Travelers 2014 Annual Report Download - page 121

Table of Contents
The following table summarizes the composition of the Company's reinsurance recoverables:
The $401 million decline in net reinsurance recoverables from December 31, 2013 primarily reflected the impact of (i) net favorable prior year
reserve development, (ii) cash collections, (iii) commutation agreements, as well as (iv) a slightly lower level of reinsurance purchased in 2014.
The following table presents the Company's top five reinsurer groups by reinsurance recoverable at December 31, 2014 (in millions). Also
included is the A.M. Best rating of each reinsurer group at February 12, 2015:
On January 25, 2015, AXIS Capital Holdings Limited and PartnerRe Ltd. announced that they had signed a definitive amalgamation agreement.
The Company's aggregated reinsurance recoverables from these entities at December 31, 2014 totaled approximately $236 million. The A.M. Best
ratings for each entity at February 12, 2015 was "A+" (second highest of 16 ratings). A.M. Best has placed the ratings of each entity under review
with negative implications.
At December 31, 2014, the Company held $1.17 billion of collateral in the form of letters of credit, funds and trust agreements held to fully or
partially collateralize certain reinsurance recoverables.
For a discussion of a pending reinsurance dispute pertaining to a portion of the Company's reinsurance recoverable from the Munich Re Group
in the foregoing table, see note 16 of notes to the consolidated financial statements.
Included in reinsurance recoverables are amounts related to structured settlements, which are annuities purchased from various life insurance
companies to settle certain personal physical injury claims, of which workers' compensation claims comprise a significant portion. In cases where
the Company did not receive a release from the claimant, the amount due from the life insurance company related to the structured settlement is
included in the Company's consolidated balance sheet as a reinsurance recoverable and the related claim cost is included in the liability for claims
and claim
120
(at December 31, in millions)
2014
2013
Gross reinsurance recoverables on paid and unpaid claims and
claim adjustment expenses
$
4,270
$
4,707
Allowance for uncollectible reinsurance
(203
)
(239
)
Net reinsurance recoverables
4,067
4,468
Mandatory pools and associations
1,909
1,897
Structured settlements
3,284
3,348
Total reinsurance recoverables
$
9,260
$
9,713
Reinsurer Group
Reinsurance
Recoverable
A.M. Best Rating of Group's Predominant Reinsurer
Swiss Re Group
$
464
A+
second highest of 16 ratings
Munich Re Group
462
A+
second highest of 16 ratings
Sompo Japan Nipponkoa Group(1)
250
A+
second highest of 16 ratings
Berkshire Hathaway
229
A++
highest of 16 ratings
XL Capital Group(2)
202
A
third highest of 16 ratings
(1) On September 1, 2014, NKSJ Holdings, Inc. changed its name to Sompo Japan Nipponkoa Holdings, Inc.
(2) On January 9, 2015, XL Capital Group announced that it had entered into an agreement to acquire Catlin Group Limited.
Additionally, A.M. Best has placed XL Capital Group's ratings under review with negative implications.