Travelers 2015 Annual Report Download - page 60

In particular, in recent years, we have undertaken various actions to improve our underwriting
margins in our Agency Automobile line of business. See ‘‘Item 1—Business—Personal Insurance—
Competition’’ above for a description of some of these actions, including the offer of a new, more
competitively-priced product. These factors include (i) changes in customer preferences and demand for
direct distribution channels, (ii) utilization of comparative rating technologies by agents and/or
technology companies and (iii) other technological changes, as described above. If our strategies to
increase profitability in the Agency Automobile line of business do not continue to be effective, we may
need to explore other actions or initiatives to improve our competitive position and profitability in this
line of business.
Overall, our competitive position in our various businesses is based on many factors, including but
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;
• ability to keep pace relative to our competitors with changes in technology and information
systems;
• speed of claims payment;
• ability to provide our products and services in a cost effective manner;
• ability to adapt to changes in business models, customer preferences or regulation impacting the
markets in which we operate;
• perceived overall financial strength and corresponding ratings assigned by independent rating
agencies;
• reputation, experience and qualifications of employees;
• geographic scope of business; and
• local presence.
We may have difficulty in continuing to compete successfully on any of these bases in the future. If
competition limits our ability to retain existing business or write new business at adequate rates or on
appropriate terms, our results of operations could be materially and adversely affected. See
‘‘Competition’’ sections of the discussion on business segments in ‘‘Item 1—Business.’’
Disruptions to our relationships with our independent agents and brokers could adversely affect
us. We market our insurance products primarily through independent agents and brokers. An
important part of our business is written through less than a dozen such intermediaries. Further, there
has been a trend of increased consolidation by agents and brokers, which could impact our
relationships with, and fees paid to, some agents and brokers, and/or otherwise negatively impact the
pricing or distribution of our products. Agents and brokers may increasingly compete with us to the
extent that markets increasingly provide them with direct access to providers of capital seeking
exposure to insurance risk. See also ‘‘The intense competition that we face could harm our ability to
maintain or increase our business volumes and our profitability.’’ In all of the foregoing situations, loss
of all or a substantial portion of the business provided through such agents and brokers could
materially and adversely affect our future business volume and results of operations.
We may also seek to develop new products or distribution channels, which could disrupt our
relationships with our agents and brokers. In addition, agents and brokers may create alternate
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