Travelers 2015 Annual Report Download - page 40

Combined ratio excluding
incremental impact of direct
to consumer initiative ...... The combined ratio excluding incremental impact of direct to
consumer initiative is the combined ratio adjusted to exclude the
direct, variable impact of the Company’s direct-to-consumer
initiative in the Personal Insurance segment.
Commercial multi-peril policies . Refers to policies which cover both property and third-party liability
exposures.
Commutation agreement ...... An agreement between a reinsurer and a ceding company whereby
the reinsurer pays an agreed-upon amount in exchange for a
complete discharge of all obligations, including future obligations,
between the parties for reinsurance losses incurred.
Debt-to-total capital ratio ..... The ratio of debt to total capitalization.
Debt-to-total capital ratio
excluding net unrealized gain
(loss) on investments ....... The ratio of debt to total capitalization excluding the after-tax
impact of net unrealized investment gains and losses.
Deductible ................ The amount of loss that an insured retains.
Deferred acquisition costs
(DAC) ................. Incremental direct costs of acquired and renewal insurance
contracts, consisting of commissions (other than contingent
commissions) and premium-related taxes that are deferred and
amortized to achieve a matching of revenues and expenses when
reported in financial statements prepared in accordance with U.S.
Generally Accepted Accounting Principles (GAAP).
Deficiency ................ With regard to reserves for a given liability, a deficiency exists when
it is estimated or determined that the reserves are insufficient to
pay the ultimate settlement value of the related liabilities. Where
the deficiency is the result of an estimate, the estimated amount of
deficiency (or even the finding of whether or not a deficiency exists)
may change as new information becomes available.
Demand surge ............. Significant short-term increases in building material and labor costs
due to a sharp increase in demand for those materials and services,
commonly as a result of a large catastrophe resulting in significant
widespread property damage.
Direct written premiums ...... The amounts charged by an insurer to insureds in exchange for
coverages provided in accordance with the terms of an insurance
contract. The amounts exclude the impact of all reinsurance
premiums, either assumed or ceded.
Earned premiums or premiums
earned ................. That portion of property casualty premiums written that applies to
the expired portion of the policy term. Earned premiums are
recognized as revenues under both SAP and GAAP.
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