The Hartford 2009 Annual Report Download - page 113

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In addition to the property catastrophe reinsurance coverage described in the above table, the Company has other treaties and facultative
reinsurance agreements that cover property catastrophe losses on an aggregate excess of loss and on a per risk basis. The principal
property catastrophe reinsurance program and other reinsurance programs include a provision to reinstate limits in the event that a
catastrophe loss exhausts limits on one or more layers under the treaties.
In addition to the reinsurance protection provided by The Hartford’ s traditional property catastrophe reinsurance program described
above, the Company has fully collateralized reinsurance coverages from Foundation Re, Foundation Re II and Foundation Re III for
losses sustained from qualifying hurricane and earthquake loss events and other qualifying catastrophe losses. Foundation Re,
Foundation Re II and Foundation Re III are Cayman Islands reinsurance companies which financed the provision of the reinsurance
through the issuance of catastrophe bonds. Under the terms of the treaties with Foundation Re, Foundation Re II and Foundation Re III,
the Company is reimbursed for losses from natural disaster events using a customized industry index contract designed to replicate The
Hartford's own catastrophe losses, with a provision that the actual losses incurred by the Company for covered events, net of reinsurance
recoveries, cannot be less than zero.
The following table summarizes the terms of the reinsurance treaties with Foundation Re, Foundation Re II and Foundation Re III that
were in place as of February 1, 2010:
Covered perils Treaty term Covered losses
Bond amount issued by
Foundation Re,
Foundation Re II or
Foundation Re III
Hurricane loss events affecting the Gulf
and Eastern Coast of the United States
and loss events arising from California,
Pacific Northwest, and New Madrid
earthquakes.
2/17/2006 to
2/17/2010
26% of $400 in losses in excess of an
index loss trigger equating to
approximately $1.3 billion in Hartford
losses
$105
Hurricane loss events affecting the Gulf
and Eastern Coast of the United States
11/17/2006 to
11/17/2010
45% of $400 in losses in excess of an
index loss trigger equating to
approximately $1.85 billion in Hartford
losses
180
Hurricane loss events affecting the Gulf
and Eastern Coast of the United States
1/27/2010 to
1/27/2014
90% of $200 in losses in excess of an
index loss trigger equating to
approximately $1.2 billion in Hartford
losses
180
As of February 1, 2010, there have been no events that are expected to trigger a recovery under any of the reinsurance programs with
Foundation Re, Foundation Re II or Foundation III and, accordingly, the Company has not recorded any recoveries from the associated
reinsurance treaties.