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

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

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.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave