Travelers 2015 Annual Report Download - page 218

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. DEBT (Continued)
The Travelers Companies, Inc. fully and unconditionally guarantees the payment of all principal,
premiums, if any, and interest on certain debt obligations of its subsidiaries TPC and Travelers
Insurance Group Holdings Inc. The guarantees pertain to the $200 million 7.75% notes due 2026 and
the $500 million 6.375% notes due 2033.
Maturities—The amount of debt obligations, other than commercial paper, that become due in
each of the next five years is as follows: 2016, $400 million; 2017, $450 million; 2018, $500 million;
2019, $500 million; and 2020, $500 million.
Credit Agreement
The Company is party to a five-year, $1.0 billion revolving credit agreement with a syndicate of
financial institutions that expires in June 2018. Pursuant to the credit agreement covenants, the
Company must maintain a minimum consolidated net worth, defined as shareholders’ equity
determined in accordance with GAAP plus (a) trust preferred securities (not to exceed 15% of total
capital) and (b) mandatorily convertible securities (combined with trust preferred securities, not to
exceed 25% of total capital) less goodwill and other intangible assets, of $13.73 billion. In addition, the
credit agreement contains other customary restrictive covenants as well as certain customary events of
default, including with respect to a change in control, which is defined to include the acquisition of
35% or more of the Company’s voting stock and certain changes in the composition of the Company’s
board of directors. At December 31, 2015, the Company was in compliance with these covenants.
Generally, the cost of borrowing under this agreement will range from LIBOR plus 87.5 basis points to
LIBOR plus 150 basis points, depending on the Company’s credit ratings. At December 31, 2015, that
cost would have been LIBOR plus 112.5 basis points, had there been any amounts outstanding under
the credit agreement. This credit agreement also supports the Company’s commercial paper program.
Shelf Registration
In June 2013, the Company filed with the Securities and Exchange Commission a universal shelf
registration statement for the potential offering and sale of securities to replace the Company’s
previous registration statement that had expired in the normal course of business. The Company may
offer these securities from time to time at prices and on other terms to be determined at the time of
offering.
9. SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY
Authorized Shares
The number of authorized shares of the Company is 1.755 billion, consisting of five million of
preferred stock, 1.745 billion shares of voting common stock and five million undesignated shares. The
Company’s Articles of Incorporation authorize the board of directors to establish, from the
undesignated shares, one or more classes and series of shares, and to further designate the type of
shares and terms thereof.
Preferred Stock
In May 2013, the Company’s shareholders voted to amend the Company’s Articles of
Incorporation to provide authority to issue up to five million additional shares of preferred stock.
Subsequent to this amendment of the Company’s Articles of Incorporation, the Company filed a shelf
registration statement with the Securities and Exchange Commission in June 2013 pursuant to which it
may publicly sell securities, including the new preferred stock, from time to time.
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