Travelers 2007 Annual Report Download - page 166

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
entity can accomplish this by either reporting the fair value and non-fair-value carrying amounts as
separate line items or aggregating those amounts and disclosing parenthetically the amount of fair
value included in the aggregate amount.
FAS 159 is effective for fiscal years beginning after November 15, 2007. Upon adoption, an entity
is permitted to elect the fair value option irrevocably for any existing asset or liability within the scope
of the standard. The adjustment to reflect the difference between the fair value and the carrying
amount would be accounted for as a cumulative-effect adjustment to retained earnings as of the date of
initial adoption. Retrospective application would not be permitted. The Company will not elect the fair
value option for assets and liabilities currently held upon its adoption of FAS 159 effective January 1,
2008. Therefore, FAS 159 will not have an impact on the Company’s results of operations, financial
position or liquidity.
Collateral Assignment Split-Dollar Life Insurance Arrangements
In March 2007, the FASB issued Emerging Issues Task Force Issue No. 06-10, Accounting for
Deferred Compensation and Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life
Insurance Arrangements (EITF 06-10). EITF 06-10 provides guidance on the recognition and
measurement of assets related to collateral assignment split-dollar life insurance arrangements.
EITF 06-10 is effective for fiscal years beginning after December 15, 2007. The Company does not
expect the adoption of EITF 06-10 effective January 1, 2008 to have a material effect on its results of
operations, financial position or liquidity.
Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting
by Parent Companies and Equity Method Investors for Investments in Investment Companies
In June 2007, AcSEC issued Statement of Position 07-1, Clarification of the Scope of the Audit and
Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method
Investors for Investments in Investment Companies (SOP 07-1). SOP 07-1 provides guidance in
determining whether an entity is within the scope of the AICPA Audit and Accounting Guide
Investment Companies. It also addresses whether the specialized industry accounting of the Investment
Company Audit Guide should be retained by a parent company in consolidation or by an equity
method investor. The provisions of SOP 07-1 are effective for fiscal years beginning on or after
December 15, 2007. In February 2008, the FASB issued FASB Staff Position SOP 07-1-1, Effective Date
of AICPA Statement of Position 07-1, which provides an indefinite deferral of SOP 07-1.
Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
In June 2007, the FASB issued Emerging Issues Task Force Issues No. 06-11, Accounting for
Income Tax Benefits of Dividends on Share-Based Payment Awards (EITF 06-11). EITF 06-11 requires
that realized income tax benefits related to dividend payments that are charged to retained earnings
and paid to employees holding equity shares, nonvested equity share units, and outstanding equity
share options should be recognized as an increase in additional paid-in capital. EITF 06-11 shall be
applied to share-based payment awards that are declared in fiscal years beginning after December 15,
2007. The Company does not expect the adoption of EITF 06-11 effective January 1, 2008 to have a
material effect on its results of operations, financial position or liquidity.
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