The Hartford 2007 Annual Report Download - page 94

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The Company has several catastrophe reinsurance programs, including reinsurance treaties that cover property and workers’
compensation losses aggregating from single catastrophe events. The following table summarizes the primary catastrophe treaty
reinsurance coverages that the Company has in place as of January 1, 2008:
Coverage Treaty term
% of layer(s)
reinsured Per occurrence limit Retention
Principal property catastrophe program covering
property catastrophe losses from a single event
1/1/2008 to
1/1/2009
Varies by layer,
but averages 89%
across all layers
Aggregates to $750
across all layers
$ 250
Layer covering property catastrophe losses from a
single wind or earthquake event affecting the
northeast of the United States from Virginia to
Maine
6/1/2007 to
6/1/2008
90% 300 1,000
Property catastrophe losses from a single event on
excess and surplus property business
1/1/2008 to
1/1/2009
95% Aggregates to $280
across all layers
20
Property catastrophe losses from a single event on
property business written with national accounts
7/1/2007 to
7/1/2008
91% 160 15
Reinsurance with the Florida Hurricane
Catastrophe Fund covering Florida Personal Lines
property catastrophe losses from a single event
6/1/2007 to
6/1/2008
90% 423 [1] 83
Workers’ compensation losses arising from a
single catastrophe event
7/1/2007 to
7/1/2008
95% 280 20
[1] The per occurrence limit on the FHCF treaty increased from $264 for the 6/1/2006 to 6/1/2007 treaty year to $423 for the 6/1/2007 to 6/1/2008
treaty year due to the Company’s election to purchase additional limits under the “Temporary Increase in Coverage Limit (TCIL)” statutory
provision in excess of the coverage the Company is required to purchase from the FHCF.
In addition to the property catastrophe reinsurance coverage described in the above table, the Company has other treaties and facultative
reinsurance agreements that cover property catastrophe losses on an aggregate excess of loss and on a per risk basis. Property
catastrophe losses incurred on property business written with national accounts is also reimbursable under the principal catastrophe
reinsurance program, subject to the overall program limits and retention. In the aftermath of the 2004 and 2005 hurricane season, third-
party catastrophe loss models for hurricane loss events were updated to incorporate medium-term forecasts of increased hurricane
frequency and severity.
The principal property catastrophe reinsurance program and other reinsurance programs include a provision to reinstate limits in the
event that a catastrophe loss exhausts limits on one or more layers under the treaties.
In addition to the reinsurance protection provided by The Hartford’ s reinsurance program described above, the Company has fully
collateralized reinsurance coverages from Foundation Re and Foundation Re II for losses sustained from qualifying hurricane and
earthquake loss events and other qualifying catastrophe losses. Foundation Re and Foundation Re II are Cayman Islands reinsurance
companies which financed the provision of the reinsurance through the issuance of catastrophe bonds. Under the terms of the treaties
with Foundation Re and Foundation Re II, the Company is reimbursed for losses from natural disaster events using a customized
industry index contract designed to replicate The Hartford's own catastrophe losses, with a provision that the actual losses incurred by
the Company for covered events, net of reinsurance recoveries, cannot be less than zero.