The Hartford 2008 Annual Report Download - page 232

Table of Contents
Year ended December 31, 2007 compared to the year ended December 31, 2006
Earned premiums for the Middle Market segment decreased by $103, or 4%. The decrease was primarily due to earned
pricing decreases and a decrease in new business written premium and premium renewal retention over the last six months
of 2006 and the first six months of 2007.
New business
premium
• The decrease in new business written premium was primarily due to continued price
competition and the effect of state-mandated rate reductions in workers’ compensation. New
business written premium declined in all lines except workers’ compensation. As written
premium is earned over the 12-month term of the policies, the earned pricing changes during
2007 were primarily a reflection of the written pricing changes over the last six months of 2006
and the first six months of 2007.
Premium renewal
retention
• The decrease in premium renewal retention was primarily due to continued price competition
and the effect of state-mandated rate reductions in workers’ compensation. Premium renewal
retention decreased in all lines of business, including property, commercial auto, general
liability, workers’ compensation and marine.
Earned pricing
increase
(decrease)
• Earned pricing decreased in all lines of business, including property, commercial auto, general
liability, workers’ compensation and marine.
Policies in-force • Despite the decrease in earned premium, the number of policies in force has increased. The
change in policies in force does not correspond directly with the change in earned premiums
due to a reduction 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.
Middle Market — Underwriting Summary 2008 2007 2006
Written premiums $ 2,242 $ 2,326 $ 2,515
Change in unearned premium reserve (57) (94) (8)
Earned premiums 2,299 2,420 2,523
Losses and loss adjustment expenses
Current accident year before catastrophes 1,460 1,561 1,577
Current accident year catastrophes 116 15 36
Prior accident years (134) (16) 13
Total losses and loss adjustment expenses 1,442 1,560 1,626
Amortization of deferred policy acquisition costs 513 529 544
Insurance operating costs and expenses 175 174 139
Underwriting results $ 169 $ 157 $ 214
Loss and loss adjustment expense ratio
Current accident year before catastrophes 63.5 64.5 62.6
Current accident year catastrophes 5.1 0.6 1.5
Prior accident years (5.9) (0.7) 0.5
Total loss and loss adjustment expense ratio 62.7 64.5 64.6
Expense ratio 29.0 28.5 26.7
Policyholder dividend ratio 0.9 0.6 0.2
Combined ratio 92.6 93.5 91.5
Catastrophe ratio
Current accident year 5.1 0.6 1.5
Prior accident years (0.5) (0.1) —
Total catastrophe ratio 4.6 0.5 1.4
Combined ratio before catastrophes 88.1 93.0 90.1
Combined ratio before catastrophes and prior accident year
development 93.4 93.5 89.6
141
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009