Travelers 2014 Annual Report Download - page 193

Table of Contents
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVESTMENTS (Continued)
Proceeds from the sale of real estate investments were $15 million, $18 million and $53 million in 2014, 2013 and 2012, respectively. Gross gains
of $6 million, $7 million and $19 million were realized on those sales in 2014, 2013 and 2012, respectively, and there were no gross losses. The
Company had no real estate held for sale at December 31, 2014 and 2013. Accumulated depreciation on real estate held for investment purposes was
$290 million and $264 million at December 31, 2014 and 2013, respectively.
Future minimum rental income on operating leases relating to the Company's real estate properties is expected to be $85 million, $72 million,
$56 million, $44 million and $34 million for 2015, 2016, 2017, 2018 and 2019, respectively, and $64 million for 2020 and thereafter.
Short
- term Securities
The Company's short
- term securities consist of Aaa - rated registered money market funds, U.S. Treasury securities, high - quality commercial
paper (primarily A1/P1) and high
- quality corporate securities purchased within a year to their maturity with a combined average of 57 days to
maturity at December 31, 2014. The amortized cost of these securities, which totaled $4.36 billion and $3.88 billion at December 31, 2014 and 2013,
respectively, approximated their fair value.
Variable Interest Entities
Entities which do not have sufficient equity at risk to allow the entity to finance its activities without additional financial support or in which
the equity investors, as a group, do not have the characteristic of a controlling financial interest are referred to as variable interest entities (VIE). A
VIE is consolidated by the variable interest holder that is determined to have the controlling financial interest (primary beneficiary) as a result of
having both the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and the obligation to absorb
losses or right to receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary
beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE's capital structure, contractual terms, nature of the
VIE's operations and purpose and the Company's relative exposure to the related risks of the VIE on the date it becomes initially involved in the
VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis.
The Company is a passive investor in limited partner equity interests issued by third party VIEs. These include certain of the Company's
investments in private equity limited partnerships, hedge funds and real estate partnerships where the Company is not related to the general
partner. These investments are generally accounted for under the equity method and reported in the Company's consolidated balance sheet as
other investments unless the Company is deemed the primary beneficiary. These equity interests generally cannot be redeemed. Distributions from
these investments are received by the Company as a result of liquidation of the underlying investments of the funds and/or as income distribution.
The Company's maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the
Company's consolidated balance sheet and any unfunded commitment. Neither the carrying amounts nor the unfunded commitments related to
these VIEs are material.
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