The Hartford 2012 Annual Report Download - page 205

Table of Contents



The Company is involved in both the cession and assumption of insurance with affiliated and unaffiliated insurers. The Company entered into two
reinsurance transactions upon completion of the sales of its Retirement Plans and Individual Life businesses in January 2013. See Note 2 - Business
Dispositions for further discussion of these transactions.
As of December 31, 2012, 2011 and 2010, the Company’s policy for the largest amount of life insurance retained on any one life by any company was $ 10.
Life insurance fees, earned premiums and other were comprised of the following:

  
Gross fee income, earned premiums and other $8,546 $ 9,342 $ 9,482
Reinsurance assumed 137 134 192
Reinsurance ceded (524)(524)(576)
   
The Company reinsures certain of its risks to other reinsurers under yearly renewable term, coinsurance, and modified coinsurance arrangements, and
variations thereto. Yearly renewable term and coinsurance arrangements result in passing all or a portion of the risk to the reinsurer. Generally, the reinsurer
receives a proportionate amount of the premiums less an allowance for commissions and expenses and is liable for a corresponding proportionate amount of all
benefit payments. Modified coinsurance is similar to coinsurance except that the cash and investments that support the liabilities for contract benefits are not
transferred to the assuming company, and settlements are made on a net basis between the companies. Coinsurance with funds withheld is a form of
coinsurance except that the investment assets that support the liabilities are withheld by the ceding company.
The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with
those used to account for the underlying policies. Life insurance recoveries on ceded reinsurance agreements were $ 285, $224 and $275 for the years ended
December 31, 2012, 2011, and 2010, respectively.
In addition, the Company has reinsured a portion of the risk associated with U.S. variable annuities and the associated GMDB and GMWB riders, and of the
risks associated with variable annuity contract and rider benefits issued by Hartford Life Insurance KK (“HLIKK”), an indirect wholly owned subsidiary.
The effect of reinsurance on property and casualty premiums written and earned was as follows:
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   
Direct $10,405 $ 10,368 $ 10,070
Assumed 230 226 234
Ceded (788)(742)(619)
   

Direct $10,484 $10,337 $ 10,105
Assumed 205 225 256
Ceded (796) (688) (668)
   
Ceded losses, which reduce losses and loss adjustment expenses incurred, were $ 512, $385, and $598 for the years ended December 31, 2012, 2011, and
2010, respectively.
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