Overview
The business insurance team provides a broad array of products and services for small and mid-sized business enterprises. The Hartford is the 5th-largest commercial lines carrier in the United States based on direct written premium, per A.M. Best. It is a market leader in small business insurance, serving more than 770,000 customers, and in middle market, serving more than 54,000 customers. Business insurance is sold through approximately 6,000 independent agents and brokers.
2006 highlights
- Achieved overall written premium growth of 4%, driven by 7% growth in small commercial. Continue to be among the front-runners in growth, total written premium, and overall profitability in the small commercial market.
- Launched Technology Practice Group, a holistic underwriting approach bringing together the expertise of Middle Market, Small Commercial, and Hartford Financial Products to market our industry-leading errors and omissions FailSafe®, Spectrum®, General Liability Choice®, and Property Choice® products more effectively to technology firms of all sizes.
- Fully launched Customized Pricing, our sophisticated predictive pricing model that automatically provides the most appropriate price for a new small business submission based on a combination of individual risk factors and unique characteristics.
- Introduced a new Commercial Auto offering in the majority of states that is much more competitive on pricing, easier for agents to use, and faster to quote.
- Introduced a new set of coverages designed specifically for mid-size businesses within the $6 billion commercial real estate industry.
- Broadened our distribution reach by adding more than 1,000 local agencies.
Overview
The personal insurance team offers home and automobile insurance through approximately 5,800 independent agents and directly through AARP. The Hartford is the 12th-largest personal lines insurance carrier in the United States, based on direct written premium, per A.M. Best. In the agent business, we continued to expand our ability to write and efficiently service a broader range of customers. The Hartford has partnered with AARP since 1984 and currently provides insurance coverage for approximately 12% of eligible households. The AARP partnership has recently been extended until 2020.
2006 highlights
- Achieved significant new business premium growth – more than 21% growth through our AARP program and more than 17% growth through our agency business.
- Added more than 1,700 local agencies and successfully entered the West Virginia market for agency sales.
- Launched Dimensions with Auto Packages as a new feature of our Dimensions rating plan, offering customers more choice and broadening our market reach.
- Divested the Omni Insurance Group, which wrote non-standard auto business.
- For the second consecutive year, our AARP contact centers were certified by J.D. Power and Associates** for customer satisfaction excellence.
- The Hartford Customer Service Group (HCSG), specializing in contact center sales and service for more than 3.6 million AARP members, extended its partnership with AARP’s Health Care Options program through 2009.
- Accelerated shift toward use of broadcast media to extend reach and complement core AARP marketing programs.
Overview
The specialty commercial insurance team sells customized insurance products and risk management services through independent agents, brokers, and wholesalers. Through The Hartford’s Specialty Risk Services, the specialty commercial insurance team also provides third-party administrator and risk management services.
2006 highlights
- Specialty Risk Services LLC is the 2nd-largest property casualty third-party administrator nationally, generating more than $250 million annually in total revenues, and servicing 20 major carriers and 15% of the Fortune 100, with a 95% client retention rate.
- Hartford Financial Products (HFP) has enhanced its product portfolio with a number of new and industry-leading products such as Priority ProtectionSM Plus and Professional Choice Liability Policy.SM Both of these products, along with our new Large Private Company department, are designed to enhance the needs of The Hartford consumer base.
- Created new Real Estate Errors and Omissions (E&O) Liability product designed specifically for small businesses.
*The combined ratio relates underwriting results to earned premium, and is the sum of the loss and loss adjustment expense ratio, the expense ratio, and the policyholder dividend ratio. A combined ratio under 100% indicates an underwriting profit, while an underwriting loss occurs when the combined ratio is over 100%.
**For J.D. Power and Associates Certified Call Center ProgramSM information, visit www.jdpower.com or call 1-866-842-7548.
“Non-GAAP financial measures” as defined by the rules of the Securities and Exchange Commission are referenced herein. The Hartford uses non-GAAP financial measures to assist investors in analyzing The Hartford’s operating performance. These measures should be considered in addition to our results prepared in accordance with GAAP, as set forth in our Annual Report on Form 10-K, but are not a substitute for GAAP results.
The Hartford uses the non-GAAP financial measure core earnings as an important measure of the Company’s operating performance. We believe the measure core earnings provides investors with a valuable measure of the performance of the Company’s ongoing businesses because core earnings excludes the cumulative effect of accounting changes and the effect of all realized gains and losses (net of tax) that tend to be highly variable from period to period based on capital market conditions. Net income is the most directly comparable GAAP measure. A reconciliation of core earnings to net income for the periods presented herein is set forth on The Hartford’s web site at www.thehartford.com/ir/financialmeasures.html.
Assets under management is an internal performance measure used by the Company because a significant portion of the Company’s revenues are based upon asset values. These revenues increase or decrease with a rise or fall, correspondingly, in the level of assets under management. Assets under management is the sum of total assets, mutual fund assets, and third-party assets managed by Hartford Investment Management Company.
Book value per share excluding AOCI is calculated based upon a non-GAAP financial measure. It is calculated by dividing (a) stockholders’ equity excluding AOCI, net of tax, by (b) common shares outstanding. The Hartford provides book value per share excluding AOCI to enable investors to analyze the amount of the Company’s net worth that is primarily attributable to the Company’s business operations. The Hartford believes book value per share excluding AOCI is useful to investors because it eliminates the effect of items which typically fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per share is the most directly comparable GAAP measure.