The Hartford 2008 Annual Report Download - page 226

Table of Contents
Year ended December 31, 2007 compared to the year ended December 31, 2006
Earned premiums for the Small Commercial segment increased $84, or 3%, primarily due to new business premiums
outpacing non-renewals for workers’ compensation business over the last six months of 2006 and the first six months of
2007.
New business
premium
• New business written premium for Small Commercial decreased by $52, or 10%, as increased
competition led to a reduction in new business for workers’ compensation, package business
and commercial auto. While the Company has focused on increasing new business from its
agents and expanding writings in certain territories, actions taken by some of the Company’s
competitors to increase market share and increase business appetite in certain classes of risks
may be contributing to the Company’s lower new business growth. Also contributing to the
decrease in new business premium is lower average premium per account partly due to writing
more liability-only policies.
Premium renewal
retention
• Premium renewal retention for Small Commercial decreased due, in part, to lower retention of
larger accounts and a reduction in average premium per account.
Earned pricing
increase
(decrease)
• As written premium is earned over the 12-month term of the policies, the earned pricing
changes during 2007 are primarily a reflection of the written pricing changes over the last six
months of 2006 and the first six months of 2007.
Policies in-force • Consistent with the increase in earned premium, the number of policies in force has increased.
The growth in policies in force does not correspond directly with the change in earned
premiums due to the effect of changes in earned pricing, changes in the average premium per
policy and because policy in force counts are as of a point in time rather than over a period of
time.
Small Commercial — Underwriting Summary 2008 2007 2006
Written premiums $ 2,696 $ 2,747 $ 2,728
Change in unearned premium reserve (28) 11 76
Earned premiums 2,724 2,736 2,652
Losses and loss adjustment expenses
Current accident year before catastrophes 1,447 1,594 1,509
Current accident year catastrophes 122 28 34
Prior accident years (89) (209) (75)
Total losses and loss adjustment expenses 1,480 1,413 1,468
Amortization of deferred policy acquisition costs 636 635 634
Insurance operating costs and expenses 171 180 128
Underwriting results $ 437 $ 508 $ 422
Loss and loss adjustment expense ratio
Current accident year before catastrophes 53.1 58.3 56.9
Current accident year catastrophes 4.5 1.0 1.3
Prior accident years (3.3) (7.6) (2.8)
Total loss and loss adjustment expense ratio 54.3 51.6 55.3
Expense ratio 29.1 29.2 28.5
Policyholder dividend ratio 0.5 0.6 0.2
Combined ratio 84.0 81.4 84.1
Catastrophe ratio
Current accident year 4.5 1.0 1.3
Prior accident years (0.1) 0.2 (0.7)
Total catastrophe ratio 4.4 1.2 0.6
Combined ratio before catastrophes 79.6 80.3 83.5
Combined ratio before catastrophes and prior accident year
development 82.8 88.0 85.6
137
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009