Travelers 2007 Annual Report Download - page 70

charges in the Company’s consolidated statement of income, thereby increasing net income for the
second quarter and full year 2004 and increasing shareholders’ equity at December 31, 2007, 2006, 2005
and 2004, in each case by the approximate after-tax amount of the change. The effect on tangible
shareholders’ equity (adjusted for the effects of deferred taxes associated with goodwill and other
intangible assets) at December 31, 2007, 2006, 2005 and 2004 would not be material.
Increases to goodwill and deferred tax liabilities would be reflected on the Company’s balance
sheet as of April 1, 2004, either due to purchase accounting or adjustment of SPC’s reserves prior to
the merger of SPC and TPC. On May 3, 2006, the Company received a letter from the Division of
Enforcement of the SEC (the Division) advising the Company that it is conducting an inquiry relating
to the second quarter 2004 adjustments and the April 1, 2004 merger between SPC and TPC. The
Company is cooperating with the Division’s requests for information.
Item 2. PROPERTIES
The Company owns its corporate headquarters buildings located at 385 Washington Street and 130
West Sixth Street, St. Paul, Minnesota. These buildings are adjacent to one another and consist of
approximately 1.1 million square feet of gross floor space.
The Company also owns six buildings in Hartford, Connecticut. The Company currently occupies
approximately 1.8 million square feet of office space in these buildings. The Company also owns other
real property, which includes office buildings in Denver, Colorado; Fall River, Massachusetts; and a
data center located in Norcross, Georgia. In January 2007, the Company acquired a building and
adjacent land in Windsor, Connecticut and in June 2007 sold an office building which it owned in
Irving, Texas. The Company leases 197 field and claim offices totaling approximately 5.2 million square
feet throughout the United States under leases or subleases with third parties.
The Company owns a building in London, England, which houses a portion of its operations in the
United Kingdom.
The Company, through its subsidiaries, owns an investment portfolio of income-producing
properties and real estate funds. Included in this portfolio are four office buildings in which the
Company holds a 50% ownership interest located in New York, New York, which collectively accounted
for approximately 10% of the carrying value of the property portfolio at December 31, 2007.
In the opinion of the Company’s management, the Company’s properties are adequate and suitable
for its business as presently conducted and are adequately maintained.
Item 3. LEGAL PROCEEDINGS
This section describes the major pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Company or any of its subsidiaries is a party or to which any of
the Company’s property is subject.
Asbestos- and Environmental-Related Proceedings
In the ordinary course of its insurance business, the Company receives claims for insurance arising
under policies issued by the Company asserting alleged injuries and damages from asbestos- and
environmental-related exposures that are the subject of related coverage litigation, including, among
others, the litigation described below. The Company continues to be subject to aggressive asbestos-
related litigation. The conditions surrounding the final resolution of these claims and the related
litigation continue to change. The Company is defending its asbestos- and environmental-related
litigation vigorously and believes that it has meritorious defenses; however, the outcomes of these
disputes are uncertain. In this regard, the Company employs dedicated specialists and aggressive
resolution strategies to manage asbestos and environmental loss exposure, including settling litigation
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