Travelers 2011 Annual Report Download - page 164

the Company separates the credit loss component of the impairment from the amount related to all
other factors and reports the credit loss component in net realized investment gains (losses). The
impairment related to all other factors is reported in accumulated other changes in equity from
nonowner sources.
For non-fixed maturity investments and for fixed maturity investments the Company intends to sell
or for which it is more likely than not that the Company will be required to sell before an anticipated
recovery in value, the full amount of the impairment is included in net realized investment gains
(losses).
Upon recognizing an other-than-temporary impairment, the new cost basis of the investment is the
previous amortized cost basis less the other-than-temporary impairment recognized in net realized
investment gains (losses). The new cost basis is not adjusted for any subsequent recoveries in fair value;
however, for fixed maturity investments the difference between the new cost basis and the expected
cash flows is accreted on a quarterly basis to net investment income over the remaining expected life of
the investment.
Due to the subjective nature of the Company’s analysis and estimates of future cash flows, along
with the judgment that must be applied in the analysis, it is possible that the Company could reach a
different conclusion whether or not to impair a security if it had access to additional information about
the issuer. Additionally, it is possible that the issuer’s actual ability to meet contractual obligations may
be different than what the Company determined during its analysis, which may lead to a different
impairment conclusion in future periods.
See note 1 of notes to the Company’s consolidated financial statements for a further discussion of
investment impairments.
Goodwill and Other Intangible Assets Impairments
See note 1 of notes to the Company’s consolidated financial statements for a discussion of
impairments of goodwill and other intangible assets.
OTHER UNCERTAINTIES
For a discussion of other risks and uncertainties that could impact the Company’s results of
operations or financial position, see note 15 of notes to the Company’s consolidated financial
statements and ‘‘Item 1A—Risk Factors.’’
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See note 1 of notes to the Company’s consolidated financial statements for a discussion of recently
issued accounting standards updates.
The Company is currently required to prepare its financial statements in accordance with U.S.
Generally Accepted Accounting Principles (GAAP), as promulgated by the Financial Accounting
Standards Board (FASB). During the last several years, the Securities and Exchange Commission (SEC)
has been evaluating whether, when and how International Financial Reporting Standards (IFRS) should
be incorporated into the U.S. financial reporting system. Before making a decision, the SEC is
completing its work plan to evaluate the remaining differences between GAAP and IFRS and examine
the variations in the way IFRS was applied by various foreign companies that file financial statements
with the SEC. In December 2011, the SEC staff provided an update of its progress but declined to
provide a timetable for completing its analysis and making a recommendation.
The International Accounting Standards Board (IASB) and the FASB continue to work on a joint
project to develop a global insurance standard that involves methodologies for valuing insurance
contract liabilities that may be significantly different from the methodologies required by current
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