The Hartford 2008 Annual Report Download - page 434

Table of Contents
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
11. Reserves for Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses
As described in Note 1, The Hartford establishes reserves for unpaid losses and loss adjustment expenses on reported and
unreported claims. These reserve estimates are based on known facts and interpretations of circumstances, and consideration
of various internal factors including The Hartford’s experience with similar cases, historical trends involving claim payment
patterns, loss payments, pending levels of unpaid claims, loss control programs and product mix. In addition, the reserve
estimates are influenced by consideration of various external factors including court decisions, economic conditions and
public attitudes. The effects of inflation are implicitly considered in the reserving process.
The establishment of appropriate reserves, including reserves for catastrophes and asbestos and environmental claims, is
inherently uncertain. The Hartford regularly updates its reserve estimates as new information becomes available and events
unfold that may have an impact on unsettled claims. Changes in prior year reserve estimates, which may be material, are
reflected in the results of operations in the period such changes are determined to be necessary. For further discussion of
asbestos and environmental claims, see Note 12.
Life
The following table displays the development of the loss reserves (included in reserve for future policy benefits and unpaid
losses and loss adjustment expenses in the Consolidated Balance Sheets) resulting primarily from group disability products.
For the years ended December 31,
2008 2007 2006
Beginning liabilities for life unpaid losses and loss
adjustment expenses-gross $ 6,028 $ 5,877 $ 5,729
Reinsurance recoverables 261 236 238
Beginning liabilities for life unpaid losses and loss
adjustment expenses 5,767 5,641 5,491
Add provision for life unpaid losses and loss adjustment
expenses
Current year 3,243 3,186 3,067
Prior years (118) (125) (160)
Total provision for life unpaid losses and loss adjustment
expenses 3,125 3,061 2,907
Less payments
Current year 1,554 1,470 1,335
Prior years 1,503 1,465 1,422
Total payments 3,057 2,935 2,757
Ending liabilities for life unpaid losses and loss adjustment
expenses, net 5,835 5,767 5,641
Reinsurance recoverables 231 261 236
Ending liabilities for life unpaid losses and loss adjustment
expenses-gross $ 6,066 $ 6,028 $ 5,877
The favorable prior year claim development in 2008, 2007 and 2006 was principally due to continued disability and waiver
claims management as well as favorable development on the experience rated financial institutions block. The favorable loss
experience on the financial institutions block inversely impacts the commission expenses incurred.
The liability for future policy benefits and unpaid losses and loss adjustment expenses is comprised of the following:
2008 2007
Group Life Term, Disability and Accident unpaid losses and loss adjustment
expenses $ 6,066 $ 6,028
Group Life Other unpaid losses and loss adjustment expenses 253 269
Individual Life unpaid losses and loss adjustment expenses 123 121
Future Policy Benefits 10,305 8,913
Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses $ 16,747 $ 15,331
F-68
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009