Travelers 2004 Annual Report Download - page 170

THE ST. PAUL TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
9. INSURANCE CLAIMS RESERVES, Continued
facts, current law and management’s judgment. However, the uncertainties surrounding the final resolution of
these claims continue, and it is presently not possible to determine the ultimate exposure for asbestos and
environmental claims and related litigation. As a result, these reserves are subject to revision as new information
becomes available and as claims develop. The continuing uncertainties include, without limitation, the risks and
lack of predictability inherent in major litigation, any impact from the bankruptcy protection sought by various
asbestos producers and other asbestos defendants, a further increase or decrease in asbestos and environmental
claims which cannot now be anticipated, the role of any umbrella or excess policies the Company has issued, the
resolution or adjudication of some disputes pertaining to the amount of available coverage for asbestos claims in
a manner inconsistent with the Company’s previous assessment of these claims, the number and outcome of
direct actions against the Company and future developments pertaining to the Company’s ability to recover
reinsurance for asbestos and environmental claims. In addition, the Company sees, as an emerging trend, an
increase in the Company’s asbestos-related loss and loss expense experience as a result of the exhaustion or
unavailability due to insolvency of other insurance potentially available to policyholders along with the
insolvency or bankruptcy of other defendants. It is also not possible to predict changes in the legal and legislative
environment and their impact on the future development of asbestos and environmental claims. This
development will be affected by future court decisions and interpretations, as well as changes in applicable
legislation. It is also difficult to predict the ultimate outcome of large coverage disputes until settlement
negotiations near completion and significant legal questions are resolved or, failing settlement, until the dispute
is adjudicated. This is particularly the case with policyholders in bankruptcy where negotiations often involve a
large number of claimants and other parties and require court approval to be effective. As part of its continuing
analysis of asbestos reserves, which includes an annual ground-up review of asbestos policyholders, the
Company continues to study the implications of these and other developments.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the
current related reserves. In addition, the Company’s estimate of ultimate claims and claim adjustment expenses
may change. These additional liabilities or increases in estimates, or a range of either, cannot now be reasonably
estimated and could result in income statement charges that could be material to the Company’s results of
operations and financial condition in future periods.
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