Travelers 2006 Annual Report Download - page 150

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The following is a summary of the approximate carrying value of the Company’s non-publicly traded
securities at December 31, 2006:
(in millions) Carrying Value
Investment partnerships, including hedgefunds .............................$ 2,077
Fixed income securities...................................................208
Equity investments. ......................................................176
Real estate partnerships and joint ventures .................................188
Venture capital. .........................................................465
Total.................................................................$ 3,114
Investment Impairments
The Company recognizes an impairment loss when an invested asset’s value d eclines below cost,
adjusted for accretion, amortization and previous other-than-temporary impairments (new cost basis), and
the change is deemed tobeother-than-temporary, or if it is determined that the Company will not be able
to recover all amounts due pursuant to the issuers’ contractual obligations prior to sale or maturity. When
the Company determines that an invested asset is other-than-temporarily impaired, the invested asset is
written down to fair value and the amount of the impairment is included inearnings as a realized
investment loss. The fair value then becomes the newcost basis of the investment and any subsequent
recoveries in fair value are recognized at disposition.
The Company recognizes a realized loss when impairment is deemed to be other-than-temporary even
if a decision to sell an invested asset has not been made. When theCompany has decided to sell a
temporarily impaired available-for-sale invested asset and the Company does not expect the fair value of
the invested asset to fully recover prior to the expected time of sale, the invested asset is deemed to be
other-than-temporarily impaired in the period in which the decision to sell is made.
Factors considered in determining whether a decline is other-than-temporary include the length of
time and the extent to which fair value has been below cost, the financial condition andnear-term
prospects of the issuer, and the Company’s ability and intent to hold the investment for a period of time
sufficient to allow for any anticipated recovery.
The Company’s process for reviewing invested assets for impairments during any quarter includes the
following:
•Identification and evaluation of investments that have possible indications of other-than-temporary
impairment, which includes an analysis of investments with gross unrealized investment losses that
have fair values less than80% of cost for six consecutive months or more;
•Review of portfolio manager(s) recommendations for other-than-temporary impairments based on
the investee’s current financial condition, liquidity, near-term recovery prospects and other factors;
•Consideration of evidentialmatter, including an evaluation of factors or triggers that may cause
individual investments to qualify as having other-than-temporary impairments; and
•Determination of the status of each analyzed investment as other-than-temporary or not, with
documentation of the rationale for the decision.
Sales of Temporarily Impaired Invested Assets
The Company may, from time to time, sell invested assets subsequent to the balance sheet date that
were considered temporarily impaired at the balance sheet date for several reasons. For all subsequent