Travelers 2007 Annual Report Download - page 57

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.
Subrogation ............... A principle of law incorporated in insurance policies, which enables
an insurance company, after paying a claim under a policy, to
recover the amount of the loss from another person or entity who is
legally liable for it.
Third-party liability .......... A liability owed to a claimant (third party) who is not one of the
two parties to the insurance contract. Insured liability claims are
referred to as third-party claims.
Treaty reinsurance .......... The reinsurance of a specified type or category of risks defined in a
reinsurance agreement (a ‘‘treaty’’) between a primary insurer or
other reinsured and a reinsurer. Typically, in treaty reinsurance, the
primary insurer or reinsured is obligated to offer and the reinsurer
is obligated to accept a specified portion of all that type or category
of risks originally written by the primary insurer or reinsured.
Umbrella coverage .......... A form of insurance protection against losses in excess of amounts
covered by other liability insurance policies or amounts not covered
by the usual liability policies.
Unassigned surplus .......... The undistributed and unappropriated amount of statutory surplus.
Underwriter ............... An employee of an insurance company who examines, accepts or
rejects risks and classifies accepted risks in order to charge an
appropriate premium for each accepted risk. The underwriter is
expected to select business that will produce an average risk of loss
no greater than that anticipated for the class of business.
Underwriting .............. The insurer’s or reinsurer’s process of reviewing applications for
insurance coverage, and the decision as to whether to accept all or
part of the coverage and determination of the applicable premiums;
also refers to the acceptance of that coverage.
Underwriting expense ratio .... For SAP, it is the ratio of underwriting expenses incurred less other
income to net written premiums. For GAAP, it is the ratio of
underwriting expenses incurred reduced by an allocation of fee
income and billing and policy fees to net earned premiums.
Underwriting gain or loss ..... Net earned premiums and fee income less claims and claim
adjustment expenses and insurance-related expenses.
Unearned premium .......... The portion of premiums written that is allocable to the unexpired
portion of the policy term.
Voluntary market ........... The market in which a person seeking insurance obtains coverage
without the assistance of residual market mechanisms.
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