Travelers 2014 Annual Report Download - page 60

Table of Contents
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the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or
through the insolvency of other participating insurers; and
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uncertainties arising from the insolvency or bankruptcy of policyholders and other defendants.
It is also not possible to predict changes in the legal, regulatory and legislative environment and their impact on the future development of
asbestos and environmental claims. This environment could be affected by changes in applicable legislation and future court and regulatory
decisions and interpretations, including the outcome of legal challenges to legislative and/or judicial reforms establishing medical criteria for the
pursuit of asbestos claims. It is also difficult to predict the ultimate outcome of complex coverage disputes until settlement negotiations near
completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is particularly the case with
policyholders in bankruptcy where negotiations often involve a large number of claimants and other parties and require court approval to be
effective.
While the ongoing evaluation of asbestos and environmental claims and associated liabilities considers the inconsistencies of court decisions
as to coverage, plaintiffs' expanded theories of liability and the risks inherent in complex litigation and other uncertainties, it is possible that the
outcome of the continued uncertainties regarding these claims could result in liability in future periods that differs from current reserves by an
amount that could materially and adversely affect our results of operations. See the "Asbestos Claims and Litigation" and "Environmental Claims
and Litigation" sections of "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations." Also see
"Item 3 —Legal Proceedings."
We are exposed to, and may face adverse developments involving, mass tort claims such as those relating to exposure to potentially harmful
products or substances. In addition to asbestos and environmental claims, we face exposure to other types of mass tort claims, including claims
related to exposure to potentially harmful products or substances, including lead paint, silica and welding rod fumes. Establishing claims and claim
adjustment expense reserves for mass tort claims is subject to uncertainties because of many factors, including expanded theories of liability,
disputes concerning medical causation with respect to certain diseases, geographical concentration of the lawsuits asserting the claims and the
potential for a large rise in the total number of claims without underlying epidemiological developments suggesting an increase in disease rates.
Moreover, evolving judicial interpretations regarding the application of various tort theories and defenses, including application of various
theories of joint and several liabilities, as well as the application of insurance coverage to these claims, make it difficult to estimate our ultimate
liability for such claims.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the current related reserves. In addition,
our estimate of claims and claim adjustment expenses may change, and such change could be material. These additional liabilities or increases in
estimates, or a range of either, cannot now be reasonably estimated and could materially and adversely affect our results of operations.
The effects of emerging claim and coverage issues on our business are uncertain. As industry practices and legal, judicial, social and other
environmental conditions change, unexpected and unintended issues related to claim and coverage may emerge. These issues may adversely affect
our business, including by extending coverage beyond our underwriting intent, by increasing the number, size or types of claims or by mandating
changes to our underwriting practices. Examples of emerging claims and coverage issues include, but are not limited to:
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judicial expansion of policy coverage and the impact of new or expanded theories of liability;
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plaintiffs targeting property and casualty insurers, including us, in purported class action litigation relating to claims - handling and
other practices;
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