Travelers 2014 Annual Report Download - page 133

Table of Contents
(7)
Workers' compensation large deductible policies provide third party coverage in which the Company typically is responsible for paying the
entire loss under such policies and then seeks reimbursement from the insured for the deductible amount. "Claims from large deductible
policies" represent the estimated future payment for claims and claim related expenses below the deductible amount, net of the estimated
recovery of the deductible. The liability and the related deductible receivable for unpaid claims are presented in the consolidated balance
sheet as "contractholder payables" and "contractholder receivables," respectively. Most deductibles for such policies are paid directly
from the policyholder's escrow which is periodically replenished by the 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:
(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 $628 million. Offsetting these liabilities
are deferred tax assets of $588 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 statutory
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
132
(in millions)
Total
Less than
1 Year
1 - 3 Years
3 - 5 Years
After
5 Years
Contractholder payables/receivables
$
4,362
$
1,089
$
1,211
$
657
$
1,405