Hartford Financial Services Group says it made an accounting error when reporting its third-quarter earnings—a mistake that now puts the insurer in the red for 2012.
Hartford says it made an amended filing with the U.S. Securities Exchange Commission on Friday to correct a miscalculation related to the sale of its life-insurance operations.
The Hartford is now reporting a net loss of $38 million for 2012. The company previously said net income for the year was $350 million, down 51 percent from 2011.
At the start of the year, Hartford said it completed the sale its individual life insurance to the Prudential Insurance Co., its retirement plans to Massachusetts Mutual Life Insurance Co., and its individual annuity business to Forethought Financial Group, Inc.
Due to the omission of “certain reinsurance recoverable balances on the gain/loss calculation,” Hartford now says the individual life insurance transaction will result in an after-tax loss of $393 million rather than no material gain or loss at all, as it had estimated last September.
The company says there was a “material weakness in its internal control over financial reporting” in September, but this has been resolved.
“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,” says CEO Liam E. McGee, in a statement.
He says the transactions “were attractive for The Hartford and completed on favorable financial terms.” The sales generated a statutory capital benefit of $2.2 billion, McGee adds.
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