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

Attached files

file	filename
EX-99.1 - EX-99.1 - TRAVELERS COMPANIES, INC.	a17-2802_1ex99d1.htm
8-K - 8-K - TRAVELERS COMPANIES, INC.	a17-2802_18k.htm

Exhibit 99.2

The Travelers Companies, Inc.

Financial Supplement - Fourth Quarter 2016

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

Bond & Specialty 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
Selected Statistics - Direct to Consumer	21

Supplemental Detail
Interest Expense and Other	22
Consolidated Balance Sheet	23
Investment Portfolio	24
Investment Portfolio - Fixed Maturities Data	25
Investment Income	26
Net Realized and Unrealized Investment Gains (Losses)	27
Reinsurance Recoverables	28
Net Reserves for Losses and Loss Adjustment Expense	29
Asbestos and Environmental Reserves	30
Capitalization	31
Statutory Capital and Surplus to GAAP Shareholders’ Equity Reconciliation	32
Statement of Cash Flows	33
Statement of Cash Flows (continued)	34

Glossary of Financial Measures and Description of Reportable Business Segments	35

The information included in the Financial Supplement is unaudited. This document should be read in conjunction with the Company’s Form 10-K 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)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Net income	$	833		$	812		$	928		$	866		$	691		$	664		$	716		$	943		$	3,439		$	3,014
Net income per share:
Basic	$	2.58		$	2.56		$	3.00		$	2.87		$	2.33		$	2.27		$	2.48		$	3.32		$	10.99		$	10.39
Diluted	$	2.55		$	2.53		$	2.97		$	2.83		$	2.30		$	2.24		$	2.45		$	3.28		$	10.88		$	10.28

Operating income	$	827		$	806		$	918		$	886		$	698		$	649		$	701		$	919		$	3,437		$	2,967
Operating income per share:
Basic	$	2.56		$	2.54		$	2.96		$	2.94		$	2.35		$	2.22		$	2.43		$	3.23		$	10.99		$	10.22
Diluted	$	2.53		$	2.52		$	2.93		$	2.90		$	2.33		$	2.20		$	2.40		$	3.20		$	10.87		$	10.12

Return on equity	13.4		%	13.3		%	15.4		%	14.5		%	11.6		%	10.9		%	11.6		%	15.8		%	14.2		%	12.5		%
Operating return on equity	14.5		%	14.2		%	16.2		%	15.8		%	12.5		%	11.6		%	12.5		%	16.4		%	15.2		%	13.3		%

Total assets, at period end	$	102,691		$	101,664		$	102,110		$	100,184		$	101,680		$	102,446		$	102,787		$	100,245		$	100,184		$	100,245
Total equity, at period end	$	24,847		$	24,121		$	24,033		$	23,598		$	24,166		$	24,714		$	24,439		$	23,221		$	23,598		$	23,221

Book value per share, at period end	$	77.96		$	77.51		$	79.00		$	79.75		$	82.65		$	85.73		$	86.04		$	83.05		$	79.75		$	83.05
Less: Net unrealized investment gains, net of tax	6.51			4.42			4.65			4.36			6.02			8.12			7.22			2.61			4.36			2.61
Adjusted book value per share, at period end	$	71.45		$	73.09		$	74.35		$	75.39		$	76.63		$	77.61		$	78.82		$	80.44		$	75.39		$	80.44

Weighted average number of common shares outstanding (basic)	320.8			314.8			307.6			299.7			294.2			290.1			286.0			282.1			310.6			288.1
Weighted average number of common shares outstanding and common stock equivalents (diluted)	324.5			318.0			311.0			303.3			297.9			293.6			289.8			285.1			313.9			291.0
Common shares outstanding at period end	318.7			311.2			304.2			295.9			292.4			288.3			284.1			279.6			295.9			279.6

Common stock dividends declared	$	178		$	194		$	189		$	183		$	181		$	197		$	193		$	191		$	744		$	762

Common stock repurchased:
Under Board of Directors authorization
Shares	5.6			7.9			7.3			8.8			5.1			4.9			4.7			6.6			29.6			21.3
Cost	$	600		$	800		$	750		$	1,000		$	550		$	550		$	550		$	750		$	3,150		$	2,400
Other
Shares	0.7			—			—			—			0.5			—			0.1			—			0.7			0.6
Cost	$	72		$	1		$	—		$	1		$	59		$	—		$	12		$	1		$	74		$	72

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Reconciliation to Net Income and Earnings Per Share

($ and shares in millions, except earnings per share)

																			YTD		YTD
	1Q		2Q		3Q		4Q			1Q			2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015			2016			2016		2016		2016		2015		2016
Net income
Net income	$	833	$	812	$	928	$	866		$	691		$	664	$	716	$	943	$	3,439	$	3,014
Less: Net realized investment gains (losses), after-tax	6		6		10		(20		)	(7		)	15		15		24		2		47
Operating income	$	827	$	806	$	918	$	886		$	698		$	649	$	701	$	919	$	3,437	$	2,967

Basic earnings per share
Net income	$	2.58	$	2.56	$	3.00	$	2.87		$	2.33		$	2.27	$	2.48	$	3.32	$	10.99	$	10.39
Less: Net realized investment gains (losses), after-tax	0.02		0.02		0.04		(0.07		)	(0.02		)	0.05		0.05		0.09		—		0.17
Operating income	$	2.56	$	2.54	$	2.96	$	2.94		$	2.35		$	2.22	$	2.43	$	3.23	$	10.99	$	10.22

Diluted earnings per share
Net income	$	2.55	$	2.53	$	2.97	$	2.83		$	2.30		$	2.24	$	2.45	$	3.28	$	10.88	$	10.28
Less: Net realized investment gains (losses), after-tax	0.02		0.01		0.04		(0.07		)	(0.03		)	0.04		0.05		0.08		0.01		0.16
Operating income	$	2.53	$	2.52	$	2.93	$	2.90		$	2.33		$	2.20	$	2.40	$	3.20	$	10.87	$	10.12

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

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016
Basic and Diluted
Net income, as reported	$	833		$	812		$	928		$	866		$	691		$	664		$	716		$	943		$	3,439		$	3,014
Participating share-based awards - allocated income	(6		)	(6		)	(6		)	(6		)	(5		)	(5		)	(6		)	(7		)	(25		)	(22		)
Net income available to common shareholders - basic and diluted	$	827		$	806		$	922		$	860		$	686		$	659		$	710		$	936		$	3,414		$	2,992

Common Shares
Basic
Weighted average shares outstanding	320.8			314.8			307.6			299.7			294.2			290.1			286.0			282.1			310.6			288.1

Diluted
Weighted average shares outstanding	320.8			314.8			307.6			299.7			294.2			290.1			286.0			282.1			310.6			288.1
Weighted average effects of dilutive securities - stock options and performance shares	3.7			3.2			3.4			3.6			3.7			3.5			3.8			3.0			3.3			2.9
Diluted weighted average shares outstanding	324.5			318.0			311.0			303.3			297.9			293.6			289.8			285.1			313.9			291.0

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

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Statement of Income - Consolidated

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Revenues
Premiums	$	5,888		$	5,931		$	6,032		$	6,023		$	5,981		$	6,067		$	6,209		$	6,277		$	23,874		$	24,534
Net investment income	592			632			614			541			544			549			582			627			2,379			2,302
Fee income	114			115			116			115			117			119			116			106			460			458
Net realized investment gains (losses)	10			10			15			(32		)	(9		)	19			23			35			3			68
Other revenues	25			22			21			31			53			31			31			148			99			263
Total revenues	6,629			6,710			6,798			6,678			6,686			6,785			6,961			7,193			26,815			27,625

Claims and expenses
Claims and claim adjustment expenses	3,431			3,547			3,382			3,363			3,712			3,762			3,856			3,740			13,723			15,070
Amortization of deferred acquisition costs	963			963			987			972			971			989			1,012			1,013			3,885			3,985
General and administrative expenses	995			1,032			1,028			1,039			995			1,054			1,057			1,048			4,094			4,154
Interest expense	92			92			94			95			91			93			89			90			373			363
Total claims and expenses	5,481			5,634			5,491			5,469			5,769			5,898			6,014			5,891			22,075			23,572

Income before income taxes	1,148			1,076			1,307			1,209			917			887			947			1,302			4,740			4,053
Income tax expense	315			264			379			343			226			223			231			359			1,301			1,039
Net income	$	833		$	812		$	928		$	866		$	691		$	664		$	716		$	943		$	3,439		$	3,014

Other-than-temporary impairments (OTTI)
Total OTTI losses	$	(4	)	$	(8	)	$	(14	)	$	(28	)	$	(28	)	$	(4	)	$	(4	)	$	(4	)	$	(54	)	$	(40	)
OTTI losses recognized in net realized investment gains (losses)	$	(3	)	$	(6	)	$	(14	)	$	(29	)	$	(18	)	$	(4	)	$	(4	)	$	(3	)	$	(52	)	$	(29	)
OTTI gains (losses) recognized in other comprehensive income	$	(1	)	$	(2	)	$	—		$	1		$	(10	)	$	—		$	—		$	(1	)	$	(2	)	$	(11	)

Other statistics
Effective tax rate on net investment income	19.3		%	20.5		%	21.1		%	18.7		%	19.3		%	19.4		%	19.0		%	21.3		%	20.0		%	19.8		%
Net investment income (after-tax)	$	478		$	503		$	484		$	440		$	439		$	442		$	472		$	493		$	1,905		$	1,846

Catastrophes, net of reinsurance:
Pre-tax	$	162		$	221		$	85		$	46		$	318		$	333		$	89		$	137		$	514		$	877
After-tax	$	106		$	143		$	56		$	33		$	207		$	222		$	58		$	89		$	338		$	576

Prior year reserve development - favorable (unfavorable)
Pre-tax	$	243		$	207		$	199		$	292		$	180		$	288		$	39		$	264		$	941		$	771
After-tax	$	158		$	133		$	132		$	194		$	119		$	192		$	27		$	172		$	617		$	510

Certain prior period amounts have been restated to conform to the 2016 presentation.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Net Income by Major Component and Combined Ratio - Consolidated

($ in millions, net of tax)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Underwriting gain	$	395		$	353		$	486		$	491		$	289		$	248		$	269		$	393		$	1,725		$	1,199
Net investment income	478			503			484			440			439			442			472			493			1,905			1,846
Other income (expense), including interest expense	(46		)	(50		)	(52		)	(45		)	(30		)	(41		)	(40		)	33			(193		)	(78		)
Operating income	827			806			918			886			698			649			701			919			3,437			2,967
Net realized investment gains (losses)	6			6			10			(20		)	(7		)	15			15			24			2			47
Net income	$	833		$	812		$	928		$	866		$	691		$	664		$	716		$	943		$	3,439		$	3,014

Combined ratio (1) (2)
Loss and loss adjustment expense ratio	57.4		%	58.9		%	55.2		%	55.0		%	61.1		%	61.1		%	61.2		%	58.8		%	56.6		%	60.5		%
Underwriting expense ratio	31.5		%	31.9		%	31.7		%	31.6		%	31.2		%	32.0		%	31.7		%	31.2		%	31.7		%	31.5		%
Combined ratio	88.9		%	90.8		%	86.9		%	86.6		%	92.3		%	93.1		%	92.9		%	90.0		%	88.3		%	92.0		%
Combined ratio excluding incremental impact of direct to consumer initiative	88.5		%	90.3		%	86.4		%	86.1		%	92.0		%	92.7		%	92.5		%	89.6		%	87.8		%	91.7		%

Impact of catastrophes on combined ratio	2.7		%	3.7		%	1.4		%	0.8		%	5.3		%	5.5		%	1.4		%	2.2		%	2.1		%	3.6		%
Impact of prior year reserve development on combined ratio	-4.1		%	-3.5		%	-3.3		%	-4.9		%	-3.0		%	-4.7		%	-0.6		%	-4.2		%	-3.9		%	-3.2		%

(1) Before policyholder dividends.

(2) Billing and policy fees and other, 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:

																	YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015		2016		2016		2016		2016		2015		2016
Billing and policy fees and other	$	23	$	22	$	20	$	22	$	22	$	22	$	23	$	22	$	87	$	89
Fee income:
Loss and loss adjustment expenses	$	42	$	43	$	44	$	41	$	44	$	45	$	44	$	35	$	170	$	168
Underwriting expenses	72		72		72		74		73		74		72		71		290		290
Total fee income	$	114	$	115	$	116	$	115	$	117	$	119	$	116	$	106	$	460	$	458

Certain prior period amounts have been restated to conform to the 2016 presentation.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Operating Income - Consolidated

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Revenues
Premiums	$	5,888		$	5,931		$	6,032		$	6,023		$	5,981		$	6,067		$	6,209		$	6,277		$	23,874		$	24,534
Net investment income	592			632			614			541			544			549			582			627			2,379			2,302
Fee income	114			115			116			115			117			119			116			106			460			458
Other revenues	25			22			21			31			53			31			31			148			99			263
Total revenues	6,619			6,700			6,783			6,710			6,695			6,766			6,938			7,158			26,812			27,557

Claims and expenses
Claims and claim adjustment expenses	3,431			3,547			3,382			3,363			3,712			3,762			3,856			3,740			13,723			15,070
Amortization of deferred acquisition costs	963			963			987			972			971			989			1,012			1,013			3,885			3,985
General and administrative expenses	995			1,032			1,028			1,039			995			1,054			1,057			1,048			4,094			4,154
Interest expense	92			92			94			95			91			93			89			90			373			363
Total claims and expenses	5,481			5,634			5,491			5,469			5,769			5,898			6,014			5,891			22,075			23,572

Operating income before income taxes	1,138			1,066			1,292			1,241			926			868			924			1,267			4,737			3,985
Income tax expense	311			260			374			355			228			219			223			348			1,300			1,018
Operating income	$	827		$	806		$	918		$	886		$	698		$	649		$	701		$	919		$	3,437		$	2,967

Other statistics
Effective tax rate on net investment income	19.3		%	20.5		%	21.1		%	18.7		%	19.3		%	19.4		%	19.0		%	21.3		%	20.0		%	19.8		%
Net investment income (after-tax)	$	478		$	503		$	484		$	440		$	439		$	442		$	472		$	493		$	1,905		$	1,846

Catastrophes, net of reinsurance:
Pre-tax	$	162		$	221		$	85		$	46		$	318		$	333		$	89		$	137		$	514		$	877
After-tax	$	106		$	143		$	56		$	33		$	207		$	222		$	58		$	89		$	338		$	576

Prior year reserve development - favorable (unfavorable)
Pre-tax	$	243		$	207		$	199		$	292		$	180		$	288		$	39		$	264		$	941		$	771
After-tax	$	158		$	133		$	132		$	194		$	119		$	192		$	27		$	172		$	617		$	510

Certain prior period amounts have been restated to conform to the 2016 presentation.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Selected Statistics - Property and Casualty Operations

($ in millions)

																							YTD			YTD
	1Q			2Q			3Q			4Q			1Q		2Q			3Q		4Q			4Q			4Q
	2015			2015			2015			2015			2016		2016			2016		2016			2015			2016
Statutory underwriting
Gross written premiums	$	6,474		$	6,542		$	6,618		$	6,148		$	6,712	$	6,688		$	6,798	$	6,297		$	25,782		$	26,495
Net written premiums	$	5,897		$	6,169		$	6,191		$	5,864		$	6,166	$	6,345		$	6,389	$	6,058		$	24,121		$	24,958

Net earned premiums	$	5,888		$	5,931		$	6,032		$	6,023		$	5,981	$	6,067		$	6,209	$	6,277		$	23,874		$	24,534
Losses and loss adjustment expenses	3,379			3,495			3,333			3,307			3,663		3,709			3,803		3,685			13,514			14,860
Underwriting expenses	1,890			1,949			1,947			1,867			1,932		2,009			2,001		1,926			7,653			7,868
Statutory underwriting gain	619			487			752			849			386		349			405		666			2,707			1,806
Policyholder dividends	9			10			10			12			10		11			11		16			41			48
Statutory underwriting gain after policyholder dividends	$	610		$	477		$	742		$	837		$	376	$	338		$	394	$	650		$	2,666		$	1,758

Other statutory statistics
Reserves for losses and loss adjustment expenses	$	40,296		$	40,273		$	40,091		$	39,782		$	40,224	$	39,797		$	39,956	$	39,904		$	39,782		$	39,904
Increase (decrease) in reserves	$	(711	)	$	(23	)	$	(182	)	$	(309	)	$	442	$	(427	)	$	159	$	(52	)	$	(1,225	)	$	122
Statutory capital and surplus	$	20,944		$	20,851		$	20,822		$	20,567		$	20,569	$	20,634		$	20,609	$	20,759		$	20,567		$	20,759
Net written premiums/surplus (1)	1.14:1			1.15:1			1.16:1			1.17:1			1.19:1		1.19:1			1.20:1		1.20:1			1.17:1			1.20:1

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

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Written and Earned Premiums - Property and Casualty Operations

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016
Written premiums
Gross	$	6,474		$	6,542		$	6,618		$	6,148		$	6,712		$	6,688		$	6,798		$	6,297		$	25,782		$	26,495
Ceded	(577		)	(373		)	(427		)	(284		)	(546		)	(343		)	(409		)	(239		)	(1,661		)	(1,537		)
Net	$	5,897		$	6,169		$	6,191		$	5,864		$	6,166		$	6,345		$	6,389		$	6,058		$	24,121		$	24,958

Earned premiums
Gross	$	6,308		$	6,356		$	6,447		$	6,443		$	6,381		$	6,487		$	6,604		$	6,665		$	25,554		$	26,137
Ceded	(420		)	(425		)	(415		)	(420		)	(400		)	(420		)	(395		)	(388		)	(1,680		)	(1,603		)
Net	$	5,888		$	5,931		$	6,032		$	6,023		$	5,981		$	6,067		$	6,209		$	6,277		$	23,874		$	24,534

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Operating Income - Business and International Insurance

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Revenues
Premiums	$	3,620		$	3,609		$	3,653		$	3,639		$	3,599		$	3,631		$	3,692		$	3,698		$	14,521		$	14,620
Net investment income	454			487			471			412			415			420			445			483			1,824			1,763
Fee income	111			111			112			111			114			115			111			102			445			442
Other revenues	8			5			5			5			33			8			10			125			23			176
Total revenues	4,193			4,212			4,241			4,167			4,161			4,174			4,258			4,408			16,813			17,001

Claims and expenses
Claims and claim adjustment expenses	2,265			2,238			2,229			2,127			2,299			2,385			2,380			2,126			8,859			9,190
Amortization of deferred acquisition costs	584			578			589			578			579			588			598			593			2,329			2,358
General and administrative expenses	654			674			675			683			663			696			697			690			2,686			2,746
Total claims and expenses	3,503			3,490			3,493			3,388			3,541			3,669			3,675			3,409			13,874			14,294

Operating income before income taxes	690			722			748			779			620			505			583			999			2,939			2,707
Income tax expense	175			179			202			213			144			112			126			277			769			659
Operating income	$	515		$	543		$	546		$	566		$	476		$	393		$	457		$	722		$	2,170		$	2,048

Other statistics
Effective tax rate on net investment income	19.4		%	20.7		%	21.5		%	18.9		%	19.4		%	19.5		%	18.7		%	21.4		%	20.2		%	19.8		%
Net investment income (after-tax)	$	366		$	386		$	371		$	334		$	335		$	337		$	363		$	378		$	1,457		$	1,413

Catastrophes, net of reinsurance:
Pre-tax	$	99		$	108		$	39		$	1		$	148		$	212		$	72		$	80		$	247		$	512
After-tax	$	65		$	70		$	25		$	4		$	97		$	143		$	47		$	52		$	164		$	339

Prior year reserve development - favorable (unfavorable)
Pre-tax	$	77		$	103		$	49		$	176		$	93		$	138		$	19		$	234		$	405		$	484
After-tax	$	50		$	65		$	35		$	118		$	63		$	94		$	14		$	152		$	268		$	323

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Operating Income by Major Component and Combined Ratio - Business and International Insurance

($ in millions, net of tax)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Underwriting gain	$	142		$	155		$	172		$	227		$	121		$	48		$	87		$	263		$	696		$	519
Net investment income	366			386			371			334			335			337			363			378			1,457			1,413
Other income (expense)	7			2			3			5			20			8			7			81			17			116
Operating income	$	515		$	543		$	546		$	566		$	476		$	393		$	457		$	722		$	2,170		$	2,048

Combined ratio (1) (2)
Loss and loss adjustment expense ratio	61.2		%	60.6		%	59.6		%	57.0		%	62.4		%	64.2		%	63.0		%	56.3		%	59.6		%	61.4		%
Underwriting expense ratio	32.1		%	32.6		%	32.6		%	32.6		%	32.4		%	33.3		%	33.1		%	32.7		%	32.5		%	32.9		%
Combined ratio	93.3		%	93.2		%	92.2		%	89.6		%	94.8		%	97.5		%	96.1		%	89.0		%	92.1		%	94.3		%

Impact of catastrophes on combined ratio	2.7		%	2.9		%	1.1		%	0.0		%	4.1		%	5.8		%	1.9		%	2.2		%	1.7		%	3.5		%
Impact of prior year reserve development on combined ratio	-2.1		%	-2.8		%	-1.4		%	-4.8		%	-2.6		%	-3.8		%	-0.5		%	-6.3		%	-2.8		%	-3.3		%

(1) Before policyholder dividends.

expenses and underwriting expenses as follows:

																	YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015		2016		2016		2016		2016		2015		2016
Billing and policy fees and other	$	7	$	6	$	4	$	6	$	6	$	6	$	6	$	6	$	23	$	24
Fee income:
Loss and loss adjustment expenses	$	42	$	43	$	44	$	41	$	44	$	45	$	44	$	35	$	170	$	168
Underwriting expenses	69		68		68		70		70		70		67		67		275		274
Total fee income	$	111	$	111	$	112	$	111	$	114	$	115	$	111	$	102	$	445	$	442

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Selected Statistics - Business and International Insurance

($ in millions)

																	YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015		2016		2016		2016		2016		2015		2016

Statutory underwriting
Gross written premiums	$	4,276	$	4,027	$	3,981	$	3,783	$	4,366	$	3,997	$	3,956	$	3,717	$	16,067	$	16,036
Net written premiums	$	3,797	$	3,679	$	3,590	$	3,517	$	3,914	$	3,680	$	3,583	$	3,498	$	14,583	$	14,675

Net earned premiums	$	3,620	$	3,609	$	3,653	$	3,639	$	3,599	$	3,631	$	3,692	$	3,698	$	14,521	$	14,620
Losses and loss adjustment expenses	2,216		2,187		2,182		2,073		2,252		2,334		2,330		2,077		8,658		8,993
Underwriting expenses	1,206		1,192		1,178		1,151		1,236		1,231		1,203		1,173		4,727		4,843
Statutory underwriting gain	198		230		293		415		111		66		159		448		1,136		784
Policyholder dividends	7		8		7		9		8		9		9		9		31		35
Statutory underwriting gain after policyholder dividends	$	191	$	222	$	286	$	406	$	103	$	57	$	150	$	439	$	1,105	$	749

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Net Written Premiums - Business and International Insurance

($ in millions)

																	YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015		2016		2016		2016		2016		2015		2016

Net written premiums by market
Domestic
Select Accounts	$	722	$	709	$	654	$	631	$	724	$	709	$	657	$	639	$	2,716	$	2,729
Middle Market	1,726		1,451		1,597		1,528		1,829		1,494		1,616		1,524		6,302		6,463
National Accounts	299		228		254		267		320		234		245		259		1,048		1,058
First Party	340		452		411		361		358		466		399		378		1,564		1,601
Specialized Distribution	268		300		277		266		286		302		263		243		1,111		1,094
Total Domestic	3,355		3,140		3,193		3,053		3,517		3,205		3,180		3,043		12,741		12,945
International	442		539		397		464		397		475		403		455		1,842		1,730
Total	$	3,797	$	3,679	$	3,590	$	3,517	$	3,914	$	3,680	$	3,583	$	3,498	$	14,583	$	14,675

Net written premiums by product line
Workers’ compensation	$	1,142	$	906	$	957	$	910	$	1,198	$	916	$	939	$	892	$	3,915	$	3,945
Commercial automobile	502		487		494		475		544		517		502		474		1,958		2,037
Commercial property	391		507		451		411		406		520		437		424		1,760		1,787
General liability	491		469		489		475		537		471		506		473		1,924		1,987
Commercial multi-peril	822		765		780		779		829		777		777		774		3,146		3,157
International	442		539		397		464		397		475		403		455		1,842		1,730
Other	7		6		22		3		3		4		19		6		38		32
Total	$	3,797	$	3,679	$	3,590	$	3,517	$	3,914	$	3,680	$	3,583	$	3,498	$	14,583	$	14,675

National Accounts
Additions to claim volume under administration (1)	$	761	$	536	$	558	$	667	$	797	$	545	$	553	$	661	$	2,522	$	2,556
Written fees	$	114	$	92	$	91	$	88	$	115	$	91	$	87	$	84	$	385	$	377

Certain prior period amounts have been restated to conform to the 2016 presentation.

(1) Includes new and renewal business.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Operating Income - Bond & Specialty Insurance

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Revenues
Premiums	$	504		$	524		$	539		$	518		$	508		$	518		$	529		$	533		$	2,085		$	2,088
Net investment income	56			57			56			54			52			51			53			54			223			210
Other revenues	5			5			4			8			3			6			4			7			22			20
Total revenues	565			586			599			580			563			575			586			594			2,330			2,318

Claims and expenses
Claims and claim adjustment expenses	192			192			113			146			164			80			173			155			643			572
Amortization of deferred acquisition costs	94			97			104			98			96			98			102			101			393			397
General and administrative expenses	100			99			93			97			94			96			98			101			389			389
Total claims and expenses	386			388			310			341			354			274			373			357			1,425			1,358

Operating income before income taxes	179			198			289			239			209			301			213			237			905			960
Income tax expense	55			47			93			77			65			99			67			76			272			307
Operating income	$	124		$	151		$	196		$	162		$	144		$	202		$	146		$	161		$	633		$	653

Other statistics
Effective tax rate on net investment income	18.3		%	18.6		%	18.6		%	17.6		%	18.1		%	18.1		%	18.8		%	19.0		%	18.3		%	18.5		%
Net investment income (after-tax)	$	46		$	47		$	45		$	44		$	42		$	42		$	43		$	44		$	182		$	171

Catastrophes, net of reinsurance:
Pre-tax	$	1		$	1		$	1		$	—		$	1		$	3		$	1		$	1		$	3		$	6
After-tax	$	—		$	1		$	1		$	—		$	—		$	2		$	1		$	1		$	2		$	4

Prior year reserve development - favorable (unfavorable)
Pre-tax	$	35		$	40		$	103		$	80		$	60		$	150		$	41		$	75		$	258		$	326
After-tax	$	23		$	26		$	67		$	52		$	39		$	98		$	26		$	49		$	168		$	212

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Operating Income by Major Component and Combined Ratio - Bond & Specialty Insurance

($ in millions, net of tax)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Underwriting gain	$	75		$	101		$	148		$	113		$	100		$	156		$	99		$	113		$	437		$	468
Net investment income	46			47			45			44			42			42			43			44			182			171
Other income (expense)	3			3			3			5			2			4			4			4			14			14
Operating income	$	124		$	151		$	196		$	162		$	144		$	202		$	146		$	161		$	633		$	653

Combined ratio
Loss and loss adjustment expense ratio	37.6		%	36.3		%	20.6		%	27.6		%	31.9		%	15.0		%	32.3		%	27.8		%	30.4		%	26.8		%
Underwriting expense ratio	38.5		%	37.4		%	36.5		%	37.5		%	37.4		%	37.4		%	37.8		%	37.9		%	37.5		%	37.6		%
Combined ratio	76.1		%	73.7		%	57.1		%	65.1		%	69.3		%	52.4		%	70.1		%	65.7		%	67.9		%	64.4		%

Impact of catastrophes on combined ratio	0.1		%	0.3		%	0.1		%	0.0		%	0.1		%	0.6		%	0.2		%	0.2		%	0.2		%	0.3		%
Impact of prior year reserve development on combined ratio	-6.9		%	-7.7		%	-19.1		%	-15.6		%	-11.9		%	-29.1		%	-7.5		%	-14.2		%	-12.4		%	-15.6		%

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Selected Statistics - Bond & Specialty Insurance

($ in millions)

																	YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015		2016		2016		2016		2016		2015		2016

Statutory underwriting
Gross written premiums	$	522	$	537	$	580	$	514	$	536	$	549	$	580	$	518	$	2,153	$	2,183
Net written premiums	$	478	$	534	$	565	$	504	$	492	$	536	$	566	$	505	$	2,081	$	2,099

Net earned premiums	$	504	$	524	$	539	$	518	$	508	$	518	$	529	$	533	$	2,085	$	2,088
Losses and loss adjustment expenses	189		191		111		143		162		78		171		147		634		558
Underwriting expenses	196		199		202		188		195		198		205		196		785		794
Statutory underwriting gain	119		134		226		187		151		242		153		190		666		736
Policyholder dividends	2		2		3		3		2		2		2		7		10		13
Statutory underwriting gain after policyholder dividends	$	117	$	132	$	223	$	184	$	149	$	240	$	151	$	183	$	656	$	723

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Net Written Premiums - Bond & Specialty Insurance

($ in millions)

																	YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015		2016		2016		2016		2016		2015		2016

Net written premiums by product line
Fidelity & surety	$	206	$	259	$	267	$	220	$	219	$	255	$	266	$	221	$	952	$	961
General liability	226		236		247		243		227		240		246		241		952		954
Other	46		39		51		41		46		41		54		43		177		184
Total	$	478	$	534	$	565	$	504	$	492	$	536	$	566	$	505	$	2,081	$	2,099

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Operating Income - Personal Insurance

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Revenues
Premiums	$	1,764		$	1,798		$	1,840		$	1,866		$	1,874		$	1,918		$	1,988		$	2,046		$	7,268		$	7,826
Net investment income	82			88			87			75			77			78			84			90			332			329
Fee income	3			4			4			4			3			4			5			4			15			16
Other revenues	12			12			9			15			14			14			14			14			48			56
Total revenues	1,861			1,902			1,940			1,960			1,968			2,014			2,091			2,154			7,663			8,227

Claims and expenses
Claims and claim adjustment expenses	974			1,117			1,040			1,090			1,249			1,297			1,303			1,459			4,221			5,308
Amortization of deferred acquisition costs	285			288			294			296			296			303			312			319			1,163			1,230
General and administrative expenses	234			252			252			250			230			255			254			249			988			988
Total claims and expenses	1,493			1,657			1,586			1,636			1,775			1,855			1,869			2,027			6,372			7,526

Operating income before income taxes	368			245			354			324			193			159			222			127			1,291			701
Income tax expense	116			71			113			102			54			43			64			30			402			191
Operating income	$	252		$	174		$	241		$	222		$	139		$	116		$	158		$	97		$	889		$	510

Other statistics
Effective tax rate on net investment income	19.6		%	20.8		%	20.9		%	18.5		%	19.5		%	19.7		%	21.0		%	21.9		%	20.0		%	20.6		%
Net investment income (after-tax)	$	66		$	70		$	68		$	62		$	62		$	63		$	66		$	71		$	266		$	262

Catastrophes, net of reinsurance:
Pre-tax	$	62		$	112		$	45		$	45		$	169		$	118		$	16		$	56		$	264		$	359
After-tax	$	41		$	72		$	30		$	29		$	110		$	77		$	10		$	36		$	172		$	233

Prior year reserve development - favorable (unfavorable)
Pre-tax	$	131		$	64		$	47		$	36		$	27		$	—		$	(21	)	$	(45	)	$	278		$	(39	)
After-tax	$	85		$	42		$	30		$	24		$	17		$	—		$	(13	)	$	(29	)	$	181		$	(25	)

Certain prior period amounts have been restated to conform to the 2016 presentation.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Operating Income by Major Component and Combined Ratio - Personal Insurance

($ in millions, net of tax)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Underwriting gain	$	178		$	97		$	166		$	151		$	68		$	44		$	83		$	17		$	592		$	212
Net investment income	66			70			68			62			62			63			66			71			266			262
Other income (expense)	8			7			7			9			9			9			9			9			31			36
Operating income	$	252		$	174		$	241		$	222		$	139		$	116		$	158		$	97		$	889		$	510

Combined ratio (1)
Loss and loss adjustment expense ratio	55.2		%	62.2		%	56.5		%	58.5		%	66.7		%	67.6		%	65.5		%	71.4		%	58.1		%	67.8		%
Underwriting expense ratio	28.3		%	28.9		%	28.6		%	28.2		%	27.0		%	28.1		%	27.4		%	26.8		%	28.5		%	27.3		%
Combined ratio	83.5		%	91.1		%	85.1		%	86.7		%	93.7		%	95.7		%	92.9		%	98.2		%	86.6		%	95.1		%
Combined ratio excluding incremental impact of direct to consumer initiative	81.8		%	89.4		%	83.2		%	85.0		%	92.8		%	94.6		%	91.7		%	97.1		%	84.8		%	94.1		%

Impact of catastrophes on combined ratio	3.5		%	6.2		%	2.5		%	2.4		%	9.0		%	6.2		%	0.8		%	2.8		%	3.6		%	4.5		%
Impact of prior year reserve development on combined ratio	-7.5		%	-3.5		%	-2.6		%	-1.9		%	-1.4		%	0.0		%	1.1		%	2.2		%	-3.8		%	0.5		%

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

																	YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015		2016		2016		2016		2016		2015		2016
Billing and policy fees and other	$	16	$	16	$	16	$	16	$	16	$	16	$	17	$	16	$	64	$	65

Fee income	$	3	$	4	$	4	$	4	$	3	$	4	$	5	$	4	$	15	$	16

Certain prior period amounts have been restated to conform to the 2016 presentation.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Selected Statistics - Personal Insurance

($ in millions)

																	YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015		2016		2016		2016		2016		2015		2016

Statutory underwriting
Gross written premiums	$	1,676	$	1,978	$	2,057	$	1,851	$	1,810	$	2,142	$	2,262	$	2,062	$	7,562	$	8,276
Net written premiums	$	1,622	$	1,956	$	2,036	$	1,843	$	1,760	$	2,129	$	2,240	$	2,055	$	7,457	$	8,184

Net earned premiums	$	1,764	$	1,798	$	1,840	$	1,866	$	1,874	$	1,918	$	1,988	$	2,046	$	7,268	$	7,826
Losses and loss adjustment expenses	974		1,117		1,040		1,091		1,249		1,297		1,302		1,461		4,222		5,309
Underwriting expenses	488		558		567		528		501		580		593		557		2,141		2,231
Statutory underwriting gain	$	302	$	123	$	233	$	247	$	124	$	41	$	93	$	28	$	905	$	286

Policies in force (in thousands)
Automobile	2,125		2,166		2,224		2,283		2,346		2,417		2,502		2,587		2,283		2,587
Homeowners and other	4,107		4,121		4,145		4,158		4,188		4,244		4,279		4,311		4,158		4,311

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Selected Statistics - Personal Insurance (Agency Automobile) (1)

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Statutory underwriting

Gross written premiums	$	828		$	893		$	938		$	892		$	939		$	1,022		$	1,099		$	1,063		$	3,551		$	4,123
Net written premiums	$	822		$	890		$	934		$	888		$	932		$	1,018		$	1,095		$	1,058		$	3,534		$	4,103

Net earned premiums	$	802		$	827		$	854		$	878		$	891		$	925		$	973		$	1,019		$	3,361		$	3,808
Losses and loss adjustment expenses	516			582			585			640			626			703			751			945			2,323			3,025
Underwriting expenses	215			230			234			227			234			252			259			256			906			1,001
Statutory underwriting gain (loss)	$	71		$	15		$	35		$	11		$	31		$	(30	)	$	(37	)	$	(182	)	$	132		$	(218	)

Other statistics
Combined ratio (2):
Loss and loss adjustment expense ratio	64.4		%	70.4		%	68.5		%	73.0		%	70.3		%	75.9		%	77.1		%	92.8		%	69.1		%	79.4		%
Underwriting expense ratio	25.8		%	26.1		%	25.4		%	25.1		%	24.9		%	25.4		%	24.3		%	23.9		%	25.6		%	24.6		%
Combined ratio	90.2		%	96.5		%	93.9		%	98.1		%	95.2		%	101.3		%	101.4		%	116.7		%	94.7		%	104.0		%

Impact of catastrophes on combined ratio	0.0		%	2.1		%	0.1		%	0.1		%	2.0		%	2.7		%	0.3		%	0.6		%	0.5		%	1.4		%
Impact of prior year reserve development on combined ratio	-2.8		%	-2.5		%	-2.4		%	-2.2		%	-0.8		%	0.0		%	0.0		%	3.9		%	-2.5		%	0.8		%

Catastrophe losses, net of reinsurance:
Pre-tax	$	—		$	18		$	—		$	1		$	19		$	24		$	4		$	5		$	19		$	52
After-tax	$	—		$	12		$	—		$	—		$	12		$	16		$	2		$	4		$	12		$	34

Prior year reserve development - favorable (unfavorable)
Pre-tax	$	22		$	21		$	21		$	20		$	7		$	—		$	—		$	(40	)	$	84		$	(33	)
After-tax	$	15		$	14		$	13		$	13		$	4		$	—		$	—		$	(25	)	$	55		$	(21	)

Policies in force (in thousands)	2,021			2,057			2,106			2,157			2,212			2,275			2,350			2,428
Change from prior year quarter	1.8		%	3.8		%	5.8		%	7.9		%	9.5		%	10.6		%	11.6		%	12.6		%
Change from prior quarter	1.1		%	1.8		%	2.4		%	2.4		%	2.5		%	2.8		%	3.3		%	3.3		%

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

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

																	YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015		2016		2016		2016		2016		2015		2016
Billing and policy fees and other	$	9	$	8	$	8	$	9	$	9	$	9	$	9	$	9	$	34	$	36

Fee income	$	2	$	2	$	2	$	2	$	2	$	2	$	2	$	2	$	8	$	8

Certain prior period amounts have been restated to conform to the 2016 presentation.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Selected Statistics - Personal Insurance (Agency Homeowners and Other) (1)

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Statutory underwriting

Gross written premiums	$	795		$	1,029		$	1,052		$	897		$	803		$	1,045		$	1,075		$	920		$	3,773		$	3,843
Net written premiums	$	748		$	1,010		$	1,035		$	894		$	760		$	1,036		$	1,058		$	918		$	3,687		$	3,772

Net earned premiums	$	914		$	920		$	930		$	929		$	920		$	926		$	942		$	949		$	3,693		$	3,737
Losses and loss adjustment expenses	425			498			414			407			578			541			493			447			1,744			2,059
Underwriting expenses	236			289			291			263			236			297			301			272			1,079			1,106
Statutory underwriting gain	$	253		$	133		$	225		$	259		$	106		$	88		$	148		$	230		$	870		$	572

Other statistics
Combined ratio (2):
Loss and loss adjustment expense ratio	46.5		%	54.2		%	44.6		%	43.8		%	62.8		%	58.4		%	52.3		%	47.2		%	47.2		%	55.1		%
Underwriting expense ratio	27.9		%	28.8		%	28.8		%	28.8		%	27.6		%	29.5		%	29.2		%	28.9		%	28.6		%	28.8		%
Combined ratio	74.4		%	83.0		%	73.4		%	72.6		%	90.4		%	87.9		%	81.5		%	76.1		%	75.8		%	83.9		%

Impact of catastrophes on combined ratio	6.7		%	10.1		%	4.7		%	4.7		%	16.0		%	9.7		%	1.2		%	5.2		%	6.5		%	8.0		%
Impact of prior year reserve development on combined ratio	-11.8		%	-4.6		%	-2.8		%	-1.6		%	-1.8		%	0.0		%	2.0		%	0.5		%	-5.2		%	0.2		%

Catastrophe losses, net of reinsurance:
Pre-tax	$	61		$	93		$	43		$	44		$	147		$	91		$	11		$	49		$	241		$	298
After-tax	$	40		$	60		$	28		$	29		$	96		$	59		$	7		$	31		$	157		$	193

Prior year reserve development - favorable (unfavorable)
Pre-tax	$	108		$	43		$	26		$	15		$	17		$	—		$	(19	)	$	(5	)	$	192		$	(7	)
After-tax	$	70		$	28		$	17		$	10		$	11		$	—		$	(12	)	$	(4	)	$	125		$	(5	)

Policies in force (in thousands)	4,008			4,017			4,034			4,042			4,068			4,117			4,146			4,174
Change from prior year quarter	-3.3		%	-2.3		%	-0.9		%	0.2		%	1.5		%	2.5		%	2.8		%	3.3		%
Change from prior quarter	-0.6		%	0.2		%	0.4		%	0.2		%	0.6		%	1.2		%	0.7		%	0.7		%

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

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

																	YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		3Q		4Q		4Q		4Q
	2015		2015		2015		2015		2016		2016		2016		2016		2015		2016
Billing and policy fees and other	$	7	$	7	$	7	$	6	$	7	$	6	$	6	$	7	$	27	$	26

Fee income	$	1	$	2	$	2	$	2	$	2	$	2	$	2	$	1	$	7	$	7

Certain prior period amounts have been restated to conform to the 2016 presentation.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Selected Statistics - Direct to Consumer (1)

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Net written premiums
Automobile	$	38		$	38		$	47		$	43		$	51		$	53		$	63		$	57		$	166		$	224
Homeowners and other	14			18			20			18			17			22			24			22			70			85
Total net written premiums	$	52		$	56		$	67		$	61		$	68		$	75		$	87		$	79		$	236		$	309

Revenues
Premiums	$	48		$	51		$	56		$	59		$	63		$	67		$	73		$	78		$	214		$	281
Other revenues	—			1			—			1			—			1			1			1			2			3
Total revenues	48			52			56			60			63			68			74			79			216			284

Claims and expenses
Claims and claim adjustment expenses	32			39			39			45			45			53			59			68			155			225
Amortization of deferred acquisition costs	1			1			2			1			1			2			2			1			5			6
General and administrative expenses	37			38			41			37			30			30			32			29			153			121
Total claims and expenses	70			78			82			83			76			85			93			98			313			352

Operating loss before income taxes	(22		)	(26		)	(26		)	(23		)	(13		)	(17		)	(19		)	(19		)	(97		)	(68		)
Income taxes	(8		)	(9		)	(9		)	(8		)	(5		)	(5		)	(7		)	(7		)	(34		)	(24		)
Operating loss	$	(14	)	$	(17	)	$	(17	)	$	(15	)	$	(8	)	$	(12	)	$	(12	)	$	(12	)	$	(63	)	$	(44	)

Other statistics
Policies in force (in thousands)
Automobile	104			109			118			126			134			142			152			159
Homeowners and other	99			104			111			116			120			127			133			137

Catastrophes, net of reinsurance:
Pre-tax	$	1		$	1		$	2		$	—		$	3		$	3		$	1		$	2		$	4		$	9
After-tax	$	1		$	—		$	2		$	—		$	2		$	2		$	1		$	1		$	3		$	6

Prior year reserve development - favorable (unfavorable)
Pre-tax	$	1		$	—		$	—		$	1		$	3		$	—		$	(2	)	$	—		$	2		$	1
After-tax	$	—		$	—		$	—		$	1		$	2		$	—		$	(1	)	$	—		$	1		$	1

(1) Represents incremental premiums, other revenues and claims and expenses of Direct to Consumer business activities included in Personal Insurance operating income.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Interest Expense and Other

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Revenues
Other revenues	$	—		$	—		$	3		$	3		$	3		$	3		$	3		$	2		$	6		$	11

Claims and expenses
Interest expense	92			92			94			95			91			93			89			90			373			363
General and administrative expenses	7			7			8			9			8			7			8			8			31			31
Total claims and expenses	99			99			102			104			99			100			97			98			404			394

Operating loss before income tax benefit	(99		)	(99		)	(99		)	(101		)	(96		)	(97		)	(94		)	(96		)	(398		)	(383		)
Income taxes	(35		)	(37		)	(34		)	(37		)	(35		)	(35		)	(34		)	(35		)	(143		)	(139		)
Operating loss	$	(64	)	$	(62	)	$	(65	)	$	(64	)	$	(61	)	$	(62	)	$	(60	)	$	(61	)	$	(255	)	$	(244	)

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Consolidated Balance Sheet

(in millions)

	December 31,		December 31,
	2016 (1)		2015

Assets
Fixed maturities, available for sale, at fair value (amortized cost $59,650 and $58,878)	$	60,515	$	60,658
Equity securities, available for sale, at fair value (cost $504 and $528)	732		705
Real estate investments	928		989
Short-term securities	4,865		4,671
Other investments	3,448		3,447
Total investments	70,488		70,470

Cash	307		380
Investment income accrued	630		642
Premiums receivable	6,722		6,437
Reinsurance recoverables	8,287		8,910
Ceded unearned premiums	589		656
Deferred acquisition costs	1,923		1,849
Deferred taxes	465		296
Contractholder receivables	4,609		4,374
Goodwill	3,580		3,573
Other intangible assets	268		279
Other assets	2,377		2,318
Total assets	$	100,245	$	100,184

	December 31,			December 31,
	2016 (1)			2015

Liabilities
Claims and claim adjustment expense reserves	$	47,949		$	48,295
Unearned premium reserves	12,329			11,971
Contractholder payables	4,609			4,374
Payables for reinsurance premiums	273			296
Debt	6,437			6,344
Other liabilities	5,427			5,306
Total liabilities	77,024			76,586

Shareholders’ equity
Common stock (1,750.0 shares authorized; 279.6 and 295.9 shares issued and outstanding)	22,614			22,172
Retained earnings	32,196			29,945
Accumulated other comprehensive loss	(755		)	(157		)
Treasury stock, at cost (489.5 and 467.6 shares)	(30,834		)	(28,362		)
Total shareholders’ equity	23,221			23,598
Total liabilities and shareholders’ equity	$	100,245		$	100,184

(1) Preliminary.

The Travelers Companies, Inc.

Investment Portfolio

(at carrying value, $ in millions)

	December 31,		Pre-tax Book		December 31,		Pre-tax Book
	2016		Yield (1)		2015		Yield (1)
Investment portfolio

Taxable fixed maturities (including redeemable preferred stock)	$	28,895	3.17	%	$	29,612	3.30	%
Tax-exempt fixed maturities	31,620		3.25	%	31,046		3.58	%
Total fixed maturities	60,515		3.21	%	60,658		3.44	%

Non-redeemable preferred stocks	129		5.37	%	162		5.73	%
Public common stocks	603				543
Total equity securities	732				705

Real estate investments	928				989

Short-term securities	4,865		0.74	%	4,671		0.37	%

Private equities	2,049				2,056
Hedge funds	339				416
Real estate partnerships	644				626
Other investments	416				349
Total other investments	3,448				3,447

Total investments	$	70,488			$	70,470

Net unrealized investment gains, net of tax, included in shareholders’ equity	$	730			$	1,289

(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)

	December 31,		December 31,
	2016		2015
Fixed maturities
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	2,035	$	2,194
Obligations of states and political subdivisions:
Pre-refunded	5,157		6,060
All other	26,753		25,351
Total	31,910		31,411
Debt securities issued by foreign governments	1,662		1,873
Mortgage-backed securities - principally obligations of U.S. Government agencies	1,708		1,981
Corporates (including redeemable preferreds)	23,200		23,199
Total fixed maturities	$	60,515	$	60,658

Fixed Maturities

Quality Characteristics (1)

	December 31, 2016
	Amount		% of Total
Quality Ratings
Aaa	$	25,795	42.6	%
Aa	17,456		28.9
A	8,368		13.8
Baa	7,139		11.8
Total investment grade	58,758		97.1
Ba	1,066		1.8
B	432		0.7
Caa and lower	259		0.4
Total below investment grade	1,757		2.9
Total fixed maturities	$	60,515	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	4.2

(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)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Gross investment income
Fixed maturities	$	531		$	526		$	516		$	518		$	503		$	497		$	490		$	491		$	2,091		$	1,981
Short-term securities	2			3			3			4			6			7			7			9			12			29
Other	69			113			105			30			44			53			95			138			317			330
	602			642			624			552			553			557			592			638			2,420			2,340
Investment expenses	10			10			10			11			9			8			10			11			41			38
Net investment income, pre-tax	592			632			614			541			544			549			582			627			2,379			2,302
Income taxes	114			129			130			101			105			107			110			134			474			456
Net investment income, after-tax	$	478		$	503		$	484		$	440		$	439		$	442		$	472		$	493		$	1,905		$	1,846

Effective tax rate	19.3		%	20.5		%	21.1		%	18.7		%	19.3		%	19.4		%	19.0		%	21.3		%	20.0		%	19.8		%

Average invested assets (1)	$	70,722		$	70,291		$	70,569		$	70,756		$	69,926		$	70,033		$	70,110		$	70,697		$	70,627		$	70,246

Average yield pre-tax (1)	3.3		%	3.6		%	3.5		%	3.1		%	3.1		%	3.1		%	3.3		%	3.5		%	3.4		%	3.3		%
Average yield after-tax	2.7		%	2.9		%	2.7		%	2.5		%	2.5		%	2.5		%	2.7		%	2.8		%	2.7		%	2.6		%

(1) Excludes net unrealized investment gains, 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)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Net realized investment gains (losses)
Fixed maturities	$	17		$	14		$	30		$	7		$	4		$	21		$	11		$	8		$	68		$	44
Equity securities	—			(1		)	(10		)	(20		)	(5		)	2			2			3			(31		)	2
Other (1)	(7		)	(3		)	(5		)	(19		)	(8		)	(4		)	10			24			(34		)	22
Realized investment gains (losses) before tax	10			10			15			(32		)	(9		)	19			23			35			3			68
Related taxes	4			4			5			(12		)	(2		)	4			8			11			1			21
Net realized investment gains (losses)	$	6		$	6		$	10		$	(20	)	$	(7	)	$	15		$	15		$	24		$	2		$	47

Gross investment gains (1)	$	71		$	102		$	108		$	96		$	120		$	150		$	68		$	141		$	377		$	479
Gross investment losses before impairments (1)	(58		)	(86		)	(79		)	(99		)	(111		)	(127		)	(41		)	(103		)	(322		)	(382		)
Net investment gains (losses) before impairments	13			16			29			(3		)	9			23			27			38			55			97
Other-than-temporary impairment losses	(3		)	(6		)	(14		)	(29		)	(18		)	(4		)	(4		)	(3		)	(52		)	(29		)
Net realized investment gains (losses) before tax	10			10			15			(32		)	(9		)	19			23			35			3			68
Related taxes	4			4			5			(12		)	(2		)	4			8			11			1			21
Net realized investment gains (losses)	$	6		$	6		$	10		$	(20	)	$	(7	)	$	15		$	15		$	24		$	2		$	47

	March 31,			June 30,			September 30,			December 31,			March 31,			June 30,			September 30,			December 31,
	2015			2015			2015			2015			2016			2016			2016			2016

Net unrealized investment gains, net of tax, by asset type
Fixed maturities	$	2,853		$	1,830		$	1,983		$	1,780		$	2,495		$	3,336		$	2,887		$	865
Equity securities & other	319			274			183			194			198			249			248			247
Unrealized investment gains before tax	3,172			2,104			2,166			1,974			2,693			3,585			3,135			1,112
Related taxes	1,096			728			752			685			934			1,244			1,086			382

Balance, end of period	$	2,076		$	1,376		$	1,414		$	1,289		$	1,759		$	2,341		$	2,049		$	730

(1) 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		$	44		$	56		$	47		$	44		$	30		$	31		$	36		$	45		$	191		$	142
Gross investment Treasury future losses		$	54		$	47		$	61		$	34		$	49		$	42		$	33		$	20		$	196		$	144

The Company entered into these arrangements as part of its strategy to manage the duration of its 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)

	December 31,			December 31,
	2016			2015
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses	$	3,181		$	3,848
Allowance for uncollectible reinsurance	(116		)	(157		)
Net reinsurance recoverables (i)	3,065			3,691
Mandatory pools and associations (ii)	2,054			2,015
Structured settlements (iii)	3,168			3,204
Total reinsurance recoverables	$	8,287		$	8,910

(i) The Company’s top five reinsurer groups, including retroactive reinsurance, included in net reinsurance recoverables is as follows:

	A.M. Best Rating of Group’s	December 31,
Reinsurer	Predominant Reinsurer	2016
Swiss Re Group	A+ second highest of 16 ratings	$	367
Berkshire Hathaway	A++ highest of 16 ratings	245
Sompo Japan Nipponkoa Group	A+ second highest of 16 ratings	205
Munich Re Group	A+ second highest of 16 ratings	185
XL Capital Group	A third highest of 16 ratings	145

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 incurred but not reported 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 December 31, 2016, after deducting mandatory pools and associations and structured settlement balances, $2.4 billion, or 79%, were rated by A.M. Best Company. Of the total rated by A.M. Best Company, 99% were rated A- or better. The remaining 21% of net recoverables from reinsurers were comprised of the following: 5% related to the Company’s participation in voluntary pools, 13% related to recoverables from captive insurance companies and 3% were balances from other companies not rated by A.M. Best Company. In addition, $1.0 billion of the net recoverables were collateralized by letters of credit, funds held or trust agreements at December 31, 2016.

(ii) 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. Recoverables due from the National Flood Insurance Program are included with mandatory pools.

(iii) Included in reinsurance recoverables are certain amounts related to structured settlements, which comprise 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 from the claimant, the amount due from the life insurance company related to the structured settlement is included in the Company’s consolidated balance sheet as a liability and as a reinsurance recoverable, as the Company retains the contingent liability to pay the claimant in the event that the life insurance company fails to make the required annuity payments. The Company would be required to make such payments, to the extent the purchased annuities are not covered by state guaranty associations.

The Company’s top five groups by structured settlement is as follows:

	A.M. Best Rating of Group’s	December 31,
Group	Predominant Insurer	2016
Fidelity and Guaranty Life (1)	B++ fifth highest of 16 ratings	$	881
Metlife (2)	A third highest of 16 ratings	390
Genworth Financial Group (3)	B++ fifth highest of 16 ratings	378
John Hancock Group	A+ second highest of 16 ratings	295
Symetra Financial Corporation	A third highest of 16 ratings	267

(1) Fidelity and Guaranty Life (FGL) has entered into a definitive merger agreement with Anbang Insurance Group Co., Ltd. whereby Anbang will acquire all of the outstanding shares of FGL. A.M. Best’s ratings of FGL were placed under review with developing implications following the announcement of the merger agreement. The Company does not have any structured settlements with Anbang.

(2) MetLife Inc. previously announced a plan to pursue the separation of a substantial portion of its U.S. Retail segment into an entity to be named Brighthouse Financial, Inc. Brighthouse will include MetLife Insurance Company USA, which holds the majority of the structured settlement annuities that the Company has with MetLife. On October 7, 2016, A.M. Best downgraded MetLife Insurance Company USA’s financial strength rating to A (Excellent) from A+ (Superior), with a stable outlook.

(3) On October 23, 2016, Genworth Financial (Genworth) announced that they have entered into a definitive agreement under which China Oceanwide Holdings Group Co., Ltd. (China Oceanwide) has agreed to acquire all of the outstanding shares of Genworth. The transaction, which has been approved by both companies’ boards of directors, is expected to close by the middle of 2017, subject to the requisite approval by Genworth’s stockholders as well as certain other closing conditions, including the receipt of regulatory approvals. China Oceanwide is a privately held, family owned international financial holding group headquartered in Beijing, China. Following the announcement A.M. Best affirmed the financial strength rating of Genworth Life & Annuity Insurance Company at B++ (Good), and downgraded Genworth Life Insurance Company and Genworth Life Insurance Company of New York from B++ (Good) to B (Fair) and placed all ratings under review with negative implications.

The Travelers Companies, Inc.

Net Reserves for Losses and Loss Adjustment Expense

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016
Statutory Reserves for Losses and Loss Adjustment Expenses

Business and International Insurance
Beginning of period	$	34,568		$	33,924		$	33,905		$	33,856		$	33,669		$	34,002		$	33,632		$	33,801		$	34,568		$	33,669
Incurred	2,216			2,187			2,182			2,073			2,252			2,334			2,330			2,077			8,658			8,993
Paid	(2,616		)	(2,291		)	(2,075		)	(2,173		)	(2,020		)	(2,642		)	(2,137		)	(2,213		)	(9,155		)	(9,012		)
Foreign exchange and other	(244		)	85			(156		)	(87		)	101			(62		)	(24		)	(84		)	(402		)	(69		)
End of period	$	33,924		$	33,905		$	33,856		$	33,669		$	34,002		$	33,632		$	33,801		$	33,581		$	33,669		$	33,581

Bond & Specialty Insurance
Beginning of period	$	3,239		$	3,228		$	3,212		$	3,142		$	3,030		$	3,020		$	2,927		$	2,881		$	3,239		$	3,030
Incurred	189			191			111			143			162			78			171			147			634			558
Paid	(200		)	(207		)	(181		)	(255		)	(172		)	(168		)	(217		)	(201		)	(843		)	(758		)
Foreign exchange and other	—			—			—			—			—			(3		)	—			(1		)	—			(4		)
End of period	$	3,228		$	3,212		$	3,142		$	3,030		$	3,020		$	2,927		$	2,881		$	2,826		$	3,030		$	2,826

Personal Insurance
Beginning of period	$	3,200		$	3,144		$	3,156		$	3,093		$	3,083		$	3,202		$	3,238		$	3,274		$	3,200		$	3,083
Incurred	974			1,117			1,040			1,091			1,249			1,297			1,302			1,461			4,222			5,309
Paid	(1,030		)	(1,105		)	(1,103		)	(1,101		)	(1,130		)	(1,261		)	(1,266		)	(1,238		)	(4,339		)	(4,895		)
End of period	$	3,144		$	3,156		$	3,093		$	3,083		$	3,202		$	3,238		$	3,274		$	3,497		$	3,083		$	3,497

Total
Beginning of period	$	41,007		$	40,296		$	40,273		$	40,091		$	39,782		$	40,224		$	39,797		$	39,956		$	41,007		$	39,782
Incurred	3,379			3,495			3,333			3,307			3,663			3,709			3,803			3,685			13,514			14,860
Paid	(3,846		)	(3,603		)	(3,359		)	(3,529		)	(3,322		)	(4,071		)	(3,620		)	(3,652		)	(14,337		)	(14,665		)
Foreign exchange and other	(244		)	85			(156		)	(87		)	101			(65		)	(24		)	(85		)	(402		)	(73		)
End of period	$	40,296		$	40,273		$	40,091		$	39,782		$	40,224		$	39,797		$	39,956		$	39,904		$	39,782		$	39,904

Prior Year Reserve Development: Unfavorable (Favorable)

Business and International Insurance
Asbestos	$	—		$	—		$	224		$	—		$	—		$	—		$	225		$	—		$	224		$	225
Environmental	—			72			—			—			—			82			—			—			72			82
All other	(77		)	(175		)	(273		)	(176		)	(93		)	(220		)	(244		)	(234		)	(701		)	(791		)
Total Business and International Insurance (1)	(77		)	(103		)	(49		)	(176		)	(93		)	(138		)	(19		)	(234		)	(405		)	(484		)

Bond & Specialty Insurance	(35		)	(40		)	(103		)	(80		)	(60		)	(150		)	(41		)	(75		)	(258		)	(326		)

Personal Insurance	(131		)	(64		)	(47		)	(36		)	(27		)	—			21			45			(278		)	39
Total	$	(243	)	$	(207	)	$	(199	)	$	(292	)	$	(180	)	$	(288	)	$	(39	)	$	(264	)	$	(941	)	$	(771	)

(1) Excludes accretion of discount.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Asbestos and Environmental Reserves

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Asbestos reserves
Beginning reserves:
Gross	$	2,520		$	1,959		$	1,856		$	2,086		$	1,989		$	1,937		$	1,317		$	1,597		$	2,520		$	1,989
Ceded	(163		)	(123		)	(122		)	(190		)	(179		)	(164		)	(83		)	(195		)	(163		)	(179		)
Net	2,357			1,836			1,734			1,896			1,810			1,773			1,234			1,402			2,357			1,810
Incurred losses and loss expenses:
Gross	—			—			313			—			—			—			355			—			313			355
Ceded	—			—			(89		)	—			—			—			(130		)	—			(89		)	(130		)
Paid loss and loss expenses:
Gross	560			104			83			96			52			619			75			85			843			831
Ceded	(40		)	(1		)	(22		)	(10		)	(15		)	(81		)	(18		)	(9		)	(73		)	(123		)
Foreign exchange and other:
Gross	(1		)	1			—			(1		)	—			(1		)	—			—			(1		)	(1		)
Ceded	—			—			(1		)	1			—			—			—			—			—			—
Ending reserves:
Gross	1,959			1,856			2,086			1,989			1,937			1,317			1,597			1,512			1,989			1,512
Ceded	(123		)	(122		)	(190		)	(179		)	(164		)	(83		)	(195		)	(186		)	(179		)	(186		)
Net	$	1,836		$	1,734		$	1,896		$	1,810		$	1,773		$	1,234		$	1,402		$	1,326		$	1,810		$	1,326

Environmental reserves
Beginning reserves:
Gross	$	353		$	341		$	406		$	393		$	375		$	366		$	439		$	411		$	353		$	375
Ceded	(7		)	(6		)	(15		)	(15		)	(14		)	(14		)	(18		)	(17		)	(7		)	(14		)
Net	346			335			391			378			361			352			421			394			346			361
Incurred losses and loss expenses:
Gross	—			81			—			—			—			87			—			—			81			87
Ceded	—			(9		)	—			—			—			(5		)	—			—			(9		)	(5		)
Paid loss and loss expenses:
Gross	11			15			13			17			10			14			28			15			56			67
Ceded	(1		)	—			—			—			—			(1		)	(1		)	(4		)	(1		)	(6		)
Foreign exchange and other:
Gross	(1		)	(1		)	—			(1		)	1			—			—			(1		)	(3		)	—
Ceded	—			—			—			1			—			—			—			—			1			—
Ending reserves:
Gross	341			406			393			375			366			439			411			395			375			395
Ceded	(6		)	(15		)	(15		)	(14		)	(14		)	(18		)	(17		)	(13		)	(14		)	(13		)
Net	$	335		$	391		$	378		$	361		$	352		$	421		$	394		$	382		$	361		$	382

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Capitalization

($ in millions)

	December 31,			December 31,
	2016			2015
Debt
Short-term debt
Commercial paper	$	100		$	100
5.75% Senior notes due December 15, 2017 (1)	450			—
6.25% Senior notes due June 20, 2016	—			400
Total short-term debt	550			500

Long-term debt
5.75% Senior notes due December 15, 2017 (1)	—			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
4.60% Senior notes due August 1, 2043 (1)	500			500
4.30% Senior notes due August 25, 2045 (1)	400			400
8.50% Junior subordinated debentures due December 15, 2045	56			56
3.75% Senior notes due May 15, 2046 (1)	500			—
8.312% Junior subordinated debentures due July 1, 2046	73			73
6.25% Fixed-to-floating rate junior subordinated debentures due March 15, 2067 (2)	107			107
Total long-term debt	5,911			5,861
Unamortized fair value adjustment	47			49
Unamortized debt issuance costs	(71		)	(66		)
	5,887			5,844
Total debt	6,437			6,344

Common equity (excluding net unrealized investment gains, net of tax)	22,491			22,309
Total capital (excluding net unrealized investment gains, net of tax)	$	28,928		$	28,653
Total debt to capital (excluding net unrealized investment gains, net of tax)	22.3		%	22.1		%

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

(2) Redeemable anytime prior to March 15, 2017 with make-whole premium. Redeemable anytime on or after March 15, 2017 at par.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Statutory Capital and Surplus to GAAP Shareholders’ Equity Reconciliation

($ in millions)

	December 31,			December 31,
	2016 (1)			2015

Statutory capital and surplus	$	20,759		$	20,567

GAAP adjustments

Goodwill and intangible assets	3,684			3,687

Investments	1,273			2,258

Noninsurance companies	(4,559		)	(4,688		)

Deferred acquisition costs	1,923			1,849

Deferred federal income tax	(1,038		)	(1,269		)

Current federal income tax	(31		)	(23		)

Reinsurance recoverables	69			109

Furniture, equipment & software	690			672

Agents balances	156			153

Other	295			283

Total GAAP adjustments	2,462			3,031

GAAP shareholders’ equity	$	23,221		$	23,598

(1) Estimated and Preliminary

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

The Travelers Companies, Inc.

Statement of Cash Flows - Preliminary

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Cash flows from operating activities
Net income	$	833		$	812		$	928		$	866		$	691		$	664		$	716		$	943		$	3,439		$	3,014
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment (gains) losses	(10		)	(10		)	(15		)	32			9			(19		)	(23		)	(35		)	(3		)	(68		)
Depreciation and amortization	225			204			191			198			213			200			211			202			818			826
Deferred federal income tax expense	133			9			(37		)	12			105			(30		)	(46		)	81			117			110
Amortization of deferred acquisition costs	963			963			987			972			971			989			1,012			1,013			3,885			3,985
Equity in income from other investments	(43		)	(91		)	(80		)	(4		)	(17		)	(27		)	(70		)	(118		)	(218		)	(232		)
Premiums receivable	(258		)	(228		)	186			115			(393		)	(174		)	227			54			(185		)	(286		)
Reinsurance recoverables	69			194			(16		)	25			126			190			(68		)	362			272			610
Deferred acquisition costs	(987		)	(1,004		)	(1,007		)	(922		)	(1,014		)	(1,048		)	(1,034		)	(965		)	(3,920		)	(4,061		)
Claims and claim adjustment expense reserves	(561		)	(265		)	(48		)	(201		)	226			(613		)	248			(118		)	(1,075		)	(257		)
Unearned premium reserves	185			177			180			(294		)	328			203			194			(353		)	248			372
Other	(350		)	(85		)	530			(39		)	(395		)	108			403			73			56			189
Net cash provided by operating activities	199			676			1,799			760			850			443			1,770			1,139			3,434			4,202

Cash flows from investing activities
Proceeds from maturities of fixed maturities	2,830			2,484			3,491			2,311			1,748			2,025			2,875			2,327			11,116			8,975
Proceeds from sales of investments:
Fixed maturities	906			320			329			395			421			318			126			552			1,950			1,417
Equity securities	11			17			10			21			14			24			33			21			59			92
Real estate investments	7			3			5			16			69			—			—			—			31			69
Other investments	146			208			151			208			186			157			226			270			713			839
Purchases of investments:
Fixed maturities	(3,325		)	(2,914		)	(3,733		)	(2,118		)	(2,700		)	(3,005		)	(3,299		)	(2,605		)	(12,090		)	(11,609		)
Equity securities	(8		)	(14		)	(9		)	(18		)	(12		)	(14		)	(10		)	(15		)	(49		)	(51		)
Real estate investments	(6		)	(63		)	(47		)	(7		)	(7		)	(13		)	(10		)	(18		)	(123		)	(48		)
Other investments	(168		)	(107		)	(114		)	(145		)	(162		)	(128		)	(132		)	(158		)	(534		)	(580		)
Net sales (purchases) of short-term securities	(134		)	567			(1,215		)	456			85			596			(816		)	(64		)	(326		)	(199		)
Securities transactions in course of settlement	305			(122		)	(80		)	(216		)	291			170			50			(532		)	(113		)	(21		)
Acquisitions, net of cash acquired	—			—			—			(13		)	—			—			—			—			(13		)	—
Other	(90		)	(88		)	(44		)	(82		)	(79		)	(75		)	(86		)	(104		)	(304		)	(344		)
Net cash provided by (used in) investing activities	474			291			(1,256		)	808			(146		)	55			(1,043		)	(326		)	317			(1,460		)

The Travelers Companies, Inc.

Statement of Cash Flows - Preliminary (Continued)

($ in millions)

																									YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			3Q			4Q			4Q			4Q
	2015			2015			2015			2015			2016			2016			2016			2016			2015			2016

Cash flows from financing activities
Treasury stock acquired - share repurchase authorization	(600		)	(800		)	(750		)	(1,000		)	(550		)	(550		)	(550		)	(750		)	(3,150		)	(2,400		)
Treasury stock acquired - net employee share-based compensation	(71		)	(1		)	(1		)	(1		)	(59		)	—			(12		)	(1		)	(74		)	(72		)
Dividends paid to shareholders	(177		)	(192		)	(188		)	(182		)	(180		)	(195		)	(194		)	(188		)	(739		)	(757		)
Payment of debt	—			—			—			(400		)	—			(400		)	—			—			(400		)	(400		)
Issuance of debt	—			—			392			—			—			491			—			—			392			491
Issuance of common stock - employee share options	90			27			25			41			64			65			35			168			183			332
Excess tax benefits from share-based payment arrangements (1)	27			4			11			13			—			—			—			—			55			—
Net cash used in financing activities	(731		)	(962		)	(511		)	(1,529		)	(725		)	(589		)	(721		)	(771		)	(3,733		)	(2,806		)

Effect of exchange rate changes on cash	(8		)	4			(5		)	(3		)	2			(5		)	(2		)	(4		)	(12		)	(9		)

Net increase (decrease) in cash	(66		)	9			27			36			(19		)	(96		)	4			38			6			(73		)
Cash at beginning of period	374			308			317			344			380			361			265			269			374			380
Cash at end of period	$	308		$	317		$	344		$	380		$	361		$	265		$	269		$	307		$	380		$	307

Income taxes paid	$	126		$	471		$	285		$	325		$	63		$	404		$	181		$	244		$	1,207		$	892
Interest paid	$	34		$	149		$	34		$	148		$	42		$	138		$	43		$	135		$	365		$	358

(1) In connection with the Company’s adoption of the new accounting standard related to Improvements to Employee Share-Based Payment Accounting in the first quarter of 2016, cash flows related to taxes on share-based payments are included in net income as an operating activity rather than being reported separately as a financing activity.

The Travelers Companies, Inc.

Financial Supplement - Fourth Quarter 2016

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 investment 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 (loss) 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 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, and net realized investment gains (losses), net of tax, for the period presented. Adjusted average shareholders’ equity is (a) the sum of total adjusted shareholders’ equity 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.

Return on equity is the ratio of annualized net income (loss) to average shareholders’ equity for the periods presented. Operating return on equity is the ratio of annualized operating income (loss) 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 a variety of events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis and volcanic eruptions. Catastrophes can also result from a terrorist attack (including those involving nuclear, biological, chemical or radiological events), explosions, infrastructure failures or as a consequence of political instability. 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, which may be related to one or more prior years. 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 (loss), and changes in claims and claim adjustment expense reserve levels from period to period.

Combined ratio For Statutory Accounting Practices (SAP), the combined ratio is the sum of the SAP loss and LAE ratio and the SAP underwriting expense ratio as defined in the statutory financial statements required by insurance regulators. The combined ratio, as used in this financial supplement, is the equivalent of, and is calculated in the same manner as, the SAP combined ratio except that the SAP underwriting expense ratio is based on net written premium and the underwriting expense ratio as used in this financial supplement is based on net earned premiums. For SAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses less certain administrative services fee income to net earned premiums as defined in the statutory financial statements required by insurance regulators. The loss and LAE ratio as used in this financial supplement is calculated in the same manner as the SAP ratio. For SAP, the underwriting expense ratio is the ratio of underwriting expenses incurred (including commissions paid), less certain administrative services fee income and billing and policy fees, to net written premiums as defined in the statutory financial statements required by insurance regulators. The underwriting expense ratio as used in this financial supplement, is the ratio of underwriting expenses (including the amortization of deferred acquisition costs), less certain administrative services fee income and billing and policy fees, to net earned premiums.

The combined ratio, loss and LAE ratio, and underwriting expense ratio are used as indicators 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 over 100% generally indicates an underwriting loss.

Other companies’ method of computing similarly titled measures may not be comparable to the Company’s method of computing these ratios.

Combined ratio excluding the incremental impact of the direct to consumer initiative is the 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. 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 per share is useful in an analysis of a property casualty company’s book value per share 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 capital and surplus represents the excess of an insurance company’s admitted assets over its liabilities, including loss reserves, as determined in accordance with statutory accounting practices.

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

Business and International Insurance - Business and International Insurance offers a broad array of property and casualty insurance and insurance related services to its clients, primarily in the United States and in Canada, as well as in the United Kingdom, the Republic of Ireland, Brazil and throughout other parts of the world as a corporate member of Lloyd’s. Business and International Insurance is organized as follows: Select Accounts; Middle Market including Commercial Accounts, Construction, Technology, Public Sector Services, Oil & Gas, and Excess Casualty; National Accounts; First Party including National Property, Inland Marine, Ocean Marine and Boiler & Machinery; Specialized Distribution including Northland, National Programs, and Agribusiness; and International. As of January 1, 2016, Global Partner Services, which had previously been included in Middle Market, is now being included in International. Financial data for all periods presented has been restated to be consistent with the 2016 presentation. Business and International Insurance also includes the Special Liability Group (which manages the Company’s asbestos and environmental liabilities) and the assumed reinsurance and certain other runoff operations, which are collectively referred to as Business and International Insurance Other.

Bond & Specialty Insurance - Bond & Specialty Insurance provides surety, crime, management and professional liability, and cyber risk coverages and related risk management services to a wide range of primarily domestic customers, utilizing various degrees of financially-based underwriting approaches. The range of coverages includes performance, payment and commercial surety and fidelity bonds for construction and general commercial enterprises; management liability coverages for losses caused by the actual or alleged negligence or misconduct of directors and officers or employee dishonesty; employment practices liability coverages and fiduciary coverages for public corporations, private companies and not-for-profit organizations; professional liability coverage for actual or alleged errors and omissions committed in the course of professional conduct or practice for a variety of professionals including, among others, lawyers and design professionals; and professional and management liability, property, workers’ compensation, auto and general liability and fidelity insurance for financial institutions.

Personal Insurance - Personal Insurance writes a broad range of property and casualty insurance covering individuals’ personal risks. The primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.

TRAVELERS COMPANIES, INC. - FORM 8-K - EX-99.2 - January 24, 2017

Attached files

TRAVELERS COMPANIES, INC. Reports