thehartford.com

The Hartford includes in its public disclosures financial measures that are not calculated based on generally accepted accounting principles (“non-GAAP”). The Hartford uses non-GAAP and other financial measures to assist investors in analyzing the Company’s operating performance. 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.

Many of the non-GAAP and other financial measures used by The Hartford are included in The Hartford’s third quarter Investor Financial Supplement and earnings press release.  An explanation of those measures, including for each non-GAAP financial measure a reconciliation to the most directly comparable GAAP measure, is set forth in the Investor Financial Supplement and earnings press release. 

On the November 3, 2011 third quarter earnings conference call, The Hartford’s senior management referenced the financial measure “normalized core earnings” when addressing the Company’s third quarter financial results.  Normalized core earnings is a non-GAAP financial measure.  Net income is the most directly comparable GAAP financial measure.  Normalized core earnings is calculated based on the non-GAAP financial measure core earnings, as adjusted to eliminate the effect of the following third quarter 2011 items: DAC unlock charge; higher-than-budgeted P&C catastrophe losses; reestimation of current accident year losses in Commercial Markets; excess partnership returns; charges resulting from the Company’s annual review of its legacy environmental liabilities; charges related to assessments in connection with the liquidation of Executive Life Insurance Company of New York; and ongoing P&C net prior year reserve development. The Hartford believes that the measure normalized core earnings provides investors with a valuable measure of the Company's operating performance in the third quarter of 2011 for the same reasons applicable to its underlying measure, core earnings, with the further benefit of eliminating the impact of a number of particularly volatile items that would otherwise obscure the financial performance of the Company's businesses. Normalized core earnings should not be considered as a substitute for net income and does not reflect the overall profitability of the Company's business. Therefore, The Hartford believes that it is useful for investors to evaluate both net income and normalized core earnings when reviewing the Company's performance.

A reconciliation of net income to normalized core earnings is set forth below.