Travelers 2009 Annual Report Download - page 133

Travelers Property Casualty Corp., and the Company assumed certain obligations relating to the notes
pursuant to a Second Supplemental Indenture dated April 1, 2004. Each note had a principal amount
of $25.00. The redemption price for each note was $25.5625 plus $0.009375 of accrued and unpaid
interest. Any note called for redemption could be surrendered for conversion into common stock
before the close of business on April 17, 2007. Each note was convertible into 0.4684 shares of common
stock of The Travelers Companies, Inc. Holders of $36 million of the notes tendered their certificates
in exchange for the issuance of 670,910 of the Company’s common shares. The remaining $857 million
of notes were redeemed for cash, along with accrued interest to the date of redemption. The Company
recorded a $39 million pretax loss ($25 million after-tax) in other revenues in the second quarter of
2007 related to the redemption, consisting of the redemption premium paid and the write-off of
remaining unamortized issuance costs.
In May 2007, the Company issued $250 million aggregate principal amount of 5.375% senior notes
due June 15, 2012 (the 2012 senior notes), $450 million aggregate principal amount of 5.75% senior
notes due December 15, 2017 (the 2017 senior notes), and $800 million aggregate principal amount of
6.25% senior notes due June 15, 2037 (the 2037 senior notes). The total net proceeds of these three
senior note issuances, after original issuance discounts and the deduction of underwriting expenses and
commissions and other expenses, were approximately $1.47 billion. Interest on each of the senior note
issuances is payable semi-annually on June 15 and December 15. Each series of senior notes is
redeemable in whole at any time or in part from time to time, at the Company’s option, at a
redemption price equal to the greater of (a) 100% of the principal amount of senior notes to be
redeemed, or (b) the sum of the present values of the remaining scheduled payments of principal and
interest on the senior notes to be redeemed (exclusive of interest accrued to the date of redemption)
discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the then current Treasury rate plus 12.5 basis points for the 2012 senior notes,
15 basis points for the 2017 senior notes and 20 basis points for the 2037 senior notes. The Company
applied a portion of the net proceeds of this offering to repay approximately $442 million of senior
notes maturing on August 16, 2007 and to repay approximately $42 million of medium-term notes
maturing in the third quarter of 2007. The remaining proceeds were used for general corporate
purposes. Prior to applying these proceeds, the Company invested them in investment grade,
marketable securities.
In August 2007, the Company’s $442 million, 5.01% senior notes matured and were fully paid.
In 2007, medium-term notes with a cumulative par value of $72 million and interest rates ranging
from 6.85% to 7.37% matured and were fully paid.
The amounts of debt obligations, other than commercial paper, that becomes due in 2010, 2011
and 2012 are $273 million, $11 million and $250 million, respectively.
Dividends. Dividends paid to shareholders totaled $693 million, $715 million and $742 million in
2009, 2008 and 2007, respectively. On February 3, 2010, the Company’s board of directors declared a
quarterly dividend of $0.33 per share, payable March 31, 2010 to shareholders of record on March 10,
2010. The declaration and payment of future dividends to holders of the Company’s common stock will
be at the discretion of the Company’s board of directors and will depend upon many factors, including
the Company’s financial position, earnings, capital requirements of the Company’s operating
subsidiaries, legal requirements, regulatory constraints and other factors as the board of directors
deems relevant. Dividends would be paid by the Company only if declared by its board of directors out
of funds legally available, subject to any other restrictions that may be applicable to the Company.
Share Repurchases. Since May 2006, the Company’s board of directors has approved four common
share repurchase authorizations, for a cumulative authorization of up to $16 billion of shares of the
Company’s common stock. Under these authorizations, the most recent of which totaled $6 billion and
was approved by the board of directors in October 2009, repurchases may be made from time to time
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