The Hartford 2007 Annual Report Download - page 114

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Small Commercial — Underwriting Summary 2007 2006 2005
Written premiums $ 2,747 $ 2,728 $ 2,545
Change in unearned premium reserve 11 76 124
Earned premiums 2,736 2,652 2,421
Losses and loss adjustment expenses
Current accident year before catastrophes 1,594 1,509 1,426
Current accident year catastrophes 28 34 50
Prior accident years (209) (75) (24)
Total losses and loss adjustment expenses 1,413 1,468 1,452
Amortization of deferred policy acquisition costs 635 634 596
Insurance operating costs and expenses 180 128 141
Underwriting results $ 508 $ 422 $ 232
Loss and loss adjustment expense ratio
Current accident year before catastrophes 58.3 56.9 58.9
Current accident year catastrophes 1.0 1.3 2.1
Prior accident years (7.6) (2.8) (1.0)
Total loss and loss adjustment expense ratio 51.6 55.3 60.0
Expense ratio 29.2 28.5 30.2
Policyholder dividend ratio 0.6 0.2 0.2
Combined ratio 81.4 84.1 90.4
Catastrophe ratio
Current accident year 1.0 1.3 2.1
Prior accident years 0.2 (0.7) 0.4
Total catastrophe ratio 1.2 0.6 2.5
Combined ratio before catastrophes 80.3 83.5 87.9
Combined ratio before catastrophes and prior accident year
development 88.0 85.6 89.3
Underwriting results and ratios
Year ended December 31, 2007 compared to the year ended December 31, 2006
Underwriting results increased by $86, from $422 to $508, with a corresponding 2.7 point improvement in the combined ratio, from
84.1 to 81.4, due to:
Change in underwriting results
Increase in earned premiums $ 84
Losses and loss adjustment expenses
Volume change — Increase in current accident year loss and loss adjustment expenses before
catastrophes due to the increase in earned premium (47)
Ratio change — An increase in the current accident year non-catastrophe loss and loss adjustment
expense ratio before catastrophes (38)
Net increase in current accident year loss and loss adjustment expenses before catastrophes (85)
Catastrophes — Decrease in current accident year catastrophe losses 6
Reserve changes — Increase in net favorable prior accident year reserve development 134
Net decrease in losses and loss adjustment expenses 55
Operating expenses
Increase in amortization of deferred policy acquisition costs (1)
Increase in insurance operating costs and expenses (52)
Increase in operating expenses (53)
Increase in underwriting results from 2006 to 2007 $ 86