Travelers 2012 Annual Report Download - page 284

THE TRAVELERS COMPANIES, INC.
(Parent Company Only)
NOTES TO THE CONDENSED FINANCIAL INFORMATION OF REGISTRANT
1. OTHER REVENUES
In 2010, other revenues included $60 million of expenses related to the Company’s purchase and
retirement of $885 million of its $1.0 billion 6.25% fixed-to-floating rate junior subordinated
debentures.
2. GUARANTEES
In the ordinary course of selling business entities to third parties, The Travelers Companies, Inc.
(TRV) has agreed to indemnify purchasers for losses arising out of breaches of representations and
warranties with respect to the business entities being sold, covenants and obligations of TRV and/or its
subsidiaries following the closing, and in certain cases obligations arising from undisclosed liabilities,
adverse reserve development, imposition of additional taxes due to either a change in the tax law or an
adverse interpretation of the tax law, or certain named litigation. Such indemnification provisions
generally survive for periods ranging from eight years following the applicable closing date to the
expiration of the relevant statutes of limitations, although, in some cases, there may be other agreed
upon term limitations or no term limitations. Certain of these contingent obligations are subject to
deductibles which have to be incurred by the obligee before TRV is obligated to make payments. The
maximum amount of TRV’s contingent obligation for indemnifications related to the sale of business
entities that are quantifiable was $95 million at December 31, 2012, of which $9 million was recognized
on the balance sheet at that date.
TRV also has contingent obligations for guarantees related to its subsidiary’s debt obligations and
various other indemnifications. TRV also provides standard indemnifications to service providers in the
normal course of business. The indemnification clauses are often standard contractual terms. Certain of
these guarantees and indemnifications have no stated or notional amounts or limitation to the
maximum potential future payments, and, accordingly, TRV is unable to develop an estimate of the
maximum potential payments for such arrangements.
TRV fully and unconditionally guarantees the payment of all principal, premiums, if any, and
interest on certain debt obligations of its subsidiaries TPC and 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.
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