Full Description

The Hartford Financial Services Group, Inc. (The Hartford) is an insurance and financial services company. It provides investment products, individual life, group life and group disability insurance products, and property and casualty insurance products in the United States. The Hartford is organized into two operations: Life, and Property & Casualty. The Life and Property & Casualty operations conduct business in 11 operating segments. Life is organized into four groups, which comprises six segments. The Retail Products Group (Retail) and Individual Life segments make up the Individual Markets Group. The Retirement Plans and Group Benefits segments make up the Employer Markets Group. The International and Institutional Solutions Group (Institutional) segments each make up their own group. During the year ended December 31, 2008, it acquired a part of the defined contribution record keeping business of Princeton Retirement Group, Sun Life Retirement Services, Inc. and TopNoggin LLC. In April 2009, Beazley Group Plc acquired First State Management Group, Inc., from The Hartford. On June 24, 2009, The Hartford completed the acquisition of Federal Trust Corporation.

Property & Casualty is organized into five reporting segments: the underwriting segments of Personal Lines, Small Commercial, Middle Market and Specialty Commercial (collectively Ongoing Operations), and the Other Operations segment. The Company maintains a retail mutual fund operation, whereby the Company, through wholly owned subsidiaries, provides investment management and administrative services to The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc. (The mutual funds) families of 62 mutual funds and one closed-end fund.

Life

Life’s business is conducted by Hartford Life, Inc. (Hartford Life or Life), an indirect subsidiary of The Hartford. Hartford Life provides retail and institutional investment products, including variable annuities, fixed market value adjusted (MVA) annuities, mutual funds, private placement life insurance, which includes life insurance products purchased by a company on the lives of its employees, and retirement plan services for the savings and retirement needs of over seven million customers; life insurance for wealth protection, accumulation and transfer needs for approximately 760,000 customers; group benefits products, such as group life and group disability insurance, and fixed and variable annuity products through its international operations for the savings and retirement needs of approximately 490,000 customers.

The Retail segment focuses, through the sale of individual variable and fixed annuities, mutual funds and other investment products, on the savings and retirement needs of the growing number of individuals who are preparing for retirement or who have already retired. Life sells both variable and fixed individual annuity products through a distribution network of national and regional broker-dealer organizations, banks and other financial institutions and independent financial advisors.

The Individual Life segment provides life insurance strategies to an array of business intermediaries and partners to solve the wealth protection, accumulation and transfer needs of its affluent, emerging affluent and business life insurance clients. Variable universal life provides life insurance with an investment return linked to underlying investments as policyholders are allowed to invest premium dollars among a variety of underlying mutual funds. In Life’s second-to-die products, two lives are insured rather than one, and the policy proceeds are paid upon the deaths of both insureds. Second-to-die policies are used in estate planning for a married couple as the policy proceeds are paid out at the time an estate tax liability is incurred. Universal life and interest sensitive whole life insurance coverages provide life insurance with adjustable rates of return based on existing interest rates and on the returns of the underlying investment portfolios. Universal life provides policyholders with flexibility in the timing and amount of premium payments and the amount of the death benefit, provided there are sufficient policy funds to cover all policy charges for the coming period, unless guaranteed no-lapse coverage is in effect.

Life is a provider of retirement products and services. Products and services offered by Retirement Plans include asset management and plan administration sold to municipalities and not-for-profit organizations. Life also provides retirement products and services, including asset management and plan administration sold to small and medium-size corporations. Life offers a number of different investment products, including variable annuities and fixed products, to the employees in Section 457 and 403(b) plans. Life manages the fixed income funds and certain other outside money managers act as advisors to the equity funds offered in Section 457 and 403(b) plans administered by Life. As of December 31, 2008, Life administered over 4,300 plans under Sections 457 and 403(b). Life sells retirement plan products and services to corporations under 401(k) plans targeting the small and medium case markets. The number of 401(k) plans administered, as of December 31, 2008, was over 25,400.

The Group Benefits segment provides employers groups, associations, affinity groups and financial institutions with group life, accident and disability coverage, along with other products and services, including voluntary benefits and group retiree health. The Company also offers disability underwriting, administration, claims processing services, and reinsurance to other insurers and self-funded employer plans. Life is a carrier in the large case market of the group disability insurance business. Life also offers voluntary, or employee-paid, short-term and long-term disability group benefits.

Life’s short-term disability benefit plans provide a weekly benefit amount (typically 60% to 70% of the insured’s earned income up to a specified maximum benefit) to insureds when they are unable to work due to an accident or illness. Long-term disability insurance provides a monthly benefit for those extended periods of time not covered by a short-term disability benefit plan when insureds are unable to work due to disability. Insureds may receive total or partial disability benefits. Group term life insurance provides term coverage to employees and members of associations, affinity groups, and financial institutions and their dependents for a specified period and has no accumulation of cash values. Life offers options for its basic group life insurance coverage, including portability of coverage and a living benefit and critical illness option, whereby terminally ill policyholders can receive death benefits in advance. Life also offers voluntary, or employee-paid, life group benefits and accidental death and dismemberment coverage either packaged with life insurance or on a stand-alone basis. Life offers a host of other products and services, such as Family and Medical Leave Act Administration, group retiree health, and specialized insurance products for physicians. Life provides excess of loss medical coverage (known as stop loss insurance) to employers who self-fund their medical plans and pay claims using the services of a third party administrator. Life also provides travel accident, hospital indemnity, supplemental health insurance for military personnel and their families and other coverages to individual members of various associations, affinity groups, financial institutions and employee groups.

International, which has operations located in Japan, Brazil, Ireland and the United Kingdom, provides investments, retirement savings and other insurance and savings products to individuals and groups outside the United States and Canada. The Company’s Japan operation sells both variable and fixed individual annuity products through a distribution network of Japan’s broker-dealer organizations, banks and other financial institutions and independent financial advisors. International’s other operations include a 50%-owned joint venture in Brazil and a startup operation in Europe. The Brazil joint venture operates under the name Icatu-Hartford, and distributes pension, life insurance and other insurance and savings products through broker-dealer organizations and various partnerships. The Company’s European operation, Hartford Life Limited, began selling unit-linked investment bonds in the United Kingdom in April 2005. Hartford Life Limited established its operations in Dublin, Ireland, with a branch office in London to help market and service its business in the United Kingdom. During 2008, the Company launched a new product called Rising Income/Care Story, which is a guaranteed minimum withdrawal benefit (GMWB) variable annuity combined with a nursing care rider, as well as the new product Plus 5, which is a 10-year guaranteed minimum accumulation benefit (GMAB) variable annuity with a 5% bonus at year 10.

Life provides structured settlement contracts, institutional annuities, longevity assurance, institutional mutual funds and stable value investment products. In addition, Life is engaged in the variable private placement life insurance (PPLI) market, which includes life insurance policies purchased by a company or a trust on the lives of employees, with Life or a trust sponsored by Life named as the beneficiary under the policy.

PPLI products are utilized by employers to fund non-qualified benefits or other post-employment benefit liabilities. Structured settlement annuity contracts provide periodic payments to an injured person or survivor, typically in settlement of a claim under a liability policy in-lieu-of a lump sum settlement. Longevity assurance is an individual fixed deferred payout annuity that provides life contingent benefits to individuals with the purpose of providing individuals with protection from the risk of outliving retirement income. Life sells institutional shares of The Hartford Mutual Funds to both qualified (section 401(k) and 457 plans) and non-qualified (endowments and foundations) institutional investors on an investment only basis. The two primary sub-advisors to the Hartford HLS Funds are Wellington, of Boston, Massachusetts for most of the equity funds and HIMCO for the fixed-income funds.

Property & Casualty

Property & Casualty provides workers’ compensation, property, automobile, liability, umbrella, specialty casualty, marine, livestock, and fidelity and surety coverages to commercial accounts primarily throughout the United States; professional liability coverage and directors and officers liability coverage, as well as excess and surplus lines business not normally written by standard commercial lines insurers; automobile, homeowners and home-based business coverage to individuals throughout the United States, and insurance-related services. Personal Lines sells automobile, homeowners’ and home-based business coverages to individuals across the United States, including a special program designed for members of American Association of Retired Persons (AARP).

Small Commercial provides standard commercial insurance coverage to small commercial businesses primarily throughout the United States. Small Commercial offers workers’ compensation, property, automobile, liability and umbrella coverages under several different products. Some of these coverages are sold together as part of a single multi-peril package policy called Spectrum. The sale of Spectrum business owners’ package policies and workers’ compensation policies accounts for most of the written premium in the Small Commercial segment. Middle Market provides standard commercial insurance coverage to middle market commercial businesses primarily throughout the United States. Middle Market offers workers’ compensation, property, automobile, liability, umbrella and marine coverages under different products.

Specialty Commercial offers a variety of insurance products and risk management services. Specialty Commercial provides standard commercial insurance products, including workers’ compensation, automobile and liability coverages to large-sized companies. Specialty Commercial also provides fidelity, surety, professional liability, specialty casualty and livestock coverages, as well as property excess and surplus lines coverages not normally written by standard lines insurers. A significant portion of specialty casualty business, including workers’ compensation business, is written through large deductible programs where the insured typically provides collateral to support loss payments made within their deductible. The specialty casualty business also provides retrospectively-rated programs where the premiums are adjustable based on loss experience. In addition, Specialty Commercial provides third-party administrator services for claims administration, integrated benefits and loss control through Specialty Risk Services, LLC, a subsidiary of the Company.

The Other Operations segment operates under a single management structure, Heritage Holdings, which is responsible for two related activities. The first activity is the management of certain subsidiaries and operations of The Hartford that have discontinued writing new business. The second is the management of claims (and the associated reserves) related to asbestos, environmental and other exposures.