874766--2/23/2010--HARTFORD_FINANCIAL_SERVICES_GROUP

related topics

{loss, insurance, financial}

{operation, natural, condition}

{financial, litigation, operation}

{capital, credit, financial}

{tax, income, asset}

{regulation, change, law}

{condition, economic, financial}

{system, service, information}

{debt, indebtedness, cash}

{product, candidate, development}

{competitive, industry, competition}

Our adjustment of our risk management program relating to products we offer with guaranteed benefits to emphasize protection of statutory surplus will likely result in greater U.S. GAAP volatility in our earnings and potentially material charges to net income in periods of rising equity market pricing levels. The amount of statutory capital that we have and the amount of statutory capital that we must hold to maintain our financial strength and credit ratings and meet other requirements can vary significantly from time to time and is sensitive to a number of factors outside of our control, including equity market, credit market, interest rate and foreign currency conditions, changes in policyholder behavior and changes in rating agency models. We have experienced and may experience additional future downgrades in our financial strength or credit ratings, which may make our products less attractive, increase our cost of capital and inhibit our ability to refinance our debt, which would have a material adverse effect on our business, results of operations, financial condition and liquidity. Our valuations of many of our financial instruments include methodologies, estimations and assumptions that are subject to differing interpretations and could result in changes to investment valuations that may materially adversely affect our results of operations and financial condition. Evaluation of available-for-sale securities for other-than-temporary impairment involves subjective determinations and could materially impact our results of operations. Losses due to nonperformance or defaults by others, including issuers of investment securities (which include structured securities such as commercial mortgage backed securities and residential mortgage backed securities or other high yielding bonds) mortgage loans or reinsurance and derivative instrument counterparties, could have a material adverse effect on the value of our investments, results of operations, financial condition and cash flows. If assumptions used in estimating future gross profits differ from actual experience, we may be required to accelerate the amortization of DAC and increase reserves for guaranteed minimum death and income benefits, which could have a material adverse effect on our results of operations and financial condition. If our businesses do not perform well, we may be required to recognize an impairment of our goodwill or to establish a valuation allowance against the deferred income tax asset, which could have a material adverse effect on our results of operations and financial condition. The occurrence of one or more terrorist attacks in the geographic areas we serve or the threat of terrorism in general may have a material adverse effect on our business, consolidated operating results, financial condition and liquidity. It is difficult for us to predict our potential exposure for asbestos and environmental claims, and our ultimate liability may exceed our currently recorded reserves, which may have a material adverse effect on our operating results, financial condition and liquidity. We are particularly vulnerable to losses from the incidence and severity of catastrophes, both natural and man-made, the occurrence of which may have a material adverse effect on our financial condition, consolidated results of operations and liquidity. We may incur losses due to our reinsurers unwillingness or inability to meet their obligations under reinsurance contracts and the availability, pricing and adequacy of reinsurance may not be sufficient to protect us against losses. Our consolidated results of operations, financial condition and cash flows may be materially adversely affected by unfavorable loss development. Competitive activity may adversely affect our market share and financial results, which could have a material adverse effect on our business, results of operations and financial condition. Our participation in the CPP subjects us to additional restrictions, oversight and cost that could materially affect our business, results and prospects. We may experience unfavorable judicial or legislative developments that could have a material adverse effect on our results of operations, financial condition and liquidity. Potential changes in domestic and foreign regulation may increase our business costs and required capital levels, which could have a material adverse effect on our business, consolidated operating results, financial condition and liquidity. We may experience difficulty in marketing and distributing products through our current and future distribution channels. Our business, results of operations, financial condition and liquidity may be adversely affected by the emergence of unexpected and unintended claim and coverage issues. Limits on the ability of our insurance subsidiaries to pay dividends to us could have a material adverse effect on our liquidity. As a property and casualty insurer, the premium rates we are able to charge and the profits we are able to obtain are affected by the actions of state insurance departments that regulate our business, the cyclical nature of the business in which we compete and our ability to adequately price the risks we underwrite, which may have a material adverse effect on our consolidated results of operations, financial condition and cash flows. If we are unable to maintain the availability of our systems and safeguard the security of our data due to the occurrence of disasters or other unanticipated events, our ability to conduct business may be compromised, which may have a material adverse effect on our business, consolidated results of operations, financial condition or cash flows. If we experience difficulties arising from outsourcing relationships, our ability to conduct business may be compromised. Potential changes in federal or state tax laws, including changes impacting the availability of the separate account dividend received deduction, could adversely affect our business, consolidated operating results or financial condition or liquidity. Changes in accounting principles and financial reporting requirements could result in material changes to our reported results and financial condition.

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874766--2/23/2010--HARTFORD_FINANCIAL_SERVICES_GROUP_INC/DE