Travelers 2014 Annual Report Download - page 180

Table of Contents
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
reflect the Company's assessment of the risks inherent in the projected future cash flows and the Company's weighted
- average cost of capital, and
are compared against available market data for reasonableness.
Other indefinite
- lived intangible assets held by the Company are also reviewed for impairment on at least an annual basis. The classification of
the asset as indefinite
- lived is reassessed and an impairment is recognized if the carrying amount of the asset exceeds its fair value.
Intangible assets that are deemed to have a finite useful life are amortized over their useful lives. The carrying amount of intangible assets with
a finite useful life is regularly reviewed for indicators of impairment in value. Impairment is recognized only if the carrying amount of the intangible
asset is not recoverable from its undiscounted cash flows and is measured as the difference between the carrying amount and the fair value of the
asset.
As a result of the reviews performed for the years ended December 31, 2014, 2013 and 2012, the Company determined that the estimated fair
value substantially exceeded the respective carrying value of its reporting units for those years and that goodwill was not impaired. The Company
also determined during its reviews for each year that its other indefinite
- lived intangible assets and finite - lived intangible assets were not impaired.
Claims and Claim Adjustment Expense Reserves
Claims and claim adjustment expense reserves represent estimates for the ultimate cost of unpaid reported and unreported claims incurred and
related expenses. The reserves are adjusted regularly based upon experience. Included in the claims and claim adjustment expense reserves in the
consolidated balance sheet are certain reserves discounted to the present value of estimated future payments. The liabilities for losses for most
long
- term disability and annuity claim payments, primarily arising from workers' compensation insurance and workers' compensation excess
insurance policies, were discounted using a rate of 5% at both December 31, 2014 and 2013. These discounted reserves totaled $2.01 billion and
$2.21 billion at December 31, 2014 and 2013, respectively.
The Company performs a continuing review of its claims and claim adjustment expense reserves, including its reserving techniques and its
reinsurance. The reserves are also reviewed regularly by qualified actuaries employed by the Company. Since the reserves are based on estimates,
the ultimate liability may be more or less than such reserves. The effects of changes in such estimated reserves are included in the results of
operations in the period in which the estimates are changed. Such changes in estimates could occur in a future period and may be material to the
Company's results of operations and financial position in such period.
Other Liabilities
Included in other liabilities in the consolidated balance sheet is the Company's estimate of its liability for guaranty fund and other insurance
-
related assessments. The liability for expected state guaranty fund and other premium - based assessments is recognized as the Company writes or
becomes obligated to write or renew the premiums on which the assessments are expected to be based. The liability for loss
- based assessments is
recognized as the related losses are incurred. At December 31, 2014 and 2013, the Company had a liability of $245 million and $261 million,
respectively, for guaranty fund and other insurance
- related assessments and related recoverables of $15 million and $14 million,
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