The Hartford 2008 Annual Report Download - page 435

Table of Contents
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
11. Reserves for Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses (continued)
Property & Casualty
A rollforward of liabilities for property and casualty unpaid losses and loss adjustment expenses follows:
For the years ended December 31,
2008 2007 2006
Beginning liabilities for property and casualty unpaid
losses and loss adjustment expenses-gross $ 22,153 $ 21,991 $ 22,266
Reinsurance and other recoverables 3,922 4,387 5,403
Beginning liabilities for property and casualty unpaid
losses and loss adjustment expenses-net 18,231 17,604 16,863
Add provision for property & casualty unpaid losses and
loss adjustment expenses
Current year 6,933 6,869 6,706
Prior years (226) 48 296
Total provision for property and casualty unpaid losses
and loss adjustment expenses 6,707 6,917 7,002
Less payments
Current year 2,888 2,563 2,448
Prior years 3,703 3,727 3,702
Total payments 6,591 6,290 6,150
Less net reserves for Omni business sold — — 111
Ending liabilities for property and casualty unpaid losses
and loss adjustment expenses-net 18,347 18,231 17,604
Reinsurance and other recoverables 3,586 3,922 4,387
Ending liabilities for property and casualty unpaid losses
and loss adjustment expenses-gross $ 21,933 $ 22,153 $ 21,991
In the opinion of management, based upon the known facts and current law, the reserves recorded for The Hartford’s
property and casualty businesses at December 31, 2008 represent the Company’s best estimate of its ultimate liability for
losses and loss adjustment expenses related to losses covered by policies written by the Company. Based on information or
trends that are not presently known, future reserve re-estimates may result in adjustments to these reserves. Such
adjustments could possibly be significant, reflecting any variety of new and adverse or favorable trends. Because of the
significant uncertainties surrounding environmental and particularly asbestos exposures, it is possible that management’s
estimate of the ultimate liabilities for these claims may change and that the required adjustment to recorded reserves could
exceed the currently recorded reserves by an amount that could be material to The Hartford’s results of operations, financial
condition and liquidity. For a further discussion, see Note 12.
Examples of current trends affecting frequency and severity include increases in medical cost inflation rates, the changing
use of medical care procedures, the introduction of new products and changes in internal claim practices. Other trends
include changes in the legislative and regulatory environment over workers’ compensation claims and evolving exposures to
claims relating to molestation or abuse and other mass torts. In the case of the reserves for asbestos exposures, factors
contributing to the high degree of uncertainty include inadequate loss development patterns, plaintiffs’ expanding theories of
liability, the risks inherent in major litigation, and inconsistent emerging legal doctrines. In the case of the reserves for
environmental exposures, factors contributing to the high degree of uncertainty include expanding theories of liabilities and
damages; the risks inherent in major litigation; inconsistent decisions concerning the existence and scope of coverage for
environmental claims; and uncertainty as to the monetary amount being sought by the claimant from the insured.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009