Travelers 2009 Annual Report Download - page 254

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. CONTINGENCIES, COMMITMENTS AND GUARANTEES (Continued)
The Company cooperated with these subpoenas and requests for information. In addition, outside
counsel, with the oversight of the Company’s board of directors, conducted an internal review of these
matters. This review was commenced after the announcement of litigation brought in October 2004 by
the New York Attorney General’s office against a major broker. In particular, upon completion of its
review with respect to non-traditional insurance and reinsurance products, the Company concluded that
no adjustment to previously issued financial statements was required. Any authority with open inquiries
or investigations could ask that additional work be performed or reach conclusions different from the
Company’s.
Broker Anti-Trust Litigation—In 2005, four putative class action lawsuits were brought against a
number of insurance brokers and insurers, including the Company and/or certain of its affiliates, by
plaintiffs who allegedly purchased insurance products through one or more of the defendant brokers.
The plaintiffs alleged that various insurance brokers conspired with each other and with various
insurers, including the Company and/or certain of its affiliates, to artificially inflate premiums, allocate
brokerage customers and rig bids for insurance products offered to those customers. To the extent they
were not originally filed there, the federal class actions were transferred to the U.S. District Court for
the District of New Jersey and were consolidated for pre-trial proceedings with other class actions
under the caption In re Insurance Brokerage Antitrust Litigation. On August 1, 2005, various plaintiffs,
including the four named plaintiffs in the above-referenced class actions, filed an amended consolidated
class action complaint naming various brokers and insurers, including the Company and certain of its
affiliates, on behalf of a putative nationwide class of policyholders. The complaint included causes of
action under the Sherman Act, the Racketeer Influenced and Corrupt Organizations Act (RICO), state
common law and the laws of the various states prohibiting antitrust violations. The complaint sought
monetary damages, including punitive damages and trebled damages, permanent injunctive relief,
restitution, including disgorgement of profits, interest and costs, including attorneys’ fees. All
defendants moved to dismiss the complaint for failure to state a claim. After giving plaintiffs multiple
opportunities to replead, the court dismissed the Sherman Act claims on August 31, 2007 and the
RICO claims on September 28, 2007, both with prejudice, and declined to exercise supplemental
jurisdiction over the state law claims. The plaintiffs appealed the district court’s decisions to the U.S.
Court of Appeals for the Third Circuit. Oral argument before the Third Circuit took place on April 21,
2009. The parties continue to await a ruling from the Third Circuit. Additional individual actions have
been brought in state and federal courts against the Company involving allegations similar to those in
In re Insurance Brokerage Antitrust Litigation, and further actions may be brought. The Company
believes that all of these lawsuits have no merit and intends to defend vigorously.
Other—In addition to those described above, the Company is involved in numerous lawsuits, not
involving asbestos and environmental claims, arising mostly in the ordinary course of business
operations, either as a liability insurer defending third-party claims brought against policyholders or as
an insurer defending claims brought against it relating to coverage or the Company’s business practices.
While the ultimate resolution of these legal proceedings could be material to the Company’s results of
operations in a future period, in the opinion of the Company’s management, none would likely have a
material adverse effect on the Company’s financial position or liquidity.
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