Travelers 2007 Annual Report Download - page 127

deductible receivable for unpaid claims are presented in the consolidated balance sheet as
‘‘contractholder payables’’ and ‘‘contractholder receivables,’’ respectively. Most deductibles for such
policies are paid directly from the policyholder’s escrow which is periodically replenished by the
policyholder. The payment of the loss amounts above the deductible are reported within ‘‘Claims
and claim adjustment expenses’’ in the above table. Because the timing of the collection of the
deductible (contractholder receivables) occurs shortly after the payment of the deductible to a
claimant (contractholder payables), these cash flows offset each other in the table.
The estimated timing of the payment of the contractholder payables and the collection of
contractholder receivables for workers’ compensation policies is presented below:
Less than 1 1-3 3-5 After 5
(in millions) Total Year Years Years Years
Contractholder payables/ receivables ....... $6,696 $1,730 $1,938 $1,006 $2,022
(9) The amounts in ‘‘Loss-based assessments’’ relate to estimated future payments of second-injury
fund assessments which would result from payment of current claim liabilities. Second injury funds
cover the cost of any additional benefits for aggravation of a pre-existing condition. For loss-based
assessments, the cost is shared by the insurance industry and self-insureds, funded through
assessments to insurance companies and self-insureds based on losses. Amounts relating to second-
injury fund assessments are included in ‘‘other liabilities’’ in the consolidated balance sheet.
(10) The amounts in ‘‘Reinsurance contracts accounted for as deposits’’ represent estimated future
nominal payments for reinsurance agreements that are accounted for as deposits. Amounts payable
under deposit agreements are included in ‘‘other liabilities’’ in the consolidated balance sheet. The
amounts reported in the table are presented on a nominal basis and have not been adjusted to
reflect the time value of money. Accordingly, the amounts above will differ from the Company’s
balance sheet to the extent that deposit values in the balance sheet have been discounted using
deposit accounting.
(11) The amounts in ‘‘Payouts from ceded funds withheld’’ represent estimated payments for losses and
return of funds held related to certain reinsurance arrangements whereby the Company holds a
portion of the premium due to the reinsurer and is allowed to pay claims from the amounts held.
(12) Amounts are included in the consolidated balance sheet as ‘‘Other liabilities’’ and ‘‘Deferred tax
assets.’’
Some of the Company’s liabilities related to unrecognized tax benefits have associated temporary
differences for which offsetting current or deferred tax assets exist and are as follows:
Less than 1 1-3 3-5 After 5
(in millions) Total Year Years Years Years
Receivables related to unrecognized tax benefits ... $209 $— $209 $— $—
The above table does not include an analysis of liabilities reported for structured settlements for
which the Company has purchased annuities and remains contingently liable in the event of default by
the company issuing the annuity. The Company is not reasonably likely to incur material future
payment obligations under such agreements. In addition, the Company was not required to make any
contributions to its qualified pension plan in 2007 or 2006 and does not have a best estimate of
contributions expected to be paid to the qualified pension plan. Accordingly, any future contributions
are not included in the foregoing table.
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