Travelers 2010 Annual Report Download - page 48

Glossary of Selected Insurance Terms
Accident year .............. The annual calendar accounting period in which loss events
occurred, regardless of when the losses are actually reported,
booked or paid.
Adjusted unassigned surplus . . . Unassigned surplus as of the most recent statutory annual report
reduced by twenty-five percent of that year’s unrealized
appreciation in value or revaluation of assets or unrealized profits
on investments, as defined in that report.
Admitted insurer ........... A company licensed to transact insurance business within a state.
Annuity .................. A contract that pays a periodic benefit over the remaining life of a
person (the annuitant), the lives of two or more persons or for a
specified period of time.
Assigned risk pools .......... Reinsurance pools which cover risks for those unable to purchase
insurance in the voluntary market. Possible reasons for this inability
include the risk being too great or the profit being too small under
the required insurance rate structure. The costs of the risks
associated with these pools are charged back to insurance carriers
in proportion to their direct writings.
Assumed reinsurance ........ Insurance risks acquired from a ceding company.
Average value analysis ....... An actuarial method used to estimate ultimate losses for a given
cohort of claims such as an accident year/product line component.
If the paid-to-date losses are then subtracted from the estimated
ultimate losses, the result is an indication of the unpaid losses.
The basic premise of the method is that average claim values are
stable and predictable over time for a particular cohort of claims.
The method is utilized most often where ultimate claim counts are
known or reliably estimable fairly early after the start of an accident
year and average values are expected to be fairly predictable from
one year to the next.
The method comes up with an estimate of ultimate claims counts by
accident year cohort, and multiplies it by an estimate of average
claim value by accident year cohort, with multiple methods used to
estimate these average claim values.
Book value per share ........ Total common shareholders’ equity divided by the number of
common shares outstanding.
Bornhuetter-Ferguson method . . An actuarial method to estimate ultimate losses for a given cohort
of claims such as an accident year/product line component. If the
paid-to-date losses are then subtracted from the estimated ultimate
losses, the result is an indication of the outstanding losses.
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