Travelers 2012 Annual Report Download - page 251

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. CONTINGENCIES, COMMITMENTS AND GUARANTEES (Continued)
Ohio state court, which have been dismissed following favorable rulings by Ohio trial and appellate
courts. From time to time, SPC and/or its subsidiaries have been named in similar individual direct
actions in other jurisdictions.
Outcome and Impact of Asbestos and Environmental Claims and Litigation. Currently, it is not
possible to predict legal outcomes and their impact on the future development of claims and litigation
relating to asbestos and environmental claims. Any such development will be affected by future court
decisions and interpretations, as well as changes in applicable legislation. Because of these
uncertainties, additional liabilities may arise for amounts in excess of the Company’s current reserves.
In addition, the Company’s estimate of ultimate claims and claim adjustment expenses may change.
These additional liabilities or increases in estimates, or a range of either, cannot now be reasonably
estimated and could result in income statement charges that could be material to the Company’s results
of operations in future periods.
Other Proceedings Not Arising Under Insurance Contracts or Reinsurance Agreements
Broker Anti-Trust Litigation—In 2005, four putative class action lawsuits were brought against a
number of insurance brokers and insurers, including the Company, by plaintiffs who allegedly
purchased insurance products through one or more of the defendant brokers. The plaintiffs alleged that
various insurance brokers conspired with each other and with various insurers, including the Company,
to artificially inflate premiums, allocate brokerage customers and rig bids for insurance products
offered to those customers. To the extent they were not originally filed there, the federal class actions
were transferred to the U.S. District Court for the District of New Jersey and were consolidated for
pre-trial proceedings with other class actions under the caption In re Insurance Brokerage Antitrust
Litigation. On August 1, 2005, various plaintiffs, including the four named plaintiffs in the above-
referenced class actions, filed an amended consolidated class action complaint naming various brokers
and insurers, including the Company, on behalf of a putative nationwide class of policyholders. The
complaint included causes of action under the Sherman Act, the Racketeer Influenced and Corrupt
Organizations Act (RICO), state common law and the laws of the various states prohibiting antitrust
violations. The complaint sought monetary damages, including punitive damages and trebled damages,
permanent injunctive relief, restitution, including disgorgement of profits, interest and costs, including
attorneys’ fees. All defendants moved to dismiss the complaint for failure to state a claim. After giving
plaintiffs multiple opportunities to replead, the court dismissed the Sherman Act claims on August 31,
2007 and the RICO claims on September 28, 2007, both with prejudice, and declined to exercise
supplemental jurisdiction over the state law claims. The plaintiffs appealed the district court’s decisions
to the U.S. Court of Appeals for the Third Circuit. On August 16, 2010, the Third Circuit affirmed the
district court’s dismissal of all Sherman Act and RICO claims against certain defendants, including the
Company, except for Sherman Act and RICO claims involving the sale of excess casualty insurance
through a single defendant broker, as well as all state law claims, which they remanded to the district
court for further proceedings. On October 1, 2010, defendants, including the Company, filed renewed
motions to dismiss the remanded claims. On March 18, 2011, the Company and certain other
defendants entered into an agreement with the plaintiffs to settle the lawsuit, under which the
Company agreed to pay $6.75 million. Preliminary approval of the settlement was granted on June 27,
2011. On September 14, 2011, the court conducted a final fairness hearing, and on March 30, 2012, the
court granted final approval of the settlement. On April 27, 2012, three members of the settlement
class appealed the court’s order granting final approval of the settlement to the U.S. Court of Appeals
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