The Hartford 2008 Annual Report Download - page 237

Table of Contents
Net unfavorable reserve development of $13 in 2006 consisted primarily of a $20 increase in general liability loss and loss
adjustment expense reserves related to accident years 1998 to 2005 and a $10 increase in marine loss reserves, partially
offset by a $25 reduction in allocated loss adjustment expense reserves for workers’ compensation business related to
accident years 2003 to 2005.
Operating expenses increased by $20
The 1.8 point increase in the expense ratio and the 0.4 point increase in the policyholder dividend ratio was primarily due to
an increase in insurance operating costs and expenses and the decrease in earned premiums. Insurance operating costs and
expenses increased by $35, partially due to the effect of a $12 reduction of estimated Citizens’ assessments related to the
2005 Florida hurricanes recorded in 2006. Also contributing to the increase in insurance operating costs and expenses was
an increase in IT costs, an increase in non-deferrable salaries and benefits, and an $8 increase in policyholder dividends. The
increase in policyholder dividends was largely due to an $8 increase in the estimated amount of dividends payable to certain
workers’ compensation policyholders due to underwriting profits.
Amortization of deferred policy acquisition costs decreased by $15, due largely to the decrease in earned premium and
corresponding decrease in acquisition costs.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009