Travelers 2005 Annual Report Download - page 3

2005 Annual Report 1
“We recognize that the world keeps changing
and with it, so do the risk management needs
of our policyholders. Insurers who can antici-
pate trends and developments, demonstrating
that they are indeed looking out for the needs
of their agents and customers, have a clear
competitive advantage.”
Jay S. Fishman
Chairman & Chief Executive Officer
To Our Shareholders:
For St. Paul Travelers, 2005 was a successful year.
We produced solid financial results, notwithstanding
losses from an unprecedented hurricane season, and
we made real progress in positioning our franchise for
future growth.
We recorded strong underlying operating performance
across all of our business segments. Retention levels
were at or near all-time highs, and we were pleased
with our level of new business. We also achieved the
efficiencies of scale we had identified at the time of
our merger in 2004, and we did so more quickly than
we had originally planned. Overall, despite after-tax
charges of $1.5 billion for catastrophes and $548
million for an increase in our asbestos reserves, we
recorded operating income in excess of $2 billion,
realizing a nearly 10 percent operating return on equity.
This year also marked the sale of our majority stake
in Nuveen Investments, which enabled us to invest the
$2.4 billion in pre-tax proceeds in our core property
casualty insurance business, significantly strengthen-
ing our capital position and increasing our financial
flexibility.
A Year of Unprecedented Natural Disasters
A series of major windstorms made this year one of
extraordinary challenges for our industry. The most
dramatic of the storms, Hurricane Katrina, severely
impacted the lives of residents and affected over
90,000 square miles in the southeastern United States.
The devastation was unprecedented, and the impact
will be felt for years to come.
Our claim professionals have been working tirelessly
for months, responding to the human tragedy and
doing their best to resolve tens of thousands of claims
fairly and quickly. Thousands of claim professionals –
some on the front lines and others in offices in cities
such as Jackson, Houston and Atlanta – have gone
above and beyond, working long hours under difficult
circumstances and reaching out to our agents, brokers
and policyholders in every way possible.
St. Paul Travelers also provided substantial corporate
and employee support to American Red Cross relief
efforts after Hurricane Katrina.
Looking to the Future – A Strategy for Growth
We begin 2006 with distinct advantages. We have an
impressive, broad national reach – built upon excellent
relationships with our distributors at a local level –