Travelers 2015 Annual Report Download - page 73

impact the content and presentation of our reported financial results and could cause increased
volatility in reported earnings, resulting in other adverse impacts on the Company’s ratings and cost of
capital, and decrease the understandability of our financial results as well as the comparability of our
reported results with other insurers.
Changes in U.S. tax laws or in the tax laws of other jurisdictions in which we operate could
adversely impact us. Tax laws may change in ways that adversely impact us. For example, federal tax
legislation could be enacted to reduce the existing statutory U.S. federal corporate income tax rate
from 35%, which would, accordingly, reduce any U.S. deferred tax asset. The amount of any net
deferred tax asset is volatile and significantly impacted by changes in unrealized investment gains and
losses. The effect of a reduction in a tax rate on net deferred tax assets is required to be recognized, in
full, as a reduction of income from continuing operations in the period when enacted and, along with
other changes in the tax rules that may increase the Company’s actual tax expense, could materially and
adversely affect our results of operations.
Our investment portfolio has benefited from tax exemptions and certain other tax laws, including,
but not limited to, those governing dividends-received deductions and tax credits (such as foreign tax
credits). Federal and/or state tax legislation could be enacted in connection with deficit reduction or
various types of fundamental tax reform that would lessen or eliminate some or all of the tax
advantages currently benefiting us and therefore could materially and adversely impact our results of
operations. In addition, such legislation could adversely affect the value of our investment portfolio,
particularly changes to the taxation of interest from municipal bonds (which comprise 45% of our
investment portfolio as of December 31, 2015) could materially and adversely impact the value of those
bonds.
Other tax law changes could adversely impact us. The size of the federal deficit, as well as the
budget constraints faced by many states and localities, increases the likelihood that Congress and state
and local governments will raise revenue by enacting legislation increasing the taxes paid by individuals
and corporations.
Item 1B. UNRESOLVED STAFF COMMENTS
NONE.
Item 2. PROPERTIES
The Company leases its principal executive offices in New York, New York, as well as 234 field
and claim offices totaling approximately 4.7 million square feet throughout the United States under
leases or subleases with third parties. The Company also leases offices in Canada, the United Kingdom,
Brazil, India, China and the Republic of Ireland that house operations (primarily for the Business and
International Insurance segment) in those locations. The Company owns six buildings in Hartford,
Connecticut, consisting of approximately 1.8 million square feet of office space. The Company also
owns an office building in St. Paul, Minnesota which consists of approximately 587,000 square feet of
office space. The Company also owns buildings located in Norcross, Georgia and Omaha, Nebraska.
The Company owns a building in London, England, which houses a portion of its Business and
International Insurance segment’s operations in the United Kingdom.
In the opinion of the Company’s management, the Company’s properties are adequate and suitable
for its business as presently conducted and are adequately maintained.
73