Travelers 2015 Annual Report Download - page 274

THE TRAVELERS COMPANIES, INC.
(Parent Company Only)
NOTES TO THE CONDENSED FINANCIAL INFORMATION OF REGISTRANT
1. GUARANTEES
In the ordinary course of selling businesses to third parties, The Travelers Companies, Inc. (TRV)
has agreed to indemnify purchasers for losses arising out of breaches of representations and warranties
with respect to the businesses being sold, covenants and obligations of TRV and/or its subsidiaries, and
in certain cases, obligations arising from certain liabilities. Such indemnification provisions generally are
applicable from the closing date to the expiration of the relevant statutes of limitations, although, in
some cases, there may be agreed upon term limitations or no term limitations. Certain of these
contingent obligations are subject to deductibles which have to be incurred by the obligee before
TRV is obligated to make payments. The maximum amount of TRV’s contingent obligation for
indemnifications related to the sale of businesses that are quantifiable was $44 million at December 31,
2015, of which $2 million was recognized on the balance sheet at that date.
TRV also has contingent obligations for guarantees related to its subsidiary’s debt obligations and
various other indemnifications. TRV also provides standard indemnifications to service providers in the
normal course of business. The indemnification clauses are often standard contractual terms.
Certain of the guarantees and indemnifications described above have no stated or notional
amounts or limitation to the maximum potential future payments, and, accordingly, TRV is unable to
develop an estimate of the maximum potential payments for such arrangements.
TRV fully and unconditionally guarantees the payment of all principal, premiums, if any, and
interest on certain debt obligations of its subsidiaries TPC and TIGHI. The guarantees pertain to the
$200 million 7.75% notes due 2026 and the $500 million 6.375% notes due 2033.
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