Travelers 2008 Annual Report Download - page 67

• medical developments that link health issues to particular causes, resulting in liability claims.
In some instances, these emerging issues may not become apparent for some time after we have
issued the affected insurance policies. As a result, the full extent of liability under our insurance
policies may not be known for many years after the policies are issued.
In addition, the potential passage of new legislation designed to expand the right to sue, to remove
limitations on recovery, to extend the statutes of limitations or otherwise to repeal or weaken tort
reforms could have an adverse impact on our business. In particular, recent shifts in the political
landscape could increase the likelihood of the passing of such legislation in a number of states.
The effects of these and other unforeseen emerging claim and coverage issues are extremely hard
to predict and could harm our business and materially and adversely affect our results of operations.
The intense competition that we face could harm our ability to maintain or increase our business
volumes and our profitability. The property and casualty insurance industry is highly competitive, and
we believe that it will remain highly competitive for the foreseeable future. We compete with both
domestic and foreign insurers, a number of which are experiencing financial difficulties. Competitors
that are experiencing financial difficulties may offer products at prices and on terms that are not
consistent with our economic standards in an effort to maintain their business. The competitive
environment in which we operate could also be impacted by current general economic conditions,
which could reduce the volume of business available to us, as well as to our competitors. Also,
competitors that receive financial support from the federal government may have advantages that are
not available to other market participants. See ‘‘Item 7—Management’s Discussion and Analysis of
Financial Condition and Results of Operation—Outlook.’’
Our competitive position is based on many factors, including but not limited to our:
• ability to retain existing customers, to obtain new business and to profitably price our business;
• agent, broker and client relationships;
• speed of claims payment;
• premiums charged, contract terms and conditions, products and services offered (including the
ability to design customized programs);
• perceived overall financial strength and corresponding ratings assigned by independent rating
agencies;
• reputation, experience and qualifications of employees;
• geographic scope of business;
• local presence; and
• ability to keep pace relative to our competitors with changes in technology and information
systems.
We may have difficulty in continuing to compete successfully on any of these bases in the future. If
competition limits our ability to retain existing business or write new business at adequate rates, our
results of operations could be materially and adversely affected. See ‘‘Competition’’ sections of the
discussion on business segments in ‘‘Item 1—Business.’’
The insurance industry and we are the subject of a number of investigations by state and federal
authorities in the United States. We cannot predict the outcome of these investigations or the impact
on our business practices or financial results. As part of industry-wide investigations, we have
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