Travelers 2005 Annual Report Download - page 161

THE ST. PAUL TRAVELERS COMPANIES, INC.AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
149
2. MERGER (Continued)
assumed cost-of-capital on the capital supporting the loss reserves. The fair value adjustmentis
reported as an intangible asset on the consolidated balance sheet, and the amounts measured in
accordance with the acquirer’s accounting policies for insurance contracts are reported as part of the
claims and claim adjustment expense reserves and reinsurance recoverables. The intangible asset will
be recognized into income over the expected payment pattern. Because the time value of money and
the risk adjustment (cost of capital) components of the intangible asset run off at different rates, the
amount recognized in income may be a net benefit insome periods and a net expense inother
periods.
(8) The merger-related assets and liabilities of Nuveen Investments that were included in the allocation of
the purchase price were removed from the respective lines of the Company’s consolidated balance
sheet and are reported on a net basis under the above caption “Net assets of discontinued operations”
at December 31, 2004. Included in “Net assets of discontinued operations” at December 31, 2004 were
goodwill of $1.70 billion and intangible assets of $651 million related to Nuveen Investments. See
note 3.
Identification and Valuationof Intangible Assets
Intangible assets subject to amortization (excluding the Nuveen Investments’ intangible assets noted
in item 8 of the allocation of the purchase price previously presented) were as follows:
(in millions)
Amount assigned
as of April 1,
2004
Weighted-
average
amortization
period
Major intangible asset class
Customer-related(a)........................... $ 4 95 7.8 years
Marketing-related ............................. 202.0 years
Fair value adjustment on claims and claim
adjustment expense reserves and reinsurance
recoverables(b).............................. 191 30.0 years
Total........................................... $ 7 06
(a) Primarily includes customer-related insurance intangibles based on rates derived from expected
business retention and profitability levels.
(b) See item 7 of the allocation of the purchase price previously presented.
Intangible assets not subject to amortization were as follows:
(in millions)
Amount assigned
as of April 1,
2004
Major intangible asset class
Contract-based .............................................. 20
Total......................................................... $ 2 0