Travelers 2007 Annual Report Download - page 194

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. REINSURANCE (Continued)
reinsurance treaty, to protect against losses resulting from catastrophes in the Northeastern United
States.
Certain of the assumed reinsurance contracts that the Company has entered into with
non-affiliated companies on an excess of loss basis do not transfer insurance risk. These contracts,
which totaled $165 million and $265 million at December 31, 2007 and 2006, respectively, are
accounted for using deposit accounting and are included in other liabilities in the consolidated balance
sheet.
The following is a summary of reinsurance financial data reflected in the consolidated statement of
income:
(for the year ended December 31, in millions) 2007 2006 2005
Written premiums
Direct ................................................. $23,824 $23,635 $23,289
Assumed ............................................... 374 404 447
Ceded ................................................. (2,580) (2,889) (3,350)
Total net written premiums ................................ $21,618 $21,150 $20,386
Earned premiums
Direct ................................................. $24,000 $23,280 $23,370
Assumed ............................................... 180 478 502
Ceded ................................................. (2,710) (2,998) (3,531)
Total net earned premiums ................................ $21,470 $20,760 $20,341
Percentage of assumed earned premiums to net earned premiums ..... 0.8% 2.3% 2.5%
Ceded claims and claim adjustment expenses incurred .............. $ 1,299 $ 2,158 $ 3,601
Reinsurance recoverables include amounts recoverable on both paid and unpaid claims and were
as follows:
(at December 31, in millions) 2007 2006
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment
expenses ..................................................... $10,731 $12,837
Allowance for uncollectible reinsurance ................................ (688) (773)
Net reinsurance recoverables ........................................ 10,043 12,064
Structured settlements ............................................. 3,615 3,758
Mandatory pools and associations .................................... 1,983 1,998
Total reinsurance recoverables ....................................... $15,641 $17,820
Terrorism Risk Insurance Acts
On November 26, 2002, the Terrorism Risk Insurance Act of 2002 (the Terrorism Act) was enacted
into Federal law and established the Terrorism Risk Insurance Program (the Program), a temporary
Federal program in the Department of the Treasury, that provided for a system of shared public and
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