Travelers 2009 Annual Report Download - page 201

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVESTMENTS (Continued)
respectively, were owned by outside investors. The net carrying value of the trusts owned by the
Company at December 31, 2009 and 2008 was $16 million and $245 million, respectively.
• Real estate joint venture—The Company holds a 50% equity interest in a joint venture for the
purpose of developing, maintaining and operating a shopping center to generate investment
returns. During 2009, the Company increased its interest in the joint venture by providing
mortgage loan financing, thereby becoming the primary beneficiary resulting in consolidation. At
December 31, 2009, the total assets of the joint venture were approximately $67 million. The
noncontrolling interest in the joint venture’s equity and earnings were not material.
The Company has a significant interest in the following VIE, which is not consolidated because the
Company is not considered to be the primary beneficiary:
• Camperdown UK Limited, which SPC sold in December 2003—The Company’s variable interest
resulted from an agreement to indemnify the purchaser in the event a specified reserve
deficiency develops, a reserve-related foreign exchange impact occurs or a foreign tax adjustment
is imposed on a pre-sale reporting period. The maximum amount of this indemnification
obligation is $138 million. The carrying value of this obligation at December 31, 2009 and 2008
was zero and $23 million, respectively.
The Company has other significant interests in VIEs, including private equity funds and real estate
entities. Neither the carrying amounts nor the unfunded commitments related to these entities are
material.
The following securities are not consolidated:
• Mandatorily redeemable preferred securities of trusts holding solely the subordinated debentures
of the Company—These securities were issued by three separate trusts that were established for
the sole purpose of issuing the securities to investors and are fully guaranteed by the Company.
The subordinated debt that the Company issued to these trusts is included in the ‘‘Debt’’ section
of liabilities on the Company’s consolidated balance sheet. That debt had a carrying value of
$309 million at both December 31, 2009 and 2008.
Unrealized Investment Losses
The following tables summarize, for all investments in an unrealized loss position at December 31,
2009 and 2008, the aggregate fair value and gross unrealized loss by length of time those securities
have been continuously in an unrealized loss position. The fair value amounts reported in the tables are
estimates that are prepared using the process described in note 4. The Company also relies upon
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