Shareholders' Equity and Dividend Availability

12 Months Ended

Dec. 31, 2014

Shareholders' Equity and Dividend Availability disclosure

Shareholders' Equity and Dividend Availability disclosure [Text Block]

9. SHAREHOLDERS' EQUITY AND DIVIDEND AVAILABILITY

Authorized Shares

        The number of authorized shares of the company is 1.755 billion, consisting of five million of preferred stock, 1.745 billion shares of voting common stock and five million undesignated shares. The Company's Articles of Incorporation authorize the board of directors to establish, from the undesignated shares, one or more classes and series of shares, and to further designate the type of shares and terms thereof.

Preferred Stock

        In May 2013, the Company's shareholders voted to amend the Company's Articles of Incorporation to provide authority to issue up to five million additional shares of preferred stock. Subsequent to this amendment of the Company's Articles of Incorporation, the Company filed a shelf registration statement with the Securities and Exchange Commission in June 2013 pursuant to which it may publicly sell securities, including the new preferred stock, from time to time. The new shelf registration statement replaced the Company's prior shelf registration statement.

Common Stock

        The Company is governed by the Minnesota Business Corporation Act. All authorized shares of voting common stock have no par value. Shares of common stock reacquired are considered authorized and unissued shares.

Treasury Stock

        The Company's board of directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise. The authorizations do not have a stated expiration date. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company's financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company's desired ratings from independent rating agencies, funding of the Company's qualified pension plan, capital requirements of the Company's operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions and other factors. The following table summarizes repurchase activity in 2014 and remaining repurchase capacity at December 31, 2014.

Quarterly Period Ending (in millions, except per share amounts)	Number of shares purchased		Cost of shares repurchased		Average price paid per share		Remaining capacity under share repurchase authorization
March 31, 2014		7.8	$	650	$	82.97	$	4,109
June 30, 2014		9.5		875		92.67		3,234
September 30, 2014		8.1		750		92.47		2,484
December 31, 2014		9.7		1,000		102.82		1,484
Total		35.1	$	3,275		93.27		1,484

        The Company's Amended and Restated 2004 Stock Incentive Plan provides settlement alternatives to employees in which the Company retains shares to cover tax withholding costs and exercise costs. During the years ended December 31, 2014 and 2013, the Company acquired $58 million and $61 million, respectively, of its common stock under this plan.

        Common shares acquired are reported as treasury stock in the consolidated balance sheet.

Dividend Availability

        The Company's U.S. insurance subsidiaries, domiciled principally in the state of Connecticut, are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid by each insurance subsidiary to its respective parent company without prior approval of insurance regulatory authorities. A maximum of $3.25 billion is available by the end of 2015 for such dividends to the holding company, TRV, without prior approval of the Connecticut Insurance Department. The Company may choose to accelerate the timing within 2015 and/or increase the amount of dividends from its insurance subsidiaries in 2015, which could result in certain dividends being subject to approval by the Connecticut Insurance Department.

        In addition to the regulatory restrictions on the availability of dividends that can be paid by the Company's U.S. insurance subsidiaries, the maximum amount of dividends that may be paid to the Company's shareholders is limited, to a lesser degree, by certain covenants contained in its line of credit agreement with a syndicate of financial institutions that require the Company to maintain a minimum consolidated net worth as described in note 8.

        TRV is not dependent on dividends or other forms of repatriation from its foreign operations to support its liquidity needs. The undistributed earnings of the Company's foreign operations are not material and are intended to be permanently reinvested in those operations.

        TRV and its two non-insurance holding company subsidiaries received $4.10 billion of dividends in 2014 from their U.S. insurance subsidiaries.

        For the years ended December 31, 2014, 2013 and 2012, TRV declared cash dividends per common share of $2.15, $1.96 and $1.79, respectively, and paid cash dividends of $729 million, $729 million and $694 milllion, respectively.

Statutory Net Income and Statutory Capital and Surplus

        Statutory net income of the Company's domestic and international insurance subsidiaries was $3.97 billion, $4.18 billion and $2.84 billion for the years ended December 31, 2014, 2013 and 2012, respectively. Statutory capital and surplus of the Company's domestic and international insurance subsidiaries was $21.05 billion and $21.12 billion at December 31, 2014 and 2013, respectively.