Company: HIG-PG
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000874766-25-000023
Chunk: 45

Company: HARTFORD INSURANCE GROUP, INC.
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7
Chunk 45
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 $1.7 billion, including both Run-off A&E and A&E reserves in Business Insurance and Personal Insurance. The $650 reinsurance premium was placed in a collateral trust account as security for NICO’s claim payment obligations to the Company. The Company has retained the risk of collection on amounts due from other third-party reinsurers and continues to be responsible for claims handling and other administrative services, subject to certain conditions. The A&E ADC covered substantially all the Company’s A&E reserve development up to the reinsurance limit, which as of December 31, 2024, has been exhausted.

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|Table of ContentsIndex to MD&APart II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Under retroactive reinsurance accounting, net adverse A&E reserve development after December 31, 2016 results in an offsetting reinsurance recoverable up to the $1.5 billion limit. Cumulative ceded losses up to the $650 reinsurance premium paid have been recognized as a dollar-for-dollar offset to direct losses incurred. Cumulative ceded losses exceeding the $650 reinsurance premium paid have resulted in a deferred gain. As of December 31, 2024, the Company has exhausted the treaty limit and incurred a cumulative $1.5 billion in adverse development on A&E reserves that have been ceded under the A&E ADC treaty with NICO, including $1,538 for Run-off A&E reserves, partially offset by a $38 reduction for A&E reserves in Business Insurance and Personal Insurance. As such, no remaining coverage is available for any future adverse net reserve development, which may be significant. The Company has recorded a $850 deferred gain within other liabilities, representing the difference between the reinsurance recoverable of $1.5 billion and ceded premium paid of $650. Recoveries from NICO will be collected once the Company has paid cumulative losses in excess of the $1.7 billion attachment point. The deferred gain will be recognized over the claim settlement period in the proportion of the amount of cumulative ceded losses collected from the reinsurer to the estimated ultimate reinsurance recoveries.Net and Gross Survival RatiosNet and gross survival ratios are a measure of the quotient of the carried reserves divided by average annual payments (net of reinsurance and on a gross basis) and is an indication of the number of years that carried reserves would last (i.e., survive) if future annual payments were consistent with the calculated historical average.Since December 31