The Hartford 2008 Annual Report Download - page 240

Table of Contents
• Casualty earned premiums decreased by $36, or 6%, for the year ended December 31, 2007, primarily because of a
decline in new business written premium and lower premium renewal retention on business written through industry
trade groups. Also contributing to the decrease in earned premiums was an increase in the estimated return premium
due to insureds under retrospectively-rated policies.
• Professional liability, fidelity and surety earned premium grew $35, or 5%, for the year ended December 31, 2007 due
to an increase in earned premiums in professional liability and surety business. The increase in earned premium from
professional liability business was primarily due to a decrease in the portion of risks ceded to outside reinsurers and an
increase in the mix of lower limit middle market professional liability premium, partially offset by the effect of earned
pricing decreases and a decrease in new business written premium. A lower frequency of class action cases in the past
couple of years has put downward pressure on rates during 2006 and 2007. The increase in earned premium from surety
business was primarily due to an increase in public construction spending and construction costs, resulting in more
bonded work programs for current clients and larger bond limits.
• Within the “other” category, earned premium decreased by $35, or 29%. The “Other” category of earned premiums
includes premiums assumed under inter-segment arrangements. Beginning in the third quarter of 2006, the Company
reduced the premiums assumed by Specialty Commercial under inter-segment arrangements covering certain liability
claims.
Specialty Commercial — Underwriting Summary 2008 2007 2006
Written premiums $ 1,361 $ 1,415 $ 1,538
Change in unearned premium reserve (21) (31) 45
Earned premiums 1,382 1,446 1,493
Losses and loss adjustment expenses
Current accident year before catastrophes 941 961 1,025
Current accident year catastrophes 47 9 9
Prior accident years (81) 84 36
Total losses and loss adjustment expenses 907 1,054 1,070
Amortization of deferred policy acquisition costs 313 323 306
Insurance operating costs and expenses 91 87 71
Underwriting results $ 71 $ (18) $ 46
Loss and loss adjustment expense ratio
Current accident year before catastrophes 68.1 66.6 68.4
Current accident year catastrophes 3.4 0.6 0.6
Prior accident years (5.8) 5.8 2.5
Total loss and loss adjustment expense ratio 65.6 73.0 71.5
Expense ratio 28.3 27.4 25.6
Policyholder dividend ratio 0.9 0.9 (0.1)
Combined ratio 94.8 101.3 97.0
Catastrophe ratio
Current accident year 3.4 0.6 0.6
Prior accident years (1.2) 0.1 (2.6)
Total catastrophe ratio 2.2 0.7 (2.0)
Combined ratio before catastrophes 92.6 100.6 99.0
Combined ratio before catastrophes and prior accident year
development 97.3 94.9 93.9
Other revenues [1] $ 371 $ 354 $ 337
[1] Represents servicing revenue.
146
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009