The Hartford 2007 Annual Report Download - page 233

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-56
11. Reserves for Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses
As described in Note 1, The Hartford establishes reserves for unpaid losses and loss adjustment expenses on reported and unreported
claims. These reserve estimates are based on known facts and interpretations of circumstances, and consideration of various internal
factors including The Hartford’ s experience with similar cases, historical trends involving claim payment patterns, loss payments,
pending levels of unpaid claims, loss control programs and product mix. In addition, the reserve estimates are influenced by
consideration of various external factors including court decisions, economic conditions and public attitudes. The effects of inflation
are implicitly considered in the reserving process.
The establishment of appropriate reserves, including reserves for catastrophes and asbestos and environmental claims, is inherently
uncertain. The Hartford regularly updates its reserve estimates as new information becomes available and events unfold that may have
an impact on unsettled claims. Changes in prior year reserve estimates, which may be material, are reflected in the results of operations
in the period such changes are determined to be necessary. For further discussion of asbestos and environmental claims, see Note 12.
Life
The following table displays the development of the loss reserves (included in reserve for future policy benefits and unpaid losses and
loss adjustment expenses in the Consolidated Balance Sheets) resulting primarily from group disability products.
For the years ended December 31,
2007 2006 2005
Beginning liabilities for life unpaid losses and loss adjustment expenses-gross $4,985 $ 4,832 $ 4,714
Reinsurance recoverables 233 238 297
Beginning liabilities for life unpaid losses and loss adjustment expenses 4,752 4,594 4,417
Add provision for life unpaid losses and loss adjustment expenses
Current year 2,127 2,140 1,994
Prior years (65) (128) (112)
Total provision for life unpaid losses and loss adjustment expenses 2,062 2,012 1,882
Less payments
Current year 758 724 645
Prior years 1,221 1,130 1,060
Total payments 1,979 1,854 1,705
Ending liabilities for life unpaid losses and loss adjustment expenses 4,835 4,752 4,594
Reinsurance recoverables 257 233 238
Ending liabilities for life unpaid losses and loss adjustment expenses-gross $5,092 $ 4,985 $ 4,832
The favorable prior year claim development in 2007 and 2006 is principally due to continued strong disability claims management as
well as favorable development on the experience rated financial institutions block. The favorable loss experience on the financial
institutions block inversely impacts the commission expenses incurred.
The liability for future policy benefits and unpaid losses and loss adjustment expenses is comprised of the following:
2007 2006
Group Disability and Accident and Other unpaid losses and loss adjustment expenses $ 5,092 $ 4,985
Group Life unpaid losses and loss adjustment expenses 1,205 1,132
Individual Life unpaid losses and loss adjustment expenses 121 110
Future Policy Benefits 8,913 7,789
Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses $ 15,331 $ 14,016