The Hartford 2014 Annual Report Download - page 205

Table of Contents




A rollforward of liabilities for unpaid losses and loss adjustment expenses follows:

  
      
Reinsurance and other recoverables 3,028 3,027 3,033
   

Current year 6,572 6,621 7,274
Prior years 228 192 (4)
   

Current year 2,639 2,552 2,882
Prior years 4,072 4,274 4,216
   
   
Reinsurance and other recoverables 3,041 3,028 3,027
      
As of December 31, 2014 and 2013, property and casualty insurance products reserves were discounted by a total of $556 and $553, respectively. The current
accident year benefit from discounting property and casualty insurance products reserves was $34 in 2014, $46 in 2013 and $48 in 2012. The reduction in
the discount benefit in 2014 as compared to 2013 reflects lower claim volume and a shorter than expected payment pattern in 2014. The slight reduction in
the discount benefit in 2013 as compared to 2012 reflects lower claim volume in 2013 partially offset by a higher discount rate in 2013. Accretion of
discounts for prior accident years totaled $31 in 2014, $31 in 2013, and $52 in 2012.
In the opinion of management, based upon the known facts and current law, the reserves recorded for the Company’s property and casualty insurance
products at December 31, 2014 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. However, because of the significant uncertainties surrounding reserves, and particularly asbestos and
environmental 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 Company’s results of operations or cash flows. For
additional information, see Note 14 - Commitments and Contingencies, Guaranty Fund and Other Insurance-related Assessments.
Losses and loss adjustment expenses are also impacted by trends, frequency and severity. 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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