The Hartford 2008 Annual Report Download - page 231

Table of Contents
MIDDLE MARKET
Middle Market provides standard commercial insurance coverage to middle market commercial businesses, primarily
throughout the United States, with greater than $5 in annual payroll, $15 in annual revenues or $15 in total property values.
This segment offers workers’ compensation, property, automobile, liability, umbrella, marine and livestock coverages.
Premiums [1] 2008 2007 2006
Written premiums $ 2,242 $ 2,326 $ 2,515
Earned premiums $ 2,299 $ 2,420 $ 2,523
[1] The difference between written premiums and earned premiums is attributable to the change in unearned premium
reserve.
Premium Measures 2008 2007 2006
New business premium $ 420 $ 394 $ 464
Premium renewal retention 79% 78% 82%
Written pricing decrease (5%) (5%) (5%)
Earned pricing decrease (6%) (5%) (5%)
Policies in-force as of end of period 90,478 88,254 86,640
Earned Premiums
Year ended December 31, 2008 compared to the year ended December 31, 2007
Earned premiums for the Middle Market segment decreased by $121, or 5%, driven primarily by decreases in commercial
auto, workers’ compensation and general liability. Earned premium decreases were primarily due to a decline in earned
pricing in 2008 and the effect of non-renewals outpacing new business in commercial auto and general liability over the last
nine months of 2007 and the first nine months of 2008, partially offset by the effect of new business written premium
outpacing non-renewals in workers’ compensation since the fourth quarter of 2007.
New business
premium
• New business written premium increased by $26, or 7%, in 2008 as an increase in new business
written premium for workers’ compensation was partially offset by a decrease in new business
for general liability, marine and commercial auto. While continued price competition and the
effect of some state-mandated rate reductions in workers’ compensation has lessened the
attractiveness of new business in certain lines and regions, the Company has increased new
business for workers’ compensation due, in part, to the effect of targeting business in selected
industries and regions of the country.
Premium renewal
retention
• Premium renewal retention increased from 78% to 79% due largely to an increase in retention
of property and marine business, partially offset by the effect of larger written pricing decreases
on workers’ compensation and property business. The Company continued to take actions to
protect renewals in 2008, including the use of reduced pricing on targeted accounts.
Earned pricing
decrease
• Earned pricing decreased in all lines of business, including workers’ compensation, commercial
auto, general liability, property and marine. As written premium is earned over the 12-month
term of the policies, the earned pricing decreases in 2008 were primarily a reflection of
mid-single digit written pricing decreases over the last nine months of 2007 and the first nine
months of 2008. A number of carriers have continued to compete fairly aggressively on price,
particularly on larger accounts within Middle Market, which has contributed to mid-single digit
price decreases across the industry.
Policies in-force • The number of policies in-force increased by 3%, due largely to growth on smaller accounts.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009