Travelers 2005 Annual Report Download - page 170

THE ST. PAUL TRAVELERS COMPANIES, INC.AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
158
6. INVESTMENTS (Continued)
Proceeds from the sale of real estate investments totaled $37 million in2005. Gross gains of $15
million and no gross losses were realized on those sales in 2005. The Company did not sell any real estate
investments in 2004 or 2003.
Future minimum rental income expected on operating leases relating to the Company’s real estate
properties is $93 million, $84 million, $70 million, $52 million, $37 million, and$40 million for 2006, 2007,
2008, 2009, 2010 and 2011 and thereafter, respectively.
Venture Capital
The cost and fair value of investments in venture capital, which are reported as part of other
investments in the Company’s consolidated balance sheet, were as follows:
Gross Unrealized Fair
(at December 31, 2005, in millions) Cost Gains Losses Value
Venture capital.................................... $ 406 $ 91 $ 2$ 4 95
Gross Unrealized Fair
(at December 31, 2004, in millions) Cost Gains Losses Value
Venturecapital.................................... $480 $ 29 $ 1 8$491
Variable Interest Entities
The following entities are consolidated:
•Municipal Trusts—The Company ownsinterests invarious municipal trusts that were formed for
the purpose of allowingmore flexibility to generate investment income in a manner consistentwith
the Company’s investmentobjectives and tax position. As of both December 31, 2005 and 2004,
there were 36such trusts, which held a combined total of $441 million and $450 million,
respectively, in municipal securities, of which $84 million and $84 million, respectively, were owned
by outside investors. The net carrying value of the trusts owned by the Company at December 31,
2005 and 2004 was $357 million and $366 million, respectively.
•Venture Capital Entities and Tax CreditFunds—The Company has investments in venture capital
entities which are held for the purposes of generating long-term investment returns. The Company
also has investments in certain tax credit funds which generate tax benefits. The Company
consolidates certain venture capital investments and tax credit funds under the provisions of the
FASB Revised Interpretation No. 46, Consolidation of Variable Interest Entities. The combined
carrying values of these investments were not significant at December 31, 2005 and 2004.
The Company has significant interests in VIEs which are not consolidated because the Company is
not considered to be the primary beneficiary. These entities are as follows:
•The Company has a significant variable interest in one real estate entity. This investment has total
assets of approximately $143 million and $117 million as of December 31, 2005 and 2004,
respectively. The carrying value of the Company’s share of this investment was approximately $31
million and $38 million at December 31, 2005 and 2004, respectively, which also represented its
maximum exposure to loss. The purpose of the Company’s involvement in this entity is to generate
investment returns.