The Hartford 2008 Annual Report Download - page 170

Table of Contents
Key Performance Ratios and Measures
The Company considers several measures and ratios to be the key performance indicators for the property and casualty
underwriting businesses. The following table and the segment discussions for the years ended December 31, 2008, 2007 and
2006 include various ratios and measures of profitability. Management believes that these ratios and measures are useful in
understanding the underlying trends in The Hartford’s property and casualty insurance underwriting business. However,
these key performance indicators should only be used in conjunction with, and not in lieu of, underwriting income for the
underwriting segments of Personal Lines, Small Commercial, Middle Market and Specialty Commercial and net income for
the Property & Casualty business as a whole, Ongoing Operations and Other Operations. These ratios and measures may not
be comparable to other performance measures used by the Company’s competitors.
Ongoing Operations earned premium growth 2008 2007 2006
Personal Lines 1% 3% 4%
Small Commercial — 3% 10%
Middle Market (5%) (4%) 4%
Specialty Commercial (4%) (3%) (12%)
Ongoing Operations (2%) 1% 3%
Ongoing Operations combined ratio
Combined ratio before catastrophes and prior year development 88.9 90.5 88.0
Catastrophe ratio
Current year 5.3 1.7 1.9
Prior years (0.2) 0.1 (0.7)
Total catastrophe ratio 5.0 1.8 1.2
Non-catastrophe prior year development (3.2) (1.5) 0.1
Combined ratio 90.7 90.8 89.3
Other Operations net income (loss) $ (97) $ 30 $ (35)
Total Property & Casualty measures of net investment income
Investment yield, after-tax 3.2% 4.4% 4.1%
Average annual invested assets at cost $ 29,797 $ 29,760 $ 27,324
Year ended December 31, 2008 compared to the year ended December 31, 2007
Ongoing Operations earned premium growth
Personal Lines • The decrease in the earned premium growth rate from 2007 to 2008 was due to a
significantly lower growth rate on AARP business and a change to declining earned
premium in Agency, partially offset by the effect of the sale of Omni in 2006 which
lowered the growth rate in 2007. Excluding Omni, Personal Lines earned premium grew
7% in 2007. The effects of larger declines in auto and homeowners’ new business
premium and a change to declining homeowners’ renewal retention since the middle of
2007 were largely offset by the effect of a change to modest earned pricing increases in
auto.
Small Commercial • The earned premium growth rate in 2008 was reduced from moderate earned premium
increases in 2007 to no growth in 2008. The decrease in the growth rate was primarily
attributable to slightly larger earned pricing decreases in 2008 compared to 2007 and a
change to decreasing premium renewal retention since the middle of 2007.
Middle Market • Earned premium declined in the mid-single digits in both 2007 and 2008. The effect of
slightly larger earned pricing decreases in 2008 has been largely offset by the effect of a
change to new business growth since the second quarter of 2008.
Specialty Commercial • Earned premium decreased by 4% in 2008 compared to a decrease of 3% in 2007. A
larger earned premium decrease in property and a change from earned premium growth
in professional liability, fidelity and surety in 2007 to no growth in 2008, was partially
offset by an improvement in the rate of earned premium decline in casualty. Property
earned premium decreased more significantly in 2008 than in 2007 due, in part, to a
decision to stop writing specialty property business with large, national accounts. Also
contributing to the larger decrease in property earned premium in 2008 were the effects
of a change to decreasing earned pricing and a change to decreasing new business in
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009