The Hartford 2008 Annual Report Download - page 238

Table of Contents
SPECIALTY COMMERCIAL
Specialty Commercial offers a variety of customized insurance products and risk management services. The segment
provides standard commercial insurance products including workers’ compensation, automobile and liability coverages to
large-sized companies. Specialty Commercial also provides professional liability, fidelity and surety and specialty casualty
coverages, as well as core property and excess and surplus lines coverages not normally written by standard lines insurers.
Specialty Commercial provides other 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.
Written Premiums [1] 2008 2007 2006
Property $ 50 $ 111 $ 142
Casualty 538 534 582
Professional liability, fidelity and surety 691 689 697
Other 82 81 117
Total $ 1,361 $ 1,415 $ 1,538
Earned Premiums [1]
Property $ 87 $ 133 $ 144
Casualty 526 543 579
Professional liability, fidelity and surety 685 685 650
Other 84 85 120
Total $ 1,382 $ 1,446 $ 1,493
[1] The difference between written premiums and earned premiums is attributable to the change in unearned premium
reserve.
Earned Premiums
Year ended December 31, 2008 compared to the year ended December 31, 2007
Earned premiums for the Specialty Commercial segment decreased by $64, or 4%, primarily due to a decrease in property
earned premiums and, to a lesser extent, casualty earned premiums.
• Property earned premiums decreased by $46, or 35%, primarily due to the Company’s decision to stop writing specialty
property business with large, national accounts and the effect of increased competition for core excess and surplus lines
business. As a result of increased competition and capacity for core excess and surplus lines business, the Company has
experienced a decrease in earned pricing, lower new business growth and lower premium renewal retention since the
third quarter of 2007, particularly for catastrophe-exposed business.
• Casualty earned premiums decreased by $17, or 3%, primarily because of lower earned premium from captive
programs and a decline in new business premium on loss-sensitive business written with larger accounts over the last
nine months of 2007 and first three months of 2008.
• Professional liability, fidelity and surety earned premium was flat. Earned premium for professional liability was
relatively flat as the effect of earned pricing decreases in 2008 and the effect of a decline in new business written
premium over the last nine months of 2007 and the first six months of 2008 were largely offset by the effect of a
decrease in the portion of risks ceded to outside reinsurers. Earned premium for fidelity and surety business was also
relatively flat as a modest decrease in commercial surety was largely offset by a modest increase in contract surety.
• Within the “Other” category, earned premium remained relatively flat from 2007 to 2008. The “Other” category of
earned premiums includes premiums assumed under inter-segment arrangements.
Year ended December 31, 2007 compared to the year ended December 31, 2006
Earned premiums for the Specialty Commercial segment decreased by $47, or 3%, for the year ended December 31, 2007,
primarily due to a decrease in casualty, property and other earned premiums, partially offset by an increase in professional
liability, fidelity and surety earned premiums.
• Property earned premiums decreased by $11, or 8%, primarily due to lower premium renewal retention and
the effect of an arrangement with Berkshire Hathaway to share premiums written under subscription policies.
Under the arrangement with Berkshire Hathaway that commenced in the second quarter of 2007, a share of
excess and surplus lines business that was previously written entirely by the Company is now being written in
conjunction with Berkshire Hathaway under subscription policies, whereby both companies share, or
participate, in the business written. The arrangement with Berkshire Hathaway enables the Company to offer
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009