Travelers 2003 Annual Report Download - page 56
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54
resolution of any dispute pertaining to these claims. Because these factors vary from claim-to-claim and policyholder-
by-policyholder, Travelers cannot provide a meaningful average of the duration of an environmental claim. However,
based upon Travelers experience in resolving these claims, the duration may vary from months to several years.
Over the past three years, Travelers has experienced a significant reduction in the number of policyholders with
pending coverage litigation disputes and a continued reduction in the number of policyholders tendering for the first
time an environmental remediation-type claim to Travelers. While there continues to be a reduction in the number of
policyholders with active environmental claims, the recent decline is not as dramatic as it had been in the past.
In 2003, there were 103 policyholders tendering an environmental remediation-type claim to Travelers for the first
time. This compares to 110 policyholders doing so in 2002 and 134 policyholders in 2001. Travelers review of
policyholders tendering claims for the first time has indicated that they are fewer in number and lower in severity. In
addition, these policyholders generally present smaller exposures, have fewer sites and are lower tier defendants.
Further, regulatory agencies are utilizing risk-based analysis and more efficient clean-up technologies.
As of December 31, 2003, the number of policyholders with pending coverage litigation disputes pertaining to
environmental claims was 189, approximately 8% less than the number pending as of December 31, 2002, and
approximately 12% less than the number pending as of December 31, 2001. Travelers has resolved, for approximately
$2.025 billion (before reinsurance), the environmental liabilities presented by 5,904, or 92%, of the total 6,436
policyholders who have tendered environmental claims to Travelers through December 31, 2003. Travelers generally
has been successful in resolving Travelers coverage litigation disputes and continues to reduce Travelers potential
exposure through settlements with some policyholders. However, continued increases in settlement amounts have led
Travelers to add $59.8 million to its environmental reserves in the fourth quarter of 2003.
The following table displays activity for environmental losses and loss expenses and reserves:
(at and for the year ended December 31, in millions) 2003 2002 2001
Be
g
innin
g
reserves:
Direc
t
$ 447.8 $ 478.8 $ 668.8
Ceded
(
62.3
)
(
82.8
)
(
110.9
)
Ne
t
385.5 396.0 557.9
Incurred losses and loss ex
p
enses:
Direc
t
59.8 153.9 57.8
Ceded -
(
3.8
)
(
12.1
)
Losses
p
aid:
Direct 176.3 184.9 247.8
Ceded
(
21.1
)
(
24.3
)
(
40.2
)
Endin
g
reserves:
Direc
t
331.3 447.8 478.8
Ceded
(
41.2
)
(
62.3
)
(
82.8
)
Net $ 290.1 $ 385.5 $ 396.0