Travelers 2003 Annual Report Download - page 119

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117
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. REINSURANCE, Continued
Reinsurance recoverables, net of valuation allowance, include amounts recoverable on unpaid and paid claims
and were as follows:
(at December 31, in millions) 2003 2002
Pools and associations $ 2,203.7 $ 2,094.9
Structured settlements:
Non-affiliated companies 1,551.6 1,563.9
Formerly affiliated companies:
Property-casualty business 760.6 810.4
Accident and health business 98.4 107.6
Other:
Non-affiliated companies 6,557.0 6,398.8
Formerly affiliated companies 2.6 1.9
Total reinsurance recoverables $ 11,173.9 $ 10,977.5
In 1996, Lloyd’s of London (Lloyd’s) restructured its operations with respect to claims for years prior to 1993
and reinsured these into Equitas Limited (Equitas). Amounts recoverable from unaffiliated insurers at December
31, 2003 and 2002 include $269.1 million and $296.5 million, respectively, recoverable from Equitas. The
outcome of the restructuring of Lloyd’s continues to be uncertain and the impact, if any, on collectibility of
amounts recoverable by Travelers from Equitas cannot be quantified at this time. It is possible that an
unfavorable impact on collectibility could have a material adverse effect on Travelers results of operations in a
future period. However, in the opinion of Travelers management, it is not likely that the outcome could have a
material adverse effect on Travelers financial condition or liquidity.
Travelers reports its reinsurance recoverables net of an allowance for estimated uncollectible reinsurance
recoverables. The allowance is based upon Travelers ongoing review of amounts outstanding, length of
collection periods, amounts in dispute, changes in reinsurer credit standing, and other relevant factors. Amounts
deemed to be uncollectible, including amounts due from known insolvent reinsurers, are written off and charged
against the allowance for estimated uncollectible reinsurance recoverables. Any subsequent collections of
amounts previously written off are reported as part of underwriting results.
The allowance for estimated uncollectible reinsurance recoverables was $386.4 million and $329.1 million at
December 31, 2003 and 2002, respectively.
7. INSURANCE CLAIMS RESERVES
Claims and claim adjustment expense reserves were as follows:
(at December 31, in millions) 2003 2002
Property-casualty $ 34,474.2 $ 33,628.4
Accident and health 98.4 107.6
Total $ 34,572.6 $ 33,736.0