Travelers 2011 Annual Report Download - page 52

Fidelity and surety programs . . . Fidelity insurance coverage protects an insured for loss due to
embezzlement or misappropriation of funds by an employee. Surety
is a three-party agreement in which the insurer agrees to pay a
third party or make complete an obligation in response to the
default, acts or omissions of an insured.
GAAP combined ratio ....... The sum of the loss and LAE ratio, the underwriting expense ratio
and, where applicable, the ratio of dividends to policyholders to net
premiums earned. A combined ratio under 100% generally indicates
an underwriting profit. A combined ratio over 100% generally
indicates an underwriting loss.
GAAP combined ratio excluding
incremental impact of direct
to consumer initiative ...... The GAAP combined ratio adjusted to exclude the direct, variable
impact of the Company’s direct-to-consumer initiative in the
Personal Insurance segment.
Gross written premiums ...... The direct and assumed contractually determined amounts charged
to the policyholders for the effective period of the contract based
on the terms and conditions of the insurance contract.
Ground-up analysis .......... A method to estimate ultimate claim costs for a given cohort of
claims such as an accident year/product line component. It involves
analyzing the exposure and claim activity at an individual insured
level and then through the use of deterministic or stochastic
scenarios and/or simulations, estimating the ultimate losses for those
insureds. The total losses for the cohort are then the sum of the
losses for each individual insured.
In practice, the method is sometimes simplified by performing the
individual insured analysis only for the larger insureds, with the
costs for the smaller insureds estimated via sampling approaches
(extrapolated to the rest of the smaller insured population) or
aggregate approaches (using assumptions consistent with the
ground-up larger insured analysis).
Guaranteed cost products ..... An insurance policy where the premiums charged will not be
adjusted for actual loss experience during the covered period.
Guaranty fund ............. A state-regulated mechanism that is financed by assessing insurers
doing business in those states. Should insolvencies occur, these
funds are available to meet some or all of the insolvent insurer’s
obligations to policyholders.
Holding company liquidity ..... Total cash, short-term invested assets and other readily marketable
securities held by the holding company.
Incurred but not reported
(IBNR) reserves .......... Reserves for estimated losses and LAE that have been incurred but
not yet reported to the insurer. This includes amounts for
unreported claims, development on known cases, and re-opened
claims.
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