Earnings (Loss) Per Common Share

6 Months Ended

Jun. 30, 2011

Earnings (Loss) Per Common Share [Abstract]

Earnings (Loss) Per Common Share

2. Earnings (Loss) Per Common Share

The following table presents a reconciliation of net income and shares used in calculating basic earnings (loss) per common share to those used in calculating diluted earnings (loss) per common share.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In millions, except for per share data)	2011			2010			2011		2010
Earnings
Income from continuing operations
Income from continuing operations, net of tax	$	104		$	175		$	453	$	495
Less: Preferred stock dividends and accretion of discount		11			11			21		494
Income from continuing operations, net of tax, available to common shareholders		93			164			432		1
Add: Dilutive effect of preferred stock dividends		—			—			—		—
Income from continuing operations, net of tax, available to common shareholders and assumed conversion of preferred shares	$	93		$	164		$	432	$	1
Income (loss) from discontinued operations, net of tax	$	(80	)	$	(99	)	$	82	$	(100	)
Net income
Net income	$	24		$	76		$	535	$	395
Less: Preferred stock dividends and accretion of discount		11			11			21		494
Net income (loss) available to common shareholders		13			65			514		(99	)
Add: Dilutive effect of preferred stock dividends		—			—			21		—
Net income (loss) available to common shareholders and assumed conversion of preferred shares	$	13		$	65		$	535	$	(99	)
Shares
Weighted average common shares outstanding, basic		445.1			443.9			444.9		418.8
Dilutive effect of warrants		36.3			35.2			38.6		—
Dilutive effect of stock compensation plans		1.0			1.1			1.4		—
Dilutive effect of mandatory convertible preferred shares		—			—			20.7		—
Weighted average shares outstanding and dilutive potential common shares		482.4			480.2			505.6		418.8
Earnings (loss) per common share
Basic
Income from continuing operations, net of tax, available to common shareholders	$	0.21		$	0.37		$	0.97	$	—
Income (loss) from discontinued operations, net of tax		(0.18	)		(0.22	)		0.19		(0.24	)
Net income (loss) available to common shareholders	$	0.03		$	0.15		$	1.16	$	(0.24	)
Diluted
Income from continuing operations, net of tax, available to common shareholders	$	0.19		$	0.34		$	0.89	$	—
Income (loss) from discontinued operations, net of tax		(0.16	)		(0.20	)		0.17		(0.24	)
Net income (loss) available to common shareholders	$	0.03		$	0.14		$	1.06	$	(0.24	)

The declaration of a quarterly common stock dividend of $0.10 during the first and second quarter of 2011 triggered a provision in The Hartford’s Warrant Agreement with The Bank of New York Mellon, relating to warrants to purchase common stock issued in connection with the Company’s participation in the Capital Purchase Program, resulting in an adjustment to the warrant exercise price. The warrant exercise price at June 30, 2011, March 31, 2011 and December 31, 2010 was $9.754, $9.773 and $9.790, respectively.

For the three months ended June 30, 2011, 20.7 million shares for mandatory convertible preferred shares, along with the related dividend adjustment, would have been antidilutive to the earnings per share calculations. Assuming the impact of the mandatory convertible preferred shares was not antidilutive, weighted average common shares outstanding and dilutive potential common shares would have totaled 503.1 million.

For the six months ended June 30, 2011, the diluted earnings per share calculation on income from continuing operations, net of tax, available to common shareholders was calculated using 484.9 million weighted average common shares outstanding and dilutive potential common shares, as the inclusion of 20.7 million shares for mandatory convertible preferred shares, along with the related dividend adjustment, would have been antidilutive.

For the three months ended June 30, 2010, 20.8 million shares for mandatory convertible preferred shares, along with the related dividend adjustment, would have been antidilutive to the earnings per share calculations. Assuming the impact of the mandatory convertible preferred shares was not antidilutive, weighted average common shares outstanding and dilutive potential common shares would have totaled 501.0 million.

As a result of the net loss available to common shareholders for the six months ended June 30, 2010, the Company is required to use basic weighted average common shares outstanding in the calculation of the six months ended June 30, 2010 diluted loss per share, since the inclusion of 34.4 million shares for warrants, 1.2 million shares for stock compensation plans and 12.1 million shares for mandatory convertible preferred shares, along with the related dividend adjustment, would have been antidilutive to the earnings per share calculations. In the absence of the net loss available to common shareholders and assuming the impact of the mandatory convertible preferred shares was not antidilutive, weighted average common shares outstanding and dilutive potential common shares would have totaled 466.5 million.