Earnings (Loss) Per Common Share

9 Months Ended

Sep. 30, 2011

Earnings (Loss) Per Common Share [Abstract]

Earnings (Loss) Per Common Share

2. Earnings (Loss) Per Common Share

The following table presents a reconciliation of net income and shares used in calculating basic earnings (loss) per common share to those used in calculating diluted earnings (loss) per common share.

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(In millions, except for per share data)	2011			2010		2011		2010
Earnings
Income (loss) from continuing operations
Income (loss) from continuing operations, net of tax	$	(3	)	$	665	$	450	$	1,160
Less: Preferred stock dividends and accretion of discount		10			10		31		504
Income (loss) from continuing operations, net of tax, available to common shareholders		(13	)		655		419		656
Add: Dilutive effect of preferred stock dividends		—			10		—		—
Income (loss) from continuing operations, net of tax, available to common shareholders and assumed conversion of preferred shares	$	(13	)	$	665	$	419	$	656
Income (loss) from discontinued operations, net of tax	$	3		$	1	$	85	$	(99	)
Net income
Net income	$	—		$	666	$	535	$	1,061
Less: Preferred stock dividends and accretion of discount		10			10		31		504
Net income (loss) available to common shareholders		(10	)		656		504		557
Add: Dilutive effect of preferred stock dividends		—			10		—		—
Net income (loss) available to common shareholders and assumed conversion of preferred shares	$	(10	)	$	666	$	504	$	557
Shares
Weighted average common shares outstanding, basic		445.3			444.1		445.0		427.2
Dilutive effect of warrants		—			29.0		34.8		32.6
Dilutive effect of stock compensation plans		—			1.4		1.2		1.3
Dilutive effect of mandatory convertible preferred shares		—			20.8		—		—
Weighted average shares outstanding and dilutive potential common shares		445.3			495.3		481.0		461.1
Earnings (loss) per common share
Basic
Income (loss) from continuing operations, net of tax, available to common shareholders	$	(0.03	)	$	1.47	$	0.94	$	1.54
Income (loss) from discontinued operations, net of tax		0.01			0.01		0.19		(0.24	)
Net income (loss) available to common shareholders	$	(0.02	)	$	1.48	$	1.13	$	1.30
Diluted
Income (loss) from continuing operations, net of tax, available to common shareholders	$	(0.03	)	$	1.34	$	0.87	$	1.42
Income (loss) from discontinued operations, net of tax		0.01			—		0.18		(0.21	)
Net income (loss) available to common shareholders	$	(0.02	)	$	1.34	$	1.05	$	1.21

The declaration of a quarterly common stock dividend of $0.10 during the first, second and third quarters of 2011 triggered a provision in The Hartford’s Warrant Agreement with The Bank of New York Mellon, relating to warrants to purchase common stock issued in connection with the Company’s participation in the Capital Purchase Program, resulting in an adjustment to the warrant exercise price. The warrant exercise price at September 30, 2011, June 30, 2011, March 31, 2011 and December 31, 2010 was $9.729, $9.754, $9.773 and $9.790, respectively.

As a result of the losses available to common shareholders in the three months ended September 30, 2011, the Company is required to use basic weighted average common shares outstanding in the calculation of the three months ended September 30, 2011 diluted loss per share, since the inclusion of 27.4 million shares for warrants, 0.7 million shares for stock compensation plans and 20.7 million shares for mandatory convertible preferred shares, along with the related dividend adjustment, 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 494.1 million.

For the nine months ended September 30, 2011, 20.8 million shares for mandatory convertible preferred shares, along with the related dividend adjustment, would have been antidilutive to the earnings per share calculations. Assuming the impact of the mandatory convertible preferred shares was not antidilutive, weighted average common shares outstanding and dilutive potential common shares would have totaled 501.8 million.

For the nine months ended September 30, 2010, 14.9 million shares for mandatory convertible preferred shares, along with the related dividend adjustment, would have been antidilutive to the earnings per share calculation. Assuming the impact of the mandatory convertible preferred shares was not antidilutive, weighted average common shares outstanding and dilutive potential common shares would have totaled 476.0 million.