Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill and Other Intangible Assets disclosure

Goodwill and Other Intangible Assets disclosure [Text Block]

6. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The following table presents the carrying amount of the Company's goodwill by segment at December 31, 2011 and 2010:

(in millions)	2011		2010

Business Insurance	$	2,168	$	2,168
Financial, Professional & International Insurance		557		557
Personal Insurance		613		613
Other		27		27

Total	$	3,365	$	3,365

Other Intangible Assets

The following presents a summary of the Company's other intangible assets by major asset class at December 31, 2011 and 2010:

(at December 31, 2011, in millions)	Gross Carrying Amount		Accumulated Amortization		Net

Intangibles subject to amortization
Customer-related	$	935	$	830	$	105
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables(1)		191		79		112

Total intangible assets subject to amortization		1,126		909		217
Intangible assets not subject to amortization		216		—		216

Total other intangible assets	$	1,342	$	909	$	433

(at December 31, 2010, in millions)	Gross Carrying Amount		Accumulated Amortization		Net

Intangibles subject to amortization
Customer-related	$	935	$	783	$	152
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables(1)		191		57		134

Total intangible assets subject to amortization		1,126		840		286
Intangible assets not subject to amortization		216		—		216

Total other intangible assets	$	1,342	$	840	$	502

(1): The fair value adjustment of $191 million was recorded in connection with the merger of The St. Paul Companies, Inc. and Travelers Property Casualty Corp. in 2004 and was based on management's estimate of nominal claims and claim adjustment expense reserves and reinsurance recoverables (after adjusting for conformity with the acquirer's accounting policy on discounting of workers' compensation reserves), expected payment patterns, the April 1, 2004 U.S. Treasury spot rate yield curve, a leverage ratio assumption (reserves to statutory surplus), and a cost of capital expressed as a spread over risk-free rates. The method used calculates a risk adjustment to a risk-free discounted reserve that will, if reserves run off as expected, produce results that yield the assumed cost-of-capital on the capital supporting the loss reserves. The fair value adjustment is reported as an other intangible asset on the consolidated balance sheet, and the amounts measured in accordance with the acquirer's accounting policies for insurance contracts are reported as part of the claims and claim adjustment expense reserves and reinsurance recoverables. The intangible asset will be recognized into income over the expected payment pattern. Because the time value of money and the risk adjustment (cost of capital) components of the intangible asset run off at different rates, the amount recognized in income may be a net benefit in some periods and a net expense in other periods.

The following presents a summary of the Company's amortization expense for other intangible assets by major asset class:

(for the year ended December 31, in millions)	2011		2010		2009

Customer-related	$	47	$	61	$	72
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables		22		25		28

Total amortization expense	$	69	$	86	$	100

Intangible asset amortization expense is estimated to be $52 million in 2012, $45 million in 2013, $43 million in 2014, $23 million in 2015 and $9 million in 2016.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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