity including AOCI) 10.8% 9.8% 11.4% 10.9% 12.1% ROE (operating income last 12 months to equity excluding AOCI) 16.0% 15.2% 15.4% 13.6% 13.6% Assets under management $ 165,115 $ 168,173 $ 187,636 $ 192,038 $ 210,054 DAC capitalization $ 342 $ 386 $ 441 $ 457 DAC amortization $ 163 $ 175 $ 202 $ 229 DAC and PVFP assets $ 5,904 $ 5,927 $ 6,265 $ 6,623 Statutory net income (loss) (YTD) $ (137) $ 1,026 Statutory surplus $ 3,019 $ 4,466 --------------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ----------------------------------- CHANGE CHANGE 2002 2003 CHANGE ---------- --------- ----------- ---------- ---------- REVENUES Investment Products Individual Annuity 25% 6% $ 1,539 $ 1,750 14% Other Investment Products 29% (32%) 1,568 2,058 31% ---------------------------------------------------------------------------------------------------------------------------- Total Investment Products 27% (17%) 3,107 3,808 23% Individual Life 5% - 958 982 3% Group Benefits 3% (1%) 2,582 2,624 2% Corporate Owned Life Insurance (20%) (3%) 592 483 (18%) Other NM 84% (304) 161 NM ---------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 19% (8%) $6,935 $8,058 16% --------------------------------------------------------------------------------------------------------------------------------- OPERATING RESULTS BY SEGMENT Investment Products Individual Annuity 42% 13% $ 333 $ 373 12% Other Investment Products 63% - 99 116 17% ---------------------------------------------------------------------------------------------------------------------------- Total Investment Products 46% 10% 432 489 13% Individual Life 21% 14% 133 143 8% Group Benefits 14% 8% 128 148 16% Corporate Owned Life Insurance (17%) - 43 39 (9%) Other 67% 64% (48) (49) (2%) ---------------------------------------------------------------------------------------------------------------------------- Operating income, before Bancorp litigation and tax related items 38% 14% 688 770 12% Bancorp litigation - 100% (11) (40) NM Tax related items - - 76 30 (61%) ---------------------------------------------------------------------------------------------------------------------------- Operating income 38% 42% 753 760 1% ---------------------------------------------------------------------------------------------------------------------------- Add: Net realized capital (losses) gains, after-tax [1] NM NM (190) 26 NM Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] 67% 25% 6 17 183% ---------------------------------------------------------------------------------------------------------------------------- NET INCOME 91% 48% $ 557 $ 769 38% --------------------------------------------------------------------------------------------------------------------------------- ROE (net income last 12 twelve months to equity including AOCI) 1.3 1.2 ROE (operating income last 12 months to equity excluding AOCI) (2.4) - Assets under management 27% 9% DAC capitalization 4% DAC amortization 13% DAC and PVFP assets 6% Statutory net income (loss) (YTD) Statutory surplus --------------------------------------------------------------------------------------------------------------------------------- [1] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses).
L-1
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE OPERATING RESULTS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ----------- ----------- ----------- ----------- ----------- REVENUES Earned premiums $ 657 $ 683 $ 706 $ 981 $ 716 Fee income 616 617 656 716 771 Net investment income [1] 493 503 504 512 522 Other revenues 29 27 37 35 32 Net realized capital (losses) gains [1] (59) (44) 59 4 21 ---------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 1,736 1,786 1,962 2,248 2,062 -------------------------------------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES Benefits, claims and claim adjustment expenses 1,023 1,083 1,086 1,375 1,072 Amortization of deferred policy acquisition costs and present value of future profits 142 163 175 202 229 Insurance operating costs and expenses 388 351 395 379 410 Other expenses [2] 30 33 32 94 30 ---------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 1,583 1,630 1,688 2,050 1,741 -------------------------------------------------------------------------------------------------------------------------- NET INCOME INCOME BEFORE INCOME TAXES 153 156 274 198 321 Income tax expense [3] 28 30 31 37 82 ---------------------------------------------------------------------------------------------------------------------- NET INCOME 125 126 243 161 239 Less: Net realized capital (losses) gains, after-tax [1] (39) (29) 38 3 14 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] 3 2 6 4 5 ---------------------------------------------------------------------------------------------------------------------- OPERATING INCOME [3] [4] $ 167 $ 157 $ 211 $ 162 $ 230 -------------------------------------------------------------------------------------------------------------------------- EFFECTIVE TAX RATE - NET INCOME [3] 18.3% 19.2% 11.3% 18.7% 25.5% EFFECTIVE TAX RATE - OPERATING INCOME [3] 23.0% 23.0% 5.8% 19.0% 25.1% -------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ----------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ----------- ----------- ---------- REVENUES Earned premiums 9% (27%) $ 2,697 $ 3,086 14% Fee income 25% 8% 2,577 2,760 7% Net investment income [1] 6% 2% 1,849 2,041 10% Other revenues 10% (9%) 120 131 9% Net realized capital (losses) gains [1] NM NM (308) 40 NM --------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 19% (8%) 6,935 8,058 16% ------------------------------------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES Benefits, claims and claim adjustment expenses 5% (22%) 4,158 4,616 11% Amortization of deferred policy acquisition costs and present value of future profits 61% 13% 628 769 22% Insurance operating costs and expenses 6% 8% 1,438 1,535 7% Other expenses [2] - (68%) 144 189 31% --------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 10% (15%) 6,368 7,109 12% ------------------------------------------------------------------------------------------------------------------------- NET INCOME INCOME BEFORE INCOME TAXES 110% 62% 567 949 67% Income tax expense [3] 193% 122% 10 180 NM --------------------------------------------------------------------------------------------------------------------- NET INCOME 91% 48% 557 769 38% Less: Net realized capital (losses) gains, after-tax [1] NM NM (190) 26 NM Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] 67% 25% 6 17 183% --------------------------------------------------------------------------------------------------------------------- OPERATING INCOME [3] [4] 38% 42% $ 753 $ 760 1% ------------------------------------------------------------------------------------------------------------------------- EFFECTIVE TAX RATE - NET INCOME [3] 7.2 6.8 1.8% 19.0% 17.2 EFFECTIVE TAX RATE - OPERATING INCOME [3] 2.1 6.1 14.8% 18.7% 3.9 ------------------------------------------------------------------------------------------------------------------------- [1] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses). [2] The third quarter ended September 30, 2003 includes $62 of before-tax expense related to the Bancorp litigation dispute. [3] The year ended December 31, 2002 includes a $76 tax benefit and the quarter ended June 30, 2003 and the year ended December 31, 2003 include a $30 tax benefit primarily related to the favorable treatment of certain tax items arising during the 1996-2002 tax years. [4] The third quarter ended September 30, 2003 includes $40 of after-tax expense related to Bancorp litigation dispute.
L-2
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE TOTAL ASSETS UNDER MANAGEMENT/JAPAN DATA 4Q 1Q 2Q 3Q 4Q TOTAL ASSETS UNDER MANAGEMENT 2002 2003 2003 2003 2003 ----------- ----------- ------------ ----------- ----------- Assets General account $ 42,716 $ 45,060 $ 47,218 $ 48,028 $ 50,959 Separate account 107,078 108,068 122,556 125,110 136,633 ----------------------------------------------------------------------------------------------------------- TOTAL ASSETS 149,794 153,128 169,774 173,138 187,592 Mutual fund assets 15,321 15,045 17,862 18,900 22,462 ----------------------------------------------------------------------------------------------------------- TOTAL ASSETS UNDER MANAGEMENT $ 165,115 $ 168,173 $ 187,636 $ 192,038 $ 210,054 ------------------------------------------------------------------------------------------------------------------- JAPAN ACCOUNT VALUE Yen(Y) (Y) 204,556 (Y) 273,880 (Y) 373,611 (Y) 535,180 (Y) 666,878 U.S.$ $ 1,722 $ 2,319 $ 3,119 $ 4,800 $ 6,220 ------------------------------------------------------------------- SALES Yen(Y) (Y) 92,153 (Y) 83,068 (Y) 71,408 (Y) 149,326 (Y) 126,708 U.S.$ $ 757 $ 700 $ 600 $ 1,276 $ 1,159 ------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER --------------------------------------- TOTAL ASSETS UNDER MANAGEMENT CHANGE CHANGE 2002 2003 CHANGE ------------ ----------- ----------- ----------- ----------- Assets General account 19% 6% Separate account 28% 9% ------------------------------------------------------------------------------------------------------------- TOTAL ASSETS 25% 8% Mutual fund assets 47% 19% ------------------------------------------------------------------------------------------------------------- TOTAL ASSETS UNDER MANAGEMENT 27% 9% --------------------------------------------------------------------------------------------------------------------- JAPAN ACCOUNT VALUE Yen(Y) NM 25% U.S.$ NM 30% --------------------------------------------------------------------- SALES Yen(Y) 37% (15%) (Y) 176,485 (Y) 430,510 144% U.S.$ 53% (9%) $ 1,433 $ 3,735 161% ---------------------------------------------------------------------------------------------------------------------
L-3
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE CONSOLIDATED BALANCE SHEETS 4Q 1Q 2Q 3Q 2002 2003 2003 2003 ----------------- ----------------- ----------------- ----------------- Investments Fixed maturities, available-for-sale, at fair value $ 29,377 $ 31,676 $ 34,060 $ 35,237 Equity securities, available-for-sale, at fair value 458 410 452 424 Policy loans, at outstanding balance 2,934 2,876 2,889 2,533 Other investments 1,122 1,071 937 891 ----------------------------------------------------------------------------------------------------------------------------------- Total investments 33,891 36,033 38,338 39,085 Cash 179 289 190 293 Premiums receivable and agents' balances 208 191 192 205 Reinsurance recoverables 796 865 797 686 Deferred policy acquisition costs and present value of future profits 5,758 5,904 5,927 6,265 Deferred income taxes (274) (347) (562) (479) Goodwill 796 796 796 796 Other assets 1,362 1,329 1,540 1,177 Separate account assets 107,078 108,068 122,556 125,110 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 149,794 $ 153,128 $ 169,774 $ 173,138 ----------------------------------------------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $ 8,583 $ 8,735 $ 8,928 $ 9,362 Other policyholder funds and benefits payable 23,957 25,252 26,255 26,241 Unearned premiums 54 52 51 63 Debt [1] 1,575 1,575 1,725 1,805 Other liabilities 2,858 3,555 3,762 4,150 Separate account liabilities 107,078 108,068 122,556 125,110 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 144,105 147,237 163,277 166,731 ----------------------------------------------------------------------------------------------------------------------------------- Equity excluding AOCI, net of tax 4,980 5,089 5,314 5,458 AOCI, net of tax 709 802 1,183 949 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 5,689 5,891 6,497 6,407 ----------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 149,794 $ 153,128 $ 169,774 $ 173,138 ----------------------------------------------------------------------------------------------------------------------------------- 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 4Q QUARTER QUARTER 2003 CHANGE CHANGE ------------------ ----------- ----------- Investments Fixed maturities, available-for-sale, at fair value $ 37,462 28% 6% Equity securities, available-for-sale, at fair value 357 (22%) (16%) Policy loans, at outstanding balance 2,512 (14%) (1%) Other investments 823 (27%) (8%) ------------------------------------------------------------------------------------------------------ Total investments 41,154 21% 5% Cash 265 48% (10%) Premiums receivable and agents' balances 335 61% 63% Reinsurance recoverables 604 (24%) (12%) Deferred policy acquisition costs and present value of future profits 6,623 15% 6% Deferred income taxes (486) (77%) (1%) Goodwill 796 - - Other assets 1,668 22% 42% Separate account assets 136,633 28% 9% ------------------------------------------------------------------------------------------------------ TOTAL ASSETS $ 187,592 25% 8% ------------------------------------------------------------------------------------------------------ Future policy benefits, unpaid claims and claim adjustment expenses $ 11,411 33% 22% Other policyholder funds and benefits payable 26,186 9% - Unearned premiums 58 7% (8%) Debt [1] 1,805 15% - Other liabilities 4,440 55% 7% Separate account liabilities 136,633 28% 9% ------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES 180,533 25% 8% ------------------------------------------------------------------------------------------------------ Equity excluding AOCI, net of tax 6,198 24% 14% AOCI, net of tax 861 21% (9%) ------------------------------------------------------------------------------------------------------ TOTAL STOCKHOLDERS' EQUITY 7,059 24% 10% ------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 187,592 25% 8% ------------------------------------------------------------------------------------------------------ Hartford Life and Accident Insurance Company NAIC RBC Hartford Life Insurance Company NAIC RBC Hartford Life and Annuity Insurance Company NAIC RBC ------------------------------------------------------------------------------------------------------ [1] Includes junior subordinated debentures.
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 Policy 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 Policy Acquisition Costs (98) (20) (37) (5) Amortization - Present Value of Future Profits (3) - (6) - Amortization - Realized Capital (Losses) - - - - ------------------------------------------- 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 Policy Acquisition Costs (119) (20) (39) (4) Amortization - Present Value of Future Profits (6) - (3) - Amortization - Realized Capital (Losses) - - - - ------------------------------------------- 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 ------------------------------------------------------------------------------------------------------------ Adjustments to unrealized gains and losses on securities available - for - sale and other 234 103 142 - Balance excluding adjustments to unrealized gains and losses on ------------------------------------------- securities available - for - sale and other $ 4,243 $ 364 $ 1,803 $ 47 Capitalization 254 48 73 6 Acquisition of Hartford Life Group Insurance Company - - - 53 Amortization - Deferred Policy Acquisition Costs (133) (30) (37) (5) Amortization - Present Value of Future Profits (4) - (8) - Amortization - Realized Capital Gains - - - - ------------------------------------------- Balance, December 31, 2003 $ 4,360 $ 382 $ 1,831 $ 101 Adjustments to unrealized gains and losses on securities available - for - sale and other (190) (95) (131) - ------------------------------------------------------------------------------------------------------------ BALANCE, DECEMBER 31, 2003 INCLUDING ADJUSTMENTS TO UNREALIZED GAINS AND LOSSES ON SECURITIES AVAILABLE-FOR-SALE AND OTHER $ 4,170 $ 287 $ 1,700 $ 101 ------------------------------------------------------------------------------------------------------------ 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 Policy 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 Policy Acquisition Costs - (6) - (166) Amortization - Present Value of Future Profits - - - (9) Amortization - Realized Capital (Losses) - - (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 Policy Acquisition Costs - (11) - (193) Amortization - Present Value of Future Profits - - - (9) Amortization - Realized Capital (Losses) - - (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 ------------------------------------------------------------------------------------------------------------ Adjustments to unrealized gains and losses on securities available - for - sale and other - - - 479 Balance excluding adjustments to unrealized gains and losses on -------------------------------------------- securities available - for - sale and other $ 13 $ 267 $ 7 $ 6,744 Capitalization 1 75 - 457 Acquisition of Hartford Life Group Insurance Company - - - 53 Amortization - Deferred Policy Acquisition Costs (1) (11) - (217) Amortization - Present Value of Future Profits - - - (12) Amortization - Realized Capital Gains - - 14 14 -------------------------------------------- Balance, December 31, 2003 $ 13 $ 331 $ 21 $ 7,039 Adjustments to unrealized gains and losses on securities available - for - sale and other - - - (416) ------------------------------------------------------------------------------------------------------------ BALANCE, DECEMBER 31, 2003 INCLUDING ADJUSTMENTS TO UNREALIZED GAINS AND LOSSES ON SECURITIES AVAILABLE-FOR-SALE AND OTHER $ 13 $ 331 $ 21 $ 6,623 ------------------------------------------------------------------------------------------------------------
L-5 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE REINSURANCE RECOVERABLE ANALYSIS AS OF SEPTEMBER 30, 2003 STATUTORY RESERVE CREDIT AND AMOUNTS RECOVERABLE Gross statutory reinsurance reserve credit $ 1,705 Liability for reinsurance in unauthorized companies (3) ----------------------------------------------------------------------------- Net statutory reinsurance reserve credit $ 1,702 ----------------------------------------------------------------------------- Statutory amounts recoverable from reinsurers $ 171 ----------------------------------------------------------------------------- The top ten reinsurers represent $1,648 or 88% of the total statutory reserve credit and amounts recoverable. o 18% of this amount is with reinsurers rated "A++" by A.M. Best at January 13, 2004. o 26% of this amount is with reinsurers rated "A+" by A.M. Best at January 13, 2004. o 2% of this amount is with reinsurers rated "A" by A.M. Best at January 13, 2004. o 46% of this amount is with reinsurers rated "A-" by A.M. Best at January 13, 2004. o 8% of this amount is with reinsurers rated "B+" by A.M. Best at January 13, 2004. L-6
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE STATUTORY SURPLUS TO GAAP STOCKHOLDERS' EQUITY RECONCILIATION SEPTEMBER 30, 2003 DECEMBER 31, 2002 -------------------------- -------------------------- Statutory Capital and Surplus $ 3,626 $ 3,019 GAAP Adjustments Investment in subsidiaries (2,086) (1,769) Deferred policy acquisition costs 6,265 5,758 Deferred taxes (671) (445) Benefit reserves (3,244) (2,887) Unrealized gains on investments, net of impairments 1,901 1,334 Asset valuation reserve and interest maintenance reserve 430 200 Goodwill 476 559 Other, net (290) (80) -------------------------------------------------------------------------------------------------------------------------- GAAP STOCKHOLDERS' EQUITY $ 6,407 $ 5,689 --------------------------------------------------------------------------------------------------------------------------
L-7
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS INCOME STATEMENTS - INDIVIDUAL ANNUITY 4Q 1Q 2Q 3Q 4Q REVENUES 2002 2003 2003 2003 2003 --------- --------- --------- -------- --------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ 233 $ 231 $ 259 $ 296 $ 326 Other fees 40 38 33 28 32 ---------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 273 269 292 324 358 Gross MVA/MGLI spread income 25 22 27 30 30 Investment expenses (2) (2) (2) (1) (3) ---------------------------------------------------------------------------------------------------------- NET GUARANTEED SEPARATE ACCOUNT INCOME 23 20 25 29 27 Direct premiums 21 28 30 20 18 Reinsurance premiums (28) (37) (32) (29) (32) ---------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 289 280 315 344 371 NET INVESTMENT INCOME Gross investment income on G/A assets [1] 113 117 128 129 126 Investment expenses (1) (1) (1) (1) (1) ---------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 112 116 127 128 125 Net investment income on assigned capital 14 14 16 16 18 Charge for invested capital (32) (30) (31) (36) (36) ---------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 94 100 112 108 107 Net realized capital gains (losses) [1] 3 5 3 2 3 ----------------------------------------------------------------------------------------------------------- TOTAL REVENUES 386 385 430 454 481 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 16 17 14 12 8 Other contract benefits 28 29 27 22 24 Change in reserve 5 12 16 10 7 Interest credited on G/A assets 75 77 83 84 77 ---------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 124 135 140 128 116 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 232 230 281 286 290 Operating expenses 50 45 49 46 50 Premium taxes, licenses and fees 3 4 3 3 2 Other miscellaneous expenses 2 2 1 2 - ---------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 287 281 334 337 342 Deferred policy acquisition costs (205) (205) (250) (256) (254) ---------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSES 82 76 84 81 88 Amortization of deferred policy acquisition costs and present value of future profits 84 87 101 125 137 ---------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 290 298 325 334 341 INCOME BEFORE INCOME TAX EXPENSE 96 87 105 120 140 Income tax expense (benefit) 18 16 (7) 22 29 ---------------------------------------------------------------------------------------------------------- NET INCOME $ 78 $ 71 $ 112 $ 98 $111 ---------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ------------------------------ REVENUES CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- --------- --------- -------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees 40% 10% $ 1,011 $ 1,112 10% Other fees (20%) 14% 157 131 (17%) ------------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 31% 10% 1,168 1,243 6% Gross MVA/MGLI spread income 20% - 101 109 8% Investment expenses (50%) NM (7) (8) (14%) ------------------------------------------------------------------------------------------------------------- NET GUARANTEED SEPARATE ACCOUNT INCOME 17% (7%) 94 101 7% Direct premiums (14%) (10%) 87 96 10% Reinsurance premiums (14%) (10%) (113) (130) (15%) ------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 28% 8% 1,236 1,310 6% NET INVESTMENT INCOME Gross investment income on G/A assets [1] 12% (2%) 377 500 33% Investment expenses - - (3) (4) (33%) ------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 12% (2%) 374 496 33% Net investment income on assigned capital 29% 13% 56 64 14% Charge for invested capital (13%) - (134) (133) 1% ------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 14% (1%) 296 427 44% Net realized capital gains (losses) [1] - 50% 7 13 86% -------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 25% 6% 1,539 1,750 14% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits (50%) (33%) 49 51 4% Other contract benefits (14%) 9% 98 102 4% Change in reserve 40% (30%) 29 45 55% Interest credited on G/A assets 3% (8%) 259 321 24% ------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS (6%) (9%) 435 519 19% OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 25% 1% 784 1,087 39% Operating expenses - 9% 195 190 (3%) Premium taxes, licenses and fees (33%) (33%) 11 12 9% Other miscellaneous expenses (100%) (100%) 9 5 (44%) ------------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 19% 1% 999 1,294 30% Deferred policy acquisition costs (24%) 1% (682) (965) (41%) ------------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSES 7% 9% 317 329 4% Amortization of deferred policy acquisition costs and present value of future profits 63% 10% 370 450 22% ------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 18% 2% 1,122 1,298 16% INCOME BEFORE INCOME TAX EXPENSE 46% 17% 417 452 8% Income tax expense (benefit) 61% 32% 84 60 (29%) ------------------------------------------------------------------------------------------------------------- NET INCOME 42% 13% $ 333 $392 18% ------------------------------------------------------------------------------------------------------------- [1] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses).
L-8
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS INCOME STATEMENTS - OTHER 4Q 1Q 2Q 3Q 4Q REVENUES 2002 2003 2003 2003 2003 --------- --------- -------- -------- -------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ 15 $ 16 $ 18 $ 21 $ 24 Other fees 67 68 76 85 92 ----------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 82 84 94 106 116 Direct premiums 98 100 145 402 151 Reinsurance premiums - - - - - ----------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 180 184 239 508 267 NET INVESTMENT INCOME Gross investment income on G/A assets [1] 201 199 200 212 221 Investment expenses (3) (3) (3) (3) (3) ----------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 198 196 197 209 218 Net investment income on assigned capital 5 5 6 6 6 Charge for invested capital - 1 - 1 1 ----------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 203 202 203 216 225 Net realized capital gains (losses) [1] 1 2 5 4 3 ------------------------------------------------------------------------------------------------------------ TOTAL REVENUES 384 388 447 728 495 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Other contract benefits 71 73 72 74 66 Change in reserve 86 85 133 392 144 Interest credited on G/A assets 105 101 106 113 115 ----------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 262 259 311 579 325 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 51 52 63 67 81 Operating expenses 53 47 52 57 60 Other miscellaneous expenses 1 3 2 1 1 ----------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 105 102 117 125 142 Deferred policy acquisition costs (28) (34) (40) (41) (48) ----------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSES 77 68 77 84 94 Amortization of deferred policy acquisition costs and present value of future profits 18 22 20 20 30 ----------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 357 349 408 683 449 INCOME BEFORE INCOME TAX EXPENSE 27 39 39 45 46 Income tax expense 8 12 10 14 15 ----------------------------------------------------------------------------------------------------------- NET INCOME $ 19 $ 27 $ 29 $ 31 $ 31 ----------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ----------------------------------- REVENUES CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ----------- ----------- -------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees 60% 14% $ 65 $ 79 22% Other fees 37% 8% 304 321 6% --------------------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 41% 9% 369 400 8% Direct premiums 54% (62%) 424 798 88% Reinsurance premiums - - (1) - 100% --------------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 48% (47%) 792 1,198 51% NET INVESTMENT INCOME Gross investment income on G/A assets [1] 10% 4% 767 832 8% Investment expenses - - (11) (12) (9%) --------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 10% 4% 756 820 8% Net investment income on assigned capital 20% - 20 23 15% Charge for invested capital - - (2) 3 NM --------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 11% 4% 774 846 9% Net realized capital gains (losses) [1] NM (25%) 2 14 NM ---------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 29% (32%) 1,568 2,058 31% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Other contract benefits (7%) (11%) 290 285 (2%) Change in reserve 67% (63%) 352 754 114% Interest credited on G/A assets 10% 2% 377 435 15% --------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 24% (44%) 1,019 1,474 45% OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 59% 21% 243 263 8% Operating expenses 13% 5% 199 216 9% Other miscellaneous expenses - - 7 7 - --------------------------------------------------------------------------------------------------------------------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 35% 14% 449 486 8% Deferred policy acquisition costs (71%) (17%) (118) (163) (38%) --------------------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSES 22% 12% 331 323 (2%) Amortization of deferred policy acquisition costs and present value of future profits 67% 50% 74 92 24% --------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 26% (34%) 1,424 1,889 33% INCOME BEFORE INCOME TAX EXPENSE 70% 2% 144 169 17% Income tax expense 88% 7% 45 51 13% --------------------------------------------------------------------------------------------------------------------- NET INCOME 63% - $ 99 $ 118 19% --------------------------------------------------------------------------------------------------------------------- [1] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses).
L-9
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - SALES/OTHER DEPOSITS 4Q 1Q 2Q 3Q 4Q SALES 2002 2003 2003 2003 2003 --------- --------- --------- --------- --------- INDIVIDUAL ANNUITY Broker-dealer $ 2,544 $ 2,521 $ 3,003 $ 2,853 $ 2,824 Banks 1,030 980 1,305 1,464 1,530 ------------------------------------------------------------------------------------------------- TOTAL SALES BY DISTRIBUTION $3,574 $3,501 $4,308 $4,317 $4,354 ------------------------------------------------------------------------------------------------- Variable $ 3,479 $ 3,437 $ 4,206 $ 3,954 $ 4,074 Fixed MVA/other 95 64 102 363 280 ------------------------------------------------------------------------------------------------- TOTAL SALES BY PRODUCT $3,574 $3,501 $4,308 $4,317 $4,354 ------------------------------------------------------------------------------------------------- RETAIL MUTUAL FUNDS $ 832 $ 848 $1,151 $1,138 $1,634 CORPORATE Annuity $ 346 $ 179 $ 276 $ 337 $ 570 Mutual funds 1 3 - - - ------------------------------------------------------------------------------------------------- TOTAL CORPORATE $ 347 $ 182 $ 276 $ 337 $ 570 ------------------------------------------------------------------------------------------------- GOVERNMENTAL Annuity $ 51 $ 77 $ 104 $ 345 $ 102 Mutual funds - 8 8 9 8 ------------------------------------------------------------------------------------------------- TOTAL GOVERNMENTAL $ 51 $ 85 $ 112 $ 354 $ 110 ------------------------------------------------------------------------------------------------- INSTITUTIONAL Structured settlements $ 183 $ 144 $ 180 $ 172 $ 219 Terminal funding 39 9 52 308 59 Mutual funds 11 16 47 55 221 GIC/other 166 164 809 351 562 ------------------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL $ 399 $ 333 $1,088 $ 886 $1,061 ------------------------------------------------------------------------------------------------- 529 COLLEGE SAVINGS PLAN/SPECIALTY PRODUCTS/OTHER $ 30 $ 36 $ 49 $ 56 $ 91 --------------------------------------------------------------------------------------------------- SALES & OTHER DEPOSITS INDIVIDUAL ANNUITY Variable $ 3,479 $ 3,437 $ 4,206 $ 3,954 $ 4,074 Fixed MVA/other 150 140 191 452 365 ------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY 3,629 3,577 4,397 4,406 4,439 ------------------------------------------------------------------------------------------------- RETAIL MUTUAL FUNDS 832 848 1,151 1,138 1,634 CORPORATE Annuity 295 396 327 409 440 Mutual funds 5 45 52 55 63 ------------------------------------------------------------------------------------------------- TOTAL CORPORATE 300 441 379 464 503 ------------------------------------------------------------------------------------------------- GOVERNMENTAL Annuity 191 234 274 520 297 Mutual funds 2 8 8 9 8 ------------------------------------------------------------------------------------------------- TOTAL GOVERNMENTAL 193 242 282 529 305 ------------------------------------------------------------------------------------------------- INSTITUTIONAL Structured settlements 133 155 142 161 151 Terminal funding 38 9 53 304 64 Mutual funds 11 16 47 55 221 GIC/other 64 168 931 334 472 ------------------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL 246 348 1,173 854 908 ------------------------------------------------------------------------------------------------- 529 COLLEGE SAVINGS PLAN/SPECIALTY PRODUCTS/OTHER 30 36 49 56 91 --------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS $5,230 $5,492 $7,431 $7,447 $7,880 ------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ------------------------------- SALES CHANGE CHANGE 2002 2003 CHANGE ---------- --------- ---------- ---------- --------- INDIVIDUAL ANNUITY Broker-dealer 11% (1%) $ 7,734 $ 11,201 45% Banks 49% 5% 3,902 5,279 35% ------------------------------------------------------------------------------------------------------ TOTAL SALES BY DISTRIBUTION 22% 1% $ 11,636 $ 16,480 42% ------------------------------------------------------------------------------------------------------ Variable 17% 3% $ 10,348 $ 15,671 51% Fixed MVA/other 195% (23%) 1,288 809 (37%) ------------------------------------------------------------------------------------------------------ TOTAL SALES BY PRODUCT 22% 1% $ 11,636 $ 16,480 42% ------------------------------------------------------------------------------------------------------ RETAIL MUTUAL FUNDS 96% 44% $ 4,778 $ 4,771 - CORPORATE Annuity 65% 69% $ 1,001 $ 1,362 36% Mutual funds (100%) - 4 3 (25%) ------------------------------------------------------------------------------------------------------ TOTAL CORPORATE 64% 69% $ 1,005 $ 1,365 36% ------------------------------------------------------------------------------------------------------ GOVERNMENTAL Annuity 100% (70%) $ 338 $ 628 86% Mutual funds - (11%) - 33 - ------------------------------------------------------------------------------------------------------ TOTAL GOVERNMENTAL 116% (69%) $ 338 $ 661 96% ------------------------------------------------------------------------------------------------------ INSTITUTIONAL Structured settlements 20% 27% $ 516 $ 715 39% Terminal funding 51% (81%) 144 428 197% Mutual funds NM NM 47 339 NM GIC/other NM 60% 1,282 1,886 47% ------------------------------------------------------------------------------------------------------ TOTAL INSTITUTIONAL 166% 20% $ 1,989 $ 3,368 69% ------------------------------------------------------------------------------------------------------ 529 COLLEGE SAVINGS PLAN/SPECIALTY PRODUCTS/OTHER NM 63% $ 94 $ 232 147% -------------------------------------------------------------------------------------------------------- SALES & OTHER DEPOSITS INDIVIDUAL ANNUITY Variable 17% 3% $ 10,348 $ 15,671 51% Fixed MVA/other 143% (19%) 1,445 1,148 (21%) ------------------------------------------------------------------------------------------------------ TOTAL INDIVIDUAL ANNUITY 22% 1% 11,793 16,819 43% ------------------------------------------------------------------------------------------------------ RETAIL MUTUAL FUNDS 96% 44% 4,778 4,771 - CORPORATE Annuity 49% 8% 1,244 1,572 26% Mutual funds NM 15% 68 215 NM ------------------------------------------------------------------------------------------------------ TOTAL CORPORATE 68% 8% 1,312 1,787 36% ------------------------------------------------------------------------------------------------------ GOVERNMENTAL Annuity 55% (43%) 1,005 1,325 32% Mutual funds NM (11%) 45 33 (27%) ------------------------------------------------------------------------------------------------------ TOTAL GOVERNMENTAL 58% (42%) 1,050 1,358 29% ------------------------------------------------------------------------------------------------------ INSTITUTIONAL Structured settlements 14% (6%) 498 609 22% Terminal funding 68% (79%) 144 430 199% Mutual funds NM NM 47 339 NM GIC/other NM 41% 1,047 1,905 82% ------------------------------------------------------------------------------------------------------ TOTAL INSTITUTIONAL NM 6% 1,736 3,283 89% ------------------------------------------------------------------------------------------------------ 529 COLLEGE SAVINGS PLAN/SPECIALTY PRODUCTS/OTHER NM 63% 94 232 147% -------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS 51% 6% $ 20,763 $ 28,250 36% ------------------------------------------------------------------------------------------------------------
L-10
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - ASSETS UNDER MANAGEMENT 4Q 1Q 2Q 3Q 2002 2003 2003 2003 ------------- ------------- ------------- ------------- INDIVIDUAL ANNUITY General account $ 8,583 $ 9,523 $ 9,899 $ 9,796 Guaranteed separate account 9,721 9,747 9,685 9,996 Non-guaranteed separate account 56,604 55,379 64,751 68,719 --------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY $ 74,908 $ 74,649 $ 84,335 $ 88,511 ------------------------------------------------------------------------------------------------------------------------ OTHER INVESTMENT PRODUCTS General account $ 11,913 $ 12,350 $ 13,178 $ 14,084 Guaranteed separate account 417 407 401 367 Non-guaranteed separate account 7,591 7,617 9,156 9,814 --------------------------------------------------------------------------------------------------------------- TOTAL OTHER INVESTMENT PRODUCTS $ 19,921 $ 20,374 $ 22,735 $ 24,265 ------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENT PRODUCTS General account $ 20,496 $ 21,873 $ 23,077 $ 23,880 Guaranteed separate account 10,138 10,154 10,086 10,363 Non-guaranteed separate account 64,195 62,996 73,907 78,533 --------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS $ 94,829 $ 95,023 $ 107,070 $ 112,776 ------------------------------------------------------------------------------------------------------------------------ BY PRODUCT INDIVIDUAL ANNUITY Individual Variable Annuities General account $ 7,702 $ 8,620 $ 8,959 $ 8,816 Separate account 56,641 55,427 64,789 68,756 ----------------------------------------------------------------------------------------------------------- Total individual variable annuities 64,343 64,047 73,748 77,572 Fixed MVA & other individual annuities 10,565 10,602 10,587 10,939 ------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY 74,908 74,649 84,335 88,511 ------------------------------------------------------------------------------------------------------------- CORPORATE - ANNUITY 2,972 3,212 3,700 4,044 GOVERNMENTAL - ANNUITY 7,211 7,199 7,811 8,319 INSTITUTIONAL Structured settlements 2,686 2,838 2,979 3,140 Terminal funding 1,978 1,975 2,047 2,333 Other 1,741 1,681 2,151 2,168 GIC 3,333 3,469 4,047 4,261 ------------------------------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL 9,738 9,963 11,224 11,902 ------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS ACCOUNT VALUE 94,829 95,023 107,070 112,776 SPECIALTY PRODUCTS/OTHER - SEGREGATED ASSETS - 7 20 30 MUTUAL FUND ASSETS Retail mutual fund assets 14,079 13,742 16,290 17,208 Corporate mutual fund assets 393 394 471 502 Governmental mutual fund assets 642 609 684 695 Specialty Product/Other mutual fund assets - 84 104 122 Institutional mutual fund assets 120 108 166 196 529 College Savings Plan assets 87 108 147 177 ------------------------------------------------------------------------------------------------------------- TOTAL MUTUAL FUND ASSETS 15,321 15,045 17,862 18,900 ------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS ASSETS UNDER MANAGEMENT $ 110,150 $ 110,075 $ 124,952 $ 131,706 ------------------------------------------------------------------------------------------------------------------------ YEAR OVER YEAR SEQUENTIAL 4Q QUARTER QUARTER 2003 CHANGE CHANGE ------------- ---------- ---------- INDIVIDUAL ANNUITY General account $ 9,351 9% (5%) Guaranteed separate account 10,239 5% 2% Non-guaranteed separate account 78,126 38% 14% ------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY $ 97,716 30% 10% ---------------------------------------------------------------------------------------------------- OTHER INVESTMENT PRODUCTS General account $ 14,755 24% 5% Guaranteed separate account 343 (18%) (7%) Non-guaranteed separate account 11,133 47% 13% ------------------------------------------------------------------------------------------- TOTAL OTHER INVESTMENT PRODUCTS $ 26,231 32% 8% ---------------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS General account $ 24,106 18% 1% Guaranteed separate account 10,582 4% 2% Non-guaranteed separate account 89,259 39% 14% ------------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS $ 123,947 31% 10% ---------------------------------------------------------------------------------------------------- BY PRODUCT INDIVIDUAL ANNUITY Individual Variable Annuities General account $ 8,345 8% (5%) Separate account 78,156 38% 14% --------------------------------------------------------------------------------------- Total individual variable annuities 86,501 34% 12% Fixed MVA & other individual annuities 11,215 6% 3% ----------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY 97,716 30% 10% ----------------------------------------------------------------------------------------- CORPORATE - ANNUITY 4,606 55% 14% GOVERNMENTAL - ANNUITY 8,965 24% 8% INSTITUTIONAL Structured settlements 3,285 22% 5% Terminal funding 2,395 21% 3% Other 2,303 32% 6% GIC 4,677 40% 10% ----------------------------------------------------------------------------------------- TOTAL INSTITUTIONAL 12,660 30% 6% ----------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS ACCOUNT VALUE 123,947 31% 10% SPECIALTY PRODUCTS/OTHER - SEGREGATED ASSETS 48 - 60% MUTUAL FUND ASSETS Retail mutual fund assets 20,301 44% 18% Corporate mutual fund assets 585 49% 17% Governmental mutual fund assets 770 20% 11% Specialty Product/Other mutual fund assets 109 - (11%) Institutional mutual fund assets 438 NM 123% 529 College Savings Plan assets 259 198% 46% ----------------------------------------------------------------------------------------- TOTAL MUTUAL FUND ASSETS 22,462 47% 19% ----------------------------------------------------------------------------------------- TOTAL INVESTMENT PRODUCTS ASSETS UNDER MANAGEMENT $ 146,457 33% 11% ----------------------------------------------------------------------------------------------------
L-11
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INVESTMENT PRODUCTS SUPPLEMENTAL DATA - INDIVIDUAL ANNUITY - ACCOUNT VALUE ROLLFORWARD [1] 4Q 1Q 2Q 2002 2003 2003 --------------- -------------- --------------- VARIABLE ANNUITIES BEGINNING BALANCE $ 59,618 $ 64,343 $ 64,047 Sales/premiums/other deposits 3,479 3,437 4,206 Surrenders (1,859) (1,800) (1,467) Death benefits/annuitizations/other (249) (307) (297) Net exchanges 11 8 23 ----------------------------------------------------------------------------------------------------------- Net Flows 1,382 1,338 2,465 Change in market value/change in reserve/interest credited 3,343 (1,634) 7,236 ----------------------------------------------------------------------------------------------------------- ENDING BALANCE $64,343 $64,047 $73,748 ------------------------------------------------------------------------------------------------------------------------------------ FIXED MVA AND OTHER BEGINNING BALANCE $ 10,513 $ 10,565 $ 10,602 Sales/premiums/other deposits 150 140 191 Surrenders (163) (152) (239) Death benefits/annuitizations/other (92) (99) (113) Net exchanges (10) (7) (21) ----------------------------------------------------------------------------------------------------------- Net Flows (115) (118) (182) Change in market value/change in reserve/interest credited 167 155 167 ----------------------------------------------------------------------------------------------------------- ENDING BALANCE $10,565 $10,602 $10,587 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INDIVIDUAL ANNUITY BEGINNING BALANCE $ 70,131 $ 74,908 $ 74,649 Sales/premiums/other deposits 3,629 3,577 4,397 Surrenders (2,022) (1,952) (1,706) Death benefits/annuitizations/other (341) (406) (410) Net exchanges 1 1 2 ----------------------------------------------------------------------------------------------------------- Net Flows 1,267 1,220 2,283 Change in market value/change in reserve/interest credited 3,510 (1,479) 7,403 ----------------------------------------------------------------------------------------------------------- ENDING BALANCE $74,908 $74,649 $84,335 ------------------------------------------------------------------------------------------------------------------------------------ 3Q 4Q 2003 2003 --------------- --------------- VARIABLE ANNUITIES BEGINNING BALANCE $ 73,748 $ 77,572 Sales/premiums/other deposits 3,954 4,074 Surrenders (1,427) (2,163) Death benefits/annuitizations/other (270) (278) Net exchanges 11 5 ------------------------------------------------------------------------------------------- Net Flows 2,268 1,638 Change in market value/change in reserve/interest credited 1,556 7,291 ------------------------------------------------------------------------------------------- ENDING BALANCE $77,572 $86,501 -------------------------------------------------------------------------------------------------------------------- FIXED MVA AND OTHER BEGINNING BALANCE $ 10,587 $ 10,939 Sales/premiums/other deposits 452 365 Surrenders (149) (159) Death benefits/annuitizations/other (98) (93) Net exchanges (11) (4) ------------------------------------------------------------------------------------------- Net Flows 194 109 Change in market value/change in reserve/interest credited 158 167 ------------------------------------------------------------------------------------------- ENDING BALANCE $10,939 $11,215 -------------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL ANNUITY BEGINNING BALANCE $ 84,335 $ 88,511 Sales/premiums/other deposits 4,406 4,439 Surrenders (1,576) (2,322) Death benefits/annuitizations/other (368) (371) Net exchanges - 1 ------------------------------------------------------------------------------------------- Net Flows 2,462 1,747 Change in market value/change in reserve/interest credited 1,714 7,458 ------------------------------------------------------------------------------------------- ENDING BALANCE $88,511 $97,716 -------------------------------------------------------------------------------------------------------------------- [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] 4Q 1Q 2Q 2002 2003 2003 --------------- -------------- -------------- OTHER INVESTMENT PRODUCTS ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) BEGINNING BALANCE $ 19,368 $ 19,921 $ 20,374 Sales/premiums/other deposits 721 962 1,727 Surrenders (595) (348) (411) Death benefits/annuitizations/other (128) (122) (115) ---------------------------------------------------------------------------------------------------- Net Flows (2) 492 1,201 Change in market value/change in reserve/interest credited 555 (39) 1,160 ---------------------------------------------------------------------------------------------------- ENDING BALANCE $19,921 $20,374 $22,735 ------------------------------------------------------------------------------------------------------------------------------------ RETAIL MUTUAL FUNDS ASSET ROLLFORWARD BEGINNING BALANCE $ 12,967 $ 14,079 $ 13,742 Sales 832 848 1,151 Redemptions (705) (716) (615) ---------------------------------------------------------------------------------------------------- Net sales 127 132 536 Change in market value 935 (469) 2,012 Other 50 - - ---------------------------------------------------------------------------------------------------- ENDING BALANCE $14,079 $13,742 $16,290 ------------------------------------------------------------------------------------------------------------------------------------ 3Q 4Q 2003 2003 -------------- -------------- OTHER INVESTMENT PRODUCTS ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) BEGINNING BALANCE $ 22,735 $ 24,265 Sales/premiums/other deposits 1,728 1,424 Surrenders (406) (612) Death benefits/annuitizations/other (115) (100) ----------------------------------------------------------------------------------------- Net Flows 1,207 712 Change in market value/change in reserve/interest credited 323 1,254 ----------------------------------------------------------------------------------------- ENDING BALANCE $24,265 $26,231 ------------------------------------------------------------------------------------------------------------------------- RETAIL MUTUAL FUNDS ASSET ROLLFORWARD BEGINNING BALANCE $ 16,290 $ 17,208 Sales 1,138 1,634 Redemptions (654) (631) ----------------------------------------------------------------------------------------- Net sales 484 1,003 Change in market value 444 2,090 Other (10) - ----------------------------------------------------------------------------------------- ENDING BALANCE $17,208 $20,301 ------------------------------------------------------------------------------------------------------------------------- [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 DECEMBER 31, 2003 --------------------------------------------------------- ACCOUNT NET AMT AT % OF NAR RETAINED BREAKDOWN OF VARIABLE ANNUITY ACCOUNT VALUE BY GMDB TYPE VALUE RISK REINSURED NAR ------------ ---------------- --------------- ----------- Maximum anniversary value (MAV) [1] MAV only $ 62,389 $ 9,424 89% $ 1,016 with 5% rollup [2] 4,654 695 82% 122 with Earnings Protection Benefit Rider (EPB) 3,042 120 70% 36 with 5% rollup & EPB 1,466 105 83% 18 ----------------------------------------------------------------------------------------------------------------------------- Total MAV 71,551 10,344 88% 1,192 Asset Protection Benefit (APB) [3] 5,506 2 41% 1 Ratchet [4] (5 years) 47 4 99% 0 Reset [5] (5-7 years) 8,958 1,028 0% 1,027 Return of Premium [6]/Other 438 10 0% 10 -------------------------------------------------------------------------------------------------------------------------------- TOTAL $ 86,500 $ 11,388 81% $ 2,230 ---------------------------------------------------------------------------------------------------------------------------------- AS OF AS OF AS OF AS OF AS OF DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, OTHER DATA 2002 2003 2003 2003 2003 ------------- ------------ ---------------- ------------ ------------ S&P 500 Index Value at end of period 879.82 848.18 974.50 995.97 1,111.92 Total Account Value $ 64,343 $ 64,047 $ 73,748 $ 77,572 $ 86,500 Net Amount at risk 22,387 23,587 17,375 16,200 11,388 Retained net amount at risk 4,063 4,423 3,767 3,689 2,230 GMDB net statutory reserve [7] 267 286 233 205 149 Present value of retained guaranteed death benefits 159 191 183 176 132 95% Confidence interval of present value of retained guaranteed death benefits (86 - 349) (108 - 396) (121 - 387) (110 - 368) (88 - 282) ---------------------------------------------------------------------------------------------------------------------------------- Embedded value of variable annuity in-force business [8] Value of in-force $ 2,510 $ 2,332 $ 2,545 $ 2,492 $ 2,805 Cost of capital (284) (281) (339) (350) (400) ---------------------------------------------------------------------------------------------------------------------------------- TOTAL EMBEDDED VALUE $ 2,226 $ 2,051 $ 2,206 $ 2,142 $ 2,405 ---------------------------------------------------------------------------------------------------------------------------------- [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 4Q 1Q 2Q 3Q 4Q REVENUES 2002 2003 2003 2003 2003 -------- ------- ------- -------- ------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ 10 $ 9 $ 11 $ 11 $ 13 Cost of insurance charges 105 106 107 108 110 Other fees 60 64 64 69 67 ---------------------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 175 179 182 188 190 Gross MVA/MGLI spread income 2 3 2 2 1 ---------------------------------------------------------------------------------------------------------------------- NET GUARANTEED SEPARATE ACCOUNT INCOME 2 3 2 2 1 Direct premiums 15 14 15 15 17 Net reinsurance premiums (18) (18) (21) (19) (23) ---------------------------------------------------------------------------------------------------------------------- NET PREMIUMS (3) (4) (6) (4) (6) ---------------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 174 178 178 186 185 NET INVESTMENT INCOME Gross FAS 97 investment income on G/A assets 59 62 59 59 61 Gross FAS 60 investment income on G/A assets 12 11 11 11 11 ---------------------------------------------------------------------------------------------------------------------- GROSS INVESTMENT INCOME ON G/A ASSETS [1] 71 73 70 70 72 Investment expenses (1) (1) - (1) (1) ---------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 70 72 70 69 71 Net investment income on assigned capital 4 4 3 4 4 Charge for invested capital (10) (10) (10) (10) (11) ---------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME 64 66 63 63 64 Realized capital (losses) gains [1] - - (1) - - ----------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 238 244 240 249 249 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 61 61 55 62 46 Other contract benefits 5 5 6 6 6 Change in reserve - - (2) - (1) Interest credited on G/A assets 47 46 49 49 48 ---------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS 113 112 108 117 99 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 45 37 37 40 54 Operating expenses 48 44 47 47 55 Premium taxes, licenses and fees 7 8 7 7 8 Dividends to policyholders - 1 - 1 1 SUBTOTAL - EXPENSES BEFORE DEFERRAL 100 90 91 95 118 Deferred acquisition costs (57) (51) (52) (57) (73) ---------------------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSES 43 39 39 38 45 Amortization of deferred acquisition costs and present value of future profits 32 46 43 42 45 ---------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 188 197 190 197 189 INCOME BEFORE INCOME TAX EXPENSE 50 47 50 52 60 Income tax expense 16 15 14 16 19 ---------------------------------------------------------------------------------------------------------------------- NET INCOME $ 34 $ 32 $ 36 $ 36 $ 41 ---------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER --------------------------- REVENUES CHANGE CHANGE 2002 2003 CHANGE ---------- --------- -------- -------- -------- PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees 30% 18% $ 41 $ 44 7% Cost of insurance charges 5% 2% 415 431 4% Other fees 12% (3%) 239 264 10% ---------------------------------------------------------------------------------------------------------------------- TOTAL FEE INCOME 9% 1% 695 739 6% Gross MVA/MGLI spread income (50%) (50%) 10 8 (20%) ---------------------------------------------------------------------------------------------------------------------- NET GUARANTEED SEPARATE ACCOUNT INCOME (50%) (50%) 10 8 (20%) Direct premiums 13% 13% 56 61 9% Net reinsurance premiums (28%) (21%) (64) (81) (27%) ---------------------------------------------------------------------------------------------------------------------- NET PREMIUMS (100%) (50%) (8) (20) (150%) ---------------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 6% (1%) 697 727 4% NET INVESTMENT INCOME Gross FAS 97 investment income on G/A assets 3% 3% 245 241 (2%) Gross FAS 60 investment income on G/A assets (8%) - 44 44 - ---------------------------------------------------------------------------------------------------------------------- GROSS INVESTMENT INCOME ON G/A ASSETS [1] 1% 3% 289 285 (1%) Investment expenses - - (3) (3) - ---------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME ON G/A ASSETS 1% 3% 286 282 (1%) Net investment income on assigned capital - - 15 15 - Charge for invested capital (10%) (10%) (39) (41) (5%) ---------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME - 2% 262 256 (2%) Realized capital (losses) gains [1] - - (1) (1) - ----------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 5% - 958 982 3% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits (25%) (26%) 232 224 (3%) Other contract benefits 20% - 23 23 - Change in reserve - - (8) (3) 63% Interest credited on G/A assets 2% (2%) 196 192 (2%) ---------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND CLAIMS (12%) (15%) 443 436 (2%) OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 20% 35% 173 168 (3%) Operating expenses 15% 17% 185 193 4% Premium taxes, licenses and fees 14% 14% 31 30 (3%) Dividends to policyholders - - 3 3 - SUBTOTAL - EXPENSES BEFORE DEFERRAL 18% 24% 392 394 1% Deferred acquisition costs (28%) (28%) (233) (233) - ---------------------------------------------------------------------------------------------------------------------- TOTAL OTHER INSURANCE EXPENSES 5% 18% 159 161 1% Amortization of deferred acquisition costs and present value of future profits 41% 7% 160 176 10% ---------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 1% (4%) 762 773 1% INCOME BEFORE INCOME TAX EXPENSE 20% 15% 196 209 7% Income tax expense 19% 19% 63 64 2% ---------------------------------------------------------------------------------------------------------------------- NET INCOME 21% 14% $ 133 $ 145 9% ---------------------------------------------------------------------------------------------------------------------- [1] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses).
L-15
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE SUPPLEMENTAL DATA 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ------------- ------------- ------------- ------------ --------------- SALES BY DISTRIBUTION Wirehouse/regional broker-dealer/banks $ 22 $ 15 $ 18 $ 28 $ 32 Independent broker-dealer/WFS 12 13 11 12 18 Life professional/other 14 11 8 10 20 --------------------------------------------------------------------------------------------------------------------- TOTAL SALES BY DISTRIBUTION $ 48 $ 39 $ 37 $ 50 $ 70 --------------------------------------------------------------------------------------------------------------------------- SALES BY PRODUCT Variable life $ 36 $ 26 $ 23 $ 26 $ 30 Universal life/whole life 9 11 11 21 37 Term life/other 3 2 3 3 3 --------------------------------------------------------------------------------------------------------------------- TOTAL SALES BY PRODUCT $ 48 $ 39 $ 37 $ 50 $ 70 --------------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE General account $ 3,658 $ 3,682 $ 3,722 $ 3,770 $ 3,829 Separate account 3,899 3,901 4,344 4,477 4,897 --------------------------------------------------------------------------------------------------------------------- TOTAL ACCOUNT VALUE $ 7,557 $ 7,583 $ 8,066 $ 8,247 $ 8,726 --------------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE BY PRODUCT Variable life $ 3,648 $ 3,673 $ 4,141 $ 4,284 $ 4,725 Universal life/interest sensitive whole life 3,139 3,144 3,166 3,213 3,259 Modified guaranteed life 680 677 671 661 655 Other 90 89 88 89 87 --------------------------------------------------------------------------------------------------------------------- TOTAL ACCOUNT VALUE BY PRODUCT $ 7,557 $ 7,583 $ 8,066 $ 8,247 $ 8,726 --------------------------------------------------------------------------------------------------------------------------- LIFE INSURANCE IN FORCE Variable life $ 66,715 $ 66,631 $ 66,518 $ 66,561 $ 67,031 Universal life/interest sensitive whole life 38,457 38,098 37,935 37,990 38,320 Term life 20,312 21,115 21,895 22,754 24,302 Modified guaranteed life 947 933 918 896 881 Other 249 252 254 261 264 --------------------------------------------------------------------------------------------------------------------- TOTAL LIFE INSURANCE IN FORCE $ 126,680 $ 127,029 $ 127,520 $ 128,462 $ 130,798 --------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ------------------------------------- CHANGE CHANGE 2002 2003 CHANGE ------------ ------------- ------------ ------------ --------- SALES BY DISTRIBUTION Wirehouse/regional broker-dealer/banks 45% 14% $ 77 $ 93 21% Independent broker-dealer/WFS 50% 50% 56 54 (4%) Life professional/other 43% 100% 40 49 23% -------------------------------------------------------------------------------------------------------------- TOTAL SALES BY DISTRIBUTION 46% 40% $ 173 $ 196 13% -------------------------------------------------------------------------------------------------------------------- SALES BY PRODUCT Variable life (17%) 15% $ 141 $ 105 (26%) Universal life/whole life NM 76% 22 80 NM Term life/other - - 10 11 10% -------------------------------------------------------------------------------------------------------------- TOTAL SALES BY PRODUCT 46% 40% $ 173 $ 196 13% -------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE General account 5% 2% Separate account 26% 9% -------------------------------------------------------------------------------------------------------------- TOTAL ACCOUNT VALUE 15% 6% -------------------------------------------------------------------------------------------------------------------- ACCOUNT VALUE BY PRODUCT Variable life 30% 10% Universal life/interest sensitive whole life 4% 1% Modified guaranteed life (4%) (1%) Other (3%) (2%) -------------------------------------------------------------------------------------------------------------- TOTAL ACCOUNT VALUE BY PRODUCT 15% 6% -------------------------------------------------------------------------------------------------------------------- LIFE INSURANCE IN FORCE Variable life - 1% Universal life/interest sensitive whole life - 1% Term life 20% 7% Modified guaranteed life (7%) (2%) Other 6% 1% -------------------------------------------------------------------------------------------------------------- TOTAL LIFE INSURANCE IN FORCE 3% 2% --------------------------------------------------------------------------------------------------------------------
L-16
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE ACCOUNT VALUE ROLLFORWARD 4Q 1Q 2Q 2002 2003 2003 --------------- ---------------- ---------------- VARIABLE LIFE BEGINNING BALANCE $ 3,458 $ 3,648 $ 3,673 First year & single premiums 94 78 69 Renewal premiums 135 133 125 ----------------------------------------------------------------------------------------------------- Premiums and deposits 229 211 194 Change in market value/interest credited 127 (35) 437 Surrenders [2] (65) (52) (60) Death benefits/policy fees (105) (104) (107) Net exchanges 4 5 4 ----------------------------------------------------------------------------------------------------- ENDING BALANCE $ 3,648 $ 3,673 $ 4,141 -------------------------------------------------------------------------------------------------------------------------- OTHER [1] BEGINNING BALANCE $ 3,902 $ 3,909 $ 3,910 First year & single premiums 12 13 20 Renewal premiums 90 86 83 ----------------------------------------------------------------------------------------------------- Premiums and deposits 102 99 103 Change in market value/interest credited 52 49 52 Surrenders (55) (54) (48) Death benefits/policy fees (88) (88) (88) Net exchanges (4) (5) (4) ----------------------------------------------------------------------------------------------------- ENDING BALANCE $ 3,909 $ 3,910 $ 3,925 -------------------------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL LIFE BEGINNING BALANCE $ 7,360 $ 7,557 $ 7,583 First year & single premiums 106 91 89 Renewal premiums 225 219 208 ----------------------------------------------------------------------------------------------------- Premiums and deposits 331 310 297 Change in market value/interest credited 179 14 489 Surrenders (120) (106) (108) Death benefits/policy fees (193) (192) (195) Net exchanges - - - ----------------------------------------------------------------------------------------------------- ENDING BALANCE $ 7,557 $ 7,583 $ 8,066 -------------------------------------------------------------------------------------------------------------------------- 3Q 4Q 2003 2003 ---------------- --------------- VARIABLE LIFE BEGINNING BALANCE $ 4,141 $ 4,284 First year & single premiums 65 69 Renewal premiums 121 159 ------------------------------------------------------------------------------------ Premiums and deposits 186 228 Change in market value/interest credited 119 410 Surrenders [2] (64) (82) Death benefits/policy fees (103) (115) Net exchanges 5 - ------------------------------------------------------------------------------------ ENDING BALANCE $ 4,284 $ 4,725 --------------------------------------------------------------------------------------------------------- OTHER [1] BEGINNING BALANCE $ 3,925 $ 3,963 First year & single premiums 59 70 Renewal premiums 86 84 ------------------------------------------------------------------------------------ Premiums and deposits 145 154 Change in market value/interest credited 50 50 Surrenders (62) (66) Death benefits/policy fees (90) (100) Net exchanges (5) - ------------------------------------------------------------------------------------ ENDING BALANCE $ 3,963 $ 4,001 --------------------------------------------------------------------------------------------------------- TOTAL INDIVIDUAL LIFE BEGINNING BALANCE $ 8,066 $ 8,247 First year & single premiums 124 139 Renewal premiums 207 243 ------------------------------------------------------------------------------------ Premiums and deposits 331 382 Change in market value/interest credited 169 460 Surrenders (126) (148) Death benefits/policy fees (193) (215) Net exchanges - - ------------------------------------------------------------------------------------ ENDING BALANCE $ 8,247 $ 8,726 --------------------------------------------------------------------------------------------------------- [1] Includes Universal Life, Interest Sensitive Whole Life, Modified Guaranteed Life Insurance and other. [2] The fourth quarter 2003 includes return of account value of $16 for a discontinued product.
L-17
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE GROUP BENEFITS INCOME STATEMENTS 4Q 1Q 2Q 3Q 4Q REVENUES 2002 2003 2003 2003 2003 -------- -------- -------- --------- -------- PREMIUMS AND OTHER CONSIDERATIONS ASO fees $ 4 $ 6 $ 4 $ 4 $ 5 Other fees - - - 1 - ------------------------------------------------------------------------------------------------------------------ TOTAL FEE INCOME 4 6 4 5 5 Direct premiums 576 569 569 582 578 Net reinsurance premiums (7) 27 - 10 7 ------------------------------------------------------------------------------------------------------------------ NET PREMIUMS 569 596 569 592 585 ------------------------------------------------------------------------------------------------------------------ TOTAL PREMIUMS AND OTHER CONSIDERATIONS 573 602 573 597 590 NET INVESTMENT INCOME Gross FAS 60 investment income on G/A assets 58 59 55 57 57 ------------------------------------------------------------------------------------------------------------------ GROSS INVESTMENT INCOME ON G/A ASSETS [1] 58 59 55 57 57 Investment expenses (1) (1) - (1) (1) ------------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME ON G/A ASSETS 57 58 55 56 56 Net investment income on assigned capital 9 10 9 10 10 ------------------------------------------------------------------------------------------------------------------ TOTAL NET INVESTMENT INCOME 66 68 64 66 66 Realized capital (losses) gains [1] - (3) 1 - - ------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 639 667 638 663 656 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 161 175 172 167 150 Other contract benefits 267 261 251 262 251 Change in reserve 19 53 28 43 49 ------------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND CLAIMS 447 489 451 472 450 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 61 58 59 61 56 Operating expenses 74 69 72 70 86 Premium taxes, licenses and fees 10 12 11 12 12 Other miscellaneous expenses (1) (1) - - (1) ------------------------------------------------------------------------------------------------------------------ SUBTOTAL - EXPENSES BEFORE DEFERRAL 144 138 142 143 153 Deferred acquisition costs (5) (7) (4) (6) (6) ------------------------------------------------------------------------------------------------------------------ TOTAL OTHER INSURANCE EXPENSES 139 131 138 137 147 Amortization of deferred acquisition costs and present value of future profits 6 4 5 4 5 ------------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND EXPENSES 592 624 594 613 602 INCOME BEFORE INCOME TAX EXPENSE 47 43 44 50 54 Income tax expense 11 9 9 12 13 ------------------------------------------------------------------------------------------------------------------ NET INCOME $ 36 $ 34 $ 35 $ 38 $ 41 ------------------------------------------------------------------------------------------------------------------ YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER -------------------------------- REVENUES CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- ---------- ---------- -------- PREMIUMS AND OTHER CONSIDERATIONS ASO fees 25% 25% $ 19 $ 19 - Other fees - (100%) - 1 - ------------------------------------------------------------------------------------------------------------------------ TOTAL FEE INCOME 25% - 19 20 5% Direct premiums - (1%) 2,318 2,298 (1%) Net reinsurance premiums NM (30%) (10) 44 NM ------------------------------------------------------------------------------------------------------------------------ NET PREMIUMS 3% (1%) 2,308 2,342 1% ------------------------------------------------------------------------------------------------------------------------ TOTAL PREMIUMS AND OTHER CONSIDERATIONS 3% (1%) 2,327 2,362 2% NET INVESTMENT INCOME Gross FAS 60 investment income on G/A assets (2%) - 222 228 3% ------------------------------------------------------------------------------------------------------------------------ GROSS INVESTMENT INCOME ON G/A ASSETS [1] (2%) - 222 228 3% Investment expenses - - (3) (3) - ------------------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME ON G/A ASSETS (2%) - 219 225 3% Net investment income on assigned capital 11% - 39 39 - ------------------------------------------------------------------------------------------------------------------------ TOTAL NET INVESTMENT INCOME - - 258 264 2% Realized capital (losses) gains [1] - - (3) (2) 33% ------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 3% (1%) 2,582 2,624 2% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits (7%) (10%) 644 664 3% Other contract benefits (6%) (4%) 1,036 1,025 (1%) Change in reserve 158% 14% 198 173 (13%) ------------------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND CLAIMS 1% (5%) 1,878 1,862 (1%) OTHER INSURANCE EXPENSES Commissions & wholesaling expenses (8%) (8%) 230 234 2% Operating expenses 16% 23% 277 297 7% Premium taxes, licenses and fees 20% - 42 47 12% Other miscellaneous expenses - - (1) (2) (100%) ------------------------------------------------------------------------------------------------------------------------ SUBTOTAL - EXPENSES BEFORE DEFERRAL 6% 7% 548 576 5% Deferred acquisition costs (20%) - (24) (23) 4% ------------------------------------------------------------------------------------------------------------------------ TOTAL OTHER INSURANCE EXPENSES 6% 7% 524 553 6% Amortization of deferred acquisition costs and present value of future profits (17%) 25% 17 18 6% ------------------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND EXPENSES 2% (2%) 2,419 2,433 1% INCOME BEFORE INCOME TAX EXPENSE 15% 8% 163 191 17% Income tax expense 18% 8% 35 43 23% ------------------------------------------------------------------------------------------------------------------------ NET INCOME 14% 8% $ 128 $ 148 16% ------------------------------------------------------------------------------------------------------------------------ [1] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses).
L-18
THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE GROUP BENEFITS SUPPLEMENTAL DATA 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ------------- ------------- ------------- ------------- ----------- PREMIUMS FULLY INSURED - ONGOING PREMIUMS Group disability $ 232 $ 243 $ 237 $ 243 $ 240 Group life 240 243 240 249 252 Other 90 82 91 89 93 ------------------------------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING PREMIUMS 562 568 568 581 585 ------------------------------------------------------------------------------------------------------------------- Total buyouts [1] 7 28 1 11 - ---------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS 569 596 569 592 585 Group disability - premium equivalents [2] 55 50 51 50 51 ---------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND PREMIUM EQUIVALENT CLAIMS $ 624 $ 646 $ 620 $ 642 $ 636 ------------------------------------------------------------------------------------------------------------------------------------ SALES (GROSS FULLY INSURED - ONGOING SALES ANNUALIZED Group disability $ 28 $ 103 $ 51 $ 32 $ 39 NEW PREMIUMS) Group life 25 89 30 38 43 Other 12 30 11 30 11 ------------------------------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING SALES 65 222 92 100 93 ------------------------------------------------------------------------------------------------------------------- Total buyouts [1] 7 26 3 11 16 ---------------------------------------------------------------------------------------------------------------- TOTAL SALES 72 248 95 111 109 Group disability premium equivalents [2] 2 24 4 6 7 ---------------------------------------------------------------------------------------------------------------- TOTAL SALES AND PREMIUM EQUIVALENTS $ 74 $ 272 $ 99 $ 117 $ 116 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS [3] Loss Ratio 77.7% 80.3% 78.7% 78.7% 76.3% Expense Ratio 25.6% 23.5% 25.0% 24.1% 25.8% ------------------------------------------------------------------------------------------------------------------------------------ GAAP RESERVES Group disability $ 2,489 $ 2,516 $ 2,538 $ 2,552 $ 2,590 Group life 765 799 803 822 847 Other 201 186 188 212 199 ---------------------------------------------------------------------------------------------------------------------- TOTAL GAAP RESERVES $ 3,455 $ 3,501 $ 3,529 $ 3,586 $ 3,636 ------------------------------------------------------------------------------------------------------------------------------------ YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ---------------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ------------ -------------- -------------- ---------- PREMIUMS FULLY INSURED - ONGOING PREMIUMS Group disability 3% (1%) $ 961 $ 963 - Group life 5% 1% 965 984 2% Other 3% 4% 369 355 (4%) ----------------------------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING PREMIUMS 4% 1% 2,295 2,302 - ----------------------------------------------------------------------------------------------------------------- Total buyouts [1] (100%) (100%) 13 40 NM -------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS 3% (1%) 2,308 2,342 1% Group disability - premium equivalents [2] (7%) 2% 232 202 (13%) -------------------------------------------------------------------------------------------------------------- TOTAL PREMIUMS AND PREMIUM EQUIVALENT CLAIMS 2% (1%) $ 2,540 $ 2,544 - ---------------------------------------------------------------------------------------------------------------------------------- SALES (GROSS FULLY INSURED - ONGOING SALES ANNUALIZED Group disability 39% 22% $ 218 $ 225 3% NEW PREMIUMS) Group life 72% 13% 284 200 (30%) Other (8%) (63%) 95 82 (14%) ----------------------------------------------------------------------------------------------------------------- TOTAL FULLY INSURED - ONGOING SALES 43% (7%) 597 507 (15%) ----------------------------------------------------------------------------------------------------------------- Total buyouts [1] 129% 45% 14 56 NM -------------------------------------------------------------------------------------------------------------- TOTAL SALES 51% (2%) 611 563 (8%) Group disability premium equivalents [2] NM 17% 61 41 (33%) -------------------------------------------------------------------------------------------------------------- TOTAL SALES AND PREMIUM EQUIVALENTS 57% (1%) $ 672 $ 604 (10%) ---------------------------------------------------------------------------------------------------------------------------------- RATIOS [3] Loss Ratio 80.6% 78.5% Expense Ratio 23.4% 24.6% ---------------------------------------------------------------------------------------------------------------------------------- GAAP RESERVES Group disability 4% 1% Group life 11% 3% Other (1%) (6%) ----------------------------------------------------------------------------------------------------------------- TOTAL GAAP RESERVES 5% 1% ---------------------------------------------------------------------------------------------------------------------------------- [1] Takeover of open claim liabilities and other non-recurring premium amounts. [2] Administrative services only (ASO) fees and claims under claim management agreements. [3] Ratios calculated excluding the effects of buyout premiums.
L-19 PROPERTY & CASUALTY
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY FINANCIAL HIGHLIGHTS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 --------- ------------ ---------- ---------- ---------- GAAP TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Written premiums $ 2,137 $ 2,447 $ 2,134 $ 2,318 $ 2,166 Earned premiums 2,154 2,166 2,106 2,268 2,265 Business Insurance 27 (12) 42 20 51 Personal Lines 2 52 3 37 25 Specialty Commercial (24) - (4) (50) 25 Reinsurance (42) (19) (76) (10) (20) -------------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN UNDERWRITING RESULTS (37) 21 (35) (3) 81 Other Operations (35) (2,633) (12) (12) (59) -------------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS $ (72) $(2,612) $ (47) $ (15) $ 22 GAAP NORTH AMERICAN UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 59.6 58.9 60.6 59.8 55.5 -------------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 11.4 12.1 11.9 11.6 12.9 Expenses 28.3 26.2 26.7 27.5 26.9 -------------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 39.6 38.4 38.7 39.0 39.8 -------------------------------------------------------------------------------------------------------------------------- Policyholder dividends 0.8 0.4 0.5 0.4 0.2 -------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 100.0 97.7 99.7 99.2 95.6 ------------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 0.8 2.6 4.7 3.4 1.3 ------------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 99.2 95.1 95.0 95.8 94.2 ------------------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY INCOME AND ROE ---------------------------------------- Net income $ 141 $ (1,513) $ 277 $ 202 $ 223 Operating income 142 (1,510) 142 193 211 Impact of 2003 asbestos reserve addition and severance charges - (1,701) (27) - - Operating income before impact of 2003 asbestos reserve addition and severance charges 142 191 169 193 211 Net income ROE (last 12 months income-equity AOCI) 10.4% (31.0%) (19.9%) (17.1%) (15.1%) Operating income ROE (last 12 months income-equity x-AOCI) 13.1% (33.9%) (25.4%) (22.8%) (20.6%) Operating income ROE (last 12 months income-equity x-AOCI) excluding the impact of the 2003 asbestos reserve addition and severance charges 13.1% 14.4% 15.0% 15.3% 16.3% ------------------------------------------------------------------------------------------------------------------------------- SELECTED FINANCIAL DATA ----------------------- Hartford Fire Pool adjusted statutory surplus ($ in billions) Hartford Fire Pool premium to adjusted surplus ratio Hartford Fire Pool statutory net income ------------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ------------------------------------ CHANGE CHANGE 2002 2003 CHANGE --------- --------- ---------- ------------ ----------- GAAP TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Written premiums 1% (7%) $ 8,584 $ 9,065 6% Earned premiums 5% - 8,114 8,805 9% Business Insurance 89% 155% 44 101 130% Personal Lines NM (32%) (46) 117 NM Specialty Commercial NM NM (23) (29) (26%) Reinsurance 52% (100%) (59) (125) (112%) --------------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN UNDERWRITING RESULTS NM NM (84) 64 NM Other Operations (69%) NM (164) (2,716) NM --------------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS NM NM $(248) $(2,652) NM GAAP NORTH AMERICAN UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 4.1 4.3 59.6 58.7 0.9 --------------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses (1.5) (1.3) 11.2 12.1 (0.9) Expenses 1.4 0.6 28.3 26.8 1.5 --------------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES (0.2) (0.8) 39.5 39.0 0.5 --------------------------------------------------------------------------------------------------------------------------- Policyholder dividends 0.6 0.2 0.7 0.4 0.3 --------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 4.4 3.6 99.8 98.0 1.8 -------------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio (0.5) 2.1 1.3 3.0 (1.7) -------------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 5.0 1.6 98.5 95.0 3.5 -------------------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTY & CASUALTY INCOME AND ROE ---------------------------------------- Net income 58% 10% $ 469 $ (811) NM Operating income 49% 9% 523 (964) NM Impact of 2003 asbestos reserve addition and severance charges - - - (1,728) - Operating income before impact of 2003 asbestos reserve addition and severance charges 49% 9% 523 764 46% Net income ROE (last 12 months income-equity AOCI) NM 2.0 Operating income ROE (last 12 months income-equity x-AOCI) NM 2.2 Operating income ROE (last 12 months income-equity x-AOCI) excluding the impact of the 2003 asbestos reserve addition and severance charges 3.2 1.0 -------------------------------------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY ------------------------------------- DEC. 31, DEC. 31, 2003 2002 CHANGE ---------- ------------ ----------- SELECTED FINANCIAL DATA ----------------------- Hartford Fire Pool adjusted statutory surplus ($ in billions) $ 5.9 $ 4.6 28% Hartford Fire Pool premium to adjusted surplus ratio 1.5 1.8 (0.3) Hartford Fire Pool statutory net income $ (19) $ 4,794 NM --------------------------------------------------------------------------------------------------------------------------------
PC-1
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OPERATING RESULTS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 --------- ------------ -------- --------- --------- GAAP TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Written premiums $ 2,137 $ 2,447 $ 2,134 $ 2,318 $ 2,166 Change in reserve (17) 281 28 50 (99) ------------------------------------------------------------------------------------------------------------------------ Earned premiums 2,154 2,166 2,106 2,268 2,265 Loss and loss adjustment expenses [1] 1,555 1,557 1,541 1,622 1,602 Underwriting expenses 617 578 562 630 617 Dividends to policyholders 17 10 9 10 5 Other adjustments 37 29 41 21 19 ------------------------------------------------------------------------------------------------------------------------ UNDERWRITING RESULTS (72) (8) (47) (15) 22 Net servicing income 8 3 3 9 (7) Net investment income [2] 284 281 286 297 308 Periodic net coupon settlements on non-qualifying derivatives, before-tax [2] 4 4 5 5 4 Other expenses (56) (40) (38) (42) (44) Income tax expense (26) (49) (40) (61) (72) ------------------------------------------------------------------------------------------------------------------------ OPERATING INCOME, BEFORE IMPACT OF 2003 ASBESTOS RESERVE ADDITION AND SEVERANCE CHARGES 142 191 169 193 211 2003 asbestos reserve addition - (1,701) - - - Severance charges - - (27) - - ------------------------------------------------------------------------------------------------------------------------ OPERATING INCOME (LOSS) 142 (1,510) 142 193 211 Add: Net realized capital gains (losses), after-tax [2] 1 - 138 12 15 Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax [2] 2 3 3 3 3 ------------------------------------------------------------------------------------------------------------------------ NET INCOME (LOSS) $ 141 $(1,513) $ 277 $ 202 $ 223 ------------------------------------------------------------------------------------------------------------------------ Total Property & Casualty effective tax rate - net income 15.0% NM 26.3% 24.2% 26.2% Total Property & Casualty effective tax rate - operating income 15.1% NM 15.7% 23.6% 25.6% ------------------------------------------------------------------------------------------------------------------------ YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ------------------------------ CHANGE CHANGE 2002 2003 CHANGE --------- ---------- --------- ---------- -------- GAAP TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Written premiums 1% (7%) $ 8,584 $ 9,065 6% Change in reserve NM NM 470 260 (45%) -------------------------------------------------------------------------------------------------------------------------- Earned premiums 5% - 8,114 8,805 9% Loss and loss adjustment expenses [1] 3% (1%) 5,870 6,322 8% Underwriting expenses - (2%) 2,338 2,387 2% Dividends to policyholders (71%) (50%) 57 34 (40%) Other adjustments (49%) (10%) 97 110 13% -------------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS NM NM (248) (48) 81% Net servicing income NM NM 15 8 (47%) Net investment income [2] 8% 4% 1,060 1,172 11% Periodic net coupon settlements on non-qualifying derivatives, before-tax [2] - (20%) 15 18 20% Other expenses 21% (5%) (218) (164) 25% Income tax expense (177%) (18%) (101) (222) (120%) -------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME, BEFORE IMPACT OF 2003 ASBESTOS RESERVE ADDITION AND SEVERANCE CHARGES 49% 9% 523 764 46% 2003 asbestos reserve addition - - - (1,701) - Severance charges - - - (27) - -------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) 49% 9% 523 (964) NM Add: Net realized capital gains (losses), after-tax [2] NM 25% (44) 165 NM Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax [2] 50% - 10 12 20% -------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) 58% 10% $ 469 $(811) NM -------------------------------------------------------------------------------------------------------------------------- Total Property & Casualty effective tax rate - net income 11.2 2.0 13.2% NM NM Total Property & Casualty effective tax rate - operating income 10.5 2.0 16.1% NM NM -------------------------------------------------------------------------------------------------------------------------- [1] Includes catastrophes, before-tax, of $30 and $263 for the quarter and year ended December 31, 2003, respectively. [2] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses).
PC-2
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY NORTH AMERICAN CONSOLIDATING UNDERWRITING RESULTS FOR THE FOURTH QUARTER ENDED DECEMBER 31, 2003 NORTH AMERICAN BUSINESS PERSONAL SPECIALTY BEFORE INSURANCE LINES COMMERCIAL REINSURANCE --------------- ---------------- ---------------- ---------------- GAAP UNDERWRITING RESULTS Written premiums $ 1,006 $ 803 $ 338 $ 2,147 Change in reserve 34 (16) (76) (58) ------------------------------------------------------------------------------------------------------------------------ Earned premiums 972 819 414 2,205 Loss and loss adjustment expenses 586 593 311 1,490 Underwriting expenses 317 200 74 591 Dividends to policyholders 2 - 3 5 Other adjustments 16 1 1 18 ------------------------------------------------------------------------------------------------------------------------ UNDERWRITING RESULTS $ 51 $ 25 $ 25 $ 101 ------------------------------------------------------------------------------------------------------------------------------ GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 48.2 60.8 59.1 54.9 ------------------------------------------------------------------------------------------------------------------------ Loss adjustment expenses 12.0 11.8 15.8 12.6 Expenses 32.7 24.3 17.9 26.8 ------------------------------------------------------------------------------------------------------------------------ EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 44.7 36.1 33.7 39.4 ------------------------------------------------------------------------------------------------------------------------ Policyholder dividends 0.2 - 0.7 0.2 ------------------------------------------------------------------------------------------------------------------------ COMBINED RATIO 93.1 96.8 93.5 94.6 ------------------------------------------------------------------------------------------------------------------------------ Catastrophe ratio 0.7 2.7 1.0 1.5 ------------------------------------------------------------------------------------------------------------------------------ COMBINED RATIO BEFORE CATASTROPHES 92.4 94.2 92.5 93.1 ------------------------------------------------------------------------------------------------------------------------------ NORTH AMERICAN NORTH BEFORE REINSURANCE REINSURANCE AMERICAN 2003 VS 2002 ---------------- ---------------- -------------------- GAAP UNDERWRITING RESULTS Written premiums $ 16 $ 2,163 9% Change in reserve (40) (98) NM -------------------------------------------------------------------------------------- -------------------- Earned premiums 56 2,261 13% Loss and loss adjustment expenses 57 1,547 11% Underwriting expenses 18 609 8% Dividends to policyholders - 5 (71%) Other adjustments 1 19 (47%) -------------------------------------------------------------------------------------- -------------------- UNDERWRITING RESULTS $ (20) $ 81 NM -------------------------------------------------------------------------------------------- -------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 80.8 55.5 2.1 -------------------------------------------------------------------------------------- -------------------- Loss adjustment expenses 24.0 12.9 (0.7) Expenses 30.7 26.9 1.4 -------------------------------------------------------------------------------------- -------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 54.7 39.8 0.7 -------------------------------------------------------------------------------------- -------------------- Policyholder dividends - 0.2 0.6 -------------------------------------------------------------------------------------- -------------------- COMBINED RATIO 135.4 95.6 3.4 -------------------------------------------------------------------------------------------- -------------------- Catastrophe ratio (5.7) 1.3 (0.7) -------------------------------------------------------------------------------------------- -------------------- COMBINED RATIO BEFORE CATASTROPHES 141.1 94.2 4.1 -------------------------------------------------------------------------------------------- --------------------
PC-3
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY NORTH AMERICAN CONSOLIDATING UNDERWRITING RESULTS FOR THE YEAR ENDED DECEMBER 31, 2003 NORTH AMERICAN BUSINESS PERSONAL SPECIALTY BEFORE INSURANCE LINES COMMERCIAL REINSURANCE ---------------- ---------------- ---------------- ---------------- GAAP UNDERWRITING RESULTS Written premiums $ 3,957 $ 3,272 $ 1,612 $ 8,841 Change in reserve 261 91 54 406 -------------------------------------------------------------------------------------------------------------------------- Earned premiums 3,696 3,181 1,558 8,435 Loss and loss adjustment expenses 2,340 2,318 1,182 5,840 Underwriting expenses 1,174 733 356 2,263 Dividends to policyholders 24 - 10 34 Other adjustments 57 13 39 109 -------------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ 101 $ 117 $ (29) $ 189 -------------------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 50.8 61.6 62.5 57.0 -------------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 12.5 11.3 13.3 12.2 Expenses 31.8 23.0 22.9 26.8 -------------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 44.3 34.4 36.2 39.1 -------------------------------------------------------------------------------------------------------------------------- Policyholder dividends 0.6 - 0.7 0.4 -------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 95.7 95.9 99.3 96.5 -------------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 2.7 4.1 1.7 3.1 -------------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 93.0 91.8 97.6 93.4 -------------------------------------------------------------------------------------------------------------------------------- NORTH AMERICAN NORTH BEFORE REINSURANCE REINSURANCE AMERICAN 2003 VS 2002 ---------------- ---------------- ------------------- GAAP UNDERWRITING RESULTS Written premiums $ 210 $ 9,051 13% Change in reserve (142) 264 (17%) ------------------------------------------------------------------------------------- ------------------- Earned premiums 352 8,787 15% Loss and loss adjustment expenses 381 6,221 14% Underwriting expenses 95 2,358 9% Dividends to policyholders - 34 (40%) Other adjustments 1 110 16% ------------------------------------------------------------------------------------- ------------------- UNDERWRITING RESULTS $ (125) $ 64 NM ------------------------------------------------------------------------------------------- ------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 98.2 58.7 1.1 ------------------------------------------------------------------------------------- ------------------- Loss adjustment expenses 10.2 12.1 (0.4) Expenses 26.9 26.8 1.5 ------------------------------------------------------------------------------------- ------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 37.1 39.0 1.1 ------------------------------------------------------------------------------------- ------------------- Policyholder dividends - 0.4 0.4 ------------------------------------------------------------------------------------- ------------------- COMBINED RATIO 135.3 98.0 2.6 ------------------------------------------------------------------------------------------- ------------------- Catastrophe ratio 1.4 3.0 (1.7) ------------------------------------------------------------------------------------------- ------------------- COMBINED RATIO BEFORE CATASTROPHES 133.8 95.0 4.2 ------------------------------------------------------------------------------------------- -------------------
PC-4
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY BUSINESS INSURANCE UNDERWRITING RESULTS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ---------- ---------- ---------- ---------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 885 $ 990 $ 974 $ 987 $ 1,006 Change in reserve 52 110 77 40 34 ------------------------------------------------------------------------------------------------------------- Earned premiums 833 880 897 947 972 Loss and loss adjustment expenses 510 598 561 595 586 Underwriting expenses 271 268 279 310 317 Dividends to policyholders 13 7 7 8 2 Other adjustments 12 19 8 14 16 ------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ 27 $(12) $ 42 $ 20 $ 51 ------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 48.2 55.0 49.8 50.6 48.2 ------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 13.0 12.9 12.8 12.4 12.0 Expenses 32.6 30.5 31.0 32.7 32.7 ------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 45.6 43.4 43.8 45.1 44.7 ------------------------------------------------------------------------------------------------------------- Policyholder dividends 1.6 0.8 0.8 0.8 0.2 ------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 95.4 99.2 94.4 96.4 93.1 ------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 0.4 4.6 2.5 3.2 0.7 ------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 95.0 94.6 91.9 93.3 92.4 ------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ---------- --------- ---------- ---------- GAAP UNDERWRITING RESULTS Written premiums 14% 2% $ 3,412 $ 3,957 16% Change in reserve (35%) (15%) 286 261 (9%) ---------------------------------------------------------------------------------------------------------------- Earned premiums 17% 3% 3,126 3,696 18% Loss and loss adjustment expenses 15% (2%) 1,962 2,340 19% Underwriting expenses 17% 2% 1,022 1,174 15% Dividends to policyholders (85%) (75%) 48 24 (50%) Other adjustments 33% 14% 50 57 14% ---------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS 89% 155% $ 44 $ 101 130% ---------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES - 2.4 50.7 50.8 (0.1) ---------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 1.0 0.4 12.0 12.5 (0.5) Expenses (0.1) - 32.7 31.8 0.9 ---------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 0.9 0.4 44.7 44.3 0.4 ---------------------------------------------------------------------------------------------------------------- Policyholder dividends 1.4 0.6 1.5 0.6 0.9 ---------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 2.3 3.3 97.0 95.7 1.3 ---------------------------------------------------------------------------------------------------------------------- Catastrophe ratio (0.3) 2.5 0.8 2.7 (1.9) ---------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 2.6 0.9 96.2 93.0 3.2 ----------------------------------------------------------------------------------------------------------------------
PC-5
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY BUSINESS INSURANCE WRITTEN AND EARNED PREMIUMS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ---------- ---------- ---------- ---------- ------------ WRITTEN PREMIUMS [1] Small Commercial $ 440 $ 480 $ 459 $ 454 $ 469 Middle Market 445 510 515 533 537 ------------------------------------------------------------------------------------------------------------------ TOTAL $ 885 $ 990 $ 974 $ 987 $1,006 EARNED PREMIUMS [1] Small Commercial $ 413 $ 430 $ 442 $ 449 $ 461 Middle Market 420 450 455 498 511 ------------------------------------------------------------------------------------------------------------------ TOTAL $ 833 $ 880 $ 897 $ 947 $ 972 ------------------------------------------------------------------------------------------------------------------ YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ------------------------------------ CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ------------ ------------ --------- WRITTEN PREMIUMS [1] Small Commercial 7% 3% $ 1,678 $ 1,862 11% Middle Market 21% 1% 1,734 2,095 21% ---------------------------------------------------------------------------------------------------------------------- TOTAL 14% 2% $3,412 $3,957 16% EARNED PREMIUMS [1] Small Commercial 12% 3% $ 1,555 $ 1,782 15% Middle Market 22% 3% 1,571 1,914 22% ---------------------------------------------------------------------------------------------------------------------- TOTAL 17% 3% $3,126 $3,696 18% ---------------------------------------------------------------------------------------------------------------------- [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 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ---------- ---------- ---------- ---------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 756 $ 770 $ 854 $ 845 $ 803 Change in reserve (10) (2) 69 40 (16) ------------------------------------------------------------------------------------------------------------- Earned premiums 766 772 785 805 819 Loss and loss adjustment expenses 584 540 602 583 593 Underwriting expenses 176 176 175 182 200 Dividends to policyholders - - - - - Other adjustments 4 4 5 3 1 ------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ 2 $ 52 $ 3 $ 37 $ 25 ------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 64.8 58.4 65.6 61.4 60.8 ------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 11.4 11.3 11.3 11.0 11.8 Expenses 22.9 23.0 22.2 22.6 24.3 ------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 34.3 34.2 33.5 33.6 36.1 ------------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - ------------------------------------------------------------------------------------------------------------- COMBINED RATIO 99.2 92.7 99.0 95.1 96.8 ------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 1.0 1.4 8.2 4.2 2.7 ------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 98.1 91.3 90.8 90.8 94.2 ------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- GAAP COMBINED RATIO Automobile 104.6 96.1 98.0 95.9 101.9 Homeowners 80.6 80.8 102.9 92.1 80.1 ------------------------------------------------------------------------------------------------------------- TOTAL 99.2 92.7 99.0 95.1 96.8 ------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ----------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ---------- ----------- ------------ --------- GAAP UNDERWRITING RESULTS Written premiums 6% (5%) $ 3,050 $ 3,272 7% Change in reserve (60%) NM 66 91 38% ------------------------------------------------------------------------------------------------------------------- Earned premiums 7% 2% 2,984 3,181 7% Loss and loss adjustment expenses 2% 2% 2,319 2,318 - Underwriting expenses 14% 10% 696 733 5% Dividends to policyholders - - - - - Other adjustments (75%) (67%) 15 13 (13%) ------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS NM (32%) $ (46) $ 117 NM ------------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 4.0 0.6 66.1 61.6 4.5 ------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses (0.4) (0.8) 11.6 11.3 0.3 Expenses (1.4) (1.7) 23.3 23.0 0.3 ------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES (1.8) (2.5) 35.0 34.4 0.6 ------------------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - ------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 2.4 (1.7) 101.0 95.9 5.1 ------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio (1.7) 1.5 2.5 4.1 (1.6) ------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 3.9 (3.4) 98.6 91.8 6.8 ------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------- GAAP COMBINED RATIO Automobile 2.7 (6.0) 103.1 98.0 5.1 Homeowners 0.5 12.0 93.8 88.8 5.0 ------------------------------------------------------------------------------------------------------------------- TOTAL 2.4 (1.7) 101.0 95.9 5.1 -------------------------------------------------------------------------------------------------------------------------
PC-7
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY PERSONAL LINES WRITTEN AND EARNED PREMIUMS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ---------- ---------- ---------- ---------- --------- BUSINESS UNIT WRITTEN PREMIUMS [1] AARP $ 455 $ 475 $ 550 $ 537 $ 504 Other Affinity 42 42 36 35 35 Agency 197 186 201 212 205 Omni 62 67 67 61 59 -------------------------------------------------------------------------------- TOTAL $ 756 $ 770 $ 854 $ 845 $ 803 EARNED PREMIUMS [1] AARP $ 457 $ 466 $ 481 $ 499 $ 510 Other Affinity 45 44 41 40 38 Agency 200 199 198 202 208 Omni 64 63 65 64 63 -------------------------------------------------------------------------------- TOTAL $ 766 $ 772 $ 785 $ 805 $ 819 -------------------------------------------------------------------------------------- PRODUCT LINE WRITTEN PREMIUMS [1] Automobile $ 578 $ 609 $ 656 $ 632 $ 611 Homeowners 178 161 198 213 192 -------------------------------------------------------------------------------- TOTAL $ 756 $ 770 $ 854 $ 845 $ 803 EARNED PREMIUMS [1] Automobile $ 594 $ 598 $ 610 $ 620 $ 630 Homeowners 172 174 175 185 189 -------------------------------------------------------------------------------- TOTAL $ 766 $ 772 $ 785 $ 805 $ 819 -------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ----------------------------------- CHANGE CHANGE 2002 2003 CHANGE ---------- ----------- ------------ ------------ -------- BUSINESS UNIT WRITTEN PREMIUMS [1] AARP 11% (6%) $ 1,855 $ 2,066 11% Other Affinity (17%) - 179 148 (17%) Agency 4% (3%) 756 804 6% Omni (5%) (3%) 260 254 (2%) -------------------------------------------------------------------------------------- TOTAL 6% (5%) $3,050 $3,272 7% EARNED PREMIUMS [1] AARP 12% 2% $ 1,747 $ 1,956 12% Other Affinity (16%) (5%) 192 163 (15%) Agency 4% 3% 794 807 2% Omni (2%) (2%) 251 255 2% -------------------------------------------------------------------------------------- TOTAL 7% 2% $2,984 $3,181 7% -------------------------------------------------------------------------------------------- PRODUCT LINE WRITTEN PREMIUMS [1] Automobile 6% (3%) $ 2,352 $ 2,508 7% Homeowners 8% (10%) 698 764 9% -------------------------------------------------------------------------------------- TOTAL 6% (5%) $3,050 $3,272 7% EARNED PREMIUMS [1] Automobile 6% 2% $ 2,326 $ 2,458 6% Homeowners 10% 2% 658 723 10% -------------------------------------------------------------------------------------- TOTAL 7% 2% $2,984 $3,181 7% -------------------------------------------------------------------------------------------- [1] The difference between written premiums and earned premiums is attributable to the change in unearned premium reserve.
PC-8
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY SPECIALTY COMMERCIAL UNDERWRITING RESULTS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ------------ ---------- ---------- ----------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 334 $ 406 $ 399 $ 469 $ 338 Change in reserve (18) 51 44 35 (76) --------------------------------------------------------------------------------------------------------------- Earned premiums 352 355 355 434 414 Loss and loss adjustment expenses 252 265 240 366 311 Underwriting expenses 102 82 88 112 74 Dividends to policyholders 4 3 2 2 3 Other adjustments 18 5 29 4 1 --------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $ (24) $ - $ (4) $ (50) $ 25 --------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 61.0 60.3 56.4 72.6 59.1 --------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 10.4 14.9 10.7 11.7 15.8 Expenses 29.1 22.6 25.3 25.9 17.9 --------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 39.5 37.4 36.0 37.6 33.7 --------------------------------------------------------------------------------------------------------------- Policyholder dividends 1.0 0.7 0.7 0.6 0.7 --------------------------------------------------------------------------------------------------------------- COMBINED RATIO 101.5 98.4 93.2 110.7 93.5 --------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 1.0 0.9 2.5 2.5 1.0 --------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 100.5 97.5 90.7 108.2 92.5 --------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ---------- ---------- -------- GAAP UNDERWRITING RESULTS Written premiums 1% (28%) $ 1,362 $ 1,612 18% Change in reserve NM NM 140 54 (61%) -------------------------------------------------------------------------------------------------------------- Earned premiums 18% (5%) 1,222 1,558 27% Loss and loss adjustment expenses 23% (15%) 849 1,182 39% Underwriting expenses (27%) (34%) 358 356 (1%) Dividends to policyholders (25%) 50% 9 10 11% Other adjustments (94%) (75%) 29 39 34% -------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS NM NM $(23) $(29) (26%) -------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 1.9 13.5 57.6 62.5 (4.9) -------------------------------------------------------------------------------------------------------------- Loss adjustment expenses (5.4) (4.1) 11.8 13.3 (1.5) Expenses 11.2 8.0 29.3 22.9 6.4 -------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 5.8 3.9 41.1 36.2 4.9 -------------------------------------------------------------------------------------------------------------- Policyholder dividends 0.3 (0.1) 0.7 0.7 - -------------------------------------------------------------------------------------------------------------- COMBINED RATIO 8.0 17.2 99.4 99.3 0.1 -------------------------------------------------------------------------------------------------------------------- Catastrophe ratio - 1.5 0.5 1.7 (1.2) -------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 8.0 15.7 98.9 97.6 1.3 --------------------------------------------------------------------------------------------------------------------
PC-9
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY SPECIALTY COMMERCIAL WRITTEN AND EARNED PREMIUMS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ---------- ---------- ---------- ---------- ---------- WRITTEN PREMIUMS [1] Property $ 70 $ 97 $ 116 $ 147 $ 80 Casualty 128 187 149 179 155 Bond 38 45 36 42 39 Professional Liability 75 65 78 93 88 Other 23 12 20 8 (24) ----------------------------------------------------------------------------------- TOTAL $ 334 $ 406 $ 399 $ 469 $ 338 EARNED PREMIUMS [1] Property $ 95 $ 89 $ 96 $ 140 $ 104 Casualty 145 148 141 165 161 Bond 38 42 35 33 42 Professional Liability 55 64 72 77 83 Other 19 12 11 19 24 ----------------------------------------------------------------------------------- TOTAL $ 352 $ 355 $ 355 $ 434 $ 414 ----------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER -------------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ------------ ------------ ----------- WRITTEN PREMIUMS [1] Property 14% (46%) $ 405 $ 440 9% Casualty 21% (13%) 556 670 21% Bond 3% (7%) 157 162 3% Professional Liability 17% (5%) 239 324 36% Other NM NM 5 16 NM -------------------------------------------------------------------------------------------- TOTAL 1% (28%) $1,362 $1,612 18% EARNED PREMIUMS [1] Property 9% (26%) $ 346 $ 429 24% Casualty 11% (2%) 498 615 23% Bond 11% 27% 148 152 3% Professional Liability 51% 8% 200 296 48% Other 26% 26% 30 66 120% -------------------------------------------------------------------------------------------- TOTAL 18% (5%) $1,222 $1,558 27% -------------------------------------------------------------------------------------------- [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 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ------------ ------------ ------------ ----------- ------------ GAAP UNDERWRITING RESULTS Written premiums $ 153 $ 274 $ (99) $ 19 $ 16 Change in reserve (39) 123 (162) (63) (40) ---------------------------------------------------------------------------------------------------------------------- Earned premiums 192 151 63 82 56 Loss and loss adjustment expenses 175 129 122 73 57 Underwriting expenses 56 40 18 19 18 Dividends to policyholders - - - - - Other adjustments 3 1 (1) - 1 ---------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS [1] $ (42) $ (19) $ (76) $ (10) $ (20) ---------------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 85.5 80.5 178.8 82.0 80.8 ---------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses 5.6 5.6 14.5 5.8 24.0 Expenses 29.5 26.4 29.4 23.5 30.7 ---------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES 35.1 32.0 44.0 29.3 54.7 ---------------------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - ---------------------------------------------------------------------------------------------------------------------- COMBINED RATIO 120.6 112.5 222.8 111.3 135.4 ---------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 0.7 1.5 5.6 3.0 (5.7) ---------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES 119.9 111.0 217.1 108.2 141.1 ---------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER -------------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ------------ ------------ ------------ GAAP UNDERWRITING RESULTS Written premiums (90%) (16%) $ 703 $ 210 (70%) Change in reserve (3%) 37% (10) (142) NM ---------------------------------------------------------------------------------------------------------------------- Earned premiums (71%) (32%) 713 352 (51%) Loss and loss adjustment expenses (67%) (22%) 569 381 (33%) Underwriting expenses (68%) (5%) 200 95 (53%) Dividends to policyholders - - - - - Other adjustments (67%) - 3 1 (67%) ---------------------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS [1] 52% (100%) $ (59) $(125) (112%) ---------------------------------------------------------------------------------------------------------------------------- GAAP UNDERWRITING RATIOS LOSS RATIO EXCLUDING LOSS ADJUSTMENT EXPENSES 4.7 1.2 74.9 98.2 (23.3) ---------------------------------------------------------------------------------------------------------------------- Loss adjustment expenses (18.4) (18.2) 4.9 10.2 (5.3) Expenses (1.2) (7.2) 28.0 26.9 1.1 ---------------------------------------------------------------------------------------------------------------------- EXPENSE RATIO INCLUDING LOSS ADJUSTMENT EXPENSES (19.6) (25.4) 33.0 37.1 (4.1) ---------------------------------------------------------------------------------------------------------------------- Policyholder dividends - - - - - ---------------------------------------------------------------------------------------------------------------------- COMBINED RATIO (14.8) (24.1) 107.9 135.3 (27.4) ---------------------------------------------------------------------------------------------------------------------------- Catastrophe ratio 6.4 8.7 0.7 1.4 (0.7) ---------------------------------------------------------------------------------------------------------------------------- COMBINED RATIO BEFORE CATASTROPHES (21.2) (32.9) 107.2 133.8 (26.6) ---------------------------------------------------------------------------------------------------------------------------- [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 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ---------- ---------- ---------- ---------- ---------- WRITTEN PREMIUMS [1] Traditional Reinsurance $ 150 $ 240 $ (101) $ 17 $ (2) Alternative Risk Transfer (ART) 3 34 2 2 18 ------------------------------------------------------------------------------------------- TOTAL $ 153 $ 274 $(99) $ 19 $ 16 EARNED PREMIUMS [1] Traditional Reinsurance $ 171 $ 135 $ 56 $ 70 $ 38 Alternative Risk Transfer (ART) 21 16 7 12 18 ------------------------------------------------------------------------------------------- TOTAL $ 192 $ 151 $ 63 $ 82 $ 56 ------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER --------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ----------- ---------- ---------- ---------- WRITTEN PREMIUMS [1] Traditional Reinsurance NM NM $ 618 $ 154 (75%) Alternative Risk Transfer (ART) NM NM 85 56 (34%) ----------------------------------------------------------------------------------------------- TOTAL (90%) (16%) $ 703 $ 210 (70%) EARNED PREMIUMS [1] Traditional Reinsurance (78%) (46%) $ 621 $ 299 (52%) Alternative Risk Transfer (ART) (14%) 50% 92 53 (42%) ----------------------------------------------------------------------------------------------- TOTAL (71%) (32%) $ 713 $ 352 (51%) ----------------------------------------------------------------------------------------------- [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) 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 -------------- --------------- -------------- --------------- ------------- WRITTEN PRICE INCREASES Business Insurance 16% 13% 10% 9% 6% Personal Lines Automobile 11% 10% 8% 6% 7% Personal Lines Homeowners 17% 14% 14% 14% 11% PREMIUM RETENTION Business Insurance 89% 90% 89% 85% 84% Personal Lines Automobile 91% 90% 94% 91% 88% Personal Lines Homeowners 101% 103% 103% 101% 98% NEW BUSINESS % TO NET WRITTEN PREMIUM Business Insurance 26% 26% 27% 25% 26% Personal Lines Automobile 13% 13% 13% 15% 17% Personal Lines Homeowners 10% 8% 10% 11% 12%
PC-13
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY STATUTORY SURPLUS TO GAAP STOCKHOLDERS' EQUITY RECONCILIATION SEPTEMBER 30, 2003 DECEMBER 31, 2002 --------------------- -------------------- Statutory Capital and Surplus $ 5,578 $ 4,871 GAAP Adjustments Investment in subsidiaries/Capital contributions (1,643) (1,543) Goodwill 152 153 Non-admitted assets/Statutory reserves 522 1,398 Deferred policy acquisition costs 981 930 Unrealized gains on investments, net of impairments 811 673 Deferred taxes 212 (138) Benefit reserves (165) (194) Consolidation/Corporate eliminations (137) (785) Other, net (672) (395) ------------------------------------------------------------------------------------------------------------------------ GAAP Stockholders' Equity $ 5,639 $ 4,970 ------------------------------------------------------------------------------------------------------------------------
PC-14
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OTHER OPERATIONS UNDERWRITING RESULTS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 --------- -------------- --------- --------- ---------- GAAP UNDERWRITING RESULTS Written premiums $ 9 $ 7 $ 6 $ (2) $ 3 Change in reserve (2) (1) - (2) (1) ------------------------------------------------------------------------------------------------- Earned premiums 11 8 6 - 4 Loss and loss adjustment expenses 34 2,629 16 5 55 Underwriting expenses 12 12 2 7 8 ------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS $(35) $(2,633) $(12) $(12) $(59) ------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER -------------------------------------- CHANGE CHANGE 2002 2003 CHANGE ----------- ---------- -------------- ------------- -------- GAAP UNDERWRITING RESULTS Written premiums (67%) NM $ 57 $ 14 (75%) Change in reserve 50% 50% (12) (4) 67% ------------------------------------------------------------------------------------------------------- Earned premiums (64%) - 69 18 (74%) Loss and loss adjustment expenses 62% NM 171 2,705 NM Underwriting expenses (33%) 14% 62 29 (53%) ------------------------------------------------------------------------------------------------------- UNDERWRITING RESULTS (69%) NM $ (164) $(2,716) NM -------------------------------------------------------------------------------------------------------
PC-15
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OTHER OPERATIONS CLAIMS AND CLAIM ADJUSTMENT EXPENSES FOR THE FOURTH QUARTER ENDED DECEMBER 31, 2003 ASBESTOS ENVIRONMENTAL ALL OTHER [1] TOTAL ------------------ ----------------- --------------- ---------------- Beginning liability - net $ 3,601 $ 517 $ 1,195 $ 5,313 Claims and claim adjustment expenses incurred 3 (5) 60 58 Claims and claim adjustment expenses paid 35 104 22 161 Other [5] 225 - - 225 ----------------------------------------------------------------------------------------------------------------------------------- ENDING LIABILITY - NET [2] [3] $ 3,794 [4] $ 408 $ 1,233 $ 5,435 ----------------------------------------------------------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2003 Beginning liability - net $ 1,118 $ 591 $ 1,250 $ 2,959 Claims and claim adjustment expenses incurred 2,612 2 102 2,716 Claims and claim adjustment expenses paid 161 185 119 465 Other [5] 225 - - 225 ----------------------------------------------------------------------------------------------------------------------------------- ENDING LIABILITY - NET [2] [3] $ 3,794 [4] $ 408 $ 1,233 $ 5,435 ----------------------------------------------------------------------------------------------------------------------------------- [1] Includes unallocated loss adjustment expense reserves. [2] Ending liabilities include asbestos and environmental reserves reported in North American Property & Casualty of $13 and $10, respectively, as of December 31, 2003 and of $14 and $10, respectively, as of December 31, 2002. [3] Gross of reinsurance, asbestos and environmental reserves were $5,884 and $542, respectively, as of December 31, 2003 and $1,994 and $682, respectively, as of December 31, 2002. [4] As of December 31, 2003, the one year and average three year net paid amounts for asbestos claims are $161 and $124, respectively, resulting in one year and three year net survival ratios of 23.6 and 30.7 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. [5] Represents the transfer of reserves pursuant to the MacArthur settlement.
PC-16
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY SUMMARY OF GROSS ASBESTOS RESERVES AS OF DECEMBER 31, 2003 ---------------------------------------------------------------- % OF NUMBER OF ALL TIME TOTAL ASBESTOS ALL TIME ACCOUNTS[4] PAID RESERVES RESERVES ULTIMATE ---------- ----------- ----------- --------- ----------- Major asbestos defendants Structured settlements (includes 2 Wellington accounts) 5 $ 224 $ 279 5% $ 503 Wellington (direct only) 31 628 300 5% 928 Other major asbestos defendants 29 179 420 7% 599 No known policies (includes 3 Wellington accounts) 5 - - - - Accounts with future exposure > $2.5 127 415 1,354 23% 1,769 Accounts with future exposure < $2.5 826 308 111 2% 419 MacArthur Settlement 1,150 20% 1,150 Unallocated [5] - 16 936 15% 952 ----------------------------------------------------------------------------------------------------------------------------- Total direct [3] 1,770 4,550 77% 6,320 Assumed reinsurance 560 854 15% 1,414 London market 373 480 8% 853 ----------------------------------------------------------------------------------------------------------------------------- TOTAL GROSS ASBESTOS RESERVES [2] $ 2,703 $ 5,884 100% $ 8,587 ----------------------------------------------------------------------------------------------------------------------------- 3 YEAR GROSS 3 YEAR TOTAL SURVIVAL PAID LOSSES RATIO [1] ----------- ------------ (IN YEARS) Major asbestos defendants Structured settlements (includes 2 Wellington accounts) $ 93 9.0 Wellington (direct only) 177 5.1 Other major asbestos defendants 66 19.0 No known policies (includes 3 Wellington accounts) - - Accounts with future exposure > $2.5 204 20.0 Accounts with future exposure < $2.5 29 11.5 MacArthur Settlement Unallocated [5] 16 -------------------------------------------------------------------------------------- Total direct [3] 638 21.4 Assumed reinsurance 169 15.2 London market 95 15.2 -------------------------------------------------------------------------------------- TOTAL GROSS ASBESTOS RESERVES [2] 902 19.6 -------------------------------------------------------------------------------------- [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. [2] The one year gross paid amount for total asbestos claims is $319 resulting in a one year gross survival ratio of 18.4 years. [3] Three year total paid losses include payments of $53 on closed claims (not presented by category). [4] Number of accounts by category established as of December 2002. [5] Includes closed accounts, new accounts and unallocated reserves.
------------------------------------------------------------------------------------------------------------------------------------ RECONCILIATION OF GROSS ASBESTOS RESERVE FOR CEDED REINSURANCE Total gross asbestos reserves $ 5,884 Original ceded reinsurance 3,946 ------------------ ORIGINAL NET 1,938 Add: Known settlements, commutations and known insolvencies 1,579 Provision for future unrecoverable reinsurance 277 ------------------ TOTAL ENDING NET ASBESTOS RESERVES $ 3,794 ------------------------------------------------------------------------------------------------------------------------------------
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 FOURTH QUARTER ENDED DECEMBER 31, 2003 LOSS & LAE LOSS & LAE LOSS & LAE LOSS & LAE --------------- --------------- ---------------- ---------------- Gross Direct $ 66 $ 83 $ 34 $ 2 Assumed - Domestic 26 - 5 - London Market 23 (77) 8 (8) --------------------------------------------------------------------------------------------------------------------------- Total 115 6 47 (6) Ceded (80) (3) 57 1 --------------------------------------------------------------------------------------------------------------------------- NET $ 35 $ 3 $ 104 $ (5) --------------------------------------------------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 2003 Gross Direct $ 226 $ 3,113 $ 109 $ 12 Assumed - Domestic 53 585 15 (3) London Market 40 286 17 (8) --------------------------------------------------------------------------------------------------------------------------- Total 319 3,984 141 1 Ceded (158) (1,372) 44 1 --------------------------------------------------------------------------------------------------------------------------- NET $ 161 $2,612 $ 185 $ 2 ---------------------------------------------------------------------------------------------------------------------------
PC-18
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY CASUALTY UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD QUARTER ENDED DECEMBER 31, 2003 ------------------------------------------------------------------------------ BUSINESS PERSONAL SPECIALTY INSURANCE LINES COMMERCIAL REINSURANCE ---------------- ---------------- --------------------- -------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 10/1/03 - GROSS $ 5,265 $ 1,752 $ 4,915 $ 1,642 Reinsurance and other recoverables 429 44 1,800 411 ------------------------------------------------------------------------------------------------------------------------------ LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 10/1/03 - NET 4,836 1,708 3,115 1,231 Provision for unpaid claims and claim adjustment expenses Current year 592 599 304 57 Prior year (6) (6) 7 - ------------------------------------------------------------------------------------------------------------------------------ TOTAL PROVISION FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES 586 593 311 57 ------------------------------------------------------------------------------------------------------------------------------ Payments (465) (551) (300) (90) Other [1] (56) (60) (106) (3) ------------------------------------------------------------------------------------------------------------------------------ LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 12/31/03 - NET 4,901 1,690 3,020 1,195 Reinsurance and other recoverables 395 43 2,088 496 ------------------------------------------------------------------------------------------------------------------------------ LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 12/31/03 - GROSS $ 5,296 $ 1,733 $ 5,108 $ 1,691 ------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------ Earned premiums $ 972 $ 819 $ 414 $ 56 GAAP combined ratio 93.1 96.8 93.5 135.4 Loss and loss expense paid ratio 48.0 67.5 72.0 162.5 Loss and loss expense incurred ratio 60.2 72.6 74.9 104.8 Catastrophe ratio 0.7 2.7 1.0 (5.7) Prior accident year development (pts.) (0.6) (0.7) 1.7 - ------------------------------------------------------------------------------------------------------------------------------ QUARTER ENDED DECEMBER 31, 2003 -------------------------------------------------- OTHER TOTAL NAPC OPERATIONS P&C --------------- ---------------- ---------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 10/1/03 - GROSS $13,574 $ 7,870 $ 21,444 Reinsurance and other recoverables 2,684 2,580 5,264 -------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 10/1/03 - NET 10,890 5,290 16,180 Provision for unpaid claims and claim adjustment expenses Current year 1,552 - 1,552 Prior year (5) 55 50 -------------------------------------------------------------------------------------------------- TOTAL PROVISION FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES 1,547 55 1,602 -------------------------------------------------------------------------------------------------- Payments (1,406) (158) (1,564) Other [1] (225) 225 - -------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 12/31/03 - NET 10,806 5,412 16,218 Reinsurance and other recoverables 3,022 2,475 5,497 -------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 12/31/03 - GROSS $ 13,828 $ 7,887 $ 21,715 -------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------- Earned premiums $ 2,261 $ 4 $ 2,265 GAAP combined ratio 95.6 Loss and loss expense paid ratio 62.3 Loss and loss expense incurred ratio 68.4 Catastrophe ratio 1.3 Prior accident year development (pts.) (0.2) -------------------------------------------------------------------------------------------------- [1] Represents the transfer of reserves pursuant to the MacArthur settlement.
PC-19
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY CASUALTY UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD YEAR TO DATE ENDED DECEMBER 31, 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 Provision for unpaid claims and claim adjustment expenses Current year 2,346 2,324 1,130 287 Prior year (6) (6) 52 94 -------------------------------------------------------------------------------------------------------------------------------- TOTAL PROVISION FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES 2,340 2,318 1,182 381 -------------------------------------------------------------------------------------------------------------------------------- Payments (1,761) (2,211) (1,015) (409) Other [1] (56) (60) (106) (3) -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 12/31/03 - NET 4,901 1,690 3,020 1,195 Reinsurance and other recoverables 395 43 2,088 496 -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 12/31/03 - GROSS $ 5,296 $ 1,733 $ 5,108 $ 1,691 -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- Earned premiums $ 3,696 $ 3,181 $ 1,558 $ 352 GAAP combined ratio 95.7 95.9 99.3 135.3 Loss and loss expense paid ratio 47.7 69.5 65.1 116.3 Loss and loss expense incurred ratio 63.3 72.9 75.8 108.4 Catastrophe ratio 2.7 4.1 1.7 1.4 Prior accident year development (pts.) [2] (0.2) (0.2) 3.3 26.7 -------------------------------------------------------------------------------------------------------------------------------- YEAR TO DATE ENDED DECEMBER 31, 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 Provision for unpaid claims and claim adjustment expenses Current year 6,087 15 6,102 Prior year 134 2,690 2,824 ---------------------------------------------------------------------------------------------------- TOTAL PROVISION FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES 6,221 2,705 8,926 ---------------------------------------------------------------------------------------------------- Payments (5,396) (453) (5,849) Other [1] (225) 225 - ---------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 12/31/03 - NET 10,806 5,412 16,218 Reinsurance and other recoverables 3,022 2,475 5,497 ---------------------------------------------------------------------------------------------------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 12/31/03 - GROSS $ 13,828 $ 7,887 $ 21,715 ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- Earned premiums $ 8,787 $ 18 $ 8,805 GAAP combined ratio 98.0 Loss and loss expense paid ratio 61.4 Loss and loss expense incurred ratio 70.8 Catastrophe ratio 3.0 Prior accident year development (pts.) [2] 1.5 ---------------------------------------------------------------------------------------------------- [1] Represents the transfer of reserves pursuant to the MacArthur settlement. [2] 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 December 31, December 31, 2003 2002 --------------- --------------- GROSS REINSURANCE RECOVERABLE [1] Paid Loss and Loss Adjustment Expense $ 446 $ 512 Unpaid Loss and Loss Adjustment Expense 5,289 3,930 ------------------------------------------------------------------------------------------ Subtotal Gross Reinsurance Recoverable 5,735 4,442 Less: Allowance for Uncollectable Reinsurance (381) (211) ------------------------------------------------------------------------------------------ NET PROPERTY & CASUALTY REINSURANCE RECOVERABLE $5,354 $4,231 DISTRIBUTION OF NET RECOVERABLE % of % of Rated Amount Total Companies --------------- ------------------------------- Net Property & Casualty Reinsurance Recoverables $ 5,354 Less: Mandatory (Assigned Risk) Pools (446) --------------------------------------------------------------------------- NET P&C REINSURANCE RECOVERABLE EXCLUDING MANDATORY POOLS $4,908 -------------------------------------------------------------------------------- Rated A- (Excellent) or better by A.M. Best [2] $ 3,202 65.2% 91.7% Other Rated by A.M. Best 289 5.9% 8.3% ---------------------------------------------------------------------------------------------------------- Total Rated Companies 3,491 71.1% 100.0% Voluntary Pools 229 4.7% Captives 106 2.2% Other Not Rated Companies 1,082 22.0% ------------------------------------------------------------------------------------------ Total $ 4,908 100.0% ----------------------------------------------------------------------------------------------- [1] Net of commutations, settlements and known insolvencies. [2] Based on A.M. Best ratings as of December 31, 2003.
PC-21
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY AND CASUALTY CONSOLIDATED INCOME STATEMENTS 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ------------ ----------- ----------- ------------ ----------- Earned premiums $ 2,154 $ 2,166 $ 2,106 $ 2,268 $ 2,265 Net investment income [1] 284 281 286 297 308 Other revenues 99 95 113 110 110 Net realized capital gains (losses) [1] 1 (1) 212 19 23 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES 2,538 2,541 2,717 2,694 2,706 Benefits, claims and claim adjustment expenses [2] 1,555 4,161 1,541 1,622 1,602 Amortization of deferred policy acquisition costs 403 401 382 431 428 Insurance operating costs and expenses 268 216 230 230 213 Other expenses [3] 147 132 189 143 161 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL BENEFITS AND EXPENSES 2,373 4,910 2,342 2,426 2,404 Income (loss) before income taxes 165 (2,369) 375 268 302 Income tax expense (benefit) 24 (856) 98 66 79 ------------------------------------------------------------------------------------------------------------------------------------ NET INCOME (LOSS) [4] 141 (1,513) 277 202 223 Less: Net realized capital gains (losses), after-tax [1] 1 - 138 12 15 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] 2 3 3 3 3 ------------------------------------------------------------------------------------------------------------------------------------ OPERATING INCOME (LOSS) [3] [4] $ 142 $(1,510) $ 142 $ 193 $ 211 Total Property & Casualty effective tax rate - net income 15.0% NM 26.3% 24.2% 26.2% Total Property & Casualty effective tax rate - operating income 15.1% NM 15.7% 23.6% 25.6% ------------------------------------------------------------------------------------------------------------------------------------ YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ------------------------------------ CHANGE CHANGE 2002 2003 CHANGE ---------- --------- ------------ ------------ ---------- Earned premiums 5% - $ 8,114 $ 8,805 9% Net investment income [1] 8% 4% 1,060 1,172 11% Other revenues 11% - 356 428 20% Net realized capital gains (losses) [1] NM 21% (68) 253 NM --------------------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 7% - 9,462 10,658 13% Benefits, claims and claim adjustment expenses [2] 3% (1%) 5,870 8,926 52% Amortization of deferred policy acquisition costs 6% (1%) 1,613 1,642 2% Insurance operating costs and expenses (21%) (7%) 879 889 1% Other expenses [3] 10% 13% 559 625 12% --------------------------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 1% (1%) 8,921 12,082 35% Income (loss) before income taxes 83% 13% 541 (1,424) NM Income tax expense (benefit) NM 20% 72 (613) NM --------------------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) [4] 58% 10% 469 (811) NM Less: Net realized capital gains (losses), after-tax [1] NM 25% (44) 165 NM Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] 50% - 10 12 20% --------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) [3] [4] 49% 9% $ 523 $ (964) NM Total Property & Casualty effective tax rate - net income 11.2 2.0 13.2% NM NM Total Property & Casualty effective tax rate - operating income 10.5 2.0 16.1% NM NM --------------------------------------------------------------------------------------------------------------------------------- [1] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses). [2] The quarter ended March 31, 2003 includes the before-tax impact of 2003 asbestos reserve addition of $2,604. [3] The quarter ended June 30, 2003 includes severance costs of $41 before-tax and $27 after-tax. [4] The quarter ended March 31, 2003 includes the after-tax impact of 2003 asbestos reserve addition of $1,701.
PC-22
THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY CASUALTY CONSOLIDATED BALANCE SHEETS 4Q 1Q 2Q 3Q 2002 2003 2003 2003 --------------- --------------- -------------- -------------- Investments Fixed maturities, available for sale, at fair value $ 19,446 $ 20,384 $ 22,820 $ 23,565 Equity securities, available for sale, at fair value 459 209 219 215 Other investments 668 636 556 644 -------------------------------------------------------------------------------------------------------------------------- Total investments 20,573 21,229 23,595 24,424 Cash 198 366 239 203 Premiums receivable and agents' balances 2,403 2,521 2,630 2,626 Reinsurance recoverables 4,231 5,635 5,396 5,529 Deferred policy acquisition costs 930 994 987 981 Deferred income tax 610 1,408 1,107 1,136 Goodwill 153 153 153 152 Other assets 2,031 2,167 2,664 2,050 -------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 31,129 $ 34,473 $ 36,771 $ 37,101 -------------------------------------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $ 17,091 $ 21,212 $ 21,068 $ 21,444 Unearned premiums 3,942 4,246 4,410 4,504 Debt [1] 2,187 2,188 2,015 2,001 Other liabilities 2,939 3,383 3,735 3,513 -------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 26,159 31,029 31,228 31,462 -------------------------------------------------------------------------------------------------------------------------- Equity, x-AOCI, net of tax 4,262 2,663 4,590 4,899 AOCI, net of tax 708 781 953 740 -------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 4,970 3,444 5,543 5,639 -------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,129 $ 34,473 $ 36,771 $ 37,101 -------------------------------------------------------------------------------------------------------------------------- Hartford Fire NAIC RBC 390% -------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR SEQUENTIAL 4Q QUARTER QUARTER 2003 CHANGE CHANGE --------------- ------------ ----------- Investments Fixed maturities, available for sale, at fair value $ 23,715 22% 1% Equity securities, available for sale, at fair value 208 (55%) (3%) Other investments 682 2% 6% --------------------------------------------------------------------------------------------------- Total investments 24,605 20% 1% Cash 197 (1%) (3%) Premiums receivable and agents' balances 2,750 14% 5% Reinsurance recoverables 5,354 27% (3%) Deferred policy acquisition costs 975 5% (1%) Deferred income tax 1,101 80% (3%) Goodwill 152 (1%) - Other assets 2,025 - (1%) --------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 37,159 19% - --------------------------------------------------------------------------------------------------- Future policy benefits, unpaid claims and claim adjustment expenses $ 21,715 27% 1% Unearned premiums 4,372 11% (3%) Debt [1] 1,993 (9%) - Other liabilities 3,285 12% (6%) --------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 31,365 20% - --------------------------------------------------------------------------------------------------- Equity, x-AOCI, net of tax 5,087 19% 4% AOCI, net of tax 707 - (4%) --------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 5,794 17% 3% --------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 37,159 19% - --------------------------------------------------------------------------------------------------- Hartford Fire NAIC RBC --------------------------------------------------------------------------------------------------- [1] Includes junior subordinated debentures.
PC-23 INVESTMENTS
THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL ACCOUNT INVESTMENT EARNINGS BEFORE-TAX CONSOLIDATED 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 --------- --------- --------- --------- --------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 532 $ 538 $ 565 $ 580 $ 611 Tax-exempt 132 133 130 122 121 ------------------------------------------------------------------------------------------------------------------------ Total fixed maturities 664 671 695 702 732 Equities 9 8 7 7 5 Mortgage loans 10 9 9 9 11 Real estate - 1 1 - 1 Policy loans 58 58 54 51 47 Limited partnerships 26 12 11 22 10 Other [2] 28 40 30 33 41 ------------------------------------------------------------------------------------------------------------------------ Subtotal 795 799 807 824 847 Less investment expense 12 11 11 10 12 ------------------------------------------------------------------------------------------------------------------------ TOTAL NET INVESTMENT INCOME [2] $783 $788 $796 $814 $835 ------------------------------------------------------------------------------------------------------------------------ Investment yield, pre-tax [3] 6.1% 6.0% 5.7% 5.6% 5.7% Investment yield, after-tax [3] 4.3% 4.2% 4.0% 3.9% 3.9% NET REALIZED CAPITAL GAINS (LOSSES) Fixed maturities $ (27) $ (9) $ 250 $ - $ 15 Equities (45) (49) (5) 5 20 Real estate (1) - - - - Periodic net coupon settlements on non-qualifying derivatives [2] 9 8 14 11 11 GMWB derivatives, net [4] - - - - 6 Other [5] 6 5 12 7 (8) ------------------------------------------------------------------------------------------------------------------------ TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] $ (58) $ (45) $271 $23 $44 ------------------------------------------------------------------------------------------------------------------------ Gross gains on sale [5] $ 148 $ 137 $ 303 $ 132 $ 92 Gross losses on sale (93) (107) (24) (80) (9) Impairments (126) (89) (27) (29) (55) Periodic net coupon settlements on non-qualifying derivatives [2] 9 8 14 11 11 GMWB derivatives, net [4] - - - - 6 Other net gain (loss) [6] 4 6 5 (11) (1) ------------------------------------------------------------------------------------------------------------------------ TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] $ (58) $ (45) $271 $23 $44 ------------------------------------------------------------------------------------------------------------------------ YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER -------------------------------------- CHANGE CHANGE 2002 2003 CHANGE --------- --------- ------------- ------------- ------- NET INVESTMENT INCOME Fixed maturities [1] Taxable 15% 5% $ 1,987 $ 2,294 15% Tax-exempt (8%) (1%) 523 506 (3%) ----------------------------------------------------------------------------------------------------------------------------------- Total fixed maturities 10% 4% 2,510 2,800 12% Equities (44%) (29%) 36 27 (25%) Mortgage loans 10% 22% 31 38 23% Real estate - - 2 3 50% Policy loans (19%) (8%) 254 210 (17%) Limited partnerships (62%) (55%) 34 55 62% Other [2] 46% 24% 105 144 37% ----------------------------------------------------------------------------------------------------------------------------------- Subtotal 7% 3% 2,972 3,277 10% Less investment expense - (20%) 43 44 (2%) ----------------------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME [2] 7% 3% $ 2,929 $ 3,233 10% ----------------------------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax [3] (0.4) 0.1 6.0% 5.8% (0.2) Investment yield, after-tax [3] (0.4) - 4.3% 4.1% (0.2) NET REALIZED CAPITAL GAINS (LOSSES) Fixed maturities NM - $ (377) $ 256 NM Equities NM NM (42) (29) 31% Real estate 100% - 2 - (100%) Periodic net coupon settlements on non-qualifying derivatives [2] 22% - 24 44 83% GMWB derivatives, net [4] - - - 6 - Other [5] NM NM 17 16 (6%) ----------------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] NM 91% $ (376) $ 293 NM ----------------------------------------------------------------------------------------------------------------------------------- Gross gains on sale [5] (38%) (30%) $ 457 $ 664 45% Gross losses on sale 90% 89% (293) (220) 25% Impairments 56% (90%) (579) (200) 65% Periodic net coupon settlements on non-qualifying derivatives [2] 22% - 24 44 83% GMWB derivatives, net [4] - - - 6 - Other net gain (loss) [6] NM 91% 15 (1) NM ----------------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] NM 91% $ (376) $ 293 NM ----------------------------------------------------------------------------------------------------------------------------------- [1] Includes income on short-term bonds. [2] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses). [3] The investment yield calculation excludes the assets received in the CNA purchase and the collaterial received associated with the securities lending program. [4] Fourth quarter net gains on GMWB derivatives are due principally to an approximately $4 gain associated with international funds for which hedge positions were initiated in the first quarter of 2004 and $2 due to modeling refinements to improve valuation estimates. Ineffectiveness on S&P 500 and NASDAQ economic hedge positions for the quarter was not significant. [5] Includes a gain of $23 associated with the sale of Trumbull Associates, LLC in the third quarter 2003. [6] Primarily consists of changes in fair value and hedge ineffectiveness on derivative instruments.
I-1
THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL ACCOUNT INVESTMENT EARNINGS BEFORE-TAX LIFE 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 --------- --------- --------- --------- --------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 370 $ 379 $ 392 $ 396 $ 408 Tax-exempt 25 25 25 24 24 ------------------------------------------------------------------------------------------------------------------------- Total fixed maturities 395 404 417 420 432 Equities 5 5 5 4 4 Mortgage loans 6 5 5 6 7 Real estate - - - - - Policy loans 58 58 54 51 47 Limited partnerships 14 8 7 11 6 Other [2] 21 29 22 25 32 ------------------------------------------------------------------------------------------------------------------------- Subtotal 499 509 510 517 528 Less investment expense 6 6 6 5 6 ------------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME [2] $493 $503 $504 $512 $522 ------------------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax [3] 6.2% 6.1% 5.8% 5.8% 5.8% Investment yield, after-tax [3] 4.1% 4.1% 3.9% 3.9% 3.9% NET REALIZED CAPITAL GAINS (LOSSES) Fixed maturities $ (69) $ (31) $ 52 $ 3 $ (4) Equities (3) (26) (3) 5 17 Real estate - - - - - Periodic net coupon settlements on non-qualifying derivatives [2] 5 4 9 6 7 GMWB derivatives, net [4] - - - - 6 Other [5] 8 9 1 (10) (5) ------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] $ (59) $ (44) $59 $ 4 $21 ------------------------------------------------------------------------------------------------------------------------- Gross gains on sale $ 57 $ 57 $ 91 $ 61 $ 58 Gross losses on sale (37) (47) (17) (31) - Impairments (89) (67) (17) (27) (51) Periodic net coupon settlements on non-qualifying derivatives [2] 5 4 9 6 7 GMWB derivatives, net [4] - - - - 6 Other net gain (loss) [5] 5 9 (7) (5) 1 ------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] $ (59) $ (44) $59 $ 4 $21 ------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER ------------------------------------- CHANGE CHANGE 2002 2003 CHANGE --------- --------- ------------ ------------ -------- NET INVESTMENT INCOME Fixed maturities [1] Taxable 10% 3% $ 1,394 $ 1,575 13% Tax-exempt (4%) - 91 98 8% ---------------------------------------------------------------------------------------------------------------------------------- Total fixed maturities 9% 3% 1,485 1,673 13% Equities (20%) - 19 18 (5%) Mortgage loans 17% 17% 22 23 5% Real estate - - - - - Policy loans (19%) (8%) 254 210 (17%) Limited partnerships (57%) (45%) 6 32 NM Other [2] 52% 28% 84 108 29% ---------------------------------------------------------------------------------------------------------------------------------- Subtotal 6% 2% 1,870 2,064 10% Less investment expense - (20%) 21 23 (10%) ---------------------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME [2] 6% 2% $ 1,849 $ 2,041 10% ---------------------------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax [3] (0.4) - 6.1% 6.0% (0.1) Investment yield, after-tax [3] (0.2) - 4.1% 4.0% (0.1) NET REALIZED CAPITAL GAINS (LOSSES) Fixed maturities 94% NM $ (295) $ 20 NM Equities NM NM (22) (7) 68% Real estate - - - - - Periodic net coupon settlements on non-qualifying derivatives [2] 40% 17% 9 26 189% GMWB derivatives, net [4] - - - 6 - Other [5] NM 50% - (5) - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] NM NM $ (308) $ 40 NM ---------------------------------------------------------------------------------------------------------------------------------- Gross gains on sale 2% (5%) $ 175 $ 267 53% Gross losses on sale 100% 100% (112) (95) 15% Impairments 43% (89%) (380) (162) 57% Periodic net coupon settlements on non-qualifying derivatives [2] 40% 17% 9 26 189% GMWB derivatives, net [4] - - - 6 - Other net gain (loss) [5] (80%) NM - (2) - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] NM NM $ (308) $ 40 NM ---------------------------------------------------------------------------------------------------------------------------------- [1] Includes income on short-term bonds. [2] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses). [3] The investment yield calculation excludes the assets received in the CNA purchase and the collaterial received associated with the securities lending program. [4] Fourth quarter net gains on GMWB derivatives are due principally to an approximately $4 gain associated with international funds for which hedge positions were initiated in the first quarter of 2004 and $2 due to modeling refinements to improve valuation estimates. Ineffectiveness on S&P 500 and NASDAQ economic hedge positions for the quarter was not significant. [5] Primarily consists of changes in fair value and hedge ineffectiveness on derivative instruments.
I-2
THE HARTFORD FINANCIAL SERVICES GROUP, INC. GENERAL ACCOUNT INVESTMENT EARNINGS BEFORE-TAX PROPERTY & CASUALTY 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 ---------- --------- --------- ---------- --------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 161 $ 159 $ 171 $ 184 $ 203 Tax-exempt 107 108 105 98 97 -------------------------------------------------------------------------------------------------------------------------- Total fixed maturities 268 267 276 282 300 Equities 4 3 2 3 1 Mortgage loans 4 4 4 3 4 Real estate - 1 1 - 1 Policy loans - - - - - Limited partnerships 12 4 4 11 4 Other [2] 2 7 4 3 4 -------------------------------------------------------------------------------------------------------------------------- Subtotal 290 286 291 302 314 Less investment expense 6 5 5 5 6 -------------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME [2] $284 $281 $286 $297 $308 -------------------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax [3] 6.0% 5.8% 5.5% 5.4% 5.4% Investment yield, after-tax [3] 4.6% 4.4% 4.2% 4.0% 4.0% NET REALIZED CAPITAL GAINS (LOSSES) Fixed maturities $ 42 $ 22 $ 198 $ (3) $ 19 Equities (42) (23) (2) - 3 Real estate (1) - - - - Periodic net coupon settlements on non-qualifying derivatives [2] 4 4 5 5 4 Other [4] (2) (4) 11 17 (3) -------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] $ 1 $ (1) $212 $19 $23 -------------------------------------------------------------------------------------------------------------------------- Gross gains on sale [4] $ 91 $ 80 $ 212 $ 71 $ 34 Gross losses on sale (56) (60) (7) (49) (9) Impairments (37) (22) (10) (2) (4) Periodic net coupon settlements on non-qualifying derivatives [2] 4 4 5 5 4 Other net gain (loss) [5] (1) (3) 12 (6) (2) -------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] $ 1 $ (1) $212 $19 $23 -------------------------------------------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER --------------------------------------- CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- ------------- ------------- ------- NET INVESTMENT INCOME Fixed maturities [1] Taxable 26% 10% $ 591 $ 717 21% Tax-exempt (9%) (1%) 432 408 (6%) ----------------------------------------------------------------------------------------------------------------------------------- Total fixed maturities 12% 6% 1,023 1,125 10% Equities (75%) (67%) 17 9 (47%) Mortgage loans - 33% 9 15 67% Real estate - - 2 3 50% Policy loans - - - - - Limited partnerships (67%) (64%) 28 23 (18%) Other [2] 100% 33% 3 18 NM ----------------------------------------------------------------------------------------------------------------------------------- Subtotal 8% 4% 1,082 1,193 10% Less investment expense - (20%) 22 21 5% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME [2] 8% 4% $ 1,060 $ 1,172 11% ----------------------------------------------------------------------------------------------------------------------------------- Investment yield, pre-tax [3] (0.6) - 5.8% 5.5% (0.3) Investment yield, after-tax [3] (0.6) - 4.5% 4.2% (0.3) NET REALIZED CAPITAL GAINS (LOSSES) Fixed maturities (55%) NM $ (82) $ 236 NM Equities NM - (20) (22) (10%) Real estate 100% - 2 - (100%) Periodic net coupon settlements on non-qualifying derivatives [2] - (20%) 15 18 20% Other [4] (50%) NM 17 21 24% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] NM 21% $ (68) $ 253 NM ----------------------------------------------------------------------------------------------------------------------------------- Gross gains on sale [4] (63%) (52%) $ 282 $ 397 41% Gross losses on sale 84% 82% (181) (125) 31% Impairments 89% (100%) (199) (38) 81% Periodic net coupon settlements on non-qualifying derivatives [2] - (20%) 15 18 20% Other net gain (loss) [5] (100%) 67% 15 1 (93%) ----------------------------------------------------------------------------------------------------------------------------------- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [2] NM 21% $ (68) $ 253 NM ----------------------------------------------------------------------------------------------------------------------------------- [1] Includes income on short-term bonds. [2] Prior periods reflect the reclassification of periodic net coupon settlements on non-qualifying derivatives from net investment income to net realized capital gains (losses). [3] The investment yield calculation excludes the assets received in the CNA purchase and the collaterial received associated with the securities lending program. [4] Includes a gain of $23 associated with the sale of Trumbull Associates, LLC in the third quarter 2003. [5] 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 4Q 1Q 2Q 3Q 4Q 2002 2003 2003 2003 2003 --------- ---------- ---------- ---------- ---------- NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 1 $ - $ 2 $ - $ - -------------------------------------------------------------------------------------- Total fixed maturities 1 - 2 - - Other [2] 5 4 4 5 5 -------------------------------------------------------------------------------------- TOTAL NET INVESTMENT INCOME $ 6 $ 4 $ 6 $ 5 $ 5 -------------------------------------------------------------------------------------- YEAR OVER YEAR ENDED YEAR SEQUENTIAL DECEMBER 31, QUARTER QUARTER --------------------------------- CHANGE CHANGE 2002 2003 CHANGE ---------- ---------- ---------- --------- -------- NET INVESTMENT INCOME Fixed maturities [1] Taxable (100%) - $ 2 $ 2 - ------------------------------------------------------------------------------------------ Total fixed maturities (100%) - 2 2 - Other [2] - - 18 18 - ------------------------------------------------------------------------------------------ TOTAL NET INVESTMENT INCOME (17%) - $20 $20 - ------------------------------------------------------------------------------------------ [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 4Q 1Q 2Q 2002 2003 2003 -------------------------- ------------------------- ------------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ------------- ------------ ------------ ------------ ------------ ------------ Fixed maturities, at fair value [1] $ 59,974 90.9% $ 63,363 91.9% $ 68,676 92.8% Equity securities, at fair value 962 1.4% 661 1.0% 712 0.9% Policy loans, at outstanding balance 2,934 4.4% 2,876 4.2% 2,889 3.9% Real estate/Mortgage loans, at cost 578 0.9% 636 0.9% 732 1.0% Limited partnerships, at fair value 923 1.4% 786 1.1% 458 0.6% Other investments [2] 629 1.0% 590 0.9% 569 0.8% ---------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 66,000 100.0% $ 68,912 100.0% $ 74,036 100.0% ---------------------------------------------------------------------------------------------------------------------------------- Total general account investments 54,530 82.6% 57,328 83.2% 62,190 84.0% Total guaranteed separate account investments 11,470 17.4% 11,584 16.8% 11,846 16.0% ---------------------------------------------------------------------------------------------------------------------------------- HIMCO managed third party accounts $ 1,312 $ 1,521 $ 1,774 ---------------------------------------------------------------------------------------------------------------------------------- Asset-backed securities ("ABS") $ 6,091 10.1% $ 5,985 9.4% $ 6,266 9.1% Commercial mortgage-backed securities ("CMBS") 7,561 12.6% 8,469 13.4% 9,774 14.2% Collateralized mortgage obligation ("CMO") 952 1.6% 1,079 1.7% 1,091 1.6% Corporate 26,534 44.2% 28,298 44.7% 30,844 44.9% Government/Government agencies - Foreign 1,934 3.2% 2,049 3.2% 2,174 3.2% Government/Government agencies - U.S. 817 1.4% 910 1.4% 1,433 2.1% Mortgage-backed securities ("MBS") - agency 2,818 4.7% 2,426 3.8% 2,198 3.2% Municipal - taxable 166 0.3% 164 0.3% 414 0.6% Municipal - tax-exempt 10,846 18.1% 10,814 17.1% 10,592 15.4% Redeemable preferred stock 102 0.2% 103 0.2% 103 0.1% Short-term [1] 2,153 3.6% 3,066 4.8% 3,787 5.6% ---------------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 59,974 100.0% $ 63,363 100.0% $ 68,676 100.0% ---------------------------------------------------------------------------------------------------------------------------------- Total general account fixed maturities 48,889 81.5% 52,126 82.3% 57,137 83.2% Total guaranteed separate account fixed maturities 11,085 18.5% 11,237 17.7% 11,539 16.8% ---------------------------------------------------------------------------------------------------------------------------------- AAA $ 14,358 24.0% $ 14,999 23.7% $ 16,140 23.6% AA 7,784 13.0% 7,778 12.3% 7,710 11.2% A 16,034 26.7% 16,690 26.3% 17,877 26.0% BBB 12,121 20.2% 13,306 21.0% 14,991 21.8% Government 4,397 7.3% 4,260 6.7% 4,614 6.7% BB & below 3,127 5.2% 3,264 5.2% 3,557 5.2% Short-term [1] 2,153 3.6% 3,066 4.8% 3,787 5.5% ---------------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 59,974 100.0% $ 63,363 100.0% $ 68,676 100.0% ---------------------------------------------------------------------------------------------------------------------------------- 3Q 4Q 2003 2003 --------------------------- -------------------------- AMOUNT PERCENT AMOUNT PERCENT ------------- ------------ ------------- ------------ Fixed maturities, at fair value [1] $ 70,587 93.5% $ 72,998 93.9% Equity securities, at fair value 677 0.9% 603 0.8% Policy loans, at outstanding balance 2,533 3.4% 2,512 3.2% Real estate/Mortgage loans, at cost 797 1.1% 907 1.2% Limited partnerships, at fair value 444 0.5% 361 0.5% Other investments [2] 465 0.6% 307 0.4% ------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS $ 75,503 100.0% $ 77,688 100.0% ------------------------------------------------------------------------------------------------------------ Total general account investments 63,620 84.3% 65,847 84.8% Total guaranteed separate account investments 11,883 15.7% 11,841 15.2% ------------------------------------------------------------------------------------------------------------ HIMCO managed third party accounts $ 1,850 $ 2,053 ------------------------------------------------------------------------------------------------------------ Asset-backed securities ("ABS") $ 6,546 9.3% $ 6,524 8.9% Commercial mortgage-backed securities ("CMBS") 10,017 14.2% 10,731 14.7% Collateralized mortgage obligation ("CMO") 1,047 1.5% 1,073 1.5% Corporate 31,508 44.6% 33,997 46.6% Government/Government agencies - Foreign 1,530 2.2% 1,773 2.4% Government/Government agencies - U.S. 1,072 1.5% 1,430 1.9% Mortgage-backed securities ("MBS") - agency 3,078 4.4% 2,834 3.9% Municipal - taxable 458 0.6% 629 0.9% Municipal - tax-exempt 10,191 14.4% 10,216 14.0% Redeemable preferred stock 81 0.1% 80 0.1% Short-term [1] 5,059 7.2% 3,711 5.1% ------------------------------------------------------------------------------------------------------------ TOTAL FIXED MATURITIES $ 70,587 100.0% $ 72,998 100.0% ------------------------------------------------------------------------------------------------------------ Total general account fixed maturities 58,909 83.5% 61,263 83.9% Total guaranteed separate account fixed maturities 11,678 16.5% 11,735 16.1% ------------------------------------------------------------------------------------------------------------ AAA $ 15,490 21.9% $ 16,552 22.7% AA 7,583 10.7% 7,855 10.8% A 18,200 25.8% 18,750 25.7% BBB 15,536 22.0% 17,114 23.4% Government 5,146 7.3% 5,357 7.3% BB & below 3,573 5.1% 3,659 5.0% Short-term [1] 5,059 7.2% 3,711 5.1% ------------------------------------------------------------------------------------------------------------ TOTAL FIXED MATURITIES $ 70,587 100.0% $ 72,998 100.0% ------------------------------------------------------------------------------------------------------------ [1] Fourth quarter 2002 and first quarter 2003 include $66 in Corporate. Second quarter 2003 includes $257 in Corporate. Third quarter 2003 includes $107 in Corporate. Fourth quarter 2003 includes $86 in Corporate. [2] Third quarter 2003 includes $4 in Corporate. Fourth quarter 2003 includes $2 in Corporate.
I-5
THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS LIFE - GENERAL AND GUARANTEED SEPARATE ACCOUNT 4Q 1Q 2Q 2002 2003 2003 -------------------------- -------------------------- -------------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ------------- ------------ ------------- ------------ ------------- ------------ Fixed maturities, at fair value $ 40,462 89.2% $ 42,913 90.1% $ 45,599 90.8% Equity securities, at fair value 503 1.1% 452 1.0% 493 1.0% Policy loans, at outstanding balance 2,934 6.5% 2,876 6.0% 2,889 5.8% Real estate/Mortgage loans, at cost 447 1.0% 486 1.0% 555 1.1% Limited partnerships, at fair value 561 1.2% 468 1.0% 255 0.5% Other investments 454 1.0% 422 0.9% 393 0.8% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 45,361 100.0% $ 47,617 100.0% $ 50,184 100.0% ----------------------------------------------------------------------------------------------------------------------------------- Total general account investments 33,891 74.7% 36,033 75.7% 38,338 76.4% Total guaranteed separate account investments 11,470 25.3% 11,584 24.3% 11,846 23.6% ----------------------------------------------------------------------------------------------------------------------------------- ABS $ 5,360 13.3% $ 5,297 12.3% $ 5,471 12.0% CMBS 5,988 14.8% 6,923 16.1% 7,553 16.6% CMO 903 2.2% 1,024 2.4% 1,057 2.3% Corporate 21,075 52.1% 22,452 52.3% 23,788 52.1% Government/Government agencies - Foreign 846 2.1% 881 2.0% 952 2.1% Government/Government agencies - U.S. 693 1.7% 733 1.7% 728 1.6% MBS - agency 2,296 5.7% 1,955 4.6% 1,686 3.7% Municipal - taxable 114 0.3% 110 0.3% 244 0.5% Municipal - tax-exempt 2,000 4.9% 2,004 4.7% 2,051 4.5% Redeemable preferred stock 34 0.1% 34 0.1% 34 0.1% Short-term 1,153 2.8% 1,500 3.5% 2,035 4.5% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 40,462 100.0% $ 42,913 100.0% $ 45,599 100.0% ----------------------------------------------------------------------------------------------------------------------------------- Total general account fixed maturities 29,377 72.6% 31,676 73.8% 34,060 74.7% Total guaranteed separate account fixed maturities 11,085 27.4% 11,237 26.2% 11,539 25.3% ----------------------------------------------------------------------------------------------------------------------------------- AAA $ 6,960 17.2% $ 7,475 17.4% $ 7,968 17.5% AA 4,396 10.9% 4,487 10.5% 4,341 9.5% A 12,467 30.8% 13,069 30.5% 13,693 30.0% BBB 9,665 23.9% 10,608 24.7% 11,841 26.0% Government 3,737 9.2% 3,582 8.3% 3,376 7.4% BB & below 2,084 5.2% 2,192 5.1% 2,345 5.1% Short-term 1,153 2.8% 1,500 3.5% 2,035 4.5% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 40,462 100.0% $ 42,913 100.0% $ 45,599 100.0% ----------------------------------------------------------------------------------------------------------------------------------- 3Q 4Q 2003 2003 --------------------------- -------------------------- AMOUNT PERCENT AMOUNT PERCENT ------------- ------------- ------------- ------------ Fixed maturities, at fair value $ 46,915 92.0% $ 49,197 92.8% Equity securities, at fair value 462 0.9% 395 0.8% Policy loans, at outstanding balance 2,533 5.0% 2,512 4.7% Real estate/Mortgage loans, at cost 544 1.1% 579 1.1% Limited partnerships, at fair value 251 0.5% 193 0.4% Other investments 263 0.5% 119 0.2% ------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS $ 50,968 100.0% $ 52,995 100.0% ------------------------------------------------------------------------------------------------------------ Total general account investments 39,085 76.7% 41,154 77.7% Total guaranteed separate account investments 11,883 23.3% 11,841 22.3% ------------------------------------------------------------------------------------------------------------ ABS $ 5,411 11.5% $ 5,409 11.0% CMBS 7,704 16.4% 8,168 16.6% CMO 998 2.1% 1,035 2.1% Corporate 23,790 50.8% 25,553 51.9% Government/Government agencies - Foreign 657 1.4% 952 1.9% Government/Government agencies - U.S. 943 2.0% 1,126 2.3% MBS - agency 2,080 4.4% 2,175 4.4% Municipal - taxable 270 0.6% 408 0.9% Municipal - tax-exempt 2,027 4.3% 2,017 4.1% Redeemable preferred stock 33 0.1% 33 0.1% Short-term 3,002 6.4% 2,321 4.7% ------------------------------------------------------------------------------------------------------------ TOTAL FIXED MATURITIES $ 46,915 100.0% $ 49,197 100.0% ------------------------------------------------------------------------------------------------------------ Total general account fixed maturities 35,237 75.1% 37,462 76.1% Total guaranteed separate account fixed maturities 11,678 24.9% 11,735 23.9% ------------------------------------------------------------------------------------------------------------ AAA $ 7,783 16.6% $ 8,681 17.6% AA 4,323 9.2% 4,486 9.1% A 13,630 29.1% 13,901 28.3% BBB 11,889 25.3% 13,061 26.5% Government 3,975 8.5% 4,361 9.0% BB & below 2,313 4.9% 2,386 4.8% Short-term 3,002 6.4% 2,321 4.7% ------------------------------------------------------------------------------------------------------------ TOTAL FIXED MATURITIES $ 46,915 100.0% $ 49,197 100.0% ------------------------------------------------------------------------------------------------------------
I-6
THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS PROPERTY & CASUALTY - GENERAL ACCOUNT 4Q 1Q 2Q 2002 2003 2003 --------------------------- ---------------------------- --------------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT -------------- ----------- -------------- ------------ -------------- ----------- Fixed maturities, at fair value $ 19,446 94.5% $ 20,384 96.0% $ 22,820 96.7% Equity securities, at fair value 459 2.2% 209 1.0% 219 0.9% Policy loans, at outstanding balance - - - - - - Real estate/Mortgage loans, at cost 131 0.7% 150 0.7% 177 0.8% Limited partnerships, at fair value 362 1.8% 318 1.5% 203 0.9% Other investments 175 0.8% 168 0.8% 176 0.7% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 20,573 100.0% $ 21,229 100.0% $ 23,595 100.0% ----------------------------------------------------------------------------------------------------------------------------------- ABS $ 731 3.8% $ 688 3.4% $ 795 3.5% CMBS 1,573 8.1% 1,546 7.6% 2,221 9.7% CMO 49 0.3% 55 0.3% 34 0.1% Corporate 5,459 28.0% 5,846 28.6% 7,056 31.0% Government/Government agencies - Foreign 1,088 5.6% 1,168 5.7% 1,222 5.4% Government/Government agencies - U.S. 124 0.6% 177 0.9% 705 3.1% MBS - agency 522 2.7% 471 2.3% 512 2.2% Municipal - taxable 52 0.3% 54 0.3% 170 0.7% Municipal - tax-exempt 8,846 45.5% 8,810 43.2% 8,541 37.4% Redeemable preferred stock 68 0.3% 69 0.3% 69 0.3% Short-term 934 4.8% 1,500 7.4% 1,495 6.6% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 19,446 100.0% $ 20,384 100.0% $ 22,820 100.0% ----------------------------------------------------------------------------------------------------------------------------------- AAA $ 7,398 38.1% $ 7,524 36.9% $ 8,172 35.8% AA 3,388 17.4% 3,291 16.1% 3,369 14.8% A 3,567 18.3% 3,621 17.8% 4,184 18.3% BBB 2,456 12.6% 2,698 13.2% 3,150 13.8% Government 660 3.4% 678 3.3% 1,238 5.4% BB & below 1,043 5.4% 1,072 5.3% 1,212 5.3% Short-term 934 4.8% 1,500 7.4% 1,495 6.6% ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 19,446 100.0% $ 20,384 100.0% $ 22,820 100.0% ----------------------------------------------------------------------------------------------------------------------------------- 3Q 4Q 2003 2003 --------------------------- ---------------------------- AMOUNT PERCENT AMOUNT PERCENT -------------- ----------- --------------- ----------- Fixed maturities, at fair value $ 23,565 96.5% $ 23,715 96.4% Equity securities, at fair value 215 0.9% 208 0.8% Policy loans, at outstanding balance - - - - Real estate/Mortgage loans, at cost 253 1.0% 328 1.3% Limited partnerships, at fair value 193 0.8% 168 0.7% Other investments 198 0.8% 186 0.8% ---------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS $ 24,424 100.0% $ 24,605 100.0% ---------------------------------------------------------------------------------------------------- ABS $ 1,135 4.8% $ 1,115 4.7% CMBS 2,313 9.8% 2,563 10.8% CMO 49 0.2% 38 0.2% Corporate 7,718 32.9% 8,444 35.5% Government/Government agencies - Foreign 873 3.7% 821 3.5% Government/Government agencies - U.S. 129 0.5% 304 1.3% MBS - agency 998 4.2% 659 2.8% Municipal - taxable 188 0.8% 221 0.9% Municipal - tax-exempt 8,164 34.6% 8,199 34.6% Redeemable preferred stock 48 0.2% 47 0.2% Short-term 1,950 8.3% 1,304 5.5% ---------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 23,565 100.0% $ 23,715 100.0% ---------------------------------------------------------------------------------------------------- AAA $ 7,707 32.7% $ 7,871 33.2% AA 3,260 13.8% 3,369 14.2% A 4,570 19.4% 4,849 20.4% BBB 3,647 15.5% 4,053 17.1% Government 1,171 5.0% 996 4.2% BB & below 1,260 5.3% 1,273 5.4% Short-term 1,950 8.3% 1,304 5.5% ---------------------------------------------------------------------------------------------------- TOTAL FIXED MATURITIES $ 23,565 100.0% $ 23,715 100.0% ----------------------------------------------------------------------------------------------------
I-7
THE HARTFORD FINANCIAL SERVICES GROUP, INC. UNREALIZED LOSS AGING CONSOLIDATED - GENERAL AND GUARANTEED SEPARATE ACCOUNT [1] DECEMBER 31, 2003 ------------------------------------------------------ AMORTIZED FAIR VALUE UNREALIZED COST VALUE LOSS ----------------- ------------------ ------------- TOTAL SECURITIES Three months or less $ 4,867 $ 4,826 $ (41) Greater than three months to six months 3,991 3,854 (137) Greater than six months to nine months 404 382 (22) Greater than nine months to twelve months 151 142 (9) Greater than twelve months 1,844 1,688 (156) ------------------------------------------------------------------------------------------------- TOTAL $ 11,257 $ 10,892 $(365) ------------------------------------------------------------------------------------------------- BIG [2] AND EQUITY SECURITIES Three months or less $ 133 $ 129 $ (4) Greater than three months to six months 134 129 (5) Greater than six months to nine months 81 73 (8) Greater than nine months to twelve months 18 17 (1) Greater than twelve months 417 349 (68) ------------------------------------------------------------------------------------------------- TOTAL $ 783 $ 697 $(86) ------------------------------------------------------------------------------------------------- DECEMBER 31, 2002 ------------------------------------------------------ AMORTIZED FAIR VALUE UNREALIZED COST 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 December 31, 2003, fixed maturities represented $(349), or 96%, of the Company's total unrealized loss. There were no fixed maturities as of December 31, 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 December 31, 2003 and 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 DECEMBER 31, 2003 ----------------------------------------------------- AMORTIZED FAIR VALUE UNREALIZED COST VALUE LOSS ----------------- ----------------- ------------- TOTAL SECURITIES Three months or less $ 2,903 $ 2,878 $ (25) Greater than three months to six months 1,943 1,882 (61) Greater than six months to nine months 265 250 (15) Greater than nine months to twelve months 138 130 (8) Greater than twelve months 1,661 1,528 (133) ----------------------------------------------------------------------------------------------- TOTAL $ 6,910 $ 6,668 $(242) ----------------------------------------------------------------------------------------------- BIG AND EQUITY SECURITIES Three months or less $ 57 $ 55 $ (2) Greater than three months to six months 91 87 (4) Greater than six months to nine months 60 54 (6) Greater than nine months to twelve months 18 17 (1) Greater than twelve months 361 302 (59) ----------------------------------------------------------------------------------------------- TOTAL $ 587 $ 515 $(72) ----------------------------------------------------------------------------------------------- DECEMBER 31, 2002 ----------------------------------------------------- AMORTIZED FAIR VALUE UNREALIZED COST 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 DECEMBER 31, 2003 ----------------------------------------------------- AMORTIZED FAIR VALUE UNREALIZED COST VALUE LOSS ----------------- ----------------- ------------- TOTAL SECURITIES Three months or less $ 1,964 $ 1,948 $ (16) Greater than three months to six months 2,048 1,972 (76) Greater than six months to nine months 139 132 (7) Greater than nine months to twelve months 13 12 (1) Greater than twelve months 183 160 (23) ----------------------------------------------------------------------------------------------- TOTAL $ 4,347 $ 4,224 $(123) ----------------------------------------------------------------------------------------------- BIG AND EQUITY SECURITIES Three months or less $ 76 $ 74 $ (2) Greater than three months to six months 43 42 (1) Greater than six months to nine months 21 19 (2) Greater than nine months to twelve months - - - Greater than twelve months 56 47 (9) ----------------------------------------------------------------------------------------------- TOTAL $ 196 $ 182 $(14) ----------------------------------------------------------------------------------------------- DECEMBER 31, 2002 ----------------------------------------------------- AMORTIZED FAIR VALUE UNREALIZED COST 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 DECEMBER 31, 2003 TOP TEN CORPORATE FIXED MATURITY EXPOSURES BY SECTOR LIFE ------------------------- PERCENT OF TOTAL FAIR INVESTED VALUE ASSETS ------------- --------- Financial services $ 6,130 11.7% Technology and communications 4,047 7.6% Basic industry 3,199 6.0% Consumer non cyclical 2,968 5.6% Consumer cyclical 2,559 4.8% Utilities 2,245 4.2% Energy 1,613 3.0% Capital goods 1,520 2.9% Transportation 672 1.3% Other 600 1.1% -------------------------------------------------------------- TOTAL $ 25,553 48.2% -------------------------------------------------------------- P&C ------------------------- PERCENT OF TOTAL FAIR INVESTED VALUE ASSETS ------------- --------- Financial services $ 2,128 8.7% Technology and communications 1,379 5.6% Basic industry 1,107 4.5% Consumer non cyclical 822 3.3% Consumer cyclical 806 3.3% Utilities 897 3.6% Energy 555 2.3% Capital goods 452 1.8% Transportation 150 0.6% Other 148 0.6% -------------------------------------------------------------- TOTAL $ 8,444 34.3% -------------------------------------------------------------- CONSOLIDATED ------------------------- PERCENT OF TOTAL FAIR INVESTED VALUE ASSETS ------------- --------- Financial services $ 8,258 10.7% Technology and communications 5,426 7.0% Basic industry 4,306 5.5% Consumer non cyclical 3,790 4.9% Consumer cyclical 3,365 4.3% Utilities 3,142 4.0% Energy 2,168 2.8% Capital goods 1,972 2.5% Transportation 822 1.1% Other 748 1.0% -------------------------------------------------------------- TOTAL $ 33,997 43.8% -------------------------------------------------------------- TOP TEN EXPOSURES BY ISSUER [1] LIFE ------------------------- PERCENT OF TOTAL FAIR INVESTED VALUE ASSETS ------------- --------- Verizon Communications, Inc. $ 237 0.4% Ford Motor Co. 211 0.4% Amer. Express Credit Account Master Trust 203 0.4% General Motors Corp. 203 0.4% Credit Suisse Group 201 0.4% Time Warner, Inc. 199 0.4% Citigroup, Inc. 198 0.4% Capital One Master Trust 198 0.4% Government of France 189 0.3% British Telecommunication Group, PLC 183 0.3% -------------------------------------------------------------- TOTAL $ 2,022 3.8% -------------------------------------------------------------- P&C ------------------------- PERCENT OF TOTAL FAIR INVESTED VALUE ASSETS ------------- --------- State of Illinois $ 189 0.8% State of Massachusetts 187 0.8% State of California 172 0.7% New York City, NY 163 0.7% State of Georgia 159 0.6% New Jersey State Transit Authority 153 0.6% UBS AG 146 0.6% Mass. Bay Transportation Authority 130 0.5% J.P. Morgan Chase & Co. 115 0.5% New York City, NY Muni. Water Finance 102 0.4% -------------------------------------------------------------- TOTAL $ 1,516 6.2% -------------------------------------------------------------- CONSOLIDATED ------------------------- PERCENT OF TOTAL FAIR INVESTED VALUE ASSETS ------------- --------- General Motors Corp. $ 302 0.4% Verizon Communications, Inc. 293 0.4% State of Massachusetts 291 0.4% Ford Motor Co. 287 0.4% Time Warner, Inc. 275 0.4% Government of France 266 0.3% State of California 262 0.3% State of Illinois 253 0.3% DaimlerChrysler AG 253 0.3% Capital One Master Trust 249 0.3% ------------------------------------------------------------- TOTAL $ 2,731 3.5% ------------------------------------------------------------- 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