Travelers 2006 Annual Report Download - page 81

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion and analysis of the financial condition and results of operations of The
Travelers Companies, Inc. (together with its subsidiaries, the Company). 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. 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 historical financial information and applying fair value
estimates to the acquired assets, liabilities, and commitments ofSPC as of April 1, 2004. Beginning on
April 1, 2004, the results of operations and financial condition of SPC were consolidated with TPC’s.
Accordingly, all financial information presented herein for the twelve months ended December 31, 2006
and 2005 reflects the consolidated accounts of SPC and TPC. The financial information presented herein
for the twelve months ended December 31, 2004 reflects only 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. 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 net income of $4.21 billion, or $6.12 per share basic and
$5.91 diluted
•Net favorable prior year reserve development of $394 million pretax ($255 million after-tax)
•Net earned premiums of $20.76 billion
•GAAP combined ratio of 88.1%
•Pretax net investment income of $3.52 billion ($2.71 billion after-tax)
2006 Consolidated Financial Condition
•Total assets of $113.76 billion, up $574 million from December 31, 2005
•Total investments of $72.27 billion, up $3.98 billion from December 31, 2005; fixed maturities and
short-term securities comprise 94% of total investments
•Total debt of $5.76 billion, down $90 million from December 31, 2005
•Repurchased 22.8 million common shares for total cost of $1.12 billion under sharerepurchase
program
•Shareholders’ equity of $25.14 billion, up $2.83 billion from December 31, 2005; book value per
common share of $36.86, up$4.92 from December 31, 2005
CONSOLIDATED OVERVIEW
The Company provides a wide range ofproperty and casualty insurance products and services to
businesses, government units, associations and individuals, primarily in the United States and in selected
International markets.