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Consistent Delivery
 Annual Report and Form K

Table of contents

  • Page 1
    Consistent Delivery 2012 Annual Report and Form 10-K

  • Page 2
    ... of property and casualty insurance for auto, home and business. The company's diverse business lines offer its global customers a wide range of coverage sold primarily through independent agents and brokers. A component of the Dow Jones Industrial Average, Travelers has more than 20,000 employees...

  • Page 3
    ..., Professional & International Insurance GAAP combined ratio of 84.2 percent in 2012 was essentially unchanged from 2012, and our Personal Insurance GAAP combined ratio in 2012 improved 12.0 points from 2012 to 88.9 percent. We could not be more pleased with our performance in 2012 and the value we...

  • Page 4
    ... network and established customer base provide an exceptional platform for expanding the commercial lines business in Canada. - Combining Travelers Canada's existing surety, management liability and commercial middle market portfolios with Dominion's small commercial and personal products...

  • Page 5
    ... We are proud of our results in 2012, but we also understand that past achievements are no guarantee of future performance. We remain committed to underwriting fundamentals as we adapt to changes in the broader economic and business environment and address emerging risks in new and innovative ways.

  • Page 6
    ..., in 2012 we introduced Quantum Auto 2.0, a more competitively priced product supported by significant expense reduction initiatives, which we developed with input from agents to meet the needs of a broader customer segment increasingly focused on value. We are very encouraged by initial market...

  • Page 7
    ... year for Travelers. I am thankful for the incredible dedication and talent of our employees, the support and partnership of our agents and brokers, and the leadership and guidance of our Board of Directors. Responding to the changing auto insurance market The way people buy personal auto insurance...

  • Page 8
    ... business units in the Target Risk Underwriting group provide insurance products and services to address large property, inland marine, ocean marine, equipment breakdown and excess casualty risks. Business units in the Industry-Focused Underwriting and Specialized Distribution groups tailor coverage...

  • Page 9
    ... Vice President and Actuary Peter Schwartz Senior Vice President and Group General Counsel, Corporate Litigation Kevin C. Smith* + Executive Vice President, International Doreen Spadorcia* + Vice Chairman, Claim Services, Personal Insurance, Operations and Systems and Risk Control Kenneth F. Spence...

  • Page 10
    ..., Act 3 Enterprises, LLC Retired President and CEO, Tennant Company Director since 2001 Lead Independent Director EXECUTIVE Fishman (Chair) Dasburg Duberstein Hodgson Killingsworth Shepard INVESTMENT AND CAPITAL MARKETS Killingsworth (Chair) Duberstein Shepard Thomsen NOMINATING AND GOVERNANCE...

  • Page 11
    ... (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 Exchange...

  • Page 12
    ... About 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...

  • Page 13
    ... total assets by reportable business segments, see note 2 of notes to the Company's consolidated financial statements. PROPERTY AND CASUALTY INSURANCE OPERATIONS The property and casualty insurance industry is highly competitive in the areas of price, service, product offerings, agent relationships...

  • 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
    ... property, commercial auto, general liability, workers' compensation, internet liability, technology errors and omissions coverages and global companion products. • Public Sector Services provides insurance products and services to public entities including municipalities, counties, Indian Nation...

  • Page 16
    ... 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 programs to large and mid-sized customers, including office building...

  • Page 17
    ... independent agencies and brokers located throughout the United States that are serviced by 116 field offices and three customer service centers. Business Insurance continues to make significant investments in enhanced technology utilizing internet-based applications to provide real-time interface...

  • Page 18
    ..., claim, risk management or other insurance-related products and services. Target Risk Underwriting markets commercial property and casualty insurance products and services through a large network of agents and brokers to a wide customer base having specialized property and casualty coverage...

  • Page 19
    ... four types of benefits payable under workers' compensation policies: medical benefits, disability benefits, death benefits and vocational rehabilitation benefits. The Company emphasizes managed care cost containment strategies, which involve employers, employees and care providers in a cooperative...

  • Page 20
    ...General Liability. Insures businesses against third-party claims arising from accidents occurring on their premises or arising out of their operations, including as a result of injuries sustained from products sold. Specialized liability policies may also include coverage for directors' and officers...

  • Page 21
    ...agents and, to a lesser extent, regional 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...

  • Page 22
    ...General Insurance Company (Dominion), which the Company acquired on November 1, 2013. International, through its Lloyd's syndicate (Syndicate 5000), for which the Company provides 100% of the capital, underwrites through five principal business units-marine, global property, accident & special risks...

  • Page 23
    ... Lines,'' respectively. (for the year ended December 31, in millions) 2013 2012 2011 % of Total 2013 By market: Bond & Financial Products ...International ...Total Financial, Professional & International Insurance by market ...By product line: Fidelity and surety General liability . . International...

  • Page 24
    ... of general liability), professional indemnity (similar to professional liability coverage), auto and motor (similar to automobile coverage in the United States), commercial property, personal property, surety, marine, aviation, personal accident and kidnap & ransom. Marine provides coverage for...

  • Page 25
    ... 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 and markets its...

  • Page 26
    ... center locations. In addition, since 1995, the Company has had a marketing agreement with GEICO to underwrite homeowners business for certain of their auto customers. In 2009, the Company began marketing its insurance products directly to consumers, largely through online channels. The investment...

  • Page 27
    ...to write business in some states, the Company also considers the costs and benefits of those states' residual markets and guaranty funds, as well as other property and casualty business the Company writes in those states. Personal Insurance utilizes technology intended to maximize independent agents...

  • Page 28
    ... the geographic distribution of Personal Insurance's direct written premiums for the states that accounted for the majority of premium volume for the year ended December 31, 2013: State % of Total New York ...Texas(1) ...Pennsylvania . . California ...New Jersey . . Florida ...Georgia ...Virginia...

  • Page 29
    ..., on renewal business. Personal Insurance also competes with insurance companies that use exclusive agents or salaried employees to sell their products, as well as those that employ direct marketing strategies, including the use of toll-free numbers and the internet. See ''Item 1A-Risk Factors-The...

  • Page 30
    ...needs of customers, brokers, agents and underwriters. Claims management for International, while generally provided locally by staff in the respective international locations due to local knowledge of applicable laws and regulations, is also managed by the Company's U.S. Claims Services organization...

  • Page 31
    ... are amounts related to structured settlements, which are annuities purchased from various life insurance companies to settle certain personal physical injury claims, of which workers' compensation claims comprise a significant portion. In cases where the Company did not receive a release...

  • Page 32
    ... property and related coverages in the Company's Personal Insurance segment, and within the ''Select Accounts'' and the ''Commercial Accounts'' business groups within the Company's Business Insurance segment. Covered losses under the agreement are limited to the following geographic locations...

  • Page 33
    ...New Jersey, New York, Pennsylvania, Rhode Island, Virginia and Vermont. The coverage is limited to specified property coverage written in the Company's Personal Insurance segment, and within the ''Select Accounts'' and the ''Commercial Accounts'' market groups within the Company's Business Insurance...

  • Page 34
    ... leakage incurred under policies written by the National Property, Technology and Public Sector business units and the Commercial Accounts market group. Personal Insurance Earthquake Excess-of-Loss Reinsurance Treaty. For the period January 1, 2014 through December 31, 2014, the Company has entered...

  • Page 35
    ... 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 36
    ... the 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...

  • Page 37
    ... 31, 2013, Dominion's gross reserves were $2,110 million, and net reserves were $1,779 million. In December 2008, the Company completed the sale of Unionamerica Holdings Limited (Unionamerica), which comprised its United Kingdom (U.K.)-based runoff insurance and reinsurance businesses. (Unionamerica...

  • Page 38
    ... separately by the 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...

  • Page 39
    ...-Paying Ratings The following table summarizes the 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 Insurance Company of Canada and Travelers...

  • Page 40
    ... 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 41
    ... of the fixed maturity portfolio exceeds the 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 having to sell illiquid assets or...

  • Page 42
    ... with statutory accounting practices. The insurance holding company laws of other states in which TRV's domestic insurance subsidiaries are domiciled generally contain similar, although in some instances somewhat more restrictive, limitations on the payment of dividends. Rate and Rule Approvals...

  • Page 43
    ... investments in certain non-fixed maturity securities. Travelers Casualty and Surety Company had results outside the normal range for one IRIS ratio due to the amount of dividends received from its subsidiaries. In 2012, The Travelers Indemnity Company and St. Paul Fire and Marine Insurance Company...

  • Page 44
    ...the laws and insurance regulation of that jurisdiction. Travelers Underwriting Agency Limited, which as an insurance intermediary is regulated by the FCA, produces insurance business for Travelers Syndicate 5000. A TRV subsidiary, Travelers Casualty and Surety Company, has a representative office in...

  • Page 45
    ... provisions that require advance approval by state agencies of any change in control of an insurance company that is domiciled, or, in some cases, having substantial business that it is deemed to be commercially domiciled, in that state. The laws of many states also contain provisions requiring...

  • Page 46
    ... process and further support the Company's long-term financial strategies and objectives. In addition to the day-to-day ERM activities within the Company's business units, other key internal risk management functions include the Management and Operating Committees (comprised of the Company's Chief...

  • Page 47
    ...so long as it satisfies the use and registration requirements of all applicable countries. The Company regards its trademarks as highly valuable assets in marketing its products and services and vigorously seek to protect them against infringement. See ''Item 1A-Risk Factors-Intellectual property is...

  • Page 48
    ... Company when you enroll your email address by visiting the ''Email Alert Service'' section at http://investor.travelers.com. Glossary of Selected Insurance Terms Accident year ...The annual calendar accounting period in which loss events occurred, regardless of when the losses are actually reported...

  • Page 49
    ...average claim values. Book value per share ...Bornhuetter-Ferguson method . . Total common shareholders' equity divided by the number of common shares outstanding. A conventional actuarial method to estimate ultimate losses for a given cohort of claims such as an accident year/product line component...

  • Page 50
    ... from year-to-year, based on the age of the cohort. Case reserves ...Casualty insurance ... Claim department estimates of anticipated future payments to be made on each specific individual reported claim. Insurance which is primarily concerned with the losses caused by injuries to third persons...

  • Page 51
    ...GAAP combined ratio as used in this Annual Report on Form 10-K is an indicator of the Company's underwriting discipline, efficiency in acquiring and servicing its business and overall underwriting profitability. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio...

  • Page 52
    ... portion of the policy term. Earned premiums are recognized as revenues under both Statutory Accounting Practices (SAP) and GAAP. Insurance for risks not covered by standard insurance due to the unique nature of the risk. Risks could be placed in excess and surplus lines markets due to any number of...

  • Page 53
    .... For more information, see ''residual market (involuntary business).'' Fidelity insurance coverage protects an insured for loss due to embezzlement or misappropriation of funds by an employee. Surety is a three-party agreement in which the insurer agrees to pay a third party or make complete an...

  • Page 54
    ...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 of the policy...

  • Page 55
    ... incurred ... The total losses sustained by an insurance company under a policy or policies, whether paid or unpaid. Incurred losses include a provision for IBNR. National Association of Insurance Commissioners (NAIC) ... An organization of the insurance commissioners or directors of all 50 states...

  • Page 56
    ... charged during the year on policies and contracts issued, renewed or reinsured by an 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...

  • Page 57
    ... for a given cohort of claims will grow in a stable, predictable pattern from year-to-year, based on the age of the cohort. Renewal rate change ... Reported claim development method ... Residual market (involuntary business) ... Insurance market which provides coverage for risks for those unable to...

  • Page 58
    ... number of years or for life, typically in settlement of a claim under a liability policy, usually funded through the purchase of an annuity. Risk retention group ...Runoff business ... Salvage ...S-curve method ... Second-injury fund ... Self-insured retentions ...Servicing carrier ... Statutory...

  • Page 59
    ... of law incorporated in insurance policies, which enables an insurance company, after paying a claim under a policy, to recover the amount of the loss from another person or entity who is legally liable for it. A liability owed to a claimant (third party) who is not one of the two parties to...

  • Page 60
    ...excess and surplus lines of insurance. The wholesaler does not deal directly with the insurance consumer. The wholesaler deals with the retail agent or broker. A system (established under state and federal laws) under which employers provide insurance for benefit payments to their employees for work...

  • Page 61
    .... Our property and casualty insurance operations expose us to claims arising out of catastrophes. Catastrophes can be caused by various natural events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis...

  • Page 62
    ... manage our catastrophe exposure by raising prices, modifying underwriting terms or reducing exposure to certain geographies may be limited due to considerations of public policy, the evolving political environment and/or changes in the general economic climate. We also may choose to write business...

  • Page 63
    ... its common 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...

  • Page 64
    ...to a number of variables. These variables can be affected by both internal and external events, such as: changes in claims handling procedures; adverse changes in loss cost trends, including inflationary pressures on medical costs and auto and home repair costs; economic conditions including general...

  • Page 65
    ...from each other. This risk may be exacerbated in the context of an acquisition. Experts providing input to the various estimates and underlying assumptions include actuaries, underwriters, claim personnel and lawyers, as well as other members of management. Therefore, management may have to consider...

  • Page 66
    ... 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 to fund such payments. The risk of widespread defaults...

  • Page 67
    .... From time to time, we may also invest in other types of non-fixed maturity investments, including commodities. All of these asset classes are subject to greater volatility in their investment returns than fixed maturity investments. General economic conditions, changes in applicable tax laws and...

  • Page 68
    ... which is anticipated; • the emergence of a greater number of asbestos claims than anticipated as a result of extended life expectancies resulting from medical advances and lifestyle improvements; • the role of any umbrella or excess policies we have issued; • the resolution or adjudication of...

  • Page 69
    ...of claims or by mandating changes to our underwriting practices. Examples of emerging claims and coverage issues include, but are not limited to: • judicial expansion of policy coverage and the impact of new or expanded theories of liability; • plaintiffs targeting property and casualty insurers...

  • Page 70
    ... often present complex coverage and damage valuation questions; • claims under directors' & officers' insurance policies relating to losses from involvement in financial market activities, such as mortgage or financial product origination, distribution, structuring or servicing and foreclosure...

  • Page 71
    ... not limited to our: • ability to profitably price our business, retain existing customers and obtain new business; • premiums charged, contract terms and conditions, products and services offered (including the ability to design customized programs); • agent, broker and client relationships...

  • Page 72
    ... are certain amounts related to structured settlements. Structured settlements are annuities purchased from various life insurance companies to settle certain personal physical injury claims, of which workers' compensation claims comprise a significant portion. In cases where we did not receive...

  • Page 73
    ... business operations, including credit risk relating to policyholders, independent agents and brokers. We are exposed to credit risk in our surety insurance operations, where we guarantee to a third party that our customer will satisfy certain performance obligations (e.g., a construction contract...

  • Page 74
    ... complete an enterprise risk report to provide a summary of the holding company's enterprise risk management (ERM) framework. It is possible that our states of domicile will require changes in our ERM process or take other regulatory actions that could limit our ability to write additional business...

  • Page 75
    ... 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 periodically review insurers' ratings and change their ratings criteria...

  • Page 76
    ... to access separate business platforms to execute the sale of our personal insurance or commercial insurance products. Should internet disruptions occur, or frustration with our business platforms or distribution initiatives develop among our independent agents and brokers, any resulting loss of...

  • Page 77
    ..., from time to time, to protect or grow market share: • We may develop products that insure risks we have not previously insured, contain new coverage or coverage terms or contain different commission terms. For example, in response to the competitive environment in personal auto insurance, we...

  • Page 78
    ... technology systems that support our business processes and strategic initiatives in a cost and resource efficient manner. Some system development projects are long-term in nature, may negatively impact our expense ratios as we invest in the projects and may cost more than we expect to complete...

  • Page 79
    ..., 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 systems and networks. Computer viruses, hackers, employee...

  • Page 80
    ..., 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. Following the completion of our acquisition of Dominion, a larger portion of our premiums from outside of the United...

  • Page 81
    ..., underwriting, risk management, claims handling, information technology and actuarial practices; • uncertainties related to an acquiree's reserve estimates and its design and operation of internal controls over financial reporting; • the diversion of management time and resources to acquisition...

  • Page 82
    ... in a large number of insurance underwriting, claim processing and investment activities, many of which are highly complex. These activities often are subject to internal guidelines and policies, as well as legal and regulatory standards. A control system, no matter how well designed and operated...

  • Page 83
    ... be subject to claims by third parties from time to time that our products, services and technologies infringe on their intellectual property rights. In recent years, certain entities have acquired patents in order to allege claims of infringement against companies, including in some cases us. Any...

  • Page 84
    ...PROPERTIES The Company leases its principal executive offices in New York, New York, as well as 201 field and claim offices totaling approximately 4.7 million square feet throughout the United States under leases or subleases with third parties. The Company also leases offices in Canada, the United...

  • Page 85
    ... Company's executive officers is incorporated by reference from Part III, Item 10 of this annual report. PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is traded on the New York Stock Exchange...

  • Page 86
    ... 2011 2012 2013 The Travelers Companies, Inc. (2) S&P 500 Index S&P 500 Property & Casualty Insurance (3) 6FEB201419574093 (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 87
    ... independent rating agencies, 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 and related financings), market conditions and...

  • Page 88
    ... 6. SELECTED FINANCIAL DATA 2013 At and for the year ended December 31, 2012 2011 2010 (in millions, except per share amounts) 2009 Total revenues ...Net income ...Total investments ...Total assets ...Claims and claim adjustment expense reserves Total long-term debt ...Total liabilities ...Total...

  • Page 89
    ...November 1, 2013, the Company acquired all of the issued and outstanding shares of Dominion for an aggregate purchase price of approximately $1.034 billion. The results of operations of the acquired business are reported in the Company's Financial, Professional & International Insurance segment from...

  • Page 90
    ... by (v) lower net investment income and (vi) lower net favorable prior year reserve development. The improvement in underlying underwriting margins primarily resulted from the impact of earned pricing that exceeded loss cost trends in each of the Company's business segments. Partially offsetting...

  • Page 91
    ... resulted from lower non-catastrophe weather-related losses in the Business Insurance and Personal Insurance segments and the impact of earned pricing that exceeded loss cost trends in the Business Insurance and Financial, Professional & International Insurance segments. Partially offsetting this...

  • Page 92
    ... lower long-term reinvestment yields available in the market. Net investment income generated by non-fixed maturity investments was $476 million in 2012, an increase of $121 million over 2011, primarily driven by improved results from the Company's real estate partnerships and hedge fund investments...

  • Page 93
    ... the New York Fund for Reopened Cases for workers' compensation. Factors contributing to net favorable prior year reserve development in each segment are discussed in more detail in note 7 of notes to the Company's consolidated financial statements. Claims and claim adjustment expenses in 2012 were...

  • Page 94
    ... a ''catastrophe'' as an event that: • is designated a catastrophe by internationally recognized organizations that track and report on insured losses from catastrophic events, such as Property Claim Services (PCS) for events in the United States and Canada; and • the Company's estimates of its...

  • Page 95
    ... in 2012. Catastrophe losses accounted for 2.6 points and 8.3 points of the 2013 and 2012 loss and loss adjustment expense ratios, respectively. The 2013 and 2012 loss and loss adjustment expense ratios included 3.7 points and 4.2 points of benefit from net favorable prior year reserve development...

  • Page 96
    ... 3,275 7,923 $24,309 $12,418 3,408 8,061 $23,887 (for the year ended December 31, in millions) Net Written Premiums 2013 2012 2011 Business Insurance ...Financial, Professional & International Insurance ...Personal Insurance ...Total ... $12,233 3,309 7,225 $22,767 $11,872 2,981 7,594 $22,447...

  • Page 97
    ... prior year reserve development and (iv) an increase in net investment income. The improvement in underlying underwriting margins primarily resulted from the impact of earned pricing that exceeded loss cost trends, lower non-catastrophe weather-related losses and higher business volume. Partially...

  • Page 98
    ...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 market pools. Fee income in 2013 increased by $71 million or 22% over 2012...

  • Page 99
    ...above, partially offset by the impact of a change in business mix due to an increase in longer-tail loss-sensitive business in the National Accounts business group. The underwriting expense ratio of 30.7% in 2013 was 0.8 points lower than the 2012 underwriting expense ratio of 31.5%. The decrease in...

  • Page 100
    ... Insurance Core ...Business Insurance Other ...Total Business Insurance ... (for the year ended December 31, in millions) Net Written Premiums 2013 2012 2011 Select Accounts ...Commercial Accounts ...National Accounts ...Industry-Focused Underwriting . Target Risk Underwriting ...Specialized...

  • Page 101
    ...2011. Target Risk Underwriting. Net written premiums of $1.80 billion in 2013 increased by 8% over 2012, driven by the National Property and Inland Marine business units. Business retention rates remained strong in 2013 and were slightly higher than in 2012. Renewal premium changes remained positive...

  • Page 102
    ... New business premiums in 2012 increased over 2011. Specialized Distribution. Net written premiums of $858 million in 2013 declined by 1% from 2012, driven by premium decreases in National Programs. Business retention rates remained strong in 2013 but were lower than in 2012. Renewal premium changes...

  • Page 103
    ... an exclusive broker relationship in the Republic of Ireland, the Company's withdrawal from personal insurance business in the Republic of Ireland, competitive market conditions and, to a lesser extent, foreign currency rates of exchange. Net Investment Income Net investment income in 2013 was $372...

  • Page 104
    ... above, offset by the impact of the acquisition of Dominion and an increase in what the Company defines as large losses. Historically, Dominion has had a higher loss and loss adjustment expense ratio than the pre-existing business in the Financial, Professional & International Insurance segment. 94

  • Page 105
    .... Renewal rate changes continued to exceed expected loss cost trends. Net written premiums in Bond & Financial Products in 2013 were $2.03 billion, $106 million or 6% higher than in 2012, primarily driven by higher contract surety volume, rate increases in the management liability business and lower...

  • Page 106
    ... business volume in the Company's operations at Lloyd's, lower surety volumes in Canada, the impact of the Company's withdrawal from personal insurance business in the Republic of Ireland and, to a lesser extent, the impact of foreign currency rates of exchange. Excluding the surety line of business...

  • Page 107
    ...the third quarter of 2013 related to the Company's National Flood Insurance Program (NFIP) business. The Company was a participant in the NFIP Write Your Own (WYO) Program administered by the Federal Emergency Management Agency (FEMA) and the Federal Insurance & Mitigation Administration (FIMA). 97

  • Page 108
    ... weather-related losses, (iii) lower fire-related losses and (iv) higher net favorable prior year reserve development, partially offset by (v) the impact of loss cost trends, including a higher number of severe bodily injury claims in the automobile line of business. Catastrophe losses in 2012...

  • Page 109
    ... 2013 was 13.2 points lower than the 2012 ratio of 72.3%. Catastrophe losses accounted for 3.4 and 13.4 points of the loss and loss adjustment expense ratio in 2013 and 2012, respectively. Net favorable prior year reserve development provided 2.8 points and 2.3 points of benefit to the loss and loss...

  • Page 110
    ...For its Agency business, the Personal Insurance segment had approximately 6.2 million and 6.9 million active policies at December 31, 2013 and 2012, respectively. In the third quarter of 2013, the Company sold the renewal rights related to its National Flood Insurance Program (NFIP) business. Active...

  • Page 111
    ..., the Company's coverage obligations under the policies at issue would be materially increased and bounded only by the applicable per-occurrence limits and the number of asbestos bodily injury claims against the policyholders. Although the Company has seen a moderation in the overall risk associated...

  • Page 112
    ... activity and loss development on pending claims; past settlement values of similar claims; allocated claim adjustment expense; potential role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and applicable coverage defenses or...

  • Page 113
    ... Company's liability. The Company categorizes its asbestos reserves as follows: Number of Policyholders 2013 2012 Total Net Paid 2013 2012 Net Asbestos Reserves 2013 2012 (at and for the year ended December 31, $ in millions) Policyholders with settlement agreements ...Home office and field office...

  • Page 114
    ... Company's obligations under this agreement in principle are included in the ''home office and field office'' category in the preceding table. The following table displays activity for asbestos losses and loss expenses and reserves: (at and for the year ended December 31, in millions) 2013 2012 2011...

  • Page 115
    ... the Company has issued to the policyholder; the involvement of other insurers; the potential for other available coverage, including the number of years of coverage; the role, if any, of non-environmental claims or potential non-environmental claims in any resolution process; and the applicable law...

  • Page 116
    ... regulatory agencies are willing to accept risk-based site analyses and more efficient clean-up technologies. Over the past several years, the Company has experienced generally favorable trends in the number of new policyholders tendering environmental claims for the first time and in the number of...

  • Page 117
    ...that which is anticipated, the emergence of a greater number of asbestos claims than anticipated as a result of extended life expectancies resulting from medical advances and lifestyle improvements, the role of any umbrella or excess policies the Company has issued, the resolution or adjudication of...

  • Page 118
    ... management ...Total financial ...Industrial ...Public utility ...Canadian municipal securities(2) ...Sovereign corporate securities(3) ...Commercial mortgage-backed securities and loans(4) ...Asset-backed and other ...Total all other corporate bonds and redeemable preferred stock ...Total fixed...

  • Page 119
    ...of securities guaranteed by government sponsored enterprises at both dates. 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, 2013, in millions) Carrying Value...

  • Page 120
    ...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 interest in the event of issuer default. (2) No other single state accounted for 2.5% or more of the total non-pre-refunded municipal bonds. (3) The Company...

  • Page 121
    ... Aa2 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 122
    ... Aaa/Aa1 Aaa/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 123
    ... Company's investment strategy generally favors securities that reduce this risk within expected interest rate ranges. Included in the totals at December 31, 2013 and 2012 were $1.06 billion and $1.44 billion, respectively, of GNMA, FNMA and FHLMC (excluding FHA project loans) guaranteed residential...

  • Page 124
    ...-Term Investments See note 1 of notes to the Company's consolidated financial statements for further information about these invested asset classes. Other Investments The Company also invests much smaller amounts in equity securities, real estate, private equity limited partnerships, hedge funds...

  • Page 125
    ... least 102% of the market value of the loaned securities plus accrued interest. The Company has not incurred any investment losses in its securities lending program for the years ended December 31, 2013, 2012 and 2011. Lloyd's Trust Deposit The Company utilizes a Lloyd's trust deposit, whereby owned...

  • Page 126
    ... the year ended December 31, 2013, in millions) Loss Fair Value Fixed maturities ...Equity securities ...Total ... $25 1 $26 $688 27 $715 Purchases and sales of investments are based on cash requirements, the characteristics of the insurance liabilities and current market conditions. The Company...

  • Page 127
    ... third-party 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...

  • Page 128
    ... exceed the indicated threshold loss amount. In addition, more than one such event could occur in any period. Moreover, the Company is exposed to the risk of material losses from other than property and workers' compensation coverages arising out of hurricanes and earthquakes, and it is exposed...

  • Page 129
    ...'' and ''-Outlook-Underwriting Gain/Loss.'' • Changing climate conditions could also impact the creditworthiness of issuers of securities in which the Company invests. For example, water supply adequacy could impact the creditworthiness of bond issuers in the Southwestern United States, and...

  • Page 130
    ... are amounts related to structured settlements, which are annuities purchased from various life insurance companies to settle certain personal physical injury claims, of which workers' compensation claims comprise a significant portion. In cases where the Company did not receive a release...

  • Page 131
    ... its insurance products, and also include other initiatives, such as reducing operating expenses and acquisition costs. In the Agency Automobile line of business, given new business levels, the Company has undertaken various actions (which are discussed in more detail in the ''Underwriting Gain/Loss...

  • Page 132
    ... business. Property and casualty insurance market conditions are expected to remain competitive during 2014 for new business, not only in Business Insurance and Financial, Professional & International Insurance, but especially in Personal Insurance, where price comparison technology used by agents...

  • Page 133
    ...in Personal Insurance, the Company's direct to consumer initiative, the distribution channel that the Company launched in 2009, while intended to enhance the Company's long-term ability to compete successfully in a consumer-driven marketplace, is expected to remain unprofitable for a number of years...

  • Page 134
    ... taxable corporate and U.S. agency mortgage-backed bonds. The Company also invests much smaller amounts in equity securities, real estate, private equity limited partnerships, hedge funds, and real estate partnerships and joint ventures. These investment classes have the potential for higher returns...

  • Page 135
    ... Company Liquidity. TRV's liquidity requirements primarily include shareholder dividends, debt servicing, common share repurchases and, from time to time, contributions to its qualified domestic pension plan. At December 31, 2013, TRV held total cash and short-term invested assets in the United...

  • Page 136
    ... pension plan, which was 106% funded at December 31, 2013. In 2012 and 2011, the Company voluntarily made contributions totaling $217 million and $185 million, respectively, to its qualified domestic pension plan. Investing Activities Net cash flows used in investing activities in 2013 and 2012...

  • Page 137
    ... by which the market value of the fixed maturity portfolio exceeds the 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 having to...

  • Page 138
    ... independent rating agencies, 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 and related financings), market conditions and...

  • Page 139
    ... at December 31, 2013 that are expected to be settled in cash. The table below includes the amount and estimated future timing of claims and claim-related payments. The amounts do not represent the exact liability, but instead represent estimates, generally utilizing actuarial projections techniques...

  • Page 140
    ... ...Long-term unfunded investment commitments(5) Estimated claims and claim-related payments Claims and claim adjustment expenses(6) ...Claims from large deductible policies(7) ...Loss-based assessments(8) ...Payout from ceded funds withheld(9) ...Total estimated claims and claim-related payments...

  • Page 141
    ... both reported and unreported claims incurred and related claim adjustment expenses, gross of reinsurance recoverables, excluding structured settlements expected to be paid by annuity companies. The Company has entered into reinsurance agreements to protect itself from potential losses in excess of...

  • Page 142
    ... surplus, as determined in accordance with statutory accounting practices. The insurance holding company laws of other states in which the Company's subsidiaries are domiciled generally contain similar, although in some instances somewhat more restrictive, limitations on the payment of dividends...

  • Page 143
    ... plan performance and funded status at the time, that it may make voluntary pension contributions of approximately $75 million to $100 million annually beginning in 2015 as well as over the following several years. The Qualified Plan assets are managed to maximize long-term total return. The Company...

  • Page 144
    ...: (at December 31, in millions) Case 2013 IBNR Total Case 2012 IBNR Total General liability ...Commercial property ...Commercial multi-peril ...Commercial automobile ...Workers' compensation ...Fidelity and surety ...Personal automobile ...Homeowners and personal-other International and other...

  • Page 145
    ... by qualified actuaries employed by the Company. The process of estimating claims and claim adjustment expense reserves involves a high degree of judgment and is subject to a number of variables. These variables can be affected by both internal and external events, such as changes in claims handling...

  • Page 146
    ... 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 147
    ...is the time between the event triggering a claim and the reporting of the claim to the insurer, makes estimating IBNR inherently more uncertain. In addition, the greater the reporting lag, the greater the proportion of IBNR to the total claim liability for the product line. Writing new products with...

  • Page 148
    ... 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, court actions, timeliness of claim reporting, state mix of claimants and degree...

  • Page 149
    ... of new techniques that might improve current and future estimates. Some components of product line reserves are susceptible to relatively infrequent large claims that can materially impact the total estimate for that component. In such cases, the Company's actuarial analysis generally isolates...

  • Page 150
    ... from a given accident year. The speed of 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...

  • Page 151
    ...year development analysis is supplemented with projected claim counts and average values for IBNR claim counts. For components with greater lags in claim 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...

  • Page 152
    ...law • Shifts in lawsuit mix between federal and state courts • Changes in claim adjuster office structure (causing distortions in the data) • The potential impact of inflation on loss costs • Changes in settlement patterns General liability book of business risk factors • Changes in policy...

  • Page 153
    ... 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 Commercial property book of business risk factors • Policy provisions...

  • Page 154
    ... 2011 change primarily reflected better than expected development in the 2008 and 2009 accident years for certain large national property and ocean marine exposures. Commercial Multi-Peril Commercial multi-peril provides a combination of property and liability coverage typically for small businesses...

  • Page 155
    ... above, this line combines general liability and commercial property coverages and it has been impacted in the past by many of the same events as those two lines. The Company's change in reserve estimate for this product line was 2% for 2013, ǁ1% for 2012 and 5% for 2011. The 2013 change primarily...

  • Page 156
    ...can run as long as the injured worker's life, such as permanent disability benefits and on-going medical care. Despite the possibility of long payment tails, the reporting lags are generally short, settlements are generally not complex, and most of the liability can be considered high frequency with...

  • Page 157
    ...new medical processes and equipment • Changes in the use of pharmaceutical drugs • Degree of patient responsiveness to treatment General workers' compensation risk factors • Frequency of claim reopenings on claims previously closed • Mortality trends of injured workers with lifetime benefits...

  • Page 158
    ... loss development are generally not applicable to low frequency, high severity policies. Surety has certain components that are generally considered short tail coverages with short reporting lags, although large individual construction and commercial surety contracts can result in a long settlement...

  • Page 159
    ... development for accident years 2008 and prior for the contract surety business. Personal Automobile Personal automobile includes both short and long tail coverages. The payments that are made quickly typically pertain to auto physical damage (property) claims and property damage (liability) claims...

  • Page 160
    ...-year changes in reserve estimates for this product line. Personal automobile reserves represent approximately 5% of the Company's total claims and claim adjustment expense reserves. The Company's change in reserve estimate for this product line was 1% for 2013, 2% for 2012 and 3% for 2011. The 2012...

  • Page 161
    ... 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 generally restricted to the insured and the insurer. Claims on property...

  • Page 162
    ... of reasonably possible one-year changes in reserve estimates for this product line. Homeowners and personal lines other reserves represent approximately 2% of the Company's total claims and claim adjustment expense reserves. This line combines both liability and property coverages; however, the...

  • Page 163
    ... broker or lead-insurer for claim settlement purposes. International reserves are generally analyzed by country and general coverage category (e.g. General Liability in Canada, Commercial Property in the United Kingdom, etc.). The business is also generally split by direct versus assumed reinsurance...

  • Page 164
    ... international product lines as insurers domiciled outside of the U.S. do not file U.S. statutory reports. Comparative historical information on runoff business is not indicative of reasonably possible one-year changes in the reserve estimate for this mix of runoff business. Accordingly, the Company...

  • Page 165
    ... receives the quoted market prices from a third party, nationally recognized pricing service (pricing service). When quoted market prices are unavailable, the Company utilizes a pricing service to determine an estimate of fair value, which is mainly used for its fixed maturity investments. The fair...

  • Page 166
    ... bonds and corporate 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, the Company includes...

  • Page 167
    ..., 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. Other-Than-Temporary Impairments of Fixed Maturities and Equity Securities For fixed maturity investments that the Company does...

  • Page 168
    ... companies that file financial statements with the SEC. In July 2012, the SEC staff issued a final report on the SEC work plan which concluded that IFRS provide high quality accounting standards, but also indicated concerns with funding, consistency of application and enforcement of IFRS globally...

  • Page 169
    ... sufficiency of the Company's asbestos and other reserves; • the impact of emerging claims issues as well as other insurance and non-insurance litigation; • the cost and availability of reinsurance coverage; • catastrophe losses; • the impact of investment, economic and underwriting market...

  • Page 170
    ...Condition and Results of Operations.'' The Company's foreign exchange market risk exposure is concentrated in the Company's invested assets, insurance reserves and shareholders' equity denominated in foreign currencies. Cash flows from the Company's foreign operations are the primary source of funds...

  • Page 171
    ... 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 basis point changes in interest rates...

  • Page 172
    ...denominated investments would be expected to produce a loss in fair value of approximately $681 million and $459 million at December 31, 2013 and 2012, respectively. This increase in the projected loss at December 31, 2013 primarily reflected the impact of the Company's acquisition of Dominion. 162

  • Page 173
    ... Report of Independent Registered Public Accounting Firm ...Consolidated Statement of Income for the years ended December 31, 2013, 2012 and 2011 ...Consolidated Statement of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011 ...Consolidated Balance Sheet at December 31, 2013...

  • Page 174
    Report Of Independent Registered Public Accounting Firm The Board of Directors and Stockholders The Travelers Companies, Inc.: We have audited the accompanying consolidated balance sheet of The Travelers Companies, Inc. and subsidiaries (the Company) as of December 31, 2013 and 2012, and the related...

  • Page 175
    ... from other changes in total OTTI of $5 million, $42 million and $55 million for the years ended December 31, 2013, 2012 and 2011, respectively, were recognized in other comprehensive income (loss) as part of changes in net unrealized gains on investment securities having credit losses recognized in...

  • Page 176
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (in millions) For the year ended December 31, 2013 2012 2011 Net income ...Other comprehensive income (loss): Changes in net unrealized gains on investment securities: Having no credit losses recognized in...

  • Page 177
    ... 31, 2013 2012 Assets Fixed maturities, available for sale, at fair value (amortized cost $62,196 and $60,829) ...Equity securities, available for sale, at fair value (cost $686 and $462) ...Real estate investments ...Short-term securities ...Other investments ...Cash ...Investment income accrued...

  • Page 178
    ... TRAVELERS COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (in millions) For the year ended December 31, 2013 2012 2011 Convertible preferred stock-savings plan Balance, beginning of year ...Redemptions ...Conversion to common stock ...Balance, end of year...

  • Page 179
    ... ...Securities transactions in course of settlement Acquisition, net of cash acquired ...Other ... Net cash provided by (used in) investing activities ...Cash flows from financing activities Payment of debt ...Issuance of debt ...Dividends paid to shareholders ...Issuance of common stock-employee...

  • Page 180
    ... price of approximately $1.034 billion. Dominion primarily markets personal lines and small commercial insurance business in Canada. At the acquisition date, the Company recorded at fair value $3.91 billion of assets acquired and $2.88 billion of liabilities assumed as part of purchase accounting...

  • Page 181
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Accounting Standards Not Yet Adopted Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the ...

  • Page 182
    ... Funds and Real Estate Partnerships 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 183
    ... hedge funds, real estate partnerships and joint ventures are accounted for using the equity method of accounting, whereby the Company's share of the investee's earnings or losses in the fund is reported in net investment income. Trading securities were marked to market with the change in fair value...

  • Page 184
    ... the issuer to the Company's assessment of the priority of claims. The present value of the cash flows is determined by applying the effective yield of the security at the date of acquisition (or the most recent implied rate used to accrete the security if the implied rate has changed as a result of...

  • Page 185
    ... Funds and Real Estate Partnerships The Company reviews its investments in private equity limited partnerships, hedge funds and real estate partnerships for impairment no less frequently than quarterly and monitors the performance throughout the year through discussions with the managers/general...

  • Page 186
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Changes in Intent to Sell Temporarily Impaired Assets The Company may, from time to time, sell invested assets subsequent to the balance ...

  • Page 187
    ... balance sheet are certain reserves discounted to the 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...

  • Page 188
    ... 31, 2013 and 2012, respectively. Treasury Stock The cost of common stock repurchased by the Company is reported as treasury stock and represents authorized and unissued shares of the Company under the Minnesota Business Corporation Act. Statutory Accounting Practices The Company's U.S. insurance...

  • Page 189
    ... dollars. The foreign currency remeasurement and translation are calculated using current exchange rates for items reported in the balance sheets and average exchange rates for items recorded in earnings. The change in unrealized foreign currency translation gain or loss during the year, net of tax...

  • Page 190
    ..., commercial 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, generally utilizing loss-sensitive products...

  • Page 191
    ... 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 programs to large and mid-sized customers, including office building...

  • Page 192
    ... and professional services industry sectors. In addition, International markets personal lines and small commercial insurance business in Canada through Dominion, which the Company acquired on November 1, 2013. International, through its Lloyd's syndicate (Syndicate 5000), for which the Company 182

  • Page 193
    ... properties. The Company also writes coverage for boats and yachts and valuable personal items such as jewelry, and also writes coverages for umbrella liability, identity fraud, and weddings and special events. 2. SEGMENT INFORMATION The accounting policies used to prepare the segment reporting...

  • Page 194
    ... income (loss), net written premiums 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 2013 Premiums ...Net investment income Fee...

  • Page 195
    ... INFORMATION (Continued) Net written premiums by market were as follows: (for the year ended December 31, in millions) 2013 2012 2011 Business Insurance: Select Accounts ...Commercial Accounts ...National Accounts ...Industry-Focused Underwriting Target Risk Underwriting ...Specialized Distribution...

  • Page 196
    ..., 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 197
    ... TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. SEGMENT INFORMATION (Continued) (at December 31, in millions) 2013 2012 Asset reconciliation: Business Insurance ...Financial, Professional & International Insurance ...Personal Insurance ...Total...

  • Page 198
    ... securities ...All other corporate bonds ...Redeemable preferred stock ... $ 2,288 9,074 25,414 34,488 2,552 2,263 20,472 133 $62,196 Amortized Cost $ 39 445 991 $ 12 1 361 362 8 18 299 1 $700 $ 2,315 9,518 26,044 35,562 2,577 2,424 20,940 138 $63,956 Fair Value 1,436 33 179 767 6 $2,460 Total...

  • Page 199
    ... ''A1'' at both December 31, 2013 and 2012. At December 31, 2013 and 2012, the Company held commercial mortgage-backed securities (CMBS, including FHA project loans) of $475 million and $453 million, respectively, which are included in ''All other corporate bonds'' in the tables above. At December...

  • Page 200
    ...by an insurance subsidiary were pledged into a Lloyd's trust account to support capital requirements for the Company's operations at Lloyd's. Equity Securities The cost and fair value of investments in equity securities were as follows: Gross Unrealized Gains Losses Fair Value (at December 31, 2013...

  • Page 201
    ... for 2019 and thereafter. Short-term Securities The Company's short-term securities consist of Aaa-rated registered money market funds, U.S. Treasury securities, high-quality commercial paper (primarily A1/P1) and high-quality corporate securities purchased within a year to their maturity with...

  • Page 202
    ... 31, 2013 and 2012, the aggregate fair value and gross unrealized loss by length of time those securities have been continuously in an unrealized loss position. The fair value amounts reported in the tables are estimates that are prepared using the process described in note 4. The Company also...

  • Page 203
    ... 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, 2012...

  • Page 204
    ... FINANCIAL STATEMENTS (Continued) 3. INVESTMENTS (Continued) The following table summarizes, for all fixed maturities and equity securities reported at fair value for which fair value is less than 80% of amortized cost at December 31, 2013, the gross unrealized investment loss by length of time...

  • Page 205
    ... grade securities totaling $1.93 billion and $2.05 billion at December 31, 2013 and 2012, respectively. The Company defines its below investment grade securities as those securities rated below investment grade by external rating agencies, or the equivalent by the Company when a public rating does...

  • Page 206
    ... a daily mark-to-market and settlement with the broker. At December 31, 2013 and 2012, the Company had $0 and $800 million notional value of open U.S. Treasury futures contracts, respectively. Net realized investment gains in 2013, 2012 and 2011 included net gains of $115 million, net losses of $14...

  • Page 207
    ... receives the quoted market prices from a third party, nationally recognized pricing service (pricing service). When quoted market prices are unavailable, the Company utilizes a pricing service to determine an estimate of fair value, which is mainly used for its fixed maturity investments. The fair...

  • Page 208
    ...on unadjusted market prices. The Company also holds certain fixed maturity investments which are not priced by the pricing service and, accordingly, estimates the fair value of such fixed maturities using an internal matrix that is based on market information regarding interest rates, credit spreads...

  • Page 209
    ... bonds and corporate 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, the Company includes...

  • Page 210
    ... the Company's financial assets and financial liabilities are measured on a recurring basis at December 31, 2013 and 2012. An investment transferred between levels during a period is transferred at its fair value as of the beginning of that period. (at December 31, 2013, in millions) Total Level...

  • Page 211
    ... FAIR VALUE MEASUREMENTS (Continued) During the year ended December 31, 2013, the Company had transfers of $31 million of redeemable preferred stock and $54 million of non-redeemable preferred stock from Level 1 to Level 2. (at December 31, 2012, in millions) Total Level 1 Level 2 Level 3 Invested...

  • Page 212
    ... the changes in the Level 3 fair value category for the years ended December 31, 2013 and 2012. (in millions) Fixed Maturities Other Investments Total Balance at December 31, 2012 ...Total realized and unrealized investment gains (losses): Reported in net realized investment gains(1) ...Reported in...

  • Page 213
    ...-term securities ...Financial liabilities: Debt ...Commercial paper ... $3,483 $6,250 100 $3,483 $7,715 100 $1,448 $ - - $1,957 $7,715 100 $78 $- - The Company utilized a pricing service to estimate fair value for approximately 97% and 95% of short-term securities at December 31, 2013 and 2012...

  • Page 214
    ... Northeastern United States. The Company also utilizes excess-of-loss treaties to protect against earthquake losses up to a certain threshold in the Business Insurance segment (for certain markets) and for the Personal Insurance segment. The Company evaluates and monitors the financial condition of...

  • Page 215
    ...) 2013 2012 Gross reinsurance recoverables 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...

  • Page 216
    ... 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 217
    ... of the acquisition of Dominion and is subject to the impact of changes in foreign currency exchange rates. At December 31, 2013, goodwill related to Dominion was $268 million. Other Intangible Assets The following presents a summary of the Company's other intangible assets by major asset class at...

  • Page 218
    ...acquisition of Dominion in 2013 and in connection with the merger of The St. Paul Companies, Inc. and Travelers Property Casualty Corp. in 2004, respectively, and were based on management's estimate of nominal claims and claim adjustment expense reserves and reinsurance recoverables. The method used...

  • Page 219
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. INSURANCE CLAIM RESERVES Claims and claim adjustment expense reserves were as follows: (at December 31, in millions) 2013 2012 Property-casualty ...Accident and health ...Total ... $50,865 30 $...

  • Page 220
    ... of business in Canada and the marine line of business in the Company's operations at Lloyd's, partially offset by higher than expected loss experience in the public and product liability line of business in the United Kingdom. Personal Insurance. Net favorable prior year reserve development in 2013...

  • Page 221
    ... prior year reserve development in the general liability product line for the 2011 accident year resulting from higher than expected claim frequency. Financial, Professional & International Insurance. Net favorable prior year reserve development in 2012 was $298 million. In Bond & Financial Products...

  • Page 222
    ... 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 accident years. Personal Insurance...

  • Page 223
    ... activity and loss development on pending claims; past settlement values of similar claims; allocated claim adjustment expense; potential role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and applicable coverage defenses or...

  • Page 224
    ... FINANCIAL STATEMENTS (Continued) 7. INSURANCE CLAIM RESERVES (Continued) The completion of these reviews and analyses in 2013, 2012 and 2011 resulted in $190 million, $175 million and $175 million increases, respectively, in the Company's net asbestos reserves in each period. In each year, the...

  • Page 225
    ...that which is anticipated, the emergence of a greater number of asbestos claims than anticipated as a result of extended life expectancies resulting from medical advances and lifestyle improvements, the role of any umbrella or excess policies the Company has issued, the resolution or adjudication of...

  • Page 226
    ... for that reporting period. The estimates related to catastrophes are adjusted as actual claims emerge. 8. DEBT Debt outstanding was as follows: (at December 31, in millions) 2013 2012 Short-term: Commercial paper ...5.00% Senior notes due March 15, 2013 ...Total short-term debt ...Long-term: 5.50...

  • Page 227
    ... rates on commercial paper issued in 2013 ranged from 0.08% to 0.13%, and in 2012 ranged from 0.08% to 0.17%. Senior Notes-The Company's various senior debt issues are unsecured obligations that rank equally with one another. Interest payments are made semi-annually. The Company generally may...

  • Page 228
    ... 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 229
    ... have been LIBOR plus 112.5 basis points, had there been any amounts outstanding under the credit agreement. This credit agreement also supports the Company's commercial paper program. Shelf Registration In June 2013, the Company filed with the Securities and Exchange Commission a universal shelf...

  • Page 230
    ... shares. Treasury Stock The Company's board of directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934...

  • Page 231
    ...TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 9. SHAREHOLDERS' EQUITY AND DIVIDEND AVAILABILITY (Continued) Common shares acquired are reported as treasury stock in the consolidated balance sheet. Dividend Availability The Company's U.S. insurance...

  • Page 232
    ... (AOCI) for the years ended December 31, 2013, 2012 and 2011. Changes in Net Changes in Net Unrealized Gains on Unrealized Gains on Investment Investment Net Benefit Plan Securities Having Securities Having Assets and No Credit Losses Credit Losses Obligations Total Accumulated Recognized in the...

  • Page 233
    ... components of the Company's other comprehensive income (loss) and the related income tax expense (benefit) for the years ended December 31, 2013, 2012 and 2011. (for the year ended December 31, in millions) 2013 2012 2011 Changes in net unrealized gains on investment securities: Having no credit...

  • Page 234
    ...'s AOCI to the Company's consolidated statement of income for the years ended December 31, 2013, 2012 and 2011. (for the year ended December 31, in millions) 2013 2012 2011 Reclassification adjustments related to unrealized gains on investment securities: Having no credit losses recognized in the...

  • Page 235
    ... 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) 2013 2012 2011 Basic Net income, as reported ...Participating share-based awards-allocated income ...Preferred stock dividends ...Net income...

  • Page 236
    ... (benefit) related to the changes in unrealized gain on investments, unrealized loss on foreign exchange and other comprehensive income . . Total income tax expense included in the consolidated financial statements ...(for the year ended December 31, in millions) (822) $ 450 2013 57 $ 750 2012...

  • Page 237
    ...tax return purposes, as of December 31, 2013, the Company had net operating loss (NOL) carryforwards in the United States, Canada and United Kingdom. The amount and timing of realizing the benefits of NOL carryforwards depend on future taxable income and limitations imposed by tax laws. The benefits...

  • Page 238
    ... 2004 Stock Incentive Plan, as amended (the 2004 Incentive Plan), which replaced prior share-based incentive compensation plans (legacy plans). The purposes of the 2004 Incentive Plan are to align the interests of the Company's non-employee directors, executive officers and other employees with...

  • Page 239
    ... the Director Compensation Program are awarded under the 2004 Incentive Plan. Stock Option Awards Stock option awards granted to eligible officers and key employees have a ten-year term. Prior to January 1, 2007, stock options were granted with an exercise price equal to the fair market value of...

  • Page 240
    ...were used in estimating the fair value of options on grant date for the years ended December 31, 2013, 2012 and 2011: 2013 Original Grants Expected term of stock options ...Expected volatility of the Company's stock Weighted average volatility ...Expected annual dividend per share ...Risk-free rate...

  • Page 241
    ...the Company's 2004 Incentive Plan and legacy sharebased incentive compensation plans as of and for the year ended December 31, 2013 is as follows: Weighted Average Exercise Price Weighted Average Contractual Life Remaining Aggregate Intrinsic Value ($ in millions) Stock Options Number Outstanding...

  • Page 242
    ...on the actual return on equity attained. The fair value of restricted stock units, deferred stock units 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, 2013, 2012 and 2011 was...

  • Page 243
    ...14. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS The Company sponsors a qualified non-contributory defined benefit pension plan, which covers substantially all U.S. domestic employees and provides benefits under a cash balance formula, except that employees satisfying certain age and service...

  • Page 244
    ... Plans 2013 2012 Total 2013 2012 (at and for the year ended December 31, in millions) Change in projected benefit obligation: Benefit obligation at beginning of year . Benefits earned ...Interest cost on benefit obligation ...Actuarial loss (gain) ...Benefits paid ...Foreign currency exchange rate...

  • Page 245
    ...end of year ...Amounts recognized in the statement of financial position consist of: Accrued under-funded benefit plan liability ...Amounts recognized in accumulated other comprehensive income consist of: Net actuarial gain ...Prior service benefit ...Total ... Effective January 1, 2013, the Company...

  • Page 246
    ..., 2013, 2012 and 2011. Pension Plans 2013 2012 2011 Postretirement Benefit Plans 2013 2012 2011 (in millions) Net Periodic Benefit Cost: Service cost ...Interest cost on benefit obligation Expected return on plan assets . . Amortization of unrecognized: Prior service benefit ...Net actuarial loss...

  • Page 247
    ... used to determine net periodic benefit cost Discount rate ...Expected long-term rate of return on pension plans' assets ...Expected long-term rate of return on postretirement benefit plans' assets ...Assumed health care cost trend rates Following year: Medical (before age 65) ...Medical (age...

  • Page 248
    ... The Company's overall investment strategy for the U.S. qualified domestic pension plan is to achieve a mix of approximately 85% to 90% of investments for long-term growth and 10% to 15% for near-term benefit payments with a wide diversification of asset types, fund strategies and fund managers. The...

  • Page 249
    ... ...All other corporate bonds ...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...

  • Page 250
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued) (at December 31, 2012, in millions) Total Level 1 Level 2 Level 3 Invested assets: Fixed maturities Obligations of states, ...

  • Page 251
    ... Balance at end of year ...Other Postretirement Benefit Plan The Company's overall investment strategy is to achieve a mix of approximately 35% to 65% of investments for long-term growth and 35% to 60% for near-term insurance payments with a wide diversification of asset types, fund strategies and...

  • Page 252
    ...contribution is made in cash and invested according to the employee's current investment elections. The Company's matching contribution can be reinvested at any time into any other investment option. The Company's non-U.S. employees participate in separate savings plans. The total expense related to...

  • Page 253
    .... 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), a wholly-owned subsidiary of the Company, and other insurers (not including The St. Paul...

  • Page 254
    ... 10, 2013, and the parties await the court's decision. SPC, which is not covered by the Manville bankruptcy court rulings or the settlements described above, from time to time has been named as a defendant in direct action cases in Texas state court asserting common law claims. All such cases that...

  • Page 255
    ... relating to asbestos and environmental claims. Any such development will be affected by future court decisions and interpretations, as well as changes in applicable legislation. Because of these uncertainties, additional liabilities may arise for amounts in excess of the Company's current reserves...

  • Page 256
    ... 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 257
    ... certain investments, certain insurance policy obligations of former insurance subsidiaries, and various other indemnifications. The Company also provides standard indemnifications to service providers in the normal course of business. The indemnification clauses are often standard contractual terms...

  • Page 258
    ... year ended December 31, 2013, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI), were as follows: (in millions) TPC Other Subsidiaries Travelers(2) Eliminations Consolidated Total OTTI gains (losses) ...OTTI losses...

  • Page 259
    ... year ended December 31, 2012, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI), were as follows: (in millions) TPC Other Subsidiaries Travelers(2) Eliminations Consolidated Total OTTI gains ...OTTI losses recognized...

  • Page 260
    ... TPC Other Subsidiaries Travelers(2) Eliminations Consolidated Total OTTI gains ...OTTI losses recognized in net realized investment gains (losses) ...OTTI gains recognized in OCI ... $ 15 $(15) $ 30 $ 15 $(10) $ 25 $- $- $- $- $- $- $ 30 $(25) $ 55 (2) The Travelers Companies, Inc., excluding...

  • Page 261
    ...) For the year ended December 31, 2013 (in millions) TPC Other Subsidiaries Travelers(1) Eliminations Consolidated Net income ...Other comprehensive income (loss): Changes in net unrealized gains on investment securities: Having no credit losses recognized in the consolidated statement of income...

  • Page 262
    ... gains on investment securities: Having no credit losses recognized in the consolidated statement of income ...Having credit losses recognized in the consolidated statement of income ...Net changes in benefit plan assets and obligations ...Net changes in unrealized foreign currency translation...

  • Page 263
    ... gains on investment securities: Having no credit losses recognized in the consolidated statement of income ...Having credit losses recognized in the consolidated statement of income ...Net changes in benefit plan assets and obligations ...Net changes in unrealized foreign currency translation...

  • Page 264
    ... Travelers(1) Eliminations Consolidated Assets Fixed maturities, available for sale, at fair value (amortized cost $62,196) ...Equity securities, available for sale, at fair value (cost $686) ...Real estate investments ...Short-term securities ...Other investments ...Total investments ...Cash...

  • Page 265
    ... Travelers(1) Eliminations Consolidated Assets Fixed maturities, available for sale, at fair value (amortized cost $60,829) ...Equity securities, available for sale, at fair value (cost $462) ...Real estate investments ...Short-term securities ...Other investments ...Total investments ...Cash...

  • Page 266
    ... stock acquired-net employee share-based 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...

  • Page 267
    ... stock acquired-net employee share-based compensation ...Excess tax benefits from share-based payment arrangements ...Dividends paid to parent company ...Net cash used in financing activities ...Effect of exchange rate changes on cash ...Net increase in cash ...Cash at beginning of year ...Cash...

  • Page 268
    ... stock acquired-net employee share-based 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...

  • Page 269
    THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 19. SELECTED QUARTERLY FINANCIAL DATA (Unaudited) 2013 (in millions, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Total Total revenues ...Total expenses ......

  • Page 270
    ... 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 271
    ...of the Company's management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over...

  • Page 272
    ... reporting of Dominion. We also have audited, in accordance 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, 2013 and 2012, and the related consolidated statements...

  • Page 273
    ...and Analysis-Stock Ownership Guidelines'' in the Company's proxy statement filed with the Securities and Exchange Commission on April 9, 2013. 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...

  • Page 274
    ... and Field Management; Chief Legal Officer Vice Chairman-Claim Services, Personal Insurance, Operations and Systems, and Risk Control Executive Vice President and Chief Administrative Officer Executive Vice President and General Counsel Executive Vice President-Strategic Development and Corporate...

  • Page 275
    ... and general corporate law matters. Mr. Schnitzer joined Simpson Thacher in 1991. Doreen Spadorcia, 56, has been Vice Chairman-Claim Services, Personal Insurance, Operations and Systems, and Risk Control since May 2012. Prior to that, she was Chief Executive Officer- Personal Insurance and Executive...

  • Page 276
    ... Committee Report,'' ''Tabular Executive Compensation Disclosure'' and ''Non-Employee Director Compensation.'' Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS The ''Share Ownership Information'' section of the Company's Proxy Statement...

  • Page 277
    ...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. 267

  • Page 278
    ...-Related Person Transaction Approval,'' ''Employment Relationships'' and ''ThirdParty Transactions'' sections of the Company's Proxy Statement relating to its Annual Meeting of Shareholders to be held May 28, 2014 are incorporated herein by reference. Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES...

  • Page 279
    ... 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 capacities and on the dates indicated. Date By /s/ JAY S. FISHMAN Jay S. Fishman Director, Chairman and Chief Executive Officer (Principal Executive...

  • Page 280
    ... February 13, 2014 By * Cleve L. Killingsworth, Jr. Director February 13, 2014 By * Philip T. Ruegger III Director February 13, 2014 By * Donald J. Shepard Director February 13, 2014 By * Laurie J. Thomsen Director February 13, 2014 *By /s/ MATTHEW S. FURMAN Matthew S. Furman...

  • Page 281
    ... Financial Statements ...Schedules: Schedule II-Condensed Financial Information of Registrant (Parent Company Only) ...Schedule III-Supplementary Insurance Information ...Schedule V-Valuation and Qualifying Accounts ...Schedule VI-Supplementary Information Concerning Property-Casualty Insurance...

  • Page 282
    ... 2014, we reported on the consolidated balance sheet of The Travelers Companies, Inc. and subsidiaries (the Company) as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity, and cash flows for each of the years in the...

  • Page 283
    ... TRAVELERS COMPANIES, INC. (Parent Company Only) CONDENSED FINANCIAL INFORMATION OF REGISTRANT (in millions) CONDENSED STATEMENT OF INCOME For the year ended December 31, 2013 2012 2011 Revenues Net investment income ...Net realized investment gains (losses)(1) ...Other revenues ...Total revenues...

  • Page 284
    ... INCOME For the year ended December 31, 2013 2012 2011 Consolidated net income ...Other comprehensive income-parent company: Changes in net unrealized gains on investment securities: Having no credit losses recognized in the consolidated statement of income ...Having credit losses recognized in the...

  • Page 285
    SCHEDULE II THE TRAVELERS COMPANIES, INC. (Parent Company Only) CONDENSED FINANCIAL INFORMATION OF REGISTRANT (in millions) CONDENSED BALANCE SHEET At December 31, 2013 2012 Assets Fixed maturities ...Equity securities ...Short-term securities ...Investment in subsidiaries Other assets ... ... ... ...

  • Page 286
    ...of short-term securities ...Other investments, net ...Net cash provided by investing activities ...Cash flows from financing activities Payment of debt ...Issuance of debt ...Dividends paid to shareholders ...Issuance of common stock-employee share options ...Treasury stock acquired-share repurchase...

  • Page 287
    ...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 288
    ... Business Insurance ...Financial, Professional & International Insurance ...Personal Insurance ...Total-Reportable Segments ...Other ...Consolidated ...(1) (2) See note 2 of notes to the Company's consolidated financial statements for discussion of the method used to allocate net investment income...

  • Page 289
    ... 3 $ 83 $ 40 (1) Amount in 2013 represents allowance for uncollectible reinsurance recoverables acquired November 1, 2013 as part of the Company's acquisition of Dominion. (2) Credited to the related asset account. See the accompanying Report of Independent Registered Public Accounting Firm. 279

  • Page 290
    ... VI THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES Supplementary Information Concerning Property-Casualty Insurance Operations(1) 2011-2013 (in millions) Claims and Claim Adjustment Expenses Incurred Discount From Related to: Deferred Claims and Reserves for Net Acquisition Claim Adjustment Unpaid...

  • Page 291
    ....9 to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2012, and is incorporated herein by reference. 10.10* 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...

  • Page 292
    ... to The St. Paul Companies, Inc. Amended and Restated 1994 Stock Incentive Plan was filed as Exhibit 10.11 to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2012, and is incorporated herein by reference. 10.12* Current Director Compensation Program, effective as...

  • Page 293
    ... Executive Officers, amending The St. Paul Travelers Companies, Inc. Severance Plan, was filed as Exhibit 99 to the Company's Form 8-K filed on February 16, 2006, and is incorporated herein by reference. 10.38* Form of Restricted Stock Unit Award Notification and Agreement (For Management Committee...

  • Page 294
    ...46 to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2012, and is incorporated herein by reference. 10.46* Form of Performance Shares Award Notification and Agreement for Jay S. Fishman (2013) was filed as Exhibit 10.47 to the Company's annual report on Form 10-K for...

  • Page 295
    ... 31, 2013, 2012 and 2011; (vi) Notes to Consolidated Financial Statements; and (vii) Financial Statement Schedules. †* Filed herewith. Management contract or compensatory plan in which directors and/or executive officers are eligible to participate. The total amount of securities authorized...

  • Page 296
    ...) 2013 2012 2011 2010 2009 Income before income taxes ...Interest ...Portion of rentals deemed to be interest ...Income available for fixed charges ...Fixed charges: Interest ...Portion of rentals deemed to be interest ...Total fixed charges ...Preferred stock dividend requirements ...Total fixed...

  • Page 297
    ... process, summarize and report financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. By: /s/ JAY S. FISHMAN Jay S. Fishman Chairman and Chief Executive Officer...

  • Page 298
    ...process, summarize and report financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. By: /s/ JAY S. BENET Jay S. Benet Vice Chairman and Chief Financial Officer...

  • Page 299
    ...(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, 2013 (the ''Report'') fully complies...

  • Page 300
    ...(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, 2013 (the ''Report'') fully complies...

  • Page 301
    ... set forth the quarterly high and low closing sales prices of The Travelers Companies, Inc. common stock as well as the amount of quarterly cash dividends declared per share for years 2013 and 2012. Financial Information Available Travelers makes available, free of charge on its website, all of its...

  • Page 302
    ...' equity for all years in the period presented. Definitions of other terms used in this Annual Report, such as return on equity, operating return on equity, underwriting gain (loss) and GAAP combined ratio, are included in the Glossary of Selected Insurance Terms portion of the attached Form 10-K.

  • Page 303
    © 2012 The Travelers Indemnity Company. All rights reserved. 56211

  • Page 304
    The Travelers Companies, Inc. 485 Lexington Avenue New York, NY 10017-2630 800.328.2189 NYSE: TRV travelers.com