The Hartford 2007 Annual Report Download - page 132

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During the second quarters of 2007, 2006 and 2005, the Company completed its annual ground up asbestos reserve evaluations. As part
of these evaluations, the Company reviewed all of its open direct domestic insurance accounts exposed to asbestos liability as well as
assumed reinsurance accounts and its London Market exposures for both direct insurance and assumed reinsurance. These evaluations
resulted in no addition to the Company’ s net asbestos reserves. The Company currently expects to continue to perform an evaluation of
its asbestos liabilities annually.
The Company divides its gross asbestos exposures into Direct, Assumed Reinsurance and London Market. The Company further
divides its direct asbestos exposures into the following categories: Major Asbestos Defendants (the “Top 70” accounts in Tillinghast’ s
published Tiers 1 and 2 and Wellington accounts), which are subdivided further as: Structured Settlements, Wellington, Other Major
Asbestos Defendants; Accounts with Future Expected Exposures greater than $2.5, Accounts with Future Expected Exposures less than
$2.5 and Unallocated.
• Structured Settlements are those accounts where the Company has reached an agreement with the insured as to the amount and
timing of the claim payments to be made to the insured.
• The Wellington subcategory includes insureds that entered into the “Wellington Agreement” dated June 19, 1985. The Wellington
Agreement provided terms and conditions for how the signatory asbestos producers would access their coverage from the signatory
insurers.
• The Other Major Asbestos Defendants subcategory represents insureds included in Tiers 1 and 2, as defined by Tillinghast that are
not Wellington signatories and have not entered into structured settlements with The Hartford. The Tier 1 and 2 classifications are
meant to capture the insureds for which there is expected to be significant exposure to asbestos claims.
• The Unallocated category includes an estimate of the reserves necessary for asbestos claims related to direct insureds that have not
previously tendered asbestos claims to the Company and exposures related to liability claims that may not be subject to an
aggregate limit under the applicable policies.
An account may move between categories from one evaluation to the next. For example, an account with future expected exposure of
greater than $2.5 in one evaluation may be reevaluated due to changing conditions and recategorized as less than $2.5 in a subsequent
evaluation or vice versa.