Travelers 2005 Annual Report Download - page 71

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Commissioner of Insurance; (xi) State of Ill inoisDepartment of Financial and Professional Regulation;
(xii) State of Iowa Insurance Division; (xiii) State of Maryland Insurance Administration;
(xiv) Commonwealth of Massachusetts Office of the Attorney General; (xv) State of Minnesota
Department of Commerce; (xvi) State of Minnesota Office of the Attorney General; (xvii) State of New
Hampshire Insurance Department; (xviii) State of New York Office of the Attorney General; (xix) State of
New York Insurance Department; (xx) State of North Carolina Department of Insurance; (xxi) State of
Ohio Office of the Attorney General; (xxii) State of Ohio Department of Insurance; (xxiii) Commonwealth
of Pennsylvania Office of the Attorney General; (xxiv) State of Texas Department of Insurance; (xxv) State
of Washington Office of the Insurance Commissioner; (xxvi) State of West Virginia Office of Attorney
General; (xxvii) the United States Attorney for the SouthernDistrict of New York; and (xxviii) the United
States Securities and Exchange Commission. The Company and its affiliates may receive additional
subpoenas and requests for information with respect to the areas described above from other agencies or
authorities.
The Company is cooperating with these subpoenas and requests for information. In addition, outside
counsel, with the oversight of the Company’s Board of Directors, has been conducting an internal review of
certain of the Company’s business practices. This review initially focused on the Company’s relationship
with brokers and was commenced after the announcement of litigation brought by the New York Attorney
General’s office against a major broker.
The internal review was expanded to address the various requests for information described above
and to verify whether the Company’s business practices in these areas have been appropriate. The
Company’s review has been extensive, involving the examination of e-mails and underwriting files, as well
as interviews of current and former employees. The Company also continues to receive and respond to
additional requests for information and will expand its review accordingly.
To date, the Company has found only a few instances of conduct that were inconsistent with the
Company’s employee code of conduct. The Company has responded, and will continue to respond,
appropriately to any such conduct.
The Company’s internal review with respect to finite reinsurance considered finite products the
Company both purchased and sold. The Company has completed its review with respect to the identified
finite products purchased and sold, and has concluded that no adjustment to previously issued financial
statements is required. The related industry-wide investigations previously described are ongoing, as are
the Company’s efforts to cooperate with the authorities, and the various authorities could ask that
additional work be performed or reach conclusions different from the Company’s.Accordingly, it would be
premature to reach any conclusions as to the likely outcome of these matters.
Six putative class action lawsuits and two individual actions were brought against a number of
insurance brokers and insurers, including the Company and/or certain of its affiliates, by plaintiffs who
allegedly purchased insurance products through one or more of the defendant brokers. Plaintiffs allege
that various insurance brokers conspired with each other and with various insurers, including the Company
and/or certain of its affiliates, to artificially inflate premiums, allocate brokerage customers and rig bids for
insurance products offered to those customers. Five of the class actions were filed in federal district court,
and the complaints are captioned: Shell Vacations LLC v. Marsh & McLennanCompanies, Inc., et al.
(N.D. Ill. Jan. 14, 2005), Redwood Oil Company v. Marsh & McLennan Companies, Inc., et al. (N.D. Ill.
Jan. 21, 2005), Boros v. Marsh & McLennan Companies, Inc., et al. (N.D. Cal. Feb. 4, 2005), Mulcahey v.
Arthur J. Gallagher & Co., et al. (D.N.J. Feb. 23, 2005) and GoldenGate Bridge, Highway, and
Transportation District v. Marsh & McLennan Companies, Inc., et al. (D.N.J. Feb. 23, 2005). The plaintiff in
one of the five actions, Shell Vacations LLC, later voluntarily dismissed its complaint. To the extent they
were not originally filed there, the federal class actions were transferred by the Judicial Panel on
Multidistrict Litigation to the United States District Court for the District of New Jersey and have been