Travelers 2010 Annual Report Download - page 22

brokers, including managing general agents and wholesale agents, supplement this strategy. In all of
these business groups, the competitive strategy typically is market leadership attained through focused
industry knowledge applied to insurance and risk needs.
FINANCIAL, PROFESSIONAL & INTERNATIONAL INSURANCE
The Financial, Professional & International Insurance segment includes surety and financial
liability coverages, which primarily use credit-based underwriting processes, as well as property and
casualty products that are primarily marketed on a domestic basis in the United Kingdom, Canada and
the Republic of Ireland, and on an international basis as a corporate member of Lloyd’s. The segment
includes the following groups:
•Bond & Financial Products provides a wide range of customers with bond and insurance products
and risk management services. The range of coverages includes performance, payment and
commercial surety and fidelity bonds for construction and general commercial enterprises;
management liability coverages for losses caused by the actual or alleged negligence or
misconduct of directors and officers or employee dishonesty; employment practices liability
coverages and fiduciary coverages for public corporations, private companies and not-for-profit
organizations; professional liability coverage for actual or alleged errors and omissions
committed in the course of professional conduct or practice for a variety of professionals
including, among others, lawyers, design professionals and real estate agents; and professional
and management liability, property, auto and general liability and fidelity insurance for financial
institutions.
•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, among others, those in the technology, public services, and financial and professional
services industry sectors. In addition, in the Republic of Ireland, the Company writes personal
automobile coverage. International, through its Lloyd’s syndicate (Syndicate 5000), for which the
Company provides 100% of the capital, underwrites through five principal business units—
marine, global property, accident & special risks, power & utilities and aviation.
On November 3, 2010, an indirect subsidiary of the Company entered into a definitive agreement
to commence a joint venture with J. Malucelli Participa¸c˜ oes em Seguros e Resseguros S.A, a Brazilian
company (‘‘J. Malucelli’’), through the acquisition of approximately 43% of J. Malucelli’s common
stock. J. Malucelli is currently the market leader in surety in Brazil based on market share, and the
acquisition provides a platform for potentially expanding its business into the Brazilian property and
casualty market. The purchase price for this acquisition will be R$625 million Brazilian Reais (the U.S.
dollar equivalent of which will depend on the exchange rate at closing) plus an amount based on a
Brazilian inter-bank lending rate (CDI) from January 1, 2011 through the closing date of the
transaction. At December 31, 2010, R$625 million Brazilian Reais was equivalent to approximately
$377 million in U.S. dollars. The Company also has an option to increase its interest up to 49.9% of
the common stock of J. Malucelli within 18 months. The purchase price is expected to be paid in cash
from internal sources. The joint venture transaction is subject to customary closing conditions and is
expected to be finalized in the first half of 2011.
Selected Market and Product Information
The following table sets forth Financial, Professional & International Insurance net written
premiums by market and product line for the periods indicated. For a description of the markets and
10