Travelers 2002 Annual Report Download - page 6

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•Consolidated our international scope and our position at Lloyd’s. Over the course of the year, we closed or sold
international underwriting operations that lacked sufficient scale to be competitive in their local markets. Our ongoing
international insurance operations now include Canada, the United Kingdom, the Republic of Ireland and our surety
operation in Mexico.
In our Lloyd’s operation we combined our ongoing businesses into a single corporate syndicate in November 2002.
With the launch of Syndicate 5000, we have strengthened our underwriting control and effectiveness and are better
positioned to respond to market opportunities in the marine, aviation, property and specialty personal lines. Our
ongoing International and Lloyd’s business produced a 2002 combined ratio of 90.9.
•Repositioned The St. Paul in the reinsurance marketplace. Rather than continue to operate St. Paul Re as a U.S.-
based division of our company, we are now a minority shareholder in an exciting new Bermuda-based reinsurance
underwriting company, Platinum Underwriters Holdings, Ltd. This transaction enabled us to redeploy the capital that
had been supporting St. Paul Re and it also significantly reduced our exposure to catastrophes and the inherent
volatility of the reinsurance industry.
Improving the Performance and the Profitability of our Ongoing Operations The St. Paul has significant competitive
advantages in its core markets: a strong commercial lines franchise, a solid brand and substantial underwriting
expertise. The second part of our plan in 2002 involved improving what we already do well: increasing efficiency,
instituting more effective management reporting and analysis, and providing more information, authority and
responsibility to line managers with respect to their businesses.
During 2002, we made progress in:
•Significantly reducing our expense structure. We established a goal of cutting $125 million from the run rate of
corporate and insurance operation expenses by year-end 2002. We exceeded that goal by $50 million. Perhaps
more important than that expense reduction is the fact that we made solid progress in embedding a new and ongoing
attitude about expense control throughout our company. This cost-conscious mindset will help us continue to identify
areas where we can save money and assure that we are operating as efficiently as possible moving forward. These
cost savings can then be reinvested into other parts of our business where there is the potential for profitable growth.
•Instituting more effective management reporting and analysis. We have improved our financial reporting system to
include more detailed financial and operational data – down to the individual office level – to assist us in managing
the business. This disciplined analytical approach, a key to our objective of producing higher and more consistent
levels of profitability, helps us to better manage our risk profile and maintain the integrity of our balance sheet.
•Establishing performance measures and rewarding the best performers in the organization. Our improved financial
reporting and analysis also provide the tools necessary to more effectively establish performance measures within
our organization, and ultimately to assist us in evaluating individual performance. We worked hard in 2002 to put in
place a culture of meritocracy that rewards the best-performing individuals in the company.
Building for our Future 2002 was not only about addressing problem areas and enhancing performance. The third
part of our strategic plan was enhancing our core businesses and establishing new areas for profitable growth.
We laid the foundation for several important initiatives that are the core of our strategy as we move through 2003.
Each has substantial potential for helping us realize our goal of more consistently delivering higher levels of earn-
ings in 2003 and beyond.