Travelers 2015 Annual Report Download - page 121

value of fixed maturity investments and, therefore, reduce shareholders’ equity, and a declining interest
rate environment would have the opposite effects.
For further discussion of the Company’s investment portfolio, see ‘‘Investment Portfolio’’ herein.
For a discussion of the risks to the Company’s business during or following a financial market
disruption and risks to the Company’s investment portfolio, see the risk factors entitled ‘‘During or
following a period of financial market disruption or economic downturn, our business could be
materially and adversely affected’’ and ‘‘Our investment portfolio may suffer reduced returns or
material realized or unrealized losses’’ included in ‘‘Part I—Item 1A—Risk Factors’’ herein. For a
discussion of the risks to the Company’s investments from foreign currency exchange rate fluctuations,
see the risk factor entitled ‘‘We are subject to a number of risks associated with our business outside
the United States’’ included in ‘‘Part I—Item 1A—Risk Factors’’ herein and see ‘‘Part II—Item 7A—
Quantitative and Qualitative Disclosure About Market Risk—Foreign Currency Exchange Rate Risk’’
herein.
Capital Position. The Company believes it has a strong capital position and, as part of its ongoing
efforts to create shareholder value, expects to continue to return capital not needed to support its
business operations to its shareholders. The Company expects that, generally over time, the
combination of dividends to common shareholders and common share repurchases will likely not
exceed operating income. In addition, the timing and actual number of shares to be repurchased in the
future will depend on a variety of additional factors, including the Company’s financial position,
earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company’s
desired ratings from independent rating agencies, funding of the Company’s qualified pension plan,
capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints,
other investment opportunities (including mergers and acquisitions and related financings), market
conditions and other factors. For information regarding the Company’s common share repurchases in
2015, see ‘‘Liquidity and Capital Resources’’ herein. As a result of the Company’s business outside of
the United States, primarily in Canada, the United Kingdom (including Lloyd’s), the Republic of
Ireland and Brazil, the Company’s capital is also subject to the effects of changes in foreign currency
exchange rates. For example, strengthening of the U.S. dollar in comparison to other currencies could
result in a reduction of shareholders’ equity. For additional discussion of the Company’s foreign
exchange market risk exposure, see ‘‘Part II—Item 7A—Quantitative and Qualitative Disclosure About
Market Risk’’ herein.
Many of the statements in this ‘‘Outlook’’ section are forward-looking statements, which are
subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control.
Actual results could differ materially from those expressed or implied by such forward-looking
statements. Further, such forward-looking statements speak only as of the date of this report and the
Company undertakes no obligation to update them. See ‘‘—Forward-Looking Statements.’’ For a
discussion of potential risks and uncertainties that could impact the Company’s results of operations or
financial position, see ‘‘Item 1A—Risk Factors’’ and ‘‘Item 7—Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Critical Accounting Estimates’’ herein.
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