Travelers 2012 Annual Report Download - page 48

Agent ................... A licensed individual who sells and services insurance policies,
receiving a commission from the insurer for selling the business and
a fee for servicing it. An independent agent represents multiple
insurance companies and searches the market for the best product
for its client.
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 ....... A conventional 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 . . A conventional 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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