Travelers 2013 Annual Report Download - page 54

Inland marine .............. A broad type of insurance generally covering articles that may be
transported from one place to another, as well as bridges, tunnels
and other instrumentalities of transportation. It includes goods in
transit, generally other than transoceanic, and may include policies
for movable objects such as personal effects, personal property,
jewelry, furs, fine art and others.
IRIS ratios ................ Financial ratios calculated by the NAIC to assist state insurance
departments in monitoring the financial condition of insurance
companies.
Large deductible policy ....... An insurance policy where the customer assumes at least $25,000 or
more of each loss. Typically, the insurer is responsible for paying
the entire loss under those policies and then seeks reimbursement
from the insured for the deductible amount.
Lloyd’s ................... An insurance marketplace based in London, England, where
brokers, representing clients with insurable risks, deal with Lloyd’s
underwriters, who represent investors. The investors are grouped
together into syndicates that provide capital to insure the risks.
Loss..................... An occurrence that is the basis for submission and/or payment of a
claim. Losses may be covered, limited or excluded from coverage,
depending on the terms of the policy.
Loss adjustment expenses
(LAE) ................. The expenses of settling claims, including legal and other fees and
the portion of general expenses allocated to claim settlement costs.
Loss and LAE ratio (SAP and
GAAP)................. For SAP, it is the ratio of incurred losses and loss adjustment
expenses less certain administrative services fee income to net
earned premiums as defined in the statutory financial statements
required by insurance regulators. The GAAP ratio is calculated in
the same manner as the SAP ratio.
The GAAP loss and LAE ratio as used in this Annual Report on
Form 10-K is an indicator of the Company’s underwriting discipline
and underwriting profitability.
Loss reserves .............. Liabilities established by insurers and reinsurers to reflect the
estimated cost of claims incurred that the insurer or reinsurer will
ultimately be required to pay in respect of insurance or reinsurance
it has written. Reserves are established for losses and for LAE, and
consist of case reserves and IBNR reserves. As the term is used in
this document, ‘‘loss reserves’’ is meant to include reserves for both
losses and LAE.
Loss reserve development ..... The increase or decrease in incurred claims and claim adjustment
expenses as a result of the re-estimation of claims and claim
adjustment expense reserves at successive valuation dates for a
given group of claims. Loss reserve development may be related to
prior year or current year development.
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