Travelers 2006 Annual Report Download - page 239

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
227
15. CONTINGENCIES, COMMITMENTS AND GUARANTEES (Continued)
(xvi) State ofMaryland Insurance Administration; (xvii) Commonwealth of Massachusetts Office of the
Attorney General; (xviii) State of Minnesota Department of Commerce; (xix) State of Minnesota Office of
the Attorney General; (xx) State of New Hampshire Insurance Department; (xxi) State of NewYork
Office of the Attorney General; (xxii) State of New York Insurance Department; (xxiii) State of North
Carolina Department of Insurance; (xxiv) State of Ohio Office of the Attorney General; (xxv) State of
Ohio Department of Insurance; (xxvi) State of Oregon Department of Justice; (xxvii) Commonwealth of
Pennsylvania Office of the Attorney General; (xxviii) State of Texas Office of the Attorney General;
(xxvix) State of Texas Department of Insurance; (xxx) Commonwealth of Virginia Office of the Attorney
General; (xxxi) State of Washington Office of the Insurance Commissioner; (xxxii) State of West Virginia
Office of Attorney General; (xxxiii) the United States Attorney for the Southern District o f NewYork;
(xxxiv) the United States Internal Revenue Service, Departmentof the Treasury; and (xxxv) theUnited
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 bothpurchased and sold. The Company has completed its review with respect to the identified
finite products purchased and sold, andhas concluded that no adjustment to previously issued financial
statements is required.
Except as settled as previously disclosed, the industry-wide investigations described above 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 tothe likely outcome of these matters.
Four putative class action lawsuits are pending 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 offeredto
those customers. The complaints are captioned: Redwood Oil Company v. Marsh & McLennan