The Hartford Insurance Group, Inc. (HIG, NYSE)
Industry: Insurance - Diversified
Annual report, fiscal year 2010


## WE BELIEVE PEOPLE
SHOULD LIVE CONFIDENTLY.






The Hartford operates with three customer-focused divisions.

## CUSTOMERS

## COMMERCIAL MARKETS

Offering innovative risk protection and group benefits products to companies of all sizes, from one trusted source.

## CONSUMER MARKETS

Building on the strength of The Hartford’s relationship with AARP to grow as a provider of automobile and homeowners insurance.

## WEALTH MANAGEMENT

Providing innovative solutions to meet the retirement savings, income, and estate-planning needs of consumers, businesses, and institutions.

## CUSTOMERS

The Hartford was recognized by Ethisphere Institute as one of the 2011 World’s Most Ethical Companies. This recognition reflects The Hartford’s commitment to ethical practices, environmental stewardship, and community involvement.



Thanks to the thousands of Hartford teammates who are dedicated to the company, customers, and partners, 2010 was a transformational year for The Hartford. The company stabilized its businesses, strengthened its capital position, made significant progress implementing its strategy, and delivered a strong operating performance. We are encouraged by our 2010 accomplishments. Executing with renewed focus, discipline, and energy, The Hartford is committed to building a foundation for profitable growth, within prudent underwriting and risk standards.

A Year of Significant Accomplishments
The company returned to profitability for full-year 2010, delivering five consecutive quarters of earnings that began in the fourth quarter of 2009. For the full year, The Hartford reported net income of $1.7 billion, compared with a net loss of $887 million for 2009. Core earnings \( ^{*} $  were $1.9 billion, or $2.89 per diluted share for 2010, an increase of 56 percent from 2009.

During 2010, The Hartford completed a successful capital raise and the repurchase of the $3.4 billion in preferred shares issued to the U.S. Treasury under its Capital Purchase Program, strengthening the company’s balance sheet. At the end of 2010, The Hartford’s U.S. statutory surplus increased by more than $750 million over year-end 2009 to exceed $15 billion.
The company also significantly improved its investment portfolio. To reduce risk in the portfolio, our team took advantage of lower interest rates, tighter spreads, and improved market conditions. Over the course of 2010, the company sold approximately $4.2 billion of commercial mortgage-backed securities and other commercial real estate-backed holdings at attractive prices. As of December 31, 2010, the company’s net unrealized losses stood at $600 million, down from $5 billion at the start of the year.

Progress was also made on another important financial metric. At year end, our book value per diluted share was $40.40, a 12 percent year-over-year increase, driven by net income and the recovery in our investment portfolio.



LIAM E. MCGEE
Chairman, President and
Chief Executive Officer



Based on The Hartford’s improved capital position and the company’s confidence in its earnings power, the Board approved an increase in the quarterly dividend in February 2011, doubling it to $0.10 per common share. Over time, we will continue to prudently consider additional capital actions.

During the year, we further strengthened The Hartford’s Board of Directors with the appointment of three members: Paul G. Kirk, Thomas A. Renyi, and Kathryn Mikells. Paul Kirk returned to the Board after filling the U.S. Senate seat vacated by Massachusetts Senator Edward M. Kennedy. Tom Renyi is the retired Executive Chairman of The Bank of New York Mellon. And Kathryn Mikells is Executive Vice President and Chief Financial Officer of Nalco.

I want to express my gratitude to Edward J. “Ned” Kelly and Gail J. McGovern, both of whom retired from the board in 2010. The Hartford benefitted from their wisdom and insights. They helped us steer through a period of tremendous challenges, and we are grateful for their many years of exemplary service to the company.

## The Plan for the Future

With a strong foundation in place, the company established its go-forward strategy, captured in three operating principles. The first is to maximize shareholder value by generating sustained, profitable earnings growth over time and by moving to a lower-cost operating model. The Hartford has established the following targets:

– High single-digit, compounded annual adjusted core earnings growth for the two-year period ending 2012;

– Total company core ROE of 11% by the end of 2012; and

– A 200 basis point improvement in the company’s efficiency ratio between 2009 and 2012.

The second operating principle is to complement the company’s historic focus on products and distribution with an intensified focus on its customers and brand. To that end, we established a customer-focused organizational structure consisting of three businesses:

– Commercial Markets: providing risk protection and benefits for businesses;

– Consumer Markets: offering risk protection for affinities, such as AARP, and focusing on select segments;

– Wealth Management: providing life and retirement solutions for consumers and businesses.

The Hartford’s unique combination of property and casualty and life businesses is a differentiated strength. The organizational structure is enabling us to bring all of the company’s capabilities together to serve customers even more effectively.

Leveraging The Hartford’s strong and widely recognized brand is key to our focus on customers. We are striving to operate as one integrated, customer-centric brand—a company that sees



the world through its customers' eyes and delivers its brand promise consistently at every customer touch point.

As for the third operating principle, The Hartford is committed to driving superior execution. We are sharpening our execution edge by increasing efficiencies, improving decision making, and accelerating time to market. These new capabilities will make it easier for our customers and partners to do business with us.

Superior execution also extends to risk management. While the company had risk management processes in each of its businesses, it did not have a full understanding of its aggregate risk exposures. The Hartford has made progress in creating a stronger risk management function at the enterprise level by giving the Board and executive team the information and tools to more effectively oversee the company’s complete risk profile—insurance, investment, operational, and market risk.

Overall, the go-forward strategy has helped us define those businesses that best play to our strengths and provide opportunities for growth. As we committed in early 2010, we continue to be disciplined and analytical in reviewing our business portfolio and will make adjustments as appropriate. Accordingly, in late 2010 and early 2011, we completed the sale of two non-core businesses, the Canadian Mutual Funds and Specialty Risk Services (SRS).

## The Hartford's Aspiration

I am energized by the creativity, determination, and optimism of my teammates across the company. We are proud of our heritage and of the trust customers and distribution partners have in us. At the same time, we are realistic about our challenges and the state of the economy in which we operate. For example, The Hartford sees signs that the U.S. economy is beginning to improve, but the recovery process is likely to be slow and fragile given the persisting high rate of unemployment. The same pace of improvement holds true for consumer confidence, which is picking up from its historic lows.

We are determined to build the company for the long term. We aspire to be one of the world’s most admired companies by shareholders, customers, partners, teammates, and communities.

I want to thank all of my teammates across The Hartford. They are the true engine of our momentum. We are looking forward to another year of strong performance in 2011.

Sincerely,



LIAM E. MCGEE

Chairman, President and
Chief Executive Officer

April 2011



The Hartford is Building on a Strong Foundation

A LARGE AND GROWING CUSTOMER BASE

» 1 million+ business customers

» 18 million individual customers

A BROAD AND DIVERSE PRODUCT PORTFOLIO

» Products cover over 85% of total financial services product profits \( ^{*} \) 

A MULTI-CHANNEL DISTRIBUTION NETWORK

» 175K+ Life/Wealth agents

» 15K+ Property & Casualty and benefit brokers/agencies

» Internet/direct




More than a million businesses rely on The Hartford to help insure what’s important to them – from their property to their people.

To meet their needs, our Commercial Markets business has earned an industry-leading presence in offering comprehensive property and casualty, and group life and disability solutions for businesses of all sizes. Commercial Markets is well positioned in a competitive marketplace to continue its leadership across all size segments and seize new opportunities in the small and mid-sized business markets.

We enjoy strong distribution relationships with agents and brokers. With more than 15,000 commercial property and casualty agencies and benefits brokers and consultants across the United States, our distribution network is a major competitive asset.

Our focus is on our customers. The Hartford’s employees provide best-in-class customer and claims service with consistently high and independently verified satisfaction rates. We’re continually increasing our understanding of customer loyalty and satisfaction drivers and designing programs to respond quickly and effectively to feedback.

In addition, we offer a broad portfolio of contemporary insurance solutions to address our customers' diverse and evolving needs, such as our SPECTRUM \( ^{®} \)  business owner's policy; integrated leave management to help maximize employee productivity; and cyberliability protection for businesses in the digital age.

In the same vein, to address increasingly specialized needs, we are pursuing growth in targeted industries such as healthcare, technology, construction and renewable energy, where we have developed market-specific expertise and products.

## INNOVATION



THE HARTFORD PRODUCTIVITY ADVANTAGE—a single-company solution for leave management that integrates short- and long-term group disability and workers’ compensation insurance with leave management.






## Consumer Markets

## I WANT VALUE WITHOUT GIVING
UP COVERAGE OR QUALITY.

Is there a company out there that can provide me with confidence?
A company that knows what someone like me deals with? That's the real test. That, and how I'm treated when I have to make a claim.



Our Consumer Markets business continues to build on The Hartford’s long-standing partnership with AARP as a provider of automobile and homeowners insurance.

The personal auto and homeowners insurance market is large with many strong competitors. We will reach new consumers by extending AARP product distribution through select independent agents and by developing new affinity partnerships. To capitalize on our strengths, we are focusing on preferred consumer segments that best align with The Hartford’s unique value proposition.

The AARP relationship continues to represent a significant opportunity with its long-term premium growth potential and top-quartile profitability. Last year, we expanded beyond our direct AARP sales model to offer AARP members products through select independent agents in 34 states. This represents an exciting opportunity for The Hartford because the majority of AARP members prefer to buy insurance through local agents, and we have nearly 1,700 agents authorized to sell our AARP products nationwide. We plan to continue to expand this program in 2011.

The Hartford’s 27-year relationship with AARP has created a unique skill set that includes knowledge of targeted consumers and an infrastructure designed to serve affinity groups. We are capitalizing on this expertise by pursuing new affinity groups that offer a large member base with a strong emotional connection to their affinity organizations. In the fourth quarter of 2010, we announced an exclusive relationship with the American Kennel Club to offer auto and homeowners insurance to dog owners. In 2011, we plan to establish additional affinity relationships.

## INNOVATION



The Hartford launched a program that offers auto and home insurance to AMERICAN KENNEL CLUB \( ^{®} \)  (AKC \( ^{®} \) ) dog owners.







After the past two years, I seem to be farther away from my financial goals. I need new ideas, inventive products that fit my needs—and from a company I can trust.

The Hartford’s Wealth Management division understands this and is meeting the challenge with innovative offerings in annuities, mutual funds, life insurance, and retirement plans. The Hartford helps individuals, businesses, and institutions meet their retirement savings, income, and protection needs in ways that are relevant and responsive to tomorrow’s issues.

The Hartford has over seven million wealth management customers with more than $300 billion in assets under management. We believe in independent, professional financial advice and have built a strong distribution network of wholesaling relationships with more than 175,000 appointed life and wealth agents. This network gives The Hartford a competitive advantage in bringing the right solutions to our customers.

We have sharpened our focus on the annuity business and are developing a suite of competitive products that meet customer and distributor needs and fall within the appropriate risk and profitability parameters. During the second quarter of 2011, we will introduce the next version of our Hartford Personal Retirement variable annuity—a suite of solutions in the form of equity guarantees and predictable lifetime income to help customers protect their principle, income, and legacy in a way that's tailored to their needs and goals.
Our mutual funds business continues to gain scale through increased assets under management driven by strong fund performance (75% of Hartford Funds outperformed their Morningstar peers in 2010) as well as new product offerings tailored to meet consumer demand.

The Hartford’s life insurance business is expanding into new distribution relationships and continuously developing innovative products. Our new Longevity-Access rider, an industry first, provides income to someone who lives to age 90 and beyond. The Hartford has also rolled out a revolutionary process that simplifies the purchase and issue of a life insurance contract.

Our retirement plans, a fast-growing business, has recorded record sales and expanded into the middle market. The Hartford’s plan sponsors are known for their dedication to retirement plan education. And the company’s Participant Education Department recently received four Eddy Awards for best practices in participant investment education.

As people bear more of the responsibility for their financial security, The Hartford’s Wealth Management division is working across product lines to maximize value and minimize risks for a generation facing greater challenges.

## INNOVATION



The Hartford’s new life
LONGEVITYACCESS RIDER™
provides eight years or more of
income to policyholders who
live to age 90 and beyond—an
industry first.






## FINANCIAL RESULTS

2010 net income of
$1.7 billion, or $2.49
per diluted share

2010 core earnings per diluted share \( ^{*} \)  of 2.89, up 56 percent over 2009

Book value per diluted share of $40.40, up 12 percent over 2009

(in millions, except per share data)

<table><tr><td></td><td>2008</td><td>2009</td><td>2010</td><td>Change</td></tr><tr><td>Total Revenues, Excluding NII on Equity Securities, Trading</td><td>$ 19,559</td><td>$ 21,513</td><td>$ 23,157</td><td>7.6%</td></tr><tr><td>Total Assets</td><td>$ 287,583</td><td>$ 307,717</td><td>$ 318,346</td><td>3.5%</td></tr><tr><td>Book Value Per Common Share</td><td>$ 28.53</td><td>$ 38.92</td><td>$ 44.44</td><td>14%</td></tr><tr><td>Net Income (Loss)</td><td>$ (2,749)</td><td>$ (887)</td><td>$ 1,680</td><td>n/m</td></tr><tr><td>Net (Loss) Income Available to Common Shareholders Per Basic Share</td><td>$ (8.99)</td><td>$ (2.93)</td><td>$ 2.70</td><td>n/m</td></tr><tr><td>Net (Loss) Income Available to Common Shareholders Per Diluted Share</td><td>$ (8.99)</td><td>$ (2.93)</td><td>$ 2.49</td><td>n/m</td></tr><tr><td>Weighted Average Common Shares Outstanding - Basic</td><td>$ 306.7</td><td>$ 346.3</td><td>$ 431.5</td><td>n/m</td></tr><tr><td>Weighted Average Common Shares Outstanding - Assuming Dilution</td><td>$ 306.7</td><td>$ 346.3</td><td>$ 481.5</td><td>n/m</td></tr></table>

n/m – Not meaningful increases or decreases greater than or equal to 200%, or changes from a net gain to a net loss position, or vice versa.

* Denotes financial measure not calculated based on generally accepted accounting principles (“Non-GAAP”). The Hartford uses non-GAAP financial measures to assist investors in analyzing the company’s operating performance for the periods presented herein. Because The Hartford’s calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing The Hartford’s non-GAAP and other financial measures to those of other companies. These measures should be considered in addition to our results prepared in accordance with GAAP, as set forth in our Annual Report on Form 10-K, but are not a substitute for GAAP results.

The Hartford uses the non-GAAP financial measures core earnings and core earnings per share as important measures of the company's operating performance. The Hartford believes that these measures provide investors with a valuable information regarding the performance of the company's ongoing businesses because they reveal trends in the company's insurance and financial services businesses that may be obscured by the net effect of certain realized capital gains and losses (net of tax and the effects of deferred policy acquisition costs) that tend to be highly variable from period to period based on capital market conditions. Net income and net income per share are the most directly comparable GAAP measures.

A reconciliation of net income to core earnings and net income per share to core earnings per share for the periods presented herein is set forth on The Hartford's website at http://ir.thehartford.com/financials.cfm.

## A respected brand for more than 200 years

Celebrating 200 years of helping its customers achieve what's ahead, The Hartford (NYSE: HIG) is an insurance and wealth management company. Through its unique focus on customer needs, the company serves businesses and consumers by providing the products and solutions they need to protect their assets and income from risks and manage their wealth and retirement needs. A Fortune 100 company, The Hartford is recognized widely for its service expertise and as one of the world's most ethical companies.



## CORPORATE PROFILE

Celebrating 200 years of helping its customers achieve what's ahead, The Hartford Financial Services Group, Inc. is an insurance and wealth management company. Through its unique focus on customer needs, the company serves businesses and consumers by providing the products and solutions they need to protect their assets and income from risks and manage their wealth and retirement needs. A Fortune 100 company, The Hartford is recognized widely for its service expertise and as one of the world's most ethical companies.

## CORPORATE HEADQUARTERS

The Hartford Financial Services Group, Inc.
One Hartford Plaza
Hartford, CT 06155
860-547-5000

## INTERNET ADDRESS

http://www.thehartford.com

## ANNUAL MEETING

Shareholders are cordially invited to attend The Hartford’s Annual Meeting of Shareholders, which will be held on Wednesday, May 18, 2011 at 12:30 p.m. in the Wallace Stevens Theatre at The Hartford Financial Services Group, Inc.’s home office at One Hartford Plaza, 690 Asylum Avenue, Hartford, Connecticut. Shareholders of record as of March 21, 2011 are entitled to notice of, and to vote at, the Annual Meeting.

## TRANSFER AGENT/SHAREHOLDER RECORDS

For information or assistance regarding stock records, dividend checks and stock certificates:
The Hartford Financial Services Group, Inc.
c/o BNY Mellon Shareowners Services
480 Washington Boulevard
Jersey City, NJ 07310-1900
877-272-7740
www.bnymellon.com/shareowner/equityaccess

To send certificates for transfer and address changes: The Hartford Financial Services Group, Inc. c/o BNY Mellon Shareowner Services P.O. Box 358010 Pittsburgh, PA 15252-8010

Address inquiries about The Hartford’s Dividend Reinvestment and Cash Payment Plan to:
The Hartford Financial Services Group, Inc.
c/o BNY Mellon Shareowner Services
P.O. Box 358035
Pittsburgh, PA 15252-8035
www.bnymellon.com/shareowner/equityaccess

## INVESTOR RELATIONS

The Hartford Financial Services Group, Inc.
Hartford Plaza, HO-1-01
Hartford, CT 06155
Attn: Investor Relations
860-547-2537

## MEDIA INQUIRIES

The Hartford Financial Services Group, Inc.
Media Relations
Hartford Plaza, T1-2-56
Hartford, CT 06155
860-547-5200

## COMMON STOCK AND DIVIDEND INFORMATION

The Hartford’s common stock is traded on the New York Stock Exchange (“NYSE”) under the trading symbol “HIG.” The following table presents the high and low closing prices for the common stock of The Hartford on the NYSE for the periods indicated, and the quarterly dividends declared per share.

<table><tr><td></td><td>1ST QTR.</td><td>2ND QTR.</td><td>3RD QTR.</td><td>4TH QTR.</td></tr><tr><td>2010</td><td></td><td></td><td></td><td></td></tr><tr><td>Common Stock Price</td><td></td><td></td><td></td><td></td></tr><tr><td>High</td><td>$28.58</td><td>$29.64</td><td>$24.12</td><td>$27.43</td></tr><tr><td>Low</td><td>$22.34</td><td>$22.13</td><td>$19.09</td><td>$22.26</td></tr><tr><td>Dividends Declared</td><td>$0.05</td><td>$0.05</td><td>$0.05</td><td>$0.05</td></tr><tr><td></td><td>1ST QTR.</td><td>2ND QTR.</td><td>3RD QTR.</td><td>4TH QTR.</td></tr><tr><td>2009</td><td></td><td></td><td></td><td></td></tr><tr><td>Common Stock Price</td><td></td><td></td><td></td><td></td></tr><tr><td>High</td><td>$19.68</td><td>$18.16</td><td>$28.62</td><td>$29.20</td></tr><tr><td>Low</td><td>$3.62</td><td>$7.67</td><td>$10.18</td><td>$23.16</td></tr><tr><td>Dividends Declared</td><td>$0.05</td><td>$0.05</td><td>$0.05</td><td>$0.05</td></tr></table>

As of February 18, 2011, the Company had approximately 223,500 shareholders.

Some of the statements in this Annual Report may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, 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 those discussed in our 2010 Annual Report on Form 10-K, in our Quarterly Reports on Form 10-Q, and in the other filings we make with the Securities and Exchange Commission. We assume no obligation to update or alter forward-looking statements whether as a result of new information, future events or otherwise.