The Hartford 2008 Annual Report Download - page 222

Table of Contents
Earned premium increased by $37
Earned premiums increased $37, or 1%, primarily due to earned premium growth in AARP, partially offset by a decrease in
Agency and Other earned premium. Refer to the earned premium section above for further discussion.
Losses and loss adjustment expenses increased by $52
Current accident year losses and loss adjustment expenses before catastrophes decreased by $34
Personal Lines current accident year losses and loss adjustment expenses before catastrophes decreased by $34, to $2,542,
due to a decrease in the current accident year loss and loss adjustment expense ratio before catastrophes, partially offset by
the effect of higher earned premium. The current accident year loss and loss adjustment expense ratio before catastrophes
decreased by 1.4 points, to 64.8. The decrease was primarily due to favorable expected frequency on auto liability claims
and the effect of earned pricing increases for both auto and homeowners, partially offset by increased frequency and severity
of non-catastrophe losses on homeowners business.
Current accident year catastrophes increased by $133
Current accident year catastrophe losses of $258, or 6.6 points, in 2008 were higher than current accident year catastrophe
losses of $125, or 3.2 points, in 2007, primarily due to losses from hurricane Ike and tornadoes and thunderstorms in the
South and Midwest.
Net favorable prior accident year reserve development increased by $47
Net favorable reserve development of $51 in 2008 included a $46 release of auto liability reserves, primarily related to
accident years 2005 to 2007 and a $24 release of reserves for extra-contractual liability claims under non-standard personal
auto policies. Net favorable reserve development of $4 in 2007 included a $16 release of reserves for loss and allocated loss
and loss adjustment expenses on Personal Lines auto liability claims for accident years 2002 to 2006.
Operating expenses increased by $27
Amortization of deferred policy acquisition costs increased by $16, driven primarily by the increase in earned premium and
the amortization of a higher amount of acquisition costs for AARP business. Insurance operating costs and expenses
increased by $11, primarily due to an estimated $10 of assessments owed to TWIA in 2008. The expense ratio increased 0.4
points, to 22.8, due to the increase in insurance operating costs and expenses and the amortization of a higher amount of
acquisition costs on AARP business.
Year ended December 31, 2007 compared to the year ended December 31, 2006
Underwriting results decreased by $107, from $429 to $322, with a corresponding 3.1 point increase in the combined ratio,
from 88.6 to 91.7, due to:
Change in underwriting results
Earned premiums
Excluding Omni, a 7% increase in earned premium $ 251
Decrease in earned premium due to the sale of Omni in the fourth quarter of 2006 (122)
Net increase in earned premiums 129
Losses and loss adjustment expenses
Volume change — Increase in current accident year loss and loss adjustment expenses before
catastrophes due to the increase in earned premiums, excluding Omni (160)
Ratio change — An increase in the current accident year loss and loss adjustment expense ratio
before catastrophes, excluding Omni (125)
Sale of Omni — Decrease in current accident year loss and loss adjustment expenses before
catastrophes as a result of the sale of Omni 105
Net increase in current accident year loss and loss adjustment expenses before catastrophes (180)
Catastrophes — Increase in current accident year catastrophe losses (5)
Reserve changes — A decrease in net favorable prior accident year reserve development (34)
Net increase in losses and loss adjustment expenses (219)
Operating expenses
Decrease in amortization of deferred policy acquisition costs 5
Increase in insurance operating costs and expenses (22)
Net increase in operating expenses (17)
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009