The Hartford 2008 Annual Report Download - page 373

Table of Contents
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. Segment Information (continued)
Property & Casualty
Property & Casualty is organized into five reporting segments: the underwriting segments of Personal Lines, Small
Commercial, Middle Market and Specialty Commercial (collectively “Ongoing Operations”); and the Other Operations
segment.
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. Up 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
(refer to Note 20 for further discussion). Personal Lines also operates a member contact center for health insurance products
offered through the AARP Health program. AARP accounts for earned premiums of $2.8 billion, $2.7 billion, and
$2.5 billion in 2008, 2007 and 2006, respectively, which represented 27%, 26% and 24% of total Property & Casualty
earned premiums for 2008, 2007 and 2006, respectively.
Small Commercial provides standard commercial insurance coverage to small commercial businesses primarily throughout
the United States. Small commercial businesses generally represent companies with up to $5 in annual payroll, $15 in
annual revenues or $15 in total property values. This segment offers workers’ compensation, property, automobile, liability
and umbrella coverages.
Middle Market provides standard commercial insurance coverage to middle market commercial businesses primarily
throughout the United States. This segment offers workers’ compensation, property, automobile, liability, umbrella, marine
and livestock coverages, primarily to companies with greater than $5 in annual payroll, $15 in annual revenues or $15 in
total property values.
The Specialty Commercial segment offers a variety of customized insurance products and risk management services.
Specialty Commercial provides standard commercial insurance products including workers’ compensation, automobile and
liability coverages to large-sized companies. Specialty Commercial also provides professional liability, fidelity, surety,
specialty casualty coverages, core property and excess and surplus lines coverages not normally written by standard lines
insurers, and insurance products and services to captive insurance companies, pools and self-insurance groups. In addition,
Specialty Commercial provides third party administrator services for claims administration, integrated benefits and loss
control through Specialty Risk Services, a subsidiary of the Company.
The Other Operations segment consists of certain property and casualty insurance operations of The Hartford which have
discontinued writing new business and includes substantially all of the Company’s asbestos and environmental exposures.
Through inter-segment arrangements, Specialty Commercial reimburses Personal Lines, Small Commercial and Middle
Market for certain losses, including, among other coverages, losses incurred from uncollectible reinsurance and losses
incurred under certain liability claims. In addition, the Company retains a portion of the risks ceded under the Company’s
principal catastrophe reinsurance program and other reinsurance programs and, prior to 2007, the financial results of the
Company’s retention were recorded in the Specialty Commercial segment. The amount of premiums ceded to third party
reinsurers under the principal catastrophe reinsurance program and other reinsurance programs is allocated to the operating
segments based on the risks written by each operating segment that are subject to the programs.
Earned premiums assumed (ceded) under the inter-segment arrangements and retention were as follows:
Net assumed (ceded) earned premiums under inter-segment For the years ended December 31,
arrangements and retention 2008 2007 2006
Personal Lines $ (6) $ (7) $ (21)
Small Commercial (31) (29) (31)
Middle Market (31) (34) (45)
Specialty Commercial 68 70 97
Total $ — $ — $ —
Financial Measures and Other Segment Information
One of the measures of profit or loss used by The Hartford’s management in evaluating the performance of its Life segments
is net income. Net income is a measure of profit or loss used in evaluating the performance of Ongoing Operations and the
Other Operations segment. Within Ongoing Operations, the underwriting segments of Personal Lines, Small Commercial,
Middle Market and Specialty Commercial are evaluated by The Hartford’s management primarily based upon underwriting
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009