Travelers 2005 Annual Report Download - page 55

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Risk-based capital (RBC)........... A measure adopted by the NAIC and enacted by states for
determining the minimum statutory capital and surplus
requirements of insurers. Insurers having total adjusted capital
less than that required by the RBC calculation will be subject to
varying degrees of regulatory action depending on the level of
capital inadequacy.
Risk retention group. ............... An alternative form ofinsurance in which members of a similar
profession or business bandtogether to self insure their risks.
Run-off business................... An operation which has been determined to be nonstrategic;
includesnon-renewals of inforce policies and a cessation of
writing new business, where allowed by law.
Salvage ........................... The amount of money an insurer recovers through the sale of
property transferred to the insurer as a result of a loss payment.
Second-injury fund ................. The employer of an injured, impaired worker is responsible only
for the workers’ compensation benefit for the most recent
injury; the second-injury fund would cover the cost of any
additional benefits for aggravation of a prior condition. The cost
is shared by the insurance industry and self-insureds, funded
through assessments to insurance companies and self-insureds
based on either premiums or losses.
Self-insured retentions.............. That portion of the risk retained by a person for its own account.
Servicing carrier.................... An insurance company that provides, for a fee, various services
including policy issuance, claims adjusting and customer service
for insureds in a reinsurance pool.
Specialty lines. ..................... Thevarious kinds of specialized property and casualty insurance
that are written for businesses and professionals.
Statutory accounting practices
(SAP).......................... The practices and procedures prescribed or permitted by
domiciliary state insurance regulatory authorities in the United
States for recording transactions and preparing financial
statements. Statutory accounting practices generally reflect a
modified going concern basis of accounting.
Statutory surplus ................... As determined under SAP, the amount remaining after all
liabilities, including loss reserves, are subtracted from all
admitted assets. Admitted assets are assets of an insurer
prescribed or permitted by a state to be recognized on the
statutory balance sheet. Statutory surplus is also referred to as
“surplus” or “surplus as regards policyholders” for statutory
accounting purposes.
Structured settlements .............. Periodic payments to an injured person or survivor for a
determined number of years or for life, typically in settlement of
a claim under a liability policy, usually funded through the
purchase of an annuity.