Travelers 2011 Annual Report Download - page 226

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY (Continued)
Treasury Stock
The Company’s board of directors has approved common share repurchase authorizations under
which repurchases may be made from time to time in the open market, pursuant to pre-set trading
plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private
transactions or otherwise. The authorizations do not have a stated expiration date. The timing and
actual number of shares to be repurchased in the future will depend on a variety of factors, including
the Company’s financial position, earnings, share price, catastrophe losses, funding of the Company’s
qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal
requirements, regulatory constraints, other investment opportunities (including mergers and
acquisitions), market conditions and other factors. The following table summarizes repurchase activity
in 2011 and remaining repurchase capacity at December 31, 2011.
Number of Remaining capacity
Quarterly Period Ending shares Cost of shares Average price paid under share repurchase
(in millions, except per share amounts) purchased repurchased per share authorization
March 31, 2011 ................. 18.9 $1,100 $58.23 $5,409
June 30, 2011 .................. 3.9 237 60.27 5,172
September 30, 2011 .............. 7.3 375 51.77 4,797
December 31, 2011 .............. 20.9 1,188 56.74 3,609
Total ....................... 51.0 $2,900 $56.86 $3,609
The Company’s Amended and Restated 2004 Stock Incentive Plan provides settlement alternatives
to employees in which the Company retains shares to cover tax withholding costs and exercise costs.
During the years ended December 31, 2011 and 2010, the Company acquired $82 million and
$66 million, respectively, of its common stock under this plan.
Common shares acquired are reported as treasury stock in the consolidated balance sheet.
Preferred Stock
The Company’s preferred shareholders’ equity at December 31, 2010 represented the par value of
preferred shares outstanding related to a legacy Stock Ownership Plan (SOP) Trust which was
subsequently merged into The Travelers 401(k) Savings Plan (the Savings Plan). The SOP Trust could
at any time convert any or all of the preferred shares into shares of the Company’s common stock at a
rate of eight shares of common stock for each preferred share. In May 2011, the Company’s board of
directors authorized the redemption of the Company’s preferred stock held by the Savings Plan and
gave notice of that redemption to the appropriate fiduciaries of the Savings Plan. Following a fiduciary
review, the Savings Plan exercised its right to convert each preferred share into eight shares of the
Company’s common stock. As a result, all preferred shares outstanding on June 7, 2011 (190,083
shares) were converted into a total of 1.52 million shares of the Company’s common stock.
Dividend Availability
The Company’s insurance subsidiaries are subject to various regulatory restrictions that limit the
maximum amount of dividends available to be paid to their parent without prior approval of insurance
regulatory authorities. A maximum of $1.96 billion is available by the end of 2012 for such dividends
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