Item 2.01 Completion of Acquisition or Disposition of Assets
On January 1, 2013, Hartford Life, Inc., a Delaware corporation ("HLI")
completed its previously announced sale of (i) the assets of Hartford Life
Insurance Company (the "Company") relating to its retirement plans business
("Retirement Plans") to Massachusetts Mutual Life Insurance Company and (ii) all
of the issued and outstanding equity of Hartford Retirement Services, LLC,
Retirement Plans's recordkeeper, for a cash ceding commission of $355 million,
net of an adjustment at closing of $45 million as a result of net flows adjusted
for discontinuances and lapses in the retirement plans business from and
including January 1, 2012 through the closing of the transaction. The Company is
a wholly-owned subsidiary of HLI.
On January 2, 2013, HLI completed its previously announced sale of the Company's
assets relating to its individual life insurance business ("Individual Life") to
The Prudential Insurance Company of America, a subsidiary of Prudential
Financial, Inc., for cash consideration of $615 million, consisting primarily of
a ceding commission, of which $590 is attributable to the Company.
Pro forma financial information with respect to these transactions is provided
in Item 9.01 of this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information
The attached unaudited Pro Forma Condensed Consolidated Statements of Operations
for the year ended December 31, 2011 and the nine-months ended September 30,
2012 and the unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 2012 (collectively, the "Unaudited Pro Forma Condensed
Consolidated Financial Statements") are based on the Company's historical
consolidated results of operations and financial position, adjusted to give
effect to the sale of the Company's Retirement Plans and Individual Life
businesses.
The unaudited Pro Forma Condensed Consolidated Statements of Operations for the
year ended December 31, 2011 and the nine-months ended September 30, 2012 have
been prepared to present the Company's results of operations as if the sale of
each of the Retirement Plans and Individual Life businesses had occurred on
January 1, 2011. The unaudited Pro Forma Condensed Consolidated Balance Sheet as
of September 30, 2012 has been prepared to present the Company's financial
condition as if the sale of the Retirement Plans and Individual Life Insurance
businesses had occurred on September 30, 2012.
The Unaudited Pro Forma Condensed Consolidated Financial Statements do not
purport to be indicative of the financial position or results of operations of
the Company as of the dates or for such periods, nor are they necessarily
indicative of future results. The Unaudited Pro Forma Condensed Consolidated
Financial Statements and the accompanying notes should be read together with the
Company's audited Consolidated Financial Statements and accompanying notes as of
and for the year ended December 31, 2011 included in the Company's Current
Report on Form 8-K dated December 28, 2012, and Management's Discussion and
Analysis included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2011, as well as the Company's unaudited Condensed Consolidated
Financial Statements filed with the Securities & Exchange Commission on Form
10-Q as of and for the nine-months ended September 30, 2012.
(d) Exhibit
Exhibit No. Description
99.1 Unaudited Pro Forma Condensed Consolidated Statements of Operations of
Hartford Life Insurance Company and Subsidiaries for the year
ended
December 31, 2011 and the nine-months ended September 30,
2012 and the
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 2012
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Exhibit 99.1
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2011
Pro forma adjustments
Individual
(In millions, except for per share data) As reported Retirement Plans (1) Life (1) Pro forma
(Unaudited)
Revenues
Fee income and other $ 3,802 $ (373 ) $ (965 ) $ 2,464
Earned premiums 234 (7 ) 107 334
Net investment income:
Securities available-for-sale and other 2,580 (396 ) (420 ) 1,764
Equity securities, trading (2) (14 ) (14 )
Total net investment income 2,566 (396 ) (420 ) 1,750
Net realized capital gains/losses 1 10 (22 ) (11 )
Total revenues 6,603 (766 ) (1,300 ) 4,537
Benefits, losses and expenses
Benefits, losses and loss adjustment
expenses 3,107 (308 ) (761 ) 2,038
Benefits, losses and loss adjustment
expenses - returns credited on
international unit-linked bonds and
pension products (2) (14 ) (14 )
Amortization of deferred policy
acquisition costs and present value of
future profits 474 (84 ) (169 ) 221
Insurance operating costs and other
expenses 3,048 (423 ) (272 ) 2,353
Dividends to policyholders 17 (1 ) 16
Total benefits, losses and expenses 6,632 (815 ) (1,203 ) 4,614
Loss from continuing operations before
income taxes (29 ) 49 (97 ) (77 )
Income tax expense/benefit (273 ) 52 (12 ) (233 )
Net income 244 (3 ) (85 ) 156
Net income attributable to the
noncontrolling interest - -
Net income attributable to Hartford Life
Insurance Company $ 244 $ (3 ) $ (85 ) $ 156
See Explanatory Notes to Pro Forma Condensed Consolidated Statements of
Operations.
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HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations
For the nine months ended September 30, 2012
Pro
forma adjustments
Individual
(In millions, except for per share data) As reported Retirement Plans (1) Life (1) Pro forma
(Unaudited)
Revenues
Fee income and other $ 2,680 $ (276 ) $ (712 ) $ 1,692
Earned premiums 69 (5 ) 91 155
Net investment income:
Securities available-for-sale and other 1,927 (312 ) (346 ) 1,269
Equity securities, trading (2) 156 (1 ) 155
Total net investment income 2,083 (312 ) (347 ) 1,424
Net realized capital gains/losses (705 ) 1 (15 ) (719 )
Total revenues 4,127 (592 ) (983 ) 2,552
Benefits, losses and expenses
Benefits, losses and loss adjustment
expenses 2,198 (251 ) (617 ) 1,330
Benefits, losses and loss adjustment
expenses - returns credited on
international unit-linked bonds and
pension products (2) 155 155
Amortization of deferred policy
acquisition costs and present value of
future profits 262 (31 ) (76 ) 155
Insurance operating costs and other
expenses 782 (323 ) (237 ) 222
Dividends to policyholders 15 (1 ) 14
Total benefits, losses and expenses 3,412 (605 ) (931 ) 1,876
Income before income taxes 715 13 (52 ) 676
Income tax expense/benefit 137 22 (9 ) 150
Net income 578 (9 ) (43 ) 526
Net income attributable to the
noncontrolling interest (1 ) (1 )
Net income attributable to Hartford Life
Insurance Company $ 579 $ (9 ) $ (43 ) $ 527
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Hartford Life Insurance Company and Subsidiaries
Explanatory Notes to Pro Forma Condensed Consolidated Statements of Operations
(Dollar amounts in millions, unless otherwise stated)
(Unaudited)
(1) These pro forma adjustments reflect the elimination of revenues and
benefits, losses and expenses of the business sold assuming the transaction
occurred on January 1, 2011. See Explanatory Notes to Condensed Consolidated Pro
Forma Balance Sheet for information related to the form of the sale transaction
and the estimated gain on the sale transaction.
(2) Includes investment income and mark-to-market effects of equity
securities, trading, supporting the international variable annuity
business, which are classified in net investment income with
corresponding amounts credited to policyholders within benefits, losses
and loss adjustment expenses.
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HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2012
Pro forma adjustments
(In millions, except for Retirement
share and per share data) As reported Plans Individual Life
Total Impact Note Pro forma
(Unaudited)
Assets
Total investments $ 65,745 $(9,431) $(7,650) $(17,081) (1) $ 48,664
Cash 1,552 355 590 945 (7) 2,497
Premiums receivable and
agents' balances, net 75 75
Reinsurance recoverables,
net 3,762 9,055 7,083 16,138 (2) 19,900
Deferred policy acquisition
costs and present value of
future profits 3,094 (218) (1,976) (2,194) (3) 900
Deferred income taxes, net 1,333 226 345 571 (4) 1,904
Goodwill 470 (87) (224) (311) (3) 159
Other assets 1,361 (240) (268) (508) (3) 853
Separate account assets 148,357 148,357
Total assets $ 225,749 $(340) $(2,100) $(2,440) $ 223,309
Liabilities
Reserve for future policy
benefits and unpaid losses
and loss adjustment
expenses $ 11,825 $ 11,825
Other policyholder funds
and benefits payable 42,021 42,021
Other policyholder funds
and benefits payable -
international variable
annuities 1,905 1,905
Consumer notes 190 190
Other liabilities 10,879 (131) (1,979) (2,110) (3) (5) 8,769
Separate account
liabilities 148,357 148,357
Total liabilities 215,177 (131) (1,979) (2,110) 213,067
Commitments and
Contingencies
Stockholders' Equity
Common stock, $0.01 par
value - 1,500,000,000
shares authorized,
469,746,638 and 469,750,171
shares issued 6 6
Additional paid-in capital 8,279 8,279
Retained earnings 261 109 363 472 (7) 733
Accumulated other
comprehensive income, net
of tax 2,026 (318) (484) (802) (6) 1,224
Total stockholders' equity 10,572 (209) (121) (330) 10,242
Total liabilities and
stockholders' equity $ 225,749 $(340) $(2,100) $(2,440) $ 223,309
See Explanatory Notes to Pro Forma Condensed Consolidated Balance Sheet.
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--------------------------------------------------------------------------------Hartford Life Insurance Company and Subsidiaries
Explanatory Notes to Pro Forma Condensed Consolidated Balance Sheet
(Dollar amounts in millions, unless otherwise stated)
(Unaudited)
(1) These pro forma adjustments reflect the elimination of the assets of the
businesses sold.
(2) Since these sale transactions are primarily in the form of reinsurance
arrangements, the Company retains substantially all of the policyholder
liabilities of the sold businesses but records a reinsurance recoverable from
buyers at closing.
(3) These pro forma adjustments reflect write-offs of insurance contract-related
assets and liabilities as part of the reinsurance transactions, segment and
corporate goodwill related to the sold businesses, and other assets sold.
(4) The pro forma adjustment to the deferred tax asset primarily reflects
elimination of the deferred tax liability associated with unrealized
appreciation on investments.
(5) Includes accruals for estimated transaction and restructuring costs directly
attributable to the sale of the businesses.
(6) Reflects the elimination of unrealized appreciation on investments directly
related to the businesses.
(7) Using September 30, 2012 data, the following table reflects the estimated
pre-tax and after-tax gain to be recognized at the time of closing the sale.
Retirement Plans Individual Life Total
Ceding commission $ 355 $ 590 $ 945
Fair value of assets in excess
of reserves (354 ) (498 ) (852 )
Recapture affiliate reinsurance - 349 349
Intangible asset write-off (472 ) (831 ) (1,303 )
Transaction costs (28 ) (35 ) (63 )
Reinsurance loss (499 ) (425 ) (924 )
Realized capital gains -
investments 473 910 1,383
Realized capital gains -
derivatives 194 76 270
Gain from disposal of business,
pre-tax $ 168 $ 561 $ 729
Gain from disposal of business,
after-tax $ 109 $ 363 $ 472
The actual gain to be reported in continuing operations for the first quarter of
2013 is subject to change pending final determination of the net assets of the
businesses, transaction costs and other adjustments.
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