Travelers 2015 Annual Report Download - page 46

Retention ................. The amount of exposure a policyholder company retains on any one
risk or group of risks. The term may apply to an insurance policy,
where the policyholder is an individual, family or business, or a
reinsurance policy, where the policyholder is an insurance company.
Retention rate ............. The percentage of prior period premiums (excluding renewal
premium changes), accounts or policies available for renewal in the
current period that were renewed. Such statistics are subject to
change based on a number of factors, including changes in
estimates.
Retrospective premiums ...... Premiums related to retrospectively rated policies.
Retrospective rating ......... A plan or method which permits adjustment of the final premium
or commission on the basis of actual loss experience, subject to
certain minimum and maximum limits.
Return on equity ........... The ratio of net income (loss) less preferred dividends to average
shareholders’ equity.
Risk-based capital (RBC) ..... A measure adopted by the NAIC and enacted by states for
determining the minimum statutory policyholders’ surplus
requirements of insurers. Insurers having total adjusted capital less
than that required by the RBC calculation will be subject to varying
degrees of regulatory action depending on the level of capital
inadequacy.
Risk retention group ......... An alternative form of insurance in which members of a similar
profession or business band together to self insure their risks.
Runoff business ............ An operation which has been determined to be nonstrategic;
includes non-renewals of in-force policies and a cessation of writing
new business, where allowed by law.
Salvage .................. The amount of money an insurer recovers through the sale of
property transferred to the insurer as a result of a loss payment.
S-curve method ............ A mathematical function which depicts an initial slow change,
followed by a rapid change and then ending in a slow change again.
This results in an ‘‘S’’ shaped line when depicted graphically. The
actuarial application of these curves fit the reported data to date
for a particular cohort of claims to an S-curve to project future
activity for that cohort.
Second-injury fund .......... The employer of an injured, impaired worker is responsible only for
the workers’ compensation benefit for the most recent injury; the
second-injury fund would cover the cost of any additional benefits
for aggravation of a prior condition. The cost is shared by the
insurance industry and self-insureds, funded through assessments to
insurance companies and self-insureds based on either premiums or
losses.
Self-insured retentions ....... That portion of the risk retained by a person for its own account.
Servicing carrier ............ An insurance company that provides, for a fee, various services
including policy issuance, claims adjusting and customer service for
insureds in a reinsurance pool.
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