Travelers 2005 Annual Report Download - page 50

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Capacity .......................... The percentage of surplus, or the dollar amount of exposure,
that an insurer or reinsurer is willing or able to place at risk.
Capacity may apply to a single risk, a program, a line of business
or an entire book of business. Capacity may be constrained by
legal restrictions, corporate restrictions or indirect restrictions.
Case reserves ...................... Claim department estimates of anticipated future payments to
be made on each specific individual reported claim.
Casualty insurance................. Insurance which is primarily concernedwith the losses caused by
injuries to third persons, i.e., not the insured, and the legal
liability imposed on the insured resulting therefrom. It includes,
but is not limited to, employers’ liability, workers’ compensation,
public liability, automobile liability, personal liability and
aviation liability insurance. It excludes certain types of losses
that by law or custom are considered as being exclusively within
the scope of other types of insurance, such as fire or marine.
Catastrophe ....................... A severe loss, resulting from natural and manmade events,
including risks such as fire, earthquake, windstorm, explosion,
terrorism and other similar events. Each catastrophe has unique
characteristics. Catastrophes are not predictable as to timing or
amountin advance, and therefore their effects are not included
in earnings or claims and claim adjustment expense reserves
prior to occurrence. A catastrophe may also result in the
payment of reinstatement premiums and assessments from
various pools.
Catastrophe loss................... Loss and directly identified loss adjustment expenses from
catastrophes.
Catastrophe reinsurance ............ A form of excess of lossreinsurance which,subject to a specified
limit, indemnifies the ceding company for the amount of loss in
excess of a specified retention with respect to an accumulation
of losses resulting from a catastrophic event. The actual
reinsurance document is called a “catastrophe cover.” These
reinsurance contracts are typically designed to cover property
insurance losses but can be written to cover casualty insurance
losses such as from workers’ compensation policies.
Cede; ceding company.............. When an insurer reinsures its liability with anotherinsurer or a
“cession,” it “cedes” business and is referred to as the “ceding
company.”
Ceded reinsurance................. Insurance risks transferred to another company as reinsurance.
See “Reinsurance.”
Claim............................. Request by an insuredfor indemnification by an insurance
company for loss incurred from an insured peril.
Claim adjustment expenses .......... See “Loss adjustment expenses (LAE).”
Claims and claim adjustment
expenses ........................ See “Loss” and “Loss adjustment expenses.”