Travelers 2015 Annual Report Download - page 241

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. CONTINGENCIES, COMMITMENTS AND GUARANTEES
Contingencies
The major pending legal proceedings, other than ordinary routine litigation incidental to the
business, to which the Company or any of its subsidiaries is a party or to which any of the Company’s
properties is subject are described below.
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
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