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): January 14, 2004
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 001-13958 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.
The Hartford Financial Services Group, Inc. (the "Company") currently estimates
its fourth quarter 2003 net income will be between $451 million and $457
million, or between $1.58 and $1.60 per diluted share. The Company's estimated
fourth quarter 2003 net income includes estimated net realized capital gains of
approximately $28 million, after-tax. These estimated net gains arise primarily
from $71 million, after-tax, of estimated realized gains, offset by $43
million, after-tax, of estimated realized losses. The realized losses arise
primarily from impairments of approximately $36 million, after-tax, of which
approximately $16 million, after-tax, relate to securities of Parmalat SpA and
certain of its affiliates. The Company's estimated net realized capital gains
for the fourth quarter of 2003 include approximately $7 million, after-tax, of
periodic net coupon settlements pursuant to derivative investment strategies
that do not qualify for hedge accounting. Prior to this quarter, the Company
has reported such periodic net coupon settlements in net investment income. The
Company's previously publicized estimates of its 2003 financial performance
have included such periodic net coupon settlements in net investment income.
The Company's estimated fourth quarter 2003 results include, in its property &
casualty operations, an estimated prior year reserve strengthening of $23
million, after-tax, related to HartRe International. The Company's HartRe
International business was placed in runoff in 2001 and is reported in the
Other Operations segment. Fourth quarter 2003 basic and diluted weighted
average shares outstanding are estimated at 283.0 million and 285.6 million,
respectively.
The Company currently estimates its full year 2003 net loss will be between $87
million and $93 million, or between $(0.32) and $(0.34) per diluted share. The
Company's estimated 2003 net loss includes the Company's $1.7 billion,
after-tax, first quarter 2003 asbestos charge; estimated net realized capital
gains of approximately $191 million, after-tax; a second quarter severance
charge of $27 million, after-tax; a second quarter $30 million tax benefit
related to a change in estimate of the dividends-received deduction; and a third
quarter Bancorp settlement charge of $40 million, after-tax. The Company's
estimated net realized capital gains for 2003 include approximately $29 million,
after-tax, of periodic net coupon settlements on non-qualifying derivative
instruments. Full year 2003 basic and diluted weighted average shares
outstanding are estimated at 272.4 million. As a result of the antidilutive
impact from the 2003 net loss, the Company is required by generally accepted
accounting principles to use basic weighted average shares in the calculation of
2003 diluted earnings per share. In the absence of the net loss, an estimated
274.2 million weighted average common shares outstanding and dilutive potential
common shares would have been used in the diluted earnings per share
calculation.
The Company's domestic variable annuity sales were $4.1 billion for the fourth
quarter of 2003, and net flows, which equal sales minus redemptions and certain
other payments, for the quarter were $1.6 billion versus net flows of $2.3
billion for the third quarter of 2003. The decrease in net flows was driven
primarily by an increase in Putnam Hartford Capital Manager surrender activity.
Sales of all other significant life insurance products were up strongly for the
fourth quarter of 2003 compared with the fourth quarter of 2002.
On December 31, 2003, the Company acquired the group life and accident, and
short-term and long-term disability businesses of CNA Financial Corporation. The
Company originally estimated its total funding needs of the transaction,
including transaction costs and additional capital to support the Company's
higher risk based capital ratios, at approximately $600 million. The Company now
estimates its total funding needs of the transaction at approximately $540
million. The reduction in total funding needs is primarily due to the final
terms agreed to with CNA regarding the specific business acquired. Certain
elements of the specialty segment were not acquired by the Company. This
resulted in a reduction in the purchase price and the amount of additional
capital necessary to support the business. The Company financed the acquisition
with commercial paper.
As the Company previously has stated publicly, the Company, like many others in
the financial services industry, has received requests for information from the
Securities and Exchange Commission and a subpoena from the New York Attorney
General's Office, in each case requesting documentation and other information
regarding various mutual fund regulatory issues. The Company continues to
cooperate fully with these regulatory agencies in responding to these requests.
Certain of the statements in this Form 8-K are forward-looking statements.
These forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
include statements about our estimates of our results of operations for the
fiscal quarter and fiscal year ended December 31, 2003. We caution investors
that these forward-looking statements are not guarantees of our results of
operations for these periods, and actual results may differ materially.
Investors should consider the important risks and uncertainties that may cause
actual results to differ. These important risks and uncertainties include the
potential for adjustments to the estimated amounts set forth in this Form 8-K
arising from completion of the internal financial statements of our business
units and our consolidation process. Such adjustments could result in our
reported results of operations differing materially from the estimated amounts
set forth in this Form 8-K. In addition, we do not expect our auditors to
complete their audit of the 2003 financial statements until late February 2004
and the audit could give rise to material adjustments to estimated amounts set
forth in this Form 8-K. We assume no obligation to update the statements in
this Form 8-K, which speaks as of the date filed.
Item 12. Results of Operations and Financial Condition
The information set forth in the first 3 paragraphs and the final paragraph
under Item 5 above is hereby incorporated by reference.
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: January 14, 2004 By: /s/ NEAL S. WOLIN
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Name: Neal S. Wolin
Title: Executive Vice President and
General Counsel