UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY 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

Commission File Number: 001-13958

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		13-3317783 (I.R.S. Employer Identification No.)

One Hartford Plaza, Hartford, Connecticut 06155
(Address of principal executive offices) (Zip Code)

(860) 547-5000
(Registrant’s telephone number, including area code)

Indicate by check mark 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. Yes þ No o

Indicate by check mark 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). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the 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
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of October 27, 2010 there were outstanding 444,541,171 shares of Common Stock, $0.01 par value per share, of the registrant.

 

 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010

TABLE OF CONTENTS

Item		Description		Page
		Part I. FINANCIAL INFORMATION
1.		Financial Statements
		Report of Independent Registered Public Accounting Firm			5
		Condensed Consolidated Statements of Operations — For the Three and Nine Months Ended September 30, 2010 and 2009			6
		Condensed Consolidated Balance Sheets — As of September 30, 2010 and December 31, 2009			7
		Condensed Consolidated Statements of Changes in Equity — For the Nine Months Ended September 30, 2010 and 2009			8
		Condensed Consolidated Statements of Comprehensive Income — For the Three and Nine Months Ended September 30, 2010 and 2009			9
		Condensed Consolidated Statements of Cash Flows — For the Nine Months Ended September 30, 2010 and 2009			10
		Notes to Condensed Consolidated Financial Statements			11
2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			61
3.		Quantitative and Qualitative Disclosures About Market Risk			126
4.		Controls and Procedures			126
		Part II. OTHER INFORMATION
1.		Legal Proceedings			127
1A.		Risk Factors			127
2.		Unregistered Sales of Equity Securities and Use of Proceeds			130
6.		Exhibits			130
		Signature			131
		Exhibits Index			132
Exhibit 15.01
Exhibit 31.01
Exhibit 31.02
Exhibit 32.01
Exhibit 32.02
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

Forward-Looking Statements

Certain of the statements contained herein are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “projects,” and similar references to future periods.

Forward-looking statements are based on our current expectations and assumptions regarding economic, competitive and legislative developments. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. They have been made based upon management’s expectations and beliefs concerning future developments and their potential effect upon The Hartford Financial Services Group, Inc. and its subsidiaries (collectively, the “Company”). Future developments may not be in line with management’s expectations or have unanticipated effects. Actual results could differ materially from expectations, depending on the evolution of various factors, including those set forth in Part I, Item 1A, Risk Factors in The Hartford’s 2009 Form 10-K Annual Report, Part II, Item 1A, Risk Factors of The Hartford’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010, as well as in Part II, Item 1A, Risk Factors of this Form 10-Q. These important risks and uncertainties include:

•

risks and uncertainties related to the Company’s current operating environment, which reflects continued volatility in financial markets, constrained capital and credit markets and uncertainty about the strength of an economic recovery and the impact of U.S. and other governmental stimulus, budgetary and legislative initiatives, and whether management’s efforts to identify and address these risks will be timely and effective;

•

risks associated with our continued execution of steps to realign our business and reposition our investment portfolio, including the potential need to take other actions, such as divestitures;

•

market risks associated with our business, including changes in interest rates, credit spreads, equity prices and foreign exchange rates, as well as challenging or deteriorating conditions in key sectors such as the commercial real estate market, that have pressured our results and have continued to do so in 2010;

•

volatility in our earnings resulting from our adjustment of our risk management program to emphasize protection of statutory surplus;

•

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 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 additional 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 possibility of a pandemic or other man-made disaster that may adversely affect our businesses and cost and availability of reinsurance;

•

weather and other natural physical events, including the severity and frequency of storms, hail, snowfall and other winter conditions, natural disasters such as hurricanes and earthquakes, as well as climate change, including effects on weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain and snow;

•

the response of reinsurance companies under reinsurance contracts and the availability, pricing and adequacy of reinsurance to protect the Company against losses;

•

the possibility of unfavorable loss development;

•

actions by our competitors, many of which are larger or have greater financial resources than we do;

•

the restrictions, oversight, costs and other consequences of being a savings and loan holding company, including from the supervision, regulation and examination by the Office of Thrift Supervision (the “OTS”), and in the future, as a result of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), The Federal Reserve and the Office of the Controller of the Currency as regulator of Federal Trust Bank;

•

the potential effect of domestic and foreign regulatory developments, including those that could adversely impact the demand for the Company’s products, operating costs and required capital levels, including changes to statutory reserves and/or risk-based capital requirements related to secondary guarantees under universal life and variable annuity products;

•

the cost and other effects of increased regulation as a result of the enactment of the Dodd-Frank Act, which will, among other effects, vest a newly created Financial Services Oversight Council with the power to designate “systemically important” institutions, require central clearing of, and/or impose new margin and capital requirements on, derivatives transactions, and may affect our ability as a savings and loan holding company to manage our general account by limiting or eliminating investments in certain private equity and hedge funds;

•

the Company’s ability to distribute its products through distribution channels, both current and future;

•

the uncertain effects of emerging claim and coverage issues;

•

the ability of the Company to declare and pay dividends is subject to limitations;

•

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 Company’s ability to maintain the availability of its systems and safeguard the security of its data in the event of a disaster or other unanticipated events;

•

the risk that our framework for managing business risks may not be effective in mitigating risk and loss to us that could adversely affect our business;

•

the potential for difficulties arising from outsourcing relationships;

•

the impact of potential changes in federal or state tax laws, including changes affecting the availability of the separate account dividend received deduction;

•

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;

•

unfavorable judicial or legislative developments; and

•

other factors described in such forward-looking statements.

Any forward-looking statement made by the Company in this document speaks only as of the date of the filing of this Form 10-Q. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

Part I. FINANCIAL INFORMATION

Item 1.		Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
The Hartford Financial Services Group, Inc.

Hartford, Connecticut

We have reviewed the accompanying condensed consolidated balance sheet of The Hartford Financial Services Group, Inc. and subsidiaries (the “Company”) as of September 30, 2010, and the related condensed consolidated statements of operations and comprehensive income for the three-month and nine-month periods ended September 30, 2010 and 2009 and statements of changes in equity and cash flows for the nine-month periods ended September 30, 2010 and 2009. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2009, and the related consolidated statements of operations, changes in equity, comprehensive income (loss), and cash flows for the year then ended (not presented herein); and in our report dated February 23, 2010 (which report includes an explanatory paragraph relating to the Company’s change in its method of accounting and reporting for other-than-temporary impairments in 2009 and for the fair value measurement of financial instruments in 2008), we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2009 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

DELOITTE & TOUCHE LLP
Hartford, Connecticut
November 2, 2010

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions, except for per share data)		2010				2009				2010				2009
		(Unaudited)								(Unaudited)
Revenues
Earned premiums		$	3,513			$	3,499			$	10,546			$	10,920
Fee income			1,173				1,140				3,557				3,369
Net investment income (loss):
Securities available-for-sale and other			1,083				1,049				3,296				2,990
Equity securities, trading			1,043				638				(905	)			2,437
Total net investment income			2,126				1,687				2,391				5,427
Net realized capital gains (losses):
Total other-than-temporary impairment (“OTTI”) losses			(146	)			(760	)			(778	)			(1,546	)
OTTI losses recognized in other comprehensive income			31				224				403				472
Net OTTI losses recognized in earnings			(115	)			(536	)			(375	)			(1,074	)
Net realized capital losses, excluding net OTTI losses recognized in earnings			(146	)			(683	)			(151	)			(742	)
Total net realized capital losses			(261	)			(1,219	)			(526	)			(1,816	)
Other revenues			122				123				360				361
Total revenues			6,673				5,230				16,328				18,261
Benefits, losses and expenses
Benefits, losses and loss adjustment expenses			3,037				3,070				9,762				10,799
Benefits, losses and loss adjustment expenses — returns credited on international variable annuities			1,043				638				(905	)			2,437
Amortization of deferred policy acquisition costs and present value of future profits			438				687				2,027				3,620
Insurance operating costs and other expenses			1,105				1,174				3,461				3,472
Interest expense			128				118				380				357
Goodwill impairment			—				—				153				32
Total benefits, losses and expenses			5,751				5,687				14,878				20,717
Income (loss) before income taxes			922				(457	)			1,450				(2,456	)
Income tax expense (benefit)			256				(237	)			389				(1,012	)
Net income (loss)		$	666			$	(220	)		$	1,061			$	(1,444	)
Preferred stock dividends and accretion of discount			10				62				504				65
Net income (loss) available to common shareholders		$	656			$	(282	)		$	557			$	(1,509	)
Earnings (Loss) per common share
Basic		$	1.48			$	(0.79	)		$	1.30			$	(4.52	)
Diluted		$	1.34			$	(0.79	)		$	1.21			$	(4.52	)
Cash dividends declared per common share		$	0.05			$	0.05			$	0.15			$	0.15

See Notes to Condensed Consolidated Financial Statements.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

		September 30,				December 31,
(In millions, except for share and per share data)		2010				2009
		(Unaudited)
Assets
Investments
Fixed maturities, available-for-sale, at fair value (amortized cost of $78,484 and $76,015) (includes variable interest entity assets, at fair value, of $440 as of September 30, 2010)		$	79,736			$	71,153
Fixed maturities, at fair value using the fair value option (includes variable interest entity assets of $328 as of September 30, 2010)			564				—
Equity securities, trading, at fair value (cost of $33,674 and $33,070)			32,495				32,321
Equity securities, available-for-sale, at fair value (cost of $1,232 and $1,333)			1,168				1,221
Mortgage loans (net of allowances for loan losses of $164 and $366)			4,684				5,938
Policy loans, at outstanding balance			2,180				2,174
Limited partnerships and other alternative investments (includes variable interest entity assets of $14 as of September 30, 2010)			1,819				1,790
Other investments			1,427				602
Short-term investments			9,517				10,357
Total investments			133,590				125,556
Cash			1,707				2,142
Premiums receivable and agents’ balances, net			3,370				3,404
Reinsurance recoverables, net			5,242				5,384
Deferred policy acquisition costs and present value of future profits			9,386				10,686
Deferred income taxes, net			1,721				3,940
Goodwill			1,051				1,204
Property and equipment, net			1,143				1,026
Other assets			2,497				3,981
Separate account assets			154,219				150,394
Total assets		$	313,926			$	307,717
Liabilities
Reserve for future policy benefits and unpaid losses and loss adjustment expenses		$	39,890			$	39,631
Other policyholder funds and benefits payable			45,889				45,852
Other policyholder funds and benefits payable — international variable annuities			32,470				32,296
Unearned premiums			5,296				5,221
Short-term debt			—				343
Long-term debt			6,603				5,496
Consumer notes			384				1,136
Other liabilities (includes variable interest entity liabilities of $405 as of September 30, 2010)			8,266				9,454
Separate account liabilities			154,219				150,394
Total liabilities			293,017				289,823
Commitments and Contingencies (Note 9)
Equity
Preferred stock, $0.01 par value — 50,000,000 shares authorized, 575,000 and 3,400,000 shares issued, liquidation preference $1,000 per share			556				2,960
Common stock, $0.01 par value — 1,500,000,000 shares authorized, 469,758,371 and 410,184,182 shares issued			5				4
Additional paid-in capital			10,455				8,985
Retained earnings			11,488				11,164
Treasury stock, at cost — 25,391,969 and 27,177,019 shares			(1,789	)			(1,936	)
Accumulated other comprehensive income (loss), net of tax			194				(3,312	)
Total stockholders’ equity			20,909				17,865
Noncontrolling interest			—				29
Total equity			20,909				17,894
Total liabilities and equity		$	313,926			$	307,717

See Notes to Condensed Consolidated Financial Statements.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

		Nine Months Ended
		September 30,
(In millions, except for share data)		2010				2009
		(Unaudited)
Preferred Stock, at beginning of period		$	2,960			$	—
Issuance of mandatory convertible preferred stock			556				—
Accretion of preferred stock discount on issuance to U.S. Treasury			—				20
Accelerated accretion of discount from redemption of preferred stock issued to U.S. Treasury			440				—
Issuance (redemption) of preferred stock to the U.S. Treasury			(3,400	)			2,920
Preferred Stock, at end of period			556				2,940
Common Stock			5				4
Additional Paid-in Capital, at beginning of period			8,985				7,569
Issuance of warrants to U.S. Treasury			—				480
Issuance of shares under discretionary equity issuance plan			—				887
Issuance of shares under public offering			1,599				—
Issuance of shares under incentive and stock compensation plans			(123	)			(135	)
Reclassification of warrants from other liabilities to equity and extension of warrants’ term			—				186
Tax expense on employee stock options and awards			(6	)			(11	)
Additional Paid-in Capital, at end of period			10,455				8,976
Retained Earnings, at beginning of period, before cumulative effect of accounting change, net of tax			11,164				11,336
Cumulative effect of accounting change, net of tax			26				—
Retained Earnings, at beginning of period, as adjusted			11,190				11,336
Net income (loss)			1,061				(1,444	)
Cumulative effect of accounting changes, net of tax			(194	)			912
Accretion of preferred stock discount on issuance to U.S. Treasury			—				(20	)
Accelerated accretion of discount from redemption of preferred stock issued to U.S. Treasury			(440	)			—
Dividends on preferred stock			(64	)			(45	)
Dividends declared on common stock			(65	)			(50	)
Retained Earnings, at end of period			11,488				10,689
Treasury Stock, at Cost, at beginning of period			(1,936	)			(2,120	)
Issuance of shares under incentive and stock compensation plans from treasury stock			150				187
Return of shares under incentive and stock compensation plans to treasury stock			(3	)			(3	)
Treasury Stock, at Cost, at end of period			(1,789	)			(1,936	)
Accumulated Other Comprehensive Loss, Net of Tax, at beginning of period			(3,312	)			(7,520	)
Cumulative effect of accounting changes, net of tax			194				(912	)
Total other comprehensive income			3,312				5,215
Accumulated Other Comprehensive Income (Loss), Net of Tax, at end of period			194				(3,217	)
Total Stockholders’ Equity			20,909				17,456
Noncontrolling Interest, at beginning of period (Note 13)			29				92
Change in noncontrolling interest ownership			—				(61	)
Noncontrolling loss			—				(6	)
Recognition of noncontrolling interest in other liabilities			(29	)			—
Noncontrolling Interest, at end of period			—				25
Total Equity		$	20,909			$	17,481
Preferred Shares Outstanding, at beginning of period (in thousands)			3,400				6,048
Conversion of preferred to common shares			—				(6,048	)
Issuance (redemption) of shares issued to the U.S. Treasury			(3,400	)			3,400
Issuance of mandatory convertible preferred shares			575				—
Preferred Shares Outstanding, at end of period			575				3,400
Common Shares Outstanding, at beginning of period (in thousands)			383,007				300,579
Treasury stock acquired			—				(15	)
Conversion of preferred to common shares			—				24,194
Issuance of shares under discretionary equity issuance plan			—				56,109
Issuance of shares under public offering			59,590				—
Issuance of shares under incentive and stock compensation plans			1,901				2,353
Return of shares under incentive and stock compensation plans to treasury stock			(132	)			(190	)
Common Shares Outstanding, at end of period			444,366				383,030

See Notes to Condensed Consolidated Financial Statements.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
(In millions)		(Unaudited)								(Unaudited)
Comprehensive Income
Net income (loss)		$	666			$	(220	)		$	1,061			$	(1,444	)
Other comprehensive income (loss)
Change in net unrealized gain / loss on securities			1,064				3,232				2,642				5,572
Change in OTTI losses recognized in other comprehensive income			44				(51	)			97				(176	)
Change in net gain (loss) on cash-flow hedging instruments			79				99				308				(269	)
Change in foreign currency translation adjustments			164				102				205				57
Amortization of prior service cost and actuarial net losses included in net periodic benefit costs			28				11				60				31
Total other comprehensive income			1,379				3,393				3,312				5,215
Total comprehensive income		$	2,045			$	3,173			$	4,373			$	3,771

See Notes to Condensed Consolidated Financial Statements.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
Condensed Consolidated Statements of Cash Flows

		Nine Months Ended
		September 30,
(In millions)		2010				2009
		(Unaudited)
Operating Activities
Net income (loss)		$	1,061			$	(1,444	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Amortization of deferred policy acquisition costs and present value of future profits			2,027				3,620
Additions to deferred policy acquisition costs and present value of future profits			(1,999	)			(2,155	)
Change in reserve for future policy benefits and unpaid losses and loss adjustment expenses and unearned premiums			(17	)			903
Change in reinsurance recoverables			247				152
Change in receivables and other assets			(29	)			212
Change in payables and accruals			(92	)			(600	)
Change in accrued and deferred income taxes			(5	)			(252	)
Net realized capital losses			526				1,816
Net receipts from investment contracts related to policyholder funds — international variable annuities			174				2,691
Net increase in equity securities, trading			(174	)			(2,694	)
Depreciation and amortization			449				360
Goodwill impairment			153				32
Other operating activities, net			(76	)			104
Net cash provided by operating activities			2,245				2,745
Investing Activities
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale			37,320				41,749
Equity securities, available-for-sale			207				598
Mortgage loans			1,517				480
Partnerships			312				405
Payments for the purchase of:
Fixed maturities, available-for-sale			(39,485	)			(42,990	)
Equity securities, available-for-sale			(135	)			(284	)
Mortgage loans			(273	)			(249	)
Partnerships			(226	)			(228	)
Proceeds from business sold			130				7
Derivatives, net			504				(298	)
Change in policy loans, net			(6	)			(1	)
Change in payables for collateral under securities lending, net			(46	)			(2,771	)
Other investing activities, net			(105	)			(239	)
Net cash used for investing activities			(286	)			(3,821	)
Financing Activities
Deposits and other additions to investment and universal life-type contracts			9,458				11,158
Withdrawals and other deductions from investment and universal life-type contracts			(16,426	)			(18,528	)
Net transfers from separate accounts related to investment and universal life-type contracts			5,998				5,418
Proceeds from issuance of long-term debt			1,090				—
Repayments at maturity for long-term debt and payments on capital lease obligations			(343	)			(24	)
Change in commercial paper			—				(375	)
Repayments at maturity or settlement of consumer notes			(752	)			(17	)
Net proceeds from issuance of mandatory convertible preferred stock			556				—
Net proceeds from issuance of common shares under public offering			1,600				—
Redemption of preferred stock issued to the U.S. Treasury			(3,400	)			—
Proceeds from issuance of preferred stock and warrants to U.S. Treasury			—				3,400
Net proceeds from issuance of common shares under discretionary equity issuance plan			—				887
Proceeds from net issuance of shares under incentive and stock compensation plans and excess tax benefit			17				18
Dividends paid on preferred stock			(75	)			(31	)
Dividends paid on common stock			(62	)			(129	)
Changes in bank deposits and payments on bank advances			(56	)			(85	)
Net cash provided by (used for) financing activities			(2,395	)			1,692
Foreign exchange rate effect on cash			1				(10	)
Net increase (decrease) in cash			(435	)			606
Cash — beginning of period			2,142				1,811
Cash — end of period		$	1,707			$	2,417
Supplemental Disclosure of Cash Flow Information
Income taxes paid (received)		$	249			$	(392	)
Interest paid		$	324			$	303

See Notes to Condensed Consolidated Financial Statements

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

1. Basis of Presentation and Accounting Policies

Basis of Presentation

The Hartford Financial Services Group, Inc. is a financial holding company for a group of subsidiaries that provide investment products and life and property and casualty insurance to both individual and business customers in the United States (collectively, “The Hartford” or the “Company”). Also, The Hartford continues to administer business previously sold in Japan and the U.K.

The Condensed Consolidated Financial Statements have been prepared on the basis of accounting principles generally accepted in the United States of America (“U.S. GAAP”), which differ materially from the accounting practices prescribed by various insurance regulatory authorities.

The accompanying Condensed Consolidated Financial Statements and Notes as of September 30, 2010, and for the three and nine months ended September 30, 2010 and 2009 are unaudited. These financial statements reflect all adjustments (consisting only of normal accruals) which are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods. These Condensed Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in The Hartford’s 2009 Form 10-K Annual Report. The results of operations for the interim periods should not be considered indicative of the results to be expected for the full year.

Consolidation

The Condensed Consolidated Financial Statements include the accounts of The Hartford Financial Services Group, Inc., companies in which the Company directly or indirectly has a controlling financial interest and those variable interest entities in which the Company is required to consolidate. Entities in which the Company has significant influence over the operating and financing decisions but are not required to consolidate are reported using the equity method. Material intercompany transactions and balances between The Hartford and its subsidiaries and affiliates have been eliminated. For further discussions on variable interest entities see Note 5 and Note 13.

Reclassifications

Certain reclassifications have been made to prior period financial information to conform to the current period classifications.

Use of Estimates

The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The most significant estimates include those used in determining property and casualty 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 investments; living benefits required to be fair valued; goodwill impairment; valuation of investments and derivative instruments; pension and other postretirement benefit obligations; valuation allowance on deferred tax assets; and contingencies relating to corporate litigation and regulatory matters. Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the Condensed Consolidated Financial Statements.

Significant Accounting Policies

For a description of significant accounting policies, see Note 1 of the Notes to Consolidated Financial Statements included in The Hartford’s 2009 Form 10-K Annual Report, which should be read in conjunction with these accompanying Condensed Consolidated Financial Statements.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Accounting Policies (continued)

Adoption of New Accounting Standards

Variable Interest Entities

In June 2009, the Financial Accounting Standards Board (“FASB”) updated the guidance which amends the consolidation requirements applicable to variable interest entities (“VIE”). Under this new guidance, an entity would consolidate a VIE when the entity has both (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. The FASB also issued an amendment to this guidance in February 2010 which defers application of this guidance to certain entities that apply specialized accounting guidance for investment companies. The Company adopted this guidance on January 1, 2010. As a result of adoption, in addition to those VIEs the Company consolidates under the previous guidance, the Company consolidated a Company sponsored Collateralized Debt Obligation (“CDO”), electing the fair value option, and a Company sponsored Collateralized Loan Obligation, at carrying values carried forward as if the Company had been the primary beneficiary from the date the Company entered into the VIE arrangement. The impact on the Company’s Condensed Consolidated Balance Sheet as a result of adopting this new guidance was an increase in assets of $432, an increase in liabilities of $406, and an increase in January 1, 2010 retained earnings, net of tax, of $26. The Company has investments in mutual funds, limited partnerships and other alternative investments, including hedge funds, mortgage and real estate funds, mezzanine debt funds, and private equity and other funds which may be VIEs. The accounting for these investments will remain unchanged as they fall within the scope of the deferral of this new consolidation guidance. See Note 5 for further discussion.

Embedded Credit Derivatives

In March 2010, the FASB issued guidance clarifying the scope exception for certain credit derivatives embedded within structured securities which may result in bifurcation of these credit derivatives. Embedded credit derivatives resulting only from subordination of one financial instrument to another continue to qualify for the exemption. As a result, investments with an embedded credit derivative in a form other than the above mentioned subordination may need to be separately accounted for as an embedded credit derivative resulting in recognition of the change in the fair value of the embedded credit derivative in current period earnings. Upon adoption, an entity may elect the fair value option prospectively, with changes in fair value of the investment in its entirety recognized in earnings, rather than bifurcate the embedded credit derivative. The guidance is effective, on a prospective basis only, for fiscal years and interim periods within those fiscal years, beginning on or after June 15, 2010. The Company adopted this guidance on July 1, 2010 and identified securities with an amortized cost and fair value of $971 and $639, respectively, which were impacted by the scope of this standard. Upon adoption, the Company elected the fair value option for securities having an amortized cost and fair value of $447 and $214, respectively. For further discussion of fair value option, see Note 4. For the remainder of securities that were impacted by the scope of this standard, upon adoption, the embedded credit derivatives were bifurcated but are reported with the host instrument in the consolidated balance sheets. As of July 1, 2010, these securities had an amortized cost and fair value of $524 and $425, respectively, with an associated embedded derivative notional value of $525. For further discussion of embedded derivatives, see Note 5. The adoption, on July 1, 2010 resulted in the reclassification of $194, after-tax and deferred policy acquisition costs (“DAC”), net unrealized losses from accumulated other comprehensive loss to retained earnings, including $211 of unrealized capital losses and $17 of unrealized capital gains.

Future Adoption of New Accounting Standards

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

In October 2010, the FASB issued guidance clarifying the definition of acquisition costs that are eligible for deferral. Acquisition costs are to include only those costs that are directly related to the successful acquisition or renewal of insurance contracts; incremental direct costs of contract acquisition that are incurred in transactions with either independent third parties or employees; and advertising costs meeting the capitalization criteria for direct-response advertising.

This guidance will be effective for fiscal years beginning after December 15, 2011, and interim periods within those years. This guidance may be applied prospectively upon the date of adoption, with retrospective application permitted, but not required. Early adoption is permitted.

The Company will adopt this guidance on January 1, 2012. The Company has not yet determined if it will apply the guidance on a prospective or retrospective basis or the effect of the adoption on the Company’s Condensed Consolidated Financial Statements. If retrospective application is elected, the adoption could have a material impact on stockholders’ equity. If prospective application is elected, there could be a material impact to the Company’s Condensed Consolidated Statement of Operations as non-deferrable acquisition costs will increase while amortization would continue on the existing DAC balance.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Accounting Policies (continued)

Income Taxes

A reconciliation of the tax provision at the U.S. Federal statutory rate to the provision for income taxes is as follows:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Tax expense (benefit) at U.S. Federal statutory rate		$	323			$	(160	)		$	508			$	(860	)
Tax-exempt interest			(38	)			(36	)			(116	)			(111	)
Dividends received deduction			(34	)			(41	)			(115	)			(120	)
Investment valuation allowance			—				—				86				—
Nondeductible costs associated with warrants			—				—				—				78
Other			5				—				26				1
Income tax expense (benefit)		$	256			$	(237	)		$	389			$	(1,012	)

The separate account dividends received deduction (“DRD”) is estimated for the current year using information from the prior year-end, adjusted for current year equity market performance and other appropriate factors, including estimated levels of corporate dividend payments and level of policy owner equity account balances. The actual current year DRD can vary from estimates based on, but not limited to, changes in eligible dividends received by the mutual funds, amounts of distribution from these mutual funds, amounts of short-term capital gains at the mutual fund level and the Company’s taxable income before the DRD. The Company evaluates its DRD computations on a quarterly basis.

The Company’s unrecognized tax benefits were unchanged during the nine months ended September 30, 2010, remaining at $48 as of September 30, 2010. This entire amount, if it were recognized, would affect the effective tax rate for the applicable periods.

The Company’s federal income tax returns are routinely audited by the Internal Revenue Service (“IRS”). Audits have been concluded for all years through 2006. The audit of 2007 and 2008 commenced in the second quarter of 2010 and the audit of 2009 commenced in the third quarter of 2010. In addition, the Company is working with the IRS on a possible settlement of a DRD issue related to prior periods which, if settled, may result in the booking of tax benefits. Such benefits are not expected to be material to the statement of operations.

The Company’s net deferred tax asset as of September 30, 2010 and December 31, 2009 includes a net deferred tax liability of $1.4 billion and $849, respectively, for the Company’s subsidiary in Japan.

The Company has recorded a deferred tax asset valuation allowance that is adequate to reduce the total deferred tax asset to an amount that will more likely than not be realized. The deferred tax asset valuation allowance was $174 as of September 30, 2010 and was $86 as of December 31, 2009. In assessing the need for a valuation allowance, management considered future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, and taxable income in prior carry back years, as well as tax planning strategies that include holding debt securities with market value losses until recovery, selling appreciated securities to offset capital losses, and sales of certain corporate assets, including subsidiaries. Such tax planning strategies are viewed by management as prudent and feasible and will be implemented if necessary to realize the deferred tax asset. An increase in interest rates can adversely impact the Company’s tax planning strategies and in particular the Company’s ability to utilize tax benefits to offset certain previously recognized realized capital losses.

Also, for the three months ended March 31, 2010, the Company incurred a charge of $19 related to a decrease in deferred tax assets as a result of recent federal legislation that will reduce the tax deduction available to the Company related to retiree health care costs beginning in 2013.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Earnings (Loss) Per Share

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

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions, except for per share data)		2010				2009				2010				2009
Income (loss)
Net income (loss)		$	666			$	(220	)		$	1,061			$	(1,444	)
Less: Preferred stock dividends and accretion of discount			10				62				504				65
Net income (loss) available to common shareholders		$	656			$	(282	)		$	557			$	(1,509	)
Common shares
Basic
Weighted average common shares outstanding			444.1				356.1				427.2				334.1
Diluted
Warrants			29.0				—				32.6				—
Stock compensation plans			1.4				—				1.3				—
Mandatory convertible preferred shares			20.8				—				—				—
Weighted average shares outstanding and dilutive potential common shares			495.3				356.1				461.1				334.1
Earnings (loss) per common share
Basic		$	1.48			$	(0.79	)		$	1.30			$	(4.52	)
Diluted		$	1.34			$	(0.79	)		$	1.21			$	(4.52	)

On March 23, 2010, The Hartford issued 23 million depositary shares, each representing a 1/40th interest in The Hartford’s 7.25% mandatory convertible preferred stock, Series F. These shares and the related dividend adjustment are included in diluted earnings per share, if dilutive, using the if converted method. For additional information on the mandatory convertible preferred stock see Note 13.

As a result of the net loss for the three months ended September 30, 2009, the Company is required to use basic weighted average common shares outstanding in the calculation of the three months ended September 30, 2009 diluted loss per share, since the inclusion of shares for warrants of 25.3 million and stock compensation plans of 1.1 million would have been antidilutive to the earnings per share calculation. In the absence of the net loss, weighted average common shares outstanding and dilutive potential common shares would have totaled 382.5 million for the three months ended September 30, 2009.

As a result of the net loss in the nine months ended September 30, 2009, the Company is required to use basic weighted average common shares outstanding in the calculation of the nine months ended September 30, 2009 diluted loss per share, since the inclusion of shares for warrants of 8.7 million and stock compensation plans of 0.8 million would have been antidilutive to the earnings per share calculation. In the absence of the net loss, weighted average common shares outstanding and dilutive potential common shares would have totaled 343.6 million.

For the nine months ended September 30, 2010, 14.9 million shares for mandatory convertible preferred shares, along with the related dividend adjustment, would have been antidilutive to the earnings per share calculation. Assuming the impact of the mandatory convertible preferred shares was not antidilutive, weighted average common shares outstanding and dilutive potential common shares would have totaled 476.0 million.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Segment Information

Effective for third quarter 2010 reporting, The Hartford made changes to its reporting segments to reflect the manner in which the Company is currently organized for purposes of making operating decisions and assessing performance. Accordingly, segment data for prior reporting periods has been adjusted to reflect the new segment reporting. As a result, the Company created three customer focused divisions, Commercial Markets, Consumer Markets and Wealth Management, conducting business principally in seven reporting segments.

The following discussion describes the significant changes to the reporting segments:

The Commercial Markets division consists of the reporting segments of Property & Casualty Commercial and Group Benefits. The Property & Casualty Commercial reporting segment includes the former Small Commercial, Middle Market and Specialty Commercial reporting segments. Group Benefits is now included in the Commercial Markets division and is otherwise unchanged from June 30, 2010.

The Consumer Markets division and reporting segment includes the former Personal Lines reporting segment.

The Wealth Management division consists of the following reporting segments: Global Annuity, Life Insurance, Retirement Plans and Mutual Funds. Global Annuity includes the former Global Annuity - U.S. and Global Annuity — International reporting segments, as well as institutional investment products (“IIP”) which was within the former Institutional Solutions Group (“Institutional”) reporting segment. Life Insurance includes the former Individual Life reporting segment and private placement life insurance (“PPLI”) operations formerly within Institutional and Life Other. The former Retirement segment is now reported as two separate segments: Retirement Plans and Mutual Funds.

Corporate and Other includes Property & Casualty Other Operations and the former Life Other, excluding the PPLI operations now included in Life Insurance.

Certain inter-segment arrangements have been terminated retrospectively whereby the former Specialty Commercial reporting segment was reimbursing the former Personal Lines, Small Commercial and Middle Market reporting segments for certain losses incurred from uncollectible reinsurance and under certain liability claims.

As a result of this reorganization, the Company’s seven reporting segments, as well as the Corporate and Other category, are as follows:

Commercial Markets

Property & Casualty Commercial

Property & Casualty Commercial provides workers’ compensation, property, automobile, marine, livestock, liability and umbrella coverages primarily throughout the United States (“U.S.”), along with a variety of customized insurance products and risk management services including professional liability, fidelity, surety, specialty casualty coverages and third-party administrator services.

Group Benefits

Group Benefits provides employers, 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.

Consumer Markets

Consumer Markets provides standard automobile, homeowners and home-based business coverages to individuals across the U.S., including a special program designed exclusively for members of AARP. Consumer Markets also operates a member contact center for health insurance products offered through the AARP Health program.

Wealth Management

Global Annuity

Global Annuity offers individual variable, fixed market value adjusted (“fixed MVA”)and single premium immediate annuities in the U.S., a range of products to institutional investors, including but not limited to, stable value contracts and institutional annuities, and administers investments, retirement savings and other insurance and savings products to individuals and groups outside the U.S., primarily in Japan and Europe.

Life Insurance

Life Insurance sells a variety of life insurance products, including variable universal life, universal life, and term life, as well as variable PPLI owned by corporations and high net worth individuals.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Segment Information (continued)

Retirement Plans

Retirement Plans provides products and services to corporations pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), and products and services to municipalities and not-for-profit organizations under Sections 457 and 403(b) of the Code, collectively referred to as government plans.

Mutual Funds

Mutual Funds offers retail mutual funds, investment-only mutual funds and college savings plans under Section 529 of the Code (collectively referred to as non-proprietary) and proprietary mutual funds.

Corporate and Other

The Hartford includes in Corporate and Other the Company’s debt financing and related interest expense, as well as other capital raising activities; banking operations; certain fee income and commission expenses associated with sales of non-proprietary products by broker-dealer subsidiaries; and certain purchase accounting adjustments and other charges not allocated to the segments. Also included in Corporate and Other is the Company’s management of certain property and casualty operations that have discontinued writing new business and substantially all of the Company’s asbestos and environmental exposures, collectively referred to as Other Operations.

Financial Measures and Other Segment Information

The following table presents net income (loss) for each reporting segment, as well as the Corporate and Other category.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Property & Casualty Commercial		$	306			$	217			$	782			$	484
Group Benefits			46				65				145				148
Consumer Markets			70				15				113				55
Global Annuity			175				(320	)			141				(1,304	)
Life Insurance			97				8				224				18
Retirement Plans			30				(34	)			38				(162	)
Mutual Funds			18				11				67				17
Corporate and Other			(76	)			(182	)			(449	)			(700	)
Net income (loss)		$	666			$	(220	)		$	1,061			$	(1,444	)

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Segment Information (continued)

The following table presents revenues by product line for each reporting segment, as well as the Corporate and Other category.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Earned premiums, fees, and other considerations
Property & Casualty Commercial
Workers’ compensation		$	605			$	556			$	1,754			$	1,706
Property			137				144				412				451
Automobile			149				159				453				497
Package business			281				277				842				842
Liability			129				149				405				477
Fidelity and surety			56				61				169				192
Professional liability			82				96				243				298
Total Property & Casualty Commercial			1,439				1,442				4,278				4,463
Group Benefits
Group disability			487				479				1,520				1,493
Group life and accident			513				528				1,539				1,600
Other			58				62				175				188
Total Group Benefits			1,058				1,069				3,234				3,281
Consumer Markets
Automobile			698				717				2,122				2,136
Homeowners			287				272				854				821
Total Consumer Markets [1]			985				989				2,976				2,957
Global Annuity
Variable annuity			629				555				1,855				1,634
Fixed / MVA annuity			21				10				43				24
IIP			4				38				21				333
Other			5				8				13				23
Total Global Annuity			659				611				1,932				2,014
Life Insurance
Variable life			113				123				315				396
Universal life			72				92				282				286
Term / Other life			12				11				36				35
PPLI			46				21				129				86
Total Life Insurance			243				247				762				803
Retirement Plans
401(k)			77				74				233				208
Government plans			12				10				32				29
Total Retirement Plans			89				84				265				237
Mutual Funds
Non-Proprietary			151				137				467				370
Proprietary			15				—				46				—
Total Mutual Funds			166				137				513				370
Corporate and Other			47				60				143				164
Total earned premiums, fees, and other considerations			4,686				4,639				14,103				14,289
Net investment income (loss):
Securities available-for-sale and other			1,083				1,049				3,296				2,990
Equity securities, trading			1,043				638				(905	)			2,437
Total net investment income			2,126				1,687				2,391				5,427
Net realized capital losses			(261	)			(1,219	)			(526	)			(1,816	)
Other revenues			122				123				360				361
Total revenues		$	6,673			$	5,230			$	16,328			$	18,261

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Fair Value Measurements — Financial Instruments Excluding Guaranteed Living Benefits

The following financial instruments are carried at fair value in the Company’s Condensed Consolidated Financial Statements: fixed maturity and equity securities, available-for-sale (“AFS”), fixed maturities at fair value using fair value option (“FVO”), equity securities, trading, short-term investments, freestanding and embedded derivatives, separate account assets and certain other liabilities.

The following section and Note 4a apply the fair value hierarchy and disclosure requirements for the Company’s financial instruments that are carried at fair value. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad Levels (Level 1, 2 or 3).

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 derivative securities, including futures and certain option contracts.
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 in the Level 2 category are investment grade private placement securities and derivative instruments that are priced using models with significant observable market inputs, including interest rate, foreign currency and certain credit default swap contracts and have no significant unobservable market inputs.
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 such as lower quality asset-backed securities (“ABS”), commercial mortgage-backed securities (“CMBS”), commercial real estate (“CRE”) CDOs, residential mortgage-backed securities (“RMBS”) primarily backed by below-prime loans and below investment grade private placement securities. Also included in Level 3 are guaranteed product embedded and reinsurance derivatives and other complex derivative securities, including customized guaranteed minimum withdrawal benefit (“GMWB”) hedging derivatives (see Note 4a for further information on GMWB product related financial instruments), equity derivatives, long dated derivatives, swaps with optionality, certain complex credit derivatives and certain other liabilities. Because Level 3 fair values, by their nature, contain one or more significant unobservable market 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.

In many situations, inputs used to measure the fair value of an asset or liability position may fall into different levels of the fair value hierarchy. In these situations, the Company will determine the level in which the fair value falls based upon the lowest level input that is significant to the determination of the fair value. Transfers of securities among the levels occur at the beginning of the reporting period. Transfers between Level 1 and Level 2 were not material for the three and nine months ended September 30, 2010. In most cases, both observable (e.g., changes in interest rates) and unobservable (e.g., changes in risk assumptions) inputs are used in the determination of fair values that the Company has classified within Level 3. Consequently, these values and the related gains and losses are based upon both observable and unobservable inputs. The Company’s fixed maturities included in Level 3 are classified as such as they are primarily priced by independent brokers and/or within illiquid markets (i.e. below-prime RMBS and CRE CDOs).

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Fair Value Measurements — Financial Instruments Excluding Guaranteed Living Benefits (continued)

These disclosures provide information as to the extent to which the Company uses fair value to measure financial instruments and information about the inputs used to value those financial instruments to allow users to assess the relative reliability of the measurements. The following tables present assets and (liabilities) carried at fair value by hierarchy level, excluding those related to the Company’s living benefits and associated hedging programs, which are reported in Note 4a.

		September 30, 2010
						Quoted Prices
						in Active				Significant				Significant
						Markets for				Observable				Unobservable
						Identical Assets				Inputs				Inputs
		Total				(Level 1)				(Level 2)				(Level 3)
Assets accounted for at fair value on a recurring basis
Fixed maturities, AFS
ABS		$	3,009			$	—			$	2,500			$	509
CDOs			2,563				—				7				2,556
CMBS			8,160				—				7,547				613
Corporate			40,851				—				38,741				2,110
Foreign government/government agencies			1,924				—				1,873				51
States, municipalities and political subdivisions (“Municipal”)			12,723				—				12,434				289
RMBS			5,551				—				4,279				1,272
U.S. Treasuries			4,955				774				4,181				—
Total fixed maturities, AFS			79,736				774				71,562				7,400
Fixed maturities, FVO			564				—				64				500
Equity securities, trading			32,495				2,286				30,209				—
Equity securities, AFS			1,168				327				741				100
Derivative assets
Credit derivatives			(9	)			—				(9	)			—
Equity derivatives			3				—				—				3
Foreign exchange derivatives			482				—				482				—
Interest rate derivatives			74				—				98				(24	)
Other derivative contracts			34				—				—				34
Total derivative assets [1]			584				—				571				13
Short-term investments			9,517				715				8,802				—
Separate account assets [2]			148,771				112,182				35,512				1,077
Total assets accounted for at fair value on a recurring basis		$	272,835			$	116,284			$	147,461			$	9,090
Liabilities accounted for at fair value on a recurring basis
Other policyholder funds and benefits payable
Institutional notes		$	3			$	—			$	—			$	3
Equity linked notes			(8	)			—				—				(8	)
Total other policyholder funds and benefits payable			(5	)			—				—				(5	)
Derivative liabilities
Credit derivatives			(509	)			—				(53	)			(456	)
Equity derivatives			1				—				—				1
Foreign exchange derivatives			172				—				172				—
Interest rate derivatives			(77	)			—				(52	)			(25	)
Total derivative liabilities [3]			(413	)			—				67				(480	)
Other liabilities			(30	)			—				—				(30	)
Consumer notes [4]			(4	)			—				—				(4	)
Total liabilities accounted for at fair value on a recurring basis		$	(452	)		$	—			$	67			$	(519	)