Travelers 2003 Annual Report Download - page 45

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43
In addition to fee based products, National Accounts works with national and regional brokers to provide tailored
insurance coverages and programs, mainly to large corporations, and participates in state mandated residual market
workers’ compensation and automobile assigned risk plans. National Accounts net written premiums increased $168.2
million or 23% in 2003 and $315.7 million or 75% in 2002. These increases in net written premiums were due to the
continued benefit from rate increases, higher new business levels that, in part, resulted from Travelers third quarter
2003 renewal rights transaction with Royal & SunAlliance and higher business volume in residual market pools.
Commercial Accounts primarily serves mid-sized businesses for casualty products and large, mid-sized and small
businesses for property products through a network of independent agents and brokers. Commercial Accounts net
written premiums, excluding Northland and Associates, increased 16% to $3.179 billion in 2003 primarily due to
renewal price change increases that averaged 10% for 2003 (down from 22% in 2002), new business growth in
targeted markets and strong retention across all major product lines. The lower level of renewal price changes resulted
mostly from moderation in rates, primarily in the property lines. Renewal price change represents the estimated
average change in premium on policies that renew, including rate and exposure changes, versus the average premium
on those same policies for their prior term. New business premiums in Commercial Accounts for 2003 were $809.5
million, a 12% increase from 2002. The business retention ratio for 2003 was 81% up from 76% in 2002. Retention
represents the estimated percentage of premium available for renewal which renewed in the current period. This
renewal price change, new business and retention information excludes Travelers Northland and Associates operations.
Net written premiums associated with Northland and Associates declined to $546.8 million in 2003 from $824.8
million in 2002 due to the withdrawal in 2002 of business at American Equity and Associates and the $115.0 million
one-time impact from the termination of certain reinsurance contracts as previously discussed. Commercial Accounts
net written premiums increased $1.149 billion or 48% in 2002. The increase was significantly impacted by the
inclusion in 2002 of the full-year results of Northland and Associates. Net written premiums related to Northland and
Associates were $824.8 million and $167.4 million in 2002 and 2001, respectively. Excluding the impact of Northland
and Associates, net written premiums increased 22% or $491.6 million for 2002, primarily driven by renewal price
changes averaging 22% for 2002 and strong growth in new business. All major product lines – commercial
automobile, property and general liability – contributed to the rise in renewal pricing. The one area not showing
adequate rate improvement, however, was the workers’ compensation line and, accordingly, Commercial Accounts did
not grow this business. New business premiums in Commercial Accounts for 2002 were $725.4 million, a 43%
increase. The business retention ratio for 2002 was 76%, up from 71% for 2001.
Select Accounts serves small businesses through a network of independent agents. Select Accounts net written
premiums increased $178.1 million or 10% in 2003. The increase in Select Accounts net written premiums primarily
reflected renewal price change increases averaging 14% for 2003 compared to 17% for 2002, increased new business
and strong retention. New business premiums in Select Accounts for 2003 were $367.8 million compared to $305.3
million in 2002. New business growth was especially strong in property, general liability and commercial multi-peril
lines of business. The business retention ratio for 2003, which remained strong at 83%, compared to 80% for 2002.
Select’s retention remains strongest for small commercial business handled through Travelers Service Centers, while
premium growth has been greatest in the commercial multi-peril and property product lines. Select Account net
written premiums increased $156.3 million or 9% in 2002. The increase in Select Accounts net written premiums
primarily reflected renewal price changes averaging 17% for 2002 compared to 14% in 2001. New business premiums
in Select Accounts for 2002 were $305.3 million compared to $275.8 million in 2001. The business retention ratio for
2002, which was 80%, was consistent with 2001.