Travelers 2011 Annual Report Download - page 24

coverage in the United States), property, surety, marine, aviation, personal accident and
kidnap & ransom. Marine provides coverage for ship hulls, cargoes carried, private yachts,
marine-related liability, offshore energy, ports and terminals, fine art and terrorism. Aviation
provides coverage for worldwide aviation risks including physical damage and liabilities for
airline, aerospace, general aviation, aviation war and space risks. Personal accident provides
financial protection in the event of death or disablement due to accidental bodily injury, while
kidnap & ransom provides financial protection against kidnap, hijack, illegal detention and
extortion. While the covered hazards may be similar to those in the U.S. market, the different
legal environments can make the product risks and coverage terms potentially very different
from those the Company faces in the United States.
•Other. Coverages include Property, Workers’ Compensation, Commercial Automobile and
Commercial Multi-Peril, which are described above in more detail in the ‘‘Business Insurance’’
section of this report.
Net Retention Policy
The following discussion reflects the Company’s retention policy with respect to the Financial,
Professional & International Insurance segment as of January 1, 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 of reinsurance, to up to $15.2 million per policy after
the Company retains an aggregate layer of expected losses. For surety protection, where insured limits
are often significant, the Company generally retains up to $55.0 million probable maximum loss (PML)
per principal but may retain higher amounts based on the type of obligation, credit quality and other
credit risk factors. In the International operations, per-risk retentions are usually limited up to
$16.0 million, after reinsurance. Reinsurance treaties often have aggregate limits or caps which may
result in larger net per risk retentions if the aggregate limits or caps are reached. The Company utilizes
facultative reinsurance to provide additional limits capacity or to reduce retentions on an individual risk
basis. The Company may also retain amounts greater than those described herein based upon the
individual characteristics of the risk.
Geographic Distribution
The following table shows the geographic distribution of Financial, Professional & International’s
direct written premiums for the states that accounted for the majority of premium volume for the year
ended December 31, 2011:
% of
State Total
California .................................................. 6.9%
New York ................................................. 5.3
Texas ..................................................... 4.6
Florida ................................................... 3.3
Illinois .................................................... 3.2
All other domestic(1) ......................................... 43.5
Total domestic ............................................. 66.8
Total international .......................................... 33.2
Total ................................................... 100.0%
(1) No other single state within the United States accounted for 3.0% or more of the total
direct written premiums written in 2011 by the domestic operations of the Financial,
Professional & International Insurance segment.
12