Overview
The personal insurance segment offers automobile and home insurance through independent agents and directly through AARP. We are the 5th-largest direct carrier of auto and home insurance, as AARP’s exclusive personal lines’ insurance provider. We also continue to reach more customers by expanding our agency footprint, currently offering products through more than 7,000 independent agents.
2007 highlights
- Achieved a written premium growth rate of 5% for our AARP and agency business – a sector experiencing flat growth and fiercely competitive market conditions.
- Extended our agreement with AARP to 2020 as the exclusive provider of auto and home insurance for their nearly 39 million members.
- Our personal lines contact centers, which handle more than 10 million calls per year, were named International Customer Institute Management’s Global Call Center of the Year. For the third consecutive year, our AARP contact centers were certified by J.D. Power and Associates‡ for customer satisfaction excellence.
- Expanded and improved customer access by appointing 1,300 new independent agents, improving agent quoting technology, and launching a new web site for AARP members.
- In partnership with MIT AgeLab, we announced results from two new research efforts – one on Alzheimer’s disease and driving and another on disaster preparedness for older adults. We distributed the following guidebooks to families countrywide: At the Crossroads, Family Conversations about Alzheimer’s Disease, Dementia & Driving and It Could Happen to Me: Family Conversations about Disaster Planning.
Overview
The small commercial insurance segment provides a broad array of products and services for small businesses with up to $5 million in annual payroll or $15 million in annual revenues or total property values. We are a leading provider of small business insurance through the independent agency channel, currently serving more than 800,000 customers with more than 1 million policies.
2007 highlights
- In a competitive marketplace, this segment achieved policies in force growth of 5%.
- Simplified our small business model, providing agents with a one-stop solution for all sizes of small businesses, opening up access to an additional $11 billion of potential written premium.
- Launched an enhanced commercial auto offering that increased our ability to write a much wider range of business, resulting in a 23% increase in commercial auto policies in 2007.
- Introduced XactPAY WebSM Special Edition for QuickBooks® Payroll, a patent-pending billing solution that provides small business owners who use Quickbooks Payroll, a pay-as-you-go workers’ compensation insurance solution.
Overview
The middle market insurance segment provides commercial insurance coverage to companies with greater than $5 million in annual payroll or $15 million in annual revenues or total property values. The team serves more than 24,700 customers and offers workers’ compensation, property, automobile, liability, umbrella, and marine coverages, as well as commercial risk management products and services.
2007 highlights
- Policies in force grew 2% in a competitive marketplace.
- The Technology Practice Group, launched in 2006, continued to achieve strong growth rates across Middle Market, Small Commercial, and Hartford Financial Products. The group also enhanced our industry-leading FailSafe® errors & omission products. Within the middle market sector, the Technology Practice Group total policy count was up 12% over 2006.
- Introduced additional online quoting capabilities for QuoteMarine, allowing agents to submit, quote and issue coverage quickly and easily for builders’ risk, motor truck cargo, ocean cargo, and contractors’ equipment.
- In conjunction with Small Commercial, we launched an enhanced commercial auto offering that increased our ability to write a wider range of business.
Overview
The specialty commercial insurance segment 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 claims administration and risk management services. The Hartford Financial Products (HFP) division represents the company’s significant presence in the financial and professional insurance markets, providing a range of management liability solutions. HFP is one of the largest providers of directors and officers liability, employment practices liability, and errors and omissions insurance.
2007 highlights
- Specialty Risk Services LLC (SRS) is the second-largest property casualty third-party administrator nationally, generating $263 million annually in total revenues in 2007, with a 98% client retention ratio. SRS services 20 major carriers and has a 15% market share of the Fortune 100.
- First State Management Group formed a strategic relationship with certain members of the Berkshire Hathaway group of insurance companies in order to offer expanded levels of surplus lines commercial insurance.
- Hartford Financial Products opened a professional liability insurance office in London.
*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%.
†Excludes Omni business sold in 2006.
‡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 and deferred policy acquisition costs) 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 that 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.