The Hartford 2009 Annual Report Download - page 8

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Property & Casualty Segments
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. For a discussion of
Property & Casualty operations including segment performance, see Part II, Item 7, MD&A, Key Performance Measures and Ratios and
the respective segment discussions.
Property & Casualty Principal Products
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; (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.
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. Over the past three years, The Hartford rolled out new auto
and homeowners products with more coverage options and customized pricing tailored to a customer’ s individual risk. AARP
represents a significant portion of the total Personal Lines business and amounted to earned premiums of $2.8 billion in both 2009 and
2008 and $2.7 billion in 2007. Personal Lines also operates a member contact center for health insurance products offered through the
AARP Health program. In July, 2009, the Company extended the AARP Health program agreement through 2018.
Small Commercial and Middle Market provide workers’ compensation, property, automobile, liability and umbrella coverages under
several different products, primarily throughout the United States. In Small Commercial, some of these coverages are sold together as
part of a single multi-peril package policy called Spectrum. The sale of Spectrum business owners’ package policies and workers’
compensation policies accounts for most of the written premium in the Small Commercial segment. Like Personal Lines, Small
Commercial offers a product with more coverage options and customized pricing based on the policyholder’ s individualized risk
characteristics. Workers’ compensation insurance accounts for the largest share of the written premium in the Middle Market segment.
Small Commercial businesses generally represent companies with up to $5 in annual payroll, $15 in annual revenues or $15 in total
property values while Middle market businesses generally represent companies with greater than $5 in annual payroll, $15 in annual
revenues or $15 in total property values.
Specialty Commercial 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 and specialty casualty coverages. A significant portion of
specialty casualty business, including workers’ compensation business, is written through large deductible programs where the insured
typically provides collateral to support loss payments made within their deductible. The specialty casualty business also provides
retrospectively-rated programs where the premiums are adjustable based on loss experience. Captive and Specialty Programs within
Specialty Commercial, provides insurance products and services primarily 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, LLC, a subsidiary of the Company.
The Other Operations segment operates under a single management structure, Heritage Holdings, which is responsible for two related
activities. The first activity is the management of certain subsidiaries and operations of The Hartford that have discontinued writing new
business. The second is the management of claims (and the associated reserves) related to asbestos, environmental and other exposures.
Property & Casualty 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
37 million members. 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.
The Personal Lines Agency business provides customized products and services to customers through a network of independent agents
in the standard personal lines market. Similar to the other Ongoing Operations’ segments, these 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. In 2009, the Company began selling its new Open Road Advantage auto product in
20 states. In those 20 states, the Open Road Advantage auto product is sold across the Company’ s distribution channels, including
directly to AARP members, through independent agents to both AARP members and non-members and directly to non-members in four
pilot states.