e424b5
Filed Pursuant to Rule 424(b)(5)
Registration Nos. 333-103915;
333-105392
PROSPECTUS SUPPLEMENT
(To prospectus dated April 10, 2003)
$689,825,000
The Hartford Financial Services Group, Inc.
5.550% Senior Notes due 2008
This is a remarketing of $689,825,000 aggregate principal amount
of our senior notes due August 16, 2008, originally issued
as components of the 13,800,000 Equity Units we issued in May
2003, on behalf of Normal Unit holders. The senior notes will
mature on August 16, 2008. Interest on the senior notes is
payable quarterly in arrears on August 16,
November 16, February 16 and May 16 of each year. The
interest rate on the senior notes has been reset to
5.550% per year, effective from and after May 16,
2006. Purchasers of senior notes in the remarketing will receive
interest at the reset rate from May 16, 2006 commencing on
the next interest payment date, August 16, 2006.
We will purchase $265,000,000 aggregate principal amount of
senior notes being remarketed. We will retire all the senior
notes we purchase. We will not receive any proceeds from the
remarketing. See Use of Proceeds.
The senior notes are our direct, unsecured obligations and rank
equally with all of our other existing and future unsecured and
unsubordinated senior debt. The senior notes are being
remarketed in denominations of $1,000 and integral multiples of
$1,000.
Prior to this remarketing, there has been no public market for
the senior notes. The senior notes will not be listed on any
exchange.
To read about certain factors you should consider before
investing in the senior notes, see Risk Factors
beginning on page S-9 of this prospectus supplement and
beginning on page 75 of our quarterly report on
Form 10-Q for the
quarterly period ended March 31, 2006, which is
incorporated by reference in this prospectus supplement.
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Per Senior Note |
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Total |
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Price to Public(1)
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100.00395% |
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$689,852,248 |
Remarketing Fee to Remarketing Agents(2)
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.2488% |
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$1,716,050 |
Net Proceeds(3)
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99.7552% |
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$688,136,198 |
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(1) |
Plus accrued interest from May 16, 2006, if the settlement
occurs after that date. |
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(2) |
Equals 0.25% of the treasury portfolio purchase price. |
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(3) |
We will not receive any proceeds from the remarketing. See
Use of Proceeds in this prospectus supplement. |
Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities
or passed upon the accuracy or adequacy of this prospectus
supplement or the accompanying prospectus. Any representation to
the contrary is a criminal offense.
The remarketing agents expect to deliver the senior notes to
investors on or about May 16, 2006, in book-entry form only
through the facilities of The Depository Trust Company.
Merrill Lynch & Co.
Goldman,
Sachs & Co.
JPMorgan
The date of this prospectus supplement is May 11, 2006.
TABLE OF CONTENTS
Prospectus Supplement
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S-1 |
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S-1 |
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S-3 |
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S-7 |
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S-9 |
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S-11 |
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S-12 |
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S-13 |
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S-14 |
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S-17 |
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S-21 |
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S-23 |
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S-25 |
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S-25 |
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S-25 |
Prospectus
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ii |
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3 |
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58 |
i
You should rely only on the information contained or
incorporated by reference in this prospectus supplement, in the
accompanying prospectus and in any free writing prospectus with
respect to the remarketing filed by us with the Securities and
Exchange Commission. We have not, and the remarketing agents
have not, authorized any other person to provide you with
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. You should
assume that the information appearing in this prospectus
supplement, the accompanying prospectus, any free writing
prospectus with respect to the remarketing filed by us with the
Securities and Exchange Commission and the documents
incorporated by reference herein and therein is accurate only as
of their respective dates. Our business, financial condition,
results of operations and prospects may have changed since those
dates.
The remarketing agents are offering to sell, and are seeking
offers to buy, the senior notes only in jurisdictions where
offers and sales are permitted. The distribution of this
prospectus supplement and the accompanying prospectus and the
offering of the senior notes in certain jurisdictions may be
restricted by law. Persons outside the United States who come
into possession of this prospectus supplement and the
accompanying prospectus must inform themselves about and observe
any restrictions relating to the offering of the senior notes
and the distribution of this prospectus supplement and the
accompanying prospectus outside the United States. This
prospectus supplement and the accompanying prospectus do not
constitute, and may not be used in connection with, an offer to
sell, or a solicitation of an offer to buy, any securities
offered by this prospectus supplement and the accompanying
prospectus by any person in any jurisdiction in which it is
unlawful for such person to make such an offer or
solicitation.
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of this
remarketing and also adds to and updates information contained
in the accompanying prospectus and the documents incorporated by
reference into the prospectus. The second part, the accompanying
prospectus, gives more general information, some of which does
not apply to this remarketing.
If the description of this remarketing or the senior notes
varies between this prospectus supplement and the accompanying
prospectus, you should rely on the information contained in or
incorporated by reference into this prospectus supplement.
Unless we have indicated otherwise, or the context otherwise
requires, references in this prospectus supplement and the
accompanying prospectus to The Hartford,
we, us and our or similar
terms are to The Hartford Financial Services Group, Inc. and its
subsidiaries.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus supplement
and the accompanying prospectus and the documents incorporated
by reference herein and therein are forward-looking statements.
These forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform
Act of 1995 and include estimates and assumptions related to
economic, competitive and legislative developments. These
forward-looking statements are subject to change and uncertainty
which are, in many instances, beyond our control and have been
made based upon managements expectations and beliefs
concerning future developments and their potential effect upon
us. There can be no assurance that future developments will be
in accordance with managements expectations or that the
effect of future developments on us will be those anticipated by
management. Actual results could differ materially from those
expected by us, depending on the outcome of various factors,
including, but not
S-1
limited to, those set forth in Part II, Item 1A of our
Quarterly Report on
Form 10-Q for the
quarterly period ended March 31, 2006. These factors
include:
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the difficulty in predicting our potential exposure for asbestos
and environmental claims; |
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the possible occurrence of terrorist attacks; |
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the response of reinsurance companies under reinsurance
contracts and the availability, pricing and adequacy of
reinsurance to protect us against losses; |
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changes in the stock markets, interest rates or other financial
markets, including the potential effect on our statutory capital
levels; |
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the inability to effectively mitigate the impact of equity
market volatility on our financial position and results of
operations arising from obligations under annuity product
guarantees; |
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our potential exposure arising out of regulatory proceedings or
private claims relating to incentive compensation or payments
made to brokers or other producers and alleged anti-competitive
conduct; |
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the uncertain effect on us of regulatory and market-driven
changes in practices relating to the payment of incentive
compensation to brokers and other producers, including changes
that have been announced and those which may occur in the future; |
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the possibility of more unfavorable loss development; |
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the incidence and severity of catastrophes, both natural and
man-made; |
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stronger than anticipated competitive activity; |
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unfavorable judicial or legislative developments; |
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the potential effect of domestic and foreign regulatory
developments, including those which could increase our business
costs and required capital levels; |
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the possibility of general economic and business conditions that
are less favorable than anticipated; |
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our ability to distribute products through distribution
channels, both current and future; |
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the uncertain effects of emerging claim and coverage issues; |
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a downgrade in our financial strength or credit ratings; |
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the ability of our subsidiaries to pay dividends to us; |
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our ability to adequately price our property and casualty
policies; |
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our ability to recover our systems and information in the event
of a disaster or other unanticipated event; and |
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other factors described in such forward-looking statements. |
We undertake no obligation to update our forward-looking
statements for any reason, whether as a result of new
information, future events or otherwise.
You should review carefully the sections captioned Risk
Factors in this prospectus supplement and in our Quarterly
Report on
Form 10-Q for the
quarterly period ended March 31, 2006 for a more complete
discussion of the risks and uncertainties of an investment in
the senior notes.
S-2
PROSPECTUS SUPPLEMENT SUMMARY
This summary contains basic information about us and this
remarketing and is qualified in its entirety by the more
detailed information included elsewhere or incorporated by
reference in this prospectus supplement and the accompanying
prospectus. Because this is a summary, it does not contain all
of the information that you should consider before investing.
You should read this entire prospectus supplement, as well as
the accompanying prospectus and the information incorporated by
reference, before making an investment decision.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
General
The Hartford Financial Services Group, Inc. is a diversified
insurance and financial services holding company. We are among
the largest providers of investment products, individual life,
group life and disability insurance products, and property and
casualty insurance products in the United States. Hartford Fire
Insurance Company, or Hartford Fire, founded in 1810, is the
oldest of our subsidiaries. Our companies write insurance and
reinsurance in the United States and internationally. At
March 31, 2006, our total assets were $295.4 billion
and our total stockholders equity was $15.4 billion.
We were formed in December 1985 as a wholly-owned subsidiary of
ITT Corporation. On December 19, 1995, all our outstanding
shares were distributed to ITT Corporations stockholders
and we became an independent company. On May 2, 1997, we
changed our name from ITT Hartford Group, Inc. to our current
name, The Hartford Financial Services Group, Inc.
As a holding company that is separate and distinct from our
insurance subsidiaries, we have no significant business
operations of our own. Therefore, we rely on the dividends from
our insurance company and other subsidiaries as the principal
source of cash flow to meet our obligations. These obligations
include payments on our debt securities and the payment of
dividends on our capital stock. The Connecticut insurance
holding company laws limit the payment of dividends by
Connecticut-domiciled insurers. In addition, these laws require
notice to and approval by the state insurance commissioner for
the declaration or payment by those subsidiaries of any dividend
if the dividend and other dividends or distributions made within
the preceding twelve months exceeds the greater of:
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10% of the insurers policyholder surplus as of
December 31 of the preceding year, and |
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net income, or net gain from operations if the subsidiary is a
life insurance company, for the previous calendar year, in each
case determined under statutory insurance accounting principles. |
In addition, if any dividend of a Connecticut-domiciled insurer
exceeds the insurers earned surplus, it requires the prior
approval of the Connecticut Insurance Commissioner.
The insurance holding company laws of the other jurisdictions in
which our insurance subsidiaries are incorporated, or deemed
commercially domiciled, generally contain similar, and in some
instances more restrictive, limitations on the payment of
dividends. Our insurance subsidiaries are permitted to pay up to
a maximum of approximately $1.9 billion in dividends in the
aggregate to The Hartford Financial Services Group, Inc. and our
subsidiary, Hartford Life, Inc., in 2006 without prior approval
from the applicable insurance commissioner. However, through
August 31, 2006, one of our subsidiaries, Hartford Life and
Accident Insurance Company, comprising $667 million of the
$1.9 billion, will need prior approval from the insurance
commissioner to pay dividends. Through May 5, 2006, The
Hartford Financial Services Group, Inc. and Hartford Life, Inc.
received a combined total of $408 million from their
insurance subsidiaries.
Our rights to participate in any distribution of assets of any
of our subsidiaries, for example, upon their liquidation or
reorganization, and the ability of holders of the senior notes
to benefit indirectly from a distribution, are subject to the
prior claims of creditors of the applicable subsidiary, except
to the extent
S-3
that we may be a creditor of that subsidiary. Claims on these
subsidiaries by persons other than us include, as of
March 31, 2006, claims by policyholders for benefits
payable amounting to $101.7 billion, claims by separate
account holders of $158.4 billion, and other liabilities
including claims of trade creditors, claims from guaranty
associations and claims from holders of debt obligations
amounting to $15.7 billion.
Our principal executive offices are located at Hartford Plaza,
Hartford, Connecticut 06115, and our telephone number is
(860) 547-5000.
S-4
THE REMARKETING
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Issuer |
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The Hartford Financial Services Group, Inc., a Delaware
corporation. |
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Securities Remarketed |
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$689,825,000 aggregate principal amount of 5.550% senior
notes due August 16, 2008. |
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Maturity |
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The senior notes will mature on August 16, 2008. |
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Interest |
|
The interest rate on the senior notes has been reset to
5.550% per year, effective from and after May 16,
2006. Interest on the senior notes is payable quarterly in
arrears on February 16, May 16, August 16 and
November 16, of each year. Purchasers of senior notes in
the remarketing will receive interest at the reset rate from
May 16, 2006 commencing on the next interest payment date,
August 16, 2006. |
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Certain Covenants |
|
The indenture governing the senior notes contains certain
covenants that, among other things, limit our ability to issue,
assume, or guarantee any indebtedness for borrowed money that is
secured by a mortgage, pledge, lien, security interest or other
encumbrance on any principal property, as defined in the
indenture, of The Hartford or any restricted subsidiary, as
defined in the indenture, or any shares of stock of any
restricted subsidiary, without equally and ratably securing the
senior notes. See Description of the Debt Securities
in the accompanying prospectus. |
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Ranking |
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The senior notes are our direct, unsecured obligations and rank
without preference or priority among themselves and equally with
all of our other existing and future unsecured and
unsubordinated senior debt. The indenture under which the senior
notes were issued does not limit our ability to issue or incur
other debt or issue preferred stock. See Description of
the Remarketed Notes in this prospectus supplement and
Description of the Debt Securities in the
accompanying prospectus. |
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The Remarketing |
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The senior notes were issued by us in May 2003 in connection
with our issuance and sale to the public of Equity Units. Each
Equity Unit initially consisted of both a purchase contract and
a
1/20,
or 5.0%, undivided beneficial interest in $1,000 principal
amount of our senior notes due August 16, 2008, together
called a Normal Unit. In order to secure their obligations under
the purchase contracts, holders of the Equity Units pledged
their undivided beneficial ownership interests in our senior
notes to us through a collateral agent. Pursuant to the terms of
the Equity Units, the remarketing agents remarketed senior notes
on behalf of current holders of Normal Units under the terms of
and subject to the conditions in the remarketing agreement among
us, the remarketing agents, and JPMorgan Chase Bank, N.A., as
purchase contract agent and as
attorney-in-fact for
holders of Equity Units. See Remarketing in this
prospectus supplement. |
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The terms of the Equity Units and senior notes required the
remarketing agents to use their reasonable efforts to remarket |
S-5
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the senior notes of holders participating in the remarketing at
a price of approximately 100.50% of the treasury portfolio
purchase price, as defined in this prospectus supplement. In
connection with the remarketing, the remarketing agents have
reset the interest rate on the senior notes to 5.550% per year. |
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Use of Proceeds |
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The proceeds from the remarketing of the senior notes are
estimated to be $689,852,248, before deduction of the
remarketing agents fee. We will not receive any proceeds
of the remarketing. Instead, the proceeds from the remarketing
will be (i) used to purchase the treasury portfolio
described in this prospectus supplement, which treasury
portfolio will then be pledged to secure the purchase contract
obligations of the holders of the Normal Units and
(ii) used to pay the remarketing agents fees, which
will be equal to $1,716,050 (0.25% of the treasury portfolio
purchase price). Any remaining proceeds will be remitted ratably
to holders of the Normal Units as of the close of business,
5 p.m., New York City time, on May 10, 2006. See
Use of Proceeds in this prospectus supplement. |
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U.S. Federal Income Taxation |
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The senior notes are subject to Treasury regulations governing
contingent payment debt instruments. If you are a United States
taxpayer, you will be subject to federal income tax on the
accrual of original issue discount during your ownership of the
senior notes, subject to certain adjustments, regardless of your
usual method of accounting. See Certain United States
Federal Income Tax Consequences
U.S. Holders Interest Income and Original Issue
Discount in this prospectus supplement. |
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Listing |
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The senior notes are not, and are not expected to be, listed on
any national securities exchange or included in any automated
quotation system. |
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Risk Factors |
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Your investment in the senior notes will involve risks. You
should consider carefully all of the information set forth in
this prospectus supplement, the accompanying prospectus, any
free writing prospectus with respect to the remarketing filed by
us with the Securities and Exchange Commission and the documents
incorporated by reference herein and, in particular, you should
evaluate the specific factors set forth in the section of this
prospectus supplement entitled Risk Factors and the
section entitled Risk Factors in our quarterly
report on
Form 10-Q for the
quarterly period ended March 31, 2006 before deciding
whether to purchase any senior notes in this remarketing. |
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Trustee, registrar and paying agent |
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JPMorgan Chase Bank, N.A. |
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Our Participation in the
Remarketing |
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We will purchase in the remarketing $265,000,000 aggregate
principal amount of senior notes being remarketed. We will
retire all the senior notes we purchase. |
S-6
SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected income statement data and the selected balance
sheet data for each of the years were derived from our audited
consolidated financial statements which have been examined and
reported upon by Deloitte & Touche LLP, our independent
registered public accounting firm. The selected financial
information at and for the three months ended March 31,
2006 and 2005 were derived from our unaudited consolidated
financial statements which have been reviewed by
Deloitte & Touche LLP and include all adjustments,
consisting of normal recurring accruals, which we consider
necessary for a fair presentation of our financial position and
results of operations as of that date and for that period.
The table below reflects our consolidated financial position and
results of operations. You should read the following amounts in
conjunction with our consolidated financial statements and the
related notes that are incorporated in this prospectus
supplement by reference.
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Three Months Ended | |
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Year Ended December 31, | |
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March 31, | |
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March 31, | |
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2006 | |
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2005 | |
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2005 | |
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2004 | |
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2003 | |
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2002 | |
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2001 | |
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(In millions, except for per share data and combined ratios) | |
Income Statement Data
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Total Revenues
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$ |
6,543 |
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$ |
6,002 |
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$ |
27,083 |
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$ |
22,708 |
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$ |
18,719 |
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$ |
16,410 |
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$ |
15,980 |
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Income (loss) before cumulative effect of accounting changes(1)
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$ |
728 |
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$ |
666 |
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$ |
2,274 |
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$ |
2,138 |
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$ |
(91 |
) |
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$ |
1,000 |
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|
$ |
541 |
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Net income (loss)(1)(2)
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$ |
728 |
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|
$ |
666 |
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$ |
2,274 |
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|
$ |
2,115 |
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|
$ |
(91 |
) |
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$ |
1,000 |
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|
$ |
507 |
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Balance Sheet Data
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Total Assets
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$ |
295,375 |
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$ |
261,420 |
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$ |
285,557 |
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$ |
259,735 |
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$ |
225,850 |
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|
$ |
181,972 |
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$ |
181,950 |
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Long-term debt
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$ |
4,045 |
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$ |
4,300 |
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$ |
4,048 |
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$ |
4,308 |
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$ |
4,610 |
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$ |
4,061 |
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$ |
3,374 |
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Total stockholders equity
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$ |
15,410 |
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$ |
14,211 |
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$ |
15,325 |
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$ |
14,238 |
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|
$ |
11,639 |
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|
$ |
10,734 |
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|
$ |
9,013 |
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Earnings (Loss) Per Share Data
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Basic earnings (loss) per share(1)
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Income (loss) before cumulative effect of accounting changes(1)
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$ |
2.41 |
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|
$ |
2.26 |
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|
$ |
7.63 |
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|
$ |
7.32 |
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$ |
(0.33 |
) |
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$ |
4.01 |
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$ |
2.27 |
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Net income (loss)(1)(2)
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|
$ |
2.41 |
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|
$ |
2.26 |
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|
$ |
7.63 |
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|
$ |
7.24 |
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|
$ |
(0.33 |
) |
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$ |
4.01 |
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|
$ |
2.13 |
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Diluted earnings (loss) per share(1)(3)
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Income (loss) before cumulative effect of accounting changes(1)
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|
$ |
2.34 |
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|
$ |
2.21 |
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|
$ |
7.44 |
|
|
$ |
7.20 |
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|
$ |
(0.33 |
) |
|
$ |
3.97 |
|
|
$ |
2.24 |
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Net income (loss)(1)(2)
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|
$ |
2.34 |
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|
$ |
2.21 |
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|
$ |
7.44 |
|
|
$ |
7.12 |
|
|
$ |
(0.33 |
) |
|
$ |
3.97 |
|
|
$ |
2.10 |
|
Dividends declared per common share
|
|
$ |
0.40 |
|
|
$ |
0.29 |
|
|
$ |
1.17 |
|
|
$ |
1.13 |
|
|
$ |
1.09 |
|
|
$ |
1.05 |
|
|
$ |
1.01 |
|
Other Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual fund assets(4)
|
|
$ |
36,260 |
|
|
$ |
27,963 |
|
|
$ |
32,705 |
|
|
$ |
28,068 |
|
|
$ |
22,462 |
|
|
$ |
15,321 |
|
|
$ |
16,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Data Combined Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ongoing Property & Casualty Operations(5)
|
|
|
88.8 |
|
|
|
88.6 |
|
|
|
93.2 |
|
|
|
95.3 |
|
|
|
96.5 |
|
|
|
99.1 |
|
|
|
108.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
footnotes on following page
S-7
|
|
(1) |
2004 includes a $216 million tax benefit related to an
agreement with the IRS on the resolution of matters pertaining
to tax years prior to 2004. 2003 includes an after-tax charge of
$1.7 billion related to our 2003 asbestos reserve addition,
$40 million of after-tax expense related to the settlement
of a certain litigation dispute, $30 million of tax benefit
in our Life operations primarily related to the favorable
treatment of certain tax items arising during the 1996-2002 tax
years, and $27 million of after-tax severance charges in
our Property & Casualty operations. 2002 includes a
$76 million tax benefit in our Life operations, an
$11 million after-tax expense in Life related to a certain
litigation dispute and an $8 million after-tax benefit in
Lifes September 11 exposure. 2001 includes
$440 million of after-tax losses related to September 11
and a $130 million tax benefit in Life. |
|
(2) |
2004 includes a $23 million after-tax charge related to the
cumulative effect of accounting change for our adoption of
Statement of Position
03-1, Accounting
and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate
Accounts. 2001 includes a $34 million after-tax
charge related to the cumulative effect of accounting changes
for our adoption of SFAS No 133, Accounting for
Derivative Instruments and Hedging Activities and EITF
Issue No. 99-20,
Recognition of Interest Income and Impairment on Purchased
and Retained Beneficial Interests in Securitized Financial
Assets. |
|
(3) |
As a result of the net loss for the year ended December 31,
2003, Statement of Financial Accounting Standards No. 128,
Earnings per Share requires us to use basic weighted
average common shares outstanding in the calculation of the year
ended December 31, 2003 diluted earnings (loss) per share,
since the inclusion of options of 1.8 million would have
been antidilutive to the earnings per share calculation. In the
absence of the net loss, weighted average common shares
outstanding and dilutive potential common shares would have
totaled 274.2 million. |
|
(4) |
Mutual funds are owned by the shareholders of those funds and
not by us. As a result, they are not reflected in total assets
on our balance sheet. |
|
(5) |
2001 includes the impact of September 11. Before the impact
of September 11, the 2001 combined ratio was 101.7. |
S-8
RISK FACTORS
Before purchasing the senior notes, you should carefully
consider the following risk factors together with the other
information incorporated by reference or provided in this
prospectus supplement and in the accompanying prospectus in
order to evaluate an investment in the senior notes.
Risk Factors Relating to the Senior Notes
If an active trading market for the senior notes does not
develop, you may not be able to resell your senior notes.
There is currently no trading market for the senior notes and we
do not plan to list the senior notes on any national securities
exchange or include the senior notes in an automated quotation
system. In addition, the liquidity of any trading market for the
senior notes, and the market price quoted for the senior notes,
may be adversely affected by changes in the overall market for
these senior notes, by changes in interest rates and by changes
in our financial performance or prospects or in the prospects of
companies in our industry generally. We cannot predict the
extent, if any, to which investors interest will lead to a
liquid trading market.
The senior notes will be classified as contingent payment
debt instruments and you will be required to accrue original
issue discount.
For United States federal income tax purposes, the senior notes
are classified as contingent payment debt instruments. As a
result, if you are a United States taxpayer, you will generally
be subject to federal income tax on the accrual of original
issue discount during your ownership of the senior notes,
subject to certain adjustments. Additionally, it is possible
that gain or, to some extent, loss recognized on the sale,
exchange or other disposition of a senior note may be treated as
ordinary gain or loss. See Certain United States Federal
Income Tax Consequences
U.S. Holders Interest Income and Original Issue
Discount.
The senior notes will be effectively subordinated to the debt
of our subsidiaries, which could impair our ability to make
payments under the senior notes.
We are a holding company and rely primarily on dividends and
interest payments from our subsidiaries to meet our obligations
for payment of interest and principal on outstanding debt
obligations, dividends to shareholders and corporate expenses.
As a result, our cash flows and ability to service our
obligations, including the senior notes, are dependent upon the
earnings of our subsidiaries, distributions of those earnings to
us and other payments or distributions of funds by our
subsidiaries to us.
The ability of our insurance subsidiaries to pay dividends to us
in the future will depend on their statutory surplus, on their
earnings and on regulatory restrictions. In addition, our
subsidiaries have no obligation to pay any amounts due on the
senior notes. Furthermore, except to the extent we have a
priority or equal claim against our subsidiaries as a creditor,
the senior notes will be effectively subordinated to debt and
preferred stock at the subsidiary level because, as the common
shareholder of our subsidiaries, we will be subject to the prior
claims of creditors of our subsidiaries. Consequently, the
senior notes are effectively subordinated to all liabilities of
any of our subsidiaries. Substantially all of our business is
currently conducted through our subsidiaries, and we expect this
to continue. As of March 31, 2006, The Hartford Financial
Services Group, Inc. had $3,722 million of senior debt
outstanding and our subsidiaries had $275,886 million of
aggregate liabilities.
The indenture does not limit our ability or that of our
subsidiaries to issue or incur other additional senior
indebtedness. We may have difficulty paying our obligations
under the senior notes if we, or any of our subsidiaries, incur
additional indebtedness or liabilities.
S-9
The trading price of the senior notes may not fully reflect
the value of any accrued but unpaid interest.
The senior notes may trade at a price that does not fully
reflect the value of any accrued but unpaid interest. If you
dispose of your senior notes between record dates for interest
payments, you will be required to include in gross income the
daily portions of the original issue discount through the date
of disposition in income as ordinary income, and to add this
amount to your adjusted tax basis in the senior notes disposed
of. To the extent the selling price is less than your adjusted
tax basis, you will recognize a loss.
S-10
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth, for each of the periods
indicated, our ratio of earnings to total fixed charges and our
ratio of earnings excluding interest credited to contractholders
to total fixed charges excluding interest credited to
contractholders.
For purposes of computing the ratio of consolidated earnings to
fixed charges, earnings consist of income from
operations before federal income taxes, cumulative effect of
accounting changes and fixed charges. Fixed charges
consist of interest expense (including interest credited to
contractholders), capitalized interest, amortization of debt
expense and an imputed interest component for rental expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months | |
|
|
|
|
Ended March 31, | |
|
Year Ended December 31, | |
|
|
| |
|
| |
|
|
2006 | |
|
2005 | |
|
2005 | |
|
2004 | |
|
2003 | |
|
2002 | |
|
2001 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(In millions, except for ratios) | |
Income from Operations before Federal Income Taxes and
Cumulative Effect of Accounting Changes
|
|
$ |
984 |
|
|
$ |
914 |
|
|
$ |
2,985 |
|
|
$ |
2,523 |
|
|
$ |
(550 |
) |
|
$ |
1,068 |
|
|
$ |
341 |
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
66 |
|
|
|
63 |
|
|
|
252 |
|
|
|
251 |
|
|
|
271 |
|
|
|
265 |
|
|
|
295 |
|
|
|
Interest factor attributable to rentals
|
|
|
16 |
|
|
|
17 |
|
|
|
69 |
|
|
|
64 |
|
|
|
76 |
|
|
|
73 |
|
|
|
72 |
|
|
|
Interest credited to contractholders
|
|
|
880 |
|
|
|
726 |
|
|
|
5,671 |
|
|
|
2,481 |
|
|
|
1,120 |
|
|
|
1,048 |
|
|
|
1,050 |
|
|
Total fixed charges
|
|
|
962 |
|
|
|
806 |
|
|
|
5,992 |
|
|
|
2,796 |
|
|
|
1,467 |
|
|
|
1,386 |
|
|
|
1,417 |
|
|
Total fixed charges excluding interest credited to
contractholders
|
|
|
82 |
|
|
|
80 |
|
|
|
321 |
|
|
|
315 |
|
|
|
347 |
|
|
|
338 |
|
|
|
367 |
|
Earnings, as defined
|
|
|
1,946 |
|
|
|
1,720 |
|
|
|
8,977 |
|
|
|
5,319 |
|
|
|
917 |
|
|
|
2,454 |
|
|
|
1,758 |
|
Earnings, as defined, excluding interest credited to
contractholders
|
|
$ |
1,066 |
|
|
$ |
994 |
|
|
$ |
3,306 |
|
|
$ |
2,838 |
|
|
$ |
(203 |
) |
|
$ |
1,406 |
|
|
$ |
708 |
|
Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings, as defined, to total fixed charges(1)(2)
|
|
|
2.0 |
|
|
|
2.1 |
|
|
|
1.5 |
|
|
|
1.9 |
|
|
|
NM |
|
|
|
1.8 |
|
|
|
1.2 |
|
Earnings, as defined, excluding interest credited to
contractholders, to total fixed charges excluding interest
credited to contractholders(1)(3)(4)
|
|
|
13.0 |
|
|
|
12.4 |
|
|
|
10.3 |
|
|
|
9.0 |
|
|
|
NM |
|
|
|
4.2 |
|
|
|
1.9 |
|
Deficiency of earnings to fixed charges(5)
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
550 |
|
|
$ |
|
|
|
$ |
|
|
|
|
(1) |
NM: Not meaningful. |
(2) |
Before the impact of September 11 of $678 million, the
2001 ratio of earnings to fixed charges was 1.6. |
(3) |
Before the impact of September 11 of $678 million, the
2001 ratio of earnings to fixed charges excluding interest
credited to contractholders was 3.8. |
(4) |
This secondary ratio is disclosed for the convenience of fixed
income investors and the rating agencies that serve them and is
more comparable to the ratios disclosed by all issuers of fixed
income securities. |
(5) |
Represents additional earnings that would be necessary to result
in a one to one ratio of consolidated earnings to fixed charges.
This amount includes a before-tax charge of $2.6 billion
related to our 2003 asbestos reserve addition. |
S-11
USE OF PROCEEDS
We are remarketing $689,825,000 aggregate principal amount of
senior notes to investors on behalf of holders of the Normal
Units.
We will not receive any cash proceeds from the remarketing of
the senior notes. Instead, the proceeds from the remarketing
will be used as follows:
|
|
|
|
|
$686,420,081 of these proceeds, equal to the treasury portfolio
purchase price, will be applied to purchase the treasury
portfolio described below, which will be pledged to the
collateral agent to secure the Normal Unit holders
obligation to purchase our common stock under the purchase
contracts on August 16, 2006; |
|
|
|
$1,716,050 of these proceeds, which equals 25 basis points
(0.25%) of the treasury portfolio purchase price, will be
deducted and retained by the remarketing agents as a remarketing
fee; and |
|
|
|
any proceeds from the remarketing of the senior notes remaining
after deducting the treasury portfolio purchase price and the
remarketing fee will be remitted ratably to holders of the
Normal Units as of the close of business, 5 p.m.,
New York City time, on May 10, 2006. |
The treasury portfolio consists of:
|
|
|
|
|
U.S. Treasury securities (or interest or principal strips
thereof) that mature on or prior to August 15, 2006 in an
aggregate amount equal to the aggregate principal amount of the
senior notes underlying the aggregate ownership interests in
senior notes held as components of Normal Units; and |
|
|
|
U.S. Treasury securities (or interest or principal strips
thereof) that mature on or prior to August 15, 2006 in an
aggregate amount equal to the aggregate interest payment
(assuming no reset of the interest rate on the senior notes)
that would have been due on August 16, 2006 on the
aggregate principal amount of the senior notes underlying the
aggregate ownership interests in senior notes held as components
of Normal Units. |
As used in this context: treasury portfolio purchase
price means the lowest aggregate ask-side price quoted by
a primary U.S. government securities dealer to the
quotation agent on May 11, 2006 for the purchase of the
treasury portfolio for settlement on May 16, 2006.
quotation agent means Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
S-12
CAPITALIZATION
The following table sets forth our unaudited capitalization as
of March 31, 2006 and as adjusted to reflect our agreement
to purchase $265 million in aggregate principal amount of
the senior notes in the remarketing. You should read this table
in conjunction with our consolidated financial statements and
the related notes and the other information incorporated by
reference in this prospectus supplement and the accompanying
prospectus.
|
|
|
|
|
|
|
|
|
|
|
As of | |
|
|
March 31, 2006 | |
|
|
| |
|
|
|
|
As | |
|
|
Actual | |
|
Adjusted | |
|
|
| |
|
| |
|
|
($ in millions) | |
|
|
| |
Short-Term Debt
|
|
|
|
|
|
|
|
|
Commercial Paper
|
|
|
472 |
|
|
|
737 |
(1) |
Current maturities of long-term debt
|
|
|
249 |
|
|
|
249 |
|
|
|
|
|
|
|
|
Total Short-Term Debt
|
|
|
721 |
|
|
|
986 |
|
Long-Term Debt
|
|
|
|
|
|
|
|
|
Senior Notes and Debentures(2)
|
|
|
3,357 |
|
|
|
3,092 |
|
Junior Subordinated Debentures
|
|
|
688 |
|
|
|
688 |
|
|
|
|
|
|
|
|
Total Long-Term Debt
|
|
|
4,045 |
|
|
|
3,780 |
|
Total Debt
|
|
|
4,766 |
|
|
|
4,766 |
|
Stockholders Equity
|
|
|
|
|
|
|
|
|
Common Stock (par value $0.01 per share; 750 million
shares authorized; 306 million shares issued)
|
|
|
3 |
|
|
|
3 |
|
Additional paid-in capital
|
|
|
5,096 |
|
|
|
5,096 |
|
Retained earnings
|
|
|
10,814 |
|
|
|
10,814 |
|
Treasury stock, at cost (3 million shares)
|
|
|
(46 |
) |
|
|
(46 |
) |
Accumulated other comprehensive income
|
|
|
(457 |
) |
|
|
(457 |
) |
|
|
|
|
|
|
|
Total Stockholders Equity
|
|
|
15,410 |
|
|
|
15,410 |
|
|
|
|
|
|
|
|
Total Capitalization
|
|
|
20,176 |
|
|
|
20,176 |
|
|
|
(1) |
We intend to issue commercial paper to fund our purchase of
senior notes in the remarketing. Assuming we issue
$265 million of commercial paper to fund this purchase, as
of March 31, 2006, as adjusted, we would have had
$737 million of commercial paper outstanding. We anticipate
that the commercial paper issued to fund such purchase of senior
notes will be retired with the funds we receive upon the
settlement of the purchase contracts on August 16, 2006. |
|
(2) |
Includes the senior notes issued in connection with the sale of
the Equity Units. In connection with this remarketing, the
interest rate on the senior notes has been reset and, effective
from and after May 16, 2006, the senior notes will bear
interest at 5.550% per year. As of March 31, 2006,
$690.0 million principal amount of the senior notes was
outstanding. Upon settlement of our purchase of
$265 million in aggregate principal amount of the senior
notes in the remarketing, as of March 31, 2006, as
adjusted, we would have had outstanding $425 million
principal amount of the senior notes originally issued as
components of our Equity Units. |
S-13
DESCRIPTION OF THE REMARKETED SENIOR NOTES
The following description is a summary of the terms of the
senior notes being remarketed. The descriptions in this
prospectus supplement and the accompanying prospectus contain
descriptions of certain terms of the senior notes and the
indenture but do not purport to be complete, and reference is
hereby made to the indenture, supplemental indenture No. 1,
supplemental indenture No. 2 and supplemental indenture
No. 3 which have been filed as exhibits to or incorporated
by reference in the registration statement, and to the Trust
Indenture Act. This summary supplements the description of the
senior debt securities in the accompanying prospectus and, to
the extent it is inconsistent, replaces the description in the
accompanying prospectus.
General
The senior notes were issued under an indenture dated as of
October 20, 1995 between us and JPMorgan Chase Bank, N.A.
(formerly The Chase Manhattan Bank (National Association)), as
indenture trustee, as amended and supplemented by supplemental
indenture No. 1, dated as of December 27, 2000,
supplemental indenture No. 2, dated as of
September 13, 2002 and supplemental indenture No. 3,
dated as of May 23, 2003, between us and the indenture
trustee (as so amended and supplemented the
indenture). The senior notes were issued in
connection with our issuance of Equity Units. The Equity Units
initially consisted of units, referred to as Normal Units, each
with a stated amount of $50. Each Normal Unit is initially
comprised of (1) a purchase contract pursuant to which the
holder (a) agrees to purchase from us, for $50, shares of
our common stock not later than August 16, 2006 and
(b) receives from us quarterly contract adjustment payments
and (2) a
1/20
, or 5%, undivided beneficial ownership interest in
$1,000 principal amount of senior notes issued by us (equivalent
to $50 principal amount of senior notes) and due on
August 16, 2008.
This prospectus supplement relates to the remarketing of the
senior notes on behalf of the holders of Normal Units.
The senior notes are our direct, unsecured obligations and rank
without preference or priority among themselves and equally with
all of our other existing and future unsecured and
unsubordinated senior debt. The senior notes initially were
issued in an aggregate principal amount equal to $690,000,000.
We are a holding company that derives all our income from our
subsidiaries. Accordingly, our ability to service our debt,
including our obligations under the senior notes, and other
obligations are primarily dependent on the earnings of our
respective subsidiaries and the payment of those earnings to us,
in the form of dividends, loans or advances and through
repayment of loans or advances from us. In addition, any payment
of dividends, loans or advances by those subsidiaries could be
subject to statutory or contractual restrictions. Our
subsidiaries have no obligation to pay any amounts due on the
senior notes.
The senior notes are not subject to a sinking fund provision and
are not subject to defeasance or redemption. The entire
principal amount of the senior notes will mature and become due
and payable, together with any accrued and unpaid interest
thereon, on August 16, 2008.
The indenture trustee is presently the security registrar and
the paying agent for the senior notes. Senior notes will be
issued in registered form, will be in denominations of $1,000
and integral multiples of $1,000, without coupons, and may be
transferred or exchanged, without service charge but upon
payment of any taxes or other governmental charges payable in
connection with the transfer or exchange, at the office
described below. Payments on senior notes issued as a global
security will be made to the depositary or a successor
depositary. Principal and interest with respect to certificated
notes will be payable, the transfer of the senior notes will be
registrable and senior notes will be exchangeable for notes of a
like aggregate principal amount in denominations of $1,000 and
integral multiples of $1,000, at the office or agency maintained
by us for this purpose in The City of New York. We have
initially designated the corporate trust office of the indenture
trustee as that office. However, at our option, payment of
interest may be made by check mailed to the address of the
holder entitled to payment or by wire transfer to an account
appropriately designated by the holder entitled to payment.
S-14
The indenture does not contain provisions that afford holders of
the senior notes protection in the event we are involved in a
highly leveraged transaction or other similar transaction that
may adversely affect such holders. The indenture does not limit
our ability to issue or incur other debt or issue preferred
stock.
Interest
The interest rate on the senior notes has been reset to
5.550% per year, effective from and after May 16,
2006. Interest is payable quarterly in arrears on
August 16, November 16, February 16 and
May 16 of each year to the person in whose name the senior
note is registered at the close of business on the first
business day of the month in which the interest payment date
falls. Purchasers of notes in the remarketing will receive
interest at the reset rate from May 16, 2006 commencing on
the next interest payment date, August 16, 2006.
The amount of interest payable on the senior notes for any
period will be computed (1) for any full quarterly period
on the basis of a
360-day year of twelve
30-day months and
(2) for any period shorter than a full quarterly period, on
the basis of a 30-day
month and, for any period less than a month, on the basis of the
actual number of days elapsed per
30-day month. In the
event that any date on which interest is payable on the senior
notes is not a business day, then payment of the interest
payable on such date will be made on the next day that is a
business day (and without any interest or other payment in
respect of any such delay), except that, if such business day is
in the next calendar year, then such payment will be made on the
preceding business day.
Agreement by Purchasers of Certain Tax Treatment
Each senior note provides that, by acceptance of the senior
note, you intend that the senior note constitutes debt and you
agree to treat it as debt for United States federal, state and
local tax purposes.
Book-Entry System
Senior notes will be issued in the form of one or more global
certificates, which are referred to as global securities,
registered in the name of the depositary or its nominee. Except
under the limited circumstances described below, senior notes
represented by the global securities will not be exchangeable
for, and will not otherwise be issuable as, senior notes in
certificated form. The global securities described above may not
be transferred except by the depositary to a nominee of the
depositary or by a nominee of the depositary to the depositary
or another nominee of the depositary or to a successor
depositary or its nominee.
The laws of some jurisdictions may require that some purchasers
of securities take physical delivery of the securities in
certificated form. These laws may impair the ability to transfer
beneficial interests in such a global security.
Except as provided below, owners of beneficial interests in such
a global security will not be entitled to receive physical
delivery of senior notes in certificated form and will not be
considered the holders (as defined in the indenture) thereof for
any purpose under the indenture, and no global security
representing senior notes shall be exchangeable, except for
another global security of like denomination and tenor to be
registered in the name of the depositary or its nominee or a
successor depositary or its nominee. Accordingly, each
beneficial owner must rely on the procedures of the depositary
or if such person is not a participant, on the procedures of the
participant through which such person owns its interest to
exercise any rights of a holder under the indenture.
In the event that:
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the depositary notifies us that it is unwilling or unable to
continue as a depositary for the global security certificates
and no successor depositary has been appointed within
90 days after this notice, |
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an event of default occurs and is continuing with respect to the
senior notes; or |
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we determine in our sole discretion and subject to the
procedures of the depositary that we will no longer have senior
notes represented by global securities, |
certificates for the senior notes will be printed and delivered
in exchange for beneficial interests in the global security
certificates. Any global note that is exchangeable pursuant to
the preceding sentence shall be exchangeable for senior note
certificates registered in the names directed by the depositary.
We expect that these instructions will be based upon directions
received by the depositary from its participants with respect to
ownership of beneficial interests in the global security
certificates.
Governing Law
The indenture and the senior notes will be governed by and
construed in accordance with, the laws of the State of New York.
S-16
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain United States federal
income tax consequences of the purchase, ownership and
disposition of the senior notes. Unless otherwise stated, this
discussion deals only with senior notes held as capital assets
by beneficial owners of senior notes who purchase the senior
notes in the remarketing. Except as provided below, this
discussion applies only to a beneficial owner of a senior note
that is (1) an individual citizen or resident of the United
States, (2) a corporation, or other entity taxable as a
corporation, created or organized in or under the laws of the
United States or any state thereof or the District of Columbia
or (3) a partnership, estate or trust treated, for United
States federal income tax purposes, as a domestic partnership,
estate or trust (referred to as a U.S. holder).
This discussion is based upon the Internal Revenue Code of 1986,
as amended (the Code), Treasury regulations
(including proposed Treasury regulations) issued thereunder,
Internal Revenue Service (IRS) rulings and
pronouncements and judicial decisions now in effect, all of
which are subject to change, possibly with retroactive effect.
This discussion does not address all aspects of United States
federal income taxation that may be relevant to
U.S. holders in light of their particular circumstances,
such as U.S. holders who are subject to special tax
treatment (for example, (1) banks, regulated investment
companies, insurance companies, dealers in securities or
currencies or tax-exempt organizations, (2) persons holding
senior notes as part of a straddle, hedge, conversion
transaction or other integrated investment or (3) persons
whose functional currency is not the U.S. dollar), some of
which may be subject to special rules. In addition, this
discussion does not address alternative minimum taxes or state,
local or foreign taxes.
If an entity that is treated as a partnership for United States
federal income tax purposes holds a senior note, the tax
consequences may depend on the status and activities of the
partnership and its partners. Prospective investors that are
treated as partnerships for United States federal income tax
purposes should consult their own advisors regarding the federal
income tax consequences to them and their partners of an
investment in the senior notes.
No assurance can be given that the IRS will agree with the tax
consequences described herein or that, if the IRS were to take a
contrary position, that position would not ultimately be
sustained by the courts. Prospective investors are urged to
consult their own tax advisors with respect to the United States
federal income tax consequences of the purchase, ownership and
disposition of the senior notes in light of their particular
circumstances, as well as the effect of any state, local or
foreign tax laws.
U.S. Holders
Interest Income and Original Issue Discount. Because of
the manner in which the interest rate on the senior notes is
reset, the senior notes are treated as contingent payment debt
instruments subject to the noncontingent bond method
for accruing original issue discount, as set forth in applicable
Treasury regulations. As discussed more fully below, under such
method each U.S. holder is required to accrue original
issue discount, regardless of its usual method of accounting, on
the senior notes based on the comparable yield for
and adjusted issue price of the senior notes,
subject to the adjustments described below. Under these rules, a
U.S. holder may be required to accrue income in excess of
the interest payments actually received in any year.
The comparable yield of the senior notes is the rate
at which we would have issued a fixed rate debt instrument on
the original issue date of the senior notes with terms and
conditions similar to the senior notes. As required under
applicable Treasury regulations, at the time the senior notes
were originally issued we provided the comparable yield and,
solely for tax purposes, a projected payment schedule based on
the comparable yield, to holders of the senior notes. We
determined that the comparable yield was 3.60% and the projected
payments for the senior notes, per $1,000 of principal amount,
were $5.90 on August 16, 2003, $6.40 for each subsequent
quarter ending on or prior to May 16, 2006 and $12.68 for
each quarter ending after May 16, 2006. We also determined
that the projected payment for the senior notes, per $1,000 of
principal amount, at the maturity date was $1,012.68 (which
includes the stated principal amount of the senior notes as well
as the final projected interest payment).
S-17
The amount of original issue discount on a senior note for each
accrual period is determined by multiplying the comparable yield
of the senior note (adjusted for the length of the accrual
period) by the senior notes adjusted issue price at the
beginning of the accrual period. At the time the senior notes
were originally issued, we determined that the adjusted issue
price of each senior note on the original issue date was
$1,000 per $1,000 of principal amount. The adjusted issue
price at the beginning of each subsequent accrual period was
$1,000, increased by any original discount previously accrued on
such senior note, without regard to the adjustments described
below, and decreased by the projected amount of payments
received on such senior note as set forth in the projected
payment schedule. Based on the foregoing, we have determined
that the adjusted issue price of the senior notes as of
May 16, 2006 is $1,026.46 per $1,000 of principal
amount. The amount of original issue discount so determined is
then allocated on a ratable basis to each day in the accrual
period that the U.S. holder holds the senior note.
As a result of the remarketing, the remaining payments on the
senior notes will become fixed for each quarter. Any differences
between such fixed amounts and the $12.68 projected to be paid
for each quarter ending after May 16, 2006 will constitute
adjustments increasing, if the actual payments are higher than
the projected payment (positive adjustments), or
decreasing, if the actual payments are lower than the projected
payments (negative adjustments), the amount of
interest income of a U.S. holder with respect to the senior
notes. The contingent payment debt regulations require
U.S. holders to take these adjustments into account in a
reasonable manner over the period to which they relate. We
expect to account for any difference with respect to any period
as an adjustment to the accrual of interest for that period.
We will use the foregoing comparable yield and projected payment
schedule for purposes of determining our own taxable income and
for any required information reporting. U.S. holders are
generally bound by the comparable yield and projected payment
schedule we have provided unless either is unreasonable. If a
U.S. holder does not use this comparable yield and
projected payment schedule to determine interest accruals, the
U.S. holder must apply the noncontingent bond method using
its own comparable yield and projected payment schedule. A
U.S. holder that uses its own comparable yield and
projected payment schedule must explicitly disclose this fact
and the reason why it has used its own comparable yield and
projected payment schedule. In general, the U.S. holder
must make this disclosure on a statement attached to its timely
filed United States federal income tax return for the taxable
year that includes the date it acquires the senior notes.
In addition, a U.S. holder that purchases a senior note in
the remarketing for an amount that differs from the adjusted
issue price of the senior note at the time of such purchase will
be required to adjust its original issue discount inclusions
with respect to the senior note. If the purchase price is less
than the adjusted issue price of the senior note the
U.S. holder will be required to make a positive adjustment,
and if the purchase price is more than the adjusted issue price
of the senior note the U.S. holder will be required to make
a negative adjustment. Any such difference should generally be
allocated under a reasonable method to daily portions of
original issue discount over the remaining term of the senior
note. The amount so allocated to a daily portion of original
issue discount should be taken into account as an increase or
reduction in the original issue discount accrued for that
period. Any positive or negative adjustment of the kind
described in this paragraph made by a U.S. holder will
increase or decrease, respectively, the U.S. holders
tax basis in the senior note.
The comparable yield and projected payment schedule described
above was supplied by us solely for computing income under the
noncontingent bond method for United States federal income tax
purposes, and does not constitute a projection or representation
as to the amounts that holders of senior notes will actually
receive.
Sale, Exchange or Other Disposition of Senior Notes. Upon
the sale, exchange or other disposition of a senior note, a
U.S. holder will recognize gain or loss in an amount equal
to the difference between the amount realized and the
U.S. holders adjusted tax basis in the senior note.
Gain or loss recognized on such a sale, exchange or other
disposition generally will be treated as capital gain or loss.
However, the treatment of such gain or loss as a capital gain or
loss is not entirely free from doubt. Gain
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recognized on the sale, exchange or other disposition of a
senior note may be treated as ordinary income to the extent of
any positive adjustment that has not yet been accrued and
included in income by the U.S. holder. In addition, it is
possible that gain or, to some extent, loss recognized on the
sale, exchange or other disposition of a senior note during the
six-month period following the date the interest rate is reset
may be treated as ordinary gain or loss unless at the time of
such sale, exchange or other disposition no further payments are
due with respect to the senior note for the remainder of such
six-month period. Individuals are taxed at reduced rates on
capital gain derived from capital assets held for more than one
year. The deductibility of capital losses is subject to
limitations.
A U.S. holders tax basis in its senior notes is
generally increased by original issue discount previously
accrued on its senior notes, reduced by payments received on its
senior notes and adjusted to account for positive or negative
adjustments in respect of differences between the holders
purchase price for its senior notes and the notes adjusted
issue price (as described above).
Non-U.S. Holders
Subject to backup withholding, which is described below,
payments of principal and interest (including original issue
discount) on the senior notes to, or on behalf of, any
beneficial owner of the senior notes that is not a
U.S. holder (a
non-U.S. holder)
will not be subject to U.S federal withholding tax, provided, in
the case of interest, that:
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(i) such
non-U.S. holder
does not actually or constructively own 10% or more of the total
combined voting power of all classes of our stock entitled to
vote, |
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(ii) such
non-U.S. holder is
not a controlled foreign corporation for federal income tax
purposes that is related to us through stock ownership, or a
bank receiving interest pursuant to a loan agreement entered
into in the ordinary course of its trade or business, and |
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(iii) such
non-U.S. holder
certifies, under penalties of perjury, that it is not a United
States person and provides its name and address and certain
other information (generally on IRS Form W-8BEN or a
suitable substitute form). |
The Treasury regulations provide alternative methods for
satisfying the requirement referred to in clause (iii)
above. In the case of senior notes held by a foreign
partnership, the regulations generally require that the
requirement referred to in clause (iii) above be satisfied
by the partners rather than the foreign partnership and that the
partnership provide certain information to establish its
entitlement to an exemption from withholding.
Subject to backup withholding, which is described below, any
capital gain realized by a
non-U.S. holder
upon the sale, exchange or other disposition of a senior note
generally will not be subject to U.S. federal income or
withholding taxes if such gain is not effectively connected with
a U.S. trade or business of such
non-U.S. holder
and, in the case of an individual, such
non-U.S. holder is
not present in the United States for 183 days or more in
the taxable year of the sale, exchange or other disposition.
Any such interest or capital gain that is effectively connected
with the conduct of a U.S. trade or business of a
non-U.S. holder
will be subject to regular income tax at graduated rates as
described above with respect to U.S. holders (and in
certain cases a branch profits tax), unless an applicable tax
treaty provides an exemption.
Backup Withholding Tax and Information Reporting
Unless a U.S. holder is an exempt recipient, such as a
corporation, original issue discount accrued with respect to the
senior notes and the proceeds received from sale of the senior
notes may be subject to information reporting, and may also be
subject to United States federal backup withholding tax at the
applicable rate if such U.S. holder fails to supply an
accurate taxpayer identification number or otherwise fails to
comply with applicable United States information reporting or
certification requirements. A
non-U.S. holder
may have to comply with certification procedures to establish
that such holder is not a
S-19
United States person in order to avoid information reporting and
backup withholding tax requirements. In any event, withholding
agents must report to the IRS and each
non-U.S. holder
the amount of interest (including original issue discount) paid
or accrued with respect to the senior notes held by each
non-U.S. holder
and the rate of withholding, if any, applicable to each
non-U.S. holder.
Any amounts so withheld under the backup withholding rules may
be allowed as a credit against the holders United States
federal income tax liability or as a refund, provided the
required information is furnished to the IRS.
S-20
CERTAIN BENEFIT PLAN INVESTOR CONSIDERATIONS
The following discussion was not intended or written to be
used, and cannot be used, for the purpose of avoiding United
States federal tax penalties. This discussion was written in
connection with the promotion or marketing of the senior
notes.
The following is a summary of certain considerations associated
with the purchase of the senior notes by employee benefit plans
that are subject to the U.S. Employee Retirement Income
Security Act of 1974, as amended, (ERISA Plans), or by plans,
individual retirement accounts and other arrangements that are
subject to Section 4975 of the Code or provisions under any
federal, state, local,
non-U.S. or other
laws or regulations that are similar to such provisions of ERISA
or the Code (collectively, Similar Laws), and entities whose
underlying assets are considered to include plan
assets of such plans, accounts and arrangements (each, a
Plan).
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General Fiduciary Matters |
Under ERISA and the Code, any person who exercises any
discretionary authority or control over the administration of a
Plan or the management or disposition of the assets of such
Plan, or who renders investment advice for a fee or other
compensation to a Plan, is generally considered to be a
fiduciary of the Plan.
Each fiduciary of a Plan should consider the fiduciary standards
of ERISA in the context of the Plans particular
circumstances before authorizing an investment in the senior
notes. Accordingly, among other factors, the fiduciary should
consider whether the investment is in accordance with the
documents and instruments governing the Plan and the applicable
provisions of ERISA, the Code or any Similar Law relating to a
fiduciarys duties to the Plan including, without
limitation, the prudence, diversification, delegation of control
and prohibited transaction provisions of ERISA, the Code and any
other applicable Similar Law.
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Prohibited Transaction Issues |
Section 406 of ERISA and Section 4975 of the Code
prohibit ERISA Plans from engaging in specified transactions
involving plan assets with persons or entities who are
parties in interest, within the meaning of ERISA, or
disqualified persons, within the meaning of
Section 4975 of the Code, unless an exemption is available
with respect to such transaction. A party in interest or
disqualified person who engages in a non-exempt prohibited
transaction may be subject to excise taxes and other penalties
and liabilities under ERISA and the Code and the prohibited
transaction itself may have to be rescinded. In addition, the
fiduciary of the ERISA Plan that permits such a non-exempt
prohibited transaction may be subject to penalties and
liabilities under ERISA and the Code.
The acquisition and/or holding of notes by an ERISA Plan with
respect to which the issuer, the remarketing agents or the
current holders of Equity Units, is considered a party in
interest or a disqualified person, may constitute or result in a
direct or indirect prohibited transaction under Section 406
of ERISA and/or Section 4975 of the Code, unless the
investment is acquired and is held in accordance with an
applicable statutory, class or individual prohibited transaction
exemption. In this regard, the U.S. Department of Labor, or
the DOL, has issued prohibited transaction class exemptions, or
PTCEs, that may apply to the acquisition and holding of the
senior notes. These class exemptions include, without
limitation, PTCE 84-14 (relating to transactions determined
by independent qualified professional asset managers),
PTCE 90-1 (relating to transactions involving insurance
company pooled separate accounts), PTCE 91-38 (relating to
transactions involving bank collective investment funds),
PTCE 95-60 (relating to transactions involving life
insurance company general accounts) and PTCE 96-23
(relating to transactions determined by in-house asset
managers). Although these exemptions exist, a purchaser of any
senior notes should be aware that there can be no assurance that
all of the conditions of any such exemptions will be satisfied.
Furthermore, a purchaser of the senior notes should be aware
that even if the conditions specified in one or more of the
above-referenced exemptions are met, the scope of the
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exemptive relief provided by the exemption might not cover all
acts which might be construed as prohibited transactions.
In addition, any insurance company proposing to use assets of
its general account to purchase the senior notes should consider
the implications of the United States Supreme Courts
decision in John Hancock Mutual Life Insurance Co. v.
Harris Trust and Savings Bank, 510 U.S. 86,
114 S. Ct. 517 (1993) as well as the regulations
issued by the United States Department of Labor (DOL) in
January 2000 in response to the decision. In the decision, the
Court held that to the extent that insurance contacts issued to
employee benefit plans provide for a return that is not
guaranteed, but instead varies with the performance of the
insurers general account, the insurers general
account may become plan assets subject to ERISA and
therefore subject to the fiduciary obligations of ERISA.
Because of the preceding, the senior notes should not be
purchased or held by any person investing plan
assets of any Plan, unless such purchase and holding will
not constitute a non-exempt prohibited transaction under ERISA
and the Code or similar violation of any applicable Similar Laws.
Representation
Accordingly, by acceptance of a note, each purchaser and
subsequent transferee of a note will be deemed to have
represented and warranted that either (i) no portion of the
assets used by such purchaser or transferee to acquire or hold
the senior notes constitutes assets of any Plan or (ii) the
purchase and holding of the senior notes by such purchaser or
transferee will not constitute a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975
of the Code or similar violation under any applicable Similar
Laws.
The preceding discussion is general in nature and is not
intended to be all-inclusive. Due to the complexity of these
rules and the penalties that may be imposed upon persons
involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries, or other persons
considering purchasing the senior notes on behalf of, or with
the assets of, any Plan, consult with their counsel regarding
the potential applicability of ERISA, Section 4975 of the
Code and any Similar Laws to such investment and whether an
exemption would be applicable to the purchase and holding of the
senior notes.
Each purchaser and holder of the senior notes has exclusive
responsibility for ensuring that its purchase and holding of the
senior notes does not violate the fiduciary and prohibited
transaction rules of ERISA, the Code or any Similar Laws. The
sale of any senior notes to any Plan is in no respect a
representation by us or any of our affiliates or representatives
that such an investment meets all relevant legal requirements
with respect to investments by Plans generally or any particular
Plan, or that such an investment is appropriate for Plans
generally or any particular Plan.
S-22
REMARKETING
Under the terms and subject to the conditions contained in a
remarketing agreement, dated as of May 9, 2006, among us,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Goldman, Sachs & Co. and J.P. Morgan Securities
Inc., as the remarketing agents, and JPMorgan Chase Bank, N.A,
as the purchase contract agent and
attorney-in-fact for
holders of the purchase contracts, the remarketing agents
remarketed the senior notes at a price equal to approximately
100.50% of the treasury portfolio purchase price.
On May 11, 2006, the remarketing agents reset the interest
rate on the senior notes to 5.550% per year.
The proceeds from the remarketing of the senior notes are
estimated to be $689,852,248, before deduction of the
remarketing agents fee. We will not receive any proceeds
of the remarketing. Instead, a portion of the proceeds from the
remarketing of senior notes that are held as part of Normal
Units equal to the treasury portfolio purchase price of
$686,420,081 will be applied to purchase, on behalf of the
holders of those Normal Units, the treasury portfolio, which
will be pledged to secure the obligations of holders of Normal
Units to purchase shares of our common stock under the purchase
contracts on August 16, 2006.
None of the remarketing agents has any obligation to purchase
any of the senior notes.
We will purchase $265,000,000 aggregate principal amount of
senior notes being remarketed. We will retire all the senior
notes we purchase.
The remarketing agents will retain a remarketing fee equal to
$1,716,050 (0.25% of the treasury portfolio purchase price).
Normal Units holders will not otherwise be responsible for the
payment of any remarketing fee in connection with the
remarketing.
Any proceeds from the remarketing of the senior notes remaining
after deducting the treasury portfolio purchase price and the
remarketing fee, will be remitted ratably to holders of the
Normal Units as of the close of business, 5 p.m., New York
City time, on May 10, 2006. See Use of Proceeds
in this prospectus supplement.
The remarketing agreement provides that the remarketing is
subject to customary conditions precedent, including the
delivery of legal opinions.
The senior notes have no established trading market. The
remarketing agents have advised us that they intend to make a
market in the senior notes, but they have no obligation to do so
and may discontinue market making at any time without providing
any notice. We cannot provide you with any assurance as to the
liquidity of any trading market for the senior notes.
In order to facilitate the remarketing of the senior notes, the
remarketing agents may engage in transactions that stabilize,
maintain or otherwise affect the price of the senior notes.
These transactions consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the senior notes.
In general, purchases of senior notes for the purpose of
stabilization, as well as other purchases by the remarketing
agents for their own accounts, could cause the price of the
senior notes to be higher than it might be in the absence of
these purchases. We and the remarketing agents make no
representation or prediction as to the direction or magnitude of
any effect that the transactions described above may have on the
price of the senior notes. In addition, we and the remarketing
agents make no representation that the remarketing agents will
engage in these transactions or that these transactions, once
commenced, will not be discontinued without notice.
S-23
We have agreed to indemnify the remarketing agents against
certain liabilities, including liabilities under the Securities
Act of 1933, arising out of or in connection with their duties
under the remarketing agreement, and to contribute to payments
the remarketing agents may be required to make in respect of
those liabilities.
Certain of the remarketing agents and their respective
affiliates have, from time to time, performed, and may in the
future perform, various financial advisory, investment banking
and commercial banking services for us, for which they received
or will receive customary fees and expenses.
S-24
VALIDITY OF THE SECURITIES
Certain legal matters in connection with the remarketing of the
senior notes will be passed upon for us by Debevoise &
Plimpton LLP, New York, New York. Certain legal matters will be
passed upon for the remarketing agents by Davis Polk &
Wardwell, New York, New York.
EXPERTS
The consolidated financial statements, the related financial
statement schedules, and managements report on the
effectiveness of internal control over financial reporting
incorporated in this prospectus by reference from The Hartford
Financial Services Group, Inc.s Annual Report on
Form 10-K for the
year ended December 31, 2005 have been audited by
Deloitte & Touche LLP, an independent registered public
accounting firm, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated
in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for
the periods ended March 31, 2006 and 2005 which is
incorporated herein by reference, Deloitte & Touche
LLP, an independent registered public accounting firm, have
applied limited procedures in accordance with the standards of
the Public Company Accounting Oversight Board (United States)
for a review of such information. However, as stated in their
reports included in the Companys Quarterly Report on
Form 10-Q for the
quarterly period ended March 31, 2006 and incorporated by
reference herein, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the
degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review
procedures applied. Deloitte & Touche LLP are not
subject to the liability provisions of Section 11 of the
Securities Act of 1933 for their reports on the unaudited
interim financial information because those reports are not
reports or a part of the registration
statement prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act. This statement
supersedes the section entitled Experts in the
accompanying prospectus.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus supplement is part of a registration statement
that we filed with the SEC. The registration statement,
including the attached exhibits, contains additional relevant
information about us. The rules of the SEC allow us to omit from
this prospectus some of the information included in the
registration statement. This information may be inspected and
copied at, or obtained at prescribed rates from the Public
Reference Section of the SEC at 100 F Street, NE,
Room 1580, Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for
further information on the operation of these public reference
facilities. The SEC maintains an Internet site,
http://www.sec.gov, which contains reports, proxy and
information statements and other information regarding issuers
that are subject to the SECs reporting requirements.
We are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended. We fulfill our
obligations with respect to such requirements by filing periodic
reports and other information with the SEC. These reports and
other information are available as provided above and may also
be inspected at the offices of The New York Stock Exchange at
20 Broad Street, New York, New York 10005.
The rules of the SEC allow us to incorporate by reference
information into this prospectus supplement. The information
incorporated by reference is considered to be a part of this
prospectus supplement, and information that we file later with
the SEC will automatically update and supersede this
information. This prospectus supplement incorporates by
reference the documents listed below:
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our Annual Report on
Form 10-K for the
year ended December 31, 2005; |
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our Quarterly Report on
Form 10-Q for the
quarter ended March 31, 2006; |
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our Current Reports on
Form 8-K filed on
February 17, 2006, May 5, 2006, May 9, 2006 and
May 11, 2006; and |
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all documents filed by us pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act after the
date of this prospectus and prior to the termination of this
remarketing. |
We will provide without charge to each person, including any
beneficial owner, to whom a copy of this prospectus is
delivered, upon written or oral request of such person, a copy
of any or all of the documents referred to above which have been
or may be incorporated by reference in this prospectus
supplement. You should direct requests for those documents to
The Hartford Financial Services Group, Inc., Hartford Plaza,
Hartford, Connecticut 06115-1900, Attention: Investor Relations
(telephone (860) 547-5000).
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PROSPECTUS
The Hartford Financial
Services Group, Inc.
Debt Securities
Junior Subordinated Deferrable Interest Debentures
Preferred Stock
Common Stock
Depositary Shares
Warrants
Stock Purchase Contracts
Stock Purchase Units
Hartford Capital IV
Hartford Capital V
Hartford Capital VI
Preferred Securities Guaranteed
as Described in this Prospectus
and the Accompanying Prospectus Supplement
by The Hartford Financial Services Group, Inc.
By this prospectus, we may offer from time to time up to
$2,586,562,704 of any combination of the securities described in
this prospectus.
We will provide specific terms of the securities in supplements
to this prospectus. You should read this prospectus and any
supplement carefully before you invest. A supplement may also
change or update information contained in this prospectus.
We will not use this prospectus to confirm sales of any of our
securities unless it is attached to a prospectus supplement.
Unless we state otherwise in a prospectus supplement, we will
not list any of these securities on any securities exchange.
Neither the Securities and Exchange Commission nor any state
securities commission has determined whether this prospectus is
truthful or complete. They have not made, nor will they make,
any determination as to whether anyone should buy these
securities. Any representation to the contrary is a criminal
offense.
The date of this Prospectus is April 10, 2003
TABLE OF CONTENTS
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission utilizing a
shelf registration process. Under this shelf
process, we may sell the securities described in the prospectus
from time to time. This prospectus provides you with a general
description of the securities we may offer. We may also add,
update or change information contained in this prospectus
through one or more supplements to this prospectus. Any
statement that we make in this prospectus will be modified or
superseded by any inconsistent statement made by us in a
prospectus supplement. The rules of the SEC allow us to
incorporate by reference information into this prospectus. This
information incorporated by reference is considered to be a part
of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information.
See Incorporation by Reference. You should read both
this prospectus and any prospectus supplement together with
additional information described under the heading Where
You Can Find More Information.
No person has been authorized to give any information or to make
any representations, other than those contained or incorporated
by reference in this prospectus and, if given or made, such
information or representation must not be relied upon as having
been authorized by The Hartford Financial Services Group, Inc.,
or any underwriter, agent, dealer or remarketing firm. Neither
the delivery of this prospectus nor any sale made hereunder
shall under any circumstances create any implication that there
has been no change in the affairs of The Hartford Financial
Services Group, Inc. since the date hereof or that the
information contained or incorporated by reference herein is
correct as of any time subsequent to the date of such
information. This prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities by
anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom
it is unlawful to make such offer or solicitation.
FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this prospectus or
incorporated by reference into this prospectus (other than
statements of historical fact) are forward-looking statements.
These forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform
Act of 1995 and include estimates and assumptions related to
economic, competitive and legislative developments. These
forward-looking statements are subject to change and uncertainty
which are, in many instances, beyond our control and have been
made based upon managements expectations and beliefs
concerning future developments and their potential effect upon
us. There can be no assurance that future developments will be
in accordance with managements expectations or that the
effect of future developments on us will be those anticipated by
management. Actual results could differ materially from those
expected by us, depending on the outcome of various factors.
These factors include:
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the difficulty in predicting our potential exposure for asbestos
and environmental claims and related litigation, in particular,
significant uncertainty with regard to the outcome of our
current dispute with Mac Arthur Company and its subsidiary,
Western MacArthur Company; |
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the uncertain nature of damage theories and loss amounts and the
development of additional facts related to the September 11
terrorist attack; |
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the uncertain impact on us of the Bush Administrations
budget proposals relating to the distribution of nontaxable
dividends to stockholders and the creation of new tax-favored
individual savings accounts; |
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the response of reinsurance companies under reinsurance
contracts, the impact of increasing reinsurance rates, and the
availability and adequacy of reinsurance to protect us against
losses; |
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the possibility of more unfavorable loss experience than
anticipated; |
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the possibility of general economic and business conditions that
are less favorable than anticipated; |
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the incidence and severity of catastrophes, both natural and
man-made; |
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the effect of changes in interest rates, the stock markets or
other financial markets; |
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stronger than anticipated competitive activity; |
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unfavorable legislative, regulatory or judicial developments; |
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our ability to distribute our products through distribution
channels, both current and future; |
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the uncertain effects of emerging claims and coverage issues; |
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the effect of assessments and other surcharges for guaranty
funds and second-injury funds and other mandatory pooling
arrangements; |
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a downgrade in our claims-paying, financial strength or credit
ratings; |
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the ability of our subsidiaries to pay dividends to us; and |
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other factors described in such forward-looking statements. |
iii
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
We are a diversified insurance and financial services holding
company. Through our subsidiaries, we are among the largest
providers of investment products, individual life, group life
and disability insurance products, and property and casualty
insurance products in the United States. Hartford Fire Insurance
Company, or Hartford Fire, founded in 1810, is the oldest of our
subsidiaries. Our companies write insurance and reinsurance in
the United States and internationally. At December 31,
2002, our total assets were $182.0 billion and our total
stockholders equity was $10.7 billion.
We were formed in December 1985 as a wholly owned subsidiary of
ITT Corporation. On December 19, 1995, all our outstanding
shares were distributed to ITT Corporations stockholders
and we became an independent company. On May 2, 1997, we
changed our name from ITT Hartford Group, Inc. to our current
name, The Hartford Financial Services Group, Inc.
As a holding company that is separate and distinct from our
insurance subsidiaries, we have no significant business
operations of our own. Therefore, we rely on the dividends from
our insurance company subsidiaries, which are primarily
domiciled in Connecticut, and our other subsidiaries as the
principal source of cash flow to meet our obligations. These
obligations include payments on our debt securities and the
payment of dividends on our capital stock, including preferred
stock. The Connecticut insurance holding company laws limit the
payment of dividends by Connecticut-domiciled insurers. Under
these laws, the insurance subsidiaries may only make their
dividend payments out of earned surplus. In addition, these laws
require notice to and approval by the state insurance
commissioner for the declaration or payment by those
subsidiaries of any dividend if the dividend and other dividends
or distributions made within the preceding twelve months exceeds
the greater of:
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10% of the insurers policyholder surplus as of
December 31 of the preceding year, and |
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net income, or net gain from operations if the subsidiary is a
life insurance company, for the previous calendar year, |
in each case determined under statutory insurance accounting
principles.
The insurance holding company laws of the other jurisdictions in
which some of our insurance subsidiaries are incorporated
generally contain similar, and in some instances more
restrictive, limitations on the payment of dividends. As of
December 31, 2002, our insurance subsidiaries are permitted
to pay us up to a maximum of approximately $1.8 billion in
dividends in 2003 without prior regulatory approval.
Our rights to participate in any distribution of assets of any
of our subsidiaries (for example, upon their liquidation or
reorganization) and the ability of holders of the securities to
benefit indirectly from a distribution, are subject to the prior
claims of creditors of the applicable subsidiary, except to the
extent that we may be a creditor of that subsidiary. Claims on
these subsidiaries by persons other than us include, as of
December 31, 2002, claims by policyholders for benefits
payable amounting to $49.7 billion, claims by separate
account holders of $107.1 billion, and other liabilities
including claims of trade creditors, claims from guaranty
associations and claims from holders of debt obligations
amounting to $14.5 billion.
Our principal executive offices are located at Hartford Plaza,
Hartford, Connecticut 06115, and our telephone number is
(860) 547-5000.
THE HARTFORD CAPITAL TRUSTS
We created each trust as a Delaware statutory trust pursuant to
a trust agreement. We will enter into an amended and restated
trust agreement for each trust, which will state the terms and
conditions for the trust to issue and sell its preferred
securities and common securities. We will amend and restate each
trust agreement in its entirety substantially in the form filed
as an exhibit to the Registration Statement which includes this
prospectus. Each trust agreement will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended,
which we refer to in this prospectus as the Trust
Indenture Act.
1
Each trust exists for the exclusive purposes of:
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issuing and selling to the public preferred securities,
representing undivided beneficial interests in the assets of the
trust, |
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issuing and selling to us common securities, representing
undivided beneficial interests in the assets of the trust, |
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using the proceeds from the sale of the preferred securities and
common securities to acquire a corresponding series of junior
subordinated deferrable interest debentures, which we refer to
in this prospectus as the corresponding junior
subordinated debentures, |
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distributing the cash payments it receives from the
corresponding junior subordinated debentures it owns to you and
the other holders of preferred securities and us, as the holder
of common securities, and |
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engaging in the other activities that are necessary, convenient
or incidental to these purposes. |
Accordingly, the corresponding junior subordinated debentures
will be the sole assets of the trust, and payments under the
corresponding junior subordinated debentures and the related
expense agreement will be the sole revenue of the trust.
We will own all of the common securities of each trust. The
common securities of a trust will rank equally with and payments
will be made pro rata with the preferred securities of the
trust, except that if an event of default under a trust
agreement then exists, our rights as holder of the common
securities to payment of distributions and payments upon
liquidation or redemption will be subordinated to your rights as
a holder of the preferred securities of the trust. See
Description of Preferred Securities
Subordination of Common Securities.
Unless we state otherwise in a prospectus supplement, each trust
has a term of approximately 45 years. A trust may also
terminate earlier. The trustees of each trust will conduct its
business and affairs. As holder of the common securities we will
initially appoint the trustees. Initially, the trustees will be:
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Wilmington Trust Company, which will act as property trustee and
as Delaware trustee, and |
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Two of our employees or officers or those of our affiliates, who
will act as administrative trustees. |
Wilmington Trust Company, as property trustee, will act as sole
indenture trustee under each trust agreement for purposes of
compliance with the provisions of the Trust Indenture Act.
Wilmington Trust Company will also act as trustee under the
guarantee and the junior subordinated indenture pursuant to
which we will issue the junior subordinated debentures. See
Description of Junior Subordinated Debentures and
Description of Guarantee.
The holder of the common securities of a trust, or the holders
of a majority in liquidation preference of the preferred
securities if an event of default under the trust agreement for
the trust has occurred and is continuing, will be entitled to
appoint, remove or replace the property trustee and/or the
Delaware trustee of the trust. You will not have the right to
vote to appoint, remove or replace the administrative trustees.
Only we, as the holder of the common securities, will have these
voting rights. The duties and obligations of the trustees are
governed by the applicable trust agreement. We will pay all fees
and expenses related to the trusts and the offering of the
preferred securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of the trusts, except
for payments made on the preferred securities or the common
securities, subject to the guarantee.
The principal executive office of each trust is Hartford Plaza,
Hartford, Connecticut 06115, Attention: Secretary, and its
telephone number is (860) 547-5000.
2
USE OF PROCEEDS
Unless we state otherwise in a prospectus supplement, we intend
to use the proceeds from the sale of the securities offered by
this prospectus, including the corresponding junior subordinated
debentures issued to the trusts in connection with their
investment of all the proceeds from the sale of preferred
securities, for general corporate purposes, including working
capital, capital expenditures, investments in loans to
subsidiaries, acquisitions and refinancing of debt, including
outstanding commercial paper and other short-term indebtedness.
We will include a more detailed description of the use of
proceeds of any specific offering of securities in the
prospectus supplement relating to the offering.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of consolidated
earnings to fixed charges for the years and the periods
indicated:
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Year Ended December 31, | |
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2002 | |
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Ratio of Consolidated Earnings to Total Fixed Charges
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1.7 |
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1.2 |
(1) |
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2.0 |
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1.8 |
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1.8 |
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Ratio of Consolidated Earnings to Total Fixed Charges and
Preference Dividends(2)
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1.7 |
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1.2 |
(1) |
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2.0 |
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1.8 |
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1.8 |
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(1) |
For 2001, the calculation of the ratio of consolidated earnings
to total fixed charges reflects losses of $678 million
relating to the terrorist attack on September 11, 2001. |
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We had no dividends on preferred stock for the years 1998 to
2002. |
For purposes of computing the ratio of consolidated earnings to
fixed charges, earnings consists of income from
operations before federal income taxes and fixed charges.
Fixed charges consists of interest expense
(including interest credited to contractholders), capitalized
interest, amortization of debt expense and an imputed interest
component for rental expense.
DESCRIPTION OF THE DEBT SECURITIES
We may offer unsecured senior debt securities or subordinated
debt securities. We refer to the senior debt securities and the
subordinated debt securities together in this prospectus as the
debt securities. The senior debt securities will
rank equally with all of our other unsecured, unsubordinated
obligations. The subordinated debt securities will be
subordinate and junior in right of payment to all of our senior
debt.
We will issue the senior debt securities in one or more series
under an indenture, which we refer to as the senior
indenture, dated as of October 20, 1995, between us
and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as
trustee. We will issue subordinated debt securities in one or
more series under an indenture, which we refer to as the
subordinated indenture, between us and the trustee
to be named in the prospectus supplement relating to the
offering of subordinated debt securities.
The following description of the terms of the indentures is a
summary. It summarizes only those portions of the indentures
which we believe will be most important to your decision to
invest in our debt securities. You should keep in mind, however,
that it is the indentures, and not this summary, which define
your rights as a debtholder. There may be other provisions in
the indentures which are also important to you. You should read
the indentures for a full description of the terms of the debt.
The senior indenture and the subordinated indenture are filed as
exhibits to the Registration Statement that includes this
prospectus. See Where You Can Find More Information
for information on how to obtain copies of the senior indenture
and the subordinated indenture.
3
The Debt Securities are Unsecured Obligations
Our debt securities will be unsecured obligations. Our senior
debt securities will be unsecured and will rank equally with all
of our other unsecured and unsubordinated obligations. As a
non-operating holding company most of our operating assets are
owned by our subsidiaries. We rely primarily on dividends from
these subsidiaries to meet our obligations for payment of
principal and interest on our outstanding debt obligations and
corporate expenses. Accordingly, the debt securities will be
effectively subordinated to all existing and future liabilities
of our subsidiaries, and you should rely only on our assets for
payments on the debt securities. The payment of dividends by our
insurance subsidiaries is limited under the insurance holding
company laws in the jurisdictions where those subsidiaries are
domiciled. See The Hartford Financial Services Group,
Inc.
Unless we state otherwise in the applicable prospectus
supplement, the indentures do not limit us from incurring or
issuing other secured or unsecured debt under either of the
indentures or any other indenture that we may have entered into
or enter into in the future. See Subordination
under the Subordinated Indenture and the prospectus
supplement relating to any offering of subordinated debt
securities.
Terms of the Debt Securities
We may issue the debt securities in one or more series through
an indenture that supplements the senior indenture or the
subordinated indenture or through a resolution of our board of
directors or an authorized committee of our board of directors.
You should refer to the applicable prospectus supplement for the
specific terms of the debt securities. These terms may include
the following:
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title of the debt securities, |
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any limit upon the aggregate principal amount of the series, |
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maturity date(s) or the method of determining the maturity
date(s), |
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interest rate(s) or the method of determining the interest
rate(s), |
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dates on which interest will be payable and circumstances, if
any, in which interest may be deferred, |
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dates from which interest will accrue and the method of
determining those dates, |
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place or places where we may pay principal, premium, if any, and
interest and where you may present the debt securities for
registration or transfer or exchange, |
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place or places where notices and demands relating to the debt
securities and the indentures may be made, |
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redemption or early payment provisions, |
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sinking fund or similar provisions, |
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authorized denominations if other than denominations of $1,000, |
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currency, currencies, or currency units, if other than in U.S.
dollars, in which the principal of, premium, if any, and
interest on the debt securities is payable, or in which the debt
securities are denominated, |
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any additions, modifications or deletions, in the events of
default or covenants of The Hartford Financial Services Group,
Inc. specified in the indenture relating to the debt securities, |
4
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if other than the principal amount of the debt securities, the
portion of the principal amount of the debt securities that is
payable upon declaration of acceleration of maturity, |
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any additions or changes to the indenture necessary to permit or
facilitate issuing the series in bearer form, registrable or not
registrable as to principal, and with or without interest
coupons, |
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any index or indices used to determine the amount of payments of
principal of and premium, if any, on the debt securities and the
method of determining these amounts, |
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whether a temporary global security will be issued and the terms
upon which these temporary debt securities may be exchanged for
definitive debt securities, |
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whether the debt securities will be issued in whole or in part
in the form of one or more global securities, |
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identity of the depositary for global securities, |
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appointment of any paying agent(s), |
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the terms and conditions of any obligation or right we would
have or any option you would have to convert or exchange the
debt securities into other securities or cash, |
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in the case of the subordinated indenture, any provisions
regarding subordination, and |
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additional terms not inconsistent with the provisions of the
indentures. |
Debt securities may also be issued under the indentures upon the
exercise of warrants or delivery upon settlement of stock
purchase contracts. See Description of Warrants and
Description of Stock Purchase Contracts.
Special Payment Terms of the Debt Securities
We may issue one or more series of debt securities at a
substantial discount below their stated principal amount. These
may bear no interest or interest at a rate which at the time of
issuance is below market rates. We will describe United States
federal tax consequences and special considerations relating to
any series in the applicable prospectus supplement.
The purchase price of any of the debt securities may be payable
in one or more foreign currencies or currency units. The debt
securities may be denominated in one or more foreign currencies
or currency units, or the principal of, premium, if any, or
interest on any debt securities may be payable in one or more
foreign currencies or currency units. We will describe the
restrictions, elections, United States federal income tax
considerations, specific terms and other information relating to
the debt securities and any foreign currencies or foreign
currency units in the applicable prospectus supplement.
If we use any index to determine the amount of payments of
principal of, premium, if any, or interest on any series of debt
securities, we will also describe in the applicable prospectus
supplement the special United States federal income tax,
accounting and other considerations applicable to the debt
securities.
Denominations, Registration and Transfer
We expect to issue most debt securities in fully registered form
without coupons and in denominations of $1,000 and any integral
multiple of $1,000. Except as we may describe in the applicable
prospectus supplement, debt securities of any series will be
exchangeable for other debt securities of the same issue and
series, in any authorized denominations, of a like aggregate
principal amount and bearing the same interest rate.
You may present debt securities for exchange as described above,
or for registration of transfer, at the office of the securities
registrar or at the office of any transfer agent we designate
for that purpose.
5
You will not incur a service charge but you must pay any taxes
and other governmental charges as described in the indentures.
We will appoint the trustees as securities registrar under the
indentures. We may at any time rescind the designation of any
transfer agent that we initially designate or approve a change
in the location through which the transfer agent acts. We will
specify the transfer agent in the applicable prospectus
supplement. We may at any time designate additional transfer
agents.
Global Debt Securities
We may issue all or any part of a series of debt securities in
the form of one or more global securities. We will appoint the
depository holding the global debt securities. Unless we
otherwise state in the applicable prospectus supplement, the
depositary will be The Depository Trust Company, or DTC. We will
issue global securities in registered form and in either
temporary or definitive form. Unless it is exchanged for
individual debt securities, a global security may not be
transferred except:
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by the depositary to its nominee, |
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by a nominee of the depositary to the depositary or another
nominee, or |
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by the depositary or any nominee to a successor of the
depositary, or a nominee of the successor. |
We will describe the specific terms of the depositary
arrangement in the applicable prospectus supplement. We expect
that the following provisions will generally apply to these
depositary arrangements.
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Beneficial Interests in a Global Security |
If we issue a global security, the depositary for the global
security or its nominee will credit on its book-entry
registration and transfer system the principal amounts of the
individual debt securities represented by the global security to
the accounts of persons that have accounts with it. We refer to
those persons as participants in this prospectus.
The accounts will be designated by the dealers, underwriters or
agents for the debt securities, or by us if the debt securities
are offered and sold directly by us. Ownership of beneficial
interests in a global security will be limited to participants
or persons who may hold interests through participants.
Ownership and transfers of beneficial interests in the global
security will be shown on, and transactions can be effected only
through, records maintained by the applicable depositary or its
nominee, for interests of participants, and the records of
participants, for interests of persons who hold through
participants. The laws of some states require that you take
physical delivery of securities in definitive form. These limits
and laws may impair your ability to transfer beneficial
interests in a global security.
So long as the depositary or its nominee is the registered owner
of a global security, the depositary or nominee will be
considered the sole owner or holder of the debt securities
represented by the global security for all purposes under the
indenture. Except as provided below, you:
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will not be entitled to have any of the individual debt
securities represented by the global security registered in your
name, |
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will not receive or be entitled to receive physical delivery of
any debt securities in definitive form, and |
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will not be considered the owner or holder of the debt
securities under the indenture. |
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Payments of Principal, Premium and Interest |
We will make principal, premium, if any, and interest payments
on global securities to the depositary that is the registered
holder of the global security or its nominee. The depositary for
the global securities will be solely responsible and liable for
all payments made on account of your beneficial ownership
interests in the global security and for maintaining,
supervising and reviewing any records relating to your
beneficial ownership interests.
6
We expect that the depositary or its nominee, upon receipt of
any principal, premium, if any, or interest payment immediately
will credit participants accounts with amounts in
proportion to their respective beneficial interests in the
principal amount of the global security as shown on the records
of the depositary or its nominee. We also expect that payments
by participants to you, as an owner of a beneficial interest in
the global security held through those participants, will be
governed by standing instructions and customary practices, as is
now the case with securities held for the accounts of customers
in bearer form or registered in street name. These
payments will be the responsibility of those participants.
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Issuance of Individual Debt Securities |
Unless we state otherwise in the applicable prospectus
supplement, if a depositary for a series of debt securities is
at any time unwilling, unable or ineligible to continue as
depositary, we will issue individual debt securities in exchange
for the global security. In addition, we may at any time and in
our sole discretion, subject to any limitations described in the
prospectus supplement relating to the debt securities, determine
not to have any debt securities represented by one or more
global securities. If that occurs, we will issue individual debt
securities in exchange for the global security.
Further, we may specify that you may, on terms acceptable to us,
the trustee and the depositary, receive individual debt
securities in exchange for your beneficial interest in a global
security, subject to any limitations described in the prospectus
supplement relating to the debt securities. In that instance,
you will be entitled to physical delivery of individual debt
securities equal in principal amount to that beneficial interest
and to have the debt securities registered in your name. Unless
we otherwise specify, we will issue those individual debt
securities in denominations of $1,000 and integral multiples of
$1,000.
Payment and Paying Agents
Unless we state otherwise in an applicable prospectus
supplement, we will pay principal of, premium, if any, and
interest on your debt securities at the office of the trustee
for your debt securities in the City of New York or at the
office of any paying agent that we may designate.
Unless we state otherwise in an applicable prospectus
supplement, we will pay any interest on debt securities to the
registered owner of the debt security at the close of business
on the record date for the interest, except in the case of
defaulted interest. We may at any time designate additional
paying agents or rescind the designation of any paying agent. We
must maintain a paying agent in each place of payment for the
debt securities.
Any moneys deposited with the trustee or any paying agent, or
then held by us in trust, for the payment of the principal of,
premium, if any, and interest on any debt security that remain
unclaimed for two years after the principal, premium or interest
has become due and payable will, at our request, be repaid to
us. After repayment to us, you are entitled to seek payment only
from us as a general unsecured creditor.
Redemption
Unless we state otherwise in an applicable prospectus
supplement, debt securities will not be subject to any sinking
fund.
Unless we state otherwise in an applicable prospectus
supplement, we may, at our option, redeem any series of debt
securities on any interest payment date in whole or in part. We
may redeem debt securities in denominations larger than $1,000
but only in integral multiples of $1,000.
7
Except as we may otherwise specify in the applicable prospectus
supplement, the redemption price for any debt security which we
redeem will equal any accrued and unpaid interest to the
redemption date, plus the greater of:
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the principal amount, and |
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an amount equal to: |
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for debt securities bearing interest at a fixed rate, the
discounted remaining fixed amount payments, calculated as
described below, or |
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for debt securities bearing interest determined by reference to
a floating rate, the discounted swap equivalent payments,
calculated as described below. |
The discounted remaining fixed amount payments will equal the
sum of the current values of the amounts of interest and
principal that would have been payable by us on each interest
payment date after the redemption date and at stated maturity of
the final payment of principal. This calculation will take into
account any required sinking fund payments, but will otherwise
assume that we have not redeemed the debt security prior to the
stated maturity.
The current value of any amount is the present value of that
amount on the redemption date after discounting that amount on a
semiannual basis, from the originally scheduled date for
payment. We will use the treasury rate to calculate this present
value.
The treasury rate is a per annum rate, determined on the
redemption date to be the per annum rate equal to the semiannual
bond equivalent yield to maturity for United States Treasury
securities maturing at the stated maturity of the final payment
of principal of the debt securities redeemed. We will determine
this rate by reference to the weekly average yield to maturity
for United States Treasury securities maturing on that stated
maturity, if reported in the most recent Statistical Release
H.15(519) of the Board of Governors of the Federal Reserve. If
no such securities mature at the stated maturity, we will
determine the rate by interpolation between the most recent
weekly average yields to maturity for two series of United
States Treasury securities, (1) one maturing as close as
possible to, but earlier than, the stated maturity and
(2) the other maturing as close as possible to, but later
than, the stated maturity, in each case as published in the most
recent Statistical Release H.15(519) of the Board of Governors
of the Federal Reserve.
The discounted swap equivalent payments will equal the sum of:
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the current value of the amount of principal that would have
been payable by us at the stated maturity of the final payment
of the principal of the debt securities redeemed. This
calculation will take into account any required sinking fund
payments, but will otherwise assume that we had not redeemed the
debt security prior to the stated maturity, and |
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the sum of the current values of the fixed rate payments that
leading interest rate swap dealers would require to be paid by
an assumed fixed rate payer having the same credit standing as
ours against floating rate payments to be made by these leading
dealers equal to the interest payments on the debt securities
being redeemed, taking into account any required sinking fund
payments but otherwise assuming we had not redeemed the debt
securities prior to the stated maturity, under a standard
interest rate swap agreement having a notional principal amount
equal to the principal amount of the debt securities, a
termination date set at the stated maturity of the debt security
and payment dates for both fixed and floating rate payers set at
each interest payment date of the debt securities. The amount of
the fixed rate payments will be based on quotations received by
the trustee, or an agent appointed for that purpose, from four
leading interest rate swap dealers or, if quotations from four
leading interest rate swap dealers are not obtainable, three
leading interest rate swap dealers. |
8
We will mail notice of any redemption of your debt securities at
least 30 days but not more than 60 days before the
redemption date to you at your registered address. Unless we
default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the debt
securities or the portions called for redemption.
Consolidation, Merger and Sale of Assets
We will not consolidate with or merge into any other corporation
or convey, transfer or lease our properties and assets
substantially as an entirety to any person, and no person may
consolidate with or merge into us or convey, transfer or lease
to us its properties and assets substantially as an entirety,
unless:
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if we consolidate with or merge into another corporation or
convey or transfer our properties and assets substantially as an
entirety to any person, the successor corporation is organized
under the laws of the United States of America or any state or
the District of Columbia, and the successor corporation
expressly assumes our obligations relating to the debt
securities, |
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immediately after giving effect to the consolidation, merger,
conveyance or transfer, there exists no event of default, and no
event which, after notice or lapse of time or both, would become
an event of default, and |
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other conditions described in the indenture are met. |
The general provisions of the indenture do not protect you
against transactions, such as a highly leveraged transaction,
that may adversely affect you.
Limitations upon Liens
The indentures provide that neither we nor our restricted
subsidiaries may issue, assume or guarantee any indebtedness for
money borrowed if the indebtedness is secured by a lien upon any
of our or any restricted subsidiaries principal property,
or on any shares of stock of any restricted subsidiary, whether
the principal property or shares of stock are now owned or later
acquired.
The indentures permit us to incur secured debt if we provide
that the debt securities will be secured equally and ratably
with or in priority to the new secured indebtedness. In this
event, we may also provide that any of our other indebtedness,
including indebtedness guaranteed by us or the restricted
subsidiary, will be secured equally with or in priority to the
new secured indebtedness. Further, the restriction on incurring
secured indebtedness will not apply to:
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liens on property or shares of stock of any corporation existing
at the time the corporation becomes a restricted subsidiary, |
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liens on property existing at the time it is acquired, or liens
on property which secure the payment of the purchase price of
the property, or liens on property which secure indebtedness
incurred or guaranteed for the purpose of financing the purchase
price of the property or the construction of that property,
including improvements to existing property, which indebtedness
is incurred or guaranteed within 180 days after the latest
of the acquisition or completion of construction or commencement
of operation of the property, |
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liens securing indebtedness owing by any restricted subsidiary
to us or a wholly owned restricted subsidiary, |
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liens on the property of a corporation existing at the time the
corporation is merged into or consolidated with us or a
restricted subsidiary or at the time of a purchase, lease or
other |
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acquisition of the properties of a corporation or other person
as an entirety by us or a restricted subsidiary, |
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liens on our property or the property of a restricted subsidiary
in favor of the United States of America or any state, agency,
instrumentality or political subdivision of the United States of
America, or in favor of any other country, or any political
subdivision of that country, to secure any indebtedness incurred
or guaranteed for the purpose of financing all or any part of
the purchase price or the cost of construction of the property
subject to those liens within 180 days after the latest of
the acquisition, completion of construction or commencement of
operation of that property, and |
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any extension, renewal or replacement of any lien referred to in
the five preceding clauses. |
Exceptions for Specified
Amount of Indebtedness
We and one or more restricted subsidiaries may, without securing
the debt securities, issue, assume or guarantee secured
indebtedness which would otherwise be subject to the above
restrictions, provided that after doing so the aggregate amount
of this indebtedness does not exceed 10% of consolidated net
tangible assets. In computing the aggregate amount of
indebtedness outstanding for purposes of the previous sentence,
indebtedness issued, assumed or guaranteed pursuant to the above
clauses is not included.
When we use the term consolidated net tangible
assets, we mean the total amount of assets, less
applicable reserves and other properly deductible items, after
deducting:
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all current liabilities, excluding any liabilities which are by
their terms extendible or renewable at the option of the obligor
to a time more than 12 months after the time as of which
the amount is being computed, and |
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all segregated goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent balance sheet
of The Hartford Financial Services Group, Inc. and its
consolidated subsidiaries and prepared in accordance with
generally accepted accounting principles. Our subsidiaries
include any corporation where more than 50% of its voting stock
is owned or controlled by us or by another subsidiary. |
When we use the term principal property, we mean all
land, buildings, machinery and equipment, and leasehold
interests and improvements relating to these items, which would
be reflected on our consolidated balance sheet prepared in
accordance with generally accepted accounting principles,
excluding all tangible property located outside the United
States of America and excluding any tangible property which, in
the opinion of our board of directors set forth in a board
resolution, is not material to us and our consolidated
subsidiaries taken as a whole.
When we use the term restricted subsidiary, we mean
any subsidiary which is incorporated under the laws of any state
of the United States or of the District of Columbia, and which
is a regulated insurance company principally engaged in one or
more of the property, casualty and life insurance businesses.
However, no subsidiary is a restricted subsidiary:
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if the total assets of that subsidiary are less than 10% of our
total assets and the total assets of our consolidated
subsidiaries, including that subsidiary, in each case as set
forth on the most recent fiscal year-end balance sheets of the
subsidiary and us and our consolidated subsidiaries,
respectively, and computed in accordance with generally accepted
accounting principles, or |
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if in the judgment of our board of directors, as evidenced by a
board resolution, the subsidiary is not material to the
financial condition of us and our subsidiaries taken as a whole. |
10
As of the date of this prospectus, the following subsidiaries
meet the definition of restricted subsidiaries: Hartford Fire,
Hartford Life Insurance Company, Hartford Life and Accident
Insurance Company and Hartford Life and Annuity Insurance
Company.
Modification and Waiver
We and the trustee may modify and amend each indenture with the
consent of the holders of a majority in aggregate principal
amount of the series of debt securities affected. However, no
modification or amendment may, without the consent of the holder
of each outstanding debt security affected:
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change the stated maturity of the principal of, or any
installment of interest on, any outstanding debt security, |
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reduce the principal amount of, or the rate of interest on or
any premium payable upon the redemption of, or the amount of
principal of an original issue discount security that would be
due and payable upon a declaration of acceleration of the
maturity of, any outstanding debt security, |
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change the place of payment, or the coin or currency in which
any outstanding debt security or the interest is payable, |
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impair your right to institute suit for the enforcement of any
payment on or relating to any outstanding debt security after
the stated maturity, or |
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change the amendment provisions of the indenture requiring the
consent of the affected holders for waiver of compliance with
the indenture or waiver of past defaults. |
Waiver
The holders of a majority in principal amount of the outstanding
debt securities of a series may, on behalf of the holders of all
debt securities of that series, waive compliance by us with
certain restrictive covenants of the indenture which relate to
that series.
The holders of not less than a majority in principal amount of
the outstanding debt securities of a series may, on behalf of
the holders of that series, generally waive any past default
under the indenture relating to that series of debt securities.
However, a default in the payment of the principal of (or
premium, if any), or any interest on, any debt security of that
series or relating to a provision which under the indenture
cannot be modified or amended without the consent of the holder
of each outstanding debt security of that series affected cannot
be so waived.
Events of Default
Under the terms of each indenture, each of the following
constitutes an event of default for a series of debt securities:
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default for 30 days in the payment of any interest when due, |
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default in the payment of principal, or premium, if any, at
maturity, |
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default in the performance of any other covenant in the
indenture for 60 days after written notice, |
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our bankruptcy, insolvency or reorganization, |
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acceleration or default in the payment of indebtedness for
borrowed money in excess of $25,000,000, which has not been
rescinded or annulled within 30 days after notice, or |
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any other event of default described in the applicable board
resolution or supplemental indenture under which the series of
debt securities is issued. |
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We are required to furnish the trustee annually with a statement
as to the fulfillment of our obligations under the indenture.
Each indenture provides that the trustee may withhold notice to
you of any default, except in respect of the payment of
principal or interest on the debt securities, if it considers it
in the interests of the holders of the debt securities to do so.
Effect of an Event of
Default
If an event of default exists, the trustee or the holders of not
less than 25% in principal amount of a series of debt securities
may declare the principal amount, or, if the debt securities are
original issue discount securities, the portion of the principal
amount as may be specified in the terms of that series, of the
debt securities of that series to be due and payable
immediately, by a notice in writing to us, and to the trustee if
given by holders. Upon that declaration the principal will
become immediately due and payable. However, at any time after a
declaration of acceleration has been made, but before a judgment
or decree for payment of the money due has been obtained, the
holders of a majority in principal amount of outstanding debt
securities may, subject to conditions specified in the
indenture, rescind and annul that declaration.
Subject to the provisions of the indentures relating to the
duties of the trustee, if an event of default then exists, the
trustee will be under no obligation to exercise any of its
rights or powers under the indenture at your request, order or
direction, unless you have offered to the trustee reasonable
security or indemnity. Subject to the provisions for the
security or indemnification of the trustee, the holders of a
majority in principal amount of a series of outstanding debt
securities have the right to direct the time, method and place
of conducting and proceeding for and remedy available to the
trustee, or exercising any trust or power conferred on the
trustee in connection with the debt securities of that series.
Legal Proceedings and
Enforcement of Right to Payment
You will not have any right to institute any proceeding in
connection with the indenture or for any remedy under the
indenture, unless you have previously given to the trustee
written notice of a continuing event of default with respect to
debt securities of that series. In addition, the holders of at
least 25% in principal amount of the outstanding debt securities
must have made written request, and offered reasonable
indemnity, to the trustee to institute that proceeding as
trustee, and, within 60 days following the receipt of that
notice, the trustee must not have received from the holders of a
majority in principal amount of the outstanding debt securities
of that series a direction inconsistent with that request, and
must have failed to institute the proceeding. However, you will
have an absolute right to receive payment of the principal of,
premium, if any, and interest on that debt security on or after
the due dates expressed in the debt security and to institute a
suit for the enforcement of that payment.
Satisfaction and Discharge
Each indenture provides that when, among other things, all debt
securities not previously delivered to the trustee for
cancellation:
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have become due and payable, or |
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will become due and payable at their stated maturity within one
year, |
and we deposit or cause to be deposited with the trustee, in
trust, an amount in the currency or currencies in which the debt
securities are payable sufficient to pay and discharge the
entire indebtedness on the debt securities not previously
delivered to the trustee for cancellation, for the principal,
and premium, if any, and interest to the date of the deposit or
to the stated maturity, as the case may be, then the indenture
will cease to be of further effect, and we will be deemed to
have satisfied and discharged the indenture. However, we will
continue to be obligated to pay all other sums due under the
indenture and to provide the officers certificates and
opinions of counsel described in the indenture.
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Defeasance
Unless we state otherwise in the applicable prospectus
supplement, each indenture provides that we will be deemed to
have paid and discharged the entire indebtedness on all the debt
securities of a series at any time prior to their stated
maturity or redemption when:
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we have irrevocably deposited or caused to be deposited with the
trustee, in trust, either: |
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sufficient funds to pay and discharge the entire indebtedness on
the debt securities for the principal, premium, if any, and
interest to the stated maturity or any redemption date, or |
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the amount of U.S. government securities as will, in the
written opinion of independent public accountants delivered to
the trustee, together with predetermined and certain income to
accrue, without consideration of any reinvestment, be sufficient
to pay and discharge when due the entire indebtedness on the
debt securities for principal, premium, if any, and interest to
the stated maturity or any redemption date, |
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we have paid or caused to be paid all other sums payable on the
debt securities, |
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we have delivered to the trustee an officers certificate
and an opinion of counsel to the effect that: |
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we have received from, or there has been published by, the
Internal Revenue Service a ruling, or |
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since the date of execution of the applicable indenture, there
has been a change in the applicable federal income tax law, |
in either case to the effect that the deposit and related
defeasance would not cause you to recognize income, gain or loss
for federal income tax purposes,
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we have delivered to the trustee an opinion of counsel that
neither we nor the trust held by the trustee will immediately
after the deposit just described be an investment
company or a company controlled by an
investment company within the meaning of the
Investment Company Act of 1940, and |
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we have delivered to the trustee the other officers
certificates and opinions of counsel as may be required by the
indenture, each stating that all conditions precedent relating
to the satisfaction and discharge of the entire indebtedness on
all debt securities have been complied with. |
The subordinated indenture will not be discharged as described
above if we have defaulted in the payment of principal of,
premium, if any, or interest on any senior debt and that default
is continuing or another event of default on the senior debt
then exists and has resulted in the senior debt becoming or
being declared due and payable prior to the date it would have
become due and payable.
Conversion or Exchange
We may convert or exchange the debt securities into common stock
or other securities. If so, we will describe the specific terms
on which the debt securities may be converted or exchanged in
the applicable prospectus supplement. The conversion or exchange
may be mandatory, at your option, or at our option. The
applicable prospectus supplement will describe the manner in
which the shares of common stock or other securities you would
receive would be converted or exchanged.
Subordination under the Subordinated Indenture
In the subordinated indenture, we have agreed that any
subordinated debt securities are subordinate and junior in right
of payment to all senior debt to the extent provided in the
subordinated indenture.
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In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceeding relative to us, the
holders of senior debt will first be entitled to receive payment
in full of principal of, premium, if any, and interest on the
senior debt before the holders of subordinated debt securities
will be entitled to receive or retain any payment of the
principal of, premium, if any, or interest on the subordinated
debt securities.
If the maturity of any subordinated debt securities is
accelerated, the holders of all senior debt outstanding at the
time of the acceleration will first be entitled to receive
payment in full of all amounts due, including any amounts due
upon acceleration, before you will be entitled to receive any
payment of the principal of, premium, if any, or interest on the
subordinated debt securities.
We will not make any payments of principal of, premium, if any,
or interest on the subordinated debt securities if:
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a default in any payment on senior debt then exists, |
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an event of default on any senior debt resulting in the
acceleration of its maturity then exists, or |
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any judicial proceeding is pending in connection with default. |
When we use the term debt we mean, with respect to
any person, whether recourse is to all or a portion of the
assets of that person and whether or not contingent:
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every obligation of that person for money borrowed, |
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every obligation of that person evidenced by bonds, debentures,
notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets
or businesses, |
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every reimbursement obligation of that person with respect to
letters of credit, bankers acceptances or similar
facilities issued for the account of that person, |
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every obligation of that person issued or assumed as the
deferred purchase price of property or services, but excluding
trade accounts payable or accrued liabilities arising in the
ordinary course of business, |
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every capital lease obligation of that person, and |
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every obligation of the type referred to in the prior five
clauses of another person and all dividends of another person
the payment of which that person has guaranteed or is
responsible or liable for, directly or indirectly, including as
obligor. |
When we use the term senior debt we mean the
principal of, premium, if any, and interest on debt, whether
incurred on, prior to, or after the date of the subordinated
indenture, unless the instrument creating or evidencing that
debt or pursuant to which that debt is outstanding states that
those obligations are not superior in right of payment to the
subordinated debt securities or to other debt which ranks
equally with, or junior to, the subordinated debt securities.
Interest on this senior debt includes interest accruing on or
after the filing of any petition in bankruptcy or for
reorganization relating to The Hartford Financial Services
Group, Inc., whether or not the claim for post-petition interest
is allowed in that proceeding.
However, senior debt will not include:
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any debt of The Hartford Financial Services Group, Inc. which
when incurred and without regard to any election under Section
1111(b) of the Bankruptcy Code, was without recourse to The
Hartford Financial Services Group, Inc., |
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any debt of The Hartford Financial Services Group, Inc. to any
of its subsidiaries, |
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debt to any employee of The Hartford Financial Services Group,
Inc., |
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any liability for taxes, and |
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indebtedness or monetary obligations to trade creditors or
assumed by The Hartford Financial Services Group, Inc. or any of
its subsidiaries in the ordinary course of business in
connection with the obtaining of materials or services. |
We are a non-operating holding company, and most of our assets
are owned by our subsidiaries. Accordingly, the debt securities
will be effectively subordinated to all our existing and future
liabilities, including liabilities under contracts of insurance
and annuities written by our insurance subsidiaries. You should
rely only on our assets for payments of interest and principal
and premium, if any. The payment of dividends by our insurance
company subsidiaries is limited under the insurance holding
company laws in the jurisdictions where those subsidiaries are
domiciled. See The Hartford Financial Services Group,
Inc.
The subordinated indenture does not limit the amount of
additional senior debt that we may incur. We expect from time to
time to incur additional senior debt.
The subordinated indenture provides that we may change the
subordination provisions relating to any particular issue of
subordinated debt securities prior to issuance. We will describe
any change in the prospectus supplement relating to the
subordinated debt securities.
Governing Law
The indentures and the debt securities will be governed by and
construed in accordance with the laws of the State of New York.
Concerning the Trustees
Each of the trustees acts as depositary for funds of, makes
loans to, and performs other services for, us and our
subsidiaries in the normal course of business.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
We will issue the junior subordinated debentures in one or more
series under a junior subordinated indenture, as supplemented
from time to time, between us and Wilmington Trust Company, as
debenture trustee.
The following description of the terms of the junior
subordinated debentures is a summary. It summarizes only those
terms of the junior subordinated debentures which we believe
will be most important to your decision to invest in our junior
subordinated debentures. You should keep in mind, however, that
it is the junior subordinated indenture, and not this summary,
which defines your rights as a holder of our junior subordinated
debentures. There may be other provisions in the junior
subordinated indenture which are also important to you. You
should read the junior subordinated indenture for a full
description of the terms of the junior subordinated debentures.
The junior subordinated indenture is filed as an exhibit to the
Registration Statement that includes this prospectus. See
Where You Can Find More Information for information
on how to obtain a copy of the junior subordinated indenture.
Ranking of the Junior Subordinated Debentures
Each series of junior subordinated debentures will rank equally
with all other series of junior subordinated debentures, and
will be unsecured and subordinate and junior in right of
payment, as described in the junior subordinated indenture, to
all of our senior debt. See
Subordination.
As a non-operating holding company, most of our operating assets
and the assets of our consolidated subsidiaries are owned by our
subsidiaries. We rely primarily on dividends from our
subsidiaries to meet our obligations for payment of principal
and interest on our outstanding debt obligations and corporate
expenses. Accordingly, the junior subordinated debentures will
be effectively
15
subordinated to all existing and future liabilities of our
subsidiaries. You should rely only on our assets for payments on
the junior subordinated debentures. The payment of dividends by
our insurance company subsidiaries is limited under the
insurance holding company laws in which those subsidiaries are
domiciled. See The Hartford Financial Services Group,
Inc.
Unless we state otherwise in the applicable prospectus
supplement, the junior subordinated indenture does not limit us
from incurring or issuing other secured or unsecured debt under
the junior subordinated indenture or any other indenture that we
may have entered into or enter into in the future. See
Subordination and the prospectus
supplement relating to any offering of securities.
Terms of the Junior Subordinated Debentures
We may issue the junior subordinated debentures in one or more
series through an indenture that supplements the junior
subordinated indenture or through a resolution of our board of
directors or an authorized committee of our board of directors.
You should refer to the applicable prospectus supplement for the
specific terms of the junior subordinated debentures. These may
include:
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the title and any limit upon the aggregate principal amount, |
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the date(s) on which the principal is payable or the method of
determining those date(s), |
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the interest rate(s) or the method of determining these interest
rate(s), |
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the date(s) on which interest will be payable or the method of
determining these date(s), |
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the circumstances in which interest may be deferred, if any, |
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the regular record date or the method of determining this date, |
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the place or places where we may pay principal, premium, if any,
and interest, |
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conversion or exchange provisions, if any, |
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the redemption or early payment provisions, |
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the authorized denominations, |
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the currency, currencies or currency units in which we may pay
the purchase price for, the principal of, premium, if any, and
interest on the junior subordinated debentures, |
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additions to or changes in the events of default or any changes
in any of our covenants specified in the junior subordinated
indenture, |
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any index or indices used to determine the amount of payments of
principal and premium, if any, or the method of determining
these amounts, |
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whether a temporary global security will be issued and the terms
upon which you may exchange a temporary global security for
definitive junior subordinated debt securities, |
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whether we will issue the junior subordinated debt securities in
whole or in part in the form of one or more global securities, |
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the terms and conditions of any obligation or right we would
have to convert or exchange the junior subordinated debentures
into preferred securities or other securities, and |
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additional terms not inconsistent with the provisions of the
junior subordinated indenture. |
Special Payment Terms of the Junior Subordinated
Debentures
We may issue junior subordinated debentures at a substantial
discount below their stated principal amount, bearing no
interest or interest at a rate which at the time of issuance is
below market rates. We
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will describe United States Federal income tax consequences and
special considerations relating to any junior subordinated
debentures in the applicable prospectus supplement.
The purchase price of any of the junior subordinated debentures
may be payable in one or more foreign currencies or currency
units. The junior subordinated debentures may be denominated in
one or more foreign currencies or currency units, or the
principal of, premium, if any, or interest on any junior
subordinated debentures may be payable in one or more foreign
currencies or currency units. We will describe the restrictions,
elections, federal income tax considerations, specific terms and
other information relating to the junior subordinated debentures
and the foreign currency units in the applicable prospectus
supplement.
If we use any index to determine the amount of payments of
principal of, premium, if any, or interest on any series of
junior subordinated debentures, we will also describe special
federal income tax, accounting and other considerations relating
to the junior subordinated debentures in the applicable
prospectus supplement.
Denominations, Registration and Transfer
Unless we state otherwise in the applicable prospectus
supplement, we will issue the junior subordinated debentures
only in registered form without coupons in denominations of $25
and any integral multiple of $25. Junior subordinated debentures
of any series will be exchangeable for other junior subordinated
debentures of the same issue and series, of any authorized
denominations, of a like aggregate principal amount, of the same
original issue date and stated maturity and bearing the same
interest rate.
You may present junior subordinated debentures for exchange as
described above, or for registration of transfer, at the office
of the securities registrar or at the office of any transfer
agent we designate for that purpose. You will not incur a
service charge but you must pay any taxes and other governmental
charges as described in the indenture. We will appoint the
trustees as securities registrars under the indentures. We may
at any time rescind the designation of any transfer agent that
we initially designate or approve a change in the location
through which the transfer agent acts. We must maintain a
transfer agent in each place of payment. We will specify the
transfer agent in the applicable prospectus supplement. We may
at any time designate additional transfer agents.
If we redeem any junior subordinated debentures, neither we nor
the debenture trustee will be required to:
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issue, register the transfer of, or exchange junior subordinated
debentures during a period beginning at the opening of business
15 days before the day of selection for redemption of the
junior subordinated debentures and ending at the close of
business on the day of mailing of the relevant notice of
redemption, or |
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transfer or exchange any junior subordinated debentures selected
for redemption, except for any portion not redeemed of any
junior subordinated debenture that is being redeemed in part. |
Global Junior Subordinated Debentures
We may issue a series of junior subordinated debentures in the
form of one or more global junior subordinated debentures. We
will identify the depositary holding the global junior
subordinated debentures in the applicable prospectus supplement.
We will issue global junior subordinated debentures only in
fully registered form and in either temporary or permanent form.
Unless it is exchanged for an individual junior subordinated
debenture, a global junior subordinated debenture may not be
transferred except:
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by the depositary to its nominee, |
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by a nominee of the depositary to the depositary or another
nominee, or |
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by the depositary or any nominee to a successor depositary, or
any nominee of the successor. |
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We will describe the specific terms of the depositary
arrangement in the applicable prospectus supplement. We expect
that the following provisions will generally apply to these
depositary arrangements.
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Beneficial Interests in a Global Junior Subordinated
Debenture |
If we issue a global junior subordinated debenture, the
depositary for the global junior subordinated debenture or its
nominee will credit on its book-entry registration and transfer
system the principal amounts of the individual junior
subordinated debentures represented by the global junior
subordinated debenture to the accounts of persons that have
accounts with it. We refer to those persons as
participants in this prospectus. The accounts will
be designated by the dealers, underwriters or agents for the
junior subordinated debentures, or by us if the junior
subordinated debentures are offered and sold directly by us.
Ownership of beneficial interests in a global junior
subordinated debenture will be limited to participants or
persons that may hold interests through participants. Ownership
and transfers of beneficial interests in the global junior
subordinated debenture will be shown on, and effected only
through, records maintained by the applicable depositary or its
nominee, for interests of participants, and the records of
participants, for interests of persons who hold through
participants. The laws of some states require that you take
physical delivery of securities in definitive form. These limits
and laws may impair your ability to transfer beneficial
interests in a global junior subordinated debenture.
So long as the depositary or its nominee is the registered owner
of the global junior subordinated debenture, the depositary or
the nominee will be considered the sole owner or holder of the
junior subordinated debentures represented by the global junior
subordinated debenture for all purposes under the junior
subordinated indenture. Except as provided below, you:
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will not be entitled to have any of the individual junior
subordinated debentures represented by the global junior
subordinated debenture registered in your name, |
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will not receive or be entitled to receive physical delivery of
any junior subordinated debentures in definitive form, and |
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will not be considered the owner or holder of the junior
subordinated debenture under the junior subordinated indenture. |
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Payments of Principal, Premium and Interest |
We will make principal, premium and interest payments on global
junior subordinated debentures to the depositary that is the
registered holder of the global junior subordinated debenture or
its nominee. The depositary for the junior subordinated
debentures will be solely responsible and liable for all
payments made on account of your beneficial ownership interests
in the global junior subordinated debenture and for maintaining,
supervising and reviewing any records relating to your
beneficial ownership interests.
We expect that the depositary or its nominee, upon receipt of
principal, premium or interest payments, immediately will credit
participants accounts with amounts in proportion to their
respective beneficial interests in the principal amount of the
global junior subordinated debenture as shown on the records of
the depositary or its nominee. We also expect that payments by
participants to you, as an owner of a beneficial interest in the
global junior subordinated debenture held through those
participants, will be governed by standing instructions and
customary practices, as is now the case with securities held for
the accounts of customers in bearer form or registered in
street name. These payments will be the
responsibility of those participants.
Issuance of Individual
Junior Subordinated Debentures
Unless we state otherwise in the applicable prospectus
supplement, if a depositary for a series of junior subordinated
debentures is at any time unwilling, unable or ineligible to
continue as depositary, we will issue individual junior
subordinated debentures in exchange for the global junior
subordinated debenture. In addition, we may at any time and in
our sole discretion, subject to any limitations described in the
prospectus supplement relating to the junior subordinated
debentures, determine not to have any
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junior subordinated debentures represented by one or more global
junior subordinated debentures. If that occurs, we will issue
individual junior subordinated debentures in exchange for the
global junior subordinated debenture.
Further, we may specify that you may, on terms acceptable to us,
the debenture trustee and the depositary for the global junior
subordinated debenture, receive individual junior subordinated
debentures in exchange for your beneficial interest in a global
junior subordinated debenture, subject to any limitations
described in the prospectus supplement relating to the junior
subordinated debentures. In that instance, you will be entitled
to physical delivery of individual junior subordinated
debentures equal in principal amount to that beneficial interest
and to have the junior subordinated debentures registered in
your name. Unless we otherwise specify, those individual junior
subordinated debentures will be issued in denominations of $25
and integral multiples of $25.
Payment and Paying Agents
Unless we state otherwise in the applicable prospectus
supplement, we will pay principal of, premium, if any, and
interest on your junior subordinated debentures at the office of
the debenture trustee in the City of New York or at the office
of any paying agent that we may designate.
Unless we state otherwise in the applicable prospectus
supplement, we will pay any interest on junior subordinated
debentures to the registered owner of the junior subordinated
debenture at the close of business on the regular record date
for the interest, except in the case of defaulted interest. We
may at any time designate additional paying agents or rescind
the designation of any paying agent. We must maintain a paying
agent in each place of payment for the junior subordinated
debentures.
Any moneys deposited with the debenture trustee or any paying
agent, or then held by us in trust, for the payment of the
principal of, premium, if any, and interest on any junior
subordinated debenture that remain unclaimed for two years after
the principal, premium or interest has become due and payable
will, at our request, be repaid to us. After repayment to us,
you are entitled to seek payment only from us as a general
unsecured creditor.
Redemption
Unless we state otherwise in the applicable prospectus
supplement, junior subordinated debentures will not be subject
to any sinking fund.
We may, at our option, redeem any series of junior subordinated
debentures on any interest payment date in whole or in part. We
may redeem junior subordinated debentures in denominations
larger than $25 but only in integral multiples of $25.
Redemption Price
Except as we may otherwise specify in the applicable prospectus
supplement, the redemption price for any junior subordinated
debenture redeemed will equal any accrued and unpaid interest to
the redemption date, plus the greater of:
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the principal amount, and |
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an amount equal to: |
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for junior subordinated debentures bearing interest at a fixed
rate, the discounted remaining fixed amount payments, calculated
as described below, or |
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for junior subordinated debentures bearing interest determined
by reference to a floating rate, the discounted swap equivalent
payments, calculated as described below. |
The discounted remaining fixed amount payments will equal the
sum of the current values of the amounts of interest and
principal that would have been payable by us on each interest
payment date after the redemption date and at stated maturity of
the final payment of principal. This calculation will take into
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account any required sinking fund payments, but will otherwise
assume that we have not redeemed the junior subordinated
debenture prior to the stated maturity.
The current value of any amount is the present value of that
amount on the redemption date after discounting that amount on a
monthly, quarterly or semiannual basis, whichever corresponds to
the interest payment date periods of the related series of
junior subordinated debentures, from the originally scheduled
date for payment. We will use the treasury rate to calculate
this present value.
The treasury rate is a per annum rate, expressed as a decimal
and, in the case of United States Treasury bills, converted to a
per annum yield, determined on the redemption date to be the per
annum rate equal to the semiannual bond equivalent yield to
maturity, adjusted to reflect monthly or quarterly compounding
in the case of junior subordinated debentures having monthly or
quarterly interest payment dates for United States Treasury
securities maturing at the stated maturity of the final payment
of principal of the junior subordinated debentures redeemed. We
will determine this rate by reference to the weekly average
yield to maturity for United States Treasury securities maturing
on that stated maturity if reported in the most recent
Statistical Release H.15(519) of the Board of Governors of the
Federal Reserve. If no such securities mature at the stated
maturity, we will determine the rate by interpolation between
the most recent weekly average yields to maturity for two series
of United States Treasury securities, (1) one maturing as
close as possible to, but earlier than, the stated maturity and
(2) the other maturing as close as possible to, but later
than, the stated maturity, in each case as published in the most
recent Statistical Release H.15(519) of the Board of Governors
of the Federal Reserve.
The discounted swap equivalent payments will equal the sum of:
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the current value of the amount of principal that would have
been payable by us pursuant to the terms of the junior
subordinated debenture at the stated maturity of the final
payment of the principal of the junior subordinated debentures.
This calculation will take into account any required sinking
fund payments but will otherwise assume that we had not redeemed
the junior subordinated debenture prior to the stated maturity,
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the sum of the current values of the fixed rate payments that
leading interest rate swap dealers would require to be paid by
an assumed fixed rate payer having the same credit standing as
ours against floating rate payments to be made by these leading
dealers equal to the interest payments on the junior
subordinated debentures being redeemed, taking into account any
required sinking fund payment, but otherwise assuming we had not
redeemed the junior subordinated debenture prior to the stated
maturity, under a standard interest rate swap agreement having a
notional principal amount equal to the principal amount of the
junior subordinated debentures, a termination date set at the
stated maturity of the junior subordinated debentures and
payment dates for both fixed and floating rate payers set at
each interest payment date of the junior subordinated
debentures. The amount of the fixed rate payments will be based
on quotations received by the trustee, or an agent appointed for
that purpose, from four leading interest rate swap dealers or,
if quotations from four leading interest rate swap dealers are
not obtainable, three leading interest rate swap dealers. |
Special Event
Redemption
Unless we state otherwise in the applicable prospectus
supplement, if a special event relating to a series of junior
subordinated debentures then exists, we may, at our option,
redeem the series of junior subordinated debentures in whole,
but not in part, on any interest payment date within 90 days of
the special event occurring. The redemption price will equal the
principal amount of the junior subordinated debentures then
outstanding plus accrued and unpaid interest to the date fixed
for redemption.
A special event means a tax event or an
investment company event. A tax event
occurs when a trust receives an opinion of counsel experienced
in these matters to the effect that, as a result of any
amendment to, or change, including any announced prospective
change in, the laws or regulations of the United States or any
political subdivision or taxing authority affecting taxation, or
as a result of any
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official administrative pronouncement or judicial decision
interpreting or applying those laws or regulations, which
amendment or change is effective or pronouncement or decision is
announced on or after the date of issuance of the preferred
securities of a trust, there is more than an insubstantial risk
that:
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the trust is, or will be within 90 days of that date, subject to
United States federal income tax with respect to income received
or accrued on the corresponding series of junior subordinated
debentures; |
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interest payable by us on the series of junior subordinated
debentures is not, or within 90 days of that date, will not
be, deductible, in whole or in part, for United States federal
income tax purposes; or |
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the trust is, or will be within 90 days of that date, subject to
more than a de minimis amount of other taxes, duties or other
governmental charges. |
An investment company event occurs when, in respect
of a trust, there is change in law or regulation, or a change in
interpretation or application of law or regulation, by any
legislative body, court, governmental agency or regulatory
authority such that such trust is or will be considered an
investment company that is required to be registered
under the Investment Company Act of 1940, which change becomes
effective on or after the date of issuance of the preferred
securities of a trust.
Notice of Redemption
We will mail notice of any redemption of your junior
subordinated debentures at least 30 days but not more than
60 days before the redemption date to you at your
registered address. Unless we default in payment of the
redemption price, on and after the redemption date interest will
cease to accrue on the junior subordinated debentures or the
portions called for redemption.
Option to Extend Interest Payment Date
If provided in the applicable prospectus supplement, we will
have the right during the term of any series of junior
subordinated debentures to extend the interest payment period
for a specified number of interest payment periods, subject to
the terms, conditions and covenants specified in the prospectus
supplement. However, we may not extend these interest payments
beyond the maturity of the junior subordinated debentures. We
will describe the federal income tax consequences and special
considerations relating to any junior subordinated debentures in
the applicable prospectus supplement.
If we exercise this right, during the extension period we and
our subsidiaries may not:
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declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment on, any of our
capital stock, or |
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make any payment of principal, premium, if any, or interest on
or repay, repurchase or redeem any debt securities that rank
equally with or junior in interest to the junior subordinated
debentures or make any related guarantee payments, |
other than:
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dividends or distributions on our common stock, |
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redemptions or purchases of any rights pursuant to our rights
plan, or any successor to our rights plan, and the declaration
of a dividend of these rights in the future, and |
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payments under any guarantee. |
Modification of Indenture
We and the debenture trustee may, without the consent of the
holders of junior subordinated debentures, amend, waive or
supplement the junior subordinated indenture for specified
purposes, including, among other things, curing ambiguities,
defects or inconsistencies. However, no action may
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materially adversely affect the interests of holders of any
series of junior subordinated debentures or, in the case of
corresponding junior subordinated debentures, the holders of the
corresponding series of preferred securities so long as they
remain outstanding. We may also amend the junior subordinated
indenture to maintain the qualification of the indenture under
the Trust Indenture Act.
We and the debenture trustee may, with the consent of the
holders of not less than a majority in principal amount of the
series of junior subordinated debentures affected, modify the
junior subordinated indenture in a manner affecting the rights
of the holders of junior subordinated debentures. However, no
modification may, without the consent of the holder of each
outstanding junior subordinated debenture affected:
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change the stated maturity of the junior subordinated debentures, |
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reduce the principal amount of the junior subordinated
debentures, |
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reduce the rate or, except as permitted by the junior
subordinated indenture and the terms of the series of junior
subordinated debentures, extend the time of payment of interest
on the junior subordinated debentures, or |
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reduce the percentage of principal amount of the junior
subordinated debentures, the holders of which are required to
consent to the modification of the junior subordinated indenture. |
In the case of corresponding junior subordinated debentures, so
long as any of the corresponding series of preferred securities
remain outstanding:
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no such modification may be made that adversely affects the
holders of the preferred securities, |
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no termination of the junior subordinated indenture may occur,
and |
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no waiver of any debenture event of default or compliance with
any covenant under the junior subordinated indenture may be
effective, |
without the prior consent of the holders of at least a majority
of the aggregate liquidation preference of the preferred
securities unless the principal of the corresponding junior
subordinated debentures and all accrued and unpaid interest on
the corresponding junior subordinated debentures have been paid
in full and other conditions are satisfied.
In addition, we and the debenture trustee may execute, without
your consent, any supplemental indenture for the purpose of
creating any new series of junior subordinated debentures.
Debenture Events of Default
Under the terms of the junior subordinated indenture, each of
the following constitutes a debenture event of default for a
series of junior subordinated debentures:
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failure for 30 days to pay any interest on the series of
junior subordinated debentures when due, subject to the deferral
of any due date in the case of an extension period, |
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failure to pay any principal or premium, if any, on the series
of junior subordinated debentures when due, including at
maturity, upon redemption or by declaration, |
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failure to observe or perform in any material respect specified
other covenants contained in the indenture for 90 days
after written notice from the debenture trustee or the holders
of at least 25% in principal amount of the relevant series of
outstanding junior subordinated debentures, |
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our bankruptcy, insolvency or reorganization, or |
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any other event of default described in the applicable board
resolution or supplemental indenture under which the series of
debt securities is issued. |
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Effect of Event of
Default
The holders of a majority in outstanding principal amount of the
series of junior subordinated debentures have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the debenture trustee. The debenture
trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the series of junior
subordinated debentures may declare the principal due and
payable immediately upon a debenture event of default. In the
case of corresponding junior subordinated debentures, if the
debenture trustee or the holders of the corresponding junior
subordinated debentures fail to make this declaration, the
holders of at least 25% in aggregate liquidation preference of
the corresponding series of preferred securities will have that
right.
Waiver of Event of
Default
The holders of a majority in aggregate outstanding principal
amount of the series of junior subordinated debentures may
rescind and annul the declaration and its consequences if:
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the event of default is other than our non-payment of the
principal of the junior subordinated debentures which has become
due solely by such acceleration and all other events of default
have been cured or waived, and |
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we have paid or deposited with the debenture trustee a sum
sufficient to pay: |
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all overdue installments of interest (including interest on
overdue installments of interest) and principal (and premium, if
any) due other than by acceleration, and |
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certain amounts owing to the debenture trustee, its agents and
counsel. |
The holders of a majority in aggregate outstanding principal
amount of the junior subordinated debentures affected by the
default may, on behalf of the holders of all the junior
subordinated debentures, waive any past default and its
consequences, except:
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a default in the payment of principal (or premium, if any) or
interest, |
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a default relating to a covenant or provision which under the
junior subordinated indenture cannot be modified or amended
without the consent of the holder of each outstanding junior
subordinated debenture. |
We are required under the junior subordinated indenture to file
annually with the junior subordinated indenture trustee a
certificate of compliance.
Direct Actions by Preferred
Securityholders
If a debenture event of default is attributable to our failure
to pay interest or principal on the corresponding junior
subordinated debentures on the date the interest or principal is
payable, you, as a holder of preferred securities, may institute
a legal proceeding directly against us, which we refer to in
this prospectus as a direct action, for enforcement
of payment to you of the principal of or interest on the
corresponding junior subordinated debentures having a principal
amount equal to the aggregate liquidation amount of your related
preferred securities.
We may not amend the junior subordinated indenture to remove the
right to bring a direct action without the prior written consent
of the holders of all of the preferred securities. If the right
to bring a direct action is removed, the applicable issue may
become subject to the reporting obligations under the Securities
Exchange Act of 1934. We have the right under the junior
subordinated indenture to set-off any payment made to you as a
holder of preferred securities by us in connection with a direct
action. You will not be able to exercise directly any other
remedy available to holders of the corresponding junior
subordinated debentures.
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You will not be able to exercise directly any remedies other
than those described in the preceding paragraph available to
holders of the junior subordinated debentures unless there has
been an event of default under the trust agreement.
Consolidation, Merger, Sale of Assets and Other
Transactions
We will not consolidate with or merge into any other corporation
or convey, transfer or lease our properties and assets
substantially as an entirety to any person, and no person will
consolidate with or merge into us or convey, transfer or lease
its properties and assets substantially as an entirety to us,
unless:
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if we consolidate with or merge into another corporation or
convey or transfer our properties and assets substantially as an
entirety to any person, the successor corporation is organized
under the laws of the United States or any state or the District
of Columbia, and the successor corporation expressly assumes our
obligations relating to the junior subordinated debentures, |
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immediately after giving effect to the consolidation, merger,
conveyance or transfer, there exists no debenture event of
default, and no event which, after notice or lapse of time or
both, would become a debenture event of default, |
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in the case of corresponding junior subordinated debentures, the
transaction is permitted under the related trust agreement or
guarantee and does not give rise to any breach or violation of
the related trust agreement or guarantee, and |
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other conditions described in the junior subordinated indenture
are met. |
The general provisions of the junior subordinated indenture do
not protect you against transactions, such as a highly leveraged
transaction, that may adversely affect you.
Satisfaction and Discharge
The junior subordinated indenture provides that when, among
other things, all junior subordinated debentures not previously
delivered to the debenture trustee for cancellation:
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have become due and payable, or |
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will become due and payable at their stated maturity within one
year, |
and we deposit or cause to be deposited with the debenture
trustee, in trust, an amount in the currency or currencies in
which the junior subordinated debentures are payable sufficient
to pay and discharge the entire indebtedness on the junior
subordinated debentures not previously delivered to the
debenture trustee for cancellation, for the principal, premium,
if any, and interest on the date of the deposit or to the stated
maturity, as the case may be, then the junior subordinated
indenture will cease to be of further effect and we will be
deemed to have satisfied and discharged the indenture. However,
we will continue to be obligated to pay all other sums due under
the junior subordinated indenture and to provide the
officers certificates and opinions of counsel described in
the junior subordinated indenture.
Conversion or Exchange
We may convert or exchange the junior subordinated debentures
into preferred securities or other securities. If so, we will
describe the specific terms on which junior subordinated
debentures may be converted or exchanged in the applicable
prospectus supplement. The conversion or exchange may be
mandatory, at your option or at our option. The applicable
prospectus supplement will state the manner in which the
preferred securities you would receive would be converted or
exchanged.
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Subordination
In the junior subordinated indenture, we have agreed that any
junior subordinated debentures will be subordinate and junior in
right of payment to all senior debt to the extent provided in
the junior subordinated indenture.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to
us, the holders of senior debt will first be entitled to receive
payment in full of principal of, premium, if any, and interest
on the senior debt before the holders of junior subordinated
debentures or, in the case of corresponding junior subordinated
debentures, the property trustee on behalf of the holders, will
be entitled to receive or retain any payment of the principal,
premium, if any, or interest on the junior subordinated
debentures.
If the maturity of any junior subordinated debentures is
accelerated, the holders of all senior debt outstanding at the
time of the acceleration will first be entitled to receive
payment in full of all amounts due, including any amounts due
upon acceleration, before you will be entitled to receive any
payment of the principal of, premium, if any, or interest on the
junior subordinated debentures.
We will not make any payments of principal of, premium, if any,
or interest on the junior subordinated debentures if:
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a default in any payment on senior debt then exists, |
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an event of default on any senior debt resulting in the
acceleration of its maturity then exists, or |
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any judicial proceeding is pending in connection with a default. |
When we use the term debt, we mean, with respect to
any person, whether recourse is to all or a portion of the
assets of that person and whether or not contingent:
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every obligation of that person for money borrowed, |
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every obligation of that person evidenced by bonds, debentures,
notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets
or businesses, |
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every reimbursement obligation of that person with respect to
letters of credit, bankers acceptances or similar
facilities issued for the account of the person, |
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every obligation of that person issued or assumed as the
deferred purchase price of property or services, but excluding
trade accounts payable or accrued liabilities arising in the
ordinary course of business, |
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every capital lease obligation of that person, and |
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every obligation of the type referred to in the prior five
clauses of another person and all dividends of another person
the payment of which the person has guaranteed or is responsible
or liable for, directly or indirectly, including as obligor. |
When we use the term senior debt we mean the
principal, premium, if any, and interest on debt, whether
incurred on, prior to or after the date of the junior
subordinated indenture, unless the instrument creating or
evidencing that debt or pursuant to which that debt is
outstanding states that those obligations are not superior in
right of payment to the junior subordinated debentures or to
other debt which ranks equally with, or junior to, the junior
subordinated debentures. Interest on this senior debt includes
interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to The Hartford
Financial Services Group, Inc., whether or not the claim for
post-petition interest is allowed in that proceeding.
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However, senior debt will not include:
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any debt of The Hartford Financial Services Group, Inc. which
when incurred and without regard to any election under
Section 1111(b) of the Bankruptcy Code, was without
recourse to The Hartford Financial Services Group, Inc., |
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any debt of The Hartford Financial Services Group, Inc. to any
of its subsidiaries, |
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debt to any employee of The Hartford Financial Services Group,
Inc., |
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any liability for taxes, |
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indebtedness or monetary obligations to trade creditors or
assumed by The Hartford Financial Services Group, Inc. or any of
its subsidiaries in the ordinary course of business in
connection with the obtaining of materials or services, and |
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any other junior subordinated debentures issued pursuant to the
Junior Subordinated Indenture, dated as of February 28,
1996 and the Junior Subordinated Indenture, dated as of
October 30, 1996. |
We are a non-operating holding company, and most of our assets
are owned by our subsidiaries. Accordingly, the junior
subordinated debentures will be effectively subordinated to all
existing and future liabilities of our subsidiaries, including
liabilities under contracts of insurance and annuities written
by our insurance subsidiaries. You should rely only on our
assets for payments of interest and principal and premium, if
any. The payment of dividends by our insurance company
subsidiaries is limited under the insurance holding company laws
in the jurisdictions where those subsidiaries are domiciled. See
The Hartford Financial Services Group, Inc.
The junior subordinated indenture does not limit the amount of
additional senior debt that we may incur. We expect from time to
time to incur additional senior debt.
The indenture provides that we may change the subordination
provisions relating to any particular issue of junior
subordinated debentures prior to issuance. We will describe any
change in the prospectus supplement relating to the junior
subordinated debentures.
Governing Law
The junior subordinated indenture and the junior subordinated
debentures will be governed by and construed in accordance with
the laws of the State of New York.
Information Concerning the Debenture Trustee
The debenture trustee will have all the duties and
responsibilities of an indenture trustee specified in the Trust
Indenture Act. Subject to those provisions, the debenture
trustee is not required to exercise any of its powers under the
junior subordinated indenture at your request, unless you offer
reasonable indemnity against the costs, expenses and liabilities
which the trustee might incur. The debenture trustee is not
required to expend or risk its own funds or incur personal
financial liability in performing its duties if the debenture
trustee reasonably believes that it is not reasonably assured of
repayment or adequate indemnity.
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DESCRIPTION OF CAPITAL STOCK OF
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
Authorized and Outstanding Capital Stock
Our Amended and Restated Certificate of Incorporation, as
amended effective May 1, 2002, provides that our authorized
capital stock is 800,000,000 shares. These shares consist of:
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50,000,000 shares of preferred stock, par value $.01 per share,
of which 300,000 shares have been designated as Series A
Participating Cumulative Preferred Stock; and |
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750,000,000 shares of common stock, par value $.01 per share. |
As of March 31, 2003, we had 255,441,328 outstanding shares
of common stock. Holders of common stock have received a right
entitling them, when the right becomes exercisable, to purchase
shares of Series A Participating Cumulative Preferred
Stock. See Rights Agreement. No shares
of preferred stock are currently outstanding.
No holders of any class of our capital stock are entitled to
preemptive rights except as may be agreed from time to time by
us and any such holders.
In general, the classes of authorized capital stock are afforded
preferences in relation to dividends and liquidation rights in
the order listed above. Our board of directors is empowered,
without approval of our stockholders, to cause the preferred
stock to be issued in one or more classes or series, or both,
with the numbers of shares of each class or series and the
rights, preferences and limitations of each class or series to
be determined by it. The specific matters that may be determined
by our board of directors include the dividend rights, voting
rights, redemption rights, liquidation preferences, conversion
and exchange rights, retirement and sinking fund provisions and
other rights, qualifications, limitations and restrictions of
any wholly unissued series of preferred stock, or of the entire
class of preferred stock if none of the shares have been issued,
the number of shares constituting that series and the terms and
conditions of the issue of the shares.
The following description of our capital stock is a summary. It
summarizes only those aspects of our capital stock which we
believe will be most important to your decision to invest in our
capital stock. You should keep in mind, however, that it is our
Amended and Restated Certificate of Incorporation and our
Amended and Restated By-Laws, and the Delaware General
Corporation Law, and not this summary, which define your rights
as a securityholder. There may be other provisions in these
documents which are also important to you. You should read these
documents for a full description of the terms of our capital
stock. Our Amended and Restated Certificate of Incorporation and
our Amended and Restated
By-Laws are
incorporated by reference as exhibits to the Registration
Statement that includes this prospectus. See Where You Can
Find More Information for information on how to obtain
copies of these documents.
Common Stock
Subject to any preferential rights of any preferred stock
created by our board of directors, as a holder of our common
stock you are entitled to dividends as our board of directors
may declare from time to time out of funds that we can legally
use to pay dividends. The holders of common stock possess
exclusive voting rights, except to the extent provided by law
and to the extent our board of directors specifies voting power
for any preferred stock that is issued.
As a holder of our common stock, you are entitled to one vote
for each share of common stock and do not have any right to
cumulate votes in the election of directors. In the event of our
liquidation, dissolution or winding-up, you will be entitled to
receive on a proportionate basis any assets remaining after
provision for payment of creditors and after payment or
provision for payment of any liquidation preferences to holders
of preferred stock. Our common stock is listed on the New York
Stock Exchange under the symbol HIG.
The transfer agent and registrar for our common stock is The
Bank of New York.
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Preferred Stock
We will describe the particular terms of any series of preferred
stock in the prospectus supplement relating to the offering.
We will fix or designate the rights, preferences, privileges and
restrictions, including dividend rights, voting rights, terms of
redemption, retirement and sinking fund provisions and
liquidation preferences, if any, of a series of preferred stock
through a certificate of designation adopted by our board of
directors or a duly authorized committee of our board of
directors. We will describe the terms, if any, on which shares
of any series of preferred stock are convertible or exchangeable
into common stock in the prospectus supplement relating to the
offering. The conversion or exchange may be mandatory, at your
option or at our option. The applicable prospectus supplement
will state the manner in which the shares of common stock that
you will receive as a holder of preferred stock would be
converted or exchanged.
On October 10, 1995, our board of directors declared a
dividend of rights to holders of record of our common stock
outstanding as of the close of business on December 19,
1995, with respect to common stock issued after that date until
the distribution date, and, in certain circumstances, with
respect to common stock issued after the distribution date. When
those rights become exercisable, holders of the rights will be
entitled to purchase shares of Series A Participating
Cumulative Preferred Stock. See Rights
Agreement.
Provisions of Our Amended and Restated Certificate of
Incorporation and Amended and Restated
By-Laws that May Delay
or Make More Difficult Unsolicited Acquisitions or Changes of
Our Control
Some provisions of our Amended and Restated Certificate of
Incorporation and Amended and Restated
By-Laws may delay or
make more difficult unsolicited acquisitions or changes of our
control. We believe that these provisions will enable us to
develop our business in a manner that will foster long-term
growth without disruption caused by the threat of a takeover not
thought by our board of directors to be in our best interest and
the best interests of our stockholders.
Those provisions could have the effect of discouraging third
parties from making proposals involving an unsolicited
acquisition or change of control of our company, although the
proposals, if made, might be considered desirable by a majority
of our stockholders. Those provisions may also have the effect
of making it more difficult for third parties to cause the
replacement of our current management without the concurrence of
our board of directors.
These provisions include:
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the availability of capital stock for issuance from time to time
at the discretion of our board of directors (see
Authorized and Outstanding Capital Stock
and Preferred Stock), |
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prohibitions against stockholders calling a special meeting of
stockholders or acting by written consent instead of at a
meeting, |
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requirements for advance notice for raising business or making
nominations at stockholders meetings, and |
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the ability of our board of directors to increase the size of
the board and to appoint directors to fill newly created
directorships. |
No Stockholder Action by
Written Consent; Special Meetings
Our Amended and Restated Certificate of Incorporation and
Amended and Restated By-Laws provide that stockholder action can
be taken only at an annual or special meeting and cannot be
taken by written consent. Our Amended and Restated Certificate
of Incorporation and Amended and Restated By-Laws also provide
that special meetings of stockholders can be called only by the
chairman of our board of directors or by a vote of the majority
of the entire board of directors. Furthermore, our Amended and
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Restated By-Laws provide that only such business as is specified
in the notice of any special meeting of stockholders may come
before the meeting.
Advance Notice for Raising
Business or Making Nominations at Meetings
Our Amended and Restated By-Laws establish an advance notice
procedure for stockholder proposals to be brought before an
annual meeting of stockholders and for nominations by
stockholders of candidates for election as directors at an
annual or special meeting at which directors are to be elected.
The only business that may be conducted at an annual meeting of
stockholders is the election of members of the board of
directors for the succeeding year and business that has been
specified in the notice of the meeting given by or at the
direction of the board of directors or otherwise brought before
the meeting by, or at the direction of, the board of directors,
or by a stockholder who has given to the secretary of the
company timely written notice, in proper form, of the
stockholders intention to bring that business before the
meeting. Only persons who are nominated by, or at the direction
of, the board of directors, or who are nominated by a
stockholder who has given timely written notice, in proper form,
to the secretary prior to a meeting at which directors are to be
elected will be eligible for election as directors.
To be timely, notice of business to be brought before an annual
meeting or nominations of candidates for election as directors
at an annual meeting must be given by a stockholder to the
companys secretary not later than 90 days prior to
the anniversary date for the immediately preceding annual
meeting, or not more than 10 days after the first public
disclosure of the originally scheduled date of the annual
meeting, whichever is earlier.
Similarly, notice of nominations to be brought before a special
meeting of stockholders for the election of directors must be
delivered to the secretary no later than the close of business
on the seventh day following the date on which notice of the
date of the special meeting of stockholders is given.
The notice of any nomination for election as a director is
required to state:
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the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated, |
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a representation that the stockholder is a holder of record of
stock entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or
persons specified in the notice, |
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a description of all arrangements or understandings relating to
the nomination between the stockholder and each nominee and any
other person or persons, naming those persons, |
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all other information regarding each nominee proposed by the
stockholder that would have been required to be included in a
proxy statement filed under the proxy rules of the Securities
and Exchange Commission had each nominee been nominated, or
intended to be nominated, by our board of directors, |
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the consent of each nominee to serve as a director if so
elected, and |
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if applicable, a representation that the stockholder intends to
solicit proxies in support of each nominee. |
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Number of Directors; Filling of Vacancies |
Our Amended and Restated By-Laws provide that newly created
directorships resulting from any increase in the authorized
number of directors, or any vacancy, may be filled by a vote of
a majority of directors then in office, subject to the
requirement in the Amended and Restated By-Laws that the
majority of directors holding office immediately after the
election must be independent directors, as defined
in the Amended and Restated By-Laws. Accordingly, our board of
directors may be able to prevent any stockholder from obtaining
majority representation on the board of directors by increasing
the size of the board and filling the newly created
directorships with its own nominees.
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Rights Agreement
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The Hartford Financial Services Group, Inc. Rights |
On October 10, 1995, our board of directors declared a
dividend of one right for each share of common stock outstanding
as of the close of business on December 19, 1995, with
respect to common stock issued after that date until the
distribution date, and, in certain circumstances, with respect
to common stock issued after the distribution date.
On May 21, 1998, our board of directors declared a
two-for-one stock split effected in the form of a 100% stock
dividend distributed on July 15, 1998 to stockholders of
record as of June 24, 1998. Before our board of directors
declared the two-for-one stock split, each right entitled the
registered holder to purchase from us, when it became
exercisable, one one-thousandth (1/1000th) of a share of
Series A Participating Cumulative Preferred Stock, at a
price of $220, subject to adjustment in specific circumstances.
As a result of the stock split, the terms of the rights were
adjusted so that the holder of a right may purchase from us,
when the right becomes exercisable, one two-thousandth
(1/2000th) of a share of Series A Participating Cumulative
Preferred Stock, at a price of $110, subject to adjustment in
specific circumstances.
Each right is subject to redemption at a price of $.005 per
share. The terms of the rights are described in the rights
agreement, dated as of November 1, 1995, between us and The
Bank of New York, as rights agent. The rights will not be
exercisable until the distribution date and will expire on
November 1, 2005, unless earlier redeemed by us as
described below. Until a right is exercised, the holder of the
right will not as a result of holding that right have rights as
a stockholder of our company including the right to vote or to
receive dividends with respect to the rights or the
Series A Participating Cumulative Preferred Stock relating
to the right.
The following description of the terms of the rights is a
summary. It summarizes only those terms of the rights which we
believe will be most important to your decision to invest in our
common stock. You should keep in mind, however, that it is the
rights agreement, and not this summary, which defines your
rights as a holder of our rights. There may be other provisions
in the rights agreement which are also important to you. You
should read the rights agreement for a full description of the
terms of the rights. The rights agreement is filed as an exhibit
to the Registration Statement that includes this prospectus. See
Where You Can Find More Information for information
on how to obtain a copy of the rights agreement.
Under the rights agreement, the distribution date is the earlier
of:
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the time that we learn that a person or group, including any
affiliate or associate of the person or group, has acquired, or
has obtained the right to acquire, beneficial ownership of more
than 15% of the outstanding shares of our common stock (we refer
to that person or group as an acquiring person),
unless provisions preventing accidental triggering of the
distribution of the rights apply, and |
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the close of business on the date, if any, that may be
designated by our board of directors following the commencement
of, or first public disclosure of an intent to commence, a
tender or exchange offer for more than 15% or more of the
outstanding shares of our common stock. |
A person or group, or any affiliate or associate of the person
or group, however, that inadvertently acquires more than 15% of
the outstanding shares of our common stock will not be deemed to
be an acquiring person provided that person or group reduces its
percentage of beneficial ownership to less than 15% of the
outstanding shares of our common stock by the close of business
on the fifth business day after notice from us that that
persons or groups ownership interest exceeds 15% of
the outstanding shares of
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our common stock. That person or group will be deemed to be an
acquiring person at the end of that five business day period
absent such reduction.
Until the distribution date, the rights will be evidenced by the
certificates for common stock rather than separate right
certificates. Therefore, from the issuance date until the
distribution date, you will be able to transfer the rights only
with the common stock and each transfer of common stock will
also transfer the associated rights. As soon as practicable
following the distribution date, we will mail separate
certificates evidencing the rights to holders of record of the
common stock as of the close of business on the distribution
date, and to each initial record holder of common stock
originally issued after the distribution date. These separate
certificates alone will then evidence the rights.
The number of shares of Series A Participating Cumulative
Preferred Stock or other securities that we will issue upon
exercise of the rights, the purchase price, the redemption price
and the number of rights associated with each share of common
stock are all subject to adjustment from time to time if there
is any change in the common stock or the Series A
Participating Cumulative Preferred Stock. An adjustment may be
made as a result of stock dividends, stock splits,
recapitalizations, mergers, consolidations, combinations or
exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization or any
distribution or issuance of cash, assets, evidences of
indebtedness or subscription rights, options or warrants to
holders of common stock or Series A Participating
Cumulative Preferred Stock.
We may, but we are not required to, issue fractions of rights or
distribute right certificates which evidence fractional rights.
Instead of issuing fractional rights, we may make a cash payment
based on the market price of those rights. In addition, we may,
but we are not required to, issue fractions of shares upon the
exercise of the rights or distribute certificates which evidence
fractional shares of Series A Participating Cumulative
Preferred Stock. Instead of fractional shares of Series A
Participating Cumulative Preferred Stock, we may utilize a
depositary arrangement as provided by the terms of the
Series A Participating Cumulative Preferred Stock and, for
fractions other than one two-thousandth (1/2000th) of a share of
Series A Participating Cumulative Preferred Stock or
integral multiples, may make a cash payment based on the market
price of those shares.
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Triggering Event and Effect of Triggering Event |
Any time there is an acquiring person, the rights will entitle
you, provided you are not the acquiring person, to purchase, for
the purchase price of the rights, that number of one
two-thousandths of a share of Series A Participating
Cumulative Preferred Stock equivalent to the number of shares of
common stock which at the time of that event would have a market
value of twice the purchase price.
If we are acquired in a merger or other business combination by
an acquiring person or an affiliate or associate of an acquiring
person that is a publicly traded corporation, or 50% or more of
our assets or assets representing 50% or more of our revenues or
cash flow are sold, leased, exchanged or otherwise transferred
in one or more transactions to an acquiring person or an
affiliate or associate of an acquiring person that is not a
publicly traded corporation, each right will entitle you,
subject to the next paragraph, to purchase, for the purchase
price of the right, that number of common shares of that
corporation which at the time of the transaction would have a
market value of twice the purchase price. If we are acquired in
a merger or other business combination by an acquiring person or
an affiliate or associate of an acquiring person that is not a
publicly traded entity or 50% or more of our assets or assets
representing 50% or more of our revenues or cash flow are sold,
leased, exchanged or otherwise transferred in one or more
transactions to an acquiring person or an affiliate or associate
of an acquiring person that is not a publicly
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traded entity, each right will entitle you, subject to the next
paragraph, to purchase, for the purchase price of the right, at
your option:
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that number of shares of the surviving corporation which at the
time of the transaction would have a book value of twice the
purchase price, |
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that number of shares of that entity which at the time of the
transaction would have a book value of twice the purchase price,
or |
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if that entity has an affiliate which has publicly traded common
shares, that number of common shares of that affiliate which at
the time of the transaction would have market value of twice the
purchase price. |
Any rights that are at any time beneficially owned by an
acquiring person, or any affiliate or associate of an acquiring
person, will be null and void and nontransferable. Any holder of
that right, including any purported transferee or subsequent
holder, will be unable to exercise or transfer the right.
At any time prior to the earlier of:
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the time a person or group becomes an acquiring person, and |
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November 1, 2005, |
our board of directors may redeem the rights in whole, but not
in part, at a price, which we refer to in this prospectus as the
redemption price, in cash or common stock or other
securities deemed by our board of directors to be at least
equivalent in value to $.005 per right. This amount is subject
to adjustment as provided in the rights agreement. Immediately
upon the action of our board of directors ordering the
redemption of the rights, and without any further action and
without any notice, your right to exercise the rights will
terminate and your only right as a holder of rights will be to
receive the redemption price. Within 10 business days after the
action of our board of directors ordering the redemption of the
rights, we will give notice of the redemption to the holders of
the then outstanding rights by mail. We will state the method by
which we will pay the redemption price in the notice of
redemption.
In addition, at any time after there is an acquiring person, our
board of directors may elect to exchange each right, other than
rights that have become null and void and nontransferable as
described above, for a consideration per right consisting of
one-half of the securities that would be issuable at that time
upon exercise of one right.
At any time prior to the distribution date, we may, without your
approval, supplement or amend any provision of the rights
agreement, including, without limitation, the distribution date,
the definition of acquiring person, the time during which the
rights may be redeemed or the terms of the Series A
Participating Cumulative Preferred Stock. However, we will not
supplement or amend the rights agreement to reduce the
redemption price or provide for an earlier expiration date.
After the distribution date and subject to applicable law, we
may amend the rights agreement without your approval only:
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to cure any ambiguity or to correct or supplement any provision
contained in the rights agreement which may be defective or
inconsistent with any other provision of the rights agreement, or |
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to make any other provision which we may deem necessary or
desirable and which will not adversely affect the interests of
the holders of right certificates. |
Any supplement or amendment adopted during any period after any
person or group has become an acquiring person but prior to the
distribution date will be null and void unless that supplement
or amendment could have been adopted under the prior sentence
after the distribution date.
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Effect of the Rights Agreement |
The rights agreement is designed to protect you in the event of
unsolicited offers to acquire us and other coercive takeover
tactics which, in the opinion of our board of directors, could
impair our ability to represent your interests. The provisions
of the rights agreement may render an unsolicited takeover more
difficult or less likely to occur or might prevent such a
takeover, even though that takeover may offer you the
opportunity to sell your stock at a price above the prevailing
market rate and may be favored by a majority of our stockholders.
Restrictions on Ownership Under Insurance Laws
State insurance laws could be a significant deterrent to any
person interested in acquiring control of our company. The
insurance holding company laws of each of the jurisdictions in
which our insurance subsidiaries are incorporated or
commercially domiciled, as well as state corporation laws,
govern any acquisition of control of our insurance subsidiaries
or of our company. In general, these laws provide that no person
or entity may directly or indirectly acquire control of an
insurance company unless that person or entity has received the
prior approval of the insurance regulatory authorities. An
acquisition of control would be presumed in the case of any
person or entity who purchases 10% or more of our outstanding
common stock, or 5% or more, in the case of the Florida
insurance holding company laws, unless the applicable insurance
regulatory authorities determine otherwise.
Delaware General Corporation Law
The terms of Section 203 of the Delaware General
Corporation Law apply to us since we are a Delaware corporation.
Under Section 203, with some exceptions, a Delaware
corporation may not engage in a broad range of business
combinations, such as mergers, consolidations and sales of
assets, with an interested stockholder, for a period
of three years from the date that person became an interested
stockholder unless:
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the transaction or the business combination that results in a
person becoming an interested stockholder is approved by the
board of directors of the corporation before the person becomes
an interested stockholder, |
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upon consummation of the transaction which results in the
stockholder becoming an interested stockholder, the interested
stockholder owns 85% or more of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding shares owned by persons who are directors and also
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on or after the date the person becomes an interested
stockholder, the business combination is approved by the
corporations board of directors and by holders of at least
two-thirds of the corporations outstanding voting stock,
excluding shares owned by the interested stockholder, at a
meeting of stockholders. |
Under Section 203, an interested stockholder is
defined as any person (or the affiliates or associates of such
person), other than the corporation and any direct or indirect
majority-owned subsidiary, that is:
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the owner of 15% or more of the outstanding voting stock of the
corporation, or |
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an affiliate or associate of the corporation and was the owner
of 15% or more of the outstanding voting stock of the
corporation at any time within the three-year period immediately
prior to the date on which it is sought to be determined whether
the person is an interested stockholder. |
Section 203 does not apply to a corporation that so
provides in an amendment to its certificate of incorporation or
by-laws passed by a majority of its outstanding shares at any
time. This stockholder action does not become effective for
12 months following its adoption and would not apply to
persons who were
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already interested stockholders at the time of the amendment.
Our Amended and Restated Certificate of Incorporation does not
exclude us from the restrictions imposed under Section 203.
Section 203 makes it more difficult for a person who would
be an interested stockholder to effect business combinations
with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the
restrictions imposed. The provisions of Section 203 may
encourage companies interested in acquiring us to negotiate in
advance with our board of directors, because the stockholder
approval requirement would be avoided if a majority of the
directors then in office approve either the business combination
or the transaction which results in the stockholder becoming an
interested stockholder. These provisions also may have the
effect of preventing changes in our management. It is further
possible that these provisions could make it more difficult to
accomplish transactions that stockholders may otherwise deem to
be in their best interest.
DESCRIPTION OF DEPOSITARY SHARES
General Terms
We may elect to offer depositary shares representing receipts
for fractional interests in debt securities or preferred stock.
In this case, we will issue receipts for depositary shares, each
of which will represent a fraction of a debt security or share
of a particular series of preferred stock, as the case may be.
We will deposit the debt securities or shares of any series of
preferred stock represented by depositary shares under a deposit
agreement between us and a depositary which we will name in the
applicable prospectus supplement. Subject to the terms of the
deposit agreement, as an owner of a depositary share you will be
entitled, in proportion to the applicable fraction of a debt
security or share of preferred stock represented by the
depositary share, to all the rights and preferences of the debt
security or preferred stock, as the case may be, represented by
the depositary share, including, as the case may be, interest,
dividend, voting, conversion, redemption, sinking fund,
repayment at maturity, subscription and liquidation rights.
The following description of the terms of the deposit agreement
is a summary. It summarizes only those terms of the deposit
agreement that we believe will be most important to your
decision to invest in our depositary shares. You should keep in
mind, however, that it is the deposit agreement, and not this
summary, which defines your rights as a holder of depositary
shares. There may be other provisions in the deposit agreement
that are also important to you. You should read the deposit
agreement for a full description of the terms of the depositary
shares. The form of the deposit agreement is filed as an exhibit
to the Registration Statement that includes this prospectus. See
Where You Can Find More Information for information
on how to obtain a copy of the deposit agreement.
Interest, Dividends and Other Distributions
The depositary will distribute all payments of interest, cash
dividends or other cash distributions received on the debt
securities or preferred stock, as the case may be, to you in
proportion to the number of depositary shares that you own.
In the event of a distribution other than in cash, the
depositary will distribute property received by it to you in an
equitable manner, unless the depositary determines that it is
not feasible to make a distribution. In that case the depositary
may sell the property and distribute the net proceeds from the
sale to you.
Redemption of Depositary Shares
If we redeem a debt security or series of preferred stock
represented by depositary shares, the depositary will redeem
your depositary shares from the proceeds received by the
depositary resulting from the redemption. The redemption price
per depositary share will be equal to the applicable fraction of
the redemption price per debt security or share of preferred
stock, as the case may be, payable in relation to
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the redeemed series of debt securities or preferred stock.
Whenever we redeem debt securities or shares of preferred stock
held by the depositary, the depositary will redeem as of the
same redemption date the number of depositary shares
representing, as the case may be, the debt securities or shares
of preferred stock redeemed. If fewer than all the depositary
shares are to be redeemed, the depositary shares to be redeemed
will be selected by lot, proportionately or by any other
equitable method as the depositary may determine.
Exercise of Rights under the Indentures or Voting the
Preferred Stock
Upon receipt of notice of any meeting at which you are entitled
to vote, or of any request for instructions or directions from
you as holder of debt securities, the depositary will mail to
you the information contained in that notice. Each record holder
of the depositary shares on the record date will be entitled to
instruct the depositary how to give instructions or directions
with respect to the debt securities represented by that
holders depositary shares or how to vote the amount of the
preferred stock represented by that holders depositary
shares. The record date for the depositary shares will be the
same date as the record date for the debt securities or
preferred stock, as the case may be. The depositary will
endeavor, to the extent practicable, to give instructions or
directions with respect to the debt securities or to vote the
amount of the preferred stock, as the case may be, represented
by the depositary shares in accordance with those instructions.
We will agree to take all reasonable action which the depositary
may deem necessary to enable the depositary to do so. The
depositary will abstain from giving instructions or directions
with respect to the debt securities or voting shares of the
preferred stock, as the case may be, if it does not receive
specific instructions from you.
Amendment and Termination of the Deposit Agreement
We and the depositary may amend the form of depositary receipt
evidencing the depositary shares and any provision of the
deposit agreement at any time. However, any amendment which
materially and adversely alters the rights of the holders of the
depositary shares will not be effective unless the amendment has
been approved by the holders of at least a majority of the
depositary shares then outstanding.
The deposit agreement will terminate if:
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all outstanding depositary shares have been redeemed, or |
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there has been a complete repayment or redemption of the debt
securities or a final distribution in respect of the preferred
stock, including in connection with our liquidation, dissolution
or winding up, and the repayment, redemption or distribution
proceeds, as the case may be, have been distributed to you. |
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to us notice
of its election to do so. We also may, at any time, remove the
depositary. Any resignation or removal will take effect upon the
appointment of a successor depositary and its acceptance of such
appointment. We must appoint the successor depositary within
60 days after delivery of the notice of resignation or
removal. The successor depositary must be a bank or trust
company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
Charges of Depositary
We will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary
arrangements. We will pay charges of the depositary in
connection with the initial deposit of the debt securities or
preferred stock, as the case may be, and issuance of depositary
receipts, all withdrawals of shares of debt securities or
preferred stock, as the case may be, by you and any repayment or
redemption of the debt securities or preferred stock, as the
case may be. You will pay other
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transfer and other taxes and governmental charges, as well as
the other charges that are expressly provided in the deposit
agreement to be for your account.
Miscellaneous
The depositary will forward all reports and communications from
us which are delivered to the depositary and which we are
required or otherwise determine to furnish to holders of debt
securities or preferred stock, as the case may be.
Neither we nor the depositary will be liable under the deposit
agreement to you other than for the depositarys gross
negligence, willful misconduct or bad faith. Neither we nor the
depositary will be obligated to prosecute or defend any legal
proceedings relating to any depositary shares, debt securities
or preferred stock unless satisfactory indemnity is furnished.
We and the depositary may rely upon written advice of counsel or
accountants, or upon information provided by persons presenting
debt securities or shares of preferred stock for deposit, you or
other persons believed to be competent and on documents which we
and the depositary believe to be genuine.
DESCRIPTION OF WARRANTS
We may issue warrants, including warrants to purchase debt
securities, preferred stock, common stock or other of our
securities. We may issue warrants independently or together with
any other securities, and they may be attached to or separate
from those securities. We will issue the warrants under warrant
agreements between us and a bank or trust company, as warrant
agent, that we will describe in the prospectus supplement
relating to the warrants that we offer.
The following description of the terms of the warrants is a
summary. It summarizes only those terms of the warrants and the
warrant agreement which we believe will be most important to
your decision to invest in our warrants. You should keep in
mind, however, that it is the warrant agreement and the warrant
certificate relating to the warrants, and not this summary,
which defines your rights as a warrantholder. There may be other
provisions in the warrant agreement and the warrant certificate
relating to the warrants which are also important to you. You
should read these documents for a full description of the terms
of the warrants. Forms of these documents are filed as exhibits
to the Registration Statement that includes this prospectus. See
Where You Can Find More Information for information
on how to obtain copies of these documents.
Debt Warrants
We will describe in the applicable prospectus supplement the
terms of warrants to purchase debt securities that we may offer,
the warrant agreement relating to the debt warrants and the
warrant certificates representing the debt warrants. These terms
will include the following:
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the title of the debt warrants, |
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the debt securities for which the debt warrants are exercisable, |
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the aggregate number of the debt warrants, |
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the principal amount of debt securities that you may purchase
upon exercise of each debt warrant, and the price or prices at
which we will issue the debt warrants, |
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the procedures and conditions relating to the exercise of the
debt warrants, |
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the designation and terms of any related debt securities issued
with the debt warrants, and the number of debt warrants issued
with each debt security, |
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the date, if any, from which you may separately transfer the
debt warrants and the related securities, |
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the date on which your right to exercise the debt warrants
commences, and the date on which your right expires, |
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the maximum or minimum number of the debt warrants which you may
exercise at any time, |
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if applicable, a discussion of material United States federal
income tax considerations, |
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any other terms of the debt warrants and terms, procedures and
limitations relating to your exercise of the debt warrants, and |
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the terms of the securities you may purchase upon exercise of
the debt warrants. |
We will also describe in the applicable prospectus supplement
any provisions for a change in the exercise price or expiration
date of the warrants and the kind, frequency and timing of any
notice to be given. You may exchange debt warrant certificates
for new debt warrant certificates of different denominations and
may exercise debt warrants at the corporate trust office of the
warrant agent or any other office that we indicate in the
applicable prospectus supplement. Prior to exercise, you will
not have any of the rights of holders of the debt securities
purchasable upon that exercise and will not be entitled to
payments of principal, premium, if any, or interest on the debt
securities purchasable upon the exercise.
Other Warrants
We may issue other warrants. We will describe in the applicable
prospectus supplement the following terms of those warrants:
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the title of the warrants, |
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the securities, which may include preferred stock or common
stock, for which you may exercise the warrants, |
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the aggregate number of the warrants, |
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the number of securities that you may purchase upon exercise of
each warrant, and the price or prices at which we will issue the
warrants, |
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the procedures and conditions relating to the exercise of the
warrants, |
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the designation and terms of any related securities issued with
the warrants, and the number of warrants issued with each
security, |
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the date, if any, from which you may separately transfer the
warrants and the related securities, |
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the date on which your right to exercise the warrants commences,
and the date on which your right expires, |
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the maximum or minimum number of warrants which you may exercise
at any time, |
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if applicable, a discussion of material United States federal
income tax considerations, and |
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any other terms of the warrants, including terms, procedures and
limitations relating to your exchange and exercise of the
warrants. |
We will also describe in the applicable prospectus supplement
any provisions for a change in the exercise price or the
expiration date of the warrants and the kind, frequency and
timing of any notice to be given. You may exchange warrant
certificates for new warrant certificates of different
denominations and may exercise warrants at the corporate trust
office of the warrant agent or any other office that we indicate
in the applicable prospectus supplement. Prior to the exercise
of your warrants, you will not have any of the rights of holders
of the preferred stock, common stock or other securities
purchasable upon that exercise and will not be entitled to
dividend payments, if any, or voting rights of the preferred
stock, common stock or other securities purchasable upon the
exercise.
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Exercise of Warrants
We will describe in the prospectus supplement relating to the
warrants the principal amount or the number of our securities
that you may purchase for cash upon exercise of a warrant, and
the exercise price. You may exercise a warrant as described in
the prospectus supplement relating to the warrants at any time
up to the close of business on the expiration date stated in the
prospectus supplement. Unexercised warrants will become void
after the close of business on the expiration date, or any later
expiration date that we determine.
We will forward the securities purchasable upon the exercise as
soon as practicable after receipt of payment and the properly
completed and executed warrant certificate at the corporate
trust office of the warrant agent or other office stated in the
applicable prospectus supplement. If you exercise less than all
of the warrants represented by the warrant certificate, we will
issue you a new warrant certificate for the remaining warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE
UNITS
We may issue stock purchase contracts, including contracts
obligating you to purchase from us, and for us to sell to you, a
specific number of shares of common stock or preferred stock, or
other property, at a future date or dates. The price per share
of preferred stock or common stock may be fixed at the time the
stock purchase contracts are issued or may be determined by
reference to a specific formula described in the stock purchase
contracts. We may issue stock purchase contracts separately or
as a part of units each consisting of a stock purchase contract
and debt securities, trust preferred securities, depositary
shares representing fractional interests in debt securities or
shares of preferred stock, or debt obligations of third parties,
including U.S. Treasury securities, securing your obligations to
purchase the preferred stock or the common stock, or other
property, under the stock purchase contract. The stock purchase
contracts may require us to make periodic payments to you or
vice versa and the payments may be unsecured or prefunded on
some basis. The stock purchase contracts may require you to
secure your obligations in a specified manner. We will describe
in the applicable prospectus supplement the terms of any stock
purchase contracts or stock purchase units.
DESCRIPTION OF PREFERRED SECURITIES
The trustees of each trust will issue preferred securities and
common securities of the trust. The preferred securities will
represent preferred undivided beneficial interests in the assets
of the related trust. As a holder of trust preferred securities,
you will generally be entitled to a preference with respect to
distributions and amounts payable on redemption or liquidation
over the common securities of the trust, as well as other
benefits as described in the corresponding trust agreement. Each
of the trusts is a legally separate entity and the assets of one
are not available to satisfy the obligations of any of the
others.
The following description of the terms of the form of trust
agreement is a summary. It summarizes only those portions of the
form of trust agreement which we believe will be most important
to your decision to invest in the preferred securities. You
should keep in mind, however, that it is the trust agreement,
and not this summary, which defines your rights as a holder.
There may be other provisions in the trust agreement which are
also important to you. You should read the form of trust
agreement itself for a full description of the terms of the
preferred securities. The form of trust agreement is filed as an
exhibit to the Registration Statement. See Where You Can
Find More Information for information on how to obtain a
copy of the trust agreement.
Ranking of Preferred Securities
The preferred securities of a trust will rank equally, and we
will make payments proportionately, with the common securities
of the trust except as described under
Subordination of Common Securities. The
preferred securities of each trust represent preferred undivided
beneficial interests in the
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assets of the trust. The property trustee will hold legal title
to the corresponding junior subordinated debentures in trust for
the benefit of the holders of the related preferred securities
and common securities.
Each guarantee agreement that we execute for your benefit, as a
holder of preferred securities of a trust, will be a guarantee
on a subordinated basis with respect to the related preferred
securities. However, our guarantee will not guarantee payment of
distributions or amounts payable on redemption or liquidation of
the preferred securities when the related trust does not have
funds on hand available to make such payments. See
Description of Guarantee.
Distributions on the Preferred Securities
The trust will pay the distributions on the preferred securities
and common securities at a rate specified in the prospectus
supplement.
The amount of distributions the trust must pay for any period
will be computed on the basis of a 360-day year of twelve 30-day
months unless we otherwise specify in the applicable prospectus
supplement. Distributions that are in arrears may bear interest
at the rate per annum specified in the applicable prospectus
supplement. The term distributions as we use it in
this prospectus includes any additional amounts provided in the
corresponding trust agreement.
Distributions on the preferred securities will be cumulative,
will accrue from the date of original issuance and will be
payable on the dates specified in the applicable prospectus
supplement. If any date on which distributions are payable on
the preferred securities is not a business day, the trust will
instead make the payment on the next succeeding day that is a
business day, and without any interest or other payment on
account of the delay. However, if that business day is in the
next succeeding calendar year, the trust will make the payment
on the immediately preceding business day. In each case payment
will be made with the same force and effect as if made on the
date the payment was originally due. When we use the term
business day in this prospectus, we mean any day
other than a Saturday or a Sunday, or a day on which banking
institutions in the City of New York are authorized or required
by law or executive order to remain closed or a day on which the
corporate trust office of the property trustee or the debenture
trustee is closed for business.
If provided in the applicable prospectus supplement, we have the
right under the junior subordinated indenture, the contract that
provides the terms for the corresponding junior subordinated
debentures, to extend the interest payment period for a
specified number of periods. However, we may not extend these
interest payments beyond the maturity of the junior subordinated
debentures. As a consequence of any extension, distributions on
the corresponding preferred securities would be deferred by the
trust during the extension period. These distributions would
continue to accumulate additional distributions at the rate per
annum set form in the prospectus supplement.
If we exercise this right, during the extension period we and
our subsidiaries may not:
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declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment on, any of our
capital stock, or |
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make any payment of principal, premium, if any, or interest on
or repay, repurchase or redeem any debt securities that rank
equally with or junior in interest to the corresponding junior
subordinated debentures or make any related guarantee payments, |
other than:
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dividends or distributions on our common stock, |
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redemptions or purchases of any rights pursuant to our rights
plan, or any successor to our rights plan, and the declaration
of a dividend of these rights in the future, and |
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payments under any guarantee. |
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We anticipate that the revenue of each trust available for
distribution to you, as a holder of preferred securities, will
be limited to payments under the corresponding junior
subordinated debentures in which the trust will invest the
proceeds from the issuance and sale of its preferred securities
and its common securities. See Description of
Corresponding Junior Subordinated Debentures.
If we do not make interest payments on the corresponding junior
subordinated debentures, the property trustee will not have
funds available to pay distributions on the corresponding
preferred securities. The payment of distributions, if and to
the extent the trust has funds legally available for the payment
of these distributions is guaranteed by us on a limited basis as
set forth under Description of Guarantee.
The trust will pay distributions on the preferred securities to
you provided you are entered in the register of the trust on the
relevant record dates. As long as the preferred securities
remain in book-entry form, the record date will be one business
day prior to the relevant distribution date. If any preferred
securities are not in book-entry form, the record date for the
preferred securities will be the date 15 days prior to the
relevant distribution date.
Redemption
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Redemption on a Repayment or Redemption of the
Corresponding Junior Subordinated Debentures |
Upon the repayment or redemption, in whole or in part, of any
corresponding junior subordinated debentures, the property
trustee must apply the proceeds from that repayment or
redemption to redeem a like amount of the corresponding
preferred securities. This redemption must be made upon not less
than 30 nor more than 60 days notice to you. The redemption
price will be equal to the aggregate liquidation preference of
the preferred securities, plus accumulated and unpaid
distributions on the preferred securities to the date of
redemption and the related amount of any premium paid by us upon
the concurrent redemption of the corresponding junior
subordinated debentures. See Description of Corresponding
Junior Subordinated Debentures Optional
Redemption.
If less than all of any series of corresponding junior
subordinated debentures are repaid or redeemed, then the
proceeds from the repayment or redemption will be allocated to
redeem a proportionate amount of each of the preferred
securities and the common securities. The amount of premium, if
any, paid by us upon the redemption of all or any part of any
series of any corresponding junior subordinated debentures
repaid or redeemed will be allocated proportionately to the
redemption of the preferred securities and the common securities.
We must repay the principal of the corresponding junior
subordinated debentures when they are due. In addition, we will
have the right to redeem any series of corresponding junior
subordinated debentures:
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in whole or in part, subject to the conditions we describe under
Description of Corresponding Junior Subordinated
Debentures Optional Redemption, |
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at any time, in whole, but not in part, upon the occurrence of a
tax event or an investment company event, each as defined below,
and subject to the further conditions we describe under
Description of Corresponding Junior Subordinated
Debentures Optional Redemption, or |
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as we may otherwise specify in the applicable prospectus
supplement. |
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Redemption or Distribution Upon the Occurrence of a Tax
Event or an Investment Company Event |
If an event occurs that constitutes a tax event or an investment
company event we will have the right to:
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redeem the corresponding junior subordinated debentures in
whole, but not in part, and cause a mandatory redemption of the
preferred securities and common securities in whole, |
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but not in part, within 90 days following the occurrence of
the tax event or an investment company event, or |
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terminate the related trust and cause the corresponding junior
subordinated debentures to be distributed to the holders of the
preferred securities and common securities in liquidation of the
trust. |
If provided in the applicable prospectus supplement, we will
have the right to extend or shorten the maturity of any series
of corresponding junior subordinated debentures at the time that
we exercise our right to elect to terminate the related trust
and cause the corresponding junior subordinated debentures to be
distributed to the holders of the preferred securities and
common securities in liquidation of the trust.
When we use the term additional sums in this
prospectus we mean the additional amounts that may be necessary
in order that the amount of distributions then due and payable
by a trust on its outstanding preferred securities and common
securities will not be reduced as a result of any additional
taxes, duties and other governmental charges to which the trust
has become subject as a result of a tax event.
When we use the term tax event we mean the receipt
by the trust of an opinion of counsel experienced in those
matters to the effect that, as a result of any amendment to, or
change, including any announced prospective change, in, the laws
of the United States or any political subdivision or taxing
authority affecting taxation, or as a result of any official
administrative pronouncement or judicial decision interpreting
or applying those laws or regulations, which amendment or change
is effective or pronouncement or decision is announced on or
after the trust issues the preferred securities, there is more
than an insubstantial risk that:
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the trust is, or will be within 90 days of the date of the
opinion, subject to United States federal income tax with
respect to income received or accrued on the corresponding
series of corresponding junior subordinated debentures, |
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interest payable by us on the series of corresponding junior
subordinated debentures is not, or within 90 days of the
date of the opinion, will not be, deductible, in whole or in
part, for United States federal income tax purposes, or |
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the trust is, or will be within 90 days of the date of the
opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges. |
When we use the term investment company event we
mean the occurrence of a change in law or regulation or a change
in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory
authority to the effect that the applicable trust is or will be
considered an investment company that is required to be
registered under the Investment Company Act of 1940, which
change becomes effective on or after the date of original
issuance of the series of preferred securities issued by the
trust.
When we use the term like amount, we mean:
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with respect to a redemption of any series of preferred
securities, preferred securities having a liquidation amount
equal to that portion of the principal amount of corresponding
junior subordinated debentures to be contemporaneously redeemed,
the proceeds of which will be used to pay the redemption price
of the preferred securities, and |
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with respect to a distribution of corresponding junior
subordinated debentures to you, as a holder of preferred
securities in connection with a dissolution or liquidation of
the related trust, corresponding junior subordinated debentures
having a principal amount equal to the liquidation amount of
your preferred securities. |
When we use the term liquidation amount, we mean the
stated amount of $25 per preferred security and common security.
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After the liquidation date fixed for any distribution of
corresponding junior subordinated debentures for any series of
preferred securities:
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the series of preferred securities will no longer be deemed to
be outstanding, |
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The Depository Trust Company, which we refer to in this
prospectus as DTC, or its nominee, as the record
holder of the series of preferred securities, will receive a
registered global certificate or certificates representing the
corresponding junior subordinated debentures to be delivered
upon that distribution, and |
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any certificates representing the series of preferred securities
not held by DTC or its nominee will be deemed to represent the
corresponding junior subordinated debentures having a principal
amount equal to the stated liquidation preference of the series
of preferred securities, and bearing accrued and unpaid interest
in an amount equal to the accrued and unpaid distributions on
the series of preferred securities until you present the
certificates to the administrative trustees or their agent for
transfer or reissuance. |
We can make no assurance as to what the market prices will be
for the preferred securities or the corresponding junior
subordinated debentures that may be distributed to you in
exchange for your preferred securities if a dissolution and
liquidation of a trust were to occur. Accordingly, the preferred
securities that you purchase, or the corresponding junior
subordinated debentures that you receive on dissolution and
liquidation of a trust, may trade at a discount to the price
that you paid to purchase the preferred securities.
Voluntary Distribution of Junior Subordinated Debentures
If we so provide in the applicable prospectus supplement, we may
elect, at any time, to dissolve the trust and cause the
corresponding junior subordinated debentures to be distributed
to you, as a holder of the preferred securities, and us, as the
holder of the common securities, in liquidation of the trust.
Redemption Procedures
The trust will redeem the preferred securities on each
redemption date at the redemption price with the applicable
proceeds from the contemporaneous redemption of the
corresponding junior subordinated debentures. The trust will
make redemptions of the preferred securities and pay the
redemption price only to the extent that it has funds available
for the payment of the redemption price. See also
Subordination of Common Securities.
If a trust gives notice to you of redemption of your preferred
securities, then by 12:00 noon, New York City time, on the
redemption date, to the extent funds are available, the property
trustee will irrevocably deposit with DTC funds sufficient to
pay the applicable redemption price and will give DTC
irrevocable instructions and authority to pay the redemption
price to you. See Book-Entry Issuance.
If the preferred securities are no longer in book-entry form,
the trust, to the extent funds are available, will irrevocably
deposit with the paying agent for the preferred securities funds
sufficient to pay the applicable redemption price to you and
will give the paying agent irrevocable instructions and
authority to pay the redemption price to you upon surrender of
your certificates.
The trust will pay any distributions payable on or prior to the
redemption date for any preferred securities called for
redemption to you on the relevant record dates for the
distribution. If the trust has given notice of redemption and
has deposited the required funds, then upon the date of the
deposit, all your rights will cease, except your right to
receive the redemption price, without interest on that
redemption price, and your preferred securities will cease to be
outstanding. If any date fixed for redemption of preferred
securities is not a business day, then the trust will pay the
redemption price on the next succeeding day which is a business
day, and without any interest or other payment on account of the
delay. However, if the business day falls in the next calendar
year, the trust will make the payment on the immediately
preceding business day. If payment of the redemption price is
improperly withheld or refused
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and not paid either by the trust or by us pursuant to the
guarantee as described under Description of
Guarantee, distributions on the preferred securities will
continue to accrue at the then applicable rate, from the
redemption date originally established by the trust for the
preferred securities to the date the redemption price is
actually paid. In this case the actual payment date will be the
date fixed for redemption for purposes of calculating the
redemption price.
Subject to applicable law, including United States federal
securities law, we or our subsidiaries may at any time purchase
outstanding preferred securities by tender, in the open market
or by private agreement.
The trust will make payment of the redemption price on the
preferred securities and any distribution of corresponding
junior subordinated debentures to the applicable record holders
as they appear on the register for the preferred securities on
the relevant record date. This date will generally be one
business day prior to the relevant redemption date or
liquidation date. However, if any preferred securities are not
in book-entry form, the relevant record date for the preferred
securities will be the date 15 days prior to the redemption
date or liquidation date.
If less than all of the preferred securities and common
securities issued by a trust are to be redeemed on a redemption
date, then the aggregate liquidation amount of the preferred
securities and common securities to be redeemed will be
allocated proportionately among the preferred securities and the
common securities. The property trustee will select the
particular preferred securities to be redeemed on a
proportionate basis not more than 60 days prior to the
redemption date from the outstanding preferred securities not
previously called for redemption, by any method that the
property trustee deems fair and appropriate. This method may
provide for the selection for redemption of portions, equal to
$25 or an integral multiple of $25, of the liquidation amount of
preferred securities. The property trustee will promptly notify
the trust registrar in writing of the preferred securities
selected for redemption and, in the case of any preferred
securities selected for partial redemption, the liquidation
amount of the preferred securities to be redeemed.
Subordination of Common Securities
The trust will make payment of distributions, any additional
amounts and the redemption price on the preferred securities and
common securities proportionately based on the liquidation
amount of the preferred securities and common securities.
However, if on any distribution date or redemption date a
debenture event of default exists, the trust will not make any
payment on the common securities unless payment in full in cash
of all accumulated and unpaid distributions, any additional
amounts and the full amount of the redemption price on all of
the outstanding preferred securities of the trust, has been made
or provided for. The property trustee will apply all available
funds first to the payment in full in cash of all distributions
on, or redemption price of, the preferred securities then due
and payable.
If any event of default resulting from a debenture event of
default exists, we as holder of the common securities of the
trust will be deemed to have waived any right to act with
respect to the event of default under the trust agreement until
the effect of all those events of default with respect to the
preferred securities have been cured, waived or otherwise
eliminated. Until any events of default under the trust
agreement with respect to the preferred securities have been so
cured, waived or otherwise eliminated, the property trustee will
act solely on your behalf, as a holder of the preferred
securities, and not on our behalf as holder of the common
securities, and only you acting with the other holders will have
the right to direct the property trustee to act on your behalf.
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Liquidation Distribution Upon Dissolution
Each trust will automatically terminate upon expiration of its
term or the redemption of all of the preferred securities of the
trust. In addition, we will terminate the trust on the first to
occur of:
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our bankruptcy, dissolution or liquidation, |
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the distribution of a like amount of corresponding junior
subordinated debentures to the holders of its preferred
securities and common securities, |
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the redemption of all of the preferred securities, and |
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the entry of an order for the dissolution of the trust by a
court of competent jurisdiction. |
If an early dissolution occurs as described in the clauses
above, the trustees will liquidate the trust as expeditiously as
the trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the trust as
provided by applicable law, to the holders of the preferred
securities and common securities a like amount of corresponding
junior subordinated debentures. If the property trustee
determines that this distribution is not practical, you will be
entitled to receive out of the assets of the trust available for
distribution, after satisfaction of liabilities to creditors of
the trust as provided by applicable law, an amount equal to the
aggregate of the liquidation amount plus accrued and unpaid
distributions to the date of payment. We refer to this
liquidation amount in this prospectus as the liquidation
distribution. If the trust can make the liquidation
distribution only in part because it has insufficient assets
available to pay the full aggregate liquidation distribution,
then it will pay the amounts on a proportionate basis. We, as
the holder of the common securities, will be entitled to receive
distributions upon any liquidation proportionately with you, and
the other holders of the preferred securities, except that if an
event exists that constitutes a debenture event of default, the
preferred securities will have a priority over the common
securities. A supplemental indenture may provide that if an
early dissolution occurs as described in the third clause above,
the corresponding junior subordinated debentures may be subject
to optional redemption in whole, but not in part.
Events of Default; Notice
Under the terms of the form of trust agreement, each of the
following constitutes an event of default for a series of
preferred securities:
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the occurrence of a debenture event of default under the junior
subordinated indenture (see Description of Junior
Subordinated Debentures Debenture Events of
Default), |
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default by the property trustee in the payment of any
distribution when it becomes due and payable, and continuation
of that default for a period of 30 days, |
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default by the property trustee in the payment of any redemption
price of the preferred securities or common securities when it
becomes due and payable, |
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default in the performance, or breach, in any material respect,
of any covenant or warranty of the trustees in the trust
agreement, other than a covenant or warranty a default in the
performance of which or the breach of which is dealt with in the
second and third clauses above, and continuation of the default
or breach for a period of 60 days after there has been
given to the defaulting trustee or trustees by the holders of at
least 10% in aggregate liquidation amount of the outstanding
preferred securities, a written notice specifying the default or
breach and requiring it to be remedied and stating that the
notice is a notice of default under such trust agreement, or |
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the bankruptcy or insolvency of the property trustee and our
failure to appoint a successor property trustee within
60 days of that event. |
Within five business days after the occurrence of any event of
default actually known to the property trustee, the property
trustee will transmit notice of the event of default to you, the
administrative
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trustees and us, as depositor, unless the event of default has
been cured or waived. We, as depositor, and the administrative
trustees are required to file annually with the property trustee
a certificate as to whether or not we are and they are in
compliance with all the conditions and covenants applicable to
them and to us under the trust agreement.
If a debenture event of default then exists, the preferred
securities will have a preference over the common securities
upon termination of the trust. See Liquidation
Distribution Upon Dissolution.
The existence of an event of default does not entitle you to
accelerate the maturity.
Removal of Trustees
Unless a debenture event of default then exists, the holder of
the common securities may remove any trustee. If a debenture
event of default then exists the holders of a majority in
liquidation amount of the outstanding preferred securities may
remove the property trustee and the Delaware trustee. In no
event will you have the right to vote to appoint, remove or
replace the administrative trustees. These voting rights are
vested exclusively in us as the holder of the common securities.
No resignation or removal of a trustee and no appointment of a
successor trustee will be effective until the acceptance of
appointment by the successor trustee in accordance with the
provisions of the trust agreement.
Co-trustees and Separate Property Trustee
Unless an event of default then exists, for the purpose of
meeting the legal requirements of the Trust Indenture Act or of
any jurisdiction in which any part of the trust property may be
located, we, as the holder of the common securities, and the
administrative trustees will have power to appoint one or more
persons approved by the property trustee either to act as a
co-trustee, jointly with the property trustee, of all or any
part of the trust property, or, to the extent required by law,
to act as separate trustee. These persons will have the powers
provided in the instrument of appointment, and we may vest in
that person or persons any property, title, right or power
deemed necessary or desirable, subject to the provisions of the
trust agreement. If a debenture event of default exists, the
property trustee alone will have power to make that appointment.
Merger or Consolidation of Trustees
Any corporation into which the property trustee, the Delaware
trustee or any administrative trustee that is not a natural
person may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the trustee is a party, or
any corporation succeeding to all or substantially all the
corporate trust business of the trustee, will be the successor
of such trustee under the trust agreements, provided that the
corporation is otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the
Trusts
A trust may not merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other
body, except as described below.
A trust may, at our request, with the consent of the
administrative trustees and without your consent, merge with or
into, consolidate, amalgamate, or be replaced by a trust
organized under the laws of any state. However, the following
conditions must be satisfied:
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the successor entity must either: |
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expressly assume all of the obligations of the trust relating to
the preferred securities, or |
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substitute for the preferred securities other securities having
substantially the same terms and the same ranking as the
preferred securities, |
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we must expressly appoint a trustee of the successor entity
possessing the same powers and duties as the property trustee as
the holder of the corresponding junior subordinated debentures, |
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the successor securities must be listed, or any successor
securities must be listed upon notification of issuance, on any
national securities exchange or other organization on which the
preferred securities are then listed, |
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the merger, consolidation, amalgamation or replacement must not
cause the preferred securities, including any successor
securities, to be downgraded by any nationally recognized
statistical rating organization, |
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the merger, consolidation, amalgamation or replacement must not
adversely affect the rights, preferences and privileges of
holders of the preferred securities, including any successor
securities, in any material respect, |
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the successor entity must have a purpose identical to that of
the trust, |
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prior to the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease we must have received an opinion
of counsel to the trust to the effect that: |
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the merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of
holders of the preferred securities, including any successor
securities, in any material respect, and |
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following the merger, consolidation, amalgamation or replacement
neither the trust nor the successor entity will be required to
register as an investment company under the Investment Company
Act, and |
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we or any permitted successor or assignee must own all of the
common securities of the successor entity and guarantee the
obligations of such successor entity under the successor
securities at least to the extent provided by the guarantee. |
However, a trust must not, except with the consent of holders of
100% in liquidation amount of the preferred securities,
consolidate, amalgamate, merge with or into, or be replaced by
or convey, transfer or lease its properties and assets
substantially as an entirety to any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or
replace it if it would cause the trust or the successor entity
to be classified as other than a grantor trust for federal
income tax purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided below and under Description of
Guarantee Amendments and Assignment and as
otherwise required by law and the applicable trust agreement,
you will have no voting rights.
We and the trustees may amend a trust agreement without your
consent:
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to cure any ambiguity, correct or supplement any provisions in
the trust agreement which may be inconsistent with any other
provision, or to make any other provisions with respect to
matters or questions arising under the trust agreement, which
are not inconsistent with the other provisions of the trust
agreement, or |
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to modify, eliminate or add to any provisions of the trust
agreement to the extent necessary to ensure that the trust will
be classified for federal income tax purposes as a grantor trust
at all times that any preferred securities and common securities
are outstanding, or to ensure that the trust will not be
required to register as an investment company under the
Investment Company Act. |
However, in the case of the first clause above, the action may
not adversely affect in any material respect the interests of
the holders of the preferred securities or our interests, as the
holder of the common securities. Any amendments of the trust
agreement will become effective when notice is given to you and
us.
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We and the trustees may also amend a trust agreement with:
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the consent of holders representing not less than a majority,
based upon liquidation amounts, of the outstanding preferred
securities and common securities, and |
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receipt by the trustees of an opinion of counsel to the effect
that the amendment or the exercise of any power granted to the
trustees under the amendment will not affect the status of the
trust as a grantor trust for federal income tax purposes or its
exemption from the status of an investment company
under the Investment Company Act. |
Without both your and our consent a trust agreement may not be
amended to:
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change the amount or timing of any distribution on the preferred
securities and common securities or otherwise adversely affect
the amount of any distribution of the preferred securities and
common securities as of a specified date, or |
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restrict your or our right to institute suit for the enforcement
of any payment on or after that date. |
So long as any corresponding junior subordinated debentures are
held by the property trustee, the trustees may not:
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direct the time, method and place of conducting any proceeding
for any remedy available to the debenture trustee, or for
executing any trust or power conferred on the debenture trustee
with respect to the corresponding junior subordinated debentures, |
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waive any past default that is waiveable under specified
sections of the junior subordinated indenture, |
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exercise any right to rescind or annul a declaration that the
principal of all the junior subordinated debentures is due and
payable, or |
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consent to any amendment, modification or termination of the
junior subordinated indenture or the corresponding junior
subordinated debentures, where that consent is required, |
without, in each case, obtaining the prior approval of the
holders of a majority in aggregate liquidation amount of all
outstanding preferred securities. However, where a consent under
the junior subordinated indenture would require the consent of
each holder of corresponding junior subordinated debentures
affected by the consent, no consent may be given by the property
trustee without the prior consent of each holder of the
corresponding preferred securities.
The trustees may not revoke any action previously authorized or
approved by a vote of the preferred securities except by
subsequent vote of the holders of the preferred securities. The
property trustee will notify you of any notice of default with
respect to the corresponding junior subordinated debentures. In
addition to obtaining the approval of the holders of the
preferred securities prior to taking any of these actions, the
trustees must obtain an opinion of counsel experienced in these
matters to the effect that the trust will not be classified as a
corporation or partnership for United States federal income tax
purposes on account of the action.
Any required approval of holders of preferred securities may be
given at a meeting of holders of preferred securities convened
for that purpose or through a written consent. The property
trustee will cause a notice of any meeting at which you are
entitled to vote, or of any matter upon which action by written
consent is to be taken, to be given to each holder of record of
preferred securities in the manner set forth in the trust
agreement.
Your vote or consent is not required for a trust to redeem and
cancel the preferred securities under the applicable trust
agreement.
Any preferred securities that are owned by us, the trustees or
any of our affiliates or any affiliate of the trustees, will,
for purposes of a vote or consent, be treated as if they were
not outstanding.
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Global Preferred Securities
We may issue a series of preferred securities in the form of one
or more global preferred securities. We will identify the
depositary which will hold the global preferred security in the
applicable prospectus supplement. Unless we otherwise indicate
in the applicable prospectus supplement, the depositary will be
DTC. We will issue global preferred securities only in fully
registered form and in either temporary or permanent form.
Unless it is exchanged for individual preferred securities, a
global preferred security may not be transferred except:
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by the depositary to its nominee, |
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by a nominee of the depositary to the depositary or another
nominee, or |
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by the depositary or any nominee to a successor depositary, or
any nominee of the successor. |
We will describe the specific terms of the depositary
arrangement in the applicable prospectus supplement. We expect
that the following provisions will generally apply to these
depositary arrangements.
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Beneficial Interests in a Global Preferred Security |
If we issue a global preferred security, the depositary for the
global preferred security or its nominee will credit on its
book-entry registration and transfer system the aggregate
liquidation amounts of the individual preferred securities
represented by the global preferred securities to the accounts
of participants. The accounts will be designated by the dealers,
underwriters or agents for the preferred securities, or by us if
the preferred securities are offered and sold directly by us.
Ownership of beneficial interests in a global preferred security
will be limited to participants or persons that may hold
interests through participants. Ownership and transfers of
beneficial interests in the global preferred security will be
shown on, and effected only through, records maintained by the
applicable depositary or its nominee, for interests of
participants, and the records of participants, for interests of
persons who hold through participants. The laws of some states
require that you take physical delivery of the securities in
definitive form. These limits and laws may impair your ability
to transfer beneficial interests in a global preferred security.
So long as the depositary or its nominee is the registered owner
of the global preferred security, the depositary or nominee will
be considered the sole owner or holder of the preferred
securities represented by the global preferred security for all
purposes under the trust agreement. Except as provided below,
you:
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will not be entitled to have any of the individual preferred
securities represented by the global preferred security
registered in your name, |
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will not receive or be entitled to receive physical delivery of
any preferred securities in definitive form, and |
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will not be considered the owner or holder of the preferred
security under the trust agreement. |
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Payments of Distributions |
We will pay distributions on global preferred securities to the
depositary that is the registered holder of the global security,
or its nominee. The depositary for the preferred securities will
be solely responsible and liable for all payments made on
account of your beneficial ownership interests in the global
preferred security and for maintaining, supervising and
reviewing any records relating to your beneficial ownership
interests.
We expect that the depositary or its nominee, upon receipt of
any payment of liquidation amount, premium or distributions,
immediately will credit participants accounts with amounts
in proportion to their respective beneficial interests in the
aggregate liquidation amount of the global preferred security as
shown on the records of the depositary or its nominee. We also
expect that payments by participants to owners of
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beneficial interests in the global preferred security held
through those participants will be governed by standing
instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or
registered in street name. These payments will be
the responsibility of those participants.
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Issuance of Individual Preferred Securities |
Unless we state otherwise in the applicable prospectus
supplement, if a depositary for a series of preferred securities
is at any time unwilling, unable or ineligible to continue as a
depositary and we do not appoint a successor depositary within
90 days, we will issue individual preferred securities in
exchange for the global preferred security. In addition, we may
at any time and in our sole discretion, subject to any
limitations described in the prospectus supplement relating to
the preferred securities, determine not to have any preferred
securities represented by one or more global preferred
securities. If that occurs, we will issue individual preferred
securities in exchange for the global preferred security.
Further, we may specify that you may, on terms acceptable to us,
the property trustee and the depositary for the global preferred
security, receive individual preferred securities in exchange
for your beneficial interests in a global preferred security,
subject to any limitations described in the prospectus
supplement relating to the preferred securities. In that
instance, you will be entitled to physical delivery of
individual preferred securities equal in liquidation amount to
that beneficial interest and to have the preferred securities
registered in its name. Unless we otherwise specify, those
individual preferred securities will be issued in denominations
of $25 and integral multiples of $25.
Payment and Paying Agency
The trust will make payments on the preferred securities to DTC,
which will credit the relevant accounts at DTC on the applicable
distribution dates. However, if any preferred securities are not
held by DTC, the trust will make the payments by check mailed to
the address of the holder entitled to the payment as shown on
the register. Unless we state otherwise in the applicable
prospectus supplement, the paying agent will initially be the
property trustee, together with any co-paying agent chosen by
the property trustee and acceptable to the administrative
trustees and us. The paying agent may resign as paying agent
upon 30 days written notice to the administrative
trustees, property trustees and us. If the property trustee
ceases to be the paying agent, the administrative trustees will
appoint a successor to act as paying agent. The successor must
be a bank or trust company acceptable to the administrative
trustees and us.
Registrar and Transfer Agent
Unless we state otherwise in the applicable prospectus
supplement, the property trustee will act as registrar and
transfer agent for the preferred securities.
The trust will register transfers of preferred securities
without charge, but upon your payment of any tax or other
governmental charges that may be imposed in connection with any
transfer or exchange. The trust will not be required to register
the transfer of its preferred securities after the preferred
securities have been called for redemption.
Information Concerning the Property Trustee
The property trustee, unless an event of default then exists,
will be required to perform only those duties that are
specifically set forth in the applicable trust agreement. After
an event of default, the property trustee must exercise the same
degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. However, the
property trustee is under no obligation to exercise any of the
powers vested in it by the trust agreement at your request
unless you offer reasonable indemnity against the costs,
expenses and liabilities that it might incur. If no event of
default then exists and the property trustee is required to
decide between alternative causes of action, construe ambiguous
provisions in a trust agreement or is unsure of the application
of any provision of a trust agreement, and the matter is
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not one on which holders are entitled under the trust agreement
to vote, then the property trustee will take such action as is
directed by us. If it is not so directed, the property trustee
will take such action as it deems advisable and in the best
interests of the holders of the preferred securities and the
holder of the common securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
Miscellaneous
The trust agreements authorize and direct the administrative
trustees to operate the related trusts in such a way that the
trust will not be deemed to be an investment company required to
be registered under the Investment Company Act or taxed as a
corporation for federal income tax purposes and so that the
corresponding junior subordinated debentures will be treated as
our indebtedness for United States federal income tax purposes.
We and the administrative trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of
trust of the trust or the trust agreement, that we and the
administrative trustees determine in our discretion to be
necessary or desirable for these purposes, as long as the action
does not materially adversely affect the interests of the
holders of the preferred securities.
You have no preemptive or similar rights as a holder of
preferred securities. No trust may borrow money or issue debt or
mortgage or pledge any of its assets.
DESCRIPTION OF GUARANTEE
At the same time as the issuance by a trust of its preferred
securities, we will execute and deliver a guarantee for your
benefit, as a holder of the preferred securities. The Wilmington
Trust Company will act as indenture trustee under the guarantee
for the purposes of compliance with the Trust Indenture Act. The
guarantee will be qualified as an indenture under the Trust
Indenture Act.
The following description of the terms of the guarantee is a
summary. It summarizes only those portions of the guarantee
which we believe will be most important to your decision to
invest in the preferred securities. You should keep in mind,
however, that it is the guarantee, and not this summary, which
defines your rights. There may be other provisions in the
guarantee which are also important to you. You should read the
guarantee itself for a full description of its terms. The
guarantee is filed as an exhibit to the Registration Statement
that includes this prospectus. See Where You Can Find More
Information for information on how to obtain a copy of the
guarantee. When we refer in this summary to preferred
securities, we mean the preferred securities issued by a trust
to which the guarantee relates.
General Terms of the Guarantee
We will irrevocably agree to pay in full on a subordinated
basis, to the extent described below, the guarantee payments, as
defined below, to you, as and when due, regardless of any
defense, right of set-off or counterclaim that the trust may
have or assert other than the defense of payment.
The following payments, which we refer to in this prospectus as
the guarantee payments, to the extent not paid by or
on behalf of the related trust, will be subject to the guarantee:
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any accrued and unpaid distributions required to be paid to you
on the related preferred securities, to the extent that the
trust has funds available for the payments, |
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the redemption price for any preferred securities called for
redemption, to the extent that the trust has funds available for
the payments, or |
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upon a voluntary or involuntary dissolution, winding up or
liquidation of the trust, unless the corresponding junior
subordinated debentures are distributed to you, the lesser of: |
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the liquidation distribution, and |
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the amount of assets of the trust remaining available for
distribution to you. |
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Our obligation to make a guarantee payment may be satisfied by
us directly paying to you the required amounts or by causing the
trust to pay the amounts to you.
The guarantee will be an irrevocable guarantee on a subordinated
basis of the related trust obligations under the preferred
securities, but will apply only to the extent that the related
trust has funds sufficient to make the payments. It is not a
guarantee of collection.
If we do not make interest payments on the corresponding junior
subordinated debentures held by the trust, we expect that the
trust will not pay distributions on the preferred securities and
will not have funds legally available for those payments. The
guarantee will rank subordinate and junior in right of payment
to all senior debt. See Status of the
Guarantee.
As a non-operating holding company, most of our operating assets
and the assets of our consolidated subsidiaries are owned by our
subsidiaries. We rely primarily on dividends from our
subsidiaries to meet our obligations for payment of principal
and interest on our outstanding debt obligations and corporate
expenses. Accordingly, our obligations under the guarantee will
be effectively subordinated to all existing and future
liabilities of our subsidiaries. You should rely only on our
assets for payments we owe. The payment of dividends by our
insurance company subsidiaries is limited under the insurance
holding company laws in which those subsidiaries are domiciled.
See The Hartford Financial Services Group, Inc.
Unless we state otherwise in the applicable prospectus
supplement, the guarantee does not limit the amount of secured
or unsecured debt that we may incur. We expect from time to time
to incur additional senior debt.
We have, through the guarantee, the trust agreement, the junior
subordinated debentures, the junior subordinated indenture and
the expense agreement, taken together, fully, irrevocably and
unconditionally guaranteed all of the obligations of the trust
under the preferred securities. No single document standing
alone or operating in conjunction with fewer than all of the
other documents constitutes the guarantee. It is only the
combined operation of these documents that has the effect of
providing a full, irrevocable and unconditional guarantee of the
obligations of the trust under the preferred securities. See
Relationship Among the Preferred Securities, the
Corresponding Junior Subordinated Debentures and the
Guarantees.
Status of the Guarantee
The guarantee will constitute an unsecured obligation of The
Hartford Financial Services Group, Inc. and will rank
subordinate and junior in right of payment to all its senior
debt.
Unless we state otherwise in the applicable prospectus
supplement, the guarantee of a series of preferred securities
will rank equally with the guarantees relating to all other
series of preferred securities that we may issue. The guarantee
will constitute a guarantee of payment and not of collection,
which means that the guaranteed party may institute a legal
proceeding directly against us to enforce its rights under the
guarantee without first instituting a legal proceeding against
any other person or entity. The property trustee of the related
trust will hold the guarantee for your benefit. The guarantee
will not be discharged except by payment of the guarantee
payments in full to the extent not paid by the trust or upon
distribution of the corresponding junior subordinated debentures
to you.
Amendments and Assignment
We may not amend the guarantee without the prior approval of the
holders of not less than a majority of the aggregate liquidation
amount of outstanding preferred securities, except for any
changes which do not materially adversely affect the rights of
the holders of the preferred securities, in which case no vote
will be required. The manner of obtaining any approval will be
as set forth under Description of the Preferred
Securities Voting Rights; Amendment of Trust
Agreement.
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All guarantees and agreements contained in the guarantee will
bind our successors, assigns, receivers, trustees and
representatives and will inure to the benefit of the holders of
the related preferred securities then outstanding.
Events of Default
An event of default under the guarantee will occur when we fail
to perform any of our payment or other obligations under the
guarantee. The holders of not less than a majority in aggregate
liquidation amount of the related preferred securities have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee
under the guarantee or to direct the exercise of any trust or
power conferred upon the guarantee trustee under the guarantee.
You may institute a legal proceeding directly against us to
enforce your rights under the guarantee without first
instituting a legal proceeding against the trust, the guarantee
trustee or any other person or entity.
We, as guarantor, are required to file annually with the
guarantee trustee a certificate as to whether or not we are in
compliance with all the conditions and covenants applicable to
us under the guarantee.
Information Concerning the Guarantee Trustee
The guarantee trustee, unless a default by us in the performance
of the guarantee then exists, is required to perform only those
duties that are specifically set forth in the guarantee. After a
default under the guarantee, the guarantee trustee must exercise
the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs.
However, the guarantee trustee is under no obligation to
exercise any of the powers vested in it by the guarantee at your
request unless you offer reasonable indemnity against the costs,
expenses and liabilities that it might incur.
Termination of the Guarantee
The guarantee will terminate and be of no further force and
effect:
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upon full payment of the redemption price of the related
preferred securities, |
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upon full payment of the amounts payable upon liquidation of the
related trust, or |
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upon distribution of corresponding junior subordinated
debentures to the holders of the preferred securities. |
The guarantee will continue to be effective or will be
reinstated if at any time you must restore payment of any sums
paid under the preferred securities or the guarantee.
Governing Law
The guarantee will be governed by and construed in accordance
with the laws of the State of New York.
The Expense Agreement
Under an expense agreement entered into by us, we will
irrevocably and unconditionally guarantee to each person or
entity to whom a trust becomes indebted or liable, the full
payment of any costs, expenses or liabilities of the trust,
other than obligations of the trust to pay to you the amounts
due to you under the terms of the preferred securities.
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DESCRIPTION OF CORRESPONDING JUNIOR SUBORDINATED
DEBENTURES
The corresponding junior subordinated debentures are to be
issued in one or more series of junior subordinated debentures
under the junior subordinated indenture with terms corresponding
to the terms of the related preferred securities. See
Description of Junior Subordinated Debentures.
The following description of the terms of the corresponding
junior subordinated debentures and the junior subordinated
indenture is a summary. It summarizes only those portions of the
junior subordinated indenture which we believe will be most
important to your decision to invest in the preferred
securities. You should keep in mind, however, that it is the
junior subordinated indenture, and not this summary, which
defines your rights. There may be other provisions in the junior
subordinated indenture which are also important to you. You
should read the junior subordinated indenture itself for a full
description of its terms. The junior subordinated indenture is
filed as an exhibit to the Registration Statement that includes
this prospectus. See Where You Can Find More
Information for information on how to obtain a copy of the
junior subordinated indenture.
General Terms of the Corresponding Junior Subordinated
Debentures
At the same time a trust issues preferred securities, the trust
will invest the proceeds from the sale and the consideration
paid by us for the common securities in a series of
corresponding junior subordinated debentures issued by us to the
trust. Each series of corresponding junior subordinated
debentures will be in the principal amount equal to the
aggregate stated liquidation amount of the related preferred
securities plus our investment in the common securities and,
unless we state otherwise in the applicable prospectus
supplement, will rank equally with all other series of
corresponding junior subordinated debentures. The corresponding
junior subordinated debentures will be unsecured and subordinate
and junior in right of payment to the extent and in the manner
set forth in the junior subordinated indenture to all our senior
debt. See Description of Junior Subordinated
Debentures Subordination and the prospectus
supplement relating to any offering of related preferred
securities.
Optional Redemption
Unless we state otherwise in the applicable prospectus
supplement, we may, at our option, redeem the corresponding
junior subordinated debentures on any interest payment date, in
whole or in part. Unless we state otherwise in the applicable
prospectus supplement, the redemption price for any
corresponding junior subordinated debentures will be equal to
any accrued and unpaid interest to the date fixed for
redemption, plus the greater of:
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the principal amount of the debentures, and |
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an amount equal to: |
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for junior subordinated debentures bearing interest at a fixed
rate, the discounted remaining fixed amount payments. See
Description of Junior Subordinated Debentures
Redemption. |
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for junior subordinated debentures bearing interest determined
by reference to a floating rate, the discounted swap equivalent
payments. See Description of Junior Subordinated
Debentures Redemption. |
If a tax event or an investment company event exists, we may, at
our option, redeem the corresponding junior subordinated
debentures on any interest payment date falling within
90 days of the occurrence of the tax event or investment
company event, in whole but not in part, subject to the
provisions of the junior subordinated indenture. The redemption
price for any corresponding junior subordinated debentures will
be equal to 100% of the principal amount of the corresponding
junior subordinated debentures then outstanding plus accrued and
unpaid interest to the date fixed for redemption. See
Description of Junior Subordinated Debentures
Redemption.
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For so long as the applicable trust is the holder of all the
outstanding series of corresponding junior subordinated
debentures, the trust will use the proceeds of any redemption to
redeem the corresponding preferred securities. We may not redeem
a series of corresponding junior subordinated debentures in part
unless all accrued and unpaid interest has been paid in full on
all outstanding corresponding junior subordinated debentures of
the series for all interest periods terminating on or prior to
the redemption date.
Covenants of The Hartford Financial Services Group, Inc.
We will covenant in the junior subordinated indenture for each
series of corresponding junior subordinated debentures that we
will pay additional sums to the trust, if:
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the trust that has issued the corresponding series of preferred
securities and common securities is the holder of all of the
corresponding junior subordinated debentures, |
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a tax event exists, and |
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we have not redeemed the corresponding junior subordinated
debentures or terminated the trust. |
We will also covenant, for each series of corresponding junior
subordinated debentures, that we and our subsidiaries will not:
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declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment on any of our
capital stock, or |
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make any payment of principal of, interest or premium, if any,
on or repay or repurchase or redeem any debt securities,
including other corresponding junior subordinated debentures,
that rank equally with or junior in interest to the
corresponding junior subordinated debentures or make any related
guarantee payments, |
other than:
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dividends or distributions in our common stock, |
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redemptions or purchases of any rights pursuant to our rights
plan, or any successor to our rights plan, and the declaration
of a dividend of these rights in the future, and |
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payments under any guarantee of preferred securities, |
if at that time:
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there has occurred any event of which we have actual knowledge
that with the giving of notice or the lapse of time, or both,
would constitute an event of default under the
junior subordinated indenture for that series of corresponding
junior subordinated debentures which we have not taken
reasonable steps to cure, |
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we are in default on our payment of any obligations under the
related guarantee, or |
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we have given notice of our selection of an extension period as
provided in the junior subordinated indenture for that series of
corresponding junior subordinated debentures and have not
rescinded that notice, or the extension period, or any
extension, is continuing. |
We will also covenant, for each series of corresponding junior
subordinated debentures:
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to maintain, by ourselves or our permitted successors, directly
or indirectly, 100% ownership of the common securities of the
trust to which corresponding junior subordinated debentures have
been issued, |
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not to voluntarily terminate, wind-up or liquidate any trust,
except in connection with a distribution of corresponding junior
subordinated debentures to you in liquidation of the |
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trust, or in connection with mergers, consolidations or
amalgamations permitted by the related trust agreement, and |
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to use our reasonable efforts, consistent with the terms and
provisions of the related trust agreement, to cause the trust to
remain a statutory trust and not to be classified as an
association taxable as a corporation for United States federal
income tax purposes. |
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE
CORRESPONDING
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEES
As long as payments of interest and other payments are made when
due on each series of corresponding junior subordinated
debentures, these payments will be sufficient to cover
distributions and other payments due on the related preferred
securities, primarily because:
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the aggregate principal amount of each series of corresponding
junior subordinated debentures will be equal to the sum of the
aggregate stated liquidation amount of the corresponding
preferred securities and corresponding common securities, |
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the interest rate and interest and other payment dates on each
series of corresponding junior subordinated debentures will
match the distribution rate and distribution and other payment
dates for the corresponding preferred securities, |
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we will pay for all and any costs, expenses and liabilities of
the trust except the obligations of the trust to holders of its
preferred securities under the preferred securities, and |
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each trust agreement further provides that the trust will not
engage in any activity that is not consistent with the limited
purposes of the trust. |
We will irrevocably guarantee payments of distributions and
other amounts due on the preferred securities, to the extent the
trust has funds available for the payment of such distributions,
to the extent set forth under Description of
Guarantee.
Taken together, our obligations under each series of junior
subordinated debentures, the junior subordinated indenture, the
related trust agreement, the related expense agreement and the
related guarantee provide a full, irrevocable and unconditional
guarantee of payments of distributions and other amounts due on
the related series of preferred securities. No single document
standing alone or operating in conjunction with fewer than all
of the other documents constitutes the guarantee. It is only the
combined operation of these documents that has the effect of
providing a full, irrevocable and unconditional guarantee of the
obligations of the trust under the preferred securities. If and
to the extent that we do not make payments on any series of
corresponding junior subordinated debentures, the trust will not
pay distributions or other amounts due on its preferred
securities.
Notwithstanding anything to the contrary in the junior
subordinated indenture, we have the right to set-off any payment
we are otherwise required to make under the indenture with and
to the extent we have made or are making a payment under the
related guarantee.
You may institute a legal proceeding directly against us to
enforce your rights under the related guarantee without first
instituting a legal proceeding against the guarantee trustee,
the related trust or any other person or entity.
The preferred securities of each trust evidence your rights to
the benefits of the trust. Each trust exists for the sole
purpose of issuing its preferred securities and common
securities, investing the proceeds from the sale of such
securities in corresponding junior subordinated debentures and
related purposes.
A principal difference between your rights as a holder of a
preferred security and the rights of a holder of a corresponding
junior subordinated debenture is that a holder of a
corresponding junior subordinated debenture will accrue, and,
subject to the permissible extension of the interest period, is
entitled to receive, interest on the principal amount of
corresponding junior subordinated debentures held,
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while you are only entitled to receive distributions if and to
the extent the trust has funds available for the payment of
those distributions.
Upon any voluntary or involuntary termination, winding-up or
liquidation of any trust involving the liquidation of the
corresponding junior subordinated debentures, you will be
entitled to receive, out of assets held by the trust, the
liquidation distribution in cash. See Description of
Preferred Securities Liquidation Distribution Upon
Termination.
Upon any voluntary or involuntary liquidation or bankruptcy of
The Hartford Financial Services Group, Inc., the property
trustee, as holder of the corresponding junior subordinated
debentures, would be a subordinated creditor. In this case, the
property trustee would be subordinated in right of payment to
all senior debt, but entitled to receive payment in full of
principal and interest, before any of our stockholders receive
payments or distributions. Since we are the guarantor under each
guarantee and have agreed to pay for all costs, expenses and
liabilities of each trust, your position as a holder of the
preferred securities and the position of a holder of the
corresponding junior subordinated debentures relative to other
creditors and to our stockholders in the event of liquidation or
bankruptcy of our company would be substantially the same.
A default or event of default under any senior debt would not
constitute a default or event of default under the junior
subordinated indenture. However, in the event of payment
defaults under, or acceleration of, senior debt, the
subordination provisions of the junior subordinated indenture
provide that we may not make payments on the corresponding
junior subordinated debentures until the senior debt has been
paid in full or any payment default under the senior debt has
been cured or waived. Our failure to make required payments on
any series of corresponding junior subordinated debentures would
constitute an event of default under the junior subordinated
indenture.
PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus through
agents, underwriters or dealers, or directly to purchasers.
Agents whom we designate may solicit offers to purchase the
securities.
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We will name any agent involved in offering or selling
securities, and disclose any commissions that we will pay to the
agent, in the applicable prospectus supplement. |
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Unless we indicate otherwise in the applicable prospectus
supplement, our agents will act on a best efforts basis for the
period of their appointment. |
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Our agents may be deemed to be underwriters under the Securities
Act of 1933, as amended, of any of the securities that they
offer or sell. |
We may use an underwriter or underwriters in the offer or sale
of our securities.
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If we use an underwriter or underwriters, we will execute an
underwriting agreement with the underwriter or underwriters at
the time that we reach an agreement for the sale of the
securities. |
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We will include the names of the specific managing underwriter
or underwriters, as well as the names of any other underwriters,
and the terms of the transactions, including the compensation
the underwriters and dealers will receive, in the applicable
prospectus supplement. |
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The underwriters will use the applicable prospectus supplement
to sell the securities. |
We may use a dealer to sell the securities.
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If we use a dealer, we, as principal, will sell the securities
to the dealer. |
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The dealer will then sell the securities to the public at
varying prices that the dealer will determine at the time it
sells our securities. |
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We will include the name of the dealer and the terms of our
transactions with the dealer in the applicable prospectus
supplement. |
We may solicit directly offers to purchase the securities, and
we may directly sell the securities to institutional or other
investors. We will describe the terms of our direct sales in our
prospectus supplement.
We may also offer and sell securities, if so indicated in the
applicable prospectus supplement, in connection with a
remarketing upon their purchase, in accordance with a redemption
or repayment pursuant to their terms, or otherwise, by one or
more firms referred to as remarketing firms, acting as
principals for their own accounts or as our agents. Any
remarketing firm will be identified and the terms of its
agreement, if any, with us, and its compensation will be
described in the applicable prospectus supplement. Remarketing
firms may be deemed to be underwriters under the Securities Act
in connection with the securities they remarket.
We may indemnify agents, underwriters, dealers and remarketing
firms against certain liabilities, including liabilities under
the Securities Act. Our agents, underwriters, dealers and
remarketing firms, or their affiliates, may be customers of,
engage in transactions with or perform services for us, in the
ordinary course of business.
We may authorize our agents and underwriters to solicit offers
by certain institutions to purchase the securities at the public
offering price under delayed delivery contracts.
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If we use delayed delivery contracts, we will disclose that we
are using them in the prospectus supplement and will tell you
when we will demand payment and delivery of the securities under
the delayed delivery contracts. |
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These delayed delivery contracts will be subject only to the
conditions that we describe in the prospectus supplement. |
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We will describe in the applicable prospectus supplement the
commission that underwriters and agents soliciting purchases of
the securities under delayed contracts will be entitled to
receive. |
LEGAL OPINIONS
Unless we state otherwise in the applicable prospectus
supplement the validity of any securities offered by this
prospectus will be passed upon for us by Debevoise &
Plimpton, New York, New York, and for the trusts by Richards,
Layton & Finger, P.A., special Delaware counsel to the
trusts, and for any underwriters or agents by counsel that we
will name in the applicable prospectus supplement.
EXPERTS
The consolidated financial statements and the related financial
statement schedules incorporated in this prospectus by reference
from the Companys Annual Report on
Form 10-K for the
year ended December 31, 2002 have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference (which report
expresses an unqualified opinion and includes an explanatory
paragraph relating to the Companys changes in its method
of accounting for (a) goodwill and indefinite-lived
intangible assets in 2002, (b) accounting for derivative
instruments and hedging activities in 2001 and (c) the
recognition of interest income and impairment on purchased
retained beneficial interests in securitized financial assets in
2001), and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting
and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a Registration Statement that we
filed with the Securities and Exchange Commission. The
Registration Statement, including the attached exhibits,
contains additional relevant information about us. The rules and
regulations of the Securities and Exchange Commission allow us
to omit some of the information about The Hartford Financial
Services Group, Inc. In addition, we file reports, proxy
statements, information statements and other information with
the Securities and Exchange Commission. This information may be
read and copied at the Public Reference Room of the Securities
and Exchange Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. Information regarding
the operation of the Public Reference Room may be obtained by
calling the Securities and Exchange Commission at
1-800-SEC-0330. The
material may also be accessed electronically by means of the
Securities and Exchange Commissions home page on the
Internet at http://www.sec.gov or through our web site at
http://www.thehartford.com.
Our common stock is listed on the New York Stock Exchange, Inc.
You can also inspect reports and other information concerning us
at the office of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005.
INCORPORATION BY REFERENCE
The rules of the Securities and Exchange Commission allow us to
incorporate by reference information into this prospectus. The
information incorporated by reference is considered to be a part
of this prospectus, and information that we file later with the
Securities and Exchange Commission will automatically update and
supercede this information. This prospectus incorporates by
reference the documents listed below.
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Our Annual Report on
Form 10-K for the
year ended December 31, 2002, |
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description of our common stock and the rights associated with
our common stock contained in our registration statement on
Form 8-A, dated
September 18, 1995 (as amended by the
Form 8-A/ A filed
on November 13, 1995), |
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our current reports on
Form 8-K filed on
March 17, 2003 and March 25, 2003, and |
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all documents filed by us pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this
prospectus. |
We will provide without charge to each person, including any
beneficial owner, to whom a copy of this prospectus is
delivered, upon written or oral request of such person, a copy
of any or all of the documents referred to above which have been
or may be incorporated by reference in this prospectus. You
should direct requests for those documents to The Hartford
Financial Services Group, Inc., Hartford Plaza, Hartford,
Connecticut 06115, Attention: Brian S. Becker, Senior Vice
President and Corporate Secretary (Telephone:
860-547-5000).
58
$689,825,000
The Hartford Financial Services Group, Inc.
5.550% Senior Notes due 2008
PROSPECTUS SUPPLEMENT
Merrill Lynch & Co.
Goldman, Sachs & Co.
JPMorgan
May 11, 2006