Travelers 2008 Annual Report Download - page 73

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
under appropriate circumstances. For a discussion of other information regarding the Company’s
asbestos and environmental exposure, see ‘‘Part II—Item 7—Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Asbestos Claims and Litigation,’’ ‘‘—Environmental
Claims and Litigation’’ and ‘‘—Uncertainty Regarding Adequacy of Asbestos and Environmental
Reserves.’’
In October 2001 and April 2002, two purported class action suits (Wise v. Travelers and Meninger v.
Travelers) were filed against TPC and other insurers (not including SPC) in state court in West Virginia.
These and other cases subsequently filed in West Virginia were consolidated into a single proceeding in
the Circuit Court of Kanawha County, West Virginia. The plaintiffs allege that the insurer defendants
engaged in unfair trade practices by inappropriately handling and settling asbestos claims. The plaintiffs
seek to reopen large numbers of settled asbestos claims and to impose liability for damages, including
punitive damages, directly on insurers. Similar lawsuits were filed in Massachusetts and Hawaii state
courts (these suits and the West Virginia suits are collectively referred to as the Statutory and Hawaii
Actions).
In March 2002, the plaintiffs in consolidated asbestos actions pending before a mass tort panel of
judges in West Virginia state court amended their complaint to include TPC as a defendant, alleging
that TPC and other insurers breached alleged duties to certain users of asbestos products. The
plaintiffs seek damages, including punitive damages. Lawsuits seeking similar relief and raising similar
allegations, primarily violations of purported common law duties to third parties, are also pending in
Texas state court against TPC and SPC, and in Louisiana state court against TPC (the claims asserted
in these suits, together with the West Virginia suit, are collectively referred to as the Common Law
Claims).
The federal bankruptcy court that had presided over the bankruptcy of TPC’s former policyholder
Johns-Manville Corporation issued a temporary injunction prohibiting the prosecution of the Statutory
Actions (but not the Hawaii Actions), the Common Law Claims and an additional set of cases filed in
various state courts in Texas and Ohio, and enjoining certain attorneys from filing any further lawsuits
against TPC based on similar allegations. Notwithstanding the injunction, additional common law
claims were filed against TPC.
In November 2003, the parties reached a settlement of the Statutory and Hawaii Actions. This
settlement includes a lump-sum payment of up to $412 million by TPC, subject to a number of
significant contingencies. In May 2004, the parties reached a settlement resolving substantially all
pending and similar future Common Law Claims against TPC. This settlement requires a payment of
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