Travelers 2006 Annual Report Download - page 26

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Net Retention Policy
The following discussion reflects the Company’s retention policy as of January 1, 2007. For third party
liability, including but not limited to umbrella liability, professional liability, directors’ and officers’ liability,
and employment practices liability, Financial, Professional & International Insurance generally limits the
net retentions up to $11.5 million per policy after reinsurance. For surety protection, the Company
generally retains up to $24.5 million probable maximum loss (PML) per principal but may retain higher
amounts based on the type of obligation, credit quality and other credit risk factors. In the International
and Lloyd’s operations, per risk retentions range from $3 million to $10 million. The Company also utilizes
facultative reinsurance to provide additional limits capacity or to reduce retentions on an individual risk
basis. The Company may also retain amounts greater than those described herein based upon the
individual characteristics of the risk.
Geographic Distribution
The following table shows the distribution ofFinancial, Professional & International’s direct written
premiums for the states, or for locations outside of the United States, that accounted for the majority of
premium volume for the year ended December 31, 2006:
State
% of
Total
California........................................................... 5.8%
New York ........................................................... 5.3
Texas............................................................... 4.1
Florida.............................................................. 3.7
Illinois .............................................................. 3.1
All other domestic(1) ................................................. 44.2
Total domestic ..................................................... 66.2
Total international ................................................. 33.8
Total ............................................................. 100.0%
(1) No other single state within the United States accounted for 3.0% or more of the total direct written
premiums written in 2006 by the Financial, Professional & International Insurancesegment.
Competition
The competitive landscape in which the Financial, Professional & International Insurance segment
operates is affected by many of the same factors described previously for the Business Insurance segment.
Bond & Financial Products competes 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 a lesser extent, regional insurance companies and companies that have
developed niche programs for specific industry segments.In addition, many large commercial customers
self-insure their risks or utilize large deductibles onpurchased insurance.
Bond & Financial Products underwrites and markets its products to national, mid-sized and small
businesses and organizations, as well as individuals, anddistributes them through both national and
wholesale brokers, regional brokers, and retail agents. Bond & Financial Products competes in the
competitive surety and management liability marketplaces, as well as offering general property and
casualty coverages to financial institutions. Both national and regional property casualty insurance
companies compete with Bond & Financial Products. Its reputation for timely and consistent decision-
making, a nationwide network of local underwriting, claims and industry experts andstrong producer and