Travelers 2013 Annual Report Download - page 84

deferred tax asset is volatile and significantly impacted by changes in unrealized investment gains and
losses. The effect of a reduction in a tax rate on net deferred tax assets is required to be recognized, in
full, as a reduction of income from continuing operations in the period when enacted and, along with
other changes in the tax rules that may increase the Company’s actual tax expense, could materially and
adversely affect our results of operations.
Our investment portfolio has benefited from tax exemptions and certain other tax laws, including,
but not limited to, those governing dividends-received deductions and tax credits (such as foreign tax
credits). Federal and/or state tax legislation could be enacted in connection with deficit reduction or
various types of fundamental tax reform that would lessen or eliminate some or all of the tax
advantages currently benefiting us and therefore could materially and adversely impact our results of
operations. In addition, such legislation could adversely affect the value of our investment portfolio,
particularly changes to the taxation of interest from municipal bonds (which comprise 49% of our
investment portfolio as of December 31, 2013) could materially and adversely impact the value of those
bonds.
Other tax law changes could adversely impact us. The size of the federal deficit, as well as the
budget constraints faced by many states and localities, increases the likelihood that Congress and state
and local governments will raise revenue by enacting legislation increasing the taxes paid by individuals
and corporations.
Item 1B. UNRESOLVED STAFF COMMENTS
NONE.
Item 2. PROPERTIES
The Company leases its principal executive offices in New York, New York, as well as 201 field
and claim offices totaling approximately 4.7 million square feet throughout the United States under
leases or subleases with third parties. The Company also leases offices in Canada, the United Kingdom,
India, China and the Republic of Ireland that house operations (primarily for the Financial,
Professional & International Insurance segment) in those locations. The Company owns six buildings in
Hartford, Connecticut, consisting of approximately 1.8 million square feet of office space. The
Company also owns two office buildings in St. Paul, Minnesota, which are adjacent to one another and
consist of approximately 1.1 million square feet of office space. The Company also owns a building
located in Norcross, Georgia, and land outside of Omaha, Nebraska where an additional building is
under construction. The Company owns a building in London, England, which houses a portion of its
Financial, Professional & International Insurance segment’s operations in the United Kingdom.
The Company, through its subsidiaries, owns an investment portfolio of income-producing
properties and real estate funds. Included in this portfolio are four office buildings in which the
Company holds a 50% ownership interest located in New York, New York, which collectively accounted
for approximately 12% of the carrying value of the property portfolio at December 31, 2013.
In the opinion of the Company’s management, the Company’s properties are adequate and suitable
for its business as presently conducted and are adequately maintained.
Item 3. LEGAL PROCEEDINGS
The information required with respect to this item can be found under ‘‘Contingencies’’ in note 16
of notes to the Company’s consolidated financial statements in this annual report and is incorporated
by reference into this Item 3.
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