Travelers 2006 Annual Report Download - page 24

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Selected Market and Product Information
The following table sets forth Financial, Professional & International Insurance net written premiums
by market and product line for the periods indicated. For a description of the markets and product lines
referred to in the table, see “—Principal Markets and Methods of Distribution” and “—Product Lines,”
respectively.
(for the year ended December 31, in millions)2006 2005 2004
% of Total
2006
By market:
Bond & FinancialProducts ............................... $ 2 ,255 $ 2,117 $ 1,819 66.5%
International and Lloyd’s ................................. 1,138 1,042 889 33.5
Total Financial, Professional & International
Insurance by market ................................. $ 3 ,393 $ 3,159 $ 2,708 100.0%
By product line:
Fidelity and surety....................................... $ 1 ,125 $1,026 $963 33.2%
General liability......................................... 1,006 981 768 29.6
International ............................................ 1,138 1,042 889 33.5
Other.................................................. 124 110 88 3.7
Total Financial, Professional & International
Insurance by product line ............................ $ 3 ,393 $ 3,159 $ 2,708 100.0%
Principal Markets and Methods of Distribution
Within the Financial, Professional & International Insurance segment, Bond & Financial Products
distributes the majority of its products in the United States through approximately 6,400 of the same
independent agencies and brokers that distribute the Business Insurance segment’s products. These
brokers and independent agencies are located throughout the United States. Bond & Financial Products,
in conjunction with the Business Insurance segment, is making significant investments in enhanced
technology utilizing internet-based applications to provide real-time interface capabilities with its
independent agencies and brokers. Bond & Financial Products builds relationships with well-established,
independent insurance agencies and brokers. In selecting new independent agencies and brokers to
distribute its products, Bond & Financial Products considers each agency’s or broker’s profitability,
financial stability, staff experience and strategic fit with its operating and marketing plans. Once an agency
or broker is appointed, its ongoing performance is monitored.Inaddition, Bond & Financial Products sells
its surety products through independent agents using subsidiaries in Mexico, Canada and the United
Kingdom. The Company has reached a definitive agreement to sell its Mexican subsidiary.
The International and Lloyd’s market distributes its products through brokers in the domestic markets
of each of the three countries in which it operates, the United Kingdom, Canada and the Republic of
Ireland. It also writes business at Lloyd’s, where its products are distributed through Lloyd’s wholesale and
retail brokers. By virtue of Lloyd’s worldwide licenses, Financial, Professional & International Insurance
has access to international markets across the world.
Pricing and Underwriting
Pricing levels for Financial, Professional & International Insurance property and casualty insurance
products are generally developed based upon an expectation of the frequency and severity of estimated
losses, the expenses of producing business and managing claims, and a reasonable allowance for profit.
Financial, Professional & International Insurance has a disciplined approach to underwriting andrisk
management that emphasizes profitable growth rather than premium volume or market share.