The Hartford 2008 Annual Report Download - page 28

Table of Contents
Property & Casualty
Property & Casualty provides (1) workers’ compensation, property, automobile, liability, umbrella, specialty casualty,
marine, livestock and fidelity and surety coverages to commercial accounts primarily throughout the United States;
(2) professional liability coverage and directors and officers liability coverage, as well as excess and surplus lines business
not normally written by standard commercial lines insurers; (3) automobile, homeowners and home-based business coverage
to individuals throughout the United States; and (4) insurance-related services.
The Hartford seeks to distinguish itself in the property and casualty market through its product depth and innovation,
distribution capacity, customer service expertise, and technology for ease of doing business. The Hartford is the eleventh
largest property and casualty insurance operation in the United States based on direct written premiums for the year ended
December 31, 2007, according to A.M. Best Company, Inc. (“A.M. Best”). Property & Casualty generated revenues of
$10.2 billion, $12.5 billion, and $12.4 billion in 2008, 2007, and 2006, respectively. Revenues include earned premiums,
servicing revenue, net investment income and net realized capital gains and losses. Earned premiums for 2008, 2007, and
2006 were $10.3 billion, $10.5 billion, and $10.4 billion, respectively. Additionally, net income was $92, $1.5 billion and
$1.5 billion for 2008, 2007 and 2006, respectively. Total assets for Property & Casualty were $36.7 billion, $41.8 billion,
and $41.0 billion as of December 31, 2008, 2007, and 2006, respectively.
Ongoing Operations consists of the underwriting segments of Personal Lines, Small Commercial, Middle Market and
Specialty Commercial. Ongoing Operations earned premiums for 2008, 2007, and 2006 were $10.3 billion, $10.5 billion,
and $10.4 billion, respectively. Additionally, Ongoing Operations net income was $189, $1.5 billion and $1.6 billion for
2008, 2007 and 2006, respectively. Total assets for Ongoing Operations were $31.5 billion, $35.9 billion, and $34.1 billion
as of December 31, 2008, 2007, and 2006, respectively.
Personal Lines
Personal Lines sells automobile, homeowners and home-based business coverages directly to the consumer and through a
network of independent agents. Most of the Company’s personal lines business sold directly to the consumer is to the
members of AARP through a direct marketing operation. Until the sale of the business on November 30, 2006, the Company
also sold non-standard auto insurance through the Company’s Omni Insurance Group, Inc. (“Omni”) subsidiary. Personal
Lines had earned premiums of $3.9 billion, $3.9 billion, and $3.8 billion in 2008, 2007, and 2006, respectively. AARP
represents a significant portion of the total Personal Lines business and amounted to earned premiums of $2.8 billion,
$2.7 billion, and $2.5 billion in 2008, 2007, and 2006, respectively. The Hartford’s exclusive licensing arrangement with
AARP continues until January 1, 2020 for automobile, homeowners and home-based business. This agreement provides
Personal Lines with an important competitive advantage as management expects favorable “baby boom” demographics to
increase AARP membership during this period. Personal Lines’ underwriting income for 2008, 2007, and 2006 was $280,
$322, and $429, respectively. The Hartford is the twelfth largest personal lines insurer in the United States based on direct
written premiums for the year ended December 31, 2007 according to A.M. Best. Personal Lines also operates a member
contact center for health insurance products offered through the AARP Health program. The AARP Health program
agreement continues through 2009.
Principal Products
Personal Lines provides standard automobile, homeowners and home-based business coverages to individuals across the
United States, including a special program designed exclusively for members of AARP. Beginning in 2006, the Company
enhanced its new Dimensions automobile and homeowners class plans for insurance sold through independent agents and
brokers. “Dimensions with Packages”, introduced in 2006, is a suite of products that offers coverages and competitive rates
tailored to a customer’s individual risk. Dimensions uses a large number of interactive rating variables to determine a rate
that most accurately reflects the customer’s individual characteristics. In 2007 and 2008, The Hartford rolled out a new
“Next Generation Auto” product to AARP customers. Similar to The Hartford’s Dimensions with Packages for Agency
business, Next Generation Auto offers more coverage options and provides customized pricing based on the AARP
policyholder’s individualized risk characteristics.
Marketing and Distribution
Personal Lines reaches diverse markets through multiple distribution channels including direct sales to the consumer,
brokers and independent agents. In direct sales to the consumer, the Company markets its products through a mix of media,
including direct marketing, the internet and advertising in publications. Most of Personal Lines’ direct sales to the consumer
are through its exclusive licensing arrangement with AARP to market automobile, homeowners and home-based business
insurance products to AARP’s nearly 39 million members.
The Personal Lines Agency business provides customized products and services to customers through a network of
independent agents in the standard personal lines market. Independent agents are not employees of The Hartford. An
important strategic objective of the Company is to develop common products and processes for all of its personal lines
business regardless of the distribution channel.
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009