TRAVELERS COMPANIES, INC. - FORM 8-K - EX-99.2 - January 21, 2021

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EX-99.1 - EX-99.1 - TRAVELERS COMPANIES, INC.a991pressrelease123120.htm
8-K - 8-K - TRAVELERS COMPANIES, INC.trv-20210121.htm
The Travelers Companies, Inc.                                                image211.gif
Financial Supplement - Fourth Quarter 2020                                                


Page Number
Consolidated Results
Financial Highlights1
Reconciliation to Net Income (Loss) and Earnings Per Share2
Statement of Income (Loss)3
Net Income (Loss) by Major Component and Combined Ratio4
Core Income (Loss)5
Selected Statistics - Property and Casualty Operations6
Written and Earned Premiums - Property and Casualty Operations7
Business Insurance
Segment Income (Loss)8
Segment Income (Loss) by Major Component and Combined Ratio9
Selected Statistics10
Net Written Premiums11
Bond & Specialty Insurance
Segment Income12
Segment Income by Major Component and Combined Ratio13
Selected Statistics14
Net Written Premiums15
Personal Insurance
Segment Income 16
Segment Income by Major Component and Combined Ratio17
Selected Statistics18
Net Written Premiums19
Selected Statistics - Domestic Agency Automobile20
Selected Statistics - Domestic Agency Homeowners and Other21
Supplemental Detail
Interest Expense and Other22
Consolidated Balance Sheet23
Investment Portfolio24
Investment Portfolio - Fixed Maturities Data25
Investment Income26
Net Realized and Unrealized Investment Gains (Losses) included in Shareholders’ Equity27
Reinsurance Recoverables28
Net Reserves for Losses and Loss Adjustment Expense29
Asbestos and Environmental Reserves30
Capitalization31
Statutory Capital and Surplus to GAAP Shareholders’ Equity Reconciliation32
Statement of Cash Flows33
Statement of Cash Flows (continued)34
Glossary of Financial Measures and Description of Reportable Business Segments35-36
 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.                                                 image211.gif
Financial Highlights

($ and shares in millions, except for per share data)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Net income (loss)$796 $557 $396 $873 $600 $(40)$827 $1,310 $2,622 $2,697 
Net income (loss) per share:
Basic$3.01 $2.11 $1.52 $3.37 $2.34 $(0.16)$3.24 $5.13 $10.01 $10.56 
Diluted$2.99 $2.10 $1.50 $3.35 $2.33 $(0.16)$3.23 $5.10 $9.92 $10.52 
Core income (loss)$755 $537 $378 $867 $676 $(50)$798 $1,262 $2,537 $2,686 
Core income (loss) per share:
Basic$2.85 $2.04 $1.45 $3.35 $2.64 $(0.20)$3.13 $4.94 $9.69 $10.52 
Diluted$2.83 $2.02 $1.43 $3.32 $2.62 $(0.20)$3.12 $4.91 $9.60 $10.48 
Return on equity13.5 %9.0 %6.2 %13.5 %9.4 %(0.6)%12.1 %18.4 %10.5 %10.0 %
Core return on equity13.0 %9.2 %6.5 %14.8 %11.5 %(0.8)%13.5 %20.5 %10.9 %11.3 %
Total assets, at period end$107,246 $108,572 $110,241 $110,122 $109,436 $113,337 $116,384 $116,764 $110,122 $116,764 
Total equity, at period end$24,340 $25,321 $25,607 $25,943 $25,204 $26,943 $27,849 $29,201 $25,943 $29,201 
Book value per share, at period end$92.94 $97.26 $99.21 $101.55 $99.69 $106.42 $109.94 $115.68 $101.55 $115.68 
Less: Net unrealized investment gains, net of tax3.85 7.21 9.12 8.79 7.06 14.41 15.05 16.14 8.79 16.14 
Adjusted book value per share, at period end$89.09 $90.05 $90.09 $92.76 $92.63 $92.01 $94.89 $99.54 $92.76 $99.54 
Weighted average number of common shares outstanding (basic)262.9 261.3 259.2 256.8 254.4 251.6 253.3 253.4 260.0 253.5 
Weighted average number of common shares outstanding and common stock equivalents (diluted)264.8 263.7 261.8 259.0 255.9 251.6 254.3 254.8 262.3 254.6 
Common shares outstanding at period end261.9 260.3 258.1 255.5 252.8 253.2 253.3 252.4 255.5 252.4 
Common stock dividends declared$204 $217 $215 $212 $210 $218 $218 $218 $848 $864 
Common stock repurchased:
Under Board of Directors authorization
Shares2.9 2.6 2.5 2.8 3.5 — — 1.4 10.8 4.9 
Cost$375 $375 $375 $375 $425 $— $— $200 $1,500 $625 
Other
Shares0.3 — — 0.1 0.3 — — — 0.4 0.3 
Cost$46 $1 $— $1 $46 $— $— $1 $48 $47 




See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
1
The Travelers Companies, Inc.                                                 image211.gif
Reconciliation to Net Income (Loss) and Earnings per Share


($ and shares in millions, except earnings per share)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Net income (loss)
Net income (loss)$796 $557 $396 $873 $600 $(40)$827 $1,310 $2,622 $2,697 
Adjustments:
Net realized investment (gains) losses, after-tax(41)(20)(18)(6)76 (10)(29)(48)(85)(11)
Core income (loss)$755 $537 $378 $867 $676 $(50)$798 $1,262 $2,537 $2,686 
Basic earnings per share
Net income (loss)$3.01 $2.11 $1.52 $3.37 $2.34 $(0.16)$3.24 $5.13 $10.01 $10.56 
Adjustments:
Net realized investment (gains) losses, after-tax(0.16)(0.07)(0.07)(0.02)0.30 (0.04)(0.11)(0.19)(0.32)(0.04)
Core income (loss)$2.85 $2.04 $1.45 $3.35 $2.64 $(0.20)$3.13 $4.94 $9.69 $10.52 
Diluted earnings per share
Net income (loss)$2.99 $2.10 $1.50 $3.35 $2.33 $(0.16)$3.23 $5.10 $9.92 $10.52 
Adjustments:
Net realized investment (gains) losses, after-tax(0.16)(0.08)(0.07)(0.03)0.29 (0.04)(0.11)(0.19)(0.32)(0.04)
Core income (loss)$2.83 $2.02 $1.43 $3.32 $2.62 $(0.20)$3.12 $4.91 $9.60 $10.48 
Adjustments to net income (loss) and weighted average shares for net income (loss) EPS calculations: (1)
Basic and Diluted1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Net income (loss), as reported$796 $557 $396 $873 $600 $(40)$827 $1,310 $2,622 $2,697 
Participating share-based awards - allocated income(5)(4)(3)(7)(5)(1)(6)(10)(19)(19)
Net income (loss) available to common shareholders - basic and diluted$791 $553 $393 $866 $595 $(41)$821 $1,300 $2,603 $2,678 
Common Shares
Basic
Weighted average shares outstanding262.9 261.3 259.2 256.8 254.4 251.6 253.3 253.4 260.0 253.5 
Diluted
Weighted average shares outstanding262.9 261.3 259.2 256.8 254.4 251.6 253.3 253.4 260.0 253.5 
Weighted average effects of dilutive securities - stock options and performance shares1.9 2.4 2.6 2.2 1.5 — 1.0 1.4 2.3 1.1 
Diluted weighted average shares outstanding264.8 263.7 261.8 259.0 255.9 251.6 254.3 254.8 262.3 254.6 

(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.
2
The Travelers Companies, Inc.                                                 image211.gif
Statement of Income (Loss) - Consolidated


($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Revenues
Premiums$6,855 $6,988 $7,179 $7,250 $7,229 $6,955 $7,380 $7,480 $28,272 $29,044 
Net investment income582 648 622 616 611 268 671 677 2,468 2,227 
Fee income109 116 121 113 108 114 101 106 459 429 
Net realized investment gains (losses)53 25 23 12 (98)13 37 50 113 2 
Other revenues72 57 68 72 58 51 86 84 269 279 
Total revenues7,671 7,834 8,013 8,063 7,908 7,401 8,275 8,397 31,581 31,981 
Claims and expenses
Claims and claim adjustment expenses4,442 4,821 5,230 4,640 4,789 5,107 4,886 4,341 19,133 19,123 
Amortization of deferred acquisition costs1,117 1,134 1,169 1,181 1,178 1,173 1,207 1,215 4,601 4,773 
General and administrative expenses1,057 1,125 1,098 1,085 1,137 1,121 1,109 1,142 4,365 4,509 
Interest expense88 89 84 83 84 85 87 83 344 339 
Total claims and expenses6,704 7,169 7,581 6,989 7,188 7,486 7,289 6,781 28,443 28,744 
Income (loss) before income taxes967 665 432 1,074 720 (85)986 1,616 3,138 3,237 
Income tax expense (benefit)171 108 36 201 120 (45)159 306 516 540 
Net income (loss)$796 $557 $396 $873 $600 $(40)$827 $1,310 $2,622 $2,697 
Investment impairments
Total net investment impairment (charges) recoveries$(1)$(1)$— $(1)$(16)$(46)$4 $3 $(3)$(55)
Credit loss (charges) recoveries recognized in net realized investment gains (losses)$(1)$(1)$— $(2)$(16)$(46)$4 $3 $(4)$(55)
Non-credit losses recognized in other comprehensive income$— $— $— $1 $— $— $— $— $1 $— 
Other statistics
Effective tax rate on net investment income14.7 %15.4 %15.2 %14.8 %15.1 %6.2 %15.6 %15.4 %15.0 %14.3 %
Net investment income (after-tax)$496 $548 $528 $525 $519 $251 $566 $572 $2,097 $1,908 
Catastrophes, net of reinsurance:
Pre-tax$193 $367 $241 $85 $333 $854 $397 $29 $886 $1,613 
After-tax$152 $290 $190 $67 $263 $673 $314 $24 $699 $1,274 
Prior year reserve development - favorable (unfavorable):
Pre-tax$51 $123 $(294)$60 $27 $2 $142 $180 $(60)$351 
After-tax$41 $99 $(232)$45 $21 $1 $113 $141 $(47)$276 
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
3
The Travelers Companies, Inc.                                                 image211.gif
Net Income (Loss) by Major Component and Combined Ratio - Consolidated


($ in millions, net of tax)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Underwriting gain (loss)$307 $52 $(101)$396 $220 $(232)$281 $741 $654 $1,010 
Net investment income496 548 528 525 519 251 566 572 2,097 1,908 
Other income (expense), including interest expense(48)(63)(49)(54)(63)(69)(49)(51)(214)(232)
Core income (loss)755 537 378 867 676 (50)798 1,262 2,537 2,686 
Net realized investment gains (losses)41 20 18 6 (76)10 29 48 85 11 
Net income (loss)$796 $557 $396 $873 $600 $(40)$827 $1,310 $2,622 $2,697 
Combined ratio (1) (2)
Loss and loss adjustment expense ratio64.0 %68.2 %72.0 %63.3 %65.5 %72.7 %65.6 %57.3 %66.9 %65.1 %
Underwriting expense ratio29.7 %30.2 %29.5 %29.1 %30.0 %31.0 %29.3 %29.4 %29.6 %29.9 %
Combined ratio93.7 %98.4 %101.5 %92.4 %95.5 %103.7 %94.9 %86.7 %96.5 %95.0 %
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development(0.7)%(1.8)%4.1 %(0.8)%(0.4)%— %(1.9)%(2.4)%0.2 %(1.2)%
Catastrophes, net of reinsurance2.8 %5.3 %3.3 %1.1 %4.6 %12.3 %5.3 %0.4 %3.1 %5.5 %
Underlying combined ratio91.6 %94.9 %94.1 %92.1 %91.3 %91.4 %91.5 %88.7 %93.2 %90.7 %
 
(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)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Billing and policy fees and other$27 $26 $28 $27 $28 $17 $24 $28 $108 $97 
Fee income:
Loss and loss adjustment expenses$40 $45 $47 $42 $41 $44 $35 $41 $174 $161 
Underwriting expenses69 71 74 71 67 70 66 65 285 268 
Total fee income$109 $116 $121 $113 $108 $114 $101 $106 $459 $429 
Non-insurance general and administrative expenses$47 $50 $48 $56 $55 $52 $60 $67 $201 $234 
 






See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
4
The Travelers Companies, Inc.                                                 image211.gif
Core Income (Loss) - Consolidated


($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Revenues
Premiums$6,855 $6,988 $7,179 $7,250 $7,229 $6,955 $7,380 $7,480 $28,272 $29,044 
Net investment income582 648 622 616 611 268 671 677 2,468 2,227 
Fee income109 116 121 113 108 114 101 106 459 429 
Other revenues72 57 68 72 58 51 86 84 269 279 
Total revenues
7,618 7,809 7,990 8,051 8,006 7,388 8,238 8,347 31,468 31,979 
Claims and expenses
Claims and claim adjustment expenses4,442 4,821 5,230 4,640 4,789 5,107 4,886 4,341 19,133 19,123 
Amortization of deferred acquisition costs1,117 1,134 1,169 1,181 1,178 1,173 1,207 1,215 4,601 4,773 
General and administrative expenses1,057 1,125 1,098 1,085 1,137 1,121 1,109 1,142 4,365 4,509 
Interest expense88 89 84 83 84 85 87 83 344 339 
Total claims and expenses
6,704 7,169 7,581 6,989 7,188 7,486 7,289 6,781 28,443 28,744 
Core income (loss) before income taxes914 640 409 1,062 818 (98)949 1,566 3,025 3,235 
Income tax expense (benefit)159 103 31 195 142 (48)151 304 488 549 
Core income (loss)$755 $537 $378 $867 $676 $(50)$798 $1,262 $2,537 $2,686 
Other statistics
Effective tax rate on net investment income14.7 %15.4 %15.2 %14.8 %15.1 %6.2 %15.6 %15.4 %15.0 %14.3 %
Net investment income (after-tax)$496 $548 $528 $525 $519 $251 $566 $572 $2,097 $1,908 
Catastrophes, net of reinsurance:
Pre-tax$193 $367 $241 $85 $333 $854 $397 $29 $886 $1,613 
After-tax$152 $290 $190 $67 $263 $673 $314 $24 $699 $1,274 
Prior year reserve development - favorable (unfavorable):
Pre-tax$51 $123 $(294)$60 $27 $2 $142 $180 $(60)$351 
After-tax$41 $99 $(232)$45 $21 $1 $113 $141 $(47)$276 









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

5
The Travelers Companies, Inc.                                      image211.gif    
Selected Statistics - Property and Casualty Operations


($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Statutory underwriting
Gross written premiums$7,839 $7,824 $8,022 $7,378 $8,152 $7,751 $8,243 $7,617 $31,063 $31,763 
Net written premiums$7,057 $7,450 $7,569 $7,075 $7,346 $7,346 $7,771 $7,269 $29,151 $29,732 
Net earned premiums$6,855 $6,988 $7,179 $7,250 $7,229 $6,955 $7,380 $7,480 $28,272 $29,044 
Losses and loss adjustment expenses4,389 4,764 5,166 4,578 4,733 5,053 4,830 4,291 18,897 18,907 
Underwriting expenses2,116 2,217 2,179 2,072 2,193 2,212 2,214 2,153 8,584 8,772 
Statutory underwriting gain (loss)350 7 (166)600 303 (310)336 1,036 791 1,365 
Policyholder dividends13 9 15 10 12 8 11 10 47 41 
Statutory underwriting gain (loss) after policyholder dividends$337 $(2)$(181)$590 $291 $(318)$325 $1,026 $744 $1,324 
Other statutory statistics
Reserves for losses and loss adjustment expenses$42,581 $42,979 $43,624 $43,743 $43,913 $45,112 $46,181 $46,247 $43,743 $46,247 
Increase in reserves$172 $398 $645 $119 $170 $1,199 $1,069 $66 $1,334 $2,504 
Statutory capital and surplus$21,074 $21,080 $20,780 $21,330 $20,808 $20,607 $21,230 $22,180 $21,330 $22,180 
Net written premiums/surplus (1)1.33:11.34:11.38:11.37:11.41:1 1.42:1 1.39:1 1.34:1 1.37:11.34:1

(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.

6
The Travelers Companies, Inc.                                                 image211.gif
Written and Earned Premiums - Property and Casualty Operations

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Written premiums
Gross$7,839 $7,824 $8,022 $7,378 $8,152 $7,751 $8,243 $7,617 $31,063 $31,763 
Ceded(782)(374)(453)(303)(806)(405)(472)(348)(1,912)(2,031)
Net$7,057 $7,450 $7,569 $7,075 $7,346 $7,346 $7,771 $7,269 $29,151 $29,732 
Earned premiums
Gross$7,282 $7,429 $7,636 $7,723 $7,683 $7,446 $7,898 $7,961 $30,070 $30,988 
Ceded(427)(441)(457)(473)(454)(491)(518)(481)(1,798)(1,944)
Net$6,855 $6,988 $7,179 $7,250 $7,229 $6,955 $7,380 $7,480 $28,272 $29,044 






























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

7
The Travelers Companies, Inc.                                                 image211.gif
Segment Income (Loss) - Business Insurance

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Revenues
Premiums$3,742 $3,783 $3,882 $3,893 $3,864 $3,735 $3,841 $3,854 $15,300 $15,294 
Net investment income427 481 457 451 453 180 498 502 1,816 1,633 
Fee income104 111 114 108 102 108 95 100 437 405 
Other revenues43 30 39 43 31 36 58 51 155 176 
Total revenues
4,316 4,405 4,492 4,495 4,450 4,059 4,492 4,507 17,708 17,508 
Claims and expenses
Claims and claim adjustment expenses2,580 2,686 3,028 2,669 2,791 2,880 2,804 2,329 10,963 10,804 
Amortization of deferred acquisition costs615 618 634 636 636 622 633 627 2,503 2,518 
General and administrative expenses632 686 657 652 685 656 651 672 2,627 2,664 
Total claims and expenses
3,827 3,990 4,319 3,957 4,112 4,158 4,088 3,628 16,093 15,986 
Segment income (loss) before income taxes489 415 173 538 338 (99)404 879 1,615 1,522 
Income tax expense (benefit)75 64 (6)90 49 (41)39 166 223 213 
Segment income (loss)$414 $351 $179 $448 $289 $(58)$365 $713 $1,392 $1,309 
Other statistics
Effective tax rate on net investment income14.6 %15.3 %15.1 %14.8 %15.0 %6.3 %15.6 %15.4 %15.0 %14.4 %
Net investment income (after-tax)$365 $407 $389 $384 $385 $169 $421 $423 $1,545 $1,398 
Catastrophes, net of reinsurance:
Pre-tax$95 $211 $116 $48 $195 $377 $97 $(24)$470 $645 
After-tax$75 $167 $91 $37 $154 $298 $76 $(19)$370 $509 
Prior year reserve development - favorable (unfavorable):
Pre-tax$(21)$71 $(316)$8 $5 $— $(220)$124 $(258)$(91)
After-tax$(16)$57 $(249)$5 $3 $— $(173)$97 $(203)$(73)












See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
8
The Travelers Companies, Inc.                                                 image211.gif
Segment Income (Loss) by Major Component and Combined Ratio - Business Insurance



($ in millions, net of tax)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Underwriting gain (loss)$44 $(48)$(210)$65 $(84)$(221)$(59)$292 $(149)$(72)
Net investment income365 407 389 384 385 169 421 423 1,545 1,398 
Other income (expense)5 (8)— (1)(12)(6)3 (2)(4)(17)
Segment income (loss)$414 $351 $179 $448 $289 $(58)$365 $713 $1,392 $1,309 
Combined ratio (1) (2)
Loss and loss adjustment expense ratio67.6 %69.6 %76.6 %67.3 %70.9 %75.8 %71.8 %59.2 %70.3 %69.4 %
Underwriting expense ratio30.5 %31.5 %30.4 %30.2 %31.3 %31.3 %30.5 %30.6 %30.6 %30.9 %
Combined ratio98.1 %101.1 %107.0 %97.5 %102.2 %107.1 %102.3 %89.8 %100.9 %100.3 %
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development0.6 %(1.9)%8.1 %(0.2)%(0.1)%— %5.8 %(3.2)%1.7 %0.6 %
Catastrophes, net of reinsurance2.5 %5.6 %3.0 %1.3 %5.0 %10.1 %2.5 %(0.6)%3.0 %4.2 %
Underlying combined ratio95.0 %97.4 %95.9 %96.4 %97.3 %97.0 %94.0 %93.6 %96.2 %95.5 %
 
(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)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Billing and policy fees and other$4 $3 $5 $4 $4 $3 $4 $5 $16 $16 
Fee income:
Loss and loss adjustment expenses$40 $45 $47 $42 $41 $44 $35 $41 $174 $161 
Underwriting expenses64 66 67 66 61 64 60 59 263 244 
Total fee income$104 $111 $114 $108 $102 $108 $95 $100 $437 $405 
Non-insurance general and administrative expenses$38 $41 $39 $43 $47 $42 $52 $56 $161 $197 
 






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

9
The Travelers Companies, Inc.                                                 image211.gif
Selected Statistics - Business Insurance

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Statutory underwriting
Gross written premiums$4,730 $4,193 $4,271 $3,957 $4,794 $4,127 $4,230 $3,909 $17,151 $17,060 
Net written premiums$4,163 $3,874 $3,889 $3,703 $4,190 $3,777 $3,833 $3,631 $15,629 $15,431 
Net earned premiums$3,742 $3,783 $3,882 $3,893 $3,864 $3,735 $3,841 $3,854 $15,300 $15,294 
Losses and loss adjustment expenses2,529 2,631 2,969 2,608 2,737 2,828 2,750 2,282 10,737 10,597 
Underwriting expenses1,226 1,226 1,164 1,133 1,247 1,167 1,145 1,132 4,749 4,691 
Statutory underwriting gain (loss)(13)(74)(251)152 (120)(260)(54)440 (186)6 
Policyholder dividends11 7 11 7 10 6 9 7 36 32 
Statutory underwriting gain (loss) after policyholder dividends$(24)$(81)$(262)$145 $(130)$(266)$(63)$433 $(222)$(26)





























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

10
The Travelers Companies, Inc.                                                 image211.gif
Net Written Premiums - Business Insurance


($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Net written premiums by market          
Domestic          
Select Accounts$785 $756 $695 $675 $799 $734 $658 $630 $2,911 $2,821 
Middle Market2,410 2,009 2,150 2,061 2,408 1,960 2,131 2,012 8,630 8,511 
National Accounts304 223 273 251 301 215 239 241 1,051 996 
National Property and Other387 588 553 437 428 585 602 471 1,965 2,086 
Total Domestic3,886 3,576 3,671 3,424 3,936 3,494 3,630 3,354 14,557 14,414 
International277 298 218 279 254 283 203 277 1,072 1,017 
Total$4,163 $3,874 $3,889 $3,703 $4,190 $3,777 $3,833 $3,631 $15,629 $15,431 
Net written premiums by product line          
Domestic          
Workers’ compensation$1,191 $893 $905 $817 $1,096 $780 $774 $699 $3,806 $3,349 
Commercial automobile719 677 674 666 755 667 689 679 2,736 2,790 
Commercial property389 583 568 474 433 620 603 507 2,014 2,163 
General liability678 548 611 579 683 531 630 603 2,416 2,447 
Commercial multi-peril902 871 885 884 956 892 899 861 3,542 3,608 
Other7 4 28 4 13 4 35 5 43 57 
Total Domestic3,886 3,576 3,671 3,424 3,936 3,494 3,630 3,354 14,557 14,414 
International277 298 218 279 254 283 203 277 1,072 1,017 
Total$4,163 $3,874 $3,889 $3,703 $4,190 $3,777 $3,833 $3,631 $15,629 $15,431 










See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
11
The Travelers Companies, Inc.                                                 image211.gif
Segment Income - Bond & Specialty Insurance


($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Revenues
Premiums$606 $632 $653 $674 $667 $693 $723 $740 $2,565 $2,823 
Net investment income56 58 59 60 55 42 58 58 233 213 
Other revenues6 6 7 7 5 5 7 10 26 27 
Total revenues668 696 719 741 727 740 788 808 2,824 3,063 
Claims and expenses
Claims and claim adjustment expenses266 238 303 287 327 403 392 342 1,094 1,464 
Amortization of deferred acquisition costs112 118 123 125 124 128 133 134 478 519 
General and administrative expenses117 120 124 122 125 123 124 128 483 500 
Total claims and expenses495 476 550 534 576 654 649 604 2,055 2,483 
Segment income before income taxes173 220 169 207 151 86 139 204 769 580 
Income tax expense35 46 30 40 29 14 24 40 151 107 
Segment income$138 $174 $139 $167 $122 $72 $115 $164 $618 $473 
Other statistics
Effective tax rate on net investment income14.4 %14.8 %14.9 %13.2 %14.7 %3.0 %14.8 %14.4 %14.3 %12.3 %
Net investment income (after-tax)$47 $50 $50 $52 $47 $41 $49 $50 $199 $187 
Catastrophes, net of reinsurance:
Pre-tax$3 $— $1 $1 $1 $7 $2 $1 $5 $11 
After-tax$2 $— $1 $1 $1 $5 $2 $1 $4 $9 
Prior year reserve development - favorable (unfavorable):
Pre-tax$3 $39 $3 $20 $— $(33)$— $32 $65 $(1)
After-tax$2 $31 $2 $16 $— $(26)$— $25 $51 $(1)












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

12
The Travelers Companies, Inc.                                                image211.gif
Segment Income by Major Component and Combined Ratio - Bond & Specialty Insurance

($ in millions, net of tax)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Underwriting gain$86 $120 $85 $111 $72 $29 $61 $107 $402 $269 
Net investment income47 50 50 52 47 41 49 50 199 187 
Other income5 4 4 4 3 2 5 7 17 17 
Segment income$138 $174 $139 $167 $122 $72 $115 $164 $618 $473 
Combined ratio (1)
Loss and loss adjustment expense ratio43.5 %37.4 %45.7 %42.4 %48.8 %57.8 %54.0 %45.7 %42.2 %51.5 %
Underwriting expense ratio37.6 %37.5 %37.6 %36.2 %37.1 %36.0 %35.3 %35.2 %37.3 %35.9 %
Combined ratio81.1 %74.9 %83.3 %78.6 %85.9 %93.8 %89.3 %80.9 %79.5 %87.4 %
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development(0.5)%(6.2)%(0.5)%(2.9)%— %4.7 %— %(4.2)%(2.5)%— %
Catastrophes, net of reinsurance0.5 %0.1 %0.2 %0.2 %0.2 %1.0 %0.3 %0.1 %0.2 %0.4 %
Underlying combined ratio81.1 %81.0 %83.6 %81.3 %85.7 %88.1 %89.0 %85.0 %81.8 %87.0 %


(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)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Non-insurance general and administrative expenses$1 $1 $1 $2 $1 $1 $2 $2 $5 $6 














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

13
The Travelers Companies, Inc.                                                 image211.gif
Selected Statistics - Bond & Specialty Insurance

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Statutory underwriting          
Gross written premiums$662 $747 $770 $752 $750 $770 $803 $861 $2,931 $3,184 
Net written premiums$587 $710 $728 $714 $663 $734 $754 $800 $2,739 $2,951 
Net earned premiums$606 $632 $653 $674 $667 $693 $723 $740 $2,565 $2,823 
Losses and loss adjustment expenses264 236 298 286 325 401 390 339 1,084 1,455 
Underwriting expenses233 251 261 242 254 253 261 261 987 1,029 
Statutory underwriting gain109 145 94 146 88 39 72 140 494 339 
Policyholder dividends2 2 4 3 2 2 2 3 11 9 
Statutory underwriting gain after policyholder dividends$107 $143 $90 $143 $86 $37 $70 $137 $483 $330 
 




























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

14
The Travelers Companies, Inc.                                                 image211.gif
Net Written Premiums - Bond & Specialty Insurance

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Net written premiums by market
Domestic
Management Liability$367 $403 $424 $411 $401 $438 $467 $463 $1,605 $1,769 
Surety184 244 232 206 215 220 208 202 866 845 
Total Domestic551 647 656 617 616 658 675 665 2,471 2,614 
International36 63 72 97 47 76 79 135 268 337 
Total$587 $710 $728 $714 $663 $734 $754 $800 $2,739 $2,951 
Net written premiums by product line
Domestic
Fidelity & surety$239 $298 $292 $260 $272 $274 $268 $258 $1,089 $1,072 
General liability262 292 293 301 289 326 339 357 1,148 1,311 
Other50 57 71 56 55 58 68 50 234 231 
Total Domestic551 647 656 617 616 658 675 665 2,471 2,614 
International36 63 72 97 47 76 79 135 268 337 
Total$587 $710 $728 $714 $663 $734 $754 $800 $2,739 $2,951 



















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

15
The Travelers Companies, Inc.                                                 image211.gif
Segment Income - Personal Insurance


($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Revenues
Premiums$2,507 $2,573 $2,644 $2,683 $2,698 $2,527 $2,816 $2,886 $10,407 $10,927 
Net investment income99 109 106 105 103 46 115 117 419 381 
Fee income5 5 7 5 6 6 6 6 22 24 
Other revenues22 21 22 22 22 10 21 23 87 76 
Total revenues2,633 2,708 2,779 2,815 2,829 2,589 2,958 3,032 10,935 11,408 
Claims and expenses
Claims and claim adjustment expenses1,596 1,897 1,899 1,684 1,671 1,824 1,690 1,670 7,076 6,855 
Amortization of deferred acquisition costs390 398 412 420 418 423 441 454 1,620 1,736 
General and administrative expenses300 311 309 300 320 333 328 333 1,220 1,314 
Total claims and expenses2,286 2,606 2,620 2,404 2,409 2,580 2,459 2,457 9,916 9,905 
Segment income before income taxes347 102 159 411 420 9 499 575 1,019 1,503 
Income tax expense (benefit)69 14 28 84 84 (1)107 118 195 308 
Segment income$278 $88 $131 $327 $336 $10 $392 $457 $824 $1,195 
Other statistics
Effective tax rate on net investment income15.4 %16.1 %15.8 %15.6 %15.8 %9.1 %16.2 %16.0 %15.8 %15.2 %
Net investment income (after-tax)$84 $91 $89 $89 $87 $41 $96 $99 $353 $323 
Catastrophes, net of reinsurance:
Pre-tax$95 $156 $124 $36 $137 $470 $298 $52 $411 $957 
After-tax$75 $123 $98 $29 $108 $370 $236 $42 $325 $756 
Prior year reserve development - favorable:
Pre-tax$69 $13 $19 $32 $22 $35 $362 $24 $133 $443 
After-tax$55 $11 $15 $24 $18 $27 $286 $19 $105 $350 












See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
16
The Travelers Companies, Inc.                                                 image211.gif
Segment Income by Major Component and Combined Ratio - Personal Insurance


($ in millions, net of tax)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Underwriting gain (loss)$177 $(20)$24 $220 $232 $(40)$279 $342 $401 $813 
Net investment income84 91 89 89 87 41 96 99 353 323 
Other income17 17 18 18 17 9 17 16 70 59 
Segment income$278 $88 $131 $327 $336 $10 $392 $457 $824 $1,195 
Combined ratio (1)
Loss and loss adjustment expense ratio63.7 %73.7 %71.8 %62.8 %61.9 %72.2 %60.0 %57.9 %68.0 %62.8 %
Underwriting expense ratio26.4 %26.5 %26.2 %25.7 %26.3 %29.1 %26.4 %26.2 %26.2 %26.9 %
Combined ratio90.1 %100.2 %98.0 %88.5 %88.2 %101.3 %86.4 %84.1 %94.2 %89.7 %
Domestic Agency combined ratio88.9 %98.8 %97.2 %88.2 %86.9 %100.4 %86.0 %84.2 %93.3 %89.1 %
Impact on combined ratio:
Net favorable prior year reserve development(2.8)%(0.5)%(0.7)%(1.2)%(0.8)%(1.3)%(12.8)%(0.8)%(1.3)%(4.1)%
Catastrophes, net of reinsurance3.8 %6.1 %4.7 %1.3 %5.0 %18.6 %10.5 %1.8 %4.0 %8.8 %
Underlying combined ratio89.1 %94.6 %94.0 %88.4 %84.0 %84.0 %88.7 %83.1 %91.5 %85.0 %

(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)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Billing and policy fees and other$23 $23 $23 $23 $24 $14 $20 $23 $92 $81 
Fee income$5 $5 $7 $5 $6 $6 $6 $6 $22 $24 















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

17
The Travelers Companies, Inc.                                                 image211.gif
Selected Statistics - Personal Insurance


($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Statutory underwriting
Gross written premiums$2,447 $2,884 $2,981 $2,669 $2,608 $2,854 $3,210 $2,847 $10,981 $11,519 
Net written premiums$2,307 $2,866 $2,952 $2,658 $2,493 $2,835 $3,184 $2,838 $10,783 $11,350 
Net earned premiums$2,507 $2,573 $2,644 $2,683 $2,698 $2,527 $2,816 $2,886 $10,407 $10,927 
Losses and loss adjustment expenses1,596 1,897 1,899 1,684 1,671 1,824 1,690 1,670 7,076 6,855 
Underwriting expenses657 740 754 697 692 792 808 760 2,848 3,052 
Statutory underwriting gain (loss)$254 $(64)$(9)$302 $335 $(89)$318 $456 $483 $1,020 
Policies in force (in thousands)
Automobile2,981 2,980 2,979 2,973 2,970 2,993 3,015 3,029 2,973 3,029 
Homeowners and Other5,163 5,263 5,361 5,444 5,534 5,679 5,790 5,858 5,444 5,858 




























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

18
The Travelers Companies, Inc.                                                 image211.gif
Net Written Premiums - Personal Insurance

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Net written premiums by market
Domestic
Agency
Automobile$1,224 $1,300 $1,347 $1,253 $1,260 $1,141 $1,402 $1,277 $5,124 $5,080 
Homeowners and Other837 1,258 1,300 1,145 990 1,419 1,482 1,294 4,540 5,185 
Total Agency2,061 2,558 2,647 2,398 2,250 2,560 2,884 2,571 9,664 10,265 
Direct-to-Consumer95 103 115 99 100 102 124 107 412 433 
Total Domestic2,156 2,661 2,762 2,497 2,350 2,662 3,008 2,678 10,076 10,698 
International151 205 190 161 143 173 176 160 707 652 
Total$2,307 $2,866 $2,952 $2,658 $2,493 $2,835 $3,184 $2,838 $10,783 $11,350 




























See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
19
The Travelers Companies, Inc.                                                 image211.gif
Selected Statistics - Personal Insurance - Domestic Agency Automobile (1)

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Statutory underwriting
Gross written premiums$1,240 $1,304 $1,352 $1,258 $1,272 $1,145 $1,407 $1,282 $5,154 $5,106 
Net written premiums$1,224 $1,300 $1,347 $1,253 $1,260 $1,141 $1,402 $1,277 $5,124 $5,080 
Net earned premiums$1,228 $1,249 $1,271 $1,276 $1,279 $1,091 $1,316 $1,309 $5,024 $4,995 
Losses and loss adjustment expenses810 876 891 971 842 627 742 819 3,548 3,030 
Underwriting expenses296 312 310 299 301 317 323 315 1,217 1,256 
Statutory underwriting gain$122 $61 $70 $6 $136 $147 $251 $175 $259 $709 
Other statistics
Combined ratio (2):
Loss and loss adjustment expense ratio66.0 %70.1 %70.1 %76.1 %65.9 %57.5 %56.4 %62.6 %70.7 %60.7 %
Underwriting expense ratio23.4 %23.9 %22.9 %23.1 %23.5 %28.2 %23.4 %23.9 %23.3 %24.6 %
Combined ratio89.4 %94.0 %93.0 %99.2 %89.4 %85.7 %79.8 %86.5 %94.0 %85.3 %
Impact on combined ratio:
Net favorable prior year reserve development(3.4)%(1.1)%(0.5)%(0.5)%(0.4)%(1.0)%(1.6)%(1.2)%(1.3)%(1.1)%
Catastrophes, net of reinsurance0.7 %1.3 %0.8 %0.1 %0.6 %2.5 %0.4 %— %0.7 %0.8 %
Underlying combined ratio92.1 %93.8 %92.7 %99.6 %89.2 %84.2 %81.0 %87.7 %94.6 %85.6 %
Catastrophe losses, net of reinsurance:
Pre-tax$9 $16 $11 $1 $7 $27 $6 $— $37 $40 
After-tax$7 $13 $8 $1 $6 $21 $4 $— $29 $31 
Prior year reserve development - favorable:
Pre-tax$42 $13 $5 $6 $6 $11 $22 $16 $66 $55 
After-tax$33 $10 $5 $4 $5 $9 $17 $13 $52 $44 
Policies in force (in thousands)2,516 2,517 2,524 2,532 2,540 2,570 2,596 2,614 
Change from prior year quarter(0.1)%— %0.2 %0.6 %1.0 %2.1 %2.9 %3.2 %
Change from prior quarter(0.1)%— %0.3 %0.3 %0.3 %1.2 %1.0 %0.7 %
(1)  Represents Automobile policies sold through agents, brokers and other intermediaries, and excludes direct to consumer.
(2)  Billing and policy fees and other, which are a component of other revenues, and fee income are allocated as a reduction of underwriting expenses.
($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Billing and policy fees and other$12 $12 $12 $11 $12 $7 $10 $11 $47 $40 
Fee income$3 $3 $4 $3 $3 $4 $4 $3 $13 $14 
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
20
The Travelers Companies, Inc.                                                 image211.gif
Selected Statistics - Personal Insurance - Domestic Agency Homeowners and Other (1)

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Statutory underwriting
Gross written premiums$954 $1,268 $1,316 $1,147 $1,086 $1,432 $1,495 $1,297 $4,685 $5,310 
Net written premiums$837 $1,258 $1,300 $1,145 $990 $1,419 $1,482 $1,294 $4,540 $5,185 
Net earned premiums$1,011 $1,050 $1,089 $1,125 $1,145 $1,188 $1,227 $1,294 $4,275 $4,854 
Losses and loss adjustment expenses604 801 801 542 642 1,010 792 702 2,748 3,146 
Underwriting expenses277 335 349 314 310 385 392 361 1,275 1,448 
Statutory underwriting gain (loss)$130 $(86)$(61)$269 $193 $(207)$43 $231 $252 $260 
Other statistics
Combined ratio (2):
Loss and loss adjustment expense ratio59.8 %76.3 %73.6 %48.2 %56.1 %85.0 %64.5 %54.2 %64.3 %64.8 %
Underwriting expense ratio28.4 %28.2 %28.4 %27.6 %28.1 %28.9 %28.3 %27.7 %28.2 %28.2 %
Combined ratio88.2 %104.5 %102.0 %75.8 %84.2 %113.9 %92.8 %81.9 %92.5 %93.0 %
Impact on combined ratio:
Net favorable prior year reserve development(2.4)%(1.3)%(1.4)%(0.8)%(1.5)%(1.7)%(27.2)%(0.5)%(1.4)%(7.8)%
Catastrophes, net of reinsurance8.0 %12.9 %9.9 %3.0 %10.8 %34.2 %23.6 %3.9 %8.3 %17.9 %
Underlying combined ratio82.6 %92.9 %93.5 %73.6 %74.9 %81.4 %96.4 %78.5 %85.6 %82.9 %
Catastrophe losses, net of reinsurance:
Pre-tax$80 $136 $107 $34 $123 $407 $289 $51 $357 $870 
After-tax$63 $107 $85 $27 $97 $322 $228 $41 $282 $688 
Prior year reserve development - favorable:
Pre-tax$25 $13 $15 $9 $17 $21 $333 $7 $62 $378 
After-tax$19 $11 $12 $7 $14 $16 $263 $6 $49 $299 
Policies in force (in thousands)4,726 4,825 4,927 5,016 5,111 5,255 5,365 5,432 
Change from prior year quarter6.1 %6.5 %7.1 %7.8 %8.1 %8.9 %8.9 %8.3 %
Change from prior quarter1.6 %2.1 %2.1 %1.8 %1.9 %2.8 %2.1 %1.2 %
(1)  Represents Homeowners and Other Lines sold through agents, brokers and other intermediaries, and excludes direct to consumer.
(2)  Billing and policy fees and other, which are a component of other revenues, and fee income are allocated as a reduction of underwriting expenses.
($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Billing and policy fees and other$8 $8 $8 $8 $8 $5 $7 $8 $32 $28 
Fee income$2 $2 $3 $2 $2 $3 $3 $2 $9 $10 
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
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Interest Expense and Other

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Revenues
Other revenues$1 $— $— $— $— $— $— $— $1 $— 
Claims and expenses
Interest expense88 89 84 83 84 85 87 83 344 339 
General and administrative expenses8 8 8 11 7 9 6 9 35 31 
Total claims and expenses96 97 92 94 91 94 93 92 379 370 
Loss before income tax benefit(95)(97)(92)(94)(91)(94)(93)(92)(378)(370)
Income tax benefit(20)(21)(21)(19)(20)(20)(19)(20)(81)(79)
Loss$(75)$(76)$(71)$(75)$(71)$(74)$(74)$(72)$(297)$(291)




























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

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Consolidated Balance Sheet

($ in millions)December 31,
2020 (1)		December 31,
2019
Assets
Fixed maturities, available for sale, at fair value (amortized cost $68,830 and $65,281; allowance for expected credit losses of $2 at December 31, 2020)
$74,003 $68,134 
Equity securities, at fair value (cost $387 and $376)
453 425 
Real estate investments1,026 963 
Short-term securities5,511 4,943 
Other investments3,430 3,419 
Total investments84,423 77,884 
Cash721 494 
Investment income accrued603 618 
Premiums receivable (net of allowance for expected credit losses of $105 at December 31, 2020)
7,829 7,909 
Reinsurance recoverables (net of allowance for estimated uncollectible reinsurance of $146 at December 31, 2020)
8,350 8,235 
Ceded unearned premiums772 689 
Deferred acquisition costs2,358 2,273 
Contractholder receivables (net of allowance for expected credit losses of $19 at December 31, 2020)
4,242 4,599 
Goodwill3,976 3,961 
Other intangible assets317 330 
Other assets3,173 3,130 
Total assets$116,764 $110,122 
Liabilities
Claims and claim adjustment expense reserves$54,521 $51,849 
Unearned premium reserves15,222 14,604 
Contractholder payables4,261 4,619 
Payables for reinsurance premiums356 363 
Deferred taxes558 137 
Debt6,550 6,558 
Other liabilities6,095 6,049 
Total liabilities87,563 84,179 
Shareholders’ equity
Common stock (1,750.0 shares authorized; 252.4 and 255.5 shares issued and outstanding)
23,743 23,469 
Retained earnings38,771 36,977 
Accumulated other comprehensive income2,502 640 
Treasury stock, at cost (527.3 and 522.1 shares)
(35,815)(35,143)
Total shareholders’ equity29,201 25,943 
Total liabilities and shareholders’ equity$116,764 $110,122 
Note: Certain reclassifications have been made to the 2019 consolidated balance sheet to conform to the 2020 presentation.

(1) Preliminary
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Investment Portfolio

(at carrying value, $ in millions)December 31,
2020		Pre-tax Book
Yield (1)		December 31,
2019		Pre-tax Book
Yield (1)
Investment portfolio
Taxable fixed maturities (including redeemable preferred stock)$40,230 2.90 %$38,570 3.17 %
Tax-exempt fixed maturities33,773 2.83 %29,564 3.12 %
Total fixed maturities74,003 2.87 %68,134 3.15 %
Non-redeemable preferred stocks43 5.03 %42 5.04 %
Public common stocks410 383 
Total equity securities453 425 
Real estate investments1,026 963 
Short-term securities5,511 0.18 %4,943 1.82 %
Private equities2,301 2,236 
Hedge funds197 186 
Real estate partnerships701 658 
Other investments231 339 
Total other investments3,430 3,419 
Total investments$84,423 $77,884 
Net unrealized investment gains, net of tax, included in shareholders’ equity$4,074 $2,246 

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


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Investment Portfolio - Fixed Maturities Data

(at carrying value, $ in millions)December 31,
2020		December 31,
2019
Fixed maturities
U.S. Treasury securities and obligations of U.S. Government corporations and agencies$2,149 $2,095 
Obligations of states and political subdivisions:
Pre-refunded3,544 2,056 
All other32,816 27,861 
Total36,360 29,917 
Debt securities issued by foreign governments1,054 1,173 
Mortgage-backed securities - principally obligations of U.S. Government agencies2,361 3,280 
Corporates (including redeemable preferreds)32,079 31,669 
Total fixed maturities$74,003 $68,134 
 
Fixed Maturities
Quality Characteristics (1)
 
 December 31, 2020December 31, 2019
 Amount% of TotalAmount% of Total
Quality Ratings
Aaa$31,653 42.8 %$29,164 42.9 %
Aa18,327 24.8 15,819 23.2 
A12,944 17.5 12,148 17.8 
Baa9,738 13.1 9,541 14.0 
Total investment grade72,662 98.2 66,672 97.9 
Ba870 1.2 846 1.2 
B366 0.5 511 0.7 
Caa and lower105 0.1 105 0.2 
Total below investment grade1,341 1.8 1,462 2.1 
Total fixed maturities$74,003 100.0 %$68,134 100.0 %
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 purchases3.8 4.0 

(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.
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Investment Income

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Gross investment income
Fixed maturities$511 $514 $520 $525 $511 $498 $502 $500 $2,070 $2,011 
Short-term securities28 27 26 24 22 13 6 3 105 44 
Other53 118 85 77 88 (234)173 182 333 209 
592 659 631 626 621 277 681 685 2,508 2,264 
Investment expenses10 11 9 10 10 9 10 8 40 37 
Net investment income, pre-tax582 648 622 616 611 268 671 677 2,468 2,227 
Income taxes86 100 94 91 92 17 105 105 371 319 
Net investment income, after-tax$496 $548 $528 $525 $519 $251 $566 $572 $2,097 $1,908 
Effective tax rate14.7 %15.4 %15.2 %14.8 %15.1 %6.2 %15.6 %15.4 %15.0 %14.3 %
Average invested assets (1)$74,040$74,370$74,910$75,996$76,191$76,635$78,722$80,373$74,866$78,070
Average yield pre-tax (1)3.1 %3.5 %3.3 %3.2 %3.2 %1.4 %3.4 %3.4 %3.3 %2.9 %
Average yield after-tax2.7 %2.9 %2.8 %2.8 %2.7 %1.3 %2.9 %2.8 %2.8 %2.4 %

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

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Net Realized and Unrealized Investment Gains (Losses) included in Shareholders' Equity

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Net realized investment gains (losses)
Fixed maturities$16 $13 $14 $12 $(2)$10 $23 $21 $55 $52 
Equity securities 41 10 8 14 (88)43 16 37 73 8 
Other (1)(4)2 1 (14)(8)(40)(2)(8)(15)(58)
Realized investment gains (losses) before tax53 25 23 12 (98)13 37 50 113 2 
Related taxes12 5 5 6 (22)3 8 2 28 (9)
Net realized investment gains (losses)$41 $20 $18 $6 $(76)$10 $29 $48 $85 $11 
Gross investment gains (1)$65 $31 $30 $32 $31 $69 $41 $64 $158 $205 
Gross investment losses before impairments (1)(11)(5)(7)(18)(113)(10)(8)(17)(41)(148)
Net investment gains (losses) before impairments54 26 23 14 (82)59 33 47 117 57 
Net credit impairment (charges) recoveries(1)(1)— (2)(16)(46)4 3 (4)(55)
Net realized investment gains (losses) before tax53 25 23 12 (98)13 37 50 113 2 
Related taxes12 5 5 6 (22)3 8 2 28 (9)
Net realized investment gains (losses)$41 $20 $18 $6 $(76)$10 $29 $48 $85 $11 
($ in millions)March 31,
2019		June 30,
2019		September 30,
2019		December 31,
2019		March 31,
2020		June 30,
2020		September 30,
2020		December 31,
2020
Net unrealized investment gains, net of tax, included in shareholders’ equity, by asset type
Fixed maturities$1,284 $2,388 $2,990 $2,853 $2,271 $4,632 $4,842 $5,175 
Equity securities & other— 1 1 — 2 2 2 — 
Unrealized investment gains before tax1,284 2,389 2,991 2,853 2,273 4,634 4,844 5,175 
Related taxes 277 511 637 607 488 988 1,032 1,101 
Balance, end of period$1,007 $1,878 $2,354 $2,246 $1,785 $3,646 $3,812 $4,074 
(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$1 $— $— $— $5 $— $— $— $1 $5 
Gross investment Treasury future losses$1 $— $— $— $12 $— $— $— $1 $12 
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.
 

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Reinsurance Recoverables

($ in millions)December 31, 2020December 31, 2019
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses (1)$3,731 $3,476 
Gross structured settlements (2)2,964 2,965 
Mandatory pools and associations (3) 1,801 1,886 
Gross reinsurance recoverables (4)8,496 8,327 
Allowance for estimated uncollectible reinsurance (5)(146)(92)
Net reinsurance recoverables$8,350 $8,235 
(1)  The Company’s top five reinsurer groups, including retroactive reinsurance, included in gross reinsurance recoverables is as follows:
ReinsurerA.M. Best Rating of Group's Predominant ReinsurerDecember 31, 2020
Swiss Re Group A+ second highest of 16 ratings$535 
Berkshire HathawayA++ highest of 16 ratings333 
Munich Re GroupA+ second highest of 16 ratings290 
Alleghany GroupA+ second highest of 16 ratings204 
Axa Group A+ second highest of 16 ratings177 
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.

(2)  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 amounts due from the life insurance company related to the structured settlement are included in both the claims and claim adjustment expense reserves and reinsurance recoverables in the Company’s consolidated balance sheet, as the Company retains the 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 included in gross structured settlements is as follows:
GroupA.M. Best Rating of Group's Predominant InsurerDecember 31, 2020
Fidelity & Guaranty Life Group  A- fourth highest of 16 ratings$757 
Genworth Financial Group (a) B seventh highest of 16 ratings323 
John Hancock Group A+ second highest of 16 ratings271 
Brighthouse Financial, Inc. A third highest of 16 ratings234 
Symetra Financial Corporation A third highest of 16 ratings229 

(a) On October 23, 2016, Genworth Financial (Genworth) announced that they have entered into a definitive agreement under which China Oceanwide Holdings Group Co., Ltd. agreed to acquire all of the outstanding shares of Genworth. On March 7, 2017, Genworth stockholders adopted the merger agreement. On January 4, 2021, the parties announced that although the merger agreement remains in effect, they have not extended the closing deadline of December 31, 2020, and either party is able to terminate the merger agreement at any time.

(3)  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. 

(4) Of the total reinsurance recoverables at December 31, 2020, after deducting mandatory pools and associations and before allowances for estimated uncollectible reinsurance, $5.85 billion, or 87%, were rated by A.M. Best Company.  The Company utilizes updated A.M. Best credit ratings on a quarterly basis when determining the allowance. Of the total rated by A.M. Best Company, 94% were rated A- or better.  The remaining 13% of reinsurance recoverables were comprised of the following:  6% related to captive insurance companies, 1% related to the Company’s participation in voluntary pools and 6% were balances from other companies not rated by A.M. Best Company.  Certain of the Company's reinsurance recoverables are collateralized by letters of credit, funds held or trust agreements.

(5) The Company reports its reinsurance recoverables net of an allowance for estimated uncollectible reinsurance. The allowance is based upon the Company’s ongoing review of amounts outstanding, length of collection periods, changes in reinsurer credit standing, disputes, applicable coverage defenses and other relevant factors.  For structured settlements, the allowance is also based upon the Company’s ongoing review of life insurers’ creditworthiness and estimated amounts of coverage that would be available from state guaranty funds if a life insurer defaults. A probability-of-default methodology which reflects current and forecasted economic conditions is used to estimate the amount of uncollectible reinsurance due to credit-related factors and the estimate is reported in an allowance for estimated uncollectible reinsurance. The allowance also includes estimated uncollectible amounts related to dispute risk with reinsurers. The Company adopted updated guidance for the accounting for credit losses for financial instruments for the quarter ending March 31, 2020 which resulted in the recognition of an allowance for expected credit losses on structured settlements of $53 million, pre-tax, with an offsetting after-tax cumulative effect adjustment to retained earnings as of January 1, 2020.
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Net Reserves for Losses and Loss Adjustment Expense

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Statutory Reserves for Losses and Loss Adjustment Expenses
Business Insurance
Beginning of period$33,857 $34,086 $34,377 $34,963 $35,142 $35,415 $36,210 $36,946 $33,857 $35,142 
Incurred2,529 2,631 2,969 2,608 2,737 2,828 2,750 2,282 10,737 10,597 
Paid(2,320)(2,345)(2,354)(2,482)(2,364)(2,067)(2,054)(2,296)(9,501)(8,781)
Foreign exchange and other20 5 (29)53 (100)34 40 67 49 41 
End of period$34,086 $34,377 $34,963 $35,142 $35,415 $36,210 $36,946 $36,999 $35,142 $36,999 
Bond & Specialty Insurance
Beginning of period$2,987 $3,068 $3,042 $3,074 $3,094 $3,085 $3,276 $3,447 $2,987 $3,094 
Incurred264 236 298 286 325 401 390 339 1,084 1,455 
Paid(189)(260)(256)(290)(300)(216)(237)(243)(995)(996)
Foreign exchange and other6 (2)(10)24 (34)6 18 28 18 18 
End of period$3,068 $3,042 $3,074 $3,094 $3,085 $3,276 $3,447 $3,571 $3,094 $3,571 
Personal Insurance
Beginning of period$5,565 $5,427 $5,560 $5,587 $5,507 $5,413 $5,626 $5,788 $5,565 $5,507 
Incurred1,596 1,897 1,899 1,684 1,671 1,824 1,690 1,670 7,076 6,855 
Paid(1,751)(1,781)(1,862)(1,782)(1,693)(1,644)(1,546)(1,816)(7,176)(6,699)
Foreign exchange and other17 17 (10)18 (72)33 18 35 42 14 
End of period$5,427 $5,560 $5,587 $5,507 $5,413 $5,626 $5,788 $5,677 $5,507 $5,677 
Total
Beginning of period$42,409 $42,581 $42,979 $43,624 $43,743 $43,913 $45,112 $46,181 $42,409 $43,743 
Incurred4,389 4,764 5,166 4,578 4,733 5,053 4,830 4,291 18,897 18,907 
Paid(4,260)(4,386)(4,472)(4,554)(4,357)(3,927)(3,837)(4,355)(17,672)(16,476)
Foreign exchange and other43 20 (49)95 (206)73 76 130 109 73 
End of period$42,581 $42,979 $43,624 $43,743 $43,913 $45,112 $46,181 $46,247 $43,743 $46,247 
Prior Year Reserve Development: Unfavorable (Favorable)
Business Insurance
Asbestos$— $— $220 $— $— $— $295 $— $220 $295 
Environmental— 60 8 8 17 17 4 16 76 54 
All other21 (131)88 (16)(22)(17)(79)(140)(38)(258)
Total Business Insurance (1)21 (71)316 (8)(5)— 220 (124)258 91 
Bond & Specialty Insurance(3)(39)(3)(20)— 33 — (32)(65)1 
Personal Insurance(69)(13)(19)(32)(22)(35)(362)(24)(133)(443)
Total$(51)$(123)$294 $(60)$(27)$(2)$(142)$(180)$60 $(351)
(1)  Excludes accretion of discount.

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

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Asbestos reserves
Beginning reserves:
Gross$1,608 $1,564 $1,474 $1,685 $1,601 $1,530 $1,470 $1,772 $1,608 $1,601 
Ceded(327)(321)(295)(334)(322)(316)(301)(365)(327)(322)
Net1,281 1,243 1,179 1,351 1,279 1,214 1,169 1,407 1,281 1,279 
Incurred losses and loss expenses:
Gross— — 268 — — — 362 — 268 362 
Ceded— — (48)— — — (67)— (48)(67)
Paid loss and loss expenses:
Gross44 90 57 86 69 60 61 105 277 295 
Ceded(6)(26)(9)(12)(6)(15)(2)(35)(53)(58)
Foreign exchange and other:
Gross— — — 2 (2)— 1 1 2 — 
Ceded— — — — — — 1 — — 1 
Ending reserves:
Gross1,564 1,474 1,685 1,601 1,530 1,470 1,772 1,668 1,601 1,668 
Ceded(321)(295)(334)(322)(316)(301)(365)(330)(322)(330)
Net$1,243 $1,179 $1,351 $1,279 $1,214 $1,169 $1,407 $1,338 $1,279 $1,338 
Environmental reserves
Beginning reserves:
Gross$358 $338 $388 $374 $350 $350 $356 $351 $358 $350 
Ceded(24)(24)(29)(29)(29)(27)(26)(37)(24)(29)
Net334 314 359 345 321 323 330 314 334 321 
Incurred losses and loss expenses:
Gross— 67 8 9 19 17 15 16 84 67 
Ceded— (7)— (1)(2)— (11)— (8)(13)
Paid loss and loss expenses:
Gross20 16 22 34 18 11 21 25 92 75 
Ceded— (1)— (1)(4)(1)— (1)(2)(6)
Foreign exchange and other:
Gross— (1)— 1 (1)— 1 1 — 1 
Ceded— 1 — — — — — — 1 — 
Ending reserves:
Gross338 388 374 350 350 356 351 343 350 343 
Ceded(24)(29)(29)(29)(27)(26)(37)(36)(29)(36)
Net$314 $359 $345 $321 $323 $330 $314 $307 $321 $307 
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
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Capitalization

($ in millions)December 31,
2020		December 31,
2019
Debt
Short-term debt
Commercial paper$100 $100 
3.90% Senior notes due November 1, 2020 (1)— 500 
Total short-term debt100 600 
Long-term debt
7.75% Senior notes due April 15, 2026200 200 
7.625% Junior subordinated debentures due December 15, 2027125 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, 204556 56 
3.75% Senior notes due May 15, 2046 (1)500 500 
8.312% Junior subordinated debentures due July 1, 204673 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)500 500 
2.55% Senior notes due April 27, 2050 (1)500 — 
Total long-term debt6,504 6,004 
Unamortized fair value adjustment41 43 
Unamortized debt issuance costs(95)(89)
6,450 5,958 
Total debt6,550 6,558 
Common equity (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)25,127 23,697 
Total capital (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)$31,677 $30,255 
Total debt to capital (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)20.7 %21.7 %
(1)  Redeemable anytime with “make-whole” premium. 


See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
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Statutory Capital and Surplus to GAAP Shareholders' Equity Reconciliation

($ in millions)December 31,
2020 (1)		December 31,
2019
Statutory capital and surplus$22,180 $21,330 
GAAP adjustments  
Goodwill and intangible assets3,568 3,589 
Investments5,337 3,130 
Noninsurance companies(3,730)(4,111)
Deferred acquisition costs2,358 2,273 
Deferred federal income tax(1,585)(1,144)
Current federal income tax(42)(29)
Reinsurance recoverables55 47 
Furniture, equipment & software841 676 
Agents balances168 212 
Other51 (30)
Total GAAP adjustments7,021 4,613 
GAAP shareholders’ equity$29,201 $25,943 

(1) Estimated and Preliminary
 




















See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
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The Travelers Companies, Inc.                                                 image211.gif
Statement of Cash Flows - Preliminary


($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Cash flows from operating activities
Net income (loss)$796 $557 $396 $873 $600 $(40)$827 $1,310 $2,622 $2,697 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net realized investment (gains) losses(53)(25)(23)(12)98 (13)(37)(50)(113)(2)
Depreciation and amortization211 190 180 182 203 188 186 212 763 789 
Deferred federal income tax expense (benefit)32 (22)(20)(23)6 (77)4 38 (33)(29)
Amortization of deferred acquisition costs1,117 1,134 1,169 1,181 1,178 1,173 1,207 1,215 4,601 4,773 
Equity in (income) loss from other investments(34)(98)(64)(55)(67)253 (154)(162)(251)(130)
Premiums receivable(434)(345)168 227 (326)(245)247 418 (384)94 
Reinsurance recoverables98 53 61 (55)(15)75 (210)(12)157 (162)
Deferred acquisition costs(1,185)(1,223)(1,211)(1,128)(1,215)(1,238)(1,241)(1,160)(4,747)(4,854)
Claims and claim adjustment expense reserves(2)331 598 120 388 1,067 1,218 (51)1,047 2,622 
Unearned premium reserves551 407 392 (342)414 229 317 (368)1,008 592 
Other(458)194 355 444 (636)292 (38)511 535 129 
Net cash provided by operating activities639 1,153 2,001 1,412 628 1,664 2,326 1,901 5,205 6,519 
Cash flows from investing activities
Proceeds from maturities of fixed maturities1,556 1,482 1,857 1,950 1,461 1,610 2,170 2,146 6,845 7,387 
Proceeds from sales of investments:
Fixed maturities769 726 306 386 388 832 774 1,063 2,187 3,057 
Equity securities39 32 28 41 33 21 22 35 140 111 
Other investments105 135 106 113 64 75 45 97 459 281 
Purchases of investments:
Fixed maturities(2,914)(2,794)(2,526)(2,477)(2,630)(2,160)(5,161)(4,122)(10,711)(14,073)
Equity securities(22)(19)(21)(32)(35)(24)(21)(32)(94)(112)
Real estate investments(77)(8)(10)(12)(16)(8)(9)(80)(107)(113)
Other investments(146)(116)(107)(128)(103)(125)(93)(166)(497)(487)
Net sales (purchases) of short-term securities(109)606 (1,114)(340)906 (2,053)(240)821 (957)(566)
Securities transactions in course of settlement295 (72)209 (274)85 9 428 (569)158 (47)
Other(82)(87)(74)(82)(69)(75)(78)(108)(325)(330)
Net cash provided by (used in) investing activities(586)(115)(1,346)(855)84 (1,898)(2,163)(915)(2,902)(4,892)

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Statement of Cash Flows - Preliminary (Continued)

($ in millions)1Q20192Q20193Q20194Q20191Q20202Q20203Q20204Q2020YTD 4Q2019YTD 4Q2020
Cash flows from financing activities
Treasury stock acquired - share repurchase authorization(375)(375)(375)(375)(425)— — (200)(1,500)(625)
Treasury stock acquired - net employee share-based compensation(46)(1)— (1)(46)— — (1)(48)(47)
Dividends paid to shareholders(205)(214)(214)(211)(210)(216)(217)(218)(844)(861)
Payment of debt— (500)— — — — — (500)(500)(500)
Issuance of debt492 — — — — 490 — — 492 490 
Issuance of common stock - employee share options63 111 32 7 31 34 7 55 213 127 
Net cash provided by (used in) financing activities(71)(979)(557)(580)(650)308 (210)(864)(2,187)(1,416)
Effect of exchange rate changes on cash2 — (6)9 (12)5 7 16 5 16 
Net increase (decrease) in cash(16)59 92 (14)50 79 (40)138 121 227 
Cash at beginning of period373 357 416 508 494 544 623 583 373 494 
Cash at end of period$357 $416 $508 $494 $544 $623 $583 $721 $494 $721 
Income taxes paid$5 $320 $42 $61 $15 $2 $396 $165 $428 $578 
Interest paid$50 $121 $60 $107 $60 $106 $60 $113 $338 $339 

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The Travelers Companies, Inc.                                                 image211.gif
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 2020 ranges from approximately $20 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.
 
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Glossary of Financial Measures and Description of Reportable Business Segments
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.
 
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.

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TRAVELERS COMPANIES, INC. Reports