The Hartford 2008 Annual Report Download - page 172

Table of Contents
Ongoing Operations combined ratio
For 2008, the Ongoing Operations’ combined ratio was relatively flat at 90.7 as a 1.7 point increase in net favorable
non-catastrophe prior accident year reserve development and a 1.6 point reduction in the current accident year combined
ratio before catastrophes and prior year development was almost entirely offset by a 3.2 point increase in catastrophes,
driven by higher current accident year catastrophes.
Combined ratio before
catastrophes and
prior accident year
development
• The combined ratio before catastrophes and prior accident year development decreased
by 1.6 points, to 88.9, as the effects of a lower loss and loss adjustment expense ratio for
Small Commercial and Middle Market workers’ compensation claims, lower claim
frequency on Personal Lines auto claims and lower non-catastrophe losses on Small
Commercial package business were partially offset by earned pricing decreases across
the commercial lines businesses and higher non-catastrophe losses on Middle Market
property and Personal Lines homeowners’ business.
Catastrophes • The catastrophe ratio increased by 3.2 points, primarily due to an increase in current
accident year catastrophes in 2008, driven by losses from hurricane Ike and losses from
tornadoes and thunderstorms in the South and Midwest.
Non-catastrophe prior
accident year
development
• Net non-catastrophe prior accident year reserve development in Ongoing Operations was
more favorable in 2008 than in 2007. Favorable non-catastrophe reserve development of
3.2 points, or $333, in 2008 included, among other reserve changes, a $156 release of
reserves for workers’ compensation claims, primarily related to accident years 2000 to
2007, a $105 release of general liability claims, primarily related to accident years 2001
to 2007, and a $75 release of reserves for professional liability claims related to accident
years 2003 through 2006. See the “Reserves” section for a discussion of prior accident
year reserve development for Ongoing Operations in 2008.
Other Operations net income (loss)
• Other Operations reported a net loss of $97 in 2008 compared to net income of $30 in 2007. The change from net
income in 2007 to a net loss in 2008 was primarily due to an increase in net realized capital losses and lower net
investment income, partially offset by a decrease in net unfavorable prior accident year reserve development. See the
Other Operations segment MD&A for further discussion.
Investment yield and average invested assets
• In 2008, the after-tax investment yield decreased due to a change from net income to net losses from limited
partnerships and other alternative investments in 2008 and, to a lesser extent, a lower investment yield for fixed
maturities.
• Average annual invested assets at cost increased modestly due to positive operating cash flows, partially offset by the
effects of impairments of securities and dividends paid to Corporate.
100
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009