Summary
The Hartford Financial Services Group, Inc. (HIG) filed an 8-K on February 5, 2009, to report its fourth quarter and full-year 2008 financial results. A significant event disclosed was a pre-tax goodwill impairment charge of $745 million. This impairment was primarily driven by the sharp decline in equity markets and The Hartford's share price during the fourth quarter of 2008, triggering an interim goodwill impairment test. The impairment charge was largely allocated to the Individual Annuity segment ($422 million) and Corporate ($323 million).
Key Highlights
- 1The Hartford recorded a substantial pre-tax goodwill impairment charge of $745 million for the fourth quarter of 2008.
- 2The goodwill impairment was triggered by adverse market conditions, including declining equity markets and a decrease in The Hartford's stock price.
- 3The impairment charge was primarily concentrated in the Individual Annuity ($422 million) and Corporate ($323 million) reporting units.
- 4The company reported favorable prior accident year reserve development for property and casualty lines totaling $192 million in the fourth quarter of 2008.
- 5Key areas contributing to reserve releases included general liability, workers' compensation, personal auto liability, and commercial auto liability.
- 6The Hartford provided updated details on its capital position, noting a preliminary year-end 2008 risk-based-capital (RBC) ratio of 385% for Hartford Life and Accident Insurance Company (HLA).
- 7The company discussed factors that led to a lower-than-initially-estimated HLA RBC ratio, including cash-flow testing requirements, credit-related impacts, and currency fluctuations.