Travelers 2006 Annual Report Download

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2006 ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K

Table of contents

  • Page 1
    2006 ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K

  • Page 2
    ...reï¬,ects financial information for Travelers Property Casualty Corp. for the three months ended March 31, 2004, and the consolidated accounts of The St. Paul Companies, Inc. and Travelers Property Casualty Corp. for the subsequent nine months ended Dec. 31, 2004. Operating income equals net income...

  • Page 3
    ... a leading U.S. property casualty insurer in the independent agency channel. Our focus this year has been on increasing our importance to our distributors and customers, through improving our responsiveness and accessibility. For the year, Travelers recorded $4.2 billion of net and operating income...

  • Page 4
    ... not underwrite certain types of risks?" One focus is to identify new opportunities to provide insurance coverage for areas of the economy that are expanding at above-average rates. Given the changing nature of risk, we have to develop our product set to meet the evolving needs of our customers. We...

  • Page 5
    ... ï¬,ow of knowledge across our organization, we made two structural changes during 2006. First, we realigned our commercial insurance businesses into two new segments - Business Insurance and Financial, Professional & International Insurance. This change was designed to both maximize our franchise...

  • Page 6
    ... our competition in the property casualty insurance industry by executing on all fronts. To that end, we continue to focus on maximizing productivity, motivating and retaining employees, developing sustainable product advantages, driving out unnecessary costs and building a distribution model that...

  • Page 7
    ...Commercial Accounts Irwin R. Vice Chairman Ettinger * + Martin P. Hudson + Chief Executive Officer - International Patrick J. Kinney + President - Field Management Michael F. Klein* + Senior Vice President - Business Insurance Thomas M. Kunkel + Chief Executive Officer - Bond & Financial Products...

  • Page 8
    ... products and services to address large property, inland marine, ocean marine and excess casualty risks and tailor coverage to complex industries, including the oil & gas, technology, agriculture, trucking (through Northland Insurance), construction and public entity sectors, among others. National...

  • Page 9
    ... as well as International and Lloyd's businesses. Bond & Financial Products provides surety, management liability, professional liability and crime coverages, primarily to U.S.-based businesses, both public and private, and to non-profit entities. Property and casualty products are marketed on an...

  • Page 10
    ... 2004 Blythe J. McGarvie** President, Leadership for International Finance, LLC Director since 2004 *Members of the Executive Compensation Subcommittee ** Prior to becoming directors of the company upon the merger of The St. Paul Companies and Travelers Property Casualty Corp. on April 1, 2004...

  • Page 11
    ..., St. Paul, MN 55102 (Address of principal executive offices) (Zip Code) (651) 310-7911 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common stock, without par value...

  • Page 12
    ... About Market Risk ...Financial Statements and Supplementary Data ...Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information...Part III Directors and Executive Officers of the Registrant...Executive Compensation ...Security...

  • Page 13
    ...TPC's assets and certain liabilities not related to the property casualty insurance business. Effective February 26, 2007, The St. Paul Travelers Companies, Inc. changed its name to The Travelers Companies, Inc. and, on February 27, 2007, its common stock began trading on the New York Stock Exchange...

  • Page 14
    ... organized into the following six groups, which collectively comprise Business Insurance Core operations: • Select Accounts serves small businesses for property and casualty products, including commercial multi-peril, property, general liability, commercial auto and workers' compensation insurance...

  • Page 15
    ... of products and services. These products include property, commercial auto, general liability, workers' compensation, umbrella, internet liability, technology errors and omissions coverages and global companion products. • Public Sector Services markets insurance products and services to public...

  • Page 16
    ... damage coverages on an admitted or excess and surplus lines basis. Business Insurance also includes the Special Liability Group (which manages the Company's asbestos and environmental liabilities); the assumed reinsurance, health care, and certain international and other runoff operations; policies...

  • Page 17
    ... with its operating and marketing plans. Once an agency or broker is appointed, Business Insurance carefully monitors its performance. Select Accounts is a leading provider of property casualty products to small businesses. It serves firms with generally fewer than 50 employees. Products offered by...

  • Page 18
    ... insurance policy. Through a network of field offices, the Company's underwriting specialists work closely with national and regional brokers to tailor insurance programs to meet clients' needs. Workers' compensation accounted for approximately 78% of sales to National Accounts customers during 2006...

  • Page 19
    ...liability, excess and surplus lines, environmental, umbrella and fidelity. Gulf also provided insurance products specifically designed for financial institutions, the entertainment industry and sports organizations. Pricing and Underwriting Pricing levels for Business Insurance property and casualty...

  • Page 20
    ... effort that focuses on the injured employee's early return to work, cost-effective quality care and customer service in this market. The Company offers the following three types of workers' compensation products: • guaranteed cost insurance products, in which policy premium charges are fixed for...

  • Page 21
    ... from products sold and general business operations. Specialized liability policies may also include coverage for directors' and officers' liability arising in their official capacities, employment practices liability insurance, fiduciary liability for trustees and sponsors of pension, health and...

  • Page 22
    ... provide claims and policy management services. These contracts, which generally have three-year terms, are selected by state agencies through a bid process based on the quality of service and price. National Accounts services approximately 36% of the total workers' compensation assigned risk market...

  • Page 23
    ... with bond and insurance products and risk management services. The range of coverages includes surety and fidelity bonds for construction and general commercial enterprises, professional liability and management liability for public corporations, private companies and not-for-profit organizations...

  • Page 24
    ... 2006 By market: Bond & Financial Products ...International and Lloyd's ...Total Financial, Professional & International Insurance by market ...By product line: Fidelity and surety ...General liability ...International ...Other ...Total Financial, Professional & International Insurance by product...

  • Page 25
    ... losses, Financial, Professional & International Insurance limits the writing of new commercial property and energy and marine business and selectively takes underwriting action on existing business in some markets. In addition, underwriting standards have been tightened, price increases have...

  • Page 26
    ... with other stock companies, mutual companies, alternative risk sharing groups and other underwriting organizations. Competitors in this market are primarily national property and casualty insurance companies willing to write most classes of business using traditional products and pricing and, to...

  • Page 27
    ...underwrites through four principal lines of business at Lloyd's: aviation, marine, global property, and accident and special risks. PERSONAL INSURANCE Personal Insurance writes virtually all types of property and casualty insurance covering personal risks. The primary coverages in Personal Insurance...

  • Page 28
    ... regions, three single state companies and six service centers. In selecting new independent agencies to distribute its products, Personal Insurance considers each agency's profitability, financial stability, staff experience and strategic fit with Personal Insurance's operating and marketing plans...

  • Page 29
    ... and rating plans, which enable Personal Insurance to streamline its risk selection and pricing processes. Pricing for personal automobile insurance is driven by changes in the frequency of claims and by inflation in the cost of automobile repairs, medical care and litigation of liability claims. As...

  • Page 30
    .... Underwriters work with Company management on business plan development, marketing, and overall growth and profitability. Channel-specific production and claim information is used to analyze results and identify problems and opportunities. Product Lines The primary coverages in Personal Insurance...

  • Page 31
    ... table shows the distribution of Personal Insurance's direct written premiums for the states that accounted for the majority of premium volume for the year ended December 31, 2006: State % of Total New York ...Texas ...Pennsylvania ...Massachusetts...Florida ...New Jersey ...Georgia ...Virginia...

  • Page 32
    ... training, financial reporting and control, and human resources strategy. In addition to the field teams, claim staff is dedicated to each of Personal Insurance's single state companies in Florida, Massachusetts and New Jersey. This structure permits the Company to maintain the economies of scale of...

  • Page 33
    ...escrow funds and letters of credit, under certain reinsurance agreements. The Company monitors the financial condition of reinsurers on an ongoing basis and reviews its reinsurance arrangements periodically. Reinsurers are selected based on their financial condition, business practices and the price...

  • Page 34
    ... on all Florida property and casualty lines of business, excluding accident and health, the National Flood Insurance Program, workers' compensation and medical malpractice insurance. The FHCF's resources are limited to these contributions and to its borrowing capacity at the time of a significant...

  • Page 35
    ..., medical malpractice insurance, health or life insurance, flood insurance and reinsurance. The Terrorism Extension Act exempted from coverage certain additional types of insurance, including commercial automobile, professional liability (other than directors and officers'), surety, burglary and...

  • Page 36
    ... each line of business and type of exposure. For a description of the Company's reserving methods for asbestos and environmental claims, see "Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Asbestos Claims and Litigation," and "-Environmental Claims and...

  • Page 37
    ...the writing of these risks. See "Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Asbestos Claims and Litigation," and "-Environmental Claims and Litigation." General conditions and trends that have affected the development of these liabilities in the past...

  • Page 38
    ...liability-end of year ...Reinsurance recoverables . Net liability-end of year . . Gross reestimated liability... development related to asbestos and environmental claims and claim adjustment expenses, in millions: Asbestos Gross ...Net ...1996 1997 1998 1999 2000 2001 $ 6,150 $ 6,063 $ 5,928 $ 5,800 ...

  • Page 39
    ... by the Company's Special Liability Group, a separate unit staffed by dedicated legal, claim, finance and engineering professionals. For additional information on asbestos and environmental claims, see "Item 7- Management's Discussion and Analysis of Financial Conditions and Results of Operations...

  • Page 40
    ... claims-paying (or financial strength) ratings of the Travelers Reinsurance Pool, Travelers C&S of America, Northland Pool, Travelers Personal single state companies, Travelers Europe, Discover Reinsurance Company, Afianzadora Insurgentes, S.A. de C.V., St. Paul Guarantee Insurance Company and St...

  • Page 41
    ... Commercial Insurance Company, Travelers Casualty Company of Connecticut, Travelers Property Casualty Insurance Company, Travelers Personal Security Insurance Company, Travelers Personal Insurance Company, Travelers Excess and Surplus Lines Company, St. Paul Fire and Marine Insurance Company, St...

  • Page 42
    ... credit ratings (ICR) of "aa-" of Travelers Insurance Companies and its property/casualty members. Concurrently, A.M. Best affirmed the debt ratings of "a-" on senior debt, "bbb+" on subordinated debt, "bbb" on trust preferred securities, "bbb" on preferred stock and "AMB-1" on commercial paper...

  • Page 43
    ... value of the net insurance liabilities, plus the positive cash flow from newly sold policies and the large amount of high quality liquid bonds provides assurance of the Company's ability to fund the payment of claims without having to sell illiquid assets or access credit facilities. The Company...

  • Page 44
    ...to broker and agent compensation. The Company discontinued paying contingent commissions on excess casualty and umbrella business effective September 30, 2006. In addition, the Company discontinued paying contingent commissions for homeowners multi-peril, private passenger automobile physical damage...

  • Page 45
    ...coverage in the voluntary market. Insurance Regulatory Information System The National Association of Insurance Commissioners (NAIC) developed the Insurance Regulatory Information System (IRIS) to help state regulators identify companies that may require special attention. Financial examiners review...

  • Page 46
    ..., St. Paul Travelers Insurance Company Limited, is regulated by the Financial Services Authority (FSA). The FSA's principal objectives are to maintain market confidence, promote public understanding of the financial system, protect consumers, and to fight financial crime. TRV's Lloyd's syndicates...

  • Page 47
    ... to the umbrella trademark, which will be owned by the Company. Effective February 26, 2007, the Company's name was changed to The Travelers Companies, Inc. and, on February 27, 2007, its common stock began trading on the New York Stock Exchange under the new symbol "TRV''. Company Website and...

  • Page 48
    ... in that report. A company licensed to transact insurance business within a state. A contract that pays a periodic benefit over the remaining life of a person (the annuitant), the lives of two or more persons or for a specified period of time. Reinsurance pools which cover risks for those unable...

  • Page 49
    ...place at risk. Capacity may apply to a single risk, a program, a line of business or an entire book of business. Capacity may be constrained by legal restrictions, corporate restrictions or indirect restrictions. A closely-held insurance company whose primary purpose is to provide insurance coverage...

  • Page 50
    ... resulting therefrom. It includes, but is not limited to, employers' liability, workers' compensation, public liability, automobile liability, personal liability and aviation liability insurance. It excludes certain types of losses that by law or custom are considered as being exclusively within the...

  • Page 51
    ...insurance coverage protects an insured for loss due to embezzlement or misappropriation of funds by an employee. Surety is a three-party agreement in which the insurer agrees to pay a second party or make complete an obligation in response to the default, acts or omissions of an insured. Commercial...

  • Page 52
    ... insurable risks, deal with Lloyd's underwriters, who represent investors. The investors are grouped together into syndicates that provide capital to insure the risks. An occurrence that is the basis for submission and/or payment of a claim. Losses may be covered, limited or excluded from coverage...

  • Page 53
    ... expense reserves at successive valuation dates for a given group of claims. Loss reserve development may be related to prior year or current year development. The total losses sustained by an insurance company under a policy or policies, whether paid or unpaid. Incurred losses include a provision...

  • Page 54
    ... company. Contractual entity which directs insureds to the insurer for coverage. This term includes agents and brokers. Insurance that provides coverage to a person or business with an insurable interest in tangible property for that person's or business's property loss, damage or loss of use...

  • Page 55
    ... on the age of the cohort. Reinstatement premiums ... Reinsurance... Reinsurance agreement...Reported claim development method ... Residual market (involuntary business) ... Insurance market which provides coverage for risks for those unable to purchase insurance in the voluntary market. Possible...

  • Page 56
    ... balance sheet. Statutory surplus is also referred to as "surplus" or "surplus as regards policyholders" for statutory accounting purposes. Return on equity...Risk-based capital (RBC) ... Risk retention group ...Run-off business... Salvage ...S-curve method... Second-injury fund ... Self-insured...

  • Page 57
    ... A system (established under state and federal laws) under which employers provide insurance for benefit payments to their employees for work-related injuries, deaths and diseases, regardless of fault. Subrogation ... Third-party liability ... Treaty reinsurance ... Umbrella coverage ... Unassigned...

  • Page 58
    ...this report, including our consolidated financial statements and the notes thereto. Catastrophe losses could materially reduce our profitability and adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance. Our property and casualty insurance operations...

  • Page 59
    ... into account estimated recoveries from reinsurance, salvage and subrogation. The process of estimating loss reserves involves a high degree of judgment and is subject to a number of variables. These variables can be affected by both internal and external events, such as changes in claims handling...

  • Page 60
    ...Results of Operations-Critical Accounting Estimates-Claims and Claim Adjustment Expense Reserves." Our business could be harmed because of our potential exposure to asbestos and environmental claims and related litigation. Asbestos Claims. We believe that the property and casualty insurance industry...

  • Page 61
    ... these and other developments. We completed our most recent annual review during the third quarter of 2006. See the "Asbestos Claims and Litigation" and "Environmental Claims and Litigation" sections of "Management's Discussion and Analysis of Financial Condition and Results of Operations." Also see...

  • Page 62
    ... in medical costs and auto and home repair costs; • judicial expansion of policy coverage and the impact of new theories of liability; • a growing trend of plaintiffs targeting property and casualty insurers, including us, in purported class action litigation relating to claim-handling and other...

  • Page 63
    ... system is generally designed to protect the interests of policyholders, and not necessarily the interests of insurers, their shareholders and other investors. This regulatory system also addresses authorization for lines of business, capital and surplus requirements, limitations on the types...

  • Page 64
    ... foreign insurers, some of which have greater financial resources than we do. In addition, several property and casualty insurers writing commercial lines of business now offer products for alternative forms of risk protection, including large deductible programs and various forms of self-insurance...

  • Page 65
    ...insurance guaranty funds and the involuntary assumption of hard-to-place or high-risk insurance business, primarily in workers' compensation insurance lines. The inability of our insurance subsidiaries to pay dividends to us in an amount sufficient to meet our debt service obligations and other cash...

  • Page 66
    ... write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. Computer viruses, hackers and other external hazards could expose our data systems to security breaches. These increased risks and expanding regulatory...

  • Page 67
    ..., Massachusetts and Irving, Texas, and a data center located in Norcross, Georgia. In January 2007, the Company acquired a building and adjacent land in Windsor, Connecticut. The Company leases 196 field and claim offices totaling approximately 5.1 million square feet throughout the United States...

  • Page 68
    ... four office buildings in which the Company holds a 50% ownership interest located in New York, New York, which collectively accounted for approximately 15% of the carrying value of the property portfolio at December 31, 2006. In the opinion of the Company's management, the Company's properties are...

  • Page 69
    ... asbestos claims. The plaintiffs seek to reopen large numbers of settled asbestos claims and to impose liability for damages, including punitive damages, directly on insurers. Lawsuits similar to Wise were filed in Massachusetts and Hawaii (these suits are collectively referred to as the "Statutory...

  • Page 70
    ... of claims and litigation relating to asbestos and environmental claims. Any such development will be affected by future court decisions and interpretations, as well as changes in applicable legislation. Because of these uncertainties, additional liabilities may arise for amounts in excess of...

  • Page 71
    ... savings plan commenced a putative class action against the Company and certain of its current and former officers and directors captioned Spiziri v. The St. Paul Travelers Companies, Inc., et al. (Dec. 28, 2004). The complaint alleges violations of the Employee Retirement Income Security Act based...

  • Page 72
    ...Employers Reinsurance Company (Employers) and Gerling Global Reinsurance Corporation of America (Gerling), to recover amounts due under reinsurance contracts issued to Gulf and related to Gulf's February 2003 settlement of a coverage dispute under a vehicle residual value protection insurance policy...

  • Page 73
    ... the Company's Board of Directors, has been conducting an internal review of certain of the Company's business practices. This review initially focused on the Company's relationship with brokers and was commenced after the announcement of litigation brought by the New York Attorney General's office...

  • Page 74
    ... lawsuits, not involving asbestos and environmental claims, arising mostly in the ordinary course of business operations either as a liability insurer defending third-party claims brought against policyholders, or as an insurer defending claims brought against it relating to coverage or the Company...

  • Page 75
    ... to goodwill and deferred tax liabilities would be reflected on the Company's balance sheet as of April 1, 2004, either due to purchase accounting or adjustment of SPC's reserves prior to the merger of SPC and TPC. On May 3, 2006, the Company received a letter from the Division of Enforcement...

  • Page 76
    ... COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is traded on the New York Stock Exchange, where it is assigned the symbol "TRV." The number of holders of record, including individual owners, of the Company's common stock was 89,234 as...

  • Page 77
    ...of The St. Paul Companies, Inc. only until the date of the merger (April 1, 2004), and is that of The Travelers Companies, Inc. thereafter. (2) Companies in the S&P Property-Casualty Index as of December 31, 2006 were the following: The Travelers Companies, Inc., ACE Ltd., AMBAC Financial Group, Inc...

  • Page 78
    ISSUER PURCHASES OF EQUITY SECURITIES The table below sets forth information regarding repurchases by the Company of its common stock during the periods indicated. Total number of shares purchased as part of publicly announced plans or programs Maximum dollar value of shares that may yet be ...

  • Page 79
    ...$ 12.07 $ 23.30 (1) On April 1, 2004, Travelers Property Casualty Corp. (TPC) merged with a subsidiary of The St. Paul Companies, Inc. (SPC), as a result of which TPC became a wholly-owned subsidiary of SPC and SPC changed its name to The St. Paul Travelers Companies, Inc. On February 26, 2007, the...

  • Page 80
    ... voting power of TPC's outstanding voting securities. Citigroup received a private letter ruling from the Internal Revenue Service that the Citigroup Distribution was tax-free to Citigroup, its stockholders and TPC. As part of the ruling process, Citigroup agreed to vote the shares it continued...

  • Page 81
    ... consolidated accounts of SPC and TPC for the nine months ended December 31, 2004. Effective February 26, 2007, The St. Paul Travelers Companies, Inc. changed its name to The Travelers Companies, Inc. EXECUTIVE SUMMARY 2006 Consolidated Results of Operations • Income from continuing operations and...

  • Page 82
    ... post-merger operations, whereas the Company's 2004 results reflected combined post-merger operations for the nine months subsequent to the April 1, 2004 merger date, plus the results of TPC only for the three months ended March 31, 2004. Overview Income from continuing operations in 2006 totaled...

  • Page 83
    ... price increases. In the Business Insurance segment, earned premiums in 2006 declined 2% from the comparable 2005 total, primarily reflecting the impact of business in runoff and the sale of the Personal Catastrophe Risk operation in November 2005. Earned premiums in the Financial, Professional...

  • Page 84
    ... the impacts of new business growth and increased retention in many of the Company's insurance operations in 2005. Net Investment Income The following table sets forth information regarding the Company's investments. (for the year ended December 31, in millions) 2006 2005 2004 Average investments...

  • Page 85
    .... It is the application of the yields to the segments' investable funds and capital that determines the respective business segment's share of actual net investment income. Fee Income The National Accounts market in the Business Insurance segment is the primary source of the Company's fee-based...

  • Page 86
    ... pricing in the marketplace. Rates for certain products in selected markets declined from 2004 levels. In the first quarter of 2005, the Company implemented changes in the timing and structure of reinsurance purchased in the Business Insurance and Financial, Professional & International Insurance...

  • Page 87
    ... operations in 2006, primarily in the commercial multi-peril, general liability, property and commercial automobile lines of business. That favorable development was partially offset by increases to asbestos and environmental reserves, which are discussed in more detail in the "Asbestos Claims...

  • Page 88
    ... reserves using TPC's long-established practices that includes evaluating exposures by type of claim (e.g. construction defect, construction wrap-up, other), by type of coverage (e.g. guaranteed cost, loss responsive, other) and by detailed line of business (general liability, commercial auto, etc...

  • Page 89
    ... bonds for new projects of the construction contractor. Also as part of the workout plan, the Company was able to implement additional accounting and engineering procedures for each open project, which included using specialists to implement additional forecasting, cash management, and reporting...

  • Page 90
    ... million of state assessments related to catastrophe losses, and also reflected investments made for process re-engineering and to support business growth and product development, primarily in the Personal Insurance segment. These factors were partially offset by the benefit of expense efficiencies...

  • Page 91
    ... specific construction contractor described above announced that insurance regulators had approved its submitted run-off plan. Based upon industry's knowledge of the co-surety's run-off plan and the Company's analysis of its financial condition, the Company concluded that it was unlikely to collect...

  • Page 92
    ... made for process reengineering and to support business growth and product development, primarily in the Personal Insurance segment. These factors were partially offset by expense efficiencies realized since the completion of the merger. Discontinued Operations In March 2005, the Company and Nuveen...

  • Page 93
    ... OF OPERATIONS BY SEGMENT Business Insurance Results of the Company's Business Insurance segment were as follows: (for the year ended December 31, in millions) 2006 2005 2004 Revenues: Earned premiums ...Net investment income...Fee income ...Other revenues...Total revenues ...Total claims and...

  • Page 94
    ... National Accounts is the primary source of fee income due to its service businesses, which include claim and loss prevention services to large companies that choose to self-insure a portion of their insurance risks, and claims and policy management services to workers' compensation residual market...

  • Page 95
    ...Business Insurance operations, which resulted from reductions in the frequency of non-catastrophe related losses attributable to improved underwriting and pricing strategies in prior years, the results of which emerged in 2004. Approximately half of the $155 million 2006 pre-tax increase to asbestos...

  • Page 96
    ... by market were as follows: (for the year ended December 31, in millions) Gross Written Premiums 2006 2005 2004 Select Accounts ...Commercial Accounts...National Accounts ...Industry-Focused Underwriting ...Target Risk Underwriting ...Specialized Distribution ...Total Business Insurance Core...

  • Page 97
    ... rates remained strong and increased over 2005, and focused investments in technology and personnel led to improvement in new business volume over 2005. Renewal price changes for the Select Accounts market in 2006 were consistent with 2005, as modest pricing pressures in non-coastal coverages...

  • Page 98
    ...certain national small business insurance programs from Select Accounts to the National Programs business unit. In addition, Northland also experienced premium growth in 2006, primarily resulting from higher business retention rates and new business volume in commercial trucking, its primary line of...

  • Page 99
    ... reserve development and an increase in general and administrative expenses. Operating income in 2006 also benefited from favorable tax impacts from businesses outside of the United States, including an $18 million benefit associated with the pending sale of the Company's Mexican surety subsidiary...

  • Page 100
    ...reporting lag at the Company's operations at Lloyd's, the impact of which was partially offset by the sale of certain classes of personal insurance business at those Lloyd's operations... changes in underwriting and pricing strategies for International property-related exposures. Claim and claim ...

  • Page 101
    ...at Lloyd's, strong business retention rates and new business volume in International, and the absence of catastrophe-related reinstatement premiums. The Bond & Financial Products category represents the combination of the Company's previous Bond and Financial & Professional Services marketing groups...

  • Page 102
    ... to the changes being implemented. In International in 2005, business retention rates increased, and new business volume declined compared with 2004. Personal Insurance Results of the Company's Personal Insurance segment were as follows: (for the year ended December 31, in millions) 2006 2005 2004...

  • Page 103
    ... both years, industry and Company initiatives to fight fraud in several states led to a decrease in the total number of claims and a change in historical loss development patterns. In the Homeowners and Other line of business, favorable prior year reserve development in 2006 and 2005 was partially...

  • Page 104
    ..., technology and infrastructure to support business growth and product development. Written Premiums The Personal Insurance segment's gross and net written premiums by product line were as follows: (for the year ended December 31, in millions) Gross Written Premiums 2006 2005 2004 Automobile...

  • Page 105
    ... of the Company's new multivariate pricing product in selected states. The Personal Insurance segment had approximately 7.1 million and 6.6 million policies in force at December 31, 2006 and 2005, respectively. In the Automobile line of business, policies in force at December 31, 2006 increased 10...

  • Page 106
    ... in policyholders' favor and other Company defenses are not successful, the Company's coverage obligations under the policies at issue would be materially increased and bounded only by the applicable per-occurrence limits and the number of asbestos bodily injury claims against the policyholders. 94

  • Page 107
    ... Travelers Property Casualty Corp. (TPC) has entered into settlement agreements, which have been approved by the court in connection with the proceedings initiated by TPC in the Johns Manville bankruptcy court. On March 29, 2006, the United States District Court for the Southern District of New York...

  • Page 108
    ... cases challenging the applicability of aggregate limits on asbestos claims. Developing payment trends among policyholders in the Home Office and Field Office as well as Assumed and International categories were also analyzed. In 2006 the Home Office and Field Office categories, which account...

  • Page 109
    ... asbestos reserves as follows: Number of Policyholders 2006 2005 Total Net Paid 2006 2005 Net Asbestos Reserves 2006 2005 (at and for the year ended December 31, $ in millions) Policyholders with settlement agreements ...Home office, field office and other ...Assumed reinsurance and International...

  • Page 110
    development related to existing policyholders, new claims from policyholders reporting claims for the first time and policyholders for which there is, or may be, litigation and direct actions against the Company. Assumed reinsurance exposure primarily consists of reinsurance of excess coverage, ...

  • Page 111
    .... This form of settlement is commonly referred to as a "buy-back" of policies for future environmental liability. In addition, many of the agreements have also extinguished any insurance obligation which the Company may have for other claims, including but not limited to asbestos and other...

  • Page 112
    ... the number of policyholders tendering claims for the first time. These policyholders generally present smaller exposures, have fewer sites and are lower tier defendants. Further, regulatory agencies are utilizing risk-based analysis and more efficient clean-up technologies. However, the Company has...

  • Page 113
    ... umbrella or excess policies the Company has issued, the resolution or adjudication of some disputes pertaining to the amount of available coverage for asbestos and environmental claims in a manner inconsistent with the Company's previous assessment of these claims, the number and outcome of direct...

  • Page 114
    ... of duration) and its effect on total return cannot be fully controlled, particularly when interest rates move dramatically, the investment process generally favors securities that control this risk within expected interest rate ranges. The Company does not purchase residual interests in CMOs...

  • Page 115
    ... securities classified as available for sale at December 31, 2006 and 2005, respectively. Virtually all of these securities are rated Aaa. The Company's real estate investments include warehouses and office buildings and other commercial land and properties that are directly owned. The Company...

  • Page 116
    ... ended December 31, 2006, the Company recognized the following other-than-temporary impairments: • $7 million in the fixed maturities portfolio, consisting of $6 million resulting from the potential to sell various holdings prior to a recovery in market value, and $1 million related to credit risk...

  • Page 117
    ...escrow funds and letters of credit, under certain reinsurance agreements. The Company monitors the financial condition of reinsurers on an ongoing basis and reviews its reinsurance arrangements periodically. Reinsurers are selected based on their financial condition, business practices and the price...

  • Page 118
    ... trends, asbestos- and environmental-related developments and reinsurance and litigation costs. The Company expects property casualty market conditions to continue to be competitive throughout 2007. Relative to 2006, within the Business Insurance segment, the Company expects renewal price changes to...

  • Page 119
    ... the Company's financial condition or results of operations, see Item 1A-"Risk Factors" in this report. LIQUIDITY AND CAPITAL RESOURCES Liquidity is a measure of a company's ability to generate sufficient cash flows to meet the short- and long-term cash requirements of its business operations. The...

  • Page 120
    ... securities. These investment classes have the potential for higher returns but also involve varying degrees of risk, including less stable rates of return and less liquidity. The primary goals of the Company's asset liability management process are to satisfy the insurance liabilities, manage...

  • Page 121
    ...present value of the net insurance liabilities, plus the positive cash flow from newly sold policies and the large amount of high quality liquid bonds provides assurance of the Company's ability to fund the payment of claims without having to sell illiquid assets or access credit facilities. Sale of...

  • Page 122
    .... On May 2, 2006, the Company's Board of Directors authorized a program to repurchase up to $2 billion of the Company's common stock. Under this program, repurchases may be made from time to time in the open market, in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, pursuant...

  • Page 123
    ...its Board of Directors out of funds legally available, subject to any other restrictions that may be applicable to the Company. Capital Resources Capital resources reflect the overall financial strength of the Company and its ability to borrow funds at competitive rates and raise new capital to meet...

  • Page 124
    ... only liabilities at December 31, 2006 that are expected to be settled in cash. The table below includes the amount and estimated future timing of claims and claim related payments. The amounts do not represent the exact liability, but instead represent estimates, generally utilizing actuarial...

  • Page 125
    ... the ordinary course of business to lease office space, equipment and furniture. (3) Includes agreements with vendors to purchase system software administration and maintenance services. (4) In connection with the sale of its insurance brokerage operations, the Company committed to acquire brokerage...

  • Page 126
    ... 1 of the financial statements.) (8) Workers' compensation large deductible policies provide third party coverage in which the Company typically is responsible for paying the entire loss under such policies and then seeks reimbursement from the insured for the deductible amount. "Claims from large...

  • Page 127
    ... December 31, or the insurer's net income for the twelve-month period ending the preceding December 31, in each case determined in accordance with statutory accounting practices and by state regulation. This declaration or payment is further limited by adjusted unassigned surplus, as determined in...

  • Page 128
    ... to agency loans and letters of credit, issuance of debt securities, third party loans related to venture capital investments and various indemnifications related to the sale of business entities to third parties. See note 15 to the Company's consolidated financial statements. The Company does...

  • Page 129
    ...) Case 2006 IBNR Total Case 2005 IBNR Total General liability ...Property ...Commercial multi-peril ...Commercial automobile ...Workers' compensation...Fidelity and surety ...Personal automobile ...Homeowners and personal-other ...International and other ...Property-casualty ...Accident and health...

  • Page 130
    ... loss development over time as facts and circumstances change in the years following the policy issuance. The use of the occurrence form accounts for much of the reserve development in asbestos and environmental exposures, and it is also used to provide coverage for construction general liability...

  • Page 131
    ... to the total claim liability for the product line. Writing new products with material reporting lags can result in adding several years worth of IBNR claim exposure before the reporting lag exposure becomes clearly observable, thereby increasing the risk associated with pricing and reserving such...

  • Page 132
    ... from that being estimated currently. Some risk factors will affect more than one product line. Examples include changes in claim department practices, changes in settlement patterns, regulatory and legislative actions, court actions, timeliness of claim reporting, state mix of claimants, and degree...

  • Page 133
    ... of prior experience periods using loss trend, rate level differences, mix of business changes and other known or observed factors influencing the current accident year relative to prior accident years. The exact number of prior accident years utilized varies by product line component, based on the...

  • Page 134
    ... that the change should be reflected in the Company's estimated claim liabilities. The final estimate selected by management in a reporting period is based on these various detailed analyses of past data, adjusted to reflect any new actionable information. Discussion of Product Lines The following...

  • Page 135
    ... on an "occurrence basis," certain general liability coverages (such as those covering directors and officers or professional liability) are typically insured on a "claims-made" basis. General liability reserves are generally analyzed as two components: primary and excess/umbrella, with the primary...

  • Page 136
    ... claim reporting, such as excess and umbrella components of this product line, the company utilizes the BF method more heavily than paid and case incurred development. Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required general liability reserves...

  • Page 137
    ... properties. The claim reporting and settlement process for property coverage claim reserves is generally restricted to the insured and the insurer. Overall, the claim liabilities for this line create a low estimation risk, except possibly for catastrophes and business interruption claims. Property...

  • Page 138
    ... single losses. The reserving risk for this line differs from that of the general liability product line and the property product line due to the nature of the customer. Commercial multi-peril is generally sold to smaller sized accounts, while the customer profile for general liability and property...

  • Page 139
    ... and property damage liability risk factors Trends in jury awards Changes in the underlying court system Changes in case law Litigation trends Frequency of claims with payment capped by policy limits Change in average severity of accidents, or proportion of severe accidents Changes in auto safety...

  • Page 140
    ... some payments can run as long as the injured worker's life, such as permanent disability benefits and on-going medical care. Despite the possibility of long payment tails, the reporting lags are generally short, settlements are generally not complex, and most of the liability can be considered high...

  • Page 141
    ...volatility of fidelity reserves is generally related to the type of business of the insured, the size and complexity of the insured's business operations, amount of policy limit (1) These are administrative bodies that evaluate whether or not a given claim for workers' compensation benefits is valid...

  • Page 142
    ... (beyond those included in the general discussion section) include: Fidelity risk factors Type of business of insured Policy limit and attachment points Third-party claims Coverage litigation Complexity of claims Growth in insureds' operations Surety risk factors Economic trends, including the...

  • Page 143
    ... of claims with payment capped by policy limits Change in average severity of accidents, or proportion of severe accidents Subrogation opportunities Degree of patient responsiveness to treatment Changes in claim handling philosophies No-fault risk factors (for selected states and time periods...

  • Page 144
    ... portion of the homeowners policy generates claims which take longer to pay due to the involvement of litigation and negotiation, but with generally small reporting lags. In addition, reserves related to umbrella coverages have greater uncertainty since umbrella liability payments are often made...

  • Page 145
    ... in building material and labor costs due to a sharp increase in demand for those materials and services Homeowners book of business risk factors Policy provisions mix (e.g., deductibles, policy limits, endorsements, etc.) Degree of concentration of policyholders Changes in underwriting standards...

  • Page 146
    ... runoff operations that are extremely long tail (e.g., U.S. excess liabilities reinsured through the London market, and several underwriting pools in runoff). The speed of claim reporting and claim settlement is a function of the specific coverage provided, the jurisdiction, the distribution system...

  • Page 147
    ... international product lines as insurers domiciled outside of the U.S. do not file U.S. statutory reports. Comparative historical information on runoff business is not indicative of reasonably possible one-year changes in the reserve estimate for this mix of runoff business. Accordingly, the Company...

  • Page 148
    ...expected cash flows using market rates commensurate with the credit quality and maturity of the investment. Equity securities are valued based on quoted market prices. The following table identifies the fair value of fixed maturity securities by pricing source at December 31, 2006 and 2005. 2006 (in...

  • Page 149
    ... in the Company's financial statements. The underlying investments of these venture capital investments are reported at estimated fair value. The fair value of the venture capital investments is based on an estimate determined by the external fund manager and reviewed by the Company for investments...

  • Page 150
    ... which fair value has been below cost, the financial condition and near-term prospects of the issuer, and the Company's ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. The Company's process for reviewing invested assets for impairments...

  • Page 151
    ... sale. Additionally, for certain securitized financial assets with contractual cash flows (including asset-backed securities), the Company periodically updates its best estimate of cash flows over the life of the security. If management determines that the fair value of a securitized financial asset...

  • Page 152
    ..., the Company performs a review on at least an annual basis, of goodwill held by its reporting units, which are the Company's three operating and reportable segments: Business Insurance, Financial, Professional & International Insurance and Personal Insurance. In August 2006, the Company announced...

  • Page 153
    ... Resources section of Management's Discussion and Analysis. The Company's foreign exchange market risk exposure is concentrated in the Company's invested assets and insurance reserves denominated in foreign currencies. Cash flows from the Company's foreign operations are the primary source of funds...

  • Page 154
    ... short-term securities, debt and derivative financial instruments. The primary market risk to the Company's market sensitive instruments is interest rate risk. The sensitivity analysis model uses a 100 basis point change in interest rates to measure the hypothetical change in fair value of financial...

  • Page 155
    ... FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ...Consolidated Statement of Income for the years ended December 31, 2006, 2005 and 2004...Consolidated Balance Sheet at December 31, 2006 and 2005 ...Consolidated Statement of Changes in Shareholders' Equity...

  • Page 156
    ... Company Accounting Oversight Board (United States), the effectiveness of The Travelers Companies, Inc. and subsidiaries internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control- Integrated Framework issued by the Committee of Sponsoring...

  • Page 157
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (in millions, except per share data) For the year ended December 31, 2006 2005 2004 Revenues Premiums...Net investment income ...Fee income ...Net realized investment gains (losses) ...Other revenues ...Total ...

  • Page 158
    ... assets ...Other assets...Total assets ...Liabilities Claims and claim adjustment expense reserves...Unearned premium reserves ...Contractholder payables ...Payables for reinsurance premiums ...Debt ...Other liabilities ...Total liabilities ...Shareholders' equity Preferred Stock Savings Plan...

  • Page 159
    ...) on investment securities ...Change in minimum pension liability adjustment ...Net change in unrealized foreign currency translation and other changes ...Adjustment to initially apply FAS Statement No. 158, net of tax ...Balance, end of year ...Treasury stock (at cost) Balance, beginning of year...

  • Page 160
    ... operations ...Net cash used in investing activities ...Cash flows from financing activities Issuance of debt ...Payment of debt...Dividends paid to shareholders ...Issuance of common stock-- employee share options ...Treasury stock acquired-share repurchase program ...Treasury stock acquired...

  • Page 161
    ... Company changed its name to The Travelers Companies, Inc. The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities...

  • Page 162
    ...FAS 123, Accounting for Stock-Based Compensation, and a replacement of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. FAS 123R requires public entities to measure the cost of employee services received in exchange for an...

  • Page 163
    ... using modified prospective application did not have a material effect on the Company's results of operations, financial condition or liquidity. See note 11. Accounting Changes and Error Corrections In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154, Accounting Changes...

  • Page 164
    ... Financial Accounting Standards No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights, or coverages...

  • Page 165
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) only an embedded derivative that is tied to the prepayment risk of the underlying prepayable financial assets and if both of the following ...

  • Page 166
    ... on the Company's results of operations, financial condition or liquidity. Fair Value Option In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159). FAS 159 permits an entity to irrevocably...

  • Page 167
    ... stocks, are classified as available for sale with changes in fair value, net of income tax, charged or credited directly to accumulated other changes in equity from nonowner sources. The Company's real estate investments include warehouses, office buildings and other commercial land and properties...

  • Page 168
    ... care, software and computer services, and networking and information technologies infrastructures industries. The Company typically is involved with venture capital companies early in their formation, as they are developing and determining the viability of, and market demand for, their product...

  • Page 169
    ...investments are reported at estimated fair value. These non-publicly traded securities are valued based on factors such as management judgment, recent financial information and other market data. Investment Impairments The Company recognizes an impairment loss when an invested asset's value declines...

  • Page 170
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Company's process for reviewing invested assets for impairments during any quarter includes the following: • Identification and ...

  • Page 171
    .... The adjustments to the yield for non-highly rated prepayable fixed maturities are accounted for using the prospective method. Dividends on equity securities are recognized in income when declared. Rental income on real estate is recognized on a straight-line basis over the lease term. See note...

  • Page 172
    ...Assets A review is performed on at least an annual basis, of goodwill held by the reporting units, which are the Company's three operating and reportable segments: Business Insurance; Financial, Professional & International Insurance; and Personal Insurance. The impairment test is a two-step process...

  • Page 173
    ... claims and claim adjustment expense reserves in the consolidated balance sheet are certain reserves discounted to the present value of estimated future payments. The liabilities for losses for some long-term disability payments under workers' compensation insurance and workers' compensation excess...

  • Page 174
    ... shares of the Company under the Minnesota Business Corporation Act. Statutory Accounting Practices The Company's insurance subsidiaries, domiciled principally in the states of Connecticut and Minnesota, prepare statutory financial statements in accordance with the accounting practices prescribed or...

  • Page 175
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The amount of the assets received in an RITC is equal to the accepted claims including incurred but not reported (IBNR) claims and is ...

  • Page 176
    ... Company may use derivative financial instruments, including interest rate swaps, equity swaps, credit derivatives, options, forward contracts and financial futures, as a means of hedging exposure to interest rate, equity price change and foreign currency risk. The Company's insurance subsidiaries...

  • Page 177
    ... companies, with particular emphasis on workers' compensation, general liability and automobile liability. National Accounts also includes Discover Re, which provides property and casualty insurance products on an unbundled basis using third-party administrators for insureds who utilize programs...

  • Page 178
    ... of products and services. These products include property, commercial auto, general liability, workers' compensation, umbrella, internet liability, technology errors and omissions coverages and global companion products. • Public Sector Services markets insurance products and services to public...

  • Page 179
    ... damage coverages on an admitted or excess and surplus lines basis. Business Insurance also includes the Special Liability Group (which manages the Company's asbestos and environmental liabilities); the assumed reinsurance, health care, and certain international and other runoff operations; policies...

  • Page 180
    ... insurance and risk management services to several customer groups, including those in the technology, public services, and financial and professional services industry sectors. International primarily underwrites employers' liability (similar to workers' compensation coverage in the United States...

  • Page 181
    ... SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. SEGMENT INFORMATION The company is organized into three reportable business segments: Business Insurance; Financial, Professional & International Insurance; and Personal Insurance. The accounting policies used to generate the...

  • Page 182
    ... COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. SEGMENT INFORMATION (Continued) Business Insurance Financial, Professional & International Insurance Personal Insurance Total Reportable Segments (at and for the year ended December 31, in millions) 2006...

  • Page 183
    ... STATEMENTS (Continued) 2. SEGMENT INFORMATION (Continued) Net written premiums by market were as follows: (for the year ended December 31, in millions) 2006 2005 2004 Business Insurance: Select Accounts ...Commercial Accounts ...National Accounts ...Industry-Focused Underwriting...Target Risk...

  • Page 184
    ...millions) 2006 2005 2004 Revenue reconciliation Earned premiums Business Insurance: Commercial multi-peril...Workers' compensation ...Commercial automobile ...Property ...General liability ...Other ...Total Business Insurance ...Financial, Professional & International Insurance: Fidelity and surety...

  • Page 185
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. SEGMENT INFORMATION (Continued) (at December 31, in millions) 2006 2005 Asset reconciliation: Business Insurance ...Financial, Professional & International Insurance ...Personal Insurance ...Total assets for reportable segments ...Other...

  • Page 186
    ... FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS Fixed Maturities The Company's investment portfolio includes the fixed maturities, equity securities, and other investments acquired in the merger at their fair values as of the merger date. The fair value at acquisition became the new cost...

  • Page 187
    .... Additionally, these subsidiaries have funds deposited with third parties to be used as collateral to secure various liabilities on behalf of insureds, cedants and other creditors. These funds had a fair value of $43 million at both December 31, 2006 and 2005. The Company also had $253 million of...

  • Page 188
    ... include warehouses, office buildings, land, and other commercial real estate assets that are directly owned. The Company negotiates commercial leases with individual tenants through unrelated, licensed real estate brokers. Negotiated terms and conditions include, among others, rental rates, length...

  • Page 189
    ... reserve deficiency develops, a reserve-related foreign exchange impact occurs, or a foreign tax adjustment is imposed on a pre-sale reporting period. The maximum amount of this indemnification obligation is $187 million. The fair value of this obligation as of December 31, 2006 and 2005 was...

  • Page 190
    ... "Debt" section of liabilities on the Company's consolidated balance sheet. That debt had a carrying value of $399 million and $1.03 billion at December 31, 2006 and 2005, respectively. During 2006, the Company redeemed the $593 million, 7.60% subordinated debentures issued to St. Paul Capital Trust...

  • Page 191
    ...$ 11 - 80 18 $109 $ 25 5 40 10 $80 At December 31, 2006 and 2005, the Company had concentrations of credit risk in tax-exempt investments of the state of Texas of $3.86 billion and $3.27 billion, respectively, of the state of California of $2.10 billion and $1.54 billion, respectively, and of the...

  • Page 192
    ... Such assets include publicly traded below investment grade bonds and certain other privately issued bonds that are classified as below investment grade loans. The Company monitors creditworthiness of counterparties to financial instruments by using controls that include credit approvals, limits and...

  • Page 193
    ... to protect the Company from any credit risk, as any ceded balances are jointly backed by all the pool members. The Company assumed 100% of the workers' compensation premiums previously written by the Accident Department of its former affiliate, The Travelers Insurance Company. Certain of the...

  • Page 194
    ... for using deposit accounting and are included in other liabilities in the consolidated balance sheet. The following is a summary of reinsurance financial data reflected in the consolidated statement of income: (for the year ended December 31, in millions) 2006 2005 2004 Written premiums Direct...

  • Page 195
    ... insurance, medical malpractice insurance, health or life insurance, flood insurance, and reinsurance. The Terrorism Extension Act exempted from coverage certain additional types of insurance, including commercial automobile, professional liability (other than directors and officers'), surety...

  • Page 196
    ...presents the carrying amount of the Company's goodwill by segment at December 31, 2006 and 2005: (at December 31, in millions) 2006 2005 Business Insurance...Financial, Professional & International Insurance...Personal Insurance...Other ...Total ...Other Intangible Assets $2,168 551 613 106 $3,438...

  • Page 197
    ...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...

  • Page 198
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 6. INSURANCE CLAIM RESERVES Claims and claim adjustment expense reserves were as follows: (at December 31, in millions) 2006 2005 Property-casualty ...Accident and health ...Total ... $ 59,202 86 ...

  • Page 199
    ...discount. Business Insurance. Net favorable prior year reserve development totaled $21 million in 2006, primarily concentrated in the commercial multi-peril, general liability, property and commercial automobile lines of business, partially offset by increases for asbestos reserves and environmental...

  • Page 200
    ... in underwriting and pricing strategies for International property-related exposures. Personal Insurance. Net favorable prior year reserve development in 2005 totaled $360 million. In the automobile line of business, the improvement was driven by better than expected results from changes in claim...

  • Page 201
    ... from a co-surety on a specific construction contractor claim. Personal Insurance. Net favorable prior year reserve development in 2004 was $378 million. In the homeowners line of business, the improvement was driven by a significant decrease in the number of claims, attributable to changes in the...

  • Page 202
    ... of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an analysis of each policyholder's potential liability; the jurisdictions involved; past and anticipated future claim activity and loss development on pending claims; past settlement values of...

  • Page 203
    ... defendants. As in prior years, the 2006 annual review considered active policyholders and litigation cases, including cases challenging the applicability of aggregate limits on asbestos claims. Developing payment trends among policyholders in the Home Office and Field Office as well as Assumed and...

  • Page 204
    ... umbrella or excess policies the Company has issued, the resolution or adjudication of some disputes pertaining to the amount of available coverage for asbestos and environmental claims in a manner inconsistent with the Company's previous assessment of these claims, the number and outcome of direct...

  • Page 205
    ... SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 6. INSURANCE CLAIM RESERVES (Continued) estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company's operating results in future periods...

  • Page 206
    ...The notes pay interest semi-annually on June 20 and December 20 of each year, beginning December 20, 2006, and rank equally with all of the Company's other senior unsecured indebtedness. Either series of senior notes is redeemable in whole or in part from time to time, at the Company's option, prior...

  • Page 207
    ... proceeds of $442 million. Description of Debt Commercial Paper-The Company maintains an $800 million commercial paper program with $1 billion of back-up liquidity, consisting entirely of a bank credit agreement. Interest rates on commercial paper issued in 2006 ranged from 4.5% to 5.4%, and in 2005...

  • Page 208
    ... to an initial conversion price of $53.37 per share of common stock), subject to adjustment in certain events. On or after April 18, 2007, the notes may be redeemed at the Company's option. The notes are general unsecured obligations and are subordinated in right of payment to all existing and...

  • Page 209
    ... collectively provided the Company access to $1.0 billion of bank credit lines. Pursuant to covenants in the new credit agreement, the Company must maintain an excess of consolidated net worth over goodwill and other intangible assets of not less than $10 billion at all times. The Company must also...

  • Page 210
    ... Exchange Commission a shelf registration statement for the potential offering and sale of securities. The Company may offer these securities from time to time at prices and on other terms to be determined at the time of offering. During 2006, the Company issued senior debt with a par value of $800...

  • Page 211
    ... of Directors authorized a program to repurchase up to $2 billion of shares of the Company's common stock. Under this program, 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...

  • Page 212
    ... was related to the Company's minimum pension liability prior to the application of FAS 158. Activity in 2006 represented the adjustment to initially apply the provisions of FAS 158. (2) Includes foreign currency translation adjustments, changes in the value of private equity securities, and hedging...

  • Page 213
    ...) 2006 2005 2004 Basic Income from continuing operations, as reported ...Preferred stock dividends, net of taxes ...Income from continuing operations available to common shareholders-basic...Diluted Income from continuing operations available to common shareholders ...Effect of dilutive securities...

  • Page 214
    ... operations ...Total income tax expense included in consolidated statement of income ...Composition of income tax benefit included in common shareholders' equity Benefit relating to stock-based compensation, the change in unrealized appreciation on investments, unrealized loss on foreign exchange...

  • Page 215
    ... tax assets will be realized. For tax return purposes, as of December 31, 2006, the Company had a U.S. net operating loss (NOL) carryforward that expires, if unused, in 2017-2018. The amount and timing of realizing the benefit of NOL carryforwards depends on future taxable income and limitations...

  • Page 216
    ... compensation plan, The Travelers 2004 Stock Incentive Plan (the 2004 Incentive Plan), which was adopted in July 2004 following the merger of SPC and TPC. The purposes of the 2004 Incentive Plan are to reward the efforts of the Company's non-employee directors, executive officers and other employees...

  • Page 217
    ... with an exercise price equal to the fair market value of the Company's common stock on the date of grant. The stock options granted generally vest upon meeting certain years of service criteria. Except as the Compensation Committee of the Board may allow in the future, stock options cannot be sold...

  • Page 218
    ... were used in estimating the fair value of options on grant date for the year ended December 31, 2006: Original Grants Reload Grants Expected term of stock options ...Expected volatility of the Company's stock ...Weighted average volatility ...Expected annual dividend per share...Risk free rate...

  • Page 219
    ...stock option activity under the Company's 2004 Incentive Plan and the legacy TPC and legacy SPC share-based incentive compensation plans as of and for the year ended December 31, 2006 is as follows: Weighted Average Exercise Price Weighted Average Contractual Life Remaining Aggregate Intrinsic Value...

  • Page 220
    ... and Equity Awards program established pursuant to the 2004 Incentive Plan. Awards issued under CAP are in the form of restricted stock and the number of shares included in the restricted stock award is calculated at a 10% discount from the market price on the date of the award and generally vest in...

  • Page 221
    ...vest, depending on the actual return on equity attained. The fair value of restricted stock, deferred stock and performance shares is measured at the market price of the Company stock at date of grant. The total fair value of shares that vested during the year ended December 31, 2006 was $59 million...

  • Page 222
    ... the Company's unearned compensation balances were reclassified to common stock for all years presented. Cash received from the exercise of employee stock options under share-based compensation plans totaled $216 million in 2006. The tax benefit realized for tax deductions from employee stock option...

  • Page 223
    ...a cash balance formula, except that employees satisfying certain age and service requirements remain covered by a prior final pay formula. Prior to December 31, 2004, both TPC and SPC sponsored qualified non-contributory defined benefit pension plans. These plans were merged to form one Company plan...

  • Page 224
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued) The incremental effects of applying FAS 158 on individual line items of the Company's balance sheet at December 31, 2006 were as...

  • Page 225
    ... plan assets at beginning of year ...Actual return on plan assets ...Company contributions ...Benefits paid ...Foreign currency exchange rate change ...Fair value of plan assets at end of year...Reconciliation of prepaid (accrued) benefit cost and total amount recognized Funded status of plan at end...

  • Page 226
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued) (at and for the year ended December 31, in millions) Postretirement Benefit Plans 2006 2005 Change in projected benefit ...

  • Page 227
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued) For pension plans with an accumulated benefit obligation in excess of plan assets, the aggregate projected benefit obligation ...

  • Page 228
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued) Assumptions and Health Care Cost Trend Rate Sensitivity (at and for the year ended December 31,) 2006 2005 Assumptions used to ...

  • Page 229
    ... FINANCIAL STATEMENTS (Continued) 12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued) Plan Assets The percentage of the fair value of pension plan assets held by asset category is as follows: (at December 31,) 2006 2005 Equity securities...Debt securities ...Cash ...Other...

  • Page 230
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued) Estimated Future Benefit Payments Benefits expected to be paid, which reflect estimated future employee service, are estimated ...

  • Page 231
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued) To finance the preferred stock purchase for future allocation to qualified employees, the SOP borrowed $150 million at 9.4% from...

  • Page 232
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) contracts and foreign currency forward contracts, which are not designated as hedges at December 31, 2006 and 2005. The Company engaged in U.S. Treasury...

  • Page 233
    ... reorganization, ACandS sought to establish a trust to pay asbestos bodily injury claims against it and sought to assign to the trust its rights under the insurance policies issued by TPC. The proposed plan and disclosure statement filed by ACandS claimed that ACandS had settled the vast majority of...

  • Page 234
    ... asbestos claims. The plaintiffs seek to reopen large numbers of settled asbestos claims and to impose liability for damages, including punitive damages, directly on insurers. Lawsuits similar to Wise were filed in Massachusetts and Hawaii (these suits are collectively referred to as the "Statutory...

  • Page 235
    ... TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 15. CONTINGENCIES, COMMITMENTS AND GUARANTEES (Continued) 2003, the same bankruptcy court extended the existing injunction to apply to an additional set of cases filed in various state courts in Texas...

  • Page 236
    ... savings plan commenced a putative class action against the Company and certain of its current and former officers and directors captioned Spiziri v. The St. Paul Travelers Companies, Inc., et al. (Dec. 28, 2004). The complaint alleges violations of the Employee Retirement Income Security Act based...

  • Page 237
    ...Employers Reinsurance Company (Employers) and Gerling Global Reinsurance Corporation of America (Gerling), to recover amounts due under reinsurance contracts issued to Gulf and related to Gulf's February 2003 settlement of a coverage dispute under a vehicle residual value protection insurance policy...

  • Page 238
    ... and Market Conduct Compliance Division, Financial Services Commission of Ontario, Canada; (iv) State of Connecticut Insurance Department; (v) State of Connecticut Office of the Attorney General; (vi) State of Delaware Department of Insurance; (vii) State of Florida Department of Financial Services...

  • Page 239
    ... the Company's Board of Directors, has been conducting an internal review of certain of the Company's business practices. This review initially focused on the Company's relationship with brokers and was commenced after the announcement of litigation brought by the New York Attorney General's office...

  • Page 240
    ... lawsuits, not involving asbestos and environmental claims, arising mostly in the ordinary course of business operations either as a liability insurer defending third-party claims brought against policyholders, or as an insurer defending claims brought against it relating to coverage or the Company...

  • Page 241
    ... obligations for guarantees related to agency loans and letters of credit, issuance of debt securities, third party loans related to venture capital investments and various indemnifications related to the sale of business entities. During 2006, the Company entered into construction loan and...

  • Page 242
    ... deficiency develops, a reserve-related foreign exchange impact occurs, or a foreign tax adjustment is imposed on a pre-sale reporting period. The fair value of this obligation as of December 31, 2006 was $65 million, which was included in "Other Liabilities" on the Company's consolidated balance...

  • Page 243
    ... included in the allocation of purchase price . Employee termination costs included in general and administrative expenses: Business Insurance...Financial, Professional and International Insurance ...Personal Insurance...Total included in general and administrative expenses...Total restructuring...

  • Page 244
    ... was accounted for as a purchase business combination, using TPC's historical financial information and applying fair value estimates to the acquired assets, liabilities and commitments of SPC as of April 1, 2004. Effective February 26, 2007, the Company changed its name to The Travelers Companies...

  • Page 245
    ... intangible asset class Customer-related (a) Marketing-related Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables (b) Total $495 20 191 $706 7.8 years 2.0 years 30.0 years (a) Primarily includes customer-related insurance intangibles based on rates...

  • Page 246
    ... in the following consolidating financial statements are not directly comparable between 2005 and 2004. During 2005, the Company combined the previously separate St. Paul Insurance Group and Travelers Property Casualty reinsurance pools, forming the new Travelers Reinsurance Pool effective July...

  • Page 247
    ..., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 21. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES (Continued) CONSOLIDATING STATEMENT OF INCOME (Unaudited) For the year ended December 31, 2006 (in millions) TPC Other Subsidiaries...

  • Page 248
    ..., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 21. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES (Continued) CONSOLIDATING STATEMENT OF INCOME (Unaudited) For the year ended December 31, 2005 (in millions) TPC Other Subsidiaries...

  • Page 249
    ..., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 21. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES (Continued) CONSOLIDATING STATEMENT OF INCOME (Unaudited) For the year ended December 31, 2004 (in millions) TPC Other Subsidiaries...

  • Page 250
    ... ...Other assets...Total assets ...Liabilities Claims and claim adjustment expense reserves ...Unearned premium reserves ...Contractholder payables ...Payables for reinsurance premiums ...Debt ...Other liabilities ...Total liabilities ...Shareholders' equity Preferred Stock Savings Plan-convertible...

  • Page 251
    ... ...Other assets...Total assets ...Liabilities Claims and claim adjustment expense reserves ...Unearned premium reserves ...Contractholder payables ...Payables for reinsurance premiums ...Debt ...Other liabilities ...Total liabilities ...Shareholders' equity Preferred Stock Savings Plan-convertible...

  • Page 252
    ...-net employee share-based compensation ...Excess tax benefits from share-based payment arrangements ...Dividends received by (paid to) parent company ...Capital contributions and loans between subsidiaries . Other ...Net cash used in financing activities ...Effect of exchange rate changes on cash...

  • Page 253
    ...of continuing operations ...Net cash used in investing activities of discontinued operations ...Net cash used in investing activities ...Cash flows from financing activities Issuance of debt ...Payment of debt ...Dividends to shareholders ...Issuance of common stock-employee share options...Issuance...

  • Page 254
    ... discontinued operations ...Net cash provided by (used in) investing activities ...Cash flows from financing activities Issuance of debt ...Payment of debt ...Dividends to shareholders ...Issuance of common stock-employee share options ...Treasury stock acquired-net employee share-based compensation...

  • Page 255
    ... to change its name to The Travelers Companies, Inc. and, effective the same day, amended its Bylaws to reflect the name change. As a result, references to the Company's name in these financial statements and notes thereto have been changed, where applicable, to reflect the new Company name. 243

  • Page 256
    ...Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial...

  • Page 257
    ...of the Company's management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over...

  • Page 258
    ...on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan...

  • Page 259
    ... Officer Executive Vice President and General Counsel Executive Vice President-Claim Services Executive Vice President-Personal Insurance Executive Vice President-Business Insurance Executive Vice President-Strategic Development and Financial, Professional & International Insurance Executive Vice...

  • Page 260
    ... President for the National Accounts Group's property-casualty business in 1985 and subsequently took on responsibility as Chairman of Commercial Lines in 1990. William H. Heyman, 58, has been Vice Chairman since May 2005, and before that, he was Executive Vice President and Chief Investment Officer...

  • Page 261
    ... Senior Vice President and Chief Information Officer for the Company since the Merger. In 2006 he was given the additional responsibility for Insurance Operations, which includes the policyholder and agency service centers, underwriting support and policy processing, agency operations and billing...

  • Page 262
    ... The St. Paul International 1988 Stock Option Plan and The St. Paul Holdings 1996 Stock Option Plan were established to grant options to certain eligible employees of SPC's United Kingdom operations. The options granted under these plans were priced at the market price of the Company's common stock...

  • Page 263
    ... price of stock options and shares used to pay withholding taxes on equity awards generally; and (iii) shares purchased by the Company on the open market using cash from option exercises, as limited by the 2004 Incentive Plan. Except for shares delivered to or retained in the Travelers Stock Plan...

  • Page 264
    ... Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of The Travelers Companies, Inc. and in the capacities and on the dates indicated. Date By /S/ JAY S. FISHMAN Jay S. Fishman Director, Chairman, Chief Executive Officer and President (Principal...

  • Page 265
    Date By * Blythe J. McGarvie * Glen D. Nelson, M.D. * Laurie J. Thomsen /S/ BRUCE A. BACKBERG Bruce A. Backberg, Attorney-in-fact Director February 23, 2007 By Director February 23, 2007 By Director February 23, 2007 *By February 23, 2007 253

  • Page 266
    ... Statements...Schedules: Schedule II-Condensed Financial Information of Registrant (Parent Company Only) ...Schedule III-Supplementary Insurance Information ...Schedule V-Valuation and Qualifying Accounts ...Schedule VI-Supplementary Information Concerning Property-Casualty Insurance Operations...

  • Page 267
    ... balance sheet of The Travelers Companies, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statement of income, changes in shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2006, which are included in this Form...

  • Page 268
    SCHEDULE II THE TRAVELERS COMPANIES, INC. (Parent Company Only) CONDENSED FINANCIAL INFORMATION OF REGISTRANT (in millions) CONDENSED STATEMENT OF INCOME (LOSS) For the period ended December 31,* 2006 2005 2004 Revenues Net investment income ...Net realized investment gains (losses) ...Other ...

  • Page 269
    ... BALANCE SHEET At December 31, 2006 2005 Assets Fixed maturities ...Equity securities ...Short-term securities ...Investment in subsidiaries...Other assets...Total assets ...Liabilities Debt ...Other liabilities ...Total liabilities ...Shareholders' equity Preferred Stock Savings Plan-convertible...

  • Page 270
    SCHEDULE II THE TRAVELERS COMPANIES, INC. (Parent Company Only) CONDENSED FINANCIAL INFORMATION OF REGISTRANT (in millions) CONDENSED STATEMENT OF CASH FLOWS For the period ended December 31,* 2006 2005 2004 Cash flows from operating activities Net income ...Adjustments to reconcile net income to ...

  • Page 271
    ... ... 2004 Business Insurance ...Financial, Professional & International Insurance...Personal Insurance ...Total-Reportable Segments ...Other ...Consolidated ... (a) Beginning in the second quarter of 2004, the Company developed a methodology to allocate net investment income and invested assets to...

  • Page 272
    SCHEDULE V THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES Valuation and Qualifying Accounts (in millions) Balance at beginning of period Charged to costs and expenses(1) Charged to other accounts(2) Balance at end of period Deductions(3) 2006 Reinsurance recoverables ...Allowance for uncollectible...

  • Page 273
    SCHEDULE VI THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES Supplementary Information Concerning Property-Casualty Insurance Operations(1) 2004-2006 (in millions) Affiliation with Registrant (2) 2006 ...2005 ...2004 ... Claims and claim adjustment expenses incurred Amortization Paid claims Deferred ...

  • Page 274
    ... incorporated herein by reference. Trademark License Agreement dated as of August 19, 2002, by and between Travelers Property Casualty Corp. ("TPC") and The Travelers Insurance Company, was filed as Exhibit 10.2 to TPC's quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2002...

  • Page 275
    ...10.1 to the Company's quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2005, and is incorporated herein by reference. The Travelers Amended and Restated Deferred Compensation Plan for Non-Employee Directors was filed as Exhibit 99.2 of the Company's Registration Statement on Form...

  • Page 276
    ...10.27 to the Company's Form 10-K for the fiscal year ended December 31, 2004, and are incorporated herein by reference. TPC Compensation Plan for Non-Employee Directors as amended on January 22, 2004 was filed as Exhibit 10.16 to TPC's annual report on Form 10-K for the fiscal year ended December 31...

  • Page 277
    ... Agreement, amending The St. Paul Travelers Companies, Inc. Severance Plan, was filed as Exhibit 99 to the Company's Form 8-K filed on February 16, 2006, and is incorporated herein by reference. Assurance of Discontinuance with the Office of the Attorney General of the State of New York, the Office...

  • Page 278
    ... be furnished to security holders who make written request therefor to The Travelers Companies, Inc., 385 Washington Street, Saint Paul, MN, 55102, Attention: Corporate Secretary. †* Filed herewith. Management contract or compensatory plan in which directors and/or executive officers are eligible...

  • Page 279
    ... in 2002 included a $1.39 billion charge for strengthening asbestos reserves, net of the benefit from an indemnification agreement with Citigroup, Inc., a former affiliate. For the year ended December 31, 2002, the Company's earnings were not sufficient to cover fixed charges by $260 million. 267

  • Page 280
    ... Chairman and Chief Executive Officer, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2006 of The Travelers Companies, Inc. (the Company); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state...

  • Page 281
    ... I, Jay S. Benet, Vice Chairman and Chief Financial Officer, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2006 of The Travelers Companies, Inc. (the Company); Based on my knowledge, this report does not contain any untrue statement of a material...

  • Page 282
    ...-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, the undersigned officer of The Travelers Companies, Inc. (the "Company"), hereby certifies that the Company's Annual Report on Form 10-K for the year ended December 31, 2006 (the "Report") fully complies...

  • Page 283
    ...-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, the undersigned officer of The Travelers Companies, Inc. (the "Company"), hereby certifies that the Company's Annual Report on Form 10-K for the year ended December 31, 2006 (the "Report") fully complies...

  • Page 284
    ... instruction form, and an annual report, will be mailed beginning on or about March 23, 2007, to each shareholder of record as of March 5, 2007. 1 Stock Price and Dividend Rate Our common stock is traded on The New York Stock Exchange under the symbol "TRV". 1 As of Feb. 15, 2007, Travelers had...

  • Page 285
    www.travelers.com NYSE: TRV The Travelers Companies, Inc. 385 Washington Street Saint Paul, MN 55102-1396 800.328.2189