UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2003
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-19277 13-3317783
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(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
The Hartford Financial Services Group, Inc.
Hartford Plaza
Hartford, Connecticut 06115-1900
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 547-5000
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Item 5. Other Events.
This Current Report on Form 8-K is filed on behalf of The Hartford Financial
Services Group, Inc. ("The Hartford") to provide supplemental financial
disclosure relating to the three fiscal years ended December 31, 2002.
Specifically, this report provides historical underwriting ratios under United
States generally accepted accounting principles ("GAAP") relating to certain of
The Hartford's property & casualty segments and related reconciliation detail.
GAAP Underwriting Ratios
------------------------
In The Hartford's Annual Report on Form 10-K for the year ended December 31,
2002, (the "2002 10-K") which was filed with the SEC on March 3, 2003, the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" section included five underwriting ratios for each of The Hartford's
property & casualty segments, other than certain run-off operations. The five
underwriting ratios are loss ratio, loss adjustment expense ratio, expense
ratio, dividend ratio and combined ratio.
Consistent with The Hartford's historical practice, the underwriting ratios were
calculated based on statutorily prescribed insurance accounting standards. Two
of the elements required by these standards in the calculation of these ratios
are prepared differently under GAAP.
In the future, in light of the SEC's recent promulgation of Regulation G
pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"), The
Hartford will no longer report in its Exchange Act filings statutory
underwriting ratios, and will instead report underwriting ratios based solely on
financial measures calculated in accordance with GAAP. To aid investors in
comparing The Hartford's future financial results with historical results, this
report includes GAAP underwriting ratios for each of the applicable property &
casualty segments for the twelve fiscal quarters in the period ended December
31, 2002.
Reconciliation of Statutory Accounting Measures
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The expense ratios and the expense component of the combined ratios set forth in
the 2002 10-K were based on written premiums, which are calculated based on
statutory accounting principles. In the 2002 10-K, each measure of written
premium was reconciled to earned premium, which is the most directly comparable
financial measure calculated and presented in accordance with GAAP.
The statutory underwriting ratios set forth in the 2002 10-K also were based on
statutory underwriting expenses, for which all policy acquisition costs were
expensed as incurred. In contrast, a GAAP calculation of underwriting expenses
requires that certain policy acquisition costs be capitalized when incurred and
amortized over time. This report includes a reconciliation of the statutory
underwriting expense measures underlying the 2002 10-K statutory underwriting
ratios to the corresponding GAAP underwriting expense measures.
QTR 1 QTR 2 QTR 3 QTR 4 YEAR
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BUSINESS BUSINESS BUSINESS BUSINESS BUSINESS
INSURANCE INSURANCE INSURANCE INSURANCE INSURANCE
2002 2002 2002 2002 2002
---- ---- ---- ---- ----
Underwriting Expenses (Statutory) $260 $266 $282 $280 $1,088
Less: Prepaid Acquisition Costs $16 $19 $22 $9 $66
Underwriting Expenses (GAAP) $244 $247 $260 $271 $1,022
Loss Ratio 51.6% 53.3% 50.1% 48.2% 50.7%
Loss Adjustment Expense Ratio 12.0% 11.5% 11.5% 13.0% 12.0%
Expense Ratio 33.4% 32.2% 32.7% 32.6% 32.7%
Dividend Ratio 1.0% 2.0% 1.6% 1.6% 1.5%
Combined Ratio 98.0% 99.0% 95.9% 95.4% 97.0%
PERSONAL PERSONAL PERSONAL PERSONAL PERSONAL
LINES LINES LINES LINES LINES
2002 2002 2002 2002 2002
---- ---- ---- ---- ----
Underwriting Expenses (Statutory) $181 $174 $172 $176 $703
Less: Prepaid Acquisition Costs $5 $3 $(1) $0 $7
Underwriting Expenses (GAAP) $176 $171 $173 $176 $696
Loss Ratio 65.0% 67.5% 67.0% 64.8% 66.1%
Loss Adjustment Expense Ratio 11.8% 12.2% 11.1% 11.4% 11.6%
Expense Ratio 24.4% 23.0% 23.0% 22.9% 23.3%
Dividend Ratio 0.0% 0.0% 0.0% 0.0% 0.0%
Combined Ratio 101.2% 102.7% 101.1% 99.2% 101.0%
SPECIALTY SPECIALTY SPECIALTY SPECIALTY SPECIALTY
COMMERCIAL COMMERCIAL COMMERCIAL COMMERCIAL COMMERCIAL
2002 2002 2002 2002 2002
---- ---- ---- ---- ----
Underwriting Expenses (Statutory) $90 $94 $110 $87 $381
Less: Prepaid Acquisition Costs $14 $16 $8 $(15) $23
Underwriting Expenses (GAAP) $76 $78 $102 $102 $358
Loss Ratio 55.6% 54.7% 57.8% 61.0% 57.6%
Loss Adjustment Expense Ratio 14.0% 12.2% 11.4% 10.4% 11.8%
Expense Ratio 32.5% 28.4% 28.1% 29.1% 29.3%
Dividend Ratio 0.7% 0.6% 0.5% 1.0% 0.7%
Combined Ratio 102.8% 96.0% 97.8% 101.5% 99.4%
REINSURANCE REINSURANCE REINSURANCE REINSURANCE REINSURANCE
2002 2002 2002 2002 2002
---- ---- ---- ---- ----
Underwriting Expenses (Statutory) $51 $46 $48 $46 $191
Less: Prepaid Acquisition Costs $7 $(4) $(2) $(10) $(9)
Underwriting Expenses (GAAP) $44 $50 $50 $56 $200
Loss Ratio 72.3% 72.5% 68.3% 85.5% 74.9%
Loss Adjustment Expense Ratio 5.0% 2.8% 6.2% 5.6% 4.9%
Expense Ratio 25.1% 29.7% 27.6% 29.5% 28.0%
Dividend Ratio 0.0% 0.0% 0.0% 0.0% 0.0%
Combined Ratio 102.4% 105.0% 102.2% 120.6% 107.9%
NAP&C NAP&C NAP&C NAP&C NAP&C
2002 2002 2002 2002 2002
---- ---- ---- ---- ----
Underwriting Expenses (Statutory) $582 $580 $612 $589 $2,363
Less: Prepaid Acquisition Costs $42 $34 $27 $(16) $87
Underwriting Expenses (GAAP) $540 $546 $585 $605 $2,276
Loss Ratio 59.2% 60.6% 59.1% 59.6% 59.6%
Loss Adjustment Expense Ratio 11.6% 11.1% 10.9% 11.4% 11.2%
Expense Ratio 29.0% 28.0% 28.0% 28.3% 28.3%
Dividend Ratio 0.5% 0.9% 0.7% 0.8% 0.7%
Combined Ratio 100.2% 100.5% 98.7% 100.0% 99.8%
QTR 1 QTR 2 QTR 3 QTR 4 YEAR
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BUSINESS BUSINESS BUSINESS BUSINESS BUSINESS
INSURANCE INSURANCE INSURANCE INSURANCE INSURANCE
2001 2001 2001[1] 2001 2001[8]
---- ---- ------- ---- -------
Underwriting Expenses (Statutory) $225 $218 $232 $251 $926
Less: Prepaid Acquisition Costs $17 $18 $8 $11 $54
Underwriting Expenses (GAAP) $208 $200 $224 $240 $872
Loss Ratio 54.5% 52.9% 82.0% 50.1% 59.9%
Loss Adjustment Expense Ratio 12.4% 12.1% 18.3% 11.8% 13.7%
Expense Ratio 33.5% 31.3% 33.6% 34.2% 33.2%
Dividend Ratio 2.1% 0.9% 1.0% 1.2% 1.3%
Combined Ratio 102.6% 97.2% 134.9% 97.2% 108.0%
PERSONAL PERSONAL PERSONAL PERSONAL PERSONAL
LINES LINES LINES LINES LINES
2001 2001 2001[2] 2001 2001[9]
---- ---- ------- ---- -------
Underwriting Expenses (Statutory) $167 $174 $178 $168 $687
Less: Prepaid Acquisition Costs $6 $14 $13 $5 $38
Underwriting Expenses (GAAP) $161 $160 $165 $163 $649
Loss Ratio 62.0% 70.3% 67.4% 69.7% 67.4%
Loss Adjustment Expense Ratio 10.8% 12.2% 12.1% 11.5% 11.7%
Expense Ratio 24.2% 23.6% 23.6% 23.2% 23.6%
Dividend Ratio 0.0% 0.0% 0.0% 0.0% 0.0%
Combined Ratio 97.1% 106.1% 103.1% 104.4% 102.7%
SPECIALTY SPECIALTY SPECIALTY SPECIALTY SPECIALTY
COMMERCIAL COMMERCIAL COMMERCIAL COMMERCIAL COMMERCIAL
2001 2001 2001[3] 2001 2001[10]
---- ---- ------- ---- -------
Underwriting Expenses (Statutory) $81 $79 $85 $89 $334
Less: Prepaid Acquisition Costs $10 $(8) $4 $(12) $(6)
Underwriting Expenses (GAAP) $71 $87 $81 $101 $340
Loss Ratio 57.9% 61.1% 113.4% 56.0% 73.1%
Loss Adjustment Expense Ratio 16.8% 12.5% 22.3% 18.2% 17.6%
Expense Ratio 29.5% 33.9% 30.8% 38.4% 33.1%
Dividend Ratio 0.6% 0.4% 0.3% 0.3% 0.4%
Combined Ratio 104.8% 108.0% 166.7% 112.9% 124.2%
REINSURANCE REINSURANCE REINSURANCE REINSURANCE REINSURANCE
2001 2001 2001[4] 2001[6] 2001[11]
---- ---- ------- ------- -------
Underwriting Expenses (Statutory) $76 $60 $62 $54 $252
Less: Prepaid Acquisition Costs $23 $(1) $(11) $(13) $(2)
Underwriting Expenses (GAAP) $53 $61 $73 $67 $254
Loss Ratio 86.2% 84.9% 248.6% 81.4% 108.9%
Loss Adjustment Expense Ratio 2.4% 4.8% 8.1% 7.4% 5.3%
Expense Ratio 21.3% 26.7% 56.2% 27.6% 29.8%
Dividend Ratio 0.0% 0.0% 0.0% 0.0% 0.0%
Combined Ratio 109.9% 116.4% 312.9% 116.4% 144.0%
NAP&C NAP&C NAP&C NAP&C NAP&C
2001 2001 2001[5] 2001[7] 2001[12]
---- ---- ------- ------- -------
Underwriting Expenses (Statutory) $549 $531 $557 $562 $2,199
Less: Prepaid Acquisition Costs $56 $23 $14 $(9) $84
Underwriting Expenses (GAAP) $493 $508 $543 $571 $2,115
Loss Ratio 62.2% 64.7% 93.3% 62.1% 70.3%
Loss Adjustment Expense Ratio 11.0% 11.3% 15.7% 12.0% 12.5%
Expense Ratio 27.8% 28.2% 30.9% 29.8% 29.2%
Dividend Ratio 0.8% 0.4% 0.4% 0.5% 0.5%
Combined Ratio 101.8% 104.5% 140.3% 104.4% 112.5%
NAP&C refers to North American Property & Casualty
[1] Includes impacts from September 11 of 29.8 in the loss ratio, 6.2 in the
loss adjustment expense ratio, 0.8 in the expense ratio and 36.9 in the
combined ratio.
[2] Includes impacts from September 11 of 0.9 in the loss ratio, 0.2 in the
loss adjustment expense ratio and 1.1 in the combined ratio.
[3] Includes impacts from September 11 of $1 in underwriting expenses, 50.7
in the loss ratio, 9.5 in the loss adjustment expense ratio, 1.4 in the
expense ratio and 61.5 in the combined ratio.
[4] Includes impacts from September 11 of 164.8 in the loss ratio, 3.4 in
the loss adjustment expense ratio, 23.4 in the expense ratio and 191.6
in the combined ratio.
[5] Includes impacts from September 11 of $1 in underwriting expenses, 30.5
in the loss ratio, 4.5 in the loss adjustment expense ratio, 2.0 in the
expense ratio and 37.0 in the combined ratio.
[6] Includes impacts from September 11 of 1.9 in the loss ratio, (0.8) in
the loss adjustment expense ratio, (2.7) in the expense ratio and (1.7)
in the combined ratio.
[7] Includes impacts from September 11 of 0.4 in the loss ratio, (0.1) in
the loss adjustment expense ratio, (0.4) in the expense ratio and (0.2)
in the combined ratio.
[8] Includes impacts from September 11 of 7.6 in the loss ratio, 1.6 in the
loss adjustment expense ratio, 0.2 in the expense ratio and 9.3 in the
combined ratio.
[9] Includes impacts from September 11 of 0.2 in the loss ratio, 0.1 in the
loss adjustment expense ratio and 0.3 in the combined ratio.
[10] Includes impacts from September 11 of $1 in underwriting expenses, 13.6
in the loss ratio, 2.6 in the loss adjustment expense ratio, 0.3 in the
expense ratio and 16.5 in the combined ratio.
[11] Includes impacts from September 11 of 25.2 in the loss ratio, 0.4 in the
loss adjustment expense ratio, 2.2 in the expense ratio and 27.8 in the
combined ratio.
[12] Includes impacts from September 11 of $1 in underwriting expenses, 7.5
in the loss ratio, 1.1 in the loss adjustment expense ratio, 0.4 in the
expense ratio and 9.0 in the combined ratio.
QTR 1 QTR 2 QTR 3 QTR 4 YEAR
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BUSINESS BUSINESS BUSINESS BUSINESS BUSINESS
INSURANCE INSURANCE INSURANCE INSURANCE INSURANCE
2000 2000 2000 2000 2000
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Underwriting Expenses (Statutory) $202 $199 $205 $207 $813
Less: Prepaid Acquisition Costs $8 $6 $4 $3 $21
Underwriting Expenses (GAAP) $194 $193 $201 $204 $792
Loss Ratio 57.0% 53.9% 52.3% 46.8% 52.4%
Loss Adjustment Expense Ratio 13.1% 12.0% 12.6% 14.5% 13.1%
Expense Ratio 34.9% 33.9% 34.8% 34.0% 34.4%
Dividend Ratio 1.3% 1.3% 1.2% 1.4% 1.3%
Combined Ratio 106.3% 101.1% 101.0% 96.7% 101.2%
PERSONAL PERSONAL PERSONAL PERSONAL PERSONAL
LINES LINES LINES LINES LINES
2000 2000 2000 2000 2000
---- ---- ---- ---- ----
Underwriting Expenses (Statutory) $158 $168 $167 $160 $653
Less: Prepaid Acquisition Costs $6 $15 $12 $5 $38
Underwriting Expenses (GAAP) $152 $153 $155 $155 $615
Loss Ratio 63.2% 67.2% 64.3% 64.0% 64.7%
Loss Adjustment Expense Ratio 10.7% 11.1% 10.3% 10.9% 10.8%
Expense Ratio 24.9% 24.1% 24.1% 23.7% 24.2%
Dividend Ratio 0.0% 0.0% 0.0% 0.0% 0.0%
Combined Ratio 98.7% 102.4% 98.7% 98.6% 99.6%
SPECIALTY SPECIALTY SPECIALTY SPECIALTY SPECIALTY
COMMERCIAL COMMERCIAL COMMERCIAL COMMERCIAL COMMERCIAL
2000 2000 2000 2000 2000
---- ---- ---- ---- ----
Underwriting Expenses (Statutory) $85 $86 $111 $55 $337
Less: Prepaid Acquisition Costs $(4) $(3) $14 $(21) $(14)
Underwriting Expenses (GAAP) $89 $89 $97 $76 $351
Loss Ratio 57.2% 58.5% 59.4% 66.6% 60.4%
Loss Adjustment Expense Ratio 13.6% 13.3% 15.5% 18.0% 15.1%
Expense Ratio 37.2% 37.3% 30.1% 32.5% 34.0%
Dividend Ratio 0.3% 0.3% 0.2% 0.2% 0.2%
Combined Ratio 108.4% 109.4% 105.1% 117.4% 109.7%
REINSURANCE REINSURANCE REINSURANCE REINSURANCE REINSURANCE
2000 2000 2000 2000 2000
---- ---- ---- ---- ----
Underwriting Expenses (Statutory) $72 $64 $64 $62 $262
Less: Prepaid Acquisition Costs $16 $1 $0 $(13) $4
Underwriting Expenses (GAAP) $56 $63 $64 $75 $258
Loss Ratio 72.3% 70.6% 77.8% 70.5% 72.7%
Loss Adjustment Expense Ratio 3.9% 3.5% 4.3% 5.6% 4.4%
Expense Ratio 30.6% 31.3% 32.3% 33.0% 31.9%
Dividend Ratio 0.0% 0.0% 0.0% 0.0% 0.0%
Combined Ratio 106.8% 105.4% 114.4% 109.1% 109.0%
NAP&C NAP&C NAP&C NAP&C NAP&C
2000 2000 2000 2000 2000
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Underwriting Expenses (Statutory) $517 $517 $547 $484 $2,065
Less: Prepaid Acquisition Costs $26 $19 $30 $(26) $49
Underwriting Expenses (GAAP) $491 $498 $517 $510 $2,016
Loss Ratio 61.2% 61.7% 61.0% 59.2% 60.8%
Loss Adjustment Expense Ratio 11.2% 10.8% 11.3% 12.5% 11.5%
Expense Ratio 30.9% 30.3% 29.7% 29.7% 30.1%
Dividend Ratio 0.5% 0.5% 0.5% 0.5% 0.5%
Combined Ratio 103.8% 103.3% 102.5% 101.9% 102.9%
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
Date: May 8, 2003 By: /s/ NEAL S. WOLIN
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Name: Neal S. Wolin
Title: Executive Vice President and
General Counsel