Travelers 2013 Annual Report Download - page 142

policyholder. The payment of the loss amounts above the deductible are reported within ‘‘Claims
and claim adjustment expenses’’ in the above table. Because the timing of the collection of the
deductible (contractholder receivables) occurs shortly after the payment of the deductible to a
claimant (contractholder payables), these cash flows offset each other in the table.
The estimated timing of the payment of the contractholder payables and the collection of
contractholder receivables for workers’ compensation policies is presented below:
Less than After
(in millions) Total 1 Year 1 - 3 Years 3 - 5 Years 5 Years
Contractholder payables/receivables ......... $4,328 $1,091 $1,204 $633 $1,400
(8) The amounts in ‘‘Loss-based assessments’’ relate to estimated future payments of second-injury
fund assessments which would result from payment of current claim liabilities. Second injury funds
cover the cost of any additional benefits for aggravation of a pre-existing condition. For loss-based
assessments, the cost is shared by the insurance industry and self-insureds, funded through
assessments to insurance companies and self-insureds based on losses. Amounts relating to second-
injury fund assessments are included in ‘‘other liabilities’’ in the consolidated balance sheet.
(9) The amounts in ‘‘Payout from ceded funds withheld’’ represent estimated payments for losses and
return of funds held related to certain reinsurance arrangements whereby the Company holds a
portion of the premium due to the reinsurer and is allowed to pay claims from the amounts held.
(10) The Company’s current liabilities related to unrecognized tax benefits from uncertain tax positions
are $381 million. Offsetting these liabilities are deferred tax assets of $362 million associated with
the temporary differences that would exist if these positions become realized.
The above table does not include an analysis of liabilities reported for structured settlements for
which the Company has purchased annuities and remains contingently liable in the event of default by
the company issuing the annuity. The Company is not reasonably likely to incur material future
payment obligations under such agreements. In addition, the Company is not currently subject to any
minimum funding requirements for its qualified pension plan. Accordingly, future contributions are not
included in the foregoing table.
Dividend Availability
The Company’s principal insurance subsidiaries are domiciled in the state of Connecticut. The
insurance holding company laws of Connecticut applicable to the Company’s subsidiaries requires
notice to, and approval by, the state insurance commissioner for the declaration or payment of any
dividend that, together with other distributions made within the preceding twelve months, exceeds the
greater of 10% of the insurer’s capital and surplus as of the preceding December 31, or the insurer’s
net income for the twelve-month period ending the preceding December 31, in each case determined in
accordance with statutory accounting practices and by state regulation. This declaration or payment is
further limited by adjusted unassigned surplus, as determined in accordance with statutory accounting
practices. The insurance holding company laws of other states in which the Company’s subsidiaries are
domiciled generally contain similar, although in some instances somewhat more restrictive, limitations
on the payment of dividends. A maximum of $3.33 billion is available by the end of 2014 for such
dividends to the holding company, TRV, without prior approval of the Connecticut Insurance
Department. The Company may choose to accelerate the timing within 2014 and/or increase the
amount of dividends from its insurance subsidiaries in 2014, which could result in certain dividends
being subject to approval by the Connecticut Insurance Department.
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