The Hartford 2010 Annual Report Download - page 42

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Prior accident years development recorded in 2010
Included within prior accident years development for the year ended December 31, 2010 were the following reserve strengthenings
(releases):
For the year ended December 31, 2010
Propert
y
& Casualt
y
Commercial
Consumer
Markets
Corporate and
Other
Total Property and
Casualty Insurance
Auto liability $(54) $(115) $ — $ (169)
Professional liability (88) — — (88)
Workers’ compensation (70) — — (70)
General liability, umbrella and high hazard liability (66) — — (66)
General liability, excluding umbrella and high hazard liability (42) — — (42)
Package business (19) — — (19)
Commercial property (16) — — (16)
Fidelity and surety (5) — — (5)
Homeowners — 23 — 23
Net environmental reserves — — 67 67
Net asbestos reserves — — 189 189
All other non-A&E within Other Operations — — 11 11
Uncollectible reinsurance (30) — — (30)
Discount accretion on workers' compensation 26 —
— 26
Catastrophes 1 10 — 11
Other reserve re-estimates, net 2 (4) (16) (18)
Total prior accident years development $ (361) $ (86) $ 251 $ (196)
During 2010, the Company’ s re-estimates of prior accident years reserves included the following significant reserve changes:
• Released reserves for commercial auto claims as the Company lowered its reserve estimate to recognize a lower severity trend
during 2009 that continued into 2010 on larger claims in accident years 2002 to 2009.
• Released reserves for personal auto liability claims. Favorable trends in reported severity have persisted, most notably for accident
years 2008 and 2009. As these accident years develop, the uncertainty around the ultimate losses is reduced and management
places more weight on the emerged experience. The reserve releases impact accident years 2004 through 2009, as some of the
older years are also showing improvements in reported severity.
• Released reserves for professional liability claims, primarily related to directors’ and officers’ (“D&O”) claims in accident years
2008 and prior. For these accident years, reported losses for claims under D&O policies have been emerging favorably to initial
expectations due to lower than expected claim severity.
• Released reserves for workers’ compensation business, primarily related to accident years 2006 and 2007. Management updated
reviews of state reforms affecting these accident years and determined impacts to be more favorable than previously estimated.
Accordingly, management reduced reserve estimates for these years.
• Released reserves for general liability claims, primarily related to accident years 2005 through 2008. Claim emergence for these
accident years continues to be lower than anticipated. Management now believes this lower level of claim activity will continue
into the future and has reduced its reserve estimate in response to these favorable trends. Partially offsetting this reserve release is
strengthening on loss adjustment expense reserves during the second quarter of 2010 due to higher than expected allocated loss
expenses for claims in accident years 2000 and prior.
• Released reserves for package business claims, primarily related to accident years 2005 through 2009. Claim emergence within the
liability portion of the package coverage for these accident years continues to be lower than anticipated. Management now believes
this lower level of claim activity will continue into the future and has reduced its reserve estimate in response to these favorable
trends.
• Strengthened reserves for homeowners' claims. During 2010, the Company observed a lengthening of the claim reporting period
for homeowners' claims for prior accident years which resulted in increasing management's estimate of the ultimate cost to settle
these claims. The Company is also spending more on independent adjuster fees to better assess property damages.
• The Company reviewed its allowance for uncollectible reinsurance in the second quarter of 2010 and reduced its allowance, in part,
by a reduction in gross ceded loss recoverables.
• Refer to the Other Operations Claims section for further discussion concerning the Company’ s annual evaluations of net
environmental and net asbestos reserves, and related reinsurance.