Travelers 2014 Annual Report Download - page 245

Table of Contents
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. CONTINGENCIES, COMMITMENTS AND GUARANTEES (Continued)
Asbestos and Environmental Claims and Litigation
In the ordinary course of its insurance business, the Company has received and continues to receive claims for insurance arising under
policies issued by the Company asserting alleged injuries and damages from asbestos
- and environmental - related exposures that are the subject of
related coverage litigation. The Company is defending asbestos
- and environmental - related litigation vigorously and believes that it has
meritorious defenses; however, the outcomes of these disputes are uncertain. In this regard, the Company employs dedicated specialists and
aggressive resolution strategies to manage asbestos and environmental loss exposure, including settling litigation under appropriate
circumstances. Currently, it is not possible to predict legal outcomes and their impact on the future development of claims and litigation relating to
asbestos and environmental claims. Any such development will be affected by future court decisions and interpretations, as well as changes in
applicable legislation. Because of these uncertainties, additional liabilities may arise for amounts in excess of the Company's current reserves. In
addition, the Company's estimate of ultimate claims and claim adjustment expenses may change. These additional liabilities or increases in
estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the
Company's results of operations in future periods.
Settlement of Asbestos Direct Action Litigation
In October 2001 and April 2002, two purported class action suits (Wise v. Travelers and Meninger v. Travelers) were filed against
Travelers Property Casualty Corp. (TPC), a wholly
- owned subsidiary of the Company, and other insurers (not including The St. Paul
Companies, Inc. (SPC), which was acquired by TPC in 2004) in state court in West Virginia. These and other cases subsequently filed in
West Virginia were consolidated into a single proceeding in the Circuit Court of Kanawha County, West Virginia. The plaintiffs alleged that
the insurer defendants engaged in unfair trade practices in violation of state statutes by inappropriately handling and settling asbestos
claims. The plaintiffs sought to reopen large numbers of settled asbestos claims and to impose liability for damages, including punitive
damages, directly on insurers. Similar lawsuits alleging inappropriate handling and settling of asbestos claims were filed in Massachusetts
and Hawaii state courts. These suits are collectively referred to as the Statutory and Hawaii Actions.
In March 2002, the plaintiffs in consolidated asbestos actions pending before a mass tort panel of judges in West Virginia state court
amended their complaint to include TPC as a defendant, alleging that TPC and other insurers breached alleged duties to certain users of
asbestos products. The plaintiffs sought damages, including punitive damages. Lawsuits seeking similar relief and raising similar
allegations, primarily violations of purported common law duties to third parties, were also asserted in various state courts against TPC and
SPC. The claims asserted in these suits are collectively referred to as the Common Law Claims.
In response to these claims, TPC moved to enjoin the Statutory Actions and the Common Law Claims in the federal bankruptcy court
that had presided over the bankruptcy of TPC's former policyholder Johns
- Manville Corporation on the ground that the suits violated
injunctions entered in connection with confirmation of the Johns
- Manville bankruptcy (the 1986 Orders). The bankruptcy court issued a
temporary restraining order and referred the parties to mediation. In November 2003, the parties reached a settlement of the Statutory and
Hawaii Actions, which included a lump
- sum payment of up to $412 million by TPC, subject to a number of significant
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