Travelers 2014 Annual Report Download - page 50

Table of Contents
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Structured settlements
Periodic payments to an injured person or survivor for a determined number of years or for
life, typically in settlement of a claim under a liability policy, usually funded through the
purchase of an annuity.
Subrogation
A principle of law incorporated in insurance policies, which enables an insurance company,
after paying a claim under a policy, to recover the amount of the loss from another person or
entity who is legally liable for it.
Third - party liability
A liability owed to a claimant (third party) who is not one of the two parties to the insurance
contract. Insured liability claims are referred to as third
- party claims.
Total capitalization
The sum of total shareholders' equity and debt.
Treaty reinsurance
The reinsurance of a specified type or category of risks defined in a reinsurance agreement
(a "treaty") between a primary insurer or other reinsured and a reinsurer. Typically, in treaty
reinsurance, the primary insurer or reinsured is obligated to offer and the reinsurer is
obligated to accept a specified portion of all that type or category of risks originally written
by the primary insurer or reinsured.
Umbrella coverage
A form of insurance protection against losses in excess of amounts covered by other liability
insurance policies or amounts not covered by the usual liability policies.
Unassigned surplus
The undistributed and unappropriated amount of statutory capital and surplus.
Underlying combined ratio
The underlying combined ratio is the sum of the underlying loss and LAE ratio and the
underlying underwriting expense ratio. The underlying combined ratio is an indicator of the
Company's underwriting discipline and underwriting profitability for the current accident
year.
Underlying loss and LAE ratio
The underlying loss and LAE ratio is the loss and LAE ratio, adjusted to exclude the impact
of catastrophes and prior year reserve development. The underlying loss and LAE ratio is an
indicator of the Company's underwriting discipline and underwriting profitability for the
current accident year.
Underlying underwriting expense ratio
The underlying underwriting expense ratio is the underwriting expense ratio adjusted to
exclude the impact of catastrophes.
Underlying underwriting margin
Net earned premiums and fee income less claims and claim adjustment expenses (excluding
catastrophe losses and prior year reserve development) and insurance
- related expenses.
Underwriter
An employee of an insurance company who examines, accepts or rejects risks and classifies
accepted risks in order to charge an appropriate premium for each accepted risk. The
underwriter is expected to select business that will produce an average risk of loss no greater
than that anticipated for the class of business.