Attachment: 8-K

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                                            Exhibit 99.1

                                            The Travelers Companies, Inc.

                            485 Lexington Avenue

                                            New York, NY 10017-2630

                                            www.travelers.com

NYSE: TRV

Travelers Reports Excellent Fourth Quarter and Full Year Results,

Including Strong Earnings and Premium Growth

Fourth Quarter 2021 Record Net Income per Diluted Share of $5.37 and Return on Equity of 18.6%

Fourth Quarter 2021 Record Core Income per Diluted Share of $5.20 and Core Return on Equity of 19.8%

Full Year Net Income of $3.662 billion, up 36%, and Return on Equity of 12.7%

Full Year Core Income of $3.522 billion, up 31%, and Core Return on Equity of 13.7%

•Record fourth quarter net income of $1.333 billion and record core income of $1.289 billion.

•Consolidated combined ratio of 88.0% and underlying combined ratio of 88.7%.

•Net written premiums of $7.995 billion, up 10% compared to the prior year quarter; record full year net written premiums of $31.959 billion, up 7% compared to the prior year.

•Net written premium growth in all three segments compared to the prior year quarter; Business Insurance up 9%, Bond & Specialty Insurance up 13% and Personal Insurance up 10%.

•Total capital returned to shareholders of $1.017 billion, including $801 million of share repurchases; full year total capital returned to shareholders of $3.076 billion, including $2.200 billion of share repurchases.

•Book value per share of $119.77, up 4% from year-end 2020; adjusted book value per share of $109.76, up 10% from year-end 2020.

•Board of Directors declares regular quarterly cash dividend of $0.88 per share.

New York, January 20, 2022 — The Travelers Companies, Inc. today reported net income of $1.333 billion, or $5.37 per diluted share, for the quarter ended December 31, 2021, compared to $1.310 billion, or $5.10 per diluted share, in the prior year quarter. Core income in the current quarter was $1.289 billion, or $5.20 per diluted share, compared to $1.262 billion, or $4.91 per diluted share, in the prior year quarter. Core income increased primarily due to higher net investment income and a higher underlying underwriting gain (i.e., excluding net prior year reserve development and catastrophe losses), partially offset by lower net favorable prior year reserve development. Net realized investment gains in the current quarter were $58 million pre-tax ($44 million after-tax), compared to $50 million pre-tax ($48 million after-tax) in the prior year quarter. Per diluted share amounts benefited from the impact of share repurchases.

Consolidated Highlights

($ in millions, except for per share amounts, and after-tax, except for premiums and revenues)						Three Months Ended December 31,																		Twelve Months Ended December 31,
						2021						2020						Change						2021						2020						Change
Net written premiums						$	7,995					$	7,269					10		%				$	31,959					$	29,732					7		%
Total revenues						$	9,011					$	8,397					7						$	34,816					$	31,981					9
Net income						$	1,333					$	1,310					2						$	3,662					$	2,697					36
per diluted share						$	5.37					$	5.10					5						$	14.49					$	10.52					38
Core income						$	1,289					$	1,262					2						$	3,522					$	2,686					31
per diluted share						$	5.20					$	4.91					6						$	13.94					$	10.48					33
Diluted weighted average shares outstanding						246.4						254.8						(3)						250.8						254.6						(1)
Combined ratio						88.0		%				86.7		%				1.3			pts			94.5		%				95.0		%				(0.5)			pts
Underlying combined ratio						88.7		%				88.7		%				—			pts			90.3		%				90.7		%				(0.4)			pts
Return on equity						18.6		%				18.4		%				0.2			pts			12.7		%				10.0		%				2.7			pts
Core return on equity						19.8		%				20.5		%				(0.7)			pts			13.7		%				11.3		%				2.4			pts

						As of
						December 31, 2021						December 31, 2020						Change
Book value per share						$	119.77					$	115.68					4		%
Adjusted book value per share						109.76						99.54						10		%

See Glossary of Financial Measures for definitions and the statistical supplement for additional financial data.     

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“We are very pleased to report outstanding results for the fourth quarter and full year, including meaningful top line growth, strong margins and excellent returns from our investment portfolio,” said Alan Schnitzer, Chairman and Chief Executive Officer. “Another year of exceptional performance is a testament to our franchise value, underwriting excellence and investment expertise.

“Core income for the quarter was $1.3 billion, or $5.20 per diluted share, generating core return on equity of 19.8%. These results were driven by strong underlying underwriting income and returns from our investment portfolio. Our higher underlying underwriting income was driven by record net earned premiums of $8 billion and an excellent underlying combined ratio of 88.7%. For the full year, record underlying underwriting income of $2.3 billion after-tax contributed meaningfully to the 31% increase in core income to $3.5 billion, or $13.94 per diluted share. Our high-quality investment portfolio generated after-tax net investment income of $2.5 billion for the year. Our impressive operating results, together with our strong balance sheet, enabled us to grow adjusted book value per share by more than 10% during the year, after returning $3.1 billion of excess capital to shareholders, including $2.2 billion of share repurchases, and making important investments in our business.

“Our best-in-class marketplace execution enabled us to grow net written premiums by 10% this quarter to $8 billion, with each of our three segments contributing. In Business Insurance, net written premiums grew by 9%, with renewal premium change of 9.2% near an all-time high, while retention was higher than in the prior year quarter. In addition, new business was up 16% year over year. In Bond & Specialty Insurance, net written premiums increased by 13%, driven by renewal premium change of 10.9% and continued strong retention in our management liability business. In Personal Insurance, net written premiums increased by 10%. Policies in force in both Auto and Homeowners increased to record levels, driven by continued strong retention and new business. Renewal premium change improved in Auto to 1.2% and remained strong in Homeowners at 8.7%.

“Our Perform and Transform call to action once again served us well in 2021. In addition to delivering excellent financial results today, we continue to leverage our scale and resources to execute on our ambitious innovation agenda for tomorrow. We’re enriching 160 years of insurance expertise by investing in digital tools and virtual capabilities, deploying robotics and proprietary AI models, and hiring and developing top data scientists, engineers, roboticists and meteorologists, among others, to build the insurance company of the future. Looking forward, with the best talent in the industry, we remain well positioned to capitalize on opportunities and deliver industry leading returns.”

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Consolidated Results

						Three Months Ended December 31,																		Twelve Months Ended December 31,
($ in millions and pre-tax, unless noted otherwise)						2021						2020						Change						2021						2020						Change
Underwriting gain:						$	926					$	955					$	(29)					$	1,542					$	1,302					$	240
Underwriting gain includes:
Net favorable prior year reserve development						95						180						(85)						538						351						187
Catastrophes, net of reinsurance						(36)						(29)						(7)						(1,847)						(1,613)						(234)
Net investment income						743						677						66						3,033						2,227						806
Other income (expense), including interest expense						(77)						(66)						(11)						(288)						(294)						6
Core income before income taxes						1,592						1,566						26						4,287						3,235						1,052
Income tax expense						303						304						(1)						765						549						216
Core income						1,289						1,262						27						3,522						2,686						836
Net realized investment gains after income taxes						44						48						(4)						132						11						121
Impact of changes in tax laws and/or tax rates (1)						—						—						—						8						—						8
Net income						$	1,333					$	1,310					$	23					$	3,662					$	2,697					$	965
Combined ratio						88.0		%				86.7		%				1.3			pts			94.5		%				95.0		%				(0.5)			pts
Impact on combined ratio
Net favorable prior year reserve development						(1.2)			pts			(2.4)			pts			1.2			pts			(1.8)			pts			(1.2)			pts			(0.6)			pts
Catastrophes, net of reinsurance						0.5			pts			0.4			pts			0.1			pts			6.0			pts			5.5			pts			0.5			pts
Underlying combined ratio						88.7		%				88.7		%				—			pts			90.3		%				90.7		%				(0.4)			pts
Net written premiums
Business Insurance						$	3,966					$	3,631					9		%				$	16,092					$	15,431					4		%
Bond & Specialty Insurance						905						800						13						3,376						2,951						14
Personal Insurance						3,124						2,838						10						12,491						11,350						10
Total						$	7,995					$	7,269					10		%				$	31,959					$	29,732					7		%

 (1) Impact is recognized in the accounting period in which the change is enacted

Fourth Quarter 2021 Results

(All comparisons vs. fourth quarter 2020, unless noted otherwise)

Net income of $1.333 billion increased $23 million, primarily due to higher core income. Core income of $1.289 billion increased $27 million, primarily due to higher net investment income and a higher underlying underwriting gain, partially offset by lower net favorable prior year reserve development. The underlying underwriting gain benefited from higher business volumes. Net realized investment gains were $58 million pre-tax ($44 million after-tax), compared to $50 million pre-tax ($48 million after-tax) in the prior year quarter.

Combined ratio: 

•The combined ratio of 88.0% increased 1.3 points due to lower net favorable prior year reserve development (1.2 points) and higher catastrophe losses (0.1 points).

•The underlying combined ratio of 88.7% was comparable to the prior year quarter. See below for further details by segment.

•Net favorable prior year reserve development in Business Insurance and Bond & Specialty Insurance was partially offset by net unfavorable prior year reserve development in Personal Insurance. See below for further details by segment.

•Catastrophe losses primarily resulted from tornado activity in Kentucky, windstorms in multiple states and a wildfire in Colorado. Catastrophe and non-catastrophe weather-related losses in the fourth quarter of 2021

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were reduced by $255 million of recoveries available under the Company's 2021 Underlying Property Aggregate Catastrophe Excess-of-Loss Reinsurance Treaty. There were no recoveries under the Company's 2020 Underlying Property Aggregate Catastrophe Excess-of-Loss Reinsurance Treaty in the fourth quarter of 2020, as the treaty was fully utilized in the third quarter of 2020.

Net investment income of $743 million pre-tax ($624 million after-tax) increased 10%. Income from the non-fixed income investment portfolio increased over the prior year quarter, primarily due to higher private equity and real estate partnership returns. Non-fixed income returns are generally reported on a one-quarter lagged basis and directionally follow the broader equity markets. Income from the fixed income investment portfolio increased slightly over the prior year quarter, primarily due to growth in fixed maturity investments, partially offset by lower interest rates.

Net written premiums of $7.995 billion increased 10%. See below for further details by segment.

Full Year 2021 Results

(All comparisons vs. full year 2020, unless noted otherwise)

 

Net income of $3.662 billion increased $965 million, primarily due to higher core income and higher net realized investment gains. Core income of $3.522 billion increased by $836 million, primarily due to higher net investment income, a higher underlying underwriting gain and higher net favorable prior year reserve development, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. Net realized investment gains were $171 million pre-tax ($132 million after-tax), compared to $2 million pre-tax ($11 million after-tax) in the prior year.

Combined ratio:

 

•The combined ratio of 94.5% improved 0.5 points due to higher net favorable prior year reserve development (0.6 points) and a lower underlying combined ratio (0.4 points), partially offset higher catastrophe losses (0.5 points).

•The underlying combined ratio of 90.3% improved 0.4 points. See below for further details by segment.

•Net favorable prior year reserve development occurred in all segments. See below for further details by segment.

•Catastrophe losses included the fourth quarter events described above, as well as Hurricane Ida, winter storms and severe wind and hail storms in several regions of the United States in the first nine months of 2021. Catastrophe and non-catastrophe weather-related losses in 2021 were reduced by $350 million of recoveries available under the Company's 2021 Underlying Property Aggregate Catastrophe Excess-of-Loss Reinsurance Treaty. Catastrophe and non-catastrophe weather-related losses in 2020 were reduced by $280 million of recoveries available under the Company's 2020 Underlying Property Aggregate Catastrophe Excess-of-Loss Reinsurance Treaty.

Net investment income of $3.033 billion pre-tax ($2.541 billion after-tax) increased 36%. Income from the non-fixed income investment portfolio increased from the prior year, primarily due to higher private equity partnership returns. Income from the fixed income investment portfolio decreased from the prior year, primarily due to lower interest rates, partially offset by growth in fixed maturity investments.

Net written premiums of $31.959 billion increased 7%. See below for further details by segment.

Shareholders’ Equity

Shareholders’ equity of $28.887 billion decreased 1% from year-end 2020, primarily due to lower net unrealized investment gains resulting from higher interest rates, common share repurchases and dividends to shareholders, partially offset by net income of $3.662 billion. Net unrealized investment gains included in shareholders’ equity were $3.060 billion pre-tax ($2.415 billion after-tax) compared to $5.175 billion pre-tax ($4.074 billion after-tax) at year-end 2020. Book value per share of $119.77 increased 4% over year-end 2020. Adjusted book value per share of $109.76, which excludes net unrealized investment gains, increased 10% over year-end 2020.

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The Company repurchased 5.1 million shares during the fourth quarter at an average price of $156.26 per share for a total of $801 million. At December 31, 2021, the Company had $4.005 billion of capacity remaining under its share repurchase authorization approved by the Board of Directors. At the end of the quarter, statutory capital and surplus was $23.906 billion, and the ratio of debt-to-capital was 20.2%. The ratio of debt-to-capital excluding after-tax net unrealized investment gains included in shareholders’ equity was 21.6%, within the Company’s target range of 15% to 25%.

The Board of Directors declared a regular quarterly dividend of $0.88 per share. The dividend is payable on March 31, 2022 to shareholders of record at the close of business on March 10, 2022.

Business Insurance Segment Financial Results

						Three Months Ended December 31,																		Twelve Months Ended December 31,
($ in millions and pre-tax, unless noted otherwise)						2021						2020						Change						2021						2020						Change
Underwriting gain (loss):						$	523					$	382					$	141					$	640					$	(90)					$	730
Underwriting gain (loss) includes:
Net favorable (unfavorable) prior year reserve development						74						124						(50)						173						(91)						264
Catastrophes, net of reinsurance						43						24						19						(793)						(645)						(148)
Net investment income						552						502						50						2,265						1,633						632
Other income (expense)						(7)						(5)						(2)						(21)						(21)						—
Segment income before income taxes						1,068						879						189						2,884						1,522						1,362
Income tax expense						201						166						35						499						213						286
Segment income						$	867					$	713					$	154					$	2,385					$	1,309					$	1,076
Combined ratio						87.0		%				89.8		%				(2.8)			pts			95.7		%				100.3		%				(4.6)			pts
Impact on combined ratio
Net (favorable) unfavorable prior year reserve development						(1.8)			pts			(3.2)			pts			1.4			pts			(1.1)			pts			0.6			pts			(1.7)			pts
Catastrophes, net of reinsurance						(1.0)			pts			(0.6)			pts			(0.4)			pts			5.1			pts			4.2			pts			0.9			pts
Underlying combined ratio						89.8		%				93.6		%				(3.8)			pts			91.7		%				95.5		%				(3.8)			pts
Net written premiums by market
Domestic
Select Accounts						$	693					$	630					10		%				$	2,833					$	2,821					—		%
Middle Market						2,210						2,012						10						8,933						8,511						5
National Accounts						256						241						6						987						996						(1)
National Property and Other						535						471						14						2,265						2,086						9
Total Domestic						3,694						3,354						10						15,018						14,414						4
International						272						277						(2)						1,074						1,017						6
Total						$	3,966					$	3,631					9		%				$	16,092					$	15,431					4		%

 

Fourth Quarter 2021 Results

(All comparisons vs. fourth quarter 2020, unless noted otherwise)

 

Segment income for Business Insurance was $867 million after-tax, an increase of $154 million. Segment income increased primarily due to a higher underlying underwriting gain and higher net investment income, partially offset by lower net favorable prior year reserve development. The underlying underwriting gain benefited from higher business volumes.

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Combined ratio:

•The combined ratio of 87.0% improved 2.8 points due to a lower underlying combined ratio (3.8 points) and a higher benefit related to catastrophe losses (0.4 points), partially offset by lower net favorable prior year reserve development (1.4 points).

•The underlying combined ratio of 89.8% improved 3.8 points, primarily reflecting earned pricing that exceeded loss cost trends, a favorable impact associated with the pandemic, a lower level of property losses and a lower expense ratio.

•Net favorable prior year reserve development was primarily driven by better than expected loss experience in domestic operations in the workers' compensation product line for multiple accident years.

Net written premiums of $3.966 billion increased 9%, reflecting strong renewal premium change and retention, as well as higher new business levels.

Full Year 2021 Results

(All comparisons vs. full year 2020, unless noted otherwise)

 

Segment income for Business Insurance was $2.385 billion after-tax, an increase of $1.076 billion. Segment income increased primarily due to higher net investment income, a higher underlying underwriting gain and net favorable prior year reserve development (compared to net unfavorable prior year reserve development in the prior year), partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes.

 

Combined ratio:

•The combined ratio of 95.7% improved 4.6 points due to a lower underlying combined ratio (3.8 points) and net favorable prior year reserve development compared to net unfavorable prior year reserve development in the prior year (1.7 points), partially offset by higher catastrophe losses (0.9 points).

•The underlying combined ratio of 91.7% improved 3.8 points, primarily reflecting earned pricing that exceeded loss cost trends and a favorable impact associated with the pandemic.

•Net favorable prior year reserve development was primarily driven by better than expected loss experience in domestic operations in the workers' compensation product line for multiple accident years and in the commercial property and commercial automobile product lines for recent accident years, as well as better than expected loss experience in the segment's international operations for recent accident years, partially offset by an increase in asbestos reserves of $225 million, an increase in other reserves related to run-off operations and an increase to environmental reserves. Net unfavorable prior year reserve development in the prior year included an increase in asbestos reserves of $295 million.

Net written premiums of $16.092 billion increased 4%, and benefited from strong renewal premium change and retention.

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Bond & Specialty Insurance Segment Financial Results

 

			Three Months Ended December 31,																		Twelve Months Ended December 31,
($ in millions and pre-tax, unless noted otherwise)			2021						2020						Change						2021						2020						Change
Underwriting gain:			$	147					$	138					$	9					$	569					$	346					$	223
Underwriting gain includes:
Net favorable (unfavorable) prior year reserve development			24						32						(8)						105						(1)						106
Catastrophes, net of reinsurance			(10)						(1)						(9)						(40)						(11)						(29)
Net investment income			61						58						3						247						213						34
Other income			4						8						(4)						17						21						(4)
Segment income before income taxes			212						204						8						833						580						253
Income tax expense			42						40						2						165						107						58
Segment income			$	170					$	164					$	6					$	668					$	473					$	195
Combined ratio			81.5		%				80.9		%				0.6			pts			81.5		%				87.4		%				(5.9)			pts
Impact on combined ratio
Net (favorable) unfavorable prior year reserve development			(3.0)			pts			(4.2)			pts			1.2			pts			(3.3)			pts			—			pts			(3.3)			pts
Catastrophes, net of reinsurance			1.2			pts			0.1			pts			1.1			pts			1.3			pts			0.4			pts			0.9			pts
Underlying combined ratio			83.3		%				85.0		%				(1.7)			pts			83.5		%				87.0		%				(3.5)			pts
Net written premiums
Domestic
Management Liability			$	510					$	463					10		%				$	1,983					$	1,769					12		%
Surety			215						202						6						888						845						5
Total Domestic			725						665						9						2,871						2,614						10
International			180						135						33						505						337						50
Total			$	905					$	800					13		%				$	3,376					$	2,951					14		%

Fourth Quarter 2021 Results

(All comparisons vs. fourth quarter 2020, unless noted otherwise)

 

Segment income for Bond & Specialty Insurance was $170 million after-tax, an increase of $6 million. Segment income increased primarily due to a higher underlying underwriting gain, partially offset by higher catastrophe losses and lower net favorable prior year reserve development. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

•The combined ratio of 81.5% increased 0.6 points due to lower net favorable prior year reserve development (1.2 points) and higher catastrophe losses (1.1 points), partially offset by a lower underlying combined ratio (1.7 points).

•The underlying combined ratio of 83.3% improved 1.7 points, primarily reflecting earned pricing that exceeded loss cost trends and a lower expense ratio.

•Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment's domestic operations in the fidelity and surety product lines for recent accident years.

Net written premiums of $905 million increased 13%, reflecting strong retention and renewal premium change in management liability and strong production in surety.

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Full Year 2021 Results

(All comparisons vs. full year 2020, unless noted otherwise)

 

Segment income for Bond & Specialty Insurance was $668 million after-tax, an increase of $195 million. Segment income increased primarily due to a higher underlying underwriting gain, net favorable prior year reserve development in the current year (compared to an insignificant amount of net unfavorable prior year reserve development in the prior year) and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

•The combined ratio of 81.5% improved 5.9 points due to a lower underlying combined ratio (3.5 points) and net favorable prior year reserve development in the current year (3.3 points), partially offset by higher catastrophe losses (0.9 points).

•The underlying combined ratio of 83.5% improved 3.5 points, primarily reflecting earned pricing that exceeded loss cost trends, a lower level of losses associated with the pandemic and a lower expense ratio.

•Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment's domestic operations in the fidelity and surety product lines for multiple accident years, partially offset by higher than expected loss experience in the general liability product line for management liability coverages for multiple accident years.

Net written premiums of $3.376 billion increased 14%, driven by the same factors described above for the fourth quarter of 2021.

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Personal Insurance Segment Financial Results

			Three Months Ended December 31,																		Twelve Months Ended December 31,
($ in millions and pre-tax, unless noted otherwise)			2021						2020						Change						2021						2020						Change
Underwriting gain:			$	256					$	435					$	(179)					$	333					$	1,046					$	(713)
Underwriting gain includes:
Net favorable (unfavorable) prior year reserve development			(3)						24						(27)						260						443						(183)
Catastrophes, net of reinsurance			(69)						(52)						(17)						(1,014)						(957)						(57)
Net investment income			130						117						13						521						381						140
Other income			21						23						(2)						85						76						9
Segment income before income taxes			407						575						(168)						939						1,503						(564)
Income tax expense			80						118						(38)						179						308						(129)
Segment income			$	327					$	457					$	(130)					$	760					$	1,195					$	(435)
Combined ratio			91.1		%				84.1		%				7.0			pts			96.5		%				89.7		%				6.8			pts
Impact on combined ratio
Net (favorable) unfavorable prior year reserve development			0.1			pts			(0.8)			pts			0.9			pts			(2.2)			pts			(4.1)			pts			1.9			pts
Catastrophes, net of reinsurance			2.3			pts			1.8			pts			0.5			pts			8.5			pts			8.8			pts			(0.3)			pts
Underlying combined ratio			88.7		%				83.1		%				5.6			pts			90.2		%				85.0		%				5.2			pts
Net written premiums
Domestic
Automobile			$	1,456					$	1,348					8		%				$	5,827					$	5,369					9		%
Homeowners and Other			1,504						1,330						13						5,980						5,329						12
Total Domestic			2,960						2,678						11						11,807						10,698						10
International			164						160						3						684						652						5
Total			$	3,124					$	2,838					10		%				$	12,491					$	11,350					10		%

Fourth Quarter 2021 Results

(All comparisons vs. fourth quarter 2020, unless noted otherwise)

 

Segment income for Personal Insurance was $327 million after-tax, a decrease of $130 million. Segment income decreased primarily due to a lower underlying underwriting gain, net unfavorable prior year reserve development (compared to net favorable prior year reserve development in the prior year quarter) and higher catastrophe losses, partially offset by higher net investment income. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

•The combined ratio of 91.1% increased 7.0 points due to a higher underlying combined ratio (5.6 points), net unfavorable prior year reserve development compared to favorable prior year reserve development in the prior year quarter (0.9 points) and higher catastrophe losses (0.5 points).

•The underlying combined ratio of 88.7% increased 5.6 points, primarily driven by higher losses in the automobile product line due to a comparison to a low level of loss activity in the prior year quarter as a result of the pandemic and, to a lesser extent, elevated severity in the current quarter, partially offset by lower losses in the homeowners and other product line.

•Net unfavorable prior year reserve development was not significant in the quarter.

Net written premiums of $3.124 billion increased 10%. Domestic Automobile net written premiums increased 8%, driven by strong retention and new business. Domestic Homeowners and Other net written premiums increased 13%, driven by strong retention and renewal premium change of 8.7%.

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Full Year 2021 Results

(All comparisons vs. full year 2020, unless noted otherwise)

 

Segment income for Personal Insurance was $760 million after-tax, a decrease of $435 million. Segment income decreased primarily due to a lower underlying underwriting gain, lower net favorable prior year reserve development and higher catastrophe losses, partially offset by higher net investment income. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

•The combined ratio of 96.5% increased 6.8 points due to a higher underlying combined ratio (5.2 points) and lower net favorable prior year reserve development (1.9 points), partially offset by a smaller impact from catastrophe losses (0.3 points).

•The underlying combined ratio of 90.2% increased 5.2 points, primarily driven by higher losses in the automobile product line due to a comparison to a low level of loss activity (net of premium refunds) in the prior year as a result of the pandemic and, to a lesser extent, elevated severity in the current year and higher losses in the homeowners and other product line.

•Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment's domestic operations in both the homeowners and other and automobile product lines for recent accident years.

Net written premiums of $12.491 billion increased 10%. Excluding premium refunds provided to personal automobile customers primarily in 2020, net written premiums increased 8%. Domestic Automobile net written premiums increased 9%. Excluding the impact of premium refunds, Domestic Automobile net written premiums increased 4%, driven by strong retention and higher levels of new business. Domestic Homeowners and Other net written premiums increased 12%, driven by strong retention, renewal premium change of 8.3% and higher levels of new business.

 

Financial Supplement and Conference Call

 

The information in this press release should be read in conjunction with the financial supplement that is available on our website at www.travelers.com. Travelers management will discuss the contents of this release and other relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on Thursday, January 20, 2022. Investors can access the call via webcast at http://investor.travelers.com or by dialing 1.844.895.1976 within the United States and 1.647.689.5389 outside the United States. Prior to the webcast, a slide presentation pertaining to the quarterly earnings will be available on the Company’s website.

Following the live event, replays will be available via webcast for one year at http://investor.travelers.com and by telephone for 30 days by dialing 1.800.585.8367 within the United States or 1.416.621.4642 outside the United States. All callers should use conference ID 4999622.

About Travelers

 

The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has approximately 30,000 employees and generated revenues of approximately $35 billion in 2021. For more information, visit www.travelers.com.

Travelers may use its website and/or social media outlets, such as Facebook and Twitter, as distribution channels of material Company information. Financial and other important information regarding the Company is routinely accessible through and posted on our website at http://investor.travelers.com, our Facebook page at https://www.facebook.com/travelers and our Twitter account (@Travelers) at https://twitter.com/travelers. In addition, you may automatically receive email alerts and other information about Travelers when you enroll your email address by visiting the Email Notifications section at http://investor.travelers.com.

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Travelers is organized into the following reportable business segments:

 

Business Insurance - Business Insurance offers a broad array of property and casualty insurance products and 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.

Bond & Specialty Insurance - Bond & Specialty Insurance offers surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers, primarily in the United States, and certain surety and specialty insurance products in Canada, the United Kingdom and the Republic of Ireland, as well as Brazil through a joint venture, in each case utilizing various degrees of financially-based underwriting approaches.

Personal Insurance - Personal Insurance offers a broad range of property and casualty insurance products and services 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.

 * * * * *

Forward-Looking Statements

 

This press release contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “views,” “estimates” and similar expressions are used to identify these forward-looking statements. These statements include, among other things, the Company’s statements about:

•the Company’s outlook, the impact of trends on its business and its future results of operations and financial condition;

•the impact of COVID-19 and related economic conditions;

•the impact of legislative or regulatory actions or court decisions taken in response to COVID-19 or otherwise;

•share repurchase plans;

•the sufficiency of the Company’s asbestos and other reserves;

•the impact of emerging claims issues as well as other insurance and non-insurance litigation;

•catastrophe losses;

•the impact of investment, economic and underwriting market conditions, including inflation;

•strategic and operational initiatives to improve profitability and competitiveness;

•the Company’s competitive advantages and innovation agenda;

•new product offerings; and

•the impact of developments in the tort environment.

The Company cautions investors that such statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond the Company’s control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Some of the factors that could cause actual results to differ include, but are not limited to, the following:

Insurance-Related Risks

•high levels of catastrophe losses;

•actual claims may exceed the Company’s claims and claim adjustment expense reserves, or the estimated level of claims and claim adjustment expense reserves may increase, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments;

•the Company’s potential exposure to asbestos and environmental claims and related litigation;

•the Company is exposed to, and may face adverse developments involving, mass tort claims; and

•the effects of emerging claim and coverage issues on the Company’s business are uncertain, and court decisions or legislative changes that take place after the Company issues its policies can result in an unexpected increase in the number of claims.

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Financial, Economic and Credit Risks

•a period of financial market disruption or an economic downturn;

•the Company’s investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses;

•the Company is exposed to credit risk related to reinsurance and structured settlements, and reinsurance coverage may not be available to the Company;

•the Company is exposed to credit risk in certain of its insurance operations and with respect to certain guarantee or indemnification arrangements that it has with third parties;

•a downgrade in the Company’s claims-paying and financial strength ratings; and

•the Company’s insurance subsidiaries may be unable to pay dividends to the Company’s holding company in sufficient amounts.

Business and Operational Risks

•the impact of COVID-19 and related risks, including with respect to revenues, claims and claim adjustment expenses, general and administrative expenses, investments, inflation, adverse legislative and/or regulatory action, operational disruptions and heightened cyber security risks and foreign currency exchange rate changes;

•the intense competition that the Company faces, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which it operates;

•disruptions to the Company’s relationships with its independent agents and brokers or the Company’s inability to manage effectively a changing distribution landscape;

•the Company’s efforts to develop new products, expand in targeted markets, improve business processes and workflows or make acquisitions may not be successful and may create enhanced risks;

•the Company's pricing and capital models may provide materially different indications than actual results;

•loss of or significant restrictions on the use of particular types of underwriting criteria, such as credit scoring, or other data or methodologies, in the pricing and underwriting of the Company’s products; and

•the Company is subject to additional risks associated with its business outside the United States.

Technology and Intellectual Property Risks

•as a result of cyber attacks or otherwise, the Company may experience difficulties with technology, data and network security or outsourcing relationships;

•the Company’s dependence on effective information technology systems and on continuing to develop and implement improvements in technology; and

•the Company may be unable to protect and enforce its own intellectual property or may be subject to claims for infringing the intellectual property of others.

Regulatory and Compliance Risks

•changes in regulation, including higher tax rates; and

•the Company's compliance controls may not be effective.

In addition, the Company’s share repurchase plans depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company’s desired ratings from independent rating agencies, changes in levels of written premiums, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws and other factors, including the ongoing level of uncertainty related to COVID-19.

Our forward-looking statements speak only as of the date of this press release or as of the date they are made, and we undertake no obligation to update forward-looking statements. For a more detailed discussion of these factors, see the information under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Forward Looking Statements” in the quarterly report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on October 19, 2021, and in our most recent annual report on Form 10-K filed with the SEC on February 11, 2021, in each case as updated by our periodic filings with the SEC.

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GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

 

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. Reconciliations of these measures to the most comparable GAAP measures also follow.

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.

 

RECONCILIATION OF NET INCOME TO CORE INCOME AND CERTAIN OTHER NON-GAAP MEASURES

 

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.

Reconciliation of Net Income to Core Income less Preferred Dividends

						Three Months Ended December 31,												Twelve Months Ended December 31,
($ in millions, after-tax)						2021						2020						2021						2020
Net income						$	1,333					$	1,310					$	3,662					$	2,697
Adjustments:
Net realized investment gains						(44)						(48)						(132)						(11)
Impact of changes in tax laws and/or tax rates (1)						—						—						(8)						—
Core income						$	1,289					$	1,262					$	3,522					$	2,686

(1) Impact is recognized in the accounting period in which the change is enacted

 

						Three Months Ended December 31,												Twelve Months Ended December 31,
($ in millions, pre-tax)						2021						2020						2021						2020
Net income						$	1,650					$	1,616					$	4,458					$	3,237
Adjustments:
Net realized investment gains						(58)						(50)						(171)						(2)
Core income						$	1,592					$	1,566					$	4,287					$	3,235

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						Twelve Months Ended December 31,
($ in millions, after-tax)						2020						2019						2018						2017						2016						2015						2014						2013						2012						2011						2010						2009						2008						2007						2006						2005
Net income						$2,697						$2,622						$2,523						$2,056						$3,014						$3,439						$3,692						$3,673						$2,473						$1,426						$3,216						$3,622						$2,924						$4,601						$4,208						$1,622
Less: Loss from discontinued operations						—						—						—						—						—						—						—						—						—						—						—						—						—						—						—						(439)
Income from continuing operations						2,697						2,622						2,523						2,056						3,014						3,439						3,692						3,673						2,473						1,426						3,216						3,622						2,924						4,601						4,208						2,061
Adjustments:
Net realized investment (gains) losses						(11)						(85)						(93)						(142)						(47)						(2)						(51)						(106)						(32)						(36)						(173)						(22)						271						(101)						(8)						(35)
Impact of changes in tax laws and/or tax rates (1) (2)						—						—						—						129						—						—						—						—						—						—						—						—						—						—						—						—
Core income						2,686						2,537						2,430						2,043						2,967						3,437						3,641						3,567						2,441						1,390						3,043						3,600						3,195						4,500						4,200						2,026
Less: Preferred dividends						—						—						—						—						—						—						—						—						—						1						3						3						4						4						5						6
Core income, less preferred dividends						$2,686						$2,537						$2,430						$2,043						$2,967						$3,437						$3,641						$3,567						$2,441						$1,389						$3,040						$3,597						$3,191						$4,496						$4,195						$2,020

(1) Impact is recognized in the accounting period in which the change is enacted

(2) 2017 reflects impact of Tax Cuts and Jobs Act of 2017 (TCJA)

Reconciliation of Net Income per Share to Core Income per Share on a Basic and Diluted Basis

						Three Months Ended December 31,												Twelve Months Ended December 31,
						2021						2020						2021						2020
Basic income per share
Net income						$	5.43					$	5.13					$	14.63					$	10.56
Adjustments:
Net realized investment gains, after-tax						(0.18)						(0.19)						(0.53)						(0.04)
Impact of changes in tax laws and/or tax rates (1)						—						—						(0.03)						—
Core income						$	5.25					$	4.94					$	14.07					$	10.52
Diluted income per share
Net income						$	5.37					$	5.10					$	14.49					$	10.52
Adjustments:
Net realized investment gains, after-tax						(0.17)						(0.19)						(0.52)						(0.04)
Impact of changes in tax laws and/or tax rates (1)						—						—						(0.03)						—
Core income						$	5.20					$	4.91					$	13.94					$	10.48

(1) Impact is recognized in the accounting period in which the change is enacted

Reconciliation of Segment Income to Total Core Income

						Three Months Ended December 31,												Twelve Months Ended December 31,
($ in millions, after-tax)						2021						2020						2021						2020
Business Insurance						$	867					$	713					$	2,385					$	1,309
Bond & Specialty Insurance						170						164						668						473
Personal Insurance						327						457						760						1,195
Total segment income						1,364						1,334						3,813						2,977
Interest Expense and Other						(75)						(72)						(291)						(291)
Total core income						$	1,289					$	1,262					$	3,522					$	2,686

 

RECONCILIATION OF SHAREHOLDERS’ EQUITY TO ADJUSTED SHAREHOLDERS’ EQUITY AND CALCULATION OF RETURN ON EQUITY AND CORE RETURN ON EQUITY

 

Adjusted shareholders’ equity is shareholders’ equity excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity, net realized investment gains (losses), net of tax, for the period presented, the effect of a change in tax laws and tax rates at enactment (excluding the portion related to net unrealized investment gains (losses)), preferred stock and discontinued operations.

 

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Reconciliation of Shareholders’ Equity to Adjusted Shareholders’ Equity

						As of December 31,
($ in millions)						2021						2020						2019						2018						2017						2016						2015						2014						2013						2012						2011						2010						2009						2008						2007						2006						2005
Shareholders’ equity						$28,887						$29,201						$25,943						$22,894						$23,731						$23,221						$23,598						$24,836						$24,796						$25,405						$24,477						$25,475						$27,415						$25,319						$26,616						$25,135						$22,303
Adjustments:
Net unrealized investment (gains) losses, net of tax, included in shareholders’ equity						(2,415)						(4,074)						(2,246)						113						(1,112)						(730)						(1,289)						(1,966)						(1,322)						(3,103)						(2,871)						(1,859)						(1,856)						146						(620)						(453)						(327)
Net realized investment (gains) losses, net of tax						(132)						(11)						(85)						(93)						(142)						(47)						(2)						(51)						(106)						(32)						(36)						(173)						(22)						271						(101)						(8)						(35)
Impact of changes in tax laws and/or tax rates (1) (2)						(8)						—						—						—						287						—						—						—						—						—						—						—						—						—						—						—						—
Preferred stock						—						—						—						—						—						—						—						—						—						—						—						(68)						(79)						(89)						(112)						(129)						(153)
Loss from discontinued operations						—						—						—						—						—						—						—						—						—						—						—						—						—						—						—						—						439
Adjusted shareholders’ equity						$26,332			$26,332			$25,116						$23,612						$22,914						$22,764						$22,444						$22,307						$22,819						$23,368						$22,270						$21,570						$23,375						$25,458						$25,647						$25,783						$24,545						$22,227

(1) Impact is recognized in the accounting period in which the change is enacted

(2) 2017 reflects impact of Tax Cuts and Jobs Act of 2017 (TCJA)

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

Average shareholders’ equity is (a) the sum of total shareholders’ equity excluding preferred stock at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two. Adjusted 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.

 

Calculation of Return on Equity and Core Return on Equity

						Three Months Ended December 31,												Twelve Months Ended December 31,
($ in millions, after-tax)						2021						2020						2021						2020
Annualized net income						$	5,333					$	5,236					$	3,662					$	2,697
Average shareholders’ equity						28,680						28,525						28,735						26,892
Return on equity						18.6		%				18.4		%				12.7		%				10.0		%
Annualized core income						$	5,159					$	5,044					$	3,522					$	2,686
Adjusted average shareholders’ equity						26,101						24,558						25,718						23,790
Core return on equity						19.8		%				20.5		%				13.7		%				11.3		%

 

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						Twelve Months Ended December 31,
($ in millions)						2020						2019												2018						2017						2016						2015						2014						2013						2012						2011						2010						2009						2008						2007						2006						2005
Core income, less preferred dividends						$2,686						$2,537												$2,430						$2,043						$2,967						$3,437						$3,641						$3,567						$2,441						$1,389						$3,040						$3,597						$3,191						$4,496						$4,195						$2,020
Adjusted average shareholders’ equity						23,790						23,335												22,814						22,743						22,386						22,681						23,447						23,004						22,158						22,806						24,285						25,777						25,668						25,350						23,381						21,118
Core return on equity						11.3%						10.9%												10.7%						9.0%						13.3%						15.2%						15.5%						15.5%						11.0%						6.1%						12.5%						14.0%						12.4%						17.7%						17.9%						9.6%

RECONCILIATION OF PRE-TAX UNDERWRITING GAIN EXCLUDING CERTAIN ITEMS TO NET INCOME

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. Pre-tax underwriting gain, excluding the impact of catastrophes and net favorable (unfavorable) prior year loss reserve development, is the underwriting gain adjusted to exclude claims and claim adjustment expenses, reinstatement premiums and assessments related to catastrophes and loss reserve development related to time periods prior to the current year. In the opinion of the Company’s management, this measure is meaningful to users of the financial statements to understand the Company’s periodic earnings and the variability of earnings caused by the unpredictable nature (i.e., the timing and amount) of catastrophes and loss reserve development. This measure is also referred to as underlying underwriting margin or underlying underwriting gain.

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 2021 ranges from $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.

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Components of Net Income

						Three Months Ended December 31,												Twelve Months Ended December 31,
($ in millions, after-tax except as noted)						2021						2020						2021						2020
Pre-tax underwriting gain excluding the impact of catastrophes and net prior year loss reserve development						$	867					$	804					$	2,851					$	2,564
Pre-tax impact of catastrophes						(36)						(29)						(1,847)						(1,613)
Pre-tax impact of net favorable prior year loss reserve development						95						180						538						351
Pre-tax underwriting gain						926						955						1,542						1,302
Income tax expense on underwriting results						197						214						326						292
Underwriting gain						729						741						1,216						1,010
Net investment income						624						572						2,541						1,908
Other income (expense), including interest expense						(64)						(51)						(235)						(232)
Core income						1,289						1,262						3,522						2,686
Net realized investment gains						44						48						132						11
Impact of changes in tax laws and/or tax rates (1)						—						—						8						—
Net income						$	1,333					$	1,310					$	3,662					$	2,697

(1) Impact is recognized in the accounting period in which the change is enacted

Reconciliation of after-tax underlying underwriting income (also known as underlying underwriting gain) to net income

						Twelve Months Ended December 31,
($ in millions, after-tax)						2021						2020						2019						2018						2017						2016						2015						2014						2013						2012						2011
Underlying underwriting income						$	2,251					$	2,008					$	1,400					$	1,522					$	1,239					$	1,265					$	1,446					$	1,430					$	1,277					$	888					$	451
Impact of catastrophes						(1,459)						(1,274)						(699)						(1,355)						(1,267)						(576)						(338)						(462)						(387)						(1,214)						(1,669)
Impact of net favorable (unfavorable) prior year reserve development						424						276						(47)						409						378						510						617						616						552						622						473
Underwriting income (loss)						1,216						1,010						654						576						350						1,199						1,725						1,584						1,442						296						(745)
Net investment income						2,541						1,908						2,097						2,102						1,872						1,846						1,905						2,216						2,186						2,316						2,330
Other income (expense), including interest expense						(235)						(232)						(214)						(248)						(179)						(78)						(193)						(159)						(61)						(171)						(195)
Core income						3,522						2,686						2,537						2,430						2,043						2,967						3,437						3,641						3,567						2,441						1,390
Net realized investment gains						132						11						85						93						142						47						2						51						106						32						36
Impact of changes in tax laws and/or tax rates (1) (2)						8						—						—						—						(129)						—						—						—						—						—						—
Net income						$	3,662					$	2,697					$	2,622					$	2,523					$	2,056					$	3,014					$	3,439					$	3,692					$	3,673					$	2,473					$	1,426

(1) Impact is recognized in the accounting period in which the change is enacted

(2) 2017 reflects impact of Tax Cuts and Jobs Act of 2017 (TCJA)

COMBINED RATIO AND ADJUSTMENTS FOR UNDERLYING COMBINED RATIO

 

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 earnings release, 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 earnings release 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 earnings release 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 earnings release, is the ratio of underwriting expenses (including the amortization of deferred acquisition costs), less certain administrative services fee income, billing and policy fees and other, to net earned premiums.

17

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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.

Underlying combined ratio represents the combined ratio excluding the impact of net prior year reserve development and catastrophes. The underlying combined ratio is an indicator of the Company’s underwriting discipline and underwriting profitability for the current accident year.

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

Calculation of the Combined Ratio

						Three Months Ended December 31,												Twelve Months Ended December 31,
($ in millions, pre-tax)						2021						2020						2021						2020
Loss and loss adjustment expense ratio
Claims and claim adjustment expenses						$	4,819					$	4,341					$	20,298					$	19,123
Less:
Policyholder dividends						10						10						41						41
Allocated fee income						37						41						150						161
Loss ratio numerator						$	4,772					$	4,290					$	20,107					$	18,921
Underwriting expense ratio
Amortization of deferred acquisition costs						$	1,301					$	1,215					$	5,043					$	4,773
General and administrative expenses (G&A)						1,153						1,142						4,677						4,509
Less:
Non-insurance G&A						75						67						303						234
Allocated fee income						63						65						252						268
Billing and policy fees and other						26						28						107						97
Expense ratio numerator						$	2,290					$	2,197					$	9,058					$	8,683
Earned premium						$	8,024					$	7,480					$	30,855					$	29,044
Combined ratio (1)
Loss and loss adjustment expense ratio						59.5		%				57.3		%				65.1		%				65.1		%
Underwriting expense ratio						28.5		%				29.4		%				29.4		%				29.9		%
Combined ratio						88.0		%				86.7		%				94.5		%				95.0		%

(1)  For purposes of computing ratios, 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. These allocations are to conform the calculation of the combined ratio with statutory accounting. Additionally, general and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio. 

 

RECONCILIATION OF BOOK VALUE PER SHARE AND SHAREHOLDERS’ EQUITY TO CERTAIN NON-GAAP MEASURES

 

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. Tangible book value per share is adjusted book value per share excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding. In the opinion of the Company’s management, tangible book value per share is useful in an analysis of a property casualty company’s book value on a nominal basis as it removes certain effects of purchase accounting (i.e., goodwill and other intangible assets), in addition to the effect of changing prices on invested assets.

18

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Reconciliation of Shareholders’ Equity to Tangible Shareholders’ Equity, Excluding Net Unrealized Investment Gains, Net of Tax

 

						As of
($ in millions, except per share amounts)						December 31, 2021						December 31, 2020
Shareholders’ equity						$	28,887					$	29,201
Less: Net unrealized investment gains, net of tax, included in shareholders’ equity						2,415						4,074
Shareholders’ equity, excluding net unrealized investment gains, net of tax, included in shareholders’ equity						26,472						25,127
Less:
Goodwill						4,008						3,976
Other intangible assets						306						317
Impact of deferred tax on other intangible assets						(66)						(59)
Tangible shareholders’ equity						$	22,224					$	20,893
Common shares outstanding						241.2						252.4
Book value per share						$	119.77					$	115.68
Adjusted book value per share						109.76						99.54
Tangible book value per share						92.15						82.77

RECONCILIATION OF TOTAL CAPITALIZATION TO TOTAL CAPITALIZATION EXCLUDING NET UNREALIZED INVESTMENT GAINS, NET OF TAX

 

Total capitalization is the sum of total shareholders’ equity and debt. Debt-to-capital ratio excluding net unrealized gain on investments, net of tax, included in shareholders’ equity, is the ratio of debt to total capitalization excluding the after-tax impact of net unrealized investment gains and losses 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.

						As of
($ in millions)						December 31, 2021						December 31, 2020
Debt						$	7,290					$	6,550
Shareholders’ equity						28,887						29,201
Total capitalization						36,177						35,751
Less: Net unrealized investment gains, net of tax, included in shareholders’ equity						2,415						4,074
Total capitalization excluding net unrealized gain on investments, net of tax, included in shareholders’ equity						$	33,762					$	31,677
Debt-to-capital ratio						20.2		%				18.3		%
Debt-to-capital ratio excluding net unrealized investment gains, net of tax, included in shareholders’ equity						21.6		%				20.7		%

 

RECONCILIATION OF INVESTED ASSETS TO INVESTED ASSETS EXCLUDING NET UNREALIZED INVESTMENT GAINS (LOSSES)

						Twelve Months Ended December 31,
($ in millions, after-tax)						2021						2020						2019						2018						2017						2016						2015						2014						2013						2012						2011
Invested assets						$	87,375					$	84,423					$	77,884					$	72,278					$	72,502					$	70,488					$	70,470					$	73,261					$	73,160					$	73,838					$	72,701
Less: Net unrealized investment gains (losses), pre-tax						3,060						5,175						2,853						(137)						1,414						1,112						1,974						3,008						2,030						4,761						4,399
Invested assets excluding net unrealized investment gains (losses)						$	84,315					$	79,248					$	75,031					$	72,415					$	71,088					$	69,376					$	68,496					$	70,253					$	71,130					$	69,077					$	68,302

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OTHER DEFINITIONS

 

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.

For Business Insurance and Bond & Specialty Insurance, retention is the amount of premium available for renewal that was retained, excluding rate and exposure changes. For Personal Insurance, retention is the ratio of the expected number of renewal policies that will be retained throughout the annual policy period to the number of available renewal base policies. For all of the segments, renewal rate change represents the estimated change in average premium on policies that renew, excluding exposure changes. Exposure is the measure of risk used in the pricing of an insurance product. The change in exposure is the amount of change in premium on policies that renew attributable to the change in portfolio risk. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. New business is the amount of written premium related to new policyholders and additional products sold to existing policyholders. These are operating statistics, which are in part dependent on the use of estimates and are therefore subject to change. For Business Insurance, retention, renewal premium change and new business exclude National Accounts. For Bond & Specialty Insurance, retention, renewal premium change and new business exclude surety and other products that are generally sold on a non-recurring, project specific basis. For each of the segments, production statistics referred to herein are domestic only unless otherwise indicated.

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.

Holding company liquidity is the total funds available at the holding company level to fund general corporate purposes, primarily the payment of shareholder dividends and debt service. These funds consist of total cash, short-term invested assets and other readily marketable securities held by the holding company.

For a glossary of other financial terms used in this press release, we refer you to the Company’s most recent annual report on Form 10-K filed with the SEC on February 11, 2021, and subsequent periodic filings with the SEC.

 

###

 

Contacts

Media:			Institutional Investors:
Patrick Linehan			Abbe Goldstein
917.778.6267			917.778.6825

20

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The Travelers Companies, Inc.                                                

Financial Supplement - Fourth Quarter 2021                                                

			Page Number
Consolidated Results
Financial Highlights			1
Reconciliation to Net Income (Loss) and Earnings Per Share			2
Statement of Income (Loss)			3
Net Income (Loss) by Major Component and Combined Ratio			4
Core Income (Loss)			5
Selected Statistics - Property and Casualty Operations			6
Written and Earned Premiums - Property and Casualty Operations			7
Business Insurance
Segment Income (Loss)			8
Segment Income (Loss) 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 - Automobile			20
Selected Statistics - 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 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

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The Travelers Companies, Inc.                                                 

Financial Highlights

($ and shares in millions, except for per share data)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Net income (loss)						$	600					$	(40)					$	827					$	1,310					$	733					$	934					$	662					$	1,333																													$	2,697					$	3,662
Net income (loss) per share:
Basic						$	2.34					$	(0.16)					$	3.24					$	5.13					$	2.89					$	3.70					$	2.65					$	5.43																													$	10.56					$	14.63
Diluted						$	2.33					$	(0.16)					$	3.23					$	5.10					$	2.87					$	3.66					$	2.62					$	5.37																													$	10.52					$	14.49
Core income (loss)						$	676					$	(50)					$	798					$	1,262					$	699					$	879					$	655					$	1,289																													$	2,686					$	3,522
Core income (loss) per share:
Basic						$	2.64					$	(0.20)					$	3.13					$	4.94					$	2.75					$	3.48					$	2.63					$	5.25																													$	10.52					$	14.07
Diluted						$	2.62					$	(0.20)					$	3.12					$	4.91					$	2.73					$	3.45					$	2.60					$	5.20																													$	10.48					$	13.94
Return on equity						9.4		%				(0.6)		%				12.1		%				18.4		%				10.2		%				13.0		%				9.2		%				18.6		%																												10.0		%				12.7		%
Core return on equity						11.5		%				(0.8)		%				13.5		%				20.5		%				11.1		%				13.7		%				10.1		%				19.8		%																												11.3		%				13.7		%
Total assets, at period end						$	109,436					$	113,337					$	116,384					$	116,764					$	117,032					$	119,759					$	120,706					$	120,466																													$	116,764					$	120,466
Total equity, at period end						$	25,204					$	26,943					$	27,849					$	29,201					$	28,269					$	29,156					$	28,474					$	28,887																													$	29,201					$	28,887
Book value per share, at period end						$	99.69					$	106.42					$	109.94					$	115.68					$	112.42					$	116.86					$	115.74					$	119.77																													$	115.68					$	119.77
Less: Net unrealized investment gains, net of tax						7.06						14.41						15.05						16.14						11.21						12.98						10.97						10.01																														16.14						10.01
Adjusted book value per share, at period end						$	92.63					$	92.01					$	94.89					$	99.54					$	101.21					$	103.88					$	104.77					$	109.76																													$	99.54					$	109.76
Weighted average number of common shares outstanding (basic)						254.4						251.6						253.3						253.4						252.1						250.7						247.7						243.8																														253.5						248.5
Weighted average number of common shares outstanding and common stock equivalents (diluted)						255.9						251.6						254.3						254.8						254.1						253.1						250.1						246.4																														254.6						250.8
Common shares outstanding at period end						252.8						253.2						253.3						252.4						251.5						249.5						246.0						241.2																														252.4						241.2
Common stock dividends declared						$	210					$	218					$	218					$	218					$	216					$	224					$	220					$	216																													$	864					$	876
Common stock repurchased:
Under Board of Directors authorization
Shares						3.5						—						—						1.4						2.4						2.6						3.8						5.1																														4.9						13.9
Cost						$	425					$	—					$	—					$	200					$	356					$	400					$	600					$	800																													$	625					$	2,156
Other
Shares						0.3						—						—						—						0.3						—						—						—																														0.3						0.3
Cost						$	46					$	—					$	—					$	1					$	41					$	1					$	1					$	1																													$	47					$	44

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

1

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The Travelers Companies, Inc.                                                 

Reconciliation to Net Income (Loss) and Earnings per Share

($ and shares in millions, except earnings per share)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Net income (loss)
Net income (loss)						$	600					$	(40)					$	827					$	1,310					$	733					$	934					$	662					$	1,333																													$	2,697					$	3,662
Adjustments:
Net realized investment (gains) losses, after-tax						76						(10)						(29)						(48)						(34)						(47)						(7)						(44)																														(11)						(132)
Impact of changes in tax laws and/or tax rates (1)						—						—						—						—						—						(8)						—						—																														—						(8)
Core income (loss)						$	676					$	(50)					$	798					$	1,262					$	699					$	879					$	655					$	1,289																													$	2,686					$	3,522
Basic earnings per share
Net income (loss)						$	2.34					$	(0.16)					$	3.24					$	5.13					$	2.89					$	3.70					$	2.65					$	5.43																													$	10.56					$	14.63
Adjustments:
Net realized investment (gains) losses, after-tax						0.30						(0.04)						(0.11)						(0.19)						(0.14)						(0.19)						(0.02)						(0.18)																														(0.04)						(0.53)
Impact of changes in tax laws and/or tax rates (1)						—						—						—						—						—						(0.03)						—						—																														—						(0.03)
Core income (loss)						$	2.64					$	(0.20)					$	3.13					$	4.94					$	2.75					$	3.48					$	2.63					$	5.25																													$	10.52					$	14.07
Diluted earnings per share
Net income (loss)						$	2.33					$	(0.16)					$	3.23					$	5.10					$	2.87					$	3.66					$	2.62					$	5.37																													$	10.52					$	14.49
Adjustments:
Net realized investment (gains) losses, after-tax						0.29						(0.04)						(0.11)						(0.19)						(0.14)						(0.18)						(0.02)						(0.17)																														(0.04)						(0.52)
Impact of changes in tax laws and/or tax rates (1)						—						—						—						—						—						(0.03)						—						—																														—						(0.03)
Core income (loss)						$	2.62					$	(0.20)					$	3.12					$	4.91					$	2.73					$	3.45					$	2.60					$	5.20																													$	10.48					$	13.94

Adjustments to net income (loss) and weighted average shares for net income (loss) EPS calculations: (2)

Basic and Diluted						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Net income (loss), as reported						$	600					$	(40)					$	827					$	1,310					$	733					$	934					$	662					$	1,333																													$	2,697					$	3,662
Participating share-based awards - allocated income						(5)						(1)						(6)						(10)						(5)						(7)						(5)						(10)																														(19)						(27)
Net income (loss) available to common shareholders - basic and diluted						$	595					$	(41)					$	821					$	1,300					$	728					$	927					$	657					$	1,323																													$	2,678					$	3,635
Common Shares
Basic
Weighted average shares outstanding						254.4						251.6						253.3						253.4						252.1						250.7						247.7						243.8																														253.5						248.5
Diluted
Weighted average shares outstanding						254.4						251.6						253.3						253.4						252.1						250.7						247.7						243.8																														253.5						248.5
Weighted average effects of dilutive securities - stock options and performance shares						1.5						—						1.0						1.4						2.0						2.4						2.4						2.6																														1.1						2.3
Diluted weighted average shares outstanding						255.9						251.6						254.3						254.8						254.1						253.1						250.1						246.4																														254.6						250.8

(1) Impact is recognized in the accounting period in which the change is enacted.

(2)  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

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The Travelers Companies, Inc.                                                 

Statement of Income (Loss) - Consolidated

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Revenues
Premiums						$	7,229					$	6,955					$	7,380					$	7,480					$	7,386					$	7,616					$	7,829					$	8,024																													$	29,044					$	30,855
Net investment income						611						268						671						677						701						818						771						743																														2,227						3,033
Fee income						108						114						101						106						101						104						97						100																														429						402
Net realized investment gains (losses)						(98)						13						37						50						44						61						8						58																														2						171
Other revenues						58						51						86						84						81						88						100						86																														279						355
Total revenues						7,908						7,401						8,275						8,397						8,313						8,687						8,805						9,011																														31,981						34,816
Claims and expenses
Claims and claim adjustment expenses						4,789						5,107						4,886						4,341						4,970						5,045						5,464						4,819																														19,123						20,298
Amortization of deferred acquisition costs						1,178						1,173						1,207						1,215						1,207						1,254						1,281						1,301																														4,773						5,043
General and administrative expenses						1,137						1,121						1,109						1,142						1,163						1,174						1,187						1,153																														4,509						4,677
Interest expense						84						85						87						83						82						83						87						88																														339						340
Total claims and expenses						7,188						7,486						7,289						6,781						7,422						7,556						8,019						7,361																														28,744						30,358
Income (loss) before income taxes						720						(85)						986						1,616						891						1,131						786						1,650																														3,237						4,458
Income tax expense (benefit)						120						(45)						159						306						158						197						124						317																														540						796
Net income (loss)						$	600					$	(40)					$	827					$	1,310					$	733					$	934					$	662					$	1,333																													$	2,697					$	3,662
Other statistics
Effective tax rate on net investment income						15.1		%				6.2		%				15.6		%				15.4		%				15.9		%				16.7		%				16.3		%				16.0		%																												14.3		%				16.2		%
Net investment income (after-tax)						$	519					$	251					$	566					$	572					$	590					$	682					$	645					$	624																													$	1,908					$	2,541
Catastrophes, net of reinsurance:
Pre-tax						$	333					$	854					$	397					$	29					$	835					$	475					$	501					$	36																													$	1,613					$	1,847
After-tax						$	263					$	673					$	314					$	24					$	659					$	376					$	395					$	29																													$	1,274					$	1,459
Prior year reserve development - favorable (unfavorable):
Pre-tax						$	27					$	2					$	142					$	180					$	317					$	182					$	(56)					$	95																													$	351					$	538
After-tax						$	21					$	1					$	113					$	141					$	249					$	144					$	(44)					$	75																													$	276					$	424

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

3

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The Travelers Companies, Inc.                                                 

Net Income (Loss) by Major Component and Combined Ratio - Consolidated

($ in millions, net of tax)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Underwriting gain (loss)						$	220					$	(232)					$	281					$	741					$	166					$	253					$	68					$	729																													$	1,010					$	1,216
Net investment income						519						251						566						572						590						682						645						624																														1,908						2,541
Other income (expense), including interest expense						(63)						(69)						(49)						(51)						(57)						(56)						(58)						(64)																														(232)						(235)
Core income (loss)						676						(50)						798						1,262						699						879						655						1,289																														2,686						3,522
Net realized investment gains (losses)						(76)						10						29						48						34						47						7						44																														11						132
Impact of changes in tax laws and/or tax rates (1)						—						—						—						—						—						8						—						—																														—						8
Net income (loss)						$	600					$	(40)					$	827					$	1,310					$	733					$	934					$	662					$	1,333																													$	2,697					$	3,662
Combined ratio (2) (3)
Loss and loss adjustment expense ratio						65.5		%				72.7		%				65.6		%				57.3		%				66.7		%				65.6		%				69.2		%				59.5		%																												65.1		%				65.1		%
Underwriting expense ratio						30.0		%				31.0		%				29.3		%				29.4		%				29.9		%				29.7		%				29.4		%				28.5		%																												29.9		%				29.4		%
Combined ratio						95.5		%				103.7		%				94.9		%				86.7		%				96.6		%				95.3		%				98.6		%				88.0		%																												95.0		%				94.5		%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development						(0.4)		%				—		%				(1.9)		%				(2.4)		%				(4.2)		%				(2.4)		%				0.8		%				(1.2)		%																												(1.2)		%				(1.8)		%
Catastrophes, net of reinsurance						4.6		%				12.3		%				5.3		%				0.4		%				11.3		%				6.3		%				6.4		%				0.5		%																												5.5		%				6.0		%
Underlying combined ratio						91.3		%				91.4		%				91.5		%				88.7		%				89.5		%				91.4		%				91.4		%				88.7		%																												90.7		%				90.3		%

 

(1)  Impact is recognized in the accounting period in which the change is enacted.

(2)  Before policyholder dividends.

(3)  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.  These allocations are to conform the calculation of the combined ratio with statutory accounting. Additionally, 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)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Billing and policy fees and other						$	28					$	17					$	24					$	28					$	27					$	27					$	27					$	26																													$	97					$	107
Fee income:
Loss and loss adjustment expenses						$	41					$	44					$	35					$	41					$	38					$	39					$	36					$	37																													$	161					$	150
Underwriting expenses						67						70						66						65						63						65						61						63																														268						252
Total fee income						$	108					$	114					$	101					$	106					$	101					$	104					$	97					$	100																													$	429					$	402
Non-insurance general and administrative expenses						$	55					$	52					$	60					$	67					$	70					$	77					$	81					$	75																													$	234					$	303

 

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

4

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The Travelers Companies, Inc.                                                 

Core Income (Loss) - Consolidated

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Revenues
Premiums						$	7,229					$	6,955					$	7,380					$	7,480					$	7,386					$	7,616					$	7,829					$	8,024																													$	29,044					$	30,855
Net investment income						611						268						671						677						701						818						771						743																														2,227						3,033
Fee income						108						114						101						106						101						104						97						100																														429						402
Other revenues						58						51						86						84						81						88						100						86																														279						355
Total revenues						8,006						7,388						8,238						8,347						8,269						8,626						8,797						8,953																														31,979						34,645
Claims and expenses
Claims and claim adjustment expenses						4,789						5,107						4,886						4,341						4,970						5,045						5,464						4,819																														19,123						20,298
Amortization of deferred acquisition costs						1,178						1,173						1,207						1,215						1,207						1,254						1,281						1,301																														4,773						5,043
General and administrative expenses						1,137						1,121						1,109						1,142						1,163						1,174						1,187						1,153																														4,509						4,677
Interest expense						84						85						87						83						82						83						87						88																														339						340
Total claims and expenses						7,188						7,486						7,289						6,781						7,422						7,556						8,019						7,361																														28,744						30,358
Core income (loss) before income taxes						818						(98)						949						1,566						847						1,070						778						1,592																														3,235						4,287
Income tax expense (benefit)						142						(48)						151						304						148						191						123						303																														549						765
Core income (loss)						$	676					$	(50)					$	798					$	1,262					$	699					$	879					$	655					$	1,289																													$	2,686					$	3,522
Other statistics
Effective tax rate on net investment income						15.1		%				6.2		%				15.6		%				15.4		%				15.9		%				16.7		%				16.3		%				16.0		%																												14.3		%				16.2		%
Net investment income (after-tax)						$	519					$	251					$	566					$	572					$	590					$	682					$	645					$	624																													$	1,908					$	2,541
Catastrophes, net of reinsurance:
Pre-tax						$	333					$	854					$	397					$	29					$	835					$	475					$	501					$	36																													$	1,613					$	1,847
After-tax						$	263					$	673					$	314					$	24					$	659					$	376					$	395					$	29																													$	1,274					$	1,459
Prior year reserve development - favorable (unfavorable):
Pre-tax						$	27					$	2					$	142					$	180					$	317					$	182					$	(56)					$	95																													$	351					$	538
After-tax						$	21					$	1					$	113					$	141					$	249					$	144					$	(44)					$	75																													$	276					$	424

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

5

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The Travelers Companies, Inc.                                          

Selected Statistics - Property and Casualty Operations

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Statutory underwriting
Gross written premiums						$	8,152					$	7,751					$	8,243					$	7,617					$	8,407					$	8,597					$	8,876					$	8,364																													$	31,763					$	34,244
Net written premiums						$	7,346					$	7,346					$	7,771					$	7,269					$	7,505					$	8,135					$	8,324					$	8,002																													$	29,732					$	31,966
Net earned premiums						$	7,229					$	6,955					$	7,380					$	7,480					$	7,386					$	7,616					$	7,829					$	8,029																													$	29,044					$	30,860
Losses and loss adjustment expenses						4,733						5,053						4,830						4,291						4,920						5,003						5,415						4,773																														18,907						20,111
Underwriting expenses						2,193						2,212						2,214						2,153						2,276						2,361						2,385						2,269																														8,772						9,291
Statutory underwriting gain (loss)						303						(310)						336						1,036						190						252						29						987																														1,365						1,458
Policyholder dividends						12						8						11						10						11						10						10						10																														41						41
Statutory underwriting gain (loss) after policyholder dividends						$	291					$	(318)					$	325					$	1,026					$	179					$	242					$	19					$	977																													$	1,324					$	1,417
Other statutory statistics
Reserves for losses and loss adjustment expenses						$	43,913					$	45,112					$	46,181					$	46,247					$	47,153					$	47,893					$	48,662					$	48,589																													$	46,247					$	48,589
Increase in reserves						$	170					$	1,199					$	1,069					$	66					$	906					$	740					$	769					$	(73)																													$	2,504					$	2,342
Statutory capital and surplus						$	20,808					$	20,607					$	21,230					$	22,180					$	22,403					$	22,797					$	22,987					$	23,906																													$	22,180					$	23,906
Net written premiums/surplus (1)						1.41:1						1.42:1						1.39:1						1.34:1						1.33:1						1.35:1						1.36:1						1.34:1																														1.34:1						1.34:1

(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

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The Travelers Companies, Inc.                                                 

Written and Earned Premiums - Property and Casualty Operations

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Written premiums
Gross						$	8,152					$	7,751					$	8,243					$	7,617					$	8,407					$	8,597					$	8,876					$	8,364																													$	31,763					$	34,244
Ceded						(806)						(405)						(472)						(348)						(902)						(462)						(552)						(369)																														(2,031)						(2,285)
Net						$	7,346					$	7,346					$	7,771					$	7,269					$	7,505					$	8,135					$	8,324					$	7,995																													$	29,732					$	31,959
Earned premiums
Gross						$	7,683					$	7,446					$	7,898					$	7,961					$	7,895					$	8,164					$	8,376					$	8,574																													$	30,988					$	33,009
Ceded						(454)						(491)						(518)						(481)						(509)						(548)						(547)						(550)																														(1,944)						(2,154)
Net						$	7,229					$	6,955					$	7,380					$	7,480					$	7,386					$	7,616					$	7,829					$	8,024																													$	29,044					$	30,855

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

7

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The Travelers Companies, Inc.                                                 

Segment Income (Loss) - Business Insurance

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Revenues
Premiums						$	3,864					$	3,735					$	3,841					$	3,854					$	3,799					$	3,880					$	3,970					$	4,085																													$	15,294					$	15,734
Net investment income						453						180						498						502						523						615						575						552																														1,633						2,265
Fee income						102						108						95						100						95						97						90						93																														405						375
Other revenues						31						36						58						51						53						57						69						56																														176						235
Total revenues						4,450						4,059						4,492						4,507						4,470						4,649						4,704						4,786																														17,508						18,609
Claims and expenses
Claims and claim adjustment expenses						2,791						2,880						2,804						2,329						2,788						2,539						2,703						2,368																														10,804						10,398
Amortization of deferred acquisition costs						636						622						633						627						627						642						653						659																														2,518						2,581
General and administrative expenses						685						656						651						672						683						688						684						691																														2,664						2,746
Total claims and expenses						4,112						4,158						4,088						3,628						4,098						3,869						4,040						3,718																														15,986						15,725
Segment income (loss) before income taxes						338						(99)						404						879						372						780						664						1,068																														1,522						2,884
Income tax expense (benefit)						49						(41)						39						166						55						137						106						201																														213						499
Segment income (loss)						$	289					$	(58)					$	365					$	713					$	317					$	643					$	558					$	867																													$	1,309					$	2,385
Other statistics
Effective tax rate on net investment income						15.0		%				6.3		%				15.6		%				15.4		%				15.8		%				16.7		%				16.3		%				16.0		%																												14.4		%				16.2		%
Net investment income (after-tax)						$	385					$	169					$	421					$	423					$	441					$	511					$	481					$	464																													$	1,398					$	1,897
Catastrophes, net of reinsurance:
Pre-tax						$	195					$	377					$	97					$	(24)					$	506					$	149					$	181					$	(43)																													$	645					$	793
After-tax						$	154					$	298					$	76					$	(19)					$	399					$	119					$	143					$	(34)																													$	509					$	627
Prior year reserve development - favorable (unfavorable):
Pre-tax						$	5					$	—					$	(220)					$	124					$	134					$	73					$	(108)					$	74																													$	(91)					$	173
After-tax						$	3					$	—					$	(173)					$	97					$	105					$	58					$	(86)					$	58																													$	(73)					$	135

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

8

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The Travelers Companies, Inc.                                                 

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

($ in millions, net of tax)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Underwriting gain (loss)						$	(84)					$	(221)					$	(59)					$	292					$	(116)					$	137					$	80					$	412																													$	(72)					$	513
Net investment income						385						169						421						423						441						511						481						464																														1,398						1,897
Other income (expense)						(12)						(6)						3						(2)						(8)						(5)						(3)						(9)																														(17)						(25)
Segment income (loss)						$	289					$	(58)					$	365					$	713					$	317					$	643					$	558					$	867																													$	1,309					$	2,385
Combined ratio (1) (2)
Loss and loss adjustment expense ratio						70.9		%				75.8		%				71.8		%				59.2		%				72.2		%				64.3		%				67.0		%				56.9		%																												69.4		%				65.0		%
Underwriting expense ratio						31.3		%				31.3		%				30.5		%				30.6		%				31.3		%				31.0		%				30.5		%				30.1		%																												30.9		%				30.7		%
Combined ratio						102.2		%				107.1		%				102.3		%				89.8		%				103.5		%				95.3		%				97.5		%				87.0		%																												100.3		%				95.7		%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development						(0.1)		%				—		%				5.8		%				(3.2)		%				(3.5)		%				(1.9)		%				2.7		%				(1.8)		%																												0.6		%				(1.1)		%
Catastrophes, net of reinsurance						5.0		%				10.1		%				2.5		%				(0.6)		%				13.3		%				3.9		%				4.6		%				(1.0)		%																												4.2		%				5.1		%
Underlying combined ratio						97.3		%				97.0		%				94.0		%				93.6		%				93.7		%				93.3		%				90.2		%				89.8		%																												95.5		%				91.7		%

 

(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.  These allocations are to conform the calculation of the combined ratio with statutory accounting. Additionally, 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)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Billing and policy fees and other						$	4					$	3					$	4					$	5					$	4					$	3					$	4					$	3																													$	16					$	14
Fee income:
Loss and loss adjustment expenses						$	41					$	44					$	35					$	41					$	38					$	39					$	36					$	37																													$	161					$	150
Underwriting expenses						61						64						60						59						57						58						54						56																														244						225
Total fee income						$	102					$	108					$	95					$	100					$	95					$	97					$	90					$	93																													$	405					$	375
Non-insurance general and administrative expenses						$	47					$	42					$	52					$	56					$	60					$	65					$	68					$	63																													$	197					$	256

 

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

9

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The Travelers Companies, Inc.                                                 

Selected Statistics - Business Insurance

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Statutory underwriting
Gross written premiums						$	4,794					$	4,127					$	4,230					$	3,909					$	4,776					$	4,356					$	4,453					$	4,244																													$	17,060					$	17,829
Net written premiums						$	4,190					$	3,777					$	3,833					$	3,631					$	4,125					$	3,980					$	4,021					$	3,973																													$	15,431					$	16,099
Net earned premiums						$	3,864					$	3,735					$	3,841					$	3,854					$	3,799					$	3,880					$	3,970					$	4,090																													$	15,294					$	15,739
Losses and loss adjustment expenses						2,737						2,828						2,750						2,282						2,741						2,500						2,657						2,326																														10,597						10,224
Underwriting expenses						1,247						1,167						1,145						1,132						1,251						1,226						1,205						1,190																														4,691						4,872
Statutory underwriting gain (loss)						(120)						(260)						(54)						440						(193)						154						108						574																														6						643
Policyholder dividends						10						6						9						7						8						6						8						7																														32						29
Statutory underwriting gain (loss) after policyholder dividends						$	(130)					$	(266)					$	(63)					$	433					$	(201)					$	148					$	100					$	567																													$	(26)					$	614

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

10

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The Travelers Companies, Inc.                                                 

Net Written Premiums - Business Insurance

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Net written premiums by market
Domestic
Select Accounts						$	799					$	734					$	658					$	630					$	729					$	726					$	685					$	693																													$	2,821					$	2,833
Middle Market						2,408						1,960						2,131						2,012						2,384						2,087						2,252						2,210																														8,511						8,933
National Accounts						301						215						239						241						290						213						228						256																														996						987
National Property and Other						428						585						602						471						445						647						638						535																														2,086						2,265
Total Domestic						3,936						3,494						3,630						3,354						3,848						3,673						3,803						3,694																														14,414						15,018
International						254						283						203						277						277						307						218						272																														1,017						1,074
Total						$	4,190					$	3,777					$	3,833					$	3,631					$	4,125					$	3,980					$	4,021					$	3,966																													$	15,431					$	16,092
Net written premiums by product line
Domestic
Workers’ compensation						$	1,096					$	780					$	774					$	699					$	948					$	754					$	751					$	722																													$	3,349					$	3,175
Commercial automobile						755						667						689						679						762						715						716						705																														2,790						2,898
Commercial property						433						620						603						507						466						678						656						608																														2,163						2,408
General liability						683						531						630						603						714						615						685						685																														2,447						2,699
Commercial multi-peril						956						892						899						861						940						908						953						967																														3,608						3,768
Other						13						4						35						5						18						3						42						7																														57						70
Total Domestic						3,936						3,494						3,630						3,354						3,848						3,673						3,803						3,694																														14,414						15,018
International						254						283						203						277						277						307						218						272																														1,017						1,074
Total						$	4,190					$	3,777					$	3,833					$	3,631					$	4,125					$	3,980					$	4,021					$	3,966																													$	15,431					$	16,092

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

11

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The Travelers Companies, Inc.                                                

Segment Income - Bond & Specialty Insurance

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Revenues
Premiums						$	667					$	693					$	723					$	740					$	743					$	776					$	806					$	813																													$	2,823					$	3,138
Net investment income						55						42						58						58						59						64						63						61																														213						247
Other revenues						5						5						7						10						5						7						5						6																														27						23
Total revenues						727						740						788						808						807						847						874						880																														3,063						3,408
Claims and expenses
Claims and claim adjustment expenses						327						403						392						342						374						335						375						389																														1,464						1,473
Amortization of deferred acquisition costs						124						128						133						134						134						142						147						147																														519						570
General and administrative expenses						125						123						124						128						130						135						135						132																														500						532
Total claims and expenses						576						654						649						604						638						612						657						668																														2,483						2,575
Segment income before income taxes						151						86						139						204						169						235						217						212																														580						833
Income tax expense						29						14						24						40						32						48						43						42																														107						165
Segment income						$	122					$	72					$	115					$	164					$	137					$	187					$	174					$	170																													$	473					$	668
Other statistics
Effective tax rate on net investment income						14.7		%				3.0		%				14.8		%				14.4		%				15.0		%				15.7		%				15.3		%				15.1		%																												12.3		%				15.3		%
Net investment income (after-tax)						$	47					$	41					$	49					$	50					$	50					$	55					$	53					$	52																													$	187					$	210
Catastrophes, net of reinsurance:
Pre-tax						$	1					$	7					$	2					$	1					$	24					$	3					$	3					$	10																													$	11					$	40
After-tax						$	1					$	5					$	2					$	1					$	19					$	2					$	2					$	8																													$	9					$	31
Prior year reserve development - favorable (unfavorable):
Pre-tax						$	—					$	(33)					$	—					$	32					$	15					$	44					$	22					$	24																													$	(1)					$	105
After-tax						$	—					$	(26)					$	—					$	25					$	12					$	35					$	18					$	19																													$	(1)					$	84

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

12

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The Travelers Companies, Inc.                                                

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

($ in millions, net of tax)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Underwriting gain						$	72					$	29					$	61					$	107					$	84					$	128					$	118					$	114																													$	269					$	444
Net investment income						47						41						49						50						50						55						53						52																														187						210
Other income						3						2						5						7						3						4						3						4																														17						14
Segment income						$	122					$	72					$	115					$	164					$	137					$	187					$	174					$	170																													$	473					$	668
Combined ratio (1)
Loss and loss adjustment expense ratio						48.8		%				57.8		%				54.0		%				45.7		%				49.9		%				42.6		%				46.3		%				47.4		%																												51.5		%				46.6		%
Underwriting expense ratio						37.1		%				36.0		%				35.3		%				35.2		%				35.3		%				35.5		%				34.8		%				34.1		%																												35.9		%				34.9		%
Combined ratio						85.9		%				93.8		%				89.3		%				80.9		%				85.2		%				78.1		%				81.1		%				81.5		%																												87.4		%				81.5		%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development						—		%				4.7		%				—		%				(4.2)		%				(2.1)		%				(5.7)		%				(2.6)		%				(3.0)		%																												—		%				(3.3)		%
Catastrophes, net of reinsurance						0.2		%				1.0		%				0.3		%				0.1		%				3.1		%				0.4		%				0.3		%				1.2		%																												0.4		%				1.3		%
Underlying combined ratio						85.7		%				88.1		%				89.0		%				85.0		%				84.2		%				83.4		%				83.4		%				83.3		%																												87.0		%				83.5		%

(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)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Non-insurance general and administrative expenses						$	1					$	1					$	2					$	2					$	2					$	1					$	1					$	2																													$	6					$	6

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

13

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The Travelers Companies, Inc.                                                 

Selected Statistics - Bond & Specialty Insurance

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Statutory underwriting
Gross written premiums						$	750					$	770					$	803					$	861					$	834					$	919					$	984					$	988																													$	3,184					$	3,725
Net written premiums						$	663					$	734					$	754					$	800					$	723					$	854					$	894					$	905																													$	2,951					$	3,376
Net earned premiums						$	667					$	693					$	723					$	740					$	743					$	776					$	806					$	813																													$	2,823					$	3,138
Losses and loss adjustment expenses						325						401						390						339						371						331						373						385																														1,455						1,460
Underwriting expenses						254						253						261						261						270						287						300						288																														1,029						1,145
Statutory underwriting gain						88						39						72						140						102						158						133						140																														339						533
Policyholder dividends						2						2						2						3						3						4						2						3																														9						12
Statutory underwriting gain after policyholder dividends						$	86					$	37					$	70					$	137					$	99					$	154					$	131					$	137																													$	330					$	521

 

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

14

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The Travelers Companies, Inc.                                                 

Net Written Premiums - Bond & Specialty Insurance

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Net written premiums by market
Domestic
Management Liability						$	401					$	438					$	467					$	463					$	444					$	497					$	532					$	510																													$	1,769					$	1,983
Surety						215						220						208						202						200						232						241						215																														845						888
Total Domestic						616						658						675						665						644						729						773						725																														2,614						2,871
International						47						76						79						135						79						125						121						180																														337						505
Total						$	663					$	734					$	754					$	800					$	723					$	854					$	894					$	905																													$	2,951					$	3,376
Net written premiums by product line
Domestic
Fidelity & surety						$	272					$	274					$	268					$	258					$	256					$	287					$	307					$	273																													$	1,072					$	1,123
General liability						289						326						339						357						340						389						401						400																														1,311						1,530
Other						55						58						68						50						48						53						65						52																														231						218
Total Domestic						616						658						675						665						644						729						773						725																														2,614						2,871
International						47						76						79						135						79						125						121						180																														337						505
Total						$	663					$	734					$	754					$	800					$	723					$	854					$	894					$	905																													$	2,951					$	3,376

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

15

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The Travelers Companies, Inc.                                                 

Segment Income (Loss) - Personal Insurance

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Revenues
Premiums						$	2,698					$	2,527					$	2,816					$	2,886					$	2,844					$	2,960					$	3,053					$	3,126																													$	10,927					$	11,983
Net investment income						103						46						115						117						119						139						133						130																														381						521
Fee income						6						6						6						6						6						7						7						7																														24						27
Other revenues						22						10						21						23						23						24						26						24																														76						97
Total revenues						2,829						2,589						2,958						3,032						2,992						3,130						3,219						3,287																														11,408						12,628
Claims and expenses
Claims and claim adjustment expenses						1,671						1,824						1,690						1,670						1,808						2,171						2,386						2,062																														6,855						8,427
Amortization of deferred acquisition costs						418						423						441						454						446						470						481						495																														1,736						1,892
General and administrative expenses						320						333						328						333						344						343						360						323																														1,314						1,370
Total claims and expenses						2,409						2,580						2,459						2,457						2,598						2,984						3,227						2,880																														9,905						11,689
Segment income (loss) before income taxes						420						9						499						575						394						146						(8)						407																														1,503						939
Income tax expense (benefit)						84						(1)						107						118						80						25						(6)						80																														308						179
Segment income (loss)						$	336					$	10					$	392					$	457					$	314					$	121					$	(2)					$	327																													$	1,195					$	760
Other statistics
Effective tax rate on net investment income						15.8		%				9.1		%				16.2		%				16.0		%				16.4		%				17.1		%				16.8		%				16.5		%																												15.2		%				16.7		%
Net investment income (after-tax)						$	87					$	41					$	96					$	99					$	99					$	116					$	111					$	108																													$	323					$	434
Catastrophes, net of reinsurance:
Pre-tax						$	137					$	470					$	298					$	52					$	305					$	323					$	317					$	69																													$	957					$	1,014
After-tax						$	108					$	370					$	236					$	42					$	241					$	255					$	250					$	55																													$	756					$	801
Prior year reserve development - favorable (unfavorable):
Pre-tax						$	22					$	35					$	362					$	24					$	168					$	65					$	30					$	(3)																													$	443					$	260
After-tax						$	18					$	27					$	286					$	19					$	132					$	51					$	24					$	(2)																													$	350					$	205

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

16

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The Travelers Companies, Inc.                                                 

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

($ in millions, net of tax)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Underwriting gain (loss)						$	232					$	(40)					$	279					$	342					$	198					$	(12)					$	(130)					$	203																													$	813					$	259
Net investment income						87						41						96						99						99						116						111						108																														323						434
Other income						17						9						17						16						17						17						17						16																														59						67
Segment income (loss)						$	336					$	10					$	392					$	457					$	314					$	121					$	(2)					$	327																													$	1,195					$	760
Combined ratio (1)
Loss and loss adjustment expense ratio						61.9		%				72.2		%				60.0		%				57.9		%				63.6		%				73.3		%				78.2		%				66.0		%																												62.8		%				70.3		%
Underwriting expense ratio						26.3		%				29.1		%				26.4		%				26.2		%				26.7		%				26.4		%				26.4		%				25.1		%																												26.9		%				26.2		%
Combined ratio						88.2		%				101.3		%				86.4		%				84.1		%				90.3		%				99.7		%				104.6		%				91.1		%																												89.7		%				96.5		%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development						(0.8)		%				(1.3)		%				(12.8)		%				(0.8)		%				(5.9)		%				(2.2)		%				(1.0)		%				0.1		%																												(4.1)		%				(2.2)		%
Catastrophes, net of reinsurance						5.0		%				18.6		%				10.5		%				1.8		%				10.8		%				10.9		%				10.4		%				2.3		%																												8.8		%				8.5		%
Underlying combined ratio						84.0		%				84.0		%				88.7		%				83.1		%				85.4		%				91.0		%				95.2		%				88.7		%																												85.0		%				90.2		%

(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 to conform the calculation of the combined ratio with statutory accounting. Additionally, 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)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Billing and policy fees and other						$	24					$	14					$	20					$	23					$	23					$	24					$	23					$	23																													$	81					$	93
Fee income						$	6					$	6					$	6					$	6					$	6					$	7					$	7					$	7																													$	24					$	27
Non-insurance general and administrative expenses						$	—					$	—					$	—					$	—					$	2					$	3					$	4					$	3																													$	—					$	12

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

17

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The Travelers Companies, Inc.                                                 

Selected Statistics - Personal Insurance

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Statutory underwriting
Gross written premiums						$	2,608					$	2,854					$	3,210					$	2,847					$	2,797					$	3,322					$	3,439					$	3,132																													$	11,519					$	12,690
Net written premiums						$	2,493					$	2,835					$	3,184					$	2,838					$	2,657					$	3,301					$	3,409					$	3,124																													$	11,350					$	12,491
Net earned premiums						$	2,698					$	2,527					$	2,816					$	2,886					$	2,844					$	2,960					$	3,053					$	3,126																													$	10,927					$	11,983
Losses and loss adjustment expenses						1,671						1,824						1,690						1,670						1,808						2,172						2,385						2,062																														6,855						8,427
Underwriting expenses						692						792						808						760						755						848						880						791																														3,052						3,274
Statutory underwriting gain (loss)						$	335					$	(89)					$	318					$	456					$	281					$	(60)					$	(212)					$	273																													$	1,020					$	282
Policies in force (in thousands)
Automobile						2,970						2,993						3,015						3,029						3,056						3,098						3,141						3,179																														3,029						3,179
Homeowners and Other						5,534						5,679						5,790						5,858						5,944						6,076						6,168						6,230																														5,858						6,230

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

18

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The Travelers Companies, Inc.                                                 

Net Written Premiums - Personal Insurance

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Net written premiums by product line
Domestic
Automobile						$	1,333					$	1,204					$	1,484					$	1,348					$	1,375					$	1,467					$	1,529					$	1,456																													$	5,369					$	5,827
Homeowners and Other						1,017						1,458						1,524						1,330						1,144						1,634						1,698						1,504																														5,329						5,980
Total Domestic						2,350						2,662						3,008						2,678						2,519						3,101						3,227						2,960																														10,698						11,807
International						143						173						176						160						138						200						182						164																														652						684
Total						$	2,493					$	2,835					$	3,184					$	2,838					$	2,657					$	3,301					$	3,409					$	3,124																													$	11,350					$	12,491

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

19

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The Travelers Companies, Inc.                                                 

Selected Statistics - Personal Insurance - Automobile

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Statutory underwriting
Gross written premiums						$	1,447					$	1,322					$	1,609					$	1,460					$	1,481					$	1,604					$	1,656					$	1,567																													$	5,838					$	6,308
Net written premiums						$	1,433					$	1,316					$	1,602					$	1,453					$	1,466					$	1,597					$	1,648					$	1,562																													$	5,804					$	6,273
Net earned premiums						$	1,467					$	1,254					$	1,499					$	1,500					$	1,478					$	1,525					$	1,557					$	1,581																													$	5,720					$	6,141
Losses and loss adjustment expenses						982						738						841						923						845						1,026						1,180						1,280																														3,484						4,331
Underwriting expenses						354						374						381						369						370						389						399						369																														1,478						1,527
Statutory underwriting gain (loss)						$	131					$	142					$	277					$	208					$	263					$	110					$	(22)					$	(68)																													$	758					$	283
Other statistics
Combined ratio (1):
Loss and loss adjustment expense ratio						66.9		%				58.9		%				56.0		%				61.5		%				57.2		%				67.2		%				75.9		%				80.9		%																												60.9		%				70.5		%
Underwriting expense ratio						24.3		%				28.9		%				24.3		%				24.5		%				24.6		%				24.4		%				24.1		%				23.2		%																												25.4		%				24.1		%
Combined ratio						91.2		%				87.8		%				80.3		%				86.0		%				81.8		%				91.6		%				100.0		%				104.1		%																												86.3		%				94.6		%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development						(0.2)		%				(1.2)		%				(1.4)		%				(1.4)		%				(5.2)		%				(2.1)		%				(0.4)		%				0.6		%																												(1.0)		%				(1.7)		%
Catastrophes, net of reinsurance						0.5		%				2.9		%				0.2		%				—		%				0.4		%				1.7		%				3.4		%				(0.3)		%																												0.8		%				1.3		%
Underlying combined ratio						90.9		%				86.1		%				81.5		%				87.4		%				86.6		%				92.0		%				97.0		%				103.8		%																												86.5		%				95.0		%
Catastrophes, net of reinsurance:
Pre-tax						$	8					$	35					$	3					$	—					$	6					$	26					$	53					$	(5)																													$	46					$	80
After-tax						$	6					$	27					$	3					$	—					$	5					$	21					$	41					$	(4)																													$	36					$	63
Prior year reserve development - favorable (unfavorable):
Pre-tax						$	3					$	15					$	21					$	20					$	78					$	33					$	6					$	(10)																													$	59					$	107
After-tax						$	2					$	12					$	17					$	16					$	61					$	26					$	5					$	(8)																													$	47					$	84
Policies in force (in thousands)						2,970						2,993						3,015						3,029						3,056						3,098						3,141						3,179
Change from prior year quarter						(0.4)		%				0.4		%				1.2		%				1.9		%				2.9		%				3.5		%				4.2		%				5.0		%
Change from prior quarter						(0.1)		%				0.8		%				0.7		%				0.5		%				0.9		%				1.4		%				1.4		%				1.2		%

(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)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Billing and policy fees and other						$	15					$	9					$	12					$	13					$	14					$	14					$	14					$	14																													$	49					$	56
Fee income						$	3					$	4					$	4					$	3					$	3					$	4					$	4					$	4																													$	14					$	15

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

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The Travelers Companies, Inc.                                                 

Selected Statistics - Personal Insurance - Homeowners and Other

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Statutory underwriting
Gross written premiums						$	1,161					$	1,532					$	1,601					$	1,387					$	1,316					$	1,718					$	1,783					$	1,565																													$	5,681					$	6,382
Net written premiums						$	1,060					$	1,519					$	1,582					$	1,385					$	1,191					$	1,704					$	1,761					$	1,562																													$	5,546					$	6,218
Net earned premiums						$	1,231					$	1,273					$	1,317					$	1,386					$	1,366					$	1,435					$	1,496					$	1,545																													$	5,207					$	5,842
Losses and loss adjustment expenses						689						1,086						849						747						963						1,146						1,205						782																														3,371						4,096
Underwriting expenses						338						418						427						391						385						459						481						422																														1,574						1,747
Statutory underwriting gain (loss)						$	204					$	(231)					$	41					$	248					$	18					$	(170)					$	(190)					$	341																													$	262					$	(1)
Other statistics
Combined ratio (1):
Loss and loss adjustment expense ratio						56.0		%				85.3		%				64.5		%				53.9		%				70.5		%				79.8		%				80.5		%				50.7		%																												64.7		%				70.1		%
Underwriting expense ratio						28.6		%				29.3		%				28.7		%				28.1		%				28.9		%				28.5		%				28.8		%				27.1		%																												28.7		%				28.3		%
Combined ratio						84.6		%				114.6		%				93.2		%				82.0		%				99.4		%				108.3		%				109.3		%				77.8		%																												93.4		%				98.4		%
Impact on combined ratio:
Net favorable prior year reserve development						(1.6)		%				(1.5)		%				(25.9)		%				(0.3)		%				(6.6)		%				(2.2)		%				(1.6)		%				(0.4)		%																												(7.4)		%				(2.6)		%
Catastrophes, net of reinsurance						10.5		%				34.1		%				22.3		%				3.8		%				21.9		%				20.6		%				17.6		%				4.8		%																												17.5		%				16.0		%
Underlying combined ratio						75.7		%				82.0		%				96.8		%				78.5		%				84.1		%				89.9		%				93.3		%				73.4		%																												83.3		%				85.0		%
Catastrophes, net of reinsurance:
Pre-tax						$	129					$	435					$	295					$	52					$	299					$	297					$	264					$	74																													$	911					$	934
After-tax						$	102					$	343					$	233					$	42					$	236					$	234					$	209					$	59																													$	720					$	738
Prior year reserve development - favorable:
Pre-tax						$	19					$	20					$	341					$	4					$	90					$	32					$	24					$	7																													$	384					$	153
After-tax						$	16					$	15					$	269					$	3					$	71					$	25					$	19					$	6																													$	303					$	121
Policies in force (in thousands)						5,534						5,679						5,790						5,858						5,944						6,076						6,168						6,230
Change from prior year quarter						7.2		%				7.9		%				8.0		%				7.6		%				7.4		%				7.0		%				6.5		%				6.4		%
Change from prior quarter						1.7		%				2.6		%				2.0		%				1.2		%				1.5		%				2.2		%				1.5		%				1.0		%

(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)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Billing and policy fees and other						$	9					$	5					$	8					$	10					$	9					$	10					$	9					$	9																													$	32					$	37
Fee income						$	3					$	2					$	2					$	3					$	3					$	3					$	3					$	3																													$	10					$	12

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

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The Travelers Companies, Inc.                                                 

Interest Expense and Other

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Revenues
Other revenues						$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—																													$	—					$	—
Claims and expenses
Interest expense						84						85						87						83						82						83						87						88																														339						340
General and administrative expenses						7						9						6						9						6						8						8						7																														31						29
Total claims and expenses						91						94						93						92						88						91						95						95																														370						369
Loss before income tax benefit						(91)						(94)						(93)						(92)						(88)						(91)						(95)						(95)																														(370)						(369)
Income tax benefit						(20)						(20)						(19)						(20)						(19)						(19)						(20)						(20)																														(79)						(78)
Loss						$	(71)					$	(74)					$	(74)					$	(72)					$	(69)					$	(72)					$	(75)					$	(75)																													$	(291)					$	(291)

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

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The Travelers Companies, Inc.                                                 

Consolidated Balance Sheet

($ in millions)						December 31, 2021 (1)						December 31, 2020
Assets
Fixed maturities, available for sale, at fair value (amortized cost $74,751 and $68,830; allowance for expected credit losses of $3 and $2)						$	77,810					$	74,003
Equity securities, at fair value (cost $749 and $415)						893						484
Real estate investments						979						1,026
Short-term securities						3,836						5,511
Other investments						3,857						3,399
Total investments						87,375						84,423
Cash						761						721
Investment income accrued						615						603
Premiums receivable (net of allowance for expected credit losses of $107 and $105)						8,085						7,829
Reinsurance recoverables (net of allowance for estimated uncollectible reinsurance of $141 and $146)						8,452						8,350
Ceded unearned premiums						902						772
Deferred acquisition costs						2,542						2,358
Contractholder receivables (net of allowance for expected credit losses of $21 and $19)						3,890						4,242
Goodwill						4,008						3,976
Other intangible assets						306						317
Other assets						3,530						3,173
Total assets						$	120,466					$	116,764
Liabilities
Claims and claim adjustment expense reserves						$	56,907					$	54,521
Unearned premium reserves						16,469						15,222
Contractholder payables						3,911						4,261
Payables for reinsurance premiums						384						356
Deferred taxes						289						558
Debt						7,290						6,550
Other liabilities						6,329						6,095
Total liabilities						91,579						87,563
Shareholders’ equity
Common stock (1,750.0 shares authorized; 241.2 and 252.4 shares issued and outstanding)						24,154						23,743
Retained earnings						41,555						38,771
Accumulated other comprehensive income						1,193						2,502
Treasury stock, at cost (541.5 and 527.3 shares)						(38,015)						(35,815)
Total shareholders’ equity						28,887						29,201
Total liabilities and shareholders’ equity						$	120,466					$	116,764

(1) Preliminary

Certain prior period amounts have been reclassified to conform to the 2021 presentation.

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The Travelers Companies, Inc.                                                 

Investment Portfolio

(at carrying value, $ in millions)						December 31, 2021						Pre-tax Book Yield (1)						December 31, 2020						Pre-tax Book Yield (1)
Investment portfolio
Taxable fixed maturities (including redeemable preferred stock)						$	44,743					2.60		%				$	40,230					2.90		%
Tax-exempt fixed maturities						33,067						2.81		%				33,773						2.83		%
Total fixed maturities						77,810						2.69		%				74,003						2.87		%
Non-redeemable preferred stocks						66						3.04		%				68						2.96		%
Common stocks						827												416
Total equity securities						893												484
Real estate investments						979												1,026
Short-term securities						3,836						0.10		%				5,511						0.18		%
Private equities						2,672												2,301
Hedge funds						231												197
Real estate partnerships						768												701
Other investments						186												200
Total other investments						3,857												3,399
Total investments						$	87,375											$	84,423
Net unrealized investment gains, net of tax, included in shareholders’ equity						$	2,415											$	4,074

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

Certain prior period amounts have been reclassified to conform to the 2021 presentation.

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The Travelers Companies, Inc.                                                 

Investment Portfolio - Fixed Maturities Data

(at carrying value, $ in millions)						December 31, 2021						December 31, 2020
Fixed maturities
U.S. Treasury securities and obligations of U.S. Government corporations and agencies						$	3,562					$	2,149
Obligations of states and political subdivisions:
Pre-refunded						4,032						3,544
All other						32,830						32,816
Total						36,862						36,360
Debt securities issued by foreign governments						1,041						1,054
Mortgage-backed securities - principally obligations of U.S. Government agencies						1,817						2,361
Corporates (including redeemable preferreds)						34,528						32,079
Total fixed maturities						$	77,810					$	74,003

 

Fixed Maturities

Quality Characteristics (1)

 

						December 31, 2021												December 31, 2020
						Amount						% of Total						Amount						% of Total
Quality Ratings
Aaa						$	33,323					42.8		%				$	31,653					42.8		%
Aa						18,140						23.3						18,327						24.8
A						14,757						19.0						12,944						17.5
Baa						10,483						13.5						9,738						13.1
Total investment grade						76,703						98.6						72,662						98.2
Ba						742						0.9						870						1.2
B						293						0.4						366						0.5
Caa and lower						72						0.1						105						0.1
Total below investment grade						1,107						1.4						1,341						1.8
Total fixed maturities						$	77,810					100.0		%				$	74,003					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						4.2												3.8

(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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The Travelers Companies, Inc.                                                 

Investment Income

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Gross investment income
Fixed maturities						$	511					$	498					$	502					$	500					$	491					$	493					$	497					$	508																													$	2,011					$	1,989
Short-term securities						22						13						6						3						3						1						2						1																														44						7
Other						88						(234)						173						182						218						335						281						243																														209						1,077
						621						277						681						685						712						829						780						752																														2,264						3,073
Investment expenses						10						9						10						8						11						11						9						9																														37						40
Net investment income, pre-tax						611						268						671						677						701						818						771						743																														2,227						3,033
Income taxes						92						17						105						105						111						136						126						119																														319						492
Net investment income, after-tax						$	519					$	251					$	566					$	572					$	590					$	682					$	645					$	624																													$	1,908					$	2,541
Effective tax rate						15.1		%				6.2		%				15.6		%				15.4		%				15.9		%				16.7		%				16.3		%				16.0		%																												14.3		%				16.2		%
Average invested assets (1)						$76,191						$76,635						$78,722						$80,373						$81,209						$82,594						$84,647						$85,806																														$78,070						$83,574
Average yield pre-tax (1)						3.2		%				1.4		%				3.4		%				3.4		%				3.5		%				4.0		%				3.6		%				3.5		%																												2.9		%				3.6		%
Average yield after-tax						2.7		%				1.3		%				2.9		%				2.8		%				2.9		%				3.3		%				3.0		%				2.9		%																												2.4		%				3.0		%

(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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The Travelers Companies, Inc.                                                 

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

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Net realized investment gains (losses)
Fixed maturities						$	(2)					$	10					$	23					$	21					$	14					$	24					$	12					$	17																													$	52					$	67
Equity securities						(82)						44						16						38						26						32						(1)						38																														16						95
Other (1)						(14)						(41)						(2)						(9)						4						5						(3)						3																														(66)						9
Realized investment gains (losses) before tax						(98)						13						37						50						44						61						8						58																														2						171
Related taxes						(22)						3						8						2						10						14						1						14																														(9)						39
Net realized investment gains (losses)						$	(76)					$	10					$	29					$	48					$	34					$	47					$	7					$	44																													$	11					$	132
Gross investment gains (1)						$	31					$	69					$	41					$	64					$	50					$	72					$	24					$	66																													$	205					$	212
Gross investment losses before impairments (1)						(113)						(10)						(8)						(17)						(6)						(11)						(15)						(7)																														(148)						(39)
Net investment gains (losses) before impairments						(82)						59						33						47						44						61						9						59																														57						173
Net credit impairment (charges) recoveries						(16)						(46)						4						3						—						—						(1)						(1)																														(55)						(2)
Net realized investment gains (losses) before tax						(98)						13						37						50						44						61						8						58																														2						171
Related taxes						(22)						3						8						2						10						14						1						14																														(9)						39
Net realized investment gains (losses)						$	(76)					$	10					$	29					$	48					$	34					$	47					$	7					$	44																													$	11					$	132
($ in millions)						March 31, 2020						June 30, 2020						September 30, 2020						December 31, 2020						March 31, 2021						June 30, 2021						September 30, 2021						December 31, 2021
Net unrealized investment gains, net of tax, included in shareholders’ equity, by asset type
Fixed maturities						$	2,271					$	4,632					$	4,842					$	5,175					$	3,577					$	4,113					$	3,428					$	3,062
Other						2						2						2						—						2						(1)						(2)						(2)
Unrealized investment gains before tax						2,273						4,634						4,844						5,175						3,579						4,112						3,426						3,060
Related taxes						488						988						1,032						1,101						762						873						727						645
Balance, end of period						$	1,785					$	3,646					$	3,812					$	4,074					$	2,817					$	3,239					$	2,699					$	2,415
(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						$	5					$	—					$	—					$	—					$	—					$	—					$	—					$	—																													$	5					$	—
Gross investment Treasury future losses						$	12					$	—					$	—					$	—					$	—					$	—					$	—					$	—																													$	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.

 

Certain prior period amounts have been reclassified to conform to the 2021 presentation.

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The Travelers Companies, Inc.                                                 

Reinsurance Recoverables

($ in millions)						December 31, 2021						December 31, 2020
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses (1)						$	3,931					$	3,731
Gross structured settlements (2)						2,900						2,964
Mandatory pools and associations (3)						1,762						1,801
Gross reinsurance recoverables (4)						8,593						8,496
Allowance for estimated uncollectible reinsurance (5)						(141)						(146)
Net reinsurance recoverables						$	8,452					$	8,350

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

Reinsurer

A.M. Best Rating of Group's Predominant Reinsurer

December 31, 2021

Swiss Re Group

A+ second highest of 16 ratings

$

531

Munich Re Group

A+ second highest of 16 ratings

297

Berkshire Hathaway

A++ highest of 16 ratings

289

Alleghany Group

A+ second highest of 16 ratings

244

Axa Group

A+ second highest of 16 ratings

187

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:

Group

A.M. Best Rating of Group's Predominant Insurer

December 31, 2021

Fidelity & Guaranty Life Group

A- fourth highest of 16 ratings

$

724

Genworth Financial Group

B seventh highest of 16 ratings

307

John Hancock Group

A+ second highest of 16 ratings

264

Symetra Financial Corporation

A third highest of 16 ratings

222

Brighthouse Financial, Inc.

A third highest of 16 ratings

220

(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, 2021, after deducting mandatory pools and associations and before allowances for estimated uncollectible reinsurance, $5.93 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. 

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The Travelers Companies, Inc.                                                 

Net Reserves for Losses and Loss Adjustment Expense

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Statutory Reserves for Losses and Loss Adjustment Expenses
Business Insurance
Beginning of period						$	35,142					$	35,415					$	36,210					$	36,946					$	36,999					$	37,694					$	38,010					$	38,342																													$	35,142					$	36,999
Incurred						2,737						2,828						2,750						2,282						2,741						2,500						2,657						2,326																														10,597						10,224
Paid						(2,364)						(2,067)						(2,054)						(2,296)						(2,056)						(2,196)						(2,288)						(2,438)																														(8,781)						(8,978)
Foreign exchange and other						(100)						34						40						67						10						12						(37)						3																														41						(12)
End of period						$	35,415					$	36,210					$	36,946					$	36,999					$	37,694					$	38,010					$	38,342					$	38,233																													$	36,999					$	38,233
Bond & Specialty Insurance
Beginning of period						$	3,094					$	3,085					$	3,276					$	3,447					$	3,571					$	3,691					$	3,770					$	3,892																													$	3,094					$	3,571
Incurred						325						401						390						339						371						331						373						385																														1,455						1,460
Paid						(300)						(216)						(237)						(243)						(256)						(254)						(235)						(341)																														(996)						(1,086)
Foreign exchange and other						(34)						6						18						28						5						2						(16)						2																														18						(7)
End of period						$	3,085					$	3,276					$	3,447					$	3,571					$	3,691					$	3,770					$	3,892					$	3,938																													$	3,571					$	3,938
Personal Insurance
Beginning of period						$	5,507					$	5,413					$	5,626					$	5,788					$	5,677					$	5,768					$	6,113					$	6,428																													$	5,507					$	5,677
Incurred						1,671						1,824						1,690						1,670						1,808						2,172						2,385						2,062																														6,855						8,427
Paid						(1,693)						(1,644)						(1,546)						(1,816)						(1,730)						(1,837)						(2,051)						(2,075)																														(6,699)						(7,693)
Foreign exchange and other						(72)						33						18						35						13						10						(19)						3																														14						7
End of period						$	5,413					$	5,626					$	5,788					$	5,677					$	5,768					$	6,113					$	6,428					$	6,418																													$	5,677					$	6,418
Total
Beginning of period						$	43,743					$	43,913					$	45,112					$	46,181					$	46,247					$	47,153					$	47,893					$	48,662																													$	43,743					$	46,247
Incurred						4,733						5,053						4,830						4,291						4,920						5,003						5,415						4,773																														18,907						20,111
Paid						(4,357)						(3,927)						(3,837)						(4,355)						(4,042)						(4,287)						(4,574)						(4,854)																														(16,476)						(17,757)
Foreign exchange and other						(206)						73						76						130						28						24						(72)						8																														73						(12)
End of period						$	43,913					$	45,112					$	46,181					$	46,247					$	47,153					$	47,893					$	48,662					$	48,589																													$	46,247					$	48,589
Prior Year Reserve Development: Unfavorable (Favorable)
Business Insurance
Asbestos						$	—					$	—					$	295					$	—					$	—					$	—					$	225					$	—																													$	295					$	225
All other						(5)						—						(75)						(124)						(134)						(73)						(117)						(74)																														(204)						(398)
Total Business Insurance (1)						(5)						—						220						(124)						(134)						(73)						108						(74)																														91						(173)
Bond & Specialty Insurance						—						33						—						(32)						(15)						(44)						(22)						(24)																														1						(105)
Personal Insurance						(22)						(35)						(362)						(24)						(168)						(65)						(30)						3																														(443)						(260)
Total						$	(27)					$	(2)					$	(142)					$	(180)					$	(317)					$	(182)					$	56					$	(95)																													$	(351)					$	(538)

(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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The Travelers Companies, Inc.                                                 

Asbestos Reserves

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Asbestos reserves
Beginning reserves:
Gross						$	1,601					$	1,530					$	1,470					$	1,772					$	1,668					$	1,616					$	1,565					$	1,777																													$	1,601					$	1,668
Ceded						(322)						(316)						(301)						(365)						(330)						(327)						(315)						(369)																														(322)						(330)
Net						1,279						1,214						1,169						1,407						1,338						1,289						1,250						1,408																														1,279						1,338
Incurred losses and loss expenses:
Gross						—						—						362						—						—						—						287						—																														362						287
Ceded						—						—						(67)						—						—						—						(62)						—																														(67)						(62)
Paid loss and loss expenses:
Gross						69						60						61						105						52						51						75						89																														295						267
Ceded						(6)						(15)						(2)						(35)						(3)						(12)						(8)						(23)																														(58)						(46)
Foreign exchange and other:
Gross						(2)						—						1						1						—						—						—						(1)																														—						(1)
Ceded						—						—						1						—						—						—						—						—																														1						—
Ending reserves:
Gross						1,530						1,470						1,772						1,668						1,616						1,565						1,777						1,687																														1,668						1,687
Ceded						(316)						(301)						(365)						(330)						(327)						(315)						(369)						(346)																														(330)						(346)
Net						$	1,214					$	1,169					$	1,407					$	1,338					$	1,289					$	1,250					$	1,408					$	1,341																													$	1,338					$	1,341

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

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The Travelers Companies, Inc.                                                 

Capitalization

($ in millions)						December 31, 2021						December 31, 2020
Debt
Short-term debt
Commercial paper						$	100					$	100
Total short-term debt						100						100
Long-term debt
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						500
2.55% Senior notes due April 27, 2050 (1)						500						500
3.05% Senior notes due June 8, 2051 (1)						750						—
Total long-term debt						7,254						6,504
Unamortized fair value adjustment						39						41
Unamortized debt issuance costs						(103)						(95)
						7,190						6,450
Total debt						7,290						6,550
Common equity (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)						26,472						25,127
Total capital (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)						$	33,762					$	31,677
Total debt to capital (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)						21.6		%				20.7		%

(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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The Travelers Companies, Inc.                                                 

Statutory Capital and Surplus to GAAP Shareholders' Equity Reconciliation

($ in millions)						December 31, 2021 (1)						December 31, 2020
Statutory capital and surplus						$	23,906					$	22,180
GAAP adjustments
Goodwill and intangible assets						3,557						3,568
Investments						3,261						5,337
Noninsurance companies						(4,230)						(3,730)
Deferred acquisition costs						2,542						2,358
Deferred federal income tax						(1,274)						(1,585)
Current federal income tax						(39)						(42)
Reinsurance recoverables						87						55
Furniture, equipment & software						770						841
Agents balances						147						168
Other						160						51
Total GAAP adjustments						4,981						7,021
GAAP shareholders’ equity						$	28,887					$	29,201

(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.                                                 

Statement of Cash Flows - Preliminary

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Cash flows from operating activities
Net income (loss)						$	600					$	(40)					$	827					$	1,310					$	733					$	934					$	662					$	1,333																													$	2,697					$	3,662
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net realized investment (gains) losses						98						(13)						(37)						(50)						(44)						(61)						(8)						(58)																														(2)						(171)
Depreciation and amortization						203						188						186						212						235						215						212						208																														789						870
Deferred federal income tax expense (benefit)						6						(77)						4						38						56						1						4						1																														(29)						62
Amortization of deferred acquisition costs						1,178						1,173						1,207						1,215						1,207						1,254						1,281						1,301																														4,773						5,043
Equity in (income) loss from other investments						(67)						253						(154)						(162)						(200)						(313)						(261)						(219)																														(130)						(993)
Premiums receivable						(326)						(245)						247						418						(333)						(385)						256						204																														94						(258)
Reinsurance recoverables						(15)						75						(210)						(12)						12						142						(134)						(121)																														(162)						(101)
Deferred acquisition costs						(1,215)						(1,238)						(1,241)						(1,160)						(1,258)						(1,343)						(1,354)						(1,272)																														(4,854)						(5,227)
Claims and claim adjustment expense reserves						388						1,067						1,218						(51)						777						536						986						89																														2,622						2,388
Unearned premium reserves						414						229						317						(368)						509						459						492						(211)																														592						1,249
Other						(636)						292						(38)						511						(504)						410						407						437																														129						750
Net cash provided by operating activities						628						1,664						2,326						1,901						1,190						1,849						2,543						1,692																														6,519						7,274
Cash flows from investing activities
Proceeds from maturities of fixed maturities						1,461						1,610						2,170						2,146						2,064						2,283						2,176						2,329																														7,387						8,852
Proceeds from sales of investments:
Fixed maturities						388						832						774						1,063						1,238						1,244						382						301																														3,057						3,165
Equity securities						38						21						22						35						25						20						29						28																														116						102
Real estate investments						—						—						—						—						—						—						7						24																														—						31
Other investments						59						75						45						97						79						116						80						152																														276						427
Purchases of investments:
Fixed maturities						(2,630)						(2,160)						(5,161)						(4,122)						(4,754)						(4,708)						(4,894)						(3,797)																														(14,073)						(18,153)
Equity securities						(35)						(24)						(36)						(32)						(19)						(22)						(334)						(32)																														(127)						(407)
Real estate investments						(16)						(8)						(9)						(80)						(5)						(9)						(8)						(6)																														(113)						(28)
Other investments						(103)						(125)						(78)						(166)						(97)						(124)						(115)						(184)																														(472)						(520)
Net sales (purchases) of short-term securities						906						(2,053)						(240)						821						524						(718)						948						917																														(566)						1,671
Securities transactions in course of settlement						85						9						428						(569)						269						(40)						178						(426)																														(47)						(19)
Acquisition, net of cash acquired						—						—						—						—						(38)						—						—						—																														—						(38)
Other						(69)						(75)						(78)						(108)						(60)						(53)						(86)						(80)																														(330)						(279)
Net cash provided by (used in) investing activities						84						(1,898)						(2,163)						(915)						(774)						(2,011)						(1,637)						(774)																														(4,892)						(5,196)

Certain prior period amounts have been reclassified to conform to the 2021 presentation.

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The Travelers Companies, Inc.                                                 

Statement of Cash Flows - Preliminary (Continued)

($ in millions)						1Q2020						2Q2020						3Q2020						4Q2020						1Q2021						2Q2021						3Q2021						4Q2021																														YTD 4Q2020						YTD 4Q2021
Cash flows from financing activities
Treasury stock acquired - share repurchase authorization						(425)						—						—						(200)						(356)						(400)						(600)						(800)																														(625)						(2,156)
Treasury stock acquired - net employee share-based compensation						(46)						—						—						(1)						(41)						(1)						(1)						(1)																														(47)						(44)
Dividends paid to shareholders						(210)						(216)						(217)						(218)						(214)						(222)						(219)						(214)																														(861)						(869)
Payment of debt						—						—						—						(500)						—						—						—						—																														(500)						—
Issuance of debt						—						490						—						—						—						739						—						—																														490						739
Issuance of common stock - employee share options						31						34						7						55						134						72						50						37																														127						293
Net cash provided by (used in) financing activities						(650)						308						(210)						(864)						(477)						188						(770)						(978)																														(1,416)						(2,037)
Effect of exchange rate changes on cash						(12)						5						7						16						3						—						(7)						3																														16						(1)
Net increase (decrease) in cash						50						79						(40)						138						(58)						26						129						(57)																														227						40
Cash at beginning of period						494						544						623						583						721						663						689						818																														494						721
Cash at end of period						$	544					$	623					$	583					$	721					$	663					$	689					$	818					$	761																													$	721					$	761
Income taxes paid						$	15					$	2					$	396					$	165					$	58					$	284					$	201					$	164																													$	578					$	707
Interest paid						$	60					$	106					$	60					$	113					$	59					$	104					$	59					$	115																													$	339					$	337

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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.

Reconciliation of Shareholders’ Equity to Adjusted Shareholders’ Equity

						As of
($ in millions)						March 31, 2020						June 30, 2020						September 30, 2020						December 31, 2020						March 31, 2021						June 30, 2021						September 30, 2021						December 31, 2021
Shareholders’ equity						$	25,204					$	26,943					$	27,849					$	29,201					$	28,269					$	29,156					$	28,474					$	28,887
Adjustments:
Net unrealized investment gains, net of tax, included in shareholders’ equity						(1,785)						(3,646)						(3,812)						(4,074)						(2,817)						(3,239)						(2,699)						(2,415)
Net realized investment (gains) losses, net of tax						76						66						37						(11)						(34)						(81)						(88)						(132)
Impact of changes in tax laws and/or tax rates (1)						—						—						—						—						—						(8)						(8)						(8)
Adjusted shareholders’ equity						$	23,495					$	23,363					$	24,074					$	25,116					$	25,418					$	25,828					$	25,679					$	26,332
(1) Impact is recognized in the accounting period in which the change is enacted

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 2021 ranges from $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

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The Travelers Companies, Inc.                                                 

Glossary of Financial Measures and Description of Reportable Business Segments

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.

 

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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Attachment: XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

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Attachment: XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

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Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT