Travelers 2015 Annual Report Download - page 57

• any impact on asbestos defendants we insure due to the bankruptcy of other asbestos
defendants;
• the unavailability of other insurance sources potentially available to policyholders, whether
through exhaustion of policy limits or through the insolvency of other participating insurers; and
• uncertainties arising from the insolvency or bankruptcy of policyholders.
It is also not possible to predict changes in the legal, regulatory and legislative environment and
their impact on the future development of asbestos and environmental claims. This environment could
be affected by changes in applicable legislation and future court and regulatory decisions and
interpretations, including the outcome of legal challenges to legislative and/or judicial reforms
establishing medical criteria for the pursuit of asbestos claims. It is also difficult to predict the ultimate
outcome of complex coverage disputes until settlement negotiations near completion and significant
legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is particularly
the case with policyholders in bankruptcy where negotiations often involve a large number of claimants
and other parties and require court approval to be effective.
While the ongoing evaluation of asbestos and environmental claims and associated liabilities
considers the inconsistencies of court decisions as to coverage, plaintiffs’ expanded theories of liability
and the risks inherent in complex litigation and other uncertainties, it is possible that the outcome of
the continued uncertainties regarding these claims could result in liability in future periods that differs
from current reserves by an amount that could materially and adversely affect our results of operations.
See the ‘‘Asbestos Claims and Litigation’’ and ‘‘Environmental Claims and Litigation’’ sections of
‘‘Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.’’
Also see ‘‘Item 3—Legal Proceedings.’’
We are exposed to, and may face adverse developments involving, mass tort claims such as those
relating to exposure to potentially harmful products or substances. In addition to asbestos and
environmental claims, we face exposure to other types of mass tort claims, including claims related to
exposure to potentially harmful products or substances, including lead paint, silica and welding rod
fumes. Establishing claims and claim adjustment expense reserves for mass tort claims is subject to
uncertainties because of many factors, including expanded theories of liability, disputes concerning
medical causation with respect to certain diseases, geographical concentration of the lawsuits asserting
the claims and the potential for a large rise in the total number of claims without underlying
epidemiological developments suggesting an increase in disease rates. Moreover, evolving judicial
interpretations regarding the application of various tort theories and defenses, including application of
various theories of joint and several liabilities, as well as the application of insurance coverage to these
claims, make it difficult to estimate our ultimate liability for such claims.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess
of the current related reserves. In addition, our estimate of claims and claim adjustment expenses may
change, and such change could be material. These additional liabilities or increases in estimates, or a
range of either, cannot now be reasonably estimated and could materially and adversely affect our
results of operations.
The effects of emerging claim and coverage issues on our business are uncertain. As industry
practices and legal, judicial, social and other environmental conditions change, unexpected and
unintended issues related to claim and coverage may emerge. These issues may adversely affect our
business, including by extending coverage beyond our underwriting intent, by increasing the number,
size or types of claims or by mandating changes to our underwriting practices. Examples of emerging
claims and coverage issues include, but are not limited to:
• judicial expansion of policy coverage and the impact of new or expanded theories of liability;
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