The Hartford 2007 Annual Report Download - page 91

91
A rollforward of liabilities for unpaid losses and loss adjustment expenses by segment for Property & Casualty for the year ended
December 31, 2005 follows:
For the year ended December 31, 2005
Personal
Lines
Small
Commercial
Middle
Market
Specialty
Commercial
Ongoing
Operations
Other
Operations
Total
P&C
Beginning liabilities for unpaid losses
and loss adjustment expenses-gross $ 2,000 $2,532 $ 3,638 $ 5,406 $ 13,576 $ 7,753 $ 21,329
Reinsurance and other recoverables 190 115 413 2,037 2,755 2,383 5,138
Beginning liabilities for unpaid losses
and loss adjustment expenses-net 1,810 2,417 3,225 3,369 10,821 5,370 16,191
Provision for unpaid losses and loss
adjustment expenses
Current year before catastrophes 2,291 1,426 1,431 1,216 6,364 — 6,364
Current accident years 98 50 38 165 351 — 351
Prior years (95) (24) 52 103 36 212 248
Total provision for unpaid losses and loss
adjustment expenses 2,294 1,452 1,521 1,484
6,751 212 6,963
Payments (2,337) (1,038) (1,139) (1,086) (5,600) (691) (6,291)
Ending liabilities for unpaid losses and
loss adjustment expenses-net 1,767 2,831 3,607 3,767 11,972 4,891 16,863
Reinsurance and other recoverables 385 192 565 2,306 3,448 1,955 5,403
Ending liabilities for unpaid losses and
loss adjustment expenses-gross $ 2,152 $3,023 $ 4,172 $ 6,073 $ 15,420 $ 6,846 $ 22,266
Earned premiums $ 3,610 $2,421 $2,355 $1,766 $ 10,152 $ 4 $ 10,156
Loss and loss expense paid ratio [1] 64.7 42.9 48.3 61.6 55.1
Loss and loss expense incurred ratio 63.6 60.0 64.6 84.1 66.5
Prior accident year development (pts.) (2.6) (1.0) 2.2 5.8 0.4
[1] The “loss and loss expense paid ratio” represents the ratio of paid loss and loss adjustment expenses to earned premiums.
Prior accident year development recorded in 2005
Included within prior accident year development for the year ended December 31, 2005 were the following reserve strengthenings
(releases).
Personal
Lines
Small
Commercial
Middle
Market
Specialty
Commercial
Ongoing
Operations
Other
Operations
Total
P&C
Strengthening of workers’ compensation
reserves for claim payments expected to
emerge after 20 years of development $ — $ 15 $ 35 $ 70 $ 120 $ — $ 120
Release of 2003 and 2004 accident year
workers’ compensation reserves — (37) (38)
—
(75) — (75)
Release of reserves for allocated loss
adjustment expenses (95) (23) (2) — (120) — (120)
Strengthening of general liability reserves in
Middle Market — — 40 — 40 — 40
Strengthening of reserves for 2004 hurricanes 9 20 — 4 33 — 33
Strengthening of assumed casualty
reinsurance reserves — — — — — 85 85
Strengthening of environmental reserves — — — — — 37 37
Other reserve re-estimates, net [1] (9) 1 17 29 38 90 128
Total prior accident year development for
the year ended December 31, 2005 $ (95) $ (24) $ 52 $ 103 $ 36 $ 212 $ 248
[1] Includes reserve discount accretion of $30, including $6 in Small Commercial, $7 in Middle Market, $10 in Specialty Commercial and $7 in Other
Operations.
During the year ended December 31, 2005, the Company’ s re-estimates of prior accident year reserves included the following
significant reserve changes.
Ongoing Operations
• Strengthened workers’ compensation reserves for claim payments expected to emerge after 20 years of development by $120. For
workers’ compensation claims involving permanent disability, it is particularly difficult to estimate how such claims will develop
more than 20 years after the year the claims were incurred (known as “the tail”). During 2005, the Company’ s actuaries performed
an actuarial study to re-estimate the required reserves for additional development beyond the 20th year following a claim being
incurred. This study involved gathering extensive historical data dating back over 50 years which could be used for making these