Travelers 2008 Annual Report Download

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2008 Annual Report and Form 10-K
Like no other

Table of contents

  • Page 1
    2008 Annual Report and Form 10-K Like no other

  • Page 2
    ... the Travelers-St. Paul merger, we have achieved an average annual operating return on equity of approximately 14.5 percent. Critical to our success this year was the very strong performance of our investment portfolio. Our long-standing, disciplined approach to evaluating risk and reward helped...

  • Page 3
    ... At and for the year ended Dec. 31, Dollar amounts in millions, except per share amounts. 2008 2007 2006 Net Earned Premiums Total Revenues 1 Operating Income Net Income 2 Net Income Per Diluted Common Share Total Investments Total Assets Shareholders' Equity Total Employees 1 $ 21,579 $ 24,477...

  • Page 4
    ... TravelersExpressSM product for small businesses and our Quantum Auto® and Quantum Home® products for individuals, all multivariate pricing products. We also have developed online quote and issue tools for Agribusiness, Inland Marine and Ocean Marine, among others. Customer focus - Travelers knows...

  • Page 5
    ...of the United States, Travelers Claim employees were immediately available to help customers. Before the storm made landfall, teams of trained and equipped Claim professionals were ready to get to work. Our decision a few years ago to develop an innovative Enterprise Response strategy and a National...

  • Page 6
    ... National Accounts markets insurance and risk management services to large companies. In addition, business units in the Target Risk Underwriting, Industry-Focused Underwriting and Specialized Distribution groups provide insurance products and services to address large property, inland marine, ocean...

  • Page 7
    ... services provided by a public relations firm in response to a crisis event. t Significant enhancements to the Risk Management PLUS+ Online® Web site include new educational resources to address exposures related to professional liability, Directors & Officers liability, crime, kidnap & ransom...

  • Page 8
    ... Also, the National Distribution unit is continuing to develop and expand product distribution through aggregators, employers, associations, affinity groups and financial institutions to achieve a broader reach of customers. Agent service - One2One, a strategic marketing communication program that...

  • Page 9
    ...Select Accounts Alan D. Schnitzer*+ Vice Chairman, Chief Legal Officer & Executive Vice President - Financial, Professional & International Insurance Richard D. Schug+ Senior Vice President & Chief Actuary - Business Insurance Peter Schwartz Senior Vice President & Group General Counsel - Corporate...

  • Page 10
    ... Markets Jay S. Fishman Chairman and CEO, The Travelers Companies, Inc. Director since 2001 Blythe J. McGarvie CEO, Leadership for International Finance, LLC Director since 2004 McGarvie (Chair) Duberstein Graev Killingsworth Nelson Lawrence G. Graev Chairman, CEO and President, The GlenRock Group...

  • Page 11
    ... year ended December 31, 2008 or អ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-10898 The Travelers Companies, Inc. (Exact name of registrant as specified in its charter) Minnesota (State or...

  • Page 12
    ... 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, Executive Officers and Corporate Governance ...Executive Compensation ...Security...

  • Page 13
    ... 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...

  • Page 14
    ... 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. 2

  • Page 15
    ... Company work together in actively managing and controlling exposure and claims and they share risk through policy features such as deductibles or retrospective rating. Products offered include workers' compensation, general liability, umbrella, commercial auto, property and inland marine coverages...

  • Page 16
    ...casualty carriers that do not have in-house expertise with reinsurance, underwriting, engineering, claim handling and risk management services for this type of coverage. • Global Accounts provides insurance to U.S. companies with foreign property and liability exposures (home-foreign), and foreign...

  • Page 17
    ... the United States that are serviced by approximately 100 field offices and three customer service centers. Business Insurance continues to make significant investments in enhanced technology utilizing internet-based applications to provide real-time interface capabilities with independent agencies...

  • Page 18
    ... commercial residual market business discussed below. National Accounts includes the Company's Discover Re operation, which principally provides commercial auto liability, general liability, workers' compensation and property coverages. It serves retail brokers and insureds who utilize programs...

  • Page 19
    ... for each facility or program. Pricing and Underwriting Pricing of Business Insurance property and casualty insurance products is generally developed based upon an estimation of expected losses, the expenses of producing, issuing and servicing business and managing claims, the time value of money...

  • Page 20
    ... employers, employees and care providers in a cooperative effort that focuses on the injured employee's early return to work and cost-effective quality care. The Company offers the following types of workers' compensation products: • guaranteed cost insurance products, in which policy premium...

  • Page 21
    .... 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 welfare, and other employee benefit plans, errors and...

  • Page 22
    ... National Accounts business is typically written through national brokers and, to a lesser extent, regional brokers. Insurance companies compete in this market based on price, product offerings, claim and loss prevention services, managed care cost containment and risk management information systems...

  • Page 23
    ... of Ireland and business written as a corporate member at Lloyd's. International, through its operations in the United Kingdom, Canada and the Republic of Ireland, offers specialized insurance and risk management services to several customer groups, including those in the technology, public services...

  • Page 24
    ... States. Bond & Financial Products, in conjunction with the Business Insurance segment, continues to make investments in enhanced technology utilizing internet-based applications to provide real-time interface capabilities with its independent agencies and brokers. Bond & Financial Products builds...

  • Page 25
    .... 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 welfare, and other employee benefit plans, errors and...

  • Page 26
    ... of claim and risk management services provided. The Company has developed expertise in various markets in these countries similar to those served in the United States and provides both property and casualty coverage for these markets. Products are generally distributed through a relatively small...

  • Page 27
    ... state companies and five service centers. In selecting new independent agencies to distribute its products, Personal Insurance considers, among other attributes, each agency's profitability, financial stability, staff experience and strategic fit with Personal Insurance's operating and marketing...

  • Page 28
    ...diversify the homeowners line of business. Pricing and Underwriting Pricing of Personal Insurance property and casualty insurance products is generally developed based upon an estimation of expected losses, the expenses of producing, issuing and servicing business and managing claims, the time value...

  • Page 29
    ... team of employees responsible for working with the agent on business plan development, marketing, and overall growth and profitability. The Company uses agency level management information to analyze and understand results and to identify problems and opportunities. The Personal Insurance products...

  • Page 30
    ... of Personal Insurance's direct written premiums for the states that accounted for the majority of premium volume for the year ended December 31, 2008: State % of Total New York ...Texas ...Pennsylvania . . New Jersey . . Massachusetts California ...Connecticut . . Georgia ...Virginia ...Florida...

  • Page 31
    ... practices enable Personal Insurance to price its products competitively in all of its distribution channels. CLAIMS MANAGEMENT The Company's claims function is managed through its Claim Services operations. With nearly 13,000 employees, Claim Services employs a diverse group of professionals...

  • Page 32
    ... management of workers' compensation claims. Innovative medical and claims management technologies permit nurse, medical and claims professionals to share appropriate vital information that supports prompt investigation, effective return to work and claim resolution strategies. These technologies...

  • Page 33
    .... In addition to the coverage provided under this treaty, the Company also utilizes a catastrophe bond program, as well as a Northeast catastrophe reinsurance treaty, to protect against losses resulting from catastrophes in the Northeastern United States. General Catastrophe Reinsurance Treaty. The...

  • Page 34
    ... Re utilizes a dual trigger that is based upon the Company's covered losses incurred and an index that is created by applying predetermined percentages to insured industry losses in each state in the covered area as reported by Property Claim Services, a division of Insurance Services Offices, Inc...

  • Page 35
    ..., professional liability (other than directors and officers'), surety, burglary and theft, and farm-owners multi-peril. In the case of a war declared by Congress, only workers' compensation losses are covered by the Acts. The Acts generally require that all commercial property casualty insurers...

  • Page 36
    ... to the insurer). Informed judgment is applied throughout the process. The Company derives estimates for unreported claims and development on reported claims principally from actuarial analyses of historical patterns of loss development by accident year for each type of exposure and business unit...

  • Page 37
    ...on policies written prior to the mid-1980s involving liability exposures such as asbestos and environmental claims. In the post-1984 period, the Company has developed more stringent underwriting standards and policy exclusions and has significantly contracted or terminated the writing of these risks...

  • Page 38
    ... Guaranty Lloyds Insurance Company, which were acquired from Citigroup on October 1, 2001. Also includes reserves of Commercial Guaranty Casualty Insurance Company, which was contributed to TPC by Citigroup on October 3, 2001. At December 31, 2001, these gross reserves were $867 million, and net...

  • Page 39
    ... 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 Condition and Results of Operations- Asbestos...

  • Page 40
    ... 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 41
    ... Company, Gulf Underwriters Insurance Company, American Equity Insurance Company, Select Insurance Company, St. Paul Fire and Casualty Insurance Company, The Travelers Lloyds Insurance Company and Travelers Lloyds of Texas Insurance Company. In addition, at December 31, 2008, Seaboard Surety Company...

  • Page 42
    ...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 also invests...

  • Page 43
    ... 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 accordance with statutory accounting practices. The insurance holding company laws of other states in which...

  • Page 44
    .... Insurance company investments must comply with applicable laws and regulations which prescribe the kind, quality and concentration of investments. In general, these laws and regulations permit investments in federal, state and municipal obligations, corporate bonds, preferred and common equity...

  • Page 45
    ...offered an optional fixed commission program in the U.S. for most commercial insurance lines. International Regulation TRV's insurance underwriting subsidiaries based in the United Kingdom, Travelers Insurance Company Limited and Travelers Casualty and Surety Company of Europe Limited, are regulated...

  • Page 46
    ...), the Risk Committee of management, the Credit Committee, the Chief Compliance Officer, the Business Conduct Officer, the Corporate Actuarial group, the Internal Audit group, the Accounting Policy group, the Enterprise Underwriting group and many others. A senior executive oversees the ERM process...

  • Page 47
    ... About Market Risk,'' and ''Item 8-Financial Statements and Supplementary Data.'' OTHER INFORMATION Customer Concentration In the opinion of the Company's management, no material part of the business of the Company and its subsidiaries is dependent upon a single customer or group of customers, the...

  • Page 48
    Glossary of Selected Insurance Terms Accident year ...The annual calendar accounting period in which loss events occurred, regardless of when the losses are actually reported, booked or paid. Unassigned surplus as of the most recent statutory annual report reduced by twenty-five percent of that year...

  • Page 49
    ... 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 to the company's owners or...

  • Page 50
    ...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 scope of other types of insurance, such as fire or marine...

  • Page 51
    ... a single policy. Each policy reinsured is separately negotiated. Commercial multi-peril policies . Commutation agreement ... Deductible ...Deferred acquisition costs ... Deficiency ... Demand surge ... Direct written premiums ... Earned premiums or premiums earned ... Excess liability ...Excess of...

  • Page 52
    ... plans are set up on a state-by-state basis to cover only those risks in that state. For more information, see ''residual market (involuntary business).'' Fidelity insurance coverage protects an insured for loss due to embezzlement or misappropriation of funds by an employee. Surety is a three-party...

  • Page 53
    ... standards throughout the United States. Direct written premiums plus assumed reinsurance premiums less premiums ceded to reinsurers. Net income (loss) excluding the after-tax impact of net realized investment gains (losses), discontinued operations and cumulative effect of changes in accounting...

  • Page 54
    ...share basis. The ratio of operating income to average equity excluding net unrealized investment gains and losses and discontinued operations, net of tax. An actuarial method to estimate ultimate losses for a given cohort of claims such as an accident year/product line component. If the paid-to-date...

  • Page 55
    ... redundancy exists) may change as new information becomes available. Additional premiums payable to reinsurers to restore coverage limits that have been exhausted as a result of reinsured losses under certain excess-of-loss reinsurance treaties. The practice whereby one insurer, called the reinsurer...

  • Page 56
    ... case of workers' compensation. The costs of the residual market are usually charged back to the direct insurance carriers in proportion to the carriers' voluntary market shares for the type of coverage involved. The amount of exposure a policyholder company retains on any one risk or group of risks...

  • Page 57
    ...'' for statutory accounting purposes. Periodic payments to an injured person or survivor for a determined number of years or for life, typically in settlement of a claim under a liability policy, usually funded through the purchase of an annuity. A principle of law incorporated in insurance policies...

  • Page 58
    ...excess and surplus lines of insurance. The wholesaler does not deal directly with the insurance consumer. The wholesaler deals with the retail agent or broker. A system (established under state and federal laws) under which employers provide insurance for benefit payments to their employees for work...

  • Page 59
    ... ability or our willingness to manage our catastrophe exposure by raising prices, modifying underwriting terms or reducing exposure to certain geographies may be limited due to considerations of public policy, the evolving political environment, changes in the general economic climate and/or social...

  • Page 60
    ...the Terrorism Risk Insurance Program Reauthorization Act of 2007 provides benefits in the event of certain acts of terrorism, those benefits are subject to a deductible and other limitations. Under this law, once our losses exceed 20% of our commercial property and casualty insurance premium for the...

  • Page 61
    ... developments and the impact of rating agency actions. You should also refer to ''Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operation'', particularly the ''Outlook'' section. Our investment portfolio may suffer reduced returns or material losses. Investment...

  • Page 62
    ... are certain amounts related to structured settlements. Structured settlements comprise annuities purchased from various life insurance companies to settle certain personal physical injury claims, of which workers' compensation claims comprise a significant portion. In cases where we did not receive...

  • Page 63
    ... 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 procedures; adverse changes in loss cost trends, including inflationary pressures in medical costs and auto and home repair...

  • Page 64
    ... reserves by product line, including examples of common factors that can affect required reserves, see ''Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates-Claims and Claim Adjustment Expense Reserves.'' Our business could be...

  • Page 65
    ...any umbrella or excess policies we have 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 our previous assessment of these claims, the number and outcome of direct actions against...

  • Page 66
    ... the number or size of claims. Examples of emerging claims and coverage issues include, but are not limited to: • judicial expansion of policy coverage and the impact of new theories of liability; • plaintiffs targeting property and casualty insurers, including us, in purported class action...

  • Page 67
    ...; • speed of claims payment; • premiums charged, contract terms and conditions, products and services offered (including the ability to design customized programs); • perceived overall financial strength and corresponding ratings assigned by independent rating agencies; • reputation...

  • Page 68
    ...subpoenas and written requests for information from a number of government agencies and authorities, including, among others, state attorneys general, state insurance departments, the U.S. Attorney for the Southern District of New York and the U.S. Securities and Exchange Commission (SEC). The areas...

  • Page 69
    ... the marketing and sale of certain of our products, and we may increasingly rely on internet applications and toll-free numbers for distribution. In some instances, our agents and brokers are required to access separate business platforms to execute the sale of our personal insurance or commercial...

  • Page 70
    ... a large number of insurance underwriting, claim processing and investment activities, many of which are highly complex. These activities often are subject to internal guidelines and policies, as well as legal and regulatory standards. A control system, no matter how well designed and operated, can...

  • Page 71
    ... ability to 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...

  • Page 72
    ... information. Item 2. PROPERTIES The Company leases its principal executive offices in New York, New York, as well as 191 field and claim offices totaling approximately 5.3 million square feet throughout the United States under leases or subleases with third parties. The Company owns six buildings...

  • Page 73
    ... numbers of settled asbestos claims and to impose liability for damages, including punitive damages, directly on insurers. Similar lawsuits were filed in Massachusetts and Hawaii state courts (these suits and the West Virginia suits are collectively referred to as the Statutory and Hawaii Actions...

  • Page 74
    ...). In that case, the Company intends to litigate the direct action cases vigorously. SPC, which is not covered by the bankruptcy court rulings or the settlements described above, is a party to pending direct action cases in Texas state court asserting common law claims. All such cases that are still...

  • Page 75
    ...subpoenas and written requests for information from a number of government agencies and authorities, including, among others, state attorneys general, state insurance departments, the U.S. Attorney for the Southern District of New York and the U.S. Securities and Exchange Commission (SEC). The areas...

  • Page 76
    ... 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's business practices...

  • Page 77
    ... 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is traded on the New York Stock Exchange under the symbol ''TRV.'' The number of holders of record, including individual owners, of the Company's common stock...

  • Page 78
    ...500 PROPERTY & CASUALTY INSURANCE (2) 17FEB200921245354 (1) Assumes $100 invested in common shares of The St. Paul Companies, Inc. on December 31, 2003. The performance reflected is that of The St. Paul Companies, Inc. only until the date of the merger (April 1, 2004), and is that of The Travelers...

  • Page 79
    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 80
    ... subsidiary of SPC, and SPC changed its name to The St. Paul Travelers Companies, Inc. On February 26, 2007, the name of the Company was changed to The Travelers Companies, Inc. All financial information presented herein for the year ended December 31, 2004 reflects the accounts of TPC for the three...

  • Page 81
    ....12 • Holding company liquidity of $2.15 billion CONSOLIDATED OVERVIEW The Company provides a wide range of property and casualty insurance products and services to businesses, government units, associations and individuals, primarily in the United States and in selected international markets. 69

  • Page 82
    ... included a net pretax benefit of $163 million due to the implementation of a new fixed, value-based compensation program for the majority of the Company's agents which resulted in a reduction in commission expense compared to what would have otherwise been reported, due to a change in the timing of...

  • Page 83
    ... and new business. In the Financial, Professional & International Insurance segment, earned premium growth of 2% in 2008 (adjusted for the sale of Afianzadora Insurgentes) was driven by changes in the terms of certain reinsurance treaties for Bond & Financial Products. In the Personal Insurance...

  • Page 84
    ...fixed maturity investments include private equity partnerships, hedge funds and real estate partnerships that are accounted for under the equity method of accounting and typically report financial statement information on a lag. These partnerships and funds produced negative net investment income of...

  • Page 85
    ...that are dedicated to specific reportable business segments. The invested assets and related net investment income from these legal entities are reported in the applicable business segment and are not allocated. Fee Income The National Accounts market in the Business Insurance segment is the primary...

  • Page 86
    ... retention rates and new business volume, was largely offset by premium declines in National Accounts, Target Risk Underwriting and Specialized Distribution which primarily resulted from declines in renewal price changes. Net written premiums in the Financial, Professional & International Insurance...

  • Page 87
    ... rates of exchange and strong business volume in construction surety, in Canada and at Lloyd's. Adjustments to prior year premium estimates for the Company's operations at Lloyd's also contributed to the growth in net premium volume in 2007. Net written premium growth of 4% in the Personal Insurance...

  • Page 88
    ... its personal insurance business. The Company also offered the majority of its agents conducting commercial insurance business the option to switch to this new program. The Company's total payout rate for all agent compensation for 2007 was substantially the same as for 2006; however, the change to...

  • Page 89
    ... of the new fixed agent compensation program described above. Adjusting for these factors in both years, the adjusted 2008 expense ratio was 0.2 points higher than the adjusted expense ratio in 2007, reflecting continued investments to support business growth and product development, as well...

  • Page 90
    ... over 2006 earned premiums of $10.88 billion, reflecting the growth in net written premium volume in the majority of the markets comprising this segment, driven by strong business retention rates and increases in new business volume, partially offset by minor decreases in renewal price changes. 78

  • Page 91
    ... automobile product lines. The net favorable prior year reserve development in the general liability and commercial multi-peril lines was attributable to several factors, including improved legal and judicial environments, as well as enhanced risk control, underwriting and claim process initiatives...

  • Page 92
    ... risk control, underwriting and claim process initiatives. The commercial automobile product line experienced better than expected loss development due to more favorable legal and judicial environments, claim handling initiatives focused on the automobile line of insurance and improvements in auto...

  • Page 93
    ... Written Premiums The Business Insurance segment's gross and net written premiums by market were as follows: (for the year ended December 31, in millions) Gross Written Premiums 2008 2007 2006 Select Accounts ...Commercial Accounts ...National Accounts ...Industry-Focused Underwriting . Target Risk...

  • Page 94
    ... above. All markets in Business Insurance Core operations, except National Accounts and Specialized Distribution, recorded net written premium growth in 2007, driven by higher new business volume throughout the majority of markets coupled with continued strong business retention rates, offset in...

  • Page 95
    ...for National Accounts' products is adjusted based on actual loss performance, which continues to be favorable due to workers' compensation reforms. Overall new business volume increased slightly over 2007. Business retention rates in 2008 remained strong and increased over 2007. Net written premiums...

  • Page 96
    ... of the Company's Financial, Professional & International Insurance segment were as follows: (for the year ended December 31, in millions) 2008 2007 2006 Revenues: Earned premiums ...Net investment income ...Other revenues ...Total revenues ...Total claims and expenses ...Operating income ...Loss...

  • Page 97
    ... development in the United Kingdom, in part due to favorable claim activity relating to 2007 flood losses. In the Bond & Financial Products group, better than expected loss experience for the contract surety business within the fidelity and surety product line, resulting from favorable settlements...

  • Page 98
    ... supporting business growth. Written Premiums Financial, Professional & International Insurance gross and net written premiums by market were as follows: (for the year ended December 31, in millions) Gross Written Premiums 2008 2007 2006 Bond & Financial Products ...International ...Total Financial...

  • Page 99
    ... Bond and Financial Products (excluding the surety line of business), business retention rates in 2007 increased over 2006. Renewal price changes in 2007 were positive but down from 2006, and new business levels declined due in part to competitive market conditions. In the International group, net...

  • Page 100
    .... In addition, the Homeowners and Other product line experienced improvement in older accident years for the umbrella line as well as favorable experience from accident year 2007 for allied coverages due to less than expected claim activity. Net favorable prior year reserve development in 2007 of...

  • Page 101
    ...settlement process, thereby changing historical loss development patterns. In addition, 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...

  • Page 102
    ... new fixed agent compensation program, was 0.9 points higher than the 2006 expense ratio of 28.3%, reflecting the impact of continued investments to support business growth and product development. Written Premiums The Personal Insurance segment's gross and net written premiums by product line were...

  • Page 103
    ... Gulf coasts of the United States. Adjusting for the sale of Mendota for both years, net written premiums in the Homeowners and Other line of business in 2007 increased 7% over 2006. The Personal Insurance segment had approximately 7.4 million and 7.2 million policies in force at December 31, 2008...

  • Page 104
    ...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. Accordingly, although the Company has seen a moderation in the overall risk...

  • Page 105
    ...insurers based on novel legal theories of liability. The Company believes it has meritorious defenses to these claims and has received favorable rulings in certain jurisdictions. Travelers Property Casualty Corp. (TPC), a wholly-owned subsidiary of the Company, had entered into settlement agreements...

  • Page 106
    ... a high degree of uncertainty with respect to future exposure from asbestos claims. As in prior years, the annual claim review considered active policyholders and litigation cases for potential product and ''non-product'' liability. The Home Office and Field Office categories, which account for...

  • Page 107
    ... to be provided. Payment obligations may be subject to annual maximums and are only made when valid claims are presented. Wellington accounts refer to the 35 defendants that are parties to a 1985 agreement settling certain disputes concerning insurance coverage for their asbestos claims. Many of the...

  • Page 108
    .... In December 2008, the Company completed the sale of Unionamerica, which comprised its United Kingdom-based runoff insurance and reinsurance businesses. Included in the claim and claim adjustment expense reserves transferred to the purchaser were gross and net asbestos reserves of $330 million and...

  • Page 109
    .... 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 110
    ... defense and settlement costs driven in part by adverse judicial developments in certain states regarding the availability of coverage for environmental claims. In December 2008, the Company completed the sale of Unionamerica, which comprised its United Kingdom-based runoff insurance and reinsurance...

  • Page 111
    ...outcome of direct actions against the Company, future developments pertaining to the Company's ability to recover reinsurance for asbestos and environmental claims and the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or...

  • Page 112
    ...is to fund future claims payments, the Company employs a conservative investment philosophy. A significant majority of funds available for investment are deployed in a widely diversified portfolio of high quality, liquid intermediate-term taxable U.S. government, tax-exempt U.S. municipal bonds, and...

  • Page 113
    ... Value Average Credit Rating Credit Sector(1) Government: Debt securities issued by foreign governments ...Corporate: Financial Bank ...Insurance ...Brokerage and asset management Finance/leasing ...Industrial ...Public utility ...Sovereign corporate securities(2) . Commercial mortgage-backed...

  • Page 114
    ... Company when a public rating does not exist. Ratings shown are the higher of the rating of the underlying issuer or the insurer in the case of securities enhanced by third-party insurance for the payment of principal and interest in the event of issuer default. (2) No other single state accounted...

  • Page 115
    ... in 2008. The Company's real estate investments include warehouses and office buildings and other commercial land and properties that are directly owned. The Company's other investments are primarily comprised of private equity limited partnerships, hedge funds, real estate partnerships, joint...

  • Page 116
    ... of credit spreads generally), as well as net unrealized investment losses on equity securities, which reflected current market conditions. Net pretax unrealized investment gains at December 31, 2007 increased by $258 million over year-end 2006, primarily driven by the fixed maturity portfolio. The...

  • Page 117
    ...externally managed securities with respect to which the Company does not have the ability to assert an intention to hold until recovery in market value; • $10 million in the real estate portfolio, related to the fundamental decline in the financial condition of one real estate development property...

  • Page 118
    ... externally managed securities with respect to which the Company does not have the ability to assert an intention to hold until recovery in market value and $1 million related to credit risk associated with various issuers' deteriorated financial position; • $4 million in the equity portfolio when...

  • Page 119
    ... ended December 31, 2008: (in millions) Loss Fair Value Fixed maturities ...Equity securities ...Total ... $168 4 $172 $2,735 17 $2,752 Purchases and sales of investments are based on cash requirements, the characteristics of the insurance liabilities and current market conditions. The Company...

  • Page 120
    ...exposures would materially change the estimated threshold loss amounts. This information in the tables is based on the Company's in-force portfolio and catastrophic reinsurance program as of December 31, 2008. Catastrophe modeling requires a significant amount of judgment and a number of assumptions...

  • Page 121
    ... of reinsurance recoverables were collateralized by letters of credit, trust agreements and funds held. Included in reinsurance recoverables are certain amounts related to structured settlements. Structured settlements comprise annuities purchased from various life insurance companies to settle 109

  • Page 122
    ...-effective provider of property and casualty insurance in the United States and in selected international markets. A variety of factors continue to affect the property and casualty insurance market and the Company's core business outlook for 2009, including general economic conditions, competitive...

  • Page 123
    ... for new business generally has less of an impact on underwriting profitability than renewal price changes, particularly in an environment of high retention rates, which the Company has experienced over the past several years. In the Business Insurance and the Financial, Professional & International...

  • Page 124
    ... impact the Company's investment portfolio, particularly investments in private equity limited partnerships, real estate partnerships and hedge funds, resulting in a decline in transaction volume in these asset classes, and as a result, lower net investment income. For the year ended December 31...

  • Page 125
    ... reliant on its commercial paper program to meet its operating cash flow needs. The Company currently utilizes letters of credit issued by major banks to support its operations at Lloyd's. As a result of movements in foreign currency exchange rates, additional capital, which the Company expects to...

  • Page 126
    ... the fixed maturity portfolio exceeds the expected present value of the net insurance liabilities, as well as the positive cash flow from newly sold policies and the large amount of high quality liquid bonds, provide assurance of the Company's ability to fund the payment of claims without having to...

  • Page 127
    ... USF&G Corporation and subsequently assumed by the Company after the merger of The St. Paul Companies Inc. (SPC) and Travelers Property Casualty Corp. (TPC). During the period prior to redemption, the Company had repurchased and retired $22 million of the debentures in open market transactions. Upon...

  • Page 128
    ... in the third quarter of 2007. The remaining proceeds were used for general corporate purposes. Prior to applying these proceeds, the Company invested them in investment grade, marketable securities. In August 2007, the Company's $442 million, 5.01% senior notes matured and were fully paid. 116

  • Page 129
    ... made from time to time in the open market, pursuant to preset trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise. The authorization does not have a stated expiration date. The timing and actual number of shares to be...

  • Page 130
    ... 2008. The net unrealized loss position at December 31, 2008 reflected the impact of rising interest rates on longer-dated fixed maturity securities primarily due to the widening of credit spreads generally. Line of Credit Agreement. The Company maintains an $800 million commercial paper program, of...

  • Page 131
    ..., five-year revolving credit agreement with a syndicate of financial institutions. Pursuant to covenants in the 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 132
    ...,930 Total estimated claims and claims related payments ...Liabilities related to unrecognized tax benefits(12) . Total ... (1) See note 8 of notes to the Company's consolidated financial statements for a further discussion of outstanding indebtedness. Because the amounts reported in the foregoing...

  • Page 133
    ...financial statements. (5) Includes commitments to vendors entered into in the ordinary course of business for goods and services including office supplies, archival services, etc. (6) Represents estimated timing for fulfilling unfunded commitments for private equity limited partnerships, hedge funds...

  • Page 134
    ...'s consolidated 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...

  • Page 135
    ... 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 accordance with statutory accounting practices. The insurance holding company laws of other states in which...

  • Page 136
    ...reserves are reviewed regularly by qualified actuaries employed by the Company. 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 137
    ... reserves by product line were as follows: (at December 31, in millions) Case 2008 IBNR Total Case 2007 IBNR Total General liability ...Property ...Commercial multi-peril ...Commercial automobile ...Workers' compensation ...Fidelity and surety ...Personal automobile ...Homeowners and personal-other...

  • Page 138
    ... insured reports the loss many years later. Most general liability policies are written on an occurrence basis. These policies are subject to substantial loss development over time as facts and circumstances change in the years following the policy issuance. The occurrence form, which accounts for...

  • Page 139
    ... reserves 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 140
    ... The principal estimation and analysis methods utilized by the Company's actuaries are the paid development method, the case incurred development method, the Bornhuetter-Ferguson (BF) method, and average value analysis combined with the reported claim development method. The BF method is usually...

  • Page 141
    ... 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 142
    ... are written 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...

  • Page 143
    ... claim counts and average values for IBNR claim counts. For components with greater lags in claim reporting, such as excess and umbrella components of this product line, the company relies more heavily on the BF method than on the paid and case incurred development methods. Examples of common risk...

  • Page 144
    ... as well as enhanced risk control, underwriting and claim process initiatives. The 2006 change largely resulted from directors and officers and errors and omissions adjustments due to worse than expected large loss activity and additional information from detailed claim reviews, primarily associated...

  • Page 145
    ... Commercial multi-peril provides a combination of property and liability coverage typically for small businesses and, therefore, includes both short and long tail coverages. For property coverage, it generally takes a relatively short period of time to close claims, while for the other coverages...

  • Page 146
    ... favorable legal and judicial environments as well as enhanced risk control, underwriting and claim process initiatives. Commercial Automobile The commercial automobile product line is a mix of property and liability coverages and, therefore, includes both short and long tail coverages. The payments...

  • Page 147
    ... claim handling initiatives and improvements in auto safety technology. Workers' Compensation Workers' compensation is generally considered a long tail coverage, as it takes a relatively long period of time to finalize claims from a given accident year. While certain payments such as initial medical...

  • Page 148
    ... on claims previously closed Mortality trends of injured workers with lifetime benefits and medical treatment Degree of cost shifting between workers' compensation and health insurance Workers' compensation book of business risk factors Product mix Injury type mix Changes in underwriting standards...

  • Page 149
    ...latent defects Financial strategy of insured Changes in statutory obligations Geographic spread of business Fidelity and Surety book of business risk factors Changes in policy provisions (e.g., deductibles, limits, endorsements) Changes in underwriting standards Unanticipated changes in risk factors...

  • Page 150
    ...) include: Bodily injury and property damage liability risk factors Trends in jury awards Changes in the underlying court system and its philosophy Changes in case law Litigation trends Frequency of claims with payment capped by policy limits Change in average severity of accidents, or proportion...

  • Page 151
    ...from changes in claim handling practices as well as initiatives to fight fraud. Homeowners and Personal Lines Other Homeowners is generally considered a short tail coverage. Most payments are related to the property portion of the policy, where the claim reporting and settlement process is generally...

  • Page 152
    ... statutory reporting framework. Due to changes in the business mix for this line over time, the recently incurred claim liabilities are relatively short term (due to both the products and the jurisdictions involved, e.g., the Republic of Ireland and the United Kingdom), while the older liabilities...

  • Page 153
    ... or single issues Changes in tort law Changes in claim adjuster office structure (causing distortions in the data) International and other book of business risk factors Changes in policy provisions (e.g., deductibles, policy limits, endorsements, ''claims-made'' language) Changes in underwriting...

  • Page 154
    ... same date in 2007, generally due to settlement activity and commutations. Recoverables attributable to structured settlements relate primarily to personal injury claims, of which workers' compensation claims comprise a significant portion, for which the Company has purchased annuities and remains...

  • Page 155
    ...like securities, sector groupings, and matrix pricing. Additionally, the pricing service uses an Option Adjusted Spread model to develop prepayment and interest rate scenarios. The pricing service evaluates each asset class based on relevant market information, relevant credit information, perceived...

  • Page 156
    ... estimated fair value provided by the Company's primary pricing service. The Company holds privately placed corporate bonds and estimates the fair value of these bonds using an internal matrix that is based on market information regarding interest rates, credit spreads and liquidity. The underlying...

  • Page 157
    ... investments, where the fair value estimate is determined either internally or by an external fund manager based on recent filings, operating results, balance sheet stability, growth and other business and market sector fundamentals. The Company holds shares of common stock of one private company...

  • Page 158
    ... the type of underlying investments. The private equity partnerships and real estate partnerships provide financial information quarterly which is generally available to investors, including the Company, within three to six months following the date of the reporting period. The hedge funds provide...

  • Page 159
    ... of external and internal portfolio managers' recommendations for other-than-temporary impairments of any other investments based on the investee's current financial condition, liquidity, near-term recovery prospects, the outlook for the business sectors in which the investee operates and other...

  • Page 160
    ...the external fund manager and the Company's portfolio managers. Internally managed venture capital investments and non-public and preferred equity securities are reviewed quarterly by the Company's portfolio managers. The Company's portfolio managers and the external fund manager review and consider...

  • Page 161
    ... and Non-Public Common and Preferred Equity Securities Included in other investments are private equity limited partnerships, investments in hedge funds and real estate partnerships that generally report investments on their balance sheet at fair value and are accounted for by the Company using the...

  • Page 162
    ... Financial Accounting Standards Board (FASB). During 2008, the Securities and Exchange Commission (SEC) issued a proposed Roadmap for comment for the potential use in filings with the SEC of financial statements for U.S. issuers prepared in accordance with International Financial Reporting Standards...

  • Page 163
    ... issued without third-party insurance. The primary market risk to the investment portfolio is interest rate and credit risk associated with investments in fixed maturity securities. The portfolio duration relative to the liabilities' duration is primarily managed through cash market transactions and...

  • Page 164
    ... financial statements as well as the ''Liquidity and Capital Resources'' section of ''Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations.'' The Company's foreign exchange market risk exposure is concentrated in the Company's invested assets and insurance...

  • Page 165
    ...in interest rates. Foreign Currency Exchange Rate Risk The Company uses fair values of investment securities to measure its potential loss from foreign denominated investments. A hypothetical 10% reduction in value of foreign denominated investments is used to estimate the impact on the market value...

  • Page 166
    ... FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ...Consolidated Statement of Income for the years ended December 31, 2008, 2007 and 2006 ...Consolidated Balance Sheet at December 31, 2008 and 2007 ...Consolidated Statement of Changes in Shareholders' Equity...

  • Page 167
    ...ended December 31, 2008, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), The Travelers Companies, Inc. and subsidiaries internal control over financial reporting...

  • Page 168
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (in millions, except per share data) For the year ended December 31, 2008 2007 2006 Revenues Premiums ...Net investment income ...Fee income ...Net realized investment gains (losses) Other revenues ... ... ... ... ... ...

  • Page 169
    ... investments ... 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 170
    ... on investment securities ...Net change in benefit plan assets and obligations recognized in equity . . Net change in unrealized foreign currency translation and other changes ... Balance, end of year ...Treasury stock (at cost) Balance, beginning of year ...Treasury shares acquired-share repurchase...

  • Page 171
    ... stock-employee share options ...Treasury stock acquired-share repurchase authorization ...Treasury stock acquired-net employee share-based compensation Excess tax benefits from share-based payment arrangements ...Other ... Net cash used in financing activities ...Effect of exchange rate changes...

  • Page 172
    ... financial statements have not been issued. FSP FAS 157-3 amends FAS 157 to clarify the application of fair value in inactive markets and allows for the use of management's internal assumptions about future cash flows with appropriately risk-adjusted discount rates when relevant observable market...

  • Page 173
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) that is not a forced liquidation or distressed sale at the measurement date. The adoption of FSP FAS 157-3 in the third quarter did not ...

  • Page 174
    ...on the Company's results of operations, financial position or liquidity. Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R) In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158...

  • Page 175
    ... deferred stock units issued under employee compensation programs containing such dividend participation features would be considered participating securities subject to the ''two-class method'' in computing EPS rather than the ''treasury stock method.'' The FSP is effective for financial statements...

  • Page 176
    ...Revised Statement of Financial Accounting Standards No. 141R, Business Combinations (FAS 141R), a replacement of FAS 141, Business Combinations. FAS 141R provides revised guidance on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities...

  • Page 177
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Accounting Policies Investments Fixed Maturity and Equity Securities Fixed maturities include bonds, notes and redeemable preferred stocks....

  • Page 178
    ... securities. The Company uses the equity method of accounting for private equity limited partnerships, real estate partnerships, hedge funds and joint ventures. The partnerships and hedge funds generally report investments on their balance sheet at fair value. The financial statements prepared...

  • Page 179
    ...Investments in private equity limited partnerships, real estate partnerships, hedge funds and joint ventures are accounted for using the equity method of accounting, whereby the Company's share of the investee's earnings or losses in the fund are reported in net investment income. Trading securities...

  • Page 180
    ..., or cost for equity securities; and (4) the financial condition, near-term and long-term prospects for the issuer, including the relevant industry conditions and trends, and implications of rating agency actions and offering prices. When the Company determines that an invested asset is other-than...

  • Page 181
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Sales of Temporarily Impaired Invested Assets The Company may, from time to time, sell invested assets subsequent to the balance sheet date...

  • Page 182
    ... and Non-Public Common and Preferred Equity Securities Included in other investments are private equity limited partnerships, investments in hedge funds and real estate partnerships that generally report investments on their balance sheet at fair value and are accounted for by the Company using the...

  • Page 183
    ... TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) the year through discussions with the managers/general partners. If the Company becomes aware of an impairment of a partnership's investments...

  • Page 184
    ... Assets The Company performs a review, 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 Company estimates the...

  • Page 185
    ... Company, which stock represents authorized and unissued 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...

  • Page 186
    ... attributable to temporary differences between the financial statement and tax return bases of assets and liabilities, based on enacted tax rates and other provisions of the tax law. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized in income in the...

  • Page 187
    ... 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. 175

  • Page 188
    ... Company work together in actively managing and controlling exposure and claims and they share risk through policy features such as deductibles or retrospective rating. Products offered include workers' compensation, general liability, umbrella, commercial auto, property and inland marine coverages...

  • Page 189
    ...SIGNIFICANT ACCOUNTING POLICIES (Continued) • Target Risk Underwriting. The following units serve commercial businesses requiring specialized product underwriting, claims handling and risk management services: • National Property provides traditional and customized property insurance programs to...

  • Page 190
    ... of Ireland and business written as a corporate member at Lloyd's. International, through its operations in the United Kingdom, Canada and the Republic of Ireland, offers specialized insurance and risk management services to several customer groups, including those in the technology, public services...

  • Page 191
    ...million of net written premiums for the years ended December 31, 2007 and 2006, respectively. The sale was not material to the Company's results of operations or financial position. 2. SEGMENT INFORMATION The Company is organized into three reportable business segments: Business Insurance; Financial...

  • Page 192
    ...of the Company's revenues, operating income and total assets by reportable business segments: Financial, Professional & International Insurance Total Reportable Segments (for the year ended December 31, in millions) Business Insurance Personal Insurance 2008 Premiums ...Net investment income Fee...

  • Page 193
    ... INFORMATION (Continued) Net written premiums by market were as follows: (for the year ended December 31, in millions) 2008 2007 2006 Business Insurance: Select Accounts ...Commercial Accounts ...National Accounts ...Industry-Focused Underwriting Target Risk Underwriting ...Specialized Distribution...

  • Page 194
    ..., Professional & International Insurance: Fidelity and surety ...General liability ...International ...Other ... Total Financial, Professional & International Insurance ...Personal Insurance: Automobile ...Homeowners and Other ...Total Personal Insurance ...Total earned premiums Net investment...

  • Page 195
    ... ...Financial, Professional & International Insurance ...Personal Insurance ...Total assets for reportable segments ...Other assets(2) ...Total consolidated assets ... $ 82,622 13,356 13,151 109,129 622 $109,751 $ 87,160 14,099 13,300 114,559 665 $115,224 (1) The amount of investments in equity...

  • Page 196
    ... agencies and authorities ...Obligations of states, municipalities and political subdivisions ...Debt securities issued by foreign governments ...Mortgage-backed securities, collateralized mortgage obligations and pass-through securities ...All other corporate bonds ...Redeemable preferred stock...

  • Page 197
    ...TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS (Continued) included in ''All other corporate bonds'' in the tables above. At December 31, 2008, approximately $258 million of these securities, or the loans backing such securities, contained guarantees by the United States Government...

  • Page 198
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS (Continued) securing outstanding letters of credit had a fair value of $104 million and $142 million at December 31, 2008 and 2007, respectively. Equity Securities The cost and fair ...

  • Page 199
    ...TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS (Continued) Other Investments Other investments include private equity limited partnerships, hedge funds, real estate partnerships, joint ventures, non-public common and preferred equity...

  • Page 200
    ... states, municipalities and political subdivisions ...Debt securities issued by foreign governments ...Mortgage-backed securities, collateralized mortgage obligations and pass-through securities ...All other corporate bonds ...Redeemable preferred stock ...Total fixed maturities ...Equity securities...

  • Page 201
    ... states, municipalities and political subdivisions ...Debt securities issued by foreign governments ...Mortgage-backed securities, collateralized mortgage obligations and pass-through securities ...All other corporate bonds ...Redeemable preferred stock ...Total fixed maturities ...Equity securities...

  • Page 202
    ... 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 other monitoring procedures. Net Investment Income (for the year ended...

  • Page 203
    ... in fair value of the derivative hedging the net investment, including any forward premium or discount, is reflected in the accumulated other changes in equity from nonowner sources as part of the foreign currency translation adjustment. For the years ended December 31, 2008 and 2007, the amount...

  • Page 204
    ... six million non-public stock purchase warrants of Platinum Underwriters Holdings, Ltd., a publicly-held company. These warrants are not designated and do not qualify as hedges under FAS 133 and as such the mark-to-market changes in fair value are reflected in net realized investment gains (losses...

  • Page 205
    ... inputs reflect the Company's own assumptions about the inputs that market participants would use. - Valuation of Investments Reported at Fair Value in Financial Statements The fair value of a financial instrument is the estimated amount at which the instrument could be exchanged in an orderly...

  • Page 206
    ... like securities, sector groupings and matrix pricing. Additionally, the pricing service uses an Option Adjusted Spread model to develop prepayment and interest rate scenarios. The pricing service evaluates each asset class based on relevant market information, relevant credit information, perceived...

  • Page 207
    ... equity securities, with a fair value estimate of $224 million, reported in other investments, where the fair value estimate is determined either internally or by an external fund manager based on recent filings, operating results, balance sheet stability, growth and other business and market sector...

  • Page 208
    ... period included in earnings attributable to changes in the fair value of assets still held at the reporting date ... The Company had no financial assets or financial liabilities that were measured at fair value on a non-recurring basis during the twelve months ended December 31, 2008. Valuation of...

  • Page 209
    ... amounts related to structured settlements. Structured settlements comprise annuities purchased from various life insurance companies to settle certain personal physical injury claims, of which workers' compensation claims comprise a significant portion. In cases where the Company did not receive...

  • Page 210
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. REINSURANCE (Continued) agreements. The Company employs dedicated specialists and strategies to manage reinsurance collections and disputes. The Company is also required to participate in ...

  • Page 211
    ..., professional liability (other than directors and officers'), surety, burglary and theft, and farm-owners multi-peril. In the case of a war declared by Congress, only workers' compensation losses are covered by the Acts. The Acts generally require that all commercial property casualty insurers...

  • Page 212
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. REINSURANCE (Continued) for that program year. The Company has had no terrorism-related losses since the Program was established. Because the Acts are relatively new and their interpretation is ...

  • Page 213
    ...the merger of The St. Paul Companies, Inc. and Travelers Property Casualty Corp. in 2004 and was based on management's estimate of nominal claims and claim adjustment expense reserves and reinsurance recoverables (after adjusting for conformity with the acquirer's accounting policy on discounting of...

  • Page 214
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. INSURANCE CLAIM RESERVES Claims and claim adjustment expense reserves were as follows: (at December 31, in millions) 2008 2007 Property-casualty ...Accident and health ...Total ... $54,646 77 $...

  • Page 215
    ... automobile product lines. The net favorable prior year reserve development in the general liability and commercial multi-peril lines was attributable to several factors, including improved legal and judicial environments, as well as enhanced risk control, underwriting and claim process initiatives...

  • Page 216
    ... development in the United Kingdom, in part due to favorable claim activity relating to 2007 flood losses. In the Bond & Financial Products group, better than expected loss experience for the contract surety business within the fidelity and surety product line, resulting from favorable settlements...

  • Page 217
    .... The commercial multi-peril and liability lines of business experienced better than anticipated loss development that was attributable to several factors, including improving legal and judicial environments, as well as enhanced risk control, underwriting and claim process initiatives. The favorable...

  • Page 218
    ... process; and applicable coverage defenses or determinations, if any, including the determination as to whether or not an asbestos claim is a products/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim. In the third quarter of 2008, the Company...

  • Page 219
    ..., judicial rulings and legislative actions. Developing payment trends among policyholders in the Home Office, Field Office and Assumed and International categories are also analyzed. In addition, the Company reviews its historical gross and net loss and expense paid experience, year-by-year...

  • Page 220
    ... the Company has issued to the policyholder; the involvement of other insurers; the potential for other available coverage, including the number of years of coverage; the role, if any, of non-environmental claims or potential non-environmental claims in any resolution process; and the applicable law...

  • Page 221
    ...outcome of direct actions against the Company, future developments pertaining to the Company's ability to recover reinsurance for asbestos and environmental claims and the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or...

  • Page 222
    ...TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. DEBT Debt outstanding was as follows: (at December 31, in millions) 2008 2007 Short-term: Commercial paper ...Zero coupon convertible notes, effective yield 4.17%, due March 3, 2009 . 7.81% Private...

  • Page 223
    ... preferred stock, debt exchangeable for common equity, and debt exchangeable for preferred equity) which generally are treated by the ratings agencies as having similar equity content to the debentures. The Company can redeem the debentures at its option, in whole or in part, at any time on...

  • Page 224
    ... USF&G Corporation and subsequently assumed by the Company after the merger of The St. Paul Companies Inc. (SPC) and Travelers Property Casualty Corp. (TPC). During the period prior to redemption, the Company had repurchased and retired $22 million of the debentures in open market transactions. Upon...

  • Page 225
    ... to the original issue price plus accreted original issue discount. Each note is convertible at the option of the holder at any time on or prior to maturity, unless previously redeemed by the Company, into common stock of the Company at a conversion rate of 16.6433 shares for each $1,000 principal...

  • Page 226
    ...500 million. Line of Credit Agreement On June 10, 2005, the Company entered into a $1.0 billion, five-year revolving credit agreement with a syndicate of financial institutions. Pursuant to covenants in the credit agreement, the Company must maintain an excess of consolidated net worth over goodwill...

  • Page 227
    ...merger related to The St. Paul Companies, Inc. Stock Ownership Plan (SOP) Trust which was subsequently merged into The Travelers 401(k) Savings Plan (the 401(k) Savings Plan). The SOP Trust may at any time convert any or all of the preferred shares into shares of the Company's common stock at a rate...

  • Page 228
    ... million, respectively, of its common stock under these plans. Common shares acquired are reported as treasury stock in the consolidated balance sheet. Dividend Availability The Company's insurance subsidiaries are subject to various regulatory restrictions that limit the maximum amount of dividends...

  • Page 229
    ... to initially apply the provisions of FAS 158. Activity in 2008 and 2007 represented net changes in assets and obligations related to the Company's employee benefit plans recognized in equity from nonowner sources. (2) Includes foreign currency translation adjustments and hedging activities...

  • Page 230
    ... 26 $4,238 Net income available to common shareholders-diluted ...Common Shares Basic Weighted average shares outstanding ...Diluted Weighted average shares outstanding ...Weighted average effects of dilutive securities: Stock options and other incentive plans ...Convertible preferred stock ...Zero...

  • Page 231
    ...' equity Expense (benefit) relating to stock-based compensation, the change in unrealized appreciation on investments, unrealized loss on foreign exchange and unrealized loss on derivatives, and other comprehensive income ...Total income tax expense included in consolidated financial statements...

  • Page 232
    ... tax assets ...Less valuation allowance ...Net deferred tax assets ...Deferred tax liabilities Deferred acquisition costs ...Investments ...Internally-developed software . Other ... Total gross deferred tax liabilities ...Total deferred income taxes ... If the Company determines that any of its...

  • Page 233
    ...non-employee directors, executive officers and other employees with those of the Company's shareholders, and to attract and retain personnel by providing incentives in the form of stock-based awards. The 2004 Incentive Plan permits grants of nonqualified stock options, incentive stock options, stock...

  • Page 234
    ..., in annual installments beginning at least six months following termination of service as a director. The shares of deferred stock units issued under the Director Compensation Program are awarded under the 2004 Incentive Plan. Stock Option Awards Stock option awards granted to eligible officers and...

  • Page 235
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. SHARE-BASED INCENTIVE COMPENSATION (Continued) Period Option granted Option Award Vesting terms 2008, 2007 and 2006 ...April 2004 through 2005 . . Options vest at end of 3-year period (cliff ...

  • Page 236
    ... FINANCIAL STATEMENTS (Continued) 12. SHARE-BASED INCENTIVE COMPENSATION (Continued) 2007 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 ...2006...

  • Page 237
    ... average grant-date fair value of options granted (per share) ...Total intrinsic value of options exercised during the year (in millions) ... $13.60 $ 74 $4.94 $ 5 Restricted Stock, Restricted Stock Units, Deferred Stock and Performance Share Award Programs The Company, commencing with equity...

  • Page 238
    ...NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. SHARE-BASED INCENTIVE COMPENSATION (Continued) A summary of restricted stock units, deferred stock awards and performance share activity under the Company's 2004 Incentive Plan and legacy plans as of and for the year ended December 31, 2008...

  • Page 239
    ... prior final average pay formula. In addition, the Company and TPC sponsor nonqualified defined benefit pension plans which cover certain highly-compensated employees and also sponsor postretirement health and life insurance benefit plans for employees satisfying certain age and service requirements...

  • Page 240
    ... plan assets at end of year ...Funded status of plan at end of year ...Amounts recognized in the statement of financial position consist of: Accrued over-funded benefit plan assets ...Accrued under-funded benefit plan liabilities ...Total ...Amounts recognized in accumulated other changes in equity...

  • Page 241
    ... end of year ...Funded status of plan at year end ...Amounts recognized in the statement of financial position consist of: Accrued under-funded benefit plan liability ...Total ...Amounts recognized in accumulated other changes in equity from nonowner sources consist of: Prior service benefit ...Net...

  • Page 242
    ... TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued) The Company has discretion regarding whether to provide additional funding and when to provide such funding to its qualified pension plan. During 2008, the Company voluntarily made...

  • Page 243
    ... portfolio of high quality fixed maturity corporate bonds (rated Aa or higher) available at the year-end valuation date for which the timing and amount of cash outflows correspond with the timing and amount of the estimated benefit payouts of the Company's benefit plan. The 2007 discount rate...

  • Page 244
    .... Pension plan assets are invested for the exclusive benefit of the plan participants and beneficiaries and are intended, over time, to satisfy the benefit obligations under the plan. Risk tolerance is established through consideration of plan liabilities, plan funded status, and corporate financial...

  • Page 245
    ... can be reinvested at any time into any other investment option. The expense related to this plan was $94 million and $78 million for the years ended December 31, 2008 and 2007, respectively. Included in the Savings Plan are a legacy Savings Plus Plan (SPP) and a Stock Ownership Plan (SOP) in which...

  • Page 246
    ... numbers of settled asbestos claims and to impose liability for damages, including punitive damages, directly on insurers. Similar lawsuits were filed in Massachusetts and Hawaii state courts (these suits and the West Virginia suits are collectively referred to as the Statutory and Hawaii Actions...

  • Page 247
    ...). In that case, the Company intends to litigate the direct action cases vigorously. SPC, which is not covered by the bankruptcy court rulings or the settlements described above, is a party to pending direct action cases in Texas state court asserting common law claims. All such cases that are still...

  • Page 248
    ...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 249
    ... previously issued financial statements was required. Any authority with open inquiries or investigations could ask that additional work be performed or reach conclusions different from the Company's. In 2005, four putative class action lawsuits were brought against a number of insurance brokers and...

  • Page 250
    ... is not acquired. The maximum annual amount payable to Aon for such services and any such contractual payment related to that commitment is $20 million. Guarantees The Company has contingent obligations for guarantees related to letters of credit, issuance of debt securities, certain investments and...

  • Page 251
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 15. CONTINGENCIES, COMMITMENTS AND GUARANTEES (Continued) following the closing, and in certain cases obligations arising from undisclosed liabilities, adverse reserve development, imposition of ...

  • Page 252
    ... CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES (Continued) CONSOLIDATING STATEMENT OF INCOME (Unaudited) For the year ended December 31, 2008 (in millions) TPC Other Subsidiaries Travelers(1) Eliminations Consolidated Revenues Premiums ...Net investment income...

  • Page 253
    ... CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES (Continued) CONSOLIDATING STATEMENT OF INCOME (Unaudited) For the year ended December 31, 2007 (in millions) TPC Other Subsidiaries Travelers(1) Eliminations Consolidated Revenues Premiums ...Net investment income...

  • Page 254
    ... 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 Travelers(1) Eliminations Consolidated Revenues Premiums ...Net investment income...

  • Page 255
    ... Total assets ...Liabilities Claims and claim adjustment expense reserves Unearned premium reserves ...Contractholder payables ...Payables for reinsurance premiums ...Debt ...Other liabilities ...Shareholders' equity Preferred Stock Savings Plan-convertible preferred stock (0.3 shares issued and...

  • Page 256
    ...investments ... Total assets ...Liabilities Claims and claim adjustment expense reserves Unearned premium reserves ...Contractholder payables ...Payables for reinsurance premiums ...Debt ...Other liabilities ...Shareholders' equity Preferred Stock Savings Plan-convertible preferred stock (0.3 shares...

  • Page 257
    ...Real estate ...Other investments ...Net sales (purchases) of short-term securities . Securities transactions in course of settlement Other ...Cash flows from financing activities Issuance of debt ...Payment of debt ...Dividends paid to shareholders ...Issuance of common stock-employee share options...

  • Page 258
    ... paid to shareholders ...Issuance of common stock-employee share options ...Treasury shares acquired-share repurchase authorization ...Treasury shares acquired-net employee share-based compensation ...Excess tax benefits from share-based payment arrangements ...Dividends paid to parent company...

  • Page 259
    ...Real estate ...Other investments ...Net (purchases) sales of short-term securities . Securities transactions in course of settlement Other ...Cash flows from financing activities Issuance of debt ...Payment of debt ...Dividends paid to shareholders ...Issuance of common stock-employee share options...

  • Page 260
    ...TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 18. SELECTED QUARTERLY FINANCIAL DATA (Unaudited) 2008 (in millions, except per share...before income taxes ...Income tax expense ...Net income ...Net income per share:(1) Basic ...Diluted ... $6,427 4,...

  • Page 261
    ...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 262
    ... to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management has assessed the Company's internal control over financial reporting as of December 31, 2008. The standard measures adopted...

  • Page 263
    ... with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of The Travelers Companies, Inc. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in shareholders' equity, and cash...

  • Page 264
    ...Board of Directors and Chief Executive Officer Vice Chairman and Chief Financial Officer Vice Chairman Vice Chairman and Chief Investment Officer Vice Chairman, Chief Legal Officer and Executive Vice President- Financial, Professional and International Insurance President and Chief Operating Officer...

  • Page 265
    ...of Market Regulation of the U.S. Securities and Exchange Commission; and a managing director of Smith Barney. Alan D. Schnitzer, 43, has been Vice Chairman and Chief Legal Officer since joining the Company in April 2007 and Executive Vice President-Financial, Professional and International Insurance...

  • Page 266
    ...policy processing, agency operations and billing. Prior to joining Travelers as its Chief Information Officer in 2003, Mr. Bloom was a partner in the Financial Services Practice at Accenture. He also served previously as a Vice President at Hartford Life, responsible for business technology services...

  • Page 267
    ... 1996 Stock Option Plan which was established to grant options to certain eligible employees of TRV's United Kingdom operations. The options granted under the plan were priced at the market price of the Company's common stock on the date of grant and were eligible for exercise at any time from...

  • Page 268
    ... Public Accounting Firm-Audit and Non-Audit Fees'' section of the Company's Proxy Statement relating to its Annual Meeting of Shareholders to be held May 5, 2009 is incorporated herein by reference. PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Documents filed as a part of the report...

  • Page 269
    ... 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 and Chief Executive Officer (Principal Executive...

  • Page 270
    Date By * Thomas R. Hodgson Director February 19, 2009 By * Cleve L. Killingsworth, Jr. Director February 19, 2009 By * Robert I. Lipp Director February 19, 2009 By * Blythe J. McGarvie Director February 19, 2009 By * Glen D. Nelson, M.D. Director February 19, 2009 By * Laurie ...

  • Page 271
    ... 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 272
    ... Public Accounting Firm The Board of Directors and Stockholders The Travelers Companies, Inc.: Under date of February 19, 2009, we reported on the consolidated balance sheet of The Travelers Companies, Inc. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements...

  • Page 273
    ... II THE TRAVELERS COMPANIES, INC. (Parent Company Only) CONDENSED FINANCIAL INFORMATION OF REGISTRANT (in millions) CONDENSED STATEMENT OF INCOME For the year ended December 31, 2008 2007 2006 Revenues Net investment income ...Net realized investment gains (losses) ...Other revenues ...Total...

  • Page 274
    ...Total liabilities ...Shareholders' equity Preferred Stock Savings Plan-convertible preferred stock (0.3 shares issued and outstanding at both dates) ...Common stock (1,750.0 shares authorized, 585.1 and 627.8 shares issued and outstanding) ...Retained earnings ...Accumulated other changes in equity...

  • Page 275
    ... from investing activities Net sales (purchases) of short-term securities ...Other investments, net ...Net cash provided by (used in) investing activities ...Cash flows from financing activities Issuance of debt ...Payment of debt ...Dividends paid to shareholders ...Treasury stock acquired-share...

  • Page 276
    ... Business Insurance ...Financial, Professional & International Insurance . Personal Insurance ... Total-Reportable Segments ...Other ... Consolidated ... (a) See note 2 to the consolidated financial statements for discussion of the method used to allocate net investment income and invested assets...

  • Page 277
    ... V THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES Valuation and Qualifying Accounts (in millions) Balance at beginning of period Charged to costs and expenses Charged to other accounts(1) Balance at end of period Deductions(2) 2008 Reinsurance recoverables ...Allowance for uncollectible: Premiums...

  • Page 278
    ... expenses Amortization Paid claims Deferred incurred related to: Policy Claims and Discount from Net of deferred and claim Acquisition Claim Adjustment reserves for Unearned Earned Investment Current Prior acquisition adjustment Premiums Costs Expense Reserves unpaid claims Premiums Premiums Income...

  • Page 279
    ... Executive Performance Plan was filed as Exhibit 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. 10.7* Form of Executive Officer Capital Accumulation Program Restricted Stock Award Notification and Agreement...

  • Page 280
    ... and Citigroup Inc., was filed as Exhibit 10.2 to TPC's quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2002, and is incorporated herein by reference. 10.23* Form of Non-Solicitation and Non-Disclosure Agreement for Executive Officers, amending The St. Paul Travelers Companies...

  • Page 281
    .... Stipulation with the New York State Department of Insurance was filed as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2006, and is incorporated herein by reference. 10.25 10.26*†Current Director Compensation Program, effective as of...

  • Page 282
    ... 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 283
    ... December 31, 2008, 2007, 2006 and 2005. Data for the year ended December 31, 2004 reflects information for TPC for the period January 1, 2004 through March 31, 2004, and for the Company for the nine-month period from the merger date of April 1, 2004 through December 31, 2004. The ratio of earnings...

  • Page 284
    ... 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, 2008 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 285
    ...process, summarize and report financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. By: /s/ JAY S. BENET Jay S. Benet Vice Chairman and Chief Financial Officer...

  • Page 286
    ...(d) of the Exchange Act and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 19, 2009 By: /s/ JAY S. BENET Name: Jay S. Benet Title: Vice Chairman and Chief Financial Officer 274

  • Page 287
    ...Act and SEC Rules 13a-14(a) and 15d-14(a) regarding Travelers financial statements, disclosure controls and procedures and other matters. In addition, following its 2008 annual meeting of shareholders, Travelers submitted to the NYSE the annual certification of the company's Chief Executive Officer...

  • Page 288
    NYSE: TRV The Travelers Companies, Inc. 485 Lexington Avenue New York, NY 10017-2630 800.328.2189 www.travelers.com