Travelers 2011 Annual Report Download - page 225

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. DEBT (Continued)
Travelers Insurance Group Holdings Inc. (TIGHI). The guarantees pertain to the $500 million 5.00%
notes due 2013, the $200 million 7.75% notes due 2026 and the $500 million 6.375% notes due 2033.
Maturities—The amount of debt obligations, other than commercial paper, that become due in
each of the next five years is as follows: 2012, $250 million; 2013, $500 million; 2014, none; 2015,
$400 million; and 2016, $400 million.
Line of Credit Agreement
The Company is party to a three-year, $1.0 billion revolving credit agreement with a syndicate of
financial institutions that expires in June 2013. Pursuant to the credit agreement covenants, the
Company must maintain a minimum consolidated net worth (generally defined as shareholders’ equity
plus certain trust preferred and mandatorily convertible securities, reduced for goodwill and other
intangible assets) of $14.35 billion. The Company must also maintain a ratio of total debt to the sum of
total debt plus consolidated net worth of not greater than 0.40 to 1.00. In addition, the credit
agreement contains other customary restrictive covenants as well as certain customary events of default,
including with respect to a change in control, which is defined to include the acquisition of 35% or
more of the Company’s voting stock and certain changes in the composition of the Company’s board of
directors. At December 31, 2011, the Company was in compliance with these covenants. Generally, the
cost of borrowing under this agreement will range from LIBOR plus 100 basis points to LIBOR plus
175 basis points depending on the Company’s credit ratings. At December 31, 2011, that cost would
have been LIBOR plus 125 basis points had there been any amounts outstanding under the credit
agreement. This line of credit also supports the Company’s commercial paper program.
Shelf Registration
In December 2011, the Company filed with the Securities and Exchange Commission a universal
shelf registration statement for the potential offering and sale of securities to replace the Company’s
previous registration statement that had expired in the normal course of business. The Company may
offer these securities from time to time at prices and on other terms to be determined at the time of
offering. During 2010, the Company issued securities with a principal amount of $1.25 billion under the
prior shelf registration statement.
9. SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY
Common Stock
The Company is governed by the Minnesota Business Corporation Act. All authorized shares of
voting common stock have no par value. Shares of common stock reacquired are considered authorized
and unissued shares. The number of authorized shares of the company is 1.75 billion, consisting of
1.745 billion shares of voting common stock and five million undesignated shares. The Company’s
articles of incorporation authorize the board of directors to establish, from the undesignated shares,
one or more classes and series of shares, and to further designate the type of shares and terms thereof.
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