|
|
|
|
|
þ
|
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
13-3317783
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Indicate by check mark:
|
Yes
|
No
|
|
•
|
if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
|
þ
|
|
•
|
if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
|
|
þ
|
•
|
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|
þ
|
|
•
|
whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
|
þ
|
|
•
|
if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
|
þ
|
|
•
|
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|
|
|
|
Large accelerated filer
þ
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
o
|
|
|
•
|
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)
|
|
þ
|
Item
|
Description
|
Page
|
|
|
|
1
|
||
1A.
|
||
1B.
|
||
2
|
||
3
|
||
4
|
||
|
|
|
5
|
||
6
|
||
7
|
||
7A.
|
||
8
|
||
9
|
||
9A.
|
||
9B.
|
||
|
|
|
10
|
||
11
|
||
12
|
||
13
|
||
14
|
||
|
|
|
15
|
||
|
||
|
•
|
challenges related to the Company’s current operating environment, including continuing uncertainty about the strength and speed of the recovery in the United States and other key economies and the impact of any governmental stimulus or austerity initiatives, sovereign credit concerns, a sustained low interest rate environment, higher tax rates, and other potentially adverse developments on financial, commodity and credit markets and consumer and business spending and investment and the effect of these events on our returns in investment portfolios and our hedging costs associated with our variable annuities business;
|
•
|
the risks, challenges and uncertainties associated with the realignment of our business to focus on our property and casualty, group benefits and mutual fund businesses, and our decision to place our Individual Annuity business into run-off and sell the Individual Life and Retirement Plans businesses;
|
•
|
the risks, challenges and uncertainties associated with
our
capital management plan, expense reduction initiatives and other actions, which may include acquisitions, divestitures or restructurings;
|
•
|
execution risk related to the continued reinvestment of our investment portfolios and refinement of our hedge program for our run-off annuity block;
|
•
|
market risks associated with our business, including changes in interest rates, credit spreads, equity prices, market volatility and foreign exchange rates, and implied volatility levels, as well as continuing uncertainty in key sectors such as the global real estate market;
|
•
|
the possibility of unfavorable loss development including with respect to long-tailed exposures;
|
•
|
the possibility of a pandemic, earthquake, or other natural or man-made disaster that may adversely affect our businesses;
|
•
|
weather and other natural physical events, including the severity and frequency of storms, hail, winter storms, hurricanes and tropical storms, as well as climate change and its potential impact on weather patterns;
|
•
|
risk associated with the use of analytical models in making decisions in key areas such as underwriting, capital, hedging, reserving, and catastrophe risk management;
|
•
|
the uncertain effects of emerging claim and coverage issues;
|
•
|
the Company’s ability to effectively price its property and casualty policies, including its ability to obtain regulatory consents to pricing actions or to non-renewal or withdrawal of certain product lines;
|
•
|
the impact on our statutory capital of various factors, including many that are outside the Company’s control, which can in turn affect our credit and financial strength ratings, cost of capital, regulatory compliance and other aspects of our business and results;
|
•
|
risks to our business, financial position, prospects and results associated with negative rating actions or downgrades in the Company’s financial strength and credit ratings or negative rating actions or downgrades relating to our investments;
|
•
|
the impact on our investment portfolio if our investment portfolio is concentrated in any particular segment of the economy;
|
•
|
volatility in our statutory and U.S. GAAP earnings and potential material changes to our results resulting from our adjustment of our risk management program to emphasize protection of economic value;
|
•
|
the potential for differing interpretations of the methodologies, estimations and assumptions that underlie the valuation of the Company’s financial instruments that could result in changes to investment valuations;
|
•
|
the subjective determinations that underlie the Company’s evaluation of other-than-temporary impairments on available-for-sale securities;
|
•
|
losses due to nonperformance or defaults by others;
|
•
|
the potential for further acceleration of deferred policy acquisition cost amortization;
|
•
|
the potential for further impairments of our goodwill or the potential for changes in valuation allowances against deferred tax assets;
|
•
|
the possible occurrence of terrorist attacks and the Company’s ability to contain its exposure, including the effect of the absence or insufficiency of applicable terrorism legislation on coverage;
|
•
|
the difficulty in predicting the Company’s potential exposure for asbestos and environmental claims;
|
•
|
the response of reinsurance companies under reinsurance contracts and the availability, pricing and adequacy of reinsurance to protect the Company against losses;
|
•
|
actions by our competitors, many of which are larger or have greater financial resources than we do;
|
•
|
the Company’s ability to distribute its products through distribution channels, both current and future;
|
•
|
the cost and other effects of increased regulation as a result of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which, among other effects, vests a Financial Stability Oversight Council with the power to designate “systemically important” institutions, requires central clearing of and imposes margin requirements on certain derivatives transactions, and created a new “Federal Insurance Office” within the U.S. Department of the Treasury;
|
•
|
unfavorable judicial or legislative developments;
|
•
|
the potential effect of other domestic and foreign regulatory developments, including those that could adversely impact the demand for the Company’s products, operating costs and required capital levels;
|
•
|
regulatory limitations on the ability of the Company and certain of its subsidiaries to declare and pay dividends;
|
•
|
the Company’s ability to maintain the availability of its systems and safeguard the security of its data in the event of a disaster, cyber or other information security incident or other unanticipated event;
|
•
|
the risk that our framework for managing operational risks may not be effective in mitigating material risk and loss to the Company;
|
•
|
the potential for difficulties arising from outsourcing and similar third-party relationships;
|
•
|
the impact of changes in federal or state tax laws;
|
•
|
regulatory requirements that could delay, deter or prevent a takeover attempt that shareholders might consider in their best interests;
|
•
|
the impact of potential changes in accounting principles and related financial reporting requirements;
|
•
|
the Company’s ability to protect its intellectual property and defend against claims of infringement; and
|
•
|
other factors described in such forward-looking statements.
|
•
|
a liability for unpaid losses, including those that have been incurred but not yet reported, as well as estimates of all expenses associated with processing and settling these claims;
|
•
|
a liability equal to the balance that accrues to the benefit of the life insurance policyholder as of the consolidated financial statement date, otherwise known as the account value;
|
•
|
a liability for future policy benefits, representing the present value of future benefits to be paid to or on behalf of policyholders less the present value of future net premiums;
|
•
|
fair value reserves for living benefits embedded derivative guarantees; and
|
•
|
death and living benefit reserves which are computed based on a percentage of revenues less actual claim costs.
|
•
|
Providing a comprehensive view of the risks facing the Company, including risk concentrations and correlations;
|
•
|
Helping management define the Company's overall capacity and appetite for risk by evaluating the risk return profile of the business relative to the Company's strategic intent and financial underpinning;
|
•
|
Assisting management in setting specific risk tolerances and limits that are measurable, actionable, and comply with the Company's overall risk philosophy;
|
•
|
Communicating and monitoring the Company's risk exposures relative to set limits and recommending, or implementing as appropriate, mitigating strategies; and
|
•
|
Providing valuable insight to assist leaders in growing the businesses and achieving optimal risk-adjusted returns within established guidelines.
|
1.
|
Risk Culture and Governance: The Company has established policies for its major risks and a formal governance structure with leadership oversight and an assignment of accountability and authority. The governance structure starts at the Board and cascades to the ERCC and then to individual risk committees across the Company. In addition, the Company promotes a strong risk management culture and high expectations around ethical behavior.
|
2.
|
Risk Identification and Assessment: Through its ERM organization, the Company has developed processes for the identification, assessment, and, when appropriate, response to internal and external risks to the Company's operations and business objectives. Risk identification and prioritization has been established within each area, including processes around emerging risks.
|
3.
|
Risk Appetite, Tolerances, and Limits: The Company has a formal enterprise risk appetite framework that is approved by the ERCC and reviewed by the Board. The risk appetite framework includes an enterprise risk appetite statement, risk preferences, risk tolerances and an associated limit structure for each of the Company’s major risks. These limits, which are encapsulated in formal risk policies, are reviewed by the appropriate governing risk committee.
|
4.
|
Risk Management and Controls: While the Company utilizes the committee structure to elevate risk discussions and decision-making, there are a variety of working groups that provide decisioning and management of risk within determined tolerances and limits.
|
5.
|
Risk Reporting and Communication: The Company monitors its major risks at the enterprise level through a number of enterprise reports, including but not limited to, a monthly risk dashboard, tracking the return on risk-capital across products, and regular stress testing. ERM communicates the Company's risk exposures to senior and executive management and the Board, and reviews key business performance metrics, risk indicators, audit reports, risk/control self-assessments and risk event data.
|
•
|
Insurance Risk
|
•
|
Operational Risk
|
•
|
Financial Risk
|
Item 1B.
|
UNRESOLVED STAFF COMMENTS
|
Item 2.
|
PROPERTIES
|
Item 5.
|
MARKET FOR THE HARTFORD’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
1
st
Qtr.
|
2
nd
Qtr.
|
3
rd
Qtr.
|
4
th
Qtr.
|
||||||||
2013
|
|
|
|
|
||||||||
Common Stock Price
|
|
|
|
|
||||||||
High
|
$
|
26.46
|
|
$
|
31.43
|
|
$
|
32.30
|
|
$
|
36.62
|
|
Low
|
$
|
23.05
|
|
$
|
24.82
|
|
$
|
29.60
|
|
$
|
30.68
|
|
Dividends Declared
|
$
|
0.10
|
|
$
|
0.10
|
|
$
|
0.15
|
|
$
|
0.15
|
|
2012
|
|
|
|
|
||||||||
Common Stock Price
|
|
|
|
|
||||||||
High
|
$
|
22.02
|
|
$
|
21.95
|
|
$
|
20.34
|
|
$
|
22.88
|
|
Low
|
$
|
16.37
|
|
$
|
16.10
|
|
$
|
15.93
|
|
$
|
19.41
|
|
Dividends Declared
|
$
|
0.10
|
|
$
|
0.10
|
|
$
|
0.10
|
|
$
|
0.10
|
|
Period
|
Total Number of Shares Purchased
|
|
Average
Price Paid per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or Programs
|
Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under
the Plans or Programs [1]
|
|||||
|
|
|
|
|
(in millions)
|
|||||
October 1, 2013 – October 31, 2013
|
2,331,663
|
|
|
$
|
32.77
|
|
2,331,663
|
$
|
766
|
|
November 1, 2013 – November 30, 2013
|
1,787,466
|
|
|
$
|
34.69
|
|
1,787,466
|
$
|
704
|
|
December 1, 2013 – December 31, 2013
|
2,597,635
|
|
|
$
|
34.44
|
|
2,435,940
|
$
|
617
|
|
Total
|
6,716,764
|
|
|
$
|
33.93
|
|
6,555,069
|
|
[1]
|
On January 31, 2013 the Company’s Board of Directors authorized a $500 equity repurchase program. On June 26, 2013, the Board of Directors approved a $750 increase in the Company's authorized equity repurchase program.
I
n January 2014, the Board of Directors approved an increase in the Company's authorized equity repurchase program by an amount that, when combined with the amount remaining under the existing authorization, provides the Company with the ability to repurchase $2 billion in equity during the period commencing on January 1, 2014 and ending on December 31, 2015. The Company’s repurchase authorization, permits purchases of common stock, as well as warrants or other derivative securities. Repurchases may be made in the open market, through derivative, accelerated share repurchase and other privately negotiated transactions, and through plans designed to comply with Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended. The timing of any future repurchases will be dependent upon several factors, including the market price of the Company’s securities, the Company’s capital position, consideration of the effect of any repurchases on the Company’s financial strength or credit ratings, and other corporate considerations. The repurchase program may be modified, extended or terminated by the Board of Directors at any time.
|
Annual Return Percentage
|
||||||||||
|
For the years ended
|
|||||||||
Company/Index
|
2009
|
2010
|
2011
|
2012
|
2013
|
|||||
The Hartford Financial Services Group, Inc.
|
43.91
|
%
|
14.89
|
%
|
(37.55
|
)%
|
41.01
|
%
|
64.12
|
%
|
S&P 500 Index
|
26.46
|
%
|
15.06
|
%
|
2.11
|
%
|
16.00
|
%
|
32.39
|
%
|
S&P Insurance Composite Index
|
13.90
|
%
|
15.80
|
%
|
(8.28
|
)%
|
19.09
|
%
|
46.71
|
%
|
Cumulative Five-Year Total Return
|
|||||||||||||
|
Base
|
|
|||||||||||
|
Period
|
For the years ended
|
|||||||||||
Company/Index
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
|||||||
The Hartford Financial Services Group, Inc.
|
$
|
100
|
|
143.91
|
|
165.34
|
|
103.26
|
|
145.61
|
|
238.98
|
|
S&P 500 Index
|
$
|
100
|
|
126.46
|
|
145.51
|
|
148.59
|
|
172.37
|
|
228.19
|
|
S&P Insurance Composite Index
|
$
|
100
|
|
113.90
|
|
131.89
|
|
120.97
|
|
144.07
|
|
211.36
|
|
Item 6.
|
SELECTED FINANCIAL DATA
|
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||
Income Statement Data
|
|
|
|
|
|
||||||||||
Total revenues
|
$
|
26,236
|
|
$
|
26,122
|
|
$
|
21,733
|
|
$
|
21,770
|
|
$
|
24,004
|
|
Income (loss) from continuing operations before income taxes
|
63
|
|
(581
|
)
|
200
|
|
2,272
|
|
(1,515
|
)
|
|||||
Income (loss) from continuing operations, net of tax
|
310
|
|
(100
|
)
|
573
|
|
1,704
|
|
(710
|
)
|
|||||
Income (loss) from discontinued operations, net of tax
|
(134
|
)
|
62
|
|
139
|
|
(68
|
)
|
(59
|
)
|
|||||
Net income (loss)
|
$
|
176
|
|
$
|
(38
|
)
|
$
|
712
|
|
$
|
1,636
|
|
$
|
(769
|
)
|
Preferred stock dividends and accretion of discount
|
10
|
|
42
|
|
42
|
|
515
|
|
127
|
|
|||||
Net income (loss) available to common shareholders
|
$
|
166
|
|
$
|
(80
|
)
|
$
|
670
|
|
$
|
1,121
|
|
$
|
(896
|
)
|
Balance Sheet Data
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
277,884
|
|
$
|
298,513
|
|
$
|
302,609
|
|
$
|
316,789
|
|
$
|
306,035
|
|
Short-term debt
|
$
|
438
|
|
$
|
320
|
|
$
|
—
|
|
$
|
400
|
|
$
|
343
|
|
Total debt (including capital lease obligations)
|
$
|
6,544
|
|
$
|
7,126
|
|
$
|
6,216
|
|
$
|
6,607
|
|
$
|
5,839
|
|
Preferred stock
|
$
|
—
|
|
$
|
556
|
|
$
|
556
|
|
$
|
556
|
|
$
|
2,960
|
|
Total stockholders’ equity
|
$
|
18,905
|
|
$
|
22,447
|
|
$
|
21,486
|
|
$
|
18,754
|
|
$
|
16,184
|
|
Net income (loss) available to common shareholders per common share
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.37
|
|
$
|
(0.18
|
)
|
$
|
1.51
|
|
$
|
2.60
|
|
$
|
(2.59
|
)
|
Diluted
|
$
|
0.34
|
|
$
|
(0.18
|
)
|
$
|
1.40
|
|
$
|
2.40
|
|
$
|
(2.59
|
)
|
Cash dividends declared per common share
|
$
|
0.50
|
|
$
|
0.40
|
|
$
|
0.40
|
|
$
|
0.20
|
|
$
|
0.20
|
|
Description
|
|
Page
|
|
|
|
The Hartford's Operations Overview
|
|
|
|
|
|
Consolidated Results of Operations
|
|
|
|
|
|
Investment Results
|
|
|
|
|
|
Critical Accounting Estimates
|
|
|
|
|
|
Key Performance Measures and Ratios
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Group Benefits
|
|
|
|
|
|
|
||
|
|
|
Talcott Resolution
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
2013
|
2012
|
2011
|
Increase
(Decrease) From 2012 to 2013 |
Increase
(Decrease) From 2011 to 2012 |
||||||
Earned premiums
|
$
|
13,226
|
|
$
|
13,631
|
|
$
|
14,088
|
|
$(405)
|
$(457)
|
Fee income
|
2,805
|
|
4,386
|
|
4,700
|
|
(1,581)
|
(314)
|
|||
Net investment income (loss):
|
|
|
|
—
|
—
|
||||||
Securities available-for-sale and other
|
3,362
|
|
4,227
|
|
4,263
|
|
(865)
|
(36)
|
|||
Equity securities, trading
|
6,061
|
|
4,364
|
|
(1,345
|
)
|
1,697
|
5,709
|
|||
Total net investment income
|
9,423
|
|
8,591
|
|
2,918
|
|
832
|
5,673
|
|||
Net realized capital gains (losses):
|
|
|
|
—
|
—
|
||||||
Total other-than-temporary impairment (“OTTI”) losses
|
(93
|
)
|
(389
|
)
|
(263
|
)
|
296
|
(126)
|
|||
OTTI losses recognized in other comprehensive income
|
20
|
|
40
|
|
89
|
|
(20)
|
(49)
|
|||
Net OTTI losses recognized in earnings
|
(73
|
)
|
(349
|
)
|
(174
|
)
|
276
|
(175)
|
|||
Net realized capital gains on business dispositions
|
1,575
|
|
—
|
|
—
|
|
1,575
|
—
|
|||
Net realized capital gains (losses), excluding net OTTI losses recognized in earnings
|
(995
|
)
|
(395
|
)
|
(52
|
)
|
(600)
|
(343)
|
|||
Total net realized capital gains (losses)
|
507
|
|
(744
|
)
|
(226
|
)
|
1,251
|
(518)
|
|||
Other revenues
|
275
|
|
258
|
|
253
|
|
17
|
5
|
|||
Total revenues
|
26,236
|
|
26,122
|
|
21,733
|
|
114
|
4,389
|
|||
Benefits, losses and loss adjustment expenses
|
10,948
|
|
13,248
|
|
14,627
|
|
(2,300)
|
(1,379)
|
|||
Benefits, losses and loss adjustment expenses — returns credited on international variable annuities
|
6,060
|
|
4,363
|
|
(1,345
|
)
|
1,697
|
5,708
|
|||
Amortization of deferred policy acquisition costs and present value of future profits
|
2,701
|
|
1,988
|
|
2,444
|
|
713
|
(456)
|
|||
Insurance operating costs and other expenses
|
4,280
|
|
5,204
|
|
5,269
|
|
(924)
|
(65)
|
|||
Loss on extinguishment of debt
|
213
|
|
910
|
|
—
|
|
(697)
|
910
|
|||
Reinsurance loss on disposition, including reduction in goodwill of $156 and $342, respectively
|
1,574
|
|
533
|
|
—
|
|
1,041
|
533
|
|||
Interest expense
|
397
|
|
457
|
|
508
|
|
(60)
|
(51)
|
|||
Goodwill impairment
|
—
|
|
—
|
|
30
|
|
—
|
(30)
|
|||
Total benefits, losses and expenses
|
26,173
|
|
26,703
|
|
21,533
|
|
(530)
|
5,170
|
|||
Income (loss) from continuing operations before income taxes
|
63
|
|
(581
|
)
|
200
|
|
644
|
(781)
|
|||
Income tax benefit
|
(247
|
)
|
(481
|
)
|
(373
|
)
|
234
|
(108)
|
|||
Income (loss) from continuing operations, net of tax
|
310
|
|
(100
|
)
|
573
|
|
410
|
(673)
|
|||
Income (loss) from discontinued operations, net of tax
|
(134
|
)
|
62
|
|
139
|
|
(196)
|
(77)
|
|||
Net income (loss)
|
$
|
176
|
|
$
|
(38
|
)
|
$
|
712
|
|
$214
|
$(750)
|
•
|
Current accident year losses and loss adjustment expenses before catastrophes of
$6.3 billion
, before tax, in 2013, decreased from
$6.6 billion
, before tax, in 2012. The decrease was primarily driven by lower loss and loss adjustment expenses in Property and Casualty Commercial workers’ compensation business due to favorable severity and frequency.
|
•
|
Current accident year catastrophe losses of
$312
, before tax, in
2013
, compared to
$706
, before tax, in
2012
. Losses in 2013 were primarily due to multiple thunderstorm, hail, and tornado events across various U.S. geographic regions. Losses in 2012 were primarily driven by
$350
related to Storm Sandy and multiple thunderstorm, hail, and tornado events across various U.S. geographic regions.
|
•
|
A loss on extinguishment of debt of $213, before tax, in
2013
, compared to $910, before tax in
2012
. The loss in
2013
related to the repurchase of approximately $800 of senior notes at a premium to the face amount of the then outstanding debt. The resulting loss on extinguishment of debt consists of the repurchase premium, the write-off of the unamortized discount, and debt issuance and other costs related to the repurchase transaction. The loss in
2012
related to the repurchase of all outstanding 10% fixed-to-floating rate junior subordinated debentures due 2068 with a $1.75 billion aggregate principal amount all held by Allianz. The loss in 2012 consisted of the premium associated with repurchasing the 10% Debentures at an amount greater than the face amount, the write-off of the unamortized discount and debt issuance costs related to the 10% Debentures and other costs related to the repurchase transaction.
|
•
|
Reinsurance loss on disposition of $533, before tax, in 2012 consisting of an impairment of goodwill and a loss accrual for premium deficiency related to the disposition of the Individual Life business, and losses in 2012 from the operations of the Retirement Plans and Individual Life businesses sold in 2013. For further discussion of the sale of these businesses, see Note
2
-
Business Dispositions
of Notes to Consolidated Financial Statements.
|
•
|
An increase of $853 in the Unlock charge, before tax, in
2013
compared to an Unlock benefit of $47, before tax, in
2012
. The Unlock charge in
2013
was primarily due to Japan hedge cost assumption changes associated with expanding the Japan variable annuity hedging program in 2013, partially offset by actual separate account returns being above our aggregated estimated returns during the period. The Unlock benefit in
2012
was driven primarily by actual separate account returns above our aggregated estimated return, partially offset by assumption changes in connection with the annual policyholder behavior assumption study. For further discussion of Unlocks, see MD&A - Critical Accounting Estimates, Estimated Gross Profits Used in the Valuation and Amortization of Assets and Liabilities Associated with Variable Annuity and Other Universal Life-Type Contracts and MD&A - Talcott Resolution.
|
•
|
Net realized capital gains (losses), excluding the realized capital gain on business dispositions and OTTI, increased to a loss of
$995
, before tax, from a loss in the prior year of
$395
, before tax, primarily due to losses on the international variable annuity hedge program in 2013. The losses in 2013 primarily resulted from the weakening of the yen and rising equity markets. Certain hedge assets generated realized capital losses on rising equity markets and weakening of the yen and are used to hedge liabilities that are not carried at fair value. For further discussion of investment results, see MD&A - Key Performance Measures and Ratios, Net Realized Capital Gains (Losses). For information on the related sensitivities of the variable annuity hedging program, see Enterprise Risk Management, Variable Product Guarantee Risks and Risk Management.
|
•
|
Net asbestos reserve strengthening of $130, before tax in
2013
, compared to $48, before tax in
2012
, resulting from the Company's annual review of its asbestos liabilities. For further information, see MD&A - Critical Accounting Estimates, Property & Casualty Other Operations Claims with the Property and Casualty Insurance Product Reserves, Net of Reinsurance.
|
•
|
The Company reported a loss from discontinued operations primarily due to the realized capital loss of $102, after-tax, on the sale of Hartford Life International, Ltd. ("HLIL") in 2013.
|
•
|
Differences between the Company's effective income tax rate and the U.S. statutory rate of 35% are due primarily to tax-exempt interest earned on invested assets and the dividends received deduction ("DRD"). The $234 decrease in the income tax benefit in 2013 compared with the higher income tax benefit in 2012 was primarily due to the $644 increase in income (loss) from continuing operations, before tax. The income tax benefit of $247 and $481 in 2013 and 2012, respectively, includes separate account DRD benefits of $139 and $145, respectively.
|
•
|
Net realized capital losses increased primarily due to losses in 2012 on the international variable annuity hedge program, compared to gains in 2011. The losses resulted from rising equity markets and weakening of the yen. Certain hedge assets generated realized capital losses on rising equity markets and weakening of the yen and are used to hedge liabilities that are not carried at fair value. In addition, 2012 includes intent-to-sell impairments relating to the sales of the Retirement Plans and Individual Life businesses.
|
•
|
A loss on extinguishment of debt of $910, before tax in 2012 related to the repurchase of all outstanding 10% fixed-to-floating rate junior subordinated debentures due 2068 with a $1.75 billion aggregate principal amount all held by Allianz. The loss consisted of the premium associated with repurchasing the 10% Debentures at an amount greater than the face amount, the write-off of the unamortized discount and debt issuance costs related to the 10% Debentures and other costs related to the repurchase transaction.
|
•
|
Reinsurance loss on disposition of $533, before tax, in 2012 consisting of a goodwill impairment charge and loss accrual for premium deficiency related to the disposition of the Individual Life business.
|
•
|
Income (loss) from discontinued operations, after-tax, decreased due to a realized gain on the sale of Specialty Risk Services of $150, after-tax, which was partially offset by a loss of $74, after-tax, from the disposition of Federal Trust Corporation.
|
•
|
An Unlock benefit of $47, before tax, in 2012 compared to an Unlock charge of $734, before tax, in 2011. The benefit in 2012 was driven primarily by actual separate account returns above our aggregated estimated return, partially offset by policyholder assumption changes which reduced expected future gross profits including additional costs associated with the U.S. variable annuity macro hedge program. The Unlock charge in 2011 was primarily due to the impact of changes to the international variable annuity hedge program.
|
•
|
Differences between the Company's effective income tax rate and the U.S. statutory rate of 35% are due primarily to tax-exempt interest earned on invested assets and the dividends received deduction ("DRD"). The $108 increase in the income tax benefit in 2012 compared with the income tax benefit in 2011 was primarily due to the $781 decrease in income (loss) from continuing operations, before tax. The income tax benefit of $481and $373 in 2012 and 2011, respectively, includes separate account DRD benefits of $140 and $201, respectively. The income tax benefit in 2011 includes a release of $86, or 100%, of the valuation allowance associated with realized capital losses, as well as a tax benefit of $52 as a result of a resolution of a tax matter with the IRS for the computation of DRD for years 1998, 2000 and 2001.
|
•
|
Current accident year catastrophe losses of $706, before tax, in 2012 compared to $745, before tax, in 2011. The losses in 2012 primarily include Storm Sandy, as well as multiple thunderstorm, hail, and tornado events across various U.S. geographic regions in both 2012 and 2011.
|
•
|
The Company recorded reserve releases of $61, before tax, in 2012, compared to reserve strengthening of $48, before tax, in 2011, in its property and casualty insurance prior accident years development, excluding asbestos and environmental reserves. For additional information regarding prior accident years development, see MD&A - Critical Accounting Estimates.
|
•
|
Net asbestos reserve strengthening of $48, before tax, in 2012, compared to $294, before tax, in 2011 resulting from the Company's annual review of its asbestos liabilities.
|
•
|
A $112, before tax charge in 2011 related to the write-off of capitalized costs associated with a policy administration software project that was discontinued.
|
Net income (loss) by segment
|
2013
|
2012
|
2011
|
Increase
(Decrease) From 2012 to 2013 |
Increase
(Decrease) From 2011 to 2012 |
||||||||||
Property & Casualty Commercial
|
$
|
870
|
|
$
|
547
|
|
$
|
526
|
|
$
|
323
|
|
$
|
21
|
|
Consumer Markets
|
229
|
|
166
|
|
7
|
|
63
|
|
159
|
|
|||||
Property & Casualty Other Operations
|
(2
|
)
|
57
|
|
(117
|
)
|
(59
|
)
|
174
|
|
|||||
Group Benefits
|
192
|
|
129
|
|
92
|
|
63
|
|
37
|
|
|||||
Mutual Funds
|
76
|
|
71
|
|
98
|
|
5
|
|
(27
|
)
|
|||||
Talcott Resolution
|
(634
|
)
|
1
|
|
540
|
|
(635
|
)
|
(539
|
)
|
|||||
Corporate
|
(555
|
)
|
(1,009
|
)
|
(434
|
)
|
454
|
|
(575
|
)
|
|||||
Net income (loss)
|
$
|
176
|
|
$
|
(38
|
)
|
$
|
712
|
|
$
|
214
|
|
$
|
(750
|
)
|
|
December 31, 2013
|
December 31, 2012
|
||||||||
|
Amount
|
Percent
|
Amount
|
Percent
|
||||||
Fixed maturities, available-for-sale ("AFS"), at fair value
|
$
|
62,357
|
|
79.2
|
%
|
$
|
85,922
|
|
81.6
|
%
|
Fixed maturities, at fair value using the fair value option ("FVO")
|
844
|
|
1.1
|
%
|
1,087
|
|
1.0
|
%
|
||
Equity securities, AFS, at fair value
|
868
|
|
1.1
|
%
|
890
|
|
0.8
|
%
|
||
Mortgage loans
|
5,598
|
|
7.1
|
%
|
6,711
|
|
6.4
|
%
|
||
Policy loans, at outstanding balance
|
1,420
|
|
1.8
|
%
|
1,997
|
|
1.9
|
%
|
||
Limited partnerships and other alternative investments
|
3,040
|
|
3.9
|
%
|
3,015
|
|
2.9
|
%
|
||
Other investments [1]
|
521
|
|
0.7
|
%
|
1,114
|
|
1.1
|
%
|
||
Short-term investments
|
4,008
|
|
5.1
|
%
|
4,581
|
|
4.3
|
%
|
||
Total investments excluding equity securities, trading
|
78,656
|
|
100
|
%
|
105,317
|
|
100
|
%
|
||
Equity securities, trading, at fair value [2]
|
19,745
|
|
|
28,933
|
|
|
||||
Total investments
|
$
|
98,401
|
|
|
$
|
134,250
|
|
|
|
For the years ended December 31,
|
||||||||||||||
|
2013
|
2012
|
2011
|
||||||||||||
(Before tax)
|
Amount
|
Yield [1]
|
Amount
|
Yield [1]
|
Amount
|
Yield [1]
|
|||||||||
Fixed maturities [2]
|
$
|
2,623
|
|
4.1
|
%
|
$
|
3,352
|
|
4.2
|
%
|
$
|
3,382
|
|
4.2
|
%
|
Equity securities, AFS
|
30
|
|
3.6
|
%
|
37
|
|
4.3
|
%
|
36
|
|
3.8
|
%
|
|||
Mortgage loans
|
262
|
|
4.9
|
%
|
337
|
|
5.2
|
%
|
281
|
|
5.4
|
%
|
|||
Policy loans
|
83
|
|
5.9
|
%
|
119
|
|
6.0
|
%
|
131
|
|
6.1
|
%
|
|||
Limited partnerships and other alternative investments
|
287
|
|
9.5
|
%
|
196
|
|
7.1
|
%
|
243
|
|
12.0
|
%
|
|||
Other investments [3]
|
200
|
|
|
297
|
|
|
305
|
|
|
||||||
Investment expense
|
(123
|
)
|
|
(111
|
)
|
|
(115
|
)
|
|
||||||
Total securities AFS and other
|
$
|
3,362
|
|
4.3
|
%
|
$
|
4,227
|
|
4.3
|
%
|
$
|
4,263
|
|
4.4
|
%
|
Equity securities, trading
|
6,061
|
|
|
4,364
|
|
|
(1,345
|
)
|
|
||||||
Total net investment income (loss)
|
$
|
9,423
|
|
|
$
|
8,591
|
|
|
$
|
2,918
|
|
|
|||
Total securities, AFS and other excluding limited partnerships and other alternative investments
|
3,075
|
|
4.1
|
%
|
4,031
|
|
4.3
|
%
|
4,020
|
|
4.2
|
%
|
[1]
|
Yields calculated using annualized net investment income (excluding income related to equity securities, trading) divided by the monthly average invested assets at cost, or adjusted carrying value, as applicable, excluding equity securities, trading, repurchase agreement and dollar roll collateral, and consolidated variable interest entity non-controlling interests. Yield calculations for the year ended
December 31, 2013
exclude assets transferred due to the sale of the Retirement Plans and Individual Life businesses. Yield calculations for all periods exclude income and assets associated with the disposal of the HLIL business. Yields by asset type exclude investment expenses.
|
[2]
|
Includes net investment income on short-term investments.
|
[3]
|
Primarily includes income from derivatives that qualify for hedge accounting and hedge fixed maturities.
|
|
|
For the years ended December 31,
|
||||||||||
(Before tax)
|
|
2013
|
|
2012
|
|
2011
|
||||||
Gross gains on sales
|
|
$
|
2,387
|
|
|
$
|
821
|
|
|
$
|
687
|
|
Gross losses on sales
|
|
(692
|
)
|
|
(440
|
)
|
|
(384
|
)
|
|||
Net OTTI losses recognized in earnings [1]
|
|
(73
|
)
|
|
(349
|
)
|
|
(174
|
)
|
|||
Valuation allowances on mortgage loans
|
|
(1
|
)
|
|
14
|
|
|
24
|
|
|||
Japanese fixed annuity contract hedges, net [2]
|
|
6
|
|
|
(36
|
)
|
|
3
|
|
|||
Periodic net coupon settlements on credit derivatives/Japan
|
|
(7
|
)
|
|
(10
|
)
|
|
(10
|
)
|
|||
Results of variable annuity hedge program
|
|
|
|
|
|
|
||||||
U.S. GMWB derivatives, net
|
|
262
|
|
|
519
|
|
|
(397
|
)
|
|||
U.S. macro hedge program
|
|
(234
|
)
|
|
(340
|
)
|
|
(216
|
)
|
|||
Total U.S. program
|
|
28
|
|
|
179
|
|
|
(613
|
)
|
|||
International program
|
|
(1,586
|
)
|
|
(1,467
|
)
|
|
691
|
|
|||
Total results of variable annuity hedge program
|
|
(1,558
|
)
|
|
(1,288
|
)
|
|
78
|
|
|||
Other, net [3]
|
|
445
|
|
|
544
|
|
|
(450
|
)
|
|||
Net realized capital gains (losses)
|
|
$
|
507
|
|
|
$
|
(744
|
)
|
|
$
|
(226
|
)
|
[1]
|
Includes
$177
of intent-to-sell impairments for the year ended
December 31, 2012
, relating to the sales of the Retirement Plans and Individual Life businesses in 2013.
|
[2]
|
Relates to the Japanese fixed annuity products (adjustment of product liability for changes in spot currency exchange rates, related derivative hedging instruments excluding periodic net coupon settlements, and the change in value related to Japan government FVO securities).
|
[3]
|
Primarily consists of transactional foreign currency re-valuation associated with the internal reinsurance of the Japan variable annuity business, which is primarily offset in AOCI, and gains and losses on non-qualifying derivatives.
|
•
|
Gross gains on sales for the year ended
December 31, 2013
were predominately from the sale of the Retirement Plans and Individual Life businesses resulting in a gain of
$1.5 billion
. The remaining gains on sales were primarily due to the sales of corporate securities and tax-exempt municipals. Gross losses on sales were primarily the result of the sales of U.S. Treasuries and mortgage backed securities. The sales were predominantly due to management of duration and liquidity as well as progress towards sector allocation objectives.
|
•
|
Gross gains and losses on sales for the year ended
December 31, 2012
were predominately from investment grade corporate securities, municipal bonds, mortgage backed securities and U.S. Treasuries. These sales were the result of tactical portfolio management as well as to maintain duration targets.
|
•
|
Gross gains and losses on sales for the year ended
December 31, 2011
were predominately from investment grade corporate securities, U.S. Treasuries, municipal bonds and commercial real estate related securities. These sales were the result of reinvestment into spread product well-positioned for modest economic growth, as well as the purposeful reduction of certain exposures.
|
•
|
See Other-Than-Temporary Impairments within the Investment Portfolio Risks and Risk Management section of the MD&A.
|
•
|
See Valuation Allowances on Mortgage Loans within the Investment Portfolio Risks and Risk Management section of the MD&A.
|
•
|
For the year ended
December 31, 2013
the gain on U.S. GMWB related derivatives, net, was primarily related to gains of
$203
from revaluing the liability for living benefits largely driven by favorable policyholder behavior related to increased surrenders and gains of
$38
due to liability assumption updates for lapses and withdrawal rates. The loss on the U.S. macro hedge program for the year ended
December 31, 2013
was primarily driven by losses of
$114
due to an improvement in domestic equity markets, losses of
$56
related to an increase in interest rates, and losses of
$31
related to a decrease in equity market volatility. The loss on the international program for the year ended
December 31, 2013
was primarily driven by losses of
$1.1 billion
related to an improvement in global equity markets and losses of
$608
largely related to depreciation of the Japanese yen in relation to the euro.
|
•
|
For the year ended
December 31, 2012
the gain on U.S. GMWB related derivatives, net, was primarily driven by liability model assumption updates of
$274
largely related to a reduction in the reset assumptions to better align with actual experience, gains of
$106
related to outperformance of underlying actively managed funds compared to their respective indices, and gains of
$83
driven by a decline in equity market volatility. The loss on the U.S. macro hedge program for the year ended
December 31, 2012
was primarily driven by losses of
$167
related to the passage of time, losses of
$118
due to an improvement in domestic equity markets, and losses of
$60
related to a decrease in equity market volatility. The loss on the international program for the year ended
December 31, 2012
was primarily driven by losses of
$795
related to an improvement in global equity markets and losses of
$672
related to depreciation of the Japanese yen in relation to the euro and the U.S. dollar.
|
•
|
For the year ended
December 31, 2011
the loss on U.S. GMWB related derivatives, net, was primarily due to a decrease in long-term interest rates that resulted in a loss of
$283
and higher interest rate volatility that resulted in a loss of
$84
. The loss on the U.S. macro hedge program for the year ended
December 31, 2011
was primarily driven by the passage of time and a decrease in equity market volatility since the purchase date of certain options during the fourth quarter. The gain associated with the international program for the year ended
December 31, 2011
was primarily driven by the Japanese yen strengthening, a decline in global equity markets, and a decrease in interest rates.
|
•
|
Other, net gain for the year ended
December 31, 2013
was partially related to gains of
$239
on transactional foreign currency re-valuation primarily associated with the internal reinsurance of the Japan variable annuity business, which is offset in AOCI, due to depreciation of the Japanese yen versus the U.S. dollar. Gains of
$71
on interest derivatives were primarily associated with fixed rate bonds sold as part of the Individual Life and Retirement Plans business dispositions. For further information on the business dispositions, see Note 2 of Notes to Consolidated Financial Statements. Additional gains included
$69
on interest rate derivatives primarily due to an increase in U.S. interest rates and
$42
of gains on credit derivatives due to credit spreads tightening.
|
•
|
Other, net gain for the year ended
December 31, 2012
was primarily related to gains of
$313
on credit derivatives due to credit spreads tightening, gains of
$251
on transactional foreign currency re-valuation primarily associated with the internal reinsurance of the Japan variable annuity business, which is offset in AOCI, and gains of
$96
on interest derivatives largely driven by the de-designation of the cash flow hedges associated with bonds included in the sale of Individual Life and Retirement Plans businesses. For further information on the business dispositions, see Note 2 of Notes to the Consolidated Financial Statements. These gains were partially offset by losses of
$111
related to Japan 3Win foreign currency swaps primarily driven by the strengthening of the currency basis swap spread between the U.S. dollar and Japanese yen and the decline in U.S. interest rates.
|
•
|
Other, net loss for the year ended
December 31, 2011
was primarily due to losses of
$148
on credit derivatives driven by credit spreads widening and losses
of
$129
on tra
nsactional foreign currency re-valuation primarily associated with the internal reinsurance of the Japan variable annuity business, which is offset in AOCI. Additionally losses of
$94
for the year ended
December 31, 2011
resulted from equity futures and options used to hedge equity market risk in the investment portfolio due to an increase in equity market during the hedged period. Also included were losses of
$69
on Japan 3Win foreign currency swaps primarily driven by a decrease in long-term U.S. interest rates.
|
•
|
property and casualty insurance product reserves, net of reinsurance;
|
•
|
estimated gross profits used in the valuation and amortization of assets and liabilities associated with variable annuity and other universal life-type contracts;
|
•
|
evaluation of other-than-temporary impairments on available-for-sale securities and valuation allowances on mortgage loans;
|
•
|
living benefits required to be fair valued (in other policyholder funds and benefits payable);
|
•
|
goodwill impairment;
|
•
|
valuation of investments and derivative instruments;
|
•
|
valuation allowance on deferred tax assets; and
|
•
|
contingencies relating to corporate litigation and regulatory matters.
|
|
Property & Casualty Commercial
|
Consumer
Markets
|
Property & Casualty
Other Operations
|
Total Property &
Casualty
|
||||||||
Reserve Line of Business
|
|
|
|
|
||||||||
Auto liability
|
$
|
691
|
|
$
|
1,372
|
|
$
|
—
|
|
$
|
2,063
|
|
Auto physical damage
|
18
|
|
25
|
|
—
|
|
43
|
|
||||
Homeowners’
|
—
|
|
422
|
|
—
|
|
422
|
|
||||
Professional liability
|
631
|
|
—
|
|
—
|
|
631
|
|
||||
Package business
|
1,236
|
|
—
|
|
—
|
|
1,236
|
|
||||
General liability
|
2,480
|
|
31
|
|
—
|
|
2,511
|
|
||||
Fidelity and surety
|
180
|
|
—
|
|
—
|
|
180
|
|
||||
Commercial property
|
130
|
|
—
|
|
—
|
|
130
|
|
||||
A&E
|
22
|
|
1
|
|
1,985
|
|
2,008
|
|
||||
Workers’ compensation
|
8,463
|
|
—
|
|
—
|
|
8,463
|
|
||||
Assumed reinsurance
|
—
|
|
—
|
|
265
|
|
265
|
|
||||
All other non-A&E
|
—
|
|
—
|
|
724
|
|
724
|
|
||||
Total reserves-net
|
13,851
|
|
1,851
|
|
2,974
|
|
18,676
|
|
||||
Reinsurance and other recoverables
|
2,442
|
|
13
|
|
573
|
|
3,028
|
|
||||
Total reserves-gross
|
$
|
16,293
|
|
$
|
1,864
|
|
$
|
3,547
|
|
$
|
21,704
|
|
For the year ended December 31, 2013
|
||||||||||||
|
Property & Casualty Commercial
|
Consumer Markets
|
Property & Casualty Other Operations
|
Total Property & Casualty
|
||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, gross
|
$
|
16,020
|
|
$
|
1,926
|
|
$
|
3,770
|
|
$
|
21,716
|
|
Reinsurance and other recoverables
|
2,365
|
|
16
|
|
646
|
|
3,027
|
|
||||
Beginning liabilities for unpaid losses and loss adjustment expenses, net
|
13,655
|
|
1,910
|
|
3,124
|
|
18,689
|
|
||||
Provision for unpaid losses and loss adjustment expenses
|
|
|
|
|
||||||||
Current accident year before catastrophes
|
3,897
|
|
2,412
|
|
—
|
|
6,309
|
|
||||
Current accident year catastrophes [3]
|
105
|
|
207
|
|
—
|
|
312
|
|
||||
Prior accident years
|
83
|
|
(39
|
)
|
148
|
|
192
|
|
||||
Total provision for unpaid losses and loss adjustment expenses
|
4,085
|
|
2,580
|
|
148
|
|
6,813
|
|
||||
Less: Payments
|
3,889
|
|
2,639
|
|
298
|
|
6,826
|
|
||||
Ending liabilities for unpaid losses and loss adjustment expenses, net
|
13,851
|
|
1,851
|
|
2,974
|
|
18,676
|
|
||||
Reinsurance and other recoverables
|
2,442
|
|
13
|
|
573
|
|
3,028
|
|
||||
Ending liabilities for unpaid losses and loss adjustment expenses, gross
|
$
|
16,293
|
|
$
|
1,864
|
|
$
|
3,547
|
|
$
|
21,704
|
|
Earned premiums
|
$
|
6,203
|
|
$
|
3,660
|
|
|
|
||||
Loss and loss expense paid ratio [1]
|
62.7
|
|
72.1
|
|
|
|
||||||
Loss and loss expense incurred ratio
|
65.9
|
|
70.5
|
|
|
|
||||||
Prior accident years development (pts) [2]
|
1.3
|
|
(1.1
|
)
|
|
|
[1]
|
The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums.
|
[2]
|
“Prior accident years development (pts)” represents the ratio of prior accident years development to earned premiums.
|
[3]
|
Contributing to the current accident year catastrophes losses were the following events:
|
For the year ended December 31, 2013
|
||||||||||||
|
Property & Casualty Commercial
|
Consumer Markets
|
Property & Casualty Other Operations
|
Total Property & Casualty Insurance
|
||||||||
Auto liability
|
$
|
141
|
|
$
|
3
|
|
$
|
—
|
|
$
|
144
|
|
Homeowners
|
—
|
|
(6
|
)
|
—
|
|
(6
|
)
|
||||
Professional liability
|
(29
|
)
|
—
|
|
—
|
|
(29
|
)
|
||||
Package business
|
2
|
|
—
|
|
—
|
|
2
|
|
||||
General liability
|
(75
|
)
|
—
|
|
—
|
|
(75
|
)
|
||||
Fidelity and surety
|
(8
|
)
|
—
|
|
—
|
|
(8
|
)
|
||||
Commercial property
|
(7
|
)
|
—
|
|
—
|
|
(7
|
)
|
||||
Net asbestos reserves
|
—
|
|
—
|
|
130
|
|
130
|
|
||||
Net environmental reserves
|
—
|
|
—
|
|
12
|
|
12
|
|
||||
Uncollectible reinsurance
|
(25
|
)
|
—
|
|
—
|
|
(25
|
)
|
||||
Workers’ compensation
|
(2
|
)
|
—
|
|
—
|
|
(2
|
)
|
||||
Workers’ compensation - NY 25a Fund for Reopened Cases
|
80
|
|
—
|
|
—
|
|
80
|
|
||||
Change in workers’ compensation discount, including accretion
|
30
|
|
—
|
|
—
|
|
30
|
|
||||
Catastrophes
|
(24
|
)
|
(39
|
)
|
—
|
|
(63
|
)
|
||||
Other reserve re-estimates, net
|
—
|
|
3
|
|
6
|
|
9
|
|
||||
Total prior accident years development
|
$
|
83
|
|
$
|
(39
|
)
|
$
|
148
|
|
$
|
192
|
|
•
|
Strengthened reserves in commercial auto liability, primarily related to specialty lines claims, arising from a higher frequency of large loss bodily injury claims in accident years 2010 through 2012.
|
•
|
Released reserves in professional liability for accident years 2008 through 2012 due to lower than expected claim severity, primarily for large-sized accounts.
|
•
|
Released reserves in general liability in accident years 2006 through 2011. The emergence of claim severity as well as the frequency of late reported claims for these years was lower than expected and management has placed more weight on the emerged experience.
|
•
|
Refer to the Property & Casualty Other Operations Claims section for further discussion on net asbestos and net environmental reserves.
|
•
|
The Company reviewed its allowance for uncollectible reinsurance in the second quarter of 2013 and reduced its allowance as a result of favorable collections compared to expectations.
|
•
|
Release in workers’ compensation is the net of releases for accident year 2009 and prior reflecting favorable development in average severity, the result of a speed up in settlements and the result of moving to an enhanced state-level analysis of loss experience, offset by strengthening workers’ compensation for accident years 2010 through 2012 reflecting the emergence of a higher mix of more severe claims.
|
•
|
Reserve strengthening related to the closing of the New York Section 25A Fund for Reopened Cases (the "Fund"). These claims were previously funded through assessments and paid by the Fund. The claims will become payable by the Company effective January 1, 2014.
|
•
|
Released reserves for catastrophes primarily related to Storm Sandy.
|
•
|
Other reserve re-estimates, net includes an $18 recovery related to a class action settlement with American International Group involving prior accident years involuntary workers compensation pool loss and loss adjustment expense.
|
For the year ended December 31, 2012
|
||||||||||||
|
Property & Casualty Commercial
|
Consumer Markets
|
Property & Casualty Other Operations
|
Total Property & Casualty Insurance
|
||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, gross
|
$
|
15,437
|
|
$
|
2,061
|
|
$
|
4,052
|
|
$
|
21,550
|
|
Reinsurance and other recoverables
|
2,343
|
|
9
|
|
681
|
|
3,033
|
|
||||
Beginning liabilities for unpaid losses and loss adjustment expenses, net
|
13,094
|
|
2,052
|
|
3,371
|
|
18,517
|
|
||||
Provision for unpaid losses and loss adjustment expenses
|
|
|
|
|
||||||||
Current accident year before catastrophes
|
4,178
|
|
2,390
|
|
—
|
|
6,568
|
|
||||
Current accident year catastrophes [3]
|
325
|
|
381
|
|
—
|
|
706
|
|
||||
Prior accident years
|
72
|
|
(141
|
)
|
65
|
|
(4
|
)
|
||||
Total provision for unpaid losses and loss adjustment expenses
|
4,575
|
|
2,630
|
|
65
|
|
7,270
|
|
||||
Less: Payments
|
4,014
|
|
2,772
|
|
312
|
|
7,098
|
|
||||
Ending liabilities for unpaid losses and loss adjustment expenses, net
|
13,655
|
|
1,910
|
|
3,124
|
|
18,689
|
|
||||
Reinsurance and other recoverables
|
2,365
|
|
16
|
|
646
|
|
3,027
|
|
||||
Ending liabilities for unpaid losses and loss adjustment expenses, gross
|
$
|
16,020
|
|
$
|
1,926
|
|
$
|
3,770
|
|
$
|
21,716
|
|
Earned premiums
|
$
|
6,259
|
|
$
|
3,636
|
|
|
|
||||
Loss and loss expense paid ratio [1]
|
64.1
|
|
76.2
|
|
|
|
||||||
Loss and loss expense incurred ratio
|
73.1
|
|
72.3
|
|
|
|
||||||
Prior accident years development (pts) [2]
|
1.2
|
|
(3.9
|
)
|
|
|
[1]
|
The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums.
|
[2]
|
“Prior accident years development (pts)” represents the ratio of prior accident years development to earned premiums.
|
[3]
|
Contributing to the current accident year catastrophes losses were the following events:
|
For the year ended December 31, 2012
|
||||||||||||
|
Property & Casualty Commercial
|
Consumer Markets
|
Property & Casualty Other Operations
|
Total Property & Casualty Insurance
|
||||||||
Auto liability
|
$
|
56
|
|
$
|
(81
|
)
|
$
|
—
|
|
$
|
(25
|
)
|
Homeowners
|
—
|
|
(32
|
)
|
—
|
|
(32
|
)
|
||||
Professional liability
|
40
|
|
—
|
|
—
|
|
40
|
|
||||
Package business
|
(20
|
)
|
—
|
|
—
|
|
(20
|
)
|
||||
General liability
|
(87
|
)
|
—
|
|
—
|
|
(87
|
)
|
||||
Fidelity and surety
|
(9
|
)
|
—
|
|
—
|
|
(9
|
)
|
||||
Commercial property
|
(8
|
)
|
—
|
|
—
|
|
(8
|
)
|
||||
Net asbestos reserves
|
—
|
|
—
|
|
48
|
|
48
|
|
||||
Net environmental reserves
|
—
|
|
—
|
|
10
|
|
10
|
|
||||
Workers’ compensation
|
78
|
|
—
|
|
—
|
|
78
|
|
||||
Change in workers’ compensation discount, including accretion
|
52
|
|
—
|
|
—
|
|
52
|
|
||||
Catastrophes
|
(37
|
)
|
(29
|
)
|
—
|
|
(66
|
)
|
||||
Other reserve re-estimates, net
|
7
|
|
1
|
|
7
|
|
15
|
|
||||
Total prior accident years development
|
$
|
72
|
|
$
|
(141
|
)
|
$
|
65
|
|
$
|
(4
|
)
|
•
|
Released reserves for personal auto liability claims, primarily for accident years 2008 through 2011. As these accident years matured, favorable bodily injury severity trends were observed and management placed more weight on the emerged experience. Management has adjusted trend assumptions accordingly.
|
•
|
Released reserves for homeowners claims, primarily for accident year 2011 as a result of favorable large loss frequency and lower than expected severity.
|
•
|
Strengthened reserves for commercial auto liability claims, primarily for accident year 2010 and 2011. Higher than expected bodily injury severity, driven by large loss activity, has been observed for these accident years.
|
•
|
Strengthened reserves for professional liability directors and officers claims for accident years 2011 and prior as a result of higher severity, primarily for mid- and large-sized accounts.
|
•
|
Released reserves in package business liability coverages and general liability, primarily for accident years 2006 through 2011. Claim severity emergence for these years was lower than expected and management has placed more weight on the emerged experience. In addition, older years have improved due to favorable emergence of larger claims.
|
•
|
Strengthened reserves in workers' compensation primarily due to the emergence of lost time claims from 2011.
|
•
|
The change in workers’ compensation discount, including accretion, primarily reflects a decrease in the number of tabular claims, and to a lesser extent, the decrease in interest rates.
|
•
|
Reserve releases on certain prior year catastrophes, primarily related to 2001 World Trade Center worker's compensation claims.
|
•
|
Refer to the Property & Casualty Other Operations Claims section for further discussion on net asbestos and net environmental reserves.
|
For the year ended December 31, 2011
|
||||||||||||
|
Property & Casualty Commercial
|
Consumer Markets
|
Property & Casualty Other Operations
|
Total Property & Casualty Insurance
|
||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, gross
|
$
|
14,727
|
|
$
|
2,177
|
|
$
|
4,121
|
|
$
|
21,025
|
|
Reinsurance and other recoverables
|
2,361
|
|
17
|
|
699
|
|
3,077
|
|
||||
Beginning liabilities for unpaid losses and loss adjustment expenses, net
|
12,366
|
|
2,160
|
|
3,422
|
|
17,948
|
|
||||
Provision for unpaid losses and loss adjustment expenses
|
|
|
|
|
||||||||
Current accident year before catastrophes
|
4,139
|
|
2,536
|
|
—
|
|
6,675
|
|
||||
Current accident year catastrophes [3]
|
320
|
|
425
|
|
—
|
|
745
|
|
||||
Prior accident years
|
125
|
|
(75
|
)
|
317
|
|
367
|
|
||||
Total provision for unpaid losses and loss adjustment expenses
|
4,584
|
|
2,886
|
|
317
|
|
7,787
|
|
||||
Less: Payments
|
3,856
|
|
2,994
|
|
368
|
|
7,218
|
|
||||
Ending liabilities for unpaid losses and loss adjustment expenses, net
|
13,094
|
|
2,052
|
|
3,371
|
|
18,517
|
|
||||
Reinsurance and other recoverables
|
2,343
|
|
9
|
|
681
|
|
3,033
|
|
||||
Ending liabilities for unpaid losses and loss adjustment expenses, gross
|
$
|
15,437
|
|
$
|
2,061
|
|
$
|
4,052
|
|
$
|
21,550
|
|
Earned premiums
|
$
|
6,127
|
|
$
|
3,747
|
|
|
|
||||
Loss and loss expense paid ratio [1]
|
62.9
|
|
79.9
|
|
|
|
||||||
Loss and loss expense incurred ratio
|
74.8
|
|
77.0
|
|
|
|
||||||
Prior accident years development (pts) [2]
|
2.0
|
|
(2.0
|
)
|
|
|
[1]
|
The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums.
|
[2]
|
“Prior accident years development (pts)” represents the ratio of prior accident years development to earned premiums.
|
[3]
|
Contributing to the current accident year catastrophes losses were the following events:
|
For the year ended December 31, 2011
|
||||||||||||
|
Property & Casualty Commercial
|
Consumer Markets
|
Property & Casualty Other Operations
|
Total Property & Casualty Insurance
|
||||||||
Auto liability
|
$
|
(4
|
)
|
$
|
(93
|
)
|
$
|
—
|
|
$
|
(97
|
)
|
Homeowners
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
||||
Professional liability
|
29
|
|
—
|
|
—
|
|
29
|
|
||||
Package business
|
(76
|
)
|
—
|
|
—
|
|
(76
|
)
|
||||
General liability
|
(40
|
)
|
—
|
|
—
|
|
(40
|
)
|
||||
Fidelity and surety
|
(7
|
)
|
—
|
|
—
|
|
(7
|
)
|
||||
Commercial property
|
(4
|
)
|
—
|
|
—
|
|
(4
|
)
|
||||
Net asbestos reserves
|
—
|
|
—
|
|
294
|
|
294
|
|
||||
Net environmental reserves
|
—
|
|
—
|
|
26
|
|
26
|
|
||||
Workers’ compensation
|
171
|
|
—
|
|
—
|
|
171
|
|
||||
Change in workers’ compensation discount, including accretion
|
38
|
|
—
|
|
—
|
|
38
|
|
||||
Catastrophes
|
12
|
|
25
|
|
—
|
|
37
|
|
||||
Other reserve re-estimates, net
|
6
|
|
(6
|
)
|
(3
|
)
|
(3
|
)
|
||||
Total prior accident years development
|
$
|
125
|
|
$
|
(75
|
)
|
$
|
317
|
|
$
|
367
|
|
•
|
Released reserves for personal auto liability claims, primarily for accident years 2006 through 2010. Favorable trends in reported severity have persisted or improved over this time period.
|
•
|
Strengthened reserves in professional liability for accident years 2007 through 2008, primarily in the directors and officers (“D&O”) line of business. Detailed reviews of claims involving the sub-prime mortgage market collapse, and shareholder class action lawsuits, resulted in a higher estimate of future claim costs for these exposures.
|
•
|
Released reserves in package business liability coverages and general liability, in accident years 2005 through 2009. As these accident years developed, claim severity has emerged lower than expected.
|
•
|
Strengthened reserves in workers’ compensation in accident years 2008 through 2010. Accident year 2010 loss costs trends were higher than expected as an increase in frequency outpaced a moderation of severity trends. Strengthening in accident years 2009 and 2008 was the result of higher than expected loss emergence for these years. Strengthening in more recent years is partially offset by releases in accident years 2007 and prior.
|
•
|
Strengthened prior year catastrophe reserves, primarily related to a severe wind and hail storm in Arizona during the fourth quarter of 2010. Severity of property damage associated with this event increased more than expected.
|
•
|
Refer to the Property & Casualty Other Operations Claims section for discussion concerning the Company’s annual evaluations of net environmental and net asbestos reserves, and related reinsurance.
|
|
Asbestos
|
|
Environmental
|
All Other [1]
|
Total
|
||||||||
2013
|
|
|
|
|
|
||||||||
Beginning liability — net [2] [3]
|
$
|
1,776
|
|
|
$
|
290
|
|
$
|
1,058
|
|
$
|
3,124
|
|
Losses and loss adjustment expenses incurred
|
130
|
|
|
12
|
|
6
|
|
148
|
|
||||
Less: Losses and loss adjustment expenses paid
|
192
|
|
|
32
|
|
74
|
|
298
|
|
||||
Ending liability — net [2] [3]
|
$
|
1,714
|
|
[4]
|
$
|
270
|
|
$
|
990
|
|
$
|
2,974
|
|
2012
|
|
|
|
|
|
||||||||
Beginning liability — net [2] [3]
|
$
|
1,892
|
|
|
$
|
320
|
|
$
|
1,159
|
|
$
|
3,371
|
|
Losses and loss adjustment expenses incurred
|
48
|
|
|
10
|
|
7
|
|
65
|
|
||||
Less: Losses and loss adjustment expenses paid
|
164
|
|
|
40
|
|
108
|
|
312
|
|
||||
Ending liability — net [2] [3]
|
$
|
1,776
|
|
|
$
|
290
|
|
$
|
1,058
|
|
$
|
3,124
|
|
2011
|
|
|
|
|
|
||||||||
Beginning liability — net [2] [3]
|
$
|
1,787
|
|
|
$
|
334
|
|
$
|
1,302
|
|
$
|
3,423
|
|
Losses and loss adjustment expenses incurred
|
294
|
|
|
26
|
|
(3
|
)
|
317
|
|
||||
Less: Losses and loss adjustment expenses paid
|
189
|
|
|
40
|
|
140
|
|
369
|
|
||||
Ending liability — net [2] [3]
|
$
|
1,892
|
|
|
$
|
320
|
|
$
|
1,159
|
|
$
|
3,371
|
|
[1]
|
“All Other” includes unallocated loss adjustment expense reserves. “All Other” also includes the Company’s allowance for uncollectible reinsurance. When the Company commutes a ceded reinsurance contract or settles a ceded reinsurance dispute, the portion of the allowance for uncollectible reinsurance attributable to that commutation or settlement, if any, is reclassified to the appropriate cause of loss.
|
[2]
|
Excludes amounts reported in Property & Casualty Commercial and Consumer Markets reporting segments (collectively “Ongoing Operations”) for asbestos and environmental net liabilities of $18 and $5 respectively, as of
December 31, 2013
,
$15
and
$7
, respectively, as of
December 31, 2012
, and
$15
and
$8
, respectively, as of
December 31, 2011
; total net losses and loss adjustment expenses incurred for the years ended
December 31, 2013
,
2012
and
2011
of $15,
$13
and
$27
, respectively, related to asbestos and environmental claims; and total net losses and loss adjustment expenses paid for the years ended
December 31, 2013
,
2012
and
2011
of $14,
$15
and
$20
, respectively, related to asbestos and environmental claims.
|
[3]
|
Gross of reinsurance, asbestos and environmental reserves, including liabilities in Property & Casualty Commercial and Consumer Markets, were $2,182 and $311, respectively, as of
December 31, 2013
;
$2,294
and
$334
, respectively, as of
December 31, 2012
; and
$2,442
and
$367
, respectively, as of
December 31, 2011
.
|
[4]
|
The one year and average three year net paid amounts for asbestos claims, including Ongoing Operations, were $201 and $191, respectively, resulting in a one year net survival ratio of 8.6 and a three year net survival ratio of 9.1. 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.
|
|
Asbestos [1]
|
Environmental [1]
|
||||||||||
|
Paid Losses & LAE
|
Incurred Losses & LAE
|
Paid Losses & LAE
|
Incurred Losses & LAE
|
||||||||
2013
|
|
|
|
|
||||||||
Gross
|
|
|
|
|
||||||||
Direct
|
$
|
159
|
|
$
|
72
|
|
$
|
23
|
|
$
|
6
|
|
Assumed Reinsurance
|
68
|
|
50
|
|
4
|
|
6
|
|
||||
London Market
|
16
|
|
8
|
|
6
|
|
—
|
|
||||
Total
|
243
|
|
130
|
|
33
|
|
12
|
|
||||
Ceded
|
(51
|
)
|
—
|
|
(1
|
)
|
—
|
|
||||
Net
|
$
|
192
|
|
$
|
130
|
|
$
|
32
|
|
$
|
12
|
|
2012
|
|
|
|
|
||||||||
Gross
|
|
|
|
|
||||||||
Direct
|
$
|
153
|
|
$
|
55
|
|
$
|
31
|
|
$
|
9
|
|
Assumed Reinsurance
|
51
|
|
14
|
|
7
|
|
—
|
|
||||
London Market
|
17
|
|
5
|
|
5
|
|
3
|
|
||||
Total
|
221
|
|
74
|
|
43
|
|
12
|
|
||||
Ceded
|
(57
|
)
|
(26
|
)
|
(3
|
)
|
(2
|
)
|
||||
Net
|
$
|
164
|
|
$
|
48
|
|
$
|
40
|
|
$
|
10
|
|
2011
|
|
|
|
|
||||||||
Gross
|
|
|
|
|
||||||||
Direct
|
$
|
170
|
|
$
|
350
|
|
$
|
32
|
|
$
|
25
|
|
Assumed Reinsurance
|
55
|
|
12
|
|
8
|
|
—
|
|
||||
London Market
|
23
|
|
16
|
|
6
|
|
4
|
|
||||
Total
|
248
|
|
378
|
|
46
|
|
29
|
|
||||
Ceded
|
(59
|
)
|
(84
|
)
|
(6
|
)
|
(3
|
)
|
||||
Net
|
$
|
189
|
|
$
|
294
|
|
$
|
40
|
|
$
|
26
|
|
[1]
|
Excludes asbestos and environmental paid and incurred loss and LAE reported in Ongoing Operations. Total gross losses and LAE incurred in Ongoing Operations for the years ended
December 31, 2013
,
2012
and
2011
includes $15, $13 and $30, respectively, related to asbestos and environmental claims. Total gross losses and LAE paid in Ongoing Operations for the years ended
December 31, 2013
,
2012
and
2011
includes $14, $15 and $22, respectively, related to asbestos and environmental claims.
|
•
|
Major Asbestos Defendants represent the “Top 70” accounts in Tillinghast's published Tiers 1 and 2 and Wellington accounts. Major Asbestos Defendants have the fewest number of asbestos accounts and include reserves related to PPG Industries, Inc. (“PPG”). In January 2009, the Company, along with approximately three dozen other insurers, entered into a modified agreement in principle with PPG to resolve the Company's coverage obligations for all its PPG asbestos liabilities. The agreement is contingent on the fulfillment of certain conditions. Major Asbestos Defendants gross asbestos reserves accounted for approximately 29% of the Company's total Direct gross asbestos reserves as of June 30, 2013.
|
•
|
Non-Major Accounts are all other open direct asbestos accounts and largely represent smaller and more peripheral defendants. These exposures represented 1,125 accounts and contained approximately 44% of the Company's total Direct gross asbestos reserves as of June 30, 2013.
|
•
|
Unallocated Direct Accounts includes an estimate of the reserves necessary for asbestos claims related to direct insureds that have not previously tendered asbestos claims to the Company and exposures related to liability claims that may not be subject to an aggregate limit under the applicable policies.
|
|
|
Asbestos [1]
|
Environmental [2]
|
Total A&E
|
|||||
Gross
|
|
|
|
|
|
|
|||
Direct
|
$
|
1,637
|
|
$
|
229
|
|
$
|
1,866
|
|
Assumed Reinsurance
|
|
291
|
|
|
34
|
|
|
325
|
|
London Market
|
|
254
|
|
|
48
|
|
|
302
|
|
Total
|
|
2,182
|
|
|
311
|
|
|
2,493
|
|
Ceded
|
|
(450
|
)
|
|
(36
|
)
|
|
(486
|
)
|
Net
|
$
|
1,732
|
|
$
|
275
|
|
$
|
2,007
|
|
[1]
|
The one year gross paid amount for total asbestos claims is $253, resulting in a one year gross survival ratio of 8.6. The three year average gross paid amount for total asbestos claims is $247, resulting in a three year gross survival ratio of 8.8.
|
[2]
|
The one year gross paid amount for total environmental claims is $41, resulting in a one year gross survival ratio of 7.6. The three year average gross paid amount for total environmental claims is $50, resulting in a three year gross survival ratio of 6.3.
|
|
Property & Casualty Commercial
|
Consumer Markets
|
Property & Casualty Other Operations
|
Total Property & Casualty [1]
|
Range of prior accident year unfavorable (favorable) development for the ten years ended December 31, 2013
|
(3.1)% - 1.5%
|
(6.9)% - 0.2%
|
1.9% - 9.3%
|
(1.2)% - 2.6%
|
[1]
|
Excluding the reserve strengthening for asbestos and environmental reserves, over the past ten years reserve re-estimates for total property and casualty insurance ranged from
(2.5)%
to
1.0%
.
|
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
||||||||||||||||||||||
Liabilities for unpaid losses and loss adjustment expenses, net of reinsurance
|
$
|
16,218
|
|
$
|
16,191
|
|
$
|
16,863
|
|
$
|
17,604
|
|
$
|
18,231
|
|
$
|
18,347
|
|
$
|
18,210
|
|
$
|
17,948
|
|
$
|
18,517
|
|
$
|
18,689
|
|
$
|
18,676
|
|
Cumulative paid losses and loss expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
One year later
|
4,415
|
|
3,594
|
|
3,702
|
|
3,727
|
|
3,703
|
|
3,771
|
|
3,882
|
|
4,037
|
|
4,216
|
|
4,274
|
|
|
||||||||||||
Two years later
|
6,779
|
|
6,035
|
|
6,122
|
|
5,980
|
|
5,980
|
|
6,273
|
|
6,401
|
|
6,664
|
|
6,897
|
|
—
|
|
|
||||||||||||
Three years later
|
8,686
|
|
7,825
|
|
7,755
|
|
7,544
|
|
7,752
|
|
8,074
|
|
8,241
|
|
8,503
|
|
—
|
|
—
|
|
|
||||||||||||
Four years later
|
10,075
|
|
9,045
|
|
8,889
|
|
8,833
|
|
9,048
|
|
9,411
|
|
9,538
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Five years later
|
11,063
|
|
9,928
|
|
9,903
|
|
9,778
|
|
10,061
|
|
10,395
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Six years later
|
11,821
|
|
10,798
|
|
10,674
|
|
10,564
|
|
10,845
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Seven years later
|
12,601
|
|
11,448
|
|
11,334
|
|
11,216
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Eight years later
|
13,193
|
|
12,023
|
|
11,895
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Nine years later
|
13,718
|
|
12,526
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Ten years later
|
14,186
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Liabilities re-estimated
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
One year later
|
16,632
|
|
16,439
|
|
17,159
|
|
17,652
|
|
18,005
|
|
18,161
|
|
18,014
|
|
18,315
|
|
18,513
|
|
18,881
|
|
|
||||||||||||
Two years later
|
17,232
|
|
16,838
|
|
17,347
|
|
17,475
|
|
17,858
|
|
18,004
|
|
18,136
|
|
18,275
|
|
18,686
|
|
—
|
|
|
||||||||||||
Three years later
|
17,739
|
|
17,240
|
|
17,318
|
|
17,441
|
|
17,700
|
|
18,139
|
|
18,093
|
|
18,299
|
|
—
|
|
—
|
|
|
||||||||||||
Four years later
|
18,367
|
|
17,344
|
|
17,497
|
|
17,439
|
|
17,866
|
|
18,120
|
|
18,056
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Five years later
|
18,554
|
|
17,570
|
|
17,613
|
|
17,676
|
|
17,848
|
|
18,092
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Six years later
|
18,836
|
|
17,777
|
|
17,895
|
|
17,673
|
|
17,857
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Seven years later
|
19,063
|
|
18,064
|
|
17,899
|
|
17,749
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Eight years later
|
19,351
|
|
18,062
|
|
18,045
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Nine years later
|
19,358
|
|
18,214
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Ten years later
|
19,517
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
||||||||||||
Deficiency (redundancy), net of reinsurance
|
$
|
3,299
|
|
$
|
2,023
|
|
$
|
1,182
|
|
$
|
145
|
|
$
|
(374
|
)
|
$
|
(255
|
)
|
$
|
(154
|
)
|
$
|
351
|
|
$
|
169
|
|
$
|
192
|
|
|
|
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
||||||||||||||||||||
Net reserve, as initially estimated
|
$
|
16,191
|
|
$
|
16,863
|
|
$
|
17,604
|
|
$
|
18,231
|
|
$
|
18,347
|
|
$
|
18,210
|
|
$
|
17,948
|
|
$
|
18,517
|
|
$
|
18,689
|
|
$
|
18,676
|
|
Reinsurance and other recoverables, as initially estimated
|
5,138
|
|
5,403
|
|
4,387
|
|
3,922
|
|
3,586
|
|
3,441
|
|
3,077
|
|
3,033
|
|
3,027
|
|
3,028
|
|
||||||||||
Gross reserve, as initially estimated
|
$
|
21,329
|
|
$
|
22,266
|
|
$
|
21,991
|
|
$
|
22,153
|
|
$
|
21,933
|
|
$
|
21,651
|
|
$
|
21,025
|
|
$
|
21,550
|
|
$
|
21,716
|
|
$
|
21,704
|
|
Net re-estimated reserve
|
$
|
18,214
|
|
$
|
18,045
|
|
$
|
17,749
|
|
$
|
17,857
|
|
$
|
18,092
|
|
$
|
18,056
|
|
$
|
18,299
|
|
$
|
18,686
|
|
$
|
18,881
|
|
|
||
Re-estimated and other reinsurance recoverables
|
5,647
|
|
5,971
|
|
4,362
|
|
4,103
|
|
3,777
|
|
3,288
|
|
2,988
|
|
2,805
|
|
2,620
|
|
|
|||||||||||
Gross re-estimated reserve
|
$
|
23,861
|
|
$
|
24,016
|
|
$
|
22,111
|
|
$
|
21,960
|
|
$
|
21,869
|
|
$
|
21,344
|
|
$
|
21,287
|
|
$
|
21,491
|
|
$
|
21,501
|
|
|
||
Gross deficiency (redundancy)
|
$
|
2,532
|
|
$
|
1,750
|
|
$
|
120
|
|
$
|
(193
|
)
|
$
|
(64
|
)
|
$
|
(307
|
)
|
$
|
262
|
|
$
|
(59
|
)
|
$
|
(215
|
)
|
|
|
Calendar Year
|
||||||||||||||||||||||||||||||||
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
Total
|
||||||||||||||||||||||
By Accident year
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
2003 & Prior
|
$
|
414
|
|
$
|
600
|
|
$
|
507
|
|
$
|
628
|
|
$
|
187
|
|
$
|
282
|
|
$
|
227
|
|
$
|
288
|
|
$
|
7
|
|
$
|
158
|
|
$
|
3,298
|
|
2004
|
—
|
|
(352
|
)
|
(108
|
)
|
(226
|
)
|
(83
|
)
|
(56
|
)
|
(20
|
)
|
(1
|
)
|
(9
|
)
|
(7
|
)
|
(862
|
)
|
|||||||||||
2005
|
—
|
|
—
|
|
(103
|
)
|
(214
|
)
|
(133
|
)
|
(47
|
)
|
(91
|
)
|
(5
|
)
|
6
|
|
(6
|
)
|
(593
|
)
|
|||||||||||
2006
|
—
|
|
—
|
|
—
|
|
(140
|
)
|
(148
|
)
|
(213
|
)
|
(118
|
)
|
(45
|
)
|
(7
|
)
|
(69
|
)
|
(740
|
)
|
|||||||||||
2007
|
—
|
|
—
|
|
—
|
|
—
|
|
(49
|
)
|
(113
|
)
|
(156
|
)
|
(71
|
)
|
(15
|
)
|
(67
|
)
|
(471
|
)
|
|||||||||||
2008
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(39
|
)
|
1
|
|
(31
|
)
|
(1
|
)
|
(37
|
)
|
(107
|
)
|
|||||||||||
2009
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(39
|
)
|
(13
|
)
|
(24
|
)
|
(8
|
)
|
(84
|
)
|
|||||||||||
2010
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
245
|
|
3
|
|
61
|
|
309
|
|
|||||||||||
2011
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
36
|
|
148
|
|
184
|
|
|||||||||||
2012
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
19
|
|
19
|
|
|||||||||||
Total strengthening (release)
|
$
|
414
|
|
$
|
248
|
|
$
|
296
|
|
$
|
48
|
|
$
|
(226
|
)
|
$
|
(186
|
)
|
$
|
(196
|
)
|
$
|
367
|
|
$
|
(4
|
)
|
$
|
192
|
|
$
|
953
|
|
|
Talcott Resolution
|
|||||
|
As of December 31,
|
|||||
|
2013
|
2012
|
||||
DAC [1]
|
$
|
1,552
|
|
$
|
5,112
|
|
SIA [1]
|
$
|
149
|
|
$
|
325
|
|
URR [2]
|
$
|
50
|
|
$
|
1,880
|
|
Death and Other Insurance Benefit Reserves, net of reinsurance [3]
|
$
|
565
|
|
$
|
1,277
|
|
[1]
|
For additional information on DAC and SIA, see Note
8
- Deferred Policy Acquisition Costs and Present Value of Future Profits and Note
10
-
Sales Inducements
, respectively, of Notes to Consolidated Financial Statements.
|
[2]
|
URR associated with the Individual Life business is no longer included in EGP based balances due to the sale of this business in 2013. As of December 31, 2012, URR included approximately
$1.8
billion related to the Individual Life business. For additional information regarding business dispositions, see Note
2
-
Business Dispositions
of Notes to Consolidated Financial Statements.
|
[3]
|
For additional information on death and other insurance benefit reserves, see Note
11
-
Separate Accounts, Death Benefits and Other Insurance Benefit Features
of Notes to Consolidated Financial Statements.
|
|
Talcott Resolution
|
||||||||
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
DAC
|
$
|
(1,086
|
)
|
$
|
(144
|
)
|
$
|
(419
|
)
|
SIA
|
(72
|
)
|
(82
|
)
|
(22
|
)
|
|||
URR
|
16
|
|
26
|
|
40
|
|
|||
Death and Other Insurance Benefit Reserves
|
336
|
|
247
|
|
(333
|
)
|
|||
Total (before tax)
|
$
|
(806
|
)
|
$
|
47
|
|
$
|
(734
|
)
|
Income tax effect
|
(281
|
)
|
16
|
|
(261
|
)
|
|||
Total (after-tax)
|
$
|
(525
|
)
|
$
|
31
|
|
$
|
(473
|
)
|
|
As of December 31, 2013
|
As of December 31, 2012
|
||||||||||||||||
|
Segment
Goodwill
|
Goodwill in
Corporate
|
Total
|
Segment
Goodwill
|
Goodwill in
Corporate
|
Total
|
||||||||||||
Group Benefits
|
$
|
—
|
|
$
|
138
|
|
$
|
138
|
|
$
|
—
|
|
$
|
138
|
|
$
|
138
|
|
Consumer Markets
|
119
|
|
—
|
|
119
|
|
119
|
|
—
|
|
119
|
|
||||||
Mutual Funds
|
149
|
|
92
|
|
241
|
|
149
|
|
92
|
|
241
|
|
||||||
Talcott Resolution:
|
|
|
|
|
|
|
||||||||||||
Retirement Plans [1]
|
—
|
|
—
|
|
—
|
|
87
|
|
69
|
|
156
|
|
||||||
Total
|
$
|
268
|
|
$
|
230
|
|
$
|
498
|
|
$
|
355
|
|
$
|
299
|
|
$
|
654
|
|
|
|
For the years ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Net income (loss)
|
|
$
|
176
|
|
|
$
|
(38
|
)
|
|
$
|
712
|
|
Less: Unlock impacts on net income (loss)
|
|
(525
|
)
|
|
28
|
|
|
(481
|
)
|
|||
Less: Restructuring and other costs, net of tax
|
|
(44
|
)
|
|
(129
|
)
|
|
(16
|
)
|
|||
Less: Income (loss) from discontinued operations, net of tax
|
|
(134
|
)
|
|
62
|
|
|
139
|
|
|||
Less: Loss on extinguishment of debt, net of tax
|
|
(138
|
)
|
|
(587
|
)
|
|
—
|
|
|||
Less: Reinsurance loss on business disposition, net of tax
|
|
(24
|
)
|
|
(388
|
)
|
|
—
|
|
|||
Less: Net realized capital gains (losses), net of tax and DAC, excluded from core earnings
|
|
(701
|
)
|
|
(410
|
)
|
|
(38
|
)
|
|||
Core earnings
|
|
$
|
1,742
|
|
|
$
|
1,386
|
|
|
$
|
1,108
|
|
Underwriting Summary
|
2013
|
2012
|
2011
|
||||||
Written premiums
|
$
|
6,208
|
|
$
|
6,209
|
|
$
|
6,176
|
|
Change in unearned premium reserve
|
5
|
|
(50
|
)
|
49
|
|
|||
Earned premiums
|
6,203
|
|
6,259
|
|
6,127
|
|
|||
Losses and loss adjustment expenses
|
|
|
|
||||||
Current accident year before catastrophes
|
3,897
|
|
4,178
|
|
4,139
|
|
|||
Current accident year catastrophes
|
105
|
|
325
|
|
320
|
|
|||
Prior accident years
|
83
|
|
72
|
|
125
|
|
|||
Total losses and loss adjustment expenses
|
4,085
|
|
4,575
|
|
4,584
|
|
|||
Amortization of deferred policy acquisition costs
|
905
|
|
927
|
|
917
|
|
|||
Underwriting expenses
|
953
|
|
925
|
|
887
|
|
|||
Dividends to policyholders
|
16
|
|
14
|
|
18
|
|
|||
Underwriting gain (loss)
|
244
|
|
(182
|
)
|
(279
|
)
|
|||
Net servicing income [2]
|
21
|
|
17
|
|
13
|
|
|||
Net investment income
|
984
|
|
924
|
|
910
|
|
|||
Net realized capital gains (losses)
|
72
|
|
67
|
|
(50
|
)
|
|||
Goodwill impairment
|
—
|
|
—
|
|
(30
|
)
|
|||
Other expenses
|
(130
|
)
|
(115
|
)
|
(151
|
)
|
|||
Income from continuing operations before income taxes
|
1,191
|
|
711
|
|
413
|
|
|||
Income tax expense
|
320
|
|
159
|
|
37
|
|
|||
Income from continuing operations, net of tax
|
871
|
|
552
|
|
376
|
|
|||
Income (loss) from discontinued operations, net of tax [1]
|
(1
|
)
|
(5
|
)
|
150
|
|
|||
Net income
|
$
|
870
|
|
$
|
547
|
|
$
|
526
|
|
[1]
|
Represents the income from operations and sale of Specialty Risk Services (“SRS”). For additional information, see Note
20
of Notes to Consolidated Financial Statements.
|
[2]
|
Includes servicing revenues of
$112
,
$102
, and
$97
for the years ended
December 31, 2013
,
December 31, 2012
, and
December 31, 2011
respectively.
|
Premium Measures [1]
|
2013
|
2012
|
2011
|
||||||
New business premium
|
$
|
1,035
|
|
$
|
968
|
|
$
|
1,097
|
|
Standard commercial lines policy count retention
|
81
|
%
|
83
|
%
|
82
|
%
|
|||
Standard commercial lines renewal written pricing increase
|
8
|
%
|
7
|
%
|
4
|
%
|
|||
Standard commercial lines renewal earned pricing increase
|
8
|
%
|
6
|
%
|
2
|
%
|
|||
Standard commercial lines policies in-force as of end of period (in thousands)
|
1,250
|
|
1,263
|
|
1,254
|
|
[1]
|
Standard commercial lines represents the Company’s small commercial and middle market property and casualty lines.
|
•
|
Favorable current accident year losses and loss adjustment expenses before catastrophes were primarily driven by lower loss and loss adjustment expenses in workers’ compensation due to favorable severity and frequency. The current accident year loss and loss adjustment expense ratio before catastrophes decreased accordingly by 4.0 points to 62.8 in 2013 from 66.8 in 2012.
|
•
|
Current accident year catastrophe losses of $105, before tax, in 2013, compared to $325, before tax, in 2012. Losses in 2013 were primarily due to multiple thunderstorm, hail, and tornado events across various U.S. geographic regions. Losses in 2012 were primarily driven by $207 related to Storm Sandy and multiple thunderstorm, hail, and tornado events across various U.S. geographic regions. For additional information, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves, Net of Reinsurance.
|
•
|
Prior accident years reserve strengthening of $83, before tax, in 2013, compared to $72, before tax, in 2012. Development in 2013 was primarily due to strengthening related to commercial auto liability and the closing of the New York Section 25A Fund for Reopened Cases partially offset by a release of general liability reserves. Development in 2012 was primarily due to strengthening related to commercial auto liability claims, professional liability directors and officers claims and workers compensation partially offset by a release of general liability and catastrophe reserves. For additional information, see MD&A - Critical Accounting Estimates, Reserve Roll-forwards and Development.
|
•
|
Current accident year catastrophe losses of $325, before tax, in 2012, compared to $320, before tax, in 2011. Losses in 2012 were primarily driven by $207 related to Storm Sandy and multiple thunderstorm, hail, and tornado events across various U.S. geographic regions. Losses in 2011 were primarily driven by $60 related to Hurricane Irene and multiple tornado, winter storm, and thunderstorm events across various U.S. geographic regions. For additional information, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves, Net of Reinsurance.
|
•
|
Prior accident years reserve strengthening of $72, before tax, in 2012, compared to $125, before tax, in 2011. The decline in unfavorable prior year development was primarily due to lower strengthening on workers' compensation reserves. For additional information, see MD&A - Critical Accounting Estimates, Reserve Roll-forwards and Development.
|
Operating Summary
|
2013
|
2012
|
2011
|
||||||
Written premiums
|
$
|
3,719
|
|
$
|
3,630
|
|
$
|
3,675
|
|
Change in unearned premium reserve
|
59
|
|
(6
|
)
|
(72
|
)
|
|||
Earned premiums
|
3,660
|
|
3,636
|
|
3,747
|
|
|||
Losses and loss adjustment expenses
|
|
|
|
||||||
Current accident year before catastrophes
|
2,412
|
|
2,390
|
|
2,536
|
|
|||
Current accident year catastrophes
|
207
|
|
381
|
|
425
|
|
|||
Prior accident years
|
(39
|
)
|
(141
|
)
|
(75
|
)
|
|||
Total losses and loss adjustment expenses
|
2,580
|
|
2,630
|
|
2,886
|
|
|||
Amortization of deferred policy acquisition costs
|
332
|
|
332
|
|
337
|
|
|||
Underwriting expenses
|
571
|
|
581
|
|
572
|
|
|||
Underwriting gain (loss)
|
177
|
|
93
|
|
(48
|
)
|
|||
Net servicing income [1]
|
34
|
|
23
|
|
19
|
|
|||
Net investment income
|
145
|
|
159
|
|
187
|
|
|||
Net realized capital gains (losses)
|
34
|
|
12
|
|
(11
|
)
|
|||
Other expenses
|
(61
|
)
|
(56
|
)
|
(162
|
)
|
|||
Income (loss) before income taxes
|
329
|
|
231
|
|
(15
|
)
|
|||
Income tax expense (benefit)
|
100
|
|
65
|
|
(22
|
)
|
|||
Net income
|
$
|
229
|
|
$
|
166
|
|
$
|
7
|
|
[1]
|
Includes servicing revenues of
$163
,
$155
and
$156
for years ended
December 31, 2013
,
2012
and
2011
respectively.
|
Written Premiums
|
2013
|
2012
|
2011
|
||||||
Product Line
|
|
|
|
||||||
Automobile
|
$
|
2,562
|
|
$
|
2,514
|
|
$
|
2,562
|
|
Homeowners
|
1,157
|
|
1,116
|
|
1,113
|
|
|||
Total
|
$
|
3,719
|
|
$
|
3,630
|
|
$
|
3,675
|
|
Earned Premiums
|
|
|
|
||||||
Product Line
|
|
|
|
||||||
Automobile
|
$
|
2,522
|
|
$
|
2,526
|
|
$
|
2,619
|
|
Homeowners
|
1,138
|
|
1,110
|
|
1,128
|
|
|||
Total
|
$
|
3,660
|
|
$
|
3,636
|
|
$
|
3,747
|
|
Premium Measures
|
2013
|
2012
|
2011
|
||||||
Policies in force at year end
|
|
|
|
||||||
Automobile
|
2,019
|
|
2,015
|
|
2,081
|
|
|||
Homeowners
|
1,319
|
|
1,319
|
|
1,339
|
|
|||
Total policies in force at year end
|
3,338
|
|
3,334
|
|
3,419
|
|
|||
New business premium
|
|
|
|
||||||
Automobile
|
$
|
374
|
|
$
|
332
|
|
$
|
298
|
|
Homeowners
|
$
|
131
|
|
$
|
117
|
|
$
|
91
|
|
Policy count retention
|
|
|
|
||||||
Automobile
|
86
|
%
|
85
|
%
|
83
|
%
|
|||
Homeowners
|
87
|
%
|
86
|
%
|
84
|
%
|
|||
Renewal written pricing increase
|
|
|
|
||||||
Automobile
|
5
|
%
|
4
|
%
|
5
|
%
|
|||
Homeowners
|
7
|
%
|
6
|
%
|
8
|
%
|
|||
Renewal earned pricing increase
|
|
|
|
||||||
Automobile
|
5
|
%
|
5
|
%
|
6
|
%
|
|||
Homeowners
|
6
|
%
|
7
|
%
|
9
|
%
|
Ratios and Supplemental Data
|
2013
|
2012
|
2011
|
|||
Loss and loss adjustment expense ratio
|
|
|
|
|||
Current accident year before catastrophes
|
65.9
|
|
65.7
|
|
67.7
|
|
Current accident year catastrophes
|
5.7
|
|
10.5
|
|
11.3
|
|
Prior year development
|
(1.1
|
)
|
(3.9
|
)
|
(2.0
|
)
|
Total loss and loss adjustment expense ratio
|
70.5
|
|
72.3
|
|
77.0
|
|
Expense ratio
|
24.7
|
|
25.1
|
|
24.3
|
|
Combined ratio
|
95.2
|
|
97.4
|
|
101.3
|
|
Current accident year catastrophes and prior year development
|
4.6
|
6.6
|
9.3
|
|||
Combined ratio before catastrophes and prior year development
|
90.6
|
|
90.8
|
|
91.9
|
|
Product Combined Ratios
|
2013
|
2012
|
2011
|
|||
Automobile
|
97.3
|
|
97.6
|
|
95.3
|
|
Homeowners
|
89.2
|
|
97.0
|
|
115.8
|
|
•
|
Current accident year losses and loss adjustment expenses before catastrophes increased in 2013 compared to 2012 in line with the growth in earned premium and as reflected by the current accident year loss and loss adjustment expense ratio before catastrophes of 65.9 in 2013 as compared with 65.7 in 2012.
|
•
|
Current accident year catastrophe losses of $207, before tax, in 2013 compared to $381, before tax in 2012. Losses in 2013 were primarily due to multiple thunderstorm, hail and tornado events across various U.S. geographic regions. Losses in 2012 were primarily driven by losses from Storm Sandy of $143 along with other thunderstorm and hail events across various U.S. geographic regions. For additional information, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves, Net of Reinsurance.
|
•
|
Prior accident years reserve releases of $39, before tax, in 2013 compared to $141, before tax, in 2012. Reserve releases in 2013 were primarily related to Storm Sandy. Reserve releases in 2012 were due to favorable emergence of losses in auto liability, homeowners and catastrophes. For additional information, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves, Net of Reinsurance.
|
•
|
Current accident year losses and loss adjustment expenses before catastrophes decreased primarily due to lower earned premiums and a decrease in the overall current accident year loss and loss adjustment expense ratio before catastrophes. In 2012, the current accident year loss and loss adjustment expense ratio before catastrophes decreased primarily due to a decrease in home, partially offset by an increase in auto. The decrease for home was primarily due to earned pricing increases and a decrease in the frequency of non-catastrophe weather claims. The increase for auto was primarily due to higher loss cost severity for first party physical damage and third party property damage claims, largely offset by the effect of earned pricing increases.
|
•
|
Current accident year catastrophe losses of $381, before tax, in 2012 compared to $425, before tax in 2011. Losses in 2012 were primarily driven by $143 related to Storm Sandy and multiple thunderstorm, hail, and tornado events across various U.S. geographic regions. Losses in 2011 were primarily driven by $60 related to Hurricane Irene and multiple tornado, winter storm, and thunderstorm events across various U.S. geographic regions.
|
•
|
Favorable prior year development of $141, pre-tax, in 2012 compared with $75, pre-tax, in 2011, as a result of more favorable development in homeowners' and catastrophe losses. For additional information regarding prior accident years reserve development, see the Property and Casualty Insurance Product Reserves, Net of Reinsurance section within Critical Accounting Estimates.
|
Underwriting Summary
|
2013
|
2012
|
2011
|
||||||
Written premiums
|
$
|
2
|
|
$
|
8
|
|
$
|
1
|
|
Change in unearned premium reserve
|
1
|
|
10
|
|
1
|
|
|||
Earned premiums
|
1
|
|
(2
|
)
|
—
|
|
|||
Losses and loss adjustment expenses
|
|
|
|
||||||
Prior accident years
|
148
|
|
65
|
|
317
|
|
|||
Total losses and loss adjustment expenses
|
148
|
|
65
|
|
317
|
|
|||
Underwriting expenses
|
29
|
|
33
|
|
27
|
|
|||
Underwriting losses
|
(176
|
)
|
(100
|
)
|
(344
|
)
|
|||
Net servicing expense
|
(1
|
)
|
—
|
|
—
|
|
|||
Net investment income
|
141
|
|
149
|
|
151
|
|
|||
Net realized capital gains (losses)
|
12
|
|
17
|
|
(1
|
)
|
|||
Other income
|
2
|
|
5
|
|
3
|
|
|||
Income (loss) before income taxes
|
(22
|
)
|
71
|
|
(191
|
)
|
|||
Income tax expense (benefit)
|
(20
|
)
|
14
|
|
(74
|
)
|
|||
Net income (loss)
|
$
|
(2
|
)
|
$
|
57
|
|
$
|
(117
|
)
|
Operating Summary
|
2013
|
2012
|
2011
|
||||||
Premiums and other considerations [1]
|
$
|
3,330
|
|
$
|
3,810
|
|
$
|
4,147
|
|
Net investment income
|
390
|
|
405
|
|
411
|
|
|||
Net realized capital gains (losses)
|
50
|
|
40
|
|
(3
|
)
|
|||
Total revenues
|
3,770
|
|
4,255
|
|
4,555
|
|
|||
Benefits, losses and loss adjustment expenses
|
2,518
|
|
3,029
|
|
3,306
|
|
|||
Amortization of deferred policy acquisition costs
|
33
|
|
33
|
|
35
|
|
|||
Insurance operating costs and other expenses
|
964
|
|
1,033
|
|
1,121
|
|
|||
Total benefits, losses and expenses
|
3,515
|
|
4,095
|
|
4,462
|
|
|||
Income before income taxes
|
255
|
|
160
|
|
93
|
|
|||
Income tax expense
|
63
|
|
31
|
|
1
|
|
|||
Net income [1]
|
$
|
192
|
|
$
|
129
|
|
$
|
92
|
|
Premiums and other considerations
|
|
|
|
||||||
Fully insured — ongoing premiums
|
$
|
3,272
|
|
$
|
3,745
|
|
$
|
4,036
|
|
Buyout premiums
|
1
|
|
3
|
|
49
|
|
|||
Other
|
57
|
|
62
|
|
62
|
|
|||
Total premiums and other considerations
|
3,330
|
|
3,810
|
|
4,147
|
|
|||
Fully insured ongoing sales, excluding buyouts
|
$
|
393
|
|
$
|
405
|
|
$
|
505
|
|
[1]
|
Group Benefits has a block of Association - Financial Institution business ("association business")
that is subject to a profit sharing arrangement with third parties. The association business represented $277, $321 and $367 of premiums and other considerations, and $1, $2 and $(6) of net income (loss) in
2013
,
2012
and
2011
, respectively.
|
Operating Summary
|
2013
|
2012
|
2011
|
||||||
Fee income and other revenue
|
$
|
678
|
|
$
|
599
|
|
$
|
649
|
|
Net investment loss
|
—
|
|
(3
|
)
|
(3
|
)
|
|||
Net realized capital losses
|
—
|
|
—
|
|
1
|
|
|||
Total revenues
|
678
|
|
596
|
|
647
|
|
|||
Amortization of DAC
|
39
|
|
35
|
|
47
|
|
|||
Insurance operating costs and other expenses
|
521
|
|
452
|
|
448
|
|
|||
Total benefits, losses and expenses
|
560
|
|
487
|
|
495
|
|
|||
Income before income taxes
|
118
|
|
109
|
|
152
|
|
|||
Income tax expense
|
42
|
|
38
|
|
54
|
|
|||
Net income
|
$
|
76
|
|
$
|
71
|
|
$
|
98
|
|
MUTUAL FUNDS AUM by DISTRIBUTION CHANNEL
|
|
|
|
||||||
Retail Mutual Funds [1]
|
|
|
|
||||||
AUM, beginning of period
|
$
|
45,013
|
|
$
|
41,785
|
|
$
|
50,225
|
|
Sales
|
11,303
|
|
8,810
|
|
11,145
|
|
|||
Redemptions [3]
|
(12,721
|
)
|
(11,087
|
)
|
(16,560
|
)
|
|||
Net flows
|
(1,418
|
)
|
(2,277
|
)
|
(5,415
|
)
|
|||
Change in market value and other
|
9,445
|
|
5,505
|
|
(3,025
|
)
|
|||
AUM, end of period
|
$
|
53,040
|
|
$
|
45,013
|
|
$
|
41,785
|
|
|
|
|
|
||||||
Retirement Mutual Funds [2]
|
|
|
|
||||||
AUM, beginning of period
|
$
|
16,598
|
|
$
|
16,140
|
|
$
|
16,635
|
|
Sales
|
3,869
|
|
3,031
|
|
5,486
|
|
|||
Redemptions [3]
|
(6,975
|
)
|
(5,171
|
)
|
(4,893
|
)
|
|||
Net flows
|
(3,106
|
)
|
(2,140
|
)
|
593
|
|
|||
Change in market value and other
|
4,386
|
|
2,598
|
|
(1,088
|
)
|
|||
AUM, end of period
|
$
|
17,878
|
|
$
|
16,598
|
|
$
|
16,140
|
|
|
|
|
|
||||||
Total Mutual Funds
|
|
|
|
||||||
AUM, beginning of period
|
$
|
61,611
|
|
$
|
57,925
|
|
$
|
66,860
|
|
Sales
|
15,172
|
|
11,841
|
|
16,631
|
|
|||
Redemptions [3]
|
(19,696
|
)
|
(16,258
|
)
|
(21,453
|
)
|
|||
Net flows
|
(4,524
|
)
|
(4,417
|
)
|
(4,822
|
)
|
|||
Change in market value and other
|
13,831
|
|
8,103
|
|
(4,113
|
)
|
|||
AUM, end of period
|
$
|
70,918
|
|
$
|
61,611
|
|
$
|
57,925
|
|
Average Mutual Funds Assets Under Management
|
$
|
66,265
|
|
$
|
59,768
|
|
$
|
62,392
|
|
Annuity Mutual Fund Assets [4]
|
$
|
25,817
|
|
$
|
26,036
|
|
$
|
27,613
|
|
Total Assets Under Management
|
$
|
96,735
|
|
$
|
87,647
|
|
$
|
85,538
|
|
Average Assets Under Management
|
$
|
92,191
|
|
$
|
86,592
|
|
$
|
93,013
|
|
[1]
|
Includes mutual funds offered within 529 college savings plans previously categorized as Other.
|
[2]
|
Includes mutual funds offered within employee directed retirement plans including on-going business related to the Company's Retirement Plans and Individual Life businesses sold in January 2013.
|
[3]
|
Redemptions in the retail channel include a portfolio rebalance at a key distributor of $1.1 billion, and in the defined contribution channel include an institutional redemption of $1.4 billion, together totaling $2.5 billion for the year ended December 30, 2013.
|
[4]
|
Includes Company-sponsored mutual fund assets held in separate accounts supporting variable insurance and investment products.
|
MUTUAL FUNDS AUM by ASSET CLASS
|
2013
|
2012
|
2011
|
||||||
Equity
|
42,426
|
|
35,843
|
|
35,489
|
|
|||
Fixed Income
|
14,632
|
|
14,524
|
|
13,064
|
|
|||
Multi-Strategy Investments
|
13,860
|
|
11,244
|
|
9,372
|
|
|||
Total Mutual Funds AUM, end of period
|
$
|
70,918
|
|
$
|
61,611
|
|
$
|
57,925
|
|
RETURN ON ASSETS
|
|
|
|
||||||
ROA
|
8.2
|
|
8.2
|
|
10.5
|
|
|||
Effect of restructuring, net of tax
|
(0.2
|
)
|
(0.3
|
)
|
—
|
|
|||
Effect of net realized gains, net of tax and DAC
|
(0.1
|
)
|
—
|
|
—
|
|
|||
ROA, core earnings
|
8.5
|
|
8.5
|
|
10.5
|
|
Operating Summary
|
2013
|
2012
|
2011
|
||||||
Earned premiums [1]
|
$
|
89
|
|
$
|
(10
|
)
|
$
|
129
|
|
Fee income and other [1]
|
2,059
|
|
3,558
|
|
3,780
|
|
|||
Net investment income (loss)
|
|
|
|
||||||
Securities available-for-sale and other
|
1,675
|
|
2,562
|
|
2,584
|
|
|||
Equity securities trading [2]
|
6,061
|
|
4,364
|
|
(1,345
|
)
|
|||
Total net investment income
|
7,736
|
|
6,926
|
|
1,239
|
|
|||
Net realized capital gains (losses)
|
428
|
|
(1,005
|
)
|
(66
|
)
|
|||
Total revenues
|
10,312
|
|
9,469
|
|
5,082
|
|
|||
Benefits, losses and loss adjustment expenses
|
1,617
|
|
2,949
|
|
3,537
|
|
|||
Benefits, losses and loss adjustment expenses — returns credited on international variable annuities [2]
|
6,060
|
|
4,363
|
|
(1,345
|
)
|
|||
Amortization of deferred policy acquisition costs
|
1,392
|
|
661
|
|
1,108
|
|
|||
Insurance operating costs and other expenses
|
739
|
|
1,418
|
|
1,463
|
|
|||
Reinsurance loss on disposition, including goodwill impairment of $224
|
1,505
|
|
415
|
|
—
|
|
|||
Total benefits, losses and expenses
|
11,313
|
|
9,806
|
|
4,763
|
|
|||
Income (loss) from continuing operations, before income taxes
|
(1,001
|
)
|
(337
|
)
|
319
|
|
|||
Income tax benefit
|
(500
|
)
|
(271
|
)
|
(168
|
)
|
|||
Income (loss) from continuing operations
|
(501
|
)
|
(66
|
)
|
487
|
|
|||
Income (loss) from discontinued operations, net of tax [3]
|
(133
|
)
|
67
|
|
53
|
|
|||
Net income (loss) [6]
|
$
|
(634
|
)
|
$
|
1
|
|
$
|
540
|
|
Assets Under Management
|
|
|
|
||||||
Variable annuity account value
|
$
|
81,942
|
|
$
|
94,371
|
|
$
|
99,922
|
|
Fixed Market Value Adjusted annuity and other account value
|
13,203
|
|
14,755
|
|
16,417
|
|
|||
Institutional annuity account value [4]
|
16,857
|
|
17,744
|
|
19,330
|
|
|||
Other account value [5]
|
108,133
|
|
102,429
|
|
100,937
|
|
|||
Total account value [4]
|
$
|
219,127
|
|
$
|
228,143
|
|
$
|
235,310
|
|
Variable Annuities - Account Value Roll Forward
|
|
|
|
||||||
Account value, beginning of period
|
$
|
94,371
|
|
$
|
99,922
|
|
$
|
116,520
|
|
Net flows
|
(22,740
|
)
|
(13,594
|
)
|
(13,400
|
)
|
|||
Change in market value and other
|
15,230
|
|
11,303
|
|
(4,831
|
)
|
|||
Effect of currency translation
|
(4,919
|
)
|
(3,260
|
)
|
1,633
|
|
|||
Account value, end of period
|
$
|
81,942
|
|
$
|
94,371
|
|
$
|
99,922
|
|
[1]
|
Includes earned premiums, fee income and other related to the Retirement Plans business of
$38
,
$368
and
$380
and the Individual Life business of
$2
,
$866
and
$899
, for the years ended December 31, 2013, 2012 and 2011, respectively.
|
[2]
|
Includes investment income and mark-to-market effects of equity securities, trading, supporting the international variable annuity business, which are classified in net investment income with corresponding amounts credited to policyholders within benefits, losses and loss adjustment expenses.
|
[3]
|
Represents the loss from operations and sale of Hartford Life International Limited ("HLIL"). For additional information, see Note
20
Discontinued Operations of Notes to Consolidated Financial Statements.
|
[4]
|
Included in the balance is approximately
$(1.0) billion
,
$(1.2) billion
and
$(1.3) billion
for the years ended December 31, 2013, 2012 and 2011, respectively, related to a Talcott Resolution intra-segment funding agreement which is eliminated in consolidation.
|
[5]
|
Other account value includes
$54.7 billion
,
$14.7 billion
, and
$38.7 billion
as of
December 31, 2013
, and
$51.8 billion
,
$13.2 billion
, and
$37.4 billion
as of
December 31, 2012
, for the Retirement Plans, Individual Life, and Private Placement Life Insurance businesses; respectively. Account
values
a
ssociated with the Retirement Plans, and Individual Life businesses no longer generate asset-based fee income due to the sales of these businesses.
|
[6]
|
Includes net losses of $39 and $172, respectively, for the year ended December 31, 2012 and net income of $3 and $114, respectively, for the year ended December 31, 2011 related to the Retirement Plans and Individual Life businesses sold in 2013, see Note
2
-
Business Dispositions
of Notes to Consolidated Financial Statements
|
Operating Summary
|
2013
|
2012
|
2011
|
||||||
Earned premiums
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Fee income [1]
|
11
|
|
167
|
|
209
|
|
|||
Net investment income
|
27
|
|
31
|
|
23
|
|
|||
Net realized capital gains (losses)
|
(89
|
)
|
125
|
|
(96
|
)
|
|||
Other revenue
|
1
|
|
1
|
|
—
|
|
|||
Total revenues
|
(50
|
)
|
324
|
|
136
|
|
|||
Benefits, losses and loss adjustment expenses
|
—
|
|
—
|
|
(3
|
)
|
|||
Insurance operating costs and other expenses
|
78
|
|
365
|
|
202
|
|
|||
Loss on extinguishment of debt
|
213
|
|
910
|
|
—
|
|
|||
Reinsurance loss on disposition
|
69
|
|
118
|
|
—
|
|
|||
Interest expense
|
397
|
|
457
|
|
508
|
|
|||
Total benefits, losses and expenses
|
757
|
|
1,850
|
|
707
|
|
|||
Loss from continuing operations before income taxes
|
(807
|
)
|
(1,526
|
)
|
(571
|
)
|
|||
Income tax benefit
|
(252
|
)
|
(517
|
)
|
(201
|
)
|
|||
Loss from continuing operations, net of tax
|
(555
|
)
|
(1,009
|
)
|
(370
|
)
|
|||
Loss from discontinued operations, net of tax [2]
|
—
|
|
—
|
|
(64
|
)
|
|||
Net loss
|
$
|
(555
|
)
|
$
|
(1,009
|
)
|
$
|
(434
|
)
|
[1]
|
Fee income includes the income associated with the sales of non-proprietary insurance products in the Company’s broker-dealer subsidiaries that has an offsetting commission expense in insurance operating costs and other expenses.
|
[2]
|
Represents the loss from operations and sale of Federal Trust Corporation. For additional information, see Note
20
Discontinued Operations of Notes to Consolidated Financial Statements.
|
•
|
Insurance Risk
|
•
|
Operational Risk
|
•
|
Financial Risk
|
•
|
Property:
Risk of loss to personal or commercial property from automobile related accidents, weather, explosions, smoke, shaking, fire, theft, vandalism, inadequate installation, faulty equipment, collisions and falling objects, and/or machinery mechanical breakdown resulting in physical damage and other covered perils.
|
•
|
Liability:
Risk of loss from automobile related accidents, uninsured and underinsured drivers, lawsuits from accidents, defective products, breach of warranty, negligent acts by professional practitioners, environmental claims, latent exposures, fraud, coercion, forgery, failure to fulfill obligations per contract surety, liability from errors and omissions, derivative lawsuits, and other securities actions and covered perils.
|
•
|
Mortality:
Risk of loss from unexpected trends in insured deaths impacting timing of payouts from life insurance or annuity products, personal or commercial automobile related accidents, and death of employees or executives during the course of employment, while on disability, or while collecting workers compensation benefits.
|
•
|
Morbidity
: Risk of loss to an insured from illness incurred during the course of employment or illness from other covered perils.
|
•
|
Disability:
Risk of loss incurred from personal or commercial automobile related losses, accidents arising outside of the workplace, injuries or accidents incurred during the course of employment, or from equipment, each loss resulting short term or long term disability payments.
|
•
|
Longevity:
Risk of loss from increased life expectancy trends among policyholders receiving long term benefit payments or annuity payouts.
|
Coverage
|
|
Treaty term
|
|
% of layer(s) reinsurance
|
|
Per occurrence limit
|
|
Retention
|
Principal property catastrophe program covering property catastrophe losses from a single event
|
|
1/1/2014 to 1/1/2015
|
|
90%
|
|
$850
|
|
$350
|
Reinsurance with the FHCF covering Florida Personal Lines property catastrophe losses from a single event
|
|
6/1/2013 to 6/1/2014
|
|
90%
|
|
$119
|
[1]
|
$43
|
Workers compensation losses arising from a single catastrophe event [2]
|
|
7/1/2013 to 7/1/2014
|
|
80%
|
|
$350
|
|
$100
|
[1]
|
The per occurrence limit on the FHCF treaty is $119 for the 6/1/2013 to 6/1/2014 treaty year based on the Company's election to purchase the required coverage from FHCF. Coverage is based on the best available information from FHCF, which was updated in January 2014.
|
[2]
|
In addition, to the limit shown above, the workers compensation reinsurance includes a non-catastrophe, industrial accident layer, 80% of $30 excess a $20 retention.
|
Covered perils
|
Treaty term
|
Covered losses
|
Bond amount issued by Foundation Re III
|
Hurricane loss events affecting the Gulf and Eastern Coast of the United States
|
2/18/2011 to 2/18/2015
|
At the time of the purchase, 67.5% of $200 in losses in excess of an index loss trigger equating to approximately $1.4 billion in losses to The Hartford
|
$135
|
Reinsurance Recoverable
|
2013
|
2012
|
||||
Paid loss and loss adjustment expenses
|
$
|
138
|
|
$
|
170
|
|
Unpaid loss and loss adjustment expenses
|
2,841
|
|
2,852
|
|
||
Gross reinsurance recoverable
|
2,979
|
|
3,022
|
|
||
Less: allowance for uncollectible reinsurance
|
(244
|
)
|
(268
|
)
|
||
Net reinsurance recoverable
|
$
|
2,735
|
|
$
|
2,754
|
|
Distribution of gross reinsurance recoverable
|
2013
|
|
2012
|
|
||||||
Gross reinsurance recoverable
|
$
|
2,979
|
|
|
$
|
3,022
|
|
|
||
Less: mandatory (assigned risk) pools and structured settlements
|
(569
|
)
|
|
(588
|
)
|
|
||||
Gross reinsurance recoverable excluding mandatory pools and structured settlements
|
$
|
2,410
|
|
|
$
|
2,434
|
|
|
||
|
|
% of Total
|
|
% of Total
|
||||||
Rated A- (Excellent) or better by A.M. Best [1]
|
$
|
1,558
|
|
64.6
|
%
|
$
|
1,691
|
|
69.5
|
%
|
Other rated by A.M. Best
|
4
|
|
0.2
|
%
|
6
|
|
0.2
|
%
|
||
Total rated companies
|
1,562
|
|
64.8
|
%
|
1,697
|
|
69.7
|
%
|
||
Voluntary pools
|
96
|
|
4.0
|
%
|
95
|
|
3.9
|
%
|
||
Captives
|
499
|
|
20.7
|
%
|
368
|
|
15.1
|
%
|
||
Other not rated companies
|
253
|
|
10.5
|
%
|
274
|
|
11.3
|
%
|
||
Total
|
$
|
2,410
|
|
100.0
|
%
|
$
|
2,434
|
|
100.0
|
%
|
Reinsurance Recoverable
|
2013
|
2012
|
||||
Unpaid loss and loss adjustment expenses
|
20,595
|
|
1,912
|
|
||
Gross reinsurance recoverable
|
20,595
|
|
1,912
|
|
||
Less: allowance for uncollectible reinsurance
|
—
|
|
—
|
|
||
Net reinsurance recoverable
|
$
|
20,595
|
|
$
|
1,912
|
|
•
|
Liquidity Risk
|
•
|
Interest Rate Risk
|
•
|
Equity Risk
|
•
|
Foreign Currency Exchange Risk
|
•
|
Credit Risk
|
|
Change in Fair Value as of December 31,
|
|||||||||||
|
2013
|
2012
|
||||||||||
Basis point shift
|
--100
|
|
+100
|
|
-100
|
|
+100
|
|
||||
Increase (decrease) in fair value
|
$
|
2,297
|
|
$
|
(2,190
|
)
|
$
|
3,406
|
|
$
|
(3,357
|
)
|
•
|
reduce the value of assets under management and the amount of fee income generated from those assets;
|
•
|
reduce the value of equity securities trading supporting the international variable annuities, the related policyholder funds and benefits payable, and the amount of fee income generated from those variable annuities;
|
•
|
increase the liability for GMWB benefits resulting in realized capital losses;
|
•
|
increase the value of derivative assets used to hedge product guarantees resulting in realized capital gains;
|
•
|
increase the costs of the hedging instruments we use in our hedging program;
|
•
|
increase the Company’s net amount at risk for GMDB, GMWB and GMIB benefits;
|
•
|
decrease the Company’s actual gross profits, resulting in increased DAC amortization;
|
•
|
increase the amount of required assets to be held backing variable annuity guarantees to maintain required regulatory reserve levels and targeted risk based capital ratios; and
|
•
|
decrease the Company’s estimated future gross profits. See Estimated Gross Profits Used in the Valuation and Amortization of Assets and Liabilities Associated with Variable Annuity and Other Universal Life-Type Contracts within the Critical Accounting Estimates section of the MD&A for further information.
|
Total Variable Annuity Guarantees
|
|||||||||||||
As of December 31, 2013
|
|||||||||||||
($ in billions)
|
Account Value
|
Gross Net Amount at Risk
|
Retained Net Amount at Risk
|
% of Contracts In the Money[4]
|
% In the Money [4] [5]
|
||||||||
U. S. Variable Annuity [1]
|
|
|
|
|
|
||||||||
GMDB
|
$
|
61.8
|
|
$
|
4.3
|
|
$
|
1.0
|
|
16
|
%
|
26
|
%
|
GMWB
|
30.3
|
|
0.2
|
|
0.1
|
|
5
|
%
|
12
|
%
|
|||
Japan Variable Annuity [1]
|
|
|
|
|
|
||||||||
GMDB
|
20.1
|
|
0.8
|
|
0.6
|
|
31
|
%
|
8
|
%
|
|||
GMIB [3]
|
18.5
|
|
0.1
|
|
0.1
|
|
20
|
%
|
3
|
%
|
Total Variable Annuity Guarantees
|
||||||||||||
As of December 31, 2012
|
||||||||||||
($ in billions)
|
Account Value
|
Gross Net Amount at Risk
|
Retained Net Amount at Risk
|
% of Contracts In the Money [4]
|
% In the Money [4] [5]
|
|||||||
U. S Variable Annuity [1]
|
|
|
|
|
|
|||||||
GMDB [2]
|
64.8
|
|
$
|
6.6
|
|
$
|
2.2
|
|
48
|
%
|
13
|
%
|
GMWB
|
34.2
|
|
0.7
|
|
0.5
|
|
23
|
%
|
9
|
%
|
||
Japan Variable Annuity [1]
|
|
|
|
|
|
|||||||
GMDB
|
27.7
|
|
5.7
|
|
4.8
|
|
98
|
%
|
18
|
%
|
||
GMIB [3]
|
26.0
|
|
3.3
|
|
3.3
|
|
97
|
%
|
12
|
%
|
||
U.K. Variable Annuity [1] [6]
|
|
|
|
|
|
|||||||
GMDB
|
1.9
|
|
—
|
|
—
|
|
100
|
%
|
2
|
%
|
||
GMWB
|
1.7
|
|
—
|
|
—
|
|
24
|
%
|
7
|
%
|
[1]
|
Policies with a guaranteed living benefit (a GMWB in the U.S. or a GMIB in Japan) also have a guaranteed death benefit. The net amount at risk (“NAR”) for each benefit is shown; however these benefits are not additive. When a policy terminates due to death, any NAR related to GMWB or GMIB is released. Similarly, when a policy goes into benefit status on a GMWB or GMIB, its GMDB NAR is released.
|
[2]
|
Excludes group annuity contracts with GMDB benefits previously sold by Retirement Plans business. For further discussion of the sale of the Retirement Plans business, see Note 2 - Business Dispositions.
|
[3]
|
Includes small amount of GMWB and GMAB.
|
[4]
|
Excludes contracts that are fully reinsured.
|
[5]
|
For all contracts that are “in the money”, this represents the percentage by which the average contract was in the money.
|
[6]
|
On December 12, 2013, the Company completed the sale of the U.K variable annuity business of Hartford Life International Limited ("HLIL"), an indirect wholly-owned subsidiary. For further discussion of the sale of the U.K. variable annuity business, HLIL in 2013, see Note 2 - Business Dispositions and Note
20
-
Discontinued Operations
of Notes to Consolidated Financial Statements.
|
GMIB [1]
|
As of December 31, 2013
|
|||||
($ in billions)
|
Account Value
|
Net Amount at Risk
|
||||
2014
|
$
|
2.2
|
|
$
|
—
|
|
2015
|
4.4
|
|
—
|
|
||
2016
|
2.0
|
|
—
|
|
||
2017
|
2.4
|
|
0.1
|
|
||
2018
|
1.1
|
|
—
|
|
||
2019 & beyond [2]
|
4.2
|
|
—
|
|
||
Total
|
$
|
16.3
|
|
$
|
0.1
|
|
[1]
|
Excludes certain non-GMIB living benefits of $2.2billion of account value and $0.0 billion of NAR.
|
[2]
|
In 2019 & beyond, $2.0 billion of the $4.2 billion is associated with account value that is eligible in 2021.
|
Variable Annuity Guarantees [1]
|
U.S. GAAP Treatment [1]
|
Primary Market Risk Exposures [1]
|
U.S. Variable Guarantees
|
|
|
GMDB
|
Accumulation of the portion of fees required to cover expected claims, less accumulation of actual claims paid
|
Equity Market Levels
|
GMWB
|
Fair Value
|
Equity Market Levels / Implied
Volatility / Interest Rates
|
For Life Component of GMWB
|
Accumulation of the portion of fees required to cover expected claims, less accumulation of actual claims paid
|
Equity Market Levels
|
International Variable Guarantees
|
|
|
GMDB & GMIB
|
Accumulation of the portion of fees required to cover expected claims, less accumulation of actual claims paid
|
Equity Market Levels / Interest
Rates / Foreign Currency
|
GMWB
|
Fair Value
|
Equity Market Levels / Implied
Volatility / Interest
Rates / Foreign Currency
|
GMAB
|
Fair Value
|
Equity Market Levels / Implied
Volatility / Interest Rates / Foreign Currency
|
[1]
|
Each of these guarantees and the related U.S. GAAP accounting volatility will also be influenced by actual and estimated policyholder behavior.
|
U.S. Programs
|
International Programs
|
||||
GMWB [1]
|
Macro
|
Japan
|
|||
Hedge Assets
|
Liabilities
|
Hedge Assets
|
Liabilities
|
Hedge Assets
|
Liabilities [2]
|
Fair Value
|
Fair Value
|
Fair Value
|
Not Fair Value
|
Fair Value
|
Not Fair Value
|
[2]
|
The liabilities for international variable annuity are primarily not measured on a fair value basis. However there is an immaterial portion of the international variable annuity with a GMWB or GMAB which is measured on a fair value basis.
|
U.S. GAAP Sensitivity Analysis
|
As of December 31, 2013
|
||||||||||||||||||||||||||
(pre Tax/DAC) [1]
|
U.S. Programs
|
International Program
|
|||||||||||||||||||||||||
|
GMWB
|
Macro
|
Japan
|
||||||||||||||||||||||||
Equity Market Return
|
(20
|
)%
|
(10
|
)%
|
10
|
%
|
(20
|
)%
|
(10
|
)%
|
10
|
%
|
(20
|
)%
|
(10
|
)%
|
10
|
%
|
|||||||||
Potential Net Fair Value Impact
|
$
|
6
|
|
$
|
(1
|
)
|
$
|
5
|
|
$
|
62
|
|
$
|
24
|
|
$
|
(19
|
)
|
$
|
356
|
|
$
|
172
|
|
$
|
(167
|
)
|
Interest Rates
|
-50bps
|
|
-25bps
|
|
25bps
|
|
-50bps
|
|
-25bps
|
|
25bps
|
|
-50bps
|
|
-25bps
|
|
25bps
|
|
|||||||||
Potential Net Fair Value Impact
|
$
|
2
|
|
$
|
3
|
|
$
|
(8
|
)
|
$
|
16
|
|
$
|
8
|
|
$
|
(8
|
)
|
$
|
(2
|
)
|
$
|
6
|
|
$
|
(4
|
)
|
Implied Volatilities
|
10
|
%
|
2
|
%
|
(10
|
)%
|
10
|
%
|
2
|
%
|
(10
|
)%
|
10
|
%
|
2
|
%
|
(10
|
)%
|
|||||||||
Potential Net Fair Value Impact
|
$
|
36
|
|
$
|
7
|
|
$
|
(28
|
)
|
$
|
66
|
|
$
|
14
|
|
$
|
(75
|
)
|
$
|
56
|
|
$
|
10
|
|
$
|
(33
|
)
|
Yen Strengthens +/ Weakens -
|
20
|
%
|
10
|
%
|
(10
|
)%
|
20
|
%
|
10
|
%
|
(10
|
)%
|
20
|
%
|
10
|
%
|
(10
|
)%
|
|||||||||
Potential Net Fair Value Impact
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
$
|
28
|
|
$
|
5
|
|
$
|
(7
|
)
|
[1]
|
These sensitivities are based on the following key market levels as of December 31, 2013: 1) S&P of
1848
; 2) 10yr US swap rate of
3.25
%; 3) S&P 10yr volatility of
25.14
% and 4) FX rates of USDJPY @
105.31
and EURJPY @
144.73
|
•
|
The sensitivity analysis is only valid as of the measurement date and assumes instantaneous changes in the capital market factors and no ability to rebalance hedge positions prior to the market changes;
|
•
|
Changes to the underlying hedging program, policyholder behavior, and variation in underlying fund performance relative to the hedged index, which could materially impact the liability; and
|
•
|
The impact of elapsed time on liabilities or hedge assets, any non-parallel shifts in capital market factors, or correlated moves across the sensitivities.
|
•
|
In general, as equity market levels and interest rates decline, the amount and volatility of both our actual potential obligation, as well as the related statutory surplus and capital margin for death and living benefit guarantees associated with U.S. variable annuity contracts can be materially negatively affected, sometimes at a greater than linear rate. Other market factors that can impact statutory surplus, reserve levels and capital margin include differences in performance of variable subaccounts relative to indices and/or realized equity and interest rate volatilities. In addition, as equity market levels increase, generally surplus levels will increase. RBC ratios will also tend to increase when equity markets increase. However, as a result of a number of factors and market conditions, including the level of hedging costs and other risk transfer activities, reserve requirements for death and living benefit guarantees and RBC requirements could increase with rising equity markets, resulting in lower RBC ratios. Non-market factors, which can also impact the amount and volatility of both our actual potential obligation, as well as the related statutory surplus and capital margin, include actual and estimated policyholder behavior experience as it pertains to lapsation, partial withdrawals, and mortality.
|
•
|
For guaranteed benefits (GMDB, GMIB, and GMWB) reinsured from our international operations to our U.S. insurance subsidiaries, or guaranteed by our U.S. insurance subsidiaries, the Company hedges its aggregate economic exposure to the various risks arising out of the product guarantees, with a focus on the underlying economics of the exposure to the entire Company, rather than the direct liability of the underlying issuer of the related products. The Company believes that hedging economic exposure in this manner is consistent with certain intercompany reinsurance agreements and guarantees, results in increased capital efficiency and results in a better risk profile than taking alternative approaches to hedging that might emphasize statutory or GAAP measures or considerations. The amount and volatility of both our actual potential obligation, as well as the related statutory surplus and capital margin can be materially affected by a variety of factors, both market and non-market. Market factors include declines in various equity market indices and interest rates, changes in value of the yen versus other global currencies, difference in the performance of variable subaccounts relative to indices, and increases in realized equity, interest rate, and currency volatilities. Non-market factors include actual and estimated policyholder behavior experience as it pertains to lapsation, withdrawals, mortality, and annuitization. Risk mitigation activities, such as hedging, may also result in material and sometimes counterintuitive impacts on statutory surplus and capital margin. Notably, as changes in these market and non-market factors occur, both our potential obligation and the related statutory reserves and/or required capital can increase or decrease at a greater than linear rate.
|
•
|
As the value of certain fixed-income and equity securities in our investment portfolio decreases, due in part to credit spread widening, statutory surplus and RBC ratios may decrease.
|
•
|
As the value of certain derivative instruments that do not qualify for hedge accounting decreases, statutory surplus and RBC ratios may decrease.
|
•
|
The life insurance subsidiaries’ exposure to foreign currency exchange risk exists with respect to non-U.S. dollar denominated assets and liabilities. Assets and liabilities denominated in foreign currencies are accounted for at their U.S. dollar equivalent values using exchange rates at the balance sheet date. As foreign currency exchange rates vary in comparison to the U.S. dollar, the remeasured value of those non-dollar denominated assets or liabilities will also vary, causing an increase or decrease to statutory surplus.
|
•
|
Our statutory surplus is also impacted by widening credit spreads as a result of the accounting for the assets and liabilities in our fixed MVA annuities. Statutory separate account assets supporting the fixed MVA annuities are recorded at fair value. In determining the statutory reserve for the fixed MVA annuities, we are required to use current crediting rates in the U.S. and Japanese LIBOR in Japan. In many capital market scenarios, current crediting rates in the U.S. are highly correlated with market rates implicit in the fair value of statutory separate account assets. As a result, the change in statutory reserve from period to period will likely substantially offset the change in the fair value of the statutory separate account assets. However, in periods of volatile credit markets, such as we have experienced, actual credit spreads on investment assets may increase sharply for certain sub-sectors of the overall credit market, resulting in statutory separate account asset market value losses. As actual credit spreads are not fully reflected in the current crediting rates in the U.S. or Japanese LIBOR in Japan, the calculation of statutory reserves will not substantially offset the change in fair value of the statutory separate account assets resulting in reductions in statutory surplus. This has resulted and may continue to result in the need to devote significant additional capital to support the product.
|
•
|
With respect to our fixed annuity business, sustained low interest rates may result in a reduction in statutory surplus and an increase in NAIC required capital.
|
Fixed Maturities by Credit Quality
|
||||||||||||||||
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||
|
Amortized Cost
|
Fair Value
|
Percent of Total Fair Value
|
Amortized Cost
|
Fair Value
|
Percent of Total Fair Value
|
||||||||||
United States Government/Government agencies
|
$
|
8,231
|
|
$
|
8,208
|
|
13.2
|
%
|
$
|
10,481
|
|
$
|
10,975
|
|
12.8
|
%
|
AAA
|
6,215
|
|
6,376
|
|
10.2
|
%
|
8,646
|
|
9,220
|
|
10.7
|
%
|
||||
AA
|
12,054
|
|
12,273
|
|
19.7
|
%
|
14,939
|
|
16,104
|
|
18.7
|
%
|
||||
A
|
14,777
|
|
15,498
|
|
24.9
|
%
|
20,396
|
|
22,650
|
|
26.4
|
%
|
||||
BBB
|
15,555
|
|
16,087
|
|
25.7
|
%
|
20,833
|
|
22,689
|
|
26.4
|
%
|
||||
BB & below
|
3,809
|
|
3,915
|
|
6.3
|
%
|
4,452
|
|
4,284
|
|
5.0
|
%
|
||||
Total fixed maturities, AFS
|
$
|
60,641
|
|
62,357
|
|
100
|
%
|
$
|
79,747
|
|
85,922
|
|
100
|
%
|
Securities by Type
|
||||||||||||||||||||||||||||
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||||||||||||||
|
Cost or Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair Value
|
Percent of Total Fair Value
|
Cost or Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair Value
|
Percent of Total Fair Value
|
||||||||||||||||||
ABS
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Consumer loans
|
$
|
1,982
|
|
$
|
11
|
|
$
|
(48
|
)
|
$
|
1,945
|
|
3.1
|
%
|
$
|
2,234
|
|
$
|
29
|
|
$
|
(116
|
)
|
$
|
2,147
|
|
2.5
|
%
|
Small business
|
194
|
|
3
|
|
(16
|
)
|
181
|
|
0.3
|
%
|
336
|
|
7
|
|
(67
|
)
|
276
|
|
0.3
|
%
|
||||||||
Other
|
228
|
|
11
|
|
—
|
|
239
|
|
0.4
|
%
|
313
|
|
27
|
|
—
|
|
340
|
|
0.4
|
%
|
||||||||
Collateralized debt obligations ("CDOs")
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Collateralized loan obligations (“CLOs”)
|
1,781
|
|
3
|
|
(34
|
)
|
1,750
|
|
2.8
|
%
|
2,197
|
|
—
|
|
(68
|
)
|
2,129
|
|
2.5
|
%
|
||||||||
Commercial real estate ("CREs")
|
176
|
|
88
|
|
(16
|
)
|
248
|
|
0.4
|
%
|
420
|
|
44
|
|
(80
|
)
|
384
|
|
0.4
|
%
|
||||||||
Other [1]
|
383
|
|
17
|
|
(9
|
)
|
389
|
|
0.6
|
%
|
553
|
|
16
|
|
(11
|
)
|
527
|
|
0.6
|
%
|
||||||||
Commercial mortgage-backed securities ("CMBS")
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Agency backed [2]
|
1,068
|
|
20
|
|
(12
|
)
|
1,076
|
|
1.7
|
%
|
962
|
|
79
|
|
—
|
|
1,041
|
|
1.2
|
%
|
||||||||
Bonds
|
2,836
|
|
168
|
|
(31
|
)
|
2,973
|
|
4.8
|
%
|
4,535
|
|
293
|
|
(160
|
)
|
4,668
|
|
5.4
|
%
|
||||||||
Interest only (“IOs”)
|
384
|
|
28
|
|
(15
|
)
|
397
|
|
0.6
|
%
|
586
|
|
45
|
|
(19
|
)
|
612
|
|
0.7
|
%
|
||||||||
Corporate
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Basic industry
|
2,085
|
|
106
|
|
(38
|
)
|
2,153
|
|
3.5
|
%
|
3,741
|
|
369
|
|
(6
|
)
|
4,104
|
|
4.8
|
%
|
||||||||
Capital goods
|
2,077
|
|
161
|
|
(14
|
)
|
2,224
|
|
3.6
|
%
|
3,109
|
|
389
|
|
(2
|
)
|
3,496
|
|
4.1
|
%
|
||||||||
Consumer cyclical
|
1,801
|
|
119
|
|
(17
|
)
|
1,903
|
|
3.1
|
%
|
2,423
|
|
266
|
|
(5
|
)
|
2,684
|
|
3.1
|
%
|
||||||||
Consumer non-cyclical
|
3,600
|
|
288
|
|
(21
|
)
|
3,867
|
|
6.2
|
%
|
5,927
|
|
759
|
|
(7
|
)
|
6,679
|
|
7.8
|
%
|
||||||||
Energy
|
2,384
|
|
174
|
|
(17
|
)
|
2,541
|
|
4.1
|
%
|
3,816
|
|
499
|
|
(3
|
)
|
4,312
|
|
5.0
|
%
|
||||||||
Financial services
|
5,044
|
|
287
|
|
(145
|
)
|
5,186
|
|
8.3
|
%
|
7,230
|
|
604
|
|
(211
|
)
|
7,623
|
|
8.9
|
%
|
||||||||
Tech./comm.
|
3,223
|
|
223
|
|
(28
|
)
|
3,418
|
|
5.5
|
%
|
3,971
|
|
526
|
|
(16
|
)
|
4,481
|
|
5.2
|
%
|
||||||||
Transportation
|
972
|
|
65
|
|
(13
|
)
|
1,024
|
|
1.6
|
%
|
1,393
|
|
163
|
|
(2
|
)
|
1,554
|
|
1.8
|
%
|
||||||||
Utilities
|
5,605
|
|
386
|
|
(51
|
)
|
5,940
|
|
9.5
|
%
|
7,792
|
|
1,017
|
|
(24
|
)
|
8,785
|
|
10.2
|
%
|
||||||||
Other
|
222
|
|
14
|
|
(2
|
)
|
234
|
|
0.4
|
%
|
292
|
|
39
|
|
—
|
|
331
|
|
0.4
|
%
|
||||||||
Foreign govt./govt. agencies
|
4,228
|
|
52
|
|
(176
|
)
|
4,104
|
|
6.6
|
%
|
3,985
|
|
191
|
|
(40
|
)
|
4,136
|
|
4.8
|
%
|
||||||||
Municipal
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Taxable
|
1,299
|
|
32
|
|
(67
|
)
|
1,264
|
|
2.0
|
%
|
2,235
|
|
246
|
|
(15
|
)
|
2,466
|
|
2.9
|
%
|
||||||||
Tax-exempt
|
10,633
|
|
393
|
|
(117
|
)
|
10,909
|
|
17.5
|
%
|
10,766
|
|
1,133
|
|
(4
|
)
|
11,895
|
|
13.9
|
%
|
||||||||
RMBS
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Agency
|
3,366
|
|
59
|
|
(38
|
)
|
3,387
|
|
5.4
|
%
|
5,906
|
|
259
|
|
(3
|
)
|
6,162
|
|
7.2
|
%
|
||||||||
Non-agency
|
86
|
|
—
|
|
—
|
|
86
|
|
0.1
|
%
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
%
|
||||||||
Alt-A
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
%
|
38
|
|
—
|
|
(1
|
)
|
37
|
|
—
|
%
|
||||||||
Sub-prime
|
1,187
|
|
31
|
|
(44
|
)
|
1,174
|
|
1.9
|
%
|
1,374
|
|
36
|
|
(129
|
)
|
1,281
|
|
1.5
|
%
|
||||||||
U.S. Treasuries
|
3,797
|
|
7
|
|
(59
|
)
|
3,745
|
|
6.0
|
%
|
3,613
|
|
175
|
|
(16
|
)
|
3,772
|
|
4.4
|
%
|
||||||||
Fixed maturities, AFS
|
60,641
|
|
2,746
|
|
(1,028
|
)
|
62,357
|
|
100
|
%
|
79,747
|
|
7,211
|
|
(1,005
|
)
|
85,922
|
|
100
|
%
|
||||||||
Equity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Financial services
|
233
|
|
11
|
|
(29
|
)
|
215
|
|
24.8
|
%
|
331
|
|
15
|
|
(42
|
)
|
304
|
|
34.2
|
%
|
||||||||
Other
|
617
|
|
56
|
|
(20
|
)
|
653
|
|
75.2
|
%
|
535
|
|
66
|
|
(15
|
)
|
586
|
|
65.8
|
%
|
||||||||
Equity securities, AFS
|
850
|
|
67
|
|
(49
|
)
|
868
|
|
100
|
%
|
866
|
|
81
|
|
(57
|
)
|
890
|
|
100
|
%
|
||||||||
Total AFS securities
|
$
|
61,491
|
|
$
|
2,813
|
|
$
|
(1,077
|
)
|
$
|
63,225
|
|
|
$
|
80,613
|
|
$
|
7,292
|
|
$
|
(1,062
|
)
|
$
|
86,812
|
|
|
||
Fixed maturities, FVO
|
|
|
|
$
|
844
|
|
|
|
|
|
$
|
1,087
|
|
|
[1]
|
Gross unrealized gains (losses) exclude the fair value of bifurcated embedded derivative features of certain securities. Changes in value are recorded in net realized capital gains (losses).
|
[2]
|
Includes securities with pools of loans issued by the Small Business Administration which are backed by the full faith and credit of the U.S. government.
|
December 31, 2013
|
||||||||||||||||||||||||
|
Corporate & Equity, AFS Non-Finan. [1]
|
Corporate & Equity, AFS Financials
|
Foreign Govt./ Govt. Agencies
|
Total
|
||||||||||||||||||||
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
||||||||||||||||
Italy
|
$
|
2
|
|
$
|
2
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2
|
|
$
|
2
|
|
Spain [3]
|
35
|
|
36
|
|
21
|
|
21
|
|
—
|
|
—
|
|
56
|
|
57
|
|
||||||||
Ireland
|
47
|
|
48
|
|
3
|
|
3
|
|
—
|
|
—
|
|
50
|
|
51
|
|
||||||||
Portugal
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Greece
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Higher risk
|
84
|
|
86
|
|
24
|
|
24
|
|
—
|
|
—
|
|
108
|
|
110
|
|
||||||||
Europe excluding higher risk
|
3,083
|
|
3,304
|
|
1,015
|
|
1,074
|
|
634
|
|
634
|
|
4,732
|
|
5,012
|
|
||||||||
Total Europe
|
$
|
3,167
|
|
$
|
3,390
|
|
$
|
1,039
|
|
$
|
1,098
|
|
$
|
634
|
|
$
|
634
|
|
$
|
4,840
|
|
$
|
5,122
|
|
Europe exposure net of credit default swap protection [2]
|
|
|
|
|
|
|
$
|
4,650
|
|
$
|
5,121
|
|
December 31, 2012
|
||||||||||||||||||||||||
|
Corporate & Equity, AFS Non-Finan. [1]
|
Corporate & Equity, AFS Financials
|
Foreign Govt./ Govt. Agencies
|
Total
|
||||||||||||||||||||
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
||||||||||||||||
Italy
|
$
|
4
|
|
$
|
4
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
4
|
|
$
|
4
|
|
Spain [3]
|
53
|
|
52
|
|
20
|
|
20
|
|
—
|
|
—
|
|
73
|
|
72
|
|
||||||||
Ireland
|
143
|
|
145
|
|
—
|
|
—
|
|
—
|
|
—
|
|
143
|
|
145
|
|
||||||||
Portugal
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Greece
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Higher risk
|
200
|
|
201
|
|
20
|
|
20
|
|
—
|
|
—
|
|
220
|
|
221
|
|
||||||||
Europe excluding higher risk
|
4,022
|
|
4,525
|
|
1,158
|
|
1,182
|
|
751
|
|
827
|
|
5,931
|
|
6,534
|
|
||||||||
Total Europe
|
$
|
4,222
|
|
$
|
4,726
|
|
$
|
1,178
|
|
$
|
1,202
|
|
$
|
751
|
|
$
|
827
|
|
$
|
6,151
|
|
$
|
6,755
|
|
Europe exposure net of credit default swap protection [2]
|
|
|
|
|
|
|
$
|
5,767
|
|
$
|
6,752
|
|
[1]
|
Includes amortized cost and fair value of $
34
as of
December 31, 2013
and $
74
as of
December 31, 2012
related to limited partnerships and other alternative investments, the majority of which is domiciled in the United Kingdom.
|
[2]
|
Includes a notional amount and fair value of $
190
and $
(1)
, respectively, as of
December 31, 2013
and $
384
and $
(3)
, respectively, as of
December 31, 2012
related to credit default swap protection. This includes a notional amount of $
55
and $
56
as of
December 31, 2013
and
December 31, 2012
, respectively, related to single name corporate issuers in the financial services sector.
|
[3]
|
The Company has credit default swap protection with a notional amount of $
20
related to the Corporate and Equity, AFS Financial Services.
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
||||||||
Argentina
|
$
|
38
|
|
$
|
40
|
|
$
|
15
|
|
$
|
15
|
|
Brazil
|
274
|
|
257
|
|
295
|
|
317
|
|
||||
India
|
62
|
|
62
|
|
79
|
|
86
|
|
||||
Indonesia
|
107
|
|
93
|
|
56
|
|
59
|
|
||||
Lebanon
|
26
|
|
26
|
|
13
|
|
13
|
|
||||
South Africa
|
65
|
|
60
|
|
47
|
|
47
|
|
||||
Turkey
|
88
|
|
79
|
|
48
|
|
52
|
|
||||
Ukraine
|
50
|
|
50
|
|
17
|
|
18
|
|
||||
Uruguay
|
27
|
|
25
|
|
14
|
|
14
|
|
||||
Venezuela
|
67
|
|
60
|
|
45
|
|
49
|
|
||||
Total
|
$
|
804
|
|
$
|
752
|
|
$
|
629
|
|
$
|
670
|
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||||
|
Amortized Cost
|
Fair Value
|
Net Unrealized
|
Amortized Cost
|
Fair Value
|
Net Unrealized
|
||||||||||||
AAA
|
$
|
49
|
|
$
|
52
|
|
$
|
3
|
|
$
|
47
|
|
$
|
49
|
|
$
|
2
|
|
AA
|
468
|
|
493
|
|
25
|
|
1,039
|
|
1,125
|
|
86
|
|
||||||
A
|
2,518
|
|
2,616
|
|
98
|
|
3,539
|
|
3,763
|
|
224
|
|
||||||
BBB
|
1,978
|
|
1,952
|
|
(26
|
)
|
2,537
|
|
2,563
|
|
26
|
|
||||||
BB & below
|
264
|
|
288
|
|
24
|
|
399
|
|
427
|
|
28
|
|
||||||
Total
|
$
|
5,277
|
|
$
|
5,401
|
|
$
|
124
|
|
$
|
7,561
|
|
$
|
7,927
|
|
$
|
366
|
|
December 31, 2013
|
||||||||||||||||||||||||||||||||||||
|
AAA
|
AA
|
A
|
BBB
|
BB and Below
|
Total
|
||||||||||||||||||||||||||||||
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
||||||||||||||||||||||||
2003 & Prior
|
$
|
10
|
|
$
|
10
|
|
$
|
35
|
|
$
|
36
|
|
$
|
6
|
|
$
|
6
|
|
$
|
10
|
|
$
|
10
|
|
$
|
31
|
|
$
|
33
|
|
$
|
92
|
|
$
|
95
|
|
2004
|
79
|
|
80
|
|
77
|
|
83
|
|
29
|
|
29
|
|
13
|
|
13
|
|
7
|
|
12
|
|
205
|
|
217
|
|
||||||||||||
2005
|
307
|
|
324
|
|
79
|
|
82
|
|
101
|
|
104
|
|
71
|
|
71
|
|
68
|
|
75
|
|
626
|
|
656
|
|
||||||||||||
2006
|
336
|
|
362
|
|
107
|
|
116
|
|
120
|
|
127
|
|
102
|
|
106
|
|
224
|
|
238
|
|
889
|
|
949
|
|
||||||||||||
2007
|
188
|
|
202
|
|
211
|
|
218
|
|
112
|
|
127
|
|
—
|
|
—
|
|
130
|
|
125
|
|
641
|
|
672
|
|
||||||||||||
2008
|
43
|
|
49
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
43
|
|
49
|
|
||||||||||||
2009
|
11
|
|
11
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11
|
|
11
|
|
||||||||||||
2010
|
18
|
|
19
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
18
|
|
19
|
|
||||||||||||
2011
|
63
|
|
66
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
5
|
|
—
|
|
—
|
|
69
|
|
71
|
|
||||||||||||
2012
|
35
|
|
34
|
|
—
|
|
—
|
|
8
|
|
8
|
|
11
|
|
10
|
|
—
|
|
—
|
|
54
|
|
52
|
|
||||||||||||
2013
|
30
|
|
29
|
|
89
|
|
86
|
|
59
|
|
58
|
|
10
|
|
9
|
|
—
|
|
—
|
|
188
|
|
182
|
|
||||||||||||
Total
|
$
|
1,120
|
|
$
|
1,186
|
|
$
|
598
|
|
$
|
621
|
|
$
|
435
|
|
$
|
459
|
|
$
|
223
|
|
$
|
224
|
|
$
|
460
|
|
$
|
483
|
|
$
|
2,836
|
|
$
|
2,973
|
|
Credit protection
|
31.9%
|
25.9%
|
19.7%
|
19.8%
|
12.2%
|
24.6%
|
December 31, 2012
|
||||||||||||||||||||||||||||||||||||
|
AAA
|
AA
|
A
|
BBB
|
BB and Below
|
Total
|
||||||||||||||||||||||||||||||
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
||||||||||||||||||||||||
2003 & Prior
|
$
|
180
|
|
$
|
184
|
|
$
|
102
|
|
$
|
103
|
|
$
|
57
|
|
$
|
56
|
|
$
|
5
|
|
$
|
5
|
|
$
|
42
|
|
$
|
43
|
|
$
|
386
|
|
$
|
391
|
|
2004
|
171
|
|
178
|
|
73
|
|
82
|
|
36
|
|
36
|
|
24
|
|
24
|
|
20
|
|
12
|
|
324
|
|
332
|
|
||||||||||||
2005
|
446
|
|
485
|
|
105
|
|
107
|
|
121
|
|
122
|
|
152
|
|
139
|
|
100
|
|
82
|
|
924
|
|
935
|
|
||||||||||||
2006
|
682
|
|
757
|
|
167
|
|
178
|
|
129
|
|
135
|
|
235
|
|
229
|
|
316
|
|
278
|
|
1,529
|
|
1,577
|
|
||||||||||||
2007
|
371
|
|
409
|
|
289
|
|
301
|
|
150
|
|
154
|
|
31
|
|
31
|
|
188
|
|
160
|
|
1,029
|
|
1,055
|
|
||||||||||||
2008
|
55
|
|
66
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
55
|
|
66
|
|
||||||||||||
2009
|
28
|
|
30
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
28
|
|
30
|
|
||||||||||||
2010
|
18
|
|
21
|
|
—
|
|
—
|
|
22
|
|
23
|
|
—
|
|
—
|
|
—
|
|
—
|
|
40
|
|
44
|
|
||||||||||||
2011
|
121
|
|
135
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
121
|
|
135
|
|
||||||||||||
2012
|
98
|
|
102
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
1
|
|
—
|
|
—
|
|
99
|
|
103
|
|
||||||||||||
Total
|
$
|
2,170
|
|
$
|
2,367
|
|
$
|
736
|
|
$
|
771
|
|
$
|
515
|
|
$
|
526
|
|
$
|
448
|
|
$
|
429
|
|
$
|
666
|
|
$
|
575
|
|
$
|
4,535
|
|
$
|
4,668
|
|
Credit protection
|
29.7%
|
23.4%
|
23.3%
|
16.8%
|
9.2%
|
23.7%
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||||
|
Amortized Cost [1]
|
Valuation Allowance
|
Carrying Value
|
Amortized Cost [1]
|
Valuation Allowance
|
Carrying Value
|
||||||||||||
Agricultural
|
$
|
132
|
|
$
|
(7
|
)
|
$
|
125
|
|
$
|
150
|
|
$
|
(8
|
)
|
$
|
142
|
|
Whole loans
|
5,223
|
|
(10
|
)
|
5,213
|
|
6,023
|
|
(10
|
)
|
6,013
|
|
||||||
A-Note participations
|
192
|
|
—
|
|
192
|
|
255
|
|
—
|
|
255
|
|
||||||
B-Note participations
|
99
|
|
(50
|
)
|
49
|
|
263
|
|
(50
|
)
|
213
|
|
||||||
Mezzanine loans
|
19
|
|
—
|
|
19
|
|
88
|
|
—
|
|
88
|
|
||||||
Total
|
$
|
5,665
|
|
$
|
(67
|
)
|
$
|
5,598
|
|
$
|
6,779
|
|
$
|
(68
|
)
|
$
|
6,711
|
|
[1]
|
Amortized cost represents carrying value prior to valuation allowances, if any.
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||||||
|
Amortized Cost
|
|
Market Value
|
|
Weighted Average Credit Quality
|
|
Amortized Cost
|
|
Market Value
|
|
Weighted Average Credit Quality
|
||||||||
General Obligation
|
$
|
2,358
|
|
|
$
|
2,455
|
|
|
AA
|
|
$
|
2,947
|
|
|
$
|
3,293
|
|
|
AA
|
Pre-Refunded [1]
|
567
|
|
|
605
|
|
|
AAA
|
|
629
|
|
|
678
|
|
|
AAA
|
||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transportation
|
1,880
|
|
|
1,879
|
|
|
A
|
|
1,652
|
|
|
1,799
|
|
|
A+
|
||||
Water & Sewer
|
1,455
|
|
|
1,476
|
|
|
AA-
|
|
1,380
|
|
|
1,531
|
|
|
AA
|
||||
Health Care
|
1,305
|
|
|
1,335
|
|
|
AA
|
|
1,302
|
|
|
1,443
|
|
|
AA-
|
||||
Education
|
1,077
|
|
|
1,105
|
|
|
AA
|
|
1,288
|
|
|
1,446
|
|
|
AA
|
||||
Leasing [2]
|
877
|
|
|
897
|
|
|
AA-
|
|
1,028
|
|
|
1,133
|
|
|
A+
|
||||
Sales Tax
|
793
|
|
|
795
|
|
|
AA-
|
|
862
|
|
|
966
|
|
|
AA
|
||||
Power
|
706
|
|
|
722
|
|
|
A+
|
|
892
|
|
|
976
|
|
|
A+
|
||||
Housing
|
177
|
|
|
171
|
|
|
AA
|
|
333
|
|
|
344
|
|
|
AA-
|
||||
Other
|
737
|
|
|
733
|
|
|
A+
|
|
688
|
|
|
752
|
|
|
AA-
|
||||
Total Revenue
|
9,007
|
|
|
9,113
|
|
|
AA-
|
|
9,425
|
|
|
10,390
|
|
|
AA-
|
||||
Total Municipal
|
$
|
11,932
|
|
|
$
|
12,173
|
|
|
AA-
|
|
$
|
13,001
|
|
|
$
|
14,361
|
|
|
AA-
|
[1]
|
Pre-refunded bonds are bonds for which an irrevocable trust containing sufficient U.S. treasury, agency, or other securities has been established to fund the remaining payment of principal and interest.
|
[2]
|
Leasing revenue bonds are generally the obligations of a financing authority established by the municipality that leases municipal facilities to a municipality. The notes are typically secured by lease payments made by the municipality that is leasing the facilities financed by the issue. Lease payments may be subject to annual appropriation by the municipality or the municipality may be obligated to appropriate general tax revenues to make lease payments.
|
|
December 31, 2013
|
December 31, 2012
|
||||||||
|
Amount
|
Percent
|
Amount
|
Percent
|
||||||
Hedge funds
|
$
|
1,341
|
|
44.1
|
%
|
$
|
1,309
|
|
43.4
|
%
|
Mortgage and real estate funds
|
534
|
|
17.6
|
%
|
501
|
|
16.6
|
%
|
||
Mezzanine debt funds
|
82
|
|
2.7
|
%
|
108
|
|
3.6
|
%
|
||
Private equity and other funds
|
1,083
|
|
35.6
|
%
|
1,097
|
|
36.4
|
%
|
||
Total
|
$
|
3,040
|
|
100
|
%
|
$
|
3,015
|
|
100
|
%
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||||||||
Consecutive Months
|
Items
|
Cost or Amortized Cost
|
Fair Value
|
Unrealized Loss [1]
|
Items
|
Cost or Amortized Cost
|
Fair Value
|
Unrealized Loss [1]
|
||||||||||||||
Three months or less
|
1,184
|
|
$
|
10,056
|
|
$
|
9,939
|
|
$
|
(117
|
)
|
771
|
|
$
|
3,964
|
|
$
|
3,893
|
|
$
|
(71
|
)
|
Greater than three to six months
|
349
|
|
1,200
|
|
1,167
|
|
(33
|
)
|
306
|
|
764
|
|
730
|
|
(34
|
)
|
||||||
Greater than six to nine months
|
956
|
|
6,362
|
|
5,988
|
|
(374
|
)
|
183
|
|
157
|
|
142
|
|
(15
|
)
|
||||||
Greater than nine to eleven months
|
148
|
|
413
|
|
374
|
|
(39
|
)
|
64
|
|
96
|
|
90
|
|
(6
|
)
|
||||||
Twelve months or more
|
578
|
|
5,625
|
|
5,109
|
|
(514
|
)
|
687
|
|
7,850
|
|
6,894
|
|
(936
|
)
|
||||||
Total
|
3,215
|
|
$
|
23,656
|
|
$
|
22,577
|
|
$
|
(1,077
|
)
|
2,011
|
|
$
|
12,831
|
|
$
|
11,749
|
|
$
|
(1,062
|
)
|
[1]
|
Unrealized losses exclude the fair value of bifurcated embedded derivative features of certain securities as changes in value are recorded in net realized capital gains (losses).
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||||||||
Consecutive Months
|
Items
|
Cost or Amortized Cost
|
Fair Value
|
Unrealized Loss [1]
|
Items
|
Cost or Amortized Cost
|
Fair Value
|
Unrealized Loss [1]
|
||||||||||||||
Three months or less
|
63
|
|
$
|
213
|
|
$
|
162
|
|
$
|
(51
|
)
|
68
|
|
$
|
54
|
|
$
|
36
|
|
$
|
(18
|
)
|
Greater than three to six months
|
20
|
|
177
|
|
130
|
|
(47
|
)
|
27
|
|
22
|
|
16
|
|
(6
|
)
|
||||||
Greater than six to nine months
|
28
|
|
449
|
|
336
|
|
(113
|
)
|
20
|
|
72
|
|
55
|
|
(17
|
)
|
||||||
Greater than nine to eleven months
|
10
|
|
4
|
|
3
|
|
(1
|
)
|
12
|
|
33
|
|
25
|
|
(8
|
)
|
||||||
Twelve months or more
|
58
|
|
132
|
|
93
|
|
(39
|
)
|
157
|
|
1,329
|
|
877
|
|
(452
|
)
|
||||||
Total
|
179
|
|
$
|
975
|
|
$
|
724
|
|
$
|
(251
|
)
|
284
|
|
$
|
1,510
|
|
$
|
1,009
|
|
$
|
(501
|
)
|
[1]
|
Unrealized losses exclude the fair value of bifurcated embedded derivatives features of certain securities as changes in value are recorded in net realized capital gains (losses).
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||||||||
Consecutive Months
|
Items
|
Cost or Amortized Cost
|
Fair Value
|
Unrealized Loss [1]
|
Items
|
Cost or Amortized Cost
|
Fair Value
|
Unrealized Loss [1]
|
||||||||||||||
Three months or less
|
8
|
|
$
|
1
|
|
$
|
—
|
|
$
|
(1
|
)
|
20
|
|
$
|
48
|
|
$
|
22
|
|
$
|
(26
|
)
|
Greater than three to six months
|
4
|
|
2
|
|
1
|
|
(1
|
)
|
4
|
|
1
|
|
—
|
|
(1
|
)
|
||||||
Greater than six to nine months
|
3
|
|
1
|
|
—
|
|
(1
|
)
|
4
|
|
2
|
|
—
|
|
(2
|
)
|
||||||
Greater than nine to eleven months
|
—
|
|
—
|
|
—
|
|
—
|
|
7
|
|
1
|
|
—
|
|
(1
|
)
|
||||||
Twelve months or more
|
18
|
|
2
|
|
—
|
|
(2
|
)
|
27
|
|
147
|
|
57
|
|
(90
|
)
|
||||||
Total
|
33
|
|
$
|
6
|
|
$
|
1
|
|
$
|
(5
|
)
|
62
|
|
$
|
199
|
|
$
|
79
|
|
$
|
(120
|
)
|
[1]
|
Unrealized losses exclude the fair value of bifurcate embedded derivatives features of certain securities as changes in value are recorded in net realized capital gains (losses).
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012 [1]
|
2011
|
||||||
ABS
|
$
|
9
|
|
$
|
29
|
|
$
|
27
|
|
CRE CDOs
|
2
|
|
10
|
|
41
|
|
|||
CMBS
|
|
|
|
||||||
Bonds
|
17
|
|
24
|
|
16
|
|
|||
IOs
|
4
|
|
3
|
|
5
|
|
|||
Corporate
|
20
|
|
28
|
|
50
|
|
|||
Equity
|
15
|
|
65
|
|
17
|
|
|||
RMBS Non-agency
|
—
|
|
—
|
|
—
|
|
|||
RMBS Alt-A
|
—
|
|
1
|
|
1
|
|
|||
RMBS sub-prime
|
6
|
|
12
|
|
15
|
|
|||
Other
|
—
|
|
—
|
|
2
|
|
|||
Total
|
$
|
73
|
|
$
|
172
|
|
$
|
174
|
|
[1]
|
Excludes $177 of intent-to-sell impairments related to the sales of the Retirement Plans and Individual Life businesses.
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Credit-related concerns
|
$
|
(2
|
)
|
$
|
14
|
|
$
|
27
|
|
Held for sale
|
|
|
|
||||||
Agricultural loans
|
—
|
|
—
|
|
(3
|
)
|
|||
B-note participations
|
—
|
|
—
|
|
—
|
|
|||
Mezzanine loans
|
—
|
|
—
|
|
—
|
|
|||
Total
|
$
|
(2
|
)
|
$
|
14
|
|
$
|
24
|
|
Fixed maturities
|
$
|
24,704
|
|
Short-term investments
|
984
|
|
|
Cash
|
189
|
|
|
Less: Derivative collateral
|
241
|
|
|
Total
|
$
|
25,636
|
|
Fixed maturities
|
$
|
37,432
|
|
Short-term investments
|
2,211
|
|
|
Cash
|
1,237
|
|
|
Less: Derivative collateral
|
1,251
|
|
|
Less: Cash associated with Japan variable annuities
|
281
|
|
|
Total
|
$
|
39,348
|
|
|
As of
|
||
Contractholder Obligations
|
December 31, 2013
|
||
Total Life contractholder obligations
|
$
|
219,402
|
|
Less: Separate account assets [1]
|
140,886
|
|
|
Less: International statutory separate accounts [1]
|
19,734
|
|
|
General account contractholder obligations
|
$
|
58,782
|
|
Composition of General Account Contractholder Obligations
|
|
||
Contracts without a surrender provision and/or fixed payout dates [2]
|
$
|
24,625
|
|
U.S. Fixed MVA annuities and Other [3]
|
10,142
|
|
|
International Fixed MVA annuities [3]
|
1,514
|
|
|
Guaranteed investment contracts (“GIC”) [4]
|
31
|
|
|
Other [5]
|
22,470
|
|
|
General account contractholder obligations
|
$
|
58,782
|
|
[1]
|
In the event customers elect to surrender separate account assets or international statutory separate accounts, Life Operations will use the proceeds from the sale of the assets to fund the surrender, and Life Operations’ liquidity position will not be impacted. In many instances Life Operations will receive a percentage of the surrender amount as compensation for early surrender (surrender charge), increasing Life Operations’ liquidity position. In addition, a surrender of variable annuity separate account or general account assets (see below) will decrease Life Operations’ obligation for payments on guaranteed living and death benefits.
|
[2]
|
Relates to contracts such as payout annuities or institutional notes, other than guaranteed investment products with an MVA feature (discussed below) or surrenders of term life, group benefit contracts or death and living benefit reserves for which surrenders will have no current effect on Life Operations’ liquidity requirements.
|
[3]
|
Relates to annuities that are recorded in the general account (under U.S. GAAP), although these annuities are held in a statutory separate account, as the contractholders are subject to the Company's credit risk. In the statutory separate account, Life Operations is required to maintain invested assets with a fair value equal to the MVA surrender value of the Fixed MVA contract. In the event assets decline in value at a greater rate than the MVA surrender value of the Fixed MVA contract, Life Operations is required to contribute additional capital to the statutory separate account. Life Operations will fund these required contributions with operating cash flows or short-term investments. In the event that operating cash flows or short-term investments are not sufficient to fund required contributions, the Company may have to sell other invested assets at a loss, potentially resulting in a decrease in statutory surplus. As the fair value of invested assets in the statutory separate account are generally equal to the MVA surrender value of the Fixed MVA contract, surrender of Fixed MVA annuities will have an insignificant impact on the liquidity requirements of Life Operations.
|
[4]
|
GICs are subject to discontinuance provisions which allow the policyholders to terminate their contracts prior to scheduled maturity at the lesser of the book value or market value. Generally, the market value adjustment reflects changes in interest rates and credit spreads. As a result, the market value adjustment feature in the GIC serves to protect the Company from interest rate risks and limit Life Operations’ liquidity requirements in the event of a surrender.
|
[5]
|
Surrenders of, or policy loans taken from, as applicable, these general account liabilities, which include the general account option for Talcott Resolution’s individual variable annuities and the variable life contracts of the former Individual Life business, the general account option for annuities of the former Retirement Plans business and universal life contracts sold by the former Individual Life business, may be funded through operating cash flows of Life Operations, available short-term investments, or Life Operations may be required to sell fixed maturity investments to fund the surrender payment. Sales of fixed maturity investments could result in the recognition of realized losses and insufficient proceeds to fully fund the surrender amount. In this circumstance, Life Operations may need to take other actions, including enforcing certain contract provisions which could restrict surrenders and/or slow or defer payouts. See Note
2
-
Business Dispositions
of Notes to the Consolidated Financial Statements as to the sale of the Retirement Plans and Individual Life businesses and related transfer of invested assets in January 2013.
|
•
|
The Company has unfunded commitments to purchase investments in limited partnerships, private placements and mortgage loans of approximately
$703
as disclosed in Note
15
of Notes to Consolidated Financial Statements.
|
|
Payments due by period
|
||||||||||||||
|
Total
|
Less than
1 year
|
1-3
years
|
3-5
years
|
More than
5 years
|
||||||||||
Property and casualty obligations [1]
|
$
|
22,257
|
|
$
|
5,402
|
|
$
|
5,359
|
|
$
|
2,591
|
|
$
|
8,905
|
|
Life, annuity and disability obligations [2]
|
320,661
|
|
30,529
|
|
45,442
|
|
34,993
|
|
209,697
|
|
|||||
Operating lease obligations [3]
|
231
|
|
59
|
|
91
|
|
53
|
|
28
|
|
|||||
Revolving Credit Facilities [4]
|
238
|
|
238
|
|
—
|
|
—
|
|
—
|
|
|||||
Long-term debt obligations [5]
|
12,639
|
|
577
|
|
1,445
|
|
1,634
|
|
8,983
|
|
|||||
Consumer notes [6]
|
90
|
|
16
|
|
53
|
|
21
|
|
—
|
|
|||||
Purchase obligations [7]
|
2,043
|
|
1,582
|
|
378
|
|
74
|
|
9
|
|
|||||
Other long-term liabilities reflected on the balance sheet [8]
|
289
|
|
208
|
|
81
|
|
—
|
|
—
|
|
|||||
Total
|
$
|
358,448
|
|
$
|
38,611
|
|
$
|
52,849
|
|
$
|
39,366
|
|
$
|
227,622
|
|
•
|
Reserves for Property & Casualty unpaid losses and loss adjustment expenses include IBNR and case reserves. While payments due on claim reserves are considered contractual obligations because they relate to insurance policies issued by the Company, the ultimate amount to be paid to settle both case reserves and IBNR is an estimate, subject to significant uncertainty. The actual amount to be paid is not finally determined until the Company reaches a settlement with the claimant. Final claim settlements may vary significantly from the present estimates, particularly since many claims will not be settled until well into the future.
|
•
|
In estimating the timing of future payments by year, the Company has assumed that its historical payment patterns will continue. However, the actual timing of future payments could vary materially from these estimates due to, among other things, changes in claim reporting and payment patterns and large unanticipated settlements. In particular, there is significant uncertainty over the claim payment patterns of asbestos and environmental claims. In addition, the table does not include future cash flows related to the receipt of premiums that may be used, in part, to fund loss payments.
|
•
|
Under U.S. GAAP, the Company is only permitted to discount reserves for losses and loss adjustment expenses in cases where the payment pattern and ultimate loss costs are fixed and determinable on an individual claim basis. For the Company, these include claim settlements with permanently disabled claimants. As of
December 31, 2013
, the total property and casualty reserves in the above table are gross of a reserve discount of
$553
.
|
[2]
|
Estimated life, annuity and disability obligations include death and disability claims, policy surrenders, policyholder dividends and trail commissions offset by expected future deposits and premiums on in-force contracts. Estimated life, annuity and disability obligations are based on mortality, morbidity and lapse assumptions comparable with the Company’s historical experience, modified for recent observed trends. The Company has also assumed market growth and interest crediting consistent with other assumptions. In contrast to this table, the majority of the Company’s obligations are recorded on the balance sheet at the current account values and do not incorporate an expectation of future market growth, interest crediting, or future deposits. Therefore, the estimated obligations presented in this table significantly exceed the liabilities recorded in reserve for future policy benefits and unpaid losses and loss adjustment expenses, other policyholder funds and benefits payable and separate account liabilities. Due to the significance of the assumptions used, the amounts presented could materially differ from actual results.
|
[3]
|
Includes future minimum lease payments on operating lease agreements. See Note
15
of Notes to Consolidated Financial Statements for additional discussion on lease commitments.
|
[4]
|
Represents revolving credit facility agreements in order to finance certain withholding taxes on mutual fund gains, that are subsequently refunded when HLIKK files its’ income tax returns. Both of the credit facilities expire on
September 30, 2014
. See Note
13
of Notes to Consolidated Financial Statements for additional discussion of revolving credit facilities.
|
[5]
|
Includes contractual principal and interest payments. See Note
13
of Notes to Consolidated Financial Statements for additional discussion of long-term debt obligations.
|
[6]
|
Consumer notes include principal payments and contractual interest for fixed rate notes and interest based on current rates for floating rate notes. See Note
15
of Notes to Consolidated Financial Statements for additional discussion of consumer notes.
|
[7]
|
Includes
$703
in commitments to purchase investments including approximately
$531
of limited partnership,
$7
of private placements and
$165
of mortgage loans. Outstanding commitments under these limited partnerships and mortgage loans are included in payments due in less than 1 year since the timing of funding these commitments cannot be reliably estimated. The remaining commitments to purchase investments primarily represent payables for securities purchased which are reflected on the Company’s consolidated balance sheet.
|
[8]
|
Includes cash collateral of
$180
which the Company has accepted in connection with the Company’s derivative instruments. Since the timing of the return of the collateral is uncertain, the return of the collateral has been included in the payments due in less than 1 year.
|
|
2013
|
2012
|
Change
|
|||||
Short-term debt (includes current maturities of long-term debt)
|
$
|
200
|
|
$
|
320
|
|
(38
|
)%
|
Short-term due on revolving credit facility
|
238
|
|
—
|
|
NM
|
|
||
Long-term debt
|
6,106
|
|
6,806
|
|
(10
|
)%
|
||
Total debt [1]
|
6,544
|
|
7,126
|
|
(8
|
)%
|
||
Stockholders’ equity excluding accumulated other comprehensive income (loss), net of tax (“AOCI”)
|
18,984
|
|
19,604
|
|
(3
|
)%
|
||
AOCI, net of tax
|
(79
|
)
|
2,843
|
|
(103
|
)%
|
||
Total stockholders’ equity
|
$
|
18,905
|
|
$
|
22,447
|
|
(16
|
)%
|
Total capitalization including AOCI
|
$
|
25,449
|
|
$
|
29,573
|
|
(14
|
)%
|
Debt to stockholders’ equity
|
35
|
%
|
32
|
%
|
|
|||
Debt to capitalization
|
26
|
%
|
24
|
%
|
|
[1]
|
Total debt of the Company excludes
$84
and
$161
of consumer notes as of
December 31, 2013
and
December 31, 2012
, respectively
.
|
|
2013
|
2012
|
2011
|
||||||
Net cash provided by operating activities
|
$
|
1,237
|
|
$
|
2,681
|
|
$
|
2,274
|
|
Net provided by (cash used) for investing activities
|
$
|
3,745
|
|
$
|
(2,557
|
)
|
$
|
(1,182
|
)
|
Net cash used for financing activities
|
$
|
(5,820
|
)
|
$
|
(228
|
)
|
$
|
(609
|
)
|
Cash — end of year
|
$
|
1,428
|
|
$
|
2,421
|
|
$
|
2,581
|
|
Insurance Financial Strength Ratings:
|
A.M. Best
|
Fitch
|
Standard & Poor's
|
Moody's
|
Hartford Fire Insurance Company
|
A
|
A+
|
A
|
A2
|
Hartford Life Insurance Company
|
A-
|
A-
|
BBB+
|
A3
|
Hartford Life and Accident Insurance Company
|
A-
|
A-
|
A-
|
A3
|
Hartford Life and Annuity Insurance Company
|
A-
|
A-
|
BBB+
|
Baa2
|
Other Ratings:
|
|
|
|
|
The Hartford Financial Services Group, Inc.:
|
|
|
|
|
Senior debt
|
bbb+
|
BBB
|
BBB
|
Baa3
|
Commercial paper
|
AMB-2
|
F2
|
A-2
|
P-3
|
|
2013
|
2012
|
||||
U.S. life insurance subsidiaries, includes domestic captive insurance subsidiaries
|
$
|
6,639
|
|
$
|
6,410
|
|
Property and casualty insurance subsidiaries
|
8,022
|
|
7,645
|
|
||
Total
|
$
|
14,661
|
|
$
|
14,055
|
|
•
|
U.S. STAT excludes equity of non-insurance and foreign insurance subsidiaries not held by U.S. insurance subsidiaries.
|
•
|
Costs incurred by the Company to acquire insurance policies are deferred under U.S. GAAP while those costs are expensed immediately under U.S. STAT.
|
•
|
Temporary differences between the book and tax basis of an asset or liability which are recorded as deferred tax assets are evaluated for recoverability under U.S. GAAP while those amounts deferred are subject to limitations under U.S. STAT.
|
•
|
The assumptions used in the determination of Life benefit reserves is prescribed under U.S. STAT, while the assumptions used under U.S. GAAP are generally the Company’s best estimates. The methodologies for determining life insurance reserve amounts may also be different. For example, reserving for living benefit reserves under U.S. STAT is generally addressed by the Commissioners’ Annuity Reserving Valuation Methodology and the related Actuarial Guidelines, while under U.S. GAAP, those same living benefits may be considered embedded derivatives and recorded at fair value or they may be considered SOP 03-1 reserves. The sensitivity of these life insurance reserves to changes in equity markets, as applicable, will be different between U.S. GAAP and U.S. STAT.
|
•
|
The difference between the amortized cost and fair value of fixed maturity and other investments, net of tax, is recorded as an increase or decrease to the carrying value of the related asset and to equity under U.S. GAAP, while U.S. STAT only records certain securities at fair value, such as equity securities and certain lower rated bonds required by the NAIC to be recorded at the lower of amortized cost or fair value.
|
•
|
U.S. STAT for life insurance companies establishes a formula reserve for realized and unrealized losses due to default and equity risks associated with certain invested assets (the Asset Valuation Reserve), while U.S. GAAP does not. Also, for those realized gains and losses caused by changes in interest rates, U.S. STAT for life insurance companies defers and amortizes the gains and losses, caused by changes in interest rates, into income over the original life to maturity of the asset sold (the Interest Maintenance Reserve) while U.S. GAAP does not.
|
•
|
Goodwill arising from the acquisition of a business is tested for recoverability on an annual basis (or more frequently, as necessary) for U.S. GAAP, while under U.S. STAT goodwill is amortized over a period not to exceed 10 years and the amount of goodwill is limited.
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
Item 9B.
|
OTHER INFORMATION
|
Item 10.
|
DIRECTORS, AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE HARTFORD
|
|
|
Position with The Hartford and Business Experience
|
Name
|
Age
|
During the Past Five Years
|
Scott R. Lewis
|
51
|
Senior Vice President and Controller (May 2013-Present); Senior Vice President and Chief Financial Officer, Consumer Markets (2009-May 2013); Vice President, P&C Financial Reporting and Analysis (2003-2009)
|
Beth A. Bombara
|
46
|
Executive Vice President, President of Talcott Resolution (July 2012-Present); Senior Vice President and Controller (June 2007-July 2012); Vice President (2004-June 2007)
|
James E. Davey
|
49
|
Executive Vice President and President of The Hartford Mutual Funds (2010-Present); Executive Vice President, Retirement Division (2009-2010); Executive Vice President, Employer Markets Group (2008-2009); Senior Vice President, Retirement Plans (2006-2008)
|
Douglas Elliot
|
53
|
Executive Vice President and President of Commercial Markets (April 2011-Present); President and Chief Executive Officer, HSB Group (July 2007-March 2011); President and Chief Operating Officer, HSB Group (January 2007-June 2007); Senior Advisor, Aspen Insurance Holdings (2006); Chief Executive Officer of General Commercial and Personal Lines, St. Paul Travelers Companies (2004-2007)
|
Martha Gervasi
|
52
|
Executive Vice President, Human Resources (May 2012-present); Senior Vice President, Human Resources (November 2010-May 2012); General Manager Human Resources, SABIC Innovative Plastics & SABIC Americas (January 2010-October 2010); Global Human Resource Leader, SABIC Innovative Plastics (September 2007-January 2010)
|
Brion Johnson
|
54
|
Executive Vice President, Chief Investment Officer (May 2012-Present); Chief Financial Officer, Hartford Investment Management Company [1] (October 2011-May 2012); Managing Member, Shoreline Arts & Publishing, LLC (2009-2010); Executive Vice President, PPM America, Inc. (2001-2008)
|
Alan J. Kreczko
|
62
|
Executive Vice President and General Counsel (June 2007-Present); Senior Vice President and Deputy General Counsel (2002-June 2007)
|
André A. Napoli
|
49
|
Executive Vice President and President of Consumer Markets (August 2010-Present); Executive Vice President and Chief Administrative Officer, CUNA Mutual Group (July 2009-August 2010 ); Senior Vice President, Consumer Products, CUNA Mutual Group (August 2007-July 2009); Vice President, Standard Auto Product and Pricing, Nationwide (October 2006-August 2007); Vice President, Personal Lines Pricing and Research, Nationwide (July 2005-October 2006)
|
Robert Rupp
|
61
|
Executive Vice President and Chief Risk Officer (October 2011-Present); Executive Vice President, Head of Enterprise-Wide Market Risk, BONY Mellon (September 2008-October 2011); Managing Director, Risk Management, JP Morgan Chase (2004-2008)
|
Christopher J. Swift
|
53
|
Executive Vice President and Chief Financial Officer (March 2010-Present); Vice Chairman and CFO, American Life Insurance Company (March 2009-March 2010); Vice President and CFO, AIG’s Global Life Insurance and Retirement Services Division (July 2005-March 2009)
|
[1]
|
Denotes a subsidiary of The Hartford.
|
Item 11.
|
EXECUTIVE COMPENSATION
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
[1]
|
Of these shares, 5,476,032 shares remain available for purchase under the ESPP.
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Item 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
Item 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
(a)
|
Documents filed as a part of this report:
|
(1)
|
Consolidated Financial Statements.
See Index to Consolidated Financial Statements and Schedules elsewhere herein.
|
(2)
|
Consolidated Financial Statement Schedules.
See Index to Consolidated Financial Statement and Schedules elsewhere herein.
|
(3)
|
Exhibits.
See Exhibit Index elsewhere herein.
|
|
Page(s)
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
For the years ended December 31,
|
||||||||
(In millions, except for per share data)
|
2013
|
2012
|
2011
|
||||||
Revenues
|
|
|
|
||||||
Earned premiums
|
$
|
13,226
|
|
$
|
13,631
|
|
$
|
14,088
|
|
Fee income
|
2,805
|
|
4,386
|
|
4,700
|
|
|||
Net investment income:
|
|
|
|
||||||
Securities available-for-sale and other
|
3,362
|
|
4,227
|
|
4,263
|
|
|||
Equity securities, trading
|
6,061
|
|
4,364
|
|
(1,345
|
)
|
|||
Total net investment income
|
9,423
|
|
8,591
|
|
2,918
|
|
|||
Net realized capital gains (losses):
|
|
|
|
|
|
|
|||
Total other-than-temporary impairment (“OTTI”) losses
|
(93
|
)
|
(389
|
)
|
(263
|
)
|
|||
OTTI losses recognized in other comprehensive income (“OCI”)
|
20
|
|
40
|
|
89
|
|
|||
Net OTTI losses recognized in earnings
|
(73
|
)
|
(349
|
)
|
(174
|
)
|
|||
Net realized capital gains on business dispositions
|
1,575
|
|
—
|
|
—
|
|
|||
Net realized capital gains (losses), excluding net OTTI losses recognized in earnings
|
(995
|
)
|
(395
|
)
|
(52
|
)
|
|||
Total net realized capital gains (losses)
|
507
|
|
(744
|
)
|
(226
|
)
|
|||
Other revenues
|
275
|
|
258
|
|
253
|
|
|||
Total revenues
|
26,236
|
|
26,122
|
|
21,733
|
|
|||
Benefits, losses and expenses
|
|
|
|
|
|
|
|||
Benefits, losses and loss adjustment expenses
|
10,948
|
|
13,248
|
|
14,627
|
|
|||
Benefits, losses and loss adjustment expenses — returns credited on international variable annuities
|
6,060
|
|
4,363
|
|
(1,345
|
)
|
|||
Amortization of deferred policy acquisition costs and present value of future profits
|
2,701
|
|
1,988
|
|
2,444
|
|
|||
Insurance operating costs and other expenses
|
4,280
|
|
5,204
|
|
5,269
|
|
|||
Loss on extinguishment of debt
|
213
|
|
910
|
|
—
|
|
|||
Reinsurance loss on disposition, including reduction in goodwill of $156 and $342, respectively
|
1,574
|
|
533
|
|
—
|
|
|||
Interest expense
|
397
|
|
457
|
|
508
|
|
|||
Goodwill impairment
|
—
|
|
—
|
|
30
|
|
|||
Total benefits, losses and expenses
|
26,173
|
|
26,703
|
|
21,533
|
|
|||
Income (loss) from continuing operations before income taxes
|
63
|
|
(581
|
)
|
200
|
|
|||
Income tax expense (benefit)
|
(247
|
)
|
(481
|
)
|
(373
|
)
|
|||
Income (loss) from continuing operations, net of tax
|
310
|
|
(100
|
)
|
573
|
|
|||
Income (loss) from discontinued operations, net of tax
|
(134
|
)
|
62
|
|
139
|
|
|||
Net income (loss)
|
$
|
176
|
|
$
|
(38
|
)
|
$
|
712
|
|
Preferred stock dividends
|
10
|
|
42
|
|
42
|
|
|||
Net income (loss) available to common shareholders
|
166
|
|
(80
|
)
|
670
|
|
|||
Income from continuing operations, net of tax, available to common shareholders per common share
|
|
|
|
||||||
Basic
|
$
|
0.67
|
|
$
|
(0.32
|
)
|
$
|
1.19
|
|
Diluted
|
$
|
0.62
|
|
$
|
(0.32
|
)
|
$
|
1.11
|
|
Net income (loss) available to common shareholders per common share
|
|
|
|
||||||
Basic
|
$
|
0.37
|
|
$
|
(0.18
|
)
|
$
|
1.51
|
|
Diluted
|
$
|
0.34
|
|
$
|
(0.18
|
)
|
$
|
1.40
|
|
Cash dividends declared per common share
|
$
|
0.50
|
|
$
|
0.40
|
|
$
|
0.40
|
|
|
For the years ended December 31,
|
||||||||
(In millions)
|
2013
|
2012
|
2011
|
||||||
Comprehensive Income
|
|
|
|
||||||
Net income (loss)
|
$
|
176
|
|
$
|
(38
|
)
|
$
|
712
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|||
Change in net unrealized gain/loss on securities
|
(2,431
|
)
|
1,907
|
|
2,067
|
|
|||
Change in OTTI losses recognized in other comprehensive income
|
35
|
|
52
|
|
9
|
|
|||
Change in net gain/loss on cash-flow hedging instruments
|
(320
|
)
|
(88
|
)
|
131
|
|
|||
Change in foreign currency translation adjustments
|
(315
|
)
|
(168
|
)
|
107
|
|
|||
Change in pension and other postretirement plan adjustments
|
109
|
|
(111
|
)
|
(73
|
)
|
|||
Total other comprehensive income (loss)
|
(2,922
|
)
|
1,592
|
|
2,241
|
|
|||
Total comprehensive income (loss)
|
$
|
(2,746
|
)
|
$
|
1,554
|
|
$
|
2,953
|
|
|
As of December 31,
|
|||||
(In millions, except for share and per share data)
|
2013
|
2012
|
||||
Assets
|
|
|
||||
Investments:
|
|
|
||||
Fixed maturities, available-for-sale, at fair value (amortized cost of $60,641 and $79,747) (includes variable interest entity assets, at fair value, of $31 and $89)
|
$
|
62,357
|
|
$
|
85,922
|
|
Fixed maturities, at fair value using the fair value option (includes variable interest entity assets, at fair value, of $161 and $163)
|
844
|
|
1,087
|
|
||
Equity securities, trading, at fair value (cost of $14,504 and $26,820)
|
19,745
|
|
28,933
|
|
||
Equity securities, available-for-sale, at fair value (cost of $850 and $866)
|
868
|
|
890
|
|
||
Mortgage loans (net of allowances for loan losses of $67 and $68)
|
5,598
|
|
6,711
|
|
||
Policy loans, at outstanding balance
|
1,420
|
|
1,997
|
|
||
Limited partnerships and other alternative investments (includes variable interest entity assets of $4 and $6)
|
3,040
|
|
3,015
|
|
||
Other investments
|
521
|
|
1,114
|
|
||
Short-term investments (includes variable interest entity assets, at fair value, of $3 as of December 31, 2013)
|
4,008
|
|
4,581
|
|
||
Total investments
|
98,401
|
|
134,250
|
|
||
Cash
|
1,428
|
|
2,421
|
|
||
Premiums receivable and agents’ balances, net
|
3,465
|
|
3,542
|
|
||
Reinsurance recoverables, net
|
23,330
|
|
4,666
|
|
||
Deferred policy acquisition costs and present value of future profits
|
2,161
|
|
5,725
|
|
||
Deferred income taxes, net
|
3,840
|
|
1,942
|
|
||
Goodwill
|
498
|
|
654
|
|
||
Property and equipment, net
|
877
|
|
977
|
|
||
Other assets
|
2,998
|
|
2,767
|
|
||
Separate account assets
|
140,886
|
|
141,569
|
|
||
Total assets
|
$
|
277,884
|
|
$
|
298,513
|
|
Liabilities
|
|
|
|
|
||
Reserve for future policy benefits and unpaid losses and loss adjustment expenses
|
$
|
41,373
|
|
$
|
40,992
|
|
Other policyholder funds and benefits payable
|
39,029
|
|
41,979
|
|
||
Other policyholder funds and benefits payable — international variable annuities
|
19,734
|
|
28,922
|
|
||
Unearned premiums
|
5,225
|
|
5,145
|
|
||
Short-term debt
|
438
|
|
320
|
|
||
Long-term debt
|
6,106
|
|
6,806
|
|
||
Consumer notes
|
84
|
|
161
|
|
||
Other liabilities (includes variable interest entity liabilities of $33 and $89)
|
6,104
|
|
10,172
|
|
||
Separate account liabilities
|
140,886
|
|
141,569
|
|
||
Total liabilities
|
258,979
|
|
276,066
|
|
||
Commitments and Contingencies (Note 13)
|
|
|
|
|
||
Stockholders’ Equity
|
|
|
|
|
||
Preferred stock, $0.01 par value — 50,000,000 shares authorized, 575,000 shares issued as of December 31, 2012, liquidation preference $1,000 per share
|
—
|
|
556
|
|
||
Common stock, $0.01 par value — 1,500,000,000 shares authorized, 490,923,222 and 469,744,822 shares issued
|
5
|
|
5
|
|
||
Additional paid-in capital
|
9,894
|
|
10,038
|
|
||
Retained earnings
|
10,683
|
|
10,745
|
|
||
Treasury stock, at cost — 37,632,782 and 33,439,044 shares
|
(1,598
|
)
|
(1,740
|
)
|
||
Accumulated other comprehensive income (loss), net of tax
|
(79
|
)
|
2,843
|
|
||
Total stockholders’ equity
|
18,905
|
|
22,447
|
|
||
Total liabilities and stockholders’ equity
|
$
|
277,884
|
|
$
|
298,513
|
|
|
For the years ended December 31,
|
||||||||
(In millions, except for share data)
|
2013
|
2012
|
2011
|
||||||
Preferred Stock
|
|
|
|
||||||
Balance, beginning of period
|
$
|
556
|
|
$
|
556
|
|
$
|
556
|
|
Conversion of shares to common stock
|
(556
|
)
|
—
|
|
—
|
|
|||
Balance, end of period
|
—
|
|
556
|
|
556
|
|
|||
Common Stock
|
5
|
|
5
|
|
5
|
|
|||
Additional Paid-in Capital, beginning of period
|
10,038
|
|
10,391
|
|
10,448
|
|
|||
Repurchase of warrants
|
(33
|
)
|
(300
|
)
|
—
|
|
|||
Issuance of shares under incentive and stock compensation plans
|
(36
|
)
|
(52
|
)
|
(50
|
)
|
|||
Tax benefits (expense) on employee stock options and awards
|
3
|
|
(1
|
)
|
(7
|
)
|
|||
Conversion of mandatory convertible preferred stock
|
556
|
|
—
|
|
—
|
|
|||
Issuance of shares for warrant exercise
|
(634
|
)
|
—
|
|
—
|
|
|||
Additional Paid-in Capital, end of period
|
9,894
|
|
10,038
|
|
10,391
|
|
|||
Retained Earnings, beginning of period
|
10,745
|
|
11,001
|
|
10,509
|
|
|||
Net income (loss)
|
176
|
|
(38
|
)
|
712
|
|
|||
Dividends on preferred stock
|
(10
|
)
|
(42
|
)
|
(42
|
)
|
|||
Dividends declared on common stock
|
(228
|
)
|
(176
|
)
|
(178
|
)
|
|||
Retained Earnings, end of period
|
10,683
|
|
10,745
|
|
11,001
|
|
|||
Treasury Stock, at cost, beginning of period
|
(1,740
|
)
|
(1,718
|
)
|
(1,774
|
)
|
|||
Treasury stock acquired
|
(600
|
)
|
(149
|
)
|
(51
|
)
|
|||
Issuance of shares under incentive and stock compensation plans from treasury stock
|
125
|
|
134
|
|
115
|
|
|||
Return of shares under incentive and stock compensation plans to treasury stock
|
(17
|
)
|
(7
|
)
|
(8
|
)
|
|||
Issuance of shares for warrant exercise
|
634
|
|
—
|
|
—
|
|
|||
Treasury Stock, at cost, end of period
|
(1,598
|
)
|
(1,740
|
)
|
(1,718
|
)
|
|||
Accumulated Other Comprehensive Income (Loss), net of tax, beginning of period
|
2,843
|
|
1,251
|
|
(990
|
)
|
|||
Total other comprehensive income (loss)
|
(2,922
|
)
|
1,592
|
|
2,241
|
|
|||
Accumulated Other Comprehensive Income (Loss), net of tax, end of period
|
(79
|
)
|
2,843
|
|
1,251
|
|
|||
Total Stockholders’ Equity
|
$
|
18,905
|
|
$
|
22,447
|
|
$
|
21,486
|
|
Preferred Shares Outstanding (in thousands)
|
—
|
|
575
|
|
575
|
|
|||
Common Shares Outstanding, beginning of period (in thousands)
|
436,306
|
|
442,539
|
|
444,549
|
|
|||
Treasury stock acquired
|
(19,235
|
)
|
(8,045
|
)
|
(3,225
|
)
|
|||
Issuance of shares under incentive and stock compensation plans
|
2,136
|
|
2,156
|
|
1,476
|
|
|||
Return of shares under incentive and stock compensation plans and other to treasury stock
|
(592
|
)
|
(344
|
)
|
(261
|
)
|
|||
Conversion of mandatory convertible preferred shares
|
21,178
|
|
—
|
|
—
|
|
|||
Issuance of shares for warrant exercise
|
13,497
|
|
—
|
|
—
|
|
|||
Common Shares Outstanding, end of period
|
453,290
|
|
436,306
|
|
442,539
|
|
|
For the years ended December 31,
|
||||||||
(In millions)
|
2013
|
2012
|
2011
|
||||||
Operating Activities
|
|
|
|
||||||
Net income (loss)
|
176
|
|
$
|
(38
|
)
|
$
|
712
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
|
|
|
|||
Amortization of deferred policy acquisition costs and present value of future profits
|
2,701
|
|
1,988
|
|
2,444
|
|
|||
Additions to deferred policy acquisition costs and present value of future profits
|
(1,330
|
)
|
(1,639
|
)
|
(1,696
|
)
|
|||
Change in reserve for future policy benefits and unpaid losses and loss adjustment expenses and unearned premiums
|
(308
|
)
|
(226
|
)
|
1,451
|
|
|||
Change in reinsurance recoverables
|
(561
|
)
|
(351
|
)
|
(31
|
)
|
|||
Change in receivables and other assets
|
(409
|
)
|
(257
|
)
|
(211
|
)
|
|||
Change in payables and accruals
|
497
|
|
874
|
|
(491
|
)
|
|||
Change in accrued and deferred income taxes
|
(745
|
)
|
(386
|
)
|
(82
|
)
|
|||
Net realized capital (gains) losses
|
(828
|
)
|
711
|
|
24
|
|
|||
Net disbursements from investment contracts related to policyholder funds — international variable annuities
|
(9,189
|
)
|
(1,539
|
)
|
(2,332
|
)
|
|||
Net decrease in equity securities, trading
|
9,188
|
|
1,566
|
|
2,321
|
|
|||
Depreciation and amortization
|
189
|
|
467
|
|
668
|
|
|||
Goodwill impairment
|
—
|
|
—
|
|
30
|
|
|||
Loss on extinguishment of debt
|
213
|
|
910
|
|
—
|
|
|||
Reinsurance loss on disposition
|
1,574
|
|
533
|
|
—
|
|
|||
Other operating activities, net
|
69
|
|
68
|
|
(533
|
)
|
|||
Net cash provided by operating activities
|
1,237
|
|
2,681
|
|
2,274
|
|
|||
Investing Activities
|
|
|
|
|
|
|
|||
Proceeds from the sale/maturity/prepayment of:
|
|
|
|
|
|
|
|||
Fixed maturities, available-for-sale
|
40,266
|
|
42,716
|
|
38,260
|
|
|||
Fixed maturities, fair value option
|
322
|
|
283
|
|
37
|
|
|||
Equity securities, available-for-sale
|
274
|
|
295
|
|
239
|
|
|||
Mortgage loans
|
468
|
|
515
|
|
515
|
|
|||
Partnerships
|
368
|
|
208
|
|
237
|
|
|||
Payments for the purchase of:
|
|
|
|
|
|
|
|||
Fixed maturities, available-for-sale
|
(35,446
|
)
|
(42,578
|
)
|
(37,627
|
)
|
|||
Fixed maturities, fair value option
|
(150
|
)
|
(182
|
)
|
(664
|
)
|
|||
Equity securities, available-for-sale
|
(212
|
)
|
(144
|
)
|
(270
|
)
|
|||
Mortgage loans
|
(718
|
)
|
(1,483
|
)
|
(1,800
|
)
|
|||
Partnerships
|
(353
|
)
|
(903
|
)
|
(784
|
)
|
|||
Proceeds from business sold
|
815
|
|
58
|
|
278
|
|
|||
Derivatives, net
|
(2,208
|
)
|
(2,665
|
)
|
720
|
|
|||
Change in policy loans, net
|
(5
|
)
|
4
|
|
180
|
|
|||
Change in short-term investments, net
|
318
|
|
1,400
|
|
(346
|
)
|
|||
Other investing activities, net
|
6
|
|
(81
|
)
|
(157
|
)
|
|||
Net cash provided by (used for) investing activities
|
3,745
|
|
(2,557
|
)
|
(1,182
|
)
|
|||
Financing Activities
|
|
|
|
|
|
|
|||
Deposits and other additions to investment and universal life-type contracts
|
5,942
|
|
10,951
|
|
11,531
|
|
|||
Withdrawals and other deductions from investment and universal life-type contracts
|
(25,034
|
)
|
(25,543
|
)
|
(21,022
|
)
|
|||
Net transfers from separate accounts related to investment and universal life-type contracts
|
16,978
|
|
13,196
|
|
9,843
|
|
|||
Repayments at maturity or settlement of consumer notes
|
(77
|
)
|
(153
|
)
|
(68
|
)
|
|||
Net increase (decrease) in securities loaned or sold under agreements to repurchase
|
(1,988
|
)
|
1,988
|
|
—
|
|
|||
Repurchase of Warrants
|
(33
|
)
|
(300
|
)
|
—
|
|
|||
Repayment of long-term and short-term debt
|
(1,338
|
)
|
(2,133
|
)
|
(405
|
)
|
|||
Proceeds from the issuance of long-term and short-term debt
|
533
|
|
2,123
|
|
—
|
|
|||
Proceeds from net issuance of shares under incentive and stock compensation plans, excess tax benefit and other
|
20
|
|
14
|
|
10
|
|
|||
Treasury stock acquired
|
(600
|
)
|
(154
|
)
|
(46
|
)
|
|||
Dividends paid on preferred stock
|
(21
|
)
|
(42
|
)
|
(42
|
)
|
|||
Dividends paid on common stock
|
(202
|
)
|
(175
|
)
|
(153
|
)
|
|||
Changes in bank deposits and payments on bank advances
|
—
|
|
—
|
|
(257
|
)
|
|||
Net cash used for financing activities
|
(5,820
|
)
|
(228
|
)
|
(609
|
)
|
|||
Foreign exchange rate effect on cash
|
(155
|
)
|
(56
|
)
|
36
|
|
|||
Net increase (decrease) in cash
|
(993
|
)
|
(160
|
)
|
519
|
|
|||
Cash — beginning of period
|
2,421
|
|
2,581
|
|
2,062
|
|
|||
Cash — end of period
|
$
|
1,428
|
|
$
|
2,421
|
|
$
|
2,581
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|||
Income taxes paid (received)
|
$
|
69
|
|
$
|
(486
|
)
|
$
|
179
|
|
Interest paid
|
$
|
402
|
|
$
|
461
|
|
$
|
501
|
|
Supplemental Disclosure of Non-Cash Investing Activity
|
|
|
|
||||||
Conversion of fixed maturities, available-for-sale to equity securities, available-for-sale
|
$
|
—
|
|
$
|
67
|
|
$
|
—
|
|
|
|
As of December 31, 2012
|
||
|
Carrying Value
|
||
Total fixed maturities, AFS at fair value (amortized cost of $13,916) [1]
|
15,349
|
|
|
Equity securities, AFS, at fair value (cost of $35) [2]
|
37
|
|
|
Fixed maturities, at fair value using the FVO [3]
|
16
|
|
|
Mortgage loans (net of allowances for loan losses of $1)
|
1,364
|
|
|
Policy loans, at outstanding balance
|
582
|
|
|
Total invested assets transferred
|
$
|
17,348
|
|
|
For the years ended December 31,
|
||||||||
(In millions, except for per share data)
|
2013
|
2012
|
2011
|
||||||
Earnings
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
|
|
||||||
Income (loss) from continuing operations, net of tax
|
$
|
310
|
|
$
|
(100
|
)
|
$
|
573
|
|
Less: Preferred stock dividends
|
10
|
|
42
|
|
42
|
|
|||
Income (loss) from continuing operations, net of tax, available to common shareholders
|
300
|
|
(142
|
)
|
531
|
|
|||
Income (loss) from discontinued operations, net of tax
|
(134
|
)
|
62
|
|
139
|
|
|||
Net income (loss)
|
|
|
|
|
|
|
|||
Net income (loss)
|
176
|
|
(38
|
)
|
712
|
|
|||
Less: Preferred stock dividends
|
10
|
|
42
|
|
42
|
|
|||
Net income (loss) available to common shareholders
|
$
|
166
|
|
$
|
(80
|
)
|
$
|
670
|
|
Shares
|
|
|
|
|
|
|
|||
Weighted average common shares outstanding, basic
|
447.7
|
|
437.7
|
|
445.0
|
|
|||
Dilutive effect of warrants
|
32.2
|
|
—
|
|
31.9
|
|
|||
Dilutive effect of stock compensation plans
|
4.5
|
|
—
|
|
1.1
|
|
|||
Weighted average shares outstanding and dilutive potential common shares
|
484.4
|
|
437.7
|
|
478.0
|
|
|||
Earnings (loss) per common share
|
|
|
|
||||||
Basic
|
|
|
|
||||||
Income (loss) from continuing operations, net of tax, available to common shareholders
|
$
|
0.67
|
|
$
|
(0.32
|
)
|
$
|
1.19
|
|
Income (loss) from discontinued operations, net of tax
|
(0.30
|
)
|
0.14
|
|
0.32
|
|
|||
Net income (loss) available to common shareholders
|
$
|
0.37
|
|
$
|
(0.18
|
)
|
$
|
1.51
|
|
Diluted
|
|
|
|
|
|
|
|||
Income (loss) from continuing operations, net of tax, available to common shareholders
|
$
|
0.62
|
|
$
|
(0.32
|
)
|
$
|
1.11
|
|
Income (loss) from discontinued operations, net of tax
|
(0.28
|
)
|
0.14
|
|
0.29
|
|
|||
Net income (loss) available to common shareholders
|
$
|
0.34
|
|
$
|
(0.18
|
)
|
$
|
1.40
|
|
|
For the years ended December 31,
|
||||||||
Revenues
|
2013
|
2012
|
2011
|
||||||
Earned premiums, fees, and other considerations
|
|
|
|
||||||
Property & Casualty Commercial
|
|
|
|
||||||
Workers’ compensation
|
$
|
2,975
|
|
$
|
2,987
|
|
$
|
2,809
|
|
Property
|
521
|
|
505
|
|
528
|
|
|||
Automobile
|
579
|
|
587
|
|
583
|
|
|||
Package business
|
1,139
|
|
1,160
|
|
1,145
|
|
|||
Liability
|
566
|
|
562
|
|
540
|
|
|||
Fidelity and surety
|
201
|
|
205
|
|
215
|
|
|||
Professional liability
|
222
|
|
253
|
|
307
|
|
|||
Total Property & Casualty Commercial
|
6,203
|
|
6,259
|
|
6,127
|
|
|||
Consumer Markets
|
|
|
|
|
|
|
|||
Automobile
|
2,522
|
|
2,526
|
|
2,619
|
|
|||
Homeowners
|
1,138
|
|
1,110
|
|
1,128
|
|
|||
Total Consumer Markets [1]
|
3,660
|
|
3,636
|
|
3,747
|
|
|||
Property & Casualty Other Operations
|
1
|
|
(2
|
)
|
—
|
|
|||
Group Benefits
|
|
|
|
|
|
|
|||
Group disability
|
1,452
|
|
1,735
|
|
1,929
|
|
|||
Group life
|
1,717
|
|
1,881
|
|
2,024
|
|
|||
Other
|
161
|
|
194
|
|
194
|
|
|||
Total Group Benefits
|
3,330
|
|
3,810
|
|
4,147
|
|
|||
Mutual Funds
|
|
|
|
|
|
|
|||
Retail
|
526
|
|
487
|
|
541
|
|
|||
Annuity and other
|
152
|
|
112
|
|
108
|
|
|||
Total Mutual Funds
|
678
|
|
599
|
|
649
|
|
|||
Talcott Resolution
|
2,148
|
|
3,548
|
|
3,909
|
|
|||
Corporate
|
11
|
|
167
|
|
209
|
|
|||
Total earned premiums, fees, and other considerations
|
16,031
|
|
18,017
|
|
18,788
|
|
|||
Net investment income (loss):
|
|
|
|
|
|
|
|||
Securities available-for-sale and other
|
3,362
|
|
4,227
|
|
4,263
|
|
|||
Equity securities, trading
|
6,061
|
|
4,364
|
|
(1,345
|
)
|
|||
Total net investment income
|
9,423
|
|
8,591
|
|
2,918
|
|
|||
Net realized capital gains (losses)
|
507
|
|
(744
|
)
|
(226
|
)
|
|||
Other revenues
|
275
|
|
258
|
|
253
|
|
|||
Total revenues
|
$
|
26,236
|
|
$
|
26,122
|
|
$
|
21,733
|
|
Geographical Revenue Information
|
For the years ended December 31,
|
||||||||
Revenues
|
2013
|
2012
|
2011
|
||||||
United States of America
|
$
|
20,688
|
|
$
|
21,814
|
|
$
|
21,561
|
|
Japan
|
5,548
|
|
4,363
|
|
135
|
|
|||
Other
|
—
|
|
(55
|
)
|
37
|
|
|||
Total revenues
|
$
|
26,236
|
|
$
|
26,122
|
|
$
|
21,733
|
|
|
For the years ended December 31,
|
||||||||
Net income (loss)
|
2013
|
2012
|
2011
|
||||||
Property & Casualty Commercial
|
$
|
870
|
|
$
|
547
|
|
$
|
526
|
|
Consumer Markets
|
229
|
|
166
|
|
7
|
|
|||
Property & Casualty Other Operations
|
(2
|
)
|
57
|
|
(117
|
)
|
|||
Group Benefits
|
192
|
|
129
|
|
92
|
|
|||
Mutual Funds
|
76
|
|
71
|
|
98
|
|
|||
Talcott Resolution
|
(634
|
)
|
1
|
|
540
|
|
|||
Corporate
|
(555
|
)
|
(1,009
|
)
|
(434
|
)
|
|||
Net income (loss)
|
$
|
176
|
|
$
|
(38
|
)
|
$
|
712
|
|
|
For the years ended December 31,
|
||||||||
Amortization of deferred policy acquisition costs and present value of future profits
|
2013
|
2012
|
2011
|
||||||
Property & Casualty Commercial
|
$
|
905
|
|
$
|
927
|
|
$
|
917
|
|
Consumer Markets
|
332
|
|
332
|
|
337
|
|
|||
Group Benefits
|
33
|
|
33
|
|
35
|
|
|||
Mutual Funds
|
39
|
|
35
|
|
47
|
|
|||
Talcott Resolution
|
1,392
|
|
661
|
|
1,108
|
|
|||
Total amortization of deferred policy acquisition costs and present value of future profits
|
$
|
2,701
|
|
$
|
1,988
|
|
$
|
2,444
|
|
|
For the years ended December 31,
|
||||||||
Income tax expense (benefit)
|
2013
|
2012
|
2011
|
||||||
Property & Casualty Commercial
|
$
|
320
|
|
$
|
159
|
|
$
|
37
|
|
Consumer Markets
|
100
|
|
65
|
|
(22
|
)
|
|||
Property & Casualty Other Operations
|
(20
|
)
|
14
|
|
(74
|
)
|
|||
Group Benefits
|
63
|
|
31
|
|
1
|
|
|||
Mutual Funds
|
42
|
|
38
|
|
54
|
|
|||
Talcott Resolution
|
(500
|
)
|
(271
|
)
|
(168
|
)
|
|||
Corporate
|
(252
|
)
|
(517
|
)
|
(201
|
)
|
|||
Total income tax benefit
|
$
|
(247
|
)
|
$
|
(481
|
)
|
$
|
(373
|
)
|
|
As of December 31,
|
|||||
Assets
|
2013
|
2012
|
||||
Property & Casualty Commercial
|
$
|
27,119
|
|
$
|
25,595
|
|
Consumer Markets
|
5,873
|
|
6,024
|
|
||
Property & Casualty Other Operations
|
4,331
|
|
4,509
|
|
||
Group Benefits
|
8,882
|
|
9,545
|
|
||
Mutual Funds
|
307
|
|
325
|
|
||
Talcott Resolution
|
222,269
|
|
243,836
|
|
||
Corporate
|
9,103
|
|
8,679
|
|
||
Total assets
|
$
|
277,884
|
|
$
|
298,513
|
|
Level 1
|
Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 1 securities include highly liquid U.S. Treasuries, money market funds and exchange traded equity securities, open-ended mutual funds reported in separate account assets and exchange-traded derivative securities.
|
Level 2
|
Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Most fixed maturities and preferred stocks, including those reported in separate account assets, are model priced by vendors using observable inputs and are classified within Level 2. Also included are limited partnerships and other alternative assets measured at fair value w
here an investment can be redeemed, or substantially redeemed, at the NAV at the measurement date or in the near-term, not to exceed 90 days; as well as, derivative instruments.
|
Level 3
|
Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Level 3 securities include less liquid securities, guaranteed product embedded and reinsurance derivatives and other complex derivative securities, as well as limited partnerships and other alternative investments carried at fair value that cannot be redeemed in the near-term at the NAV. Because Level 3 fair values, by their nature, contain one or more significant unobservable inputs as there is little or no observable market for these assets and liabilities, considerable judgment is used to determine the Level 3 fair values. Level 3 fair values represent the Company’s best estimate of an amount that could be realized in a current market exchange absent actual market exchanges.
|
|
December 31, 2013
|
|||||||||||
|
Total
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
Significant
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets accounted for at fair value on a recurring basis
|
|
|
|
|
||||||||
Fixed maturities, AFS
|
|
|
|
|
||||||||
ABS
|
$
|
2,365
|
|
$
|
—
|
|
$
|
2,218
|
|
$
|
147
|
|
CDOs
|
2,387
|
|
—
|
|
1,723
|
|
664
|
|
||||
CMBS
|
4,446
|
|
—
|
|
3,783
|
|
663
|
|
||||
Corporate
|
28,490
|
|
—
|
|
27,216
|
|
1,274
|
|
||||
Foreign government/government agencies
|
4,104
|
|
—
|
|
4,039
|
|
65
|
|
||||
States, municipalities and political subdivisions (“Municipal”)
|
12,173
|
|
—
|
|
12,104
|
|
69
|
|
||||
RMBS
|
4,647
|
|
—
|
|
3,375
|
|
1,272
|
|
||||
U.S. Treasuries
|
3,745
|
|
1,311
|
|
2,434
|
|
—
|
|
||||
Total fixed maturities
|
62,357
|
|
1,311
|
|
56,892
|
|
4,154
|
|
||||
Fixed maturities, FVO
|
844
|
|
—
|
|
651
|
|
193
|
|
||||
Equity securities, trading
|
19,745
|
|
12
|
|
19,733
|
|
—
|
|
||||
Equity securities, AFS
|
868
|
|
454
|
|
337
|
|
77
|
|
||||
Derivative assets
|
|
|
|
|
||||||||
Credit derivatives
|
25
|
|
—
|
|
20
|
|
5
|
|
||||
Equity derivatives
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Foreign exchange derivatives
|
14
|
|
—
|
|
14
|
|
—
|
|
||||
Interest rate derivatives
|
(21
|
)
|
—
|
|
(63
|
)
|
42
|
|
||||
U.S. GMWB hedging instruments
|
26
|
|
—
|
|
(42
|
)
|
68
|
|
||||
U.S. macro hedge program
|
109
|
|
—
|
|
—
|
|
109
|
|
||||
International program hedging instruments
|
272
|
|
—
|
|
241
|
|
31
|
|
||||
Other derivative contracts
|
17
|
|
—
|
|
—
|
|
17
|
|
||||
Total derivative assets [1]
|
442
|
|
—
|
|
170
|
|
272
|
|
||||
Short-term investments
|
4,008
|
|
427
|
|
3,581
|
|
—
|
|
||||
Limited partnerships and other alternative investments [2]
|
921
|
|
—
|
|
813
|
|
108
|
|
||||
Reinsurance recoverable for U.S. GMWB
|
29
|
|
—
|
|
—
|
|
29
|
|
||||
Modified coinsurance reinsurance contracts
|
67
|
|
—
|
|
67
|
|
—
|
|
||||
Separate account assets [3]
|
138,495
|
|
99,930
|
|
37,828
|
|
737
|
|
||||
Total assets accounted for at fair value on a recurring basis
|
$
|
227,776
|
|
$
|
102,134
|
|
$
|
120,072
|
|
$
|
5,570
|
|
Percentage of level to total
|
100
|
%
|
45
|
%
|
53
|
%
|
2
|
%
|
||||
Liabilities accounted for at fair value on a recurring basis
|
|
|
|
|
|
|
|
|
||||
Other policyholder funds and benefits payable
|
|
|
|
|
|
|
|
|
||||
U.S guaranteed withdrawal benefits
|
$
|
(36
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
(36
|
)
|
International guaranteed withdrawal benefits
|
3
|
|
—
|
|
—
|
|
3
|
|
||||
International other guaranteed living benefits
|
3
|
|
—
|
|
—
|
|
3
|
|
||||
Equity linked notes
|
(18
|
)
|
—
|
|
—
|
|
(18
|
)
|
||||
Total other policyholder funds and benefits payable
|
(48
|
)
|
—
|
|
—
|
|
(48
|
)
|
||||
Derivative liabilities
|
|
|
|
|
|
|
|
|
||||
Credit derivatives
|
(12
|
)
|
—
|
|
(9
|
)
|
(3
|
)
|
||||
Equity derivatives
|
19
|
|
—
|
|
16
|
|
3
|
|
||||
Foreign exchange derivatives
|
(388
|
)
|
—
|
|
(388
|
)
|
—
|
|
||||
Interest rate derivatives
|
(582
|
)
|
—
|
|
(558
|
)
|
(24
|
)
|
||||
U.S. GMWB hedging instruments
|
15
|
|
—
|
|
(63
|
)
|
78
|
|
||||
U.S. macro hedge program
|
30
|
|
—
|
|
—
|
|
30
|
|
||||
International program hedging instruments
|
(305
|
)
|
—
|
|
(245
|
)
|
(60
|
)
|
||||
Total derivative liabilities [4]
|
(1,223
|
)
|
—
|
|
(1,247
|
)
|
24
|
|
||||
Consumer notes [5]
|
(2
|
)
|
—
|
|
—
|
|
(2
|
)
|
||||
Total liabilities accounted for at fair value on a recurring basis
|
$
|
(1,273
|
)
|
$
|
—
|
|
$
|
(1,247
|
)
|
$
|
(26
|
)
|
|
December 31, 2012
|
|||||||||||
|
Total
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
Significant
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets accounted for at fair value on a recurring basis
|
|
|
|
|
||||||||
Fixed maturities, AFS
|
|
|
|
|
||||||||
ABS
|
$
|
2,763
|
|
$
|
—
|
|
$
|
2,485
|
|
$
|
278
|
|
CDOs
|
3,040
|
|
—
|
|
2,096
|
|
944
|
|
||||
CMBS
|
6,321
|
|
—
|
|
5,462
|
|
859
|
|
||||
Corporate
|
44,049
|
|
—
|
|
42,048
|
|
2,001
|
|
||||
Foreign government/government agencies
|
4,136
|
|
—
|
|
4,080
|
|
56
|
|
||||
Municipal
|
14,361
|
|
—
|
|
14,134
|
|
227
|
|
||||
RMBS
|
7,480
|
|
—
|
|
6,107
|
|
1,373
|
|
||||
U.S. Treasuries
|
3,772
|
|
115
|
|
3,657
|
|
—
|
|
||||
Total fixed maturities
|
85,922
|
|
115
|
|
80,069
|
|
5,738
|
|
||||
Fixed maturities, FVO
|
1,087
|
|
8
|
|
865
|
|
214
|
|
||||
Equity securities, trading
|
28,933
|
|
1,847
|
|
27,086
|
|
—
|
|
||||
Equity securities, AFS
|
890
|
|
337
|
|
469
|
|
84
|
|
||||
Derivative assets
|
|
|
|
|
||||||||
Credit derivatives
|
(19
|
)
|
—
|
|
(8
|
)
|
(11
|
)
|
||||
Equity derivatives
|
32
|
|
—
|
|
—
|
|
32
|
|
||||
Foreign exchange derivatives
|
104
|
|
—
|
|
104
|
|
—
|
|
||||
Interest rate derivatives
|
235
|
|
—
|
|
268
|
|
(33
|
)
|
||||
U.S. GMWB hedging instruments
|
36
|
|
—
|
|
(53
|
)
|
89
|
|
||||
U.S. macro hedge program
|
186
|
|
—
|
|
—
|
|
186
|
|
||||
International program hedging instruments
|
448
|
|
—
|
|
318
|
|
130
|
|
||||
Other derivative contracts
|
23
|
|
—
|
|
—
|
|
23
|
|
||||
Total derivative assets [1]
|
1,045
|
|
—
|
|
629
|
|
416
|
|
||||
Short-term investments
|
4,581
|
|
342
|
|
4,239
|
|
—
|
|
||||
Limited partnerships and other alternative investments [2]
|
907
|
|
—
|
|
593
|
|
314
|
|
||||
Reinsurance recoverable for U.S. GMWB
|
191
|
|
—
|
|
—
|
|
191
|
|
||||
Separate account assets [3]
|
138,509
|
|
97,988
|
|
39,938
|
|
583
|
|
||||
Total assets accounted for at fair value on a recurring basis
|
$
|
262,065
|
|
$
|
100,637
|
|
$
|
153,888
|
|
$
|
7,540
|
|
Percentage of level to total
|
100
|
%
|
38
|
%
|
59
|
%
|
3
|
%
|
|
December 31, 2012
|
|||||||||||
|
Total
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Liabilities accounted for at fair value on a recurring basis
|
|
|
|
|
||||||||
Other policyholder funds and benefits payable
|
|
|
|
|
||||||||
U.S guaranteed withdrawal benefits
|
$
|
(1,249
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
(1,249
|
)
|
International guaranteed withdrawal benefits
|
(50
|
)
|
—
|
|
—
|
|
(50
|
)
|
||||
International other guaranteed living benefits
|
2
|
|
—
|
|
—
|
|
2
|
|
||||
Equity linked notes
|
(7
|
)
|
—
|
|
—
|
|
(7
|
)
|
||||
Total other policyholder funds and benefits payable
|
(1,304
|
)
|
—
|
|
—
|
|
(1,304
|
)
|
||||
Derivative liabilities
|
|
|
|
|
||||||||
Credit derivatives
|
(18
|
)
|
—
|
|
(33
|
)
|
15
|
|
||||
Equity derivatives
|
25
|
|
—
|
|
—
|
|
25
|
|
||||
Foreign exchange derivatives
|
(24
|
)
|
—
|
|
(24
|
)
|
—
|
|
||||
Interest rate derivatives
|
(517
|
)
|
—
|
|
(518
|
)
|
1
|
|
||||
U.S. GMWB hedging instruments
|
536
|
|
—
|
|
106
|
|
430
|
|
||||
U.S Macro hedge program
|
100
|
|
—
|
|
—
|
|
100
|
|
||||
International program hedging instruments
|
(279
|
)
|
—
|
|
(217
|
)
|
(62
|
)
|
||||
Total derivative liabilities [4]
|
(177
|
)
|
—
|
|
(686
|
)
|
509
|
|
||||
Other liabilities
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Consumer notes [5]
|
(2
|
)
|
—
|
|
—
|
|
(2
|
)
|
||||
Total liabilities accounted for at fair value on a recurring basis
|
$
|
(1,483
|
)
|
$
|
—
|
|
$
|
(686
|
)
|
$
|
(797
|
)
|
[1]
|
Includes OTC and OTC-cleared derivative instruments in a net asset value position after consideration of the impact of collateral posting requirements, which may be imposed by agreements, clearinghouse rules, and applicable law.
As of December 31, 2013
and
2012
,
$128
and
$160
, respectively, was netted against the derivative asset value in the Consolidated Balance Sheet and is excluded from the table above. See footnote 4 below for derivative liabilities.
|
[2]
|
Represents hedge funds where investment company accounting has been applied to a wholly-owned fund of funds measured at fair value.
|
[3]
|
Approximately
$2.4 billion
and
$3.1 billion
of investment sales receivable that are not subject to fair value accounting are excluded
as of December 31, 2013
and
2012
, respectively.
|
[4]
|
Includes OTC and OTC-cleared derivative instruments in a net negative market value position (derivative liability). In the Level 3 roll-forward table included below in this Note 5, the sum of the derivative asset and liability positions are referred to as “freestanding derivatives” and are presented on a net basis.
|
[5]
|
Represents embedded derivatives associated with non-funding agreement-backed consumer equity linked notes.
|
Level 2
|
The fair values of most of the Company’s Level 2 investments are determined by management after considering prices received from third party pricing services. These investments include most fixed maturities and preferred stocks, including those reported in separate account assets; as well as, certain limited partnerships and other alternative investments and derivative instruments.
|
•
|
ABS, CDOs, CMBS and RMBS
— Primary inputs also include monthly payment information, collateral performance, which varies by vintage year and includes delinquency rates, collateral valuation loss severity rates, collateral refinancing assumptions, credit default swap indices and, for ABS and RMBS, estimated prepayment rates.
|
•
|
Corporates, including investment grade private placements
— Primary inputs also include observations of credit default swap curves related to the issuer.
|
•
|
Foreign government/government agencies
- Primary inputs also include observations of credit default swap curves related to the issuer and political events in emerging markets.
|
•
|
Municipals
— Primary inputs also include Municipal Securities Rulemaking Board reported trades and material event notices, and issuer financial statements.
|
•
|
Short-term investments
— Primary inputs also include material event notices and new issue money market rates.
|
•
|
Equity securities, trading
— Consist of investments in mutual funds. Primary inputs include net asset values obtained from third party pricing services.
|
•
|
Credit derivatives — S
ignificant inputs primarily include the swap yield curve and credit curves.
|
•
|
Foreign exchange derivatives —
Significant inputs primarily include the swap yield curve, currency spot and forward rates, and cross currency basis curves.
|
•
|
Interest rate derivatives —
Significant input is primarily the swap yield curve.
|
•
|
Limited partnerships and other alternative investments —
Primary inputs include a NAV for investment companies with no redemption restrictions as reported on their U.S. GAAP financial statements.
|
Level 3
|
Most of the Company's securities classified as Level 3 include less liquid securities such as lower quality ABS, CMBS, commercial real estate ("CRE") CDOs and RMBS primarily backed by below-prime loans. Securities included in level 3 are primarily valued based on broker prices or broker spreads, without adjustments. Primary inputs for non-broker priced investments, including structured securities, are consistent with the typical inputs used in Level 2 measurements noted above, but are Level 3 due to their less liquid markets. Additionally, certain long-dated securities are priced based on third party pricing services, including municipal securities, foreign government/government agencies, bank loans and below investment grade private placement securities. Primary inputs for these long-dated securities are consistent with the typical inputs used in Level 1 and Level 2 measurements noted above, but include benchmark interest rate or credit spread assumptions that are not observable in the marketplace. Level 3 investments also include certain limited partnerships and other alternative investments measured at fair value where the Company does not have the ability to redeem the investment in the near-term at the NAV. Also included in Level 3 are certain derivative instruments that either have significant unobservable inputs or are valued based on broker quotations. Significant inputs for these derivative contracts primarily include the typical inputs used in the Level 1 and Level 2 measurements noted above, but also include equity and interest rate volatility and swap yield curves beyond observable limits.
|
|
As of December 31, 2013
|
||||||||
Securities
|
|
|
|
Unobservable Inputs
|
|
||||
Assets accounted for at fair value on a recurring basis
|
Fair
Value
|
Predominant
Valuation
Method
|
Significant Unobservable Input
|
Minimum
|
Maximum
|
Weighted Average [1]
|
Impact of
Increase in Input
on Fair Value [2]
|
||
CMBS
|
$
|
663
|
|
Discounted
cash flows |
Spread (encompasses prepayment, default risk and loss severity)
|
99 bps
|
3,000 bps
|
527 bps
|
Decrease
|
Corporate [3]
|
665
|
|
Discounted
cash flows |
Spread
|
119 bps
|
5,594 bps
|
344 bps
|
Decrease
|
|
Municipal [3]
|
29
|
|
Discounted
cash flows |
Spread
|
184 bps
|
184 bps
|
184 bps
|
Decrease
|
|
RMBS
|
1,272
|
|
Discounted
cash flows |
Spread
|
62 bps
|
1,748 bps
|
232 bps
|
Decrease
|
|
|
|
|
Constant prepayment rate
|
—%
|
10.0%
|
3.0%
|
Decrease [4]
|
||
|
|
|
Constant default rate
|
1.0%
|
22.0%
|
8.0%
|
Decrease
|
||
|
|
|
Loss severity
|
—%
|
100.0%
|
80.0%
|
Decrease
|
|
As of December 31, 2012
|
||||||||
Securities
|
|
|
|
Unobservable Inputs
|
|
||||
Assets accounted for at fair value on a recurring basis
|
Fair
Value
|
Predominant
Valuation
Method
|
Significant Unobservable Input
|
Minimum
|
Maximum
|
Weighted Average [1]
|
Impact of
Increase in Input
on Fair Value [2]
|
||
CMBS
|
$
|
859
|
|
Discounted
cash flows |
Spread (encompasses prepayment, default risk and loss severity)
|
320 bps
|
3,615 bps
|
1,031 bps
|
Decrease
|
Corporate [3]
|
1,371
|
|
Discounted
cash flows |
Spread
|
106 bps
|
900 bps
|
328 bps
|
Decrease
|
|
Municipal
|
227
|
|
Discounted
cash flows |
Spread
|
227 bps
|
344 bps
|
258 bps
|
Decrease
|
|
RMBS
|
1,373
|
|
Discounted
cash flows |
Spread
|
54 bps
|
1,689 bps
|
367 bps
|
Decrease
|
|
|
|
|
Constant prepayment rate
|
—%
|
12.0%
|
2.0%
|
Decrease [4]
|
||
|
|
|
Constant default rate
|
1.0%
|
24.0%
|
8.0%
|
Decrease
|
||
|
|
|
|
Loss severity
|
—%
|
100.0%
|
80.0%
|
Decrease
|
[1]
|
The weig
hted average is determined based on the fair value of the securities.
|
[2]
|
Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table above.
|
[3]
|
Level 3 corporate and municipal securities excludes those for which the Company bases fair value on broker quotations as discussed below.
|
[4]
|
Decrease for above market rate coupons and increase for below market rate coupons.
|
|
As of December 31, 2013
|
||||||||
Freestanding Derivatives
|
|
|
|
Unobservable Inputs
|
|
||||
|
Fair
Value
|
Predominant Valuation
Method
|
Significant
Unobservable Input
|
Minimum
|
Maximum
|
Impact of
Increase in Input
on Fair Value [1]
|
|||
Interest rate derivative
|
|
|
|
|
|
|
|||
Interest rate swaps
|
(24
|
)
|
Discounted
cash flows |
Swap curve beyond 30 years
|
4
|
%
|
4
|
%
|
Increase
|
Long interest rate swaptions
|
42
|
|
Option model
|
Interest rate volatility
|
1
|
%
|
1
|
%
|
Increase
|
U.S. GMWB hedging instruments
|
|
|
|
|
|
|
|||
Equity options
|
72
|
|
Option model
|
Equity volatility
|
21
|
%
|
29
|
%
|
Increase
|
Customized swaps
|
74
|
|
Discounted
cash flows |
Equity volatility
|
10
|
%
|
50
|
%
|
Increase
|
U.S. macro hedge program
|
|
|
|
|
|
|
|||
Equity options
|
139
|
|
Option model
|
Equity volatility
|
24
|
%
|
31
|
%
|
Increase
|
International program hedging [2]
|
|
|
|
|
|
|
|||
Equity options
|
(35
|
)
|
Option model
|
Equity volatility
|
24
|
%
|
37
|
%
|
Increase
|
Short interest rate swaptions
|
(13
|
)
|
Option model
|
Interest rate volatility
|
—
|
%
|
1
|
%
|
Decrease
|
Long interest rate swaptions
|
50
|
|
Option model
|
Interest rate volatility
|
1
|
%
|
1
|
%
|
Increase
|
|
As of December 31, 2012
|
|||||||||
Freestanding Derivatives
|
|
|
|
Unobservable Inputs
|
|
|||||
|
Fair
Value
|
Predominant Valuation
Method
|
Significant
Unobservable Input
|
Minimum
|
Maximum
|
Impact of
Increase in Input
on Fair Value [1]
|
||||
Equity derivatives
|
|
|
|
|
|
|
||||
Equity options
|
$
|
57
|
|
Option model
|
Equity volatility
|
13
|
%
|
24
|
%
|
Increase
|
Interest rate derivative
|
|
|
|
|
|
|
||||
Interest rate swaps
|
(55
|
)
|
Discounted
cash flows |
Swap curve beyond 30 years
|
2.8
|
%
|
2.8
|
%
|
Increase
|
|
Long interest rate swaptions
|
23
|
|
Option model
|
Interest rate volatility
|
—
|
%
|
1
|
%
|
Increase
|
|
U.S. GMWB hedging instruments
|
|
|
|
|
|
|
||||
Equity options
|
281
|
|
Option model
|
Equity volatility
|
10
|
%
|
31
|
%
|
Increase
|
|
Customized swaps
|
238
|
|
Discounted
cash flows |
Equity volatility
|
10
|
%
|
50
|
%
|
Increase
|
|
U.S. macro hedge program
|
|
|
|
|
|
|
||||
Equity options
|
286
|
|
Option model
|
Equity volatility
|
24
|
%
|
43
|
%
|
Increase
|
|
International program hedging
|
|
|
|
|
|
|
||||
Equity options
|
26
|
|
Option model
|
Equity volatility
|
19
|
%
|
27
|
%
|
Increase
|
|
Long interest rate swaptions
|
42
|
|
Option model
|
Interest rate volatility
|
—
|
%
|
1
|
%
|
Increase
|
[1]
|
Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table. Changes are based on long positions, unless otherwise noted. Changes in fair value will be inversely impacted for short positions.
|
[2]
|
Level 3 international program hedging instruments excludes those for which the Company bases fair value on broker quotations.
|
•
|
risk-free rates as represented by the euro dollar futures, LIBOR deposits and swap rates to derive forward curve rates;
|
•
|
market implied volatility assumptions for each underlying index based primarily on a blend of observed market “implied volatility” data;
|
•
|
correlations of historical returns across underlying well known market indices based on actual observed returns over the ten years preceding the valuation date; and
|
•
|
three years of history for fund indexes compared to separate account fund regression.
|
Significant Unobservable Input
|
Unobservable Inputs (Minimum)
|
Unobservable Inputs (Maximum)
|
Impact of Increase in Input
on Fair Value Measurement [1]
|
Withdrawal Utilization[2]
|
20%
|
100%
|
Increase
|
Withdrawal Rates [2]
|
—%
|
8%
|
Increase
|
Lapse Rates [3]
|
—%
|
75%
|
Decrease
|
Reset Elections [4]
|
20%
|
75%
|
Increase
|
Equity Volatility [5]
|
10%
|
50%
|
Increase
|
[1]
|
Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table.
|
[2]
|
Ranges represent assumed cumulative percentages of policyholders taking withdrawals and the annual amounts withdrawn.
|
[3]
|
Range represents assumed annual percentages of full surrender of the underlying variable annuity contracts across all policy durations for in force business.
|
[4]
|
Range represents assumed cumulative percentages of policyholders that would elect to reset their guaranteed benefit base.
|
[5]
|
Range represents implied market volatilities for equity indices based on multiple pricing sources.
|
|
Fixed Maturities, AFS
|
|
|||||||||||||||||||||||||
Assets
|
ABS
|
CDOs
|
CMBS
|
Corporate
|
Foreign
govt./govt.
agencies
|
Municipal
|
RMBS
|
Total Fixed
Maturities,
AFS
|
Fixed
Maturities,
FVO
|
||||||||||||||||||
Fair value as of January 1, 2013
|
$
|
278
|
|
$
|
944
|
|
$
|
859
|
|
$
|
2,001
|
|
$
|
56
|
|
$
|
227
|
|
$
|
1,373
|
|
$
|
5,738
|
|
$
|
214
|
|
Total realized/unrealized gains (losses)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Included in net income [1], [2], [6]
|
(9
|
)
|
22
|
|
(27
|
)
|
5
|
|
(2
|
)
|
2
|
|
38
|
|
29
|
|
59
|
|
|||||||||
Included in OCI [3]
|
31
|
|
138
|
|
115
|
|
(12
|
)
|
(9
|
)
|
(11
|
)
|
52
|
|
304
|
|
—
|
|
|||||||||
Purchases
|
96
|
|
92
|
|
50
|
|
180
|
|
45
|
|
21
|
|
371
|
|
855
|
|
19
|
|
|||||||||
Settlements
|
(8
|
)
|
(126
|
)
|
(142
|
)
|
(132
|
)
|
(4
|
)
|
—
|
|
(186
|
)
|
(598
|
)
|
(3
|
)
|
|||||||||
Sales
|
(139
|
)
|
(365
|
)
|
(208
|
)
|
(403
|
)
|
(15
|
)
|
(126
|
)
|
(375
|
)
|
(1,631
|
)
|
(94
|
)
|
|||||||||
Transfers into Level 3 [4]
|
3
|
|
32
|
|
65
|
|
149
|
|
—
|
|
—
|
|
—
|
|
249
|
|
2
|
|
|||||||||
Transfers out of Level 3 [4]
|
(105
|
)
|
(73
|
)
|
(49
|
)
|
(514
|
)
|
(6
|
)
|
(44
|
)
|
(1
|
)
|
(792
|
)
|
(4
|
)
|
|||||||||
Fair value as of December 31, 2013
|
$
|
147
|
|
$
|
664
|
|
$
|
663
|
|
$
|
1,274
|
|
$
|
65
|
|
$
|
69
|
|
$
|
1,272
|
|
$
|
4,154
|
|
$
|
193
|
|
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2013 [2] [7]
|
$
|
(7
|
)
|
$
|
—
|
|
$
|
(10
|
)
|
$
|
(9
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
(1
|
)
|
$
|
(27
|
)
|
$
|
43
|
|
|
|
Freestanding Derivatives [5]
|
|||||||||||||||||||||||||
Assets (Liabilities)
|
Equity
Securities,
AFS
|
Credit
|
Equity
|
Interest
Rate
|
U.S.
GMWB
Hedging
|
U.S.
Macro
Hedge
Program
|
Intl.
Program
Hedging
|
Other
Contracts
|
Total Free-
Standing
Derivatives [5]
|
||||||||||||||||||
Fair value as of January 1, 2013
|
$
|
84
|
|
$
|
4
|
|
$
|
57
|
|
$
|
(32
|
)
|
$
|
519
|
|
$
|
286
|
|
$
|
68
|
|
$
|
23
|
|
$
|
925
|
|
Total realized/unrealized gains (losses)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Included in net income [1], [2], [6]
|
(15
|
)
|
—
|
|
(37
|
)
|
24
|
|
(372
|
)
|
(191
|
)
|
(112
|
)
|
(6
|
)
|
(694
|
)
|
|||||||||
Included in OCI [3]
|
6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Purchases
|
14
|
|
—
|
|
—
|
|
(3
|
)
|
—
|
|
44
|
|
(38
|
)
|
—
|
|
3
|
|
|||||||||
Settlements
|
—
|
|
(2
|
)
|
(7
|
)
|
3
|
|
(4
|
)
|
—
|
|
(1
|
)
|
—
|
|
(11
|
)
|
|||||||||
Sales
|
(3
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Transfers into Level 3 [4]
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(8
|
)
|
—
|
|
(8
|
)
|
|||||||||
Transfers out of Level 3 [4]
|
(9
|
)
|
—
|
|
(10
|
)
|
26
|
|
3
|
|
—
|
|
62
|
|
—
|
|
81
|
|
|||||||||
Fair value as of December 31, 2013
|
$
|
77
|
|
$
|
2
|
|
$
|
3
|
|
$
|
18
|
|
$
|
146
|
|
$
|
139
|
|
$
|
(29
|
)
|
$
|
17
|
|
$
|
296
|
|
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2013 [2] [7]
|
$
|
(15
|
)
|
$
|
(1
|
)
|
$
|
(22
|
)
|
$
|
9
|
|
$
|
(390
|
)
|
$
|
(187
|
)
|
$
|
(382
|
)
|
$
|
(6
|
)
|
$
|
(979
|
)
|
Assets
|
Limited Partnerships and Other Alternative Investments
|
Reinsurance
Recoverable
for U.S. GMWB
|
Separate Accounts
|
||||||
Fair value as of January 1, 2013
|
$
|
314
|
|
$
|
191
|
|
$
|
583
|
|
Total realized/unrealized gains (losses)
|
|
|
|
||||||
Included in net income [1], [2], [6]
|
(18
|
)
|
(192
|
)
|
23
|
|
|||
Included in OCI [3]
|
—
|
|
—
|
|
—
|
|
|||
Purchases
|
135
|
|
—
|
|
250
|
|
|||
Settlements
|
—
|
|
30
|
|
(2
|
)
|
|||
Sales
|
(22
|
)
|
—
|
|
(88
|
)
|
|||
Transfers into Level 3 [4]
|
—
|
|
—
|
|
45
|
|
|||
Transfers out of Level 3 [4]
|
(301
|
)
|
—
|
|
(74
|
)
|
|||
Fair value as of December 31, 2013
|
$
|
108
|
|
$
|
29
|
|
$
|
737
|
|
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2013 [2] [7]
|
$
|
(18
|
)
|
$
|
(192
|
)
|
$
|
21
|
|
|
Other Policyholder Funds and Benefits Payable
|
|
||||||||||||||||
Liabilities
|
U.S.
Guaranteed
Withdrawal
Benefits
|
International
Guaranteed
Living
Benefits
|
International
Other Living
Benefits
|
Equity
Linked
Notes
|
Total Other
Policyholder
Funds and
Benefits
Payable
|
Consumer
Notes
|
||||||||||||
Fair value as of January 1, 2013
|
$
|
(1,249
|
)
|
$
|
(50
|
)
|
$
|
2
|
|
$
|
(7
|
)
|
$
|
(1,304
|
)
|
$
|
(2
|
)
|
Total realized/unrealized gains (losses)
|
|
|
|
|
|
|
||||||||||||
Included in net income [1], [2], [6]
|
1,306
|
|
13
|
|
3
|
|
(10
|
)
|
1,312
|
|
—
|
|
||||||
Included in OCI [3]
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Settlements
|
(93
|
)
|
40
|
|
(2
|
)
|
(1
|
)
|
(56
|
)
|
—
|
|
||||||
Fair value as of December 31, 2013
|
$
|
(36
|
)
|
$
|
3
|
|
$
|
3
|
|
$
|
(18
|
)
|
$
|
(48
|
)
|
$
|
(2
|
)
|
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2013 [2] [7]
|
$
|
1,306
|
|
$
|
13
|
|
$
|
3
|
|
$
|
(10
|
)
|
$
|
1,312
|
|
$
|
—
|
|
|
Fixed Maturities, AFS
|
|
|||||||||||||||||||||||||
Assets
|
ABS
|
CDOs
|
CMBS
|
Corporate
|
Foreign
govt./govt.
agencies
|
Municipal
|
RMBS
|
Total Fixed
Maturities,
AFS
|
Fixed
Maturities,
FVO
|
||||||||||||||||||
Fair value as of January 1, 2012
|
$
|
361
|
|
$
|
368
|
|
$
|
588
|
|
$
|
2,255
|
|
$
|
49
|
|
$
|
437
|
|
$
|
1,063
|
|
$
|
5,121
|
|
$
|
495
|
|
Total realized/unrealized gains (losses)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Included in net income [1], [2], [6]
|
(2
|
)
|
(20
|
)
|
(83
|
)
|
3
|
|
—
|
|
(5
|
)
|
(55
|
)
|
(162
|
)
|
109
|
|
|||||||||
Included in OCI [3]
|
49
|
|
163
|
|
152
|
|
(46
|
)
|
2
|
|
41
|
|
315
|
|
676
|
|
—
|
|
|||||||||
Purchases
|
36
|
|
—
|
|
21
|
|
264
|
|
23
|
|
293
|
|
446
|
|
1,083
|
|
1
|
|
|||||||||
Settlements
|
(63
|
)
|
(47
|
)
|
(160
|
)
|
(157
|
)
|
(4
|
)
|
—
|
|
(151
|
)
|
(582
|
)
|
(1
|
)
|
|||||||||
Sales
|
(37
|
)
|
(3
|
)
|
(210
|
)
|
(114
|
)
|
(19
|
)
|
(96
|
)
|
(207
|
)
|
(686
|
)
|
(391
|
)
|
|||||||||
Transfers into Level 3 [4]
|
13
|
|
483
|
|
666
|
|
775
|
|
5
|
|
25
|
|
1
|
|
1,968
|
|
1
|
|
|||||||||
Transfers out of Level 3 [4]
|
(79
|
)
|
—
|
|
(115
|
)
|
(979
|
)
|
—
|
|
(468
|
)
|
(39
|
)
|
(1,680
|
)
|
—
|
|
|||||||||
Fair value as of December 31, 2012
|
$
|
278
|
|
$
|
944
|
|
$
|
859
|
|
$
|
2,001
|
|
$
|
56
|
|
$
|
227
|
|
$
|
1,373
|
|
$
|
5,738
|
|
$
|
214
|
|
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2012 [2] [7]
|
$
|
(5
|
)
|
$
|
(12
|
)
|
$
|
(46
|
)
|
$
|
(7
|
)
|
$
|
—
|
|
$
|
(5
|
)
|
$
|
(12
|
)
|
$
|
(87
|
)
|
$
|
(4
|
)
|
|
|
Freestanding Derivatives [5]
|
|||||||||||||||||||||||||
Assets (Liabilities)
|
Equity
Securities,
AFS
|
Credit
|
Equity
|
Interest
Rate
|
U.S.
GMWB
Hedging
|
U.S.
Macro
Hedge
Program
|
Intl.
Program
Hedging
|
Other
Contracts
|
Total Free-
Standing
Derivatives [5]
|
||||||||||||||||||
Fair value as of January 1, 2012
|
$
|
93
|
|
$
|
(561
|
)
|
$
|
40
|
|
$
|
(58
|
)
|
$
|
883
|
|
$
|
357
|
|
$
|
35
|
|
$
|
28
|
|
$
|
724
|
|
Total realized/unrealized gains (losses)
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Included in net income [1], [2], [6]
|
8
|
|
195
|
|
(40
|
)
|
(9
|
)
|
(429
|
)
|
(323
|
)
|
(21
|
)
|
(5
|
)
|
(632
|
)
|
|||||||||
Included in OCI [3]
|
(5
|
)
|
—
|
|
—
|
|
2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
|||||||||
Purchases
|
21
|
|
—
|
|
76
|
|
1
|
|
55
|
|
252
|
|
(58
|
)
|
—
|
|
326
|
|
|||||||||
Settlements
|
—
|
|
371
|
|
(19
|
)
|
—
|
|
(13
|
)
|
—
|
|
104
|
|
—
|
|
443
|
|
|||||||||
Sales
|
(33
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Transfers into Level 3 [4]
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Transfers out of Level 3 [4]
|
—
|
|
(1
|
)
|
—
|
|
32
|
|
23
|
|
—
|
|
8
|
|
—
|
|
62
|
|
|||||||||
Fair value as of December 31, 2012
|
$
|
84
|
|
$
|
4
|
|
$
|
57
|
|
$
|
(32
|
)
|
$
|
519
|
|
$
|
286
|
|
$
|
68
|
|
$
|
23
|
|
$
|
925
|
|
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2012 [2] [7]
|
$
|
5
|
|
$
|
146
|
|
$
|
(15
|
)
|
$
|
(12
|
)
|
$
|
(425
|
)
|
$
|
(322
|
)
|
$
|
(5
|
)
|
$
|
(4
|
)
|
$
|
(637
|
)
|
Assets
|
Limited Partnerships and Other Alternative Investments
|
Reinsurance Recoverable
for U.S. GMWB
|
Separate Accounts
|
||||||
Fair value as of January 1, 2012
|
$
|
—
|
|
$
|
443
|
|
$
|
1,031
|
|
Total realized/unrealized gains (losses)
|
|
|
|
||||||
Included in net income [1], [2], [6]
|
(1
|
)
|
(280
|
)
|
37
|
|
|||
Included in OCI [3]
|
—
|
|
—
|
|
—
|
|
|||
Purchases
|
55
|
|
—
|
|
252
|
|
|||
Settlements
|
—
|
|
28
|
|
(1
|
)
|
|||
Sales
|
—
|
|
—
|
|
(476
|
)
|
|||
Transfers into Level 3 [4]
|
260
|
|
—
|
|
443
|
|
|||
Transfers out of Level 3 [4]
|
—
|
|
—
|
|
(703
|
)
|
|||
Fair value as of December 31, 2012
|
$
|
314
|
|
$
|
191
|
|
$
|
583
|
|
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2012 [2] [7]
|
$
|
(1
|
)
|
$
|
(280
|
)
|
$
|
28
|
|
|
Other Policyholder Funds and Benefits Payable
|
|
|
||||||||||||||||||
Liabilities
|
U.S.
Guaranteed
Withdrawal
Benefits
|
International
Guaranteed
Living
Benefits
|
International
Other Living
Benefits
|
Equity
Linked
Notes
|
Total Other
Policyholder
Funds and
Benefits
Payable
|
Other
Liabilities
|
Consumer
Notes
|
||||||||||||||
Fair value as of January 1, 2012
|
$
|
(2,538
|
)
|
$
|
(66
|
)
|
$
|
(5
|
)
|
$
|
(9
|
)
|
$
|
(2,618
|
)
|
$
|
(9
|
)
|
$
|
(4
|
)
|
Total realized/unrealized gains (losses)
|
|
|
|
|
|
|
|
||||||||||||||
Included in net income [1], [2], [6]
|
1,430
|
|
26
|
|
11
|
|
2
|
|
1,469
|
|
(34
|
)
|
2
|
|
|||||||
Included in OCI [3]
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Settlements [8]
|
(141
|
)
|
(10
|
)
|
(4
|
)
|
—
|
|
(155
|
)
|
43
|
|
—
|
|
|||||||
Fair value as of December 31, 2012
|
$
|
(1,249
|
)
|
$
|
(50
|
)
|
$
|
2
|
|
$
|
(7
|
)
|
$
|
(1,304
|
)
|
$
|
—
|
|
$
|
(2
|
)
|
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2012 [2] [7]
|
$
|
1,430
|
|
$
|
26
|
|
$
|
11
|
|
$
|
2
|
|
$
|
1,469
|
|
$
|
—
|
|
$
|
2
|
|
[1]
|
The Company classifies gains and losses on GMWB reinsurance derivatives and Guaranteed Living Benefit embedded derivatives as unrealized gains (losses) for purposes of disclosure in this table because it is impracticable to track on a contract-by-contract basis the realized gains (losses) for these derivatives and embedded derivatives.
|
[2]
|
All amounts in these rows are reported in net realized capital gains/losses. The realized/unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on net income for the Company. All amounts are before income taxes and amortization DAC.
|
[3]
|
All amounts are before income taxes and amortization of DAC.
|
[4]
|
Transfers in and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.
|
[5]
|
Derivative instruments are reported in this table on a net basis for asset/(liability) positions and reported in the Consolidated Balance Sheet in other investments and other liabilities.
|
[6]
|
Includes both market and non-market impacts in deriving realized and unrealized gains (losses).
|
[7]
|
Amounts presented are for Level 3 only and therefore may not agree to other disclosures included herein.
|
[8]
|
Settlements of other liabilities reflect the removal of liabilities carried at fair value upon the deconsolidation of a variable interest entity. See note 6, Investments and Derivative Instruments for additional information.
|
|
For the years ended December 31,
|
|||||
|
2013
|
2012
|
||||
Assets
|
|
|
||||
Fixed maturities, FVO
|
|
|
||||
Corporate
|
(13
|
)
|
13
|
|
||
CRE CDOs
|
11
|
|
63
|
|
||
CMBS bonds
|
—
|
|
(2
|
)
|
||
Foreign government
|
(115
|
)
|
(86
|
)
|
||
RMBS
|
—
|
|
5
|
|
||
Other liabilities
|
|
|
||||
Credit-linked notes
|
—
|
|
(34
|
)
|
||
Total realized capital gains (losses)
|
$
|
(117
|
)
|
$
|
(41
|
)
|
|
As of December 31,
|
|||||
|
2013
|
2012
|
||||
Assets
|
|
|
||||
Fixed maturities, FVO
|
|
|
||||
ABS
|
$
|
3
|
|
$
|
—
|
|
CRE CDOs
|
183
|
|
205
|
|
||
CMBS
|
8
|
|
5
|
|
||
Corporate
|
92
|
|
140
|
|
||
Foreign government
|
518
|
|
730
|
|
||
U.S. government
|
24
|
|
2
|
|
||
Municipals
|
1
|
|
1
|
|
||
RMBS
|
15
|
|
4
|
|
||
Total fixed maturities, FVO
|
$
|
844
|
|
$
|
1,087
|
|
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||
|
Fair Value
Hierarchy Level |
Carrying
Amount |
Fair
Value |
Carrying
Amount |
Fair
Value |
||||||||
Assets
|
|
|
|
|
|
||||||||
Policy loans
|
Level 3
|
$
|
1,420
|
|
$
|
1,480
|
|
$
|
1,997
|
|
$
|
2,165
|
|
Mortgage loans
|
Level 3
|
5,598
|
|
5,641
|
|
6,711
|
|
6,933
|
|
||||
Liabilities
|
|
|
|
|
|
||||||||
Other policyholder funds and benefits payable [1]
|
Level 3
|
$
|
9,152
|
|
$
|
9,352
|
|
$
|
9,558
|
|
$
|
9,910
|
|
Senior notes [2]
|
Level 2
|
5,206
|
|
5,845
|
|
5,706
|
|
7,071
|
|
||||
Junior subordinated debentures [2]
|
Level 2
|
1,100
|
|
1,271
|
|
1,100
|
|
1,265
|
|
||||
Revolving Credit Facility
|
Level 2
|
238
|
|
238
|
|
—
|
|
—
|
|
||||
Consumer notes [3]
|
Level 3
|
82
|
|
82
|
|
159
|
|
159
|
|
[1]
|
Excludes guarantees on variable annuities, group accident and health and universal life insurance contracts, including corporate owned life insurance.
|
[2]
|
Included in long-term debt in the Consolidated Balance Sheets, except for current maturities, which are included in short-term debt.
|
[3]
|
Excludes amounts carried at fair value and included in preceding disclosures.
|
•
|
Fair value for policy loans and consumer notes were estimated using discounted cash flow calculations using current interest rates adjusted for estimated loan durations.
|
•
|
Fair values for mortgage loans were estimated using discounted cash flow calculations based on current lending rates for similar type loans. Current lending rates reflect changes in credit spreads and the remaining terms of the loans.
|
•
|
Fair values for other policyholder funds and benefits payable, not carried at fair value, are estimated based on the cash surrender values of the underlying policies or by estimating future cash flows discounted at current interest rates adjusted for credit risk.
|
•
|
Fair values for senior notes and junior subordinated debentures are determined using the market approach based on reported trades, benchmark interest rates and issuer spread for the Company which may consider credit default swaps.
|
•
|
Fair values for private placement junior subordinated debentures are based primarily on market quotations from independent third party brokers.
|
|
For the years ended December 31,
|
||||||||
(Before-tax)
|
2013
|
2012
|
2011
|
||||||
Fixed maturities [1]
|
$
|
2,623
|
|
$
|
3,352
|
|
$
|
3,382
|
|
Equity securities, AFS
|
30
|
|
37
|
|
36
|
|
|||
Mortgage loans
|
262
|
|
337
|
|
281
|
|
|||
Policy loans
|
83
|
|
119
|
|
131
|
|
|||
Limited partnerships and other alternative investments
|
287
|
|
196
|
|
243
|
|
|||
Other investments [2]
|
200
|
|
297
|
|
305
|
|
|||
Investment expenses
|
(123
|
)
|
(111
|
)
|
(115
|
)
|
|||
Total securities AFS and other
|
3,362
|
|
4,227
|
|
4,263
|
|
|||
Equity securities, trading
|
6,061
|
|
4,364
|
|
(1,345
|
)
|
|||
Total net investment income (loss)
|
$
|
9,423
|
|
$
|
8,591
|
|
$
|
2,918
|
|
[1]
|
Includes net investment income on short-term investments.
|
[2]
|
Includes income from derivatives that hedge fixed maturities and qualify for hedge accounting.
|
|
For the years ended December 31,
|
||||||||
(Before-tax)
|
2013
|
2012
|
2011
|
||||||
Gross gains on sales [1]
|
$
|
2,387
|
|
$
|
821
|
|
$
|
687
|
|
Gross losses on sales
|
(692
|
)
|
(440
|
)
|
(384
|
)
|
|||
Net OTTI losses recognized in earnings [2]
|
(73
|
)
|
(349
|
)
|
(174
|
)
|
|||
Valuation allowances on mortgage loans
|
(1
|
)
|
14
|
|
24
|
|
|||
Japanese fixed annuity contract hedges, net [3]
|
6
|
|
(36
|
)
|
3
|
|
|||
Periodic net coupon settlements on credit derivatives/Japan
|
(7
|
)
|
(10
|
)
|
(10
|
)
|
|||
Results of variable annuity hedge program
|
|
|
|
|
|||||
GMWB derivatives, net
|
262
|
|
519
|
|
(397
|
)
|
|||
U.S. macro hedge program
|
(234
|
)
|
(340
|
)
|
(216
|
)
|
|||
Total U.S. program
|
28
|
|
179
|
|
(613
|
)
|
|||
International program [4]
|
(1,586
|
)
|
(1,467
|
)
|
691
|
|
|||
Total results of variable annuity hedge program
|
(1,558
|
)
|
(1,288
|
)
|
78
|
|
|||
Other, net [5]
|
445
|
|
544
|
|
(450
|
)
|
|||
Net realized capital gains (losses)
|
$
|
507
|
|
$
|
(744
|
)
|
$
|
(226
|
)
|
[1]
|
Includes
$1.5 billion
of gains relating to the sales of the Retirement Plans and Individual Life businesses in the year ended
December 31, 2013
.
|
[2]
|
Includes
$177
of intent-to-sell impairments relating to the Retirement Plans and Individual Life businesses sold for the year ended
December 31, 2012
.
|
[3]
|
Includes for the years ended
December 31, 2013
,
2012
, and
2011
, transactional foreign currency re-valuation related to the Japan fixed annuity product of
$324
,
$245
, and
$(129)
, respectively, as well as the change in value related to the derivative hedging instruments and the Japan government FVO securities of
$(318)
,
$(281)
, and
$132
, respectively.
|
[4]
|
Includes
$(57)
,
$(72)
, and
$0
of transactional foreign currency re-valuation for the years ended
December 31, 2013
,
2012
, and
2011
, respectively.
|
[5]
|
For the years ended
December 31, 2013
,
2012
, and
2011
, other, net gains and losses includes
$240
,
$273
and
($129)
, respec
tively, of transactional foreign currency re-valuation associated with the internal reinsurance of the Japan GMIB variable annuity business, which is offset in AOCI. Also includes for the years ended
December 31, 2013
,
2012
, and
2011
,
$248
,
$167
and
($101)
, respectively, of other transactional foreign currency re-valuation, primarily associated with the internal reinsurance of the Japan 3 wins variable annuity business, of which a portion is offset within realized gains and losses by the change in value of the associated hedging derivatives. Also includes
$71
and
$110
of gains relati
ng to the Retirement Plans and Individual Life businesses sold for the years ended
December 31, 2013
and
2012
, respectively, as well as changes in value of non-qualifying derivatives.
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Fixed maturities, AFS
|
|
|
|
||||||
Sale proceeds
|
$
|
39,225
|
|
$
|
41,442
|
|
$
|
36,956
|
|
Gross gains [1]
|
2,214
|
|
845
|
|
617
|
|
|||
Gross losses
|
(669
|
)
|
(416
|
)
|
(381
|
)
|
|||
Equity securities, AFS
|
|
|
|
||||||
Sale proceeds
|
$
|
274
|
|
$
|
295
|
|
$
|
239
|
|
Gross gains
|
96
|
|
34
|
|
59
|
|
|||
Gross losses
|
(6
|
)
|
(20
|
)
|
—
|
|
|
For the years ended December 31,
|
||||||||
(Before-tax)
|
2013
|
2012
|
2011
|
||||||
Balance as of beginning of period
|
$
|
(1,013
|
)
|
$
|
(1,676
|
)
|
$
|
(2,072
|
)
|
Additions for credit impairments recognized on [1]:
|
|
|
|
||||||
Securities not previously impaired
|
(19
|
)
|
(28
|
)
|
(56
|
)
|
|||
Securities previously impaired
|
(13
|
)
|
(20
|
)
|
(69
|
)
|
|||
Reductions for credit impairments previously recognized on:
|
|
|
|
||||||
Securities that matured or were sold during the period
|
469
|
|
700
|
|
505
|
|
|||
Securities the Company made the decision to sell or more likely than not will be required to sell
|
2
|
|
—
|
|
—
|
|
|||
Securities due to an increase in expected cash flows
|
22
|
|
11
|
|
16
|
|
|||
Balance as of end of period
|
$
|
(552
|
)
|
$
|
(1,013
|
)
|
$
|
(1,676
|
)
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||||||||||||||||
|
Cost or
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
Non-
Credit
OTTI [1]
|
Cost or
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
Non-
Credit
OTTI [1]
|
||||||||||||||||||||
ABS
|
$
|
2,404
|
|
$
|
25
|
|
$
|
(64
|
)
|
$
|
2,365
|
|
$
|
(2
|
)
|
$
|
2,883
|
|
$
|
63
|
|
$
|
(183
|
)
|
$
|
2,763
|
|
$
|
(4
|
)
|
CDOs [2]
|
2,340
|
|
108
|
|
(59
|
)
|
2,387
|
|
—
|
|
3,170
|
|
60
|
|
(159
|
)
|
3,040
|
|
(14
|
)
|
||||||||||
CMBS
|
4,288
|
|
216
|
|
(58
|
)
|
4,446
|
|
(6
|
)
|
6,083
|
|
417
|
|
(179
|
)
|
6,321
|
|
(11
|
)
|
||||||||||
Corporate
|
27,013
|
|
1,823
|
|
(346
|
)
|
28,490
|
|
(7
|
)
|
39,694
|
|
4,631
|
|
(276
|
)
|
44,049
|
|
(19
|
)
|
||||||||||
Foreign govt./govt. agencies
|
4,228
|
|
52
|
|
(176
|
)
|
4,104
|
|
—
|
|
3,985
|
|
191
|
|
(40
|
)
|
4,136
|
|
—
|
|
||||||||||
Municipal
|
11,932
|
|
425
|
|
(184
|
)
|
12,173
|
|
—
|
|
13,001
|
|
1,379
|
|
(19
|
)
|
14,361
|
|
—
|
|
||||||||||
RMBS
|
4,639
|
|
90
|
|
(82
|
)
|
4,647
|
|
(4
|
)
|
7,318
|
|
295
|
|
(133
|
)
|
7,480
|
|
(32
|
)
|
||||||||||
U.S. Treasuries
|
3,797
|
|
7
|
|
(59
|
)
|
3,745
|
|
—
|
|
3,613
|
|
175
|
|
(16
|
)
|
3,772
|
|
—
|
|
||||||||||
Total fixed maturities, AFS
|
60,641
|
|
2,746
|
|
(1,028
|
)
|
62,357
|
|
(19
|
)
|
79,747
|
|
7,211
|
|
(1,005
|
)
|
85,922
|
|
(80
|
)
|
||||||||||
Equity securities, AFS
|
850
|
|
67
|
|
(49
|
)
|
868
|
|
—
|
|
866
|
|
81
|
|
(57
|
)
|
890
|
|
—
|
|
||||||||||
Total AFS securities [3]
|
$
|
61,491
|
|
$
|
2,813
|
|
$
|
(1,077
|
)
|
$
|
63,225
|
|
$
|
(19
|
)
|
$
|
80,613
|
|
$
|
7,292
|
|
$
|
(1,062
|
)
|
$
|
86,812
|
|
$
|
(80
|
)
|
|
December 31, 2013
|
|||||
Contractual Maturity
|
Amortized Cost
|
Fair Value
|
||||
One year or less
|
$
|
2,195
|
|
$
|
2,228
|
|
Over one year through five years
|
11,930
|
|
12,470
|
|
||
Over five years through ten years
|
10,814
|
|
11,183
|
|
||
Over ten years
|
22,031
|
|
22,631
|
|
||
Subtotal
|
46,970
|
|
48,512
|
|
||
Mortgage-backed and asset-backed securities
|
13,671
|
|
13,845
|
|
||
Total fixed maturities, AFS
|
$
|
60,641
|
|
$
|
62,357
|
|
|
December 31, 2013
|
||||||||||||||||||||||||||
|
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||||
|
Amortized Cost
|
Fair Value
|
Unrealized Losses
|
Amortized Cost
|
Fair Value
|
Unrealized Losses
|
Amortized Cost
|
Fair Value
|
Unrealized Losses
|
||||||||||||||||||
ABS
|
$
|
893
|
|
$
|
888
|
|
$
|
(5
|
)
|
$
|
477
|
|
$
|
418
|
|
$
|
(59
|
)
|
$
|
1,370
|
|
$
|
1,306
|
|
$
|
(64
|
)
|
CDOs [1]
|
137
|
|
135
|
|
(2
|
)
|
1,933
|
|
1,874
|
|
(57
|
)
|
2,070
|
|
2,009
|
|
(59
|
)
|
|||||||||
CMBS
|
812
|
|
788
|
|
(24
|
)
|
610
|
|
576
|
|
(34
|
)
|
1,422
|
|
1,364
|
|
(58
|
)
|
|||||||||
Corporate
|
4,922
|
|
4,737
|
|
(185
|
)
|
1,225
|
|
1,064
|
|
(161
|
)
|
6,147
|
|
5,801
|
|
(346
|
)
|
|||||||||
Foreign govt./govt. agencies
|
2,961
|
|
2,868
|
|
(93
|
)
|
343
|
|
260
|
|
(83
|
)
|
3,304
|
|
3,128
|
|
(176
|
)
|
|||||||||
Municipal
|
3,150
|
|
2,994
|
|
(156
|
)
|
190
|
|
162
|
|
(28
|
)
|
3,340
|
|
3,156
|
|
(184
|
)
|
|||||||||
RMBS
|
2,046
|
|
2,008
|
|
(38
|
)
|
591
|
|
547
|
|
(44
|
)
|
2,637
|
|
2,555
|
|
(82
|
)
|
|||||||||
U.S. Treasuries
|
2,914
|
|
2,862
|
|
(52
|
)
|
33
|
|
26
|
|
(7
|
)
|
2,947
|
|
2,888
|
|
(59
|
)
|
|||||||||
Total fixed maturities, AFS
|
17,835
|
|
17,280
|
|
(555
|
)
|
5,402
|
|
4,927
|
|
(473
|
)
|
23,237
|
|
22,207
|
|
(1,028
|
)
|
|||||||||
Equity securities, AFS
|
196
|
|
188
|
|
(8
|
)
|
223
|
|
182
|
|
(41
|
)
|
419
|
|
370
|
|
(49
|
)
|
|||||||||
Total securities in an unrealized loss position
|
$
|
18,031
|
|
$
|
17,468
|
|
$
|
(563
|
)
|
$
|
5,625
|
|
$
|
5,109
|
|
$
|
(514
|
)
|
$
|
23,656
|
|
$
|
22,577
|
|
$
|
(1,077
|
)
|
|
December 31, 2012
|
||||||||||||||||||||||||||
|
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||||
|
Amortized Cost
|
Fair Value
|
Unrealized Losses
|
Amortized Cost
|
Fair Value
|
Unrealized Losses
|
Amortized Cost
|
Fair Value
|
Unrealized Losses
|
||||||||||||||||||
ABS
|
$
|
163
|
|
$
|
161
|
|
$
|
(2
|
)
|
$
|
886
|
|
$
|
705
|
|
$
|
(181
|
)
|
$
|
1,049
|
|
$
|
866
|
|
$
|
(183
|
)
|
CDOs [1]
|
5
|
|
4
|
|
(1
|
)
|
2,567
|
|
2,389
|
|
(158
|
)
|
2,572
|
|
2,393
|
|
(159
|
)
|
|||||||||
CMBS
|
339
|
|
322
|
|
(17
|
)
|
1,248
|
|
1,086
|
|
(162
|
)
|
1,587
|
|
1,408
|
|
(179
|
)
|
|||||||||
Corporate
|
1,261
|
|
1,218
|
|
(43
|
)
|
1,823
|
|
1,590
|
|
(233
|
)
|
3,084
|
|
2,808
|
|
(276
|
)
|
|||||||||
Foreign govt./govt. agencies
|
1,380
|
|
1,343
|
|
(37
|
)
|
20
|
|
17
|
|
(3
|
)
|
1,400
|
|
1,360
|
|
(40
|
)
|
|||||||||
Municipal
|
271
|
|
265
|
|
(6
|
)
|
157
|
|
144
|
|
(13
|
)
|
428
|
|
409
|
|
(19
|
)
|
|||||||||
RMBS
|
910
|
|
908
|
|
(2
|
)
|
869
|
|
738
|
|
(131
|
)
|
1,779
|
|
1,646
|
|
(133
|
)
|
|||||||||
U.S. Treasuries
|
583
|
|
567
|
|
(16
|
)
|
—
|
|
—
|
|
—
|
|
583
|
|
567
|
|
(16
|
)
|
|||||||||
Total fixed maturities, AFS
|
4,912
|
|
4,788
|
|
(124
|
)
|
7,570
|
|
6,669
|
|
(881
|
)
|
12,482
|
|
11,457
|
|
(1,005
|
)
|
|||||||||
Equity securities, AFS
|
69
|
|
67
|
|
(2
|
)
|
280
|
|
225
|
|
(55
|
)
|
349
|
|
292
|
|
(57
|
)
|
|||||||||
Total securities in an unrealized loss position
|
$
|
4,981
|
|
$
|
4,855
|
|
$
|
(126
|
)
|
$
|
7,850
|
|
$
|
6,894
|
|
$
|
(936
|
)
|
$
|
12,831
|
|
$
|
11,749
|
|
$
|
(1,062
|
)
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||||
|
Amortized Cost [1]
|
Valuation Allowance
|
Carrying Value
|
Amortized Cost [1]
|
Valuation Allowance
|
Carrying Value
|
||||||||||||
Total commercial mortgage loans [2]
|
$
|
5,665
|
|
$
|
(67
|
)
|
$
|
5,598
|
|
$
|
6,779
|
|
$
|
(68
|
)
|
$
|
6,711
|
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Balance as of January 1
|
$
|
(68
|
)
|
$
|
(102
|
)
|
$
|
(155
|
)
|
(Additions)/Reversals
|
(2
|
)
|
14
|
|
(26
|
)
|
|||
Deductions
|
3
|
|
20
|
|
79
|
|
|||
Balance as of December 31
|
$
|
(67
|
)
|
$
|
(68
|
)
|
$
|
(102
|
)
|
Commercial Mortgage Loans Credit Quality
|
||||||||
|
December 31, 2013
|
December 31, 2012
|
||||||
Loan-to-value
|
Carrying Value
|
Avg. Debt-Service Coverage Ratio
|
Carrying Value
|
Avg. Debt-Service Coverage Ratio
|
||||
Greater than 80%
|
$
|
101
|
|
0.99x
|
$
|
253
|
|
0.95x
|
65% - 80%
|
1,195
|
|
1.82x
|
2,220
|
|
2.12x
|
||
Less than 65%
|
4,302
|
|
2.53x
|
4,238
|
|
2.40x
|
||
Total commercial mortgage loans
|
$
|
5,598
|
|
2.34x
|
$
|
6,711
|
|
2.24x
|
Mortgage Loans by Region
|
||||||||||
|
December 31, 2013
|
December 31, 2012
|
||||||||
|
Carrying Value
|
Percent of Total
|
Carrying Value
|
Percent of Total
|
||||||
East North Central
|
$
|
187
|
|
3.3
|
%
|
$
|
145
|
|
2.2
|
%
|
Middle Atlantic
|
409
|
|
7.3
|
%
|
477
|
|
7.1
|
%
|
||
Mountain
|
104
|
|
1.9
|
%
|
99
|
|
1.5
|
%
|
||
New England
|
353
|
|
6.3
|
%
|
350
|
|
5.2
|
%
|
||
Pacific
|
1,587
|
|
28.3
|
%
|
1,978
|
|
29.5
|
%
|
||
South Atlantic
|
899
|
|
16.1
|
%
|
1,378
|
|
20.5
|
%
|
||
West North Central
|
47
|
|
0.8
|
%
|
16
|
|
0.2
|
%
|
||
West South Central
|
338
|
|
6.0
|
%
|
398
|
|
5.9
|
%
|
||
Other [1]
|
1,674
|
|
30.0
|
%
|
1,870
|
|
27.9
|
%
|
||
Total mortgage loans
|
$
|
5,598
|
|
100.0
|
%
|
$
|
6,711
|
|
100.0
|
%
|
Mortgage Loans by Property Type
|
|
|||||||||
|
December 31, 2013
|
December 31, 2012
|
||||||||
|
Carrying Value
|
Percent of Total
|
Carrying Value
|
Percent of Total
|
||||||
Commercial
|
|
|
|
|
||||||
Agricultural
|
$
|
125
|
|
2.2
|
%
|
$
|
142
|
|
2.1
|
%
|
Industrial
|
1,718
|
|
30.7
|
%
|
2,079
|
|
30.9
|
%
|
||
Lodging
|
27
|
|
0.5
|
%
|
81
|
|
1.2
|
%
|
||
Multifamily
|
1,155
|
|
20.6
|
%
|
1,200
|
|
17.9
|
%
|
||
Office
|
1,278
|
|
22.8
|
%
|
1,510
|
|
22.5
|
%
|
||
Retail
|
1,140
|
|
20.4
|
%
|
1,460
|
|
21.8
|
%
|
||
Other
|
155
|
|
2.8
|
%
|
239
|
|
3.6
|
%
|
||
Total mortgage loans
|
$
|
5,598
|
|
100.0
|
%
|
$
|
6,711
|
|
100.0
|
%
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||||
|
Total Assets
|
Total Liabilities [1]
|
Maximum Exposure to Loss [2]
|
Total Assets
|
Total Liabilities [1]
|
Maximum Exposure to Loss [2]
|
||||||||||||
CDOs [3]
|
$
|
31
|
|
$
|
33
|
|
$
|
—
|
|
$
|
89
|
|
$
|
88
|
|
$
|
7
|
|
Investment funds [4]
|
164
|
|
—
|
|
173
|
|
163
|
|
—
|
|
162
|
|
||||||
Limited partnerships
|
4
|
|
—
|
|
4
|
|
6
|
|
1
|
|
5
|
|
||||||
Total
|
$
|
199
|
|
$
|
33
|
|
$
|
177
|
|
$
|
258
|
|
$
|
89
|
|
$
|
174
|
|
|
Notional Amount
|
Fair Value
|
||||||||||
|
December 31,
2013 |
December 31,
2012 |
December 31,
2013 |
December 31,
2012 |
||||||||
Customized swaps
|
$
|
7,839
|
|
$
|
7,787
|
|
$
|
74
|
|
$
|
238
|
|
Equity swaps, options, and futures
|
4,237
|
|
5,130
|
|
44
|
|
267
|
|
||||
Interest rate swaps and futures
|
6,615
|
|
5,705
|
|
(77
|
)
|
67
|
|
||||
Total
|
$
|
18,691
|
|
$
|
18,622
|
|
$
|
41
|
|
$
|
572
|
|
|
Notional Amount
|
Fair Value
|
||||||||||
|
December 31,
2013 |
December 31,
2012 |
December 31,
2013 |
December 31,
2012 |
||||||||
Equity options and swaps
|
9,934
|
|
7,442
|
|
139
|
|
286
|
|
||||
Total
|
$
|
9,934
|
|
$
|
7,442
|
|
$
|
139
|
|
$
|
286
|
|
|
Notional Amount
|
Fair Value
|
||||||||||
|
December 31,
2013 |
December 31,
2012 |
December 31,
2013 |
December 31,
2012 |
||||||||
Credit derivatives
|
$
|
350
|
|
$
|
350
|
|
$
|
5
|
|
$
|
28
|
|
Currency forwards [1]
|
13,410
|
|
9,327
|
|
(60
|
)
|
(87
|
)
|
||||
Currency options
|
12,066
|
|
10,342
|
|
(54
|
)
|
(24
|
)
|
||||
Equity futures
|
999
|
|
2,332
|
|
—
|
|
—
|
|
||||
Equity options
|
3,051
|
|
3,952
|
|
(30
|
)
|
47
|
|
||||
Equity swaps
|
4,269
|
|
2,617
|
|
(119
|
)
|
(12
|
)
|
||||
Customized swaps
|
—
|
|
899
|
|
—
|
|
(11
|
)
|
||||
Interest rate futures
|
952
|
|
634
|
|
—
|
|
—
|
|
||||
Interest rate swaps and swaptions
|
37,951
|
|
32,632
|
|
225
|
|
228
|
|
||||
Total
|
$
|
73,048
|
|
$
|
63,085
|
|
$
|
(33
|
)
|
$
|
169
|
|
[1]
|
As of
December 31, 2013
and
2012
, net notional amounts are $
(1.8) billion
and $
0.1 billion
, respectively, which include $
5.8 billion
and $
4.7 billion
, respectively, related to long positions and $
7.6 billion
and $
4.6 billion
, respectively, related to short positions.
|
|
Net Derivatives
|
Asset Derivatives
|
Liability Derivatives
|
|||||||||||||||||||||
|
Notional Amount
|
Fair Value
|
Fair Value
|
Fair Value
|
||||||||||||||||||||
Hedge Designation/ Derivative Type
|
Dec 31, 2013
|
Dec 31, 2012
|
Dec 31, 2013
|
Dec 31, 2012
|
Dec 31, 2013
|
Dec 31, 2012
|
Dec 31, 2013
|
Dec 31, 2012
|
||||||||||||||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate swaps
|
$
|
5,026
|
|
$
|
6,063
|
|
$
|
(92
|
)
|
$
|
271
|
|
$
|
50
|
|
$
|
271
|
|
$
|
(142
|
)
|
$
|
—
|
|
Foreign currency swaps
|
143
|
|
163
|
|
(5
|
)
|
(17
|
)
|
2
|
|
3
|
|
(7
|
)
|
(20
|
)
|
||||||||
Total cash flow hedges
|
5,169
|
|
6,226
|
|
(97
|
)
|
254
|
|
52
|
|
274
|
|
(149
|
)
|
(20
|
)
|
||||||||
Fair value hedges
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate swaps
|
1,799
|
|
753
|
|
(24
|
)
|
(55
|
)
|
3
|
|
—
|
|
(27
|
)
|
(55
|
)
|
||||||||
Foreign currency swaps
|
—
|
|
40
|
|
—
|
|
16
|
|
—
|
|
16
|
|
—
|
|
—
|
|
||||||||
Total fair value hedges
|
1,799
|
|
793
|
|
(24
|
)
|
(39
|
)
|
3
|
|
16
|
|
(27
|
)
|
(55
|
)
|
||||||||
Non-qualifying strategies
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate contracts
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate swaps, caps, floors, and futures
|
8,453
|
|
17,117
|
|
(487
|
)
|
(497
|
)
|
171
|
|
556
|
|
(658
|
)
|
(1,053
|
)
|
||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency swaps and forwards
|
258
|
|
355
|
|
(9
|
)
|
(16
|
)
|
6
|
|
5
|
|
(15
|
)
|
(21
|
)
|
||||||||
Japan 3Win foreign currency swaps
|
1,571
|
|
1,816
|
|
(354
|
)
|
(127
|
)
|
—
|
|
—
|
|
(354
|
)
|
(127
|
)
|
||||||||
Japanese fixed annuity hedging instruments
|
1,436
|
|
1,652
|
|
(6
|
)
|
224
|
|
88
|
|
228
|
|
(94
|
)
|
(4
|
)
|
||||||||
Credit contracts
|
|
|
|
|
|
|
|
|
||||||||||||||||
Credit derivatives that purchase credit protection
|
938
|
|
1,823
|
|
(15
|
)
|
(8
|
)
|
1
|
|
5
|
|
(16
|
)
|
(13
|
)
|
||||||||
Credit derivatives that assume credit risk [1]
|
1,886
|
|
2,745
|
|
33
|
|
(29
|
)
|
36
|
|
19
|
|
(3
|
)
|
(48
|
)
|
||||||||
Credit derivatives in offsetting positions
|
7,764
|
|
9,497
|
|
(7
|
)
|
(32
|
)
|
76
|
|
94
|
|
(83
|
)
|
(126
|
)
|
||||||||
Equity contracts
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equity index swaps and options
|
358
|
|
994
|
|
(1
|
)
|
47
|
|
19
|
|
57
|
|
(20
|
)
|
(10
|
)
|
||||||||
Variable annuity hedge program
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. GMWB product derivative [2]
|
21,512
|
|
28,868
|
|
(36
|
)
|
(1,249
|
)
|
—
|
|
—
|
|
(36
|
)
|
(1,249
|
)
|
||||||||
U.S. GMWB reinsurance contracts
|
4,508
|
|
5,773
|
|
29
|
|
191
|
|
29
|
|
191
|
|
—
|
|
—
|
|
||||||||
U.S. GMWB hedging instruments
|
18,691
|
|
18,622
|
|
41
|
|
572
|
|
333
|
|
743
|
|
(292
|
)
|
(171
|
)
|
||||||||
U.S. macro hedge program
|
9,934
|
|
7,442
|
|
139
|
|
286
|
|
178
|
|
356
|
|
(39
|
)
|
(70
|
)
|
||||||||
International program product derivatives [2]
|
366
|
|
2,454
|
|
6
|
|
(48
|
)
|
6
|
|
—
|
|
—
|
|
(48
|
)
|
||||||||
International program hedging instruments
|
73,048
|
|
63,085
|
|
(33
|
)
|
169
|
|
866
|
|
1,020
|
|
(899
|
)
|
(851
|
)
|
||||||||
Other
|
|
|
|
|
|
|
|
|
||||||||||||||||
Contingent capital facility put option
|
500
|
|
500
|
|
17
|
|
23
|
|
17
|
|
23
|
|
—
|
|
—
|
|
||||||||
Modified coinsurance reinsurance contracts
|
1,250
|
|
—
|
|
67
|
|
—
|
|
67
|
|
—
|
|
—
|
|
—
|
|
||||||||
Total non-qualifying strategies
|
152,473
|
|
162,743
|
|
(616
|
)
|
(494
|
)
|
1,893
|
|
3,297
|
|
(2,509
|
)
|
(3,791
|
)
|
||||||||
Total cash flow hedges, fair value hedges, and non-qualifying strategies
|
$
|
159,441
|
|
$
|
169,762
|
|
$
|
(737
|
)
|
$
|
(279
|
)
|
$
|
1,948
|
|
$
|
3,587
|
|
$
|
(2,685
|
)
|
$
|
(3,866
|
)
|
Balance Sheet Location
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed maturities, available-for-sale
|
$
|
473
|
|
$
|
703
|
|
$
|
(2
|
)
|
$
|
(32
|
)
|
$
|
1
|
|
$
|
—
|
|
$
|
(3
|
)
|
$
|
(32
|
)
|
Other investments
|
53,219
|
|
54,504
|
|
442
|
|
1,045
|
|
909
|
|
1,581
|
|
(467
|
)
|
(536
|
)
|
||||||||
Other liabilities
|
78,055
|
|
77,384
|
|
(1,223
|
)
|
(177
|
)
|
936
|
|
1,815
|
|
(2,159
|
)
|
(1,992
|
)
|
||||||||
Consumer notes
|
9
|
|
26
|
|
(2
|
)
|
(2
|
)
|
—
|
|
—
|
|
(2
|
)
|
(2
|
)
|
||||||||
Reinsurance recoverables
|
5,758
|
|
5,773
|
|
96
|
|
191
|
|
96
|
|
191
|
|
—
|
|
—
|
|
||||||||
Other policyholder funds and benefits payable
|
21,927
|
|
31,372
|
|
(48
|
)
|
(1,304
|
)
|
6
|
|
—
|
|
(54
|
)
|
(1,304
|
)
|
||||||||
Total derivatives
|
$
|
159,441
|
|
$
|
169,762
|
|
$
|
(737
|
)
|
$
|
(279
|
)
|
$
|
1,948
|
|
$
|
3,587
|
|
$
|
(2,685
|
)
|
$
|
(3,866
|
)
|
•
|
The decrease in notional amount of non-qualifying interest rate contracts primarily resulted from the termination of interest rate swaptions purchased during the third quarter of 2012 designed to hedge the interest rate risk of the securities being transferred related to the sale of the Retirement Plan business segment.
|
•
|
The decrease in notional amount related to the U.S. GMWB product derivatives was primarily driven by product lapses and partial withdrawals.
|
•
|
The decrease in notional amount related to the international program product derivatives was due to the GWMB embedded derivative disposed of as part of the sale of HLIL. For additional information on the sale agreement, refer to Note 2 - Business Dispositions of Notes to Consolidated Financial Statements.
|
•
|
The increase in notional amount related to the international program hedging instruments resulted from the Company expanding its hedging program related to international product program guarantees in the first quarter of 2013.
|
•
|
The fair value associated with the international program hedging instruments decreased primarily due to an improvement in global equity markets and depreciation of the Japanese yen in relation to the euro and the U.S. dollar.
|
•
|
The fair value related to the Japanese fixed annuity hedging instruments and Japan 3Win foreign currency swaps decreased primarily due to a depreciation of the Japanese yen in relation to the U.S. dollar.
|
•
|
The fair value related to the cash flow hedging interest rate swaps decreased primarily due to an increase in U.S. interest rates.
|
•
|
The fair value associated with the U.S. macro hedge program decreased primarily due to an improvement in domestic equity markets, an increase in interest rates and a decline in equity volatility.
|
•
|
The increase in fair value related to the combined U.S. GMWB hedging program, which includes the U.S. GMWB product, reinsurance and hedging derivatives, was primarily driven by revaluing the liability for living benefits resulting from favorable policyholder behavior largely related to increased full surrenders and liability assumption updates for partial lapses and withdrawal rates.
|
|
(i)
|
|
(ii)
|
|
(iii) = (i) - (ii)
|
(iv)
|
|
(v) = (iii) - (iv)
|
|||||||||||||||
|
|
|
|
|
Net Amounts Presented in the Statement of Financial Position
|
|
Collateral Disallowed for Offset in the Statement of Financial Position
|
|
|
||||||||||||||
|
Gross Amounts of Recognized Assets
|
|
Gross Amounts Offset in the Statement of Financial Position
|
|
Derivative Assets [1]
|
|
Accrued Interest and Cash Collateral Received [2]
|
|
Financial Collateral Received [4]
|
|
Net Amount
|
||||||||||||
Description
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other investments
|
$
|
1,845
|
|
|
$
|
1,463
|
|
|
$
|
442
|
|
|
$
|
(60
|
)
|
|
$
|
242
|
|
|
$
|
140
|
|
|
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the Statement of Financial Position
|
|
Derivative Liabilities [3]
|
|
Accrued Interest and Cash Collateral Pledged [3]
|
|
Financial Collateral Pledged [4]
|
|
Net Amount
|
||||||||||||
Description
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other liabilities
|
$
|
(2,626
|
)
|
|
$
|
(1,496
|
)
|
|
$
|
(1,223
|
)
|
|
$
|
93
|
|
|
$
|
(1,204
|
)
|
|
$
|
74
|
|
|
(i)
|
|
(ii)
|
|
(iii) = (i) - (ii)
|
(iv)
|
|
(v) = (iii) - (iv)
|
|||||||||||||||
|
|
|
|
|
Net Amounts Presented in the Statement of Financial Position
|
|
Collateral Disallowed for Offset in the Statement of Financial Position
|
|
|
||||||||||||||
|
Gross Amounts of Recognized Assets
|
|
Gross Amounts Offset in the Statement of Financial Position
|
|
Derivative Assets [1]
|
|
Accrued Interest and Cash Collateral Received [2]
|
|
Financial Collateral Received [4]
|
|
Net Amount
|
||||||||||||
Description
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other investments
|
$
|
3,396
|
|
|
$
|
2,503
|
|
|
$
|
1,045
|
|
|
$
|
(152
|
)
|
|
$
|
759
|
|
|
$
|
134
|
|
|
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the Statement of Financial Position
|
|
Derivative Liabilities [3]
|
|
Accrued Interest and Cash Collateral Pledged [3]
|
|
Financial Collateral Pledged [4]
|
|
Net Amount
|
||||||||||||
Description
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other liabilities
|
$
|
(2,528
|
)
|
|
$
|
(1,895
|
)
|
|
$
|
(177
|
)
|
|
$
|
(456
|
)
|
|
$
|
(541
|
)
|
|
$
|
(92
|
)
|
[1]
|
Included in other investments in the Company's Consolidated Balance Sheets.
|
[2]
|
Included in other assets in the Company's Consolidated Balance Sheets and is limited to the net derivative receivable associated with each counterparty.
|
[3]
|
Included in other liabilities in the Company's Consolidated Balance Sheets and is limited to the net derivative payable associated with each counterparty.
|
[4]
|
Excludes collateral associated with exchange-traded derivatives instruments.
|
Derivatives in Cash Flow Hedging Relationships
|
||||||||||||||||||
|
Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
|
Net Realized Capital Gains(Losses) Recognized in Income on Derivative (Ineffective Portion)
|
||||||||||||||||
|
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
||||||||||||
Interest rate swaps
|
$
|
(315
|
)
|
$
|
120
|
|
$
|
337
|
|
$
|
(3
|
)
|
$
|
—
|
|
$
|
(4
|
)
|
Foreign currency swaps
|
12
|
|
(31
|
)
|
(3
|
)
|
—
|
|
—
|
|
—
|
|
||||||
Total
|
$
|
(303
|
)
|
$
|
89
|
|
$
|
334
|
|
$
|
(3
|
)
|
$
|
—
|
|
$
|
(4
|
)
|
Derivatives in Cash Flow Hedging Relationships
|
||||||||||
|
|
Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
|
||||||||
|
Location
|
2013
|
2012
|
2011
|
||||||
Interest rate swaps
|
Net realized capital gain/(loss)
|
$
|
91
|
|
$
|
90
|
|
$
|
9
|
|
Interest rate swaps
|
Net investment income
|
97
|
|
140
|
|
126
|
|
|||
Foreign currency swaps
|
Net realized capital gain/(loss)
|
4
|
|
(6
|
)
|
(3
|
)
|
|||
Total
|
|
$
|
192
|
|
$
|
224
|
|
$
|
132
|
|
Derivatives in Fair Value Hedging Relationships
|
||||||||||||||||||
|
Gain (Loss) Recognized in Income [1]
|
|||||||||||||||||
|
2013
|
2012
|
2011
|
|||||||||||||||
|
Derivative
|
Hedged Item
|
Derivative
|
Hedged Item
|
Derivative
|
Hedged Item
|
||||||||||||
Interest rate swaps
|
|
|
|
|
|
|
||||||||||||
Net realized capital gains (losses)
|
$
|
32
|
|
$
|
(30
|
)
|
$
|
(3
|
)
|
$
|
(3
|
)
|
$
|
(73
|
)
|
$
|
70
|
|
Benefits, losses and loss adjustment expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
||||||
Foreign currency swaps
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net realized capital gains (losses)
|
1
|
|
(1
|
)
|
(7
|
)
|
7
|
|
(1
|
)
|
1
|
|
||||||
Benefits, losses and loss adjustment expenses
|
(2
|
)
|
2
|
|
(6
|
)
|
6
|
|
(22
|
)
|
22
|
|
||||||
Total
|
$
|
31
|
|
$
|
(29
|
)
|
$
|
(16
|
)
|
$
|
10
|
|
$
|
(97
|
)
|
$
|
93
|
|
[1]
|
The amounts presented do not include the periodic net coupon settlements of the derivative or the coupon income (expense) related to the hedged item. The net of the amounts presented represents the ineffective portion of the hedge.
|
Non-qualifying Strategies
|
|||||||||
Gain (Loss) Recognized within Net Realized Capital Gains (Losses)
|
|||||||||
|
December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Interest rate contracts
|
|
|
|
||||||
Interest rate swaps, caps, floors, and forwards
|
$
|
54
|
|
$
|
21
|
|
$
|
(22
|
)
|
Foreign exchange contracts
|
|
|
|
||||||
Foreign currency swaps and forwards
|
2
|
|
19
|
|
3
|
|
|||
Japan 3Win foreign currency swaps [1]
|
(268
|
)
|
(300
|
)
|
31
|
|
|||
Japanese fixed annuity hedging instruments [2]
|
(207
|
)
|
(178
|
)
|
109
|
|
|||
Credit contracts
|
|
|
|
||||||
Credit derivatives that purchase credit protection
|
(38
|
)
|
(64
|
)
|
(10
|
)
|
|||
Credit derivatives that assume credit risk
|
72
|
|
293
|
|
(174
|
)
|
|||
Equity contracts
|
|
|
|
||||||
Equity index swaps and options
|
(33
|
)
|
(39
|
)
|
(89
|
)
|
|||
Variable annuity hedge program
|
|
|
|
||||||
U.S. GMWB product derivative
|
1,306
|
|
1,430
|
|
(780
|
)
|
|||
U.S. GMWB reinsurance contracts
|
(192
|
)
|
(280
|
)
|
131
|
|
|||
U.S. GMWB hedging instruments
|
(852
|
)
|
(631
|
)
|
252
|
|
|||
U.S. macro hedge program
|
(234
|
)
|
(340
|
)
|
(216
|
)
|
|||
International program product derivatives
|
16
|
|
42
|
|
(13
|
)
|
|||
International program hedging instruments
|
(1,602
|
)
|
(1,509
|
)
|
704
|
|
|||
Other
|
|
|
|
||||||
Contingent capital facility put option
|
(7
|
)
|
(6
|
)
|
(5
|
)
|
|||
Modified coinsurance reinsurance contracts
|
67
|
|
—
|
|
—
|
|
|||
Total [3]
|
$
|
(1,916
|
)
|
$
|
(1,542
|
)
|
$
|
(79
|
)
|
[1]
|
The associated liability is adjusted for changes in spot rates through realized capital gains and was
$250
,
$189
and
$(100)
for the years ended
December 31, 2013
,
2012
and
2011
, respectively.
|
[2]
|
The associated liability is adjusted for changes in spot rates through realized capital gains and losses and was
$324
,
$245
and
$(129)
for the years ended
December 31, 2013
,
2012
and
2011
, respectively.
|
[3]
|
Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 5 - Fair Value Measurements.
|
•
|
The net loss associated with the international program hedging instruments was primarily driven by an improvement in global equity markets and depreciation of the Japanese yen in relation to the euro and the U.S. dollar.
|
•
|
The net loss related to the Japan 3Win foreign currency swaps and Japanese fixed annuity hedging instruments was primarily due to the depreciation of the Japanese yen in relation to the U.S. dollar.
|
•
|
The net gain related to the combined GMWB hedging program, which includes the GMWB product, reinsurance, and hedging derivatives, was primarily driven by revaluing the liability for living benefits resulting from favorable policyholder behavior largely related to increased full surrenders and liability assumption updates for partial lapses and withdrawal rates.
|
•
|
The net loss on the U.S. macro hedge program was primarily due to an improvement in domestic equity markets, an increase in interest rates and a decline in equity volatility.
|
•
|
The net loss associated with the international program hedging instruments was primarily driven by an improvement in global equity markets and depreciation of the Japanese yen in relation to the euro and the U.S. dollar.
|
•
|
The net gain related to the combined GMWB hedging program, which includes the GMWB product, reinsurance, and hedging derivatives, was primarily driven by liability model assumption updates largely related to a reduction in the reset assumptions to better align with actual experience, outperformance of underlying actively managed funds compared to their respective indices, and lower equity volatility.
|
•
|
The net loss on the U.S. macro hedge program was primarily due to the passage of time, an improvement in domestic equity markets, and a decrease in equity volatility.
|
•
|
The net loss related to the Japan 3Win foreign currency swaps and Japanese fixed annuity hedging instruments was primarily due to the depreciation of the Japanese yen in relation to the U.S. dollar, the strengthening of the currency basis swap spread between the U.S. dollar and the Japanese yen, and a decline in U.S. interest rates.
|
•
|
The gain on credit derivatives that assume credit risk as a part of replication transactions resulted from credit spread tightening.
|
•
|
The net gain associated with the international program hedging instruments was primarily driven by strengthening of the Japanese yen, a decline in global equity markets, and a decrease in interest rates.
|
•
|
The loss related to the combined GMWB hedging program, which includes the GMWB product, reinsurance, and hedging derivatives, was primarily a result of a decrease in long-term interest rates and higher interest rate volatility.
|
•
|
The net loss on the U.S. macro hedge program was primarily driven by time decay and a decrease in equity market volatility since the purchase date of certain options during the fourth quarter.
|
•
|
The loss on credit derivatives that assume credit risk as a part of replication transactions resulted from credit spread widening.
|
As of December 31, 2013
|
|||||||||||||||
|
|
|
|
Underlying Referenced Credit Obligation(s) [1]
|
|
|
|||||||||
Credit Derivative type by derivative risk exposure
|
Notional Amount [2]
|
Fair Value
|
Weighted Average Years to Maturity
|
Type
|
Average Credit Rating
|
Offsetting Notional Amount [3]
|
Offsetting Fair Value [3]
|
||||||||
Single name credit default swaps
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment grade risk exposure
|
$
|
1,259
|
|
$
|
8
|
|
1 year
|
Corporate Credit/
Foreign Gov. |
A
|
$
|
1,066
|
|
$
|
(9
|
)
|
Below investment grade risk exposure
|
24
|
|
—
|
|
1 year
|
Corporate Credit
|
CCC
|
24
|
|
(1
|
)
|
||||
Basket credit default swaps [4]
|
|
|
|
|
|
|
|
||||||||
Investment grade risk exposure
|
3,447
|
|
50
|
|
3 years
|
Corporate Credit
|
BBB
|
2,270
|
|
(35
|
)
|
||||
Below grade risk exposure
|
166
|
|
15
|
|
5 years
|
Corporate Credit
|
BB-
|
—
|
|
—
|
|
||||
Investment grade risk exposure
|
327
|
|
(7
|
)
|
3 years
|
CMBS Credit
|
A
|
327
|
|
7
|
|
||||
Below investment grade risk exposure
|
195
|
|
(31
|
)
|
3 years
|
CMBS Credit
|
B-
|
195
|
|
31
|
|
||||
Embedded credit derivatives
|
|
|
|
|
|
|
|
||||||||
Investment grade risk exposure
|
350
|
|
339
|
|
3 years
|
Corporate Credit
|
BBB+
|
—
|
|
—
|
|
||||
Total [5]
|
$
|
5,768
|
|
$
|
374
|
|
|
|
|
$
|
3,882
|
|
$
|
(7
|
)
|
December 31, 2012
|
|||||||||||||||
|
|
|
|
Unifying Refernced Credit Obligation(s) [1]
|
|
|
|
||||||||
Credit Derivative type by derivative risk exposure
|
Notional Amount [2]
|
Fair Value
|
Weighted Average Years to Maturity
|
Type
|
Average Credit Rating
|
Offsetting Notional Amount [3]
|
Offsetting Fair Value [3]
|
||||||||
Single name credit default swaps
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment grade risk exposure
|
$
|
2,321
|
|
$
|
7
|
|
3 years
|
Corporate Credit/
Foreign Gov. |
A
|
$
|
1,367
|
|
$
|
(26
|
)
|
Below investment grade risk exposure
|
145
|
|
(1
|
)
|
1 year
|
Corporate Credit
|
B+
|
145
|
|
(3
|
)
|
||||
Basket credit default swaps [4]
|
|
|
|
|
|
|
|
||||||||
Investment grade risk exposure
|
3,978
|
|
7
|
|
3 years
|
Corporate Credit
|
BBB+
|
2,712
|
|
(13
|
)
|
||||
Investment grade risk exposure
|
330
|
|
(17
|
)
|
4 years
|
CMBS Credit
|
A
|
330
|
|
17
|
|
||||
Below investment grade risk exposure
|
195
|
|
(46
|
)
|
4 years
|
CMBS Credit
|
B+
|
195
|
|
46
|
|
||||
Embedded credit derivatives
|
|
|
|
|
|
|
|
||||||||
Investment grade risk exposure
|
525
|
|
478
|
|
4 years
|
Corporate Credit
|
BBB-
|
—
|
|
—
|
|
||||
Total [5]
|
$
|
7,494
|
|
$
|
428
|
|
|
|
|
$
|
4,749
|
|
$
|
21
|
|
[1]
|
The average credit ratings are based on availability and the midpoint of the applicable ratings among Moody’s, S&P, and Fitch. If no rating is available from a rating agency, then an internally developed rating is used.
|
[2]
|
Notional amount is equal to the maximum potential future loss amount. These derivatives are governed by agreements and clearing house rules and applicable law which include collateral posting requirements. There is no additional specific collateral related to these contracts or recourse provisions included in the contracts to offset losses.
|
[3]
|
The Company has entered into offsetting credit default swaps to terminate certain existing credit default swaps, thereby offsetting the future changes in value of, or losses paid related to, the original swap.
|
[4]
|
Includes $
4.1 billion
and $
4.5 billion
as of
December 31, 2013
and
2012
, respectively, of standard market indices of diversified portfolios of corporate issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index.
|
[5]
|
Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 5 - Fair Value Measurements.
|
|
As of December 31,
|
|||||
|
2013
|
2012
|
||||
Property and Casualty Insurance Products:
|
|
|
||||
Paid loss and loss adjustment expenses
|
$
|
138
|
|
$
|
170
|
|
Unpaid loss and loss adjustment expenses
|
2,841
|
|
2,852
|
|
||
Gross reinsurance recoverable
|
2,979
|
|
3,022
|
|
||
Allowance for uncollectible reinsurance
|
(244
|
)
|
(268
|
)
|
||
Net reinsurance recoverables
|
$
|
2,735
|
|
$
|
2,754
|
|
Life Insurance Products:
|
|
|
||||
Future policy benefits and unpaid loss and loss adjustment expenses:
|
|
|
||||
Sold businesses (MassMutual and Prudential)
|
$
|
19,374
|
|
$
|
—
|
|
Other reinsurers
|
1,221
|
|
1,912
|
|
||
Net reinsurance recoverables
|
$
|
20,595
|
|
$
|
1,912
|
|
Reinsurance recoverables, net
|
$
|
23,330
|
|
$
|
4,666
|
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Gross fee income, earned premiums and other
|
$
|
7,798
|
|
$
|
8,500
|
|
$
|
9,292
|
|
Reinsurance assumed
|
138
|
|
137
|
|
134
|
|
|||
Reinsurance ceded
|
(1,780
|
)
|
(524
|
)
|
(524
|
)
|
|||
Net fee income, earned premiums and other
|
$
|
6,156
|
|
$
|
8,113
|
|
$
|
8,902
|
|
Changes in the DAC balance are as follows:
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Balance, beginning of period
|
$
|
5,725
|
|
$
|
6,556
|
|
$
|
7,473
|
|
Deferred Costs
|
1,330
|
|
1,639
|
|
1,696
|
|
|||
Amortization — DAC
|
(1,615
|
)
|
(1,844
|
)
|
(2,025
|
)
|
|||
Amortization — Unlock benefit (charge), pre-tax [1]
|
(1,086
|
)
|
(144
|
)
|
(419
|
)
|
|||
Amortization — DAC related to business dispositions [2] [3]
|
(2,229
|
)
|
—
|
|
—
|
|
|||
Adjustments to unrealized gains and losses on securities available-for-sale and other [4]
|
122
|
|
(364
|
)
|
(240
|
)
|
|||
Effect of currency translation
|
(86
|
)
|
(118
|
)
|
71
|
|
|||
Balance, end of period
|
$
|
2,161
|
|
$
|
5,725
|
|
$
|
6,556
|
|
[1]
|
Includes Unlock charge of
$887
in 2013 related to elimination of future estimated gross profits on the Japan variable annuity block due to the increased costs associated with expanding the Japan variable annuity hedging program.
|
[2]
|
Includes accelerated amortization of
$352
and
$2,374
recognized upon the sale of the Retirement Plans and Individual Life businesses, respectively, in 2013. For further information, see Note
2
- Business Dispositions of Notes to Consolidated Financial Statements.
|
[3]
|
Includes previously unrealized gains on securities AFS of
$148
and
$349
recognized upon the sale of the Retirement Plans and Individual Life businesses, respectively, in 2013.
|
[4]
|
Other includes a
$16
reduction of the DAC asset as a result of the sale of assets used to administer the Company's PPLI business in 2012. The reduction is directly attributable to this transaction as it results in lower future estimated gross profits than originally estimated on these products.
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||||||||||
|
Gross
|
Accumulated Impairments
|
Business Dispositions [1]
|
Carrying Value
|
Gross
|
Accumulated Impairments
|
Business Dispositions [2]
|
Carrying Value
|
||||||||||||||||
Property & Casualty Commercial
|
$
|
30
|
|
$
|
(30
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
30
|
|
$
|
(30
|
)
|
$
|
—
|
|
$
|
—
|
|
Consumer Markets
|
119
|
|
—
|
|
—
|
|
119
|
|
119
|
|
—
|
|
—
|
|
119
|
|
||||||||
Mutual Funds [4]
|
149
|
|
—
|
|
—
|
|
149
|
|
159
|
|
—
|
|
(10
|
)
|
149
|
|
||||||||
Talcott Resolution:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Individual Life [4]
|
—
|
|
—
|
|
—
|
|
—
|
|
224
|
|
—
|
|
(224
|
)
|
—
|
|
||||||||
Retirement Plans [4]
|
87
|
|
—
|
|
(87
|
)
|
—
|
|
87
|
|
—
|
|
—
|
|
87
|
|
||||||||
Total Talcott Resolution
|
87
|
|
—
|
|
(87
|
)
|
—
|
|
311
|
|
—
|
|
(224
|
)
|
87
|
|
||||||||
Corporate [3][4]
|
654
|
|
(355
|
)
|
(69
|
)
|
230
|
|
772
|
|
(355
|
)
|
(118
|
)
|
299
|
|
||||||||
Total
|
$
|
1,039
|
|
$
|
(385
|
)
|
$
|
(156
|
)
|
$
|
498
|
|
$
|
1,391
|
|
$
|
(385
|
)
|
$
|
(352
|
)
|
$
|
654
|
|
[1]
|
Represents a reduction in goodwill recognized in connection with the sale of Retirement Plans.
|
[2]
|
Represents a reduction in goodwill recognized in connection with the sale of WFS and a goodwill impairment recognized in connection with the sale of Individual Life.
|
[3]
|
Carrying value as of December 31, 2013 includes
$138
and
$92
, respectively, for the Group Benefits and Mutual Funds reporting units. Carrying value as of December 31, 2012 includes
$138
,
$92
and
$69
, respectively, for the Group Benefits, Mutual Funds and Retirement Plans reporting units.
|
[4]
|
For further information, see Note
2
-
Business Dispositions
of Notes to Consolidated Financial Statements.
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Balance, beginning of period
|
$
|
325
|
|
$
|
434
|
|
$
|
459
|
|
Sales inducements deferred
|
—
|
|
7
|
|
20
|
|
|||
Amortization — Unlock charge [1]
|
(72
|
)
|
(82
|
)
|
(28
|
)
|
|||
Amortization charged to income
|
(33
|
)
|
(34
|
)
|
(17
|
)
|
|||
Amortization charged to business dispositions [2]
|
(71
|
)
|
—
|
|
—
|
|
|||
Balance, end of period
|
$
|
149
|
|
$
|
325
|
|
$
|
434
|
|
|
U.S. GMDB
|
International
GMDB/GMIB
|
UL Secondary
Guarantees
|
||||||
Liability balance as of January 1, 2013
|
$
|
918
|
|
$
|
661
|
|
$
|
363
|
|
Incurred
|
182
|
|
82
|
|
292
|
|
|||
Paid
|
(135
|
)
|
(73
|
)
|
—
|
|
|||
Unlock
|
(116
|
)
|
(301
|
)
|
2
|
|
|||
Impact of reinsurance transaction
|
—
|
|
—
|
|
1,145
|
|
|||
Currency translation adjustment
|
—
|
|
(97
|
)
|
—
|
|
|||
Liability balance as of December 31, 2013
|
$
|
849
|
|
$
|
272
|
|
$
|
1,802
|
|
Reinsurance recoverable asset, as of January 1, 2013
|
$
|
608
|
|
$
|
36
|
|
$
|
21
|
|
Incurred
|
104
|
|
9
|
|
296
|
|
|||
Paid
|
(98
|
)
|
(14
|
)
|
—
|
|
|||
Unlock
|
(81
|
)
|
(2
|
)
|
—
|
|
|||
Impact of reinsurance transaction
|
—
|
|
—
|
|
1,485
|
|
|||
Currency translation adjustment
|
—
|
|
(6
|
)
|
—
|
|
|||
Reinsurance recoverable asset, as of December 31, 2013
|
$
|
533
|
|
$
|
23
|
|
$
|
1,802
|
|
|
U.S. GMDB
|
International
GMDB/GMIB
|
UL Secondary
Guarantees
|
||||||
Liability balance as of January 1, 2012
|
$
|
1,104
|
|
$
|
975
|
|
$
|
228
|
|
Incurred
|
210
|
|
133
|
|
113
|
|
|||
Paid
|
(185
|
)
|
(189
|
)
|
—
|
|
|||
Unlock
|
(211
|
)
|
(155
|
)
|
22
|
|
|||
Currency translation adjustment
|
—
|
|
(103
|
)
|
—
|
|
|||
Liability balance as of December 31, 2012
|
$
|
918
|
|
$
|
661
|
|
$
|
363
|
|
Reinsurance recoverable asset, as of January 1, 2012
|
$
|
724
|
|
$
|
40
|
|
$
|
22
|
|
Incurred
|
121
|
|
9
|
|
(1
|
)
|
|||
Paid
|
(121
|
)
|
(27
|
)
|
—
|
|
|||
Unlock
|
(116
|
)
|
18
|
|
—
|
|
|||
Currency translation adjustment
|
—
|
|
(4
|
)
|
—
|
|
|||
Reinsurance recoverable asset, as of December 31, 2012
|
$
|
608
|
|
$
|
36
|
|
$
|
21
|
|
Individual Variable Annuity Account Value by GMDB/GMIB Type
|
||||||||||
Maximum anniversary value (“MAV”) [1]
|
Account
Value
(“AV”) [8]
|
Net Amount
at Risk
(“NAR”) [10]
|
Retained Net
Amount
at Risk
(“RNAR”) [10]
|
Weighted Average
Attained Age of
Annuitant
|
||||||
MAV only
|
$
|
19,638
|
|
$
|
2,914
|
|
$
|
519
|
|
69
|
With 5% rollup [2]
|
1,610
|
|
232
|
|
64
|
|
69
|
|||
With Earnings Protection Benefit Rider (“EPB”) [3]
|
4,862
|
|
629
|
|
86
|
|
67
|
|||
With 5% rollup & EPB
|
588
|
|
119
|
|
26
|
|
70
|
|||
Total MAV
|
26,698
|
|
3,894
|
|
695
|
|
|
|||
Asset Protection Benefit (“APB”) [4]
|
18,579
|
|
277
|
|
186
|
|
68
|
|||
Lifetime Income Benefit (“LIB”) – Death Benefit [5]
|
773
|
|
9
|
|
9
|
|
66
|
|||
Reset [6] (5-7 years)
|
3,286
|
|
74
|
|
74
|
|
69
|
|||
Return of Premium (“ROP”) [7]/Other
|
12,476
|
|
71
|
|
62
|
|
67
|
|||
Subtotal U.S. GMDB
|
61,812
|
|
4,325
|
|
1,026
|
|
68
|
|||
Less: General Account Value with U.S. GMDB
|
4,349
|
|
|
|
|
|||||
Subtotal Separate Account Liabilities with GMDB
|
57,463
|
|
|
|
|
|||||
Separate Account Liabilities without U.S. GMDB
|
83,423
|
|
|
|
|
|||||
Total Separate Account Liabilities
|
$
|
140,886
|
|
|
|
|
||||
Japan GMDB [9], [11]
|
$
|
20,130
|
|
$
|
779
|
|
$
|
552
|
|
71
|
Japan GMIB [9], [11]
|
$
|
18,483
|
|
$
|
128
|
|
$
|
128
|
|
71
|
[1]
|
MAV GMDB is the greatest of current AV, net premiums paid and the highest AV on any anniversary before age
80 years
(adjusted for withdrawals).
|
[2]
|
Rollup GMDB is the greatest of the MAV, current AV, net premium paid and premiums (adjusted for withdrawals) accumulated at generally
5%
simple interest up to the earlier of age
80
years or
100%
of adjusted premiums.
|
[3]
|
EPB GMDB is the greatest of the MAV, current AV, or contract value plus a percentage of the contract’s growth. The contract’s growth is AV less premiums net of withdrawals, subject to a cap of
200%
of premiums net of withdrawals.
|
[4]
|
APB GMDB is the greater of current AV or MAV, not to exceed current AV plus
25%
times the greater of net premiums and MAV (each adjusted for premiums in the past
12 months
).
|
[5]
|
LIB GMDB is the greatest of current AV, net premiums paid, or for certain contracts a benefit amount that ratchets over time, generally based on market performance.
|
[6]
|
Reset GMDB is the greatest of current AV, net premiums paid and the most recent
five
to
seven
year anniversary AV before age
80 years
(adjusted for withdrawals).
|
[7]
|
ROP GMDB is the greater of current AV or net premiums paid.
|
[8]
|
AV includes the contract holder’s investment in the separate account and the general account.
|
[9]
|
GMDB includes a ROP and MAV (before age
80 years
) paid in a single lump sum. GMIB is a guarantee to return initial investment, adjusted for earnings liquidity which allows for free withdrawal of earnings, paid through a fixed payout annuity, after a minimum deferral period of
10 years
,
15 years
or
20 years
. The GRB related to the Japan GMIB was
$16.8 billion
as of
December 31, 2013
. The GRB related to the Japan GMAB and GMWB was $
365
as of
December 31, 2013
. These liabilities are not included in the Separate Account as they are not legally insulated from the general account liabilities of the insurance enterprise. As of
December 31, 2013
,
30%
of the GMDB RNAR and
80%
of the GMIB NAR is reinsured to a Hartford affiliate; as a result, the effects of the reinsurance are not reflected in this disclosure.
|
[10]
|
NAR is defined as the guaranteed benefit in excess of the current AV. RNAR represents NAR reduced for reinsurance. NAR and RNAR are highly sensitive to equity markets movements and increase when equity markets decline. Additionally Japan’s NAR and RNAR are highly sensitive to currency movements and increase when the Yen strengthens.
|
[11]
|
Policies with a guaranteed living benefit (GMIB in Japan) also have a guaranteed death benefit. The NAR for each benefit is shown in the table above, however these benefits are not additive. When a policy terminates due to death, any NAR related to GMWB or GMIB is released. Similarly, when a policy goes into benefit status on a GMWB or GMIB, its GMDB NAR is released.
|
Asset type
|
As of December 31, 2013
|
As of December 31, 2012
|
||||
Equity securities (including mutual funds)
|
$
|
52,858
|
|
$
|
58,208
|
|
Cash and cash equivalents
|
4,605
|
|
6,940
|
|
||
Total
|
$
|
57,463
|
|
$
|
65,148
|
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, gross
|
$
|
21,716
|
|
$
|
21,550
|
|
$
|
21,025
|
|
Reinsurance and other recoverables
|
3,027
|
|
3,033
|
|
3,077
|
|
|||
Beginning liabilities for unpaid losses and loss adjustment expenses, net
|
18,689
|
|
18,517
|
|
17,948
|
|
|||
Add provision for unpaid losses and loss adjustment expenses
|
|
|
|
|
|
|
|||
Current year
|
6,621
|
|
7,274
|
|
7,420
|
|
|||
Prior years
|
192
|
|
(4
|
)
|
367
|
|
|||
Total provision for unpaid losses and loss adjustment expenses
|
6,813
|
|
7,270
|
|
7,787
|
|
|||
Less payments
|
|
|
|
|
|
|
|||
Current year
|
2,552
|
|
2,882
|
|
3,181
|
|
|||
Prior years
|
4,274
|
|
4,216
|
|
4,037
|
|
|||
Total payments
|
6,826
|
|
7,098
|
|
7,218
|
|
|||
Ending liabilities for unpaid losses and loss adjustment expenses, net
|
18,676
|
|
18,689
|
|
18,517
|
|
|||
Reinsurance and other recoverables
|
3,028
|
|
3,027
|
|
3,033
|
|
|||
Ending liabilities for unpaid losses and loss adjustment expenses, gross
|
$
|
21,704
|
|
$
|
21,716
|
|
$
|
21,550
|
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Auto liability
|
$
|
144
|
|
$
|
(25
|
)
|
$
|
(97
|
)
|
Homeowners
|
(6
|
)
|
(32
|
)
|
(1
|
)
|
|||
Professional liability
|
(29
|
)
|
40
|
|
29
|
|
|||
Package business
|
2
|
|
(20
|
)
|
(76
|
)
|
|||
General liability
|
(75
|
)
|
(87
|
)
|
(40
|
)
|
|||
Fidelity and surety
|
(8
|
)
|
(9
|
)
|
(7
|
)
|
|||
Commercial property
|
(7
|
)
|
(8
|
)
|
(4
|
)
|
|||
Net asbestos reserves
|
130
|
|
48
|
|
294
|
|
|||
Net environmental reserves
|
12
|
|
10
|
|
26
|
|
|||
Uncollectible reinsurance
|
(25
|
)
|
—
|
|
—
|
|
|||
Workers’ compensation
|
(2
|
)
|
78
|
|
171
|
|
|||
Workers’ compensation - NY 25a Fund for Reopened Cases
|
80
|
|
—
|
|
—
|
|
|||
Change in workers’ compensation discount, including accretion
|
30
|
|
52
|
|
38
|
|
|||
Catastrophes
|
(63
|
)
|
(66
|
)
|
37
|
|
|||
Other reserve re-estimates, net
|
$
|
9
|
|
$
|
15
|
|
$
|
(3
|
)
|
Total prior accident years development
|
$
|
192
|
|
$
|
(4
|
)
|
$
|
367
|
|
•
|
a strengthening in commercial auto liability reserves, for accident years 2010 to 2012;
|
•
|
a strengthening related to the closing of the New York Section 25A Fund for Reopened Cases (the "Fund");
|
•
|
a strengthening of net asbestos reserves driven by the annual ground-up asbestos reserve evaluation;
|
•
|
partially offset by a release of general liability reserves, for accident years 2006 to 2011; and
|
•
|
also offset by a release of professional liability reserves, for accident years 2008 to 2012; and
|
•
|
also offset by a release of catastrophe reserves primarily related to Storm Sandy.
|
•
|
a release of general liability reserves, for accident years 2006 to 2008;
|
•
|
a release of catastrophes, primarily related to the 2001 World Trade Center worker's compensation claims;
|
•
|
partially offset by a strengthening of reserves for workers’ compensation reserves, for accident years 2009 to 2011; and
|
•
|
also offset by a strengthening of asbestos and environmental reserves.
|
•
|
a strengthening of reserves for workers’ compensation reserves, for accident years 2008 to 2010;
|
•
|
a strengthening of asbestos and environmental reserves;
|
•
|
partially offset by a release of auto liability claims for accident years 2006 to 2010; and
|
•
|
also offset by a release of package business liability coverages in accident years 2005 to 2009.
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, gross
|
$
|
6,547
|
|
$
|
6,547
|
|
$
|
6,388
|
|
Reinsurance recoverables
|
252
|
|
233
|
|
209
|
|
|||
Beginning liabilities for unpaid losses and loss adjustment expenses, net
|
6,295
|
|
6,314
|
|
6,179
|
|
|||
Add provision for unpaid losses and loss adjustment expenses
|
|
|
|
||||||
Current year
|
2,534
|
|
2,989
|
|
3,196
|
|
|||
Prior years
|
(17
|
)
|
52
|
|
98
|
|
|||
Total provision for unpaid losses and loss adjustment expenses
|
2,517
|
|
3,041
|
|
3,294
|
|
|||
Less payments
|
|
|
|
||||||
Current year
|
1,207
|
|
1,460
|
|
1,524
|
|
|||
Prior years
|
1,564
|
|
1,600
|
|
1,635
|
|
|||
Total payments
|
2,771
|
|
3,060
|
|
3,159
|
|
|||
Ending liabilities for unpaid losses and loss adjustment expenses, net
|
6,041
|
|
6,295
|
|
6,314
|
|
|||
Reinsurance recoverables
|
267
|
|
252
|
|
233
|
|
|||
Ending liabilities for unpaid losses and loss adjustment expenses, gross
|
$
|
6,308
|
|
$
|
6,547
|
|
$
|
6,547
|
|
|
2013
|
2012
|
||||
Group life term, disability and accident unpaid losses and loss adjustment expenses
|
$
|
6,308
|
|
$
|
6,547
|
|
Group life other unpaid losses and loss adjustment expenses
|
206
|
|
206
|
|
||
Individual life unpaid losses and loss adjustment expenses
|
167
|
|
173
|
|
||
Future policy benefits
|
12,988
|
|
12,350
|
|
||
Future policy benefits and unpaid losses and loss adjustment expenses
|
$
|
19,669
|
|
$
|
19,276
|
|
|
As of December 31,
|
|||||
|
2013
|
2012
|
||||
Revolving Credit Facilities
|
$
|
238
|
|
$
|
—
|
|
Senior Notes and Debentures
|
|
|
|
|
||
4.625% Notes, due 2013
|
—
|
|
320
|
|
||
4.75% Notes, due 2014
|
200
|
|
200
|
|
||
4.0% Notes, due 2015
|
289
|
|
300
|
|
||
7.3% Notes, due 2015
|
167
|
|
200
|
|
||
5.5% Notes, due 2016
|
275
|
|
300
|
|
||
5.375% Notes, due 2017
|
415
|
|
499
|
|
||
4.0% Notes, due 2017
|
295
|
|
325
|
|
||
6.3% Notes, due 2018
|
320
|
|
500
|
|
||
6.0% Notes, due 2019
|
413
|
|
500
|
|
||
5.5% Notes, due 2020
|
499
|
|
499
|
|
||
5.125% Notes, due 2022
|
796
|
|
796
|
|
||
7.65% Notes, due 2027
|
79
|
|
149
|
|
||
7.375% Notes, due 2031
|
63
|
|
92
|
|
||
5.95% Notes, due 2036
|
298
|
|
298
|
|
||
6.625% Notes, due 2040
|
295
|
|
299
|
|
||
6.1% Notes, due 2041
|
326
|
|
325
|
|
||
6.625% Notes, due 2042
|
178
|
|
424
|
|
||
4.3% Notes, due 2043
|
298
|
|
—
|
|
||
Junior Subordinated Debentures
|
|
|
|
|
||
7.875% Notes, due 2042
|
600
|
|
600
|
|
||
8.125% Notes, due 2068
|
500
|
|
500
|
|
||
Total Notes and Debentures
|
6,306
|
|
7,126
|
|
||
Less: Current maturities
|
200
|
|
320
|
|
||
Long-Term Debt
|
6,106
|
|
6,806
|
|
||
Total Debt
|
$
|
6,544
|
|
$
|
7,126
|
|
2014
|
$
|
200
|
|
2015
|
456
|
|
|
2016
|
275
|
|
|
2017
|
711
|
|
|
2018
|
320
|
|
|
Thereafter
|
4,438
|
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Income Tax Expense (Benefit)
|
|
|
|
||||||
Current - U.S. Federal
|
$
|
219
|
|
$
|
33
|
|
$
|
(543
|
)
|
International
|
89
|
|
6
|
|
22
|
|
|||
Total current
|
308
|
|
39
|
|
(521
|
)
|
|||
Deferred - U.S. Federal Excluding NOL Carryforward
|
(233
|
)
|
(377
|
)
|
921
|
|
|||
U.S. Net Operating Loss Carryforward
|
(86
|
)
|
(301
|
)
|
(652
|
)
|
|||
International
|
(236
|
)
|
158
|
|
(121
|
)
|
|||
Total deferred
|
(555
|
)
|
(520
|
)
|
148
|
|
|||
Total income tax benefit
|
$
|
(247
|
)
|
$
|
(481
|
)
|
$
|
(373
|
)
|
|
As of December 31,
|
|||||
Deferred Tax Assets
|
2013
|
2012
|
||||
Tax discount on loss reserves
|
$
|
632
|
|
$
|
621
|
|
Tax basis deferred policy acquisition costs
|
207
|
|
481
|
|
||
Unearned premium reserve and other underwriting related reserves
|
434
|
|
414
|
|
||
Investment-related items
|
1,641
|
|
1,525
|
|
||
Insurance product derivatives
|
13
|
|
454
|
|
||
Employee benefits
|
523
|
|
599
|
|
||
Minimum tax credit
|
823
|
|
860
|
|
||
Net operating loss carryover
|
1,093
|
|
1,007
|
|
||
Foreign tax credit carryover
|
163
|
|
149
|
|
||
Capital loss carryover
|
—
|
|
5
|
|
||
Other
|
63
|
|
118
|
|
||
Total Deferred Tax Assets
|
5,592
|
|
6,233
|
|
||
Valuation Allowance
|
(4
|
)
|
(58
|
)
|
||
Deferred Tax Assets, Net of Valuation Allowance
|
5,588
|
|
6,175
|
|
||
Deferred Tax Liabilities
|
|
|
||||
Financial statement deferred policy acquisition costs and reserves
|
(894
|
)
|
(1,694
|
)
|
||
Net unrealized gains on investments
|
(669
|
)
|
(2,396
|
)
|
||
Other depreciable and amortizable assets
|
(185
|
)
|
(143
|
)
|
||
Total Deferred Tax Liabilities
|
(1,748
|
)
|
(4,233
|
)
|
||
Net Deferred Tax Asset
|
$
|
3,840
|
|
$
|
1,942
|
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Tax provision (benefit) at U.S. Federal statutory rate
|
$
|
22
|
|
$
|
(203
|
)
|
$
|
70
|
|
Tax-exempt interest
|
(138
|
)
|
(141
|
)
|
(148
|
)
|
|||
Dividends received deduction
|
(139
|
)
|
(145
|
)
|
(206
|
)
|
|||
Valuation allowance
|
(2
|
)
|
—
|
|
(85
|
)
|
|||
Other
|
10
|
|
8
|
|
(4
|
)
|
|||
Provision (benefit) for income taxes
|
$
|
(247
|
)
|
$
|
(481
|
)
|
$
|
(373
|
)
|
|
Operating Leases
|
||
2014
|
$
|
59
|
|
2015
|
51
|
|
|
2016
|
40
|
|
|
2017
|
31
|
|
|
2018
|
22
|
|
|
Thereafter
|
28
|
|
|
Total minimum lease payments [1]
|
$
|
231
|
|
|
For the years ended December 31,
|
||||||||
Statutory Net Income (Loss)
|
2013
|
2012
|
2011
|
||||||
U.S. life insurance subsidiaries, includes domestic captive insurance subsidiaries
|
$
|
2,144
|
|
$
|
592
|
|
$
|
(1,272
|
)
|
Property and casualty insurance subsidiaries
|
1,217
|
|
883
|
|
514
|
|
|||
Total
|
$
|
3,361
|
|
$
|
1,475
|
|
$
|
(758
|
)
|
|
As of December 31,
|
|||||
Statutory Capital and Surplus
|
2013
|
2012
|
||||
U.S. life insurance subsidiaries, includes domestic captive insurance subsidiaries
|
$
|
6,639
|
|
$
|
6,410
|
|
Property and casualty insurance subsidiaries
|
8,022
|
|
7,645
|
|
||
Total
|
$
|
14,661
|
|
$
|
14,055
|
|
|
Net Unrealized Gain on Securities
|
OTTI Losses in OCI
|
Net Gain (Loss) on Cash Flow Hedging Instruments
|
Foreign Currency Translation Adjustments
|
Pension and Other Postretirement Plan Adjustments
|
Total AOCI
|
||||||||||||
Beginning balance
|
$
|
3,418
|
|
$
|
(47
|
)
|
$
|
428
|
|
$
|
406
|
|
$
|
(1,362
|
)
|
$
|
2,843
|
|
OCI before reclassifications
|
(1,416
|
)
|
51
|
|
(195
|
)
|
(337
|
)
|
74
|
|
(1,823
|
)
|
||||||
Amounts reclassified from AOCI
|
(1,015
|
)
|
(16
|
)
|
(125
|
)
|
22
|
|
35
|
|
(1,099
|
)
|
||||||
Net OCI
|
(2,431
|
)
|
35
|
|
(320
|
)
|
(315
|
)
|
109
|
|
(2,922
|
)
|
||||||
Ending balance
|
$
|
987
|
|
$
|
(12
|
)
|
$
|
108
|
|
$
|
91
|
|
$
|
(1,253
|
)
|
$
|
(79
|
)
|
|
Net Unrealized Gain on Securities
|
OTTI Losses in OCI
|
Net Gain (Loss) on Cash Flow Hedging Instruments
|
Foreign Currency Translation Adjustments
|
Pension and Other Postretirement Plan Adjustments
|
Total AOCI
|
||||||||||||
Beginning balance
|
$
|
1,511
|
|
$
|
(99
|
)
|
$
|
516
|
|
$
|
574
|
|
$
|
(1,251
|
)
|
$
|
1,251
|
|
OCI before reclassifications
|
1,928
|
|
149
|
|
58
|
|
(168
|
)
|
(320
|
)
|
1,647
|
|
||||||
Amounts reclassified from AOCI
|
(21
|
)
|
(97
|
)
|
(146
|
)
|
—
|
|
209
|
|
(55
|
)
|
||||||
Net OCI
|
1,907
|
|
52
|
|
(88
|
)
|
(168
|
)
|
(111
|
)
|
1,592
|
|
||||||
Ending balance
|
$
|
3,418
|
|
$
|
(47
|
)
|
$
|
428
|
|
$
|
406
|
|
$
|
(1,362
|
)
|
$
|
2,843
|
|
|
Net Unrealized Gain on Securities
|
OTTI Losses in OCI
|
Net Gain (Loss) on Cash Flow Hedging Instruments
|
Foreign Currency Translation Adjustments
|
Pension and Other Postretirement Plan Adjustments
|
Total AOCI
|
||||||||||||
Beginning balance
|
$
|
(556
|
)
|
$
|
(108
|
)
|
$
|
385
|
|
$
|
467
|
|
$
|
(1,178
|
)
|
$
|
(990
|
)
|
OCI before reclassifications
|
2,151
|
|
37
|
|
217
|
|
107
|
|
(170
|
)
|
2,342
|
|
||||||
Amounts reclassified from AOCI
|
(84
|
)
|
(28
|
)
|
(86
|
)
|
—
|
|
97
|
|
(101
|
)
|
||||||
Net OCI
|
2,067
|
|
9
|
|
131
|
|
107
|
|
(73
|
)
|
2,241
|
|
||||||
Ending balance
|
$
|
1,511
|
|
$
|
(99
|
)
|
$
|
516
|
|
$
|
574
|
|
$
|
(1,251
|
)
|
$
|
1,251
|
|
AOCI
|
Amount Reclassified from AOCI
|
|
Affected Line Item in the Consolidated Statement of Operations
|
|||||||
|
For year ended December 31, 2013
|
For year ended December 31, 2012
|
For year ended December 31, 2011
|
|
||||||
Net Unrealized Gain on Securities
|
|
|
|
|
||||||
Available-for-sale securities [1]
|
$
|
1,562
|
|
$
|
32
|
|
$
|
129
|
|
Net realized capital gains (losses)
|
|
1,562
|
|
32
|
|
129
|
|
Total before tax
|
|||
|
547
|
|
11
|
|
45
|
|
Income tax expense
|
|||
|
$
|
1,015
|
|
$
|
21
|
|
$
|
84
|
|
Net income (loss)
|
OTTI Losses in OCI
|
|
|
|
|
||||||
Other than temporary impairments
|
$
|
25
|
|
$
|
149
|
|
$
|
43
|
|
Net realized capital gains (losses)
|
|
25
|
|
149
|
|
43
|
|
Total before tax
|
|||
|
9
|
|
52
|
|
15
|
|
Income tax expense (benefit)
|
|||
|
$
|
16
|
|
$
|
97
|
|
$
|
28
|
|
Net income (loss)
|
Net Gains on Cash Flow Hedging Instruments
|
|
|
|
|
||||||
Interest rate swaps [2]
|
$
|
91
|
|
$
|
90
|
|
$
|
9
|
|
Net realized capital gains (losses)
|
Interest rate swaps
|
97
|
|
140
|
|
126
|
|
Net investment income
|
|||
Foreign currency swaps
|
4
|
|
(6
|
)
|
(3
|
)
|
Net realized capital gains (losses)
|
|||
|
192
|
|
224
|
|
132
|
|
Total before tax
|
|||
|
67
|
|
78
|
|
46
|
|
Income tax expense
|
|||
|
$
|
125
|
|
$
|
146
|
|
$
|
86
|
|
Net income (loss)
|
Foreign Currency Translation Adjustments
|
|
|
|
|
||||||
Currency translation adjustments [3]
|
$
|
(34
|
)
|
$
|
—
|
|
$
|
—
|
|
Net realized capital gains (losses)
|
|
(34
|
)
|
—
|
|
—
|
|
Total before tax
|
|||
|
(12
|
)
|
—
|
|
—
|
|
Income tax expense
|
|||
|
$
|
(22
|
)
|
$
|
—
|
|
$
|
—
|
|
Net income (loss)
|
Pension and Other Postretirement Plan Adjustments
|
|
|
|
|
||||||
Amortization of prior service costs
|
$
|
7
|
|
$
|
(90
|
)
|
$
|
10
|
|
Insurance operating costs and other expenses
|
Amortization of actuarial gains (losses)
|
(61
|
)
|
(232
|
)
|
(159
|
)
|
Insurance operating costs and other expenses
|
|||
|
(54
|
)
|
(322
|
)
|
(149
|
)
|
Total before tax
|
|||
|
(19
|
)
|
(113
|
)
|
(52
|
)
|
Income tax expense
|
|||
|
(35
|
)
|
(209
|
)
|
(97
|
)
|
Net income (loss)
|
|||
Total amounts reclassified from AOCI
|
$
|
1,099
|
|
$
|
55
|
|
$
|
101
|
|
Net income (loss)
|
[1]
|
The
December 31, 2013
amount includes
$1.5 billion
of net unrealized gains on securities relating to the sales of the Retirement Plans and Individual Life businesses.
|
[2]
|
The
December 31, 2013
amount includes
$71
of net gains on cash flow hedging instruments relating to the sales of the Retirement Plans and Individual Life businesses.
|
[3]
|
The
December 31, 2013
amount relates to the sale of the UK variable annuity business.
|
|
Pension Benefits
|
Other Postretirement Benefits
|
||||||
|
2013
|
2012
|
2013
|
2012
|
||||
Discount rate
|
4.75
|
%
|
4.00
|
%
|
4.25
|
%
|
3.50
|
%
|
Rate of increase in compensation levels
|
—
|
%
|
3.75
|
%
|
N/A
|
|
N/A
|
|
|
For the years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Discount rate
|
4.00
|
%
|
4.50
|
%
|
5.50
|
%
|
Expected long-term rate of return on plan assets
|
7.10
|
%
|
7.30
|
%
|
7.30
|
%
|
Rate of increase in compensation levels
|
3.75
|
%
|
3.75
|
%
|
4.00
|
%
|
|
For the years ended December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Discount rate
|
3.50
|
%
|
4.00
|
%
|
5.25
|
%
|
Expected long-term rate of return on plan assets
|
7.10
|
%
|
7.30
|
%
|
7.30
|
%
|
|
As of December 31,
|
|||||
|
2013
|
2012
|
2011
|
|||
Pre-65 health care cost trend rate
|
8.05
|
%
|
8.45
|
%
|
8.95
|
%
|
Post-65 health care cost trend rate
|
5.70
|
%
|
6.15
|
%
|
7.75
|
%
|
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
|
5.00
|
%
|
4.75
|
%
|
5.00
|
%
|
Year that the rate reaches the ultimate trend rate
|
2021
|
|
2020
|
|
2019
|
|
|
Pension Benefits
|
Other Postretirement Benefits
|
||||||||||
Change in Benefit Obligation
|
2013
|
2012
|
2013
|
2012
|
||||||||
Benefit obligation — beginning of year
|
$
|
6,080
|
|
$
|
5,465
|
|
$
|
313
|
|
$
|
424
|
|
Service cost (excluding expenses)
|
1
|
|
92
|
|
—
|
|
2
|
|
||||
Interest cost
|
238
|
|
250
|
|
11
|
|
14
|
|
||||
Plan participants’ contributions
|
—
|
|
—
|
|
24
|
|
20
|
|
||||
Actuarial loss (gain)
|
14
|
|
28
|
|
39
|
|
1
|
|
||||
Settlements
|
—
|
|
(3
|
)
|
—
|
|
—
|
|
||||
Curtailment gain due to plan freeze
|
—
|
|
(42
|
)
|
—
|
|
(116
|
)
|
||||
Change in assumptions
|
(508
|
)
|
545
|
|
(19
|
)
|
19
|
|
||||
Benefits paid
|
(308
|
)
|
(256
|
)
|
(58
|
)
|
(54
|
)
|
||||
Retiree drug subsidy
|
—
|
|
—
|
|
2
|
|
3
|
|
||||
Foreign exchange adjustment
|
(1
|
)
|
1
|
|
—
|
|
—
|
|
||||
Benefit obligation — end of year
|
$
|
5,516
|
|
$
|
6,080
|
|
$
|
312
|
|
$
|
313
|
|
|
|
|
Other Postretirement
|
|||||||||
|
Pension Benefits
|
Benefits
|
||||||||||
Change in Plan Assets
|
2013
|
2012
|
2013
|
2012
|
||||||||
Fair value of plan assets — beginning of year
|
$
|
4,850
|
|
$
|
4,513
|
|
$
|
220
|
|
$
|
203
|
|
Actual return on plan assets
|
(27
|
)
|
381
|
|
13
|
|
17
|
|
||||
Employer contributions
|
101
|
|
201
|
|
—
|
|
—
|
|
||||
Benefits paid [1]
|
(278
|
)
|
(230
|
)
|
(20
|
)
|
—
|
|
||||
Expenses paid
|
(15
|
)
|
(13
|
)
|
—
|
|
—
|
|
||||
Settlements
|
—
|
|
(3
|
)
|
—
|
|
—
|
|
||||
Foreign exchange adjustment
|
(1
|
)
|
1
|
|
—
|
|
—
|
|
||||
Fair value of plan assets — end of year
|
$
|
4,630
|
|
$
|
4,850
|
|
$
|
213
|
|
$
|
220
|
|
Funded status — end of year
|
$
|
(886
|
)
|
$
|
(1,230
|
)
|
$
|
(99
|
)
|
$
|
(93
|
)
|
[1]
|
In 2013 other postretirement benefits paid represent non-key employee postretirement medical benefits paid from the Company's prefunded trust fund.
|
|
As of December 31,
|
|||||
|
2013
|
2012
|
||||
Projected benefit obligation
|
$
|
5,516
|
|
$
|
6,080
|
|
Accumulated benefit obligation
|
5,515
|
|
6,079
|
|
||
Fair value of plan assets
|
4,630
|
|
4,850
|
|
|
Pension Benefits
|
Other Postretirement Benefits
|
||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||
Other assets
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Other liabilities
|
886
|
|
1,230
|
|
99
|
|
93
|
|
||||
Total
|
$
|
886
|
|
$
|
1,230
|
|
$
|
99
|
|
$
|
93
|
|
|
Pension Benefits
|
Other Postretirement Benefits
|
||||||||||||||||
|
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
||||||||||||
Service cost
|
$
|
1
|
|
$
|
92
|
|
$
|
102
|
|
$
|
—
|
|
$
|
2
|
|
$
|
5
|
|
Interest cost
|
238
|
|
250
|
|
259
|
|
11
|
|
14
|
|
20
|
|
||||||
Expected return on plan assets
|
(315
|
)
|
(312
|
)
|
(298
|
)
|
(14
|
)
|
(14
|
)
|
(14
|
)
|
||||||
Amortization of prior service credit
|
—
|
|
(9
|
)
|
(9
|
)
|
(7
|
)
|
(4
|
)
|
(1
|
)
|
||||||
Amortization of actuarial loss
|
59
|
|
231
|
|
159
|
|
2
|
|
1
|
|
—
|
|
||||||
Settlements
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Curtailment gain due to plan freeze
|
—
|
|
(11
|
)
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
(17
|
)
|
$
|
242
|
|
$
|
213
|
|
$
|
(8
|
)
|
$
|
(2
|
)
|
$
|
10
|
|
|
Pension Benefits
|
Other Postretirement Benefits
|
||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||
Amortization of actuarial loss
|
$
|
(59
|
)
|
$
|
(231
|
)
|
$
|
(2
|
)
|
$
|
(1
|
)
|
Settlement loss
|
—
|
|
(1
|
)
|
—
|
|
—
|
|
||||
Amortization of prior service credit
|
—
|
|
21
|
|
7
|
|
(111
|
)
|
||||
Net (gain) loss arising during the year
|
(137
|
)
|
477
|
|
21
|
|
18
|
|
||||
Total
|
$
|
(196
|
)
|
$
|
266
|
|
$
|
26
|
|
$
|
(94
|
)
|
|
Pension Benefits
|
Other Postretirement Benefits
|
||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||
Net loss
|
$
|
1,979
|
|
$
|
2,175
|
|
$
|
77
|
|
$
|
58
|
|
Prior service credit
|
—
|
|
—
|
|
(103
|
)
|
(110
|
)
|
||||
Total
|
$
|
1,979
|
|
$
|
2,175
|
|
$
|
(26
|
)
|
$
|
(52
|
)
|
|
|
Target Asset Allocation
|
||||||
|
Pension Plans
|
Other Postretirement Plans
|
||||||
|
(minimum)
|
(maximum)
|
(minimum)
|
(maximum)
|
||||
Equity securities
|
10
|
%
|
25
|
%
|
15
|
%
|
35
|
%
|
Fixed income securities
|
50
|
%
|
70
|
%
|
65
|
%
|
85
|
%
|
Alternative assets
|
10
|
%
|
25
|
%
|
—
|
%
|
—
|
%
|
|
Pension Plan Assets at Fair Value as of December 31, 2013
|
|||||||||||
Asset Category
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Short-term investments:
|
$
|
13
|
|
$
|
364
|
|
$
|
—
|
|
$
|
377
|
|
Fixed Income Securities:
|
|
|
|
|
||||||||
Corporate
|
—
|
|
890
|
|
12
|
|
902
|
|
||||
RMBS
|
—
|
|
156
|
|
2
|
|
158
|
|
||||
U.S. Treasuries
|
10
|
|
922
|
|
1
|
|
933
|
|
||||
Foreign government
|
—
|
|
42
|
|
4
|
|
46
|
|
||||
CMBS
|
—
|
|
196
|
|
1
|
|
197
|
|
||||
Other fixed income [1]
|
—
|
|
85
|
|
10
|
|
95
|
|
||||
Equity Securities:
|
|
|
|
|
||||||||
Large-cap domestic
|
—
|
|
514
|
|
—
|
|
514
|
|
||||
Mid-cap domestic
|
50
|
|
—
|
|
—
|
|
50
|
|
||||
Small-cap domestic
|
50
|
|
—
|
|
—
|
|
50
|
|
||||
International
|
459
|
|
1
|
|
—
|
|
460
|
|
||||
Other equities
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Other investments:
|
|
|
|
|
||||||||
Hedge funds
|
—
|
|
499
|
|
361
|
|
860
|
|
||||
Total pension plan assets at fair value [2]
|
$
|
582
|
|
$
|
3,669
|
|
$
|
391
|
|
$
|
4,642
|
|
[1]
|
Includes ABS, municipal bonds, and foreign bonds.
|
[2]
|
Excludes approximately
$34
of investment payables net of investment receivables that are not carried at fair value. Also excludes approximately
$22
of interest receivable carried at fair value.
|
|
Pension Plan Assets at Fair Value as of December 31, 2012
|
|||||||||||
Asset Category
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Short-term investments:
|
$
|
2
|
|
$
|
514
|
|
$
|
—
|
|
$
|
516
|
|
Fixed Income Securities:
|
|
|
|
|
||||||||
Corporate
|
—
|
|
908
|
|
3
|
|
911
|
|
||||
RMBS
|
—
|
|
325
|
|
3
|
|
328
|
|
||||
U.S. Treasuries
|
35
|
|
980
|
|
—
|
|
1,015
|
|
||||
Foreign government
|
—
|
|
52
|
|
2
|
|
54
|
|
||||
CMBS
|
—
|
|
166
|
|
—
|
|
166
|
|
||||
Other fixed income [1]
|
—
|
|
77
|
|
9
|
|
86
|
|
||||
Equity Securities:
|
|
|
|
|
||||||||
Large-cap domestic
|
—
|
|
591
|
|
—
|
|
591
|
|
||||
Mid-cap domestic
|
51
|
|
—
|
|
—
|
|
51
|
|
||||
Small-cap domestic
|
44
|
|
—
|
|
—
|
|
44
|
|
||||
International
|
258
|
|
—
|
|
—
|
|
258
|
|
||||
Other equities
|
—
|
|
1
|
|
—
|
|
1
|
|
||||
Other investments:
|
|
|
|
|
||||||||
Hedge funds
|
—
|
|
633
|
|
263
|
|
896
|
|
||||
Total pension plan assets at fair value [2]
|
$
|
390
|
|
$
|
4,247
|
|
$
|
280
|
|
$
|
4,917
|
|
[1]
|
Includes ABS and municipal bonds.
|
[2]
|
Excludes approximately
$76
of investment payables net of investment receivables that are not carried at fair value. Also excludes approximately
$9
of interest receivable carried at fair value.
|
|
Other Postretirement Plan Assets
at Fair Value as of December 31, 2013
|
|||||||||||
Asset Category
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Short-term investments
|
$
|
—
|
|
$
|
10
|
|
$
|
—
|
|
$
|
10
|
|
Fixed Income Securities:
|
|
|
|
|
||||||||
Corporate
|
—
|
|
55
|
|
—
|
|
55
|
|
||||
RMBS
|
—
|
|
19
|
|
—
|
|
19
|
|
||||
U.S. Treasuries
|
—
|
|
38
|
|
—
|
|
38
|
|
||||
Foreign government
|
—
|
|
1
|
|
—
|
|
1
|
|
||||
CMBS
|
—
|
|
24
|
|
—
|
|
24
|
|
||||
Other fixed income
|
—
|
|
4
|
|
—
|
|
4
|
|
||||
Equity Securities:
|
|
|
|
|
||||||||
Large-cap
|
—
|
|
66
|
|
—
|
|
66
|
|
||||
Total other postretirement plan assets at fair value [1]
|
$
|
—
|
|
$
|
217
|
|
$
|
—
|
|
$
|
217
|
|
|
Other Postretirement Plan Assets
at Fair Value as of December 31, 2012
|
|||||||||||
Asset Category
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Short-term investments
|
$
|
—
|
|
$
|
14
|
|
$
|
—
|
|
$
|
14
|
|
Fixed Income Securities:
|
|
|
|
|
||||||||
Corporate
|
—
|
|
65
|
|
—
|
|
65
|
|
||||
RMBS
|
—
|
|
46
|
|
—
|
|
46
|
|
||||
U.S. Treasuries
|
—
|
|
24
|
|
—
|
|
24
|
|
||||
Foreign government
|
—
|
|
1
|
|
—
|
|
1
|
|
||||
CMBS
|
—
|
|
24
|
|
—
|
|
24
|
|
||||
Other fixed income
|
—
|
|
5
|
|
—
|
|
5
|
|
||||
Equity Securities:
|
|
|
|
|
||||||||
Large-cap
|
—
|
|
50
|
|
—
|
|
50
|
|
||||
Total other postretirement plan assets at fair value [1]
|
$
|
—
|
|
$
|
229
|
|
$
|
—
|
|
$
|
229
|
|
Employer Contributions
|
Pension Benefits
|
Other Postretirement Benefits
|
||||
2013
|
$
|
101
|
|
$
|
—
|
|
2012
|
$
|
201
|
|
$
|
—
|
|
|
Pension Benefits
|
Other Postretirement Benefits
|
||||
2014
|
$
|
324
|
|
$
|
43
|
|
2015
|
310
|
|
40
|
|
||
2016
|
317
|
|
37
|
|
||
2017
|
324
|
|
34
|
|
||
2018
|
331
|
|
32
|
|
||
2019 - 2023
|
1,740
|
|
121
|
|
||
Total
|
$
|
3,346
|
|
$
|
307
|
|
2014
|
$
|
3
|
|
2015
|
3
|
|
|
2016
|
4
|
|
|
2017
|
4
|
|
|
2018
|
4
|
|
|
2019 - 2023
|
22
|
|
|
Total
|
$
|
40
|
|
|
For the year ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Stock-based compensation plans expense
|
$
|
69
|
|
$
|
95
|
|
$
|
53
|
|
Income tax benefit
|
(24
|
)
|
(33
|
)
|
(19
|
)
|
|||
Total stock-based compensation plans expense, after-tax
|
$
|
45
|
|
$
|
62
|
|
$
|
34
|
|
|
For the year ended December 31,
|
|||||||
|
2013
|
2012
|
||||||
Expected dividend yield
|
1.7%
|
1.3%
|
||||||
Expected annualized spot volatility
|
31.1
|
%
|
-
|
48.1%
|
38.6
|
%
|
-
|
51.5%
|
Weighted average annualized volatility
|
47.3%
|
51.4%
|
||||||
Risk-free spot rate
|
0.1
|
%
|
-
|
1.9%
|
0.1
|
%
|
-
|
2.0%
|
Expected term
|
5.0 years
|
5.2 years
|
|
Number of Options
(in thousands)
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic Value
|
|||||
Outstanding at beginning of year
|
4,537
|
|
$
|
38.42
|
|
5.2 years
|
$
|
—
|
|
Granted
|
1,287
|
|
24.15
|
|
|
|
|||
Exercised
|
(405
|
)
|
16.36
|
|
|
|
|||
Forfeited
|
(364
|
)
|
41.19
|
|
|
|
|||
Expired
|
(521
|
)
|
37.65
|
|
|
|
|||
Outstanding at end of year
|
4,534
|
|
36.34
|
|
6.2 years
|
$
|
—
|
|
|
Outstanding, fully vested and expected to vest
|
4,389
|
|
36.78
|
|
6.2 years
|
$
|
—
|
|
|
Exercisable at end of year
|
2,188
|
|
$
|
50.03
|
|
3.8 years
|
$
|
—
|
|
Non-vested Shares
|
Shares (in thousands)
|
Weighted-Average Grant-Date Fair Value
|
|||
Non-vested at beginning of year
|
6,991
|
|
$
|
22.98
|
|
Granted
|
4,291
|
|
26.61
|
|
|
Vested
|
(1,511
|
)
|
25.54
|
|
|
Forfeited
|
(1,228
|
)
|
22.86
|
|
|
Non-vested at end of year
|
8,543
|
|
$
|
24.37
|
|
Non-vested Units
|
Restricted Units (in thousands)
|
Weighted-Average Grant-Date Fair Value
|
|||
Non-vested at beginning of year
|
309
|
|
25.08
|
|
|
Granted
|
—
|
|
—
|
|
|
Vested
|
(306
|
)
|
25.04
|
|
|
Forfeited
|
(3
|
)
|
28.99
|
|
|
Non-vested at end of year
|
—
|
|
$
|
—
|
|
|
For the years ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Revenues
|
|
|
|
||||||
Earned premiums
|
$
|
4
|
|
$
|
—
|
|
$
|
—
|
|
Fee income and other
|
13
|
|
46
|
|
50
|
|
|||
Net investment income (loss)
|
|
|
|
||||||
Securities available-for-sale and other
|
(3
|
)
|
10
|
|
26
|
|
|||
Equity securities, trading
|
140
|
|
201
|
|
(14
|
)
|
|||
Total Net Investment Income
|
137
|
|
211
|
|
12
|
|
|||
Net realized capital losses
|
(49
|
)
|
33
|
|
75
|
|
|||
Other revenues
|
—
|
|
—
|
|
48
|
|
|||
Total revenues
|
105
|
|
290
|
|
185
|
|
|||
Benefits, losses and expenses
|
|
|
|
|
|
|
|||
Benefits, losses and loss adjustment expenses
|
2
|
|
2
|
|
(2
|
)
|
|||
Benefits, losses and loss adjustment expenses - returns credited on international variable annuities
|
140
|
|
201
|
|
(14
|
)
|
|||
Amortization of DAC
|
—
|
|
—
|
|
—
|
|
|||
Insurance operating costs and other expenses
|
23
|
|
39
|
|
95
|
|
|||
Total benefits, losses and expenses
|
165
|
|
242
|
|
79
|
|
|||
Income (loss) before income taxes
|
(60
|
)
|
48
|
|
106
|
|
|||
Income tax expense (benefit)
|
(28
|
)
|
(15
|
)
|
49
|
|
|||
Income (loss) from operations of discontinued operations, net of tax
|
(32
|
)
|
63
|
|
57
|
|
|||
Net realized capital gain (loss) on disposal, net of tax [1]
|
(102
|
)
|
(1
|
)
|
82
|
|
|||
Income (loss) from discontinued operations, net of tax
|
$
|
(134
|
)
|
$
|
62
|
|
$
|
139
|
|
Property & Casualty Commercial
|
$
|
6
|
|
Consumer Markets
|
3
|
|
|
Group Benefits
|
1
|
|
|
Mutual Funds
|
4
|
|
|
Talcott Resolution
|
69
|
|
|
Corporate
|
264
|
|
|
Total estimated restructuring and other costs
|
$
|
347
|
|
|
For the Years Ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Severance benefits
|
$
|
22
|
|
$
|
148
|
|
$
|
17
|
|
Professional fees
|
19
|
|
44
|
|
—
|
|
|||
Asset impairment charges
|
20
|
|
5
|
|
—
|
|
|||
Contract termination and other charges
|
6
|
|
2
|
|
8
|
|
|||
Total restructuring and other costs
|
$
|
67
|
|
$
|
199
|
|
$
|
25
|
|
|
For the Years Ended December 31,
|
||||||||
|
2013
|
2012
|
2011
|
||||||
Property & Casualty Commercial
|
$
|
1
|
|
$
|
5
|
|
$
|
—
|
|
Consumer Markets
|
—
|
|
1
|
|
—
|
|
|||
Group Benefits
|
—
|
|
1
|
|
—
|
|
|||
Mutual Funds
|
1
|
|
3
|
|
—
|
|
|||
Talcott Resolution
|
1
|
|
68
|
|
—
|
|
|||
Corporate
|
64
|
|
121
|
|
25
|
|
|||
Total restructuring and other costs
|
$
|
67
|
|
$
|
199
|
|
$
|
25
|
|
|
For the year ended December 31, 2013
|
||||||||||||||
|
Severance Benefits and Related Costs
|
Professional Fees
|
Asset impairment charges
|
Contract Termination and Other Charges
|
Total Restructuring and Other Costs
|
||||||||||
Balance, beginning of period
|
$
|
70
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
70
|
|
Accruals/provisions
|
22
|
|
19
|
|
20
|
|
6
|
|
67
|
|
|||||
Payments/write-offs
|
(70
|
)
|
(19
|
)
|
(20
|
)
|
—
|
|
(109
|
)
|
|||||
Balance, end of period
|
$
|
22
|
|
$
|
—
|
|
$
|
—
|
|
$
|
6
|
|
$
|
28
|
|
|
For the year ended December 31, 2012
|
||||||||||||||
|
Severance Benefits and Related Costs
|
Professional Fees
|
Asset impairment charges
|
Contract Termination and Other Charges
|
Total Restructuring and Other Costs
|
||||||||||
Balance, beginning of period
|
$
|
12
|
|
$
|
—
|
|
$
|
—
|
|
$
|
5
|
|
$
|
17
|
|
Accruals/provisions
|
148
|
|
44
|
|
5
|
|
2
|
|
199
|
|
|||||
Payments/write-offs
|
(90
|
)
|
(44
|
)
|
(5
|
)
|
(7
|
)
|
(146
|
)
|
|||||
Balance, end of period
|
$
|
70
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
70
|
|
|
Three months ended
|
|||||||||||||||||||||||
|
March 31,
|
June 30,
|
September 30,
|
December 31,
|
||||||||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
||||||||||||||||
Revenues
|
$
|
9,043
|
|
$
|
7,525
|
|
$
|
5,465
|
|
$
|
4,565
|
|
$
|
5,641
|
|
$
|
6,332
|
|
$
|
6,087
|
|
$
|
7,700
|
|
Benefits, losses and expenses
|
9,480
|
|
7,544
|
|
5,685
|
|
4,839
|
|
5,298
|
|
6,380
|
|
5,710
|
|
7,940
|
|
||||||||
Income (loss) from continuing operations, net of tax
|
(240
|
)
|
60
|
|
(64
|
)
|
(108
|
)
|
298
|
|
(7
|
)
|
316
|
|
(45
|
)
|
||||||||
Income (loss) from discontinued operations, net of tax
|
(1
|
)
|
36
|
|
(126
|
)
|
7
|
|
(5
|
)
|
20
|
|
(2
|
)
|
(1
|
)
|
||||||||
Net income (loss)
|
(241
|
)
|
96
|
|
(190
|
)
|
(101
|
)
|
293
|
|
13
|
|
314
|
|
(46
|
)
|
||||||||
Less: Preferred stock dividends and accretion of discount
|
10
|
|
10
|
|
—
|
|
11
|
|
—
|
|
10
|
|
—
|
|
11
|
|
||||||||
Net income (loss) available to common shareholders [1]
|
$
|
(251
|
)
|
$
|
86
|
|
$
|
(190
|
)
|
$
|
(112
|
)
|
$
|
293
|
|
$
|
3
|
|
$
|
314
|
|
$
|
(57
|
)
|
Basic earnings (losses) per common share
|
$
|
(0.58
|
)
|
$
|
0.20
|
|
$
|
(0.42
|
)
|
$
|
(0.26
|
)
|
$
|
0.65
|
|
$
|
0.01
|
|
$
|
0.70
|
|
$
|
(0.13
|
)
|
Diluted earnings (losses) per common share [1]
|
$
|
(0.58
|
)
|
$
|
0.18
|
|
$
|
(0.42
|
)
|
$
|
(0.26
|
)
|
$
|
0.60
|
|
$
|
0.01
|
|
$
|
0.65
|
|
$
|
(0.13
|
)
|
Weighted average common shares outstanding, basic
|
436.3
|
|
440.7
|
|
451.4
|
|
438.2
|
|
452.1
|
|
435.8
|
|
451.1
|
|
436.2
|
|
||||||||
Weighted average shares outstanding and dilutive potential common shares
|
436.3
|
|
469.0
|
|
451.4
|
|
438.2
|
|
490.6
|
|
461.7
|
|
486.1
|
|
436.2
|
|
|
As of December 31, 2013
|
||||||||
Type of Investment
|
Cost
|
Fair Value
|
Amount at
which shown on Balance Sheet |
||||||
Fixed Maturities
|
|
|
|
||||||
Bonds and notes
|
|
|
|
||||||
U.S. government and government agencies and authorities (guaranteed and sponsored)
|
$
|
8,231
|
|
$
|
8,208
|
|
$
|
8,208
|
|
States, municipalities and political subdivisions
|
11,932
|
|
12,173
|
|
12,173
|
|
|||
Foreign governments
|
4,228
|
|
4,104
|
|
4,104
|
|
|||
Public utilities
|
5,605
|
|
5,940
|
|
5,940
|
|
|||
All other corporate bonds
|
21,408
|
|
22,550
|
|
22,550
|
|
|||
All other mortgage-backed and asset-backed securities
|
9,237
|
|
9,382
|
|
9,382
|
|
|||
Total fixed maturities, available-for-sale
|
60,641
|
|
62,357
|
|
62,357
|
|
|||
Fixed maturities, at fair value using fair value option
|
958
|
|
844
|
|
844
|
|
|||
Total fixed maturities
|
61,599
|
|
63,201
|
|
63,201
|
|
|||
Equity Securities
|
|
|
|
||||||
Common stocks
|
|
|
|
||||||
Industrial, miscellaneous and all other
|
485
|
|
523
|
|
523
|
|
|||
Non-redeemable preferred stocks
|
365
|
|
345
|
|
345
|
|
|||
Total equity securities, available-for-sale
|
850
|
|
868
|
|
868
|
|
|||
Equity securities, trading
|
14,504
|
|
19,745
|
|
19,745
|
|
|||
Total equity securities
|
15,354
|
|
20,613
|
|
20,613
|
|
|||
Mortgage loans
|
5,598
|
|
5,641
|
|
5,598
|
|
|||
Policy loans
|
1,420
|
|
1,480
|
|
1,420
|
|
|||
Investments in partnerships and trusts
|
3,040
|
|
3,040
|
|
3,040
|
|
|||
Futures, options and miscellaneous
|
1,150
|
|
521
|
|
521
|
|
|||
Short-term investments
|
4,017
|
|
4,008
|
|
4,008
|
|
|||
Total investments
|
$
|
92,178
|
|
$
|
98,504
|
|
$
|
98,401
|
|
|
As of December 31,
|
|||||
Condensed Balance Sheets
|
2013
|
2012
|
||||
Assets
|
|
|
||||
Fixed maturities, available-for-sale, at fair value
|
$
|
1,064
|
|
$
|
542
|
|
Other investments
|
17
|
|
23
|
|
||
Short-term investments
|
801
|
|
825
|
|
||
Investment in affiliates
|
23,353
|
|
28,104
|
|
||
Deferred income taxes
|
1,227
|
|
1,317
|
|
||
Unamortized Issue Costs
|
51
|
|
60
|
|
||
Other assets
|
45
|
|
30
|
|
||
Total assets
|
$
|
26,558
|
|
$
|
30,901
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
||
Net payable to affiliates [1]
|
$
|
407
|
|
$
|
267
|
|
Short-term debt (includes current maturities of long-term debt)
|
200
|
|
320
|
|
||
Long-term debt
|
5,964
|
|
6,566
|
|
||
Other liabilities
|
1,082
|
|
1,301
|
|
||
Total liabilities
|
7,653
|
|
8,454
|
|
||
Total stockholders’ equity
|
18,905
|
|
22,447
|
|
||
Total liabilities and stockholders’ equity
|
$
|
26,558
|
|
$
|
30,901
|
|
|
For the years ended December 31,
|
||||||||
Condensed Statements of Operations and Comprehensive Income
|
2013
|
2012
|
2011
|
||||||
Net investment income
|
$
|
10
|
|
$
|
3
|
|
$
|
2
|
|
Net realized capital losses
|
(7
|
)
|
(6
|
)
|
(5
|
)
|
|||
Total revenues
|
3
|
|
(3
|
)
|
(3
|
)
|
|||
Interest expense
|
384
|
|
439
|
|
490
|
|
|||
Other expenses
|
178
|
|
926
|
|
(41
|
)
|
|||
Total expenses
|
562
|
|
1,365
|
|
449
|
|
|||
Loss before income taxes and earnings of subsidiaries
|
(559
|
)
|
(1,368
|
)
|
(452
|
)
|
|||
Income tax benefit
|
(187
|
)
|
(482
|
)
|
(154
|
)
|
|||
Loss before earnings of subsidiaries
|
(372
|
)
|
(886
|
)
|
(298
|
)
|
|||
Earnings of subsidiaries
|
548
|
|
848
|
|
1,010
|
|
|||
Net income (loss)
|
176
|
|
(38
|
)
|
712
|
|
|||
Other comprehensive income (loss) - parent company:
|
|
|
|
||||||
Change in net gain/loss on cash-flow hedging instruments
|
(11
|
)
|
—
|
|
—
|
|
|||
Change in net unrealized gain/loss on securities
|
(13
|
)
|
1
|
|
—
|
|
|||
Change in pension and other postretirement plan adjustments
|
127
|
|
(172
|
)
|
(57
|
)
|
|||
Other comprehensive loss, net of taxes before other comprehensive income of subsidiaries
|
103
|
|
(171
|
)
|
(57
|
)
|
|||
Other comprehensive income of subsidiaries
|
2,819
|
|
1,763
|
|
2,298
|
|
|||
Total other comprehensive income
|
2,922
|
|
1,592
|
|
2,241
|
|
|||
Total comprehensive income
|
$
|
2,746
|
|
$
|
1,554
|
|
$
|
2,953
|
|
[1]
|
Pursuant to an intercompany note agreement between White River Life Reinsurance Company ("WRR"), an affiliate captive reinsurer, and the Company, WRR may borrow up to $1 billion from the Company in order to maintain certain statutory capital levels required by its plan of operations and which can be used by WRR to settle outstanding intercompany payables with Hartford Life and Annuity Insurance Company, an indirect wholly-owned subsidiary of the Company. As of December 31, 2013, WRR has borrowed $655 under this intercompany note agreement.
|
|
For the years ended December 31,
|
||||||||
Condensed Statements of Cash Flows
|
2013
|
2012
|
2011
|
||||||
Operating Activities
|
|
|
|
||||||
Net income
|
$
|
176
|
|
$
|
(38
|
)
|
$
|
712
|
|
Loss on extinguishment of debt
|
176
|
|
910
|
|
—
|
|
|||
Undistributed earnings of subsidiaries
|
(549
|
)
|
(847
|
)
|
(1,011
|
)
|
|||
Change in operating assets and liabilities
|
1,170
|
|
770
|
|
625
|
|
|||
Cash provided by operating activities
|
973
|
|
795
|
|
326
|
|
|||
Investing Activities
|
|
|
|
||||||
Net sales of short-term investments
|
(454
|
)
|
213
|
|
432
|
|
|||
Capital contributions to subsidiaries
|
1,211
|
|
(334
|
)
|
(126
|
)
|
|||
Cash provided by (used for) investing activities
|
757
|
|
(121
|
)
|
306
|
|
|||
Financing Activities
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
295
|
|
2,123
|
|
—
|
|
|||
Repurchase of warrants
|
(33
|
)
|
(300
|
)
|
—
|
|
|||
Repayments of long-term debt
|
(1,190
|
)
|
(2,133
|
)
|
(400
|
)
|
|||
Treasury stock acquired
|
(600
|
)
|
(154
|
)
|
(46
|
)
|
|||
Proceeds from net issuances of common shares under incentive and stock compensation plans and excess tax benefits
|
20
|
|
7
|
|
9
|
|
|||
Dividends paid — Preferred shares
|
(21
|
)
|
(42
|
)
|
(42
|
)
|
|||
Dividends paid — Common Shares
|
(201
|
)
|
(175
|
)
|
(153
|
)
|
|||
Cash used for financing activities
|
(1,730
|
)
|
(674
|
)
|
(632
|
)
|
|||
Net change in cash
|
—
|
|
—
|
|
—
|
|
|||
Cash — beginning of year
|
—
|
|
—
|
|
—
|
|
|||
Cash — end of year
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
||||||
Interest Paid
|
$
|
366
|
|
$
|
443
|
|
$
|
483
|
|
Dividends Received from Subsidiaries
|
$
|
1,096
|
|
$
|
1,026
|
|
$
|
976
|
|
Segment
|
Deferred Policy
Acquisition Costs
and Present
Value of Future Profits
|
Future Policy Benefits,
Unpaid Losses and Loss Adjustment Expenses
|
Unearned Premiums
|
Other
Policyholder
Funds and Benefits Payable
|
|||||||||
As of December 31, 2013
|
|
|
|
|
|||||||||
Property & Casualty Commercial
|
$
|
404
|
|
$
|
16,293
|
|
$
|
3,188
|
|
$
|
—
|
|
|
Consumer Markets
|
145
|
|
1,864
|
|
1,858
|
|
—
|
|
|||||
Property & Casualty Other Operations
|
—
|
|
3,548
|
|
1
|
|
—
|
|
|||||
Group Benefits
|
41
|
|
6,547
|
|
65
|
|
188
|
|
|||||
Mutual Funds
|
19
|
|
—
|
|
—
|
|
—
|
|
|||||
Talcott Resolution
|
1,552
|
|
13,122
|
|
112
|
|
58,571
|
|
|||||
Corporate
|
—
|
|
(1
|
)
|
1
|
|
4
|
|
|||||
Consolidated
|
$
|
2,161
|
|
$
|
41,373
|
|
$
|
5,225
|
|
$
|
58,763
|
|
|
As of December 31, 2012
|
|
|
|
|
|
|
|
|
|||||
Property & Casualty Commercial
|
$
|
407
|
|
$
|
16,020
|
|
3,170
|
|
—
|
|
|||
Consumer Markets
|
141
|
|
1,926
|
|
1,799
|
|
—
|
|
|||||
Property & Casualty Other Operations
|
—
|
|
3,771
|
|
1
|
|
—
|
|
|||||
Group Benefits
|
43
|
|
6,791
|
|
68
|
|
228
|
|
|||||
Mutual Funds
|
22
|
|
—
|
|
—
|
|
—
|
|
|||||
Talcott Resolution
|
5,112
|
|
12,485
|
|
106
|
|
70,669
|
|
|||||
Corporate
|
—
|
|
(1
|
)
|
1
|
|
4
|
|
|||||
Consolidated
|
$
|
5,725
|
|
$
|
40,992
|
|
$
|
5,145
|
|
$
|
70,901
|
|
Segment
|
Earned
Premiums,
Fee Income and Other
|
Net
Investment Income (Loss)
|
Benefits, Losses
and Loss
Adjustment Expenses
|
Amortization of
Deferred Policy
Acquisition Costs
and Present
Value of Future Profits
|
Insurance
Operating
Costs and
Other
Expenses [1]
|
Net Written Premiums [2]
|
||||||||||||
For the year ended December 31, 2013
|
|
|||||||||||||||||
Property & Casualty Commercial
|
$
|
6,315
|
|
$
|
984
|
|
$
|
4,085
|
|
$
|
905
|
|
$
|
1,190
|
|
6,208
|
|
|
Consumer Markets
|
3,823
|
|
145
|
|
2,580
|
|
332
|
|
761
|
|
3,719
|
|
||||||
Property & Casualty Other Operations
|
—
|
|
141
|
|
148
|
|
—
|
|
27
|
|
2
|
|
||||||
Group Benefits
|
3,330
|
|
390
|
|
2,518
|
|
33
|
|
964
|
|
—
|
|
||||||
Mutual Funds
|
678
|
|
—
|
|
—
|
|
39
|
|
521
|
|
—
|
|
||||||
Talcott Resolution
|
2,148
|
|
7,736
|
|
7,677
|
|
1,392
|
|
2,244
|
|
—
|
|
||||||
Corporate
|
12
|
|
27
|
|
—
|
|
—
|
|
757
|
|
—
|
|
||||||
Consolidated
|
$
|
16,306
|
|
$
|
9,423
|
|
$
|
17,008
|
|
$
|
2,701
|
|
$
|
6,464
|
|
$
|
9,929
|
|
For the year ended December 31, 2012
|
|
|||||||||||||||||
Property & Casualty Commercial
|
6,361
|
|
924
|
|
4,575
|
|
927
|
|
1,139
|
|
6,209
|
|
||||||
Consumer Markets
|
3,791
|
|
159
|
|
2,630
|
|
332
|
|
769
|
|
3,630
|
|
||||||
Property & Casualty Other Operations
|
(2
|
)
|
149
|
|
65
|
|
—
|
|
28
|
|
8
|
|
||||||
Group Benefits
|
3,810
|
|
405
|
|
3,029
|
|
33
|
|
1,033
|
|
—
|
|
||||||
Mutual Funds
|
599
|
|
(3
|
)
|
—
|
|
35
|
|
452
|
|
—
|
|
||||||
Talcott Resolution
|
3,548
|
|
6,926
|
|
7,312
|
|
661
|
|
1,833
|
|
—
|
|
||||||
Corporate
|
168
|
|
31
|
|
—
|
|
—
|
|
1,850
|
|
—
|
|
||||||
Consolidated
|
18,275
|
|
8,591
|
|
17,611
|
|
1,988
|
|
7,104
|
|
9,847
|
|
||||||
For the year ended December 31, 2011
|
|
|||||||||||||||||
Property & Casualty Commercial
|
6,224
|
|
910
|
|
4,584
|
|
917
|
|
1,170
|
|
6,176
|
|
||||||
Consumer Markets
|
3,903
|
|
187
|
|
2,886
|
|
337
|
|
871
|
|
3,675
|
|
||||||
Property & Casualty Other Operations
|
—
|
|
151
|
|
317
|
|
—
|
|
24
|
|
1
|
|
||||||
Group Benefits
|
4,147
|
|
411
|
|
3,306
|
|
35
|
|
1,121
|
|
—
|
|
||||||
Mutual Funds
|
649
|
|
(3
|
)
|
—
|
|
47
|
|
448
|
|
—
|
|
||||||
Talcott Resolution
|
3,909
|
|
1,239
|
|
2,192
|
|
1,108
|
|
1,463
|
|
—
|
|
||||||
Corporate
|
209
|
|
23
|
|
(3
|
)
|
—
|
|
710
|
|
—
|
|
||||||
Consolidated
|
19,041
|
|
2,918
|
|
13,282
|
|
2,444
|
|
5,807
|
|
9,852
|
|
[1]
|
Includes interest expense, goodwill impairment, loss on extinguishment of debt, and reinsurance loss on disposition.
|
[2]
|
Excludes life insurance pursuant to Regulation S-X.
|
|
Gross
Amount
|
Ceded to Other
Companies
|
Assumed
From Other
Companies
|
Net
Amount
|
Percentage
of Amount
Assumed
to Net
|
|||||||||
For the year ended December 31, 2013
|
|
|
|
|
|
|||||||||
Life insurance in-force
|
$
|
883,387
|
|
$
|
278,059
|
|
$
|
49,789
|
|
$
|
655,117
|
|
8
|
%
|
Insurance revenues
|
|
|
|
|
|
|||||||||
Property and casualty insurance
|
$
|
10,494
|
|
871
|
|
241
|
|
9,864
|
|
2
|
%
|
|||
Life insurance and annuities
|
6,182
|
|
1,718
|
|
80
|
|
4,544
|
|
2
|
%
|
||||
Accident and health insurance
|
1,616
|
|
62
|
|
58
|
|
1,612
|
|
4
|
%
|
||||
Total insurance revenues
|
$
|
18,292
|
|
$
|
2,651
|
|
$
|
379
|
|
$
|
16,020
|
|
2
|
%
|
For the year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
||||
Life insurance in-force
|
$
|
946,160
|
|
$
|
137,719
|
|
$
|
48,032
|
|
$
|
856,473
|
|
6
|
%
|
Insurance revenues
|
|
|
|
|
|
|||||||||
Property and casualty insurance
|
$
|
10,484
|
|
796
|
|
205
|
|
9,893
|
|
2
|
%
|
|||
Life insurance and annuities
|
6,572
|
|
458
|
|
69
|
|
6,183
|
|
1
|
%
|
||||
Accident and health insurance
|
1,928
|
|
66
|
|
68
|
|
1,930
|
|
4
|
%
|
||||
Total insurance revenues
|
$
|
18,984
|
|
$
|
1,320
|
|
$
|
342
|
|
$
|
18,006
|
|
2
|
%
|
For the year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
||||
Life insurance in-force
|
$
|
992,921
|
|
$
|
139,590
|
|
$
|
47,365
|
|
$
|
900,696
|
|
5
|
%
|
Insurance revenues
|
|
|
|
|
|
|||||||||
Property and casualty insurance
|
$
|
10,337
|
|
688
|
|
225
|
|
9,874
|
|
2
|
%
|
|||
Life insurance and annuities
|
7,170
|
|
463
|
|
71
|
|
6,778
|
|
1
|
%
|
||||
Accident and health insurance
|
2,122
|
|
61
|
|
63
|
|
2,124
|
|
3
|
%
|
||||
Total insurance revenues
|
$
|
19,629
|
|
$
|
1,212
|
|
$
|
359
|
|
$
|
18,776
|
|
2
|
%
|
|
Balance
January 1,
|
Charged to
Costs and
Expenses
|
Translation
Adjustment
|
Write-offs/
Payments/
Other
|
Balance
December 31,
|
||||||||||
2013
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts and other
|
$
|
117
|
|
$
|
56
|
|
$
|
—
|
|
$
|
(48
|
)
|
$
|
125
|
|
Allowance for uncollectible reinsurance
|
268
|
|
(1
|
)
|
2
|
|
(25
|
)
|
244
|
|
|||||
Valuation allowance on mortgage loans
|
68
|
|
2
|
|
—
|
|
(3
|
)
|
67
|
|
|||||
Valuation allowance for deferred taxes
|
58
|
|
(2
|
)
|
—
|
|
(52
|
)
|
4
|
|
|||||
2012
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts and other
|
$
|
119
|
|
$
|
44
|
|
$
|
—
|
|
$
|
(46
|
)
|
$
|
117
|
|
Allowance for uncollectible reinsurance
|
290
|
|
10
|
|
—
|
|
(32
|
)
|
268
|
|
|||||
Valuation allowance on mortgage loans
|
102
|
|
(14
|
)
|
—
|
|
(20
|
)
|
68
|
|
|||||
Valuation allowance for deferred taxes
|
83
|
|
(25
|
)
|
—
|
|
—
|
|
58
|
|
|||||
2011
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts and other
|
$
|
119
|
|
$
|
45
|
|
$
|
—
|
|
$
|
(45
|
)
|
$
|
119
|
|
Allowance for uncollectible reinsurance
|
290
|
|
5
|
|
—
|
|
(5
|
)
|
290
|
|
|||||
Valuation allowance on mortgage loans
|
155
|
|
26
|
|
—
|
|
(79
|
)
|
102
|
|
|||||
Valuation allowance for deferred taxes
|
165
|
|
(82
|
)
|
—
|
|
—
|
|
83
|
|
|
Discount
Deducted From Liabilities [1]
|
Losses and Loss Adjustment
Expenses Incurred Related to:
|
Paid Losses and
Loss Adjustment Expenses
|
|||||||||
|
Current Year
|
Prior Year
|
||||||||||
Years ended December 31,
|
|
|
|
|
||||||||
2013
|
$
|
553
|
|
$
|
6,621
|
|
$
|
192
|
|
$
|
6,826
|
|
2012
|
$
|
538
|
|
$
|
7,274
|
|
$
|
(4
|
)
|
$
|
7,098
|
|
2011
|
$
|
542
|
|
$
|
7,420
|
|
$
|
367
|
|
$
|
7,218
|
|
[1]
|
Reserves for permanently disabled claimants and certain structured settlement contracts that fund loss run-offs have been discounted using the weighted average interest rates of
3.5%
,
4.0%
, and
4.4%
for
2013
,
2012
, and
2011
, respectively.
|
|
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
|
||
|
By:
|
/s/ Scott R. Lewis
|
|
|
|
|
Scott R. Lewis
|
|
|
|
|
Senior Vice President and Controller
|
|
|
|
|
(Chief accounting officer and duly
authorized signatory) |
|
|
|
Incorporated by Reference
|
|||
Exhibit No.
|
Description
|
Form
|
File No.
|
Exhibit No.
|
Filing Date
|
2.01
|
Purchase and Sale Agreement by and among Massachusetts Mutual Life Insurance Company, Hartford Life, Inc. and The Hartford Financial Services Group, Inc. ("The Hartford") dated as of September 4, 2012.
|
10-Q
|
001-13958
|
2.01
|
11/01/2012
|
2.02
|
Purchase and Sale Agreement by and among Hartford Life, Inc., Prudential Financial, Inc. and The Hartford dated as of September 27, 2012.
|
10-Q
|
001-13958
|
2.02
|
11/01/2012
|
3.01
|
Amended and Restated Certificate of Incorporation of The Hartford, (as amended by the Certificate of Elimination of the Series B Non-Voting Contingent Convertible Preferred Stock, Series C Non-Voting Contingent Convertible Preferred Stock, and 7.25% Mandatory Convertible Preferred Stock, Series F of the Hartford, dated September 20, 2013).**
|
|
|
|
|
3.02
|
Amended and Restated By-Laws of The Hartford, amended effective September 20, 2012.
|
8-K
|
001-13958
|
3.1
|
09/21/2012
|
4.01
|
Amended and Restated Certificate of Incorporation of The Hartford (filed as an exhibit to this report as indicated in Exhibit 3.01 hereto).
|
|
|
|
|
4.02
|
Amended and Restated By-Laws of The Hartford, amended effective September 20, 2012.
|
8-K
|
001-13958
|
3.1
|
09/21/2012
|
4.03
|
Senior Indenture, dated as of October 20, 1995, between The Hartford and The Chase Manhattan Bank (National Association) as Trustee.
|
S-3
|
333-103915
|
4.03
|
03/19/2003
|
4.04
|
Supplemental Indenture No. 1, dated as of December 27, 2000, to the Senior Indenture filed as Exhibit 4.03 hereto, between The Hartford and The Chase Manhattan Bank, as Trustee.
|
S-3/A
|
333-49666
|
4.30
|
12/27/2000
|
4.05
|
Supplemental Indenture No. 2, dated as of September 13, 2002, to the Senior Indenture filed as Exhibit 4.03 hereto, between The Hartford and JPMorgan Chase Bank, as Trustee.
|
8-K
|
001-13958
|
4.1
|
09/17/2002
|
4.06
|
Supplemental Indenture No. 3, dated as of May 23, 2003, to the Senior Indenture filed as Exhibit 4.03 hereto, between The Hartford and JPMorgan Chase Bank, as Trustee.
|
8-K
|
001-13958
|
4.1
|
05/30/2003
|
4.07
|
Senior Indenture, dated as of March 9, 2004, between The Hartford and JPMorgan Chase Bank, as Trustee.
|
8-K
|
001-13958
|
4.1
|
03/12/2004
|
4.08
|
Junior Subordinated Indenture, dated as of February 12, 2007, between The Hartford and LaSalle Bank, N.A., as Trustee.
|
8-K
|
001-13958
|
4.1
|
02/16/2007
|
4.09
|
Senior Indenture, dated as of April 11, 2007, between The Hartford and The Bank of New York Trust Company, N.A., as Trustee.
|
S-3ASR
|
333-142044
|
4.03
|
04/11/2007
|
4.10
|
Junior Subordinated Indenture, dated as of June 6, 2008, between The Hartford and The Bank of New York Trust Company, N.A., as Trustee.
|
8-K
|
001-13958
|
4.1
|
06/06/2008
|
4.11
|
First Supplemental Indenture, dated as of June 6, 2008, between The Hartford and The Bank of New York Trust Company, N.A., as Trustee.
|
8-K
|
001-13958
|
4.2
|
06/06/2008
|
4.12
|
Replacement Capital Covenant, dated as of June 6, 2008.
|
8-K
|
001-13958
|
4.4
|
06/06/2008
|
|
|
Incorporated by Reference
|
|||
Exhibit No.
|
Description
|
Form
|
File No.
|
Exhibit No.
|
Filing Date
|
4.13
|
Warrant to Purchase Shares of Common Stock of The Hartford Financial Services Group, Inc., dated June 26, 2009.
|
8-K
|
001-13958
|
4.1
|
06/26/2009
|
4.14
|
Third Supplemental Indenture, dated as of April 5, 2012, between The Hartford and The Bank of New York Mellon Trust Company, N.A., as Trustee.
|
8-K/A
|
001-13958
|
4.3
|
04/06/2012
|
4.15
|
First Supplemental Indenture, dated as of August 9, 2013, between The Hartford and The Bank of New York Mellon Trust Company, N.A., as Trustee.
|
S-3ASR
|
001-13958
|
4.7
|
08/09/2013
|
10.01
|
Preferred Partnership Agreement dated December 5, 2011 by and between The Hartford, Hartford Life, Inc., Hartford Investment Financial Services, LLC, HL Investment Advisors, LLC and Wellington Management Company, LLP.†
|
10-K
|
001-13958
|
10.01
|
03/01/2013
|
10.02
|
Four-Year Revolving Credit Facility Agreement, dated January 6, 2012, among The Hartford, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A. and Citibank, N.A., as syndication agents, and the lenders referred to therein.
|
8-K
|
001-13958
|
10.1
|
01/06/2012
|
*10.03
|
The Hartford Senior Executive Officer Severance Pay Plan.
|
10-K
|
001-13958
|
10.07
|
02/25/2011
|
*10.04
|
The Hartford Senior Executive Severance Pay Plan, as amended and restated effective February 22, 2011.
|
10-K
|
001-13958
|
10.08
|
02/25/2011
|
*10.05
|
2010 Incentive Stock Plan, as amended effective February 25, 2014.**
|
|
|
|
|
*10.06
|
The Hartford 2010 Incentive Stock Plan Administrative Rules Related to Awards for Key Employees, as amended effective December 15, 2010.
|
10-K
|
001-13958
|
10.10
|
02/25/2011
|
*10.07
|
The Hartford 2010 Incentive Stock Plan Administrative Rules Related to Awards for Non-Employee Directors, as amended effective December 15, 2010.
|
10-K
|
001-13958
|
10.11
|
02/25/2011
|
*10.08
|
The Hartford 2010 Incentive Stock Plan Forms of Individual Award Agreements.
|
10-Q
|
001-13958
|
10.04
|
08/04/2010
|
*10.09
|
Summary of Annual Executive Bonus Program.
|
8-K
|
001-13958
|
10.2
|
05/25/2010
|
*10.10
|
The Hartford 2005 Incentive Stock Plan, as amended for the fiscal year ended 2009.
|
10-K
|
001-13958
|
10.10
|
02/23/2010
|
|
|
Incorporated by Reference
|
|||
Exhibit No.
|
Description
|
Form
|
File No.
|
Exhibit No.
|
Filing Date
|
*10.11
|
The Hartford Deferred Stock Unit Plan, as amended on October 22, 2009.
|
8-K/A
|
001-13958
|
10.02
|
10/22/2009
|
*10.12
|
Form of Award Letters for Deferred Unit and Restricted Units under The Hartford’s Deferred Stock Unit Plan.
|
10-Q
|
001-13958
|
10.03
|
11/03/2009
|
*10.13
|
Form of Key Executive Employment Protection Agreement between The Hartford and certain executive officers of The Hartford, as amended.
|
10-K
|
001-13958
|
10.06
|
02/12/2009
|
*10.14
|
The Hartford 2005 Incentive Stock Plan Forms of Individual Award Agreements.
|
8-K
|
001-13958
|
10.2
|
05/24/2005
|
*10.15
|
The Hartford Incentive Stock Plan, as amended.
|
10-K
|
001-13958
|
10.09
|
02/12/2009
|
*10.16
|
The Hartford Deferred Restricted Stock Unit Plan, as amended.
|
10-K
|
001-13958
|
10.12
|
02/24/2006
|
*10.17
|
The Hartford Deferred Compensation Plan, as amended December 20, 2012.
|
10-K
|
001-13958
|
10.18
|
03/01/2013
|
*10.18
|
The Hartford Excess Pension Plan II, as amended January 1, 2013.
|
10-K
|
001-13958
|
10.19
|
03/01/2013
|
*10.19
|
The Hartford Excess Savings Plan IA, as amended January 1, 2013.
|
10-K
|
001-13958
|
10.20
|
03/01/2013
|
10.20
|
Put Option Agreement, dated February 12, 2007, among The Hartford, Glen Meadow ABC Trust and LaSalle Bank, N.A.
|
8-K
|
001-13958
|
10.1
|
02/16/2007
|
10.21
|
Warrant and Debentures Purchase Agreement, dated as of March 30, 2012, between The Hartford and Allianz SE.
|
8-K
|
001-13958
|
10.1
|
04/02/2012
|
12.01
|
Statement Re: Computation of Ratio of Earnings to Fixed Charges. **
|
|
|
|
|
21.01
|
Subsidiaries of The Hartford Financial Services Group, Inc. **
|
|
|
|
|
23.01
|
Consent of Deloitte & Touche LLP to the incorporation by reference into The Hartford’s Registration Statements on Form S-8 and Form S-3 of the report of Deloitte & Touche LLP contained in this Form 10-K regarding the audited financial statements is filed herewith. **
|
|
|
|
|
24.01
|
Power of Attorney. **
|
|
|
|
|
31.01
|
Certification of Liam E. McGee pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. **
|
|
|
|
|
31.02
|
Certification of Christopher J. Swift pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. **
|
|
|
|
|
32.01
|
Certification of Liam E. McGee pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
|
|
|
|
|
32.02
|
Certification of Christopher J. Swift pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
|
|
|
|
|
101.INS
|
XBRL Instance Document.
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema.
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase.
|
|
|
|
|
*
|
|
Management contract, compensatory plan or arrangement.
|
|
|
|
**
|
|
Filed with the Securities and Exchange Commission as an exhibit to this report.
|
|
|
|
†
|
|
Confidential treatment has been requested for the redacted portions of this agreement. A complete copy of this agreement, including the redacted portions, has been filed separately with the Securities and Exchange Commission.
|
1.
|
The name of the Corporation is
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
, and the name under which the corporation was originally incorporated is ITT Hartford Group, Inc. The date of filing of its original Certificate of Incorporation with the Secretary of State was December 9, 1985.
|
2.
|
This Amended and Restated Certificate of Incorporation restates and integrates and further amends the Certificate of Incorporation of this Corporation by amending
ARTICLE FOURTH
, subsection (a), to read in its entirety as follows: “The aggregate number of shares of stock that the Corporation shall have authority to issue is 450,000,000 shares, consisting of 400,000,000 shares designated “Common Stock” and 50,000,000 shares designated “Preferred Stock.” The shares of Common Stock and the shares of Preferred Stock shall have a par value of $.01 per share.”
|
3.
|
The text of the Certificate of Incorporation as amended or supplemented heretofore is further amended hereby to read as herein set forth in full:
|
(a)
|
The aggregate number of shares of stock that the Corporation shall have authority to issue is 450,000,000 shares, consisting of 400,000,000 shares designated “Common Stock” and 50,000,000 shares designated “Preferred Stock.” The shares of Common Stock and the shares of Preferred Stock shall have a par value of $.01 per share.
|
(b)
|
The Board of Directors of the Corporation shall have the full authority permitted by law, at any time and from time to time, to divide the authorized and unissued shares of Preferred Stock into classes or series, or both, and to determine the following provisions, designations, powers, preferences and relative, participating, optional and other special rights and the qualifications, limitations or restrictions thereof for shares of any such class or series of Preferred Stock:
|
(1)
|
the designation of such class or series, the number of shares to constitute such class or series and the stated or liquidation value thereof;
|
(2)
|
whether the shares of such class or series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights;
|
(3)
|
the dividends, if any, payable on such class or series, whether any such dividends shall be cumulative, and, if so, the rate or rates thereof, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or any other series of the same class;
|
(4)
|
whether the shares of such class or series shall be subject to redemption at the option of the Corporation and/or the holders of such class or series, or upon the happening of a specified event, and, if so, the times, price or prices, and other conditions of such redemption, including securities or other property payable upon any such redemption, if any;
|
(5)
|
the amount or amounts, if any, payable upon shares of such class or series upon, and the rights of the holders of such class or series in, the voluntary or involuntary liquidation, dissolution or winding up, or any distribution of the assets, of the Corporation;
|
(6)
|
whether the shares of such class or series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such class or series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;
|
(7)
|
whether the shares of such class or series shall be convertible into, or exchangeable for, shares of stock of any other class or any other series of the same class or any securities, whether or not issued by the Corporation, at the option of the Corporation and/or the holders of such class or series, or upon the happening of a specified event, and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any terms and conditions of conversion or exchange;
|
(8)
|
the limitations and restrictions, if any, to be effective while any shares of such class or series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of, the Common Stock or shares of stock of any other class or any other series of the same class;
|
(9)
|
the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation of upon the issuance of any additional shares of stocks, including additional shares of such class or series or of any other series of the same class or of any other class;
|
(10)
|
the ranking (be it
pari passu
, junior or senior) of each class or series vis-a-vis any other class or series of any class of Preferred Stock as to the payment of dividends, the distribution of assets and all other matters; and
|
(11)
|
any other powers, preferences and relative, participating, optional and other special rights and any qualifications, limitations or restrictions thereof, insofar as they are not inconsistent with the provisions of this Certificate of Incorporation, to the full extent permitted in accordance with the laws of the State of Delaware.
|
(c)
|
Such divisions and determinations may be accomplished by an amendment to this
ARTICLE FOURTH
, which amendment may be made solely by action of the Board of Directors, which shall have the full authority permitted by law to make such divisions and determinations.
|
(d)
|
The powers, preferences and relative, participating, optional and other special rights of each class or series of Preferred Stock and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other classes or series at any time outstanding;
provided
that each series of a class is given a distinguishing designation and that all shares of a series have powers, preferences and relative, participating, optional and other special rights and the qualifications, limitations or restrictions thereof identical with those of other shares of the same series and, except to the extent otherwise provided in the description of the series, with those other series of the same class.
|
(e)
|
Holders of shares of Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for the payment thereof, dividends at the rates fixed by the Board of Directors for the respective series before any dividends shall be declared and paid, or set aside for payment, on shares of Common Stock with respect to the same dividend period. Nothing in this
ARTICLE FOURTH
shall limit the power of the Board of Directors to create a series of Preferred Stock with dividends the rate of which is calculated by reference to, and the payment of which is concurrent with, dividends on shares of Common Stock.
|
(f)
|
In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of shares of each series of Preferred Stock will be entitled to receive the amount fixed for such series upon any such event plus, in the case of any series on which dividends will have been determined by the Board of Directors to be cumulative, an amount equal to all dividends accumulated and unpaid thereon to the date of final distribution whether or not earned or declared before any distribution shall be paid, or set aside for payment, to holders of Common Stock. If the assets of the Corporation are not sufficient to pay such amounts in full, holders of all shares of Preferred Stock will participate in the distribution of assets ratably in proportion to the full amounts to which they are entitled or in such order or priority, if any, as will have been fixed in the resolution or resolutions providing for the issue of the series of Preferred Stock. Neither the merger no consolidation of the Corporation into or with any other corporation, nor a sale, transfer or lease of all or part of its assets, will be deemed a liquidation, dissolution or winding up of the Corporation within the meaning of this paragraph except to the extent specifically provided for herein. Nothing in this
ARTICLE FOURTH
shall limit the power of the Board of Directors to create a series of Preferred Stock for which the amount to be distributed upon any liquidation, dissolution or winding of the Corporation is calculated by reference to, and the payment of which is concurrent with, the amount to be distributed to the holders of shares of Common Stock.
|
(g)
|
The Corporation, at the option of the Board of Directors, may redeem all or part of the shares of any series of Preferred Stock on the terms and conditions fixed for such series.
|
(h)
|
Except as otherwise required by law, as otherwise provided herein or as otherwise determined by the Board of Directors as to the shares of any series of Preferred Stock prior to the issuance of any such series, the holders of Preferred Stock shall have no voting rights and shall not be entitled to any notice of meetings of stockholders.
|
(i)
|
Each holder of shares of Common Stock shall be entitled to one vote for each share of Common Stock held of record on all matters on which the holders of shares of Common Stock are entitled to vote. Except as otherwise required by law, this Certificate of Incorporation or any certificate of designations providing for the creation of any series of Preferred Stock, the holders of outstanding shares of Common Stock shall have and possess the exclusive right to notice of stockholders’ meetings and the exclusive power to vote. No stockholder will be permitted to cumulate votes at any election of directors.
|
(j)
|
Subject to all the rights of the Preferred Stock, the holders of the Common Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for the payments thereof, dividends payable in cash, stock or otherwise. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, and after the holders of the Preferred Stock of each series shall have been paid in full in cash the amounts to which they respectively shall be entitled or a sum sufficient for such payment in full shall have been set aside, the remaining net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock in accordance with their respective rights and interest, to the exclusion of the holders of the Preferred Stock.
|
(a)
|
Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special stockholders’ meeting and may not be effected by consent in writing by such stockholders. Special meetings of stockholders of the Corporation may be called by the Chairman of the Board of Directors or by a majority vote of the entire Board of Directors.
|
(b)
|
Stockholders of the Corporation shall not have any preemptive rights to subscribe for additional issues of stock of the Corporation except as may be agreed from time to time by the Corporation and any such stockholder.
|
(c)
|
Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation, if any, shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, an election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of the applicable resolution or resolutions
ARTICLE FOURTH
of this Certificate of Incorporation.
|
4.
|
This Amended and Restated Certificate of Incorporation was duly adopted by vote of stockholders in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware.
|
|
|
|
|
|
|
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
|
||
|
By:
|
/s/ MICHAEL O’HALLORAN
|
|
|
|
|
Michael O’Halloran
|
|
|
|
|
Senior Vice President & Corporate Secretary
|
|
1.
|
The name of the corporation (hereinafter called the “corporation”) is:
|
2.
|
The registered office of the corporation within the State of Delaware is hereby changed to 2711 Centerville Road, Suite 400, City of Wilmington 19808, County of New Castle.
|
3.
|
The registered agent of the corporation within the State of Delaware is hereby changed to Corporation Service Company, the business officer of which is identical with the registered office of the corporation as hereby changed.
|
4.
|
The corporation has authorized the changes hereinbefore set forth by resolution of its Board of Directors
|
1.
|
The name of the Corporation is THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
4.
|
The Restated Certificate of Incorporation is corrected by inserting as a new subsection (k) in
ARTICLE FOURTH
thereof the following:
|
|
|
|
|
|
|
THE HARTFORD FINANCIAL SERVICES
GROUP, INC.
|
|
||
|
By:
|
/s/ Ricardo A. Anzaldúa
|
|
|
|
|
Ricardo A. Anzaldúa
|
|
|
|
|
Senior Vice President and Corporate Secretary
|
|
(a)
|
Except as expressly provided in this Section and in Section 7(g) or as otherwise required by applicable law or regulation, holders of the Series C Preferred Stock shall have no voting rights.
|
(b)
|
So long as any shares of the Series C Preferred Stock are outstanding, the Company shall not, without the consent or vote of the holders of a majority of the outstanding shares of the Series C Preferred Stock, voting separately as a class, amend, alter or repeal or otherwise change (including in connection with any merger or consolidation or otherwise) any provision of the Certificate of Incorporation of the Company or this Certificate of Designation, if such amendment would increase the authorized shares of the Series C Preferred Stock or alter or change the powers, preferences or special rights of the shares of the Series C Preferred Stock so as to affect the Series C Preferred Stock adversely.
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
|
||
|
By:
|
/s/ Ricardo A. Anzaldúa
|
|
|
|
|
Ricardo A. Anzaldúa
|
|
|
|
|
Senior Vice President and Corporate Secretary
|
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|
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|
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
|
||
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By:
|
/s/ Ricardo A. Anzaldúa
|
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|
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|
Ricardo A. Anzaldúa
|
|
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Senior Vice President and Corporate Secretary
|
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
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||
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By:
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/s/ Ricardo A. Anzaldua
|
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Ricardo A. Anzaldua
|
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Senior Vice President and Corporate Secretary
|
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
|
||
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By:
|
/s/ Ricardo A. Anzaldúa
|
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|
|
|
Name:
|
Ricardo A. Anzaldúa
|
|
|
|
Title:
|
Senior Vice President and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
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Stock Price on Effective Date
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effective Date
|
|
$5.00
|
|
|
$10.00
|
|
|
$15.00
|
|
|
$20.00
|
|
|
$25.00
|
|
|
$27.75
|
|
|
$30.00
|
|
|
$33.86
|
|
|
$35.00
|
|
|
$40.00
|
|
|
$50.00
|
|
|
$60.00
|
|
|
$75.00
|
|
|
$100.00
|
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|
|||||||||||||||
March 23, 2010
|
|
|
71.178
|
|
|
|
52.425
|
|
|
|
44.724
|
|
|
|
40.098
|
|
|
|
37.146
|
|
|
|
36.036
|
|
|
|
35.257
|
|
|
|
34.278
|
|
|
|
34.046
|
|
|
|
33.257
|
|
|
|
32.359
|
|
|
|
31.883
|
|
|
|
31.458
|
|
|
|
31.016
|
|
|
|
July 1, 2010
|
|
|
68.559
|
|
|
|
51.306
|
|
|
|
44.144
|
|
|
|
39.714
|
|
|
|
36.829
|
|
|
|
35.706
|
|
|
|
34.972
|
|
|
|
34.012
|
|
|
|
33.786
|
|
|
|
33.023
|
|
|
|
32.173
|
|
|
|
31.732
|
|
|
|
31.338
|
|
|
|
30.923
|
|
|
|
October 1, 2010
|
|
|
65.841
|
|
|
|
50.117
|
|
|
|
43.520
|
|
|
|
39.304
|
|
|
|
36.492
|
|
|
|
35.388
|
|
|
|
34.667
|
|
|
|
33.727
|
|
|
|
33.508
|
|
|
|
32.772
|
|
|
|
31.972
|
|
|
|
31.568
|
|
|
|
31.208
|
|
|
|
30.820
|
|
|
|
January 1, 2011
|
|
|
63.075
|
|
|
|
48.899
|
|
|
|
42.895
|
|
|
|
38.907
|
|
|
|
36.165
|
|
|
|
35.077
|
|
|
|
34.366
|
|
|
|
33.443
|
|
|
|
33.228
|
|
|
|
32.518
|
|
|
|
31.768
|
|
|
|
31.400
|
|
|
|
31.073
|
|
|
|
30.713
|
|
|
|
April 1, 2011
|
|
|
60.252
|
|
|
|
47.638
|
|
|
|
42.258
|
|
|
|
38.516
|
|
|
|
35.844
|
|
|
|
34.768
|
|
|
|
34.064
|
|
|
|
33.154
|
|
|
|
32.944
|
|
|
|
32.257
|
|
|
|
31.557
|
|
|
|
31.227
|
|
|
|
30.931
|
|
|
|
30.600
|
|
|
|
July 1, 2011
|
|
|
57.387
|
|
|
|
46.344
|
|
|
|
41.621
|
|
|
|
38.151
|
|
|
|
35.545
|
|
|
|
34.476
|
|
|
|
33.773
|
|
|
|
32.868
|
|
|
|
32.661
|
|
|
|
31.994
|
|
|
|
31.343
|
|
|
|
31.050
|
|
|
|
30.785
|
|
|
|
30.483
|
|
|
|
October 1, 2011
|
|
|
54.479
|
|
|
|
45.011
|
|
|
|
40.980
|
|
|
|
37.817
|
|
|
|
35.278
|
|
|
|
34.205
|
|
|
|
33.495
|
|
|
|
32.586
|
|
|
|
32.380
|
|
|
|
31.727
|
|
|
|
31.125
|
|
|
|
30.868
|
|
|
|
30.633
|
|
|
|
30.361
|
|
|
|
January 1, 2012
|
|
|
51.524
|
|
|
|
43.630
|
|
|
|
40.323
|
|
|
|
37.518
|
|
|
|
35.049
|
|
|
|
33.961
|
|
|
|
33.234
|
|
|
|
32.305
|
|
|
|
32.097
|
|
|
|
31.453
|
|
|
|
30.900
|
|
|
|
30.679
|
|
|
|
30.472
|
|
|
|
30.233
|
|
|
|
April 1, 2012
|
|
|
48.520
|
|
|
|
42.195
|
|
|
|
39.630
|
|
|
|
37.255
|
|
|
|
34.872
|
|
|
|
33.754
|
|
|
|
32.994
|
|
|
|
32.023
|
|
|
|
31.809
|
|
|
|
31.165
|
|
|
|
30.663
|
|
|
|
30.479
|
|
|
|
30.302
|
|
|
|
30.100
|
|
|
|
July 1, 2012
|
|
|
45.469
|
|
|
|
40.710
|
|
|
|
38.883
|
|
|
|
37.037
|
|
|
|
34.783
|
|
|
|
33.611
|
|
|
|
32.791
|
|
|
|
31.740
|
|
|
|
31.512
|
|
|
|
30.855
|
|
|
|
30.411
|
|
|
|
30.265
|
|
|
|
30.121
|
|
|
|
29.963
|
|
|
|
October 1, 2012
|
|
|
42.373
|
|
|
|
39.182
|
|
|
|
38.047
|
|
|
|
36.864
|
|
|
|
34.856
|
|
|
|
33.597
|
|
|
|
32.661
|
|
|
|
31.445
|
|
|
|
31.189
|
|
|
|
30.504
|
|
|
|
30.140
|
|
|
|
30.035
|
|
|
|
29.930
|
|
|
|
29.822
|
|
|
|
January 1, 2013
|
|
|
39.230
|
|
|
|
37.622
|
|
|
|
37.083
|
|
|
|
36.642
|
|
|
|
35.239
|
|
|
|
33.878
|
|
|
|
32.687
|
|
|
|
31.074
|
|
|
|
30.757
|
|
|
|
30.054
|
|
|
|
29.843
|
|
|
|
29.789
|
|
|
|
29.734
|
|
|
|
29.679
|
|
|
|
April 1, 2013
|
|
|
36.036
|
|
|
|
36.036
|
|
|
|
36.036
|
|
|
|
36.036
|
|
|
|
36.036
|
|
|
|
36.036
|
|
|
|
33.333
|
|
|
|
29.536
|
|
|
|
29.536
|
|
|
|
29.536
|
|
|
|
29.536
|
|
|
|
29.536
|
|
|
|
29.536
|
|
|
|
29.536
|
|
|
|
|
|
|
|
CR
1
|
|
=
|
|
CR
0
× (OS
1
/ OS
0
)
|
|
|
|
|
|
where,
|
|
|
|
|
|
|
|
|
|
CR
0
|
|
=
|
|
the Fixed Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution or immediately prior to the open of business on the effective date for such subdivision or combination, as the case may be;
|
|
|
|
|
|
CR
1
|
|
=
|
|
the Fixed Conversion Rate in effect immediately after the close of business on such Record Date or immediately after the open of business on such effective date, as the case may be;
|
|
|
|
|
|
OS
0
|
|
=
|
|
the number of shares of Common Stock outstanding immediately prior to the close of business on such Record Date or immediately prior to the open of business on such effective date, as the case may be (and prior to giving effect to such event); and
|
|
|
|
|
|
OS
1
|
|
=
|
|
the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, such dividend, distribution, subdivision or combination.
|
|
|
|
|
|
CR
1
|
|
=
|
|
CR
0
× [(OS
0
+ X) / (OS
0
+ Y)]
|
|
|
|
|
|
where,
|
|
|
|
|
|
|
|
|
|
CR
0
|
|
=
|
|
the Fixed Conversion Rate in effect immediately prior to the close of business on the Record Date for such issuance;
|
|
|
|
|
|
CR
1
|
|
=
|
|
the Fixed Conversion Rate in effect immediately after the close of business on such Record Date;
|
|
|
|
|
|
OS
0
|
|
=
|
|
the number of shares of Common Stock outstanding immediately prior to the close of business on such Record Date;
|
|
|
|
|
|
X
|
|
=
|
|
the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and
|
|
|
|
|
|
Y
|
|
=
|
|
the aggregate price payable to exercise such rights, options or warrants,
divided by
the Average VWAP per share of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement for such issuance.
|
|
|
|
|
|
CR
1
|
|
=
|
|
CR
0
× SP
0
/ (SP
0
- FMV)
|
|
|
|
|
|
where,
|
|
|
|
|
|
|
|
|
|
CR
0
|
|
=
|
|
the Fixed Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution;
|
|
|
|
|
|
CR
1
|
|
=
|
|
the Fixed Conversion Rate in effect immediately after the close of business on such Record Date;
|
|
|
|
|
|
SP
0
|
|
=
|
|
the Current Market Price per share of the Common Stock as of such Record Date; and
|
|
|
|
|
|
FMV
|
|
=
|
|
the fair market value (as determined in good faith by the Board of Directors) on the Record Date for such dividend or distribution of shares of the Corporation’s capital stock (other than Common Stock), evidences of the Corporation’s indebtedness, the Corporation’s assets or rights to acquire the capital stock, indebtedness or assets of the Corporation, expressed as an amount per share of Common Stock.
|
|
|
|
|
|
CR
1
|
|
=
|
|
CR
0
× (FMV
0
+ MP
0
) / MP
0
|
|
|
|
|
|
where,
|
|
|
|
|
|
|
|
|
|
CR
0
|
|
=
|
|
the Fixed Conversion Rate in effect at the close of business on the tenth Trading Day immediately following, and including, the date on which “ex-dividend trading” commences for such dividend or distribution on the relevant exchange;
|
|
|
|
|
|
CR
1
|
|
=
|
|
the Fixed Conversion Rate in effect immediately after the close of business on the tenth Trading Day immediately following, and including, the date on which “ex-dividend trading” commences for such dividend or distribution on the relevant exchange;
|
|
|
|
|
|
FMV
0
|
|
=
|
|
the Average VWAP per share of such capital stock or similar equity interests distributed to holders of the Common Stock applicable to one share of Common Stock over the 10 consecutive Trading Day period commencing on, and including, the date on which “ex-dividend trading” commences for such dividend or distribution on the relevant exchange; and
|
|
|
|
|
|
MP
0
|
|
=
|
|
the Average VWAP per share of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the date on which “ex-dividend trading” commences for such dividend or distribution on the relevant exchange.
|
|
|
|
|
|
CR
1
|
|
=
|
|
CR
0
× (SP
0
- T)/ (SP
0
- C)
|
|
|
|
|
|
where,
|
|
|
|
|
|
|
|
|
|
CR
0
|
|
=
|
|
the Fixed Conversion Rate in effect immediately prior to the close of business on the Record Date for such distribution;
|
|
|
|
|
|
CR
1
|
|
=
|
|
the Fixed Conversion Rate in effect immediately after the close of business on the Record Date for such distribution;
|
|
|
|
|
|
SP
0
|
|
=
|
|
the Current Market Price per share of the Common Stock as of the Record Date for such distribution;
|
|
|
|
|
|
T
|
|
=
|
|
the Dividend Threshold Amount;
provided
that if the distribution is not a regular quarterly cash dividend, the Dividend Threshold amount shall be deemed to be zero; and
|
|
|
|
|
|
C
|
|
=
|
|
an amount of cash per share of the Common Stock that the Corporation distributes to holders of the Common Stock.
|
|
|
|
|
|
CR
1
|
|
=
|
|
CR
0
× (FMV + (SP
1
× OS
1
)) / (SP
1
× OS
0
)
|
|
|
|
|
|
where:
|
|
|
|
|
|
|
|
|
|
CR
0
|
|
=
|
|
the Fixed Conversion Rate in effect immediately prior to the close of business on the tenth Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date;
|
|
|
|
|
|
CR
1
|
|
=
|
|
the Fixed Conversion Rate in effect immediately after the close of business on the tenth Trading Day immediately following, and including, the trading day next succeeding the Expiration Date;
|
|
|
|
|
|
FMV
|
|
=
|
|
the fair market value (as determined in good faith by the Board of Directors) as of the Expiration Date of the aggregate value of all cash and any other consideration paid or payable for shares of the Common Stock validly tendered or exchanged and ot withdrawn as of the Expiration Date (the “
Purchased Shares
”);
|
|
|
|
|
|
OS
1
|
|
=
|
|
the number of shares of Common Stock outstanding as of the last time tenders or exchanges may be made pursuant to such tender or exchange offer (the “
Expiration Time
”), less any Purchased Shares;
|
|
|
|
|
|
OS
0
|
|
=
|
|
the number of shares of Common Stock outstanding at the Expiration Time, including any Purchased Shares; and
|
|
|
|
|
|
SP
1
|
|
=
|
|
the Average VWAP per share of the Common Stock for the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the Expiration Date.
|
|
|
|
|
|
|
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
|
||
|
By:
|
/s/ RICARDO A. ANZALDUA
|
|
|
|
|
Name:
|
Ricardo A. Anzaldua
|
|
|
|
Title:
|
Senior Vice President and Corporate Secretary
|
|
|
|
|
Certificate Number [_____]
|
|
[Initial] Number of Shares of Series F
|
|
|
Preferred Stock [
]
|
|
|
CUSIP 416515807
|
|
|
ISIN US4165158076
|
|
|
|
|
|
|
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
|
||
|
By:
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
||
|
By:
|
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
THE BANK OF NEW YORK MELLON, as Registrar
|
|
||
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
Signature: _________________________________________________________________________
|
(Sign exactly as your name appears on the other side of this Certificate)
|
|
|
|
Signature Guarantee:
|
|
_________________________________________________________________________
|
|
|
|
|
|
|
|
|
|
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
|
||
|
By:
|
/s/ Alan J. Kreczko
|
|
|
|
|
Name:
|
Alan J. Kreczko
|
|
|
|
Title:
|
Executive Vice President and General Counsel
|
|
1.
|
Purpose
|
|
For the years ended December 31,
|
||||||||||||||
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||
EARNINGS (LOSS):
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations, before income taxes
|
$
|
63
|
|
$
|
(581
|
)
|
$
|
200
|
|
$
|
2,272
|
|
$
|
(1,515
|
)
|
Less: Undistributed earnings from limited partnerships and other alternative investments
|
33
|
|
(8
|
)
|
65
|
|
60
|
|
(380
|
)
|
|||||
Add: Total fixed charges, before interest credited to contractholders
|
434
|
|
498
|
|
562
|
|
566
|
|
537
|
|
|||||
Total earnings (loss), before interest credited to contractholders
|
464
|
|
(75
|
)
|
697
|
|
2,778
|
|
(598
|
)
|
|||||
Interest credited to contractholders [1]
|
7,011
|
|
5,871
|
|
203
|
|
526
|
|
4,537
|
|
|||||
Total earnings (loss)
|
$
|
7,475
|
|
$
|
5,796
|
|
$
|
900
|
|
$
|
3,304
|
|
$
|
3,939
|
|
|
|
|
|
|
|
||||||||||
FIXED CHARGES:
|
|
|
|
|
|
||||||||||
Interest expense
|
$
|
397
|
|
$
|
457
|
|
$
|
508
|
|
$
|
508
|
|
$
|
476
|
|
Interest factor attributable to rentals and other [2]
|
37
|
|
41
|
|
54
|
|
58
|
|
61
|
|
|||||
Total fixed charges, before interest credited to contractholders
|
434
|
|
498
|
|
562
|
|
566
|
|
537
|
|
|||||
Interest credited to contractholders [1]
|
7,011
|
|
5,871
|
|
203
|
|
526
|
|
4,537
|
|
|||||
Total fixed charges
|
7,445
|
|
6,369
|
|
765
|
|
1,092
|
|
5,074
|
|
|||||
Preferred stock dividend requirements [3]
|
2
|
|
244
|
|
15
|
|
687
|
|
271
|
|
|||||
Total fixed charges and preferred stock dividend requirements, before interest credited to contractholders
|
436
|
|
742
|
|
577
|
|
1,253
|
|
808
|
|
|||||
Total fixed charges and preferred stock dividend requirements
|
$
|
7,447
|
|
$
|
6,613
|
|
$
|
780
|
|
$
|
1,779
|
|
$
|
5,345
|
|
|
|
|
|
|
|
||||||||||
RATIOS:
|
|
|
|
|
|
||||||||||
Total earnings (loss) to total fixed charges [4]
|
1.0
|
|
NM
|
|
1.2
|
|
3.0
|
|
NM
|
|
|||||
Total earnings (loss) to total fixed charges and preferred stock dividend requirements [4]
|
1.0
|
|
NM
|
|
1.2
|
|
1.9
|
|
NM
|
|
|||||
|
|
|
|
|
|
||||||||||
Deficiency of total earnings (loss) to total fixed charges [5]
|
$
|
—
|
|
$
|
573
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,135
|
|
Deficiency of total earnings (loss) to total fixed charges and preferred stock dividend requirements [5]
|
$
|
—
|
|
$
|
817
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,406
|
|
|
|
|
|
|
|
||||||||||
Ratios before interest credited to contractholders [6]
|
|
|
|
|
|
||||||||||
Total earnings (loss) to total fixed charges [4]
|
1.1
|
|
NM
|
|
1.2
|
|
4.9
|
|
NM
|
|
|||||
Total earnings (loss) to total fixed charges and preferred stock dividend requirements [4]
|
1.1
|
|
NM
|
|
1.2
|
|
2.2
|
|
NM
|
|
[1]
|
Interest credited to contractholders includes interest credited on general account assets and interest credited on consumer notes.
|
[2]
|
Interest factor attributable to rental and others includes 1/3 of total rent expense as disclosed in the notes to the financial statements, capitalized interest and amortization of debt issuance costs.
|
[3]
|
Preferred stock dividend requirements include preferred stock dividends accrued and accretion of discount on preferred stock issuance.
|
[4]
|
Ratios of less than one-to-one are presented as “NM” or not meaningful.
|
[5]
|
Represents additional earnings that would be necessary to result in a one-to-one ratio. These amounts are primarily due to before-tax realized losses of $(744) and $(2.0) billion, which include before-tax impairments of $(349) and $(1.5) billion, for the years ended December 31, 2012 and 2009, respectively.
|
[6]
|
These secondary ratios are disclosed for the convenience of fixed income investors and the rating agencies that serve them and are more comparable to the ratios disclosed by all issuers of fixed income securities.
|
Form S-3 Registration No.
|
|
Form S-8 Registration Nos.
|
333-190506
|
|
333-105707
|
|
|
333-49170
|
|
|
333-105706
|
|
|
333-34092
|
|
|
033-80665
|
|
|
333-12563
|
|
|
333-125489
|
|
|
333-157372
|
|
|
333-160173
|
|
|
333-168537
|
/s/ Liam E. McGee
|
|
/s/ Michael G. Morris
|
Liam E. McGee
|
|
Michael G. Morris
|
|
|
|
/s/ Christopher J. Swift
|
|
/s/ Thomas A. Renyi
|
Christopher J. Swift
|
|
Thomas A. Renyi
|
|
|
|
/s/ Scott R. Lewis
|
|
/s/ Julie G. Richardson
|
Scott R. Lewis
|
|
Julie G. Richardson
|
|
|
|
/s/ Robert B. Allardice, III
|
|
/s/ Virginia P. Ruesterholz
|
Robert B. Allardice, III
|
|
Virginia P. Ruesterholz
|
|
|
|
/s/ Trevor Fetter
|
|
/s/ Charles B. Strauss
|
Trevor Fetter
|
|
Charles B. Strauss
|
|
|
|
/s/ Paul G. Kirk, Jr.
|
|
/s/ H. Patrick Swygert
|
Paul G. Kirk, Jr.
|
|
H. Patrick Swygert
|
|
|
|
/s/ Kathryn A. Mikells
|
|
|
Kathryn A. Mikells
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of The Hartford Financial Services Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 28, 2014
|
/s/ Liam E. McGee
|
|
||
|
|
Liam E. McGee
|
|
||
|
|
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of The Hartford Financial Services Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 28, 2014
|
/s/ Christopher J. Swift
|
|
||
|
|
Christopher J. Swift
|
|
||
|
|
Executive Vice President and Chief Financial Officer
|
1)
|
The Report fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934; and
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 28, 2014
|
/s/ Liam E. McGee
|
|
||
|
|
Liam E. McGee
|
|
||
|
|
Chairman, President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 28, 2014
|
/s/ Christopher J. Swift
|
|
||
|
|
Christopher J. Swift
|
|
||
|
|
Executive Vice President and Chief Financial Officer
|