* 22357 200520100100* annual statement hartford … · michael john dury svp and chief financial...

PROPERTY AND CASUALTY COMPANIES - ASSOCIATION EDITION

*22357200520100100*

ANNUAL STATEMENTFor the Year Ended December 31, 2005

of the Condition and Affairs of the

HARTFORD ACCIDENT AND INDEMNITYCOMPANY

NAIC Group Code.....0091, 0091 NAIC Company Code..... 22357 Employer's ID Number..... 06-0383030 (Current Period) (Prior Period)Organized under the Laws of Connecticut State of Domicile or Port of Entry Connecticut Country of Domicile USIncorporated/Organized..... August 12, 1913 Commenced Business..... August 12, 1913Statutory Home Office Hartford Plaza.. Hartford ..... CT ..... 06115-0000 (Street and Number) (City or Town, State and Zip Code)Main Administrative Office Hartford Plaza.. Hartford ..... CT ..... 06115-0000 860-547-5000 (Street and Number) (City or Town, State and Zip Code) (Area Code) (Telephone Number)Mail Address Hartford Plaza.. Hartford ..... CT ..... 06115-0000 (Street and Number or P. O. Box) (City or Town, State and Zip Code)Primary Location of Books and Records Hartford Plaza.. Hartford ..... CT ..... 06115-0000 860-547-5000 (Street and Number) (City or Town, State and Zip Code) (Area Code) (Telephone Number)Internet Website Address www.thehartford.comStatutory Statement Contact Randolph A. Dalton 860-547-4497 (Name) (Area Code) (Telephone Number) (Extension)

[email protected] 860-547-6343 (E-Mail Address) (Fax Number)Policyowner Relations Contact Hartford Plaza.. Hartford ..... CT ..... 06115-0000 860-547-4497 (Street and Number) (City or Town, State and Zip Code) (Area Code) (Telephone Number) (Extension)

OFFICERSName Title Name Title

1. David Kenneth Zwiener COB, COO and President 2. Frederick James Jones Jr. # SVP and Controller, P&C Oper.3. Richard Gibson Costello # VP and Corporate Secretary 4. John Nicholas Giamalis SVP and Treasurer

OTHERRamani Ayer Chief Executive Officer Judith Ann Blades Senior Executive Vice PresidentJonathan Ross Bennett # Executive Vice President Ann Morhardt de Raismes Executive Vice PresidentDana Ann Drago Executive Vice President Calvin Hudson Executive Vice PresidentDavid Michael Johnson Executive Vice President David Richard Robb Executive Vice PresidentRaymond James Sprague Executive Vice President Neal Steven Wolin EVP and General CounselDavid Mark Znamierowski Executive VP and CIO Ann Boucher Glover Group Senior Vice PresidentMichael John Dury SVP and Chief Financial Officer Thomas Scott Johnston SVP and Chief Actuary

DIRECTORS OR TRUSTEESDavid Michael Johnson David Mark Znamierowski David Kenneth Zwiener

State of........ ConnecticutCounty of..... Hartford

The officers of this reporting entity being duly sworn, each depose and say that they are the described officers of said reporting entity, and that on the reporting periodstated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except asherein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to, is a full and true statementof all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductionstherefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Proceduresmanual except to the extent that: (1) state law may differ; or, (2) that state rules or regulations require differences in reporting not related to accounting practices andprocedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers alsoincludes the related corresponding electronic filing with the NAIC, when required, that is an exact copy of the enclosed statement (except for formatting differencesdue to electronic filing). The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement.

(Signature) (Signature) (Signature)David Kenneth Zwiener Frederick James Jones Jr. Richard Gibson Costello

1. (Printed Name) 2. (Printed Name) 3. (Printed Name)COB, COO and President SVP and Controller, P&C Oper. VP and Corporate Secretary

(Title) (Title) (Title)

Subscribed and sworn to before me a. Is this an original filing? Yes [ X ] No [ ]

This day of b. If no 1. State the amendment number

2. Date filed

3. Number of pages attached

Annual Statement for the year 2005 of the HARTFORD ACCIDENT AND INDEMNITY COMPANY

2

ASSETSCurrent Year Prior Year

1 2 3 4Net Admitted

Nonadmitted Assets NetAssets Assets (Cols. 1 - 2) Admitted Assets

1. Bonds (Schedule D)................................................................................................................. .............7,860,923,874 ..................................0 .............7,860,923,874 .............7,344,732,403

2. Stocks (Schedule D):

2.1 Preferred stocks............................................................................................................. ................216,638,405 ..................................0 ................216,638,405 ..................53,410,765

2.2 Common stocks............................................................................................................. .............1,022,164,449 ..................................0 .............1,022,164,449 ................919,844,421

3. Mortgage loans on real estate (Schedule B):

3.1 First liens........................................................................................................................ ..................73,558,654 ..................................0 ..................73,558,654 ..................98,090,039

3.2 Other than first liens....................................................................................................... ..................................0 ..................................0 ..................................0 ..................................0

4. Real estate (Schedule A):

4.1 Properties occupied by the company (less $............0encumbrances).............................................................................................................. ..................................0 ..................................0 ..................................0 ..................................0

4.2 Properties held for the production of income (less $............0encumbrances).............................................................................................................. ..................................0 ..................................0 ..................................0 ..................................0

4.3 Properties held for sale (less $..........0 encumbrances)................................................ ..................................0 ..................................0 ..................................0 ..................................0

5. Cash ($.....39,223,168, Sch. E-Part 1), cash equivalents ($.....89,495,000,Sch. E-Part 2) and short-term investments ($.....333,458,459, Sch. DA)............................... ................462,176,628 ..................................0 ................462,176,628 ................242,460,973

6. Contract loans (including $..........0 premium notes)................................................................ ..................................0 ..................................0 ..................................0 ..................................0

7. Other invested assets (Schedule BA)...................................................................................... ................161,912,006 ..................11,260,314 ................150,651,692 ................156,327,214

8. Receivables for securities........................................................................................................ ..................25,708,213 ..................................0 ..................25,708,213 ..................16,312,783

9. Aggregate write-ins for invested assets................................................................................... ....................1,498,550 ..................................0 ....................1,498,550 ....................1,254,390

10. Subtotals, cash and invested assets (Lines 1 to 9)................................................................. .............9,824,580,778 ..................11,260,314 .............9,813,320,464 .............8,832,432,988

11. Title plants less $..........0 charged off (for Title insurers only)................................................. ..................................0 ..................................0 ..................................0 ..................................0

12. Investment income due and accrued....................................................................................... ................103,932,985 ..................................0 ................103,932,985 ................103,506,628

13. Premiums and considerations:

13.1 Uncollected premiums and agents' balances in course of collection........................... ..................................0 ..................................0 ..................................0 ..................................0

13.2 Deferred premiums, agents' balances and installments booked but deferredand not yet due (including $..........0 earned but unbilled premiums)........................... ..................................0 ..................................0 ..................................0 ..................................0

13.3 Accrued retrospective premiums................................................................................... ..................21,516,230 ....................2,151,622 ..................19,364,608 ..................22,763,027

14. Reinsurance:

14.1 Amounts recoverable from reinsurers........................................................................... ..................................0 ..................................0 ..................................0 ..................................0

14.2 Funds held by or deposited with reinsured companies................................................ ..................................0 ..................................0 ..................................0 ..................................0

14.3 Other amounts receivable under reinsurance contracts............................................... ..................................0 ..................................0 ..................................0 ..................................0

15. Amounts receivable relating to uninsured plans..................................................................... ..................................0 ..................................0 ..................................0 ..................................0

16.1 Current federal and foreign income tax recoverable and interest thereon............................. ..................................0 ..................................0 ..................................0 ..................................0

16.2 Net deferred tax asset.............................................................................................................. ................346,032,000 ................109,952,000 ................236,080,000 ................234,273,000

17. Guaranty funds receivable or on deposit................................................................................. ..................11,775,444 ..................................0 ..................11,775,444 ..................11,088,605

18. Electronic data processing equipment and software.............................................................. ..................................0 ..................................0 ..................................0 ..................................0

19. Furniture and equipment, including health care delivery assets ($..........0)........................... ..................................0 ..................................0 ..................................0 ..................................0

20. Net adjustment in assets and liabilities due to foreign exchange rates.................................. ..................................0 ..................................0 ..................................0 ..................................0

21. Receivables from parent, subsidiaries and affiliates............................................................... ....................6,823,746 ..................................0 ....................6,823,746 ..................76,205,282

22. Health care ($..........0) and other amounts receivable............................................................ ..................................0 ..................................0 ..................................0 ..................................0

23. Aggregate write-ins for other than invested assets................................................................. ....................4,595,747 ..................................0 ....................4,595,747 ..................................0

24. Total assets excluding Separate Accounts, Segregated Accounts and ProtectedCell Accounts (Lines 10 to 23)................................................................................................. ...........10,319,256,930 ................123,363,936 ...........10,195,892,994 .............9,280,269,530

25. From Separate Accounts, Segregated Accounts and Protected Cell Accounts..................... ..................................0 ..................................0 ..................................0 ..................................0

26. TOTALS (Lines 24 and 25)...................................................................................................... ...........10,319,256,930 ................123,363,936 ...........10,195,892,994 .............9,280,269,530

DETAILS OF WRITE-INS

0901. Derivative instruments.............................................................................................................. ....................1,498,550 ..................................0 ....................1,498,550 ....................1,254,390

0902. .................................................................................................................................................. ..................................0 ..................................0 ..................................0 ..................................0

0903. .................................................................................................................................................. ..................................0 ..................................0 ..................................0 ..................................0

0998. Summary of remaining write-ins for Line 9 from overflow page.............................................. ..................................0 ..................................0 ..................................0 ..................................0

0999. Totals (Lines 0901 thru 0903 plus 0998) (Line 9 above)........................................................ ....................1,498,550 ..................................0 ....................1,498,550 ....................1,254,390

2301. Citizens assessment recoupment receivable.......................................................................... ....................4,595,747 ..................................0 ....................4,595,747 ..................................0

2302. .................................................................................................................................................. ..................................0 ..................................0 ..................................0 ..................................0

2303. .................................................................................................................................................. ..................................0 ..................................0 ..................................0 ..................................0

2398. Summary of remaining write-ins for Line 23 from overflow page............................................ ..................................0 ..................................0 ..................................0 ..................................0

2399. Totals (Lines 2301 thru 2303 plus 2398) (Line 23 above)...................................................... ....................4,595,747 ..................................0 ....................4,595,747 ..................................0


3

LIABILITIES, SURPLUS AND OTHER FUNDS1 2

Current Year Prior Year

1. Losses (Part 2A, Line 34, Column 8)................................................................................................................................................................. ..............3,878,699,675 ..............3,675,175,401

2. Reinsurance payable on paid losses and loss adjustment expenses (Schedule F, Part 1, Column 6)........................................................... ...................................0 ...................................0

3. Loss adjustment expenses (Part 2A, Line 34, Column 9).................................................................................................................................. .................787,167,788 .................757,386,512

4. Commissions payable, contingent commissions and other similar charges..................................................................................................... ...................45,596,592 ...................49,097,140

5. Other expenses (excluding taxes, licenses and fees)........................................................................................................................................ ...................67,995,556 ...................53,235,587

6. Taxes, licenses and fees (excluding federal and foreign income taxes)........................................................................................................... .................100,368,376 ...................93,564,444

7.1 Current federal and foreign income taxes (including $..........0 on realized capital gains (losses))................................................................... .....................6,864,321 .....................9,037,828

7.2 Net deferred tax liability...................................................................................................................................................................................... ...................................0 ...................................0

8. Borrowed money $..........0 and interest thereon $..........0................................................................................................................................. ...................................0 ...................................0

9. Unearned premiums (Part 1A, Line 37, Column 5) (after deducting unearned premiums for ceded reinsurance of $.....98,621,642and including warranty reserves of $..........0).................................................................................................................................................... ..............1,594,792,349 ..............1,341,602,179

10. Advance premiums............................................................................................................................................................................................. ...................................0 ...................................0

11. Dividends declared and unpaid:

11.1 Stockholders............................................................................................................................................................................................... ...................................0 ...................................0

11.2 Policyholders............................................................................................................................................................................................... .....................5,384,697 .....................6,516,425

12. Ceded reinsurance premiums payable (net of ceding commissions)................................................................................................................ ...................................0 ...................................0

13. Funds held by company under reinsurance treaties (Schedule F, Part 3, Column 19).................................................................................... ...................................0 ...................................0

14. Amounts withheld or retained by company for account of others...................................................................................................................... ...................................0 .....................1,898,327

15. Remittances and items not allocated................................................................................................................................................................. ...................11,998,903 .....................2,169,467

16. Provision for reinsurance (Schedule F, Part 7).................................................................................................................................................. ...................................0 ...................................0

17. Net adjustments in assets and liabilities due to foreign exchange rates........................................................................................................... ...................................0 ...................................0

18. Drafts outstanding............................................................................................................................................................................................... ...................................0 ...................................0

19. Payable to parent, subsidiaries and affiliates..................................................................................................................................................... ...................................0 ...................................0

20. Payable for securities.......................................................................................................................................................................................... ...................35,957,030 ...................60,158,446

21. Liability for amounts held under uninsured accident and health plans.............................................................................................................. ...................................0 ...................................0

22. Capital notes $..........0 and interest thereon $..........0....................................................................................................................................... ...................................0 ...................................0

23. Aggregate write-ins for liabilities......................................................................................................................................................................... .................400,324,089 .................391,481,895

24. Total liabilities excluding protected cell liabilities (Lines 1 through 23).............................................................................................................. ..............6,935,149,376 ..............6,441,323,651

25. Protected cell liabilities........................................................................................................................................................................................ ...................................0 ...................................0

26. Total liabilities (Lines 24 and 25)........................................................................................................................................................................ ..............6,935,149,376 ..............6,441,323,651

27. Aggregate write-ins for special surplus funds.................................................................................................................................................... ...................................0 ...................................0

28. Common capital stock......................................................................................................................................................................................... ...................40,000,000 ...................40,000,000

29. Preferred capital stock........................................................................................................................................................................................ ...................................0 ...................................0

30. Aggregate write-ins for other than special surplus funds.................................................................................................................................. ...................................0 ...................................0

31. Surplus notes...................................................................................................................................................................................................... ...................................0 ...................................0

32. Gross paid in and contributed surplus................................................................................................................................................................ .................658,317,090 .................658,317,090

33. Unassigned funds (surplus)................................................................................................................................................................................ ..............2,562,426,528 ..............2,140,628,789

34. Less treasury stock, at cost:

34.1 ..........0.000 shares common (value included in Line 28 $..........0)........................................................................................................ ...................................0 ...................................0

34.2 ..........0.000 shares preferred (value included in Line 29 $..........0)....................................................................................................... ...................................0 ...................................0

35. Surplus as regards policyholders (Lines 27 to 33, less 34) (Page 4, Line 39).................................................................................................. ..............3,260,743,618 ..............2,838,945,879

36. TOTALS (Page 2, Line 26, Col. 3)..................................................................................................................................................................... ............10,195,892,994 ..............9,280,269,530


2301. Securities lending................................................................................................................................................................................................ .................215,786,000 .................215,768,456

2302. Note payable to affiliate...................................................................................................................................................................................... .................174,511,000 .................174,511,000

2303. Deferred gain on intercompany bond transfer................................................................................................................................................... .....................8,187,878 ...................................0

2398. Summary of remaining write-ins for Line 23 from overflow page...................................................................................................................... .....................1,839,211 .....................1,202,439

2399. Totals (Lines 2301 thru 2303 plus 2398) (Line 23 above)................................................................................................................................. .................400,324,089 .................391,481,895

2701. ............................................................................................................................................................................................................................. ...................................0 ...................................0

2702. ............................................................................................................................................................................................................................. ...................................0 ...................................0

2703. ............................................................................................................................................................................................................................. ...................................0 ...................................0

2798. Summary of remaining write-ins for Line 27 from overflow page...................................................................................................................... ...................................0 ...................................0

2799. Totals (Lines 2701 thru 2703 plus 2798) (Line 27 above)................................................................................................................................. ...................................0 ...................................0

3001. ............................................................................................................................................................................................................................. ...................................0 ...................................0

3002. ............................................................................................................................................................................................................................. ...................................0 ...................................0

3003. ............................................................................................................................................................................................................................. ...................................0 ...................................0

3098. Summary of remaining write-ins for Line 30 from overflow page...................................................................................................................... ...................................0 ...................................0

3099. Totals (Lines 3001 thru 3003 plus 3098) (Line 30 above)................................................................................................................................. ...................................0 ...................................0


4

STATEMENT OF INCOME1 2

UNDERWRITING INCOME Current Year Prior Year1. Premiums earned (Part 1, Line 34, Column 4)............................................................................................................................................... ................3,148,538,110 ................2,936,049,053

DEDUCTIONS2. Losses incurred (Part 2, Line 34, Column 7).................................................................................................................................................. ................1,740,279,163 ................1,678,177,5023. Loss expenses incurred (Part 3, Line 25, Column 1)..................................................................................................................................... ...................338,301,224 ...................392,816,2474. Other underwriting expenses incurred (Part 3, Line 25, Column 2).............................................................................................................. ...................911,567,508 ...................878,268,5455. Aggregate write-ins for underwriting deductions............................................................................................................................................ .....................................0 .....................................06. Total underwriting deductions (Lines 2 through 5)......................................................................................................................................... ................2,990,147,895 ................2,949,262,2947. Net income of protected cells.......................................................................................................................................................................... .....................................0 .....................................08. Net underwriting gain (loss) (Line 1 minus Line 6 plus Line 7)...................................................................................................................... ...................158,390,216 ...................(13,213,241)

INVESTMENT INCOME9. Net investment income earned (Exhibit of Net Investment Income, Line 17)................................................................................................ ...................430,658,114 ...................389,593,76510. Net realized capital gains (losses) less capital gains tax of $.....12,215,636 (Exhibit of Capital Gains (Losses))........................................ .....................36,522,788 .....................60,846,62611. Net investment gain (loss) (Lines 9 + 10)....................................................................................................................................................... ...................467,180,902 ...................450,440,391

OTHER INCOME12. Net gain (loss) from agents' or premium balances charged off (amount recovered $..........0

amount charged off $..........0)........................................................................................................................................................................ .....................................0 .....................................013. Finance and service charges not included in premiums................................................................................................................................ .......................1,992,605 .......................1,957,30114. Aggregate write-ins for miscellaneous income............................................................................................................................................... ...................(11,255,390) ...................(10,935,371)15. Total other income (Lines 12 through 14)...................................................................................................................................................... ......................(9,262,785) ......................(8,978,071)16. Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign

income taxes (Lines 8 + 11 + 15)................................................................................................................................................................... ...................616,308,333 ...................428,249,07917. Dividends to policyholders.............................................................................................................................................................................. .......................3,281,241 .......................3,723,58718. Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign

income taxes (Line 16 minus Line 17)............................................................................................................................................................ ...................613,027,092 ...................424,525,49219. Federal and foreign income taxes incurred.................................................................................................................................................... ...................151,020,528 .....................65,576,57320. Net income (Line 18 minus Line 19) (to Line 22)........................................................................................................................................... ...................462,006,564 ...................358,948,919

CAPITAL AND SURPLUS ACCOUNT21. Surplus as regards policyholders, December 31 prior year (Page 4, Line 39, Column 2)............................................................................ ................2,838,945,879 ................2,333,907,512

GAINS AND (LOSSES) IN SURPLUS22. Net income (from Line 20).............................................................................................................................................................................. ...................462,006,564 ...................358,948,91923. Net transfers (to) from Protected Cell accounts............................................................................................................................................. .....................................0 .....................................024. Change in net unrealized capital gains or (losses) less capital gains tax of $.....(11,641,000)..................................................................... .....................64,245,641 ...................104,366,22225. Change in net unrealized foreign exchange capital gain (loss)..................................................................................................................... .....................................0 .....................................026. Change in net deferred income tax................................................................................................................................................................ ...................(21,164,000) ...................(61,536,000)27. Change in nonadmitted assets (Exhibit of Nonadmitted Assets, Line 26 Column 3).................................................................................... ..........................447,289 ...................107,489,52428. Change in provision for reinsurance (Page 3, Line 16, Column 2 minus Column 1).................................................................................... .....................................0 .....................................029. Change in surplus notes................................................................................................................................................................................. .....................................0 .....................................030. Surplus (contributed to) withdrawn from protected cells................................................................................................................................ .....................................0 .....................................031. Cumulative effect of changes in accounting principles.................................................................................................................................. .....................................0 .....................................032. Capital changes:

32.1 Paid in.................................................................................................................................................................................................... .....................................0 .....................................032.2 Transferred from surplus (Stock Dividend)............................................................................................................................................ .....................................0 .....................................032.3 Transferred to surplus............................................................................................................................................................................ .....................................0 .....................................0

33. Surplus adjustments:33.1 Paid in.................................................................................................................................................................................................... .....................................0 .....................................033.2 Transferred to capital (Stock Dividend)................................................................................................................................................. .....................................0 .....................................033.3. Transferred from capital........................................................................................................................................................................ .....................................0 .....................................0

34. Net remittances from or (to) Home Office....................................................................................................................................................... .....................................0 .....................................035. Dividends to stockholders............................................................................................................................................................................... .....................................0 ......................(4,230,298)36. Change in treasury stock (Page 3, Lines 34.1 and 34.2, Column 2 minus Column 1)................................................................................. .....................................0 .....................................037. Aggregate write-ins for gains and losses in surplus....................................................................................................................................... ...................(83,737,755) .....................................038. Change in surplus as regards policyholders for the year (Lines 22 through 37)........................................................................................... ...................421,797,739 ...................505,038,36739. Surplus as regards policyholders, December 31 current year (Line 21 plus Line 38) (Page 3, Line 35)..................................................... ................3,260,743,618 ................2,838,945,879

DETAILS OF WRITE-INS0501. ......................................................................................................................................................................................................................... .....................................0 .....................................00502. ......................................................................................................................................................................................................................... .....................................0 .....................................00503. ......................................................................................................................................................................................................................... .....................................0 .....................................00598. Summary of remaining write-ins for Line 5 from overflow page..................................................................................................................... .....................................0 .....................................00599. Totals (Lines 0501 thru 0503 plus 0598) (Line 5 above)............................................................................................................................... .....................................0 .....................................01401. Interest expense on note payable.................................................................................................................................................................. ...................(12,564,792) ...................(12,564,792)1402. Miscellaneous income..................................................................................................................................................................................... .......................1,309,402 .......................1,629,4211403. ......................................................................................................................................................................................................................... .....................................0 .....................................01498. Summary of remaining write-ins for Line 14 from overflow page................................................................................................................... .....................................0 .....................................01499. Totals (Lines 1401 thru 1403 plus 1498) (Line 14 above)............................................................................................................................. ...................(11,255,390) ...................(10,935,371)3701. Write-off of intercompany balances................................................................................................................................................................ ...................(83,737,755) .....................................03702. ......................................................................................................................................................................................................................... .....................................0 .....................................03703. ......................................................................................................................................................................................................................... .....................................0 .....................................03798. Summary of remaining write-ins for Line 37 from overflow page................................................................................................................... .....................................0 .....................................03799. Totals (Lines 3701 thru 3703 plus 3798) (Line 37 above)............................................................................................................................. ...................(83,737,755) .....................................0


5

CASH FLOW1 2

Current Year Prior Year CASH FROM OPERATIONS

1. Premiums collected net of reinsurance.................................................................................................................................................. ....................3,405,504,302 ....................3,067,346,3772. Net investment income........................................................................................................................................................................... .......................466,218,864 .......................401,267,9883. Miscellaneous income............................................................................................................................................................................ ..........................(9,262,785) ........................(10,540,217)4. Total (Lines 1 through 3)........................................................................................................................................................................ ....................3,862,460,381 ....................3,458,074,1495. Benefit and loss related payments......................................................................................................................................................... ....................1,536,754,889 ....................1,816,661,2006. Net transfers to Separate, Segregated Accounts and Protected Cell Accounts................................................................................... ..........................................0 ..........................................07. Commissions, expenses paid and aggregate write-ins for deductions................................................................................................. ....................1,200,740,346 ....................1,145,454,9898. Dividends paid to policyholders.............................................................................................................................................................. ...........................4,412,969 ...........................4,598,3729. Federal and foreign income taxes paid (recovered) $.....12,215,636 net of tax on capital gains (losses)........................................... .......................165,409,671 .........................53,718,42110. Total (Lines 5 through 9)........................................................................................................................................................................ ....................2,907,317,875 ....................3,020,432,98211. Net cash from operations (Line 4 minus Line 10).................................................................................................................................. .......................955,142,506 .......................437,641,167

CASH FROM INVESTMENTS12. Proceeds from investments sold, matured or repaid:

12.1 Bonds........................................................................................................................................................................................... ....................3,476,392,552 ....................2,739,942,91812.2 Stocks........................................................................................................................................................................................... .........................20,902,414 .........................14,649,64112.3 Mortgage loans............................................................................................................................................................................ .........................42,567,502 .........................48,474,42912.4 Real estate................................................................................................................................................................................... ..........................................0 ..........................................012.5 Other invested assets.................................................................................................................................................................. .........................70,965,169 .........................71,086,73612.6 Net gains or (losses) on cash, cash equivalents and short-term investments............................................................................ .................................(4,827) ..........................................012.7 Miscellaneous proceeds.............................................................................................................................................................. ..........................................0 .........................81,561,26012.8 Total investment proceeds (Lines 12.1 to 12.7).......................................................................................................................... ....................3,610,822,810 ....................2,955,714,984

13. Cost of investments acquired (long-term only):13.1 Bonds........................................................................................................................................................................................... ....................4,061,095,694 ....................3,282,032,93913.2 Stocks........................................................................................................................................................................................... .......................186,275,614 .........................34,218,94813.3 Mortgage loans............................................................................................................................................................................ .........................17,819,896 .........................34,962,31813.4 Real estate................................................................................................................................................................................... ..........................................0 ..........................................013.5 Other invested assets.................................................................................................................................................................. .........................43,252,041 .........................52,972,88213.6 Miscellaneous applications.......................................................................................................................................................... .........................27,308,408 ..........................................013.7 Total investments acquired (Lines 13.1 to 13.6)......................................................................................................................... ....................4,335,751,653 ....................3,404,187,087

14. Net increase (decrease) in contract loans and premium notes............................................................................................................. ..........................................0 ..........................................015. Net cash from investments (Line 12.8 minus Lines 13.7 and 14)......................................................................................................... ......................(724,928,843) ......................(448,472,103)

CASH FROM FINANCING AND MISCELLANEOUS SOURCES16. Cash provided (applied):

16.1 Surplus notes, capital notes......................................................................................................................................................... ..........................................0 ..........................................016.2 Capital and paid in surplus, less treasury stock.......................................................................................................................... ..........................................0 ..........................................016.3 Borrowed funds............................................................................................................................................................................ ..........................................0 ..........................................016.4 Net deposits on deposit-type contracts and other insurance liabilities....................................................................................... ..........................................0 ..........................................016.5 Dividends to stockholders............................................................................................................................................................ ..........................................0 ...........................4,230,29816.6 Other cash provided (applied)..................................................................................................................................................... ........................(10,498,008) ........................(41,750,417)

17. Net cash from financing and miscellaneous sources (Lines 16.1 to 16.4 minus Line 16.5 plus Line 16.6)......................................... ........................(10,498,008) ........................(45,980,715)

RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS18. Net change in cash, cash equivalents and short-term investments (Line 11 plus Line 15 plus Line 17)............................................. .......................219,715,655 ........................(56,811,652)19. Cash, cash equivalents and short-term investments:

19.1 Beginning of year......................................................................................................................................................................... .......................242,460,973 .......................299,272,624

19.2 End of year (Line 18 plus Line 19.1)............................................................................................................................................ .......................462,176,627 .......................242,460,973

Note: Supplemental disclosures of cash flow information for non-cash transactions:20.0001 Bonds - basis adjustments........................................................................................................................................................... ..............................621,741 ...........................1,288,84220.0002 Aggregate write-ins for invested assets - derivative transactions............................................................................................... ...........................1,355,357 ..............................123,08320.0003 Receivable from parent, subsidiaries and affiliaties - settling of intercompany receivables....................................................... .........................83,737,755 ..........................................020.0004 Aggregate write-ins for liabilities - deferred unrealized gain on intercompany bond transfer................................................... ...........................8,187,878 ..........................................020.0005 Stocks - non-cash recepit of Prudential shares in demutualization............................................................................................ ..........................................0 ..............................123,803


6

UNDERWRITING AND INVESTMENT EXHIBIT PART 1 - PREMIUMS EARNED

1 2 3 4Unearned Premiums Unearned Premiums

Net December 31 December 31 PremiumsPremiums Prior Year- Current Year- EarnedWritten per per Col. 3 Last per Col. 5 During Year

Line of Business Column 6, Part 1B Year's Part 1 Part 1A (Cols. 1 + 2 - 3)

1. Fire...................................................................................................... .........................35,047,173 .........................26,655,787 .........................22,617,151 .........................39,085,809

2. Allied lines........................................................................................... .........................15,772,704 ...........................8,407,011 ...........................7,372,264 .........................16,807,451

3. Farmowners multiple peril................................................................... ..............................115,098 ................................61,437 ................................59,218 ..............................117,317

4. Homeowners multiple peril.................................................................. .......................280,050,278 .......................146,704,751 .......................159,648,733 .......................267,106,296

5. Commercial multiple peril.................................................................... .......................613,903,766 .......................301,924,852 .......................314,648,786 .......................601,179,832

6. Mortgage guaranty.............................................................................. .........................................0 .........................................0 .........................................0 .........................................0

8. Ocean marine...................................................................................... .........................10,278,836 ...........................1,843,929 ...........................1,981,379 .........................10,141,386

9. Inland marine...................................................................................... .........................90,678,604 .........................38,110,461 .........................42,361,440 .........................86,427,625

10. Financial guaranty............................................................................... .........................................0 .........................................0 .........................................0 .........................................0

11.1 Medical malpractice - occurrence....................................................... .........................................0 .........................................0 .........................................0 .........................................0

11.2 Medical malpractice - claims-made..................................................... .........................................0 .........................................0 .........................................0 .........................................0

12. Earthquake.......................................................................................... ...........................6,898,210 ...........................3,326,070 ...........................3,611,436 ...........................6,612,844

13. Group accident and health.................................................................. .........................................0 .........................................0 .........................................0 .........................................0

14. Credit accident and health (group and individual)............................... .........................................0 .........................................0 .........................................0 .........................................0

15. Other accident and health................................................................... .........................................0 .........................................0 .........................................0 .........................................0

16. Workers' compensation....................................................................... .......................890,814,651 .......................134,917,484 .......................323,981,988 .......................701,750,147

17.1 Other liability - occurrence.................................................................. .......................170,354,515 .........................70,392,573 .........................79,514,272 .......................161,232,816

17.2 Other liability - claims-made................................................................ .......................128,399,613 .........................63,215,971 .........................74,471,368 .......................117,144,216

18.1 Products liability - occurrence............................................................. ...........................8,838,849 ...........................4,924,726 ...........................4,461,890 ...........................9,301,685

18.2 Products liability - claims-made........................................................... ...............................(17,044) ................................26,486 ................................30,036 ...............................(20,594)

19.1, 19.2 Private passenger auto liability........................................................... .......................516,540,123 .......................224,825,407 .......................234,997,062 .......................506,368,468

19.3, 19.4 Commercial auto liability..................................................................... .......................190,143,385 .........................90,313,620 .........................92,379,826 .......................188,077,179

21. Auto physical damage......................................................................... .......................373,778,023 .......................166,462,468 .......................171,028,845 .......................369,211,646

22. Aircraft (all perils)................................................................................ ..........................(3,617,034) ..............................825,866 .............................(637,016) ..........................(2,154,152)

23. Fidelity................................................................................................. .........................18,947,691 ...........................9,956,575 .........................11,732,362 .........................17,171,904

24. Surety.................................................................................................. .........................54,416,532 .........................22,733,527 .........................27,435,358 .........................49,714,701

26. Burglary and theft................................................................................ ...........................2,583,509 ...........................1,470,165 ...........................1,616,743 ...........................2,436,931

27. Boiler and machinery.......................................................................... ................................89,348 ................................75,832 ..............................114,537 ................................50,643

28. Credit................................................................................................... .........................................0 .........................................0 .........................................0 .........................................0

29. International........................................................................................ ..............................996,238 ................................46,715 ................................32,012 ...........................1,010,941

30. Reinsurance - nonproportional assumed property.............................. ..........................(1,183,135) ..........................(4,266,667) ..............................641,279 ..........................(6,091,081)

31. Reinsurance - nonproportional assumed liability................................ ...........................1,097,967 ...........................4,549,434 .........................................0 ...........................5,647,401

32. Reinsurance - nonproportional assumed financial lines...................... ..............................201,847 ..................................7,887 ..................................3,035 ..............................206,699

33. Aggregate write-ins for other lines of business................................... .........................................0 .........................................0 .........................................0 .........................................0

34. TOTALS......................................................................................... ....................3,405,129,747 ....................1,317,512,367 ....................1,574,104,004 ....................3,148,538,110


3301. ............................................................................................................ .........................................0 .........................................0 .........................................0 .........................................0

3302. ............................................................................................................ .........................................0 .........................................0 .........................................0 .........................................0

3303. ............................................................................................................ .........................................0 .........................................0 .........................................0 .........................................0

3398. Summary of remaining write-ins for Line 33 from overflow page........ .........................................0 .........................................0 .........................................0 .........................................0

3399. Totals (Lines 3301 thru 3303 plus 3398) (Line 33 above)................... .........................................0 .........................................0 .........................................0 .........................................0


7

UNDERWRITING AND INVESTMENT EXHIBIT PART 1A - RECAPITULATION OF ALL PREMIUMS

(a) Gross premiums (less reinsurance) and unearned premiums on all unexpired risks and reserve for return premiums under rate credit or retrospective rating plans based upon experience.

1 2 3 4 5Amount Unearned Amount Unearned Reserve for(Running One Year (Running more than Rate Credits Total Reserveor Less from Date One Year from and Retrospective for Unearned

of Policy) Date of Policy) Earned But Adjustments Based PremiumsLine of Business (b) (b) Unbilled Premium on Experience Cols. 1 + 2 + 3 + 4

1. Fire................................................................................................. .................21,735,765 ......................881,386 .................................0 .................................0 .................22,617,150

2. Allied lines...................................................................................... ...................7,312,683 ........................59,581 .................................0 .................................0 ...................7,372,263

3. Farmowners multiple peril.............................................................. ........................59,218 .................................0 .................................0 .................................0 ........................59,218

4. Homeowners multiple peril............................................................. ...............160,200,185 .....................(551,452) .................................0 .................................0 ...............159,648,733

5. Commercial multiple peril............................................................... ...............314,453,696 ......................195,090 .................................0 .................................0 ...............314,648,786

6. Mortgage guaranty......................................................................... .................................0 .................................0 .................................0 .................................0 .................................0

8. Ocean marine................................................................................ ...................1,980,770 .............................610 .................................0 .................................0 ...................1,981,380

9. Inland marine................................................................................. .................37,854,249 ...................4,507,192 .................................0 .................................0 .................42,361,441

10. Financial guaranty.......................................................................... .................................0 .................................0 .................................0 .................................0 .................................0

11.1 Medical malpractice - occurrence.................................................. .................................0 .................................0 .................................0 .................................0 .................................0

11.2 Medical malpractice - claims-made................................................ .................................0 .................................0 .................................0 .................................0 .................................0

12. Earthquake..................................................................................... ...................3,611,436 .................................0 .................................0 .................................0 ...................3,611,436

13. Group accident and health............................................................. .................................0 .................................0 .................................0 .................................0 .................................0

14. Credit accident and health (group and individual).......................... .................................0 .................................0 .................................0 .................................0 .................................0

15. Other accident and health.............................................................. .................................0 .................................0 .................................0 .................................0 .................................0

16. Workers' compensation.................................................................. ...............340,828,093 ......................325,952 .................................0 ................(17,172,057) ...............323,981,989

17.1 Other liability - occurrence............................................................. .................81,024,049 ......................837,844 .................................0 ..................(2,347,621) .................79,514,273

17.2 Other liability - claims-made........................................................... .................74,452,879 ........................18,489 .................................0 .................................0 .................74,471,368

18.1 Products liability - occurrence........................................................ ...................4,452,484 ..........................9,406 .................................0 .................................0 ...................4,461,890

18.2 Products liability - claims-made..................................................... ........................30,036 .................................0 .................................0 .................................0 ........................30,036

19.1, 19.2 Private passenger auto liability...................................................... ...............235,003,688 .........................(6,626) .................................0 .................................0 ...............234,997,062

19.3, 19.4 Commercial auto liability................................................................ .................93,208,635 ......................339,858 .................................0 ..................(1,168,668) .................92,379,825

21. Auto physical damage.................................................................... ...............171,060,393 .......................(31,548) .................................0 .................................0 ...............171,028,845

22. Aircraft (all perils)........................................................................... .....................(637,016) .................................0 .................................0 .................................0 .....................(637,016)

23. Fidelity............................................................................................ ...................7,988,873 ...................3,743,490 .................................0 .................................0 .................11,732,363

24. Surety............................................................................................. .................17,914,511 ...................9,520,848 .................................0 .................................0 .................27,435,359

26. Burglary and theft........................................................................... ...................1,173,426 ......................443,317 .................................0 .................................0 ...................1,616,743

27. Boiler and machinery..................................................................... ......................114,186 .............................351 .................................0 .................................0 ......................114,537

28. Credit............................................................................................. .................................0 .................................0 .................................0 .................................0 .................................0

29. International................................................................................... ........................32,012 .................................0 .................................0 .................................0 ........................32,012

30. Reinsurance - nonproportional assumed property......................... ......................641,279 .................................0 .................................0 .................................0 ......................641,279

31. Reinsurance - nonproportional assumed liability........................... .................................0 .................................0 .................................0 .................................0 .................................0

32. Reinsurance - nonproportional assumed financial lines................ ..........................3,035 .................................0 .................................0 .................................0 ..........................3,035

33. Aggregate write-ins for other lines of business.............................. .................................0 .................................0 .................................0 .................................0 .................................0

34. TOTALS......................................................................................... ............1,574,498,564 .................20,293,786 .................................0 ................(20,688,345) ............1,574,104,005

35. Accrued retrospective premiums based on experience............................................................................................................................................................................ .................21,516,231

36. Earned but unbilled premiums.................................................................................................................................................................................................................. .................................0

37. Balance (sum of Lines 34 through 36)...................................................................................................................................................................................................... ............1,595,620,236


3301. ....................................................................................................... .................................0 .................................0 .................................0 .................................0 .................................0

3302. ....................................................................................................... .................................0 .................................0 .................................0 .................................0 .................................0

3303. ....................................................................................................... .................................0 .................................0 .................................0 .................................0 .................................0

3398. Summary of remaining write-ins for Line 33 from overflow page... .................................0 .................................0 .................................0 .................................0 .................................0

3399. Totals (Lines 3301 thru 3303 plus 3398) (Line 33 above)............. .................................0 .................................0 .................................0 .................................0 .................................0

(a) By gross premiums is meant the aggregate of all the premiums written in the policies or renewals in force. Are they so returned in this statement? Yes [ X ] No [ ].(b) State here basis of computation used in each case: Semi-monthly pro rata except Marine Risks not terminated: 100%


8

UNDERWRITING AND INVESTMENT EXHIBIT PART 1B - PREMIUMS WRITTEN

Gross Premiums (Less Return Premiums), Including Policy and Membership Fees Written and Renewed During Year1 Reinsurance Assumed Reinsurance Ceded 6

2 3 4 5 Net PremiumsDirect Written

Business (Cols. 1 + 2 + 3Line of Business (a) From Affiliates From Non-Affiliates To Affiliates To Non-Affiliates - 4 - 5)

1. Fire............................................................................................... ...........................0 ...........35,047,173 ...........................0 ...........................0 ...........................0 ...........35,047,173

2. Allied lines.................................................................................... .......................614 ...........15,772,704 ...........................0 .......................614 ...........................0 ...........15,772,704

3. Farmowners multiple peril............................................................ ...........................0 ................115,098 ...........................0 ...........................0 ...........................0 ................115,098

4. Homeowners multiple peril........................................................... ...........22,061,204 .........280,050,278 ...........................0 ...........22,061,204 ...........................0 .........280,050,278

5. Commercial multiple peril............................................................. ...........29,498,057 .........613,903,766 ...........................0 ...........29,498,057 ...........................0 .........613,903,766

6. Mortgage guaranty....................................................................... ...........................0 ...........................0 ...........................0 ...........................0 ...........................0 ...........................0

8. Ocean marine.............................................................................. ..................87,895 ...........10,278,836 ...........................0 ..................87,895 ...........................0 ...........10,278,836

9. Inland marine............................................................................... ................603,129 ...........90,678,604 ...........................0 ................603,129 ...........................0 ...........90,678,604

10. Financial guaranty........................................................................ ...........................0 ...........................0 ...........................0 ...........................0 ...........................0 ...........................0

11.1 Medical malpractice - occurrence................................................ ...........................0 ...........................0 ...........................0 ...........................0 ...........................0 ...........................0

11.2 Medical malpractice - claims-made.............................................. ...........................0 ...........................0 ...........................0 ...........................0 ...........................0 ...........................0

12. Earthquake................................................................................... ..................84,317 .............6,898,210 ...........................0 ..................84,317 ...........................0 .............6,898,210

13. Group accident and health........................................................... ...........................0 ...........................0 ...........................0 ...........................0 ...........................0 ...........................0

14. Credit accident and health (group and individual)........................ ...........................0 ...........................0 ...........................0 ...........................0 ...........................0 ...........................0

15. Other accident and health............................................................ ...........................0 ...........................0 ...........................0 ...........................0 ...........................0 ...........................0

16. Workers' compensation................................................................ ...........53,714,106 .........890,814,651 ...........................0 ...........53,714,106 ...........................0 .........890,814,651

17.1 Other liability - occurrence........................................................... .............5,152,935 .........170,354,515 ...........................0 .............5,152,935 ...........................0 .........170,354,515

17.2 Other liability - claims-made......................................................... ................357,601 .........128,399,613 ...........................0 ................357,601 ...........................0 .........128,399,613

18.1 Products liability - occurrence...................................................... .............2,502,417 .............8,838,849 ...........................0 .............2,502,417 ...........................0 .............8,838,849

18.2 Products liability - claims-made................................................... ...........................0 ................(17,044) ...........................0 ...........................0 ...........................0 ................(17,044)

19.1, 19.2 Private passenger auto liability.................................................... ...........55,837,550 .........516,540,123 ...........................0 ...........55,837,550 ...........................0 .........516,540,123

19.3, 19.4 Commercial auto liability.............................................................. .............3,841,047 .........190,143,385 ...........................0 .............3,841,047 ...........................0 .........190,143,385

21. Auto physical damage.................................................................. ...........37,467,654 .........373,778,023 ...........................0 ...........37,467,654 ...........................0 .........373,778,023

22. Aircraft (all perils)......................................................................... ...........................0 ...........(3,617,034) ...........................0 ...........................0 ...........................0 ...........(3,617,034)

23.

* 22357 200520100100* annual statement hartford … · michael john dury svp and chief financial...

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