Travelers 2009 Annual Report Download - page 75

and reserves for reinsurance recoverables and premiums due from policyholders, and how those
adjustments may relate to SPC’s reserves for periods prior to the merger of SPC and TPC. After
reviewing the staff’s questions and comments and discussions with the Company’s independent auditors,
the Company continues to believe that its accounting treatment for these adjustments is appropriate. If,
however, the staff disagrees, some or all of the adjustments may not be recorded as charges in the
Company’s consolidated statement of income, thereby increasing net income for the second quarter and
full year 2004 and increasing shareholders’ equity at December 31, 2004 and at the end of each
succeeding calendar year through December 31, 2009, in each case by the approximate after-tax amount
of the change. The effect on tangible shareholders’ equity (adjusted for the effects of deferred taxes
associated with goodwill and other intangible assets) at each date would not be material. Increases to
goodwill and deferred tax liabilities would be reflected on the Company’s balance sheet at April 1,
2004, either due to purchase accounting or adjustment of SPC’s reserves prior to the merger of SPC
and TPC. On May 3, 2006, the Company received a letter from the Division of Enforcement of the
SEC (the Division) advising the Company that it is conducting an inquiry relating to the second quarter
2004 adjustments and the April 1, 2004 merger between SPC and TPC. The Company cooperated with
the Division’s requests for information.
Item 2. PROPERTIES
The Company leases its principal executive offices in New York, New York, as well as 209 field
and claim offices totaling approximately 5.4 million square feet throughout the United States under
leases or subleases with third parties. The Company also leases offices in the United Kingdom, Canada
and the Republic of Ireland that house operations (primarily for the Financial, Professional &
International Insurance segment) in those locations. The Company owns six buildings in Hartford,
Connecticut. The Company currently occupies approximately 1.8 million square feet of office space in
these buildings. The Company also owns office buildings located at 385 Washington Street and 130
West Sixth Street, St. Paul, Minnesota. These buildings are adjacent to one another and consist of
approximately 1.1 million square feet of gross floor space. The Company also owns other real property,
including office buildings in Denver, Colorado and Fall River, Massachusetts, as well as a data center
located in Norcross, Georgia.
The Company owns a building in London, England, which houses a portion of its Financial,
Professional & International Insurance segment’s operations in the United Kingdom.
The Company, through its subsidiaries, owns an investment portfolio of income-producing
properties and real estate funds. Included in this portfolio are four office buildings in which the
Company holds a 50% ownership interest located in New York, New York, which collectively accounted
for approximately 11% of the carrying value of the property portfolio at December 31, 2009.
In the opinion of the Company’s management, the Company’s properties are adequate and suitable
for its business as presently conducted and are adequately maintained.
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
63