Travelers 2015 Annual Report Download - page 33

A TRV subsidiary, Travelers Casualty and Surety Company, has a representative office in China.
The representative office is regulated by the China Insurance Regulatory Commission. A TRV
subsidiary, TCI Global Services, Inc., has a liaison office in India. Insurance business in India is
regulated by the Insurance Regulatory and Development Authority. TRV’s Brazilian operations are
regulated by the Superintendencia de Seguros Privados.
Regulators in these jurisdictions require insurance companies to maintain certain levels of capital
depending on, among other things, the type and amount of insurance policies in force. Each of the
Company’s foreign insurance subsidiaries had capital significantly above their respective regulatory
requirements at December 31, 2015.
Insurance Holding Company Statutes
As a holding company, TRV is not regulated as an insurance company. However, since TRV owns
capital stock in insurance subsidiaries, it is subject to state insurance holding company statutes, as well
as certain other laws, of each of its insurance subsidiaries’ states of domicile. All holding company
statutes, as well as other laws, require disclosure and, in some instances, prior approval of material
transactions between an insurance company and an affiliate. The holding company statutes and other
laws also require, among other things, prior approval of an acquisition of control of a domestic insurer,
some transactions between affiliates and the payment of extraordinary dividends or distributions.
Insurance Regulations Concerning Change of Control. Many state insurance regulatory laws contain
provisions that require advance approval by state agencies of any change in control of an insurance
company that is domiciled, or, in some cases, having substantial business that it is deemed to be
commercially domiciled, in that state.
The laws of many states also contain provisions requiring pre-notification to state agencies prior to
any change in control of a non-domestic insurance company admitted to transact business in that state.
While these pre-notification statutes do not authorize the state agency to disapprove the change of
control, they do authorize issuance of cease and desist orders with respect to the non-domestic insurer
if it is determined that some conditions, such as undue market concentration, would result from the
acquisition.
Any transactions that would constitute a change in control of any of TRV’s insurance subsidiaries
would generally require prior approval by the insurance departments of the states in which the
insurance subsidiaries are domiciled or commercially domiciled. They may also require pre-acquisition
notification in those states that have adopted pre-acquisition notification provisions and in which such
insurance subsidiaries are admitted to transact business.
Two of TRV’s insurance subsidiaries and its operations at Lloyd’s are domiciled in the United
Kingdom. Insurers in the United Kingdom are subject to change of control restrictions, including
approval of the PRA and FCA. TRV’s insurance subsidiaries domiciled in, or authorized to conduct
insurance business in, Canada are also subject to regulatory change of control restrictions, including
approval of the Office of the Superintendent of Financial Institutions. TRV’s Brazilian operations are
subject to regulatory change of control and other share transfer restrictions, including approval of the
Brazilian insurance regulator.
These requirements may deter, delay or prevent transactions affecting the control of or the
ownership of common stock, including transactions that could be advantageous to TRV’s shareholders.
Regulatory Developments
For a discussion of domestic and international regulatory developments, see ‘‘Item 1A—Risk
Factors’’ including ‘‘Changes in federal regulation could impose significant burdens on us and otherwise
adversely impact our results’’ and ‘‘Regulatory changes outside of the United States, including in
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