Travelers 2011 Annual Report Download

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Committed to Opportunity
 Annual Report and Form K

Table of contents

  • Page 1
    Committed to Opportunity 2011 Annual Report and Form 102K

  • Page 2
    ... casualty insurance for auto, home and business. The company's diverse business lines offer customers a wide range of coverage predominantly through independent agents and brokers. A component of the Dow Jones Industrial Average, Travelers has more than 30,000 employees and operations in the United...

  • Page 3
    ... Executive Officer Å´ TO OUR SHAREHOLDERS One measure of a great company is how it performs in challenging times. The year 2011, the costliest natural catastrophe year on record, proved to be challenging for both Travelers and the insurance industry globally. Weather events in the United States...

  • Page 4
    2 2011 Annual Report Financial results over time The challenges presented in 2011 highlight the importance of our commitment to a long-term perspective - one of Travelers' hallmarks. • Operating return on equity As I have consistently stated, As long as the interest rate environment or the ...

  • Page 5
    ... market, and, with Travelers' assistance, JMalucelli is entering Brazil's growing property and casualty market. We are pleased with our progress to date. • Public Policy In 2011, our commitment to contributing Long-term investments in our business In our insurance businesses, 2011 net...

  • Page 6
    ... consecutive quarter that Business Insurance has seen positive rate change on renewed accounts. Given our efforts to date, we are pleased with our progress, and we believe we are on our way to improving profitability. best - Travelers is committed to opportunity. The company's community giving is...

  • Page 7
    ... insurance products and services to address large property, inland marine, ocean marine, equipment breakdown and excess casualty risks, while business units in the Industry-Focused Underwriting and Specialized Distribution groups tailor coverage to complex industries, including oil & gas, technology...

  • Page 8
    ... property and casualty insurance products and management liability, professional liability and crime coverages in the United Kingdom, Canada and the Republic of Ireland, and internationally through its operations at Lloyd's. The International business also provides surety bonds in Canada. 2011...

  • Page 9
    ...& Chief Administrative Officer Shane K. Boyd+ Vice President - Enterprise Communications Robert Brody+ Senior Vice President - Risk Control Services & Claim Shared Services Lisa M. Caputo*+ Executive Vice President - Marketing & Communications James W. Chapman+ President - First Party Business Group...

  • Page 10
    ...Compensation Graev (Chair) Duberstein Killingsworth Shepard Executive Fishman (Chair) Dasburg Duberstein Graev Hodgson Killingsworth Investment and Capital Markets..., The Travelers Companies, Inc. Director since 2001 Chairman & CEO, The GlenRock Group, LLC Director since 2002 Retired President & CEO...

  • Page 11
    ... NY 10017 (Address of principal executive offices) (Zip Code) (917) 778-6000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common stock, without par value New York Stock...

  • 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
    ... of commercial and personal property and casualty insurance products and services to businesses, government units, associations and individuals. The Company is incorporated as a general business corporation under the laws of the state of Minnesota and is one of the oldest insurance organizations in...

  • Page 14
    ... and Underwriting Pricing of the Company's property and casualty insurance products is generally developed based upon an estimation of expected losses, the expenses associated with producing, issuing and servicing business and managing claims, the time value of money related to the expected loss and...

  • Page 15
    ...the customer and the 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 and commercial auto coverages, and...

  • Page 16
    ... liability coverages other than workers' compensation. • 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...

  • Page 17
    ...Select Accounts ...Commercial Accounts ...National Accounts ...Industry-Focused Underwriting ...Target Risk Underwriting ...Specialized Distribution ...Total Business Insurance Core ...Business Insurance Other ...Total Business Insurance by market By product line: Workers' compensation ...Commercial...

  • Page 18
    ... The wholesale excess and surplus lines market, which is characterized by the absence of rate and form regulation, allows for more flexibility to write certain classes of business. In working with wholesale or program agents on a brokerage basis, Specialized Distribution underwrites the business and...

  • Page 19
    ... service agreements. The Company also participates in state assigned risk pools as a servicing carrier and pool participant. • Commercial Automobile. Provides coverage for businesses against losses incurred from personal bodily injury, bodily injury to third parties, property damage to an insured...

  • Page 20
    ...liability coverages described in the foregoing product line descriptions. Net Retention Policy The following discussion reflects the Company's retention policy with respect to the Business Insurance segment as of January 1, 2012. For third-party liability, Business Insurance generally limits its net...

  • Page 21
    ... brokers and direct writers. Both national and regional property and casualty insurance companies compete in the Select Accounts market which generally comprises lower-hazard, ''Main Street'' business customers. Risks are underwritten and priced using standard industry practices and a combination...

  • Page 22
    ...& 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...

  • Page 23
    ...''Business Insurance'' section of this report. • International. Provides coverage for employers' liability (similar to workers' compensation coverage in the United States), public and product liability (the equivalent of general liability), professional indemnity (similar to professional liability...

  • Page 24
    ... 2012. In the U.S. operations for third party liability, including but not limited to umbrella liability, professional liability, directors' and officers' liability, and employment practices liability, Financial, Professional & International Insurance generally limits net retentions, through the use...

  • Page 25
    ... national property and casualty insurance companies that write most classes of business using traditional products and pricing and, to a lesser extent, regional insurance companies and companies that have developed niche programs for specific industry segments. Bond & Financial Products underwrites...

  • Page 26
    ...product management area establishes underwriting guidelines integrated with its filed pricing and rating plans, which enable Personal Insurance to execute its risk selection and pricing processes. Pricing for personal automobile insurance is driven in large part by changes in the frequency of claims...

  • Page 27
    ... of the Company's independent agency-generated business on a systematic sampling basis. Insurers writing personal lines property and casualty policies may be unable to increase prices until some time after the costs associated with coverage have increased, primarily because of state insurance rate...

  • Page 28
    ...that employ direct marketing strategies, including the use of toll-free numbers and the internet. Personal Insurance believes that its continued focus on underwriting and pricing segmentation, claim settlement effectiveness strategies and expense management practices enables it to price its products...

  • Page 29
    ...are reported to and prosecuted by law enforcement agencies. Claims Services uses technology, management information and data analysis to assist the Company in reviewing its claim practices and results in order to evaluate and improve its claims management performance. The Company's claims management...

  • Page 30
    their financial condition, business practices, the price of their product offerings and the value of collateral provided. After reinsurance is purchased, the Company has limited ability to manage the credit risk to a reinsurer. In addition, in a number of jurisdictions, particularly the European ...

  • Page 31
    ... the Company's coverage under its General Catastrophe Treaty, effective for the period July 1, 2011 through June 30, 2012: Layer of Loss Reinsurance Coverage In-Force $0 - $1.0 billion ... Loss 100% retained by the Company, except for certain losses covered by the Earthquake Excess-of-Loss Treaty...

  • Page 32
    ... computer model used to estimate potential hurricane losses for the entire industry, discussed in ''Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Catastrophe Modeling.'' The Company has not yet determined the state weightings for the May 1, 2012 reset...

  • Page 33
    ... the National Property business unit in the Company's Business Insurance segment for the period July 1, 2011 through June 30, 2012. International Reinsurance Treaties. For business underwritten in Canada, the United Kingdom and Republic of Ireland and in the Company's operations at Lloyd's, separate...

  • Page 34
    ... The claims and claim adjustment expense reserves for most long-term disability and annuity claim payments, primarily arising from workers' compensation insurance and workers' compensation excess insurance policies, were discounted to the present value of estimated future payments using a rate of...

  • Page 35
    ...use of retrospectively rated insurance policies. For example, reserves for long-term disability and annuity claim payments (tabular reserves), primarily arising from workers' compensation insurance and workers' compensation excess insurance policies, are discounted to reflect the time value of money...

  • Page 36
    ...the Company completed the sale of Unionamerica Holdings Limited (Unionamerica), which comprised its United Kingdom (U.K.)-based runoff insurance and reinsurance businesses. (Unionamerica was acquired in 2004 as part of the Merger.) Immediately before the sale, the claims and claim adjustment expense...

  • Page 37
    ... 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 38
    ... current claims-paying (or financial strength) ratings of the Travelers Reinsurance Pool, Travelers C&S Co. of America, Travelers Personal single state companies, Travelers C&S Co. of Europe, Ltd., Travelers Guarantee Company of Canada and Travelers Insurance Company Limited as of February 16, 2012...

  • Page 39
    ... 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 40
    ...market interest rates, as well as an increase in workers' compensation insurance business volume. As a result, the estimated average effective duration of the Company's net insurance liabilities exceeded that of its portfolio of fixed maturity and short-term security investments at December 31, 2011...

  • Page 41
    ... of policy forms and the regulation of market conduct, including the use of credit information in underwriting as well as other underwriting and claims practices. In addition, many states have enacted variations of competitive ratemaking laws, which allow insurers to set certain premium rates for...

  • Page 42
    ...NAIC developed the Insurance Regulatory Information System (IRIS) to help state regulators identify companies that may require special attention. Financial examiners review annual statements and key financial ratios based on year-end data. These ratios assist state insurance departments in executing...

  • Page 43
    ...in compliance with these laws and regulations. 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 by the Financial Services Authority (FSA). The...

  • Page 44
    ... Bank of Ireland. Such operations are conducted through an Irish branch of Travelers Insurance Company Limited which, as mentioned above, is regulated by the FSA. In Canada, the conduct of TRV's insurance business is regulated by the Office of the Superintendent of Financial Institutions under...

  • Page 45
    ...support of the Company's long-term financial strategies and objectives. The Company uses various methods, including sophisticated computer modeling processes, to analyze catastrophic events and the risks associated with them. These analyses and methods are used in making underwriting and reinsurance...

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

  • Page 47
    ...policies, receiving a commission from the insurer for selling the business and a fee for servicing it. An independent agent represents multiple insurance companies and searches the market for the best product for its client. A contract that pays a periodic benefit over the remaining life of a person...

  • Page 48
    ... these pools are charged back to insurance carriers in proportion to their direct writings. Insurance risks acquired from a ceding company. A conventional actuarial method used to estimate ultimate losses for a given cohort of claims such as an accident year/product line component. If the paid-to...

  • Page 49
    ... resulting therefrom. It includes, but is not limited to, 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...

  • Page 50
    ... property insurance losses but can be written to cover casualty insurance losses such as from workers' compensation policies. When an insurer reinsures its liability with another insurer or a ''cession,'' it ''cedes'' business and is referred to as the ''ceding company.'' Insurance risks transferred...

  • Page 51
    ... ''Underwriting expense ratio.'' The measure of risk used in the pricing of an insurance product. The change in exposure is the amount of change in premium on policies that renew attributable to the change in portfolio risk. The reinsurance of all or a portion of the insurance provided by a single...

  • Page 52
    ..., these funds are available to meet some or all of the insolvent insurer's obligations to policyholders. Total cash, short-term invested assets and other readily marketable securities held by the holding company. Reserves for estimated losses and LAE that have been incurred but not yet reported to...

  • Page 53
    ... with Lloyd's underwriters, who represent investors. The investors are grouped together into syndicates that provide capital to insure the risks. An occurrence that is the basis for submission and/or payment of a claim. Losses may be covered, limited or excluded from coverage, depending on the terms...

  • Page 54
    ...to-age link ratios for future periods are assumed to be 1.0 (i.e., the age at which cumulative losses are assumed to have stopped growing). Net written premiums ...New business volume ...Operating income (loss) ... Operating income (loss) per share ...Operating return on equity ... Paid development...

  • Page 55
    ... insurance company. Insurance that provides coverage to a person or business with an insurable interest in tangible property for that person's or business's property loss, damage or loss of use. Reinsurance wherein the insurer cedes an agreed-upon fixed percentage of liabilities, premiums and losses...

  • Page 56
    ... risk or group of risks. The term may apply to an insurance policy, where the policyholder is an individual, family or business, or a reinsurance policy, where the policyholder is an insurance company. The percentage of prior period premiums (excluding renewal premium changes), accounts or policies...

  • Page 57
    ... risks. An operation which has been determined to be nonstrategic; includes non-renewals of in-force policies and a cessation of writing new business, where allowed by law. The amount of money an insurer recovers through the sale of property transferred to the insurer as a result of a loss payment...

  • Page 58
    ... appropriate premium for each accepted risk. The underwriter is expected to select business that will produce an average risk of loss no greater than that anticipated for the class of business. The insurer's or reinsurer's process of reviewing applications for insurance coverage, and the decision as...

  • Page 59
    ...of Financial Condition and Results of Operations-Catastrophe Modeling'' and ''-Changing Climate Conditions.'' The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Increases in the value and...

  • Page 60
    ... adversely impact the credit of the issuers of securities, such as states or municipalities, in whom we have invested. In addition, coverage in our reinsurance program for terrorism is limited. Although the Terrorism Risk Insurance Program (the Program) provides benefits in the event of certain acts...

  • Page 61
    ... currency and the negative impact of such events on global financial institutions and capital markets generally. Actions or inactions of European governments may impact these actual or perceived risks. In the U.S. during 2011, one rating agency downgraded the U.S.'s long-term debt credit rating...

  • Page 62
    .... The impact of inflation on loss costs could be more pronounced for those lines of business that are considered ''long tail'', such as general liability, as they require a relatively long period of time to finalize and settle claims for a given accident year. Changes in the level of inflation also...

  • Page 63
    ... plan obligations or by declining municipal tax bases and revenues in times of financial stress. • Some issuers may be unwilling to increase tax rates, or to reduce spending, to fund interest or principal payments on their municipal bonds, or may be unable to access the municipal bond market...

  • Page 64
    ...portion of our assets in equity securities, private equity limited partnerships, hedge funds, and real estate partnerships, all of which are subject to greater volatility in their investment returns than fixed maturity investments. General economic conditions, changes in applicable tax laws and many...

  • Page 65
    ... the number and outcome of direct actions against us; • future developments pertaining to our ability to recover reinsurance for asbestos and environmental claims; • the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits...

  • Page 66
    ... our underwriting intent or by increasing 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...

  • Page 67
    ... for similar technology to be used to access comparative rates for small commercial business. Agents and brokers may also create alternate distribution channels for commercial business, such as insurance exchanges, that may adversely impact product differentiation and pricing. Our competitive...

  • Page 68
    ...In the event that the life insurance company fails to make the required annuity payments, we would be required to make such payments if and to the extent not paid by state guaranty associations. Many reinsurance companies and life insurance companies were negatively impacted by the financial markets...

  • Page 69
    ..., and reinsurance coverage may not be available to us in the future at commercially reasonable rates or at all, and/or life insurance companies may fail to make required annuity payments, and thus our results of operations could be materially and adversely affected. We are exposed to credit risk in...

  • Page 70
    ... shareholders and other investors. For example, to protect policyholders whose insurance company becomes financially insolvent, guaranty funds have been established in all 50 states to pay the covered claims of policyholders in the event of an insolvency of an insurer, subject to applicable state...

  • Page 71
    ...our business volumes, adversely impact our ability to access the capital markets and increase our borrowing costs. Claims-paying and financial strength ratings are important to an insurer's competitive position. Rating agencies review insurers' ratings periodically, and change their ratings criteria...

  • Page 72
    ... following efforts, from time to time, to protect or grow market share: • We may develop products that insure risks we have not previously insured or contain new coverage or coverage terms. • We may refine our underwriting processes. For example, in certain of our businesses in recent years, we...

  • Page 73
    ... methods, including predictive modeling, forecasting and sophisticated simulation modeling techniques, to analyze loss trends and the risks associated with our assets and liabilities. We also use these modeling processes, analyses and methods in making underwriting, pricing and reinsurance decisions...

  • Page 74
    ... as price controls, capital controls, currency exchange limits, ownership limits and other restrictive or anti-competitive governmental actions, which could have an adverse effect on our business and our reputation. Our investments outside the United States may also subject us to currency risk and...

  • Page 75
    ... our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. Our operations rely on the reliable and secure processing, storage and transmission of confidential and other information in our computer...

  • Page 76
    ... of GAAP and IFRS, including the project for valuing insurance contract liabilities) may impact our financial statements in the future. Changes in accounting standards, particularly those that specifically apply to insurance company operations, may impact the content and presentation of our...

  • Page 77
    ...Insurance segment's operations in the United Kingdom. The Company, through its subsidiaries, owns an investment portfolio of income-producing properties and real estate funds. Included in this portfolio are four office buildings in which the Company holds a 50% ownership interest located in New York...

  • Page 78
    ... 15 of notes to the Company's consolidated financial statements in this annual report and is incorporated by reference into this Item 3. Item 4. MINE SAFETY DISCLOSURES NONE. EXECUTIVE OFFICERS OF THE REGISTRANT Information about the Company's executive officers is incorporated by reference from...

  • Page 79
    ... 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 was 69,104 as of February 10, 2012...

  • Page 80
    ... 2009 2010 2011 The Travelers Companies, Inc. (2) S&P 500 Index S&P 500 Property & Casualty Insurance (3) 10FEB201218191156 (1) The cumulative return to shareholders is a concept used to compare the performance of a company's stock over time and is the ratio of the net stock price change plus the...

  • Page 81
    ... price, catastrophe losses, funding of the Company's qualified pension plan, other investment opportunities (including mergers and acquisitions), market conditions and other factors. The Company acquired 10,469 shares during the three months ended December 31, 2011 that were not part of the publicly...

  • Page 82
    ... FINANCIAL DATA 2011 At and for the year ended December 31, 2010 2009 2008 (in millions, except per share amounts) 2007 Total revenues ...Net income ...Total investments ...Total assets ...Claims and claim adjustment expense reserves Total long-term debt ...Total liabilities ...Total shareholders...

  • Page 83
    ... after-tax) • Net realized investment gains of $55 million ($36 million after-tax) • Operating cash flows of $2.17 billion 2011 Consolidated Financial Condition • Total investments of $72.70 billion; fixed maturities and short-term securities comprise 93% of total investments • Total assets...

  • Page 84
    ... ... Total claims and expenses ...Income before income taxes ...Income tax expense (benefit) ...Net income ...Net income per share Basic ...Diluted ...GAAP combined ratio Loss and loss adjustment expense ratio ...Underwriting expense ratio ...GAAP combined ratio ...Incremental impact of direct to...

  • Page 85
    ... resulting from lower long-term reinvestment yields available in the market, as well as lower average levels of fixed maturity invested assets due to the Company's common share repurchases. Net investment income generated by non-fixed maturity investments of $355 million in 2011 was $15 million...

  • Page 86
    ... on the total investment portfolio was 4.3% in 2010, compared with 3.8% in 2009, reflecting the improvement in non-fixed maturity investment income. Fee Income The National Accounts market in the Business Insurance segment is the primary source of the Company's fee-based business. The changes in fee...

  • Page 87
    ... $62 million associated with U.S. Treasury futures contracts (which require daily mark-to-market settlement and are used to shorten the duration of the Company's fixed maturity investment portfolio). Other net realized investment gains in 2010 were $290 million, including a $205 million pretax gain...

  • Page 88
    ...the insurers writing business in those states to fund the operating deficits of such entities during periods of significant storm activity. Hurricane-related assessments are reported as a component of ''General and Administrative Expenses'' as the amounts paid to such entities are not insured losses...

  • Page 89
    ...534 7,877 $23,302 $12,098 3,713 7,474 $23,285 (for the year ended December 31, in millions) Net Written Premiums 2011 2010 2009 Business Insurance ...Financial, Professional & International Insurance ...Personal Insurance ...Total ... $11,340 3,102 7,745 $22,187 $10,857 3,211 7,567 $21,635 $10...

  • Page 90
    ... 42 $13,218 $ 9,778 $ 2,590 53.9% 32.2 86.1% Total revenues ...Total claims and expenses ...Operating income ...Loss and loss adjustment expense ratio ...Underwriting expense ratio ...GAAP combined ratio ...Overview Operating income of $1.35 billion in 2011 was $947 million, or 41%, lower than in...

  • Page 91
    ... National Accounts is the primary source of fee income due to its service businesses, which include claim and loss prevention services to large companies that choose to self-insure a portion of their insurance risks, as well as claims and policy management services to workers' compensation residual...

  • Page 92
    .... The property product line improvement primarily occurred in the 2008 and 2009 accident years as a result of better than expected loss development in Industry-Focused Underwriting and Target Risk Underwriting. The general liability product line improvement was concentrated in excess coverages for...

  • Page 93
    ... General and administrative expenses in 2011 were $1.94 billion, $40 million, or 2%, higher than in 2010, primarily driven by a higher level of state assessment expenses related to workers' compensation business in New York, which more than offset an overall reduction in operating expenses. General...

  • Page 94
    ... Core ...Business Insurance Other ...Total Business Insurance ... (for the year ended December 31, in millions) Net Written Premiums 2011 2010 2009 Select Accounts ...Commercial Accounts ...National Accounts ...Industry-Focused Underwriting . Target Risk Underwriting ...Specialized Distribution...

  • Page 95
    ... in the Technology, Agribusiness and Oil & Gas business units. Target Risk Underwriting. Net written premiums of $1.59 billion in 2011 increased slightly over 2010, as premium growth in Inland Marine and Excess Casualty was largely offset by a decline in National Property. Net written premiums...

  • Page 96
    ... underwriting actions undertaken in the Company's operations at Lloyd's intended to improve risk and reward (particularly in the catastrophe-exposed lines of business) and competitive market conditions. Earned premiums in 2011 benefited slightly from the favorable impact of foreign currency exchange...

  • Page 97
    ... than expected loss development in Canada, primarily in the surety, directors and officers, and general liability lines of business for recent accident years and better than expected development in the Company's operation at Lloyd's in the aviation, kidnap & ransom, and property lines for recent...

  • Page 98
    ... and Canada. In addition, the Aviation and Property lines of business at Lloyd's experienced net favorable prior year reserve development in 2009. In Bond & Financial Products, better than expected loss development for the contract surety business within the fidelity and surety product line for...

  • Page 99
    ...Bond & Financial Products in 2010 were $59 million, or 3% lower than in 2009, primarily reflecting the impact of underwriting actions taken and competitive market conditions in the Professional Liability and Public Company Liability business units. In addition, construction and commercial surety net...

  • Page 100
    ... personal household coverages. The Company ceased writing business through this relationship in the fourth quarter of 2010. Excluding the surety line of business, retention rates in 2010 declined from 2009. New business volume also declined in 2010, primarily due to intentional underwriting actions...

  • Page 101
    ... by favorable loss development in the 2008 and prior accident years, primarily for the umbrella line of business, partially offset by unfavorable loss development in the 2009 accident year for the homeowners line of business that was driven by higher than anticipated late-reported claims related to...

  • Page 102
    ... in 2011 was less than the increase in earned premiums, primarily reflecting an increase in the number of agents reverting to a contingent commission compensation program (the costs of which are classified in ''general and administrative expenses'') from a fixed-value compensation program (the...

  • Page 103
    ... renewal premium changes, business retention rates and new business levels. For its Agency business, the Personal Insurance segment had approximately 7.7 million and 7.6 million active policies at December 31, 2011 and 2010, respectively. In the Agency Automobile line of business, active policies at...

  • Page 104
    ... and claim adjustment expense payments experienced by the Company. The Company's asbestos-related claims and claim adjustment expense experience also has been impacted by the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits...

  • Page 105
    ...role of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an analysis of the policyholder's potential liability; the jurisdictions involved; past and anticipated future claim activity and loss development on pending claims; past settlement values of...

  • Page 106
    ... with whom the Company had entered into settlement agreements limiting the Company's liability. The Company categorizes its asbestos reserves as follows: Number of Policyholders 2011 2010 Total Net Paid 2011 2010 Net Asbestos Reserves 2011 2010 (at and for the year ended December 31, $ in...

  • Page 107
    ... identified for the annual home office review based upon, among other factors: a combination of past payments and current case reserves in excess of a specified threshold (currently $100,000), perceived level of exposure, number of reported claims, products/completed operations and potential ''non...

  • Page 108
    ...a claim-by-claim basis. Generally, the Company strives to extinguish any obligations it may have under any policy issued to the policyholder for past, present and future environmental liabilities and extinguish any pending coverage litigation dispute with the policyholder. This form of settlement is...

  • Page 109
    ... generally favorable trends in overall environmental claim payments, in the number of new policyholders tendering environmental claims for the first time and in the number of pending declaratory judgment actions relating to environmental matters. However, in 2011, the Company increased its net...

  • Page 110
    ...'s previous assessment of these claims, the number and 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 98

  • Page 111
    ... assets at December 31, 2011 were $72.70 billion, of which 93% was invested in fixed maturity and short-term investments, 1% in equity securities, 1% in real estate and 5% in other investments. Because the primary purpose of the investment portfolio is to fund future claims payments, the Company...

  • Page 112
    ...Aaa Baa1 Total financial ...and project loans(3) ... Total all other corporate bonds and redeemable preferred stock ...Total fixed maturities ... Aa2 (1) Rated using external rating agencies or by the Company when a public rating does not exist. (2) Sovereign corporate securities include corporate...

  • Page 113
    ...Aaa Baa1 Total financial ...and project loans(3) ... Total all other corporate bonds and redeemable preferred stock ...Total fixed maturities ... Aa2 (1) Rated using external rating agencies or by the Company when a public rating does not exist. (2) Sovereign corporate securities include corporate...

  • Page 114
    The following table sets forth the Company's fixed maturity investment portfolio rated using external ratings agencies or by the Company when a public rating does not exist: (at December 31, 2011, in millions) Carrying Value Percent of Total Carrying Value Quality Rating: Aaa ...Aa ...A...Baa ... ...

  • Page 115
    ... Aa1 Aaa Aa1 Aa1 Total ... (1) Rated using external rating agencies or by the 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...

  • Page 116
    ... Aa1 Total ... (1) Rated using external rating agencies or by the Company when a public rating does not exist. The Company bases its investment decision on the underlying credit characteristics of the municipal security. While its municipal bond portfolio includes a number of securities that were...

  • Page 117
    ... the geographic distribution of the Company's long-term fixed maturity investments in debt securities issued by foreign governments at December 31, 2011. (at December 31, 2011, in millions) Carrying Value Average Credit Quality(1) Foreign Government: United Kingdom . . Canada ...Germany ...Norway...

  • Page 118
    ......Total ... (1) Rated using external rating agencies or by the Company when a public rating does not exist. The table includes $150 million of short-term securities which have the highest ratings issued by external rating agencies for short-term issuances. For purposes of this table, the short-term...

  • Page 119
    ... its effect on income cannot be fully controlled, particularly when interest rates move dramatically, the Company's investment strategy generally favors securities that control this risk within expected interest rate ranges. Included in the totals at December 31, 2011 and 2010 were $1.82 billion and...

  • Page 120
    Equity Securities Available for Sale, Real Estate and Short-Term Securities See note 1 of notes to the Company's consolidated financial statements for further information about these invested asset classes. Other Investments At December 31, 2011 and 2010, the carrying value of the Company's other ...

  • Page 121
    ... at December 31, 2011 represent less than 1% of the combined fixed maturity and equity security portfolios on a pretax basis and less than 1% of shareholders' equity on an after-tax basis. For fixed maturity investments where fair value is less than the carrying value and the Company did not reach...

  • Page 122
    ...including computer modeling processes, to analyze catastrophic events and the risks associated with them. The Company uses these analyses and methods to make underwriting and reinsurance decisions designed to manage its exposure to catastrophic events. There are no industry-standard methodologies or...

  • Page 123
    ... indicative of operating trends. Accordingly, the Company's management uses the percentage of common equity calculated on this basis as a metric to evaluate the potential impact of a single hurricane or single earthquake on the Company's financial position for purposes of making underwriting and...

  • Page 124
    ..., which are based on the Company's in-force portfolio at December 31, 2011 and catastrophic reinsurance program at January 1, 2012, are net of reinsurance, after-tax and exclude most loss adjustment expenses, which historically have been less than 10% of loss estimates. The amounts for hurricanes...

  • Page 125
    ... ongoing basis and reviews its reinsurance arrangements periodically. Reinsurers are selected based on their financial condition, business practices and the price of their product offerings. After reinsurance is purchased, the Company has limited ability to manage the credit risk to a reinsurer. In...

  • Page 126
    ... structured settlement is included in the Company's consolidated balance sheet as a liability and as a reinsurance recoverable, as the Company retains the contingent liability to the claimant. In the event that the life insurance company fails to make the required annuity payments, the Company would...

  • Page 127
    ...with 2011. In the Personal Insurance segment, the Company expects both Agency Automobile and Agency Homeowners and Other renewal premium changes during 2012 will remain positive and will be slightly higher than in 2011 based on the Company's actions to file for rate increases. The need for state 115

  • Page 128
    ... to renewal business. Property and casualty insurance market conditions are expected to remain competitive during 2012 for new business, not only in Business Insurance and Financial, Professional & International Insurance, but also in Personal Insurance, where price comparison technology used by...

  • Page 129
    ... amounts in equity securities, real estate, private equity limited partnerships, hedge funds, real estate partnerships, real estate and insurance joint ventures, mortgage loans, venture capital (through direct ownership and limited partnerships) and trading securities. These investment classes have...

  • Page 130
    ...of the Company's business have been met primarily by funds generated from operations, asset maturities and income received on investments. Cash provided from these sources is used primarily for claims and claim adjustment expense payments and operating expenses, and in recent years, for common share...

  • Page 131
    ...liquidity needs will be adequately met from all of the above sources. At December 31, 2011, total cash and short-term invested assets aggregating $2.39 billion and having a weighted average maturity of 74 days were held in the United States by the holding company. These assets are sufficient to meet...

  • Page 132
    ... the market value of 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, contributes to the Company's ability to fund claim payments without...

  • Page 133
    ...'s financial position, earnings, share price, catastrophe losses, funding of the Company's qualified pension plan, capital requirements of the Company's operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions), market...

  • Page 134
    ... at competitive rates and raise new capital to meet its needs. The following table summarizes the components of the Company's capital structure at December 31, 2011 and 2010. (at December 31, in millions) 2011 2010 Debt: Short-term ...Long-term ...Net unamortized fair value adjustments and debt...

  • Page 135
    ... June 2013. Pursuant to the credit agreement covenants, the Company must maintain a minimum consolidated net worth (generally defined as shareholders' equity plus certain trust preferred and mandatorily convertible securities, reduced for goodwill and other intangible assets) of $14.35 billion. The...

  • Page 136
    ... ...Long-term unfunded investment commitments(6) ...Estimated claims and claim-related payments Claims and claim adjustment expenses(7) . . Claims from large deductible policies(8) ...Loss-based assessments(9) ...Reinsurance contracts accounted for as deposits(10) ...Payout from ceded funds withheld...

  • Page 137
    ...business for goods and services including property, plant and equipment, office supplies, archival services, etc. (6) Represents estimated timing for fulfilling unfunded commitments for private equity limited partnerships and real estate partnerships. (7) The amounts in ''Claims and claim adjustment...

  • Page 138
    ... of money. Accordingly, the amounts above will differ from the Company's balance sheet to the extent that deposit values in the balance sheet have been discounted using deposit accounting. (11) The amounts in ''Payout from ceded funds withheld'' represent estimated payments for losses and return of...

  • Page 139
    ... to actual plan performance and funded status at the time, that it may make discretionary pension contributions of approximately $75 million to $100 million annually over the next few years. The Qualified Plan assets are managed to maximize long-term total return. The Company's overall strategy...

  • Page 140
    ...Gross claims and claim adjustment expense reserves by product line were as follows: (at December 31, in millions) Case 2011 IBNR Total Case 2010 IBNR Total General liability ...Property ...Commercial multi-peril ...Commercial automobile(1) ...Workers' compensation ...Fidelity and surety ...Personal...

  • Page 141
    ... ongoing review of asbestos and environmental claims and associated liabilities considers the inconsistencies of court decisions as to coverage, plaintiffs' expanded theories of liability and the risks inherent in complex litigation and other uncertainties, in the opinion of the Company's management...

  • Page 142
    ... product lines make the aggregation of individual ranges a highly judgmental and inexact process. Property-casualty insurance policies are either written on a claims-made or on an occurrence basis. Claims-made policies generally cover, subject to requirements in individual policies, claims reported...

  • Page 143
    ... of the claim process for a given product line. Product lines are generally classifiable as either long tail or short tail, based on the average length of time between the event triggering claims under a policy and the final resolution of those claims. Short tail claims are reported and settled...

  • Page 144
    ... losses, as claims are settled in the future, to be different in amount than the 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...

  • Page 145
    ... and a determination 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. The Audit Committee of...

  • Page 146
    ... claim reporting and claim settlement is a function of the specific coverage provided, the jurisdiction and specific policy provisions such as self-insured retentions. There are numerous components underlying the general liability product line. Some of these have relatively moderate payment patterns...

  • Page 147
    ...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 factors, or perceptions thereof, that could change and, thus, affect the required general liability...

  • Page 148
    ... Changes in settlement patterns (e.g., medical malpractice) General liability book of business risk factors • Changes in policy provisions (e.g., deductibles, policy limits, endorsements) • Changes in underwriting standards • Product mix (e.g., size of account, industries insured, jurisdiction...

  • Page 149
    ... wind versus flooding) • Lags in reporting claims (e.g., winter damage to summer homes, hidden damage after an earthquake, hail damage to roofs and/or equipment on roofs) • Court or legislative changes to the statute of limitations Property book of business risk factors • Policy provisions mix...

  • Page 150
    ... settlements for, Hurricane Katrina. 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 that are made quickly typically pertain to auto physical damage (property) claims...

  • Page 151
    ... in the general discussion section) include: Bodily injury and property damage liability risk factors • Trends in jury awards • Changes in the underlying court system • Changes in case law • Litigation trends • Frequency of claims with payment capped by policy limits • Change in average...

  • Page 152
    ... legal and judicial environments, and enhanced risk control, underwriting and claim process initiatives. 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...

  • Page 153
    ... Workers' compensation reserves represent approximately 33% of the Company's total claims and claim adjustment expense reserves. The Company's change in reserve estimate for this product line was 0% in 2011, ǁ1% in 2010 and ǁ1% for 2009. Fidelity and Surety Fidelity is generally considered a short...

  • Page 154
    .... The Company actively seeks to mitigate this exposure to loss through disciplined risk selection and adherence to underwriting standards. The volatility of surety losses is generally related to the type of business performed by the insured, the type of bonded obligation, the amount of limit exposed...

  • Page 155
    ... expected loss development for the contract surety business within this product line, primarily driven by favorable settlements on large claims from older accident years. Personal Automobile Personal automobile includes both short and long tail coverages. The payments that are made quickly typically...

  • Page 156
    ... 2011 change reflected worse than expected severity for the 2007 - 2010 accident years. 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...

  • Page 157
    ...increase (decrease) in claims and claim adjustment expense reserves. Historically, the one-year change in the reserve estimate for this product line (excluding the umbrella line of business, which for statutory reporting purposes is included with the general liability line of business) over the last...

  • Page 158
    ...-insurer for claim settlement purposes. International and other reserves are generally analyzed by program/pool, country and general coverage category (e.g., U.S. Liability-excess of loss reinsurance, or General Liability-Municipalities- by country). The business is also generally split by direct...

  • Page 159
    ... that of General Liability and Property, but on an excess or excess-of-loss reinsurance basis. Excess exposure requires the insured to ''prove'' not only claims under the policy, but also the prior payment of claims reaching up to the excess policy's attachment point. Examples of common risk factors...

  • Page 160
    ... conform to 2011 presentation. (2) Included in the Company's reinsurance recoverables are certain structured settlements issued by Fidelity & Guaranty Life, which was previously a subsidiary of Old Mutual U.S. Life Holdings, Inc. prior to being sold by its U.K. parent company to Harbinger Group Inc...

  • Page 161
    ... Value Measurements The Company's estimates of fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets...

  • Page 162
    ... 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 163
    ...the Company holds a small number of municipal bonds which are not valued by the pricing service and estimates the fair value of these bonds using an internal pricing matrix with some unobservable inputs that are significant to the valuation. Due to the limited amount of observable market information...

  • Page 164
    ...U.S. financial reporting system. Before making a decision, the SEC is completing its work plan to evaluate the remaining differences between GAAP and IFRS and examine the variations in the way IFRS was applied by various foreign companies that file financial statements with the SEC. In December 2011...

  • Page 165
    ... statements. Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK MARKET RISK Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates (inclusive of credit spreads), foreign currency exchange rates and other relevant market rate...

  • Page 166
    ...invested assets were denominated in foreign currencies. The Company's exposure to equity price risk is not significant. The Company has no direct commodity risk and is not a party to any credit default swaps. The primary market risks to the investment portfolio are interest rate risk and credit risk...

  • Page 167
    ... maturities, non-redeemable preferred stocks, mortgage loans, short-term securities, debt and derivative financial instruments. The primary market risk to the Company's market sensitive instruments is interest rate risk (inclusive of credit spreads). The sensitivity analysis model uses various 155

  • Page 168
    ... rate risk, estimates of portfolio duration and convexity are used to model the loss of fair value that would be expected to result from a parallel increase in interest rates. Durations on invested assets are adjusted for call, put and interest rate reset features. Durations on tax-exempt securities...

  • Page 169
    ... FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ...Consolidated Statement of Income for the years ended December 31, 2011, 2010 and 2009 ...Consolidated Balance Sheet at December 31, 2011 and 2010 ...Consolidated Statement of Changes in Shareholders' Equity...

  • Page 170
    ...2009 due to the adoption of new FASB guidance. 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 as of December 31, 2011, based on criteria...

  • Page 171
    ... of common shares outstanding Basic ...Diluted ...For the year ended December 31, Net Realized Investment Gains Other-than-temporary impairment losses: Total gains (losses) ...Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources ...Other-than...

  • Page 172
    ... 80,181 Total 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...

  • Page 173
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (in millions) For the year ended December 31, 2011 2010 2009 Convertible preferred stock-savings plan Balance, beginning of year ...Redemptions ...Conversion to common stock ...Balance, end of ...

  • Page 174
    ... ...Treasury stock acquired-net employee share-based compensation . Excess tax benefits from share-based payment arrangements ... Net cash used in financing activities ...Effect of exchange rate changes on cash ...Net increase (decrease) in cash ...Cash at beginning of year ...Cash at end of year...

  • Page 175
    ... of The Travelers Companies, Inc. (together with its subsidiaries, the Company). The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of...

  • Page 176
    ...the quarter ending March 31, 2012. The adoption of this guidance is not expected to have any effect on the Company's results of operations, financial position or liquidity. Transfers and Servicing In April 2011, the FASB issued updated guidance related to the accounting for repurchase agreements and...

  • Page 177
    .... Equity securities, which include public common and non-redeemable preferred stocks, are classified as available for sale with changes in fair value, net of income taxes, charged or credited directly to accumulated other changes in equity from nonowner sources. Real Estate Investments The Company...

  • Page 178
    ... ACCOUNTING POLICIES (Continued) The Company uses the equity method of accounting for private equity limited partnerships, hedge funds and real estate partnerships. The partnerships and the hedge funds generally report investments on their balance sheet at fair value. The financial statements...

  • Page 179
    ...value has been less than amortized cost for fixed maturity securities or cost for equity securities; and (5) 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...

  • Page 180
    ... FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) cash flows is accreted on a quarterly basis to net investment income over the remaining expected life of the investment. Determination of Credit Loss The Company determines the credit loss component...

  • Page 181
    ... limited partnerships, 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 equity method of accounting. The Company reviews these investments for impairment no less frequently than quarterly...

  • Page 182
    ... 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 fair value...

  • Page 183
    ... present value of estimated future payments. The liabilities for losses for most long-term disability and annuity claim payments, primarily arising from workers' compensation insurance and workers' compensation excess insurance policies, were discounted using a rate of 5% at both December 31, 2011...

  • Page 184
    ... SIGNIFICANT ACCOUNTING POLICIES (Continued) fund and other insurance-related assessments and related recoverables of $19 million and $24 million, respectively. The liability for such assessments and the related recoverables are not discounted for the time value of money. The loss-based assessments...

  • Page 185
    ... rates for items recorded in earnings. The change in unrealized foreign currency translation gain or loss during the year, net of tax, is a component of accumulated other changes in equity from nonowner sources. Share-Based Compensation The Company has an employee stock incentive compensation plan...

  • Page 186
    ... the customer and the 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 and commercial auto coverages, and...

  • Page 187
    ... liability coverages other than workers' compensation. • 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...

  • Page 188
    ...& 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...

  • Page 189
    ... coverages for umbrella liability, identity fraud, and weddings and special events. 2. SEGMENT INFORMATION The Company is organized into three reportable business segments: Business Insurance; Financial, Professional & International Insurance; and Personal Insurance. The accounting policies used...

  • Page 190
    ...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 2011 Premiums ...Net investment income Fee...

  • Page 191
    ... INFORMATION (Continued) Net written premiums by market were as follows: (for the year ended December 31, in millions) 2011 2010 2009 Business Insurance: Select Accounts ...Commercial Accounts ...National Accounts ...Industry-Focused Underwriting Target Risk Underwriting ...Specialized Distribution...

  • Page 192
    ..., 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 193
    ... TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. SEGMENT INFORMATION (Continued) (at December 31, in millions) 2011 2010 Asset reconciliation: Business Insurance ...Financial, Professional & International Insurance ...Personal Insurance ...Total...

  • Page 194
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS Fixed Maturities The amortized cost and fair value of investments in fixed maturities classified as available for sale were as follows: (at December 31, 2011, in millions) Amortized ...

  • Page 195
    ... securities ...Total ... 3,288 $59,994 Pre-refunded bonds of $7.33 billion and $7.29 billion at December 31, 2011 and 2010, respectively, were bonds for which an irrevocable trust has been established to fund the remaining payments of principal and interest. The Company's fixed maturity investment...

  • Page 196
    ... as collateral to secure various liabilities on behalf of insureds, cedants and other creditors had a fair value of $90 million and $86 million at December 31, 2011 and 2010, respectively. Other investments pledged as collateral securing outstanding letters of credit had a fair value of $59 million...

  • Page 197
    ... Securities The Company's short-term securities consist of Aaa-rated registered money market funds, U.S. Treasury securities and high-quality commercial paper (primarily A1/P1) with a combined average of 79 days to maturity at December 31, 2011. The amortized cost of these securities, which totaled...

  • Page 198
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS (Continued) distribution. The Company's maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company's ...

  • Page 199
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS (Continued) Less than 12 months Gross Fair Unrealized Value Losses 12 months or longer Gross Fair Unrealized Value Losses Total Fair Value Gross Unrealized Losses (at December 31, ...

  • Page 200
    ...and equity security portfolios on a pretax basis and less than 1% of shareholders' equity on an after-tax basis. Impairment Charges Impairment charges included in net realized investment gains in the consolidated statement of income were as follows: (for the year ended December 31, in millions) 2011...

  • Page 201
    ... CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS (Continued) accumulated other changes in equity from nonowner sources for the years ended December 31, 2011 and 2010: Cumulative Additions for Additions for Adjustments to OTTI Credit OTTI Securities OTTI Securities Reductions Book Value...

  • Page 202
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS (Continued) Net Investment Income (for the year ended December 31, in millions) 2011 2010 2009 Gross investment income (loss) Fixed maturities ...Equity securities ...Short-term ...

  • Page 203
    ... VALUE MEASUREMENTS The Company's estimates of fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets...

  • Page 204
    ... 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 205
    ...the Company holds a small number of municipal bonds which are not valued by the pricing service and estimates the fair value of these bonds using an internal pricing matrix with some unobservable inputs that are significant to the valuation. Due to the limited amount of observable market information...

  • Page 206
    ... the fair value hierarchy at which the Company's financial assets and financial liabilities are measured on a recurring basis at December 31, 2011 and 2010. (at December 31, 2011, in millions) Total Level 1 Level 2 Level 3 Invested assets: Fixed maturities U.S. Treasury securities and obligations...

  • Page 207
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 4. FAIR VALUE MEASUREMENTS (Continued) (at December 31, 2010, in millions) Total Level 1 Level 2 Level 3 Invested assets: Fixed maturities U.S. Treasury securities and obligations of U.S. ...

  • Page 208
    ... 31, 2011 ...Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date ... $ - $- $ - (1) Includes impairments on investments held at the end of the...

  • Page 209
    ...than commercial paper, at December 31, 2011 and 2010, respectively. The pricing service utilizes market quotations for debt that have quoted prices in active markets. For the small amount of the Company's debt securities for which a pricing service is not used, the Company utilizes pricing estimates...

  • Page 210
    ... utilizes a catastrophe bond program and a Northeast catastrophe reinsurance treaty to protect against losses resulting from catastrophes in the Northeastern United States. The Company also utilizes an excess-of-loss treaty in its National Property business unit of the Business Insurance segment to...

  • Page 211
    ... on paid and unpaid claims and claim adjustment expenses ...Allowance for uncollectible reinsurance ...Net reinsurance recoverables ...Mandatory pools and associations ...Structured settlements ...Total reinsurance recoverables ...Terrorism Risk Insurance Program $ 6,216 $ 6,934 (345) (363...

  • Page 212
    ... 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 Program. All commercial property and casualty insurers licensed in the United States are generally...

  • 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
    ... of the Company's amortization expense for other intangible assets by major asset class: (for the year ended December 31, in millions) 2011 2010 2009 Customer-related ...Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables ...Total amortization expense...

  • Page 215
    ...-peril product line driven by late reporting of hail claims incurred in 2010 and unfavorable prior year reserve development in the commercial automobile product line that reflected worse than expected severity for the 2009-2010 accident years. Financial, Professional & International Insurance. Net...

  • Page 216
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. INSURANCE CLAIM RESERVES (Continued) Company's operation at Lloyd's in the aviation, kidnap & ransom, and property lines for recent accident years. Personal Insurance. Net favorable prior year reserve development in 2011 was $110 million...

  • Page 217
    ... general liability and commercial multi-peril product lines experienced better than anticipated loss development that was attributable to several factors, including what the Company believes is improved legal and judicial environments, as well as enhanced risk control, underwriting and claim process...

  • Page 218
    ...role of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an analysis of the policyholder's potential liability; the jurisdictions involved; past and anticipated future claim activity and loss development on pending claims; past settlement values of...

  • Page 219
    ... generally favorable trends in overall environmental claim payments, in the number of new policyholders tendering environmental claims for the first time and in the number of pending declaratory judgment actions relating to environmental matters. However, in 2011, the Company increased its net...

  • Page 220
    ...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 221
    ... to the losses, the legal and regulatory uncertainties and the nature of the information available to establish the reserves. Complex factors include, but are not limited to: determining whether damage was caused by flooding versus wind; evaluating general liability and pollution exposures...

  • Page 222
    ...TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. DEBT Debt outstanding was as follows: (at December 31, in millions) 2011 2010 Short-term: Commercial paper ...5.375% Senior notes due June 15, 2012 ...7.22% Real estate non-recourse debt due September 1, 2011 ...Total short-term debt ...Long-term...

  • Page 223
    ... in whole at any time or in part from time to time or (b) in whole, but not in part, in the event of certain tax or rating agency events relating to the debentures, at a redemption price equal to the greater of 100% of the principal amount being redeemed and the applicable make-whole amount, in each...

  • Page 224
    ... using any source of funds. Qualifying capital securities are securities (other than common stock, qualifying warrants, mandatorily convertible preferred stock, debt exchangeable for common equity, and debt exchangeable for preferred equity) which generally are treated by the ratings agencies...

  • Page 225
    ... of business. The Company may offer these securities from time to time at prices and on other terms to be determined at the time of offering. During 2010, the Company issued securities with a principal amount of $1.25 billion under the prior shelf registration statement. 9. SHAREHOLDERS' EQUITY AND...

  • Page 226
    ... The Company's preferred shareholders' equity at December 31, 2010 represented the par value of preferred shares outstanding related to a legacy Stock Ownership Plan (SOP) Trust which was subsequently merged into The Travelers 401(k) Savings Plan (the Savings Plan). The SOP Trust could at any time...

  • Page 227
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. SHAREHOLDERS' EQUITY AND DIVIDEND AVAILABILITY (Continued) without prior approval of the Connecticut Insurance Department. The Company may choose to accelerate the timing within 2012 and/or ...

  • Page 228
    ... Nonowner Sources were as follows: Net Unrealized Gains (Losses) on Investment Securities Net Benefit Plan Assets and Obligations Recognized in Equity Net Unrealized Foreign Currency Translation and Other Accumulated Other Changes in Equity from Nonowner Sources (at and for the year ended December...

  • Page 229
    ... dilutive securities. The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations: (for the year ended December 31, in millions, except per share amounts) 2011 2010 2009 Basic Net income, as reported ...Preferred stock dividends...

  • Page 230
    ...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 ...(for the year ended December...

  • Page 231
    ... income and limitations imposed by tax laws. The benefits of the NOL and AMT credit carryforwards have been recognized in the consolidated financial statements and are included in net deferred tax assets. U.S. income taxes have not been recognized on $649 million of the Company's foreign operations...

  • Page 232
    ... U.S. income tax returns for 2009 and 2010. The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next twelve months. 12. SHARE-BASED INCENTIVE COMPENSATION The Company has a share-based incentive compensation plan, The Travelers Companies, Inc...

  • Page 233
    ...shares that are used to pay the exercise price of stock options and shares used to pay withholding taxes on awards generally; and (iii) shares purchased by the Company on the open market using cash option exercise proceeds; provided, however, that the increase in the number of shares of common stock...

  • Page 234
    ... TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. SHARE-BASED INCENTIVE COMPENSATION (Continued) The fair value of each option award is estimated on the date of grant by application of a variation of the Black-Scholes option pricing model using...

  • Page 235
    ... stock unit awards to eligible officers and key employees under the Equity Awards program established pursuant to the 2004 Incentive Plan. A restricted stock unit represents the right to receive a share of common stock. These restricted stock unit awards are granted at market price, generally...

  • Page 236
    ...depending on the actual return on equity attained. The fair value of restricted stock units, deferred stock and performance shares is measured at the market price of the Company stock at date of grant. The total fair value of shares that vested during the years ended December 31, 2011, 2010 and 2009...

  • Page 237
    ..., 2011, there was $114 million of total unrecognized compensation cost related to all nonvested share-based incentive compensation awards. This includes stock options, restricted stock, restricted stock units, deferred stock and performance shares granted under the Company's 2004 Incentive Plan. The...

  • Page 238
    ...of plan at end of year ...Amounts recognized in the statement of financial position consist of: Accrued under-funded benefit plan liabilities ...Amounts recognized in accumulated other changes in equity from nonowner sources consist of: Prior service benefit ...Net actuarial loss ...Total ... $ (292...

  • Page 239
    ... ...Funded status of plan at end of year ...Amounts recognized in the statement of financial position consist of: Accrued under-funded benefit plan liability ...Amounts recognized in accumulated other changes in equity from nonowner sources consist of: Net actuarial gain ... $ (31) $ (27) The total...

  • Page 240
    ... nonowner sources related to the benefit plans for the years ended December 31, 2011, 2010 and 2009. Pension Plans 2011 2010 2009 Postretirement Benefit Plans 2011 2010 2009 (in millions) Net Periodic Benefit Cost: Service cost ...Interest cost on benefit obligation Expected return on plan assets...

  • Page 241
    ... consideration of plan liabilities, plan funded status, and corporate financial position. The asset mix guidelines have been established and are reviewed quarterly. These guidelines are intended to serve as tools to facilitate the investment of plan assets to maximize long-term total return and the...

  • Page 242
    ... benefit assets. Fair value estimates for equity and bond mutual funds held by the pension plans reflect prices received from an external pricing service that are based on observable market transactions. These estimates are included in Level 1. Short-term securities are carried at fair value which...

  • Page 243
    ... securities U.S. Treasury securities ...Money market mutual funds ...Other ...Total cash and short-term securities ...Total ... (1) The fair value estimates of the hedge fund and two private equity funds comprising these investments are determined by an external fund manager based on recent filings...

  • Page 244
    ... - $18 Total fixed maturities ...Mutual funds Equity mutual funds ...Bond mutual funds ...Total mutual funds ...Equity securities ...Other investments(1) ...Cash and short-term securities U.S. Treasury securities ...Money market mutual funds ...Other ...Total cash and short-term securities ...Total...

  • Page 245
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 13. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued) The following table presents the changes in the Level 3 fair value category for the years ended December 31, 2011 and 2010. ...

  • Page 246
    ... any time into any other investment option. The total expense related to the Savings Plan was $89 million, $93 million and $98 million for the years ended December 31, 2011, 2010 and 2009, respectively. Included in the Savings Plan are a legacy Savings Plus Plan (SPP) and a Stock Ownership Plan (SOP...

  • Page 247
    .... Asbestos Direct Action Litigation-In October 2001 and April 2002, two purported class action suits (Wise v. Travelers and Meninger v. Travelers) were filed against Travelers Property Casualty Corp. (TPC) and other insurers (not including The St. Paul Companies, Inc. (SPC)) in state court...

  • Page 248
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 15. CONTINGENCIES, COMMITMENTS AND GUARANTEES (Continued) In November 2003, the parties reached a settlement of the Statutory and Hawaii Actions. This settlement includes a lump-sum payment of up ...

  • Page 249
    ... to pay the settlement amounts plus prejudgment interest. On January 21, 2011, TPC filed an appeal with the U.S. District Court for the Southern District of New York from the bankruptcy court's January 20, 2011 judgment. On January 24, 2011, certain of the plaintiffs in the Common Law Claims actions...

  • Page 250
    ... to the Company's results of operations or have a material adverse effect on the Company's financial position or liquidity. Gain Contingencies On August 20, 2010, in a reinsurance dispute in New York state court captioned United States Fidelity & Guaranty Company v. American Re-Insurance Company, et...

  • Page 251
    ...recognized in the Company's consolidated financial statements. In an unrelated action, The Travelers Indemnity Company is one of the Settlement Class plaintiffs and a class member in a class action lawsuit captioned Safeco Insurance Company of America, et al. v. American International Group, Inc. et...

  • Page 252
    ... financial information on the same basis of accounting as the consolidated financial statements. The Travelers Companies, Inc. has fully and unconditionally guaranteed certain debt obligations of TPC, its wholly-owned subsidiary, which totaled $1.20 billion at December 31, 2011. Prior to the merger...

  • Page 253
    ... CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES (Continued) CONSOLIDATING STATEMENT OF INCOME (Unaudited) For the year ended December 31, 2011 (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, 2010 (in millions) TPC Other Subsidiaries Travelers(1) Eliminations Consolidated Revenues Premiums ...Net investment income...

  • Page 255
    ...Travelers(1) Eliminations Consolidated Net Realized Investment Gains (Losses) Other-than-temporary impairment losses: Total losses ...Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources ...Other-than-temporary impairment losses ...Other net...

  • Page 256
    ... Subsidiaries Travelers(1) Eliminations Consolidated Assets Fixed maturities, available for sale at fair value (amortized cost $59,994) ...Equity securities, available for sale, at fair value (cost $414) ...Real estate investments ...Short-term securities ...Other investments ...Total investments...

  • Page 257
    ...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 (0.2 shares...

  • Page 258
    ...net employee sharebased compensation ...Excess tax benefits from share-based payment arrangements ...Dividends paid to parent company ...Capital contributions, loans and other transactions between subsidiaries ...Net cash used in financing activities ...Effect of exchange rate changes on cash ...Net...

  • Page 259
    ... acquired-net employee sharebased compensation ...Excess tax benefits from share-based payment arrangements ...Dividends paid to parent company ...Capital contributions, loans and other transactions between subsidiaries ... Net cash used in financing activities ...Effect of exchange rate changes on...

  • Page 260
    ... acquired-net employee sharebased compensation ...Excess tax benefits from share-based payment arrangements ...Dividends paid to parent company ...Capital contributions, loans and other transactions between subsidiaries ... Net cash used in financing activities ...Effect of exchange rate changes on...

  • Page 261
    ... CONSOLIDATED FINANCIAL STATEMENTS (Continued) 18. SELECTED QUARTERLY FINANCIAL DATA (Unaudited) 2011 (in millions, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Total Total revenues ...Total expenses ...Income (loss) before income taxes ...Income tax expense...

  • Page 262
    ... 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 Officer, as...

  • Page 263
    ... management has concluded that the Company's internal control over financial reporting was effective at December 31, 2011, and that there were no material weaknesses in the Company's internal control over financial reporting as of that date. KPMG LLP, an independent registered public accounting firm...

  • Page 264
    ... 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, 2011 and 2010, and the related consolidated statements of income, changes in shareholders' equity, and cash...

  • Page 265
    ...the SEC on April 12, 2011. From time to time, some of the Company's executives may determine that it is advisable to diversify their investments for personal financial planning reasons, or may seek liquidity for other reasons, and may sell shares of common stock of the Company in the open market, in...

  • Page 266
    ... appointed Senior Vice President for the National Accounts Group's property-casualty business in 1985 and subsequently assumed the responsibility of Chairman of Commercial Lines in 1990. William H. Heyman, 63, has been Chief Investment Officer of the Company since the Merger and Vice Chairman since...

  • Page 267
    ... President-Claim Services. Prior to that, she was President and Chief Executive Officer of Bond operations for the Company since the Merger and, before that, for TPC since June 2002. From 1994 to May 2002, she managed the TPC Bond claim operation and served as General Counsel of that business unit...

  • Page 268
    ... serving as Managing Director of the Northeastern territory for National Accounts since 1996. He began his career with Travelers in 1987 as an account executive in the Commercial Accounts marketing department in Albany, New York. John P. Clifford, Jr., 56, has been Executive Vice President-Human...

  • Page 269
    ... the issuance of shares; (ii) shares that are used to pay the exercise price of stock options and shares used to pay withholding taxes on equity awards generally; and (iii) shares purchased by the Company on the open market using cash from option exercises, as limited by the 2004 Incentive Plan. The...

  • Page 270
    ... 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 23, 2012 is incorporated herein by reference. PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Documents filed as a part of the report...

  • Page 271
    ...) Date: February 16, 2012 By /s/ MATTHEW S. FURMAN Matthew S. Furman Senior Vice President (Authorized Signatory) Pursuant to the requirements of the 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...

  • Page 272
    Date By * Thomas R. Hodgson Director February 16, 2012 By * Cleve L. Killingsworth, Jr. Director February 16, 2012 By * Donald J. Shepard Director February 16, 2012 By * Laurie J. Thomsen Director February 16, 2012 *By /s/ MATTHEW S. FURMAN Matthew S. Furman, Attorney-in-fact ...

  • Page 273
    ... FINANCIAL STATEMENTS AND SCHEDULES Page Report of Independent Registered Public Accounting Firm ...Consolidated Statement of Income for the years ended December 31, 2011, 2010 and 2009 ...Consolidated Balance Sheet at December 31, 2011 and 2010 ...Consolidated Statement of Changes in Shareholders...

  • Page 274
    ..., Inc.: Under date of February 16, 2012, we reported on the consolidated balance sheet of The Travelers Companies, Inc. and subsidiaries (the Company) as of December 31, 2011 and 2010, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the...

  • Page 275
    ... THE TRAVELERS COMPANIES, INC. (Parent Company Only) CONDENSED FINANCIAL INFORMATION OF REGISTRANT (in millions) CONDENSED STATEMENT OF INCOME For the year ended December 31, 2011 2010 2009 Revenues Net investment income ...Net realized investment gains (losses) ...Other revenues ...Total revenues...

  • Page 276
    SCHEDULE II THE TRAVELERS COMPANIES, INC. (Parent Company Only) CONDENSED FINANCIAL INFORMATION OF REGISTRANT (in millions) CONDENSED BALANCE SHEET At December 31, 2011 2010 Assets Fixed maturities ...Equity securities ...Short-term securities ...Investment in subsidiaries Other assets ... ... ... ...

  • Page 277
    ... II THE TRAVELERS COMPANIES, INC. (Parent Company Only) CONDENSED FINANCIAL INFORMATION OF REGISTRANT (in millions) CONDENSED STATEMENT OF CASH FLOWS For the year ended December 31, 2011 2010 2009 Cash flows from operating activities Net income ...Adjustments to reconcile net income to net cash...

  • Page 278
    ...service providers in the normal course of business. The indemnification clauses are often standard contractual terms. Certain of these guarantees and indemnifications have no stated or notional amounts or limitation to the maximum potential future payments, and, accordingly, TRV is unable to develop...

  • Page 279
    ... Business Insurance ...Financial, Professional & International Insurance ...Personal Insurance ... Total-Reportable Segments ...Other ... Consolidated ... (1) See note 2 to the consolidated financial statements for discussion of the method used to allocate net investment income and invested assets...

  • Page 280
    ... 58 $ 4 $ 95 $116 $ 37 $523 $130 $ 66 $61 $ (4) $2 $- $ 63 $ 13 $130 $ 49 (1) Charged to claims and claim adjustment expenses in the consolidated statement of income. (2) Credited to the related asset account. See the accompanying Report of Independent Registered Public Accounting Firm. 268

  • Page 281
    ... accident and health insurance business. (2) Consolidated property-casualty insurance operations. (3) For a discussion of types of reserves discounted and discount rates used, see ''Item 1-Business-Discounting.'' See the accompanying Report of Independent Registered Public Accounting Firm.

  • Page 282
    ... The St. Paul Companies, Inc. (''SPC'') Amended and Restated 1994 Stock Incentive Plan was filed as Exhibit 10(f) to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2001, and is incorporated herein by reference. 10.10* Current Director Compensation Program, effective...

  • Page 283
    ...22* First Amendment to the Company's Senior Executive Performance Plan was filed as Exhibit 10.40 to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2009, and is incorporated herein by reference. 10.23* The Travelers Deferred Compensation Plan, as Amended and Restated...

  • Page 284
    ... quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2005, and is incorporated herein by reference. 10.36* Form of Restricted Stock Unit Award Notification and Agreement (For Management Committee Member Executing Non-Compete) was filed as Exhibit 10.44 to the Company's annual report...

  • Page 285
    ... and Agreement (2012) is filed herewith. 10.46†* Form of Performance Shares Award Notification and Agreement for Jay S. Fishman (2012) is filed herewith. 10.47†* Form of Non-Employee Director Notification and Agreement of Annual Deferred Stock Award is filed herewith. 12.1†Statement regarding...

  • Page 286
    Exhibit Number Description of Exhibit 101.1†The following financial information from The Travelers Companies, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 formatted in XBRL: (i) Consolidated Statement of Income for the years ended December 31, 2011, 2010 and 2009; (ii)...

  • Page 287
    Exhibit 12.1 THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (for the year ended December 31, in millions, except ratios) 2011 2010 2009 2008 2007 Income before income taxes ...Interest ...Portion of rentals deemed to be interest ...Income available ...

  • Page 288
    ... I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2011 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 a material fact necessary to make the statements made, in...

  • Page 289
    ... I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2011 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 a material fact necessary to make the statements made, in...

  • Page 290
    ...(b) of the Securities Exchange Act of 1934 (the ''Exchange Act'') and 18 U.S.C. Section 1350, the undersigned officer of The Travelers Companies, Inc. (the ''Company'') hereby certifies that the Company's Annual Report on Form 10-K for the year ended December 31, 2011 (the ''Report'') fully complies...

  • Page 291
    ...(b) of the Securities Exchange Act of 1934 (the ''Exchange Act'') and 18 U.S.C. Section 1350, the undersigned officer of The Travelers Companies, Inc. (the ''Company'') hereby certifies that the Company's Annual Report on Form 10-K for the year ended December 31, 2011 (the ''Report'') fully complies...

  • Page 292
    ..., please contact: Wells Fargo Bank, N.A. Shareowner Services P.O. Box 64854 Saint Paul, MN 55164-0854 Toll Free: 888.326.5102 Outside U.S. and Canada: 651.450.4064 wellsfargo.com/shareownerservices Stock Price and Dividend Rate Our common stock is traded on The New York Stock Exchange (NYSE...

  • Page 293
    The Travelers Companies, Inc. 485 Lexington Avenue New York, NY 10017-2630 800.328.2189 NYSE: TRV travelers.com