TRAVELERS COMPANIES, INC. - FORM 8-K - EX-99.2

Attached files

file	filename
EX-99.1 - EX-99.1 - TRAVELERS COMPANIES, INC.	a11-10438_1ex99d1.htm
8-K - 8-K - TRAVELERS COMPANIES, INC.	a11-10438_18k.htm

Exhibit 99.2

The Travelers Companies, Inc.
Financial Supplement - First Quarter 2011

		Page Number
Consolidated Results
Financial Highlights		1
Reconciliation to Net Income and Earnings Per Share		2
Statement of Income		3
Net Income by Major Component and Combined Ratio		4
Operating Income		5
Selected Statistics - Property and Casualty Operations		6
Written and Earned Premiums - Property and Casualty Operations		7

Business Insurance
Operating Income		8
Operating Income by Major Component and Combined Ratio		9
Selected Statistics		10
Net Written Premiums		11

Financial, Professional & International Insurance
Operating Income		12
Operating Income by Major Component and Combined Ratio		13
Selected Statistics		14
Net Written Premiums		15

Personal Insurance
Operating Income		16
Operating Income by Major Component and Combined Ratio		17
Selected Statistics		18
Selected Statistics - Agency Automobile		19
Selected Statistics - Agency Homeowners and Other		20

Supplemental Detail
Interest Expense and Other		21
Consolidated Balance Sheet		22
Investment Portfolio		23
Investment Portfolio - Fixed Maturities Data		24
Investment Income		25
Net Realized and Unrealized Investment Gains (Losses)		26
Reinsurance Recoverables		27
Net Reserves for Losses and Loss Adjustment Expense		28
Asbestos and Environmental Reserves		29
Capitalization		30
Statutory to GAAP Shareholders’ Equity Reconciliation		31
Statement of Cash Flows		32
Statement of Cash Flows (continued)		33

Glossary of Financial Measures and Description of Reportable Business Segments		34

The information included in the Financial Supplement is unaudited. This document should be read in conjunction with the Company’s Form 10-Q which will be filed with the Securities and Exchange Commission.

Index

The Travelers Companies, Inc.
Financial Highlights
($ and shares in millions, except per share data)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Net income	$	647		$	670		$	1,005		$	894		$	839
Net income per share:
Basic	$	1.26		$	1.37		$	2.14		$	1.98		$	1.94
Diluted	$	1.25		$	1.35		$	2.11		$	1.95		$	1.92

Operating income	$	631		$	690		$	858		$	864		$	826
Operating income per share:
Basic	$	1.23		$	1.41		$	1.83		$	1.91		$	1.91
Diluted	$	1.22		$	1.39		$	1.81		$	1.89		$	1.89

Return on equity	9.6		%	10.1		%	15.0		%	13.6		%	13.3		%
Operating return on equity	10.1		%	11.4		%	14.3		%	14.5		%	14.1		%

Total assets, at period end (1)	$	109,171		$	107,498		$	108,629		$	105,656		$	105,252
Total equity, at period end	$	26,671		$	26,286		$	27,295		$	25,475		$	25,243

Book value per share, at period end	$	53.50		$	55.67		$	59.11		$	58.47		$	59.91
Less: Net unrealized investment gains, net of tax	3.90			5.05			6.49			4.28			4.32
Adjusted book value per share, at period end	$	49.60		$	50.62		$	52.62		$	54.19		$	55.59

Weighted average number of common shares outstanding (basic)	508.4			484.5			465.9			447.9			428.2
Weighted average number of common shares outstanding and common stock equivalents (diluted)	515.1			490.8			472.0			454.7			434.4
Common shares outstanding at period end	497.0			470.8			460.5			434.6			420.3

Common stock dividends declared	$	168		$	173		$	169		$	160		$	155

Common stock repurchased:
Under repurchase authorization (2)
Shares	27.0			28.0			11.8			28.9			18.9
Cost	$	1,400		$	1,400		$	600		$	1,600		$	1,100
Other
Shares	0.8			0.2			—			0.3			0.8
Cost	$	40		$	14		$	—		$	12		$	46

(1) Includes impact from certain reclassifications made to 2010 amounts to conform to 2011 presentation.

(2) Repurchased under Board of Director authorization.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Reconciliation to Net Income and Earnings Per Share
($ and shares in millions, except earnings per share)

	1Q		2Q			3Q		4Q		1Q
	2010		2010			2010		2010		2011
Net income
Operating income	$	631	$	690		$	858	$	864	$	826
Net realized investment gains (losses)	16		(20		)	147		30		13
Net income	$	647	$	670		$	1,005	$	894	$	839

Basic earnings per share
Operating income	$	1.23	$	1.41		$	1.83	$	1.91	$	1.91
Net realized investment gains (losses)	0.03		(0.04		)	0.31		0.07		0.03
Net income	$	1.26	$	1.37		$	2.14	$	1.98	$	1.94

Diluted earnings per share
Operating income	$	1.22	$	1.39		$	1.81	$	1.89	$	1.89
Net realized investment gains (losses)	0.03		(0.04		)	0.30		0.06		0.03
Net income	$	1.25	$	1.35		$	2.11	$	1.95	$	1.92

Adjustments to net income and weighted average shares for net income EPS calculations: (1)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011
Basic
Net income, as reported	$	647		$	670		$	1,005		$	894		$	839
Preferred stock dividends	(1		)	—			(1		)	(1		)	(1		)
Participating share-based awards - allocated income	(5		)	(5		)	(8		)	(7		)	(7		)
Net income available to common shareholders - basic	$	641		$	665		$	996		$	886		$	831

Diluted
Net income available to common shareholders - basic	$	641		$	665		$	996		$	886		$	831
Effect of dilutive securities:
Convertible preferred stock	1			—			1			1			1
Performance shares	—			—			1			1			—
Net income available to common shareholders - diluted	$	642		$	665		$	998		$	888		$	832

Common Shares
Basic
Weighted average shares outstanding	508.4			484.5			465.9			447.9			428.2

Diluted
Weighted average shares outstanding	508.4			484.5			465.9			447.9			428.2
Weighted average effects of dilutive securities:
Convertible preferred stock	1.9			1.8			1.7			1.7			1.6
Stock options and performance shares	4.8			4.5			4.4			5.1			4.6
Diluted weighted average shares outstanding	515.1			490.8			472.0			454.7			434.4

(1) Adjustments to net income and weighted average shares for net income EPS calculations can also be used for the operating income EPS calculations.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Statement of Income - Consolidated
($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Revenues
Premiums	$	5,230		$	5,340		$	5,422		$	5,440		$	5,371
Net investment income	753			762			735			809			779
Fee income	79			76			64			68			74
Net realized investment gains (losses)	25			(31		)	226			44			20
Other revenues (1)	32			32			35			(29		)	34
Total revenues	6,119			6,179			6,482			6,332			6,278

Claims and expenses
Claims and claim adjustment expenses	3,388			3,419			3,213			3,190			3,382
Amortization of deferred acquisition costs	929			950			966			957			948
General and administrative expenses	847			832			837			890			883
Interest expense	98			97			95			98			96
Total claims and expenses	5,262			5,298			5,111			5,135			5,309

Income before income taxes	857			881			1,371			1,197			969
Income tax expense	210			211			366			303			130
Net income	$	647		$	670		$	1,005		$	894		$	839

Net realized investment gains (losses)
Other-than-temporary impairment losses:
Total gains (losses)	$	(1	)	$	2		$	8		$	(2	)	$	2
Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources	(9		)	(6		)	(14		)	(4		)	(6		)
Other-than-temporary impairment losses	(10		)	(4		)	(6		)	(6		)	(4		)
Other net realized investment gains (losses)	35			(27		)	232			50			24
Net realized investment gains (losses)	$	25		$	(31	)	$	226		$	44		$	20

Other statistics
Effective tax rate on net investment income	18.9		%	19.1		%	18.8		%	20.3		%	20.2		%
Net investment income (after-tax)	$	610		$	617		$	597		$	644		$	622

Catastrophes, net of reinsurance:
Pre-tax	$	471		$	439		$	117		$	86		$	186
After-tax	$	312		$	285		$	77		$	55		$	122

(1) In 4Q 2010, “Other revenues” include $(60) million of expenses related to the Company’s purchase and retirement of $885 million of its $1 billion 6.25% fixed-to-floating rate junior subordinated debentures.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Net Income by Major Component and Combined Ratio - Consolidated

($ in millions, net of tax)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Underwriting gain	$	80		$	119		$	302		$	303		$	249
Net investment income	610			617			597			644			622
Other, including interest expense (1)	(59		)	(46		)	(41		)	(83		)	(45		)
Operating income	631			690			858			864			826
Net realized investment gains (losses)	16			(20		)	147			30			13
Net income	$	647		$	670		$	1,005		$	894		$	839

GAAP Combined ratio (2) (3)
Loss and loss adjustment expense ratio	64.0		%	63.3		%	58.7		%	58.0		%	62.1		%
Underwriting expense ratio	32.4		%	31.9		%	31.9		%	32.6		%	32.6		%
Combined ratio	96.4		%	95.2		%	90.6		%	90.6		%	94.7		%
GAAP combined ratio excluding incremental impact of direct to consumer initiative	95.8		%	94.6		%	89.7		%	89.6		%	93.8		%

Impact of catastrophes on combined ratio	9.0		%	8.2		%	2.2		%	1.5		%	3.4		%
Impact of prior year reserve development on combined ratio	-5.6		%	-7.2		%	-4.1		%	-6.4		%	-4.4		%

(1) In 4Q 2010, “Other, including interest expense” includes $(39) million, net of tax, of expenses related to the Company’s purchase and retirement of $885 million of its $1 billion 6.25% fixed-to-floating rate junior subordinated debentures.

(2) Before policyholder dividends.

(3) Billing and policy fees, which are a component of other revenues, are allocated as a reduction of underwriting expenses. In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:

	1Q		2Q		3Q		4Q		1Q
	2010		2010		2010		2010		2011
Billing and policy fees	$	27	$	25	$	27	$	25	$	26
Fee income:
Loss and loss adjustment expenses	$	36	$	31	$	23	$	30	$	33
Underwriting expenses	43		45		41		38		41
Total fee income	$	79	$	76	$	64	$	68	$	74

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Operating Income - Consolidated

($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Revenues
Premiums	$	5,230		$	5,340		$	5,422		$	5,440		$	5,371
Net investment income	753			762			735			809			779
Fee income	79			76			64			68			74
Other revenues (1)	32			32			35			(29		)	34
Total revenues	6,094			6,210			6,256			6,288			6,258

Claims and expenses
Claims and claim adjustment expenses	3,388			3,419			3,213			3,190			3,382
Amortization of deferred acquisition costs	929			950			966			957			948
General and administrative expenses	847			832			837			890			883
Interest expense	98			97			95			98			96
Total claims and expenses	5,262			5,298			5,111			5,135			5,309

Operating income before income taxes	832			912			1,145			1,153			949
Income tax expense	201			222			287			289			123
Operating income	$	631		$	690		$	858		$	864		$	826

Other statistics
Effective tax rate on net investment income	18.9		%	19.1		%	18.8		%	20.3		%	20.2		%
Net investment income (after-tax)	$	610		$	617		$	597		$	644		$	622

Catastrophes, net of reinsurance:
Pre-tax	$	471		$	439		$	117		$	86		$	186
After-tax	$	312		$	285		$	77		$	55		$	122

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Selected Statistics - Property and Casualty Operations

($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011
Statutory underwriting
Gross written premiums	$	5,803		$	5,974		$	6,004		$	5,521		$	5,961
Net written premiums	$	5,251		$	5,688		$	5,462		$	5,234		$	5,437

Net earned premiums	$	5,230		$	5,340		$	5,422		$	5,440		$	5,371
Losses and loss adjustment expenses	3,349			3,382			3,185			3,156			3,342
Underwriting expenses	1,708			1,757			1,766			1,725			1,772
Statutory underwriting gain	173			201			471			559			257
Policyholder dividends	8			7			9			6			10
Statutory underwriting gain after policyholder dividends	$	165		$	194		$	462		$	553		$	247

Other statutory statistics
Reserves for losses and loss adjustment expenses	$	40,849		$	40,766		$	40,640		$	40,235		$	40,301
Increase (decrease) in reserves	$	(74	)	$	(83	)	$	(126	)	$	(405	)	$	66
Statutory surplus	$	21,607		$	21,077		$	20,868		$	20,066		$	20,588
Net written premiums/surplus (1)	0.99:1			1.02:1			1.03:1			1.08:1			1.06:1

(1) Based on 12 months of rolling net written premiums.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Written and Earned Premiums - Property and Casualty Operations

($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011
Written premiums
Gross	$	5,803		$	5,974		$	6,004		$	5,521		$	5,961
Ceded	(552		)	(286		)	(542		)	(287		)	(524		)
Net	$	5,251		$	5,688		$	5,462		$	5,234		$	5,437

Earned premiums
Gross	$	5,697		$	5,770		$	5,864		$	5,866		$	5,804
Ceded	(467		)	(430		)	(442		)	(426		)	(433		)
Net	$	5,230		$	5,340		$	5,422		$	5,440		$	5,371

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Operating Income - Business Insurance

($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Revenues
Premiums	$	2,628		$	2,663		$	2,736		$	2,739		$	2,745
Net investment income	528			537			514			577			556
Fee income	79			76			64			66			74
Other revenues	6			7			10			5			9
Total revenues	3,241			3,283			3,324			3,387			3,384

Claims and expenses
Claims and claim adjustment expenses	1,583			1,621			1,683			1,617			1,773
Amortization of deferred acquisition costs	425			439			448			437			444
General and administrative expenses	481			469			463			491			473
Total claims and expenses	2,489			2,529			2,594			2,545			2,690

Operating income before federal income taxes	752			754			730			842			694
Income taxes	185			187			187			218			90
Operating income	$	567		$	567		$	543		$	624		$	604

Other statistics
Effective tax rate on net investment income	18.6		%	18.8		%	18.5		%	20.3		%	20.0		%
Net investment income (after-tax)	$	430		$	435		$	420		$	459		$	445

Catastrophes, net of reinsurance:
Pre-tax	$	135		$	179		$	53		$	70		$	112
After-tax	$	88		$	116		$	35		$	45		$	73

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Operating Income by Major Component and Combined Ratio - Business Insurance

($ in millions, net of tax)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Underwriting gain	$	132		$	127		$	116		$	161		$	153
Net investment income	430			435			420			459			445
Other	5			5			7			4			6
Operating income	$	567		$	567		$	543		$	624		$	604

GAAP Combined ratio (1) (2)
Loss and loss adjustment expense ratio	58.7		%	59.5		%	60.5		%	57.8		%	63.1		%
Underwriting expense ratio	32.7		%	32.3		%	31.6		%	32.3		%	31.8		%
Combined ratio	91.4		%	91.8		%	92.1		%	90.1		%	94.9		%

Impact of catastrophes on combined ratio	5.1		%	6.7		%	2.0		%	2.6		%	4.1		%
Impact of prior year reserve development on combined ratio	-9.2		%	-11.3		%	-3.8		%	-9.3		%	-5.2		%

(1) Before policyholder dividends.

(2) Billing and policy fees, which are a component of other revenues, are allocated as a reduction of underwriting expenses. In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:

	1Q		2Q		3Q		4Q		1Q
	2010		2010		2010		2010		2011
Billing and policy fees	$	4	$	4	$	5	$	4	$	5
Fee income:
Loss and loss adjustment expenses	$	36	$	31	$	23	$	28	$	33
Underwriting expenses	43		45		41		38		41
Total fee income	$	79	$	76	$	64	$	66	$	74

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Selected Statistics - Business Insurance

($ in millions)

	1Q		2Q		3Q		4Q		1Q
	2010		2010		2010		2010		2011

Statutory underwriting
Gross written premiums	$	3,118	$	2,996	$	3,027	$	2,750	$	3,306
Net written premiums	$	2,834	$	2,795	$	2,651	$	2,577	$	3,020

Net earned premiums	$	2,628	$	2,663	$	2,736	$	2,739	$	2,745
Losses and loss adjustment expenses	1,547		1,586		1,659		1,583		1,736
Underwriting expenses	866		869		867		854		899
Statutory underwriting gain	215		208		210		302		110
Policyholder dividends	4		6		5		6		7
Statutory underwriting gain after policyholder dividends	$	211	$	202	$	205	$	296	$	103

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Net Written Premiums - Business Insurance

($ in millions)

	1Q		2Q		3Q		4Q			1Q
	2010		2010		2010		2010			2011

Net written premiums by market
Select Accounts	$	702	$	716	$	664	$	636		$	732
Commercial Accounts	706		581		655		634			822
National Accounts	226		194		173		213			211
Industry-Focused Underwriting	569		584		590		556			628
Target Risk Underwriting	412		469		342		350			413
Specialized Distribution	215		247		222		188			209
Total core	2,830		2,791		2,646		2,577			3,015
Business Insurance other	4		4		5		—			5
Total	$	2,834	$	2,795	$	2,651	$	2,577		$	3,020

Net written premiums by product line
Commercial multi-peril	$	784	$	752	$	728	$	731		$	841
Workers’ compensation	725		600		635		626			854
Commercial automobile	483		492		494		441			493
Property	430		493		360		358			414
General liability	412		458		434		422			415
Other	—		—		—		(1		)	3
Total	$	2,834	$	2,795	$	2,651	$	2,577		$	3,020

National accounts
Additions to claim volume under administration (1)	$	536	$	399	$	348	$	496		$	540
Written fees	$	74	$	64	$	57	$	62		$	73

(1) Includes new and renewal business.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Operating Income - Financial, Professional & International Insurance

($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Revenues
Premiums	$	824		$	855		$	820		$	818		$	773
Net investment income	111			110			110			108			106
Fee income	—			—			—			2			—
Other revenues	6			7			7			7			7
Total revenues	941			972			937			935			886

Claims and expenses
Claims and claim adjustment expenses	516			414			350			420			433
Amortization of deferred acquisition costs	153			153			154			152			147
General and administrative expenses	149			148			153			158			160
Total claims and expenses	818			715			657			730			740

Operating income before federal income taxes	123			257			280			205			146
Income taxes	37			85			68			55			26
Operating income	$	86		$	172		$	212		$	150		$	120

Other statistics
Effective tax rate on net investment income	21.0		%	20.7		%	20.6		%	20.5		%	21.2		%
Net investment income (after-tax)	$	87		$	89		$	86		$	86		$	84

Catastrophes, net of reinsurance (1):
Pre-tax	$	86		$	3		$	(2	)	$	(5	)	$	21
After-tax	$	62		$	2		$	(2	)	$	(3	)	$	15

(1) In 3Q 2010 and 4Q 2010 “Catastrophes, net of reinsurance” includes a net benefit from re-estimation of current year catastrophe losses.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Operating Income by Major Component and Combined Ratio - Financial, Professional & International Insurance

($ in millions, net of tax)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Underwriting gain (loss)	$	(5	)	$	79		$	121		$	59		$	32
Net investment income	87			89			86			86			84
Other	4			4			5			5			4
Operating income	$	86		$	172		$	212		$	150		$	120

GAAP Combined ratio (1) (2)
Loss and loss adjustment expense ratio	62.3		%	48.1		%	42.2		%	51.2		%	55.6		%
Underwriting expense ratio	36.6		%	35.2		%	37.4		%	38.0		%	39.7		%
Combined ratio	98.9		%	83.3		%	79.6		%	89.2		%	95.3		%

Impact of catastrophes on combined ratio	10.4		%	0.4		%	-0.3		%	-0.6		%	2.7		%
Impact of prior year reserve development on combined ratio	-4.2		%	-8.4		%	-11.8		%	-6.8		%	-5.1		%

(1) Before policyholder dividends.

(2) Fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:

	1Q		2Q		3Q		4Q		1Q
	2010		2010		2010		2010		2011
Fee income:
Loss and loss adjustment expenses	$	—	$	—	$	—	$	2	$	—
Underwriting expenses	—		—		—		—		—
Total fee income	$	—	$	—	$	—	$	2	$	—

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Selected Statistics - Financial, Professional & International Insurance

($ in millions)

	1Q			2Q		3Q		4Q		1Q
	2010			2010		2010		2010		2011

Statutory underwriting
Gross written premiums	$	898		$	915	$	852	$	869	$	810
Net written premiums	$	681		$	889	$	808	$	833	$	624

Net earned premiums	$	824		$	855	$	820	$	818	$	773
Losses and loss adjustment expenses	513			412		346		420		430
Underwriting expenses	308			303		291		290		309
Statutory underwriting gain	3			140		183		108		34
Policyholder dividends	4			1		4		—		3
Statutory underwriting gain (loss) after policyholder dividends	$	(1	)	$	139	$	179	$	108	$	31

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.

Net Written Premiums - Financial, Professional & International Insurance

($ in millions)

	1Q		2Q		3Q		4Q		1Q
	2010		2010		2010		2010		2011

Net written premiums by market
Bond & Financial Products	$	362	$	559	$	547	$	513	$	369
International	319		330		261		320		255
Total	$	681	$	889	$	808	$	833	$	624

Net written premiums by product line
General liability	$	132	$	232	$	242	$	246	$	138
Fidelity & surety	194		292		273		236		196
International	319		330		261		320		255
Other	36		35		32		31		35
Total	$	681	$	889	$	808	$	833	$	624

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Operating Income - Personal Insurance
($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Revenues
Premiums	$	1,778		$	1,822		$	1,866		$	1,883		$	1,853
Net investment income	114			115			111			124			117
Other revenues	20			18			18			19			18
Total revenues	1,912			1,955			1,995			2,026			1,988

Claims and expenses
Claims and claim adjustment expenses	1,289			1,384			1,180			1,153			1,176
Amortization of deferred acquisition costs	351			358			364			368			357
General and administrative expenses	207			210			215			235			235
Total claims and expenses	1,847			1,952			1,759			1,756			1,768

Operating income before federal income taxes	65			3			236			270			220
Income taxes	6			(16		)	68			76			50
Operating income	$	59		$	19		$	168		$	194		$	170

Other statistics
Effective tax rate on net investment income	18.6		%	18.7		%	18.5		%	20.0		%	20.0		%
Net investment income (after-tax)	$	93		$	93		$	91		$	99		$	93

Catastrophes, net of reinsurance:
Pre-tax	$	250		$	257		$	66		$	21		$	53
After-tax	$	162		$	167		$	44		$	13		$	34

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Operating Income by Major Component and Combined Ratio - Personal Insurance
($ in millions, net of tax)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Underwriting gain (loss)	$	(47	)	$	(87	)	$	65		$	83		$	64
Net investment income	93			93			91			99			93
Other	13			13			12			12			13
Operating income	$	59		$	19		$	168		$	194		$	170

GAAP Combined ratio (1)
Loss and loss adjustment expense ratio	72.5		%	76.0		%	63.2		%	61.2		%	63.4		%
Underwriting expense ratio	30.1		%	29.9		%	29.9		%	30.9		%	30.8		%
Combined ratio	102.6		%	105.9		%	93.1		%	92.1		%	94.2		%
GAAP combined ratio excluding incremental impact of direct to consumer initiative	100.9		%	104.0		%	90.6		%	89.1		%	91.4		%

Impact of catastrophes on combined ratio	14.0		%	14.0		%	3.6		%	1.1		%	2.8		%
Impact of prior year reserve development on combined ratio	-1.0		%	-0.5		%	-1.2		%	-2.0		%	-3.0		%

(1) Billing and policy fees, which are a component of other revenues, are allocated as a reduction of underwriting expenses. Billing and policy fees are as follows:

	1Q		2Q		3Q		4Q		1Q
	2010		2010		2010		2010		2011
Billing and policy fees	$	23	$	21	$	22	$	21	$	21

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Selected Statistics - Personal Insurance
($ in millions)

	1Q			2Q			3Q		4Q		1Q
	2010			2010			2010		2010		2011

Statutory underwriting
Gross written premiums	$	1,787		$	2,063		$	2,125	$	1,902	$	1,845
Net written premiums	$	1,736		$	2,004		$	2,003	$	1,824	$	1,793

Net earned premiums	$	1,778		$	1,822		$	1,866	$	1,883	$	1,853
Losses and loss adjustment expenses	1,289			1,384			1,180		1,153		1,176
Underwriting expenses	534			585			608		581		564
Statutory underwriting gain (loss)	$	(45	)	$	(147	)	$	78	$	149	$	113

Policies in force (in thousands)
Automobile	2,489			2,516			2,536		2,547		2,559
Homeowners and other	5,030			5,100			5,143		5,165		5,183

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Selected Statistics - Personal Insurance (Agency Automobile) (1)
($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Statutory underwriting

Gross written premiums	$	917		$	951		$	958		$	894		$	923
Net written premiums	$	913		$	945		$	952		$	888		$	918

Net earned premiums	$	892		$	905		$	914		$	918		$	896
Losses and loss adjustment expenses	613			638			628			674			620
Underwriting expenses	249			254			254			250			249
Statutory underwriting gain (loss)	$	30		$	13		$	32		$	(6	)	$	27

Other statistics
GAAP Combined ratio (2):
Loss and loss adjustment expense ratio	68.7		%	70.5		%	68.7		%	73.4		%	69.2		%
Underwriting expense ratio	26.7		%	26.9		%	26.2		%	26.9		%	26.6		%
Combined ratio	95.4		%	97.4		%	94.9		%	100.3		%	95.8		%

Impact of catastrophes on combined ratio	0.8		%	1.6		%	0.3		%	0.5		%	0.1		%

Catastrophe losses, net of reinsurance:
Pre-tax	$	7		$	14		$	3		$	4		$	1
After-tax	$	4		$	10		$	2		$	2		$	—

Policies in force (in thousands)	2,447			2,468			2,482			2,490			2,497
Change from prior year quarter	-1.7		%	0.1		%	1.3		%	1.9		%	2.0		%
Change from prior quarter	0.2		%	0.9		%	0.6		%	0.3		%	0.3		%

(1) Represents Automobile policies sold through agents, brokers and other intermediaries, and excludes direct to consumer.

(2) Billing and policy fees, which are a component of other revenues, are allocated as a reduction of underwriting expenses.

Billing and policy fees are as follows:

	1Q		2Q		3Q		4Q		1Q
	2010		2010		2010		2010		2011
Billing and policy fees	$	13	$	11	$	12	$	12	$	12

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Selected Statistics - Personal Insurance (Agency Homeowners and Other) (1)
($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Statutory underwriting

Gross written premiums	$	849		$	1,089		$	1,140		$	982		$	891
Net written premiums	$	803		$	1,035		$	1,024		$	910		$	845

Net earned premiums	$	870		$	897		$	930		$	942		$	932
Losses and loss adjustment expenses	662			729			534			459			532
Underwriting expenses	252			292			305			276			263
Statutory underwriting gain (loss)	$	(44	)	$	(124	)	$	91		$	207		$	137

Other statistics
GAAP Combined ratio (2):
Loss and loss adjustment expense ratio	76.1		%	81.3		%	57.4		%	48.7		%	57.1		%
Underwriting expense ratio	30.6		%	29.4		%	28.9		%	29.5		%	30.0		%
Combined ratio	106.7		%	110.7		%	86.3		%	78.2		%	87.1		%

Impact of catastrophes on combined ratio	27.9		%	26.8		%	6.9		%	1.6		%	5.6		%

Catastrophe losses, net of reinsurance:
Pre-tax	$	242		$	241		$	64		$	15		$	52
After-tax	$	158		$	156		$	41		$	10		$	34

Policies in force (in thousands)	5,000			5,064			5,103			5,121			5,135
Change from prior year quarter	3.1		%	3.6		%	3.6		%	3.3		%	2.7		%
Change from prior quarter	0.8		%	1.3		%	0.8		%	0.4		%	0.3		%

(1) Represents Homeowners and Other Lines sold through agents, brokers and other intermediaries, and excludes direct to consumer.

(2) Billing and policy fees, which are a component of other revenues, are allocated as a reduction of underwriting expenses.

Billing and policy fees are as follows:

	1Q		2Q		3Q		4Q		1Q
	2010		2010		2010		2010		2011
Billing and policy fees	$	10	$	9	$	10	$	9	$	9

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Interest Expense and Other
($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Revenues
Other revenues (1)	$	—		$	—		$	—		$	(60	)	$	—

Claims and expenses
Interest expense	98			97			95			98			96
General and administrative expenses	10			5			6			6			15
Total claims and expenses	108			102			101			104			111

Operating loss before federal income tax benefit	(108		)	(102		)	(101		)	(164		)	(111		)
Income taxes	(27		)	(34		)	(36		)	(60		)	(43		)
Operating loss	$	(81	)	$	(68	)	$	(65	)	$	(104	)	$	(68	)

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Consolidated Balance Sheet
(in millions)

	March 31,		December 31,
	2011 (1)		2010

Assets
Fixed maturities, available for sale, at fair value (including $164 and $186 subject to securities lending) (amortized cost $59,720 and $60,170)	$	62,276	$	62,820
Equity securities, available for sale, at fair value (cost $421 and $372)	583		519
Real estate	866		838
Short-term securities	5,652		5,616
Other investments	3,014		2,929
Total investments	72,391		72,722

Cash	239		200
Investment income accrued	736		791
Premiums receivable	5,668		5,497
Reinsurance recoverables	11,786		11,994
Ceded unearned premiums	911		813
Deferred acquisition costs	1,801		1,782
Deferred tax asset	357		493
Contractholder receivables	5,271		5,343
Goodwill	3,365		3,365
Other intangible assets	482		502
Other assets	2,245		2,154
Total assets	$	105,252	$	105,656

	March 31,			December 31,
	2011 (1)			2010

Liabilities
Claims and claim adjustment expense reserves	$	51,440		$	51,606
Unearned premium reserves	11,116			10,921
Contractholder payables	5,271			5,343
Payables for reinsurance premiums	513			407
Debt	6,611			6,611
Other liabilities	5,058			5,293
Total liabilities	80,009			80,181

Shareholders’ equity
Preferred Stock Savings Plan - convertible preferred stock (0.2 shares issued and outstanding)	66			68
Common stock (1,748.6 shares authorized; 420.3 and 434.6 shares issued and outstanding)	20,370			20,162
Retained earnings	19,538			18,847
Accumulated other changes in equity from nonowner sources	1,272			1,255
Treasury stock, at cost (316.3 and 296.6 shares)	(16,003		)	(14,857		)
Total shareholders’ equity	25,243			25,475
Total liabilities and shareholders’ equity	$	105,252		$	105,656

(1) Preliminary.

Note: Certain reclassifications have been made to the 2010 consolidated balance sheet to conform to the 2011 presentation.

The Travelers Companies, Inc.
Investment Portfolio
(at carrying value, $ in millions)

	March 31,		Pre-tax Book		December 31,		Pre-tax Book
	2011		Yield (1)		2010		Yield (1)
Investment portfolio

Taxable fixed maturities (including redeemable preferred stock)	$	23,821	4.66	%	$	23,790	4.80	%
Tax-exempt fixed maturities	38,455		4.04	%	39,030		4.03	%
Total fixed maturities	62,276		4.28	%	62,820		4.32	%

Non-redeemable preferred stocks	220		6.44	%	215		6.47	%
Common stocks	363				304
Total equity securities	583				519

Real estate	866				838

Short-term securities	5,652		0.20	%	5,616		0.19	%

Private equities	1,784				1,725
Hedge funds	526				512
Real estate partnerships	589				580
Mortgage loans	37		6.22	%	34		6.28	%
Trading securities	24				23
Other investments	54				55
Total other investments	3,014				2,929

Total investments	$	72,391			$	72,722

Net unrealized investment gains, net of tax, included in shareholders’ equity	$	1,816			$	1,858

(1) Yields are provided for those investments with an embedded book yield.

The Travelers Companies, Inc.
Investment Portfolio - Fixed Maturities Data
(at carrying value, $ in millions)

	March 31,		December 31,
	2011		2010
Fixed maturities
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	2,194	$	2,008
Obligations of states and political subdivisions:
Pre-refunded	7,167		7,291
All other	31,781		32,244
Total	38,948		39,535
Debt securities issued by foreign governments	2,049		2,202
Mortgage-backed securities - principally obligations of U.S. Government agencies	3,929		4,164
Corporates (including redeemable preferreds)	15,156		14,911
Total fixed maturities	$	62,276	$	62,820

Fixed Maturities

Quality Characteristics (1)

	March 31, 2011
	Amount		% of Total
Quality Ratings
Aaa	$	29,156	46.8	%
Aa	20,151		32.4
A	6,565		10.5
Baa	4,542		7.3
Total investment grade	60,414		97.0
Ba	846		1.4
B	572		0.9
Caa and lower	444		0.7
Total below investment grade	1,862		3.0
Total fixed maturities	$	62,276	100.0	%
Average weighted quality	Aa2, AA
Average duration of fixed maturities and short-term securities, net of securities lending activities and net receivables and payables on investment sales and purchases	3.6

(1) Rated using external rating agencies or by Travelers when a public rating does not exist. Below investment grade assets refer to securities rated “Ba” or below.

The Travelers Companies, Inc.
Investment Income
($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Gross investment income
Fixed maturities	$	691		$	678		$	674		$	667		$	642
Short-term securities	3			3			3			4			4
Other	66			89			65			150			140
	760			770			742			821			786
Investment expenses	7			8			7			12			7
Net investment income, pre-tax	753			762			735			809			779
Income taxes	143			145			138			165			157
Net investment income, after-tax	$	610		$	617		$	597		$	644		$	622

Effective tax rate	18.9		%	19.1		%	18.8		%	20.3		%	20.2		%

Average invested assets (1)	$	72,659		$	71,294		$	70,929		$	71,359		$	70,771

Average yield pre-tax (1)	4.1		%	4.3		%	4.1		%	4.5		%	4.4		%
Average yield after-tax	3.4		%	3.5		%	3.4		%	3.6		%	3.5		%

(1) Excludes net unrealized investment gains (losses), net of tax, and is adjusted for cash, receivables for investment sales, payables on investment purchases and accrued investment income.

The Travelers Companies, Inc.
Net Realized and Unrealized Investment Gains (Losses)
($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Net realized investment gains (losses)
Fixed maturities	$	22		$	17		$	25		$	18		$	10
Equity securities (1)	8			3			104			10			1
Other (1) (2)	(5		)	(51		)	97			16			9
Realized investment gains (losses) before tax	25			(31		)	226			44			20
Related taxes	9			(11		)	79			14			7
Net realized investment gains (losses)	$	16		$	(20	)	$	147		$	30		$	13

Gross investment gains (2)	$	89		$	75		$	322		$	108		$	109
Gross investment losses before impairments (2)	(54		)	(102		)	(90		)	(58		)	(85		)
Net investment gains (losses) before impairments	35			(27		)	232			50			24
Other-than-temporary impairment losses:
Total gains (losses)	(1		)	2			8			(2		)	2
Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources	(9		)	(6		)	(14		)	(4		)	(6		)
Other-than-temporary impairment losses	(10		)	(4		)	(6		)	(6		)	(4		)
Net realized investment gains (losses) before tax	25			(31		)	226			44			20
Related taxes	9			(11		)	79			14			7
Net realized investment gains (losses)	$	16		$	(20	)	$	147		$	30		$	13

	March 31,		June 30,		September 30,		December 31,		March 31,
	2010		2010		2010		2010		2011

Net unrealized investment gains, net of tax, by asset type
Fixed maturities	$	2,653	$	3,330	$	4,399	$	2,650	$	2,556
Equity securities & other	296		296		160		175		208
Unrealized investment gains before tax	2,949		3,626		4,559		2,825		2,764
Related taxes	1,011		1,245		1,569		967		948

Balance, end of period	$	1,938	$	2,381	$	2,990	$	1,858	$	1,816

(1) In 3Q 2010, the Company sold most of its remaining common stock holdings in Verisk Analytics, Inc. (Verisk) for total proceeds of approximately $230 million as part of the secondary public offering of Verisk. The Company recorded a pretax realized investment gain of $205 million on this sale in 3Q 2010 ($102 million included in the “Equity securities” and $103 million included in the “Other investments” categories above).

(2) Includes the following gross investment gains and gross investment losses related to U.S. Treasury futures, which are settled daily:

Gross investment Treasury future gains		$	26		$	37		$	52		$	73		$	47
Gross investment Treasury future losses		$	33		$	63		$	71		$	51		$	47

The Company entered into these arrangements as part of its strategy to shorten the duration of the fixed maturity portfolio. In a changing interest rate environment, the change in the value of the futures contracts can be expected to partially offset changes in the value of the fixed maturity portfolio.

The Travelers Companies, Inc.
Reinsurance Recoverables
($ in millions)

	March 31,			December 31,
	2011			2010
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses	$	6,739		$	6,934
Allowance for uncollectible reinsurance	(362		)	(363		)
Net reinsurance recoverables	6,377			6,571
Mandatory pools and associations (1)	2,056			2,043
Structured settlements	3,353			3,380
Total reinsurance recoverables	$	11,786		$	11,994

The Company’s top five reinsurer groups, including retroactive reinsurance, by reinsurance recoverable is as follows:

	A.M. Best Rating of Group’s	March 31,		December 31,
Reinsurer	Predominant Reinsurer	2011		2010
Munich Re Group	A+ second highest of 16 ratings	$	741	$	744
Swiss Re Group	A third highest of 16 ratings	673		707
Transatlantic Holdings, Inc.	A third highest of 16 ratings	381		385
Berkshire Hathaway Group	A++ highest of 16 ratings	329		319
XL Capital Group	A third highest of 16 ratings	311		320

The gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses represent the current and estimated future amounts due from reinsurers on known and unasserted claims. The ceded reserves are estimated in a manner consistent with the underlying direct and assumed reserves. Although this total comprises recoverables due from nearly one thousand different reinsurance entities, about half is attributable to 10 reinsurer groups.

The net reinsurance recoverables reflect an allowance for uncollectible reinsurance that is based upon the Company’s ongoing review of amounts outstanding, reinsurer solvency, the Company’s experience, current economic conditions, and other relevant factors. Of the total net recoverables due from reinsurers at March 31, 2011, after deducting mandatory pools and associations and structured settlement balances, $5.0 billion, or 79%, were rated by A.M. Best Company. Of the total rated by A.M. Best Company, 98% were rated A- or better. The remaining 21% net recoverables from reinsurers were comprised of the following: 6% related to the Company’s participation in voluntary pools, 10% related to recoverables from captive insurance companies and 5% were balances from other companies not rated by A.M. Best Company. In addition, $2.0 billion of the net recoverables were collateralized by letters of credit, funds held and trust agreements at March 31, 2011.

The mandatory pools and associations represent various involuntary assigned risk pools that the Company is required to participate in. These pools principally involve workers’ compensation and automobile insurance, which provide various insurance coverages to insureds that otherwise are unable to purchase coverage in the open market. The costs of these mandatory pools in most states are usually charged back to the participating members in proportion to voluntary writings of related business in that state. In the event that a member of the pool becomes insolvent, the remaining members assume an additional pro rata share of the pool’s liabilities.

The structured settlements represent recoverables from annuities that were purchased from life insurance companies to settle personal physical injury claims, with workers’ compensation claims comprising a significant proportion. In cases where the Company did not receive a release from the claimant, the Company retains the liability to the claimant in the event that the life insurance company fails to pay; accordingly, the Company continues to report the amount due from the life insurance company as a liability and as a recoverable for GAAP purposes. The Company’s top five groups by structured settlement is as follows:

	A.M. Best Rating of Group’s	March 31,		December 31,
Group	Predominant Insurer	2011		2010
Old Mutual U.S. Life Holdings, Inc. (2)	B++ fifth highest of 16 ratings	$	1,016	$	1,028
Metlife	A+ second highest of 16 ratings	506		508
Genworth	A third highest of 16 ratings	455		458
Symetra	A third highest of 16 ratings	270		272
ING Group	A third highest of 16 ratings	227		229

(1) Includes impact from certain reclassifications made to 2010 amounts to conform to 2011 presentation.

(2) In April 2011, Old Mutual plc, a U.K. company, completed the sale of Old Mutual U.S. Life Holdings, Inc., its U.S. life insurance subsidiary, to Harbinger Group Inc.

The Travelers Companies, Inc.
Net Reserves for Losses and Loss Adjustment Expense
($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011
Business Insurance
Beginning of period	$	31,289		$	31,079		$	30,900		$	30,752		$	30,505
Incurred	1,547			1,586			1,659			1,583			1,736
Paid	(1,747		)	(1,751		)	(1,822		)	(1,832		)	(1,759		)
Foreign exchange and other	(10		)	(14		)	15			2			7
End of period	$	31,079		$	30,900		$	30,752		$	30,505		$	30,489

Financial, Professional & International Insurance
Beginning of period	$	6,003		$	6,022		$	5,995		$	6,125		$	6,068
Incurred	513			412			346			420			430
Paid	(443		)	(363		)	(312		)	(478		)	(294		)
Foreign exchange and other	(51		)	(76		)	96			1			63
End of period	$	6,022		$	5,995		$	6,125		$	6,068		$	6,267

Personal Insurance
Beginning of period	$	3,631		$	3,748		$	3,871		$	3,763		$	3,662
Incurred	1,289			1,384			1,180			1,153			1,176
Paid	(1,172		)	(1,261		)	(1,288		)	(1,254		)	(1,293		)
End of period	$	3,748		$	3,871		$	3,763		$	3,662		$	3,545

Total
Beginning of period	$	40,923		$	40,849		$	40,766		$	40,640		$	40,235
Incurred	3,349			3,382			3,185			3,156			3,342
Paid	(3,362		)	(3,375		)	(3,422		)	(3,564		)	(3,346		)
Foreign exchange and other	(61		)	(90		)	111			3			70
End of period	$	40,849		$	40,766		$	40,640		$	40,235		$	40,301

Prior Year Reserve Development: Unfavorable (Favorable)

Business Insurance
Asbestos	$	—		$	—		$	140		$	—		$	—
Environmental	—			35			—			—			—
All other	(242		)	(338		)	(242		)	(254		)	(143		)
Prior year development excluding accretion of discount	(242		)	(303		)	(102		)	(254		)	(143		)
Accretion of discount	11			12			11			11			11
Total Business Insurance	(231		)	(291		)	(91		)	(243		)	(132		)

Financial, Professional & International Insurance	(34		)	(72		)	(97		)	(56		)	(39		)

Personal Insurance	(18		)	(9		)	(23		)	(37		)	(55		)
Total	$	(283	)	$	(372	)	$	(211	)	$	(336	)	$	(226	)

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Asbestos and Environmental Reserves
($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Asbestos reserves
Beginning reserves:
Direct	$	3,097		$	3,004		$	2,867		$	3,058		$	2,941
Ceded	(339		)	(320		)	(274		)	(400		)	(393		)
Net	2,758			2,684			2,593			2,658			2,548
Incurred losses and loss expenses:
Direct	—			—			262			—			—
Ceded	—			—			(122		)	—			—
Losses paid:
Direct	93			137			71			117			65
Ceded	(19		)	(46		)	4			(7		)	(19		)
Ending reserves:
Direct	3,004			2,867			3,058			2,941			2,876
Ceded	(320		)	(274		)	(400		)	(393		)	(374		)
Net	$	2,684		$	2,593		$	2,658		$	2,548		$	2,502

Environmental reserves
Beginning reserves:
Direct	$	389		$	373		$	399		$	383		$	354
Ceded	4			4			(6		)	(6		)	(3		)
Net	393			377			393			377			351
Incurred losses and loss expenses:
Direct	—			45			—			—			—
Ceded	—			(10		)	—			—			—
Losses paid:
Direct	16			19			16			29			15
Ceded	—			—			—			(3		)	—
Ending reserves:
Direct	373			399			383			354			339
Ceded	4			(6		)	(6		)	(3		)	(3		)
Net	$	377		$	393		$	377		$	351		$	336

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Capitalization
($ in millions)

	March 31,			December 31,
	2011			2010
Debt

Short-term debt
Commercial paper	$	100		$	100
7.22% Real estate non-recourse debt due September 1, 2011	9			9
Total short-term debt	109			109

Long-term debt
5.375% Senior notes due June 15, 2012 (1)	250			250
5.00% Senior notes due March 15, 2013 (1)	500			500
5.50% Senior notes due December 1, 2015 (1)	400			400
6.25% Senior notes due June 20, 2016 (1)	400			400
5.75% Senior notes due December 15, 2017 (1)	450			450
5.80% Senior notes due May 15, 2018 (1)	500			500
5.90% Senior notes due June 2, 2019 (1)	500			500
3.90% Senior notes due November 1, 2020 (1)	500			500
7.75% Senior notes due April 15, 2026	200			200
7.625% Junior subordinated debentures due December 15, 2027	125			125
6.375% Senior notes due March 15, 2033 (1)	500			500
6.75% Senior notes due June 20, 2036 (1)	400			400
6.25% Senior notes due June 15, 2037 (1)	800			800
5.35% Senior notes due November 1, 2040 (1)	750			750
8.50% Junior subordinated debentures due December 15, 2045	56			56
8.312% Junior subordinated debentures due July 1, 2046	73			73
6.25% Fixed-to-floating rate junior subordinated debentures due March 15, 2067 (1)	115			115
Total long-term debt	6,519			6,519
Unamortized fair value adjustment	53			54
Unamortized debt issuance costs	(70		)	(71		)
	6,502			6,502
Total debt	6,611			6,611

Preferred equity	66			68

Common equity (excluding net unrealized investment gains, net of tax)	23,361			23,549

Total capital (excluding net unrealized investment gains, net of tax)	$	30,038		$	30,228

Total debt to capital (excluding net unrealized investment gains, net of tax)	22.0		%	21.9		%

(1) Redeemable anytime with “make-whole” premium.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Statutory to GAAP Shareholders’ Equity Reconciliation
($ in millions)

	March 31,			December 31,
	2011 (1)			2010

Statutory surplus	$	20,588		$	20,066

GAAP adjustments

Goodwill and intangible assets	3,662			3,679

Investments	3,143			3,179

Noninsurance companies	(3,626		)	(2,963		)

Deferred acquisition costs	1,801			1,782

Deferred federal income tax	(1,305		)	(1,238		)

Current federal income tax	(36		)	(100		)

Reinsurance recoverables	244			244

Furniture, equipment & software	681			690

Employee benefits	(13		)	(11		)

Agents balances	109			110

Other	(5		)	37

Total GAAP adjustments	4,655			5,409

GAAP shareholders’ equity	$	25,243		$	25,475

(1) Estimated and Preliminary

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

The Travelers Companies, Inc.
Statement of Cash Flows - Preliminary
($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Cash flows from operating activities
Net income	$	647		$	670		$	1,005		$	894		$	839
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment (gains) losses	(25		)	31			(226		)	(44		)	(20		)
Depreciation and amortization	216			195			197			204			208
Deferred federal income tax expense (benefit)	76			(25		)	98			29			153
Amortization of deferred acquisition costs	929			950			966			957			948
Equity in income from other investments	(45		)	(71		)	(45		)	(122		)	(122		)
Premiums receivable	(97		)	(285		)	154			199			(167		)
Reinsurance recoverables	86			442			226			546			218
Deferred acquisition costs	(939		)	(991		)	(998		)	(898		)	(964		)
Claims and claim adjustment expense reserves	(224		)	(468		)	(420		)	(856		)	(251		)
Unearned premium reserves	86			184			148			(355		)	175
Other	(179		)	(112		)	236			108			(384		)
Net cash provided by operating activities	531			520			1,341			662			633

Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,229			1,249			1,403			2,015			1,849
Proceeds from sales of investments:
Fixed maturities	1,646			1,135			500			432			490
Equity securities	19			8			130			44			8
Real estate	9			1			—			—			—
Other investments	114			75			237			291			161
Purchases of investments:
Fixed maturities	(2,175		)	(1,765		)	(1,227		)	(1,618		)	(1,824		)
Equity securities	(5		)	(14		)	(10		)	(32		)	(51		)
Real estate	(3		)	(5		)	(7		)	(6		)	(30		)
Other investments	(104		)	(123		)	(146		)	(141		)	(107		)
Net (purchases) sales of short-term securities	202			848			(1,116		)	(633		)	(31		)
Securities transactions in course of settlement	95			(93		)	(242		)	210			134
Other	(75		)	(70		)	(75		)	(98		)	(69		)
Net cash provided by (used in) investing activities	952			1,246			(553		)	464			530

The Travelers Companies, Inc.

Statement of Cash Flows - Preliminary (Continued)

($ in millions)

	1Q			2Q			3Q			4Q			1Q
	2010			2010			2010			2010			2011

Cash flows from financing activities
Payment of debt	—			(250		)	(25		)	(885		)	—
Issuance of debt	—			—			—			1,234			—
Dividends paid to shareholders	(168		)	(175		)	(169		)	(161		)	(155		)
Issuance of common stock - employee share options	123			76			68			141			168
Treasury stock acquired - share repurchase authorization	(1,407		)	(1,397		)	(637		)	(1,557		)	(1,104		)
Treasury stock acquired - net employee share-based compensation	(38		)	(2		)	—			—			(44		)
Excess tax benefits from share-based payment arrangements	4			1			1			2			7
Net cash used in financing activities	(1,486		)	(1,747		)	(762		)	(1,226		)	(1,128		)

Effect of exchange rate changes on cash	(1		)	(4		)	6			2			4

Net increase (decrease) in cash	(4		)	15			32			(98		)	39
Cash at beginning of period	255			251			266			298			200
Cash at end of period	$	251		$	266		$	298		$	200		$	239

Income taxes paid	$	44		$	265		$	202		$	273		$	112
Interest paid	$	63		$	137		$	63		$	134		$	35

The Travelers Companies, Inc.

Financial Supplement - First Quarter 2011

Glossary of Financial Measures and Description of Reportable Business Segments

The following measures are used by the Company’s management to evaluate financial performance against historical results and establish targets on a consolidated basis. In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure.

In the opinion of the Company’s management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the Company’s periodic results of operations and how management evaluates the Company’s financial performance. Internally, the Company’s management uses these measures to evaluate performance against historical results and establish financial targets on a consolidated basis.

Some of these measures exclude net realized gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends.

Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Company’s management.

Operating income (loss) is net income (loss) excluding the after-tax impact of net realized investment gains (losses). Management uses operating income to analyze each segment’s performance and as a tool in making business decisions. Financial statement users also consider operating income when analyzing the results and trends of insurance companies. Operating earnings (loss) per share is operating income (loss) on a per common share basis.

Average shareholders’ equity is (a) the sum of total shareholders’ equity excluding preferred stock at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two. Adjusted shareholders’ equity is shareholders’ equity excluding net unrealized investment gains (losses), net of tax, net realized investment gains (losses), net of tax, for the period presented and preferred stock. Adjusted average shareholders’ equity is average shareholders’ equity excluding net unrealized investment gains (losses), net of tax, for all quarters included in the calculation and, for each quarterly period included in the calculation that quarter’s net realized investment gains (losses), net of tax.

Return on equity is the ratio of annualized net income (loss) less preferred dividends to average shareholders’ equity for the periods presented. Operating return on equity is the ratio of annualized operating income (loss) less preferred dividends to adjusted average shareholders’ equity for the periods presented. In the opinion of the Company’s management, these are important indicators of how well management creates value for its shareholders through its operating activities and its capital management.

Underwriting gain (loss) is net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses. In the opinion of the Company’s management, it is important to measure the profitability of each segment excluding the results of investing activities, which are managed separately from the insurance business. This measure is used to assess each segment’s business performance and as a tool in making business decisions.

A catastrophe is a severe loss, resulting from natural and man-made events, including risks such as fire, earthquake, windstorm, explosion, terrorism and other similar events. Each catastrophe has unique characteristics, and catastrophes are not predictable as to timing or amount. Their effects are included in net and operating income and claims and claim adjustment expense reserves upon occurrence. A catastrophe may result in the payment of reinsurance reinstatement premiums and assessments from various pools. In the opinion of the Company’s management, a discussion of the impact of catastrophes is meaningful to users of the financial statements to understand the Company’s periodic earnings and the variability in periodic earnings caused by the unpredictable nature of catastrophes.

Net favorable (unfavorable) prior year loss reserve development is the increase or decrease in incurred claims and claim adjustment expenses as a result of the re-estimation of claims and claim adjustment expense reserves at successive valuation dates for a given group of claims. Loss reserve development may be related to one or more prior years or the current year. In the opinion of the Company’s management, a discussion of loss reserve development is meaningful to users of the financial statements as it allows them to assess the impact between prior and current year development on incurred claims and claim adjustment expenses, net and operating income, and changes in claims and claim adjustment expense reserve levels from period to period.

GAAP combined ratio is the sum of the loss and loss adjustment expense ratio (loss and LAE ratio) and the underwriting expense ratio. For GAAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses reduced by an allocation of fee income to net earned premiums. The underwriting expense ratio is the ratio of underwriting expenses incurred reduced by an allocation of fee income, and billing and policy fees to net earned premiums. A GAAP combined ratio under 100% generally indicates an underwriting profit. A GAAP combined ratio over 100% generally indicates an underwriting loss. The GAAP combined ratio is an operating statistic that includes GAAP measures in the numerator and the denominator.

GAAP combined ratio excluding the incremental impact of the direct to consumer initiative is the GAAP combined ratio adjusted to exclude the direct, variable impact of the company’s direct-to-consumer initiative in Personal Insurance. In the opinion of the company’s management, this is useful in an analysis of the profitability of the company’s ongoing agency business.

Gross written premiums reflect the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the insurance contract. Gross written premiums are a measure of overall business volume. Net written premiums reflect gross written premiums less premiums ceded to reinsurers.

Book value per share is total common shareholders’ equity divided by the number of common shares outstanding. Adjusted book value per share is total common shareholders’ equity excluding the after-tax impact of net unrealized investment gains and losses, divided by the number of common shares outstanding. In the opinion of the Company’s management, adjusted book value is useful in an analysis of a property casualty company’s book value as it removes the effect of changing prices on invested assets, (i.e., net unrealized investment gains (losses), net of tax) which do not have an equivalent impact on unpaid claims and claim adjustment expense reserves.

Total capital is the sum of total shareholders’ equity and debt. Debt-to-capital ratio excluding net unrealized gain (loss) on investments is the ratio of debt to total capital excluding the after-tax impact of net unrealized investment gains and losses. In the opinion of the company’s management, the debt to capital ratio is useful in an analysis of the company’s financial leverage.

Statutory surplus represents the excess of an insurance company’s assets over its liabilities in accordance with the statutory accounting practices required by state laws and regulations.

Travelers has organized its businesses into the following reportable business segments:

Business Insurance - The Business Insurance segment offers a broad array of property and casualty insurance and insurance-related services to its clients primarily in the United States. Business Insurance is organized into the following six groups, which collectively comprise Business Insurance Core operations: Select Accounts; Commercial Accounts; National Accounts; Industry-Focused Underwriting including Construction, Technology, Public Sector Services, Oil & Gas, and Agribusiness; Target Risk Underwriting including National Property, Inland Marine, Ocean Marine, Excess Casualty, Boiler & Machinery, and Global Partner Services; and Specialized Distribution including Northland and National Programs. Business Insurance also includes the Special Liability Group (which manages the Company’s asbestos and environmental liabilities) and the assumed reinsurance, and certain international and other runoff operations, which collectively are referred to as Business Insurance Other.

Financial, Professional & International Insurance - The Financial, Professional & International Insurance segment includes surety and management liability coverages, which require a primarily credit-based underwriting process, as well as property and casualty products that are primarily marketed on a domestic basis in the United Kingdom, Ireland and Canada, and on an international basis through Lloyd’s. The businesses in Financial, Professional & International Insurance are Bond & Financial Products and International.

Personal Insurance - The Personal Insurance segment writes virtually all types of property and casualty insurance covering personal risks. The primary coverages in this segment are personal automobile and homeowners insurance sold to individuals.

TRAVELERS COMPANIES, INC. - FORM 8-K - EX-99.2 - April 21, 2011

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TRAVELERS COMPANIES, INC. Reports