Travelers 2013 Annual Report Download - page 227

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. DEBT (Continued)
2013 Debt Issuance. On July 25, 2013, the Company issued $500 million aggregate principal
amount of 4.60% senior notes that will mature on August 1, 2043. The net proceeds of the issuance,
after original issuance discount and the deduction of underwriting expenses and commissions and other
expenses, totaled approximately $494 million. Interest on the senior notes is payable semi-annually in
arrears on February 1 and August 1, commencing on February 1, 2014. The senior notes are
redeemable in whole at any time or in part from time to time, at the Company’s option, at a
redemption price equal to the greater of (a) 100% of the principal amount of senior notes to be
redeemed or (b) the sum of the present value of the remaining scheduled payments of principal and
interest on the senior notes to be redeemed (exclusive of interest accrued to the date of redemption)
discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the then current treasury rate (as defined) plus 15 basis points.
2013 Debt Repayment. On March 15, 2013, the Company’s $500 million, 5.00% senior notes
matured and were fully paid.
2012 Debt Repayments. On May 29, 2012, the Company purchased and retired $8.5 million
aggregate principal amount of its 6.25% fixed-to-floating rate junior subordinated debentures due
March 15, 2067. On June 15, 2012, the Company’s $250 million, 5.375% senior notes matured and were
fully paid.
Description of Debt
Commercial Paper—The Company maintains an $800 million commercial paper program,
supported by a $1.0 billion bank credit agreement that expires on June 7, 2018. (See ‘‘Credit
Agreement’’ discussion that follows). Interest rates on commercial paper issued in 2013 ranged from
0.08% to 0.13%, and in 2012 ranged from 0.08% to 0.17%.
Senior Notes—The Company’s various senior debt issues are unsecured obligations that rank
equally with one another. Interest payments are made semi-annually. The Company generally may
redeem some or all of the notes prior to maturity in accordance with terms unique to each debt
instrument.
Junior Subordinated Debentures—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, payable semi-annually in arrears on March 15 and
September 15. From and including March 15, 2017, the debentures will bear interest at an annual rate
equal to three-month LIBOR plus 2.215%, payable quarterly on March 15, June 15, September 15 and
December 15 of each year. The Company can redeem the debentures at its option, in whole or in part,
at any time on or after March 15, 2017 at a redemption price of 100% of the principal amount being
redeemed plus accrued but unpaid interest. The Company can redeem the debentures at its option
prior to March 15, 2017 (a) in whole at any time or in part from time to time or (b) in whole, but not
in part, in the event of certain tax or rating agency events relating to the debentures, at a redemption
price equal to the greater of 100% of the principal amount being redeemed and the applicable
make-whole amount, in each case plus any accrued and unpaid interest.
The Company has the right, on one or more occasions, to defer the payment of interest on the
debentures. The Company will not be required to settle deferred interest until it has deferred interest
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