Travelers 2006 Annual Report Download - page 13

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PART I
Item 1.BUSINESS
The Travelers Companies, Inc. (together with its consolidated subsidiaries, the Company) is a holding
company principally engaged, through its subsidiaries, in providing a wide range of commercial and
personal property and casualty insurance products and services to businesses, governmentunits,
associations and individuals. The Company, known as The St. Paul Companies, Inc. (SPC) prior to its
merger with Travelers Property Casualty Corp. (TPC) in 2004, is incorporated as a general business
corporation under the laws of the state of Minnesota and is one of the oldest insurance organizations in
the United States, dating back to 1853. The principal executive offices of the Company are located at
385 Washington Street, St. Paul, Minnesota 55102, and the telephone number is [phone]. The
term “TRV” in this document refers to The Travelers Companies, Inc., the parent holding company
excluding subsidiaries.
On April 1, 2004, TPC merged with a subsidiary of 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. For
accounting purposes, this transaction was accounted for as a reverse acquisition with TPC treated as the
accounting acquirer. Accordingly, this transaction 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. Beginning on April 1, 2004, the results of
operations andfinancial condition of SPC were consolidated with TPC’s results of operations and financial
condition. Accordingly, all financial information presented herein for the twelve months ended
December 31, 2004 reflects the accounts of TPC for the three months ended March 31, 2004 and the
consolidated accounts of SPC and TPC for the nine months ended December 31, 2004.
TPC is a Connecticut corporation that was formed in 1979 and, prior to its March 2002 initial public
offering of class A common stock, was an indirect wholly-owned subsidiary of Citigroup Inc. (together with
its consolidated subsidiaries, Citigroup). TPC was reorganized in connection with its IPO in March 2002.
Pursuant to the reorganization, which was completedon March 19, 2002, TPC’s consolidated financial
statements were adjusted to exclude the accounts of certain formerly wholly-owned TPC subsidiaries,
principally The Travelers Insurance Company and its subsidiaries (being the former U.S. life insurance
operations of TPC), certain other wholly-ownednon-insurancesubsidiariesof TPC and su bstantially all of
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 under the new symbol “TRV”.
For a summary of the Company’s revenues, operating income and total assets by reportable business
segments, see note 2 of notes to the Company’s consolidated financial statements.
PROPERTY AND CASUALTY INSURANCE OPERATIONS
The property and casualty insurance industry is highly competitive in the areas of price, service,
product offerings, agent relationships and method of distribution, i.e. use of independent agents, exclusive
agents and/or salaried employees. According to A.M. Best, there are approximately 975 property casualty
organizations in the United States, comprising approximately 2,400 property and casualty companies. Of
those organizations, the top 150 accounted for approximately 93% of the consolidated industry’s total net
written premiums in 2005. The Company competes with both foreign and domestic insurers. In addition,
several property and casualty insurers writing commercial lines of business, including the Company, offer
products for alternative forms of risk protection in addition to traditional insurance products. These
products include large deductible programs and various forms of self-insurance that utilize captive
insurance companies and risk retention groups. TheCompany’s competitive position in the marketplace is