Travelers 2011 Annual Report Download - page 165

GAAP. The FASB and the IASB have also embarked on a long-term project to converge GAAP and
IFRS. The Company is not able to predict whether it will choose to, or be required to, adopt IFRS or
how the adoption of IFRS (or the convergence of GAAP and IFRS, including the joint project for
valuing insurance contract liabilities) may impact the Company’s financial statements in the future.
FORWARD-LOOKING STATEMENTS
This report contains, and management may make, certain ‘‘forward-looking statements’’ within the
meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements
of historical facts, may be forward-looking statements. Words such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘likely,’’
‘‘anticipates,’’ ‘‘expects,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘projects,’’ ‘‘believes,’’ ‘‘estimates’’ and similar expressions
are used to identify these forward-looking statements. Specifically, statements about the Company’s
share repurchase plans, expected margin improvement, future pension plan contributions and the
potential impact of investment markets and other economic conditions on the Company’s investment
portfolio and underwriting results, among others, are forward looking, and the Company may also
make forward-looking statements about, among other things:
• its results of operations and financial condition (including, among other things, premium volume,
premium rates, net and operating income, investment income and performance, return on equity,
and expected current returns and combined ratios);
• the sufficiency of the Company’s asbestos and other reserves;
• the impact of emerging claims issues as well as other insurance and non-insurance litigation;
• the cost and availability of reinsurance coverage;
• catastrophe losses;
• the impact of investment, economic and underwriting market conditions; and
• strategic initiatives.
The Company cautions investors that such statements are subject to risks and uncertainties, many
of which are difficult to predict and generally beyond the Company’s control, that could cause actual
results to differ materially from those expressed in, or implied or projected by, the forward-looking
information and statements.
For a discussion of some of the factors that could cause actual results to differ, see ‘‘Item 1A—
Risk Factors’’ and ‘‘Item 7—Management’s Discussion and Analysis of Financial Condition and Results
of Operations—Critical Accounting Estimates.’’
The Company’s forward-looking statements speak only as of the date of this report or as of the
date they are made, and the Company undertakes no obligation to update its forward-looking
statements.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISK
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as
interest rates (inclusive of credit spreads), foreign currency exchange rates and other relevant market
rate or price changes. Market risk is directly influenced by the volatility and liquidity in the markets in
which the related underlying assets are traded. The following is a discussion of the Company’s primary
market risk exposures and how those exposures are managed as of December 31, 2011. The Company’s
market risk sensitive instruments, including derivatives, are primarily entered into for purposes other
than trading.
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