Travelers 2015 Annual Report Download - page 42

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.
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 ......... For SAP, the loss and LAE ratio 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 loss and LAE
ratio as used in this report is calculated in the same manner as the
SAP ratio.
The loss and LAE ratio is an indicator of the Company’s
underwriting discipline and underwriting profitability.
Other companies’ method of computing a similarly titled measure
may not be comparable to the Company’s method of computing this
ratio.
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