Travelers 2012 Annual Report Download - page 177

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Presentation of Comprehensive Income
In June 2011, the FASB issued updated guidance to increase the prominence of items reported in
other comprehensive income by eliminating the option of presenting components of comprehensive
income as part of the statement of changes in shareholders’ equity. The updated guidance requires that
all nonowner changes in shareholders’ equity be presented either as a single continuous statement of
comprehensive income or in two separate but consecutive statements.
The updated guidance was effective for the quarter ended March 31, 2012 and was applied
retrospectively. The Company’s adoption of this guidance resulted in a change in the presentation of
the Company’s consolidated financial statements but did not have any effect on the Company’s results
of operations, financial position or liquidity.
Reconsideration of Effective Control for Repurchase Agreements
In April 2011, the FASB issued updated guidance related to the accounting for repurchase
agreements and other agreements that entitle and obligate a transferor to repurchase or redeem
financial assets before their maturity. The updated guidance eliminates the criteria to assess whether a
transferor is required to have the ability to repurchase or redeem the financial assets in order to
demonstrate effective control over the transferred asset. Transferors that maintain effective control over
a transferred asset are required to account for the transaction as a secured borrowing rather than a
sale.
The updated guidance was effective for the quarter ended March 31, 2012. The updated guidance
applies to transactions or modifications of existing transactions that occur on or after the effective date.
The adoption of this guidance did not have any effect on the Company’s results of operations, financial
position or liquidity.
Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts
In October 2010, the FASB issued updated guidance to address diversity in practice for accounting
for costs associated with acquiring or renewing insurance contracts. This guidance modifies the
definition of acquisition costs to specify that a cost must be directly related to the successful acquisition
of a new or renewal insurance contract in order to be deferred. If application of this guidance would
result in the capitalization of acquisition costs that had not previously been capitalized by a reporting
entity, the entity may elect not to capitalize those costs.
The updated guidance was effective for the quarter ended March 31, 2012. The adoption of this
guidance did not have any effect on the Company’s results of operations, financial position or liquidity.
Accounting Standard Not Yet Adopted
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
In February 2013, the FASB issued updated guidance to improve the reporting of reclassifications
out of accumulated other comprehensive income. The guidance requires an entity to present, either on
the face of the statement of income or in the notes, separately for each component of comprehensive
income, the current period reclassifications out of accumulated other comprehensive income by the
respective line items of net income affected by the reclassification.
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