Connecticut eases accounting rules for the Hartford

The Hartford (Conn.) Financial Services Group received approval from the Connecticut insurance commissioner to change accounting practices.
FEB 12, 2009
By  Bloomberg
The Hartford (Conn.) Financial Services Group Inc. today received approval from the Connecticut insurance commissioner to change accounting practices in a bid to improve its finances. The official, Thomas R. Sullivan, approved two new measures that will allow the carrier to raise the statutory surplus — the extra cash over the amount of assets needed to cover liabilities — by $987 million, for a total of $6.05 billion. Passage of both measures may raise the company’s risk-based capital ratio level by 75 percentage points, Liz Zlatkus, finance chief of The Hartford, said on a Feb. 6 conference call with analysts. Without that modification, the ratio is now at an estimated 385% for the end of 2008. The first modification allows the insurer to adjust its treatment of deferred tax assets on its balance sheets. DTAs often result from operating losses and can be used to offset income taxes. These deferred tax assets aren’t liquid, thus they wouldn’t be readily available to pay claims. Under Mr. Sullivan’s approval, The Hartford can count the deferred tax assets as 15% of its statutory surplus and capital, realizing the assets over a three-year period. Usually, insurers can count these assets toward a maximum of just 10% of their statutory surplus and capital within a one-year period. Furthermore, Mr. Sullivan modified a required asset analysis to determine if the insurer has sufficient reserves to back its lifetime benefits. In this market climate, that test would have required insurers to set aside additional reserves because the variable annuity guarantees are worth more than the account. Instead, the carrier will have to perform an analysis that reflects all benefits and expenses related to the annuity contract, allowing the contract’s future mortality-and-expense charges to go toward paying claims on the guarant

Latest News

RIA moves: True North adds $353M California RIA as SageView grows North Carolina presence
RIA moves: True North adds $353M California RIA as SageView grows North Carolina presence

Plus, a $400 million Commonwealth team departs to launch an independent family-run RIA in the East Bay area.

Blue Owl Capital, Voya strike private market partnership for retirement plans
Blue Owl Capital, Voya strike private market partnership for retirement plans

The collaboration will focus initially on strategies within collective investment trusts in DC plans, with plans to expand to other retirement-focused private investment solutions.

Top Commonwealth advisor to recruiters: Stop with the cold calls already!
Top Commonwealth advisor to recruiters: Stop with the cold calls already!

“I respectfully request that all recruiters for other BDs discontinue their efforts to contact me," writes Thomas Bartholomew.

Why AI notetakers alone can't fix 'broken' advisor meetings
Why AI notetakers alone can't fix 'broken' advisor meetings

Wealth tech veteran Aaron Klein speaks out against the "misery" of client meetings, why advisors' communication skills don't always help, and AI's potential to make bad meetings "100 times better."

Morgan Stanley, Goldman, Wells Fargo to settle Archegos trades lawsuit
Morgan Stanley, Goldman, Wells Fargo to settle Archegos trades lawsuit

The proposed $120 million settlement would close the book on a legal challenge alleging the Wall Street banks failed to disclose crucial conflicts of interest to investors.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.