The Hartford 2014 Annual Report Download - page 54

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Reserve Activity
Reserves and reserve activity in Property & Casualty Other Operations are categorized and reported as asbestos, environmental, or “all other”. The “all other”
category of reserves covers a wide range of insurance and assumed reinsurance coverages, including, but not limited to, potential liability for construction
defects, lead paint, silica, pharmaceutical products, molestation and other long-tail liabilities.
The following table presents reserve activity, inclusive of estimates for both reported and incurred but not reported claims, net of reinsurance, for Property &
Casualty Other Operations, categorized by asbestos, environmental and all other claims, for the years ended December 31, 2014, 2013 and 2012.


  

Beginning liability — net [2] [3]        
Losses and loss adjustment expenses incurred 212 30 19 261
Less: Losses and loss adjustment expenses paid 216
59 92 367
         

Beginning liability — net [2] [3]        
Losses and loss adjustment expenses incurred 130 12 6 148
Less: Losses and loss adjustment expenses paid 192
32 74 298
  
     

Beginning liability — net [2] [3]         
Losses and loss adjustment expenses incurred 48 10 7 65
Less: Losses and loss adjustment expenses paid 164
40 108 312
        
[1] “All Other” includes unallocated loss adjustment expense reserves. “All Other” also includes the Company’s allowance for uncollectible reinsurance. When the Company
commutes a ceded reinsurance contract or settles a ceded reinsurance dispute, the portion of the allowance for uncollectible reinsurance attributable to that commutation or
settlement, if any, is reclassified to the appropriate cause of loss.
[2] Excludes amounts reported in Commercial Lines and Personal Lines reporting segments (collectively “Ongoing Operations”) for asbestos and environmental net liabilities
of $16 and $6 respectively, as of December 31, 2014, $18 and $5, respectively, as of December 31, 2013, and $15 and $7, respectively, as of December 31, 2012; excludes
total net losses and loss adjustment expenses incurred for the years ended December 31, 2014, 2013 and 2012 of $16, $15 and $13, respectively, related to asbestos and
environmental claims; and excludes total net losses and loss adjustment expenses paid for the years ended December 31, 2014, 2013 and 2012 of $17, $14 and $15,
respectively, related to asbestos and environmental claims.
[3] Gross of reinsurance, asbestos and environmental reserves, including liabilities in Ongoing Operations, were $2,193 and $267, respectively, as of December 31, 2014;
$2,182 and $311, respectively, as of December 31, 2013; and $2,294 and $334, respectively, as of December 31, 2012.
[4] The one year and average three year net paid amounts for asbestos claims, including Ongoing Operations, were $229 and $201, respectively, resulting in a one year net
survival ratio of 7.6 and a three year net survival ratio of 8.6 . Net survival ratio is the quotient of the net carried reserves divided by the average annual payment amount and
is an indication of the number of years that the net carried reserve would last (i.e., survive) if the future annual claim payments were consistent with the calculated historical
average.
For paid and incurred losses and loss adjustment expenses reporting, the Company classifies its asbestos and environmental reserves into three categories:
Direct, Assumed Reinsurance and London Market. Direct insurance includes primary and excess coverage. Assumed Reinsurance includes both “treaty”
reinsurance (covering broad categories of claims or blocks of business) and “facultative” reinsurance (covering specific risks or individual policies of primary
or excess insurance companies). London Market business includes the business written by one or more of the Company’s subsidiaries in the United Kingdom,
which are no longer active in the insurance or reinsurance business. Such business includes both direct insurance and assumed reinsurance.Of the three
categories of claims (Direct, Assumed Reinsurance and London Market), direct policies tend to have the greatest factual development from which to estimate
the Company’s exposures.
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