The Hartford 2011 Annual Report Download - page 50

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• Strengthened reserves for surety business, primarily related to accident years 2004 to 2007. The net strengthening consisted of $55
strengthening of reserves for customs bonds, partially offset by a $27 release of reserves for contract surety claims. During 2008,
the Company became aware that there were a large number of late reported surety claims related to customs bonds. Continued high
volume of late reported claims during 2009 caused the Company to strengthen the reserves. Because the pattern of claim reporting
for customs bonds has not been similar to the reporting pattern of other surety bonds, future claim activity is difficult to predict. It
is possible that as additional claim activity emerges, our estimate of both the number of future claims and the cost of those claims
could change substantially.
• Strengthened reserves for homeowners’ claims. In 2008, the Company began to observe increasing claim settlement costs for the
2005 to 2008 accident years and, in the first quarter of 2009, determined that this higher cost level would continue, resulting in
reserve strengthening for these accident years. In addition, beginning in 2008, the Company observed unfavorable emergence of
homeowners' casualty claims for accident years 2003 and prior, primarily related to underground storage tanks. Following a
detailed review of these claims in the first quarter of 2009, management increased its estimate of the magnitude of this exposure
and strengthened homeowners' casualty claim reserves.
• The Company reviewed its allowance for uncollectible reinsurance in the second quarter of 2009 and reduced its allowance driven,
in part, by a reduction in gross ceded loss recoverables.
• Refer to the Property & Casualty Other Operations Claims section for discussion concerning the Company’ s annual evaluations of net
environmental and net asbestos reserves, and related reinsurance.