Travelers 2013 Annual Report Download - page 140

required estimation of both amount (including severity considerations) and timing. Amount and timing
are frequently estimated separately. An estimation of both amount and timing of future cash flows
related to claims and claim-related payments has some unavoidable estimation uncertainty.
The contractual obligations related to debt, operating leases, purchase obligations, long-term
unfunded investment commitments, estimated claims and claim-related payments (gross of the
estimated reinsurance recoveries) and liabilities related to unrecognized tax benefits, at December 31,
2013 were as follows:
Payments Due by Period Less than After
(in millions) Total 1 Year 1 - 3 Years 3 - 5 Years 5 Years
Debt
Senior notes .......................... $ 5,900 $ — $ 800 $ 950 $ 4,150
Junior subordinated debentures ............ 361 — — — 361
Total debt principal ..................... 6,261 — 800 950 4,511
Interest ............................. 5,572 365 696 590 3,921
Total long-term debt obligations(1) ........ 11,833 365 1,496 1,540 8,432
Operating leases(2) ...................... 816 178 297 175 166
Purchase obligations
Information systems administration and
maintenance commitments(3) ............ 129 48 62 17 2
Other purchase commitments(4) ........... 49 30 15 4 —
Total purchase obligations ................ 178 78 77 21 2
Long-term unfunded investment commitments(5) .1,516 333 452 502 229
Estimated claims and claim-related payments
Claims and claim adjustment expenses(6) ..... 48,637 10,622 11,405 6,395 20,215
Claims from large deductible policies(7) ...... —— — — —
Loss-based assessments(8) ................ 174 37 52 19 66
Payout from ceded funds withheld(9) ........ 229 27 54 30 118
Total estimated claims and claim-related
payments ........................... 49,040 10,686 11,511 6,444 20,399
Liabilities related to unrecognized tax
benefits(10) .......................... 381 — 381 — —
Total .............................. $63,764 $11,640 $14,214 $8,682 $29,228
(1) The Company’s $107 million remaining aggregate principal amount of 6.25% fixed-to-floating rate
debentures bear interest at an annual rate of 6.25% from the date of issuance to, but excluding,
March 15, 2017 and at a rate of three-month LIBOR plus 2.215% thereafter. The table above
includes interest payments through the scheduled maturity date of March 15, 2037. Interest
payments beginning March 15, 2017 through March 15, 2037 were calculated using the three-
month LIBOR rate as of December 31, 2013.
See note 8 of notes to the Company’s consolidated financial statements for a further discussion of
outstanding indebtedness. Because the amounts reported in the foregoing table include principal
and interest, the total long-term debt obligations will not agree with the amounts reported in
note 8.
(2) Represents agreements entered into in the ordinary course of business to lease office space,
equipment and furniture.
(3) Includes agreements with vendors to purchase system software administration and maintenance
services.
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