Travelers 2006 Annual Report Download - page 209

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
197
7. DEBT (Continued)
The following table presents the unamortized fair value adjustment and the related effective interest
rate on the SPC debt instruments acquired in the merger:
Unamortized Fair Value
Purchase Adjustment at
Effective
Interest Rate
(in millions)Issue RateMaturit y Date December 31, 2006December 31, 2005to Maturity
Senior notes........... 5.750%Mar. 2007 $ 3$18 2.625%
8.125% Apr. 201030 38 4.257%
Medium-term notes .... 6.4%-7.4% Through 201012 21 3.310%
Subordinated
debentures.......... 7.625%Dec. 202721 21 6.147%
8.470% Jan. 2027 67 7.660%
8.500% Dec. 204516 16 6.362%
8.312% Jul. 204620 20 6.362%
7.600% Oct. 2050 —42 7.057%
Zero Coupon convertible
notes ............... 4.500%Mar. 2009 12 4.175%
Total............... $ 109$185
On April 1, 2004, The Travelers Companies, Inc. fully and unconditionally guaranteed the payment of
all principal, premiums, if any, and interest on certain debt obligations of its subsidiaries TPC and
Travelers Insurance Group Holdings Inc. (TIGHI). Theguarantees pertain to the $400 million 3.75%
Notes due 2008, the $500 million 5.00% Notes due 2013, the $200 million 7.75% Notes due 2026, the $893
million 4.5% Convertible Notes due 2032 and the $500 million 6.375% Notes due2033.
Maturities—The amount of debt obligations, other than commercial paper, that become due in each of
the next five years is as follows: 2007, $1.10 billion; 2008, $552 million; 2009, $143 million; 2010, $273
million; and 2011, $2 million.
Line of Credit Agreement
In June 2005, the Companyentered into a $1.0 billion, five-year revolving credit agreement with a
syndicate of financial institutions. The new credit agreement replaced and consolidated the Company’s
three prior bank credit agreements that had collectively provided the Company access to $1.0 billion of
bank credit lines. Pursuant to covenants in the new credit agreement, the Company must maintain an
excess of consolidatednet worth over goodwill and other intangible assets of not less than $10 billion at all
times. The Company must also maintain a ratio of total consolidated debt to the sum of total consolidated
debt plus consolidated net worth of not greater than 0.40 to 1.00. In addition, the credit agreement
contains other customary restrictive covenants as well ascertain customary events of default, including with
respect to a change in control. At December 31, 2006, the Company was in compliance with these
covenants and all other covenants related to its respective debt instruments outstanding. Pursuant to the
terms of the credit agreement, the Company has an option to increase the credit available under the
facility, no more than once a year, up to a maximum facility amountof $1.5 billion, subject to the
satisfaction of a ratings requirement and certain other conditions. There was no amount outstanding under
the credit agreement as of December 31, 2006 or 2005.