The Hartford 2008 Annual Report Download - page 256

Table of Contents
During the second quarters of 2008, 2007 and 2006, the Company completed its annual evaluations of the collectability of
the reinsurance recoverables and the adequacy of the allowance for uncollectible reinsurance associated with older,
long-term casualty liabilities reported in the Other Operations segment. The evaluations in the second quarters of 2008 and
2007 resulted in no addition to the allowance for uncollectible reinsurance. In the second quarter of 2006, the Company
entered into an agreement with Equitas and all Lloyd’s syndicates reinsured by Equitas (collectively, “Equitas”) that
resolved, with minor exception, all of the Company’s ceded and assumed domestic reinsurance exposures with Equitas,
including all of the Company’s reinsurance recoveries from Equitas under the Blanket Casualty Treaty (BCT). As a result of
the settlement with Equitas and the 2006 reinsurance recoverable evaluation, the Company reduced its net reinsurance
recoverable by $243.
In conducting these evaluations of reinsurance recoverables, the Company used its most recent detailed evaluations of ceded
liabilities reported in the segment. The Company analyzed the overall credit quality of the Company’s reinsurers, recent
trends in arbitration and litigation outcomes in disputes between cedants and reinsurers, and recent developments in
commutation activity between reinsurers and cedants. The Company also considered the effect of the Equitas settlement on
the collectability of amounts due from other upper-layer reinsurers under the BCT. The allowance for uncollectible
reinsurance reflects management’s current estimate of reinsurance cessions that may be uncollectible in the future due to
reinsurers’ unwillingness or inability to pay. As of December 31, 2008, the allowance for uncollectible reinsurance for Other
Operations totals $254. The Company currently expects to perform its regular comprehensive review of Other Operations
reinsurance recoverables annually. Uncertainties regarding the factors that affect the allowance for uncollectible reinsurance
could cause the Company to change its estimates, and the effect of these changes could be material to the Company’s
consolidated results of operations or cash flows.
Consistent with the Company’s long-standing reserving practices, the Company will continue to review and monitor its
reserves in the Other Operations segment regularly and, where future developments indicate, make appropriate adjustments
to the reserves. For a discussion of the Company’s reserving practices, please see the “Critical Accounting
Estimates—Property & Casualty Reserves, Net of Reinsurance” section of Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009