The Hartford 2011 Annual Report Download - page 196

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-61
11. Reserves for Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses (continued)
Life Insurance Products Unpaid Losses and Loss Adjustment Expenses
A rollforward of liabilities, primarily from group disability products, for unpaid losses and loss adjustment expenses follows:
For the years ended December 31,
2011
2010
2009
Beginning liabilities for unpaid losses and loss adjustment expenses, gross
$
6,388
$
6,131
$
6,066
Reinsurance recoverables
209
213
231
Beginning liabilities for unpaid losses and loss adjustment expenses, net
6,179
5,918
5,835
Add provision for unpaid losses and loss adjustment expenses
Current year
3,196
3,260
3,244
Prior years
98
70
(88)
Total provision for unpaid losses and loss adjustment expenses
3,294
3,330
3,156
Less payments
Current year
1,524
1,552
1,580
Prior years
1,635
1,517
1,493
Total payments
3,159
3,069
3,073
Ending liabilities for unpaid losses and loss adjustment expenses, net
6,314
6,179
5,918
Reinsurance recoverables
233
209
213
Ending liabilities for unpaid losses and loss adjustment expenses, gross
$
6,547
$
6,388
$
6,131
The unfavorable prior year development in both 2011 and 2010 is a result of lower claim terminations, particularly in long-term
disability. The favorable prior year development in 2009 was principally due to continued disability and waiver claims management.
The liability for future policy benefits and unpaid losses and loss adjustment expenses is as follows:
2011
2010
Group Life Term, Disability and Accident unpaid losses and loss adjustment expenses
$
6,547
$
6,388
Group Life Other unpaid losses and loss adjustment expenses
213
216
Individual Life unpaid losses and loss adjustment expenses
134
110
Future Policy Benefits
12,572
11,859
Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses
$
19,466
$
18,573
Property and Casualty Insurance Products Accounting Policy
The Hartford establishes property and casualty insurance products reserves to provide for the estimated costs of paying claims under
insurance policies written by the Company. These reserves include estimates for both claims that have been reported and those that
have been incurred but not reported, and include estimates of all losses and loss adjustment expenses associated with processing and
settling these claims. Estimating the ultimate cost of future losses and loss adjustment expenses is an uncertain and complex process.
This estimation process is based significantly on the assumption that past developments are an appropriate predictor of future events,
and involves a variety of actuarial techniques that analyze experience, trends and other relevant factors. The uncertainties involved with
the reserving process have become increasingly difficult due to a number of complex factors including social and economic trends and
changes in the concepts of legal liability and damage awards. Accordingly, final claim settlements may vary from the present estimates,
particularly when those payments may not occur until well into the future.
The Hartford regularly reviews the adequacy of its estimated losses and loss adjustment expense reserves by line of business within the
various reporting segments. Adjustments to previously established reserves are reflected in the operating results of the period in which
the adjustment is determined to be necessary. Such adjustments could possibly be significant, reflecting any variety of new and adverse
or favorable trends.