Unfavorable PYD decreased to $12 million, before tax, in fourth quarter 2013 compared with $18 million, before tax, in fourth quarter 2012. Unfavorable PYD in fourth quarter 2013 was largely related to the package business, which was partially offset by favorable development on workers’ compensation, principally for older accident years.

The combined ratio before catastrophes and PYD improved to 92.5 in fourth quarter 2013 compared with 97.8 in fourth quarter 2012, reflecting improved underwriting margins in Small Commercial, Middle Market and Specialty. Before catastrophes and PYD, the fourth quarter 2013 combined ratio for Small Commercial was 85.9, a 6.9 point improvement from 92.8 in fourth quarter 2012, while Middle Market improved by 4.2 points to 94.8 from 99.0 in fourth quarter 2012 and Specialty improved 10.6 points to 100.6 from 111.2 in fourth quarter 2012.

Renewal written pricing in Standard Commercial, which is comprised of Small Commercial and Middle Market, remained strong in fourth quarter 2013, reflecting price increases in all business lines. Renewal written pricing increased 8% in Standard Commercial, consistent with the last five quarters. Small Commercial renewal written pricing increases averaged 8%, including an increase of 11% in commercial auto. Middle Market renewal written pricing increases averaged 7%, reflecting increases of 8% in both workers' compensation and property and 10% in commercial auto.

Written premiums grew 1% from $1,454 million in fourth quarter 2012 to $1,463 million in fourth quarter 2013, driven by growth in Small Commercial and Middle Market, which were up 1% and 2%, respectively. Written premium growth reflects higher pricing on renewals in Small Commercial, stronger new business production in Middle Market and solid retention in both business lines. New business premium for Small Commercial and Middle Market totaled $213 million, up 13% from $189 million in fourth quarter 2012 driven by Middle Market property and general liability. Policy count retention in Small Commercial was 82% in fourth quarter 2013 compared with 83% in fourth quarter 2012. Middle Market policy count retention for fourth quarter 2013 was 79%, flat versus fourth quarter 2012.

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