NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2019 AND 2018
AND FOR THE YEAR ENDED DECEMBER 31, 2019
($ IN THOUSANDS)
Note 1. Description of the Plan
The following description of The Hartford Investment and Savings Plan (the “Plan” or “ISP”) is provided for general information purposes only. Members should refer to the Plan document for more complete information. “Members” refers to eligible participants of the Plan.
The Hartford Financial Services Group, Inc. (“HFSG”, together with its subsidiaries, “The Hartford”, or the “Company”) is an insurance and financial services company. The Hartford, headquartered in Connecticut, is among the largest providers of property and casualty insurance and group life and disability products to individual and business customers in the United States of America. The Hartford is also a provider of mutual funds to investors. The Plan Sponsor, Hartford Fire Insurance Company, is a wholly owned subsidiary of The Hartford.
Information with regard to eligibility, contributions, distributions, vesting, trustees, withdrawals, loans, fund redistribution and certain definitions are contained in the Plan document. A Summary Plan Description (“SPD”) setting forth the highlights of the Plan is available to Members on the Fidelity Net Benefits website. Fidelity Workplace Services LLC serves as the record keeper of the Plan.
Plan Changes
See Note 9 for a general description of amendments made to the Plan document during 2019 and 2018.
General
The Plan is a defined contribution plan covering substantially all full-time and part-time employees of the Company. The Pension Administration Committee of the Company controls and manages the operation and administration of the Plan, subject to certain exemptions that are specified in the Plan document. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
The trust, as defined in the Plan document, is comprised of the aggregate funds held by the trustee, State Street Bank and Trust Company (the “Trustee”), under the trust agreement established for the purposes of the Plan. The Investment and Savings Plan Investment Committee (“ISPIC”) is responsible for the management of Plan assets except with respect to matters that are the responsibility of Newport Trust Company as fiduciary with respect to the common stock of HFSG (“Hartford Stock”) held in The Hartford Stock Fund. The ISPIC may from time to time add investment funds to, or eliminate investment funds from, the group of investment funds available under the Plan, provided, however, that the ISPIC has no authority with respect to the Hartford Stock in The Hartford Stock Fund.
Contributions
Members may elect to contribute a percentage of their eligible compensation (including, overtime and certain annual bonuses and sales incentives) and may designate their contributions as before-tax, Roth 401(k), after-tax or a combination thereof. Generally, Members may contribute 1% to 50% of eligible compensation, except that Members who are highly compensated employees may have contribution limits of less than 50% due to the operation of certain tests required under the Internal Revenue Code of 1986, as amended (the “IRC”). If Members do not elect otherwise, they are automatically enrolled to make before-tax contributions equal to 6% of eligible compensation.
The Company's contributions include a non-elective contribution of 2% of eligible compensation (“Non-elective Company contributions”) and a dollar-for-dollar matching contribution of up to 6% of eligible compensation contributed by the Member each pay period (“Matching Company contributions”). Prior to January 1, 2013, in addition to matching company contributions, the Company made floor company contributions equal to 0.5% of highly compensated eligible employees’ base salary and 1.5% of all other eligible employees’ base salary.
Note 1. Description of the Plan (continued)
Member contributions in excess of 6% of the eligible compensation are supplemental savings that are not matched by the Company.
Administrative Costs
The trust pays certain administrative expenses of the Plan out of the assets of the trust. Expenses not paid by the trust are borne by the Company.
Member Accounts
Individual accounts are maintained for each Member of the Plan. Each Member’s account is credited with that Member’s contributions and allocations of the associated Matching Company contributions, Non-Elective Company contributions and any investment earnings for the Member’s account, and is charged with withdrawals and an allocation of administrative expenses and investment losses for the Member’s account. Allocations are based on Member account balances, as defined in the Plan document. The benefit to which a Member is entitled is the benefit that can be provided from that Member’s vested account balance.
Vesting
Members are 100% vested at all times with respect to Member contributions and earnings thereon. Members first hired prior to January 1, 2016 are 100% vested in Matching Company and Non-Elective Company contributions made after January 1, 2013 after two years of service. Effective January 1, 2016, Members first hired on or after January 1, 2016 are 100% vested in Matching Company contributions and Non-Elective Company contributions after three years of service.
Members are vested 20% in Matching Company contributions made prior to January 1, 2013 for each completed year of service, until five years of service at which time the Members are 100% vested. Members are fully vested in floor company contributions made prior to January 1, 2013.
Notwithstanding the foregoing statement, a Member becomes fully vested in such Member’s Matching and Non-Elective Company contribution account upon retirement (for retirement eligible Members), disability, death, reaching age 65, or upon the complete discontinuance of Company contributions or termination of the Plan.
Investment Options
Members may direct the investment of their future contributions and/or existing account balances into various investment options offered by the Plan and may change investments and transfer amounts between funds daily. Member contributions, Matching Company contributions and Non-Elective Company contributions may be invested in any of the various investment options of the Plan in multiples of 1%, as elected or deemed elected by the Member (“Member directed investments”).
Certain investment options are parties-in-interest with The Hartford. See Note 8 for further discussion.
Notes Receivable from Members
Members may borrow from their accounts a minimum of $0.5 to a maximum equal to the lesser of $50 or 50% of their vested account balance, reduced by any pre-existing outstanding loan amounts during the last 12 months. Loan transactions are treated as transfers between the investment funds and the loan fund. Loan terms range from one to five years, or up to 15 years for the purchase of a primary residence. The loan is secured by the balance in the Member’s account. The interest rate on a loan in a calendar quarter is set on the last business day of the prior February, May, August or November based on the prime rate provided by Thomson Reuters on that date plus one percentage point and is fixed for the term of the loan. Principal and interest is paid ratably through payroll deductions.
Payment of Benefits
On termination of service due to retirement, death, disability, or certain other reasons, Members or their designated beneficiaries may elect to receive either a lump sum amount equal to the value of their vested account balance, or, in the case of
Note 1. Description of the Plan (continued)
Members meeting certain requirements, annual installments over a period not greater than thirty years (subject to certain conditions), or annual installments over the recipient’s life expectancy. If a Member was receiving installment payments, upon the Member’s death, the designated beneficiary has the option of receiving the remaining value either in a lump sum or annual installments over the beneficiary’s life expectancy.
Distributions may be paid in cash or, with respect to The Hartford Stock Fund, in stock distributions. Members or their designated beneficiaries may also elect to defer distributions subject to certain conditions.
Forfeitures
When a Member terminates employment before he or she has vested in his or her Matching Company and Non-Elective Company contributions, the non-vested portion of the Member’s account as defined by the Plan, represents a forfeiture. The Plan document permits the use of forfeitures to either reduce future Company contributions or Plan administrative expenses for the Plan year. However, if a participant is re-employed and fulfills certain requirements, as defined in the Plan document, the account will be reinstated. At December 31, 2019 and 2018, forfeited non-vested account balances totaled $25 and $57, respectively, that had not been applied yet to future contributions or expenses.
These forfeitures are applied to reduce future Matching Company contributions. During the year ended December 31, 2019, Matching Company contributions were reduced by $3,608 from forfeitures.
Adoption of New Accounting Standards
In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which amends certain disclosure requirements of ASC 820, effective for fiscal years beginning after December 15, 2019 with early adoption permitted. Early adoption is only permitted for the eliminated or modified disclosure requirements. The ASU removed the requirement to disclose the amount of and reasons for transfers between level 1 and level 2 of the fair value hierarchy as well as the policy for timing of transfers between levels. The ASU also modified the disclosure for investments in certain entities that calculate NAV to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the Plan or announced the timing publicly. It also clarified the measurement uncertainty disclosure to communicate information about the uncertainty in measurement as of the reporting date. This disclosure is applicable to the Plan and the Plan adopted the new guidance as of December 31, 2019 and affected disclosures is incorporated in Note 4, Fair Value Measurements. There are no effects on the statements of net assets available for benefits or changes therein.
Note 2. Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management of the Plan to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates.
Risks and Uncertainties
The Plan provides various investment options to its Members. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is possible that changes in the values of investment securities, which are reflected in the Statement of Changes in Net Assets Available for Benefits, may occur in the near term and such changes could materially affect the amounts reported in the financial statements.
Note 2. Accounting Policies (continued)
Investment Valuation and Income Recognition
The Plan’s investments are stated at fair value, except for fully benefit-responsive guaranteed investment contracts (“GICs”), which are reported at contract value. Fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Contract value is the amount Plan Members would receive if they were to initiate permitted transactions under the terms of the Plan (see Note 3). See Note 4 for discussion on fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Investment expenses charged to the Plan for investments in mutual funds and collective investment trusts are charged directly against the assets of the fund and are not separately reflected. Consequently, investment expenses are reflected as a reduction of
investment gain (loss) for such investments. For investments other than mutual funds and collective investment trusts, investment expenses are reflected as investment management fees paid out of the assets of the Fund and are recognized as expenses of the Plan.
Payment of Benefits
Benefits paid to Members are recorded when distributed.
Contributions
Member and Matching and Non-Elective Company contributions are recorded in the period during which the Company makes payroll deductions from Members’ compensation.
Excess Contribution Payable
The Plan is required to return contributions received during the Plan year in excess of the IRC limits. There were no such excess contributions in 2019 or 2018.
Notes Receivable from Members
Notes receivable from Members are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent notes receivable from Member loans are recorded as deemed distributions based on the terms of the Plan document.
Administrative Expenses
Certain administrative expenses of the Plan are paid by the Plan Sponsor as provided in the Plan document. Recordkeeping fees of the Plan are paid by the Plan. All investment management and transaction fees directly related to the Plan investments are paid by the Plan.
Note 3. Fully Benefit-Responsive Investment Contract with Financial Institutions
The Plan’s stable value fund ("the Fund") available to Members as an investment option is a separately managed account, managed solely for the Plan, with a stable value fund investment strategy. The investment contracts within the stable value fund meet the fully benefit-responsive investment contract criteria and, therefore, are reported at contract value. Contract value is the relevant measure for fully benefit-responsive investment contracts because this is the amount received by Members if they were to initiate permitted transactions under the terms of the Plan. Contract value represents contributions made under the contract, plus earnings based on crediting rates, less Member withdrawals and less administrative expenses. The following represents the disaggregation of contract value between types of investment contracts held by the Plan:
Note 3. Fully Benefit-Responsive Investment Contract with Financial Institutions (continued)
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Contract Issuer
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Contract Number
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Major Credit Ratings
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As of 12/31/2019 Investments at Contract Value
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As of 12/31/2018 Investments at Contract Value
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Synthetic GIC Contracts:
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Transamerica Premier Life
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MDA01097TR
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AA- / Aa2
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$
|
226,659
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$
|
220,225
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|
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American General Life
|
1646368
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AA / Aa2
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106,452
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|
103,802
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|
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American General Life
|
1635582
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AA+ / Aa2
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81,789
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|
79,895
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|
|
RGA
|
RGA00058
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AA / Aa2
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44,690
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|
43,545
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|
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Prudential
|
GA62433
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AA / Aal
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181,686
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|
176,671
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Traditional GIC Contract:
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New York Life
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GA29021
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AA+ / Aaa
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100,687
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97,774
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|
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741,963
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721,912
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Cash and cash equivalents
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|
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24,149
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Total
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$
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741,963
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$
|
746,061
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The key difference between a synthetic guaranteed investment contract ("GIC") and a traditional GIC is that the Plan owns the underlying assets of the synthetic GIC. A synthetic GIC includes a wrapper contract, which is an agreement with the wrap issuer, such as a bank or insurance company, to make payments to the Plan in certain circumstances. The wrapper contract typically includes certain conditions and limitations on the underlying assets owned by the Plan. Synthetic and traditional GICs are designed to accrue interest based on crediting rates established by the contract issuers.
The synthetic GICs held by the Plan includes wrapper contracts that provide a guarantee that the crediting rate with respect to the applicable underlying assets will not fall below 0%. Cash flow volatility (for example, timing of benefit payments) as well as asset underperformance can be passed through to the Plan through adjustments to future contract crediting rates. Formulas are provided in the contract that adjusts renewal crediting rates to recognize the difference between the fair value and the book value of the underlying assets. Crediting rates are reviewed monthly for resetting.
The Plan also holds a traditional GIC. The contract issuer is contractually obligated to repay the principal and interest at a specific interest rate that is guaranteed to the Plan. The crediting rate is based on a formula established by the contract issuer but may not be less than 0%. The crediting rate is reviewed on a quarterly basis for resetting. The contract cannot be terminated before the scheduled maturity date.
The Plan’s ability to receive amounts due in accordance with the traditional and the synthetic GIC is dependent on the third-party issuer’s ability to meet its financial obligations. The issuer’s ability to meet its contractual obligations may be affected by future economic and regulatory developments.
Certain events might limit the ability of the Plan to transact at contract value with the contract issuer. Examples of such events include the following:
1.The Plan’s failure to qualify under Section 401(a) of the Internal Revenue Code or the failure of the trust to be tax-exempt under Section 501(a) of the Internal Revenue Code
2.Premature termination of the traditional GIC contract or the synthetic GIC contract
3.Plan termination or merger
4.Changes to the Plan’s prohibition on competing investment options
5.Bankruptcy of the Plan Sponsor or other Plan Sponsor events (for example, divestitures or spinoffs of a subsidiary) that significantly affect the Plan’s normal operations.
The Plan Sponsor does not believe that any such events are probable of occurring that might limit the ability of the Plan to transact at contract value with the contract issuer or that would limit the ability of the Plan to transact at contract value with the Members.
Note 3. Fully Benefit-Responsive Investment Contract with Financial Institutions (continued)
In addition, certain events allow the issuer to terminate the contract with the Plan and settle at an amount different from contract value. Examples of such events include the following:
1.An uncured violation of the Plan’s investment guidelines
2.A breach of a material obligation under the contract by the Plan Sponsor
3.A material misrepresentation by the Plan Sponsor
4.A material amendment to the agreements without the consent of the issuer.
Note 4. Fair Value Measurements
The Plan estimates of fair value are based on ASC 820, Fair Value Measurements and Disclosures, which provides a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and requires that observable inputs be used in valuations when available.
The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Plan’s significant market assumptions. The level in the fair value hierarchy within which the fair value measurement is reported is based on the level of the input that is least observable to the measurement in its entirety. The three levels of the hierarchy are as follows:
•Level 1 - Fair values based primarily on unadjusted quoted prices for identical assets, or liabilities, in active markets that the Plan has the ability to access at the measurement date.
• Level 2 - Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities in inactive markets.
• Level 3 - Fair values derived when one or more of the significant inputs are unobservable (including assumptions about risk). With little or no observable market, the determination of fair values uses considerable judgment and represents the Plan’s best estimate of an amount that could be realized in a market exchange for the asset or liability. Also included are securities that are traded within illiquid markets and/or priced by independent brokers.
Asset Valuation Techniques - Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2019 and 2018.
Short-term Investments - Primary inputs also include material event notices and new issue money market rates.
Mutual Funds - Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open-ended mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily NAV and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.
Equity Securities - Valued at the closing price reported on the active market on which the individual securities are traded.
Collective Investment Trusts - Valued at the NAV of units of a collective trust. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV. Member transactions (purchases and sales) may occur daily. Were the Plan to initiate a full redemption of the collective trust, the investment advisor reserves the right to temporarily delay
withdrawal from the trust in order to ensure that securities liquidations will be carried out in an orderly business manner. As of December 31, 2019 and 2018 there were no unfunded commitments or redemption restrictions on collective investment trusts.
Note 4. Fair Value Measurements (continued)
The following tables set forth by level within the fair value hierarchy a summary of the Plan’s investments measured at fair value on a recurring basis at December 31, 2019 and 2018.
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Investment Assets at Fair Value December 31, 2019
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Active Markets for Identical Assets (Level 1)
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Other Observable Inputs (Level 2)
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Significant Unobservable Inputs (Level 3)
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Total
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Invested Assets
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Short Term Investments
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$
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—
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$
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6,680
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$
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—
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$
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6,680
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Mutual Funds
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770,292
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—
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—
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770,292
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Equity Securities
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821,810
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—
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—
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821,810
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Total Investments at fair value [1]
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$
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1,592,102
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$
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6,680
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$
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—
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$
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1,598,782
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Investments at net asset value:
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Collective investment trusts
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2,731,146
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Total investments
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$
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4,329,928
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[1] Excludes $1,310 of dividend receivable and $1,775 of interest receivable recorded at fair value.
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Investment Assets at Fair Value December 31, 2018
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Active Markets for Identical Assets (Level 1)
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Other Observable Inputs (Level 2)
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Significant Unobservable Inputs (Level 3)
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Total
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Invested Assets
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Short Term Investments
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$
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—
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$
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9,522
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$
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—
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$
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9,522
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Mutual Funds
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869,341
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—
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—
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869,341
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Equity Securities
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1,124,940
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—
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—
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1,124,940
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Total Investments at fair value [1]
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$
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1,994,281
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$
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9,522
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$
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—
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$
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2,003,803
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Investments at net asset value:
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Collective investment trusts
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1,365,222
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Total investments
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$
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3,369,025
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[1] Excludes $1,395 of dividend receivable and $1,566 of interest receivable recorded at fair value.
Hartford’s Investment and Savings Plan Investment Committee, which oversees the Plan’s menu of investments, works with an unaffiliated investment consultant to monitor the performance of Plan investments, periodically reviews the Plan’s menu of investments and, when appropriate, makes changes.
The valuation methods described in Note 2 may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
Note 5. Federal Income Tax Status
The Internal Revenue Service (“IRS”) has determined and informed the Company by letter dated June 13, 2017 that the Plan and related Trust are designed in accordance with the applicable regulations of the IRC. The Company and Plan management believe that the Plan is currently designed and operated in compliance with the applicable requirements of the IRC and the Plan and related Trust continue to be tax-exempt. No provision for income taxes has been included in the Plan’s financial statements.
GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS.
The Plan is subject to audit by the IRS; however there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2016.
Note 6. Plan Termination
Although the Company has not expressed any intent to do so, the Company has the right under the Plan to suspend, reduce, or partially or completely discontinue its contributions at any time and to terminate the Plan, the Trust agreement and the Trust hereunder, subject to the provisions of ERISA. In the event of termination or partial termination of the Plan or complete discontinuance of contributions, affected Members automatically become fully-vested in their accounts.
Note 7. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits between the accompanying financial statements and the amounts reflected in Form 5500 as of December 31, 2019 and 2018:
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2019
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2018
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Net assets available for benefits per accompanying financial statements
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$
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5,147,691
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$
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4,184,954
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Adjustment from contract value to fair value for fully benefit-responsive investment contracts
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18,487
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(6,159)
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Net assets per Form 5500
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$
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5,166,178
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$
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4,178,795
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The following is a reconciliation of total investment income, contributions and interest income on notes receivable on the accompanying financial statements and the amount reflected in Form 5500 for the year ended December 31, 2019:
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Total investment income, contributions and interest income on notes receivable per accompanying financial statements
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$
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1,273,122
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Adjustment from contract value to fair value for fully benefit-responsive investment contracts at beginning of the year
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$
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6,159
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Adjustment from contract value to fair value for fully benefit-responsive investment contracts at end of the year
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$
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18,487
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Total income per Form 5500
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$
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1,297,768
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Note 7. Reconciliation of Financial Statements to Form 5500 (continued)
The following is a reconciliation of benefits paid to Members between the accompanying financial statements and the amount reflected in Form 5500 for the year ended December 31, 2019:
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Benefits paid to Members per accompanying financial statements
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$
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308,144
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Deduct amounts allocated to deemed loan distributions
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119
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Benefits paid to Members per Form 5500
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$
|
308,025
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Note 8. Exempt Party-in-Interest Transactions
Certain Plan investments are in funds managed by the Trustee and certain subsidiaries of the Company. Fees paid by the Plan for trustee, custodial and investment management services amounted to $56 for the year ended December 31, 2019. The group annuity contract issued by a subsidiary of the Company was terminated in June 2018. In addition, certain Plan investments include shares of mutual funds that are advised and distributed by a subsidiary and shares of Hartford Stock. At December 31, 2019 and 2018, the fair value of affiliated mutual funds held by the Plan was $770,292 and $869,341, respectively. At December 31, 2019 and 2018, the Plan held 3,598,901 shares and 3,882,431 shares of Hartford Stock with a cost basis of $121,470 and $130,077, respectively. The shares of Hartford Stock had a fair value of $218,705 and $172,574 at December 31, 2019 and 2018, respectively. During the year ended December 31, 2019, the Plan recorded dividend income from Hartford Stock and The Hartford’s mutual funds of $11,508.
Note 9. Plan Amendments and Other Changes
Effective January 1, 2018, the definition of Service was revised to give credit for employment with Aetna, Inc. to former Aetna employees who became Company employees on January 1, 2018 as a result of the Company’s acquisition of Aetna’s group life and disability business. Former Aetna employees who did not make a proper enrollment election were automatically enrolled in the Plan by April 1,2019 with before-tax contributions equal to 6% of eligible compensation.
Effective January 1, 2018, a provision was added to the Plan to reduce the administrative burden of filing for benefits in cases where the beneficiary is unable to care for their affairs due to illness or accident, or is a minor or has died.
Effective December 1, 2018, the definition of Service was revised to give credit for employment with Y-Risk to former Y-Risk employees who became Hartford employees on December 1, 2018 as a result of the Y-Risk transaction. In addition, former Y-Risk employees who did not otherwise enroll in the Plan were automatically enrolled as of January 7, 2019 (or as soon as practicable thereafter).
Effective January 1, 2019, the Plan was amended so that (a) a Member is no longer required to obtain a plan loan before requesting a hardship withdrawal; (b) member contributions will no longer be suspended after receipt of a hardship withdrawal; and (c) earnings on before-tax contributions will be included as part of a hardship withdrawal.
Effective May 23, 2019, the definition of Service was revised to give credit for employment with Navigators to former Navigators employees who became Company employees on May 23, 2019 as a result of the Navigators transaction. In addition, former Navigators employees who did not otherwise enroll in the Plan were automatically enrolled within 90 days of the May 23, 2019 acquisition date.
Effective May 23, 2019, the definition of “Eligible Employee” was amended by adding the following to the list of Ineligible Persons: (a) a person who is a nonresident alien and who receives no earned income (within the meaning of Code Section 911(d)(2)) from the Company or its affiliate which constitutes income from sources within the United States (within the meaning of Code Section 861(a)(3)); and (b) a person who is a U.S. citizen working in a foreign country for the Company or its affiliate who is not on the U.S. payroll of Hartford Fire Insurance Company.
Effective July 1, 2019, the Plan was amended to (a) increase the maximum Member contribution from 30% of eligible pay to 50%; and (b) allow partial loan prepayments.
Note 10. Subsequent Events
The 2019 novel coronavirus ("COVID-19") outbreak, which was declared a pandemic by the World Health Organization on March 11, 2020, has negatively impacted the world economy and common stock share prices for most companies, including the Company’s common stock share price. The Plan’s investment in the Hartford Stock is stated at fair value based on the closing price of $60.77 per share of the Hartford Stock at December 31, 2019, a value significantly higher than the current market price. The impact of COVID-19 on companies continues to evolve rapidly and its future effects on the Plan’s net assets available for benefits and changes in net assets available for benefits are uncertain.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress. The CARES Act provides immediate and temporary relief for retirement plan sponsors and their participants with respect to employer contributions, distributions and participant loans. The provisions of the CARES Act may become effective and operationalized immediately, prior to amending the plan document.
The Plan has implemented the following relief provisions; however their future effects on the Plan’s net assets available for benefits and changes in net assets available for benefits are uncertain.
◦Coronavirus-related distribution – Qualified participants may take a coronavirus-related distribution of up to $100 from their retirement plan without a 10% early withdrawal penalty. Eligible distributions can be taken up to December 31, 2020. Coronavirus-related distributions may be repaid within three years.
◦Participant loans – Qualified participants may borrow up to $100 from the Plan (an increase from the $50 previously allowed), and repayment can be delayed.
◦Required minimum distributions (RMDs) – RMDs were temporarily suspended for 2020.
Effective January 1, 2020, the Plan was amended so that an eligible employee hired on or after January 1, 2020 will no longer need to wait 90 days to become a Member for purposes of making contributions to the Plan; they are immediately eligible.
Management has evaluated events subsequent to December 31, 2019, through the date the financial statements were issued, noting there are no other subsequent events requiring adjustment or disclosure in the financial statements.
******
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EIN# 06-0383750
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Plan# 100
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THE HARTFORD INVESTMENT AND SAVINGS PLAN SUPPLEMENTAL SCHEDULE
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FORM 5500, SCHEDULE H, PART IV, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR)
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AS OF DECEMBER 31, 2019
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($ IN THOUSANDS)
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(a)
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(b) Identity of issue, borrower, lessor, or similar party
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(c) Description of investment including maturity date, rate of interest, collateral, par or maturity date
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(d) Cost
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(e) Current Value
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Chartwell Equity Securities
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AMERICAN EQUITY INVT LIFE HL
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***
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$
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1,017
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APERGY CORP
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***
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1,063
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ARGO GROUP INTERNATIONAL
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***
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1,569
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AVISTA CORP
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***
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917
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BARNES GROUP INC
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***
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1,191
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BLACK HILLS CORP
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***
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1,010
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CACI INTERNATIONAL INC CL A
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***
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2,372
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CACTUS INC A
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***
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1,199
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CHEESECAKE FACTORY INC/THE
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***
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989
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COLUMBIA BANKING SYSTEM INC
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***
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1,342
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COMMVAULT SYSTEMS INC
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***
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934
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CVB FINANCIAL CORP
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***
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863
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DENNY S CORP
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***
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1,879
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DIODES INC
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***
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1,778
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DYCOM INDUSTRIES INC
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***
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997
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EAGLE MATERIALS INC
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***
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979
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EAGLE PHARMACEUTICALS INC
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***
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1,032
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EL PASO ELECTRIC CO
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***
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1,374
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EMPIRE STATE REALTY TRUST A
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***
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690
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ENPRO INDUSTRIES INC
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***
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564
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ESCO TECHNOLOGIES INC
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***
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1,146
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FIRST FINANCIAL BANCORP
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***
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1,102
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FIRST INDUSTRIAL REALTY TR
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***
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1,384
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FIRST MIDWEST BANCORP INC/IL
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***
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1,012
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FNB CORP
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***
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682
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FRANKLIN ELECTRIC CO INC
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***
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1,048
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FRESH DEL MONTE PRODUCE INC
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***
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1,011
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G III APPAREL GROUP LTD
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***
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1,365
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GLATFELTER
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***
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1,330
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HARSCO CORP
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***
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1,310
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HEALTHCARE REALTY TRUST INC
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***
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1,302
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HOPE BANCORP INC
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***
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848
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* Indicates party-in-interest.
** These synthetic portfolios have no final maturity date. Final maturity is based on the underlying assets in the bond portfolios.
*** Cost information is not required for Member directed investments, and therefore is not included.
See accompanying Report of Independent Registered Public Accounting Firm.
F-16
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EIN# 06-0383750
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Plan# 100
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THE HARTFORD INVESTMENT AND SAVINGS PLAN SUPPLEMENTAL SCHEDULE
|
|
|
|
|
|
FORM 5500, SCHEDULE H, PART IV, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR)
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AS OF DECEMBER 31, 2019
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($ IN THOUSANDS)
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