The Hartford Financial Services Group, Inc. September 10, 2008 Investor Meeting Tokyo, Japan

Transcription

1 The Hartford Financial Services Group, Inc. September 10, 2008 Investor Meeting Tokyo, Japan

2 Safe Harbor Statement Certain statements made in this presentation should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of These include statements about The Hartford s future results of operations. 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, including those discussed in The Hartford s press release issued July 28, 2008, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, our Annual Report on Form 10-K for the year ended December 31, 2007 and other filings we make with the Securities and Exchange Commission. We assume no obligation to update this presentation, which speaks as of today s date. The discussion in this presentation of The Hartford s financial performance includes financial measures that are not derived from generally accepted accounting principles, or GAAP. Information regarding these non-gaap and other financial measures is provided in the Investor Financial Supplement for the second quarter of 2008, in The Hartford s press release issued on July 28, 2008, and in the Investor Relations section of The Hartford s website at 2

3 Today s Agenda 1:30 2:00 Leading The Way in Global Retirement John Walters 2:00 2:30 The Hartford s International Markets Group Peter Smyth 2:30 3:30 The Hartford s Japan Operations Dave Levenson & Team 3:30 4:00 Questions & Answers John Walters & Team 3

4 The Hartford Leading the Way in Global Retirement John Walters President & COO Hartford Life, Inc. September 10, 2008

5 The Hartford s diversified insurance and investment businesses are executing well $416 billion of assets under management as of 6/30/08, up 3% vs. 6/30/07 47% 53% $1.5 billion in core earnings in the first half of 2008 Net income ROE over last four quarters of 12% despite credit market disruption Core earnings ROE over same period of 17% 5

6 The Hartford s international operations contribution to core earnings has grown to $131 million over the past 5 years The Hartford s YTD 6/30/03 Core Earnings* $677 million International $1 million 0% The Hartford s YTD 6/30/08 Core Earnings $1,488 million International $131 million 9% P&C 59% U.S. Annuity 26% P&C 48% U.S. Annuity 24% All Other Life 15% All Other Life 19% *Excluding asbestos reserve addition, tax related items and severance charges 6

7 Our life operations customer focus translates into leadership positions in each major business segment... (WFS) #1 in U.S. Variable Annuity AUM #2 in Variable Life Sales #8 in Non Proprietary Mutual Fund Sales WFS: #10 in Independent Broker/Dealer Firm Based on Revenue #1 in Group Disability Sales #2 in Group Life Sales #6 in New 401(k) Plans Sold #1 in Bank Owned Life Insurance Sales #2 in Structured Settlements Sales #4 in Terminal Funding Sales #1 in Japan Variable Annuity AUM #10 in UK Bond Sales #11 in UK Pension Sales 7

8 which allows us to leverage our scale to invest in our rapidly expanding businesses # of Employees # of Customers Deposits* 6/30/08 AUM 3,900 5, ,800 6 Million 11 Million 202,000 3 Million $28 Billion $7 Billion $9 Billion $5 Billion $178 Billion $47 Billion $62 Billion $38 Billion Core Earnings* $1,169 Million $429 Million $122 Million $271 Million *12 months ending 6/30/08 8

9 Hartford Life s portfolio of businesses continues to deliver stable earnings and AUM growth despite challenging markets Hartford Life 1 st half 2008 core earnings totaled $843 million, down 1% year over year. 6/30/08 AUM totaled $363 billion, up 3% vs. 6/30/07 Individual Markets Group Individual Annuity: Recent distribution enhancements and product modifications are expected to drive variable annuity sales momentum in the 4 th quarter of 2008 Mutual Funds: Compelling fund performance and seasoning of wholesaling force drove record 1 st half 2008 deposits of $8 billion with momentum continuing into 3Q 08 Individual Life: Record 1 st half 2008 life insurance sales, up 5% year over year, driven by strength in the independent channel International Markets Group Product innovation and expansion of distribution are keys to driving growth in Asia and Europe 9

10 Hartford Life s portfolio of businesses continues to deliver stable earnings and AUM growth despite challenging markets Employer Markets Group Retirement Plans: The integration of our three acquisitions will be complete in early This will provide operational efficiencies that expand our market leadership position and are expected to drive double digit CAGR in earnings Group Benefits: 1st half 2008 fully insured group life and disability sales increased 18% and 12%, respectively, versus the prior year. We expect continued success in life and disability sales in the second half of 2008 Institutional Solutions Group 1st half 2008 deposits totaled $3 billion, down 42% year over year. We will continue to approach these businesses in an opportunistic and disciplined manner, and we expect activity to increase as the financial environment improves 10

11 Key highlights of The Hartford s strategies to drive growth 11

12 Over the longer term, our goal is to capitalize on three significant strategic opportunities Expand our global leadership in retirement and investment products Offer a broad range of accumulation, retirement income and protection products Expand our international presence Significantly increase our U.S. market share in personal insurance (auto, home, and life) Become the unparalleled provider of business insurance and financial products Be the U.S. leader in small business with solutions for commercial insurance, retirement plans, group benefits and personal protection for business owners Expand our U.S. presence in middle market and national accounts with a broad product offering 12

13 Expanding our leadership position in global retirement is one of The Hartford s largest opportunities Global Investment Assets Under Management Aging populations are living longer and worker-to-retiree ratios are rapidly shrinking Markets in which The Hartford has or will launch operations account for 69% of total global investment assets $37.7 Trillion $17.0 Trillion Individuals continue to be concerned about their sources of retirement income Government-sponsored retirement benefits programs are facing greater uncertainty The Hartford has approximately 1% of total assets in current markets of operation Traditional employer-funded guaranteed retirement income streams are vanishing Myriad of retirement planning challenges fuel a need for advice Source: Cerulli Associates,

14 The Hartford s international strategy is to leverage our competitive advantages in markets that meet our target criteria 1996 Competitive advantages: Superior product solutions World class asset management 2000 Value added distribution Exemplary service Primary characteristics of our target markets: 2005 Aging demographic trends Significant and concentrated financial assets Established third party distribution channels 2009 Favorable regulatory and tax environments Launching operations in Germany in early

15 The Hartford s disciplined strategy has translated into strong international growth International AUM International Core Earnings ($ in billions) $45 $40 $35 $30 $25 $20 $15 $15 $26 $32 $39 +14% $35 $40 ($ in millions) $300 $250 $200 $150 $100 DAC Unlock $96 $247 $254 $22 $53 $194 $ % $114 $131 $10 $5 $6 $50 $13 $43 $ /30/07 6/30/08 $ YTD 6/07 YTD 6/08 15

16 The Hartford s opportunity to drive significant international growth over the next five years is clear International AUM ($ in billions) $120 $100 $80 $60 $40 $20 $0 $600 $6 $26 $32$39 $15 Germany Countries TBD International Core Earnings Countries TBD Aspiration $100 B Aspiration $500 M New country expansion prioritization: Attractive market opportunities in Asia and Europe Expand product offerings in existing countries Develop international asset management capabilities Expand distribution opportunities ($ in millions) $500 $400 $300 $200 $254 $247 Germany Maintain disciplined risk management $96 $100 $13 $43 $

17 The Hartford s International Markets Group Peter A. Smyth Executive Vice President Hartford Life, Inc. September 10, 2008

18 The World of Opportunity 18

19 The growth of wealth outside of North America makes a compelling case for international expansion ($ in trillions) Wealth for High Net Worth Individuals* $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 $3.4 $1.7 $1.7 $0.6 $1.0 $1.0 Africa Middle East $29.0 $42.8 $18.0 $16.3 $13.9 $13.5 $10.6 $11.7 $10.3 $9.5 $8.4 $7.5 $6.2 $4.8 $3.2 Latin America Asia Pacific Europe E Total Non-NA North America More than 70% of personal financial assets are outside of North America and are expected to reach $43 trillion by 2012 The compound annual growth rate of wealth outside North America is expected to be over 8% in the next 5 years, exceeding that of North America Compelling global trends include changes in demographics, retirement income sources and distribution Access to the international marketplace provides The Hartford an opportunity to diversify earnings *High net worth individuals have assets more than US $1M, as measured by total assets Source: Merrill Lynch / Cap Gemini World Wealth Report,

20 Demographic shifts will pressure government and employer pensions, historically the main sources of retirement income Ratio of Workers (aged 15-59) to Retirees (aged 60 and over)* Germany Japan S. Korea US UK Spain Italy Source: U.N. World Population Prospects Population Database, The 2006 Revision 20

21 The Hartford s survey on retirement planning indicates the level of concern about funding retirement remains high US 23% 77% Japan 11% 89% UK Germany S. Korea 18% 31% 27% 69% 73% 82% Not too/not at all concerned Somewhat concerned Extremely/very concerned Italy 38% 62% Spain 23% 77% 0% 20% 40% 60% 80% Source: The Hartford International Survey of Consumer Perceptions and Attitudes Towards Retirement Planning, September

22 The Hartford will capitalize on the global retirement opportunity The Hartford s International Mission To provide superior retirement savings and wealth protection solutions in significant international markets where The Hartford s competitive advantages can be leveraged 22

23 The Hartford saw these trends and established a position in the top three global retirement markets: US, Japan and UK The top 3 retirement markets make up over 54% of the life insurance premium market despite making up only 8% of the world s population The Hartford in Japan Number one ranking in VA assets under management with a 23% market share as of 3/31/08* $38 billion in total AUM as of June 30, 2008, up 13% year over year on a dollar basis Net flows of $3.3 billion for 12-months ending 6/30/08 The Hartford in the United Kingdom First half of 2008 sales totaled $671 million, up 152% year over year 6/30/08 AUM of $1.7 billion, up 172% year over year on a dollar basis *Source: Hoken Mainichi Shimbun 23

24 The Hartford s international operations have successfully grown assets under management and earnings $26 Japan AUM ($ in billions) $31 $38 $34 +13% $38 We have now achieved scale in Japan which has driven strong ROA s $15 $ /30/07 6/30/08 ROA* * 75* International Core Earnings ($ in millions) DAC Unlock $96 $247 $254 $22 $53 $194 $ % $114 $131 The compound annual growth of core earnings excluding the effect of our DAC unlock was 106% over the past 4 years ending December 2007 $13 $ YTD 6/07 YTD 6/08 * Excludes DAC Unlock 24

25 The Hartford has the proven capabilities to be a leader in the global retirement marketplace Our keys to success in entering new markets are the leveraging of: Scale and market leadership positions in the U.S. and Japan Innovative product development Superior risk management World class asset management Commitment to third party distribution Exceptional sales and service support 25

26 The Hartford is building a meaningful presence in the world s third largest retirement market 26

27 The Hartford currently competes in 45% of the UK s single premium retirement savings market UK Single Premium 2007 Sales Volumes $161 billion The 2007 sales volumes of the UK individual single premium market were up 21% over 2006 Other Markets 38% $62 billion $72 billion The Hartford s Current Markets 45% The Hartford currently participates in markets which account for 45% of 2007 single premium sales $27 billion The Hartford s Potential Markets 17% Potential product expansion would provide access to another 17% of this market effectively allowing us to compete in 2/3 of the UK market Source: ABI Statistics 27

28 The Hartford is offering innovative and unique products in the UK retirement marketplace Launched the UK s first guaranteed unit linked bond in April 2005 Launched Unit Linked Pension Product in in the spring of 2007 Effectively doubled the size of the market in which we play Introduced first lifetime guarantee offering in the market Winner of Moneyfacts "Best Innovation Award" in Fall of 2007 In the spring of 2008 we increased the number of investment funds to nearly

29 The Hartford has engaged industry leaders to provide world class asset management solutions for our UK products Expert money management A wide range of funds from leading fund managers Expert asset allocation Portfolio asset allocation by Ibbotson Associates Choosing the right funds Fund selection by independent experts Old Broad Street Research Ltd (OBSR) 29

30 The Hartford is developing a multi-channel, industry leading distribution model in the UK Our pension and unit linked bond products are available through all major UK independent distributors A multi-channel approach provides broad access to the UK retirement market Independent Financial Advisors (IFAs) Consists of 15,000+ IFA firms with 45,000 IFAs that sell investment and pension products* The Hartford s brand awareness among IFAs rose from 78% in 2006 to 96% in 2008 Bank Channel Consists of approximately 50 bank and building societies Pension Specialists Our focus is on the top 40 to 50 pension specialists *Source: Touchstone August Whole of Market 30

31 The Hartford is already recognized as a UK industry leader Product Best Innovation Award for Hartford Platinum with Guaranteed Retirement Income Plan, Moneyfacts Life & Pension Awards rd Best Drawdown Provider, Financial Adviser Life & Pension Awards rd Best Investment Bond Provider, Moneyfacts Life & Pension Awards 2007 Service Two five star Financial Adviser Service Awards 2007 ee+ Ecommerce Award, MoneyMarketing eexcellence Awards 2007 Three Online Service Awards in 2008, FTAdviser.com Best Business Press Advertisement, MoneyMarketing Financial Services Awards 2008 Recognized by Financial Times as the Top 50 Best Workplaces

32 UK sales for the first half of 2008 were 152% higher than the previous year $400 The Hartford s UK Quarterly Sales (Since Inception) $368 In July 2008, UK sales since inception surpassed $2 Billion (US $ in millions) $350 $300 $250 $200 $150 $100 $50 $0 $6 $19 $41 $67 $78 $103 $38 $117 $152 $139 $205 $163 $195 $206 $132 $138 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Bonds $111 $155 Pensions $291 $327 $344 The Hartford s market share of 2Q 08 industry bond and pension sales was 3.6% and 3.0% respectively A-Day pension legislation allows individuals to invest up to 235,000 per year tax deferred Expect to generate positive earnings starting in 2010 and positive full year earnings in

33 Next Stop: Germany 33

34 We will launch our German operations in early 2009 Why Germany? Why now? Largest economy and 3 rd largest life insurance* market in Europe Major distributors are partnering and looking for product manufacturers Rapidly aging, wealthy population Retirement burden shifting to individuals Government historically provided 70% of pre-retirement income for retirement and that is being scaled back to 40% Tax regime change to take effect on January 1, 2009 favoring unit linked bonds Awareness of private retirement savings need growing rapidly *Third in life premium volume Source: Swiss Re Sigma

35 The Hartford is leveraging its successful business model to enter Germany The Hartford will use an organic expansion approach in Germany We are investing $24 million in 2008 to lay the foundation for our 2009 launch Our expectation is to generate positive core earnings within 5 years We will capitalize on our core variable annuity strength Offering both recurring premium and single premium products We are employing our world class wholesaling model We are engaging several German distributors, including a leading IFA firm We will leverage our existing Dublin operations for back office activities The Hartford is evaluating other opportunities in Europe 35

36 The Hartford also continues to explore opportunities in Asia The underlying fundamentals in Asia are compelling and offer The Hartford opportunities for expansion Rapidly growing economies Increasing mass affluence as a part of the transition of wealth from West to East Significant shift in demographics with fewer workers supporting retirees Lowest birth rate in the world is Hong Kong, with South Korea and Japan also in the bottom ten* Generally higher savings rates Lack of sufficient government and employer pension programs Increase in third party distribution channels *CIA World Factbook

37 The Hartford is prioritizing opportunities for global expansion Potential for Meaningful Share (Competition /Availability of Distribution / Regulatory Environment) Relatively Less Difficult Relatively More Difficult Australia Germany Hong Kong South Korea Taiwan Spain Belgium Italy France Attractive More Attractive Near Term Retirement Product Market Opportunity (Awareness of Need / Market Size & Growth / Product Availability) 37

38 The Hartford is positioned to be a leader in the international retirement market Capture global tidal wave of demand for retirement products Aspire to become a leading provider of retirement solutions with a presence in all international priority markets Develop our products and distribution for local international markets, leveraging our existing strengths Our aspiration is by 2013 to: Reach over $100 billion in international assets under management Generate $500 million of core earnings through the international markets group 38

39 The World of Opportunity. 39

40 The Hartford s Japan Operations David N. Levenson President & CEO Hartford Life Japan September 10, 2008

41 Agenda The Hartford s Strategy in Japan David N. Levenson Governance and Compliance Masayuki Misu Marketing and Branding Kazuhiko Sunagawa Looking Ahead David N. Levenson 41

42 The Hartford s Strategy in Japan David N. Levenson President and CEO, Hartford Life Japan 42

43 Japan s retirement demographics remain extremely attractive More than 40% of Japan s population is aged 50 and over, 21% are 65 and over More than 80% of Japan s personal financial assets are held by individuals aged 50+ More than 50% of Japan s personal financial assets are in cash and deposits Age of Japan s Population Personal Financial Assets (% by Age Group) Personal Financial Asset Distribution by Type years years Over 70 years 12% 15% 15% 12% 31% years 15% Under 30 years years Over 70 years Under 30 years 26% 13% 1,490 Trillion 1,500 Trillion 35% Yen years years 5% 21% years years Insurance & Annuities: 27.0% Stocks: 9.3% Mutual Funds: 4.2% 1,490 Trillion Other: 4.4% Bonds: 3.0% Cash & Deposits 52.0% Source: Statistics Bureau, Ministry of Internal Affairs & Communication, Oct Source: The Central Council for Financial Services Information 2006, Statistics Bureau 2006 Source: Bank of Japan, Research & Statistics Dept, Flow of Funds Japan & US Overview, st Quarter 43

44 In an increasingly difficult financial market, individual investors are turning toward safer investments Variable Annuity Market volatility has impacted variable annuity sales as more households are putting their money in safer vehicles Fixed Annuity Fixed annuity bank sales accounted for more than 23% of total annuity bank sales in the first half of 2008, up from just 10% in the first half of 2007 Mutual Funds Mutual funds sales were down almost 60% year over year for the first six months of 2008 Japan Government Bonds Sales of Japan government bonds for individuals have recovered from their April 2008 all time low 44

45 While industry sales growth has slowed, the rate of product introductions in the Japan variable annuity market has rapidly increased Variable Annuity New Product Launches (by Type) Q : : : YTD: 23 Challenges Q 3Q 4Q 1Q Q 3Q 4Q 1Q Q 3Q 4Q 1Q Q 5 3Q Other GMIB GMDB GMWB GMAB Variable annuity industry sales are down 23% year-over-year for the first half of 2008 Growing number of newly launched competitor products GMAB sales have increased to nearly 70% of total variable annuity sales in 2Q 2008 Variable Annuity Market Share by Product Type (Top 7 insurers) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% GMAB Non-GMAB Other GMIB GMDB GMWB GMAB Opportunities Variable annuity assets are still only about 1% of total personal financial assets Our strong product suite makes us well positioned for long term success We have a strong and diversified distribution network of banks and securities firms 0% 1Q Q 3Q 4Q 1Q Q Source: Hartford Life Japan research & estimates. 45

46 The Hartford has a strong and diversified distribution network of banks and securities firms Securities Firms 21% The Hartford s 2Q 08 Variable Annuity Sales by Channel Mega Banks 2% Other and Shinkin Banks 8% We have one of the largest variable annuity wholesaling forces in Japan The Hartford distribution network includes almost 70 active banks and securities firms as of July 1, 2008 Trust Banks 30% Regional Banks 39% Sumitomo Mitsui Banking Corporation, the 2 nd largest variable annuity distributor in Japan, launched our new Care Story variable annuity product in July 2008 Note: "Other" includes former long-term credit banks, former "city banks," government-affiliated banks, insurance agents and leasing firms. 46

47 We recorded $3.3 billion of net flows in the 12 months ending 6/30/08 in spite of volatile markets and increased competition The Hartford s Japan Annuity Sales and Net Flows $2,500 $2,349 FA Sales VA Sales Net flows $2,000 $1,706 $1,766 $1,827 ($ in millions) $1,500 $1,000 $1,308 $1,247 $1,203 $1,106 $1,116 $1,012 $500 $0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

48 Growth in Japan assets under management is generating increased earnings Japan Total AUM ($ in billions) Japan Core Earnings ( $ in millions) $ % $38 $267 $281 $22 $15 $26 $31 $34 DAC Unlock $53 $120 $214 $259 $125 +7% $134 $6 $40 $ /30/07 6/30/ YTD 6/07 YTD 6/08 48

49 The Hartford is Japan s variable annuity industry leader Variable Annuity Assets Under Management as of March 31, 2008 Share of AUM The Hartford Mitsui Sumitomo MetLife ING Tokio Marine Nichido 2,244 2,113 1,931 3, % 14.2% 13.4% 12.2% Sumitomo Life 1, % Manulife 1, % Mitsui Life % ALICO Japan % T&D Financial Life % Daiichi Life % Source: Hoken Mainichi Shimbun, June 6, ,000 1,500 2,000 2,500 3,000 3,500 4,000 ( in billions) 49

50 Superior capabilities in each facet of our business are the keys to long-term leadership in Japan Service & Technology Infrastructure Financial Discipline & Risk Management Promotion & Branding Diversified Product Portfolio Customers, Distributors, Competitors Analysis Diversified Distribution Network Financial Strength Compliance Talent Management 50

51 The Hartford s product strategy is to build solutions that address the dynamic and individual Japanese customer needs Customer Needs to Address Our Product Positioning High Net Worth Investment Needs Estate Planning Needs Mutual Funds (planned) 3 Win For Life Affluent Cash Flow Needs Adagio V3 FA Mass Population Accumulation Needs Rising Income Age Age 51

52 Our individual annuity products address a broad array of customer needs Income Japan Customer Needs Growth Succession Sonata / Legato Rising Income / Care Story V3 3 WIN For Life Income (Fixed Annuity) Guaranteed credit rate for 5/6/10 year duration Yen and Dollar denominated products Income for life (L-GMWB) Rising income guaranteed Investment 100% principal guarantee Nursing care benefit with Care Story No front end load Income (GMIB) Investment 100% principal guarantee Free partial withdrawal or bonus available No front end load Investment (GMAB) 100% principal guarantee Customer selects target Lock in profit features No front end load Life Insurance (GMDB) Earnings liquidity Investment Principal guarantee Roll up Step up 52

53 The Hartford will launch a new GMAB product Plus 5 later this month in order to meet a growing demand Attractive product features 10 year GMAB Guarantee the greater of principal or account value, plus 5% bonus at year 10 Equity 40% + Stable Bond Fund 60% Issue age up to 80 years Target setting to lock in profits is available from 5 th year Broad distribution 4 major regional banks will launch the new product in the 2 nd half of September additional distributors will launch in October 2008 Targeting further launches later this year 53

54 The Hartford is a leader in product innovation, providing many Japan First features For Life My Choice: Japan 1 st Variable whole life insurance with Earnings Liquidity feature Total Annuity AUM Aug For Life Roll Up: Japan 1 st Variable whole life insurance Roll-up death benefits Full Year (FY) 2007 Jul Care Story: Japan 1 st Roll-up Annuity with nursing care benefits Feb Rising Income: Japan 1 st Roll-up Annuity FY 2006 Feb Adagio 3WIN: Profit lock-in + Principal guarantee FY 2005 Nov Adagio V3: Japan 1 st Benefit Payment Feature FY 2004 Sept Sonata & Legato: Entered the fixed annuity market FY 2003 FY 2002 Bank Sales Start Oct Adagio: Japan 1 st Annuity Fund Guarantee at age 90 FY 2001 FY 2000 Dec Hartford NK: Japan 1 st Step-up Death Benefit, Automatic Portfolio Rebalancing and Dollar-cost Averaging AUM ( in trillions) 54

55 Research and customer needs analysis drive The Hartford s product development Customer Input Focus groups interviews Customer survey data Customer satisfaction feedback Operational inputs Competitive Analysis Analysis of competitors products & sales Distributor analysis Distributor Discussion Product idea brainstorming Idea exchange (meetings, training sessions, seminars etc.) Japan Product Concepts Wholesaler Input Web surveys Sales support call center reports Senior sales consultant feedback Leverage U.S. Expertise Risk analysis Review other life company products Risk management / hedging controls standards Global Trends & Research Review & analysis of retirement products throughout the world 55

56 Governance & Compliance Masayuki Misu Chief Governance and Compliance Officer, Hartford Life Japan 56

57 Recent changes in regulations reflect the government s intention to increase the Japanese financial markets attractiveness Full deregulation of insurance sales at banks introduced in December 2007 Increased opportunities to broaden The Hartford s product suite Launched variable whole life insurance in June 2008 Launched nursing care rider in July 2008 Government s long standing policy to promote financial industries Encourage shifting of individuals financial assets from savings to investment Expectation of expanding tax benefits for senior citizens investments Tax benefit on insurance death benefit (high inheritance tax in Japan) Goal: Change investors focus from deposits to investments 57

58 The Financial Services Agency is moving from a traditional, rules based understanding to a modern, principles based approach Better regulation (combination of principles and rules) 14 Principles (Emulating those of U.K. and U.S.) Rules Applied to supervision on governance and risk management, etc. Applied to market conducts for enhancing customer protection (e.g., Financial Instruments and Exchange Law effective in Sep 2007) Moving toward international financial and accounting standards Transition to IFRS and Solvency II Reserves and Solvency standard 58

59 The Hartford has established a culture of compliance in accordance with local as well as U.S. standards and procedures Robust Compliance Mindset The Hartford compliance culture properly transferred to Japan Operation Compliance is one of the top priorities of our management Robust corporate governance structure consistent with the requirement of law Internal regulations including Assigned Duties and Authorities Regulation (ADAR) Advanced control over distributors sales conduct Regular distributor inspections ensures proper sales practices Compliance training of distributor agents through wholesaling network Compliance with the U.S. standards concerning AML, SOX, etc. Close support from the The Hartford s U.S. Legal/Compliance team 59

60 which has resulted in an excellent compliance track record since we started our business in Japan The Financial Services Agency enforces compliance through On-site audits Scrutiny of each area of a company s operations Regulatory sanctions Operational improvement orders Temporary suspension of business Recent example : Benefit Payment Issue The Hartford s excellent compliance track record No significant findings at last on-site audit / well prepared for next audit No regulatory sanctions imposed 60

61 Marketing and Branding Kazuhiko Sunagawa Chief Strategy Officer and Retirement Spokesperson, Hartford Life Japan 61

62 The Hartford s aided brand awareness in Japan in our target market has tripled in just over two years Aided Brand Awareness 60% 52.6% 50% 40% 36.3% 41.4% 42.3% 30% 20% 15.1% 18.8% 19.8% 23.6% 22.5% 10% 0% Jan 2005 May 2005 Sep 2005 Jan 2006 May 2006 Sep 2006 Jan 2007 May 2007 Sep 2007 Source: Surveys conducted by The Hartford on target market of individuals aged 50 and older 62

63 Our sports marketing with The Chiba Lotte Marines professional baseball team promotes our brand Started sponsorship in 2007 Only 12 professional baseball teams in Japan High visibility of The Hartford s logo on Chiba team jersey (TV, print media) Advertising on Marines homepage, fan club magazine, game programs and pocket schedule Utilizing coach Bobby Valentine for distributor events Extended contract through 2012 We will launch a Chiba Lotte Marines branded variable annuity product with one of the leading regional banks later this month Part of sales commission will support Chiba Lotte Marines NPO Hometown Baseball Fund foundation 63

64 Our new branding strategy will promote The Hartford as a leading retirement solutions provider Raise the awareness of our new tagline Master of Second Life STAGE Community website for seniors 2,500,000 visits / month (Jan.2008) over 50s: 100% All About Portal Website which provides financial information 2,500,000 visits / month over 50s: 19% Yomiuri Online Website of a newspaper company which has most readers in Japan. 36,290,000 visits / month over 50s: 36% Build awareness with our target audience, those 50 years and older, that The Hartford is their retirement solutions provider Promote our image as a leading retirement solutions provider through mass media, and community websites, etc. Position The Hartford as a thought leader in the global retirement market place 64

65 We are utilizing our website to raise financial literacy and promote The Hartford as a retirement solutions provider Succession Planning Pension Calculator Website to educate customers on retirement Remains current with regularly updated content Easy to use and understand simulation tools (e.g., pension calculator, money plan simulation, succession planning) Money Plan Simulation Retirement solutions webinars Offers attractive short movies with seminar-like content Uses charts and graphs for better understanding Content is made into a series of webinars which are updated regularly 65

66 We are adding value and providing enhanced support to our distributors through our retirement solutions group Leveraging a business model that has proven successful with our U.S. operation Providing consulting support through our retirement solutions consultants including: Retirement solution seminars In-depth knowledge in retirement planning Offering a suite of support services & tools Area #5 Area #1 Area #4 Area #3 Area #2 Tokyo Area 66

67 The Hartford s retirement specialists provide consulting support to our distributors, utilizing a suite of support services & tools Hartford Life Japan Retirement Solutions Group Hartford Life Japan Wholesaling Hartford Life Japan Retirement Solutions Consultant Specialist consulting support Distributor Hartford Life Japan Sales Consultant Distributor Support Retirement Planning Making use of assets Pensions Inheritance Tax Detailed explanation on Hartford Products Improving distributor sales results 67

68 Looking Ahead David N. Levenson President and CEO, Hartford Life Japan 68

69 The Hartford is well positioned for continued success in Japan Japan s demographics continue to make it a very attractive market for retirement products The Hartford believes superior capabilities in all facets of our business are the key to long-term growth in Japan We believe our capabilities will enable us to remain a leading retirement solutions provider in the Japan market for the long-term with emphasis in 2009 on variable annuities, fixed annuities and mutual funds 69

70 Wrap Up John Walters President and COO, Hartford Life, Inc. 70

71 The Hartford s international markets segment is key to the future success of our life operations Global retirement is one of our biggest opportunities We are currently in four international markets today with the intent to enter one or two countries per year for the next few years Core earnings from our international operations should expand as each country reaches scale We are uniquely positioned to be a global leader due to our strengths in product, distribution, risk management and service capabilities 71

72 Questions and Answers