Travelers 2014 Annual Report Download - page 159

Table of Contents
Other
- Than - Temporary Impairments of Fixed Maturities and Equity Securities
For fixed maturity investments that the Company does not intend to sell or for which it is more likely than not that the Company would not be
required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment from the amount
related to all other factors and reports the credit loss component in net realized investment gains (losses). The impairment related to all other factors
is reported in other comprehensive income.
For equity securities (including public common and non
- redeemable preferred stock) and for fixed maturity investments the Company intends
to sell or for which it is more likely than not that the Company will be required to sell before an anticipated recovery in value, the full amount of the
impairment is included in net realized investment gains (losses).
Upon recognizing an other
- than - temporary impairment, the new cost basis of the investment is the previous amortized cost basis less the
other
- than - temporary impairment recognized in net realized investment gains (losses). The new cost basis is not adjusted for any subsequent
recoveries in fair value; however, for fixed maturity investments the difference between the new cost basis and the expected cash flows is accreted
on a quarterly basis to net investment income over the remaining expected life of the investment.
Due to the subjective nature of the Company's analysis and estimates of future cash flows, along with the judgment that must be applied in the
analysis, it is possible that the Company could reach a different conclusion whether or not to impair a security if it had access to additional
information about the issuer. Additionally, it is possible that the issuer's actual ability to meet contractual obligations may be different than what
the Company determined during its analysis, which may lead to a different impairment conclusion in future periods.
See note 1 of notes to the Company's consolidated financial statements for a further discussion of investment impairments.
Goodwill and Other Intangible Assets Impairments
See note 1 of notes to the Company's consolidated financial statements for a discussion of impairments of goodwill and other intangible
assets.
OTHER UNCERTAINTIES
For a discussion of other risks and uncertainties that could impact the Company's results of operations or financial position, see note 16 of
notes to the Company's consolidated financial statements and "Item 1A—Risk Factors."
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See note 1 of the notes to the Company's consolidated financial statements for a discussion of recently issued accounting standards updates.
The Company is currently required to prepare its financial statements in accordance with U.S. Generally Accepted Accounting Principles
(GAAP), as promulgated by the Financial Accounting Standards Board (FASB). During the last several years, the Securities and Exchange
Commission (SEC) has been evaluating whether, when and how International Financial Reporting Standards (IFRS) should be incorporated into the
U.S. financial reporting system. In July 2012, the SEC staff issued a final report on its work plan which concluded that IFRS provide high quality
accounting standards, but also indicated concerns with funding, consistency of application and enforcement of IFRS globally. In November 2014,
the SEC announced that it intends to develop a recommendation in the next couple of months on whether the SEC should move towards using
IFRS for public companies.
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