The Hartford 2011 Annual Report Download - page 55

55
Impact of Re-estimates
The establishment of property and casualty insurance product reserves is an estimation process, using a variety of methods, assumptions
and data elements. Ultimate losses may vary significantly from the current estimates. Many factors can contribute to these variations
and the need to change the previous estimate of required reserve levels. Subsequent changes can generally be thought of as being the
result of the emergence of additional facts that were not known or anticipated at the time of the prior reserve estimate and/or changes in
interpretations of information and trends.
The table below shows the range of annual reserve re-estimates experienced by The Hartford over the past ten years. The amount of
prior accident year development (as shown in the reserve rollforward) for a given calendar year is expressed as a percent of the
beginning calendar year reserves, net of reinsurance. The percentage relationships presented are significantly influenced by the facts
and circumstances of each particular year and by the fact that only the last ten years are included in the range. Accordingly, these
percentages are not intended to be a prediction of the range of possible future variability. See “Impact of key assumptions on reserve
volatility” within this section for further discussion of the potential for variability in recorded loss reserves.
Property & Casualty
Commercial
Consumer
Markets
Property &
Casualty Other
Operations
Total Property and
Casualty Insurance
Range of prior accident year unfavorable
(favorable) development for the
ten years
ended December 31, 2011 [1] [2] (3.1) – 1.5 (5.2) – 5.1 3.0 – 67.5 (1.2) – 21.5
[1] Excluding the reserve strengthening for asbestos and environmental reserves, over the past ten years reserve re-estimates for total property and
casualty insurance ranged from (3.0)% to 1.6%.
[2] Development for Corporate is included in Property & Casualty Commercial and Consumer Markets in 2007 and prior.
The potential variability of the Company’ s property and casualty insurance product reserves would normally be expected to vary by
segment and the types of loss exposures insured by those segments. Illustrative factors influencing the potential reserve variability for
each of the segments are discussed above.
A table depicting the historical development of the liabilities for unpaid losses and loss adjustment expenses, net of reinsurance, follows.
Loss Development Table
Loss And Loss Adjustment Expense Liability Development – Net of Reinsurance
For the Years Ended December 31, [1]
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Liabilities for unpaid losses
and loss adjustment
expenses, net of
reinsurance
$
12,860
$
13,141
$
16,218
$
16,191
$
16,863
$
17,604
$
18,231
$
18,347
$
18,210
$
17,948
$
18,517
Cumulative paid losses
and loss expenses
One year later
3,339
3,480
4,415
3,594
3,702
3,727
3,703
3,771
3,882
4,037
Two years later
5,621
6,781
6,779
6,035
6,122
5,980
5,980
6,273
6,401
Three years later
8,324
8,591
8,686
7,825
7,755
7,544
7,752
8,074
—
Four years later
9,710
10,061
10,075
9,045
8,889
8,833
9,048
—
—
Five years later
10,871
11,181
11,063
9,928
9,903
9,778
—
—
—
Six years later
11,832
12,015
11,821
10,798
10,674
—
—
—
—
Seven years later
12,563
12,672
12,601
11,448
—
—
—
—
—
Eight years later
13,166
13,385
13,193
—
—
—
—
—
—
Nine years later
13,829
13,935
—
—
—
—
—
—
—
Ten years later
14,345
—
—
—
—
—
—
—
—
Liabilities re-estimated
One year later
13,153
15,965
16,632
16,439
17,159
17,652
18,005
18,161
18,014
18,315
Two years later
16,176
16,501
17,232
16,838
17,347
17,475
17,858
18,004
18,136
Three years later
16,768
17,338
17,739
17,240
17,318
17,441
17,700
18,139
—
Four years later
17,425
17,876
18,367
17,344
17,497
17,439
17,866
—
—
Five years later
17,927
18,630
18,554
17,570
17,613
17,676
—
—
—
Six years later
18,686
18,838
18,836
17,777
17,895
—
—
—
—
Seven years later
18,892
19,126
19,063
18,064
—
—
—
—
—
Eight years later
19,192
19,373
19,351
—
—
—
—
—
—
Nine years later
19,452
19,671
—
—
—
—
—
—
—
Ten years later
19,751
—
—
—
—
—
—
—
—
Deficiency (redundancy),
net of reinsurance
$
6,891
$
6,530
$
3,133
$
1,873
$
1,032
$
72
$
(365)
$
(208)
$
(74)
$
367