The Hartford 2008 Annual Report Download - page 153

Table of Contents
Year ended December 31, 2007 compared to the year ended December 31, 2006
Net income increased in Group Benefits for the year ended December 31, 2007, primarily due to higher earned premiums,
higher net investment income, a gain on a renewal rights transaction associated with the Company’s medical stop loss
business and a change in assumptions underlying the valuation of long term disability claims incurred in 2007. Partially
offsetting the higher net income was increased DAC amortization due to the adoption of SOP 05-1. In addition, realized
capital losses increased $17 for the year ended December 31, 2007 as compared to the prior year period. For further
discussion, see Realized Capital Gains and Losses by Segment table under Life’s Operating Section of the MD&A. A more
expanded discussion of income growth is presented below:
Premiums and other
considerations
• Premiums and other considerations increased largely due to business growth driven by new
sales and persistency over the last twelve months.
Net investment income • Net investment income increased due to a higher invested asset base and increased interest
income on allocated surplus.
Loss ratio • The segment’s loss ratio (defined as benefits, losses and loss adjustment expenses as a
percentage of premiums and other considerations excluding buyouts) for the year ended
December 31, 2007, decreased slightly. Loss ratios experience volatility in period over
period comparisons due to fluctuation in mortality and morbidity experience. Additionally
there was a change in assumptions underlying the valuation of long term disability claims
incurred in 2007.
Expense ratio • The segment’s expense ratio, excluding buyouts, for the year ended December 31, 2007,
increased primarily due to higher DAC amortization resulting from a shorter amortization
period following the adoption of SOP 05-1.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009