Travelers 2003 Annual Report Download - page 146

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144
15. COMMITMENTS AND CONTINGENCIES
Commitments
In the normal course of business, Travelers has unfunded commitments to partnerships, joint ventures and
certain private equity investments in which it invests. These commitments were $652.3 million and $864.3
million at December 31, 2003 and 2002, respectively.
Contingencies
Asbestos and Environmental-Related Proceedings
In the ordinary course of its insurance business, Travelers receives claims for insurance arising under policies
issued by Travelers asserting alleged injuries and damages from asbestos and other hazardous waste and toxic
substances which are the subject of related coverage litigation, including, among others, the litigation described
below. Travelers continues to be subject to aggressive asbestos-related litigation. The conditions surrounding
the final resolution of these claims and the related litigation continue to change.
In May 2002, Travelers agreed with approximately three dozen other insurers and PPG Industries, Inc. (PPG) on
key terms to settle asbestos-related coverage litigation under insurance policies issued to PPG. While there
remain a number of contingencies, including the final execution of documents, court approval and possible
appeals, Travelers believes that the completion of the settlement pursuant to the terms announced in May 2002 is
likely. Travelers single payment contribution to the proposed settlement is approximately $388.8 million after
reinsurance.
Travelers is involved in a bankruptcy and other proceedings relating to ACandS, Inc. (ACandS), formerly a
national installer of products containing asbestos. The proceedings involve disputes as to whether and to what
extent any of ACandS’ potential liabilities for bodily injury asbestos claims were covered by insurance policies
issued by Travelers. There were a number of developments in the proceedings since the beginning of 2003
including two decisions which were favorable to Travelers. These developments and the status of the various
proceedings are described below.
One of the proceedings was an arbitration commenced in January 2001 to determine whether and to what extent
ACandS’ financial obligations for bodily injury asbestos claims are subject to insurance policy aggregate limits.
On July 31, 2003, the arbitration panel ruled in Travelers favor that asbestos bodily injury claims paid by
ACandS on or after that decision date are subject to the aggregate limits of the policies issued to ACandS, which
have been exhausted. In October 2003, ACandS commenced a lawsuit seeking to vacate the arbitration award as
beyond the panel’s scope of authority (ACandS, Inc. v. Travelers Casualty and Surety Co., U.S.D.Ct., E.D. Pa.).
Travelers has filed its opposition to ACandS’ motion to vacate.
ACandS filed for bankruptcy in September 2002 (In re: ACandS, Inc., pending in the U.S. Bankruptcy Court for
the District of Delaware). On January 26, 2004 the bankruptcy court issued a decision rejecting confirmation of
ACandS’ proposed plan of reorganization. The bankruptcy court found, consistent with Travelers objections to
ACandS’ proposed plan, that the proposed plan was not fundamentally fair, was not proposed in good faith and
did not comply with Section 524(g) of the Bankruptcy Code. ACandS has filed a notice of appeal of the
bankruptcy court’s decision and has filed objections to the bankruptcy court’s findings of fact and conclusions of
law in the United States District Court. Travelers has moved to dismiss the appeal and objections and has also
filed an opposition to ACandS’ objections.