Travelers 2011 Annual Report Download - page 186

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Compensation cost is measured based on the grant-date fair value of an award, utilizing the
assumptions discussed in note 12. Compensation cost is recognized for financial reporting purposes
over the period in which the employee is required to provide service in exchange for the award
(generally the vesting period). In connection with certain share-based awards, participants are entitled
to receive dividends during the vesting period, either in cash or dividend equivalent shares,
commensurate with the dividends paid to common shareholders. Dividends and dividend equivalent
shares on awards that are expected to vest are recorded in retained earnings. Dividends on awards that
are not expected to vest are not subject to forfeiture and are, therefore, recorded as compensation
expense.
Nature of Operations
The Company is organized into three reportable business segments: Business Insurance; Financial,
Professional & International Insurance; and Personal Insurance. These segments reflect the manner in
which the Company’s businesses are currently managed and represent an aggregation of products and
services based on type of customer, how the business is marketed and the manner in which risks are
underwritten.
The specific business segments are as follows:
Business Insurance
The Business Insurance segment offers a broad array of property and casualty insurance and
insurance-related services to its clients primarily in the United States. Business Insurance is organized
into the following six groups, which collectively comprise Business Insurance Core operations:
•Select Accounts provides small businesses with property and casualty products, including
commercial multi-peril, property, general liability, commercial auto and workers’ compensation
insurance.
•Commercial Accounts provides mid-sized businesses with property and casualty products,
including commercial multi-peril, property, general liability, commercial auto and workers’
compensation insurance.
•National Accounts provides large companies with casualty products and services, including
workers’ compensation, general liability and automobile liability, as well as property coverages,
generally utilizing loss-sensitive products, on both a bundled and unbundled basis. National
Accounts also includes the Company’s commercial residual market business, which primarily
offers workers’ compensation products and services to the involuntary market.
•Industry-Focused Underwriting. The following units provide targeted industries with differentiated
combinations of insurance coverage, risk management, claims handling and other services:
•Construction serves a broad range of construction businesses, offering guaranteed cost
products for small to mid-sized policyholders and loss sensitive programs for larger
accounts. For the larger accounts, 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 other risk management
solutions.
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