The Hartford 2009 Annual Report Download - page 52

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• Strengthened Middle Market workers' compensation reserves by $40 for accident years 1973 and prior, primarily driven by a
reduction in reinsurance recoverables from the commutation of certain reinsurance treaties. Due to the commutations, within the
past two years, net paid losses on these claims have begun to emerge unfavorably to initial expectations and, during 2007, the
Company determined that this trend in higher paid losses would ultimately result in unpaid losses settling for more than
management's previous estimates. The $40 reserve strengthening represented 2% of net reserves for Middle Market workers’
compensation claims as of December 31, 2006.
• Strengthened general liability reserves by $39 for accident years more than 20 years old, including $25 in Specialty Commercial.
The Company has experienced an increase in defense costs for certain mass tort claims and, during 2007, the Company determined
that the increase in defense costs was a sustained trend that resulted in an increase in reserves. The $39 reserve strengthening
represented 2% of the Company’ s net reserves for general liability claims as of December 31, 2006.
• Strengthened reserves for Specialty Commercial general and products liability claims by $34, primarily related to the 1987 to 1997
accident years. Reported losses on general and products liability claims have been emerging unfavorably to previous expectations
and loss adjustment expenses have been higher than expected on late emerging claims. The $34 reserve strengthening represented
3% of the Company’ s net reserves for Specialty Commercial general liability claims as of December 31, 2006.
• Also during 2007, the Company refined its processes for allocating IBNR reserves by accident year, resulting in a reclassification of
$347 of IBNR reserves from the 2003 to 2006 accident years to the 2002 and prior accident years. This reclassification of reserves
by accident year had no effect on total recorded reserves within any segment or on total recorded reserves for any line of business
within a segment.
Other Operations
• See Other Operations Claims Reserve Activity for information concerning the Company’ s annual evaluation of these reserves and
related reinsurance.