Travelers 2004 Annual Report Download - page 201

THE ST. PAUL TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
17. CONTINGENCIES, COMMITMENTS AND GUARANTEES, Continued
Based on the Company’s beliefs about its legal positions in its various reinsurance recovery proceedings, the
Company does not expect any of these matters to have a material adverse effect on its results of operations in a
future period.
As part of ongoing, industry-wide investigations, the Company and its affiliates have received subpoenas
and written requests for information from government agencies. The areas of inquiry addressed to the Company
include its relationship with brokers and agents, the Company’s involvement with “non-traditional insurance and
reinsurance products,” lawyer liability insurance and branding requirements for salvage automobiles. The
Company or its affiliates have received subpoenas or written requests for information from: (i) State of California
Office of the Attorney General; (ii) State of California Department of Insurance; (iii) Licensing and Market
Conduct Compliance Division, Financial Services Commission of Ontario, Canada; (iv) State of Connecticut
Insurance Department; (v) State of Connecticut Office of the Attorney General; (vi) State of Delaware
Department of Insurance; (vii) State of Florida Department of Financial Services; (viii) State of Florida Office of
Insurance Regulation; (ix) State of Florida Department of Legal Affairs Office of the Attorney General; (x) State
of Illinois Department of Financial and Professional Regulation; (xi) State of Iowa Insurance Division; (xii) State
of Maryland Insurance Administration; (xiii) Commonwealth of Massachusetts Office of the Attorney General;
(xiv) State of Minnesota Office of the Attorney General; (xv) State of New York Office of the Attorney General;
(xvi) State of New York Department of Insurance; (xvii) State of North Carolina Department of Insurance;
(xviii) State of Ohio Office of the Attorney General; (xix) Commonwealth of Pennsylvania Office of the
Attorney General; (xx) State of Texas Department of Insurance; (xxi) State of West Virginia Office of the
Attorney General; and (xxii) the United States Securities and Exchange Commission. The Company is
cooperating fully with these subpoenas and requests for information. In addition, the Company is currently
undertaking its own review of the matters addressed by these subpoenas and requests for information. The
Company is not able to predict the outcome of the various agencies’ investigations or the reviews being
undertaken, or how these matters may affect the Company, if at all.
Four putative class action lawsuits have been brought against a number of insurance brokers and insurers,
including the Company, by plaintiffs who allegedly purchased insurance products through one or more of the
defendant brokers. The complaints are captioned Shell Vacations LLC v. Marsh & McLennan Companies, Inc.
(N.D. Ill. Jan. 14, 2005), Redwood Oil Company v. Marsh & McLennan Companies, Inc. (N.D. Ill. Jan. 21,
2005); Boros v. Marsh & McLennan Companies, Inc. (N.D. Cal. Feb. 4, 2005) and Mulcahey v. Arthur J.
Gallagher & Co. (D.N.J. February 23, 2005). Plaintiffs allege that various insurance brokers conspired with each
other and with various insurers, including the Company, to allocate brokerage customers and rig bids for
insurance products offered to those customers. The complaints include causes of action under the Sherman Act,
the Racketeer Influenced and Corrupt Organizations Act, federal and state common law and the laws of the
various states prohibiting antitrust violations and unfair and/or deceptive trade practices. Plaintiffs seek monetary
damages, including punitive damages and trebled damages, permanent injunctive relief, restitution, including
disgorgement of profits, interest and costs, including attorneys’ fees. The Company believes that these lawsuits
have no merit and intends to defend vigorously.
In addition to those described above, the Company is involved in numerous lawsuits, not involving asbestos
and environmental claims, arising mostly in the ordinary course of business operations either as a liability insurer
defending third-party claims brought against policyholders or as an insurer defending coverage claims brought
against it. While the ultimate resolution of these legal proceedings could be significant to the Company’s results
of operations in a future quarter, in the opinion of the Company’s management it would not be likely to have a
material adverse effect on the Company’s results of operations for a calendar year or on the Company’s financial
condition or liquidity.
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