Travelers 2014 Annual Report Download - page 181

Table of Contents
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
respectively. The liability for such assessments and the related recoverables are not discounted for the time value of money. The loss
- based
assessments are expected to be paid over a period ranging from one year to the life expectancy of certain workers' compensation claimants and the
recoveries are expected to occur over the same period of time.
Also included in other liabilities is an accrual for policyholder dividends. Certain insurance contracts, primarily workers' compensation, are
participating whereby dividends are paid to policyholders in accordance with contract provisions. Net written premiums for participating dividend
policies were approximately 1%, 1% and 2% of total net written premiums for the years ended December 31, 2014, 2013 and 2012, respectively.
Policyholder dividends are accrued against earnings using best available estimates of amounts to be paid. The liability accrued for policyholder
dividends totaled $54 million and $53 million at December 31, 2014 and 2013, respectively.
Treasury Stock
The cost of common stock repurchased by the Company is reported as treasury stock and represents authorized and unissued shares of the
Company under the Minnesota Business Corporation Act.
Statutory Accounting Practices
The Company's U.S. insurance subsidiaries, domiciled principally in the state of Connecticut, are required to prepare statutory financial
statements in accordance with the accounting practices prescribed or permitted by the insurance departments of the states of domicile. Prescribed
statutory accounting practices are those practices that are incorporated directly or by reference in state laws, regulations, and general
administrative rules applicable to all insurance enterprises domiciled in a particular state. The State of Connecticut requires insurers domiciled in
Connecticut to prepare their statutory financial statements in accordance with National Association of Insurance Commissioners' (NAIC) statutory
accounting practices.
Permitted statutory accounting practices are those practices that differ either from state
- prescribed statutory accounting practices or NAIC
statutory accounting practices.
The Company does not apply any statutory accounting practices that would be considered a prescribed or permitted statutory accounting
practice that differs from NAIC statutory accounting practices.
The Company's non
- U.S. insurance subsidiaries file financial statements prepared in accordance with the regulatory reporting requirements of
their respective local jurisdiction.
Premiums and Unearned Premium Reserves
Premiums are recognized as revenues pro rata over the policy period. Unearned premium reserves represent the unexpired portion of policy
premiums. Accrued retrospective premiums are included in premium balances receivable. Premium balances receivable are reported net of an
allowance for estimated uncollectible premium amounts.
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