Travelers 2009 Annual Report Download - page 115

The following table displays activity for environmental losses and loss expenses and reserves:
(at and for the year ended December 31, in millions) 2009 2008 2007
Beginning reserves:
Direct ........................................ $400 $478 $413
Ceded ........................................ 14 12 5
Net .......................................... 414 490 418
Incurred losses and loss expenses:
Direct ........................................ 85 85 182
Ceded ........................................ (15) —3
Net .......................................... 70 85 185
Losses paid:
Direct ........................................ 96 123 117
Ceded ........................................ (5) 5(4)
Net .......................................... 91 128 113
Sale of subsidiary:
Direct ........................................ —40 —
Ceded ........................................ —(7) —
Net .......................................... —33 —
Ending reserves:
Direct ........................................ 389 400 478
Ceded ........................................ 414 12
Net .......................................... $393 $414 $490
UNCERTAINTY REGARDING ADEQUACY OF ASBESTOS AND ENVIRONMENTAL RESERVES
As a result of the processes and procedures described above, management believes that the
reserves carried for asbestos and environmental claims at December 31, 2009 are appropriately
established based upon known facts, current law and management’s judgment. However, the
uncertainties surrounding the final resolution of these claims continue, and it is difficult to determine
the ultimate exposure for asbestos and environmental claims and related litigation. As a result, these
reserves are subject to revision as new information becomes available and as claims develop. The
continuing uncertainties include, without limitation, the risks and lack of predictability inherent in
complex litigation, any impact from the bankruptcy protection sought by various asbestos producers and
other asbestos defendants, a further increase or decrease in asbestos and environmental claims beyond
that which is anticipated, the role of any umbrella or excess policies the Company has issued, the
resolution or adjudication of disputes pertaining to the amount of available coverage for asbestos and
environmental claims in a manner inconsistent with the Company’s previous assessment of these claims,
the number and outcome of direct actions against the Company, future developments pertaining to the
Company’s ability to recover reinsurance for asbestos and environmental claims and the unavailability
of other insurance sources potentially available to policyholders, whether through exhaustion of policy
limits or through the insolvency of other participating insurers. In addition, uncertainties arise from the
insolvency or bankruptcy of policyholders and other defendants. It is also not possible to predict
changes in the legal, regulatory and legislative environment and their impact on the future development
of asbestos and environmental claims. This development will be affected by future court and regulatory
decisions and interpretations, as well as changes in applicable legislation. It is also difficult to predict
the ultimate outcome of complex coverage disputes until settlement negotiations near completion and
significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is
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