The Hartford 2008 Annual Report Download - page 194

Table of Contents
Prior accident year development recorded in 2006
Included within prior accident year development for the year ended December 31, 2006 were the following reserve
strengthenings (releases).
Personal Small Middle Specialty Ongoing Other Total
Lines Commercial Market Commercial Operations Operations P&C
Net release of catastrophe
loss reserves for 2004 and
2005 hurricanes $ (23) $ (22) $ (3) $ (35) $ (83) $ — $ (83)
Release of Personal Lines
auto liability reserves for
accident year 2005 (31) — — — (31) — (31)
Strengthening of Personal
Lines auto liability
reserves for claims with
exposure in excess of
policy limits 30 — — — 30 — 30
Strengthening of general
liability loss and loss
adjustment expense
reserves for accident
years 1998 to 2005 — — 20 — 20 — 20
Release of allocated loss
adjustment expense
reserves for workers’
compensation and
package business for
accident years 2003 to
2005 — (33) (25) — (58) — (58)
Release of Personal Lines
auto liability reserves for
accident year 2003 to
2005 (22) — — — (22) — (22)
Strengthening of Specialty
Commercial construction
defect claim reserves for
accident years 1997 and
prior — — 10 35 45 — 45
Strengthening of Specialty
Commercial workers’
compensation allocated
loss adjustment expense
reserves — — — 20 20 — 20
Effect of Equitas agreement
and strengthening of
allowance for
uncollectible reinsurance — — — — — 243 243
Strengthening of
environmental reserves — — — — — 43 43
Other reserve re-estimates,
net [1] 8 (20) 11 16 15 74 89
Total prior accident year
development for the
year ended
December 31, 2006 $ (38) $ (75) $ 13 $ 36 $ (64) $ 360 $ 296
[1] Includes reserve discount accretion of $32, including $6 in Small Commercial, $8 in Middle Market, $11 in Specialty
Commercial and $7 in Other Operations.
During the year ended December 31, 2006, the Company’s re-estimates of prior accident year reserves included the
following significant reserve changes.
Ongoing Operations
• Released net reserves related to prior year hurricanes by a total of $83, including $57 for hurricanes Katrina and Rita in
2005 and $26 for hurricanes Charley, Frances and Jeanne in 2004. Initial reserve estimates for the 2005 and 2004
hurricanes were higher because of the difficulty claim adjusters had in accessing the most significantly impacted areas
and initially higher estimates of the cost of building materials and contractors due to “demand surge”. As the reported
claims have matured, the estimated settlement value of the claims has decreased from the initial estimates. The ultimate
estimate for hurricane Katrina was increased in the first quarter of 2006 because of higher than expected claim
reporting, particularly in Personal Lines. Net loss reserves within Specialty Commercial decreased, primarily because
hurricane Katrina losses on specialty property business were reimbursable under a specialty property reinsurance treaty
as well as under the Company’s principal property catastrophe reinsurance program. After the first quarter of 2006,
Katrina new claim intake abated and settlement percentages increased, resulting in a reduction of reserves in the last
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009