Travelers 2014 Annual Report Download - page 75

Table of Contents
in the U.S. and worldwide may not succeed initially or may later be challenged by third parties. Further, the laws of certain countries outside the
United States may not adequately protect our intellectual property rights. We may incur significant costs in our efforts to protect and enforce our
intellectual property, including the initiation of expensive and protracted litigation, and we may not prevail. Any inability to enforce our intellectual
property rights could have a material adverse effect on our business and our ability to compete.
We may be subject to claims by third parties from time to time that our products, services and technologies infringe on their intellectual
property rights. In recent years, certain entities have acquired patents in order to allege claims of infringement against companies, including in
some cases, us. Any intellectual property infringement claims brought against us could cause us to spend significant time and money to defend
ourselves, regardless of the merits of the claims. If we are found to infringe any third
- party intellectual property rights, it could result in reputational
harm, payment of significant monetary damages, payment of license fees (if licenses are even available to us, on reasonable terms or otherwise)
and/or substantial time and expense to redesign our products, services or technologies to avoid the infringement. In addition, we use third
- party
software in some of our products, services and technologies. If any of our software vendors or licensors are faced with infringement claims, we may
lose our ability to use such software until the dispute is resolved. If we cannot successfully redesign an infringing product, service or technology
(or procure a substitute version), this could have a material adverse effect on our business and our ability to compete.
Changes to existing accounting standards may adversely impact our reported results. As a U.S. - based SEC registrant, we are currently
required to prepare our financial statements in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP), as promulgated by
the Financial Accounting Standards Board (FASB), subject to the accounting
- related rules and interpretations of the Securities and Exchange
Commission (SEC). During the last several years, the SEC has been evaluating whether, when and how International Financial Reporting Standards
(IFRS) should be incorporated into the U.S. financial reporting system, including for companies such as us. In December 2014, the SEC indicated
that it plans to explore allowing IFRS financial statements or financial information as supplemental information in SEC filings.
The FASB and the International Accounting Standards Board (IASB) have been working on a long
- term project to converge U.S. GAAP and
IFRS, which included a project on insurance accounting. While the FASB decided during 2014 to retain current U.S. GAAP for property and
casualty insurance contracts, the IASB is continuing its development of a new model that is significantly different than current U.S. GAAP.
We are not able to predict whether we will choose to, or be required to, adopt IFRS or how the adoption of IFRS (or the convergence of
U.S. GAAP and IFRS, including the project on the accounting for insurance contracts) may impact our financial statements in the future. Changes
in accounting standards, particularly those that specifically apply to insurance company operations, may impact the content and presentation of
our reported financial results and could cause increased volatility in reported earnings, resulting in other adverse impacts on the Company's ratings
and cost of capital, and decrease the understandability of our financial results as well as the comparability of our reported results with other
insurers.
Changes in U.S. tax laws or in the tax laws of other jurisdictions in which we operate could adversely impact us. Tax laws may change in
ways that adversely impact us. For example, federal tax legislation could be enacted to reduce the existing statutory U.S. federal corporate income
tax rate from 35%, which would, accordingly, reduce any U.S. deferred tax asset. The amount of any net deferred tax asset is volatile and
significantly impacted by changes in unrealized investment gains and losses. The effect of a reduction in a tax rate on net deferred tax assets is
required to be recognized, in full, as a reduction of income from continuing operations in the period when enacted and, along with
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