-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EQ9Ac35wuZc4mtb6fDv7ic47oIDXQzbrItM1nLsuSx/3QYUSOcNUhfah+eyAtNjp 20/RidMlpNSvOSAQJZ1Lbw== 0000950123-04-005850.txt : 20040506 0000950123-04-005850.hdr.sgml : 20040506 20040506133542 ACCESSION NUMBER: 0000950123-04-005850 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040504 ITEM INFORMATION: FILED AS OF DATE: 20040506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARTFORD FINANCIAL SERVICES GROUP INC/DE CENTRAL INDEX KEY: 0000874766 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 133317783 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13958 FILM NUMBER: 04784320 BUSINESS ADDRESS: STREET 1: HARTFORD PLZ CITY: HARTFORD STATE: CT ZIP: 06115 BUSINESS PHONE: 8605475000 MAIL ADDRESS: STREET 1: HARTFORD PLAZA T-15 CITY: HARTFORD STATE: CT ZIP: 06115 FORMER COMPANY: FORMER CONFORMED NAME: ITT HARTFORD GROUP INC /DE DATE OF NAME CHANGE: 19930328 8-K 1 y96957ke8vk.txt THE HARTFORD FINANCIAL SERVICES GROUP, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 4, 2004 --------------- THE HARTFORD FINANCIAL SERVICES GROUP, INC. ------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 001-13958 13-3317783 - ---------------------------- ------------------------ ------------------- (State or other jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) The Hartford Financial Services Group, Inc. Hartford Plaza Hartford, Connecticut 06115-1900 -------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (860) 547-5000 Item 12. Results of Operations and Financial Condition. On May 4, 2004, The Hartford Financial Services Group, Inc. issued its Investor Financial Supplement ("IFS") relating to its financial results for the first quarter ended March 31, 2004. A copy of the IFS is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. As provided in General Instruction B.6 of Form 8-K, the information and exhibit contained in this Form 8-K shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE HARTFORD FINANCIAL SERVICES GROUP, INC. Date: May 4, 2004 By: /s/ Robert J. Price ----------------------------------- Name: Robert J. Price Title: Senior Vice President and Controller EX-99.1 2 y96957kexv99w1.txt INVESTOR FINANCIAL SUPPLEMENT EXHIBIT 99.1 [PICTURE OF THE HARTFORD] INVESTOR FINANCIAL SUPPLEMENT MARCH 31, 2004 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 April 30, 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 Group Insurance Company A+ AA AA- -- Hartford Life & Annuity A+ AA AA- Aa3 Hartford Life Insurance KK -- -- AA- -- 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 First Quarter Ended March 31, 2004 and 2003 ................................ C-3 Consolidating Balance Sheets As of March 31, 2004 and December 31, 2003 ................................. C-4 Capital Structure .............................................................. C-5 Accumulated Other Comprehensive Income, Net of Tax ............................. C-6 Computation of Basic and Diluted Earnings (Loss) Per Share ..................... C-7 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 December 31, 2003 .................................................... L-6 Statutory Surplus to GAAP Stockholders' Equity Reconciliation .................. L-7 Retail Products Group 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 Rollforward ...................................... L-13 Guaranteed Minimum Death Benefits ...................................... L-14 Institutional Solutions Group Income Statements .......................................................... L-15 Supplemental Data Sales/Other Deposits ................................................... L-16 Assets Under Management ................................................ L-17 Account Value and Asset Rollforward .................................... L-18 Individual Life Income Statements ...................................................... L-19 Supplemental Data ...................................................... L-20 Account Value Rollforward .............................................. L-21 Group Benefits Income Statements ...................................................... L-22 Supplemental Data ...................................................... L-23 PROPERTY & Financial Highlights ........................................................... PC-1 CASUALTY Operating Results .............................................................. PC-2 Consolidating Underwriting Results ............................................. PC-3 Consolidating Underwriting Results, As Adjusted ................................ PC-4 Ongoing Property & Casualty Underwriting Results ............................... PC-5 Business Insurance Underwriting Results ........................................ PC-6 Business Insurance Written and Earned Premiums ................................. PC-7 Personal Lines Underwriting Results ............................................ PC-8 Personal Lines Written and Earned Premiums ..................................... PC-9 Specialty Commercial Underwriting Results ...................................... PC-10 Specialty Commercial Written and Earned Premiums ............................... PC-11 Statistical Premium Information (Year over Year) ............................... PC-12 Other Operations Operating Results ............................................. PC-13 Other Operations Claims and Claim Adjustment Expenses .......................... PC-14 Summary of Gross Asbestos Reserves ............................................. PC-15 Paid and Incurred Loss and Loss Adjustment Expense Development - A&E ........... PC-16 Unpaid Claims and Claim Adjustment Expense Reserve Rollforward First Quarter Ended March 31, 2004 ......................................... PC-17 Reinsurance Recoverable Analysis ............................................... PC-18 Consolidated Income Statements ................................................. PC-19 Consolidated Balance Sheets .................................................... PC-20 Statutory Surplus to GAAP Stockholders' Equity Reconciliation .................. PC-21 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 March 31, 2004 ....................................................... I-11
THE HARTFORD FINANCIAL SERVICES GROUP, INC. BASIS OF PRESENTATION CHANGES IN PRESENTATION ----------------------- - - On January 1, 2004, the Company adopted Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-1"). The major provisions of SOP 03-1 require establishing guaranteed minimum death benefits and other benefit reserves for annuity contracts and reclassifying certain separate account assets to general account assets. As a result of the adoption of SOP 03-1, the Company recognized a cumulative effect of accounting change, net of tax, of $(23). - - Life is organized into four reportable operating segments: Retail Products Group, Institutional Solutions Group, Individual Life and Group Benefits. 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 and capital gains and losses related to guaranteed minimum withdrawal benefits; corporate items not directly allocated to any of its reportable operating segments; and intersegment eliminations. Periodic net coupon settlements on non-qualifying derivatives and capital gains and losses related to guaranteed minimum withdrawal benefits are reflected in each applicable segment in net realized capital gains and losses. - - Property and Casualty includes Ongoing Operations and Other Operations. Ongoing Operations includes the underwriting results of the Business Insurance, Personal Lines and Specialty Commercial segments. Other Operations includes the underwriting results of certain property and casualty insurance operations that have discontinued writing new business and substantially all of the Company's asbestos and environmental exposures. Property & Casualty includes the underwriting results of Ongoing Operations 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 and income taxes. - - Underwriting results represent earned premiums less incurred claims, claim adjustment expenses and underwriting expenses. Previously, the Company included doubtful accounts expense in its calculation of underwriting results. Doubtful accounts expense is now included in other expenses for all periods presented. - - Corporate includes all of the Company's debt financing and related interest expense, as well as certain capital raising and purchase accounting adjustment activities. DEFINITIONS AND PRESENTATION ---------------------------- - - All amounts are in millions, except for per share and ratio information. - - 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 all periods presented. - - 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. - - 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 and the cumulative effect of accounting changes. 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. - - 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 2003 asbestos reserve addition, which relates solely to legacy businesses, and 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. - - 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. The difference between written premiums and earned premiums is the change in unearned premium reserve. Earned premiums is the most directly comparable GAAP measure. - - The Hartford, along with others in the property and casualty insurance industry, uses underwriting ratios as measures of performance. The loss and loss adjustment expense ratio is the ratio of claims and 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) 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 and 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) - ---------------------------------------- - - 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. - - Premium renewal retention is defined as renewal premium written in the current period divided by premium written in the immediately preceding period. - - 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. After applying these provisions to 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. - - Accumulated other comprehensive income ("AOCI") represents net of tax unrealized gain (loss) on securities; net gain (loss) on cash-flow hedging instruments; foreign currency translation adjustments; and minimum pension liability adjustment. - - 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. - - 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) and change in fair value of trading securities) by average invested assets at cost (fixed maturities at amortized cost, excluding trading securities). - - 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. - - Certain reclassifications have been made to the prior periods to conform to the March 31, 2004 presentation. - - 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
1Q 2Q 3Q 4Q 2003 2003 2003 2003 --------- --------- --------- --------- HIGHLIGHTS Net income (loss) $ (1,395) $ 507 $ 343 $ 454 Operating income (loss) $ (1,361) $ 340 $ 335 $ 433 Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [1] $ 340 $ 337 $ 375 $ 433 Total revenues $ 4,331 $ 4,682 $ 4,947 $ 4,773 Total assets $ 188,657 $ 207,801 $ 211,365 $ 225,853 Total assets under management [2] $ 205,223 $ 227,437 $ 232,115 $ 250,368 --------- --------- --------- --------- PER SHARE AND SHARES DATA Basic earnings (loss) per share Net income (loss) $ (5.46) $ 1.89 $ 1.21 $ 1.60 Operating income (loss) $ (5.33) $ 1.26 $ 1.19 $ 1.53 Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [1] $ 1.33 $ 1.25 $ 1.33 $ 1.53 Diluted earnings (loss) per share [3] Net income (loss) $ (5.46) $ 1.88 $ 1.20 $ 1.59 Operating income (loss) $ (5.33) $ 1.26 $ 1.18 $ 1.52 Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [1] [4] $ 1.33 $ 1.25 $ 1.32 $ 1.52 Weighted average common shares outstanding (basic) 255.4 268.8 282.5 283.0 Weighted average common shares outstanding and dilutive potential common shares (diluted) [3] 255.4 270.2 284.8 285.6 Common shares outstanding 255.4 282.2 282.7 283.4 Book value per share (including AOCI) $ 36.97 $ 40.75 $ 40.13 $ 41.07 Book value per share (excluding AOCI) $ 32.05 $ 34.34 $ 35.33 $ 36.67 --------- --------- --------- --------- FINANCIAL RATIOS ROE (net income (loss) last 12 months to equity including AOCI) (7.4%) (3.5%) (2.6%) (0.8%) ROE (operating income (loss) last 12 months to equity excluding AOCI) (4.8%) (3.8%) (4.0%) (2.5%) ROE before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges (operating income last 12 months to equity excluding AOCI) [5] 13.1% 13.6% 13.9% 14.8% Debt to capitalization including AOCI 31.7% 30.9% 31.2% 32.7% Investment yield, after-tax 4.2% 4.0% 3.9% 3.9% Ongoing Property & Casualty GAAP combined ratio 96.6 96.0 98.8 94.6 --------- --------- --------- --------- YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE --------- ---------- ---------- HIGHLIGHTS Net income (loss) $ 568 NM 25% Operating income (loss) $ 501 NM 16% Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [1] $ 501 47% 16% Total revenues $ 5,732 32% 20% Total assets $ 237,264 26% 5% Total assets under management [2] $ 263,813 29% 5% --------- ---- ---- PER SHARE AND SHARES DATA Basic earnings (loss) per share Net income (loss) $ 1.96 NM 23% Operating income (loss) $ 1.73 NM 13% Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [1] $ 1.73 30% 13% Diluted earnings (loss) per share [3] Net income (loss) $ 1.93 NM 21% Operating income (loss) $ 1.70 NM 12% Operating income, before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [1] [4] $ 1.70 28% 12% Weighted average common shares outstanding (basic) 289.9 34.5 sh 6.9 sh Weighted average common shares outstanding and dilutive potential common shares (diluted) [3] 294.9 39.5 sh 9.3 sh Common shares outstanding 291.7 36.3 sh 8.3 sh Book value per share (including AOCI) $ 46.41 26% 13% Book value per share (excluding AOCI) $ 38.97 22% 6% --------- ---- ---- FINANCIAL RATIOS ROE (net income (loss) last 12 months to equity including AOCI) 16.3% 23.7 17.1 ROE (operating income (loss) last 12 months to equity excluding AOCI) 16.5% 21.3 19.0 ROE before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges (operating income last 12 months to equity excluding AOCI) [5] 15.9% 2.8 1.1 Debt to capitalization including AOCI 27.6% (4.1) (5.2) Investment yield, after-tax 3.9% (0.3) - Ongoing Property & Casualty GAAP combined ratio 89.8 6.8 4.8 --------- ---- ----
[1] See page C-7 for reconciliation of net income to operating income before impacts of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges. [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, The Hartford is required by generally accepted accounting principles to use basic weighted average shares in the calculation of earnings per share for the quarter ended March 31, 2003. In the absence of the net loss, 256.1 weighted average common shares outstanding and dilutive potential common shares would have been used in the calculation for the quarter ended March 31, 2003. [4] Calculated using weighted average common shares outstanding and dilutive potential common shares of 256.1 for the quarter ended March 31, 2003. [5] The March 31, 2004 ratio reflects the equity impact of the May 2003 common stock issuance in beginning equity. The March 31, 2003 ratio excludes the earnings and equity impacts of the 2003 asbestos reserve addition. C-1 THE HARTFORD FINANCIAL SERVICES GROUP, INC. OPERATING RESULTS BY SEGMENT
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE -------- ------- ------- ------- ------- --------- ---------- LIFE [1] Individual Annuity $ 71 $ 93 $ 98 $ 111 $ 112 58% 1% Other Retail 6 8 9 10 15 150% 50% ------- ------ ------ ------ ------ --- --- Total Retail Products Group 77 101 107 121 127 65% 5% Institutional Solutions Group 31 28 32 31 29 (6%) (6%) Individual Life 32 34 36 41 34 6% (17%) Group Benefits 34 35 38 41 47 38% 15% Other 2 2 8 15 19 NM 27% ------- ------ ------ ------ ------ --- --- Life operating income, before Bancorp litigation and tax related items 176 200 221 249 256 45% 3% Bancorp litigation - - (40) - - - - Tax related items - 30 - - - - - ------- ------ ------ ------ ------ --- --- TOTAL LIFE OPERATING INCOME [2] 176 230 181 249 256 45% 3% ------- ------ ------ ------ ------ --- --- PROPERTY & CASUALTY Ongoing Operations Underwriting Results Business Insurance 7 50 34 67 225 NM NM Personal Lines 56 8 40 26 106 89% NM Specialty Commercial 5 25 (46) 26 (110) NM NM ------- ------ ------ ------ ------ --- --- Total Ongoing Operations underwriting results 68 83 28 119 221 NM 86% Other Operations underwriting results (47) (89) (22) (78) (65) (38%) 17% ------- ------ ------ ------ ------ --- --- Total Property & Casualty underwriting results 21 (6) 6 41 156 NM NM Net investment income 281 286 297 308 311 11% 1% Periodic net coupon settlements on non-qualifying derivatives, before-tax 4 5 5 4 4 - - Net servicing and other income (loss) 3 3 9 (7) 9 NM NM Other expenses (41) (52) (38) (42) (68) (66%) (62%) Income tax expense (59) (49) (70) (79) (115) (95%) (46%) ------- ------ ------ ------ ------ --- --- Property & Casualty, before 2003 asbestos reserve addition and severance charges 209 187 209 225 297 42% 32% 2003 asbestos reserve addition (1,701) - - - - 100% - Severance charges - (27) - - - - - ------- ------ ------ ------ ------ --- --- TOTAL PROPERTY & CASUALTY OPERATING INCOME (LOSS) [2] (1,492) 160 209 225 297 NM 32% ------- ------ ------ ------ ------ --- --- INTEREST AND OTHER CORPORATE (45) (50) (55) (41) (52) (16%) (27%) ------- ------ ------ ------ ------ --- --- Operating income, before 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [2] 340 337 375 433 501 47% 16% ------- ------ ------ ------ ------ --- --- 2003 asbestos reserve addition (1,701) - - - - 100% - Bancorp litigation - - (40) - - - - Tax related items - 30 - - - - - Severance charges - (27) - - - - - ------- ------ ------ ------ ------ --- --- Operating income (loss) [2] (1,361) 340 335 433 501 NM 16% Add: Net realized capital gains (losses), after-tax [2] (29) 176 15 29 95 NM NM Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax [2] 5 9 7 8 5 - (38%) Add: Cumulative effect of accounting change, after-tax - - - - (23) NM NM ------- ------ ------ ------ ------ --- --- NET INCOME (LOSS) $(1,395) $ 507 $ 343 $ 454 $ 568 NM 25% ------- ------ ------ ------ ------ --- --- PER SHARE DATA Diluted earnings (loss) per share Operating income, before 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 1.33 $ 1.25 $ 1.32 $ 1.52 $ 1.70 28% 12% Net income (loss) $ (5.46) $ 1.88 $ 1.20 $ 1.59 $ 1.93 NM 21% ------- ------ ------ ------ ------ --- ---
[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. Such effects are included in net realized capital gains and losses. C-2 THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING STATEMENTS OF OPERATIONS FIRST QUARTER ENDED MARCH 31, 2004 AND 2003
LIFE PROPERTY & CASUALTY ---------------------------- --------------------------- 2004 2003 CHANGE 2004 2003 CHANGE -------- -------- ------ ------- -------- ------ Earned premiums $ 995 $ 683 46% $ 2,186 $ 2,166 1% Fee income 786 617 27% - - - Net investment income 1,201 503 139% 311 281 11% Other revenues - 27 (100%) 104 95 9% Net realized capital gains (losses) 76 (44) NM 71 (1) NM ------- ------- ---- ------- ------- --- TOTAL REVENUES 3,058 1,786 71% 2,672 2,541 5% Benefits, claims and claim adjustment expenses 1,877 1,083 73% 1,418 4,161 (66%) Amortization of deferred policy acquisition costs and present value of future profits 233 163 43% 446 401 11% Insurance operating costs and expenses 526 351 50% 166 187 (11%) Interest expense - - - - - - Other expenses 1 4 (75%) 163 133 23% ------- ------- ---- ------- ------- --- TOTAL BENEFITS AND EXPENSES 2,637 1,601 65% 2,193 4,882 (55%) INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 421 185 128% 479 (2,341) NM Income tax expense (benefit) 117 40 193% 138 (846) NM ------- ------- ---- ------- ------- --- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 304 145 110% 341 (1,495) NM Cumulative effect of accounting change, after-tax [1] (23) - NM - - - ------- ------- ---- ------- ------- --- NET INCOME (LOSS) 281 145 94% 341 (1,495) NM Less: Net realized capital gains (losses), after-tax 50 (29) NM 47 - NM Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 2 2 - 3 3 - Less: Cumulative effect of accounting change, after-tax (23) - NM - - - ------- ------- ---- ------- ------- --- OPERATING INCOME (LOSS) [2] $ 256 $ 176 45% $ 297 $(1,492) NM ------- ------- ---- ------- ------- --- CORPORATE CONSOLIDATED ----------------------------- ----------------------------- 2004 2003 CHANGE 2004 2003 CHANGE -------- -------- ------ -------- -------- ------ Earned premiums $ - $ - - $ 3,181 $ 2,849 12% Fee income - - - 786 617 27% Net investment income 5 4 25% 1,517 788 93% Other revenues - - - 104 122 (15%) Net realized capital gains (losses) (3) - NM 144 (45) NM ------- ------- --- ------- ------- --- TOTAL REVENUES 2 4 (50%) 5,732 4,331 32% Benefits, claims and claim adjustment expenses 2 1 100% 3,297 5,245 (37%) Amortization of deferred policy acquisition costs and present value of future profits - - - 679 564 20% Insurance operating costs and expenses - - - 692 538 29% Interest expense 66 66 - 66 66 - Other expenses 16 6 167% 180 143 26% ------- ------- --- ------- ------- --- TOTAL BENEFITS AND EXPENSES 84 73 15% 4,914 6,556 (25%) INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES (82) (69) (19%) 818 (2,225) NM Income tax expense (benefit) (28) (24) (17%) 227 (830) NM ------- ------- --- ------- ------- --- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES (54) (45) (20%) 591 (1,395) NM Cumulative effect of accounting change, after-tax [1] - - - (23) - NM ------- ------- --- ------- ------- --- NET INCOME (LOSS) (54) (45) (20%) 568 (1,395) NM Less: Net realized capital gains (losses), after-tax (2) - NM 95 (29) NM Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax - - - 5 5 - Less: Cumulative effect of accounting change, after-tax - - - (23) - NM ------- ------- --- ------- ------- --- OPERATING INCOME (LOSS) [2] $ (52) $ (45) (16%) $ 501 $(1,361) NM ------- ------- --- ------- ------- ---
[1] Represents the cumulative effect of the Company's adoption of SOP 03-1. [2] Operating income includes the effect of periodic net coupon settlements on non-qualifying derivatives, after-tax. Such effects are included in net realized capital gains and losses. C-3 THE HARTFORD FINANCIAL SERVICES GROUP, INC. CONSOLIDATING BALANCE SHEETS AS OF MARCH 31, 2004 AND DECEMBER 31, 2003
LIFE PROPERTY & CASUALTY ------------------------------ ----------------------------- MAR. 31, DEC. 31, MAR. 31, DEC. 31, 2004 2003 CHANGE 2004 2003 CHANGE --------- --------- ------ -------- --------- ------ Investments Fixed maturities, available-for-sale, at fair value $ 49,580 $ 37,462 32% $ 23,196 $ 23,715 (2%) Equity securities, trading, at fair value 7,831 - NM - - - Equity securities, available-for-sale, at fair value 406 357 14% 206 208 (1%) Policy loans, at outstanding balance 2,655 2,512 6% - - - Other investments 1,167 823 42% 650 682 (5%) --------- --------- --- -------- -------- --- Total investments 61,639 41,154 50% 24,052 24,605 (2%) Cash 460 265 74% 178 197 (10%) Premiums receivable and agents' balances 207 335 (38%) 2,762 2,750 - Reinsurance recoverables 763 604 26% 5,205 5,354 (3%) Deferred policy acquisition costs and present value of future profits 6,523 6,623 (2%) 987 975 1% Deferred income taxes (927) (486) (91%) 905 1,101 (18%) Goodwill 796 796 - 152 152 - Other assets 1,887 1,668 13% 3,365 2,025 66% Separate account assets 127,141 136,633 (7%) - - - --------- --------- --- -------- -------- --- TOTAL ASSETS $ 198,489 $ 187,592 6% $ 37,606 $ 37,159 1% --------- --------- --- -------- -------- --- Future policy benefits, unpaid claims and claim adjustment expenses $ 11,666 $ 11,411 2% $ 20,246 $ 21,715 (7%) Other policyholder funds and benefits payable 45,322 26,186 73% - - - Unearned premiums 55 58 (5%) 4,563 4,372 4% Debt [1] - - - - - - Other liabilities 4,542 4,440 2% 4,595 3,285 40% Separate account liabilities 127,141 136,633 (7%) - - - --------- --------- --- -------- -------- --- TOTAL LIABILITIES 188,726 178,728 6% 29,404 29,372 - --------- --------- --- -------- -------- --- Equity excluding AOCI, net of tax 8,137 8,003 2% 7,335 7,080 4% AOCI, net of tax 1,626 861 89% 867 707 23% --------- --------- --- -------- -------- --- TOTAL STOCKHOLDERS' EQUITY 9,763 8,864 10% 8,202 7,787 5% --------- --------- --- -------- -------- --- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 198,489 $ 187,592 6% $ 37,606 $ 37,159 1% --------- --------- --- -------- -------- --- CORPORATE CONSOLIDATED -------------------------- ------------------------------ MAR. 31, DEC. 31, MAR. 31, DEC. 31, 2004 2003 CHANGE 2004 2003 CHANGE -------- -------- ------ --------- -------- ------ Investments Fixed maturities, available-for-sale, at fair value $ 38 $ 86 (56%) $ 72,814 $ 61,263 19% Equity securities, trading, at fair value - - - 7,831 - NM Equity securities, available-for-sale, at fair value - - - 612 565 8% Policy loans, at outstanding balance - - - 2,655 2,512 6% Other investments 28 2 NM 1,845 1,507 22% ------- ------- --- --------- -------- -- Total investments 66 88 (25%) 85,757 65,847 30% Cash - - - 638 462 38% Premiums receivable and agents' balances - - - 2,969 3,085 (4%) Reinsurance recoverables - - - 5,968 5,958 - Deferred policy acquisition costs and present value of future profits 1 1 - 7,511 7,599 (1%) Deferred income taxes 267 230 16% 245 845 (71%) Goodwill 772 772 - 1,720 1,720 - Other assets 63 11 NM 5,315 3,704 43% Separate account assets - - - 127,141 136,633 (7%) ------- ------- --- --------- -------- -- TOTAL ASSETS $ 1,169 $ 1,102 6% $ 237,264 $225,853 5% ------- ------- --- --------- -------- -- Future policy benefits, unpaid claims and claim adjustment expenses $ (8) $ (9) 11% $ 31,904 $ 33,117 (4%) Other policyholder funds and benefits payable (1) (1) - 45,321 26,185 73% Unearned premiums (6) (7) 14% 4,612 4,423 4% Debt [1] 5,153 5,663 (9%) 5,153 5,663 (9%) Other liabilities 459 468 (2%) 9,596 8,193 17% Separate account liabilities - - - 127,141 136,633 (7%) ------- ------- --- --------- -------- -- TOTAL LIABILITIES 5,597 6,114 (8%) 223,727 214,214 4% ------- ------- --- --------- -------- -- Equity excluding AOCI, net of tax (4,103) (4,690) 13% 11,369 10,393 9% AOCI, net of tax (325) (322) (1%) 2,168 1,246 74% ------- ------- --- --------- -------- -- TOTAL STOCKHOLDERS' EQUITY (4,428) (5,012) 12% 13,537 11,639 16% ------- ------- --- --------- -------- -- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,169 $ 1,102 6% $ 237,264 $225,853 5% ------- ------- --- --------- -------- --
[1] Includes junior subordinated debentures. C-4 THE HARTFORD FINANCIAL SERVICES GROUP, INC. CAPITAL STRUCTURE
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE -------- -------- -------- -------- -------- --------- ---------- DEBT Short-term debt (includes current maturities of long-term debt) $ 315 $ 514 $ 515 $ 1,050 $ 573 82% (45%) Long-term debt 2,596 3,337 3,660 3,661 3,862 49% 5% ------- ------- ------- ------- ------- ---- ----- TOTAL DEBT EXCLUDING JUNIOR SUBORDINATED DEBENTURES 2,911 3,851 4,175 4,711 4,435 52% (6%) Junior subordinated debentures 1,469 1,296 962 952 718 (51%) (25%) ------- ------- ------- ------- ------- ---- ----- TOTAL DEBT INCLUDING JUNIOR SUBORDINATED DEBENTURES $ 4,380 $ 5,147 $ 5,137 $ 5,663 $ 5,153 18% (9%) ------- ------- ------- ------- ------- ---- ----- STOCKHOLDERS' EQUITY Equity excluding AOCI, net of tax $ 8,185 $ 9,692 $ 9,987 $10,393 $11,369 39% 9% AOCI, net of tax 1,257 1,807 1,357 1,246 2,168 72% 74% ------- ------- ------- ------- ------- ---- ----- TOTAL STOCKHOLDERS' EQUITY $ 9,442 $11,499 $11,344 $11,639 $13,537 43% 16% ------- ------- ------- ------- ------- ---- ----- CAPITALIZATION TOTAL CAPITALIZATION INCLUDING AOCI, NET OF TAX $13,822 $16,646 $16,481 $17,302 $18,690 35% 8% TOTAL CAPITALIZATION EXCLUDING AOCI, NET OF TAX $12,565 $14,839 $15,124 $16,056 $16,522 31% 3% ------- ------- ------- ------- ------- ---- ----- FINANCIAL RATIOS DEBT (INCLUDING JUNIOR SUBORDINATED DEBENTURES) TO EQUITY INCLUDING AOCI 46.4% 44.8% 45.3% 48.7% 38.1% (8.3) (10.6) Debt (excluding junior subordinated debentures) to equity excluding AOCI 35.6% 39.7% 41.8% 45.3% 39.0% 3.4 (6.3) DEBT (INCLUDING JUNIOR SUBORDINATED DEBENTURES) TO CAPITALIZATION INCLUDING AOCI 31.7% 30.9% 31.2% 32.7% 27.6% (4.1) (5.1) Debt (excluding junior subordinated debentures) to capitalization excluding AOCI 23.2% 26.0% 27.6% 29.3% 26.8% 3.6 (2.5) ------- ------- ------- ------- ------- ---- -----
C-5 THE HARTFORD FINANCIAL SERVICES GROUP, INC. ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX
PROPERTY & LIFE CASUALTY CORPORATE CONSOLIDATED -------- ---------- --------- ------------ AS OF MARCH 31, 2004 Fixed maturities unrealized gain $ 1,629 $ 950 $ 14 $ 2,593 Equities unrealized gain 13 24 - 37 Net deferred loss on cash-flow hedging instruments 27 (10) - 17 ------- ------- ------- ------- Total unrealized gain [1] 1,669 964 14 2,647 Foreign currency translation adjustments (43) (61) - (104) Minimum pension liability adjustment - (36) (339) (375) ------- ------- ------- ------- TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) $ 1,626 $ 867 $ (325) $ 2,168 ------- ------- ------- ------- AS OF DECEMBER 31, 2003 Fixed maturities unrealized gain $ 914 $ 793 $ 17 $ 1,724 Equities unrealized gain (loss) 14 26 - 40 Net deferred gain 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 ------- ------- ------- -------
[1] Life includes a $292 cumulative effect of accounting change related to the adoption of SOP 03-1. C-6 THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
1Q 2Q 3Q 4Q 1Q 2003 2003 2003 2003 2004 --------- ------- ------- ------- ------- Numerator: Net income (loss) $ (1,395) $ 507 $ 343 $ 454 $ 568 Less: Net realized capital gains (losses), after-tax (29) 176 15 29 95 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 5 9 7 8 5 Less: Cumulative effect of accounting change, after-tax - - - - (23) --------- ------- ------- ------- ------- Operating income (loss) (1,361) 340 335 433 501 Impact of 2003 asbestos reserve addition (1,701) - - - - Impact of severance charges - (27) - - - Impact of Bancorp litigation - - (40) - - Impact of tax related items - 30 - - - --------- ------- ------- ------- ------- Operating income before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 340 $ 337 $ 375 $ 433 $ 501 Denominator: Weighted average common shares outstanding (basic) 255.4 268.8 282.5 283.0 289.9 Dilutive effect of convertible securities - - - - 1.9 Dilutive effect of options - 1.4 2.3 2.6 3.1 --------- ------- ------- ------- ------- Weighted average common shares outstanding and dilutive potential common shares (diluted) [1] 255.4 270.2 284.8 285.6 294.9 Basic earnings (loss) per share Net income (loss) $ (5.46) $ 1.89 $ 1.21 $ 1.60 $ 1.96 Less: Net realized capital gains (losses), after-tax (0.11) 0.66 0.05 0.10 0.33 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 0.02 0.03 0.03 0.03 0.02 Less: Cumulative effect of accounting change, after-tax - - - - (0.08) --------- ------- ------- ------- ------- Operating income (loss) (5.33) 1.26 1.19 1.53 1.73 Impact of 2003 asbestos reserve addition (6.66) - - - - Impact of severance charges - (0.10) - - - Impact of Bancorp litigation - - (0.14) - - Impact of tax related items - 0.11 - - - --------- ------- ------- ------- ------- Operating income before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges $ 1.33 $ 1.25 $ 1.33 $ 1.53 $ 1.73 Diluted earnings (loss) per share [1] Net income (loss) $ (5.46) $ 1.88 $ 1.20 $ 1.59 $ 1.93 Less: Net realized capital gains (losses), after-tax (0.11) 0.65 0.05 0.10 0.33 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 0.02 0.03 0.03 0.03 0.02 Less: Cumulative effect of accounting change, after-tax - - - - (0.08) --------- ------- ------- ------- ------- Operating income (loss) (5.33) 1.26 1.18 1.52 1.70 Impact of 2003 asbestos reserve addition (6.66) - - - - Impact of severance charges - (0.10) - - - Impact of Bancorp litigation - - (0.14) - - Impact of tax related items - 0.11 - - - --------- ------- ------- ------- ------- Operating income before impact of 2003 asbestos reserve addition, Bancorp litigation, tax related items and severance charges [2] $ 1.33 $ 1.25 $ 1.32 $ 1.52 $ 1.70 --------- ------- ------- ------- -------
[1] As a result of the antidilutive impact from the net loss in the quarter ended March 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 diluted earnings per share. In the absence of the net loss, 256.1 weighted average common shares outstanding and dilutive potential common shares would have been used in the calculation for the quarter ended March 31, 2003. [2] Calculated using weighted average common shares outstanding and dilutive potential common shares of 256.1 for the quarter ended March 31, 2003. C-7 LIFE THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE FINANCIAL HIGHLIGHTS
1Q 2Q 3Q 4Q 2003 2003 2003 2003 --------- --------- --------- --------- REVENUES Retail Products Group Individual Annuity [1] $ 385 $ 430 $ 454 $ 487 Other Retail 93 103 112 123 --------- --------- --------- --------- Total Retail Products Group 478 533 566 610 Institutional Solutions Group 422 470 733 485 Individual Life 244 240 249 249 Group Benefits [2] 667 638 663 656 Other [1] (25) 81 37 62 --------- --------- --------- --------- TOTAL REVENUES $ 1,786 $ 1,962 $ 2,248 $ 2,062 --------- --------- --------- --------- OPERATING RESULTS BY SEGMENT Retail Products Group Individual Annuity $ 71 $ 93 $ 98 $ 111 Other Retail 6 8 9 10 --------- --------- --------- --------- Total Retail Products Group 77 101 107 121 Institutional Solutions Group 31 28 32 31 Individual Life 32 34 36 41 Group Benefits 34 35 38 41 Other 2 2 8 15 --------- --------- --------- --------- Operating income, before Bancorp litigation and tax related items 176 200 221 249 Bancorp litigation - - (40) - Tax related items - 30 - - --------- --------- --------- --------- Operating income 176 230 181 249 Add: Net realized capital gains (losses), after-tax (29) 38 3 14 Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax 2 6 4 5 --------- --------- --------- --------- Income before cumulative effect of accounting change, net of tax 145 262 180 258 Add: Cumulative effect of accounting change, net of tax - - - - --------- --------- --------- --------- NET INCOME $ 145 $ 262 $ 180 $ 258 --------- --------- --------- --------- Operating income ROE (last 12 months to equity excluding AOCI) 16.0% 16.3% 14.6% 15.0% Operating income ROE (last 12 months to equity excluding AOCI), excluding the impacts of Bancorp litigation and tax related items. 14.0% 14.0% 14.8% 15.2% Assets under management $ 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) $ 1,026 Statutory surplus $ 4,470
YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE --------- --------- ---------- REVENUES Retail Products Group Individual Annuity [1] $ 625 62% 28% Other Retail 138 48% 12% --------- ---- ---- Total Retail Products Group 763 60% 25% Institutional Solutions Group 442 5% (9%) Individual Life 254 4% 2% Group Benefits [2] 1,004 51% 53% Other [1] 595 NM NM --------- ---- ---- TOTAL REVENUES $ 3,058 71% 48% --------- ---- ---- OPERATING RESULTS BY SEGMENT Retail Products Group Individual Annuity $ 112 58% 1% Other Retail 15 150% 50% --------- ---- ---- Total Retail Products Group 127 65% 5% Institutional Solutions Group 29 (6%) (6%) Individual Life 34 6% (17%) Group Benefits 47 38% 15% Other 19 NM 27% --------- ---- ---- Operating income, before Bancorp litigation and tax related items 256 45% 3% Bancorp litigation - - - Tax related items - - - --------- ---- ---- Operating income 256 45% 3% Add: Net realized capital gains (losses), after-tax 50 NM NM Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax 2 - (60%) --------- ---- ---- Income before cumulative effect of accounting change, net of tax 304 110% 18% Add: Cumulative effect of accounting change, net of tax (23) NM - --------- ---- ---- NET INCOME $ 281 94% 9% --------- ---- ---- Operating income ROE (last 12 months to equity excluding AOCI) 15.8% (0.2) 0.8 Operating income ROE (last 12 months to equity excluding AOCI), excluding the impacts of Bancorp litigation and tax related items. 15.8% 1.8 0.6 Assets under management $ 222,712 32% 6% DAC capitalization $ 494 8% DAC amortization $ 233 2% DAC and PVFP assets $ 6,523 (2%) Statutory net income (loss) (YTD) Statutory surplus
[1] With the adoption of SOP 03-1, certain annuity products were required to be accounted for in the general account. This change in accounting results in an increase in net investment income. [2] Group Benefits first quarter 2004 revenues reflect $301 of total revenue associated with the newly acquired business. L - 1 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE OPERATING RESULTS
1Q 2Q 3Q 4Q 2003 2003 2003 2003 -------- -------- -------- -------- REVENUES Earned premiums $ 683 $ 706 $ 981 $ 716 Fee income 617 656 716 771 Net investment income [1] 503 504 512 522 Other revenues 27 37 35 32 Net realized capital (losses) gains [2] (44) 59 4 21 -------- -------- -------- -------- TOTAL REVENUES 1,786 1,962 2,248 2,062 -------- -------- -------- -------- BENEFITS AND EXPENSES Benefits, claims and claim adjustment expenses 1,083 1,086 1,375 1,072 Amortization of deferred policy acquisition costs and present value of future profits 163 175 202 229 Insurance operating costs and expenses 351 395 379 410 Other expenses [3] 4 3 65 - -------- -------- -------- -------- TOTAL BENEFITS AND EXPENSES 1,601 1,659 2,021 1,711 -------- -------- -------- -------- NET INCOME INCOME BEFORE INCOME TAXES 185 303 227 351 Income tax expense [4] 40 41 47 93 -------- -------- -------- -------- Income before cumulative effect of accounting change, net of tax 145 262 180 258 Cumulative effect of accounting change, net of tax - - - - -------- -------- -------- -------- NET INCOME 145 262 180 258 Less: Cumulative effect of accounting change, net of tax - - - - Less: Net realized capital gains (losses), after-tax [2] (29) 38 3 14 Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] 2 6 4 5 -------- -------- -------- -------- OPERATING INCOME [4] [5] $ 176 $ 230 $ 181 $ 249 -------- -------- -------- -------- EFFECTIVE TAX RATE - NET INCOME [4] 21.6% 13.5% 20.7% 26.5% EFFECTIVE TAX RATE - OPERATING INCOME [4] 24.5% 9.1% 21.0% 26.1% -------- -------- -------- --------
YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE -------- --------- ---------- REVENUES Earned premiums $ 995 46% 39% Fee income 786 27% 2% Net investment income [1] 1,201 139% 130% Other revenues - (100%) (100%) Net realized capital (losses) gains [2] 76 NM NM -------- --- --- TOTAL REVENUES 3,058 71% 48% -------- --- --- BENEFITS AND EXPENSES Benefits, claims and claim adjustment expenses 1,877 73% 75% Amortization of deferred policy acquisition costs and present value of future profits 233 43% 2% Insurance operating costs and expenses 526 50% 28% Other expenses [3] 1 (75%) NM -------- --- --- TOTAL BENEFITS AND EXPENSES 2,637 65% 54% -------- --- --- NET INCOME INCOME BEFORE INCOME TAXES 421 128% 20% Income tax expense [4] 117 193% 26% -------- --- --- Income before cumulative effect of accounting change, net of tax 304 110% 18% Cumulative effect of accounting change, net of tax (23) NM NM -------- --- --- NET INCOME 281 94% 9% Less: Cumulative effect of accounting change, net of tax (23) NM NM Less: Net realized capital gains (losses), after-tax [2] 50 NM NM Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax [1] 2 - (60%) -------- --- --- OPERATING INCOME [4] [5] $ 256 45% 3% -------- --- --- EFFECTIVE TAX RATE - NET INCOME [4] 27.8% 6.2 1.3 EFFECTIVE TAX RATE - OPERATING INCOME [4] 26.2% 1.7 0.1 -------- --- ---
[1] With the adoption of SOP 03-1, certain annuity products were required to be accounted for in the general account. This change in accounting results in an increase in net investment income and benefits expense. [2] Includes periodic net coupon settlements on non-qualifying derivatives. [3] The third quarter ended September 30, 2003 includes an expense related to the Bancorp litigation dispute of $62. [4] The quarter ended June 30, 2003 includes a $30 tax benefit primarily related to the favorable treatment of certain tax items. [5] The third quarter ended September 30, 2003 includes an after-tax expense related to the Bancorp litigation dispute of $40. L - 2 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE TOTAL ASSETS UNDER MANAGEMENT/JAPAN DATA
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ---------- ---------- ---------- ---------- ---------- --------- ---------- TOTAL ASSETS UNDER MANAGEMENT Assets General account $ 45,060 $ 47,218 $ 48,028 $ 50,959 $ 71,348 58% 40% Separate account 108,068 122,556 125,110 136,633 127,141 18% (7%) ---------- ---------- ---------- ---------- ---------- --- -- TOTAL ASSETS 153,128 169,774 173,138 187,592 198,489 30% 6% ---------- ---------- ---------- ---------- ---------- --- -- Mutual fund assets 15,045 17,862 18,900 22,462 24,223 61% 8% ---------- ---------- ---------- ---------- ---------- --- -- TOTAL ASSETS UNDER MANAGEMENT $ 168,173 $ 187,636 $ 192,038 $ 210,054 $ 222,712 32% 6% ---------- ---------- ---------- ---------- ---------- --- -- JAPAN ACCOUNT VALUE Yen Y Y 273,880 Y 373,611 Y 535,180 Y 666,878 Y 846,172 NM 27% U.S.$ $ 2,319 $ 3,119 $ 4,800 $ 6,220 $ 8,119 NM 31% ---------- ---------- ---------- ---------- ---------- --- -- SALES Yen Y Y 83,068 Y 71,408 Y 149,326 Y 126,708 Y 153,402 85% 21% U.S.$ $ 700 $ 600 $ 1,276 $ 1,159 $ 1,436 105% 24% ---------- ---------- ---------- ---------- ---------- --- --
L - 3 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE CONSOLIDATED BALANCE SHEETS
1Q 2Q 3Q 4Q 2003 2003 2003 2003 --------- --------- --------- --------- Investments Fixed maturities, available-for-sale, at fair value $ 31,676 $ 34,060 $ 35,237 $ 37,462 Equity securities, available-for-sale, at fair value 410 452 424 357 Equity securities, trading, at fair value - - - - Policy loans, at outstanding balance 2,876 2,889 2,533 2,512 Other investments 1,071 937 891 823 --------- --------- --------- --------- Total investments 36,033 38,338 39,085 41,154 Cash 289 190 293 265 Premiums receivable and agents' balances 191 192 205 335 Reinsurance recoverables 865 797 686 604 Deferred policy acquisition costs and present value of future profits 5,904 5,927 6,265 6,623 Deferred income taxes (347) (562) (479) (486) Goodwill 796 796 796 796 Other assets 1,329 1,540 1,177 1,668 Separate account assets 108,068 122,556 125,110 136,633 --------- --------- --------- --------- TOTAL ASSETS $ 153,128 $ 169,774 $ 173,138 $ 187,592 --------- --------- --------- --------- Future policy benefits, unpaid claims and claim adjustment expenses $ 8,735 $ 8,928 $ 9,362 $ 11,411 Other policyholder funds and benefits payable 25,252 26,255 26,241 26,186 Unearned premiums 52 51 63 58 Other liabilities 3,555 3,762 4,150 4,440 Separate account liabilities 108,068 122,556 125,110 136,633 --------- --------- --------- --------- TOTAL LIABILITIES 145,662 161,552 164,926 178,728 --------- --------- --------- --------- Equity excluding AOCI, net of tax 6,664 7,039 7,263 8,003 AOCI, net of tax 802 1,183 949 861 --------- --------- --------- --------- TOTAL STOCKHOLDERS' EQUITY 7,466 8,222 8,212 8,864 --------- --------- --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 153,128 $ 169,774 $ 173,138 $ 187,592 --------- --------- --------- --------- Hartford Life and Accident Insurance Company NAIC RBC 301% Hartford Life Insurance Company NAIC RBC 393% Hartford Life and Annuity Insurance Company NAIC RBC 493% ---------
YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE --------- --------- ---------- Investments Fixed maturities, available-for-sale, at fair value $ 49,580 57% 32% Equity securities, available-for-sale, at fair value 406 (1%) 14% Equity securities, trading, at fair value 7,831 NM NM Policy loans, at outstanding balance 2,655 (8%) 6% Other investments 1,167 9% 42% --------- ---- ---- Total investments 61,639 71% 50% Cash 460 59% 74% Premiums receivable and agents' balances 207 8% (38%) Reinsurance recoverables 763 (12%) 26% Deferred policy acquisition costs and present value of future profits 6,523 10% (2%) Deferred income taxes (927) (167%) (91%) Goodwill 796 - - Other assets 1,887 42% 13% Separate account assets 127,141 18% (7%) --------- ---- ---- TOTAL ASSETS $ 198,489 30% 6% --------- ---- ---- Future policy benefits, unpaid claims and claim adjustment expenses $ 11,666 34% 2% Other policyholder funds and benefits payable 45,322 79% 73% Unearned premiums 55 6% (5%) Other liabilities 4,542 28% 2% Separate account liabilities 127,141 18% (7%) --------- ---- ---- TOTAL LIABILITIES 188,726 30% 6% --------- ---- ---- Equity excluding AOCI, net of tax 8,137 22% 2% AOCI, net of tax 1,626 103% 89% --------- ---- ---- TOTAL STOCKHOLDERS' EQUITY 9,763 31% 10% --------- ---- ---- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 198,489 30% 6% --------- ---- ---- Hartford Life and Accident Insurance Company NAIC RBC Hartford Life Insurance Company NAIC RBC Hartford Life and Annuity Insurance Company NAIC RBC
L - 4 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE DEFERRED POLICY ACQUISITION COSTS AND PRESENT VALUE OF FUTURE PROFITS
OTHER INSTITUTIONAL INDIVIDUAL RETAIL PRODUCTS SOLUTIONS INDIVIDUAL ANNUITY GROUP GROUP LIFE ---------- --------------- ------------- ---------- BALANCE, DECEMBER 31, 2002 $ 3,691 $ 155 $ 83 $ 1,656 Adjustments to unrealized gains and losses on securities available - for - sale and other 154 29 56 118 -------- ----- ----- ------- Balance excluding adjustments to unrealized gains and losses on securities available - for - sale and other $ 3,845 $ 184 $ 139 $ 1,774 Capitalization 965 98 67 233 Acquisition of Hartford Life Group Insurance Company - - - - Amortization - Deferred Policy Acquisition Costs (434) (59) (34) (153) Amortization - Present Value of Future Profits (16) - - (23) Amortization - Realized Capital (Losses) - - - - -------- ----- ----- ------- Balance, December 31, 2003 $ 4,360 $ 223 $ 172 $ 1,831 Adjustments to unrealized gains and losses on securities available - for - sale and other (190) (28) (67) (131) -------- ----- ----- ------- BALANCE, DECEMBER 31, 2003 INCLUDING ADJUSTMENTS TO UNREALIZED GAINS AND LOSSES ON SECURITIES AVAILABLE-FOR-SALE AND OTHER $ 4,170 $ 195 $ 105 $ 1,700 -------- ----- ----- ------- BALANCE, DECEMBER 31, 2003 $ 4,170 $ 195 $ 105 $ 1,700 Adjustments to unrealized gains and losses on securities available - for - sale and other 190 28 67 131 -------- ----- ----- ------- Balance excluding adjustments to unrealized gains and losses on securities available - for - sale and other $ 4,360 $ 223 $ 172 $ 1,831 Cumulative effect of accounting change (SOP 03-1) (105) - - - Capitalization 286 30 18 61 Amortization - Deferred Policy Acquisition Costs (146) (18) (9) (34) Amortization - Present Value of Future Profits (3) - - (5) Amortization - Realized Capital Gains - - - - -------- ----- ----- ------- Balance, March 31, 2004 $ 4,392 $ 235 $ 181 $ 1,853 Adjustments to unrealized gains and losses on securities available - for - sale and other (385) (38) (79) (165) -------- ----- ----- ------- BALANCE, MARCH 31, 2004 INCLUDING ADJUSTMENTS TO UNREALIZED GAINS AND LOSSES ON SECURITIES AVAILABLE-FOR-SALE AND OTHER $ 4,007 $ 197 $ 102 $ 1,688 -------- ----- ----- -------
GROUP OTHER BENEFITS JAPAN LIFE TOTAL -------- ----- ----- ------- BALANCE, DECEMBER 31, 2002 $ 43 $ 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 $ 43 $ 123 $ 7 $ 6,115 Capitalization 23 240 - 1,626 Acquisition of Hartford Life Group Insurance Company 53 - - 53 Amortization - Deferred Policy Acquisition Costs (18) (32) - (730) Amortization - Present Value of Future Profits - - - (39) Amortization - Realized Capital (Losses) - - 14 14 ----- ----- ----- ------- Balance, December 31, 2003 $ 101 $ 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 $ 101 $ 331 $ 21 $ 6,623 ----- ----- ----- ------- BALANCE, DECEMBER 31, 2003 $ 101 $ 331 $ 21 $ 6,623 Adjustments to unrealized gains and losses on securities available - for - sale and other - - - 416 ----- ----- ----- ------- Balance excluding adjustments to unrealized gains and losses on securities available - for - sale and other $ 101 $ 331 $ 21 $ 7,039 Cumulative effect of accounting change (SOP 03-1) - - - (105) Capitalization 9 90 - 494 Amortization - Deferred Policy Acquisition Costs (5) (13) - (225) Amortization - Present Value of Future Profits - - - (8) Amortization - Realized Capital Gains - - (5) (5) ----- ----- ----- ------- Balance, March 31, 2004 $ 105 $ 408 $ 16 $ 7,190 Adjustments to unrealized gains and losses on securities available - for - sale and other - - - (667) ----- ----- ----- ------- BALANCE, MARCH 31, 2004 INCLUDING ADJUSTMENTS TO UNREALIZED GAINS AND LOSSES ON SECURITIES AVAILABLE-FOR-SALE AND OTHER $ 105 $ 408 $ 16 $ 6,523 ----- ----- ----- -------
L - 5 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE REINSURANCE RECOVERABLE ANALYSIS As of DECEMBER 31, 2003 STATUTORY RESERVE CREDIT AND AMOUNTS RECOVERABLE Gross statutory reinsurance reserve credit $ 1,606 Liability for reinsurance in unauthorized companies (4) ------- Net statutory reinsurance reserve credit $ 1,602 ------- Statutory amounts recoverable from reinsurers $ 200 -------
The top ten reinsurers represent $1,516 or 84% of the total statutory reserve credit and amounts recoverable. - 19% of this amount is with reinsurers rated "A++" by A.M. Best at April 12, 2004. - 36% of this amount is with reinsurers rated "A+" by A.M. Best at April 12, 2004. - 40% of this amount is with reinsurers rated "A-" by A.M. Best at April 12, 2004. - 5% of this amount is with reinsurers rated "B+" by A.M. Best at April 12, 2004. L - 6 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE STATUTORY SURPLUS TO GAAP STOCKHOLDERS' EQUITY RECONCILIATION
DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- Statutory Capital and Surplus $ 4,470 $ 3,019 GAAP Adjustments Investment in subsidiaries (390) (194) Deferred policy acquisition costs 6,623 5,758 Deferred taxes (679) (445) Benefit reserves (3,664) (2,887) Unrealized gains on investments, net of impairments 1,945 1,334 Asset valuation reserve and interest maintenance reserve 460 200 Goodwill 472 559 Other, net (373) (80) ------- ------- GAAP STOCKHOLDERS' EQUITY $ 8,864 $ 7,264 ------- -------
L - 7 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE RETAIL PRODUCTS GROUP - INDIVIDUAL ANNUITY INCOME STATEMENTS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ----- ----- ----- ----- ----- --------- ---------- REVENUES PREMIUMS AND OTHER CONSIDERATIONS Variable annuity fees $ 231 $ 259 $ 296 $ 326 $ 359 55% 10% Other fees 38 33 28 32 26 (32%) (19%) ----- ----- ----- ----- ----- --- --- TOTAL FEE INCOME 269 292 324 358 385 43% 8% Net guaranteed separate account income 20 25 29 27 - (100%) (100%) Direct premiums 28 30 20 18 20 (29%) 11% Reinsurance premiums (37) (32) (29) (32) (34) 8% (6%) ----- ----- ----- ----- ----- --- --- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 280 315 344 371 371 33% - NET INVESTMENT INCOME Net investment income on G/A assets 116 127 128 125 275 137% 120% Net investment income on assigned capital 14 16 16 18 16 14% (11%) Charge for invested capital (30) (31) (36) (36) (36) (20%) - ----- ----- ----- ----- ----- --- --- TOTAL NET INVESTMENT INCOME 100 112 108 107 255 155% 138% Net realized capital gains (losses) [1] 5 3 2 9 (1) NM NM ----- ----- ----- ----- ----- --- --- TOTAL REVENUES 385 430 454 487 625 62% 28% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 17 14 12 8 4 (76%) (50%) Other contract benefits 23 20 15 15 16 (30%) 7% Change in reserve 12 16 10 7 9 (25%) 29% Sales inducements 15 16 18 17 6 (60%) (65%) Interest credited on G/A assets 68 74 73 69 211 NM NM ----- ----- ----- ----- ----- --- --- TOTAL BENEFITS AND CLAIMS 135 140 128 116 246 82% 112% OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 230 281 286 290 325 41% 12% Operating expenses 45 49 46 50 46 2% (8%) Premium taxes and other expenses 6 4 5 2 4 (33%) 100% ----- ----- ----- ----- ----- --- --- SUBTOTAL - EXPENSES BEFORE DEFERRAL 281 334 337 342 375 33% 10% Deferred policy acquisition costs (205) (250) (256) (254) (286) (40%) (13%) ----- ----- ----- ----- ----- --- --- TOTAL OTHER INSURANCE EXPENSE 76 84 81 88 89 17% 1% Amortization of deferred policy acquisition costs and present value of future profits 87 101 125 137 149 71% 9% ----- ----- ----- ----- ----- --- --- TOTAL BENEFITS AND EXPENSES 298 325 334 341 484 62% 42% INCOME BEFORE INCOME TAX EXPENSE 87 105 120 146 141 62% (3%) Income tax expense (benefit) 16 (7) 22 31 30 88% (3%) ----- ----- ----- ----- ----- --- --- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 71 112 98 115 111 56% (3%) Cumulative effect of accounting change, net of tax - - - - (19) - - ----- ----- ----- ----- ----- --- --- NET INCOME 71 112 98 115 92 30% (20%) Less: Cumulative effect of accounting change, net of tax - - - - (19) - - Less: Non operating net realized gains (losses), net of tax [2] - - - 4 (1) - NM ----- ----- ----- ----- ----- --- --- OPERATING INCOME 71 112 98 111 112 58% 1% Less: Tax related items - 19 - - - - - ----- ----- ----- ----- ----- --- --- OPERATING INCOME, BEFORE TAX RELATED ITEMS $ 71 $ 93 $ 98 $ 111 $ 112 58% 1%
[1] Includes periodic net coupon settlements on non-qualifying derivatives and derivatives used as economic hedges of policyholder liabilities. [2] Net gains (losses) on derivatives used as economic hedges of certain policyholder liabilities. L - 8 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE RETAIL PRODUCTS GROUP - OTHER INCOME STATEMENTS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ----- ----- ----- ----- ----- --------- ---------- REVENUES PREMIUMS AND OTHER CONSIDERATIONS Variable annuity fees $ 8 $ 8 $ 11 $ 13 $ 16 100% 23% Mutual fund and other fees 67 76 84 92 105 57% 14% ----- ----- ----- ----- ----- --- --- TOTAL FEE INCOME 75 84 95 105 121 61% 15% Direct premiums - 3 (1) 1 - - (100%) Reinsurance premiums - - - - - - - ----- ----- ----- ----- ----- --- --- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 75 87 94 106 121 61% 14% NET INVESTMENT INCOME Net investment income on G/A assets 16 16 16 17 17 6% - Net investment income on assigned capital - 1 1 - - - - Charge for invested capital 1 (1) - - - (100%) - ----- ----- ----- ----- ----- --- --- TOTAL NET INVESTMENT INCOME 17 16 17 17 17 - - Net realized capital gains (losses) [1] 1 - 1 - - (100%) - ----- ----- ----- ----- ----- --- --- TOTAL REVENUES 93 103 112 123 138 48% 12% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Other contract benefits 2 1 2 2 2 - - Change in reserve - - - - (1) - - Sales inducements - 1 - - - - - Interest credited on G/A assets 10 11 10 10 10 - - ----- ----- ----- ----- ----- --- --- TOTAL BENEFITS AND CLAIMS 12 13 12 12 11 (8%) (8%) OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 43 54 58 69 79 84% 14% Operating expenses 30 32 37 38 35 17% (8%) Premium taxes and other expenses 3 3 1 3 2 (33%) (33%) ----- ----- ----- ----- ----- --- --- SUBTOTAL - EXPENSES BEFORE DEFERRAL 76 89 96 110 116 53% 5% Deferred policy acquisition costs (20) (24) (24) (30) (30) (50%) - ----- ----- ----- ----- ----- --- --- TOTAL OTHER INSURANCE EXPENSE 56 65 72 80 86 54% 8% Amortization of deferred policy acquisition costs 16 13 14 16 18 13% 13% ----- ----- ----- ----- ----- --- --- TOTAL BENEFITS AND EXPENSES 84 91 98 108 115 37% 6% INCOME BEFORE INCOME TAX EXPENSE 9 12 14 15 23 156% 53% Income tax expense 3 3 5 5 8 167% 60% ----- ----- ----- ----- ----- --- --- NET INCOME 6 9 9 10 15 150% 50% Less: Non operating net realized gains (losses), net of tax - - - - - - - ----- ----- ----- ----- ----- --- --- OPERATING INCOME 6 9 9 10 15 150% 50% Less: Tax related items - 1 - - - - - ----- ----- ----- ----- ----- --- --- OPERATING INCOME, BEFORE TAX RELATED ITEMS $ 6 $ 8 $ 9 $ 10 $ 15 150% 50%
[1] Includes periodic net coupon settlements on non-qualifying derivatives. L - 9 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE RETAIL PRODUCTS GROUP SUPPLEMENTAL DATA - SALES/OTHER DEPOSITS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ------ ------ ------ ------ ------ --------- ---------- SALES INDIVIDUAL ANNUITY Broker-dealer $2,521 $3,003 $2,853 $2,824 $3,082 22% 9% Banks 980 1,305 1,464 1,530 1,619 65% 6% ------ ------ ------ ------ ------ --- -- TOTAL SALES BY DISTRIBUTION $3,501 $4,308 $4,317 $4,354 $4,701 34% 8% ------ ------ ------ ------ ------ --- -- Variable $3,437 $4,206 $3,954 $4,074 $4,581 33% 12% Fixed MVA/other 64 102 363 280 120 88% (57%) ------ ------ ------ ------ ------ --- -- TOTAL SALES BY PRODUCT $3,501 $4,308 $4,317 $4,354 $4,701 34% 8% ------ ------ ------ ------ ------ --- -- RETAIL MUTUAL FUNDS $ 848 $1,151 $1,138 $1,634 $1,942 129% 19% 401K Annuity $ 179 $ 276 $ 337 $ 570 $ 279 56% (51%) Mutual funds 3 - - - - (100%) - ------ ------ ------ ------ ------ --- -- TOTAL 401K $ 182 $ 276 $ 337 $ 570 $ 279 53% (51%) ------ ------ ------ ------ ------ --- -- 529 COLLEGE SAVINGS PLAN/SPECIALTY PRODUCTS/OTHER $ 36 $ 49 $ 56 $ 91 $ 100 178% 10% ------ ------ ------ ------ ------ --- -- SALES & OTHER DEPOSITS Individual Annuity Variable $3,437 $4,206 $3,954 $4,074 $4,581 33% 12% Fixed MVA/other 140 191 452 365 232 66% (36%) ------ ------ ------ ------ ------ --- -- TOTAL INDIVIDUAL ANNUITY 3,577 4,397 4,406 4,439 4,813 35% 8% ------ ------ ------ ------ ------ --- -- RETAIL MUTUAL FUNDS 848 1,151 1,138 1,634 1,942 129% 19% 401K Annuity 396 327 409 440 650 64% 48% Mutual funds 45 52 55 63 70 56% 11% ------ ------ ------ ------ ------ --- -- TOTAL 401K 441 379 464 503 720 63% 43% ------ ------ ------ ------ ------ --- -- 529 COLLEGE SAVINGS PLAN/SPECIALTY PRODUCTS/OTHER 36 49 56 91 100 178% 10% ------ ------ ------ ------ ------ --- -- TOTAL RETAIL PRODUCTS GROUP $4,902 $5,976 $6,064 $6,667 $7,575 55% 14% ------ ------ ------ ------ ------ --- --
L - 10 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE RETAIL PRODUCTS GROUP SUPPLEMENTAL DATA - ASSETS UNDER MANAGEMENT
1Q 2Q 3Q 4Q 2003 2003 2003 2003 -------- -------- -------- -------- INDIVIDUAL ANNUITY General account $ 9,523 $ 9,899 $ 9,796 $ 9,351 Guaranteed separate account 9,747 9,685 9,996 10,239 Non-guaranteed separate account 55,379 64,751 68,719 78,126 -------- -------- -------- -------- TOTAL INDIVIDUAL ANNUITY $ 74,649 $ 84,335 $ 88,511 $ 97,716 -------- -------- -------- -------- 401K General account $ 1,000 $ 1,006 $ 1,027 $ 1,024 Non-guaranteed separate account 2,212 2,694 3,017 3,582 -------- -------- -------- -------- Total 401K $ 3,212 $ 3,700 $ 4,044 $ 4,606 -------- -------- -------- -------- TOTAL RETAIL PRODUCTS GROUP General account $ 10,523 $ 10,905 $ 10,823 $ 10,375 Guaranteed separate account 9,747 9,685 9,996 10,239 Non-guaranteed separate account 57,591 67,445 71,736 81,708 -------- -------- -------- -------- TOTAL RETAIL PRODUCTS GROUP ACCOUNT VALUE $ 77,861 $ 88,035 $ 92,555 $102,322 -------- -------- -------- -------- BY PRODUCT INDIVIDUAL ANNUITY Individual Variable Annuities General account $ 8,620 $ 8,959 $ 8,816 $ 8,345 Separate account 55,427 64,789 68,756 78,156 -------- -------- -------- -------- Total individual variable annuities 64,047 73,748 77,572 86,501 Fixed MVA & other individual annuities 10,602 10,587 10,939 11,215 -------- -------- -------- -------- TOTAL INDIVIDUAL ANNUITY 74,649 84,335 88,511 97,716 -------- -------- -------- -------- 401K - ANNUITY 3,212 3,700 4,044 4,606 TOTAL RETAIL PRODUCTS GROUP ACCOUNT VALUE 77,861 88,035 92,555 102,322 SPECIALTY PRODUCTS/OTHER - SEGREGATED ASSETS 7 20 30 48 MUTUAL FUND ASSETS Retail mutual fund assets 13,742 16,290 17,208 20,301 401K mutual fund assets 394 471 502 585 Specialty Product/Other mutual fund assets 84 104 122 109 529 College Savings Plan assets 108 147 177 259 -------- -------- -------- -------- TOTAL MUTUAL FUND ASSETS 14,328 17,012 18,009 21,254 -------- -------- -------- -------- TOTAL RETAIL PRODUCTS GROUP ASSETS UNDER MANAGEMENT $ 92,196 $105,067 $110,594 $123,624 -------- -------- -------- --------
YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE -------- --------- ---------- INDIVIDUAL ANNUITY General account $ 19,338 103% 107% Guaranteed separate account - (100%) (100%) Non-guaranteed separate account 82,360 49% 5% -------- --- --- TOTAL INDIVIDUAL ANNUITY $101,698 36% 4% -------- --- --- 401K General account $ 1,048 5% 2% Non-guaranteed separate account 4,110 86% 15% -------- --- --- Total 401K $ 5,158 61% 12% -------- --- --- TOTAL RETAIL PRODUCTS GROUP General account $ 20,386 94% 96% Guaranteed separate account - (100%) (100%) Non-guaranteed separate account 86,470 50% 6% -------- --- --- TOTAL RETAIL PRODUCTS GROUP ACCOUNT VALUE $106,856 37% 4% -------- --- --- BY PRODUCT INDIVIDUAL ANNUITY Individual Variable Annuities General account $ 7,999 (7%) (4%) Separate account 82,387 49% 5% -------- --- --- Total individual variable annuities 90,386 41% 4% Fixed MVA & other individual annuities 11,312 7% 1% -------- --- --- TOTAL INDIVIDUAL ANNUITY 101,698 36% 4% -------- --- --- 401K - ANNUITY 5,158 61% 12% TOTAL RETAIL PRODUCTS GROUP ACCOUNT VALUE 106,856 37% 4% SPECIALTY PRODUCTS/OTHER - SEGREGATED ASSETS 72 NM 50% MUTUAL FUND ASSETS Retail mutual fund assets 21,888 59% 8% 401K mutual fund assets 644 63% 10% Specialty Product/Other mutual fund assets 121 44% 11% 529 College Savings Plan assets 324 NM 25% -------- --- --- TOTAL MUTUAL FUND ASSETS 22,977 60% 8% -------- --- --- TOTAL RETAIL PRODUCTS GROUP ASSETS UNDER MANAGEMENT $129,905 41% 5% -------- --- ---
L - 11 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE RETAIL PRODUCTS GROUP SUPPLEMENTAL DATA - INDIVIDUAL ANNUITY - ACCOUNT VALUE ROLLFORWARD [1]
1Q 2Q 3Q 4Q 1Q 2003 2003 2003 2003 2004 -------- -------- -------- -------- -------- VARIABLE ANNUITIES BEGINNING BALANCE $ 64,343 $ 64,047 $ 73,748 $ 77,572 $ 86,501 Sales/premiums/other deposits 3,437 4,206 3,954 4,074 4,581 Surrenders (1,800) (1,467) (1,427) (2,163) (2,033) Death benefits/annuitizations/other (307) (297) (270) (278) (359) Net exchanges 8 23 11 5 12 -------- -------- -------- -------- -------- Net Flows 1,338 2,465 2,268 1,638 2,201 Change in market value/change in reserve/interest credited (1,634) 7,236 1,556 7,291 1,684 -------- -------- -------- -------- -------- ENDING BALANCE $ 64,047 $ 73,748 $ 77,572 $ 86,501 $ 90,386 -------- -------- -------- -------- -------- FIXED MVA AND OTHER BEGINNING BALANCE $ 10,565 $ 10,602 $ 10,587 $ 10,939 $ 11,215 Sales/premiums/other deposits 140 191 452 365 232 Surrenders (152) (239) (149) (159) (176) Death benefits/annuitizations/other (99) (113) (98) (93) (105) Net exchanges (7) (21) (11) (4) (12) -------- -------- -------- -------- -------- Net Flows (118) (182) 194 109 (61) Change in market value/change in reserve/interest credited 155 167 158 167 158 -------- -------- -------- -------- -------- ENDING BALANCE $ 10,602 $ 10,587 $ 10,939 $ 11,215 $ 11,312 -------- -------- -------- -------- -------- TOTAL INDIVIDUAL ANNUITY BEGINNING BALANCE $ 74,908 $ 74,649 $ 84,335 $ 88,511 $ 97,716 Sales/premiums/other deposits 3,577 4,397 4,406 4,439 4,813 Surrenders (1,952) (1,706) (1,576) (2,322) (2,209) Death benefits/annuitizations/other (406) (410) (368) (371) (464) Net exchanges 1 2 - 1 - -------- -------- -------- -------- -------- Net Flows 1,220 2,283 2,462 1,747 2,140 Change in market value/change in reserve/interest credited (1,479) 7,403 1,714 7,458 1,842 -------- -------- -------- -------- -------- ENDING BALANCE $ 74,649 $ 84,335 $ 88,511 $ 97,716 $101,698 -------- -------- -------- -------- --------
[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 RETAIL PRODUCTS GROUP SUPPLEMENTAL DATA - OTHER RETAIL - ACCOUNT VALUE ROLLFORWARD [1]
1Q 2Q 3Q 4Q 1Q 2003 2003 2003 2003 2004 -------- -------- -------- -------- -------- 401K ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) BEGINNING BALANCE $ 2,972 $ 3,212 $ 3,700 $ 4,044 $ 4,606 Sales/premiums/other deposits 396 327 409 440 650 Surrenders (100) (107) (138) (205) (197) Death benefits/annuitizations/other (10) (9) (8) (1) (8) -------- -------- -------- -------- -------- Net Flows 286 211 263 234 445 Change in market value/change in reserve/ interest credited (46) 277 81 328 107 -------- -------- -------- -------- -------- ENDING BALANCE $ 3,212 $ 3,700 $ 4,044 $ 4,606 $ 5,158 -------- -------- -------- -------- -------- RETAIL MUTUAL FUNDS ASSET ROLLFORWARD BEGINNING BALANCE $ 14,079 $ 13,742 $ 16,290 $ 17,208 $ 20,301 Sales 848 1,151 1,138 1,634 1,942 Redemptions (716) (615) (654) (631) (887) -------- -------- -------- -------- -------- Net Sales 132 536 484 1,003 1,055 Change in market value (458) 2,028 462 2,110 557 Other (11) (16) (28) (20) (25) -------- -------- -------- -------- -------- ENDING BALANCE $ 13,742 $ 16,290 $ 17,208 $ 20,301 $ 21,888 -------- -------- -------- -------- --------
[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 RETAIL PRODUCTS GROUP - INDIVIDUAL ANNUITY SUPPLEMENTAL DATA - GUARANTEED MINIMUM DEATH BENEFITS
AS OF MARCH 31, 2004 ----------------------------------------- ACCOUNT NET AMT AT % of NAR RETAINED VALUE RISK REINSURED NAR ------- ---------- --------- -------- BREAKDOWN OF VARIABLE ANNUITY ACCOUNT VALUE BY GMDB TYPE Maximum anniversary value (MAV) [1] MAV only $62,274 $ 8,623 89% $ 935 with 5% rollup [2] 5,000 662 82% 120 with Earnings Protection Benefit Rider (EPB) 3,575 133 70% 40 with 5% rollup & EPB 1,482 108 83% 18 ------- ------- -- ------- Total MAV 72,331 9,526 88% 1,113 Asset Protection Benefit (APB) [3] 8,816 12 29% 9 Ratchet [4] (5 years) 46 4 98% 0 Reset [5] (5-7 years) 8,761 910 0% 910 Return of Premium [6]/Other 432 10 2% 10 ------- ------- -- ------- TOTAL $90,386 $10,462 80% $ 2,042 ------- ------- -- -------
AS OF AS OF AS OF AS OF AS OF MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, 2003 2003 2003 2003 2004 ----------- ----------- ------------- ------------ ----------- OTHER DATA S&P 500 Index Value at end of period 848.18 974.50 995.97 1,111.92 1,126.21 Total Account Value $ 64,047 $ 73,748 $ 77,572 $ 86,500 $ 90,386 Net Amount at risk 23,587 17,375 16,200 11,388 10,462 Retained net amount at risk 4,423 3,767 3,689 2,230 2,042 GMDB net GAAP liability [7] - - - - 106 GMDB net statutory reserve 286 233 205 149 160 Present value of retained guaranteed death benefits [8] 191 183 176 132 141 95% Confidence interval of present value of retained guaranteed death benefits [8] (108 - 396) (121 - 387) (110 - 368) (88 - 282) (77 - 417) ----------- ----------- ----------- ---------- ----------- Embedded value of variable annuity in-force business [9] Value of in-force $ 2,332 $ 2,545 $ 2,492 $ 2,805 $ 2,941 Cost of capital (281) (339) (350) (400) (401) ----------- ----------- ----------- ---------- ----------- TOTAL EMBEDDED VALUE $ 2,051 $ 2,206 $ 2,142 $ 2,405 $ 2,540 ----------- ----------- ----------- ---------- -----------
[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 MAV, not to exceed 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] This reserve was established for GAAP in 2004 with the adoption of SOP 03-1. [8] For the March 31, 2004 determination of the 95% confidence interval of present value retained guaranteed death benefits, the Hartford enhanced and expanded the stochastically generated investment performance scenarios to 1,000. This more refined projection of the range of future death claims results in a wider confidence interval. [9] 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 INSTITUTIONAL SOLUTIONS GROUP INCOME STATEMENTS
1Q 2Q 3Q 4Q 2003 2003 2003 2003 ----- ----- ----- ----- REVENUES PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ 19 $ 22 $ 22 $ 25 Cost of insurance charges 53 53 51 50 Other fees 3 1 - - ----- ----- ----- ----- TOTAL FEE INCOME 75 76 73 75 Net guaranteed separate account income 2 3 2 2 Direct premiums 100 142 403 150 ----- ----- ----- ----- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 177 221 478 227 NET INVESTMENT INCOME Net investment income on G/A assets 238 236 245 247 Net investment income on assigned capital 6 7 6 7 Charge for invested capital - 1 1 1 ----- ----- ----- ----- TOTAL NET INVESTMENT INCOME 244 244 252 255 Net realized capital gains (losses) [1] 1 5 3 3 ----- ----- ----- ----- TOTAL REVENUES 422 470 733 485 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 53 37 39 38 Other contract benefits 75 76 74 66 Change in reserve 71 118 387 148 Sales inducements - - 1 - Interest credited on G/A assets 136 143 144 143 ----- ----- ----- ----- TOTAL BENEFITS AND CLAIMS 335 374 645 395 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 10 11 10 13 Operating expenses 25 28 29 31 Dividends to policyholders 14 25 14 7 Premium taxes and other expenses [2] 2 - 62 (2) ----- ----- ----- ----- SUBTOTAL - EXPENSES BEFORE DEFERRAL 51 64 115 49 Deferred policy acquisition costs (15) (16) (17) (19) ----- ----- ----- ----- TOTAL OTHER INSURANCE EXPENSE 36 48 98 30 Amortization of deferred policy acquisition costs 6 7 6 15 ----- ----- ----- ----- TOTAL BENEFITS AND EXPENSES 377 429 749 440 INCOME BEFORE INCOME TAX EXPENSE 45 41 (16) 45 Income tax expense (benefit) 14 12 (8) 14 ----- ----- ----- ----- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 31 29 (8) 31 Cumulative effect of accounting change, net of tax - - - - ----- ----- ----- ----- NET INCOME 31 29 (8) 31 Less: Cumulative effect of accounting change, net of tax - - - - Less: Non operating net realized gains (losses), net of tax - - - - ----- ----- ----- ----- OPERATING INCOME 31 29 (8) 31 Less: Bancorp litigation - - (40) - Less: Tax related items - 1 - - ----- ----- ----- ----- OPERATING INCOME, BEFORE BANCORP LITIGATION AND TAX RELATED ITEMS $ 31 $ 28 $ 32 $ 31
YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE ----- --------- ---------- REVENUES PREMIUMS AND OTHER CONSIDERATIONS Variable annuity and life fees $ 25 32% - Cost of insurance charges 47 (11%) (6%) Other fees 2 (33%) - ----- --- --- TOTAL FEE INCOME 74 (1%) (1%) Net guaranteed separate account income - (100%) (100%) Direct premiums 109 9% (27%) ----- --- --- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 183 3% (19%) NET INVESTMENT INCOME Net investment income on G/A assets 249 5% 1% Net investment income on assigned capital 7 17% - Charge for invested capital 1 - - ----- --- --- TOTAL NET INVESTMENT INCOME 257 5% 1% Net realized capital gains (losses) [1] 2 100% (33%) ----- --- --- TOTAL REVENUES 442 5% (9%) BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 37 (30%) (3%) Other contract benefits 82 9% 24% Change in reserve 94 32% (36%) Sales inducements - - - Interest credited on G/A assets 142 4% (1%) ----- --- --- TOTAL BENEFITS AND CLAIMS 355 6% (10%) OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 10 - (23%) Operating expenses 30 20% (3%) Dividends to policyholders 12 (14%) 71% Premium taxes and other expenses [2] 3 50% NM ----- --- --- SUBTOTAL - EXPENSES BEFORE DEFERRAL 55 8% 12% Deferred policy acquisition costs (18) (20%) 5% ----- --- --- TOTAL OTHER INSURANCE EXPENSE 37 3% 23% Amortization of deferred policy acquisition costs 9 50% (40%) ----- --- --- TOTAL BENEFITS AND EXPENSES 401 6% (9%) INCOME BEFORE INCOME TAX EXPENSE 41 (9%) (9%) Income tax expense (benefit) 12 (14%) (14%) ----- --- --- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 29 (6%) (6%) Cumulative effect of accounting change, net of tax (1) - - ----- --- --- NET INCOME 28 (10%) (10%) Less: Cumulative effect of accounting change, net of tax (1) - - Less: Non operating net realized gains (losses), net of tax - - - ----- --- --- OPERATING INCOME 29 (6%) (6%) Less: Bancorp litigation - - - Less: Tax related items - - - ----- --- --- OPERATING INCOME, BEFORE BANCORP LITIGATION AND TAX RELATED ITEMS $ 29 (6%) (6%)
[1] Includes periodic net coupon settlements on non-qualifying derivatives. [2] The third quarter ended September 30, 2003 includes an expense related to the Bancorp litigation dispute of $62. L - 15 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INSTITUTIONAL SOLUTIONS GROUP SUPPLEMENTAL DATA - SALES/OTHER DEPOSITS
1Q 2Q 3Q 4Q 2003 2003 2003 2003 ---------- ---------- ---------- ---------- SALES INSTITUTIONAL Structured settlements $ 144 $ 180 $ 172 $ 219 Institutional annuities 9 52 308 59 Mutual funds 16 47 55 221 GIC/Funding agreements 164 809 351 562 ---------- ---------- ---------- ---------- TOTAL INSTITUTIONAL $ 333 $ 1,088 $ 886 $ 1,061 ---------- ---------- ---------- ---------- GOVERNMENTAL Annuity $ 77 $ 104 $ 345 $ 102 Mutual funds 8 8 9 8 ---------- ---------- ---------- ---------- TOTAL GOVERNMENTAL $ 85 $ 112 $ 354 $ 110 ---------- ---------- ---------- ---------- PRIVATE PLACEMENT LIFE INSURANCE Corporate owned $ 80 $ 15 $ 12 $ 89 High net worth - 108 4 15 ---------- ---------- ---------- ---------- TOTAL PRIVATE PLACEMENT LIFE INSURANCE $ 80 $ 123 $ 16 $ 104 ---------- ---------- ---------- ---------- SALES & OTHER DEPOSITS INSTITUTIONAL Structured settlements 155 $ 142 $ 161 $ 151 Institutional annuities 9 53 304 64 Mutual funds 16 47 55 221 GIC/Funding agreements 165 623 327 466 Other 3 308 7 6 ---------- ---------- ---------- ---------- TOTAL INSTITUTIONAL 348 1,173 854 908 ---------- ---------- ---------- ---------- GOVERNMENTAL Annuity $ 234 274 520 297 Mutual funds 8 8 9 8 ---------- ---------- ---------- ---------- TOTAL GOVERNMENTAL 242 282 529 305 ---------- ---------- ---------- ---------- PRIVATE PLACEMENT LIFE INSURANCE Corporate owned $ 87 2 55 89 High net worth - 108 4 15 ---------- ---------- ---------- ---------- TOTAL PRIVATE PLACEMENT LIFE INSURANCE $ 87 110 59 104 ---------- ---------- ---------- ---------- TOTAL INSTITUTIONAL SOLUTIONS GROUP $ 677 $ 1,565 $ 1,442 $ 1,317 ---------- ---------- ---------- ---------- YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE ---------- ---------- ---------- SALES INSTITUTIONAL Structured settlements $ 140 (3%) (36%) Institutional annuities 11 22% (81%) Mutual funds 96 NM (57%) GIC/Funding agreements 74 (55%) (87%) ---------- --- --- TOTAL INSTITUTIONAL $ 321 (4%) (70%) ---------- --- --- GOVERNMENTAL Annuity $ 126 64% 24% Mutual funds 10 25% 25% ---------- --- --- TOTAL GOVERNMENTAL $ 136 60% 24% ---------- --- --- PRIVATE PLACEMENT LIFE INSURANCE Corporate owned $ 103 29% 16% High net worth 49 - NM ---------- --- --- TOTAL PRIVATE PLACEMENT LIFE INSURANCE $ 152 90% 46% ---------- --- --- SALES & OTHER DEPOSITS INSTITUTIONAL Structured settlements $ 203 31% 34% Institutional annuities 7 (22%) (89%) Mutual funds 96 NM (57%) GIC/Funding agreements 18 (89%) (96%) Other 4 33% (33%) ---------- --- --- TOTAL INSTITUTIONAL 328 (6%) (64%) ---------- --- --- GOVERNMENTAL Annuity 358 53% 21% Mutual funds 10 25% 25% ---------- --- --- TOTAL GOVERNMENTAL 368 52% 21% ---------- --- --- PRIVATE PLACEMENT LIFE INSURANCE Corporate owned 175 101% 97% High net worth 48 - NM ---------- --- --- TOTAL PRIVATE PLACEMENT LIFE INSURANCE 223 156% 114% ---------- --- --- TOTAL INSTITUTIONAL SOLUTIONS GROUP $ 919 36% (30%) ---------- --- ---
L - 16 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INSTITUTIONAL SOLUTIONS GROUP SUPPLEMENTAL DATA - ASSETS UNDER MANAGEMENT
1Q 2Q 3Q 4Q 2003 2003 2003 2003 ---------- ---------- ---------- ---------- INSTITUTIONAL General account $ 7,793 $ 8,578 $ 9,270 $ 9,912 Guaranteed separate account 407 401 367 343 Non-guaranteed separate account 1,763 2,245 2,265 2,405 ---------- ---------- ---------- ---------- TOTAL INSTITUTIONAL $ 9,963 $ 11,224 $ 11,902 $ 12,660 ---------- ---------- ---------- ---------- GOVERNMENTAL General account $ 3,557 $ 3,594 $ 3,787 $ 3,819 Non-guaranteed separate account 3,642 4,217 4,532 5,146 ---------- ---------- ---------- ---------- TOTAL GOVERNMENTAL $ 7,199 $ 7,811 $ 8,319 $ 8,965 ---------- ---------- ---------- ---------- PRIVATE PLACEMENT LIFE INSURANCE General account $ 2,860 $ 2,835 $ 2,448 $ 2,403 Non-guaranteed separate account 20,162 20,628 20,711 21,114 ---------- ---------- ---------- ---------- TOTAL PRIVATE PLACEMENT LIFE INSURANCE $ 23,022 $ 23,463 $ 23,159 $ 23,517 ---------- ---------- ---------- ---------- TOTAL INSTITUTIONAL SOLUTIONS GROUP General account $ 14,210 $ 15,007 $ 15,505 $ 16,134 Guaranteed separate account 407 401 367 343 Non-guaranteed separate account 25,567 27,090 27,508 28,665 ---------- ---------- ---------- ---------- TOTAL INSTITUTIONAL SOLUTIONS GROUP ACCOUNT VALUE $ 40,184 $ 42,498 $ 43,380 $ 45,142 ---------- ---------- ---------- ---------- BY PRODUCT INSTITUTIONAL Structured settlements 2,838 $ 2,979 $ 3,140 $ 3,285 Institutional annuities 1,975 2,047 2,333 2,395 GIC/Funding agreements 3,469 4,047 4,261 4,677 Other 1,681 2,151 2,168 2,303 ---------- ---------- ---------- ---------- TOTAL INSTITUTIONAL 9,963 11,224 11,902 12,660 ---------- ---------- ---------- ---------- GOVERNMENTAL - ANNUITY 7,199 7,811 8,319 8,965 PRIVATE PLACEMENT LIFE INSURANCE Variable 19,863 20,326 20,557 20,993 Leveraged 3,159 3,137 2,602 2,524 ---------- ---------- ---------- ---------- TOTAL PRIVATE PLACEMENT LIFE INSURANCE 23,022 23,463 23,159 23,517 ---------- ---------- ---------- ---------- TOTAL INSTITUTIONAL SOLUTIONS GROUP ACCOUNT VALUE 40,184 42,498 43,380 45,142 MUTUAL FUND ASSETS Institutional mutual fund assets 108 166 196 438 Governmental mutual fund assets 609 684 695 770 ---------- ---------- ---------- ---------- TOTAL MUTUAL FUND ASSETS 717 850 891 1,208 ---------- ---------- ---------- ---------- TOTAL INSTITUTIONAL SOLUTIONS GROUP ASSETS UNDER MANAGEMENT $ 40,901 $ 43,348 $ 44,271 $ 46,350 ---------- ---------- ---------- ---------- YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE ---------- ---------- ---------- INSTITUTIONAL General account $ 10,135 30% 2% Guaranteed separate account 357 (12%) 4% Non-guaranteed separate account 2,449 39% 2% ---------- --- -- TOTAL INSTITUTIONAL $ 12,941 30% 2% ---------- --- -- GOVERNMENTAL General account $ 3,831 8% - Non-guaranteed separate account 5,412 49% 5% ---------- --- -- TOTAL GOVERNMENTAL $ 9,243 28% 3% ---------- --- -- PRIVATE PLACEMENT LIFE INSURANCE General account $ 2,417 (15%) 1% Non-guaranteed separate account 21,425 6% 1% ---------- --- -- TOTAL PRIVATE PLACEMENT LIFE INSURANCE $ 23,842 4% 1% ---------- --- -- TOTAL INSTITUTIONAL SOLUTIONS GROUP General account $ 16,383 15% 2% Guaranteed separate account 357 (12%) 4% Non-guaranteed separate account 29,286 15% 2% ---------- --- -- TOTAL INSTITUTIONAL SOLUTIONS GROUP ACCOUNT VALUE $ 46,026 15% 2% ---------- --- -- BY PRODUCT INSTITUTIONAL Structured settlements $ 3,492 23% 6% Institutional annuities 2,418 22% 1% GIC/Funding agreements 4,686 35% - Other 2,345 40% 2% ---------- --- -- TOTAL INSTITUTIONAL 12,941 30% 2% ---------- --- -- GOVERNMENTAL - ANNUITY 9,243 28% 3% PRIVATE PLACEMENT LIFE INSURANCE Variable 21,305 7% 1% Leveraged 2,537 (20%) 1% ---------- --- -- TOTAL PRIVATE PLACEMENT LIFE INSURANCE 23,842 4% 1% ---------- --- -- TOTAL INSTITUTIONAL SOLUTIONS GROUP ACCOUNT VALUE 46,026 15% 2% MUTUAL FUND ASSETS Institutional mutual fund assets 484 NM 11% Governmental mutual fund assets 762 25% (1%) ---------- --- -- TOTAL MUTUAL FUND ASSETS 1,246 74% 3% ---------- --- -- TOTAL INSTITUTIONAL SOLUTIONS GROUP ASSETS UNDER MANAGEMENT $ 47,272 16% 2% ---------- --- --
L - 17 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INSTITUTIONAL SOLUTIONS GROUP SUPPLEMENTAL DATA - ACCOUNT VALUE AND ASSET ROLLFORWARD [1]
1Q 2Q 2003 2003 -------- -------- INSTITUTIONAL ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) BEGINNING BALANCE $ 9,738 $ 9,963 Sales/premiums/other deposits 332 1,126 Surrenders (96) (130) Death benefits/annuitizations/other (93) (88) -------- -------- Net Flows 143 908 Change in market value/change in reserve/interest credited 82 353 -------- -------- ENDING BALANCE $ 9,963 $ 11,224 -------- -------- GOVERNMENTAL ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) BEGINNING BALANCE $ 7,211 $ 7,199 Sales/premiums/other deposits 234 274 Surrenders (152) (174) Death benefits/annuitizations/other (19) (18) -------- -------- Net Flows 63 82 Change in market value/change in reserve/interest credited (75) 530 -------- -------- ENDING BALANCE $ 7,199 $ 7,811 -------- -------- PRIVATE PLACEMENT LIFE INSURANCE ACCOUNT VALUE ROLLFORWARD BEGINNING BALANCE $ 22,995 $ 23,022 Initial and subsequent premiums 87 110 Surrenders (189) (33) Death benefits/annuitizations/other (110) (120) -------- -------- Net Flows (212) (43) Change in market value/change in reserve/interest credited 239 484 -------- -------- ENDING BALANCE $ 23,022 $ 23,463 -------- -------- 3Q 4Q 1Q 2003 2003 2004 -------- -------- -------- INSTITUTIONAL ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) BEGINNING BALANCE $ 11,224 $ 11,902 $ 12,660 Sales/premiums/other deposits 799 687 232 Surrenders (114) (210) (88) Death benefits/annuitizations/other (90) (82) (99) -------- -------- -------- Net Flows 595 395 45 Change in market value/change in reserve/interest credited 83 363 236 -------- -------- -------- ENDING BALANCE $ 11,902 $ 12,660 $ 12,941 -------- -------- -------- GOVERNMENTAL ACCOUNT VALUE ROLLFORWARD (EXCLUDING ALL MUTUAL FUNDS) BEGINNING BALANCE $ 7,811 $ 8,319 $ 8,965 Sales/premiums/other deposits 520 297 358 Surrenders (154) (197) (239) Death benefits/annuitizations/other (17) (17) (15) -------- -------- -------- Net Flows 349 83 104 Change in market value/change in reserve/interest credited 159 563 174 -------- -------- -------- ENDING BALANCE $ 8,319 $ 8,965 $ 9,243 -------- -------- -------- PRIVATE PLACEMENT LIFE INSURANCE ACCOUNT VALUE ROLLFORWARD BEGINNING BALANCE $ 23,463 $ 23,159 $ 23,517 Initial and subsequent premiums 59 104 223 Surrenders (571) (106) (16) Death benefits/annuitizations/other (93) (38) (119) -------- -------- -------- Net Flows (605) (40) 88 Change in market value/change in reserve/interest credited 301 398 237 -------- -------- -------- ENDING BALANCE $ 23,159 $ 23,517 $ 23,842 -------- -------- --------
[1] Account value includes policyholder balances for investment contracts and reserves for future policy benefits for insurance contracts. L - 18 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE INCOME STATEMENTS
1Q 2Q 3Q 4Q 2003 2003 2003 2003 ---------- ---------- ---------- ---------- REVENUES PREMIUMS AND OTHER CONSIDERATIONS Variable life fees $ 9 $ 11 $ 11 $ 13 Cost of insurance charges 106 107 108 110 Other fees 64 64 69 67 ---------- ---------- ---------- ---------- TOTAL FEE INCOME 179 182 188 190 Net guaranteed separate account income 3 2 2 1 Direct premiums 14 15 15 17 Reinsurance premiums (18) (21) (19) (23) ---------- ---------- ---------- ---------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 178 178 186 185 NET INVESTMENT INCOME Net investment income on G/A assets 72 70 69 71 Net investment income on assigned capital 4 3 4 4 Charge for invested capital (10) (10) (10) (11) ---------- ---------- ---------- ---------- TOTAL NET INVESTMENT INCOME 66 63 63 64 Net realized capital gains (losses) [1] - (1) - - ---------- ---------- ---------- ---------- TOTAL REVENUES 244 240 249 249 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 61 55 62 46 Other contract benefits 5 6 6 6 Change in reserve - (2) - (1) Interest credited on G/A assets 46 49 49 48 ---------- ---------- ---------- ---------- TOTAL BENEFITS AND CLAIMS 112 108 117 99 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 37 37 40 54 Operating expenses 44 47 47 55 Dividends to policyholders 1 - 1 1 Premium taxes and other expenses 8 7 7 8 ---------- ---------- ---------- ---------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 90 91 95 118 Deferred policy acquisition costs (51) (52) (57) (73) ---------- ---------- ---------- ---------- TOTAL OTHER INSURANCE EXPENSE 39 39 38 45 Amortization of deferred policy acquisition costs and present value of future profits 46 43 42 45 ---------- ---------- ---------- ---------- TOTAL BENEFITS AND EXPENSES 197 190 197 189 INCOME BEFORE INCOME TAX EXPENSE 47 50 52 60 Income tax expense (benefit) 15 14 16 19 ---------- ---------- ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 32 36 36 41 Cumulative effect of accounting change, net of tax - - - - ---------- ---------- ---------- ---------- NET INCOME 32 36 36 41 Less: Cumulative effect of accounting change, net of tax - - - - Less: Non operating net realized gains (losses), net of tax - - - - ---------- ---------- ---------- ---------- OPERATING INCOME 32 36 36 41 Less: Tax related items - 2 - - ---------- ---------- ---------- ---------- OPERATING INCOME, BEFORE TAX RELATED ITEMS $ 32 $ 34 $ 36 $ 41 YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE ---------- ---------- ---------- REVENUES PREMIUMS AND OTHER CONSIDERATIONS Variable life fees $ 12 33% (8%) Cost of insurance charges 110 4% - Other fees 64 - (4%) ---------- ---- ---- TOTAL FEE INCOME 186 4% (2%) Net guaranteed separate account income - (100%) (100%) Direct premiums 17 21% - Reinsurance premiums (22) (22%) 4% ---------- ---- ---- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 181 2% (2%) NET INVESTMENT INCOME Net investment income on G/A assets 80 11% 13% Net investment income on assigned capital 3 (25%) (25%) Charge for invested capital (10) - 9% ---------- ---- ---- TOTAL NET INVESTMENT INCOME 73 11% 14% Net realized capital gains (losses) [1] - - - ---------- ---- ---- TOTAL REVENUES 254 4% 2% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 67 10% 46% Other contract benefits 5 - (17%) Change in reserve - - 100% Interest credited on G/A assets 53 15% 10% ---------- ---- ---- TOTAL BENEFITS AND CLAIMS 125 12% 26% OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 44 19% (19%) Operating expenses 48 9% (13%) Dividends to policyholders 1 - - Premium taxes and other expenses 8 - - ---------- ---- ---- SUBTOTAL - EXPENSES BEFORE DEFERRAL 101 12% (14%) Deferred policy acquisition costs (61) (20%) 16% ---------- ---- ---- TOTAL OTHER INSURANCE EXPENSE 40 3% (11%) Amortization of deferred policy acquisition costs and present value of future profits 39 (15%) (13%) ---------- ---- ---- TOTAL BENEFITS AND EXPENSES 204 4% 8% INCOME BEFORE INCOME TAX EXPENSE 50 6% (17%) Income tax expense (benefit) 16 7% (16%) ---------- ---- ---- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 34 6% (17%) Cumulative effect of accounting change, net of tax (1) - - ---------- ---- ---- NET INCOME 33 3% (20%) Less: Cumulative effect of accounting change, net of tax (1) - - Less: Non operating net realized gains (losses), net of tax - - - ---------- ---- ---- OPERATING INCOME 34 6% (17%) Less: Tax related items - - - ---------- ---- ---- OPERATING INCOME, BEFORE TAX RELATED ITEMS $ 34 6% (17%)
[1] Includes periodic net coupon settlements on non-qualifying derivatives. L - 19 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE SUPPLEMENTAL DATA
1Q 2Q 3Q 4Q 2003 2003 2003 2003 ---------- ---------- ---------- ---------- SALES BY DISTRIBUTION Wirehouse/regional broker-dealer/banks $ 15 $ 18 $ 28 $ 32 Independent broker-dealer/WFS 13 11 12 18 Life professional/other 11 8 10 20 ---------- ---------- ---------- ---------- TOTAL SALES BY DISTRIBUTION $ 39 $ 37 $ 50 $ 70 ---------- ---------- ---------- ---------- SALES BY PRODUCT Variable life $ 26 $ 23 $ 26 $ 30 Universal life/whole life 11 11 21 37 Term life/other 2 3 3 3 ---------- ---------- ---------- ---------- TOTAL SALES BY PRODUCT $ 39 $ 37 $ 50 $ 70 ---------- ---------- ---------- ---------- ACCOUNT VALUE General account $ 3,682 $ 3,722 $ 3,770 $ 3,829 Separate account 3,901 4,344 4,477 4,897 ---------- ---------- ---------- ---------- TOTAL ACCOUNT VALUE $ 7,583 $ 8,066 $ 8,247 $ 8,726 ---------- ---------- ---------- ---------- ACCOUNT VALUE BY PRODUCT Variable life $ 3,673 $ 4,141 $ 4,284 $ 4,725 Universal life/interest sensitive whole life 3,144 3,166 3,213 3,259 Modified guaranteed life 677 671 661 655 Other 89 88 89 87 ---------- ---------- ---------- ---------- TOTAL ACCOUNT VALUE BY PRODUCT $ 7,583 $ 8,066 $ 8,247 $ 8,726 ---------- ---------- ---------- ---------- LIFE INSURANCE IN FORCE Variable life $ 66,631 $ 66,518 $ 66,561 $ 67,031 Universal life/interest sensitive whole life 38,098 37,935 37,990 38,320 Term life 21,115 21,895 22,754 24,302 Modified guaranteed life 933 918 896 881 Other 252 254 261 264 ---------- ---------- ---------- ---------- TOTAL LIFE INSURANCE IN FORCE $ 127,029 $ 127,520 $ 128,462 $ 130,798 ---------- ---------- ---------- ---------- YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE ---------- ---------- ---------- SALES BY DISTRIBUTION Wirehouse/regional broker-dealer/banks $ 21 40% (34%) Independent broker-dealer/WFS 16 23% (11%) Life professional/other 14 27% (30%) ---------- --- --- TOTAL SALES BY DISTRIBUTION $ 51 31% (27%) ---------- --- --- SALES BY PRODUCT Variable life $ 23 (12%) (23%) Universal life/whole life 24 118% (35%) Term life/other 4 100% 33% ---------- --- --- TOTAL SALES BY PRODUCT $ 51 31% (27%) ---------- --- --- ACCOUNT VALUE General account $ 4,395 19% 15% Separate account 4,441 14% (9%) ---------- --- --- TOTAL ACCOUNT VALUE $ 8,836 17% 1% ---------- --- --- ACCOUNT VALUE BY PRODUCT Variable life $ 4,797 31% 2% Universal life/interest sensitive whole life 3,297 5% 1% Modified guaranteed life 653 (4%) - Other 89 - 2% ---------- --- --- TOTAL ACCOUNT VALUE BY PRODUCT $ 8,836 17% 1% ---------- --- --- LIFE INSURANCE IN FORCE Variable life $ 67,101 1% - Universal life/interest sensitive whole life 38,532 1% 1% Term life 25,711 22% 6% Modified guaranteed life 872 (7%) (1%) Other 266 6% 1% ---------- --- --- TOTAL LIFE INSURANCE IN FORCE $ 132,482 4% 1% ---------- --- ---
L - 20 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE INDIVIDUAL LIFE ACCOUNT VALUE ROLLFORWARD
1Q 2Q 3Q 4Q 1Q 2003 2003 2003 2003 2004 ---------- ---------- ---------- ---------- ---------- VARIABLE LIFE BEGINNING BALANCE $ 3,648 $ 3,673 $ 4,141 $ 4,284 $ 4,725 First year & single premiums 78 69 65 69 65 Renewal premiums 133 125 121 159 139 ---------- ---------- ---------- ---------- ---------- Premiums and deposits 211 194 186 228 204 Change in market value/interest credited (35) 437 119 410 44 Surrenders [2] (52) (60) (64) (82) (75) Death benefits/policy fees (104) (107) (103) (115) (101) Net exchanges 5 4 5 - - ---------- ---------- ---------- ---------- ---------- ENDING BALANCE $ 3,673 $ 4,141 $ 4,284 $ 4,725 $ 4,797 ---------- ---------- ---------- ---------- ---------- OTHER [1] BEGINNING BALANCE $ 3,909 $ 3,910 $ 3,925 $ 3,963 $ 4,001 First year & single premiums 13 20 59 70 60 Renewal premiums 86 83 86 84 83 ---------- ---------- ---------- ---------- ---------- Premiums and deposits 99 103 145 154 143 Change in market value/interest credited 49 52 50 50 48 Surrenders (54) (48) (62) (66) (55) Death benefits/policy fees (88) (88) (90) (100) (98) Net exchanges (5) (4) (5) - - ---------- ---------- ---------- ---------- ---------- ENDING BALANCE $ 3,910 $ 3,925 $ 3,963 $ 4,001 $ 4,039 ---------- ---------- ---------- ---------- ---------- TOTAL INDIVIDUAL LIFE BEGINNING BALANCE $ 7,557 $ 7,583 $ 8,066 $ 8,247 $ 8,726 First year & single premiums 91 89 124 139 125 Renewal premiums 219 208 207 243 222 ---------- ---------- ---------- ---------- ---------- Premiums and deposits 310 297 331 382 347 Change in market value/interest credited 14 489 169 460 92 Surrenders (106) (108) (126) (148) (130) Death benefits/policy fees (192) (195) (193) (215) (199) Net exchanges - - - - - ---------- ---------- ---------- ---------- ---------- ENDING BALANCE $ 7,583 $ 8,066 $ 8,247 $ 8,726 $ 8,836 ---------- ---------- ---------- ---------- ----------
[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 - 21 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE GROUP BENEFITS INCOME STATEMENTS
1Q 2Q 3Q 4Q 2003 2003 2003 2003 ---------- ---------- ---------- ---------- REVENUES PREMIUMS AND OTHER CONSIDERATIONS ASO fees 6 4 4 5 Other fees - - 1 - ---------- ---------- ---------- ---------- TOTAL FEE INCOME 6 4 5 5 Direct premiums 569 569 582 578 Reinsurance premiums 27 - 10 7 ---------- ---------- ---------- ---------- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 602 573 597 590 NET INVESTMENT INCOME Net investment income on G/A assets 58 55 56 56 Net investment income on assigned capital 10 9 10 10 ---------- ---------- ---------- ---------- TOTAL NET INVESTMENT INCOME 68 64 66 66 Net realized capital gains (losses) [1] (3) 1 - - ---------- ---------- ---------- ---------- TOTAL REVENUES 667 638 663 656 BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 175 172 167 150 Other contract benefits 261 251 262 251 Change in reserve 53 28 43 49 ---------- ---------- ---------- ---------- TOTAL BENEFITS AND CLAIMS 489 451 472 450 OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 58 59 61 56 Operating expenses 69 72 70 86 Premium taxes and other expenses 11 11 12 11 ---------- ---------- ---------- ---------- SUBTOTAL - EXPENSES BEFORE DEFERRAL 138 142 143 153 Deferred policy acquisition costs (7) (4) (6) (6) ---------- ---------- ---------- ---------- TOTAL OTHER INSURANCE EXPENSE 131 138 137 147 Amortization of deferred policy acquisition costs and present value of future profits 4 5 4 5 ---------- ---------- ---------- ---------- TOTAL BENEFITS AND EXPENSES 624 594 613 602 INCOME BEFORE INCOME TAX EXPENSE 43 44 50 54 Income tax expense (benefit) 9 9 12 13 ---------- ---------- ---------- ---------- NET INCOME 34 35 38 41 Less: Non operating net realized gains (losses), net of tax - - - - ---------- ---------- ---------- ---------- OPERATING INCOME 34 35 38 41 Less: Tax related items - - - - ---------- ---------- ---------- ---------- OPERATING INCOME, BEFORE TAX RELATED ITEMS $ 34 $ 35 $ 38 $ 41 YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE ---------- ---------- ---------- REVENUES PREMIUMS AND OTHER CONSIDERATIONS ASO fees 9 50% 80% Other fees 1 - - ---------- --- --- TOTAL FEE INCOME 10 67% 100% Direct premiums 726 28% 26% Reinsurance premiums 179 NM NM ---------- --- --- TOTAL PREMIUMS AND OTHER CONSIDERATIONS 915 52% 55% NET INVESTMENT INCOME Net investment income on G/A assets 77 33% 38% Net investment income on assigned capital 12 20% 20% ---------- --- --- TOTAL NET INVESTMENT INCOME 89 31% 35% Net realized capital gains (losses) [1] - 100% - ---------- --- --- TOTAL REVENUES 1,004 51% 53% BENEFITS AND EXPENSES BENEFITS AND CLAIMS Death benefits 259 48% 73% Other contract benefits 387 48% 54% Change in reserve 38 (28%) (22%) ---------- --- --- TOTAL BENEFITS AND CLAIMS 684 40% 52% OTHER INSURANCE EXPENSES Commissions & wholesaling expenses 129 122% 130% Operating expenses 113 64% 31% Premium taxes and other expenses 19 73% 73% ---------- --- --- SUBTOTAL - EXPENSES BEFORE DEFERRAL 261 89% 71% Deferred policy acquisition costs (9) (29%) (50%) ---------- --- --- TOTAL OTHER INSURANCE EXPENSE 252 92% 71% Amortization of deferred policy acquisition costs and present value of future profits 5 25% - ---------- --- --- TOTAL BENEFITS AND EXPENSES 941 51% 56% INCOME BEFORE INCOME TAX EXPENSE 63 47% 17% Income tax expense (benefit) 16 78% 23% ---------- --- --- NET INCOME 47 38% 15% Less: Non operating net realized gains (losses), net of tax - - - ---------- --- --- OPERATING INCOME 47 38% 15% Less: Tax related items - - - ---------- --- --- OPERATING INCOME, BEFORE TAX RELATED ITEMS $ 47 38% 15%
[1] Includes periodic net coupon settlements on non-qualifying derivatives. L - 22 THE HARTFORD FINANCIAL SERVICES GROUP, INC. LIFE GROUP BENEFITS SUPPLEMENTAL DATA
1Q 2Q 3Q 4Q 2003 2003 2003 2003 ---------- ---------- ---------- ---------- PREMIUMS FULLY INSURED - ONGOING PREMIUMS Group disability $ 243 $ 237 $ 243 $ 240 Group life 243 240 249 252 Other 82 91 89 93 ---------- ---------- ---------- ---------- TOTAL FULLY INSURED - ONGOING PREMIUMS 568 568 581 585 ---------- ---------- ---------- ---------- Total buyouts [1] 28 1 11 - ---------- ---------- ---------- ---------- TOTAL PREMIUMS 596 569 592 585 Group disability - premium equivalents [2] 50 51 50 51 ---------- ---------- ---------- ---------- TOTAL PREMIUMS AND PREMIUM EQUIVALENT CLAIMS $ 646 $ 620 $ 642 $ 636 ---------- ---------- ---------- ---------- SALES (GROSS FULLY INSURED - ONGOING SALES ANNUALIZED Group disability $ 103 $ 51 $ 32 $ 39 NEW PREMIUMS) Group life 89 30 38 43 Other 30 11 30 11 ---------- ---------- ---------- ---------- TOTAL FULLY INSURED - ONGOING SALES 222 92 100 93 ---------- ---------- ---------- ---------- Total buyouts [1] 26 3 11 16 ---------- ---------- ---------- ---------- TOTAL SALES 248 95 111 109 Group disability premium equivalents [2] 24 4 6 7 ---------- ---------- ---------- ---------- TOTAL SALES AND PREMIUM EQUIVALENTS $ 272 $ 99 $ 117 $ 116 ---------- ---------- ---------- ---------- RATIOS [3] Loss Ratio 80.3% 78.7% 78.7% 76.3% Expense Ratio 23.5% 25.0% 24.1% 25.8% ---------- ---------- ---------- ---------- GAAP RESERVES Group disability $ 2,516 $ 2,538 $ 2,552 $ 3,997 Group life 799 803 822 1,282 Other 186 188 212 200 ---------- ---------- ---------- ---------- TOTAL GAAP RESERVES $ 3,501 $ 3,529 $ 3,586 $ 5,479 ---------- ---------- ---------- ---------- YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE ---------- ---------- ---------- PREMIUMS FULLY INSURED - ONGOING PREMIUMS Group disability $ 393 62% 64% Group life 415 71% 65% Other 97 18% 4% ---------- ---- ---- TOTAL FULLY INSURED - ONGOING PREMIUMS 905 59% 55% ---------- ---- ---- Total buyouts [1] - (100%) - ---------- ---- ---- TOTAL PREMIUMS 905 52% 55% Group disability - premium equivalents [2] 62 24% 22% ---------- ---- ---- TOTAL PREMIUMS AND PREMIUM EQUIVALENT CLAIMS $ 967 50% 52% ---------- ---- ---- SALES (GROSS FULLY INSURED - ONGOING SALES ANNUALIZED Group disability $ 139 35% NM NEW PREMIUMS) Group life 152 71% NM Other 50 67% NM ---------- ---- ---- TOTAL FULLY INSURED - ONGOING SALES 341 54% NM ---------- ---- ---- Total buyouts [1] - (100%) (100%) ---------- ---- ---- TOTAL SALES 341 38% NM Group disability premium equivalents [2] 37 54% NM ---------- ---- ---- TOTAL SALES AND PREMIUM EQUIVALENTS $ 378 39% NM ---------- ---- ---- RATIOS [3] Loss Ratio 74.8% Expense Ratio 28.1% ---------- GAAP RESERVES Group disability $ 4,042 61% 1% Group life 1,274 59% (1%) Other 202 9% 1% ---------- ---- ---- TOTAL GAAP RESERVES $ 5,518 58% 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 - 23 PROPERTY & CASUALTY THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY FINANCIAL HIGHLIGHTS
1Q 2Q 3Q 4Q 2003 2003 2003 2003 ---------- ---------- ---------- ---------- TOTAL PROPERTY & CASUALTY PREMIUMS Written premiums $ 2,447 $ 2,134 $ 2,318 $ 2,166 Earned premiums [1] 2,166 2,106 2,268 2,265 TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Business Insurance 7 50 34 67 Personal Lines 56 8 40 26 Specialty Commercial 5 25 (46) 26 ---------- ---------- ---------- ---------- ONGOING OPERATIONS UNDERWRITING RESULTS 68 83 28 119 Other Operations (2,651) (89) (22) (78) ---------- ---------- ---------- ---------- TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS $ (2,583) $ (6) $ 6 $ 41 ONGOING OPERATIONS UNDERWRITING RATIOS Loss and loss adjustment expenses Current year 69.9 68.9 68.7 67.8 Prior year [1] [2] - - 2.1 (0.2) ---------- ---------- ---------- ---------- Total loss and loss adjustment expenses 69.9 68.9 70.7 67.5 Expenses 26.2 26.6 27.6 26.8 Policyholder dividends 0.5 0.5 0.4 0.2 ---------- ---------- ---------- ---------- COMBINED RATIO 96.6 96.0 98.8 94.6 ---------- ---------- ---------- ---------- Catastrophe ratio [2] 2.7 4.7 3.4 1.5 ---------- ---------- ---------- ---------- COMBINED RATIO BEFORE CATASTROPHES 93.8 91.3 95.3 93.1 COMBINED RATIO BEFORE CATASTROPHES AND PRIOR YEAR DEVELOPMENT 93.8 91.3 93.3 92.6 ---------- ---------- ---------- ---------- TOTAL PROPERTY & CASUALTY INCOME AND ROE Net income (loss) $ (1,495) $ 295 $ 218 $ 237 Operating income (loss) [3] (1,492) 160 209 225 Impacts of 2003 asbestos reserve addition and severance charges (1,701) (27) - - Operating income before impacts of 2003 asbestos reserve addition and severance charges 209 187 209 225 Operating income ROE (last 12 months income-equity x-AOCI) (28.7%) (24.4%) (22.3%) (20.1%) Operating income ROE (last 12 months income-equity x-AOCI) excluding the impact of the 2003 asbestos reserve additon and severance charges [4] 12.6% 13.9% 14.5% 15.2% ---------- ---------- ---------- ---------- YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE ---------- ---------- ---------- TOTAL PROPERTY & CASUALTY PREMIUMS Written premiums $ 2,397 (2%) 11% Earned premiums [1] 2,186 1% (3%) TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Business Insurance 225 NM NM Personal Lines 106 89% NM Specialty Commercial (110) NM NM ---------- ---- ---- ONGOING OPERATIONS UNDERWRITING RESULTS 221 NM 86% Other Operations (65) 98% 17% ---------- ---- ---- TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS $ 156 NM NM ONGOING OPERATIONS UNDERWRITING RATIOS Loss and loss adjustment expenses Current year 66.8 3.1 1.0 Prior year [1] [2] (4.5) 4.5 4.3 ---------- ---- ---- Total loss and loss adjustment expenses 62.2 7.7 5.3 Expenses 27.3 (1.1) (0.5) Policyholder dividends 0.3 0.2 (0.1) ---------- ---- ---- COMBINED RATIO 89.8 6.8 4.8 ---------- ---- ---- Catastrophe ratio [2] (12.2) 14.9 13.7 ---------- ---- ---- COMBINED RATIO BEFORE CATASTROPHES 102.0 (8.2) (8.9) COMBINED RATIO BEFORE CATASTROPHES AND PRIOR YEAR DEVELOPMENT 92.7 1.1 (0.1) ---------- ---- ---- TOTAL PROPERTY & CASUALTY INCOME AND ROE Net income (loss) $ 341 NM 44% Operating income (loss) [3] 297 NM 32% Impacts of 2003 asbestos reserve addition and severance charges - 100% - Operating income before impacts of 2003 asbestos reserve addition and severance charges 297 42% 32% Operating income ROE (last 12 months income-equity x-AOCI) 18.5% 47.2 38.6 Operating income ROE (last 12 months income-equity x-AOCI) excluding the impact of the 2003 asbestos reserve additon and severance charges [4] 17.1% 4.5 1.9 ---------- ---- ----
PROPERTY & CASUALTY ------------------------------- MAR. 31, DEC. 31, 2004 2003 CHANGE -------- -------- ------ SELECTED FINANCIAL DATA Hartford Fire adjusted statutory surplus ($ in billions) $ 6.2 $ 5.9 5% Hartford Fire premium to adjusted surplus ratio 1.4 1.5 0.1 Hartford Fire statutory net income [5] $ 416 $ (624) NM
[1] Earned premiums for the quarter ended March 31, 2004 were reduced by $90 reflecting a decrease in estimated earned premiums on retrospectively-rated policies. Ongoing Operations for the quarter ended March 31, 2004 includes a net reserve release of $298 related to September 11 and an increase in reserves of $190 for construction defects claims. [2] Included in both the prior year loss and loss adjustment expenses ratio and catastrophe ratio is prior accident year development on catastrophe reserves including, for the quarter ended March 31, 2004, the net reserve release related to September 11. [3] Operating income for Property & Casualty before the impacts of the $90 decrease in estimated earned premiums on retrospectively-rated policies and prior year loss development is $322. [4] The March 31, 2004 ratio reflects the equity impact of the May 2003 common stock issuance in beginning equity. [5] Hartford Fire statutory net income excludes preferred-in-kind dividends from Hartford Holdings, Inc. of $160 and $609, respectively, for the quarter ended March 31, 2004 and year ended December 31, 2003. PC-1 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OPERATING RESULTS
1Q 2Q 3Q 4Q 2003 2003 2003 2003 ---------- ---------- ---------- ---------- TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Written premiums $ 2,447 $ 2,134 $ 2,318 $ 2,166 Change in reserve 281 28 50 (99) ---------- ---------- ---------- ---------- Earned premiums [1] 2,166 2,106 2,268 2,265 Loss and loss adjustment expenses Current year 1,504 1,474 1,572 1,552 Prior year [1] 53 67 50 50 ---------- ---------- ---------- ---------- Total loss and loss adjustment expenses [2] 1,557 1,541 1,622 1,602 Underwriting expenses 578 562 630 617 Dividends to policyholders 10 9 10 5 ---------- ---------- ---------- ---------- UNDERWRITING RESULTS 21 (6) 6 41 Net servicing income 3 3 9 (7) Net investment income 281 286 297 308 Periodic net coupon settlements on non-qualifying derivatives, before-tax 4 5 5 4 Other expenses (41) (52) (38) (42) Income tax expense (59) (49) (70) (79) ---------- ---------- ---------- ---------- OPERATING INCOME, BEFORE IMPACTS OF 2003 ASBESTOS RESERVE ADDITION AND SEVERANCE CHARGES 209 187 209 225 2003 asbestos reserve addition (1,701) - - - Severance charges - (27) - - ---------- ---------- ---------- ---------- OPERATING INCOME (LOSS) (1,492) 160 209 225 Add: Net realized capital gains, after tax - 138 12 15 Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax 3 3 3 3 ---------- ---------- ---------- ---------- NET INCOME (LOSS) $ (1,495) $ 295 $ 218 $ 237 ---------- ---------- ---------- ---------- Total Property & Casualty effective tax rate - net income NM 26.9% 25.1% 26.9% Total Property & Casualty effective tax rate - operating income NM 18.4% 24.6% 26.3% ---------- ---------- ---------- ---------- YEAR OVER YEAR SEQUENTIAL 1Q QUARTER QUARTER 2004 CHANGE CHANGE ---------- ---------- ---------- TOTAL PROPERTY & CASUALTY UNDERWRITING RESULTS Written premiums $ 2,397 (2%) 11% Change in reserve 211 (25%) NM ---------- --- --- Earned premiums [1] 2,186 1% (3%) Loss and loss adjustment expenses Current year 1,469 (2%) (5%) Prior year [1] (51) NM NM ---------- --- --- Total loss and loss adjustment expenses [2] 1,418 (9%) (11%) Underwriting expenses 605 5% (2%) Dividends to policyholders 7 (30%) 40% ---------- --- --- UNDERWRITING RESULTS 156 NM NM Net servicing income 9 NM NM Net investment income 311 11% 1% Periodic net coupon settlements on non-qualifying derivatives, before-tax 4 - - Other expenses (68) (66%) (62%) Income tax expense (115) (95%) (46%) ---------- --- --- OPERATING INCOME, BEFORE IMPACTS OF 2003 ASBESTOS RESERVE ADDITION AND SEVERANCE CHARGES 297 42% 32% 2003 asbestos reserve addition - 100% - Severance charges - - - ---------- --- --- OPERATING INCOME (LOSS) 297 NM 32% Add: Net realized capital gains, after tax 47 - NM Less: Periodic net coupon settlements on non-qualifying derivatives, after-tax 3 - - ---------- --- --- NET INCOME (LOSS) $ 341 NM 44% ---------- --- --- Total Property & Casualty effective tax rate - net income 28.8% NM 1.9 Total Property & Casualty effective tax rate - operating income 27.8% NM 1.5 ---------- --- ---
[1] Earned premiums for the quarter ended March 31, 2004 were reduced by $90 reflecting a decrease in estimated earned premiums on retrospectively-rated policies. The quarter ended March 31, 2004 includes a net reserve release of $395 related to September 11, an increase in reserves of $190 for construction defects claims and an increase in reserves of $130 for assumed casualty reinsurance. [2] Includes catastrophes, before tax, of ($364) for the quarter ended March 31, 2004. Catastrophes, before tax and the net reserve release of $395 related to September 11, were $31. PC-2 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY CONSOLIDATING UNDERWRITING RESULTS FOR THE FIRST QUARTER ENDED MARCH 31, 2004
TOTAL BUSINESS PERSONAL SPECIALTY ONGOING OTHER PROPERTY & INSURANCE LINES COMMERCIAL OPERATIONS OPERATIONS CASUALTY ---------- ---------- ---------- ---------- ---------- ---------- UNDERWRITING RESULTS Written premiums $ 1,136 $ 836 $ 426 $ 2,398 $ (1) $ 2,397 Change in reserve 118 1 105 224 (13) 211 ---------- ---------- ---------- ---------- ---------- ---------- Earned premiums [1] 1,018 835 321 2,174 12 2,186 Loss and loss adjustment expenses Current year 626 533 293 1,452 17 1,469 Prior year [2] (147) 1 47 (99) 48 (51) ---------- ---------- ---------- ---------- ---------- ---------- Total loss and loss adjustment expenses 479 534 340 1,353 65 1,418 Underwriting expenses 310 195 88 593 12 605 Dividends to policyholders 4 - 3 7 - 7 ---------- ---------- ---------- ---------- ---------- ---------- UNDERWRITING RESULTS $ 225 $ 106 $ (110) $ 221 $ (65) $ 156 ---------- ---------- ---------- ---------- ---------- ---------- UNDERWRITING RATIOS Loss and loss adjustment expenses Current year 61.6 64.0 90.3 66.8 Prior year [2] [3] (14.5) 0.1 14.9 (4.5) ---------- ---------- ---------- ---------- Total loss and loss adjustment expenses [1] 47.1 64.1 105.2 62.2 Expenses [1] 30.3 23.3 28.1 27.3 Policyholder dividends 0.4 - 0.8 0.3 ---------- ---------- ---------- ---------- COMBINED RATIO 77.9 87.4 134.1 89.8 ---------- ---------- ---------- ---------- Catastrophe ratio [3] (15.4) 0.8 (35.6) (12.2) ---------- ---------- ---------- ---------- COMBINED RATIO BEFORE CATASTROPHES 93.4 86.6 169.7 102.0 COMBINED RATIO BEFORE CATASTROPHES AND PRIOR YEAR DEVELOPMENT [1] 90.3 86.1 117.5 92.7 ---------- ---------- ---------- ----------
[1] Specialty Commercial earned premiums for the quarter ended March 31, 2004 were reduced by $90 reflecting a decrease in estimated earned premiums on retrospectively-rated policies. Before considering the earned premium adjustment, the combined ratio before catastrophes and prior year development is as follows: COMBINED RATIO BEFORE CATASTROPHES, PRIOR YEAR DEVELOPMENT AND EARNED PREMIUM ADJUSTMENT 90.3 86.1 91.7 89.0
[2] The quarter ended March 31, 2004 included a net reserve release related to September 11 of $175 in Business Insurance, $7 in Personal Lines, $116 in Specialty Commercial and $97 in Other Operations, an increase in reserves of $167 for construction defects claims in Specialty Commercial and $23 in Business Insurance and an increase in assumed casualty reinsurance reserves of $130 in Other Operations. See page PC-4 for the impact of these items and other prior year development on underwriting ratios. [3] Included in both the prior year loss and loss adjustment expenses ratio and catastrophe ratio is prior accident year development on catastrophe reserves including, for the quarter ended March 31, 2004, the net reserve release related to September 11. PC-3 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY CONSOLIDATING UNDERWRITING RESULTS, AS ADJUSTED [1] FOR THE FIRST QUARTER ENDED MARCH 31, 2004
TOTAL BUSINESS PERSONAL SPECIALTY ONGOING OTHER PROPERTY & INSURANCE LINES COMMERCIAL OPERATIONS OPERATIONS CASUALTY ---------- ---------- ---------- ---------- ---------- ---------- UNDERWRITING RESULTS, AS ADJUSTED [1] Written premiums $ 1,136 $ 836 $ 426 $ 2,398 $ (1) $ 2,397 Change in reserve 118 1 15 134 (13) 121 ---------- ---------- ---------- ---------- ---------- ---------- Earned premiums 1,018 835 411 2,264 12 2,276 Loss and loss adjustment expenses Current year 626 533 293 1,452 17 1,469 Prior year - - - - - - ---------- ---------- ---------- ---------- ---------- ---------- Total loss and loss adjustment expenses 626 533 293 1,452 17 1,469 Underwriting expenses 310 195 88 593 12 605 Dividends to policyholders 4 - 3 7 - 7 ---------- ---------- ---------- ---------- ---------- ---------- UNDERWRITING RESULTS, AS ADJUSTED $ 78 $ 107 $ 27 $ 212 $ (17) $ 195 Retrospectively-rated policies earned premium adjustment - - (90) (90) - (90) September 11 net reserve release 175 7 116 298 97 395 Construction defects claims reserve strengthening (23) - (167) (190) - (190) Assumed casualty reinsurance reserve strengthening - - - - (130) (130) Other prior year development (5) (8) 4 (9) (15) (24) ---------- ---------- ---------- ---------- ---------- ---------- UNDERWRITING RESULTS $ 225 $ 106 $ (110) $ 221 $ (65) $ 156 ---------- ---------- ---------- ---------- ---------- ---------- UNDERWRITING RATIOS, AS ADJUSTED [1] Loss and loss adjustment expenses Current year 61.6 64.0 70.5 64.1 Prior year - - - - ---------- ---------- ---------- ---------- Total loss and loss adjustment expenses 61.6 64.0 70.5 64.1 Expenses 30.3 23.3 21.9 26.2 Policyholder dividends 0.4 - 0.6 0.3 ---------- ---------- ---------- ---------- COMBINED RATIO 92.4 87.3 93.0 90.6 ---------- ---------- ---------- ---------- Catastrophe ratio 2.1 1.2 1.3 1.6 ---------- ---------- ---------- ---------- COMBINED RATIO BEFORE CATASTROPHES 90.3 86.1 91.7 89.0 ---------- ---------- ---------- ----------
[1] Adjusted to exclude a decrease in estimated earned premiums on retrospectively-rated policies and prior year loss development. Prior year loss development includes the net reserve release related to September 11, an increase in reserves for construction defect claims, an increase in reserves for assumed casualty reinsurance and other prior year loss development. The as adjusted underwriting ratios are non-GAAP financial measures because they exclude the effect of prior year development and the reduction in earned premiums relating to retrospectively-rated policies. The Company has included these ratios as an additional measure of the performance of the Company's Property & Casualty current operations, because they exclude the effect of items relating to prior periods. A reconciliation of the amounts underlying the as adjusted ratios to the Company's underwriting results is set forth above. PC-4 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY ONGOING OPERATIONS UNDERWRITING RESULTS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ------- --------- ------- ------- ------- --------- ---------- UNDERWRITING RESULTS Written premiums $ 2,166 $ 2,227 $ 2,301 $ 2,147 $ 2,398 11% 12% Change in reserve 159 190 115 (58) 224 41% NM ------- ------- ------- ------- ------- ---- ---- Earned premiums [1] 2,007 2,037 2,186 2,205 2,174 8% (1%) Loss and loss adjustment expenses Current year 1,403 1,403 1,499 1,495 1,452 3% (3%) Prior year [2] - - 45 (5) (99) - NM ------- ------- ------- ------- ------- ---- ---- Total loss and loss adjustment expenses 1,403 1,403 1,544 1,490 1,353 (4%) (9%) Underwriting expenses 526 542 604 591 593 13% - Dividends to policyholders 10 9 10 5 7 (30%) 40% ------- ------- ------- ------- ------- ---- ---- UNDERWRITING RESULTS $ 68 $ 83 $ 28 $ 119 $ 221 NM 86% ------- ------- ------- ------- ------- ---- ---- UNDERWRITING RATIOS Loss and loss adjustment expenses Current year 69.9 68.9 68.7 67.8 66.8 3.1 1.0 Prior year [2] [3] - - 2.1 (0.2) (4.5) 4.5 4.3 ------- ------- ------- ------- ------- ---- ---- Total loss and loss adjustment expenses [1] 69.9 68.9 70.7 67.5 62.2 7.7 5.3 Expenses [1] 26.2 26.6 27.6 26.8 27.3 (1.1) (0.5) Policyholder dividends 0.5 0.5 0.4 0.2 0.3 0.2 (0.1) ------- ------- ------- ------- ------- ---- ---- COMBINED RATIO 96.6 96.0 98.8 94.6 89.8 6.8 4.8 ------- ------- ------- ------- ------- ---- ---- Catastrophe ratio [3] 2.7 4.7 3.4 1.5 (12.2) 14.9 13.7 ------- ------- ------- ------- ------- ---- ---- COMBINED RATIO BEFORE CATASTROPHES 93.8 91.3 95.3 93.1 102.0 (8.2) (8.9) COMBINED RATIO BEFORE CATASTROPHES AND PRIOR YEAR DEVELOPMENT [1] [3] 93.8 91.3 93.3 92.6 92.7 1.1 (0.1) ------- ------- ------- ------- ------- ---- ----
[1] Earned premiums for the quarter ended March 31, 2004 were reduced by $90 reflecting a decrease in estimated earned premiums on retrospectively-rated policies. [2] The quarter ended March 31, 2004 included a net reserve release of $298 related to September 11 and an increase in reserves of $190 for construction defects claims. [3] Included in both the prior year loss and loss adjustment expenses ratio and catastrophe ratio is prior accident year development on catastrophe reserves including, for the quarter ended March 31, 2004, the net reserve release related to September 11. PC-5 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY BUSINESS INSURANCE UNDERWRITING RESULTS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ------- ------- ------- ------- ------- --------- ------- UNDERWRITING RESULTS Written premiums $ 990 $ 974 $ 987 $ 1,006 $ 1,136 15% 13% Change in reserve 110 77 40 34 118 7% NM ----- ------ ------ ------- ------- ---- ---- Earned premiums [1] 880 897 947 972 1,018 16% 5% Loss and loss adjustment expenses Current year 598 561 595 592 626 5% 6% Prior year - - - (6) (147) - NM ----- ------ ------ ------- ------- ---- ---- Total loss and loss adjustment expenses 598 561 595 586 479 (20%) (18%) Underwriting expenses 268 279 310 317 310 16% (2%) Dividends to policyholders 7 7 8 2 4 (43%) 100% ----- ------ ------ ------- ------- ---- ---- UNDERWRITING RESULTS $ 7 $ 50 $ 34 $ 67 $ 225 NM NM ----- ------ ------ ------- ------- ---- ---- UNDERWRITING RATIOS [1] Loss and loss adjustment expenses Current year 67.9 62.6 63.0 60.8 61.6 6.3 (0.8) Prior year [2] - - - (0.6) (14.5) 14.5 13.9 ----- ------ ------ ------- ------- ---- ---- Total loss and loss adjustment expenses 67.9 62.6 63.0 60.2 47.1 20.8 13.1 Expenses 30.5 31.0 32.7 32.7 30.3 0.2 2.4 Policyholder dividends 0.8 0.8 0.8 0.2 0.4 0.4 (0.2) ----- ------ ------ ------- ------- ---- ---- COMBINED RATIO 99.2 94.4 96.4 93.1 77.9 21.3 15.2 ----- ------ ------ ------- ------- ---- ---- Catastrophe ratio [2] 4.6 2.5 3.2 0.7 (15.4) 20.0 16.1 ----- ------ ------ ------- ------- ---- ---- COMBINED RATIO BEFORE CATASTROPHES 94.6 91.9 93.3 92.4 93.4 1.2 (1.0) COMBINED RATIO BEFORE CATASTROPHES AND PRIOR YEAR DEVELOPMENT 94.6 91.9 93.3 92.3 90.3 4.3 2.0 ----- ------ ------ ------- ------- ---- ----
[1] The quarter ended March 31, 2004 included a net reserve release of $175 related to September 11, an increase in reserves of $23 for construction defects claims and $5 of other prior year loss development. The following table shows underwriting ratios for the quarter ended March 31, 2004 before giving effect to these items: Loss and loss adjustment expenses Current year 61.6 Prior year - ------ Total loss and loss adjustment expenses 61.6 Expenses 30.3 Policyholder dividends 0.4 ------ COMBINED RATIO 92.4 ------ Catastrophe ratio 2.1 ------ COMBINED RATIO BEFORE CATASTROPHES 90.3 COMBINED RATIO BEFORE CATASTROPHES AND PRIOR YEAR DEVELOPMENT 90.3 ------
[2] Included in both the prior year loss and loss adjustment expenses ratio and catastrophe ratio is prior accident year development on catastrophe reserves including, for the quarter ended March 31, 2004, the net reserve release related to September 11. PC-6 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY BUSINESS INSURANCE WRITTEN AND EARNED PREMIUMS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ------- --------- ------- ------- ------- ------- ------ WRITTEN PREMIUMS [1] Small Commercial $ 480 $ 459 $ 454 $ 469 $ 560 17% 19% Middle Market 510 515 533 537 576 13% 7% ----- ----- ----- ------- ------- --- --- TOTAL $ 990 $ 974 $ 987 $ 1,006 $ 1,136 15% 13% EARNED PREMIUMS [1] Small Commercial $ 430 $ 442 $ 449 $ 461 $ 481 12% 4% Middle Market 450 455 498 511 537 19% 5% ----- ----- ----- ------- ------- --- --- TOTAL $ 880 $ 897 $ 947 $ 972 $ 1,018 16% 5% ===== ===== ===== ======= ======= === ===
[1] The difference between written premiums and earned premiums is attributable to the change in unearned premium reserve. PC-7 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY PERSONAL LINES UNDERWRITING RESULTS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ------ ------ ------ ------ ------ --------- ---------- UNDERWRITING RESULTS Written premiums $ 770 $ 854 $ 845 $ 803 $ 836 9% 4% Change in reserve (2) 69 40 (16) 1 NM NM ------ ------ ------ ------ ------ --- --- Earned premiums 772 785 805 819 835 8% 2% Loss and loss adjustment expenses Current year 540 602 583 599 533 (1%) (11%) Prior year [1] - - - (6) 1 - NM ------ ------ ------ ------ ------ --- --- Total loss and loss adjustment expenses 540 602 583 593 534 (1%) (10%) Underwriting expenses 176 175 182 200 195 11% (3%) ------ ------ ------ ------ ------ --- --- UNDERWRITING RESULTS $ 56 $ 8 $ 40 $ 26 $ 106 89% NM ------ ------ ------ ------ ------ --- --- UNDERWRITING RATIOS Loss and loss adjustment expenses Current year 69.7 76.8 72.5 73.3 64.0 5.7 9.3 Prior year [1] [2] - - - (0.7) 0.1 (0.1) (0.8) ------ ------ ------ ------ ------ --- --- Total loss and loss adjustment expenses 69.7 76.8 72.5 72.6 64.1 5.6 8.5 Expenses 23.0 22.2 22.6 24.3 23.3 (0.3) 1.0 ------ ------ ------ ------ ------ --- --- COMBINED RATIO 92.7 99.0 95.1 96.8 87.4 5.3 9.4 ------ ------ ------ ------ ------ --- --- Catastrophe ratio [2] 1.4 8.2 4.2 2.7 0.8 0.6 1.9 ------ ------ ------ ------ ------ --- --- COMBINED RATIO BEFORE CATASTROPHES 91.3 90.8 90.8 94.2 86.6 4.7 7.6 COMBINED RATIO BEFORE CATASTROPHES AND PRIOR YEAR DEVELOPMENT 91.3 90.8 90.8 93.8 86.1 5.2 7.7 ------ ------ ------ ------ ------ --- --- COMBINED RATIO Automobile 96.1 98.0 95.9 101.9 90.1 6.0 11.8 Homeowners 80.8 102.9 92.1 80.1 78.7 2.1 1.4 ------ ------ ------ ------ ------ --- --- TOTAL 92.7 99.0 95.1 96.8 87.4 5.3 9.4 ====== ====== ====== ====== ====== === ===
[1] The quarter ended March 31, 2004 includes a net reserve release of $7 related to September 11. [2] Included in both the prior year loss and loss adjustment expenses ratio and catastrophe ratio is prior accident year development on catastrophe reserves including, for the quarter ended March 31, 2004, the net reserve release related to September 11. PC-8 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY PERSONAL LINES WRITTEN AND EARNED PREMIUMS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ---- ---- ---- ---- ---- ------- ------- BUSINESS UNIT WRITTEN PREMIUMS [1] AARP $475 $550 $537 $504 $523 10% 4% Other Affinity 42 36 35 35 34 (19%) (3%) Agency 186 201 212 205 210 13% 2% Omni 67 67 61 59 69 3% 17% ---- ---- ---- ---- ---- -- -- TOTAL $770 $854 $845 $803 $836 9% 4% EARNED PREMIUMS [1] AARP $466 $481 $499 $510 $520 12% 2% Other Affinity 44 41 40 38 36 (18%) (5%) Agency 199 198 202 208 215 8% 3% Omni 63 65 64 63 64 2% 2% ---- ---- ---- ---- ---- -- -- TOTAL $772 $785 $805 $819 $835 8% 2% ==== ==== ==== ==== ==== == == PRODUCT LINE WRITTEN PREMIUMS [1] Automobile $609 $656 $632 $611 $649 7% 6% Homeowners 161 198 213 192 187 16% (3%) ---- ---- ---- ---- ---- -- -- TOTAL $770 $854 $845 $803 $836 9% 4% EARNED PREMIUMS [1] Automobile $598 $610 $620 $630 $633 6% - Homeowners 174 175 185 189 202 16% 7% ---- ---- ---- ---- ---- -- -- TOTAL $772 $785 $805 $819 $835 8% 2% ==== ==== ==== ==== ==== == ==
[1] The difference between written premiums and earned premiums is attributable to the change in unearned premium reserve. PC-9 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY SPECIALTY COMMERCIAL UNDERWRITING RESULTS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ------ ------ ------ ------ ------ ---------- ---------- UNDERWRITING RESULTS Written premiums $ 406 $ 399 $ 469 $ 338 $ 426 5% 26% Change in reserve 51 44 35 (76) 105 106% NM ------ ------ ------ ------ ------ ---- ---- Earned premiums [1] 355 355 434 414 321 (10%) (22%) Loss and loss adjustment expenses Current year 265 240 321 304 293 11% (4%) Prior year - - 45 7 47 - NM ------ ------ ------ ------ ------ ---- ---- Total loss and loss adjustment expenses 265 240 366 311 340 28% 9% Underwriting expenses 82 88 112 74 88 7% 19% Dividends to policyholders 3 2 2 3 3 - - ------ ------ ------ ------ ------ ---- ---- UNDERWRITING RESULTS $ 5 $ 25 $ (46) $ 26 $ (110) NM NM ------ ------ ------ ------ ------ ---- ---- UNDERWRITING RATIOS [1] Loss and loss adjustment expenses Current year 75.1 67.2 73.9 73.2 90.3 (15.2) (17.1) Prior year [2] - - 10.4 1.7 14.9 (14.9) (13.2) ------ ------ ------ ------ ------ ---- ---- Total loss and loss adjustment expenses 75.1 67.2 84.3 74.9 105.2 (30.1) (30.3) Expenses 22.6 25.3 25.9 17.9 28.1 (5.5) (10.2) Policyholder dividends 0.7 0.7 0.6 0.7 0.8 (0.1) (0.1) ------ ------ ------ ------ ------ ---- ---- COMBINED RATIO 98.4 93.2 110.7 93.5 134.1 (35.7) (40.6) ------ ------ ------ ------ ------ ---- ---- Catastrophe ratio [2] 0.9 2.5 2.5 1.0 (35.6) 36.5 36.6 ------ ------ ------ ------ ------ ---- ---- COMBINED RATIO BEFORE CATASTROPHES 97.5 90.7 108.2 92.5 169.7 (72.2) (77.2) COMBINED RATIO BEFORE CATASTROPHES AND PRIOR YEAR DEVELOPMENT [1] 97.5 90.7 97.8 91.0 117.5 (20.0) (26.5) ------ ------ ------ ------ ------ ---- ----
[1] Specialty Commercial earned premiums for the quarter ended March 31, 2004 were reduced by $90 reflecting a decrease in estimated earned premiums on retrospectively-rated policies. The quarter ended March 31, 2004 also included a net reserve release of $116 related to September 11, an increase in reserves of $167 for construction defects claims and ($4) of other prior year loss development. The following table shows underwriting ratios for the quarter ended March 31, 2004 before giving effect to these items: Loss and loss adjustment expenses Current year 70.5 Prior year - ---- Total loss and loss adjustment expenses 70.5 Expenses 21.9 Policyholder dividends 0.6 ---- COMBINED RATIO 93.0 ---- Catastrophe ratio 1.3 ---- COMBINED RATIO BEFORE CATASTROPHES 91.7 COMBINED RATIO BEFORE CATASTROPHES AND PRIOR YEAR DEVELOPMENT 91.7 ----
[2] Included in both the prior year loss and loss adjustment expenses ratio and catastrophe ratio is prior accident year development on catastrophe reserves including, for the quarter ended March 31, 2004, the net reserve release related to September 11. PC-10 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY SPECIALTY COMMERCIAL WRITTEN AND EARNED PREMIUMS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ---- ---- ---- ----- ---- ----- ----------- WRITTEN PREMIUMS [1] Property $ 97 $116 $147 $ 80 $ 83 (14%) 4% Casualty 187 149 179 155 192 3% 24% Bond 45 36 42 39 48 7% 23% Professional Liability 65 78 93 88 78 20% (11%) Other 12 20 8 (24) 25 108% NM ---- ---- ---- ----- ---- --- --- TOTAL $406 $399 $469 $ 338 $426 5% 26% EARNED PREMIUMS [1] Property $ 89 $ 96 $140 $ 104 $ 87 (2%) (16%) Casualty [2] 148 141 165 161 81 (45%) (50%) Bond 42 35 33 42 44 5% 5% Professional Liability 64 72 77 83 82 28% (1%) Other 12 11 19 24 27 125% 13% ---- ---- ---- ----- ---- --- --- TOTAL $355 $355 $434 $ 414 $321 (10%) (22%) ==== ==== ==== ===== ==== === ===
[1] The difference between written premiums and earned premiums is attributable to the change in unearned premium reserve. [2] Earned premiums for the quarter ended March 31, 2004 were reduced by $90 reflecting a decrease in estimated earned premiums on retrospectively-rated policies. PC-11 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR)
1Q 2Q 3Q 4Q 1Q 2003 2003 2003 2003 2004 ---- ---- ---- ---- ---- WRITTEN PRICE INCREASES Business Insurance 13% 10% 9% 6% 4% Personal Lines Automobile 10% 8% 6% 7% 4% Personal Lines Homeowners 14% 14% 14% 11% 10% PREMIUM RETENTION Business Insurance 90% 89% 85% 84% 84% Personal Lines Automobile 90% 94% 91% 88% 88% Personal Lines Homeowners 103% 103% 101% 98% 101% NEW BUSINESS % TO NET WRITTEN PREMIUM Business Insurance 26% 27% 25% 26% 26% Personal Lines Automobile 13% 13% 15% 17% 18% Personal Lines Homeowners 8% 10% 11% 12% 12%
PC-12 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OTHER OPERATIONS UNDERWRITING RESULTS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ------- ----- ---- ----- ---- --------- ---------- UNDERWRITING RESULTS Written premiums $ 281 $ (93) $ 17 $ 19 $ (1) NM NM Change in reserve 122 (162) (65) (41) (13) NM 68% ------- ----- ---- ----- ---- -- -- Earned premiums 159 69 82 60 12 (92%) (80%) Loss and loss adjustment expenses Current year 101 71 73 57 17 (83%) (70%) Prior year [1] 2,657 67 5 55 48 (98%) (13%) ------- ----- ---- ----- ---- -- -- Total loss and loss adjustment expenses 2,758 138 78 112 65 (98%) (42%) Underwriting expenses 52 20 26 26 12 (77%) (54%) ------- ----- ---- ----- ---- -- -- UNDERWRITING RESULTS $(2,651) $ (89) $(22) $ (78) $(65) 98% 17% ------- ----- ---- ----- ---- -- --
[1] The quarter ended March 31, 2004 includes a net reserve release of $97 related to September 11 and an increase of $130 for assumed casualty reinsurance reserves. PC-13 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY OTHER OPERATIONS CLAIMS AND CLAIMS ADJUSTMENT EXPENSES
FOR THE FIRST QUARTER ENDED MARCH 31, 2004 ASBESTOS ENVIRONMENTAL ALL OTHER [1] TOTAL -------- ------------- ------------- ------ Beginning liability - net $3,794 $408 $2,392 $6,594 Claims and claim adjustment expenses incurred 3 3 61 67 Claims and claim adjustment expenses paid [5] 1,091 19 67 1,177 ------ ---- ------ ------ ENDING LIABILITY - NET [2] [3] $2,706 [4] $392 $2,386 $5,484 ------ ---- ------ ------
[1] Includes unallocated loss adjustment expense reserves and the Reinsurance segment. [2] Ending liabilities include asbestos and environmental reserves reported in Ongoing Operations of $11 and $9, respectively, as of March 31, 2004 and $11 and $8, respectively, as of December 31, 2003. The total net claim and claim adjustment expenses incurred of $67 includes $2 related to asbestos and environmental claims reported in Ongoing Operations. [3] Gross of reinsurance, asbestos and environmental reserves were $4,644 and $513, respectively, as of March 31, 2004 and $5,884 and $542, respectively, as of December 31, 2003. [4] The one year and average three year net paid amounts for asbestos claims are $1,215 and $1,443, respectively, resulting in a one year net survival ratio of 2.2 (13.7 excluding the MacArthur payments) and a three year net survival ratio of 5.6 (19.1 excluding MacArthur payments). Net survival ratio is the quotient of the net carried reserves divided by the average annual payment amount and is an indication of the number of years that the net carried reserve would last (i.e. survive) if the future annual claim payments were consistent with the calculated historical average. [5] Asbestos payments include $1.15 billion of payments pursuant to the MacArthur settlement. PC-14 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY SUMMARY OF GROSS ASBESTOS RESERVES
3 YEAR GROSS SURVIVAL % OF 3 YEAR GROSS RATIO [1][2] NUMBER OF ALL TIME TOTAL ASBESTOS ALL TIME SURVIVAL BEFORE ACCOUNTS [5] PAID RESERVES RESERVES ULTIMATE RATIO [1][2] MACARTHUR ------------ -------- -------- -------- -------- ------------ ------------ (IN YEARS) (IN YEARS) AS OF MOST RECENT RESERVE EVALUATION [4] Major Asbestos Defendants Structured settlements (includes 2 Wellington accounts) 7 $ 257 $ 358 6% $ 615 9.1 9.1 Wellington (direct only) 31 682 281 5% 963 5.3 5.3 Other major asbestos defendants 27 178 443 8% 621 27.3 27.3 No known policies (includes 3 Wellington accounts) 5 - - - - - - Accounts with future exposure > $2.5 106 369 1,210 20% 1,579 16.7 16.7 Accounts with future exposure < $2.5 930 152 135 2% 287 12.9 12.9 MacArthur settlement 1 32 1,150 20% 1,182 Unallocated [3] - 100 896 15% 996 --- -------- -------- --- -------- ---- ---- Total direct 1,770 4,473 76% 6,243 22.0 16.8 Assumed reinsurance 560 931 16% 1,491 15.5 15.5 London market 373 480 8% 853 13.6 13.6 -------- -------- --- -------- ---- ---- Total 2,703 5,884 100% 8,587 19.7 16.1 --- -------- -------- --- -------- ---- ---- First quarter 2004 MacArthur payments 1 1,162 (1,162) - First quarter 2004 activity, excluding MacArthur 82 (78) 4 --- -------- -------- -------- ---- ---- TOTAL AS OF MARCH 31, 2004 [2] $ 3,947 $ 4,644 $ 8,591 6.6 14.8 -------- -------- -------- ---- ----
[1] Survival ratio is a commonly used industry ratio for comparing reserve levels between companies. While the method is commonly used, it is not a predictive technique. Survival ratios may vary over time due to numerous factors such as large payments due to the final resolution of certain asbestos liabilities, or reserve re-estimates. The survival ratio presented in the above table is computed by dividing the recorded reserves by the average of the past three years of payments. The ratio is the calculated number of years the recorded reserves would survive if future annual payments were equal to the average annual payments for the past three years. The 3-year gross survival ratio as of March 31, 2004 is computed based on total paid losses of $2,105 for the period from April 1, 2001 to March 31, 2004. All other 3-year gross survival ratios presented are based on total paid losses for the 3-year period ended December 31, 2003. [2] As of March 31, 2004, the one year gross paid amount for total asbestos claims is $1.5 billion resulting in a one year gross survival ratio of 3.1. If the ratio was calculated without considering the $1.16 billon in payments for MacArthur in first quarter 2004, the one year gross survival ratio would be 13.7. [3] Includes closed accounts, exclusive of Major Asbestos Defendants, and unallocated IBNR. [4] The information presented by account category reflects the first quarter 2004 reserve evaluation of gross asbestos losses incurred as of December 31, 2003. [5] An account may move between categories from one evaluation to the next. Reclassifications were made as a result of the reserve evaluation completed in the first quarter of 2004. There was no impact on total all-time paid losses or total reserves. PC-15 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 FIRST QUARTER ENDED MARCH 31, 2004 LOSS & LAE [1] LOSS & LAE LOSS & LAE LOSS & LAE -------------- ---------- ---------- ---------- Gross Direct $ 1,233 $ 4 $ 20 $3 Assumed - Domestic 7 - 3 - London Market 4 - 9 - ------- --- ---- -- Total 1,244 4 32 3 Ceded (153) (1) (13) - ------- --- ---- -- NET $ 1,091 $ 3 $ 19 $3 ------- --- ---- --
[1] Reflects payments pursuant to the MacArthur settlement. PC-16 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY CASUALTY UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD
FOR THE QUARTER ENDED MARCH 31, 2004 ------------------------------------------------------------------------- BUSINESS PERSONAL SPECIALTY ONGOING OTHER TOTAL INSURANCE LINES COMMERCIAL OPERATIONS OPERATIONS P&C --------- -------- ---------- ---------- ---------- -------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 1/1/04 - GROSS $ 5,296 $ 1,733 $ 5,148 $ 12,177 $ 9,538 $ 21,715 Reinsurance and other recoverables 395 43 2,096 2,534 2,963 5,497 ------- ------- ------- -------- ------- -------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 1/1/04 - NET 4,901 1,690 3,052 9,643 6,575 16,218 Provision for unpaid claims and claim adjustment expenses Current year 626 533 293 1,452 17 1,469 Prior year [1] (147) 1 47 (99) 48 (51) ------- ------- ------- -------- ------- -------- TOTAL PROVISION FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES 479 534 340 1,353 65 1,418 ------- ------- ------- -------- ------- -------- Payments [2] (447) (545) (258) (1,250) (1,176) (2,426) ------- ------- ------- -------- ------- -------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 3/31/04 - NET [1] 4,933 1,679 3,134 9,746 5,464 15,210 Reinsurance and other recoverables 369 42 1,932 2,343 2,693 5,036 ------- ------- ------- -------- ------- -------- LIABILITIES FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES AT 3/31/04 - GROSS [1] $ 5,302 $ 1,721 $ 5,066 $ 12,089 $ 8,157 $ 20,246 ------- ------- ------- -------- ------- -------- Earned premiums $ 1,018 $ 835 $ 321 $ 2,174 $ 12 $ 2,186 Loss and loss expense paid ratio [3] 43.9 65.4 80.5 57.6 Loss and loss expense incurred ratio [3] 47.1 64.1 105.2 62.2 Prior accident year development (pts.) (14.5) 0.1 14.9 (4.5) ------- ------- ------- --------
[1] The quarter ended March 31, 2004 included a net reserve release related to September 11 of $175 in Business Insurance, $7 in Personal Lines, $116 in Specialty Commercial and $97 in Other Operations, an increase in reserves of $167 for construction defects claims in Specialty Commercial and $23 in Business Insurance and casualty reinsurance reserves of $130 in Other Operations. [2] Other Operations reflects payments pursuant to the MacArthur settlement. [3] If adjusted to exclude the decrease in estimated earned premiums on retrospectively-reated policies and prior year development the loss and loss expense paid and incurred ratios would have been as follows: Loss and loss expense paid ratio 43.9 65.4 62.9 55.3 Loss and loss expense incurred ratio 61.6 64.0 70.5 64.1
PC-17 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY REINSURANCE RECOVERABLE ANALYSIS
March 31, December 31, 2004 2003 ------- ------- GROSS REINSURANCE RECOVERABLE [1] Paid Loss and Loss Adjustment Expense $ 618 $ 446 Unpaid Loss and Loss Adjustment Expense 4,935 5,289 ------- ------- Subtotal Gross Reinsurance Recoverable 5,553 5,735 Less: Allowance for Uncollectable Reinsurance (348) (381) ------- ------- NET PROPERTY & CASUALTY REINSURANCE RECOVERABLE $ 5,205 $ 5,354
% of % of Rated % of Rated DISTRIBUTION OF NET RECOVERABLE AS OF DECEMBER 31, 2003 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 [2] 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-18 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY AND CASUALTY CONSOLIDATED INCOME STATEMENTS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ------- ------ ------ ------ ------ ------- ---------- Earned premiums $ 2,166 $2,106 $2,268 $2,265 $2,186 1% (3%) Net investment income 281 286 297 308 311 11% 1% Other revenues 95 113 110 110 104 9% (5%) Net realized capital gains (losses) (1) 212 19 23 71 NM NM ------- ------ ------ ------ ------ -- -- TOTAL REVENUES 2,541 2,717 2,694 2,706 2,672 5% (1%) Benefits, claims and claim adjustment expenses [1] [2] 4,161 1,541 1,622 1,602 1,418 (66%) (11%) Amortization of deferred policy acquisition costs 401 382 431 428 446 11% 4% Insurance operating costs and expenses 187 189 209 194 166 (11%) (14%) Other expenses [3] 133 203 139 159 163 23% 3% ------- ------ ------ ------ ------ -- --- TOTAL BENEFITS AND EXPENSES 4,882 2,315 2,401 2,383 2,193 (55%) (8%) INCOME (LOSS) BEFORE INCOME TAXES (2,341) 402 293 323 479 NM 48% Income tax expense (benefit) (846) 107 75 86 138 NM 60% ------- ------ ------ ------ ------ -- --- NET INCOME (LOSS) (1,495) 295 218 237 341 NM 44% Less: Net realized capital gains (losses), after-tax - 138 12 15 47 - NM Add: Periodic net coupon settlements on non-qualifying derivatives, after-tax 3 3 3 3 3 - - ------- ------ ------ ------ ------ -- --- OPERATING INCOME (LOSS) [1] [3] $(1,492) $ 160 $ 209 $ 225 $ 297 NM 32% Total Property & Casualty effective tax rate - net income NM 26.9% 25.1% 26.9% 28.8% NM 1.9 Total Property & Casualty effective tax rate - operating income NM 18.4% 24.6% 26.3% 27.8% NM 1.5 ------- ------ ------ ------ ------ -- ---
[1] The quarter ended March 31, 2003 includes the impact of 2003 asbestos reserve addition of $2,604 before-tax and $1,701 after-tax. [2] The quarter ended March 31, 2004 includes a net reserve release of $395 related to September 11, an increase in reserves of $190 for construction defects claims and an increase in reserves of $130 for assumed casualty reinsurance. [3] The quarter ended June 30, 2003 includes severance costs of $41 before-tax and $27 after-tax. PC-19 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY CASUALTY CONSOLIDATED BALANCE SHEETS
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ------- ------- ------- ------- ------- ------- ----------- Investments Fixed maturities, available for sale, at fair value $20,384 $22,820 $23,565 $23,715 $23,196 14% (2%) Equity securities, available for sale, at fair value 209 219 215 208 206 (1%) (1%) Other investments 636 556 644 682 650 2% (5%) ------- ------- ------- ------- ------- --- --- Total investments 21,229 23,595 24,424 24,605 24,052 13% (2%) Cash 366 239 203 197 178 (51%) (10%) Premiums receivable and agents' balances 2,521 2,630 2,626 2,750 2,762 10% - Reinsurance recoverables 5,635 5,396 5,529 5,354 5,205 (8%) (3%) Deferred policy acquisition costs 994 987 981 975 987 (1%) 1% Deferred income tax 1,408 1,107 1,136 1,101 905 (36%) (18%) Goodwill 153 153 152 152 152 (1%) - Other assets 2,167 2,664 2,050 2,025 3,365 55% 66% ------- ------- ------- ------- ------- --- --- TOTAL ASSETS $34,473 $36,771 $37,101 $37,159 $37,606 9% 1% ------- ------- ------- ------- ------- --- --- Future policy benefits, unpaid claims and claim adjustment expenses $21,212 $21,068 $21,444 $21,715 $20,246 (5%) (7%) Unearned premiums 4,246 4,410 4,504 4,372 4,563 7% 4% Other liabilities 3,383 3,735 3,513 3,285 4,595 36% 40% ------- ------- ------- ------- ------- --- --- TOTAL LIABILITIES 28,841 29,213 29,461 29,372 29,404 2% - ------- ------- ------- ------- ------- --- --- Equity, x-AOCI, net of tax 4,851 6,605 6,900 7,080 7,335 51% 4% AOCI, net of tax 781 953 740 707 867 11% 23% ------- ------- ------- ------- ------- --- --- TOTAL STOCKHOLDERS' EQUITY 5,632 7,558 7,640 7,787 8,202 46% 5% ------- ------- ------- ------- ------- --- --- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $34,473 $36,771 $37,101 $37,159 $37,606 9% 1% ------- ------- ------- ------- ------- --- --- Hartford Fire NAIC RBC 398%
PC-20 THE HARTFORD FINANCIAL SERVICES GROUP, INC. PROPERTY & CASUALTY STATUTORY SURPLUS TO GAAP STOCKHOLDERS' EQUITY RECONCILIATION
DECEMBER 31, 2003 DECEMBER 31, 2002 ----------------- ----------------- Statutory Capital and Surplus $ 5,900 $4,878 GAAP Adjustments Investment in subsidiaries/Capital contributions 112 644 Goodwill 152 153 Non-admitted assets/Statutory reserves 519 1,398 Deferred policy acquisition costs 975 930 Unrealized gains on investments, net of impairments 793 673 Deferred taxes 214 (138) Benefit reserves (251) (194) Consolidation/Corporate eliminations (129) (785) Other, net (498) (402) ------- ------ GAAP Stockholders' Equity $ 7,787 $7,157 ------- ------
PC-21 INVESTMENTS THE HARTFORD FINANCIAL SERVICES GROUP, INC. INVESTMENT EARNINGS BEFORE-TAX CONSOLIDATED
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ---- ---- ---- ---- ---- ------ ------ NET INVESTMENT INCOME Fixed maturities [1] [2] Taxable $ 538 $ 565 $ 580 $ 611 $ 792 47% 30% Tax-exempt 133 130 122 121 120 (10%) (1%) ------- ------- ------- ------- ------- ---- --- Total fixed maturities 671 695 702 732 912 36% 25% Equities Available-for-sale 8 7 7 5 11 38% 120% Trading securities [3] - - - - 495 - - ------- ------- ------- ------- ------- ---- --- Total equities 8 7 7 5 506 NM NM Mortgage loans 9 9 9 11 12 33% 9% Real estate 1 1 - 1 1 - - Policy loans 58 54 51 47 45 (22%) (4%) Limited partnerships 12 11 22 10 4 (67%) (60%) Other 40 30 33 41 50 25% 22% ------- ------- ------- ------- ------- ---- --- Subtotal 799 807 824 847 1,530 91% 81% Less investment expense 11 11 10 12 13 (18%) (8%) ------- ------- ------- ------- ------- ---- --- TOTAL NET INVESTMENT INCOME [2] $ 788 $ 796 $ 814 $ 835 $ 1,517 93% 82% ------- ------- ------- ------- ------- ---- --- Investment yield, pre-tax [4] 6.0% 5.7% 5.6% 5.7% 5.7% (0.3) - Investment yield, after-tax [4] 4.2% 4.0% 3.9% 3.9% 3.9% (0.3) - NET REALIZED CAPITAL GAINS (LOSSES) Fixed maturities $ (9) $ 250 $ - $ 15 $ 108 NM NM Equities (49) (5) 5 20 13 NM (35%) Periodic net coupon settlements on non-qualifying derivatives 8 14 11 11 6 (25%) (45%) GMWB derivatives, net - - - 6 (2) - NM Other [5] 5 12 7 (8) 19 NM NM ------- ------- ------- ------- ------- ---- --- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [6] $ (45) $ 271 $ 23 $ 44 $ 144 NM NM ------- ------- ------- ------- ------- ---- --- Gross gains on sale $ 137 $ 303 $ 132 $ 92 $ 172 26% 87% Gross losses on sale (107) (24) (80) (9) (23) 79% (156%) Impairments (89) (27) (29) (55) (14) 84% 75% Periodic net coupon settlements on non-qualifying derivatives 8 14 11 11 6 (25%) (45%) GMWB derivatives, net - - - 6 (2) - NM Other net gain (loss) [5] 6 5 (11) (1) 5 (17%) NM ------- ------- ------- ------- ------- ---- --- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [6] $ (45) $ 271 $ 23 $ 44 $ 144 NM NM ------- ------- ------- ------- ------- ---- ---
[1] Includes income on short-term bonds. [2] The first quarter of 2004 includes $154 of net investment income associated with the guaranteed separate accounts pursuant to the adoption of SOP 03-01. Approximately $150 of this amount was derived from fixed maturities. [3] This amount relates to the change in value of trading securities pursuant to the adoption of SOP 03-01. [4] The investment yield calculation excludes trading securities and collateral received associated with the securities lending program. Assets received in the CNA purchase are included in the investment yield calculation beginning with the first quarter 2004. [5] Primarily consists of changes in fair value on non-qualifying derivatives and hedge ineffectiveness on qualifying derivative instruments as well as the amortization of deferred acquisition costs associated with realized capital gains. [6] First quarter 2004 includes $5 of net realized gains (losses) associated with guaranteed separate accounts classified within the general account amounts pursuant to the adoption of the SOP 03-1. I-1 THE HARTFORD FINANCIAL SERVICES GROUP, INC. INVESTMENT EARNINGS BEFORE-TAX LIFE
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ---- ---- ---- ---- ---- ------ ------ NET INVESTMENT INCOME Fixed maturities [1] [2] Taxable $ 379 $ 392 $ 396 $ 408 $ 589 55% 44% Tax-exempt 25 25 24 24 25 - 4% ------- ------- ------- ------- ------- ---- ---- Total fixed maturities 404 417 420 432 614 52% 42% Equities Available-for-sale 5 5 4 4 9 80% 125% Trading securities [3] - - - - 495 - - ------- ------- ------- ------- ------- ---- ---- Total equities 5 5 4 4 504 NM NM Mortgage loans 5 5 6 7 8 60% 14% Policy loans 58 54 51 47 45 (22%) (4%) Limited partnerships 8 7 11 6 2 (75%) (67%) Other 29 22 25 32 36 24% 13% ------- ------- ------- ------- ------- ---- ---- Subtotal 509 510 517 528 1,209 138% 129% Less investment expense 6 6 5 6 8 (33%) (33%) ------- ------- ------- ------- ------- ---- ---- TOTAL NET INVESTMENT INCOME [2] $ 503 $ 504 $ 512 $ 522 $ 1,201 139% 130% ------- ------- ------- ------- ------- ---- ---- Investment yield, pre-tax [4] 6.1% 5.8% 5.8% 5.8% 5.7% (0.4) (0.1) Investment yield, after-tax [4] 4.1% 3.9% 3.9% 3.9% 3.8% (0.3) (0.1) NET REALIZED CAPITAL GAINS (LOSSES) Fixed maturities $ (31) $ 52 $ 3 $ (4) $ 58 NM NM Equities (26) (3) 5 17 9 NM (47%) Periodic net coupon settlements on non-qualifying derivatives 4 9 6 7 2 (50%) (71%) GMWB derivatives, net - - - 6 (2) - NM Other [5] 9 1 (10) (5) 9 - NM ------- ------- ------- ------- ------- ---- ---- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [6] $ (44) $ 59 $ 4 $ 21 $ 76 NM NM ------- ------- ------- ------- ------- ---- ---- Gross gains on sale $ 57 $ 91 $ 61 $ 58 $ 100 75% 72% Gross losses on sale (47) (17) (31) - (18) 62% - Impairments (67) (17) (27) (51) (8) 88% 84% Periodic net coupon settlements on non-qualifying derivatives 4 9 6 7 2 (50%) (71%) GMWB derivatives, net - - - 6 (2) - NM Other net gain (loss) [5] 9 (7) (5) 1 2 (78%) 100% ------- ------- ------- ------- ------- ---- ---- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) [6] $ (44) $ 59 $ 4 $ 21 $ 76 NM NM ------- ------- ------- ------- ------- ---- ----
[1] Includes income on short-term bonds. [2] The first quarter of 2004 includes $154 of net investment income associated with the guaranteed separate accounts pursuant to the adoption of SOP 03-01. Approximately $150 of this amount was derived from fixed maturities. [3] This amount relates to the change in value of trading securities pursuant to the adoption of SOP 03-01. [4] The investment yield calculation excludes trading securities and collateral received associated with the securities lending program. Assets received in the CNA purchase are included in the investment yield calculation beginning with the first quarter 2004. [5] Primarily consists of changes in fair value on non-qualifying derivatives and hedge ineffectiveness on qualifying derivative instruments as well as the amortization of deferred acquisition costs associated with realized capital gains. [6] First quarter 2004 includes $5 of net realized gains (losses) associated with guaranteed separate accounts classified within the general account amounts pursuant to the adoption of the SOP 03-1. I-2 THE HARTFORD FINANCIAL SERVICES GROUP, INC. INVESTMENT EARNINGS BEFORE-TAX PROPERTY & CASUALTY
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ---- ---- ---- ---- ---- ------ ------ NET INVESTMENT INCOME Fixed maturities [1] Taxable $ 159 $ 171 $ 184 $ 203 $ 203 28% - Tax-exempt 108 105 98 97 95 (12%) (2%) ----- ----- ----- ----- ----- ---- --- Total fixed maturities 267 276 282 300 298 12% (1%) Equities 3 2 3 1 2 (33%) 100% Mortgage loans 4 4 3 4 4 - - Real estate 1 1 - 1 1 - - Limited partnerships 4 4 11 4 2 (50%) (50%) Other 7 4 3 4 9 29% 125% ----- ----- ----- ----- ----- ---- --- Subtotal 286 291 302 314 316 10% 1% Less investment expense 5 5 5 6 5 - 17% ----- ----- ----- ----- ----- ---- --- TOTAL NET INVESTMENT INCOME $ 281 $ 286 $ 297 $ 308 $ 311 11% 1% ----- ----- ----- ----- ----- ---- --- Investment yield, pre-tax [2] 5.8% 5.5% 5.4% 5.4% 5.5% (0.3) 0.1 Investment yield, after-tax [2] 4.4% 4.2% 4.0% 4.0% 4.1% (0.3) 0.1 NET REALIZED CAPITAL GAINS (LOSSES) Fixed maturities $ 22 $ 198 $ (3) $ 19 $ 50 127% 163% Equities (23) (2) - 3 4 NM 33% Periodic net coupon settlements on non-qualifying derivatives 4 5 5 4 4 - - Other [3] (4) 11 17 (3) 13 NM NM ----- ----- ----- ----- ----- ---- --- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) $ (1) $ 212 $ 19 $ 23 $ 71 NM NM ----- ----- ----- ----- ----- ---- --- Gross gains on sale $ 80 $ 212 $ 71 $ 34 $ 72 (10%) 112% Gross losses on sale (60) (7) (49) (9) (5) 92% 44% Impairments (22) (10) (2) (4) (6) 73% (50%) Periodic net coupon settlements on non-qualifying derivatives 4 5 5 4 4 - - Other net gain (loss) [3] (3) 12 (6) (2) 6 NM NM ----- ----- ----- ----- ----- ---- --- TOTAL NET REALIZED CAPITAL GAINS (LOSSES) $ (1) $ 212 $ 19 $ 23 $ 71 NM NM ----- ----- ----- ----- ----- ---- ---
[1] Includes income on short-term bonds. [2] The investment yield calculation excludes the collateral received associated with the securities lending program. [3] Primarily consists of changes in fair value on non-qualifying derivatives and hedge ineffectiveness on qualifying derivative instruments. I-3 THE HARTFORD FINANCIAL SERVICES GROUP, INC. INVESTMENT EARNINGS BEFORE-TAX CORPORATE
YEAR OVER YEAR SEQUENTIAL 1Q 2Q 3Q 4Q 1Q QUARTER QUARTER 2003 2003 2003 2003 2004 CHANGE CHANGE ---- ---- ---- ---- ---- ------ ------ NET INVESTMENT INCOME Fixed maturities [1] Taxable $ - $ 2 $ - $ - $ - - - --- --- --- --- --- --- --- Total fixed maturities - 2 - - - - - --- --- --- --- --- --- --- Other [2] 4 4 5 5 5 25% - --- --- --- --- --- --- --- TOTAL NET INVESTMENT INCOME $ 4 $ 6 $ 5 $ 5 $ 5 25% - --- --- --- --- --- --- --- NET REALIZED CAPITAL GAINS (LOSSES) Other net gain (loss) [3] $ - $ - $ - $ - $(3) - - --- --- --- --- --- --- ---
[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. [3] Primarily consists of changes in fair value on non-qualifying derivatives. I-4 THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS CONSOLIDATED
1Q 2Q 3Q 2003 2003 2003 ------------------- ------------------- ------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- ------ ------- Fixed maturities, available-for-sale, at fair value [1] [2] $ 63,363 91.9% $ 68,676 92.8% $ 70,587 93.5% Equity securities, at fair value Available-for-sale 661 1.0% 712 0.9% 677 0.9% Trading securities [2] - - - - - - -------- ----- -------- ----- -------- ----- Total equity securities, at fair value 661 1.0% 712 0.9% 677 0.9% Policy loans, at outstanding balance 2,876 4.2% 2,889 3.9% 2,533 3.4% Real estate/Mortgage loans, at cost 636 0.9% 732 1.0% 797 1.1% Limited partnerships, at fair value 786 1.1% 458 0.6% 444 0.5% Other investments [3] 590 0.9% 569 0.8% 465 0.6% -------- ----- -------- ----- -------- ----- TOTAL INVESTMENTS [2] $ 68,912 100.0% $ 74,036 100.0% $ 75,503 100.0% -------- ----- -------- ----- -------- ----- Total general account investments 57,328 83.2% 62,190 84.0% 63,620 84.3% Total guaranteed separate account investments 11,584 16.8% 11,846 16.0% 11,883 15.7% -------- ----- -------- ----- -------- ----- HIMCO managed third party accounts $ 1,521 $ 1,774 $ 1,850 -------- ----- -------- ----- -------- ----- Asset-backed securities ("ABS") $ 5,985 9.4% $ 6,266 9.1% $ 6,546 9.3% Commercial mortgage-backed securities ("CMBS") 8,469 13.4% 9,774 14.2% 10,017 14.2% Collateralized mortgage obligation ("CMO") 1,079 1.7% 1,091 1.6% 1,047 1.5% Corporate 28,298 44.7% 30,844 44.9% 31,508 44.6% Government/Government agencies - Foreign 2,049 3.2% 2,174 3.2% 1,530 2.2% Government/Government agencies - U.S. 910 1.4% 1,433 2.1% 1,072 1.5% Mortgage-backed securities ("MBS") - agency 2,426 3.8% 2,198 3.2% 3,078 4.4% Municipal - taxable 164 0.3% 414 0.6% 458 0.6% Municipal - tax-exempt 10,814 17.1% 10,592 15.4% 10,191 14.4% Redeemable preferred stock 103 0.2% 103 0.1% 81 0.1% Short-term [1] 3,066 4.8% 3,787 5.6% 5,059 7.2% -------- ----- -------- ----- -------- ----- TOTAL FIXED MATURITIES $ 63,363 100.0% $ 68,676 100.0% $ 70,587 100.0% -------- ----- -------- ----- -------- ----- Total general account fixed maturities 52,126 82.3% 57,137 83.2% 58,909 83.5% Total guaranteed separate account fixed maturities 11,237 17.7% 11,539 16.8% 11,678 16.5% -------- ----- -------- ----- -------- ----- AAA $ 14,999 23.7% $ 16,140 23.6% $ 15,490 21.9% AA 7,778 12.3% 7,710 11.2% 7,583 10.7% A 16,690 26.3% 17,877 26.0% 18,200 25.8% BBB 13,306 21.0% 14,991 21.8% 15,536 22.0% Government 4,260 6.7% 4,614 6.7% 5,146 7.3% BB & below 3,264 5.2% 3,557 5.2% 3,573 5.1% Short-term [1] 3,066 4.8% 3,787 5.5% 5,059 7.2% -------- ----- -------- ----- -------- ----- TOTAL FIXED MATURITIES $ 63,363 100.0% $ 68,676 100.0% $ 70,587 100.0% -------- ----- -------- ----- -------- -----
4Q 1Q 2003 2004 ------------------ ------------------ AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- Fixed maturities, available-for-sale, at fair value [1] [2] $ 72,998 93.9% $ 72,814 84.9% Equity securities, at fair value Available-for-sale 603 0.8% 612 0.7% Trading securities [2] - - 7,831 9.2% -------- -------- -------- -------- Total equity securities, at fair value 603 0.8% 8,443 9.9% Policy loans, at outstanding balance 2,512 3.2% 2,655 3.1% Real estate/Mortgage loans, at cost 907 1.2% 929 1.1% Limited partnerships, at fair value 361 0.5% 361 0.4% Other investments [3] 307 0.4% 555 0.6% -------- -------- -------- -------- TOTAL INVESTMENTS [2] $ 77,688 100.0% $ 85,757 100.0% -------- -------- -------- -------- Total general account investments 65,847 84.8% Total guaranteed separate account investments 11,841 15.2% -------- -------- -------- -------- HIMCO managed third party accounts $ 2,053 $ 2,326 -------- -------- -------- -------- Asset-backed securities ("ABS") $ 6,524 8.9% $ 6,373 8.8% Commercial mortgage-backed securities ("CMBS") 10,731 14.7% 11,495 15.8% Collateralized mortgage obligation ("CMO") 1,073 1.5% 902 1.2% Corporate 33,997 46.6% 34,490 47.3% Government/Government agencies - Foreign 1,773 2.4% 1,535 2.1% Government/Government agencies - U.S. 1,430 1.9% 1,333 1.8% Mortgage-backed securities ("MBS") - agency 2,834 3.9% 2,470 3.4% Municipal - taxable 629 0.9% 765 1.1% Municipal - tax-exempt 10,216 14.0% 10,282 14.1% Redeemable preferred stock 80 0.1% 74 0.1% Short-term [1] 3,711 5.1% 3,095 4.3% -------- -------- -------- -------- TOTAL FIXED MATURITIES $ 72,998 100.0% $ 72,814 100.0% -------- -------- -------- -------- Total general account fixed maturities 61,263 83.9% Total guaranteed separate account fixed maturities 11,735 16.1% -------- -------- -------- -------- AAA $ 16,552 22.7% $ 16,854 23.1% AA 7,855 10.8% 8,043 11.0% A 18,750 25.7% 18,220 25.0% BBB 17,114 23.4% 18,350 25.2% Government 5,357 7.3% 4,777 6.6% BB & below 3,659 5.0% 3,475 4.8% Short-term [1] 3,711 5.1% 3,095 4.3% -------- -------- -------- -------- TOTAL FIXED MATURITIES $ 72,998 100.0% $ 72,814 100.0% -------- -------- -------- --------
[1] 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. First quarter 2004 includes $38 in Corporate. [2] First quarter 2004 includes $11,967 in guaranteed separate account assets and $7,831 of trading securities with general account assets due to the adoption of SOP 03-1. [3] Third quarter 2003 includes $4 in Corporate. Fourth quarter 2003 includes $2 in Corporate. First quarter 2004 includes $28 in Corporate. I-5 THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS LIFE
1Q 2Q 3Q 2003 2003 2003 -------------------- -------------------- -------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- ------- ------- Fixed maturities, available-for-sale, at fair value [1] $42,913 90.1% $45,599 90.8% $46,915 92.0% Equity securities, at fair value Available-for-sale 452 1.0% 493 1.0% 462 0.9% Trading securities [1] - - - - - - ------- ----- ------- ----- ------- ----- Total equity securities, at fair value 452 1.0% 493 1.0% 462 0.9% Policy loans, at outstanding balance 2,876 6.0% 2,889 5.8% 2,533 5.0% Real estate/Mortgage loans, at cost 486 1.0% 555 1.1% 544 1.1% Limited partnerships, at fair value 468 1.0% 255 0.5% 251 0.5% Other investments 422 0.9% 393 0.8% 263 0.5% ------- ----- ------- ----- ------- ----- TOTAL INVESTMENTS [1] $47,617 100.0% $50,184 100.0% $50,968 100.0% ------- ----- ------- ----- ------- ----- Total general account investments 36,033 75.7% 38,338 76.4% 39,085 76.7% Total guaranteed separate account investments 11,584 24.3% 11,846 23.6% 11,883 23.3% ------- ----- ------- ----- ------- ----- ABS $ 5,297 12.3% $ 5,471 12.0% $ 5,411 11.5% CMBS 6,923 16.1% 7,553 16.6% 7,704 16.4% CMO 1,024 2.4% 1,057 2.3% 998 2.1% Corporate 22,452 52.3% 23,788 52.1% 23,790 50.8% Government/Government agencies - Foreign 881 2.0% 952 2.1% 657 1.4% Government/Government agencies - U.S. 733 1.7% 728 1.6% 943 2.0% MBS - agency 1,955 4.6% 1,686 3.7% 2,080 4.4% Municipal - taxable 110 0.3% 244 0.5% 270 0.6% Municipal - tax-exempt 2,004 4.7% 2,051 4.5% 2,027 4.3% Redeemable preferred stock 34 0.1% 34 0.1% 33 0.1% Short-term 1,500 3.5% 2,035 4.5% 3,002 6.4% ------- ----- ------- ----- ------- ----- TOTAL FIXED MATURITIES $42,913 100.0% $45,599 100.0% $46,915 100.0% ------- ----- ------- ----- ------- ----- Total general account fixed maturities 31,676 73.8% 34,060 74.7% 35,237 75.1% Total guaranteed separate account fixed maturities 11,237 26.2% 11,539 25.3% 11,678 24.9% ------- ----- ------- ----- ------- ----- AAA $ 7,475 17.4% $ 7,968 17.5% $ 7,783 16.6% AA 4,487 10.5% 4,341 9.5% 4,323 9.2% A 13,069 30.5% 13,693 30.0% 13,630 29.1% BBB 10,608 24.7% 11,841 26.0% 11,889 25.3% Government 3,582 8.3% 3,376 7.4% 3,975 8.5% BB & below 2,192 5.1% 2,345 5.1% 2,313 4.9% Short-term 1,500 3.5% 2,035 4.5% 3,002 6.4% ------- ----- ------- ----- ------- ----- TOTAL FIXED MATURITIES $42,913 100.0% $45,599 100.0% $46,915 100.0% ------- ----- ------- ----- ------- -----
4Q 1Q 2003 2004 -------------------- -------------------- AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- Fixed maturities, available-for-sale, at fair value [1] $49,197 92.8% $49,580 80.4% Equity securities, at fair value Available-for-sale 395 0.8% 406 0.7% Trading securities [1] - - 7,831 12.7% ------- ----- ------- ----- Total equity securities, at fair value 395 0.8% 8,237 13.4% Policy loans, at outstanding balance 2,512 4.7% 2,655 4.3% Real estate/Mortgage loans, at cost 579 1.1% 620 1.0% Limited partnerships, at fair value 193 0.4% 197 0.3% Other investments 119 0.2% 350 0.6% ------- ----- ------- ----- TOTAL INVESTMENTS [1] $52,995 100.0% $61,639 100.0% ------- ----- ------- ----- Total general account investments 41,154 77.7% Total guaranteed separate account investments 11,841 22.3% ------- ----- ------- ----- ABS $ 5,409 11.0% $ 5,365 10.8% CMBS 8,168 16.6% 8,817 17.8% CMO 1,035 2.1% 866 1.7% Corporate 25,553 51.9% 25,965 52.4% Government/Government agencies - Foreign 952 1.9% 744 1.5% Government/Government agencies - U.S. 1,126 2.3% 1,048 2.1% MBS - agency 2,175 4.4% 1,871 3.8% Municipal - taxable 408 0.9% 536 1.1% Municipal - tax-exempt 2,017 4.1% 2,238 4.5% Redeemable preferred stock 33 0.1% 47 0.1% Short-term 2,321 4.7% 2,083 4.2% ------- ----- ------- ----- TOTAL FIXED MATURITIES $49,197 100.0% $49,580 100.0% ------- ----- ------- ----- Total general account fixed maturities 37,462 76.1% Total guaranteed separate account fixed maturities 11,735 23.9% ------- ----- ------- ----- AAA $ 8,681 17.6% $ 9,058 18.3% AA 4,486 9.1% 4,719 9.5% A 13,901 28.3% 13,661 27.6% BBB 13,061 26.5% 13,920 28.0% Government 4,361 9.0% 3,860 7.8% BB & below 2,386 4.8% 2,279 4.6% Short-term 2,321 4.7% 2,083 4.2% ------- ----- ------- ----- TOTAL FIXED MATURITIES $49,197 100.0% $49,580 100.0% ------- ----- ------- -----
[1] First quarter 2004 includes $11,967 in guaranteed separate account assets and $7,831 of trading securities with general account assets due to the adoption of SOP 03-1. I-6 THE HARTFORD FINANCIAL SERVICES GROUP, INC. COMPOSITION OF INVESTED ASSETS PROPERTY & CASUALTY
1Q 2Q 3Q 2003 2003 2003 -------------------- -------------------- -------------------- AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- ------ ------- Fixed maturities, available-for-sale, at fair value $20,384 96.0% $22,820 96.7% $23,565 96.5% Equity securities, available-for-sale, at fair value 209 1.0% 219 0.9% 215 0.9% Policy loans, at outstanding balance - - - - - - Real estate/Mortgage loans, at cost 150 0.7% 177 0.8% 253 1.0% Limited partnerships, at fair value 318 1.5% 203 0.9% 193 0.8% Other investments 168 0.8% 176 0.7% 198 0.8% ------- ----- ------- ----- ------- ----- TOTAL INVESTMENTS $21,229 100.0% $23,595 100.0% $24,424 100.0% ------- ----- ------- ----- ------- ----- ABS $ 688 3.4% $ 795 3.5% $ 1,135 4.8% CMBS 1,546 7.6% 2,221 9.7% 2,313 9.8% CMO 55 0.3% 34 0.1% 49 0.2% Corporate 5,846 28.6% 7,056 31.0% 7,718 32.9% Government/Government agencies - Foreign 1,168 5.7% 1,222 5.4% 873 3.7% Government/Government agencies - U.S. 177 0.9% 705 3.1% 129 0.5% MBS - agency 471 2.3% 512 2.2% 998 4.2% Municipal - taxable 54 0.3% 170 0.7% 188 0.8% Municipal - tax-exempt 8,810 43.2% 8,541 37.4% 8,164 34.6% Redeemable preferred stock 69 0.3% 69 0.3% 48 0.2% Short-term 1,500 7.4% 1,495 6.6% 1,950 8.3% ------- ----- ------- ----- ------- ----- TOTAL FIXED MATURITIES $20,384 100.0% $22,820 100.0% $23,565 100.0% ------- ----- ------- ----- ------- ----- AAA $ 7,524 36.9% $ 8,172 35.8% $ 7,707 32.7% AA 3,291 16.1% 3,369 14.8% 3,260 13.8% A 3,621 17.8% 4,184 18.3% 4,570 19.4% BBB 2,698 13.2% 3,150 13.8% 3,647 15.5% Government 678 3.3% 1,238 5.4% 1,171 5.0% BB & below 1,072 5.3% 1,212 5.3% 1,260 5.3% Short-term 1,500 7.4% 1,495 6.6% 1,950 8.3% ------- ----- ------- ----- ------- ----- TOTAL FIXED MATURITIES $20,384 100.0% $22,820 100.0% $23,565 100.0% ------- ----- ------- ----- ------- -----
4Q 1Q 2003 2004 -------------------- -------------------- AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- Fixed maturities, available-for-sale, at fair value $23,715 96.4% $23,196 96.4% Equity securities, available-for-sale, at fair value 208 0.8% 206 0.9% Policy loans, at outstanding balance - - - - Real estate/Mortgage loans, at cost 328 1.3% 309 1.3% Limited partnerships, at fair value 168 0.7% 164 0.7% Other investments 186 0.8% 177 0.7% ------- ----- ------- ----- TOTAL INVESTMENTS $24,605 100.0% $24,052 100.0% ------- ----- ------- ----- ABS $ 1,115 4.7% $ 1,008 4.3% CMBS 2,563 10.8% 2,678 11.5% CMO 38 0.2% 36 0.2% Corporate 8,444 35.5% 8,525 36.8% Government/Government agencies - Foreign 821 3.5% 791 3.4% Government/Government agencies - U.S. 304 1.3% 285 1.2% MBS - agency 659 2.8% 599 2.6% Municipal - taxable 221 0.9% 229 1.0% Municipal - tax-exempt 8,199 34.6% 8,044 34.7% Redeemable preferred stock 47 0.2% 27 0.1% Short-term 1,304 5.5% 974 4.2% ------- ----- ------- ----- TOTAL FIXED MATURITIES $23,715 100.0% $23,196 100.0% ------- ----- ------- ----- AAA $ 7,871 33.2% $ 7,796 33.6% AA 3,369 14.2% 3,324 14.2% A 4,849 20.4% 4,559 19.7% BBB 4,053 17.1% 4,430 19.1% Government 996 4.2% 917 4.0% BB & below 1,273 5.4% 1,196 5.2% Short-term 1,304 5.5% 974 4.2% ------- ----- ------- ----- TOTAL FIXED MATURITIES $23,715 100.0% $23,196 100.0% ------- ----- ------- -----
I-7 THE HARTFORD FINANCIAL SERVICES GROUP, INC. UNREALIZED LOSS AGING CONSOLIDATED [1]
MARCH 31, 2004 DECEMBER 31, 2003 ---------------------------------- --------------------------------- AMORTIZED FAIR VALUE UNREALIZED AMORTIZED FAIR VALUE UNREALIZED COST LOSS COST LOSS ---- ----- ---- ---- ----- ---- TOTAL SECURITIES Three months or less $ 3,596 $ 3,551 $ (45) $ 4,867 $ 4,826 $ (41) Greater than three months to six months 233 229 (4) 3,991 3,854 (137) Greater than six months to nine months 1,760 1,731 (29) 404 382 (22) Greater than nine months to twelve months 235 225 (10) 151 142 (9) Greater than twelve months 1,418 1,305 (113) 1,844 1,688 (156) ------- ------- ------- ------- ------- ------- TOTAL $ 7,242 $ 7,041 $ (201) $11,257 $10,892 $ (365) ------- ------- ------- ------- ------- ------- BIG [2] AND EQUITY SECURITIES Three months or less $ 300 $ 292 $ (8) $ 133 $ 129 $ (4) Greater than three months to six months 43 41 (2) 134 129 (5) Greater than six months to nine months 54 52 (2) 81 73 (8) Greater than nine months to twelve months 75 67 (8) 18 17 (1) Greater than twelve months 271 229 (42) 417 349 (68) ------- ------- ------- ------- ------- ------- TOTAL $ 743 $ 681 $ (62) $ 783 $ 697 $ (86) ------- ------- ------- ------- ------- -------
[1] As of March 31, 2004, fixed maturities represented $(181), or 90%, of the Company's total unrealized loss of available-for-sale securities. There were no fixed maturities as of March 31, 2004 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 March 31, 2004 and December 31, 2003, 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 "Investments" included in the Critical Accounting Estimates section of the Management's Discussion & Analysis and in Note 1 of Notes to Consolidated Financial Statements, both of which are included in The Hartford's 2003 Form 10-K Annual Report. [2] Represents below investment grade ("BIG") securities. I-8 THE HARTFORD FINANCIAL SERVICES GROUP, INC. UNREALIZED LOSS AGING LIFE
MARCH 31, 2004 DECEMBER 31, 2003 ---------------------------------- ---------------------------------- AMORTIZED FAIR UNREALIZED AMORTIZED FAIR UNREALIZED COST VALUE LOSS COST VALUE LOSS ---- ----- ---- ---- ----- ---- TOTAL SECURITIES Three months or less $2,710 $2,676 $ (34) $2,903 $2,878 $ (25) Greater than three months to six months 158 155 (3) 1,943 1,882 (61) Greater than six months to nine months 742 732 (10) 265 250 (15) Greater than nine months to twelve months 145 138 (7) 138 130 (8) Greater than twelve months 1,287 1,190 (97) 1,661 1,528 (133) ------ ------ ------ ------ ------ ------ TOTAL $5,042 $4,891 $ (151) $6,910 $6,668 $ (242) ------ ------ ------ ------ ------ ------ BIG AND EQUITY SECURITIES Three months or less $ 227 $ 220 $ (7) $ 57 $ 55 $ (2) Greater than three months to six months 12 11 (1) 91 87 (4) Greater than six months to nine months 38 36 (2) 60 54 (6) Greater than nine months to twelve months 56 50 (6) 18 17 (1) Greater than twelve months 231 197 (34) 361 302 (59) ------ ------ ------ ------ ------ ------ TOTAL $ 564 $ 514 $ (50) $ 587 $ 515 $ (72) ------ ------ ------ ------ ------ ------
I-9 THE HARTFORD FINANCIAL SERVICES GROUP, INC. UNREALIZED LOSS AGING PROPERTY & CASUALTY
MARCH 31, 2004 DECEMBER 31, 2003 ---------------------------------- ---------------------------------- AMORTIZED FAIR VALUE UNREALIZED AMORTIZED FAIR VALUE UNREALIZED COST LOSS COST LOSS ---- ----- ---- ---- ----- ---- TOTAL SECURITIES Three months or less $ 886 $ 875 $ (11) $1,964 $1,948 $ (16) Greater than three months to six months 75 74 (1) 2,048 1,972 (76) Greater than six months to nine months 1,018 999 (19) 139 132 (7) Greater than nine months to twelve months 90 87 (3) 13 12 (1) Greater than twelve months 131 115 (16) 183 160 (23) ------ ------ ------ ------ ------ ------ TOTAL $2,200 $2,150 $ (50) $4,347 $4,224 $ (123) ------ ------ ------ ------ ------ ------ BIG AND EQUITY SECURITIES Three months or less $ 73 $ 72 $ (1) $ 76 $ 74 $ (2) Greater than three months to six months 31 30 (1) 43 42 (1) Greater than six months to nine months 16 16 - 21 19 (2) Greater than nine months to twelve months 19 17 (2) - - - Greater than twelve months 40 32 (8) 56 47 (9) ------ ------ ------ ------ ------ ------ TOTAL $ 179 $ 167 $ (12) $ 196 $ 182 $ (14) ------ ------ ------ ------ ------ ------
I-10 THE HARTFORD FINANCIAL SERVICES GROUP, INC. INVESTED ASSET EXPOSURES AS OF MARCH 31, 2004
LIFE -------------------- PERCENT OF TOP TEN CORPORATE TOTAL FIXED MATURITY FAIR INVESTED EXPOSURES BY SECTOR VALUE ASSETS ----- ------ Financial services $ 6,397 10.5% Technology and communications 4,221 6.8% Consumer non cyclical 2,813 4.6% Basic industry 2,791 4.5% Consumer cyclical 2,724 4.4% Utilities 2,316 3.8% Energy 1,633 2.6% Capital goods 1,731 2.8% Other 695 1.1% Transportation 644 1.0% ------- ---- TOTAL $25,965 42.1% ------- ---- TOP TEN EXPOSURES BY ISSUER [1] Verizon Communications, Inc. $ 239 0.5% Bank of America Corp. 230 0.4% Ford Motor Company 212 0.3% Credit Suisse Group 206 0.3% General Motors Corp. 202 0.3% Citigroup, Inc. 200 0.3% Capital One Master Trust 187 0.3% Time Warner, Inc. 187 0.3% DaimlerChrysler AG 184 0.3% BT Group PLC 183 0.3% ------- ---- TOTAL $ 2,030 3.3% ------- ----
P&C ------------------- PERCENT OF TOTAL FAIR INVESTED VALUE ASSETS ----- ------ Financial services $2,081 8.7% Technology and communications 1,333 5.5% Consumer non cyclical 851 3.5% Basic industry 815 3.4% Consumer cyclical 870 3.6% Utilities 1,052 4.4% Energy 625 2.6% Capital goods 520 2.2% Other 226 0.9% Transportation 152 0.6% ------ ---- TOTAL $8,525 35.4% ------ ---- State of Massachusetts $ 245 1.1% State of California 226 0.9% State of Illinois 192 0.8% New York City, NY 164 0.7% State of Georgia 159 0.7% New Jersey State Transit Authority 153 0.6% UBS AG 149 0.6% Mass. Bay Transportation Authority 132 0.5% J.P. Morgan Chase & Co. 121 0.5% Barclays PLC 112 0.5% ------ ---- TOTAL $1,653 6.9% ------ ----
CONSOLIDATED -------------------- PERCENT OF TOTAL FAIR INVESTED VALUE ASSETS ----- ------ Financial services $ 8,478 9.9% Technology and communications 5,554 6.5% Consumer non cyclical 3,664 4.3% Basic industry 3,606 4.2% Consumer cyclical 3,594 4.2% Utilities 3,368 3.9% Energy 2,258 2.6% Capital goods 2,251 2.6% Other 921 1.1% Transportation 796 0.9% ------- ---- TOTAL $34,490 40.2% ------- ---- State of Massachusetts $ 380 0.5% State of California 366 0.5% Verizon Communications, Inc. 301 0.4% General Motors Corp. 299 0.3% UBS AG 295 0.3% Ford Motor Company 288 0.3% Bank of America Corp. 266 0.3% Time Warner, Inc. 258 0.3% DaimlerChrysler AG 258 0.3% State of Illinois 258 0.3% ------- ---- TOTAL $ 2,969 3.5% ------- ----
[1] Excludes U.S. government and government agency backed securities as well as securities classified as trading securities. I-11 -----END PRIVACY-ENHANCED MESSAGE-----