Travelers 2014 Annual Report Download - page 112

Table of Contents
The following table displays the funding sources for the $10.40 billion of municipal bonds identified as revenue bonds in the foregoing table at
December 31, 2014.
The Company bases its investment decision on the underlying credit characteristics of the municipal security. While its municipal bond
portfolio includes a number of securities that were enhanced by third
- party insurance for the payment of principal and interest in the event of an
issuer default, the Company does not rely on enhanced credit characteristics provided by such third
- party insurance as part of its investing
decisions. Of the insured municipal securities in the Company's investment portfolio at December 31, 2014, approximately 100% were rated at "A3"
or above, and approximately 88% were rated at "Aa3" or above, without the benefit of insurance. The Company believes that a loss of the benefit
of insurance would not result in a material adverse impact on the Company's results of operations, financial position or liquidity, due to the
underlying credit strength of the issuers of the securities, as well as the Company's ability and intent to hold the securities. The average credit
rating of the underlying issuers of these securities was "Aa2" at December 31, 2014. The average credit rating of the entire municipal bond portfolio
was "Aa1" at December 31, 2014, with and without the enhancement provided by third
- party insurance.
111
(at December 31, 2014, in millions)
Carrying
Value
Average Credit
Quality(1)
Source:
Water and sewer
$
4,159
Aaa/Aa1
Higher education
2,254
Aaa/Aa1
Transportation
1,035
Aa1
Power and utilities
913
Aa2
Special tax
726
Aa1
Lease
286
Aa2
Housing
96
Aaa/Aa1
Healthcare
39
Aa2
Industrial revenue
29
A2
Resource recovery revenue
12
A2
Property tax
6
Aa2
Other revenue sources
849
Aa1
Total
$
10,404
Aaa/Aa1
(1) Rated using external rating agencies or by the Company when a public rating does not exist. Ratings shown are the
higher of the rating of the underlying issuer or the insurer in the case of securities enhanced by third
- party insurance
for the payment of principal and interest in the event of issuer default.