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

Attached files

file	filename
EX-99.1 - EXHIBIT 99.1 - TRAVELERS COMPANIES, INC.	a991pressrelease123119.htm
8-K - 8-K - TRAVELERS COMPANIES, INC.	a123119form8k.htm

The Travelers Companies, Inc.

Financial Supplement - Fourth Quarter 2019



	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
Core Income	5
Selected Statistics - Property and Casualty Operations	6
Written and Earned Premiums - Property and Casualty Operations	7

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

Bond & Specialty Insurance
Segment Income	12
Segment Income by Major Component and Combined Ratio	13
Selected Statistics	14
Net Written Premiums	15

Personal Insurance
Segment Income (Loss)	16
Segment Income (Loss) by Major Component and Combined Ratio	17
Selected Statistics	18
Net Written Premiums	19
Selected Statistics - Domestic Agency Automobile	20
Selected Statistics - Domestic Agency Homeowners and Other	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) included in Shareholders’ Equity	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	35-36

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 for per share data)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Net income	$	669		$	524		$	709		$	621		$	796		$	557		$	396		$	873		$	2,523		$	2,622
Net income per share:
Basic	$	2.45		$	1.93		$	2.65		$	2.33		$	3.01		$	2.11		$	1.52		$	3.37		$	9.37		$	10.01
Diluted	$	2.42		$	1.92		$	2.62		$	2.32		$	2.99		$	2.10		$	1.50		$	3.35		$	9.28		$	9.92
Core income	$	678		$	494		$	687		$	571		$	755		$	537		$	378		$	867		$	2,430		$	2,537
Core income per share:
Basic	$	2.48		$	1.83		$	2.56		$	2.15		$	2.85		$	2.04		$	1.45		$	3.35		$	9.02		$	9.69
Diluted	$	2.46		$	1.81		$	2.54		$	2.13		$	2.83		$	2.02		$	1.43		$	3.32		$	8.94		$	9.60
Return on equity	11.5		%	9.2		%	12.6		%	10.9		%	13.5		%	9.0		%	6.2		%	13.5		%	11.0		%	10.5		%
Core return on equity	11.9		%	8.7		%	12.0		%	10.0		%	13.0		%	9.2		%	6.5		%	14.8		%	10.7		%	10.9		%
Total assets, at period end	$	103,676		$	103,523		$	104,390		$	104,233		$	107,246		$	108,572		$	110,241		$	110,122		$	104,233		$	110,122
Total equity, at period end	$	22,979		$	22,623		$	22,460		$	22,894		$	24,340		$	25,321		$	25,607		$	25,943		$	22,894		$	25,943
Book value per share, at period end	$	85.03		$	84.51		$	84.82		$	86.84		$	92.94		$	97.26		$	99.21		$	101.55		$	86.84		$	101.55
Less: Net unrealized investment gains (losses), net of tax	0.49			(0.42		)	(1.69		)	(0.43		)	3.85			7.21			9.12			8.79			(0.43		)	8.79
Adjusted book value per share, at period end	$	84.54		$	84.93		$	86.51		$	87.27		$	89.09		$	90.05		$	90.09		$	92.76		$	87.27		$	92.76

Weighted average number of common shares outstanding (basic)	271.0			268.7			266.1			263.9			262.9			261.3			259.2			256.8			267.4			260.0
Weighted average number of common shares outstanding and common stock equivalents (diluted)	273.9			271.1			268.4			266.0			264.8			263.7			261.8			259.0			269.8			262.3
Common shares outstanding at period end	270.2			267.7			264.8			263.6			261.9			260.3			258.1			255.5			263.6			255.5
Common stock dividends declared	$	197		$	209		$	207		$	205		$	204		$	217		$	215		$	212		$	818		$	848
Common stock repurchased:
Under Board of Directors authorization
Shares	2.5			2.7			3.0			1.4			2.9			2.6			2.5			2.8			9.6			10.8
Cost	$	350		$	350		$	400		$	170		$	375		$	375		$	375		$	375		$	1,270		$	1,500
Other
Shares	0.3			—			0.1			—			0.3			—			—			0.1			0.4			0.4
Cost	$	51		$	—		$	—		$	—		$	46		$	1		$	—		$	1		$	51		$	48

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Reconciliation to Net Income and Earnings per Share



($ and shares in millions, except earnings per share)	1Q2018		2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Net income
Net income	$	669	$	524		$	709		$	621		$	796		$	557		$	396		$	873		$	2,523		$	2,622
Adjustments:
Net realized investment (gains) losses, after-tax	9		(30		)	(22		)	(50		)	(41		)	(20		)	(18		)	(6		)	(93		)	(85		)
Core income	$	678	$	494		$	687		$	571		$	755		$	537		$	378		$	867		$	2,430		$	2,537
Basic earnings per share
Net income	$	2.45	$	1.93		$	2.65		$	2.33		$	3.01		$	2.11		$	1.52		$	3.37		$	9.37		$	10.01
Adjustments:
Net realized investment (gains) losses, after-tax	0.03		(0.10		)	(0.09		)	(0.18		)	(0.16		)	(0.07		)	(0.07		)	(0.02		)	(0.35		)	(0.32		)
Core income	$	2.48	$	1.83		$	2.56		$	2.15		$	2.85		$	2.04		$	1.45		$	3.35		$	9.02		$	9.69
Diluted earnings per share
Net income	$	2.42	$	1.92		$	2.62		$	2.32		$	2.99		$	2.10		$	1.50		$	3.35		$	9.28		$	9.92
Adjustments:
Net realized investment (gains) losses, after-tax	0.04		(0.11		)	(0.08		)	(0.19		)	(0.16		)	(0.08		)	(0.07		)	(0.03		)	(0.34		)	(0.32		)
Core income	$	2.46	$	1.81		$	2.54		$	2.13		$	2.83		$	2.02		$	1.43		$	3.32		$	8.94		$	9.60

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



Basic and Diluted	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Net income, as reported	$	669		$	524		$	709		$	621		$	796		$	557		$	396		$	873		$	2,523		$	2,622
Participating share-based awards - allocated income	(5		)	(4		)	(5		)	(5		)	(5		)	(4		)	(3		)	(7		)	(19		)	(19		)
Net income available to common shareholders - basic and diluted	$	664		$	520		$	704		$	616		$	791		$	553		$	393		$	866		$	2,504		$	2,603
Common Shares
Basic
Weighted average shares outstanding	271.0			268.7			266.1			263.9			262.9			261.3			259.2			256.8			267.4			260.0
Diluted
Weighted average shares outstanding	271.0			268.7			266.1			263.9			262.9			261.3			259.2			256.8			267.4			260.0
Weighted average effects of dilutive securities - stock options and performance shares	2.9			2.4			2.3			2.1			1.9			2.4			2.6			2.2			2.4			2.3
Diluted weighted average shares outstanding	273.9			271.1			268.4			266.0			264.8			263.7			261.8			259.0			269.8			262.3

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

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Statement of Income - Consolidated



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Revenues
Premiums	$	6,537		$	6,695		$	6,882		$	6,945		$	6,855		$	6,988		$	7,179		$	7,250		$	27,059		$	28,272
Net investment income	603			595			646			630			582			648			622			616			2,474			2,468
Fee income	103			112			109			108			109			116			121			113			432			459
Net realized investment gains (losses)	(11		)	36			29			60			53			25			23			12			114			113
Other revenues	54			39			57			53			72			57			68			72			203			269
Total revenues	7,286			7,477			7,723			7,796			7,671			7,834			8,013			8,063			30,282			31,581
Claims and expenses
Claims and claim adjustment expenses	4,296			4,562			4,655			4,778			4,442			4,821			5,230			4,640			18,291			19,133
Amortization of deferred acquisition costs	1,061			1,081			1,117			1,122			1,117			1,134			1,169			1,181			4,381			4,601
General and administrative expenses	1,062			1,113			1,059			1,063			1,057			1,125			1,098			1,085			4,297			4,365
Interest expense	89			90			86			87			88			89			84			83			352			344
Total claims and expenses	6,508			6,846			6,917			7,050			6,704			7,169			7,581			6,989			27,321			28,443
Income before income taxes	778			631			806			746			967			665			432			1,074			2,961			3,138
Income tax expense	109			107			97			125			171			108			36			201			438			516
Net income	$	669		$	524		$	709		$	621		$	796		$	557		$	396		$	873		$	2,523		$	2,622

Other-than-temporary impairments (OTTI)
Total OTTI gains (losses)	$	—		$	(1	)	$	—		$	—		$	(1	)	$	(1	)	$	—		$	(1	)	$	(1	)	$	(3	)
OTTI losses recognized in net realized investment gains (losses)	$	—		$	(1	)	$	—		$	—		$	(1	)	$	(1	)	$	—		$	(2	)	$	(1	)	$	(4	)
OTTI gains (losses) recognized in other comprehensive income (loss)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	1		$	—		$	1

Other statistics
Effective tax rate on net investment income	14.9		%	14.8		%	15.4		%	15.0		%	14.7		%	15.4		%	15.2		%	14.8		%	15.0		%	15.0		%
Net investment income (after-tax)	$	513		$	507		$	547		$	535		$	496		$	548		$	528		$	525		$	2,102		$	2,097

Catastrophes, net of reinsurance:
Pre-tax	$	354		$	488		$	264		$	610		$	193		$	367		$	241		$	85		$	1,716		$	886
After-tax	$	280		$	384		$	209		$	482		$	152		$	290		$	190		$	67		$	1,355		$	699

Prior year reserve development - favorable (unfavorable):
Pre-tax	$	150		$	186		$	14		$	167		$	51		$	123		$	(294	)	$	60		$	517		$	(60	)
After-tax	$	119		$	148		$	10		$	132		$	41		$	99		$	(232	)	$	45		$	409		$	(47	)

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Net Income by Major Component and Combined Ratio - Consolidated



($ in millions, net of tax)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Underwriting gain (loss)	$	222		$	61		$	194		$	99		$	307		$	52		$	(101	)	$	396		$	576		$	654
Net investment income	513			507			547			535			496			548			528			525			2,102			2,097
Other income (expense), including interest expense	(57		)	(74		)	(54		)	(63		)	(48		)	(63		)	(49		)	(54		)	(248		)	(214		)
Core income	678			494			687			571			755			537			378			867			2,430			2,537
Net realized investment gains (losses)	(9		)	30			22			50			41			20			18			6			93			85
Net income	$	669		$	524		$	709		$	621		$	796		$	557		$	396		$	873		$	2,523		$	2,622
Combined ratio (1) (2)
Loss and loss adjustment expense ratio	64.9		%	67.4		%	66.9		%	68.0		%	64.0		%	68.2		%	72.0		%	63.3		%	66.8		%	66.9		%
Underwriting expense ratio	30.6		%	30.7		%	29.7		%	29.5		%	29.7		%	30.2		%	29.5		%	29.1		%	30.1		%	29.6		%
Combined ratio	95.5		%	98.1		%	96.6		%	97.5		%	93.7		%	98.4		%	101.5		%	92.4		%	96.9		%	96.5		%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development	(2.3		)%	(2.8		)%	(0.2		)%	(2.4		)%	(0.7		)%	(1.8		)%	4.1		%	(0.8		)%	(1.9		)%	0.2		%
Catastrophes, net of reinsurance	5.4		%	7.3		%	3.8		%	8.8		%	2.8		%	5.3		%	3.3		%	1.1		%	6.3		%	3.1		%
Underlying combined ratio	92.4		%	93.6		%	93.0		%	91.1		%	91.6		%	94.9		%	94.1		%	92.1		%	92.5		%	93.2		%

(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. In addition, general and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio. See following:



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019		3Q2019		4Q2019		YTD 4Q2018		YTD 4Q2019
Billing and policy fees and other	$	23	$	22	$	24	$	24	$	27	$	26	$	28	$	27	$	93	$	108
Fee income:
Loss and loss adjustment expenses	$	37	$	40	$	38	$	39	$	40	$	45	$	47	$	42	$	154	$	174
Underwriting expenses	66		72		71		69		69		71		74		71		278		285
Total fee income	$	103	$	112	$	109	$	108	$	109	$	116	$	121	$	113	$	432	$	459
Non-insurance general and administrative expenses	$	37	$	39	$	38	$	45	$	47	$	50	$	48	$	56	$	159	$	201

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Core Income - Consolidated



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Revenues
Premiums	$	6,537		$	6,695		$	6,882		$	6,945		$	6,855		$	6,988		$	7,179		$	7,250		$	27,059		$	28,272
Net investment income	603			595			646			630			582			648			622			616			2,474			2,468
Fee income	103			112			109			108			109			116			121			113			432			459
Other revenues	54			39			57			53			72			57			68			72			203			269
Total revenues	7,297			7,441			7,694			7,736			7,618			7,809			7,990			8,051			30,168			31,468
Claims and expenses
Claims and claim adjustment expenses	4,296			4,562			4,655			4,778			4,442			4,821			5,230			4,640			18,291			19,133
Amortization of deferred acquisition costs	1,061			1,081			1,117			1,122			1,117			1,134			1,169			1,181			4,381			4,601
General and administrative expenses	1,062			1,113			1,059			1,063			1,057			1,125			1,098			1,085			4,297			4,365
Interest expense	89			90			86			87			88			89			84			83			352			344
Total claims and expenses	6,508			6,846			6,917			7,050			6,704			7,169			7,581			6,989			27,321			28,443
Core income before income taxes	789			595			777			686			914			640			409			1,062			2,847			3,025
Income tax expense	111			101			90			115			159			103			31			195			417			488
Core income	$	678		$	494		$	687		$	571		$	755		$	537		$	378		$	867		$	2,430		$	2,537
Other statistics
Effective tax rate on net investment income	14.9		%	14.8		%	15.4		%	15.0		%	14.7		%	15.4		%	15.2		%	14.8		%	15.0		%	15.0		%
Net investment income (after-tax)	$	513		$	507		$	547		$	535		$	496		$	548		$	528		$	525		$	2,102		$	2,097
Catastrophes, net of reinsurance:
Pre-tax	$	354		$	488		$	264		$	610		$	193		$	367		$	241		$	85		$	1,716		$	886
After-tax	$	280		$	384		$	209		$	482		$	152		$	290		$	190		$	67		$	1,355		$	699
Prior year reserve development - favorable (unfavorable):
Pre-tax	$	150		$	186		$	14		$	167		$	51		$	123		$	(294	)	$	60		$	517		$	(60	)
After-tax	$	119		$	148		$	10		$	132		$	41		$	99		$	(232	)	$	45		$	409		$	(47	)

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Selected Statistics - Property and Casualty Operations



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019			3Q2019			4Q2019		YTD 4Q2018		YTD 4Q2019
Statutory underwriting
Gross written premiums	$	7,418	$	7,429	$	7,462	$	6,943	$	7,839	$	7,824		$	8,022		$	7,378	$	29,252	$	31,063
Net written premiums	$	6,824	$	7,131	$	7,062	$	6,691	$	7,057	$	7,450		$	7,569		$	7,075	$	27,708	$	29,151
Net earned premiums	$	6,537	$	6,695	$	6,882	$	6,945	$	6,855	$	6,988		$	7,179		$	7,250	$	27,059	$	28,272
Losses and loss adjustment expenses	4,245		4,506		4,606		4,719		4,389		4,764			5,166			4,578		18,076		18,897
Underwriting expenses	2,072		2,147		2,082		1,999		2,116		2,217			2,179			2,072		8,300		8,584
Statutory underwriting gain (loss)	220		42		194		227		350		7			(166		)	600		683		791
Policyholder dividends	13		12		12		15		13		9			15			10		52		47
Statutory underwriting gain (loss) after policyholder dividends	$	207	$	30	$	182	$	212	$	337	$	(2	)	$	(181	)	$	590	$	631	$	744
Other statutory statistics
Reserves for losses and loss adjustment expenses	$	41,669	$	41,861	$	42,293	$	42,409	$	42,581	$	42,979		$	43,624		$	43,743	$	42,409	$	43,743
Increase in reserves	$	215	$	192	$	432	$	116	$	172	$	398		$	645		$	119	$	955	$	1,334
Statutory capital and surplus	$	20,533	$	20,371	$	20,462	$	20,774	$	21,074	$	21,080		$	20,780		$	21,330	$	20,774	$	21,330
Net written premiums/surplus (1)	1.29:1		1.33:1		1.34:1		1.33:1		1.33:1		1.34:1			1.38:1			1.37:1		1.33:1		1.37:1

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

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Written and Earned Premiums - Property and Casualty Operations



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Written premiums
Gross	$	7,418		$	7,429		$	7,462		$	6,943		$	7,839		$	7,824		$	8,022		$	7,378		$	29,252		$	31,063
Ceded	(594		)	(298		)	(400		)	(252		)	(782		)	(374		)	(453		)	(303		)	(1,544		)	(1,912		)
Net	$	6,824		$	7,131		$	7,062		$	6,691		$	7,057		$	7,450		$	7,569		$	7,075		$	27,708		$	29,151
Earned premiums
Gross	$	6,903		$	7,060		$	7,266		$	7,331		$	7,282		$	7,429		$	7,636		$	7,723		$	28,560		$	30,070
Ceded	(366		)	(365		)	(384		)	(386		)	(427		)	(441		)	(457		)	(473		)	(1,501		)	(1,798		)
Net	$	6,537		$	6,695		$	6,882		$	6,945		$	6,855		$	6,988		$	7,179		$	7,250		$	27,059		$	28,272

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income - Business Insurance



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Revenues
Premiums	$	3,568		$	3,641		$	3,743		$	3,770		$	3,742		$	3,783		$	3,882		$	3,893		$	14,722		$	15,300
Net investment income	446			440			482			465			427			481			457			451			1,833			1,816
Fee income	99			107			103			103			104			111			114			108			412			437
Other revenues	31			20			33			28			43			30			39			43			112			155
Total revenues	4,144			4,208			4,361			4,366			4,316			4,405			4,492			4,495			17,079			17,708
Claims and expenses
Claims and claim adjustment expenses	2,392			2,484			2,653			2,642			2,580			2,686			3,028			2,669			10,171			10,963
Amortization of deferred acquisition costs	580			588			610			610			615			618			634			636			2,388			2,503
General and administrative expenses	650			674			648			651			632			686			657			652			2,623			2,627
Total claims and expenses	3,622			3,746			3,911			3,903			3,827			3,990			4,319			3,957			15,182			16,093
Segment income before income taxes	522			462			450			463			489			415			173			538			1,897			1,615
Income tax expense (benefit)	70			77			40			72			75			64			(6		)	90			259			223
Segment income	$	452		$	385		$	410		$	391		$	414		$	351		$	179		$	448		$	1,638		$	1,392
Other statistics
Effective tax rate on net investment income	14.7		%	14.7		%	15.3		%	14.9		%	14.6		%	15.3		%	15.1		%	14.8		%	14.9		%	15.0		%
Net investment income (after-tax)	$	380		$	376		$	408		$	395		$	365		$	407		$	389		$	384		$	1,559		$	1,545
Catastrophes, net of reinsurance:
Pre-tax	$	138		$	168		$	136		$	197		$	95		$	211		$	116		$	48		$	639		$	470
After-tax	$	110		$	132		$	107		$	156		$	75		$	167		$	91		$	37		$	505		$	370
Prior year reserve development - favorable (unfavorable):
Pre-tax	$	66		$	84		$	(56	)	$	48		$	(21	)	$	71		$	(316	)	$	8		$	142		$	(258	)
After-tax	$	52		$	68		$	(45	)	$	38		$	(16	)	$	57		$	(249	)	$	5		$	113		$	(203	)

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income by Major Component and Combined Ratio - Business Insurance



($ in millions, net of tax)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Underwriting gain (loss)	$	70		$	19		$	2		$	3		$	44		$	(48	)	$	(210	)	$	65		$	94		$	(149	)
Net investment income	380			376			408			395			365			407			389			384			1,559			1,545
Other income (expense)	2			(10		)	—			(7		)	5			(8		)	—			(1		)	(15		)	(4		)
Segment income	$	452		$	385		$	410		$	391		$	414		$	351		$	179		$	448		$	1,638		$	1,392
Combined ratio (1) (2)
Loss and loss adjustment expense ratio	65.7		%	66.9		%	69.6		%	68.7		%	67.6		%	69.6		%	76.6		%	67.3		%	67.8		%	70.3		%
Underwriting expense ratio	31.8		%	31.9		%	31.0		%	30.7		%	30.5		%	31.5		%	30.4		%	30.2		%	31.3		%	30.6		%
Combined ratio	97.5		%	98.8		%	100.6		%	99.4		%	98.1		%	101.1		%	107.0		%	97.5		%	99.1		%	100.9		%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development	(1.9		)%	(2.3		)%	1.5		%	(1.2		)%	0.6		%	(1.9		)%	8.1		%	(0.2		)%	(1.0		)%	1.7		%
Catastrophes, net of reinsurance	3.9		%	4.6		%	3.7		%	5.2		%	2.5		%	5.6		%	3.0		%	1.3		%	4.4		%	3.0		%
Underlying combined ratio	95.5		%	96.5		%	95.4		%	95.4		%	95.0		%	97.4		%	95.9		%	96.4		%	95.7		%	96.2		%

(1) Before policyholder dividends.



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019		3Q2019		4Q2019		YTD 4Q2018		YTD 4Q2019
Billing and policy fees and other	$	4	$	4	$	3	$	4	$	4	$	3	$	5	$	4	$	15	$	16
Fee income:
Loss and loss adjustment expenses	$	37	$	40	$	38	$	39	$	40	$	45	$	47	$	42	$	154	$	174
Underwriting expenses	62		67		65		64		64		66		67		66		258		263
Total fee income	$	99	$	107	$	103	$	103	$	104	$	111	$	114	$	108	$	412	$	437
Non-insurance general and administrative expenses	$	28	$	30	$	29	$	37	$	38	$	41	$	39	$	43	$	124	$	161

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Selected Statistics - Business Insurance



($ in millions)	1Q2018		2Q2018		3Q2018			4Q2018		1Q2019			2Q2019			3Q2019			4Q2019		YTD 4Q2018		YTD 4Q2019
Statutory underwriting
Gross written premiums	$	4,471	$	4,038	$	3,992		$	3,754	$	4,730		$	4,193		$	4,271		$	3,957	$	16,255	$	17,151
Net written premiums	$	3,994	$	3,781	$	3,648		$	3,533	$	4,163		$	3,874		$	3,889		$	3,703	$	14,956	$	15,629
Net earned premiums	$	3,568	$	3,641	$	3,743		$	3,770	$	3,742		$	3,783		$	3,882		$	3,893	$	14,722	$	15,300
Losses and loss adjustment expenses	2,344		2,429		2,606			2,586		2,529			2,631			2,969			2,608		9,965		10,737
Underwriting expenses	1,213		1,196		1,144			1,107		1,226			1,226			1,164			1,133		4,660		4,749
Statutory underwriting gain (loss)	11		16		(7		)	77		(13		)	(74		)	(251		)	152		97		(186		)
Policyholder dividends	11		9		11			12		11			7			11			7		43		36
Statutory underwriting gain (loss) after policyholder dividends	$	—	$	7	$	(18	)	$	65	$	(24	)	$	(81	)	$	(262	)	$	145	$	54	$	(222	)

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Net Written Premiums - Business Insurance



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019		3Q2019		4Q2019		YTD 4Q2018		YTD 4Q2019
Net written premiums by market
Domestic
Select Accounts	$	773	$	729	$	666	$	660	$	785	$	756	$	695	$	675	$	2,828	$	2,911
Middle Market	2,262		1,985		2,032		1,935		2,410		2,009		2,150		2,061		8,214		8,630
National Accounts	309		231		238		247		304		223		273		251		1,025		1,051
National Property and Other	380		518		485		422		387		588		553		437		1,805		1,965
Total Domestic	3,724		3,463		3,421		3,264		3,886		3,576		3,671		3,424		13,872		14,557
International	270		318		227		269		277		298		218		279		1,084		1,072
Total	$	3,994	$	3,781	$	3,648	$	3,533	$	4,163	$	3,874	$	3,889	$	3,703	$	14,956	$	15,629
Net written premiums by product line
Domestic
Workers’ compensation	$	1,190	$	935	$	887	$	828	$	1,191	$	893	$	905	$	817	$	3,840	$	3,806
Commercial automobile	651		629		625		613		719		677		674		666		2,518		2,736
Commercial property	391		536		492		448		389		583		568		474		1,867		2,014
General liability	591		531		559		546		678		548		611		579		2,227		2,416
Commercial multi-peril	896		831		840		823		902		871		885		884		3,390		3,542
Other	5		1		18		6		7		4		28		4		30		43
Total Domestic	3,724		3,463		3,421		3,264		3,886		3,576		3,671		3,424		13,872		14,557
International	270		318		227		269		277		298		218		279		1,084		1,072
Total	$	3,994	$	3,781	$	3,648	$	3,533	$	4,163	$	3,874	$	3,889	$	3,703	$	14,956	$	15,629

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income - Bond & Specialty Insurance



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Revenues
Premiums	$	582		$	601		$	617		$	620		$	606		$	632		$	653		$	674		$	2,420		$	2,565
Net investment income	58			57			57			61			56			58			59			60			233			233
Other revenues	6			5			5			7			6			6			7			7			23			26
Total revenues	646			663			679			688			668			696			719			741			2,676			2,824
Claims and expenses
Claims and claim adjustment expenses	216			175			205			176			266			238			303			287			772			1,094
Amortization of deferred acquisition costs	107			113			117			117			112			118			123			125			454			478
General and administrative expenses	115			116			113			115			117			120			124			122			459			483
Total claims and expenses	438			404			435			408			495			476			550			534			1,685			2,055
Segment income before income taxes	208			259			244			280			173			220			169			207			991			769
Income tax expense	35			55			48			60			35			46			30			40			198			151
Segment income	$	173		$	204		$	196		$	220		$	138		$	174		$	139		$	167		$	793		$	618
Other statistics
Effective tax rate on net investment income	14.5		%	14.3		%	14.6		%	14.8		%	14.4		%	14.8		%	14.9		%	13.2		%	14.6		%	14.3		%
Net investment income (after-tax)	$	50		$	48		$	49		$	52		$	47		$	50		$	50		$	52		$	199		$	199
Catastrophes, net of reinsurance:
Pre-tax	$	—		$	5		$	4		$	7		$	3		$	—		$	1		$	1		$	16		$	5
After-tax	$	—		$	4		$	3		$	6		$	2		$	—		$	1		$	1		$	13		$	4
Prior year reserve development - favorable:
Pre-tax	$	35		$	89		$	53		$	89		$	3		$	39		$	3		$	20		$	266		$	65
After-tax	$	28		$	70		$	42		$	70		$	2		$	31		$	2		$	16		$	210		$	51

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

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



($ in millions, net of tax)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Underwriting gain	$	119		$	153		$	143		$	165		$	86		$	120		$	85		$	111		$	580		$	402
Net investment income	50			48			49			52			47			50			50			52			199			199
Other income	4			3			4			3			5			4			4			4			14			17
Segment income	$	173		$	204		$	196		$	220		$	138		$	174		$	139		$	167		$	793		$	618
Combined ratio (1)
Loss and loss adjustment expense ratio	36.6		%	28.8		%	33.1		%	27.9		%	43.5		%	37.4		%	45.7		%	42.4		%	31.5		%	42.2		%
Underwriting expense ratio	38.1		%	37.7		%	37.1		%	36.9		%	37.6		%	37.5		%	37.6		%	36.2		%	37.5		%	37.3		%
Combined ratio	74.7		%	66.5		%	70.2		%	64.8		%	81.1		%	74.9		%	83.3		%	78.6		%	69.0		%	79.5		%
Impact on combined ratio:
Net favorable prior year reserve development	(6.0		)%	(14.8		)%	(8.7		)%	(14.4		)%	(0.5		)%	(6.2		)%	(0.5		)%	(2.9		)%	(11.0		)%	(2.5		)%
Catastrophes, net of reinsurance	—		%	0.8		%	0.6		%	1.1		%	0.5		%	0.1		%	0.2		%	0.2		%	0.6		%	0.2		%
Underlying combined ratio	80.7		%	80.5		%	78.3		%	78.1		%	81.1		%	81.0		%	83.6		%	81.3		%	79.4		%	81.8		%

(1) General and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio. See following:



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019		3Q2019		4Q2019		YTD 4Q2018		YTD 4Q2019
Non-insurance general and administrative expenses	$	—	$	2	$	1	$	2	$	1	$	1	$	1	$	2	$	5	$	5

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Selected Statistics - Bond & Specialty Insurance



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019		3Q2019		4Q2019		YTD 4Q2018		YTD 4Q2019
Statutory underwriting
Gross written premiums	$	638	$	674	$	673	$	680	$	662	$	747	$	770	$	752	$	2,665	$	2,931
Net written premiums	$	574	$	653	$	644	$	657	$	587	$	710	$	728	$	714	$	2,528	$	2,739
Net earned premiums	$	582	$	601	$	617	$	620	$	606	$	632	$	653	$	674	$	2,420	$	2,565
Losses and loss adjustment expenses	213		173		204		173		264		236		298		286		763		1,084
Underwriting expenses	232		234		232		231		233		251		261		242		929		987
Statutory underwriting gain	137		194		181		216		109		145		94		146		728		494
Policyholder dividends	2		3		1		3		2		2		4		3		9		11
Statutory underwriting gain after policyholder dividends	$	135	$	191	$	180	$	213	$	107	$	143	$	90	$	143	$	719	$	483

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Net Written Premiums - Bond & Specialty Insurance



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019		3Q2019		4Q2019		YTD 4Q2018		YTD 4Q2019
Net written premiums by market
Domestic
Management Liability	$	348	$	362	$	379	$	366	$	367	$	403	$	424	$	411	$	1,455	$	1,605
Surety	185		235		217		198		184		244		232		206		835		866
Total Domestic	533		597		596		564		551		647		656		617		2,290		2,471
International	41		56		48		93		36		63		72		97		238		268
Total	$	574	$	653	$	644	$	657	$	587	$	710	$	728	$	714	$	2,528	$	2,739
Net written premiums by product line
Domestic
Fidelity & surety	$	241	$	285	$	273	$	250	$	239	$	298	$	292	$	260	$	1,049	$	1,089
General liability	244		264		261		268		262		292		293		301		1,037		1,148
Other	48		48		62		46		50		57		71		56		204		234
Total Domestic	533		597		596		564		551		647		656		617		2,290		2,471
International	41		56		48		93		36		63		72		97		238		268
Total	$	574	$	653	$	644	$	657	$	587	$	710	$	728	$	714	$	2,528	$	2,739

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income (Loss) - Personal Insurance



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Revenues
Premiums	$	2,387		$	2,453		$	2,522		$	2,555		$	2,507		$	2,573		$	2,644		$	2,683		$	9,917		$	10,407
Net investment income	99			98			107			104			99			109			106			105			408			419
Fee income	4			5			6			5			5			5			7			5			20			22
Other revenues	17			14			17			18			22			21			22			22			66			87
Total revenues	2,507			2,570			2,652			2,682			2,633			2,708			2,779			2,815			10,411			10,935
Claims and expenses
Claims and claim adjustment expenses	1,688			1,903			1,797			1,960			1,596			1,897			1,899			1,684			7,348			7,076
Amortization of deferred acquisition costs	374			380			390			395			390			398			412			420			1,539			1,620
General and administrative expenses	288			316			290			291			300			311			309			300			1,185			1,220
Total claims and expenses	2,350			2,599			2,477			2,646			2,286			2,606			2,620			2,404			10,072			9,916
Segment income (loss) before income taxes	157			(29		)	175			36			347			102			159			411			339			1,019
Income tax expense (benefit)	28			(12		)	22			4			69			14			28			84			42			195
Segment income (loss)	$	129		$	(17	)	$	153		$	32		$	278		$	88		$	131		$	327		$	297		$	824
Other statistics
Effective tax rate on net investment income	15.6		%	15.6		%	16.1		%	15.7		%	15.4		%	16.1		%	15.8		%	15.6		%	15.8		%	15.8		%
Net investment income (after-tax)	$	83		$	83		$	90		$	88		$	84		$	91		$	89		$	89		$	344		$	353
Catastrophes, net of reinsurance:
Pre-tax	$	216		$	315		$	124		$	406		$	95		$	156		$	124		$	36		$	1,061		$	411
After-tax	$	170		$	248		$	99		$	320		$	75		$	123		$	98		$	29		$	837		$	325
Prior year reserve development - favorable:
Pre-tax	$	49		$	13		$	17		$	30		$	69		$	13		$	19		$	32		$	109		$	133
After-tax	$	39		$	10		$	13		$	24		$	55		$	11		$	15		$	24		$	86		$	105

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income (Loss) by Major Component and Combined Ratio - Personal Insurance



($ in millions, net of tax)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Underwriting gain (loss)	$	33		$	(111	)	$	49		$	(69	)	$	177		$	(20	)	$	24		$	220		$	(98	)	$	401
Net investment income	83			83			90			88			84			91			89			89			344			353
Other income	13			11			14			13			17			17			18			18			51			70
Segment income (loss)	$	129		$	(17	)	$	153		$	32		$	278		$	88		$	131		$	327		$	297		$	824
Combined ratio (1)
Loss and loss adjustment expense ratio	70.7		%	77.6		%	71.2		%	76.8		%	63.7		%	73.7		%	71.8		%	62.8		%	74.1		%	68.0		%
Underwriting expense ratio	26.8		%	27.3		%	26.0		%	25.8		%	26.4		%	26.5		%	26.2		%	25.7		%	26.5		%	26.2		%
Combined ratio	97.5		%	104.9		%	97.2		%	102.6		%	90.1		%	100.2		%	98.0		%	88.5		%	100.6		%	94.2		%
Domestic Agency combined ratio	96.5		%	103.6		%	95.4		%	101.9		%	88.9		%	98.8		%	97.2		%	88.2		%	99.4		%	93.3		%
Impact on combined ratio:
Net favorable prior year reserve development	(2.0		)%	(0.5		)%	(0.6		)%	(1.1		)%	(2.8		)%	(0.5		)%	(0.7		)%	(1.2		)%	(1.1		)%	(1.3		)%
Catastrophes, net of reinsurance	9.0		%	12.8		%	4.9		%	15.9		%	3.8		%	6.1		%	4.7		%	1.3		%	10.7		%	4.0		%
Underlying combined ratio	90.5		%	92.6		%	92.9		%	87.8		%	89.1		%	94.6		%	94.0		%	88.4		%	91.0		%	91.5		%

(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.



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019		3Q2019		4Q2019		YTD 4Q2018		YTD 4Q2019
Billing and policy fees and other	$	19	$	18	$	21	$	20	$	23	$	23	$	23	$	23	$	78	$	92
Fee income	$	4	$	5	$	6	$	5	$	5	$	5	$	7	$	5	$	20	$	22

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Selected Statistics - Personal Insurance



($ in millions)	1Q2018		2Q2018			3Q2018		4Q2018			1Q2019		2Q2019			3Q2019			4Q2019		YTD 4Q2018			YTD 4Q2019
Statutory underwriting
Gross written premiums	$	2,309	$	2,717		$	2,797	$	2,509		$	2,447	$	2,884		$	2,981		$	2,669	$	10,332		$	10,981
Net written premiums	$	2,256	$	2,697		$	2,770	$	2,501		$	2,307	$	2,866		$	2,952		$	2,658	$	10,224		$	10,783
Net earned premiums	$	2,387	$	2,453		$	2,522	$	2,555		$	2,507	$	2,573		$	2,644		$	2,683	$	9,917		$	10,407
Losses and loss adjustment expenses	1,688		1,904			1,796		1,960			1,596		1,897			1,899			1,684		7,348			7,076
Underwriting expenses	627		717			706		661			657		740			754			697		2,711			2,848
Statutory underwriting gain (loss)	$	72	$	(168	)	$	20	$	(66	)	$	254	$	(64	)	$	(9	)	$	302	$	(142	)	$	483
Policies in force (in thousands)
Automobile	2,976		2,981			2,986		2,983			2,981		2,980			2,979			2,973		2,983			2,973
Homeowners and Other	4,879		4,961			5,037		5,087			5,163		5,263			5,361			5,444		5,087			5,444

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Net Written Premiums - Personal Insurance



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019		3Q2019		4Q2019		YTD 4Q2018		YTD 4Q2019
Net written premiums by market
Domestic
Agency
Automobile	$	1,183	$	1,258	$	1,305	$	1,226	$	1,224	$	1,300	$	1,347	$	1,253	$	4,972	$	5,124
Homeowners and Other	832		1,137		1,168		1,011		837		1,258		1,300		1,145		4,148		4,540
Total Agency	2,015		2,395		2,473		2,237		2,061		2,558		2,647		2,398		9,120		9,664
Direct-to-Consumer	92		99		108		97		95		103		115		99		396		412
Total Domestic	2,107		2,494		2,581		2,334		2,156		2,661		2,762		2,497		9,516		10,076
International	149		203		189		167		151		205		190		161		708		707
Total	$	2,256	$	2,697	$	2,770	$	2,501	$	2,307	$	2,866	$	2,952	$	2,658	$	10,224	$	10,783

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

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



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Statutory underwriting
Gross written premiums	$	1,192		$	1,265		$	1,310		$	1,231		$	1,240		$	1,304		$	1,352		$	1,258		$	4,998		$	5,154
Net written premiums	$	1,183		$	1,258		$	1,305		$	1,226		$	1,224		$	1,300		$	1,347		$	1,253		$	4,972		$	5,124
Net earned premiums	$	1,158		$	1,192		$	1,227		$	1,242		$	1,228		$	1,249		$	1,271		$	1,276		$	4,819		$	5,024
Losses and loss adjustment expenses	823			851			840			900			810			876			891			971			3,414			3,548
Underwriting expenses	285			299			297			288			296			312			310			299			1,169			1,217
Statutory underwriting gain	$	50		$	42		$	90		$	54		$	122		$	61		$	70		$	6		$	236		$	259
Other statistics
Combined ratio (2):
Loss and loss adjustment expense ratio	71.1		%	71.4		%	68.5		%	72.5		%	66.0		%	70.1		%	70.1		%	76.1		%	70.8		%	70.7		%
Underwriting expense ratio	23.7		%	24.0		%	22.8		%	22.8		%	23.4		%	23.9		%	22.9		%	23.1		%	23.4		%	23.3		%
Combined ratio	94.8		%	95.4		%	91.3		%	95.3		%	89.4		%	94.0		%	93.0		%	99.2		%	94.2		%	94.0		%
Impact on combined ratio:
Net favorable prior year reserve development	(2.3		)%	(2.8		)%	(1.8		)%	(1.9		)%	(3.4		)%	(1.1		)%	(0.5		)%	(0.5		)%	(2.2		)%	(1.3		)%
Catastrophes, net of reinsurance	0.8		%	2.7		%	0.5		%	0.3		%	0.7		%	1.3		%	0.8		%	0.1		%	1.1		%	0.7		%
Underlying combined ratio	96.3		%	95.5		%	92.6		%	96.9		%	92.1		%	93.8		%	92.7		%	99.6		%	95.3		%	94.6		%
Catastrophe losses, net of reinsurance:
Pre-tax	$	10		$	32		$	6		$	4		$	9		$	16		$	11		$	1		$	52		$	37
After-tax	$	8		$	25		$	5		$	3		$	7		$	13		$	8		$	1		$	41		$	29
Prior year reserve development - favorable:
Pre-tax	$	27		$	34		$	22		$	24		$	42		$	13		$	5		$	6		$	107		$	66
After-tax	$	21		$	27		$	18		$	19		$	33		$	10		$	5		$	4		$	85		$	52

Policies in force (in thousands)	2,519			2,517			2,518			2,518			2,516			2,517			2,524			2,532
Change from prior year quarter	1.5		%	0.1		%	(0.4		)%	(0.4		)%	(0.1		)%	—		%	0.2		%	0.6		%
Change from prior quarter	(0.4		)%	(0.1		)%	—		%	—		%	(0.1		)%	—		%	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 and other, which are a component of other revenues, and fee income are allocated as a reduction of underwriting expenses.



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019		3Q2019		4Q2019		YTD 4Q2018		YTD 4Q2019
Billing and policy fees and other	$	10	$	10	$	11	$	11	$	12	$	12	$	12	$	11	$	42	$	47
Fee income	$	3	$	3	$	3	$	3	$	3	$	3	$	4	$	3	$	12	$	13

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

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



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Statutory underwriting
Gross written premiums	$	873		$	1,148		$	1,180		$	1,012		$	954		$	1,268		$	1,316		$	1,147		$	4,213		$	4,685
Net written premiums	$	832		$	1,137		$	1,168		$	1,011		$	837		$	1,258		$	1,300		$	1,145		$	4,148		$	4,540
Net earned premiums	$	972		$	996		$	1,025		$	1,038		$	1,011		$	1,050		$	1,089		$	1,125		$	4,031		$	4,275
Losses and loss adjustment expenses	687			841			746			857			604			801			801			542			3,131			2,748
Underwriting expenses	255			320			313			281			277			335			349			314			1,169			1,275
Statutory underwriting gain (loss)	$	30		$	(165	)	$	(34	)	$	(100	)	$	130		$	(86	)	$	(61	)	$	269		$	(269	)	$	252
Other statistics
Combined ratio (2):
Loss and loss adjustment expense ratio	70.7		%	84.4		%	72.8		%	82.6		%	59.8		%	76.3		%	73.6		%	48.2		%	77.7		%	64.3		%
Underwriting expense ratio	27.8		%	29.2		%	27.5		%	27.2		%	28.4		%	28.2		%	28.4		%	27.6		%	27.9		%	28.2		%
Combined ratio	98.5		%	113.6		%	100.3		%	109.8		%	88.2		%	104.5		%	102.0		%	75.8		%	105.6		%	92.5		%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development	(2.4		)%	2.2		%	0.7		%	(0.6		)%	(2.4		)%	(1.3		)%	(1.4		)%	(0.8		)%	—		%	(1.4		)%
Catastrophes, net of reinsurance	20.7		%	26.2		%	11.1		%	37.9		%	8.0		%	12.9		%	9.9		%	3.0		%	24.0		%	8.3		%
Underlying combined ratio	80.2		%	85.2		%	88.5		%	72.5		%	82.6		%	92.9		%	93.5		%	73.6		%	81.6		%	85.6		%
Catastrophe losses, net of reinsurance:
Pre-tax	$	201		$	262		$	114		$	394		$	80		$	136		$	107		$	34		$	971		$	357
After-tax	$	159		$	207		$	90		$	311		$	63		$	107		$	85		$	27		$	767		$	282
Prior year reserve development - favorable (unfavorable):
Pre-tax	$	24		$	(22	)	$	(7	)	$	6		$	25		$	13		$	15		$	9		$	1		$	62
After-tax	$	19		$	(17	)	$	(6	)	$	5		$	19		$	11		$	12		$	7		$	1		$	49

Policies in force (in thousands)	4,453			4,530			4,601			4,652			4,726			4,825			4,927			5,016
Change from prior year quarter	5.5		%	5.8		%	5.7		%	5.7		%	6.1		%	6.5		%	7.1		%	7.8		%
Change from prior quarter	1.2		%	1.7		%	1.6		%	1.1%			1.6		%	2.1		%	2.1		%	1.8		%

(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.



($ in millions)	1Q2018		2Q2018		3Q2018		4Q2018		1Q2019		2Q2019		3Q2019		4Q2019		YTD 4Q2018		YTD 4Q2019
Billing and policy fees and other	$	6	$	7	$	7	$	7	$	8	$	8	$	8	$	8	$	27	$	32
Fee income	$	2	$	2	$	2	$	2	$	2	$	2	$	3	$	2	$	8	$	9

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Interest Expense and Other



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Revenues
Other revenues	$	—		$	—		$	2		$	—		$	1		$	—		$	—		$	—		$	2		$	1

Claims and expenses
Interest expense	89			90			86			87			88			89			84			83			352			344
General and administrative expenses	9			7			8			6			8			8			8			11			30			35
Total claims and expenses	98			97			94			93			96			97			92			94			382			379

Loss before income tax benefit	(98		)	(97		)	(92		)	(93		)	(95		)	(97		)	(92		)	(94		)	(380		)	(378		)
Income tax benefit	(22		)	(19		)	(20		)	(21		)	(20		)	(21		)	(21		)	(19		)	(82		)	(81		)
Loss	$	(76	)	$	(78	)	$	(72	)	$	(72	)	$	(75	)	$	(76	)	$	(71	)	$	(75	)	$	(298	)	$	(297	)

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Consolidated Balance Sheet



($ in millions)	December 31, 2019 (1)			December 31, 2018
Assets
Fixed maturities, available for sale, at fair value (amortized cost $65,281 and $63,601)	$	68,134		$	63,464
Equity securities, at fair value (cost $376 and $382)	425			368
Real estate investments	963			904
Short-term securities	4,943			3,985
Other investments	3,419			3,557
Total investments	77,884			72,278
Cash	494			373
Investment income accrued	618			624
Premiums receivable	7,909			7,506
Reinsurance recoverables	8,235			8,370
Ceded unearned premiums	689			578
Deferred acquisition costs	2,273			2,120
Deferred taxes	—			445
Contractholder receivables	4,619			4,785
Goodwill	3,961			3,937
Other intangible assets	330			345
Other assets	3,110			2,872
Total assets	$	110,122		$	104,233

Liabilities
Claims and claim adjustment expense reserves	$	51,849		$	50,668
Unearned premium reserves	14,604			13,555
Contractholder payables	4,619			4,785
Payables for reinsurance premiums	363			289
Deferred taxes	137			—
Debt	6,558			6,564
Other liabilities	6,049			5,478
Total liabilities	84,179			81,339
Shareholders’ equity
Common stock (1,750.0 shares authorized; 255.5 and 263.7 shares issued, 255.5 and 263.6 shares outstanding)	23,469			23,144
Retained earnings	36,977			35,204
Accumulated other comprehensive income (loss)	640			(1,859		)
Treasury stock, at cost (522.1 and 510.9 shares)	(35,143		)	(33,595		)
Total shareholders’ equity	25,943			22,894
Total liabilities and shareholders’ equity	$	110,122		$	104,233

(1) Preliminary

The Travelers Companies, Inc.

Investment Portfolio



(at carrying value, $ in millions)	December 31, 2019		Pre-tax Book Yield (1)		December 31, 2018			Pre-tax Book Yield (1)
Investment portfolio
Taxable fixed maturities (including redeemable preferred stock)	$	38,570	3.17	%	$	35,150		3.23	%
Tax-exempt fixed maturities	29,564		3.12	%	28,314			3.18	%
Total fixed maturities	68,134		3.15	%	63,464			3.21	%
Non-redeemable preferred stocks	42		5.04	%	52			4.86	%
Public common stocks	383				316
Total equity securities	425				368
Real estate investments	963				904
Short-term securities	4,943		1.82	%	3,985			2.54	%
Private equities	2,236				2,293
Hedge funds	186				222
Real estate partnerships	658				675
Other investments	339				367
Total other investments	3,419				3,557
Total investments	$	77,884			$	72,278

Net unrealized investment gains (losses), net of tax, included in shareholders’ equity	$	2,246			$	(113	)

(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, 2019		December 31, 2018
Fixed maturities
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	2,095	$	2,064
Obligations of states and political subdivisions:
Pre-refunded	2,056		2,852
All other	27,861		25,759
Total	29,917		28,611
Debt securities issued by foreign governments	1,173		1,257
Mortgage-backed securities - principally obligations of U.S. Government agencies	3,280		2,573
Corporates (including redeemable preferreds)	31,669		28,959
Total fixed maturities	$	68,134	$	63,464

Fixed Maturities

Quality Characteristics (1)



	December 31, 2019				December 31, 2018
	Amount		% of Total		Amount		% of Total
Quality Ratings
Aaa	$	29,164	42.9	%	$	26,089	41.1	%
Aa	15,819		23.2		16,027		25.3
A	12,148		17.8		10,539		16.6
Baa	9,541		14.0		9,334		14.7
Total investment grade	66,672		97.9		61,989		97.7
Ba	846		1.2		912		1.4
B	511		0.7		466		0.7
Caa and lower	105		0.2		97		0.2
Total below investment grade	1,462		2.1		1,475		2.3
Total fixed maturities	$	68,134	100.0	%	$	63,464	100.0	%
Average weighted quality	Aa2, AA				Aa2, AA
Weighted average duration of fixed maturities and short-term securities, net of securities lending activities and net receivables and payables on investment sales and purchases	4.0				4.5

(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)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Gross investment income
Fixed maturities	$	481		$	489		$	498		$	512		$	511		$	514		$	520		$	525		$	1,980		$	2,070
Short-term securities	19			21			25			27			28			27			26			24			92			105
Other	113			94			134			100			53			118			85			77			441			333
	613			604			657			639			592			659			631			626			2,513			2,508
Investment expenses	10			9			11			9			10			11			9			10			39			40
Net investment income, pre-tax	603			595			646			630			582			648			622			616			2,474			2,468
Income taxes	90			88			99			95			86			100			94			91			372			371
Net investment income, after-tax	$	513		$	507		$	547		$	535		$	496		$	548		$	528		$	525		$	2,102		$	2,097

Effective tax rate	14.9		%	14.8		%	15.4%			15.0%			14.7		%	15.4		%	15.2		%	14.8		%	15.0%			15.0		%

Average invested assets (1)	$72,524			$72,618			$73,059			$73,758			$74,040			$74,370			$74,910			$75,996			$73,031			$74,866

Average yield pre-tax (1)	3.3		%	3.3		%	3.5		%	3.4		%	3.1		%	3.5		%	3.3		%	3.2		%	3.4		%	3.3		%
Average yield after-tax	2.8		%	2.8		%	3.0		%	2.9		%	2.7		%	2.9		%	2.8		%	2.8		%	2.9		%	2.8		%

(1) Excludes net unrealized investment gains (losses), 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) included in Shareholders' Equity



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Net realized investment gains (losses)
Fixed maturities	$	—		$	12		$	18		$	2		$	16		$	13		$	14		$	12		$	32		$	55
Equity securities	(14		)	12			6			(37		)	41			10			8			14			(33		)	73
Other (1)	3			12			5			95			(4		)	2			1			(14		)	115			(15		)
Realized investment gains (losses) before tax	(11		)	36			29			60			53			25			23			12			114			113
Related taxes	(2		)	6			7			10			12			5			5			6			21			28
Net realized investment gains (losses)	$	(9	)	$	30		$	22		$	50		$	41		$	20		$	18		$	6		$	93		$	85

Gross investment gains (1)	$	26		$	63		$	41		$	105		$	65		$	31		$	30		$	32		$	235		$	158
Gross investment losses before impairments (1)	(37		)	(26		)	(12		)	(45		)	(11		)	(5		)	(7		)	(18		)	(120		)	(41		)
Net investment gains (losses) before impairments	(11		)	37			29			60			54			26			23			14			115			117
Other-than-temporary impairment losses	—			(1		)	—			—			(1		)	(1		)	—			(2		)	(1		)	(4		)
Net realized investment gains (losses) before tax	(11		)	36			29			60			53			25			23			12			114			113
Related taxes	(2		)	6			7			10			12			5			5			6			21			28
Net realized investment gains (losses)	$	(9	)	$	30		$	22		$	50		$	41		$	20		$	18		$	6		$	93		$	85

($ in millions)	March 31, 2018			June 30, 2018			September 30, 2018			December 31, 2018			March 31, 2019			June 30, 2019			September 30, 2019			December 31, 2019
Net unrealized investment gains (losses), net of tax, included in shareholders’ equity, by asset type
Fixed maturities	$	173		$	(138	)	$	(561	)	$	(137	)	$	1,284		$	2,388		$	2,990		$	2,853
Equity securities & other	2			3			1			—			—			1			1			—
Unrealized investment gains (losses) before tax	175			(135		)	(560		)	(137		)	1,284			2,389			2,991			2,853
Related taxes	42			(23		)	(113		)	(24		)	277			511			637			607
Balance, end of period	$	133		$	(112	)	$	(447	)	$	(113	)	$	1,007		$	1,878		$	2,354		$	2,246


(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	$	25		$	11		$	7		$	—		$	1		$	—		$	—		$	—		$	43		$	1
Gross investment Treasury future losses	$	14		$	8		$	5		$	—		$	1		$	—		$	—		$	—		$	27		$	1

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, 2019			December 31, 2018
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses	$	3,476		$	3,485
Allowance for uncollectible reinsurance	(92		)	(110		)
Net reinsurance recoverables (i)	3,384			3,375
Mandatory pools and associations (ii)	1,886			2,005
Structured settlements (iii)	2,965			2,990
Total reinsurance recoverables	$	8,235		$	8,370

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



Reinsurer	A.M. Best Rating of Group's Predominant Reinsurer	December 31, 2019
Swiss Re Group	A+ second highest of 16 ratings	$	457
Berkshire Hathaway	A++ highest of 16 ratings	347
Munich Re Group	A+ second highest of 16 ratings	289
Axa Group	A+ second highest of 16 ratings	170
Alleghany Group	A+ second highest of 16 ratings	141

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, 2019, after deducting mandatory pools and associations and structured settlement balances, $2.8 billion, or 82%, were rated by A.M. Best Company. Of the total rated by A.M. Best Company, 99.9% were rated A- or better. The remaining 18% of net recoverables from reinsurers were comprised of the following: 3% related to the Company’s participation in voluntary pools, 11% related to recoverables from captive insurance companies and 4% were balances from other companies not rated by A.M. Best Company. In addition, $0.8 billion of the net recoverables were collateralized by letters of credit, funds held or trust agreements at December 31, 2019.

(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.

(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:



Group	A.M. Best Rating of Group's Predominant Insurer	December 31, 2019
Fidelity & Guaranty Life Group	A- fourth highest of 16 ratings	$	777
Genworth Financial Group (1)	B seventh highest of 16 ratings	338
John Hancock Group	A+ second highest of 16 ratings	272
Brighthouse Financial, Inc.	A third highest of 16 ratings	248
Symetra Financial Corporation	A third highest of 16 ratings	241

(1) 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) agreed to acquire all of the outstanding shares of Genworth. China Oceanwide is a privately held, family-owned international financial holding group headquartered in Beijing, China. On March 7, 2017, Genworth stockholders adopted the merger agreement, and the acquisition is pending the receipt of required regulatory approvals. On December 23, 2019, the parties agreed to extend the closing deadline for the transaction until March 31, 2020.

The Travelers Companies, Inc.

Net Reserves for Losses and Loss Adjustment Expense



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Statutory Reserves for Losses and Loss Adjustment Expenses
Business Insurance
Beginning of period	$	33,107		$	33,292		$	33,369		$	33,773		$	33,857		$	34,086		$	34,377		$	34,963		$	33,107		$	33,857
Incurred	2,344			2,429			2,606			2,586			2,529			2,631			2,969			2,608			9,965			10,737
Paid	(2,163		)	(2,298		)	(2,207		)	(2,454		)	(2,320		)	(2,345		)	(2,354		)	(2,482		)	(9,122		)	(9,501		)
Foreign exchange and other	4			(54		)	5			(48		)	20			5			(29		)	53			(93		)	49
End of period	$	33,292		$	33,369		$	33,773		$	33,857		$	34,086		$	34,377		$	34,963		$	35,142		$	33,857		$	35,142
Bond & Specialty Insurance
Beginning of period	$	3,187		$	3,207		$	3,111		$	3,057		$	2,987		$	3,068		$	3,042		$	3,074		$	3,187		$	2,987
Incurred	213			173			204			173			264			236			298			286			763			1,084
Paid	(201		)	(248		)	(258		)	(230		)	(189		)	(260		)	(256		)	(290		)	(937		)	(995		)
Foreign exchange and other	8			(21		)	—			(13		)	6			(2		)	(10		)	24			(26		)	18
End of period	$	3,207		$	3,111		$	3,057		$	2,987		$	3,068		$	3,042		$	3,074		$	3,094		$	2,987		$	3,094
Personal Insurance
Beginning of period	$	5,160		$	5,170		$	5,381		$	5,463		$	5,565		$	5,427		$	5,560		$	5,587		$	5,160		$	5,565
Incurred	1,688			1,904			1,796			1,960			1,596			1,897			1,899			1,684			7,348			7,076
Paid	(1,655		)	(1,676		)	(1,728		)	(1,815		)	(1,751		)	(1,781		)	(1,862		)	(1,782		)	(6,874		)	(7,176		)
Foreign exchange and other	(23		)	(17		)	14			(43		)	17			17			(10		)	18			(69		)	42
End of period	$	5,170		$	5,381		$	5,463		$	5,565		$	5,427		$	5,560		$	5,587		$	5,507		$	5,565		$	5,507
Total
Beginning of period	$	41,454		$	41,669		$	41,861		$	42,293		$	42,409		$	42,581		$	42,979		$	43,624		$	41,454		$	42,409
Incurred	4,245			4,506			4,606			4,719			4,389			4,764			5,166			4,578			18,076			18,897
Paid	(4,019		)	(4,222		)	(4,193		)	(4,499		)	(4,260		)	(4,386		)	(4,472		)	(4,554		)	(16,933		)	(17,672		)
Foreign exchange and other	(11		)	(92		)	19			(104		)	43			20			(49		)	95			(188		)	109
End of period	$	41,669		$	41,861		$	42,293		$	42,409		$	42,581		$	42,979		$	43,624		$	43,743		$	42,409		$	43,743
Prior Year Reserve Development: Unfavorable (Favorable)
Business Insurance
Asbestos	$	—		$	—		$	225		$	—		$	—		$	—		$	220		$	—		$	225		$	220
Environmental	—			55			—			—			—			60			8			8			55			76
All other	(66		)	(139		)	(169		)	(48		)	21			(131		)	88			(16		)	(422		)	(38		)
Total Business Insurance (1)	(66		)	(84		)	56			(48		)	21			(71		)	316			(8		)	(142		)	258
Bond & Specialty Insurance	(35		)	(89		)	(53		)	(89		)	(3		)	(39		)	(3		)	(20		)	(266		)	(65		)
Personal Insurance	(49		)	(13		)	(17		)	(30		)	(69		)	(13		)	(19		)	(32		)	(109		)	(133		)
Total	$	(150	)	$	(186	)	$	(14	)	$	(167	)	$	(51	)	$	(123	)	$	294		$	(60	)	$	(517	)	$	60

(1) Excludes accretion of discount.

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Asbestos and Environmental Reserves



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Asbestos reserves
Beginning reserves:
Gross	$	1,538		$	1,483		$	1,408		$	1,681		$	1,608		$	1,564		$	1,474		$	1,685		$	1,538		$	1,608
Ceded	(257		)	(234		)	(225		)	(336		)	(327		)	(321		)	(295		)	(334		)	(257		)	(327		)
Net	1,281			1,249			1,183			1,345			1,281			1,243			1,179			1,351			1,281			1,281
Incurred losses and loss expenses:
Gross	—			—			343			—			—			—			268			—			343			268
Ceded	—			—			(118		)	—			—			—			(48		)	—			(118		)	(48		)
Paid loss and loss expenses:
Gross	56			74			70			73			44			90			57			86			273			277
Ceded	(23		)	(9		)	(7		)	(9		)	(6		)	(26		)	(9		)	(12		)	(48		)	(53		)
Foreign exchange and other:
Gross	1			(1		)	—			—			—			—			—			2			—			2
Ceded	—			—			—			—			—			—			—			—			—			—
Ending reserves:
Gross	1,483			1,408			1,681			1,608			1,564			1,474			1,685			1,601			1,608			1,601
Ceded	(234		)	(225		)	(336		)	(327		)	(321		)	(295		)	(334		)	(322		)	(327		)	(322		)
Net	$	1,249		$	1,183		$	1,345		$	1,281		$	1,243		$	1,179		$	1,351		$	1,279		$	1,281		$	1,279
Environmental reserves
Beginning reserves:
Gross	$	373		$	356		$	413		$	397		$	358		$	338		$	388		$	374		$	373		$	358
Ceded	(13		)	(9		)	(25		)	(25		)	(24		)	(24		)	(29		)	(29		)	(13		)	(24		)
Net	360			347			388			372			334			314			359			345			360			334
Incurred losses and loss expenses:
Gross	—			71			—			—			—			67			8			9			71			84
Ceded	—			(16		)	—			—			—			(7		)	—			(1		)	(16		)	(8		)
Paid loss and loss expenses:
Gross	17			13			17			39			20			16			22			34			86			92
Ceded	(4		)	—			—			(2		)	—			(1		)	—			(1		)	(6		)	(2		)
Foreign exchange and other:
Gross	—			(1		)	1			—			—			(1		)	—			1			—			—
Ceded	—			—			—			(1		)	—			1			—			—			(1		)	1
Ending reserves:
Gross	356			413			397			358			338			388			374			350			358			350
Ceded	(9		)	(25		)	(25		)	(24		)	(24		)	(29		)	(29		)	(29		)	(24		)	(29		)
Net	$	347		$	388		$	372		$	334		$	314		$	359		$	345		$	321		$	334		$	321

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Capitalization



($ in millions)	December 31, 2019			December 31, 2018
Debt

Short-term debt
Commercial paper	$	100		$	100
5.90% Senior notes due June 2, 2019	—			500
3.90% Senior notes due November 1, 2020 (1)	500			—
Total short-term debt	600			600
Long-term debt
3.90% Senior notes due November 1, 2020 (1)	—			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			500
8.312% Junior subordinated debentures due July 1, 2046	73			73
4.00% Senior notes due May 30, 2047 (1)	700			700
4.05% Senior notes due March 7, 2048 (1)	500			500
4.10% Senior notes due March 4, 2049 (1)	500			—
Total long-term debt	6,004			6,004
Unamortized fair value adjustment	43			44
Unamortized debt issuance costs	(89		)	(84		)
	5,958			5,964
Total debt	6,558			6,564
Common equity (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity)	23,697			23,007
Total capital (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity)	$	30,255		$	29,571
Total debt to capital (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity)	21.7		%	22.2		%

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

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Statutory Capital and Surplus to GAAP Shareholders' Equity Reconciliation



($ in millions)	December 31, 2019 (1)			December 31, 2018
Statutory capital and surplus	$	21,330		$	20,774
GAAP adjustments
Goodwill and intangible assets	3,589			3,600
Investments	3,130			252
Noninsurance companies	(4,111		)	(4,234		)
Deferred acquisition costs	2,273			2,120
Deferred federal income tax	(1,144		)	(561		)
Current federal income tax	(29		)	(22		)
Reinsurance recoverables	47			56
Furniture, equipment & software	676			654
Agents balances	212			202
Other	(30		)	53
Total GAAP adjustments	4,613			2,120
GAAP shareholders’ equity	$	25,943		$	22,894

(1) Estimated and Preliminary

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Statement of Cash Flows - Preliminary



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Cash flows from operating activities
Net income	$	669		$	524		$	709		$	621		$	796		$	557		$	396		$	873		$	2,523		$	2,622
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment (gains) losses	11			(36		)	(29		)	(60		)	(53		)	(25		)	(23		)	(12		)	(114		)	(113		)
Depreciation and amortization	212			199			198			194			211			190			180			182			803			763
Deferred federal income tax expense (benefit)	(56		)	(14		)	27			30			32			(22		)	(20		)	(23		)	(13		)	(33		)
Amortization of deferred acquisition costs	1,061			1,081			1,117			1,122			1,117			1,134			1,169			1,181			4,381			4,601
Equity in income from other investments	(95		)	(74		)	(115		)	(81		)	(34		)	(98		)	(64		)	(55		)	(365		)	(251		)
Premiums receivable	(397		)	(263		)	152			115			(434		)	(345		)	168			227			(393		)	(384		)
Reinsurance recoverables	5			24			(50		)	(79		)	98			53			61			(55		)	(100		)	157
Deferred acquisition costs	(1,124		)	(1,160		)	(1,141		)	(1,063		)	(1,185		)	(1,223		)	(1,211		)	(1,128		)	(4,488		)	(4,747		)
Claims and claim adjustment expense reserves	180			255			445			366			(2		)	331			598			120			1,246			1,047
Unearned premium reserves	518			361			216			(385		)	551			407			392			(342		)	710			1,008
Other	(430		)	247			205			168			(458		)	194			355			444			190			535
Net cash provided by operating activities	554			1,144			1,734			948			639			1,153			2,001			1,412			4,380			5,205
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,950			1,707			1,998			1,431			1,556			1,482			1,857			1,950			7,086			6,845
Proceeds from sales of investments:
Fixed maturities	1,085			1,522			578			361			769			726			306			386			3,546			2,187
Equity securities	26			66			35			51			39			32			28			41			178			140
Real estate investments	—			—			8			66			—			—			—			—			74			—
Other investments	114			75			81			241			105			135			106			113			511			459
Purchases of investments:
Fixed maturities	(3,920		)	(4,032		)	(2,910		)	(2,664		)	(2,914		)	(2,794		)	(2,526		)	(2,477		)	(13,526		)	(10,711		)
Equity securities	(20		)	(40		)	(26		)	(31		)	(22		)	(19		)	(21		)	(32		)	(117		)	(94		)
Real estate investments	(33		)	(11		)	(13		)	(17		)	(77		)	(8		)	(10		)	(12		)	(74		)	(107		)
Other investments	(142		)	(133		)	(117		)	(145		)	(146		)	(116		)	(107		)	(128		)	(537		)	(497		)
Net sales (purchases) of short-term securities	410			792			(746		)	452			(109		)	606			(1,114		)	(340		)	908			(957		)
Securities transactions in course of settlement	202			77			(106		)	(229		)	295			(72		)	209			(274		)	(56		)	158
Acquisitions, net of cash acquired	—			—			(4		)	—			—			—			—			—			(4		)	—
Other	(53		)	(99		)	(80		)	(86		)	(82		)	(87		)	(74		)	(82		)	(318		)	(325		)
Net cash used in investing activities	(381		)	(76		)	(1,302		)	(570		)	(586		)	(115		)	(1,346		)	(855		)	(2,329		)	(2,902		)

The Travelers Companies, Inc.

Statement of Cash Flows - Preliminary (Continued)



($ in millions)	1Q2018			2Q2018			3Q2018			4Q2018			1Q2019			2Q2019			3Q2019			4Q2019			YTD 4Q2018			YTD 4Q2019
Cash flows from financing activities
Treasury stock acquired - share repurchase authorization	(350		)	(350		)	(400		)	(170		)	(375		)	(375		)	(375		)	(375		)	(1,270		)	(1,500		)
Treasury stock acquired - net employee share-based compensation	(51		)	—			—			—			(46		)	(1		)	—			(1		)	(51		)	(48		)
Dividends paid to shareholders	(197		)	(207		)	(207		)	(203		)	(205		)	(214		)	(214		)	(211		)	(814		)	(844		)
Payment of debt	(100		)	(500		)	—			—			—			(500		)	—			—			(600		)	(500		)
Issuance of debt	491			—			100			—			492			—			—			—			591			492
Issuance of common stock - employee share options	85			13			19			15			63			111			32			7			132			213
Net cash used in financing activities	(122		)	(1,044		)	(488		)	(358		)	(71		)	(979		)	(557		)	(580		)	(2,012		)	(2,187		)
Effect of exchange rate changes on cash	2			(6		)	—			(6		)	2			—			(6		)	9			(10		)	5
Net increase (decrease) in cash	53			18			(56		)	14			(16		)	59			92			(14		)	29			121
Cash at beginning of period	344			397			415			359			373			357			416			508			344			373
Cash at end of period	$	397		$	415		$	359		$	373		$	357		$	416		$	508		$	494		$	373		$	494
Income taxes paid	$	56		$	182		$	6		$	164		$	5		$	320		$	42		$	61		$	408		$	428
Interest paid	$	39		$	136		$	50		$	122		$	50		$	121		$	60		$	107		$	347		$	338

The Travelers Companies, Inc.

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, to establish performance targets on a consolidated basis, and for other reasons as discussed below. 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.

Some of these measures exclude net realized investment gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, included in shareholders’ equity, 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.

Core income (loss) is consolidated net income (loss) excluding the after-tax impact of net realized investment gains (losses), discontinued operations, the effect of a change in tax laws and tax rates at enactment, and cumulative effect of changes in accounting principles when applicable. Segment income (loss) is determined in the same manner as core income (loss) on a segment basis. Management uses segment income (loss) to analyze each segment’s performance and as a tool in making business decisions. Financial statement users also consider core income (loss) when analyzing the results and trends of insurance companies. Core income (loss) per share is core 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 realized investment gains (losses), net of tax, net unrealized investment gains (losses), net of tax, included in shareholders’ equity for the periods presented and the effect of a change in tax laws and tax rates at enactment (excluding the portion related to net unrealized investment gains (losses)). 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. Core return on equity is the ratio of annualized core 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 designated a catastrophe by internationally recognized organizations that track and report on insured losses resulting from catastrophic events, such as Property Claim Services (PCS) for events in the United States and Canada. Catastrophes can be caused by various natural events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions and other naturally-occurring events, such as solar flares. Catastrophes can also be man-made, such as terrorist attacks and other intentionally destructive acts including those involving nuclear, biological, chemical and radiological events, cyber events, explosions and destruction of infrastructure. Each catastrophe has unique characteristics and catastrophes are not predictable as to timing or amount. Their effects are included in net and core 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. The Company’s threshold for disclosing catastrophes is primarily determined at the reportable segment level. If a threshold for one segment or a combination thereof is exceeded and the other segments have losses from the same event, losses from the event are identified as catastrophe losses in the segment results and for the consolidated results of the Company. Additionally, an aggregate threshold is applied for international business across all reportable segments. The threshold for 2019 ranges from approximately $19 million to $30 million of losses before reinsurance and taxes.

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 core 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 premiums 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 and other, 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. Underlying combined ratio is the combined ratio adjusted to exclude the impact of prior year reserve development and catastrophes, net of reinsurance.

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.

The Travelers Companies, Inc.

Glossary of Financial Measures and Description of Reportable Business Segments

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

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 net unrealized investment gains and losses, net of tax, included in shareholders’ equity, 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, net of tax, included in shareholders’ equity is the ratio of debt to total capital excluding net unrealized investment gains and losses, net of tax, included in shareholders’ equity. 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 Insurance - Business Insurance offers a broad array of property and casualty insurance and insurance-related services to its customers, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world as a corporate member of Lloyd’s. Business Insurance is organized as follows: Select Accounts; Middle Market including Commercial Accounts, Construction, Technology, Public Sector Services, Oil & Gas, Excess Casualty, Inland Marine, Ocean Marine, and Boiler & Machinery; National Accounts; National Property and Other including National Property, Northland Transportation, Northfield, National Programs, and Agribusiness; and International including Global Services. Business Insurance also includes Simply Business, a leading provider of small business insurance policies primarily in the United Kingdom that was acquired in August 2017, as well as Business Insurance Other, which primarily comprises the Company’s asbestos and environmental liabilities, and the assumed reinsurance and certain other runoff operations.

Bond & Specialty Insurance - Bond & Specialty Insurance provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers in the United States and certain specialty insurance products in Canada, the United Kingdom, the Republic of Ireland and Brazil (through a joint venture as described below), 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 including directors’ and officers’ liability, employee dishonesty, employment practices liability, fiduciary liability and cyber risk for public corporations, private companies, not-for-profit organizations and financial institutions; professional liability coverage for a variety of professionals including, among others, lawyers and design professionals; and in the United States only, property, workers’ compensation, auto and general liability for financial institutions.

Bond & Specialty Insurance surety business in Brazil and Colombia is conducted through Junto Holding Brasil S.A. (Junto) and Junto Holding Latam S.A. in Brazil. The Company owns 49.5% of both Junto, a market leader in surety coverages in Brazil, and Junto Holding Latam S.A., a Colombian start-up surety provider. These joint venture investments are accounted for using the equity method and are included in “other investments” on the consolidated balance sheet.

Personal Insurance - Personal Insurance writes a broad range of property and casualty insurance covering individuals’ personal risks, primarily in the United States, as well as in Canada. 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 - EXHIBIT 99.2 - January 23, 2020

Attached files

TRAVELERS COMPANIES, INC. Reports