The Hartford 2014 Annual Report Download - page 76

Year ended December 31, 2014 compared to the year ended December 31, 2013
Overview
Net income, as compared to the prior year period, decreased in 2014 primarily due to a change to net realized capital losses and a decrease in net servicing
income, partially offset by improvements in underwriting results, driven by higher earned premiums and lower underwriting expenses.
Revenues - Earned and Written Premiums
Earned and written premiums increased in 2014 reflecting new business written premium growth in auto, primarily from AARP Direct and AARP Agency,
improved earned pricing increases in both auto and homeowners, and continued high levels of premium retention.
Losses and Loss Adjustment Expenses
Losses and loss adjustment expenses reflect an increase in current accident year loss and loss adjustment expenses before catastrophes and higher current
accident year catastrophes, partially offset by higher favorable prior accident years development.
• Current accident year losses and loss adjustment expenses before catastrophes increased in 2014 compared to 2013 driven by growth in earned
premium, partially offset by a decline in the current accident year loss and loss adjustment expense ratio before catastrophes to 65.6 in 2014 from
65.9 in 2013.
• Current accident year catastrophe losses of $232, before tax, in 2014 compared to $207, before tax, in 2013. Losses in 2014 were primarily due to
multiple thunderstorm and winter storm events across various U.S. geographic regions. Losses in 2013 were primarily due to multiple thunderstorm,
hail and tornado events across various U.S. geographic regions. For additional information, see MD&A - Critical Accounting Estimates, Property and
Casualty Insurance Product Reserves, Net of Reinsurance.
• Prior accident years reserve releases of $46, before tax, in 2014 compared to $39, before tax, in 2013. Reserve releases in 2014 were primarily related
to prior accident year catastrophes, as well as prior accident year homeowners and extra contractual liability reserves. Reserve releases in 2013 were
primarily related to Storm Sandy. For additional information, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product
Reserves, Net of Reinsurance.
Underwriting Ratios
The combined ratio, before current accident year catastrophes and prior year development, improved to 90.6 in 2014 from 92.3 in 2013.
Investment Results
Investment income decreased in 2014, as compared to the prior year period. For discussion of consolidated investment results, see MD&A - Investment
Results, Net Investment Income (Loss) and Net Realized Capital Gains (Losses).
Income Taxes
The effective tax rates in 2014 and 2013 differ from the U.S. Federal statutory rate of 35% primarily due to permanent differences related to investments in tax
exempt securities. For further discussion of income taxes, see Note 13 - Income Taxes of Notes to Consolidated Financial Statements.
Year ended December 31, 2013 compared to the year ended December 31, 2012
Overview
Net income, as compared to the prior year period, increased in 2013 primarily due to improvements in underwriting results, driven by lower current year
catastrophes partially offset by lower favorable prior year development.
Revenues - Earned and Written Premiums
Earned and written premiums increased in 2013, reflecting new business written premium growth in auto and home, primarily from the AARP Direct and
AARP through agents distribution channels and improved policy count retention in auto and home due to initiatives implemented over the last two years.
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