Posted on 05 Mar 2013 by Neilson
The Hartford today reported that it has filed an amended Form 10-Q with the U.S. Securities and Exchange Commission (SEC) to restate its results for the third quarter ended September 30, 2012. The amended filing corrects for an error in the company's preliminary calculation of the gain or loss relating to the Individual Life business transaction under U.S. generally accepted accounting principles (GAAP).
The company is now reporting a full year 2012 net loss of $38 million and shareholders' equity of $22.4 billion at December 31, 2012, as compared with the previously reported 2012 net income of $350 million and shareholders' equity of $22.8 billion. The company's 2012 core earnings of $1.4 billion are unchanged.
"We regret the error, but importantly the adjustments have no impact on our reported 2012 core earnings, statutory results or surplus, and announced capital management plan," said The Hartford's Chairman, President and Chief Executive Officer Liam E. McGee. "The Individual Life, Retirement Plans and Woodbury Financial Services transactions were attractive for The Hartford and completed on favorable financial terms. They generated an aggregate statutory capital benefit of $2.2 billion and this remains unchanged."
In September 2012, The Hartford estimated that the Individual Life transaction would not generate a material gain or loss under GAAP. Following the identification of the error, the company estimates that the transaction will result in a GAAP loss of $393 million, after tax. This estimate is subject to change pending the final determination of net assets sold, transaction costs and other adjustments. The error resulted from the omission of the impact of certain reinsurance recoverable balances on the gain/loss calculations for the transaction.
*Denotes financial measure not calculated based on generally accepted accounting principles ("non-GAAP")
The revised third quarter 2012 financial results include a $388 million after-tax loss related to the transaction, which reflects the impairment of goodwill and the establishment of a loss accrual for premium deficiency. Net realized investment losses of $5 million, after tax, related to the transaction were included in the company's announced fourth quarter 2012 financial results.
The company's previously filed financial statements for the third quarter of 2012 should no longer be relied upon. In addition, the company has determined that there was a material weakness in its internal control over financial reporting at September 30, 2012, which was remediated as of December 31, 2012.
More detail related to the restatement is available in a Form 8-K that The Hartford has filed today with the SEC. The company has furnished, along with its 8-K filing, a revised and restated Investor Financial Supplement for the quarter and full year ended December 31, 2012. In addition to the amended Form 10-Q for the quarter ended September 30, 2012, the company also filed with the SEC its 2012 Annual Report on Form 10-K.
ABOUT THE HARTFORD
With more than 200 years of expertise, The Hartford (NYSE:HIG) is a leader in property and casualty insurance, group benefits and mutual funds. The company is widely recognized for its excellence, sustainability practices, trust and integrity. More information on the company and its financial performance is available at www.thehartford.com.