Travelers 2012 Annual Report Download - page 23

% of Total
(for the year ended December 31, in millions) 2012 2011 2010 2012
By market:
Bond & Financial Products ........................... $1,924 $1,953 $1,981 64.5%
International ..................................... 1,057 1,149 1,230 35.5
Total Financial, Professional & International Insurance by
market ...................................... $2,981 $3,102 $3,211 100.0%
By product line:
Fidelity and surety ................................. $ 895 $ 957 $ 993 30.0%
General liability ................................... 859 836 834 28.8
International ..................................... 1,057 1,149 1,230 35.5
Other .......................................... 170 160 154 5.7
Total Financial, Professional & International Insurance by
product line .................................. $2,981 $3,102 $3,211 100.0%
Principal Markets and Methods of Distribution
Within the Financial, Professional & International Insurance segment, Bond & Financial Products
distributes the vast majority of its products in the United States through approximately 6,200 of the
same independent agencies and brokers that distribute the Business Insurance segment’s products.
These independent agencies and brokers are located throughout the United States. Bond & Financial
Products, in conjunction with the Business Insurance segment, continues to make investments in
enhanced technology utilizing internet-based applications to provide real-time interface capabilities with
its independent agencies and brokers. Bond & Financial Products builds relationships with well-
established, independent insurance agencies and brokers. In selecting new independent agencies and
brokers to distribute its products, Bond & Financial Products considers, among other attributes, each
agency’s or broker’s profitability, financial stability, staff experience and strategic fit with its operating
and marketing plans. Once an agency or broker is appointed, its ongoing performance is closely
monitored. In addition, Bond & Financial Products sells its surety products through independent
brokers in the United Kingdom.
The International market distributes its products principally through brokers in the domestic
markets of each of the countries in which it operates. It also writes business at Lloyd’s, where its
products are distributed through Lloyd’s wholesale and retail brokers. By virtue of Lloyd’s worldwide
licenses, Financial, Professional & International Insurance has access to international markets across
the world. In late 2008, the Company commenced an exclusive relationship with a broker in the
Republic of Ireland that significantly increased the 2009 volume of personal automobile coverage
written and also resulted in the Company writing personal household coverages. The Company ceased
writing business through this relationship in the fourth quarter of 2010 and ceased writing all remaining
personal insurance business in the Republic of Ireland in the fourth quarter of 2011.
Pricing and Underwriting
Financial, Professional & International Insurance has developed underwriting and pricing
methodologies that incorporate dedicated underwriting, claims, engineering, actuarial and product
development disciplines. This approach is designed to maintain high quality underwriting and pricing
discipline, based on an in-depth knowledge of the specific account, industry or country. Underwriters
use industry and proprietary data gathered and analyzed over many years to assess and evaluate risks
prior to quotation. The Company utilizes both standard industry forms and proprietary forms for the
insurance policies it issues. This methodology enables Financial, Professional & International Insurance
to facilitate its risk selection process and develop pricing parameters.
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