Travelers 2012 Annual Report Download - page 4

 TRAVELERS  Annual Report
weather losses have come increasingly from inland wind tornadoes
and hail This adds to the uncertainty of weather as inland wind as
compared to coastal wind hurricanes is more diffi cult to predict
and model Also while coastal wind predictably impacts specifi c
coastal regions much of the country is vulnerable to inland wind
In addition to the weather our results in  and in recent years
have been aff ected by the impact of historically low interest rates
on our investment portfolio
Reliability — Years in the making
We have been managing our business for these conditions for
years Our philosophy of running the business for the long term
enables us to address challenges from a position of strength and
organizational readiness Our fi nancial foundation is solid We
carefully balance risk and reward in both our insurance operations
and our investment portfolio And a storm like Sandy extreme as
it was was in our playbook of possibilities both in terms of our
understanding of our exposure to severe events and the response
strategy we put in place following Hurricane Katrina in 
More specifi cally we started to take action in response to the
weather patterns and low interest rates in the middle of 
Consistent with our approach of focusing on producing top tier
returns over time we embarked on a deliberate carefully calibrated
strategy of selectively but actively raising rates and improving
terms and conditions on our insurance policies Our results in 
benefi tted from that strategy Improved underwriting margins in
each of our segments contributed signifi cantly to our profi tability

After the Titanic sinks Travelers pays more than  million to
benefi ciaries in accident claims and life insurance benefi ts
Travelers issues the fi rst insurance on aerial transportation
which includes public liability property damage and workers’
compensation President Woodrow Wilson is one of the fi rst
individuals covered by such insurance
INDUSTRY UNDERWRITING ENVIRONMENT
— IMPACT OF CATASTROPHES
In the 1960s, 1970s and 1980s, catastrophe loss costs* in the
U.S. property-casualty industry were about 1 percent of written
premiums. That jumped to approximately 3.5 percent in the 1990s
and 2000s and has doubled from there to 7.2 percent in the 2010s.
-YEAR TREASURY BOND YIELD
This chart shows the decline in the yield of 10-year
Treasury bonds from Jan. 1, 1995, through Dec. 31, 2012.
Source Insurance Information Institute
Note Private carrier losses only Excludes loss adjustment expenses and reinsurance
reinstatement premiums Figures are adjusted for losses ultimately paid by foreign insurers
and reinsurers
s
%
s
%
s
%
s
%
s
%
s
%
Percent of Premium

Jan  Dec 
        
Data Source FRED Federal Reserve Economic Data Federal Reserve Bank of St Louis
Year Treasury Constant Maturity Rate
0
1
2
3
4
5
6
7
8%