Travelers 2007 Annual Report Download - page 85

Written Premiums
Consolidated gross and net written premiums were as follows:
Gross Written Premiums
(for the year ended December 31, in millions) 2007 2006 2005
Business Insurance ........................................ $13,017 $13,047 $13,453
Financial, Professional & International Insurance .................. 4,037 3,981 3,809
Personal Insurance ........................................ 7,144 7,011 6,474
Total ................................................ $24,198 $24,039 $23,736
Net Written Premiums
(for the year ended December 31, in millions) 2007 2006 2005
Business Insurance ........................................ $11,318 $11,046 $10,999
Financial, Professional & International Insurance .................. 3,465 3,393 3,159
Personal Insurance ........................................ 6,835 6,711 6,228
Total ................................................ $21,618 $21,150 $20,386
Gross and net written premiums in 2007 increased 1% and 2%, respectively, over 2006. In early
2007, the Company completed the sales of Afianzadora Insurgentes and Mendota. These operations
generated combined net written premiums of $74 million in 2007 prior to their sale, compared with
combined net written premiums of $265 million in 2006. Adjusting for the impact of that premium
volume in both years, the Company’s consolidated net written premiums in 2007 increased 3% over
2006.
Net written premiums in 2007 in each of the Company’s business segments increased 2% over the
respective 2006 total. In Business Insurance, growth was concentrated in the Commercial Accounts,
Select Accounts and Industry-Focused Underwriting markets, primarily driven by strong business
retention rates coupled with higher new business volume. In addition, a decline in premiums ceded for
catastrophe reinsurance contributed to net written premium growth over 2006 in Business Insurance. In
Financial, Professional & International Insurance, the increase reflected the favorable impact of foreign
currency rates of exchange, strong business volume in construction surety, in Canada and at Lloyd’s,
partially offset by the impact of the sale of Afianzadora Insurgentes. Adjustments to prior year
premium estimates for the Company’s operations at Lloyd’s also contributed to the growth in net
premium volume in 2007. Net written premium growth in the Personal Insurance segment in 2007 was
driven by continued strong retention rates and renewal price increases, partially offset by the impact of
the sale of Mendota and a decline in new business volume, particularly for coastal coverages.
Gross and net written premiums in 2006 increased 1% and 4%, respectively, over 2005. The
disparity between gross and net written premium growth rates in 2006 was concentrated in the Business
Insurance segment and was primarily due to a change in the structure of reinsurance coverage in the
Company’s Discover Re subsidiary that resulted in a decline in ceded premiums. Net written premium
volume in 2006 was negatively impacted by a higher level of premiums ceded for the cost of property
catastrophe reinsurance, whereas net written premiums in 2005 were reduced by $121 million of
catastrophe-related reinstatement premiums.
In Business Insurance, net written premium growth in 2006 was driven by strong increases in
Target Risk Underwriting, due to significant renewal price increases for Southeastern U.S. catastrophe-
prone exposures, and in Industry-Focused Underwriting, due to growth in several industry sectors
served by this market. That growth was largely offset by a reduction in premium volume for operations
in runoff primarily due to the sale of the Personal Catastrophe Risk operation in the fourth quarter of
2005. Business retention rates remained strong throughout the Business Insurance segment in 2006, and
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