Remarkable
things happen
when people care.
2024 ANNUAL REPORT • THE TR AVE LERS COMPANIES, IN C.
Inside Cover
Last year, we debuted a new brand manifesto and ad campaign centered around
a simple yet powerful idea: “Remarkable things happen when people care.”
You can find the manifesto at the QR code above.
The manifesto reflects Travelers employees’ extraordinary dedication to the
customers and communities we are privileged to serve. This commitment is at
the heart of everything we do.
What would you do to help bring a lost dog home in the wake of an accident?
When a devastating crash separated a loyal Australian Shepherd from his
owner, one Travelers employee went above and beyond to do just that.
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 1
Our long-standing commitment to excellence
and care was an important contributor to our
exceptional top- and bottom-line results this
past year. We delivered record core income,
underlying underwriting income, net income
per diluted share, cash flow from operations
and net written premiums.
Alan D. Schnitzer
Chairman and Chief Executive Officer
To My Fellow Shareholders
Strong results such as we delivered in 2024 not only benefit
our shareholders but also empower us to be there for the
customers and communities we are privileged to serve,
especially during their times of greatest need. That took on
particular importance last year as we faced record-breaking
natural catastrophes. Our team of more than 30,000
committed employees rose to the occasion with countless
individual acts of excellence – helping families and businesses
recover, building resilience in affected communities and
underscoring the value at the heart of our business.
Our long-standing commitment to excellence and care was
an important contributor to our exceptional top- and
bottom-line results this past year. We delivered record core
income, underlying underwriting income, net income per
diluted share, cash flow from operations and net written
premiums. Each of our three business segments was a strong
contributor to these results.
We earned $5 billion* of core income, generating core return
on equity of 17.2%. The record underlying underwriting
income, along with net favorable prior year reserve
development and strong net investment income, more than
offset a record level of catastrophe losses. Core return on
equity was more than 1,200 basis points above the average
10-year Treasury.
This year, our underlying underwriting income reached
$4.5 billion after-tax, surpassing $4 billion for the first time,
driven by record net earned premiums and very strong
profitability.
This level of underlying underwriting income is an important
and highly consequential result of the strong top-line growth
and profitability that we have achieved over the last eight
years. It positions us to deliver strong bottom-line results
even in the face of elevated losses from catastrophes, as we
and the industry experienced this year.
Net income per diluted share was $21.47, which was 68%
higher than the prior year. Share repurchases, an important
component of our disciplined capital management strategy,
contributed to the strong earnings per share result.
Thanks to our exceptional franchise value and excellent
marketplace execution by our field organization, we grew net
written premiums by 8% to a record $43.4 billion. Net written
premiums were up more than 70% from $25 billion in 2016,
with both reported and underlying profitability also improving
over that period. Growth with improving profitability is a
noteworthy accomplishment in this business.
These excellent results, along with our strong balance sheet,
enabled us to continue making important investments in our
business and return $2.1 billion of excess capital to our
shareholders during the year, including through $1.1 billion of
share repurchases. Even after this deployment of capital, we
grew adjusted book value per share by 13% during the year.
With that, let me turn to a more detailed discussion of our
2024 performance and how we are positioning Travelers for
continued success.
* See “Additional information” for a discussion and calculation of non-GAAP financial measures.
2 THE TRAVELERS COMPANIES
2024 ANNUAL REPORT
FINANCIAL
HIGHLIGHTS
$5.0 Billion
CORE
INCOME
17.2%
CORE RETURN
ON EQUITY
$43.4 Billion
NET WRITTEN
PREMIUMS
$2.1 Billion
CAPITAL
RETURNED TO
SHAREHOLDERS
As of and for the year ended December 31. Dollar amounts in millions, except per share amounts.
2024
2023
2022
2021
2020
Earned Premiums
$
41,941
$
37,761
$
33,763
$
30,855
$
29,044
Total Revenues
$
46,423
$
41,364
$
36,884
$
34,816
$
31,981
Core Income
$
5,025
$
3,072
$
2,998
$
3,522
$
2,686
Net Income
$
4,999
$
2,991
$
2,842
$
3,662
$
2,697
Net Income per Diluted Share
$
21.47
$
12.79
$
11.77
$
14.49
$
10.52
Total Investments
$
94,223
$
88,810
$
80,454
$
87,375
$
84,423
Total Assets
$ 133,189
$ 125,978
$ 115,717
$ 120,466
$ 116,764
Shareholders’ Equity
$
27,864
$
24,921
$
21,560
$
28,887
$
29,201
Return on Equity
19.2 %
13.6 %
12.2 %
12.7 %
10.0 %
Core Return on Equity
17.2 %
11.5 %
11.3 %
13.7 %
11.3 %
Book Value per Share
$
122.97
$
109.19
$
92.90
$
119.77
$
115.68
Dividends per Share
$
4.15
$
3.93
$
3.67
$
3.49
$
3.37
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 more than 30,000 employees and generated revenues of more than $46 billion in 2024.
For more information, visit Travelers.com.
Our 2024 Results Speak to the Broad
Strength of the Travelers Franchise
Travelers delivered core income of $5 billion, or $21.58 of
core income per diluted share, generating core return on
equity of 17.2% – an exceptional result and a meaningful
spread over both the 10-year Treasury and our cost of equity.
We achieved these excellent results in the face of record
catastrophe losses. We delivered a record $4.5 billion of
after-tax underlying underwriting income, an increase of
nearly 40% compared to last year’s then record, and an
underlying combined ratio that improved 330 basis points to
an excellent 86.2%.
This year’s outstanding underlying underwriting results are
even more impressive when considered in their historical
context. As illustrated by the chart below, prior to 2020,
underlying underwriting income had never exceeded
$1.5 billion. Since that time, we have taken underlying
underwriting income to an entirely new level by profitably
growing our business.
Turning to the top line, today’s production generates
tomorrow’s earned premiums. In 2024, we delivered record
net written premiums of $43.4 billion, up 8% compared to
the prior year. This represents the 15th consecutive year of
net written premium growth. All three of our business
segments contributed to this strong top-line performance,
with Business Insurance increasing 8%, Bond & Specialty
Insurance increasing 7% and Personal Insurance increasing
8%. This growth has been part of a deliberate strategy we
developed in 2016 to profitably improve our growth
trajectory. We seek to achieve profitable growth not by
competing on price but by investing in franchise value –
making sure that we offer the products, services and
experiences that our customers want to buy and our
distribution partners want to sell.
Also central to our growth strategy is our very granular
approach to risk selection, underwriting and pricing. As a
result of that approach, and investments we have made over
decades in leading data and analytics, our growth in insured
exposures correlates to returns. In other words, generally
speaking, the more attractive the returns in a business, the
more we have been growing insured exposures in that
business. Conversely, where returns have not met our target,
we have grown by pricing accordingly. All of which is to say,
Travelers’ unique combination of franchise value and
execution yields high-quality, profitable growth.
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 3
$5.0 Billion
RECORD
CORE INCOME
$43.4 Billion
RECORD
NET WRITTEN
PREMIUMS
$1.4
$1.3
$1.2
$1.5
$1.4
$2.0
$2.3
$2.1
$3.2
$4.5
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Underlying Underwriting Income1
(in billions, after-tax)
1 Excludes the impact of net prior year reserve development and catastrophe losses.
Our Investment Portfolio Continues
to Perform
We strive to be thoughtful underwriters on both sides of the
balance sheet, and we have always managed our investment
portfolio to support our insurance operations, not the other
way around. Accordingly, our investment portfolio is
positioned to meet our obligations to policyholders under
almost every foreseeable circumstance – anything from a
global pandemic to a significant natural disaster to a financial
crisis. With this in mind, we are focused on risk-adjusted
returns and credit quality rather than reaching for yield that is
not commensurate with the underlying risk.
Our well-defined and consistent investment
portfolio has been a meaningful and reliable
contributor to our results, year in and year
out. This is exactly what we saw in 2024.
Our well-defined and consistent investment portfolio has
been a meaningful and reliable contributor to our results, year
in and year out. This is exactly what we saw in 2024. Net
investment income from our fixed income and alternative
investment portfolios increased by more than 21% to a very
strong $3 billion after-tax. From a fixed income perspective,
net investment income benefited from very strong top-line
growth and record cash flow from operations, as well as from
slightly higher average interest rates. For 2025, we expect to
earn approximately $3 billion after-tax on our fixed income
portfolio alone.
Our Data-Driven Underwriting Culture and
Expertise Matter More Than Ever
Underwriting excellence is, of course, key to our success, and
there is nothing more critical to underwriting excellence than a
culture that values strong performance over time and
understands how to balance the art and science of decision
making based on data and analytics. In other words,
evaluating risk and reward is at the heart of what we do. In that
regard, our culture alone is a significant competitive
advantage, and one that we believe is very hard to replicate.
A critical component of this culture is our granular approach
to underwriting. In our commercial businesses, that means
execution on an account-by-account or class-by-class basis.
In personal lines, it means a very high degree of segmentation
by risk profile, product and geography. With that and our
advanced data and analytics, we thoughtfully select the risks
that we write and price our products deliberately with our
target return in mind.
Like every aspect of our business, our focus on performance
over time is core to how we manage our catastrophe
exposure. Although we are unable to predict what the next
event will be or where it will occur, we are taking steps every
day to ensure that our portfolio of risk properly contemplates
the potential for loss and that we maintain the right balance of
risk and reward. While the impact of the risk-based decisions
that we are making today is not always immediately evident,
those decisions will continue to drive our performance over
time. Due to our thoughtful approach to catastrophe
management, our share of catastrophe losses this year and
over time has been significantly favorable relative to our
market share. This outperformance is the result of our
prudent and integrated approach to managing our
catastrophe exposures through portfolio, risk selection,
underwriting and pricing actions. We continue to make
significant investments in advanced capabilities to ensure that
our catastrophe management teams and underwriters have
the tools and insights necessary to develop a comprehensive
view of catastrophe risk. We believe that these investments
position Travelers to continue to outperform over time.
While our competitive advantage in
underwriting is both durable and differentiating,
it is important that insurance markets be
allowed to operate in a way that allows insurers
to properly assess risk and set fair prices,
preserving the value proposition of insurance
for both consumers and carriers.
While our competitive advantage in underwriting is both
durable and differentiating, it is important that insurance
markets be allowed to operate in a way that allows insurers to
properly assess risk and set fair prices, preserving the value
proposition of insurance for both consumers and carriers.
While most insurance markets across the U.S. remain stable
and competitive, a number of states face significant
disruptions due to localized policy decisions and market
dynamics. We are engaging with stakeholders across sectors
to advocate for commonsense reforms and plan to make this
an area of focus in the year ahead. I have expanded on this
topic on the facing page.
4 THE TRAVELERS COMPANIES
2024 ANNUAL REPORT
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 5
Availability and Affordability
Why Some Insurance Markets Are Struggling and How We Can Fix Them*
In the aftermath of the devastating fires that swept through
Los Angeles neighborhoods in January, I visited the area to see
the damage firsthand and meet with affected customers and
employees. It was a heartbreaking scene – families mourning
lost homes, businesses facing uncertain futures, entire
communities grappling with unimaginable loss.
While the full impact of the event is still unfolding, and much
remains to be done to support these communities in their
recovery, it is important that lessons from a tragedy like this
lead us toward better approaches. That means taking
meaningful steps to mitigate and adapt to more frequent
extreme weather, as well as addressing the underlying factors
that leave communities vulnerable to both personal and
financial harm.
While climate change is rightly cited as an explanation, this is
an incomplete answer to a more complex problem. Economic
inflation, aging infrastructure and population migration into
higher-risk areas have emerged as primary drivers of rising
weather-related losses – trends that will likely continue.
There is also a constellation of other factors. Consider, for
example, the staggering cost of litigation abuse, as well as
development decisions and building practices that fail to
account for foreseeable extreme weather events.
Insurance plays a critical role on the sustainable path forward.
At its core, insurance is a cost-sharing mechanism, bringing
individuals and businesses together to pool resources
through premiums that accurately reflect each policyholder’s
exposure to risk. When insurers can properly assess risk and
set fair prices, this system functions reliably – even in the face
of extreme weather. Importantly, insurance also serves as a
crucial barometer of the true cost of building or rebuilding in
higher-risk areas, allowing these costs to be properly
considered during planning and development.
When this risk-sharing equation breaks down, it destabilizes
the insurance marketplace and creates protection gaps. While
most insurance markets across the U.S. remain stable and
competitive, a number of states face significant disruptions
due to localized policy decisions and market dynamics. For an
insurance market to function properly, pricing and terms must
be permitted to reflect the evolving level of risk. Regulatory
policies that disconnect pricing and terms from actual risk
drive insurers out of the market, reducing competition and
limiting consumer choice.
Markets of last resort, such as FAIR plans and wind pools,
serve a vital role by ensuring that coverage remains available
for everyone. Unfortunately, some programs have evolved far
beyond their intended purpose, increasingly becoming
markets of choice that mask underlying market failures. Many
have seen rapid growth driven by pricing that is neither
actuarially sound nor reflective of the current risk
environment. These pricing inadequacies become painfully
evident during extreme events, such as the January wildfires,
when these programs prove unsustainable – often leaving
consumers as the ultimate financial backstop.
When an insurance marketplace fails to function, families and
businesses bear the consequences. Costs rise, coverage
shrinks and economic opportunity suffers. These challenges
will not be easy to solve, but it is well past time we get started.
Real progress will require committed partnership among
policymakers, carriers and consumers. The urgency is clear –
we are seeing the damaging consequences in troubled
markets. Without prompt action, the road ahead will only
grow more difficult.
*As published by Alan Schnitzer on LinkedIn on March 31, 2025
When Disaster Strikes, Excellence in Claim
Sets Us Apart
We have long described our Claim organization as a crown
jewel of Travelers. It is both at the heart of the promise we
make to our customers and a significant competitive
advantage. This commitment to Claim excellence sets us
apart, but it particularly distinguishes us in years like 2024,
when industrywide catastrophes were significant in both
frequency and severity.
Our objective is to close 90% of property claims arising out of
catastrophe events within 30 days. What that means in
practice is our Claim team – some 13,000 strong – gets to
work often before an event strikes and well before the skies
clear, the wind dies down or the firefighters finish their work.
That includes leveraging aerial imagery, enabling us to
proactively identify locations with likely losses and determine
the degree of damage – sometimes even before our
customers have had a chance to return to their homes. We
also promptly share this information with those customers so
that they can begin the recovery process. For our Claim team,
a speedy and compassionate response is a baseline. This
means the world to our customers, as reflected in both
customer satisfaction and retention.
Preparing for Tomorrow – Leveraging the
Power of Artificial Intelligence
When we choose to make strategic investments, we evaluate
them through the lens of our Perform and Transform call to
action. Perform is about delivering on our objective of
industry-leading returns over time, and Transform is about
innovating to ensure that our competitive advantages are as
relevant and differentiating tomorrow as they are today.
Our long-standing investment in, and leveraging of, artificial
intelligence (AI) is a powerful example. We continue to
position Travelers as a leader in the property casualty industry
in this regard. It is becoming increasingly evident that the
impact of AI across the economy is going to be profound. So
is the opportunity for Travelers.
Our AI strategy begins with our significant scale and hard-to-
replicate data advantage. Given the competitive advantages
that will come from deploying AI across the insurance value
chain, and the expertise, resources and data required to get
there, scale will increasingly be a differentiator in our industry,
as will the ability to execute complex initiatives effectively and
efficiently. Expertise, resources, data, scale and execution
excellence all favor Travelers.
Building on this strong foundation, we have focused on
responsibly developing differentiating AI capabilities across
2024 ANNUAL REPORT
Travelers’
Unrivaled
Claim
Capability
6 THE TRAVELERS COMPANIES
Dedicated
Catastrophe
Response
Our data-driven catastrophe
Our data-driven catastrophe
response
response allows us to resolve
allows us to resolve
more than 90% of property
more than 90% of property
claims arising out of catastrophe
claims arising out of catastrophe
events within
events within 30 days.
30 days.
Comprehensive Digital
Services
A substantial and increasing volume
A substantial and increasing volume
of our claims can be resolved 100%
of our claims can be resolved 100%
through our digital portals. These
through our digital portals. These
portals allow customers to f
portals allow customers to file a
ile a
claim; upload documents, photos
claim; upload documents, photos
and videos;
and videos; and communicate and
and communicate and
receive payment electronically.
receive payment electronically.
Leading Wildfire
Mitigation and
Response
Our wildfire services combine
professional consulting with risk
mitigation and loss intervention.
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 7
Advanced Geospatial
Capabilities
Comprehensive imagery of more
than 85% of U.S. properties,
combined with our proprietary
artificial intelligence, allows for early
identification of losses, appropriate
resource deployment, and timely
customer contact and payment.
Sophisticated
Automated
Inspection
Predictive models power
cutting-edge inspection
methods, which results in more
than 50% of claims being paid
the same day as the inspection.
Expert Loss
Consultation
We connect customers
and agents with an
expert who can help
them make an informed
decision about whether
to file a claim.
Extensive
Contractor Network
We provide access to high-
quality repairs from 10,000+
vetted contractors through a
proprietary digital platform,
backed by a full warranty.
World-Class Expertise
Our Claim professionals are trained at Claim
University, our flagship learning institution
dedicated to helping our claim professionals
better serve our customers, and virtually all of our
claims are managed by a Travelers employee.
our three innovation priorities: extending our lead in risk
expertise; providing great experiences for our customers,
agents, brokers and employees; and optimizing productivity
and efficiency.
A key success driver in insurance is
segmenting risk as finely as possible to
achieve pricing that is accurately calibrated
to the risk. In that regard, deep learning
models have significantly improved our
ability to classify and segment risk in our
flow businesses.
In 2024, we implemented AI capabilities ranging from those
driving efficiency through automation to more advanced
generative AI and large language models. In terms of driving
efficiency, we are now using AI-infused automation broadly
throughout our business to handle hundreds of routine
workflows. Over the past few years, automation and AI have
been meaningful contributors to our expense ratio
improvement. We are also using more advanced models to
augment various aspects of our underwriting, claim
processing, service delivery, technology, analytics and other
core capabilities, including customer experience. A key
success driver in insurance is segmenting risk as finely as
possible to achieve pricing that is accurately calibrated to the
risk. In that regard, deep learning models have significantly
improved our ability to classify and segment risk in our flow
businesses.
In terms of AI, we are investing with speed and strategic
direction, consistent with our stated objective of delivering
industry-leading returns. This field will continue to develop
rapidly – and the breadth of its impact remains to be seen.
What is clear to us at Travelers is that our efforts to leverage
automation and AI have already compounded our
competitive advantages and are contributing to our record
results. Moving forward, our ambition is to continue to be a
market leader in this area, and it will be a sustained area of
focus for Travelers.
Consistent and Successful Long-Term
Financial Strategy Delivers Shareholder Value
It is always important to consider our financial results and
strategic initiatives in the context of what we are ultimately
trying to achieve. At Travelers, our simple and unwavering
mission for creating shareholder value is to:
• Deliver superior returns on equity by leveraging our
competitive advantages;
• Generate earnings and capital substantially in excess of
our growth needs; and
• Thoughtfully rightsize capital and grow book value per
share over time.
8 THE TRAVELERS COMPANIES
The results we deliver are due to our deliberate and consistent
approach to creating shareholder value. We have been clear
for many years that one of our crucial responsibilities is to
produce an appropriate return on equity for our shareholders.
This has meant developing and executing financial and
operational plans consistent with our goal of achieving
superior returns, which we defined many years ago as a mid-
teens core return on equity over time. We emphasize that this
objective is measured over time because we recognize that
the macroeconomic environment, loss cost trends, weather,
and geopolitical and other factors impact our results from
year to year, and that there will be years – or longer periods –
and environments in which a return below mid-teens is
industry leading.
The level and consistency of our return on
equity over time, particularly in the context
of the growth we have achieved, reflect the
value of our competitive advantages and the
discipline with which we run our business.
Our 2024 return on equity of 19.2% and core return on
equity of 17.2% again meaningfully exceeded the average
return on equity for the domestic P&C industry of 13.3%,
according to estimates from Conning, Inc., a global
investment management firm and insurance research
provider. As shown in the chart on page 10, our return on
equity has significantly outperformed the average return on
equity for the industry in each of the past 10 years.
Importantly, these industry-leading returns on an absolute
basis are even more impressive on a risk-adjusted basis when
you take into account our low level of volatility. The level and
consistency of our return on equity over time, particularly in
the context of the growth we have achieved, reflect the value
of our competitive advantages and the discipline with which
we run our business.
2024 ANNUAL REPORT
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 9
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 9
PREPARING FOR TOMORROW ...
Leveraging the Power of
Artificial Intelligence
Underwriting
Our underwriting tools provide timely, accurate and
summarized coverage information that improves the
efficiency of experienced underwriters, enhances the
onboarding and training experience for new underwriters
and ensures underwriting rigor and compliance.
Claim
Our claim tool provides industry-leading technical
guidance to our thousands of Claim professionals, leading
to more consistent outcomes and time savings for day-to-
day questions.
Submissions
Our business submission tool significantly reduces the time
it takes to register new business submissions in Bond &
Specialty Insurance – from two hours to two minutes –
positioning us to both win more business and deliver better
service to our customers.
Billing
Our billing tool allows us to quickly and accurately access
relevant data for customer billing inquiries, which has
reduced our response time by 98%.
Return on Equity
10 THE TRAVELERS COMPANIES
2024 ANNUAL REPORT
AVG=7.5%
AVG=12.5%
Travelers
U.S. P&C Insurers1
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
0%
5%
10%
15%
20%
13.3%
19.2%
12024 Forecast: © 2025 Conning, Inc., as published in Conning’s Property-Casualty Forecast & Analysis by Line of Insurance, 2024 Q4 edition.
Used with permission. Historical data: © 2025 S&P Global Market Intelligence LLC. Used with permission.
Travelers’ Powerful Earnings Engine
Any strategy to deliver a leading return on equity over time
requires a strategy to grow over time. To that end, we have
laid out a strategy to achieve profitable growth in the context
of the forces of change impacting our industry – namely,
changing consumer expectations, emerging technology
trends, more sophisticated data and analytics, and evolving
distribution models.
Strong underwriting is the flywheel that sets it all in motion.
Thanks to exceptional franchise value and excellent
marketplace execution, we have profitably grown our
premium base by more than 70% since 2016, from
$25 billion to more than $43 billion today. Our reported and
underlying profitability significantly improved over that period
of time. Our growth has been largely organic, from products in
which we have deep expertise, through distribution partners
with whom we have long-standing relationships, and in
geographies where we have a thorough understanding of the
regulatory environment and other market dynamics – in other
words, a relatively low-risk growth strategy. As we have
grown our business, we have also successfully executed on
our strategic initiative to improve productivity and efficiency.
It is a virtuous cycle, one in which the combination of well-
conceived and executed strategic initiatives, an effective
capital management strategy and a thoughtful investment
strategy contributes to attractive returns and growth in
adjusted book value per share. The successful execution of
this strategy over time has led to significantly higher
underlying underwriting income, meaningfully higher cash
flow from operations and growth in our investment portfolio.
The tremendous strength and relative predictability of our
underlying underwriting income have increasingly contributed
to our bottom line. Our underlying underwriting income has
more than tripled over the last eight years, reaching
$4.5 billion after-tax in 2024. This level of underlying
underwriting income positions us to deliver strong income
and returns, even with the level of outsized natural
catastrophes that we and the industry experienced in 2024.
Our growth in underwriting income also contributes to the
increase in our cash flow from operations. Since 2016, we
have more than doubled our annual cash flow from
operations to a record $9.1 billion in 2024. Cash flow is not a
measure that we or the industry talk a lot about, but it is
important. Cash flow is what enables us to make strategic
investments in our business, return excess capital to
shareholders and grow our investment portfolio. Since 2016,
we have invested $12 billion in technology (with a steadily
increasing allocation to important strategic initiatives),
returned more than $20 billion of excess capital to our
shareholders and grown our investment portfolio, excluding
unrealized investment gains (losses), by $30 billion to almost
$100 billion. Importantly, our growing investment portfolio
positions us to continue generating a higher level of
predictable and reliable net investment income.
The following charts illustrate the power of this strategy at work and its compounding, multiyear benefit.
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 11
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Accelerating Net Written Premium Growth
$43.4B
$22.4B
2.7% CAGR1
7.1% CAGR2
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Consistently Strong Underlying Profitability3
93.0%
AVG=91.0%
86.2%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Improving Expense Ratio
Higher Underlying Underwriting Income4
(after-tax)
2017
2018
2019
2020
2021
2022
2023
2024
+246%
$4.5B
$1.3B
AVG=31.7%
28.5%
Improved 3.2 pts
Higher Cash Flows from Operations
2017
2018
2019
2020
2021
2022
2023
2024
$9.1B
$3.7B
+146%
2017
2018
2019
2020
2021
2022
2023
2024
Growing Invested Assets5
$69.7B
$98.8B
Avg.
2012-2016
Avg.
2012-2016
1 Represents growth from 2012 through 2016.
2 Represents growth from 2016 through 2024.
3 Underlying underwriting combined ratio, which excludes the impact of net prior year reserve development and catastrophe losses.
4 Underlying underwriting income, which excludes the impact of net prior year reserve development and catastrophe losses.
5 Invested assets excludes net unrealized investment gains (losses).
Avg.
2012-2016
+42%
A Balanced Approach to Rightsizing Capital
The successful execution of our financial strategy, together
with our fortress balance sheet, has enabled us to grow book
value per share and adjusted book value per share
consistently over the last 10 years.
During this period, we have also returned a significant amount
of excess capital to our shareholders through dividends and
share repurchases. Over the last 10 years, we have increased
our dividend each year.
Notably, since we began our share repurchase program in
2006, we have returned approximately $57 billion of excess
capital to our shareholders, including through $42 billion of
share repurchases – well in excess of the market capitalization
of the company when we started. If you owned Travelers stock
when we began our share repurchase program in 2006, your
percentage ownership has more than tripled. This percentage
increase is even higher if you participated in our dividend
reinvestment program. Over that same period, we have
increased our dividend at an average annual rate of more
than 8%.
Our capital management strategy has been an important
driver of shareholder value creation over time. Our first
objective for the capital we generate is to reinvest it in our
business – organically and inorganically – to create
shareholder value. For example, as we continue to grow our
top line, as we have meaningfully for the past few years, we
will retain more capital to support that growth. Also, we
continue to invest in everything from talent to technology to
further our ambitious innovation agenda, advance our
strategic objectives and drive tomorrow’s performance.
Having said that, we are disciplined stewards of our
shareholders’ capital. To the extent that we generate capital
that we cannot reinvest consistent with our objective of
generating industry-leading returns over time, we will manage
it in the same way we have for nearly two decades – by
returning it to our shareholders through dividends and share
repurchases. By returning excess capital to our investors, we
give them the ability to allocate their investment dollars as
they see fit, including by investing in companies with different
growth profiles or capital needs, thereby efficiently allocating
capital across the economy. Over time, that efficient
allocation of capital in the marketplace contributes to a
stronger economy.
12 THE TRAVELERS COMPANIES
2024 ANNUAL REPORT
$139.04
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Adjusted Book Value per Share1
1 Excludes net unrealized investment gains (losses), net of tax,
included in shareholders’ equity.
$4.15
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Dividends per Share
$42.2
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Cumulative Share Repurchases (since 2006)
($ in billions)
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 13
$4.1
BILLION
$22.1
BILLION
$17.2
BILLION
THE POWER OF
Our Diversified Businesses
Our results this year and over time demonstrate the benefits of the diversification of our business across core commercial, specialty
and personal lines coverages. We engage broadly across nine major lines of insurance through our three business segments. Our
portfolio is balanced across these lines of business and further diversified by geography and customer size and type. The depth and
breadth of our business is a significant competitive advantage and one that would be very difficult to replicate.
NET WRITTEN PREMIUMS
BUSINESS INSURANCE
25%
Commercial Multi-Peril
17%
Commercial Auto
17%
Commercial Property
16%
General Liability
16%
Workers Compensation
9%
International
BOND & SPECIALTY INSURANCE
56%
Management Liability
32%
Surety
12%
International
PERSONAL INSURANCE
50%
Homeowners and Other
46%
Automobile
4%
International
COMBINED RATIO
92.5%
84.3%
94.4%
SEGMENT INCOME
$3.3
BILLION
$0.8
BILLION
$1.2
BILLION
Meaningful Total Shareholder Return
Ultimately, it is the success of our strategy – with all its
component parts – that drives our total return to
shareholders over time. We have a well-established track
record of managing the company to create value over the long
term, through periods of weather volatility; through
anticipated and unanticipated developments impacting loss
trends; through both foreseeable and unforeseeable
economic cycles; and through any number of more extreme
economic, geopolitical and other conditions. With that in
mind, the graph below compares our total return to
shareholders since the 2008 financial crisis to the returns for
the Dow 30, the S&P 500 and the S&P 500 Financials.
14 THE TRAVELERS COMPANIES
2024 ANNUAL REPORT
Our total return reflects the successful execution of our long-
term strategy. We provide our shareholders with growth in
book value, industry-leading returns, low volatility and high
credit quality. The success of this long-term strategy is
evident in the strong performance of our stock over time,
which has been remarkably consistent relative to many others
in the P&C industry. Viewing our performance through this
long-term lens, we are as confident as ever that executing on
our long-term financial strategy, managing Travelers with an
over-time discipline and continuing to invest in our
competitive advantages through our ambitious and focused
innovation agenda is the right approach for building on
Travelers’ outstanding record.
Total Return to Shareholders1
Travelers
S&P 500
S&P 500 Financials
Dow 30
Jan. 1,
2008
Dec. 31,
2008
Dec. 31,
2009
Dec. 31,
2010
Dec. 31,
2011
Dec. 31,
2012
Dec. 31,
2013
Dec. 31,
2014
Dec. 31,
2015
Dec. 31,
2016
Dec. 31,
2017
Dec. 31,
2018
Dec. 31,
2019
Dec. 31,
2020
Dec. 31,
2021
Dec. 31,
2022
Dec. 31,
2023
Dec. 31,
2024
-100%
0%
100%
200%
300%
400%
500%
600%
1 Represents the change in stock price plus the cumulative amount of dividends, assuming dividend reinvestment. For each year on the chart, total return is calculated
with January 1, 2008, as the starting point and December 31 of the relevant year as the ending point. © Bloomberg Finance L.P. Used with permission of Bloomberg.
Firing on All Cylinders – The Outlook for
Travelers
In the nearly 20 years since I joined Travelers, I have never
been more confident about the future of our business than
I am today.
Almost a decade ago, in service of our mission to deliver
industry-leading returns over time, we embarked on our
ambitious innovation strategy designed to profitably improve
our growth trajectory. This strategy includes pairing industry-
leading performance with transformation designed to ensure
that our competitive advantages are cutting edge and
effective in a changing world. Inside Travelers, our call to
action has been Perform and Transform. The strong growth,
industry-leading returns and industry-low volatility we have
delivered since demonstrate both the wisdom of the strategy
and our ability to execute it. We will build on this success by
continuing to execute our strategy with laser focus.
In the nearly 20 years since I joined Travelers,
I have never been more confident about the
future of our business than I am today.
Looking a little further out, we see significant upside in the
reinforcing benefits of scale – which, as I have said over the
last few years, will increasingly be a differentiator in our
industry. It is our scale, profitability and cash flow that support
our ability to attract the industry’s best talent and invest more
than $1.5 billion annually in technology. Our scale also
provides us with large and proprietary data sets – critically
important in the age of AI. We believe that companies that
leverage talent and scale to invest successfully will have a
significant advantage in consolidating industry premium over
time. Travelers is very well positioned in this regard.
Perhaps most importantly, wherever the years ahead take us,
we will stay true to the things that make Travelers, Travelers.
As always, that begins with our mission of creating
shareholder value and our purpose of taking care of the
people we are privileged to serve – our customers, our
communities and our colleagues.
***
It is a privilege to lead this great company. I am enormously
grateful to my colleagues for their unwavering commitment
to all that we stand for; to our agents and brokers for their
tremendous partnership and friendship; to our customers and
shareholders for their trust and confidence; and to our Board
of Directors for their wisdom and support.
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 15
Alan D. Schnitzer
Chairman and Chief Executive Officer
16 THE TRAVELERS COMPANIES
2024 ANNUAL REPORT
Elizabeth
16 THE TRAVELERS COMPANIES
2024 ANNUAL REPORT
BECAUSE WE CARE ...
we are finding new ways to be a
corporation of good citizens
Travelers understands that a healthy
private sector depends on durable and
reliable public institutions – and we are
invested in strengthening both. That is
why we created Citizen Travelers, our
nonpartisan civic engagement initiative.
Through in-house programming and
nonprofit partnerships, we are giving our
more than 30,000 employees the
resources and support to learn more,
engage in our democracy as informed
citizens and help shape the civic life of
their communities. You can find out more
at the QR code below.
PEDALING FOR PROGRESS
Jonathan
Unit Manager, Claim Auto
Drawing on his experiences as an auto
liability severity manager at Travelers,
as well as on his lifelong passion for
cycling, Jonathan has become a leading
and engaged voice for bike and
pedestrian safety in his own backyard.
Through his service on his county’s
Bicycle Pedestrian Advisory Committee, he is helping his
community design and deploy less dangerous streetscapes. “This
is an opportunity through my local government to have a say,” he
noted. The result is a safer community for all – a priority close to
Jonathan’s heart and central to our work at Travelers.
ANSWERING THE CALL
Jason
Field Training Manager, Property Claim
Dan
Consulting Engineer, Technology
As volunteer leaders with their local fire
departments, Jason and Dan are both
using skills they developed at Travelers
to make their communities safer and
more resilient. Jason brings his experience as a property field
training manager at Travelers to his role as Chairman of his local
fire district, while Dan applies the troubleshooting skills he uses as
a technology engineer at Travelers to his position as Assistant Fire
Chief of his town. Both are filling a critical need in their
communities, dedicating their time and talents to solving
problems and ensuring that emergency services are available to
anyone who needs them.
PARTNERING FOR PUBLIC SAFETY
Jim
Corporate Security
After 25 years of pouring his heart and
soul into his work with the police
department, Jim knows a lot about the
power of partnership in fostering safer
communities. After transitioning from
his role in public service to corporate
security, Jim did not hesitate when the mayor asked him to
volunteer as Chairman of the Board of Police Commissioners. “I
am forever appreciative of this community. I couldn’t imagine not wanting to give back,” he said.
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 17
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 17
BECAUSE WE CARE ...
we help shape and advance
the issues of our times
15YEARS
The Travelers Institute marked a 15 year milestone of engaging in
public policy discussion and analysis.
1,191
PROGRAMS
670
SPEAKERS
469,401
ATTENDEES
213
CITIES VISITED
1,191
670
469,401
213
PROGRAMS
SPEAKERS
ATTENDEES
CITIES VISITED
Providing Memorable
Experiences
We leverage our risk management
expertise to provide unique experiences.
Recently, our educational programs
have allowed insurance agents and the
broader public to watch and learn from a
live vehicle crash test, engage in wind
and hail demonstrations, and look
inside Travelers’ flagship education hub,
Claim University.
Making Sense of Today’s
Business Environment
Through presentations to our business
partners and their customers, we help
groups understand the business
environment in which they operate,
including macroeconomic trends and
public policy developments in
Washington, D.C., and state capitals.
Fostering Connection and
Learning
We have convened and engaged with
audiences in more than 200 cities across
the United States, the United Kingdom
and Canada through webinars, podcasts
and in-person forums.
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 17
18 THE TRAVELERS COMPANIES
2024 ANNUAL REPORT
BECAUSE WE CARE ...
we are making our communities
more resilient
BUILDING RESILIENT COMMUNITIES WITH HABITAT FOR HUMANITY
To help build stronger, more resilient communities, since 2011, we have joined forces with Habitat for Humanity®,
a nonprofit organization that helps families build and improve their homes, and the Insurance Institute for
Business & Home Safety (IBHS) to build affordable, wind-resistant homes to FORTIFIED™ standards throughout
the country.
$7.3 million
provided for rebuilding since
program inception
>750
FORTIFIED homes built for low-
income families by Habitat for
Humanity, SBP and Team
Rubicon across the United
States, made possible in part
with funding from Travelers
Resiliency is crucial in the face of changing climate conditions. Extreme wind
events, such as hurricanes and tornadoes, can cause severe damage and
significantly disrupt families and communities. Working with Team Rubicon,
SBP and Smart Home America, Travelers is helping those affected by
devastating weather events by rebuilding disaster-impacted communities with
FORTIFIED homes, which are better equipped to withstand such disasters.
In September 2024, Hurricane Francine impacted the four homes shown above, illustrating a clear
difference in resilience. The two standard construction homes on the left and the right were severely
damaged, whereas both SBP FORTIFIED homes in the center remained intact.
FORTIFIED
FORTIFIED
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 19
20 THE TRAVELERS COMPANIES
2024 ANNUAL
REPORT
BECAUSE WE CARE ...
we help our people thrive in
all areas of their lives
FINANCIAL SECURITY
$130,708* median pay for full-time U.S. employees,
who comprise 90% of our U.S. workforce, putting us in the
top quartile for employee pay in the S&P 500
$20/hr** minimum wage in the U.S.
~$625 million of funding in 2024 to provide
security in retirement for our employees through an active
defined benefit pension plan and a 401(k) savings plan
$1.3 million provided in 2024 to match student
loan payments with 401(k) contributions for more than
825 employees through The Travelers Paying It Forward
Savings Program
* Based on the median of the annual total compensation of full-time employees
in the United States as reported in our 2025 Proxy Statement.
**As of April 2025
20 THE TRAVELERS COMPANIES
2024 ANNUAL REPORT
HEALTH AND WELLNESS
52,000+ individuals covered by our medical plans
~$300 million paid in 2024 in medical-related costs
on behalf of employees, retirees and dependents
We use a tiered cost-sharing model to subsidize
health benefits: Higher-paid employees pay ~50% of their
health care costs, while our lowest-paid employees pay ~20%
BECAUSE WE CARE ...
we help our people thrive in
all areas of their lives
Consistent with the long-term perspective we bring to
managing our business, we view our human capital
management through a long-term lens. When we deliver
on our promise to our employees and their families,
promoting an inclusive workplace and committing to
their wellness and success, we are able to deliver on our
promise to our customers and drive shareholder value.
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 21
22 THE TRAVELERS COMPANIES
2024 ANNUAL REPORT
BOARD OF DIRECTORS
Back row, from left: Santana, Golden, Thomsen, Schnitzer, Leonardi, Robinson and Williams.
Front row, from left: Otis, van Kralingen, Kane and Schermerhorn.
Russell G. Golden
Retired Chairman
Financial Accounting
Standards Board
Director since 2023
William J. Kane
Retired Audit Partner
Ernst & Young
Director since 2012
Thomas B. Leonardi
Retired Executive Vice
President
American International
Group, Inc. and Vice
Chairman,
AIG Life Holdings, Inc.
Director since 2021
Clarence Otis Jr.
Retired Chairman and CEO
Darden Restaurants, Inc.
Director since 2017
Elizabeth E. Robinson
Retired Global Treasurer
The Goldman Sachs
Group, Inc.
Director since 2020
Rafael Santana
President and CEO
Westinghouse Air Brake
Technologies Corporation
Director since 2022
Todd C. Schermerhorn*
Retired Senior Vice
President and CFO
C. R. Bard, Inc.
Director since 2016
Alan D. Schnitzer
Chairman and CEO
Travelers
Director since 2015
Laurie J. Thomsen
Retired Partner and
Co-Founder
Prism Venture Partners
Director since 2004
Bridget A. van Kralingen
Senior Partner
Motive Partners
Director since 2022
David S. Williams
Retired Partner
Deloitte LLP
Director since 2024
*Independent Lead Director
2024 ANNUAL REPORT
THE TRAVELERS COMPANIES 23
BOARD COMMITTEES
Audit
Kane (Chair)
Golden
Schermerhorn
Thomsen
van Kralingen
Williams
Compensation
Otis (Chair)
Leonardi
Robinson
Santana
Executive
Schnitzer (Chair)
Kane
Leonardi
Otis
Robinson
Schermerhorn
Investment and
Capital Markets
Robinson (Chair)
Leonardi
Otis
Santana
Nominating and
Governance
Leonardi (Chair)
Otis
Robinson
Santana
Risk
Schermerhorn (Chair)
Golden
Kane
Thomsen
van Kralingen
Williams
EXECUTIVE OFFICERS
Alan D. Schnitzer
Chairman and
Chief Executive Officer
Andy F. Bessette
Executive Vice President and
Chief Administrative Officer
Daniel S. Frey
Executive Vice President and
Chief Financial Officer
William H. Heyman
Vice Chairman and
Chairman, Investment Policy
Committee
Avrohom J. Kess
Vice Chairman and
Chief Legal Officer
Michael F. Klein
Executive Vice President and
President, Personal
Insurance
Jeffrey P. Klenk
Executive Vice President and
President, Bond & Specialty
Insurance
Diane Kurtzman
Executive Vice President and
Chief Human Resources
Officer
Mojgan M. Lefebvre
Executive Vice President and
Chief Technology &
Operations Officer
Maria Olivo
Executive Vice President,
Strategic Development, and
President, International
David D. Rowland
Executive Vice President and
Co-Chief Investment Officer
Gregory C. Toczydlowski
Executive Vice President and
President, Business
Insurance
Daniel T. H. Yin
Executive Vice President and
Co-Chief Investment Officer
24 THE TRAVELERS COMPANIES
2024 ANNUAL
REPORT
F O R M 1 0 - K • T H E T R A V E L E R S C O M P A N I E S , I N C .
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________________________________
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to__________
________________________________________________
Commission file number 001-10898
________________________________________________
The Travelers Companies, Inc.
(Exact name of registrant as specified in its charter)
_________________________________________________________________
Minnesota
41-0518860
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
______________________________________________________________________________
485 Lexington Avenue
New York, NY 10017
(Address of principal executive offices) (Zip code)
(917) 778-6000
(Registrant’s telephone number, including area code)
______________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, without par value
TRV
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act). Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Act:
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
As of June 30, 2024, the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates was
$46,170,862,519.
As of February 7, 2025, 226,726,582 shares of the registrant’s common stock (without par value) were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement relating to the 2025 Annual Meeting of Shareholders are incorporated by reference into
Part III of this report.
The Travelers Companies, Inc.
Annual Report on Form 10-K
For Fiscal Year Ended December 31, 2024
TABLE OF CONTENTS
Item Number
Page
Part I
1.
Business ........................................................................................................................................................
3
1A.
Risk Factors ..................................................................................................................................................
43
1B.
Unresolved Staff Comments .........................................................................................................................
56
1C.
Cybersecurity ................................................................................................................................................
56
2.
Properties ......................................................................................................................................................
58
3.
Legal Proceedings .........................................................................................................................................
58
4.
Mine Safety Disclosures ...............................................................................................................................
58
Part II
5.
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities ...................................................................................................................................................
59
6.
Reserved .......................................................................................................................................................
61
7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations .......................
62
7A.
Quantitative and Qualitative Disclosures About Market Risk ......................................................................
117
8.
Financial Statements and Supplementary Data ............................................................................................
119
9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ......................
204
9A.
Controls and Procedures ...............................................................................................................................
204
9B.
Other Information .........................................................................................................................................
208
9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ..........................................................
208
Part III
10.
Directors, Executive Officers and Corporate Governance ...........................................................................
208
11.
Executive Compensation ..............................................................................................................................
210
12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters ....
210
13.
Certain Relationships and Related Transactions, and Director Independence .............................................
211
14.
Principal Accountant Fees and Services .......................................................................................................
211
Part IV
15.
Exhibits and Financial Statement Schedules ................................................................................................
211
16.
Form 10-K Summary ....................................................................................................................................
214
Signatures .....................................................................................................................................................
215
2
PART I
Item 1. BUSINESS
The Travelers Companies, Inc. (together with its consolidated subsidiaries, the Company) is a holding company principally
engaged, through its subsidiaries, in providing a wide range of commercial and personal property and casualty insurance
products and services to businesses, government units, associations and individuals. The Company is incorporated as a general
business corporation under the laws of the State of Minnesota and is one of the oldest insurance organizations in the United
States, dating back to 1853. The principal executive offices of the Company are located at 485 Lexington Avenue, New York,
New York 10017, and its telephone number is (917) 778-6000. The Company also maintains executive offices in Hartford,
Connecticut, and St. Paul, Minnesota. The term “TRV” in this document refers to The Travelers Companies, Inc., the parent
holding company excluding subsidiaries.
PROPERTY AND CASUALTY INSURANCE OPERATIONS
The property and casualty insurance industry is highly competitive in the areas of price, service, product offerings, agent and
broker relationships and other methods of distribution. Distribution methods include the use of local and national independent
agents and brokers, agency aggregators and carrier-based agencies, as well as direct to consumer, affinity and other partner
platforms. According to A.M. Best, there are approximately 1,100 property and casualty groups in the United States,
comprising approximately 2,600 property and casualty companies. Of those groups, the top 150 accounted for approximately
94% of the consolidated industry’s total net written premiums in 2023. The Company competes with both foreign and domestic
insurers. In addition, some property and casualty insurers writing commercial lines of business, including the Company, offer
products for alternative forms of risk protection in addition to traditional insurance products. These products include large
deductible programs and various forms of self-insurance, some of which utilize captive insurance companies and risk retention
groups. The Company’s competitive position in the marketplace is based on many factors, including the following:
•
ability to profitably price business, retain existing customers and obtain new business;
•
premiums charged, contract terms and conditions, products and services offered (including the ability to design
customized programs);
•
agent, broker and policyholder relationships;
•
ability to keep pace relative to competitors with changes in technology and information systems, including artificial
intelligence;
•
ability to use data and analytics to make decisions;
•
speed of claims payment;
•
ability to provide a positive customer experience;
•
ability to provide products and services in a cost effective manner;
•
ability to provide new products and services to meet changing customer needs;
•
ability to adapt to changes in business models, technology, customer preferences or regulation impacting the markets
in which the Company operates;
•
perceived overall financial strength and corresponding ratings assigned by independent rating agencies;
•
ability to recruit and retain qualified employees;
•
geographic scope of business; and
•
local presence.
In addition, the marketplace is affected by the available capacity of the insurance industry, as measured by statutory capital and
surplus, and the availability of reinsurance from both traditional sources, such as reinsurance companies and capital markets
(through catastrophe bonds), and non-traditional sources, such as hedge funds and pension plans. Industry capacity as
measured by statutory capital and surplus expands and contracts primarily in conjunction with profit levels generated by the
industry, less amounts returned to shareholders through dividends and share repurchases. Capital raised by debt and equity
offerings may also increase statutory capital and surplus.
Pricing and Underwriting
Pricing of the Company’s property and casualty insurance products is generally developed based upon an estimation of
expected losses, the expenses associated with producing, issuing and servicing business and managing claims, the time value of
money related to the expected loss and expense cash flows, and a reasonable profit margin that considers the capital needed to
support the Company’s business. The Company has a disciplined approach to underwriting and risk management that
emphasizes product returns and profitable growth over time rather than premium volume or market share. The Company’s
insurance subsidiaries are subject to state laws and regulations regarding rate and policy form approvals. The applicable state
3
laws and regulations establish standards in certain lines of business to ensure that rates are not excessive, inadequate, unfairly
discriminatory, or used to engage in unfair price competition. The Company’s ability to increase rates and the relative timing of
the process are dependent upon each respective state’s requirements, as well as the competitive market environment.
Geographic Distribution
The following table shows the geographic distribution of the Company’s consolidated direct written premiums for the year
ended December 31, 2024:
Location
% of Total
Domestic:
California ............................................................................................................................................................
10.5 %
Texas (1)
..............................................................................................................................................................
9.0
New York ...........................................................................................................................................................
8.2
Florida ................................................................................................................................................................
4.1
Pennsylvania .......................................................................................................................................................
4.1
Illinois .................................................................................................................................................................
3.7
Georgia ...............................................................................................................................................................
3.6
New Jersey .........................................................................................................................................................
3.6
Massachusetts .....................................................................................................................................................
3.1
All other domestic (2)
..........................................................................................................................................
45.0
Total Domestic ...............................................................................................................................................
94.9
International:
Canada ................................................................................................................................................................
2.8
All other international ........................................................................................................................................
2.3
Total International ..........................................................................................................................................
5.1
Consolidated total ..........................................................................................................................................
100.0 %
___________________________________________
(1)
The percentage for Texas includes business written by the Company through a fronting agreement with another insurer.
(2)
No other single state accounted for 3.0% or more of the Company’s consolidated direct written premiums written in 2024.
Catastrophe Exposure
The Company’s property and casualty insurance operations expose it to claims arising out of catastrophes. The Company uses
various analyses and methods, including proprietary and third-party modeling processes, to monitor and analyze underwriting
risks of business in natural catastrophe-prone areas and target risk areas for conventional terrorist attacks (defined as attacks
other than nuclear, biological, chemical or radiological events). The Company relies, in part, upon these analyses to make
underwriting decisions designed to manage its exposure on catastrophe-exposed business. For example, as a result of these
analyses, the Company has at various times limited the writing of new property and homeowners business in some markets and
has selectively taken underwriting actions on new and existing business. These underwriting actions on new and existing
business include tightening underwriting standards, selective price increases and changes to policy terms specific to hurricane-,
tornado-, wind-, wildfire- and hail-prone areas. See “Item 7—Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Catastrophe Modeling” and “—Changing Climate Conditions.” The Company also utilizes
reinsurance to manage its aggregate exposures to catastrophes. See “—Reinsurance.”
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,
including as a corporate member of Lloyd’s. Business Insurance is organized as follows:
4
Domestic
•
Select Accounts provides small businesses with property and casualty insurance products and services, including
commercial multi-peril, workers’ compensation, commercial automobile, general liability and commercial property.
•
Middle Market provides mid-sized businesses with property and casualty insurance products and services, including
workers’ compensation, general liability, commercial multi-peril, commercial automobile and commercial property, as
well as risk management, claims handling and other services. Middle Market generally provides these products to
mid-sized businesses through Commercial Accounts, as well as to targeted industries through Construction,
Technology & Life Sciences, Public Sector Services and Energy, and additionally, provides mono-line umbrella and
excess coverage insurance through Excess Casualty. Middle Market also provides insurance for goods in transit and
movable objects, as well as builders’ risk insurance, through Inland Marine; insurance for the marine transportation
industry and related services, as well as other businesses involved in international trade, through Ocean Marine; and
comprehensive breakdown for equipment, including property and business interruption, through Boiler & Machinery.
•
National Accounts provides large companies with casualty insurance products and services, including workers’
compensation, commercial automobile and general liability, generally utilizing loss-sensitive products, on both a
bundled and unbundled basis, as well as risk management, claims administration and other insurance-related services.
National Accounts also includes the Company’s commercial residual market business, which primarily offers workers’
compensation claims, policy management and other administrative services related to the involuntary market.
National Accounts also offers insurance-related services, such as claims administration, risk management, loss control
and risk management information services through Constitution State Services LLC, a wholly-owned subsidiary of the
Company.
•
National Property and Other provides traditional and customized commercial property insurance programs to large
and mid-sized customers through National Property, as well as insurance coverages and programs provided by
Northland Transportation, Agribusiness, Northfield and National Programs. Northland Transportation provides
insurance coverage for the commercial trucking industry. Agribusiness serves small- to medium-sized agricultural
businesses, including farms, ranches and other agricultural-related operations. Northfield includes commercial
property and general liability policies for small, difficult to place commercial business primarily on an excess and
surplus lines basis. National Programs offers tailored property and casualty insurance programs on an admitted basis
for customers with common risk characteristics or coverage requirements.
International
•
International, through its operations in Canada, the United Kingdom and the Republic of Ireland, provides property
and casualty insurance and risk management services to several customer groups, including, among others, those in the
technology, manufacturing, public services and commercial real estate industry sectors. International also provides
insurance for both the foreign exposures of United States organizations and the United States exposures of foreign
organizations through Global Services. At its Lloyd’s syndicate (Syndicate 5000), for which the Company provides
100% of the capital, International underwrites five principal businesses — marine, energy, property, aviation and
special risks.
Business Insurance also includes Simply Business, a leading provider of small business insurance policies primarily in the
United Kingdom, and Business Insurance Other, which primarily comprises the Company’s asbestos and environmental
liabilities and other runoff operations, including certain assumed reinsurance arrangements.
Selected Market and Product Information
The following table sets forth Business Insurance’s net written premiums by market and product line for the periods indicated.
For a description of the markets and product lines referred to in the table, see “—Principal Markets and Methods of
Distribution” and “—Product Lines,” respectively.
5
(for the year ended December 31, in millions)
2024
2023
2022
% of Total
2024
By market:
Domestic:
Select Accounts ...............................................................
$
3,727 $
3,477 $
3,099
16.9 %
Middle Market .................................................................
12,023
11,045
9,923
54.4
National Accounts ...........................................................
1,259
1,135
1,085
5.7
National Property and Other ...........................................
3,134
3,008
2,467
14.2
Total Domestic ...........................................................
20,143
18,665
16,574
91.2
International .........................................................................
1,935
1,765
1,061
8.8
Total Business Insurance by market .......................
$
22,078 $
20,430 $
17,635
100.0 %
By product line:
Domestic:
Workers’ compensation ..................................................
$
3,469 $
3,492 $
3,397
15.7 %
Commercial automobile ..................................................
3,778
3,346
3,061
17.1
Commercial property ......................................................
3,698
3,494
2,771
16.7
General liability ...............................................................
3,591
3,264
2,962
16.3
Commercial multi-peril ...................................................
5,537
5,000
4,304
25.1
Other ...............................................................................
70
69
79
0.3
Total Domestic ...........................................................
20,143
18,665
16,574
91.2
International .........................................................................
1,935
1,765
1,061
8.8
Total Business Insurance by product line ..............
$
22,078 $
20,430 $
17,635
100.0 %
Principal Markets and Methods of Distribution
Business Insurance markets and distributes products through thousands of independent agencies and brokers. Agencies and
brokers are serviced by 88 field offices and supported by customer service centers where the Company performs services for
agents for a fee and centralized business centers where the Company processes new and renewal business that meet certain
underwriting criteria.
Business Insurance builds relationships with well-established, independent insurance agencies and brokers. In selecting new
independent agencies and brokers to distribute its products, Business Insurance considers, among other factors, each agency’s
or broker’s financial strength, staff experience and strategic fit with the Company’s operating and marketing plans. Once an
agency or broker is appointed, Business Insurance regularly monitors its performance. The majority of products offered in the
United States are distributed through independent agents and brokers, many of whom also sell the Company’s Personal
Insurance and Bond & Specialty Insurance products. Business Insurance continues to make significant investments to enable
real-time interface capabilities with its independent agencies and brokers.
Domestic
•
Select Accounts markets and distributes products and services to small businesses, generally with fewer than 50
employees, through a large network of independent agents and brokers. Products offered by Select Accounts are
guaranteed-cost policies, including packaged products covering property and liability exposures. Each small business risk
is independently evaluated via an automated underwriting platform which in turn enables agents to quote, bind and issue a
substantial amount of new small business risks in an efficient manner. Risks with more complex characteristics are
underwritten with the assistance of Company personnel.
•
Middle Market markets and distributes products and services primarily to mid-sized businesses with 50 to 1,000
employees through a large network of independent agents and brokers. The Company offers a full line of products to its
Middle Market customers with an emphasis on guaranteed-cost programs. Each account is underwritten based on the
unique risk characteristics, loss history and coverage needs of the account. The ability to underwrite at this detailed level
allows Middle Market to have a broad risk appetite and a diversified customer base. Within Middle Market, products and
services are tailored to certain targeted industry segments of significant size and complexity that require unique
underwriting, claims handling services, risk management or other insurance-related products and services.
6
•
National Accounts markets and distributes products and services to large companies through a large network of national
and regional brokers. Products offered by National Accounts are primarily casualty programs that utilize loss-sensitive
products, such as large deductible, and to a lesser extent, retrospectively rated insurance and self-insured retention plans.
National Accounts also offers insurance-related services, such as claims administration, risk management, loss control and
risk management information services through Constitution State Services LLC, a wholly-owned subsidiary of the
Company. The commercial residual market business of National Accounts services approximately 36% of the total
workers’ compensation assigned risk market, making the Company one of the largest servicing carriers in the industry.
•
National Property and Other markets and distributes products and services to a wide customer base, providing
traditional and customized insurance programs to a broad range of customer sizes through a large network of agents and
brokers. National Property and Other also provides insurance coverage to the excess and surplus lines market, which is
characterized by the absence of regulation related to rate and form, and allows for more pricing and coverage flexibility to
write certain classes of business. In working with agents or program managers on a brokerage basis, National Property
and Other underwrites the business internally and sets the premium level. In working with agents or program managers
with delegated underwriting authority, the agents produce and underwrite business subject to pricing and underwriting
guidelines that have been specifically designed for each facility or program.
International markets and distributes products and services principally through brokers in each of the countries in which it
operates. International also writes business at Lloyd’s, where its products are distributed through Lloyd’s wholesale and retail
brokers. By virtue of Lloyd’s worldwide licenses, Business Insurance has access to international markets across the world.
Effective January 1, 2025, the Company renewed a quota share reinsurance agreement with subsidiaries of Fidelis Insurance
Holdings Limited (Fidelis) for 2025 pursuant to which the Company assumes 20% of the subject gross written premiums of
Fidelis on a risk-attaching basis, subject to a loss ratio cap. The Company’s portion of premiums from Fidelis is reported as part
of the International results of Business Insurance. The Company also has a minority investment in Fidelis.
Pricing and Underwriting
Business Insurance utilizes underwriting, claims, engineering, actuarial and product development disciplines for particular
industries, together with extensive amounts of proprietary data gathered and analyzed over many years, as well as third-party
data, to facilitate its risk selection process and develop pricing parameters. Business Insurance utilizes both proprietary forms
and standard industry forms for the insurance policies it issues.
A portion of business in this segment, particularly in National Accounts and Construction, is written with large deductible
insurance policies. Under workers’ compensation insurance contracts with large deductible features, the Company is obligated
to pay the claimant the full amount of the claim. The Company is subsequently reimbursed by the contractholder for the
deductible amount and, as a result, is subject to credit risk until such reimbursement is made. At December 31, 2024,
contractholder payables on unpaid losses within the deductible layer of large deductible policies were approximately $3.19
billion, and the associated receivables (net of allowance for expected credit losses) were approximately $3.17 billion. Business
Insurance also utilizes retrospectively rated policies for a portion of its business, primarily for workers’ compensation
coverage. Although the retrospectively rated feature of the policy substantially reduces insurance risk for the Company, it
introduces additional credit risk to the Company. Premiums receivable from holders of retrospectively rated policies totaled
approximately $46 million at December 31, 2024. Significant collateral, primarily letters of credit and, to a lesser extent, cash
collateral, trusts or surety bonds, is generally obtained for large deductible plans and/or retrospectively rated policies that
provide for deferred collection of deductible recoveries and/or ultimate premiums. The amount of collateral requested is based
upon the creditworthiness of the customer and the nature of the insured risks. Business Insurance regularly monitors the credit
exposure on individual accounts and the adequacy of collateral. For additional information concerning credit risk in certain of
the Company’s businesses, see “Item 1A—Risk Factors—We are exposed to credit risk in certain of our insurance operations
and with respect to certain guarantee or indemnification arrangements that we have with third parties.”
Product Lines
Business Insurance provides the following types of coverages:
Domestic
•
Workers’ Compensation. Provides coverage for employers for specified benefits payable under state or federal law for
workplace injuries to employees. There are typically four types of benefits payable under workers’ compensation policies:
medical benefits, disability benefits, death benefits and vocational rehabilitation benefits. The Company emphasizes
7
managed care cost containment strategies, which involve employers, employees and care providers in a collaborative
effort that focuses on the injured employee’s early return to work and cost-effective quality care.
•
Commercial Automobile. Provides coverage for businesses against losses incurred from personal bodily injury, bodily
injury to third parties, property damage to an insured’s vehicle and property damage to other vehicles and other property
resulting from the ownership, maintenance or use of automobiles and trucks in a business.
•
Commercial Property. Provides coverage for loss of or damage to buildings, inventory and equipment resulting from a
variety of events, including, among others, hurricanes and other windstorms, tornadoes, earthquakes, hail, wildfires,
severe winter weather, floods, volcanic eruptions, tsunamis, theft, vandalism, fires, explosions, terrorism and financial
loss due to business interruption resulting from covered property damage. Commercial property also includes specialized
equipment insurance, which provides coverage for loss or damage resulting from the mechanical breakdown of boilers
and machinery, and ocean and inland marine insurance, which provides coverage for goods in transit and unique, one-of-
a-kind exposures.
•
General Liability. Provides coverages for businesses against third-party claims arising from accidents occurring on their
premises or arising out of their operations, including as a result of injuries sustained from products sold. Coverages may
also include directors’ and officers’ liability arising in their official capacities, employment practices liability insurance,
fiduciary liability for trustees and sponsors of pension, health and welfare, and other employee benefit plans, errors and
omissions insurance for employees, agents, professionals and others arising from acts or failures to act under specified
circumstances, cyber liability, as well as umbrella and excess insurance.
•
Commercial Multi-Peril. Provides a combination of the property and liability coverages described in the foregoing
product line descriptions.
The Company offers the above coverages through the following types of products and services:
•
guaranteed-cost insurance products, where the premiums charged are not adjusted for actual loss experience during the
covered period;
•
loss-sensitive insurance products, including large deductible and retrospectively rated policies, where fees or premiums
are adjusted based on actual loss experience of the insured during the policy period; and
•
service programs, which are generally sold to the Company’s National Accounts customers, where the Company receives
fees rather than premiums for providing insurance-related services, such as claims administration, risk management, loss
control and risk management information services.
The Company also participates in state assigned risk pools as a servicing carrier and pool participant.
International
•
Provides coverage for employers’ liability (similar to workers’ compensation coverage in the United States), public and
product liability (the equivalent of general liability), professional indemnity (similar to professional liability coverage),
commercial property, commercial automobile, marine, aviation, onshore and offshore energy, construction, terrorism,
personal accident and kidnap & ransom. Marine provides coverage for ship hulls, cargoes carried, private yachts, marine-
related liability, ports and terminals, and fine art. Aviation provides coverage for worldwide aviation risks, including
physical damage and liabilities for airline, aerospace, general aviation, aviation war and space risks. Personal accident
provides financial protection in the event of death or disablement due to accidental bodily injury, while kidnap & ransom
provides financial protection against kidnap, hijack, illegal detention and extortion. While the covered hazards may be
similar to those in the U.S. market, the different legal environments can make the product risks and coverage terms very
different from those the Company faces in the United States.
Net Retention Policy Per Risk
The following discussion reflects the Company’s retention policy with respect to Business Insurance as of January 1, 2025. For
third-party liability, Business Insurance generally limits its net retention, through the use of reinsurance, to a maximum of $6.7
million per insured, per occurrence, subject further to a significant aggregate annual deductible. For property exposures,
Business Insurance generally limits its net retention, through the use of reinsurance, to a maximum amount per risk of $20.0
million per occurrence. Business Insurance generally retains its workers’ compensation exposures. Reinsurance treaties often
have aggregate limits or caps which may result in larger net per-risk retentions if the aggregate limits or caps are reached.
Business Insurance utilizes facultative reinsurance to provide additional limits capacity or to reduce retentions on an individual
8
risk basis. Business Insurance may also retain amounts greater than those described herein based upon the individual
characteristics of the risk.
Geographic Distribution
The following table shows the geographic distribution of Business Insurance’s direct written premiums for the year ended
December 31, 2024:
Location
% of Total
Domestic:
California ............................................................................................................................................................
13.2 %
New York ...........................................................................................................................................................
8.2
Texas ..................................................................................................................................................................
7.6
Illinois .................................................................................................................................................................
4.3
Florida ................................................................................................................................................................
4.1
Pennsylvania .......................................................................................................................................................
3.7
New Jersey .........................................................................................................................................................
3.7
Georgia ...............................................................................................................................................................
3.1
All other domestic (1)
..........................................................................................................................................
47.6
Total Domestic ...............................................................................................................................................
95.5
International:
Canada .................................................................................................................................................................
1.7
All other international ........................................................................................................................................
2.8
Total International ..........................................................................................................................................
4.5
Total Business Insurance ...............................................................................................................................
100.0 %
___________________________________________
(1)
No other single state accounted for 3.0% or more of Business Insurance’s direct written premiums in 2024.
Competition
The insurance industry is represented in the commercial marketplace by many insurance companies of varying size as well as
other entities offering risk alternatives, such as self-insured retentions or captive programs. Market competition operates within
the insurance regulatory framework to set the price charged for insurance products and the levels of coverage and service
provided. A company’s success in the competitive commercial insurance landscape is largely measured by its ability to
profitably provide insurance and services, including claims handling and risk management, at prices and terms that retain
existing customers and attract new customers, as well as its financial strength. See “Item 1A—Risk Factors—The intense
competition that we face, including with respect to attracting and retaining employees, and the impact of innovation,
technological change and changing customer preferences on the insurance industry and the markets in which we operate, could
harm our ability to maintain or increase our business volumes and our profitability.”
Domestic
Competitors typically write Select Accounts business through independent agents and brokers and, to a lesser extent, as direct
writers, including through affinity and other partner platforms. Both national (including international companies doing business
in the U.S.) and regional property and casualty insurance companies compete in the Select Accounts market which generally
comprises lower-hazard, “Main Street” business customers. Risks are underwritten and priced using standard industry practices
and a combination of proprietary and standard industry product offerings. Competition in this market is focused on ease and
speed of doing business and price.
Competitors typically write Middle Market business through independent agents and brokers. Several of Middle Market’s
operations require unique combinations of industry knowledge, customized coverage, specialized risk control and loss handling
services, along with partnerships with agents and brokers that also focus on these markets. Competitors in this market are
primarily national property and casualty insurance companies (including international companies doing business in the U.S.)
that write most classes of business using traditional products and pricing, and regional insurance companies. Companies
compete based on product offerings, service levels, price, claim and loss prevention services and ease and speed of doing
9
business. Efficiency through automation and response time to agent, broker and customer needs is one key to success in this
market.
In the National Accounts market, competition is based on price, product offerings, claim and loss prevention services, managed
care cost containment, risk management information systems and collateral requirements. National Accounts primarily
competes with national property and casualty insurance companies (including international companies doing business in the
U.S.), as well as with other underwriters of property and casualty insurance in the alternative risk transfer market, such as self-
insurance plans, captives managed by others, third-party administrators and a variety of other risk-financing vehicles and
mechanisms. The residual market division competes for state contracts to provide claims and policy management services.
National Property and Other competes in focused target markets. Each of these markets is different and requires unique
combinations of industry knowledge, customized coverage, specialized risk management and claims handling services, along
with partnerships with agents and brokers that also focus on these markets. Some of these businesses compete with national
carriers (including international companies doing business in the U.S.) with similarly dedicated underwriting and marketing
groups, whereas others compete with smaller regional companies. Specialized agents and brokers, including wholesale agents
and program managers, supplement this focused target market approach. National Property and Other’s competitive strategy
typically is based on the application of focused industry knowledge to insurance and risk needs.
International
International competes with numerous international and domestic insurers in Canada, the United Kingdom and the Republic of
Ireland. Companies compete on the basis of price, product offerings, distribution partnerships, the level of claim and risk
management services provided and the ease and speed of doing business. The Company has developed expertise in various
markets in these countries similar to those served in the United States and provides both property and casualty coverage for
these markets.
At Lloyd’s, International competes with other syndicates operating in the Lloyd’s market as well as international and domestic
insurers in the various markets where the Lloyd’s operation writes business worldwide, with an emphasis on short-tail insurance
lines. Competition is based on price, product, distribution partnerships and service.
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, the Republic of Ireland and Brazil (through a joint venture, as described
below), in each case utilizing various degrees of financially-based underwriting approaches. The range of coverages includes
performance, payment and commercial surety bonds for construction and general commercial enterprises; management liability
coverages including directors’ and officers’ liability, employment practices liability, fidelity 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; in the United States
only, property, workers’ compensation, auto and general liability for financial institutions; and transactional liability coverages
to public and private companies.
Bond & Specialty Insurance’s surety business in Brazil is conducted through Junto Holding Brasil S.A. (Junto). The Company
owns 49.5% of Junto, a market leader in surety coverages in Brazil. This joint venture investment is accounted for using the
equity method and is included in “other investments” on the consolidated balance sheet.
On November 3, 2023, the Company announced an agreement to acquire Corvus Insurance Holdings, Inc. (Corvus), a cyber
insurance managing general underwriter. On January 2, 2024, the Company completed its acquisition of all issued and
outstanding shares of Corvus.
Selected Product Information
The following table sets forth Bond & Specialty Insurance’s net written premiums by product line for the periods indicated. For
a description of the product lines referred to in the table, see “—Product Lines.” In addition, see “—Principal Markets and
Methods of Distribution” for a discussion of distribution channels for Bond & Specialty Insurance’s product lines.
10
(for the year ended December 31, in millions)
2024
2023
2022
% of Total
2024
Domestic:
Fidelity and surety ...............................................................
$
1,536 $
1,387 $
1,329
37.4 %
General liability ...................................................................
1,833
1,686
1,639
44.6
Other ....................................................................................
234
230
225
5.7
Total Domestic ................................................................
3,603
3,303
3,193
87.7
International ...........................................................................
506
539
539
12.3
Total Bond & Specialty Insurance ..............................
$
4,109 $
3,842 $
3,732
100.0 %
Principal Markets and Methods of Distribution
Bond & Specialty Insurance markets and distributes the vast majority of its products in the United States through many of the
same independent agencies and brokers that distribute Business Insurance’s products in the United States. Bond & Specialty
Insurance builds relationships with well-established, independent insurance agencies and brokers. In selecting new independent
agencies and brokers to distribute its products, Bond & Specialty Insurance considers, among other factors, each agency’s or
broker’s profitability, financial stability, staff experience and strategic fit with its operating and marketing plans. Once an
agency or broker is appointed, its ongoing performance is regularly monitored. Bond & Specialty Insurance continues to make
investments to enable real-time interface capabilities with its independent agencies and brokers. Bond & Specialty Insurance
also writes certain products through managing general agents and managing general underwriters.
Pricing and Underwriting
Bond & Specialty Insurance utilizes underwriting, claims, engineering, actuarial and product development disciplines for
specific accounts and industries, together with extensive amounts of proprietary data gathered and analyzed over many years, as
well as third-party data, to facilitate its risk selection process and develop pricing parameters. Bond & Specialty Insurance
utilizes both proprietary forms and standard industry forms for the insurance policies and bonds it issues.
Product Lines
Bond & Specialty Insurance writes the following types of coverages:
Domestic
•
Fidelity and Surety. Provides fidelity insurance coverage, which protects an insured for loss due to embezzlement or
misappropriation of funds by an employee, and surety, which is a three-party agreement whereby the surety company
agrees to pay a third party or to complete an obligation in response to the default, acts or omissions of a bonded party.
Surety bonds are generally provided for construction performance; legal matters, such as appeals; compliance and
licensing; and other performance obligations.
•
General Liability. Provides coverage for specialized liability exposures as described above in more detail in the
“Business Insurance” section of this report, as well as transactional liability coverages.
•
Other. Coverages include Commercial Property, Workers’ Compensation, Commercial Automobile and Commercial
Multi-Peril, which are described above in more detail in the “Business Insurance” section of this report.
International
•
Fidelity and Surety and certain General Liability products are provided internationally to various customer groups.
Net Retention Policy Per Risk
The following discussion reflects the Company’s retention policy with respect to Bond & Specialty Insurance as of January 1,
2025. For management liability coverages, including but not limited to directors’ and officers’ liability, professional liability,
employment practices liability, fidelity liability, fiduciary liability and cyber risk liability, Bond & Specialty Insurance
generally limits net retentions to $25.0 million per policy. For surety, where limits are often significant, Bond & Specialty
Insurance generally retains up to $160.0 million probable maximum loss (PML) per principal, after reinsurance, but may retain
higher amounts based on the type of obligation, credit quality and other credit risk factors. Reinsurance treaties often have
aggregate limits or caps which may result in larger net per risk retentions if the aggregate limits or caps are reached. Bond &
Specialty Insurance utilizes facultative reinsurance to provide additional limits capacity or to reduce retentions on an individual
11
risk basis. Bond & Specialty Insurance may also retain amounts greater than those described herein based upon the individual
characteristics of the risk.
Geographic Distribution
The following table shows the geographic distribution of Bond & Specialty Insurance’s direct written premiums for the year
ended December 31, 2024:
Location
% of Total
Domestic:
California ............................................................................................................................................................
10.1 %
Texas ..................................................................................................................................................................
7.5
New York ...........................................................................................................................................................
6.5
Florida ................................................................................................................................................................
4.7
Illinois .................................................................................................................................................................
3.8
Pennsylvania .......................................................................................................................................................
3.4
All other domestic (1)
..........................................................................................................................................
51.9
Total Domestic ...............................................................................................................................................
87.9
International:
United Kingdom .................................................................................................................................................
5.7
Canada ................................................................................................................................................................
4.1
All other international ........................................................................................................................................
2.3
Total International ..........................................................................................................................................
12.1
Total Bond & Specialty Insurance .................................................................................................................
100.0 %
___________________________________________
(1)
No other single state accounted for 3.0% or more of Bond & Specialty Insurance’s direct written premiums in 2024.
Competition
The competitive landscape in which Bond & Specialty Insurance operates is affected by many of the same factors described
above for Business Insurance. Competitors in this market are primarily national property and casualty insurance companies
(including international companies doing business in the U.S.) that write most classes of business and, to a lesser extent,
regional insurance companies and companies that have developed niche programs for specific industry segments.
Domestic
Bond & Specialty Insurance underwrites and markets its products to all sizes of businesses and other organizations, as well as
individuals. The Company believes that its reputation for timely and consistent decision making and financial stability, a
nationwide network of local underwriting, claims and industry experts and strong producer and customer relationships, as well
as its ability to offer its customers a full range of products and services, provides Bond & Specialty Insurance an advantage over
many of its competitors and enables it to compete effectively in a complex, dynamic marketplace. The Company believes that
the ability of Bond & Specialty Insurance to cross-sell its products to customers of Business Insurance and Personal Insurance
also provides the Company with a competitive advantage. See “Item 1A—Risk Factors—The intense competition that we face,
including with respect to attracting and retaining employees, and the impact of innovation, technological change and changing
customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or
increase our business volumes and our profitability.”
International
International competes with numerous international and domestic insurers in Canada, the United Kingdom, the Republic of
Ireland, and in Brazil through a joint venture. Companies compete on the basis of price, product offerings, distribution
partnerships, the level of claim and risk management services provided, the ease and speed of doing business and stability of the
insurer. The Company has developed expertise in various markets in these countries similar to those served in the United States
and provides certain specialty coverages for these markets.
12
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. Personal Insurance’s primary products of automobile and
homeowners insurance are complemented by a broad suite of related coverages.
Selected Product and Distribution Channel Information
The following table sets forth net written premiums for Personal Insurance’s business by product line for the periods indicated.
For a description of the product lines referred to in the following table, see “—Product Lines.” In addition, see “—Principal
Markets and Methods of Distribution” for a discussion of distribution channels for Personal Insurance’s product lines.
(for the year ended December 31, in millions)
2024
2023
2022
% of Total
2024
Domestic:
Automobile .................................................................
$
7,925 $
7,330 $
6,482
46.2 %
Homeowners and Other ..............................................
8,550
7,949
6,916
49.8
Total Domestic .......................................................
16,475
15,279
13,398
96.0
International ........................................................................
694
650
649
4.0
Total Personal Insurance ........................................
$
17,169 $
15,929 $
14,047
100.0 %
Principal Markets and Methods of Distribution
Domestic
Personal Insurance products are marketed and distributed primarily through thousands of independent agents and brokers
located throughout the United States, supported by personnel in seven sales regions. In addition, sales and service are provided
to customers through contact centers. Principal markets for Personal Insurance products are spread throughout the contiguous
United States.
In selecting new independent agencies to distribute its products, Personal Insurance considers many factors, including financial
stability, staff experience, lead sources, customer facing online and digital capabilities and operating and marketing plans.
Once an agency is appointed, Personal Insurance regularly monitors its performance.
Agents can access the Company’s agency service portal for a number of resources, including customer service, marketing and
claims management. In addition, agencies can choose to shift the ongoing service responsibility for Personal Insurance’s
customers to the Company’s Customer Care Program, where the Company provides, on behalf of an agency, a comprehensive
array of customer service needs, including billing inquiries, coverage discussions and account changes. Approximately two
thousand agencies take advantage of this service alternative, for which they generally pay a fee.
Personal Insurance also markets and distributes its products directly to consumers, largely through direct mail and digital
marketing, and through affinity partners, including employers, credit unions and consumer associations. Personal Insurance
handles the sales for these programs through the Company’s contact center locations and the Company’s wholly owned
independent agency. Personal Insurance also markets and distributes its products on other distribution platforms, including
carrier partnerships. Since 1995, the Company has had a distribution agreement with the agency affiliate of GEICO to
underwrite a portion of their homeowners business.
International
In Canada, the Company markets and distributes its personal insurance products principally through hundreds of brokers
located throughout the country.
Pricing and Underwriting
Personal Insurance has developed a product management methodology that integrates the disciplines of underwriting, claims,
actuarial and product development. This approach is designed to maintain high-quality underwriting discipline and pricing
segmentation. Proprietary and third-party data accumulated over many years is analyzed, and Personal Insurance uses a variety
of risk differentiation models to facilitate its pricing segmentation and underwriting. The Company’s product management area
establishes underwriting guidelines integrated with its filed pricing and rating plans, which enable Personal Insurance to
effectively execute its risk selection and pricing processes.
13
Domestic
Pricing for personal automobile insurance is driven in large part by changes in the frequency of claims and changes in severity,
including inflation in the cost of automobile replacements and repairs (including parts and labor), medical care and resolution of
liability claims. Pricing in the homeowners business is driven in large part by changes in the frequency of claims and changes
in severity, including inflation in the cost of materials, labor and household possessions. In addition to the normal risks
associated with any multiple peril coverage, the profitability and pricing of both homeowners and automobile insurance are
affected by the incidence of catastrophes and other weather-related events, as well as other unusual circumstances, such as the
impact of supply chain disruptions, labor shortages and elevated inflation. Insurers writing personal lines property and casualty
policies may be unable to change prices until some time after the costs associated with coverage have changed, primarily
because of state insurance rate regulation. The pace at which an insurer can change rates in response to changing costs depends,
in part, on whether the applicable state law requires prior approval of rate changes or notification to the regulator either before
or after a rate change is imposed. In states with prior approval laws, rates must be approved by the regulator before being used
by the insurer. In states having “file-and-use” laws, the insurer must file rate changes with the regulator, but does not need to
wait for approval before using the new rates. A “use-and-file” law requires an insurer to file rates within a period of time after
the insurer begins using the new rate. Approximately one-half of the states require prior approval of most rate changes. In
addition, changes to methods of marketing and underwriting in some jurisdictions are subject to state-imposed restrictions,
which can make it more difficult for an insurer to significantly manage catastrophe exposures.
The Company’s ability or willingness to change prices, modify underwriting terms or shift exposure to, or from, certain
geographies may be limited due to a number of factors, including public policy, the competitive environment, the evolving
political and legislative environment and/or changes in the general economic climate. The Company also may choose to write
business it might not otherwise write in some states for strategic purposes, such as improving access to other commercial or
personal underwriting opportunities. In choosing to write business in some states, the Company also considers the costs and
benefits of those states’ residual markets and guaranty funds, as well as other property and casualty business the Company
writes in those states.
International
Pricing and underwriting for personal automobile and homeowners insurance in Canada is driven in large part by the same
factors as in the United States. For personal automobile insurance, all provinces in Canada require prior approval before rates
are implemented. In contrast, for personal homeowners insurance, none of the provinces in Canada require regulatory filing or
approval, enabling more efficient implementation of product changes into the market.
Product Lines
Domestic
The primary coverages in Personal Insurance are personal automobile and homeowners and other insurance sold to individuals.
Personal Insurance had approximately 8.8 million active policies (i.e., policies-in-force) in the United States at December 31,
2024.
Personal Insurance writes the following types of coverages:
•
Automobile provides coverage for liability to others for both bodily injury and property damage, uninsured motorist
protection, and for physical damage to an insured’s own vehicle from collision, fire, flood, hail and theft. In addition,
many states require policies to provide first-party personal injury protection, frequently referred to as no-fault coverage.
•
Homeowners and Other provides protection against losses to dwellings and contents from a variety of perils (excluding
flooding) as well as coverage for personal liability. The Company writes homeowners insurance for dwellings,
condominiums and tenants, and rental properties. The Company also writes coverage for boats and yachts, valuable
personal items such as jewelry, umbrella liability, and weddings and special events.
International
•
International provides automobile and homeowners and other coverages in Canada (similar to coverages in the United
States). Personal Insurance had approximately 425,000 active policies in Canada at December 31, 2024.
14
Net Retention Policy Per Risk
The following discussion reflects the Company’s retention policy with respect to Personal Insurance as of January 1, 2025.
Personal Insurance generally retains its primary personal auto exposures in their entirety. For personal property insurance,
there is an $8.0 million maximum retention per risk, net of reinsurance. Personal Insurance uses facultative reinsurance to
provide additional limits capacity or to reduce retentions on an individual risk basis. Personal Insurance issues umbrella
policies up to a maximum limit of $10.0 million per risk. Personal Insurance may also retain amounts greater than those
described herein based upon the individual characteristics of the risk.
Geographic Distribution
The following table shows the geographic distribution of Personal Insurance’s direct written premiums for the year ended
December 31, 2024:
Location
% of Total
Domestic:
Texas (1)
..............................................................................................................................................................
11.3 %
New York ...........................................................................................................................................................
8.7
California ............................................................................................................................................................
6.9
Georgia ...............................................................................................................................................................
4.7
Pennsylvania .......................................................................................................................................................
4.7
Florida ................................................................................................................................................................
4.1
New Jersey .........................................................................................................................................................
3.9
Maryland ............................................................................................................................................................
3.7
Virginia ...............................................................................................................................................................
3.5
Colorado .............................................................................................................................................................
3.5
Massachusetts .....................................................................................................................................................
3.5
Illinois .................................................................................................................................................................
3.0
Connecticut .........................................................................................................................................................
3.0
All other domestic (2)
..........................................................................................................................................
31.5
Total Domestic ...............................................................................................................................................
96.0
International:
Canada ................................................................................................................................................................
4.0
Total International ..........................................................................................................................................
4.0
Total Personal Insurance ...............................................................................................................................
100.0 %
___________________________________________
(1)
The percentage for Texas includes business written by the Company through a fronting agreement with another insurer.
(2)
No other single state accounted for 3.0% or more of Personal Insurance’s direct written premiums in 2024.
Competition
Domestic
Although national companies (including international companies doing business in the U.S.) write the majority of this business,
Personal Insurance also faces competition from many regional and local companies. Competitors write business in both
traditional and alternative distribution platforms through independent agents and as direct writers, either through the use of
exclusive agents, salaried employees or direct marketing strategies. Personal Insurance primarily competes based on breadth of
product offerings, price, service (including claims handling), partner and customer experience, stability of the insurer and name
recognition. In the independent agent channel, Personal Insurance competes for business within each independent agency since
these agencies also offer policies from competing companies. Most independent personal insurance agents utilize price
comparison rating technology, sometimes referred to as “comparative raters,” as a cost-efficient means of obtaining quotes from
multiple companies. Because the use of this technology facilitates the process of generating multiple quotes, the technology has
increased price comparison on new and renewal business.
15
International
Personal Insurance competes with numerous international and domestic insurers in Canada. Companies compete based on
similar factors to those described above for domestic operations. The Company has developed expertise in various markets in
Canada similar to those served in the United States and provides both automobile and homeowners and other coverages for this
market.
See “Item 1A—Risk Factors—The intense competition that we face, including with respect to attracting and retaining
employees, and the impact of innovation, technological change and changing customer preferences on the insurance industry
and the markets in which we operate, could harm our ability to maintain or increase our business volumes and our profitability.”
CLAIMS MANAGEMENT
The Company’s claim functions are managed through its Claims Services organization, with locations in the United States and
in the other countries where it does business. With approximately 12,700 employees, Claims Services employs a group of
professionals with diverse skills, including claim adjusters, appraisers, attorneys, investigators, engineers, accountants, nurses,
data and analytics professionals, system specialists and training, management and support personnel. Approved external
service providers, such as investigators, attorneys and, when necessary, independent adjusters and appraisers, are available for
use as appropriate.
United States field claim management teams located in 16 claim centers and 56 satellite and specialty-only offices in 42 states
are organized to maintain focus on the specific claim characteristics unique to the businesses within the Company’s business
segments. Claim teams with specialized skills, required licenses, resources and workflows are matched to the unique exposures
of those businesses, with local claims management dedicated to achieving optimal results within each segment, including acting
as a third-party administrator for large customers who self-insure and retain the Company to handle their claims process on a
fee-for-service basis. The Company’s home office operations provide additional support in the form of workflow design,
quality management, information technology, advanced management information and data analysis, training, financial reporting
and controls, and human resources strategy. This structure permits the Company to maintain the economies of scale of a large,
established company while retaining the agility to respond promptly to the needs of customers, brokers, agents and
underwriters. Claims management for International, while generally provided locally by staff in the respective international
locations due to local knowledge of applicable laws and regulations, is also managed by the Company’s Claims Services
organization in the United States to leverage that knowledge base and to share best practices.
An integral part of the Company’s strategy to benefit customers and shareholders is its continuing industry leadership in the
fight against insurance fraud through its Investigative Services unit. The Company has a nationwide staff of experts who
investigate a wide array of insurance fraud schemes using in-house forensic resources and other technological tools. This staff
also has specialized expertise in fire scene examinations, medical provider fraud schemes, law firm fraud schemes and data
mining. The Company also dedicates investigative resources to ensure that violations of law are reported to and prosecuted by
law enforcement agencies.
Claims Services uses technology, management information and data analysis to assist the Company in reviewing its claim
practices and results in order to evaluate and improve its claims management performance. The Company’s claims-management
strategy is focused on segmentation of claims and appropriate technical specialization to drive effective claim resolution. The
Company regularly monitors its investment in claim resources to maintain an effective focus on claim outcomes and a
disciplined approach to continual improvement. The Company operates a state-of-the-art claims-training facility which offers
hands-on experiential learning to help ensure that its claim professionals are properly trained. In recent years, the Company has
invested significant additional resources in many of its claims handling operations, including digital, analytics, artificial
intelligence and automation capabilities. The Company regularly monitors the effect of these investments to ensure a consistent
optimization among outcomes, cost and service.
Claims Services’ catastrophe response strategy is to respond to a significant catastrophic event using its own personnel,
enabling it to minimize reliance on independent adjusters and appraisers. The Company has developed a large, dedicated
Catastrophe Response Team and has also trained a large Enterprise Response Team of existing employees. The latter team can
be deployed on short notice in the event of a catastrophe that generates claim volume exceeding the capacity of the dedicated
Catastrophe Response Team. In recent years, these internal resources and expanded digital capabilities were successfully
deployed to respond to a significant level of catastrophe claims.
16
REINSURANCE
The Company reinsures a portion of the risks it underwrites in order to manage its exposure to losses and to protect its capital.
The Company cedes to reinsurers a portion of these risks and pays premiums based upon the risk and exposure of the policies
subject to such reinsurance. The Company utilizes a variety of reinsurance agreements to manage its exposure to large property
and casualty losses, including facultative as well as catastrophe and individual risk treaties. Ceded reinsurance involves credit
risk, except with regard to mandatory pools and associations, and is predominantly subject to aggregate loss limits. Although
the reinsurer is liable to the Company to the extent of the reinsurance ceded, the Company remains liable as the direct insurer on
all risks reinsured. Reinsurance recoverables are reported after reductions for known insolvencies and after allowances for
uncollectible amounts. The Company also holds collateral, including trust agreements, escrow funds and letters of credit, under
certain reinsurance agreements. The Company monitors the financial condition of reinsurers on a regular basis and reviews its
reinsurance arrangements periodically. Reinsurers are selected based on their financial condition, business practices, the price
of their product offerings and the value of collateral provided. After reinsurance is purchased, the Company has limited ability
to manage the credit risk of a reinsurer. In addition, in a number of jurisdictions, particularly the European Union and the
United Kingdom and a small number of U.S. states, a reinsurer is permitted to transfer a reinsurance arrangement to another
reinsurer, which may be less creditworthy, without a counterparty’s consent, provided that the transfer has been approved by
the applicable regulatory and/or court authority.
For additional information regarding reinsurance, see note 6 of the notes to the consolidated financial statements and “Item 1A
—Risk Factors—We may not be able to collect all amounts due to us from reinsurers, reinsurance coverage may not be
available to us in the future at commercially reasonable rates or at all and we are exposed to credit risk related to our structured
settlements.” For a description of reinsurance-related litigation, see note 17 of the notes to the consolidated financial
statements.
Catastrophe Reinsurance
Catastrophes include hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods,
tsunamis, volcanic eruptions, solar flares and other naturally-occurring events. Catastrophes can also be man-made, such as
terrorist attacks and other destructive acts including those involving cyber events, nuclear, biological, chemical and radiological
events, civil unrest, explosions and destruction of infrastructure. The incidence and severity of catastrophes are inherently
unpredictable. The extent of losses from a catastrophe is a function of both the total amount of insured exposure affected by the
event and the severity of the event. Most catastrophes are restricted to small geographic areas; however, hurricanes,
earthquakes, wildfires, cyber attacks and other events may produce significant damage or loss in larger areas, especially those
areas that are heavily populated. For additional information regarding catastrophes, see “Item 1A—Risk Factors—High levels
of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone
areas and changing climate conditions, could materially and adversely affect our results of operations, our financial position
and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance.”
The Company generally seeks to manage its exposure to catastrophes through individual risk selection and the purchase of
catastrophe reinsurance. In addition to the Company’s catastrophe reinsurance coverages, the Company is also party to other
reinsurance treaties that can provide additional coverage for losses arising from catastrophes, as described in the “Net Retention
Policy Per Risk” sections of the respective segment discussions above. The Company conducts reviews of its risk and
catastrophe coverages on a regular basis and makes changes as it deems appropriate. The following discussion summarizes the
Company’s catastrophe reinsurance coverage at January 1, 2025.
Corporate Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty covers the accumulation of certain property losses
arising from one or multiple occurrences for the period January 1, 2025, through and including December 31, 2025. The treaty
provides for recovery of 80% of each qualifying loss in excess of a $4.0 billion retention up to $5.0 billion, 95% of losses in
excess of $5.0 billion up to $7.5 billion and 100% of losses in excess of $7.5 billion up to $8.0 billion. Therefore, the maximum
recovery under the treaty would be $3.7 billion, or 92%, of the total $4.0 billion limit. Qualifying losses for each occurrence are
after a $100 million deductible. The treaty covers all of the Company’s exposures in North America and all waters contiguous
thereto. The treaty only provides coverage for terrorism events in limited circumstances and excludes entirely losses arising
from nuclear, biological, chemical or radiological attacks. The treaty only provides coverage for cyber events and civil unrest
in limited circumstances and excludes losses arising from communicable disease. The Company’s underlying insurance
coverages generally exclude coverage for communicable disease.
17
Catastrophe Bonds. The Company has catastrophe protection through an indemnity reinsurance agreement with Long Point Re
IV Ltd. (Long Point Re IV), an independent Bermuda company registered as a special purpose insurer under the Bermuda
Insurance Act of 1978 and related regulations. The reinsurance agreement meets the requirements to be accounted for as
reinsurance in accordance with the guidance for reinsurance contracts. In connection with the reinsurance agreement, Long
Point Re IV issued notes (generally referred to as “catastrophe bonds”) to investors in amounts equal to the full coverage
provided under the reinsurance agreement as described below. The proceeds of the issuance were deposited in a reinsurance
trust account. The businesses covered by this reinsurance agreement are subsets of the Company’s overall insurance portfolio,
comprising specified property coverages spread across the following geographic locations: Connecticut, Delaware, District of
Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont
and Virginia.
The reinsurance agreement provides coverage of up to $575 million to the Company through May 24, 2026 for certain losses
from tropical cyclones, earthquakes, severe thunderstorms or winter storms in the locations listed above. The attachment point
and maximum limit under this agreement are reset annually to adjust the expected loss of the layer within a predetermined
range. For events up to and including May 24, 2025, this treaty provides up to $575 million of coverage, subject to a $2.8
billion retention. The coverage under the reinsurance agreement is limited to specified property coverage written in Personal
Insurance; Select Accounts, Middle Market (excluding Excess Casualty and Boiler & Machinery) and National Property and
Other in Business Insurance; and Other in Bond & Specialty Insurance.
Under the terms of the reinsurance agreement, the Company is obligated to pay annual reinsurance premiums to Long Point Re
IV for the reinsurance coverage. Amounts payable to the Company under the reinsurance agreement with respect to any
covered event cannot exceed the Company’s actual losses from such event. The principal amount of the catastrophe bonds will
be reduced by any amounts paid to the Company under the reinsurance agreement.
As with any reinsurance agreement, there is credit risk associated with collecting amounts due from reinsurers. With regard to
Long Point Re IV, the credit risk is mitigated by a reinsurance trust account that has been funded by Long Point Re IV with
money market funds that invest solely in direct government obligations and obligations backed by the U.S. government with
maturities of no more than 13 months. The money market funds must have a principal stability rating of at least AAAm by
Standard & Poor’s or AAAmmf by Fitch Ratings on the issuance date of the bonds and thereafter must be rated by Standard &
Poor’s or Fitch Ratings, as applicable. Other permissible investments include money market funds which invest in repurchase
and reverse repurchase agreements collateralized by direct government obligations and obligations of any agency backed by the
U.S. government with terms of no more than 397 calendar days, and cash.
At the time the agreement was entered into with Long Point Re IV, the Company evaluated the applicability of the accounting
guidance that addresses variable interest entities or VIEs. Under this guidance, an entity that is formed for business purposes is
considered a VIE if: (a) the equity investors lack the direct or indirect ability through voting rights or similar rights to make
decisions about an entity’s activities that have a significant effect on the entity’s operations or (b) the equity investors do not
provide sufficient financial resources for the entity to support its activities. Additionally, a company that absorbs a majority of
the expected losses from a VIE’s activities or is entitled to receive a majority of the entity’s expected residual returns, or both,
is considered to be the primary beneficiary of the VIE and is required to consolidate the VIE in the company’s financial
statements.
As a result of the evaluation of the reinsurance agreement with Long Point Re IV, the Company concluded that it was a VIE
because the conditions described in items (a) and (b) above were present. However, while Long Point Re IV was determined to
be a VIE, the Company concluded that it did not have a variable interest in the entity, as the variability in its results, caused by
the reinsurance agreement, is expected to be absorbed entirely by the investors in the catastrophe bonds issued by Long Point
Re IV and residual amounts earned by it, if any, are expected to be absorbed by the equity investors (the Company has neither
an equity nor a residual interest in Long Point Re IV).
Accordingly, the Company is not the primary beneficiary of Long Point Re IV and does not consolidate that entity in the
Company’s consolidated financial statements. Additionally, because the Company has no intention to pursue any transaction
that would result in it acquiring interest in and becoming the primary beneficiary of Long Point Re IV, the consolidation of that
entity in the Company’s consolidated financial statements in future periods is unlikely.
The Company has not incurred any losses that have resulted or are expected to result in a recovery under the Long Point Re IV
agreement since its inception.
18
Personal Insurance Hurricane Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty provides up to $500 million part of
$1.00 billion of coverage for a single event, subject to a $2.00 billion retention (i.e., for every dollar of loss between $2.00
billion and $3.00 billion, this treaty provides 50 cents of coverage), for homeowners property losses arising from a hurricane or
tropical storm for the period from July 1, 2024 through and including June 30, 2025. The treaty covers the United States
coastal states from Texas to Maine, excluding Florida.
Northeast Property Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty provides up to $1.00 billion of coverage,
subject to a $2.75 billion retention, for losses arising from a single occurrence and allows for one reinstatement. Coverage is
provided on an all perils basis, including but not limited to hurricanes, tornadoes, hail storms, earthquakes, winter storms and/or
freeze losses (coverage is included for terrorism events in limited circumstances). Coverage for cyber events applies only in
limited circumstances, and coverage for communicable disease and nuclear, biological and radiological terrorism attacks is
excluded from this treaty. The treaty covers territory from Virginia to Maine for the period from July 1, 2024 through and
including June 30, 2025. Losses from a covered event anywhere in North America and waters contiguous thereto may be used
to satisfy the retention. Recoveries under the catastrophe bonds (if any) would be first applied to reduce losses subject to this
treaty.
Business Insurance Earthquake Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty provided up to $293 million part
of $325 million of coverage for Middle Market, subject to a $135 million retention (i.e., for every dollar of loss between $135
million and $460 million, this treaty provided 90 cents of coverage) for the period from July 1, 2024 through and including June
30, 2025. This treaty was cancelled mid-term and replaced with a new Business Insurance treaty that provides up to $775
million part of $1.00 billion of coverage, subject to a $350 million retention (i.e., for every dollar of loss between $350 million
and $1.35 billion, this treaty provides 77.5 cents of coverage) for the period from February 1, 2025, through and including
January 31, 2026. The treaty covers losses arising from an earthquake, including other ensuing causes of loss such as fire
following and sprinkler leakage, incurred under policies written by domestic Business Insurance (with the exception of Ocean
Marine). The treaty covers the United States and Canada, their territories, possessions and waters contiguous thereto.
Personal Insurance Earthquake Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty provides up to $160 million part
of $200 million of coverage, subject to a $170 million retention, for losses occurring from an earthquake, including fire
following and sprinkler leakage, incurred by Personal Insurance from January 1, 2025 through and including December 31,
2025. The treaty covers the United States, its territories, possessions and waters contiguous thereto.
Canadian Property Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty provides coverage for 50% of losses in excess
of C$100 million (US$69 million at December 31, 2024) up to C$200 million (US$139 million at December 31, 2024) and for
100% of losses in excess of C$200 million (US$139 million at December 31, 2024) up to C$500 million (US$347 million at
December 31, 2024), in each case with respect to the accumulation of net property losses arising out of one occurrence on
business written by the Company’s Canadian businesses for the period from July 1, 2024 through and including June 30, 2025.
The treaty covers all property written by the Company’s Canadian businesses, including, but not limited to, habitational
property, commercial property, inland marine, ocean marine and auto physical damages exposures. Coverage for cyber events
applies only in limited circumstances, and coverage for communicable disease and nuclear, biological and radiological
terrorism attacks is excluded from this treaty.
Other International Reinsurance Treaties. For other business underwritten in Canada, as well as for business written in the
United Kingdom and the Republic of Ireland and in the Company’s operations at Lloyd’s, separate reinsurance protections are
purchased locally that have lower net retentions more commensurate with the size of the respective local balance sheet.
Terrorism Risk Insurance Program. The Terrorism Risk Insurance Program is a Federal program administered by the
Department of the Treasury authorized through December 31, 2027 that provides for a system of shared public and private
compensation for certain insured losses resulting from certified acts of terrorism. For a further description of the program,
including the Company’s estimated deductible under the program in 2025, see note 6 of the notes to the consolidated financial
statements and “Item 1A—Risk Factors—High levels of catastrophe losses, including as a result of factors such as increased
concentrations of insured exposures in catastrophe-prone areas and changing climate conditions, could materially and adversely
affect our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to
raise capital and the availability and cost of reinsurance.”
CLAIMS AND CLAIM ADJUSTMENT EXPENSE RESERVES
Claims and claim adjustment expense reserves represent management’s estimate of the ultimate liability for unpaid losses and
loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported as of the
balance sheet date.
19
The Company refines its reserve estimates as part of its regular ongoing process that includes reviews of key assumptions,
underlying variables and historical loss experience. The Company reflects adjustments to reserves in the results of operations
in the periods in which the estimates are changed. In establishing reserves, the Company takes into account estimated recoveries
for reinsurance, salvage and subrogation. The reserves are reviewed regularly by qualified actuaries employed by the Company.
For additional information on the process of estimating reserves and a discussion of underlying variables and risk factors, see
“Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting
Estimates.”
The process of estimating loss reserves involves a high degree of judgment and is subject to a number of variables. These
variables (discussed by product line in the “Critical Accounting Estimates” section of “Item 7—Management’s Discussion and
Analysis of Financial Condition and Results of Operations”) are affected by both internal and external events, such as changes
in claims handling procedures, inflation, judicial trends, the tort environment and the legislative landscape, among others. The
impact of many of these items on ultimate costs for claims and claim adjustment expenses is difficult to estimate. Reserve
estimation difficulties also differ significantly by product line due to differences in the underlying insurance contract (e.g.,
claims-made versus occurrence), claim complexity, the volume of claims, the potential severity of individual claims, the
determination of the occurrence date for a claim, and reporting lags (the time between the occurrence of the insured event and
when it is actually reported to the insurer). Informed judgment is applied throughout the process.
The Company derives estimates for unreported claims and development with respect to reported claims principally from
actuarial analyses of historical patterns of loss development by accident year for each business unit, product line and type of
exposure. Similarly, the Company derives estimates of unpaid loss adjustment expenses principally from actuarial analyses of
historical development patterns and the relationship of loss adjustment expenses to losses for each product line and type of
exposure. For a description of the Company’s reserving methods for asbestos and environmental claims, see “Item 7—
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Asbestos Claims and Litigation,”
and “—Environmental Claims and Litigation.”
Certain of the Company’s claims and claim adjustment expense reserves are discounted to present value. See note 8 of the
notes to the consolidated financial statements for further discussion.
Reserves on Statutory Accounting Basis
At December 31, 2024, 2023 and 2022, claims and claim adjustment expense reserves (net of reinsurance) prepared in
accordance with U.S. generally accepted accounting principles (GAAP reserves) were $93 million higher, $87 million higher
and $91 million higher, respectively, than those reported in the Company’s respective annual financial reports filed with
insurance regulators, which are prepared in accordance with statutory accounting practices (statutory reserves).
The differences between the amount of reserves reported for GAAP and statutory reporting are primarily due to the differences
in accounting for: (i) fee reimbursements associated with large deductible business, (ii) the impact of updated guidance for
credit losses applicable to structured settlements and (iii) the accounting for reinsurance.
For large deductible business, the Company pays the deductible portion of a casualty insurance claim and then seeks
reimbursement from the insured, plus a fee. The associated reserves for claim adjustment expenses are reported gross of the
expected fee income (i.e., the reserves are not net of the expected fees) for GAAP reporting. For statutory reporting, the
associated reserves are reported net of the expected fee income.
For GAAP reporting, amounts payable under structured settlements for which the Company did not receive a release of its
obligation from the claimant are reported in loss reserves and reinsurance recoverables, net of an allowance for estimated
uncollectible amounts. For statutory reporting, structured settlements for which the Company has not obtained a release are
disclosed as a contingent liability and not recorded as part of loss reserves.
Reserves for claims and claim adjustment expenses are reported gross of reinsurance recoverables (i.e., without reduction for
amounts recoverable for reinsurance) for GAAP reporting. For statutory reporting, the reserves are reported net of reinsurance
recoverables. Additionally, reinsurance balances resulting from reinsurance placed to cover losses on insured events occurring
prior to the inception of a reinsurance contract (retroactive reinsurance) are included in reinsurance recoverables for GAAP
reporting. Statutory accounting practices require retroactive reinsurance balances to be recorded in other liabilities as contra-
liabilities rather than in loss reserves.
20
Asbestos and Environmental Claims
Asbestos and environmental claims are segregated from other claims and are handled separately within the Company’s
Strategic Resolution Group, a separate unit staffed by dedicated legal, claim, finance and engineering professionals which also
has responsibility for enterprise-wide major case activity. For additional information on asbestos and environmental claims, see
“Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Asbestos Claims and
Litigation” and “—Environmental Claims and Litigation.”
INTERCOMPANY REINSURANCE POOLING ARRANGEMENTS
Most of the Company’s domestic insurance subsidiaries participate in an intercompany property and casualty reinsurance
pooling arrangement. Under such arrangements, the participating subsidiaries share substantially all insurance business they
write by reinsuring their combined premiums, losses and expenses to each participating subsidiary in accordance with the quota
share participation rate provided in the intercompany agreement. Pooling arrangements allow the participating companies to
rely on the capacity of the entire pool’s statutory capital and surplus rather than just on each participating subsidiary’s own
statutory capital and surplus.
RATINGS
Ratings are an important factor in assessing the Company’s competitive position in the insurance industry. The Company
receives ratings from the following major rating agencies: A.M. Best Company (A.M. Best), Fitch Ratings (Fitch), Moody’s
Investors Service (Moody’s) and S&P Global Ratings (S&P). Rating agencies typically issue two types of ratings for insurance
companies: claims-paying (or financial strength) ratings, which reflect the rating agency’s assessment of an insurer’s ability to
meet its financial obligations to policyholders, and debt ratings, which reflect the rating agency’s assessment of a company’s
prospects for repaying its debts and are considered by lenders in connection with the setting of interest rates and terms for a
company’s short- and long-term borrowings. Agency ratings are not a recommendation to buy, sell or hold any security, and
they may be revised or withdrawn at any time by the rating agency. Each agency’s rating should be evaluated independently of
any other agency’s rating. The system and the number of rating categories can vary widely from rating agency to rating
agency. Customers usually focus on claims-paying ratings, while creditors focus on debt ratings. Investors use both to evaluate
a company’s overall financial strength. The ratings issued on the Company or its subsidiaries by any of these agencies are
announced publicly and are available on the Company’s website and from the agencies.
A downgrade in one or more of the Company’s claims-paying ratings could negatively impact the Company’s business volumes
and competitive position because demand for certain of its products may be reduced, particularly because some customers
require that the Company maintain minimum ratings to enter into, maintain or renew business with it.
Additionally, a downgrade in one or more of the Company’s debt ratings could adversely impact the Company’s ability to
access the capital markets and other sources of funds, including in the syndicated bank loan market, and/or result in higher
financing costs. For example, downgrades in the Company’s debt ratings could result in higher interest expense under the
Company’s revolving credit agreement (under which the cost of borrowing could range from the Secured Overnight Financing
Rate (SOFR) plus 85 basis points (including a credit spread adjustment) to SOFR plus 147.5 basis points (including a credit
spread adjustment), depending on the Company’s debt ratings), the Company’s commercial paper program, or in the event that
the Company were to access the capital markets by issuing debt or similar types of securities. See note 9 of the notes to the
consolidated financial statements for a discussion of the Company’s revolving credit agreement and commercial paper program.
The Company considers the level of increased cash funding requirements in the event of a ratings downgrade as part of the
evaluation of the Company’s liquidity requirements. The Company currently believes that a one- to two-notch downgrade in its
debt ratings would not result in a material increase in interest expense under its existing credit agreement and commercial paper
programs. In addition, the Company considers the impact of a ratings downgrade as part of the evaluation of its common share
repurchases.
S&P updated its capital adequacy model in 2023. The updated model resulted in a modest improvement in its assessment of the
Company’s capital metrics. As part of its capital management strategy, the Company will continue to make its own assessment
of the appropriate level of capital to support the Company’s business operations. For a discussion of the risks to the Company’s
claims-paying and financial strength ratings, see the risk factor entitled “A downgrade in our claims-paying and financial
strength ratings could adversely impact our business volumes, adversely impact our ability to access the capital markets and
increase our borrowing costs” included in “Part I—Item 1A—Risk Factors.”
21
Claims — Paying Ratings
The following table summarizes the current claims-paying (or financial strength) ratings for each of the Company’s rated
entities as of February 13, 2025, including the position of each rating in the applicable agency’s rating scale.
A.M. Best
Moody’s
S&P
Fitch
Travelers Reinsurance Pool (a)(b) ............
A++ (1st of 16)
Aa2
(3rd of 21)
AA
(3rd of 21)
AA (3rd of 21)
Travelers C&S Co. of America ................
A++ (1st of 16)
Aa2
(3rd of 21)
AA
(3rd of 21)
AA (3rd of 21)
First Floridian Auto and Home Ins. Co. ...
A- (4th of 16)
—
—
AA (3rd of 21)
Travelers Insurance Company of Canada .
A++ (1st of 16)
—
AA-
(4th of 21)
—
The Dominion of Canada General
Insurance Company ..............................
A (3rd of 16)
—
—
—
Travelers Insurance Company Limited ....
A++ (1st of 16)
—
AA
(3rd of 21)
—
Travelers Insurance Designated Activity
Company ...............................................
A++ (1st of 16)
—
AA-
(4th of 21)
—
___________________________________________
(a)
The Travelers Reinsurance Pool consists of: The Travelers Indemnity Company, The Charter Oak Fire Insurance
Company, The Phoenix Insurance Company, The Travelers Indemnity Company of Connecticut, The Travelers
Indemnity Company of America, Travelers Property Casualty Company of America, Travelers Commercial Casualty
Company, TravCo Insurance Company, The Travelers Home and Marine Insurance Company, Travelers Casualty and
Surety Company, Northland Insurance Company, Northland Casualty Company, The Standard Fire Insurance
Company, The Automobile Insurance Company of Hartford, Connecticut, Travelers Casualty Insurance Company of
America, Farmington Casualty Company, Travelers Commercial Insurance Company, Travelers Casualty Company of
Connecticut, Travelers Property Casualty Insurance Company, Travelers Personal Security Insurance Company,
Travelers Personal Insurance Company, St. Paul Fire and Marine Insurance Company, The Travelers Casualty
Company, St. Paul Protective Insurance Company, Travelers Constitution State Insurance Company, St. Paul Guardian
Insurance Company, St. Paul Mercury Insurance Company, Fidelity and Guaranty Insurance Underwriters, Inc.,
TravCo Personal Insurance Company and United States Fidelity and Guaranty Company. In addition, the following
entities are also members of the Travelers Reinsurance Pool but have a 0% share of the pool: Northfield Insurance
Company, American Equity Specialty Insurance Company, Travelers Excess and Surplus Lines Company, St. Paul
Surplus Lines Insurance Company and Travelers Specialty Insurance Company.
(b)
The following affiliated companies are 100% reinsured by one of the pool participants noted in (a) above: Fidelity and
Guaranty Insurance Company, Gulf Underwriters Insurance Company, American Equity Insurance Company, Select
Insurance Company, The Travelers Lloyds Insurance Company and Travelers Lloyds of Texas Insurance Company.
Debt Ratings
The following table summarizes the current debt, trust preferred securities and commercial paper ratings of the Company and its
subsidiaries as of February 13, 2025. The table also presents the position of each rating in the applicable agency’s rating scale.
A.M. Best
Moody’s
S&P
Fitch
Senior debt ..................................................
a+ (5th of 22)
A2
(6th of 21)
A
(6th of 22)
A
(6th of 22)
Junior subordinated debentures ..................
a- (7th of 22)
A3
(7th of 21)
BBB+
(8th of 22)
BBB+
(8th of 22)
Commercial paper ......................................
AMB-1+ (1st of 5)
P-1
(1st of 4)
A-1
(2nd of 10)
F1
(2nd of 8)
Rating Agency Actions
The following rating agency actions were taken with respect to the Company from February 15, 2024, the date on which the
Company filed its Annual Report on Form 10-K for the year ended December 31, 2023, through February 13, 2025:
•
On April 22, 2024, Moody’s affirmed all ratings of the Company. The outlook for all ratings is stable.
•
On June 18, 2024, S&P affirmed all ratings of the Company. The outlook for all ratings is stable.
•
On August 2, 2024, A.M. Best affirmed all ratings of the Company. The outlook for all ratings is stable.
22
•
On November 25, 2024, Fitch affirmed all ratings of the Company. The outlook for all ratings is stable.
INVESTMENT OPERATIONS
The majority of funds available for investment are deployed in a widely diversified portfolio of high quality, liquid, taxable
U.S. government, tax-exempt and taxable U.S. municipal and taxable corporate and U.S. agency mortgage-backed bonds. The
Company regularly monitors the effective duration of its fixed maturity investments, and the Company’s investment purchases
and sales are executed with the objective of having adequate funds available to satisfy its insurance and debt obligations.
Generally, the expected principal and interest payments produced by the Company’s fixed maturity portfolio adequately fund
the estimated runoff of the Company’s insurance reserves. The Company manages the investment duration relative to its
liability duration. In 2024, the estimated effective duration of the Company’s portfolio of fixed maturity and short-term
security investments increased, primarily driven by the impact of higher interest rates, as well as the composition of the
investment portfolio. In 2024, the estimated effective duration of the Company’s net insurance liabilities decreased, primarily
reflecting the impact of the mix of net insurance liabilities and higher interest rates. At December 31, 2024, the estimated
effective duration of the Company’s portfolio of fixed maturity and short-term security investments was greater than the
estimated effective duration of the Company’s net insurance liabilities. The substantial amount by which the fair value of the
fixed maturity portfolio exceeds the value of the net insurance liabilities, as well as the positive cash flow from newly sold
policies and the large amount of high-quality liquid bonds, contributes to the Company’s ability to fund claim payments without
having to sell illiquid assets or access its credit facilities.
The Company also invests much smaller amounts in equity securities, real estate, private equity limited partnerships, hedge
funds, and real estate partnerships and joint ventures. These investment classes have the potential for higher returns but also
involve varying degrees of risk, including less stable rates of return and less liquidity.
See note 3 of the notes to the consolidated financial statements for additional information regarding the Company’s investment
portfolio.
REGULATION
U.S. State and Federal Regulation
The Company’s domestic insurance subsidiaries are collectively licensed to transact insurance business in all U.S. states, the
District of Columbia, Guam, Puerto Rico, the U.S. Virgin Islands, American Samoa and the Northern Mariana Islands and are
subject to regulation in both the various states and jurisdictions in which the subsidiaries are legally domiciled and in which the
subsidiaries transact business. The extent of regulation varies, but generally derives from statutes that delegate regulatory,
supervisory, and administrative authority to a department of insurance or finance in each state and jurisdiction. The regulation,
supervision, and administration relate, among other things, to standards of solvency that must be met and maintained, the nature
of and limitations on investments, premium rates, restrictions on the type and size of risks that may be insured under a single
policy, reserves and provisions for unearned premiums, losses and other obligations, deposits of securities for the benefit of
policyholders, the licensing of insurers and their agents, approval of policy forms and the regulation of market conduct,
including the use of credit and other information in underwriting as well as other underwriting and claims practices. State
insurance departments also conduct periodic examinations of the financial condition and market conduct of insurance
companies and require the filing of various financial and other reports on a quarterly and annual basis.
State insurance regulation continues to evolve in response to the changing economic and business environment as well as
efforts by regulators internationally to develop a consistent approach to regulation. While the U.S. federal government has not
historically regulated the insurance business, the Federal Insurance Office (or FIO), which was established within the U.S.
Treasury Department as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, has limited
authority over the insurance industry. State insurance regulators, through the National Association of Insurance Commissioners
(NAIC), along with the Federal Reserve and the FIO have been active in the efforts by the International Association of
Insurance Supervisors (IAIS) to develop international regulatory standards for the insurance industry that, if adopted by the
states, would result in changes to the regulation of insurance in the U.S. In response to these international efforts, the state
insurance regulators, through the NAIC, undertook several initiatives to consider and develop changes to the U.S. regulatory
framework, including the development of regulatory tools to evaluate risks and establish capital standards on a groupwide basis
in addition to the current requirements imposed on a legal-entity basis.
These changes are evidenced by the incorporation of supervisory colleges into the U.S. regulatory framework to facilitate
oversight of insurers at a group level that have been designated an internationally active insurance group by the group’s lead
state regulator. A supervisory college is a forum of the regulators having jurisdictional authority over a holding company’s
various insurance subsidiaries, including foreign insurance subsidiaries, convened to meet with the insurer’s executive
23
management to evaluate the insurer’s business strategies, approach to enterprise risk management and corporate governance
from both a groupwide and legal-entity perspective.
While insurance in the United States is regulated on a legal-entity basis, the NAIC has adopted changes to its Model Holding
Company Act that some states, including the State of Connecticut, have enacted to allow the insurance commissioner to be
designated as the groupwide supervisor (i.e., lead state commissioner) for the insurance holding company system based upon
certain criteria, including the jurisdiction of domicile of the insurance subsidiaries holding the majority of the insurance group’s
premiums, assets, or liabilities. Based upon these criteria, the State of Connecticut Insurance Department is designated as the
Company’s lead regulator and coordinates supervisory colleges for the Company. Additionally, in response to international
efforts to establish capital standards on a groupwide basis, the NAIC adopted changes to its Model Holding Company Act to
require certain insurance groups to file a Group Capital Calculation to allow the groupwide supervisor (lead state) to evaluate
the risks and available capital on a groupwide basis in addition to the risk-based capital requirements currently imposed on a
legal-entity basis. The State of Connecticut amended its holding company act to incorporate the changes made to the NAIC
Model Holding Company Act and required insurers, including the Company, to file a Group Capital Calculation beginning in
2023. These changes have not impacted the amount of capital the Company’s insurance subsidiaries are required to have.
Insurance Regulation Concerning Dividends from Insurance Subsidiaries. The Company’s principal domestic insurance
subsidiaries are domiciled in the State of Connecticut. The Connecticut insurance holding company laws require notice to, and
approval by, the state insurance commissioner for the declaration or payment of any dividend from an insurance subsidiary that,
together with other distributions made within the preceding twelve months, exceeds the greater of 10% of the insurance
subsidiary’s statutory capital and surplus as of the preceding December 31st, or the insurance subsidiary’s net income for the
twelve-month period ending the preceding December 31st, in each case determined in accordance with the statutory accounting
practices prescribed or permitted by the State of Connecticut Insurance Department. This declaration or payment is further
limited by the amount of adjusted unassigned surplus held by the insurance subsidiaries, as determined in accordance with
statutory accounting practices.
The insurance holding company laws of states in which the Company’s other domestic insurance subsidiaries are domiciled
generally contain similar, although in some instances somewhat more restrictive, limitations on the payment of dividends.
These insurance subsidiaries, as well as the insurance subsidiaries domiciled in Connecticut, may also be subject to similar
dividends limitations imposed by states in which those subsidiaries are considered commercially domiciled as a result of the
amount of business written in those states.
Rate and Rule Approvals. TRV’s domestic insurance subsidiaries are subject to each state’s laws and regulations regarding rate
and rule approvals. The applicable laws and regulations generally establish standards to ensure that rates are not excessive,
inadequate, unfairly discriminatory or used to engage in unfair price competition. An insurer’s ability to adjust rates and the
relative timing of the process are dependent upon each state’s requirements. Many states have enacted variations of competitive
ratemaking laws, which allow insurers to set certain premium rates for certain classes of insurance without having to obtain the
prior approval of the state insurance department.
Requirements for Exiting Geographic Markets and/or Canceling or Nonrenewing Policies. Many states have laws and
regulations which may impact the timing and/or the ability of an insurer to either discontinue or substantially reduce its writings
in that state. These laws and regulations typically require prior notice and in some instances insurance department approval
prior to discontinuing a line of business or withdrawing from that state. In addition, all states impose limitations on
cancellations or non-renewals of certain policies, including in particular, limitations on the reasons for cancellations and on the
timing of non-renewals.
Regulatory and Legislative Responses to Catastrophes. States from time to time have passed legislation, and regulators have
taken action, that have the effect of limiting the ability of insurers to manage catastrophe risk, such as legislation restricting
insurers from reducing exposures or withdrawing from catastrophe-prone areas or mandating that insurers participate in residual
markets involving catastrophe-prone areas. Participation in residual market mechanisms has resulted in, and may in the future
result in, significant losses or assessments to insurers, including the Company, and, in certain states, those losses or assessments
may not be commensurate with the Company’s direct catastrophe risk exposure in those states. If the Company’s competitors
leave states that have residual market mechanisms, the remaining insurers, including the Company, may be subject to
significant increases in losses or assessments following a catastrophe. In addition, following catastrophes, there have been, and
may in the future be, legislative and administrative initiatives and court decisions that seek to expand insurance coverage for
catastrophe claims beyond the original intent of the policies, seek to prevent the application of deductibles included in the
policies, or seek to limit the exercise of certain rights available to insurers under the policies. Also, the Company’s ability to
adjust policy language or terms, including deductible levels, or to increase pricing to the extent necessary to offset rising claim
costs related to catastrophes requires approval of insurance regulatory authorities in certain states. The Company’s ability or its
willingness to manage its catastrophe exposure by raising prices, modifying policy terms, or reducing exposure to certain
24
geographies may be limited due to considerations of public policy, an evolving political environment, and/or changes in general
economic conditions. Furthermore, the reduction or elimination of the National Flood Insurance Program could result in an
increase in the Company’s exposure to flood risk if insurers become required to cover flood risk under certain types of policies.
Assessments for Guaranty Funds and Second-Injury Funds and Other Mandatory Assigned Risk and Reinsurance
Arrangements. As a condition of their authority to transact insurance in virtually all states, property and casualty insurers,
including the Company’s domestic insurance subsidiaries, are required to be a member of each state’s guaranty association and
to bear a portion of the losses covered by the guaranty association (subject to a statutory maximum covered loss amount which
varies by state) suffered by claimants of insurers that become insolvent. Additionally, many states also have laws that establish
second-injury funds that impose assessments on insurers writing workers’ compensation business, including the Company, to
provide compensation to injured employees for the aggravation of a prior injury or disability.
The Company’s domestic insurance subsidiaries are also required to participate in various involuntary assigned risk pools,
principally involving workers’ compensation, automobile insurance, property damage due to wind (windpools) in states prone
to property damage from hurricanes and in Fair Access to Insurance Requirements (FAIR) plans, as well as automobile
assigned risk plans the results of which are not pooled with other carriers, which provide various insurance coverages to
individuals or other entities that otherwise are unable to purchase that coverage in the voluntary market.
Other assessments include charges mandated by statute or regulatory authority that are related directly or indirectly to
underwriting activities. Examples of such mechanisms include, but are not limited to, the Florida Hurricane Catastrophe Fund,
Florida Citizens Property Insurance Corporation, National Workers’ Compensation Reinsurance Pool, various workers’
compensation related funds (e.g., the Florida Special Disability Trust), North Carolina Beach Plan, Louisiana Citizens Property
Insurance Corporation, and the Texas Windstorm Insurance Association. Amounts payable or paid as a result of arrangements
that are in substance reinsurance, including certain involuntary pools where insurers are required to assume premiums and
losses from those pools, are accounted for as reinsurance (e.g., the National Workers’ Compensation Reinsurance Pool, North
Carolina Beach Plan). Amounts related to assessments from arrangements that are not reinsurance are reported as part of
“General and Administrative Expenses,” such as the Florida Special Disability Trust. For additional information concerning
assessments for guaranty funds and second-injury funds as well as other mandatory assigned risk and reinsurance agreements
including state-funding mechanisms, see “Item 1A—Risk Factors.”
Insurance Regulatory Information System (IRIS). The NAIC developed the IRIS to help state regulators identify companies that
may require regulatory attention. Financial examiners review annual financial statements and the results of key financial ratios
based on year-end data with the goal of identifying insurers that appear to require immediate regulatory attention. Each ratio
has an established “usual range” of results. A ratio result falling outside the usual range, however, is not necessarily considered
adverse; rather, unusual values are used as part of the regulatory early monitoring system. Furthermore, in some years, it may
not be unusual for financially sound companies to have several ratios with results outside the usual ranges. Generally, an
insurance company may become subject to regulatory scrutiny or, depending on the company’s financial condition, regulatory
action if certain of its key IRIS ratios fall outside the usual ranges and the insurer’s financial condition is trending downward.
Based on preliminary 2024 IRIS ratios calculated by the Company for its lead domestic insurance subsidiaries, in both 2024 and
2023, The Travelers Indemnity Company had results outside the normal range for one IRIS ratio due to the size of its
investments in certain non-fixed maturity securities, while Travelers Casualty and Surety Company had results outside the
normal range for one IRIS ratio due to the amount of dividends received from its subsidiaries.
Management does not anticipate regulatory action as a result of the 2024 IRIS ratio results for the lead insurance subsidiaries or
their insurance subsidiaries. In all instances in prior years, regulators have been satisfied upon follow-up that no regulatory
action was required.
Risk-Based Capital (RBC) Requirements. The NAIC maintains an RBC requirement which sets forth minimum capital
standards for most U.S.-based property and casualty insurance companies that is intended to raise the level of protection for
policyholder obligations. The Company’s U.S. insurance subsidiaries are subject to these NAIC RBC requirements based on
laws that have been adopted by individual states. These requirements subject insurers having policyholders’ surplus less than
that required by the RBC calculation to varying degrees of regulatory action, depending on the level of capital inadequacy.
The amount of policyholders’ surplus held by each of the Company’s U.S. insurance subsidiaries at December 31, 2024 and
2023 exceeded the level at which the subsidiaries would be subject to RBC regulatory action on a legal entity basis or the need
for additional analysis when evaluated on a combined basis.
25
The RBC formulas have not been designed to differentiate among adequately capitalized companies that operate with levels of
capital above the RBC requirement. Therefore, it is inappropriate and ineffective to use the formulas to rate or to rank these
companies.
Group Capital Calculation (GCC). While there is currently no group regulatory capital requirement in place for insurers in the
United States, certain states, including the State of Connecticut, adopted the NAIC Group Capital Calculation (GCC) to provide
insurance regulators with additional analytical information on a combined basis that is used by the lead state in assessing group
risks and groupwide capital adequacy to complement the RBC requirements imposed on a legal-entity basis and the holding
company analysis performed by the lead state. The GCC utilizes an aggregation of the available capital/financial resources and
the required regulatory capital of a group’s subsidiaries (known as an Aggregation Method), using the NAIC RBC requirements
to identify available and required capital for the group’s U.S. insurance subsidiaries and the local jurisdictional capital
requirements for insurance subsidiaries outside of the U.S. The GCC differs from the RBC in that it does not produce a ratio
that is subject to a minimum value or result in an identified action level. Instead, the GCC is used in conjunction with other
regulatory tools to assist in the lead regulator’s group-wide supervision and evaluation of the adequacy of a group’s capital
position.
As part of the international efforts to develop a groupwide capital standard, the IAIS completed a comparability analysis in
November 2024 of the Aggregation Method used in the U.S. (i.e., the GCC as discussed above) and recognized the U.S. method
as producing results comparable to the group capital standard (Insurance Capital Standard, or ICS) developed by the IAIS.
Investment Regulation. Insurance company investments must comply with applicable laws and regulations which prescribe the
kind, quality, and concentration of investments. In general, these laws and regulations permit investments in federal, state and
municipal obligations, corporate bonds, preferred and common equity securities, mortgage loans, real estate, and certain other
investments, subject to specified limits and certain other qualifications, depending on the type of investment. At December 31,
2024 and 2023, the Company was in compliance with these laws and regulations.
Federal Regulation. As mentioned above, the Dodd-Frank Act established a Federal Insurance Office (FIO) within the U.S.
Department of the Treasury. The FIO has limited regulatory authority and is empowered to gather data and information
regarding the insurance industry and insurers, but it has in the past recommended an expanded federal role in some
circumstances. The Dodd-Frank Act also gives the Federal Reserve supervisory authority over a number of non-bank financial
services holding companies, including holding companies with insurance company subsidiaries, if they are designated by a two-
thirds vote of a Financial Stability Oversight Council (the FSOC) as “systemically important financial institutions” (SIFI) or
own a bank or thrift. The Company, based upon the FSOC’s rules and interpretive guidance, has not been designated as a SIFI
and is not subject to regulation by the Federal Reserve. Nonetheless, it is possible that FSOC may change its rules,
interpretations, or application thereof in the future and conclude that the Company is a SIFI. If the Company were designated as
a SIFI, the Federal Reserve’s supervisory authority could include the ability to impose heightened financial regulation and
could impact requirements regarding the Company’s capital, liquidity and leverage as well as its business and investment
conduct. The Dodd-Frank Act also authorizes assessments to pay for the resolution of SIFIs that have become insolvent. The
Company (as a financial company with more than $50 billion in assets) could be assessed, and although any such assessment is
required to be risk weighted (i.e., riskier firms pay more), such costs could be material and are not currently estimable. As a
result of the foregoing, the Dodd-Frank Act, including any changes thereto or additional related regulations, or other additional
federal regulation that is adopted in the future, could impose additional burdens on the Company, including impacting the ways
in which the Company conducts its business, increasing compliance costs and duplicating state regulation, and could result in a
competitive disadvantage, particularly relative to other competitors that may not be subject to the same level of regulation.
International Regulation
The Company’s insurance subsidiaries based in Canada, and the Canadian branch of one of the Company’s U.S. insurance
subsidiaries, are regulated for solvency and risk management purposes by the Office of the Superintendent of Financial
Institutions (OSFI) under the provisions of the Insurance Companies Act (Canada). These Canadian subsidiaries and the
Canadian branch are also subject to Canadian provincial and territorial insurance legislation and regulation, primarily governing
market conduct, including pricing, underwriting, coverage, and claim conduct, in varying degrees by province/territory and by
product line.
The Company’s insurance subsidiaries based in the United Kingdom (U.K.) are regulated by two regulatory bodies, The
Prudential Regulation Authority (PRA) and The Financial Conduct Authority (FCA). One of the Company’s U.K. insurance
subsidiaries is also authorized in the U.S. as a surplus lines insurer subject to U.S. state regulation applicable to such insurers.
The Company’s managing agency (Travelers Syndicate Management Limited, or TSML) of its Lloyd’s syndicate (Syndicate
5000 at Lloyd’s) is also regulated by the PRA and the FCA, which have delegated certain regulatory responsibilities to the
26
Council of Lloyd’s. Travelers Syndicate 5000 is able to write, or reinsure, business in respect of over 200 countries and
territories throughout the world by virtue of Lloyd’s international licenses. In each such jurisdiction, the policies written by
TSML, as part of Lloyd’s, are subject to the laws and insurance regulations of that jurisdiction. Since January 1, 2019, the
Company has used a Lloyd’s insurance subsidiary in Brussels, Belgium (Lloyd’s Brussels) to cover its Lloyd’s customers’ risks
in the EU. Lloyd’s Brussels is regulated by the National Bank of Belgium.
Travelers is conducting its European insurance operations through an insurance subsidiary that is incorporated in the Republic
of Ireland and authorized and regulated by the Central Bank of Ireland. Certain operations are conducted in the U.K. through a
U.K. branch of the Irish subsidiary, which is supervised by the PRA and FCA as well as the Central Bank of Ireland.
The Company’s operations in the Republic of Ireland are also subject to regulation by the European Union (EU). Generally,
EU requirements are adopted by the EU and then implemented by enabling legislation in the member countries. Significant
areas of oversight and influence by the EU include capital and solvency requirements (Solvency II), competition law and
antitrust regulation, intermediary and distribution regulation, gender discrimination, sustainability disclosures, including climate
change disclosure (due to the requirements of the Corporate Sustainability Reporting Directive, or CSRD, and Corporate
Sustainability Due Diligence Directive, or CSDDD), artificial intelligence and data security and privacy. Under Solvency II, it
is possible that the U.S. parent of a European Union subsidiary could be subject to certain Solvency II requirements if the
regulator determines that the subsidiary’s capital position is dependent on the parent company and the U.S. parent is not already
subject to regulations deemed “equivalent” to Solvency II. Currently, as a result of the Covered Agreements described below,
the state regulatory system governing U.S. insurers is deemed “equivalent” for purposes of Solvency II.
Each of the Company’s foreign insurance subsidiaries had capital significantly above their respective regulatory requirements at
December 31, 2024.
Regulators in countries where the Company has operations are working with the International Association of Insurance
Supervisors (IAIS) (and with the NAIC, the Federal Reserve and FIO in the U.S.) to consider changes to insurance company
supervision, including group supervision and group capital requirements as described above.
The IAIS has developed a framework (i.e., the Global Monitoring Exercise, or GME) to assess the potential systemic risk in the
global insurance sector for identifying “global systemically important insurers” (G-SIIs) and high-level policy measures that
will apply to the G-SIIs. The methodology and measures were endorsed by the Financial Stability Board (FSB) which was
created by the Group of Twenty (or G-20); however, identification of G-SIIs was suspended at the beginning of 2020. In
December 2022, the FSB, in consultation with the IAIS, decided to discontinue the annual identification of G-SIIs. Going
forward the FSB will utilize a newly developed framework to inform its considerations of systemic risk in the insurance sector.
The Company has not previously been designated as a G-SII by the FSB; however, it is possible that the designation of G-SIIs
could be reinstituted, the methodologies or framework could be amended or interpreted differently in the future and the
Company could be named as a G-SII.
The IAIS completed its Common Framework for the Supervision of Internationally Active Insurance Groups (known as
ComFrame). ComFrame is intended to apply heightened regulatory requirements similar to those being developed for G-SIIs to
internationally active insurance groups (or “IAIGs”), including group supervision, group capital requirements, and resolution
planning, i.e., a written plan developed by a financial group detailing how it would be wound down in the event of an
insolvency. While the Company would not be considered an IAIG under the current criteria in ComFrame, it is possible that
the criteria could be changed. If the Company is designated as an IAIG or the NAIC and individual states adopt ComFrame or
similar provisions for large insurers, the Company could be subject to increased supervision and higher capital standards.
Covered Agreements
The U.S. Department of the Treasury and the Office of the U.S. Trade Representative have signed covered agreements (the
Covered Agreements) regarding prudential (solvency) insurance and reinsurance measures with both the EU and the U.K. The
Covered Agreements include three areas of prudential insurance supervision: reinsurance contracts, group supervision, and the
exchange of information between U.S. and U.K. regulators and between U.S. and EU regulators on insurers and reinsurers that
operate in the U.S., U.K., and EU markets. The Covered Agreement with the EU went into effect in April 2018, while the
Covered Agreement with the U.K. took full effect upon the U.K.’s exit from the EU on January 31, 2020. The Covered
Agreements are intended to promote cooperation between U.S. insurance regulators and EU and U.K. insurance regulators and
to limit the ability of the EU and the U.K. to apply solvency and group capital requirements to the worldwide operations of any
U.S. insurer operating in the EU or the U.K. It is possible that individual members of the EU could differ in how they adopt or
apply the terms of the Covered Agreement, resulting in greater regulation and higher capital standards as well as inconsistent
regulatory requirements among the jurisdictions in which the Company does business. While it is not yet known how or if
27
these actions will impact the Company, such regulation could result in increased costs of compliance, increased disclosure, and
less flexibility in capital management, and could adversely impact the Company’s results of operations and limit its growth.
The Covered Agreements eliminate the collateral and local presence requirements for EU and U.K. reinsurers operating in the
U.S., and for U.S. reinsurers operating in the EU and U.K., as a condition for credit for reinsurance in regulatory reporting and
capital requirements. The prospective elimination of the collateral requirements is conditioned on the reinsurer meeting capital
and solvency standards and maintaining a record of prompt payments to ceding insurers. While the collateral requirement is
removed for reinsurers meeting these standards, insurers and reinsurers are not prohibited from negotiating and putting into
place collateral as part of reinsurance agreements. The Covered Agreements include a five-year transition period to full
compliance in the impacted jurisdictions.
Insurance Holding Company Statutes
As a holding company, TRV is not regulated as an insurance company. However, since TRV owns capital stock in insurance
subsidiaries, it is subject to state insurance holding company statutes, as well as certain other laws, of each of its insurance
subsidiaries’ states of domicile. All holding company statutes, as well as other laws, require disclosure and, in some instances,
prior approval of certain transactions between an insurance company and an affiliate. The holding company statutes and other
laws also require, among other things, prior approval for acquiring control of a domestic insurer and the payment of
extraordinary dividends or distributions.
Insurance Regulations Concerning Change of Control. Many state insurance regulatory laws contain provisions that require
prior approval by state agencies of any change in control of an insurance company that is domiciled, or, in some cases, having
substantial business in a state such that the insurance company is deemed to be commercially domiciled in that state.
The laws of many states also contain provisions requiring pre-notification to state agencies prior to any change in control of a
non-domestic insurance company admitted to transact business in that state. While these pre-notification statutes do not
authorize the state agency to disapprove the change of control, they do authorize issuance of cease-and-desist orders with
respect to the non-domestic insurer if it is determined that some conditions, such as undue market concentration, would result
from the acquisition.
Any transactions that would constitute a change in control of any of TRV’s insurance subsidiaries would generally require prior
approval by the insurance departments of the states in which the insurance subsidiaries are domiciled or commercially
domiciled. Pre-acquisition notification may also be required in those states that have adopted pre-acquisition notification
provisions and in which such insurance subsidiaries are admitted to transact business.
As described above, one of TRV’s insurance subsidiaries and its operations at Lloyd’s are domiciled in the U.K. and one of its
insurance subsidiaries is domiciled in the Republic of Ireland. Insurers in the U.K. and the Republic of Ireland are subject to
change of control restrictions, including approval of the PRA and FCA and of the Central Bank of Ireland, respectively. TRV’s
insurance subsidiaries domiciled in, or authorized to conduct insurance business in, Canada are also subject to regulatory
change of control restrictions, including approval of OSFI. TRV’s Brazilian joint venture is subject to regulatory change of
control and other share transfer restrictions, including approval of the Superintendência de Seguros Privados (SUSEP).
These requirements may deter, delay or prevent transactions affecting the control of or the ownership of common stock,
including transactions that could be advantageous to TRV’s shareholders.
Insurance Intermediaries
The Company has domestic and international subsidiaries which act as insurance intermediaries, i.e., agents, brokers, and
managing general underwriters. These entities are regulated by state, provincial, and international regulatory and self-
regulatory bodies focused on market conduct and other matters.
Regulatory Developments
The state insurance regulatory framework has been under continuing scrutiny, and some state legislatures have considered or
enacted laws that may alter or increase state authority to regulate insurance companies and insurance holding companies.
Further, the NAIC and state insurance regulators continually re-examine existing laws and regulations, specifically focusing on
modifications to holding company statutes, regulations, interpretations of existing laws, and the development of new laws and
regulations.
As part of these changes, insurance holding company regulations were amended to require insurers who are part of a holding
company system to file an enterprise risk report to provide the lead insurance regulator with a summary of the company’s
28
Enterprise Risk Management (ERM) framework, including the material risks within the insurance holding company system that
could pose risk to the insurance entities within the holding company system. Insurers having premium volume above certain
thresholds, including the Company, are also required to perform at least annually a self-assessment of their current and future
risks, including their likely future solvency position (known as an own risk and solvency assessment, or ORSA) and file a
confidential report with the insurer’s lead insurance regulator. The requirement for an insurer to conduct an ORSA is intended
to foster an effective level of ERM for all insurers within a holding company system and to provide a group-wide perspective
on risks and capital as a supplement to the legal entity view. ORSA is now required in the United States, the U.K., Europe and
Canada and is in various stages of implementation in other jurisdictions, and included in the IAIS standards. It is possible that,
as a result of ORSA and the manner in which it may be used by insurance regulators, the Company’s states of domicile or other
regulatory bodies may require changes in its ERM process (e.g., prescribe the use of specific models or the application of
certain assumptions or scenarios in the Company’s models) that have the effect of limiting the Company’s ability to write
certain risks, limit its risk appetite, or reduce its capital management flexibility. See “Item 1—Business—Enterprise Risk
Management” for further discussion of the Company’s ERM.
For additional information concerning regulations applicable to the Company, including cyber regulations, see “Item 1A—Risk
Factors—Our businesses are heavily regulated by the states and countries in which we conduct business, including licensing,
market conduct and financial supervision, and changes in regulation, including changes in tax regulation, may reduce our
profitability and limit our growth” and “Item 1A—Risk Factors—If we experience difficulties with technology, data and
network security (including as a result of cyber attacks), outsourcing relationships or cloud-based technology, our ability to
conduct our business could be negatively impacted.”
ENTERPRISE RISK MANAGEMENT
The Company’s Enterprise Risk Management (ERM) activities involve both the identification and assessment of a broad range
of risks and the execution of coordinated strategies to effectively manage these risks. Since certain risks can be correlated with
other risks, an event or a series of events can impact multiple areas of the Company simultaneously and have a material effect
on the Company’s results of operations, financial position and/or liquidity. This requires an entity-wide view of risk and an
understanding of the potential impact on all aspects of the Company’s operations. It also requires the Company to manage its
risk-taking to be within its risk appetite in a prudent and balanced effort to create and preserve value for all of the Company’s
stakeholders. ERM also includes an evaluation of the Company’s risk capital needs, which takes into account regulatory
requirements, financial strength and credit rating considerations, in addition to economic and other factors. ERM at the
Company is an integral part of its business operations. All risk owners across all functions, all corporate leaders and the Board
of Directors are engaged in ERM. ERM involves risk-based analytics, as well as reporting and feedback throughout the
enterprise in support of the Company’s long-term financial strategies and objectives.
The Company uses various analyses and methods, including proprietary and third-party modeling processes, to make
underwriting and reinsurance decisions designed to manage its exposure to catastrophic events. In addition to catastrophe
modeling and analysis, the Company also models and analyzes its exposure to other extreme events. The Company also utilizes
proprietary and third-party modeling processes to evaluate capital adequacy. These analytical techniques are an integral
component of the Company’s ERM process and further support the Company’s long-term financial strategies and objectives.
In addition to the day-to-day ERM activities within the Company’s operations, key internal risk management functions include,
among others, the Management and Operating Committees (comprised of the Company’s Chief Executive Officer and the other
most senior members of management); the Enterprise, Segment and Function (including Catastrophe, Cyber, etc.) Risk
Committees of management; the Executive Crisis Management Team; the Sustainability Committee; and the Credit Committee.
A senior executive team comprised of the Chief Risk Officer and the Enterprise Chief Underwriting Officer oversees the ERM
process. The mission of this team is to facilitate risk assessment and to collaborate in implementing effective risk management
strategies throughout the Company. Another strategic ERM objective of this team includes working across the Company to
enhance effective and realistic risk modeling capabilities as part of the Company’s overall effort to understand and manage its
portfolio of risks to be within its risk appetite. Board oversight of ERM is provided by the Risk Committee of the Board of
Directors, which reviews the strategies, processes and controls pertaining to the Company’s insurance operations and oversees
the implementation, execution and performance of the Company’s ERM program. The Risk Committee of the Board of
Directors meets with senior management at least four times a year to discuss ERM activities and provides a report to the full
Board of Directors after each such meeting.
The Company’s ERM efforts build upon the foundation of an effective internal control environment. ERM expands the internal
control objectives of effective and efficient operations, reliable financial reporting and compliance with applicable laws and
regulations, to foster, lead and support an integrated, risk-based culture within the Company that focuses on value creation and
preservation. However, the Company can provide only reasonable, not absolute, assurance that these objectives will be met.
29
Further, the design of any risk management or control system must reflect the fact that there are resource constraints, and the
benefits must be considered relative to their costs. As a result, the possibility of material financial loss remains in spite of the
Company’s significant and comprehensive ERM efforts. An investor should carefully consider the risks and all of the other
information set forth in this annual report, including the discussions included in “Item 1A—Risk Factors,” “Item 7A—
Quantitative and Qualitative Disclosures About Market Risk,” and “Item 8—Financial Statements and Supplementary Data.”
OTHER INFORMATION
Seasonality
A discussion of the extent to which the Company’s business may be seasonal can be found under “Outlook” within “Item 7—
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and is incorporated by reference into
this Item 1.
Human Capital Management
At December 31, 2024, the Company had approximately 34,000 employees, 90% of whom are located in the United States.
The following table shows the geographic distribution of the Company’s employees as of December 31, 2024:
Location
% of Total
Domestic:
Connecticut .........................................................................................................................................................
22.1 %
New York ...........................................................................................................................................................
6.7
Minnesota ...........................................................................................................................................................
6.7
Texas ..................................................................................................................................................................
6.6
California ............................................................................................................................................................
5.2
Florida ................................................................................................................................................................
4.0
Massachusetts .....................................................................................................................................................
3.6
Georgia ...............................................................................................................................................................
3.5
Illinois .................................................................................................................................................................
3.0
All other domestic (1)
..........................................................................................................................................
28.6
Total Domestic ...............................................................................................................................................
90.0
International:
Canada .................................................................................................................................................................
5.3
United Kingdom ..................................................................................................................................................
4.5
All other international .........................................................................................................................................
0.2
Total International ..........................................................................................................................................
10.0
Consolidated total .........................................................................................................................................
100.0 %
___________________________________________
(1)
No other single state accounted for 3.0% or more of the Company’s employees as of December 31, 2024.
The average employee tenure at the Company is more than 11 years, and 20 years for the Company’s approximately 750 most
senior leaders. The Company’s average global voluntary turnover rate over the past three years was approximately 9%. The
Company believes that these employee tenure and voluntary turnover rates are due, in part, to the resources and support the
Company provides to employees throughout their careers, as discussed below.
Maintaining an Ethical Culture
The Company’s culture of honesty, integrity and accountability is critical to its long-term success. To support this culture, the
Company promotes ethics and compliance awareness across its operations. On an annual basis, all employees of the Company’s
wholly owned subsidiaries are required to complete the Company’s ethics training and certify that they have reviewed,
understand and agree to comply with the Company’s Code of Business Conduct and Ethics and other applicable Company
policies.
30
The Company provides employees with multiple channels to raise concerns, including the Human Resources, Employee
Relations and Compliance functions, as well as the Travelers Ethics Helpline. The Company’s independently administered
Ethics Helpline is available to employees and others 24 hours a day, seven days a week to report issues or seek guidance
confidentially and anonymously. Trained professionals investigate each concern and, where appropriate, escalate it internally.
In addition, the Company maintains a formal Whistleblowing and Non-Retaliation Policy that prohibits retaliation against, or
discipline of, an employee who raises concerns in good faith.
Employee Engagement
The Company strives to deliver an employee experience that engages its workforce and strengthens the organization. The
Company maintains an Employee Experience function that is responsible for, among other things, an employee experience
program that is designed to help drive superior business performance. This function helps the Company create and enhance
programs designed to improve employee engagement, reduce attrition and support the retention, growth and satisfaction of the
Company’s employees.
The Company uses various methods to evaluate the employee experience and the success of its employee engagement efforts,
as well as to inform the strategies the Company uses to enhance those efforts. In addition, the Company’s Chief Human
Resources Officer meets regularly with the Chief Executive Officer and other senior leaders to discuss employee engagement
strategies and the Company’s progress.
Based on the Company’s employee tenure and voluntary turnover rates, as discussed above, as well as other means the
Company uses to evaluate the employee experience and the success of its engagement efforts, the Company believes that its
engagement efforts are effective.
Learning and Development
The Company offers various learning and development opportunities to provide its employees with the skills and capabilities
they need to be successful. The Company’s enterprise-wide leadership framework outlines the skills and behaviors expected of
our leaders. It supports the sustainability of the culture established at Travelers and serves as the underpinning for our
leadership training. The Company also offers additional foundational workshops centered on leadership: Coaching for
Performance Excellence and Leading World Class Teams.
In addition, the Company offers career mentorship and development programs for both entry-level and experienced
professionals. For example, the Company’s Development Programs provide employees with an opportunity to progress through
a steady career path in a specific discipline such as Actuarial, Business Insights & Analytics, Data Science, Finance, Human
Resources, Engineering (Technology), Operations, Underwriting, Investments or Product Management. Participants complete
assignments and rotations designed to help them build upon their strategic thinking skills and business acumen, provide the
foundational knowledge and technical skills necessary for success and include on-the-job training, classroom instruction, self-
study materials and independent work in an assigned business area. These programs have been a part of the Company’s talent
strategy for many years.
Diversity and Inclusion
The Company believes that its diversity and inclusion efforts are important to its success. The Chief Diversity & Inclusion
Officer leads the Company’s diversity and inclusion efforts. The Company also has a Diversity Council that is chaired by the
Chairman and Chief Executive Officer and is composed of the most senior members of the Company’s leadership team.
The Company also has 10 Diversity Networks – voluntary groups led by employees, dedicated to fostering a diverse and
inclusive work environment. The networks, which are open to all employees, help foster the retention, development and success
of the Company’s employees through networking, mentorship and community volunteer opportunities. In addition, these groups
are a resource for the Company’s business leaders, providing them with important insights and perspectives.
With respect to the Company’s talent pipeline, the Company has established deliberate recruiting, retention and development
practices that are tailored to deepen talent pools and broaden advancement opportunities for all employees. These practices
include matching upcoming leaders with mentors within the organization and offering workshops to advance their careers
within the Company.
31
Performance and Succession
The Company’s performance management strategy is designed to develop the Company’s talent and equip employees with the
skills and resources necessary to ensure the Company’s continued success. To that end, managers assist with setting and
monitoring goals, planning, development and discussing opportunities for improvement throughout the year.
The Company also conducts a comprehensive annual talent review, which includes succession planning, to identify and prepare
talented employees for future leadership positions. Each line of business identifies talented employees and succession
candidates for targeted development and advancement opportunities. This talent review process culminates with the Chief
Executive Officer and those reporting directly to him meeting to review succession plans for key positions. In addition, the
Chief Executive Officer regularly meets with the Nominating and Governance Committee of the Board of Directors and the full
Board of Directors to discuss succession-related matters.
Compensation and Benefits
The Company’s compensation and benefits programs are designed to attract, motivate and retain high performing employees
and to help employees be healthy and productive in all aspects of their lives.
Paying employees equitably is the foundation of the Company’s performance-based culture. The Company has comprehensive
processes and controls in place and reviews its compensation practices annually with independent, outside experts, in each case
to help ensure equitable pay across the Company. Based in part on these measures, the Company believes that it pays its
employees equitably, regardless of gender, race or any other protected classification.
The Company’s minimum hourly wage in the United States is $18. As calculated and reported in the Company’s most recent
Proxy Statement filed in April 2024, excluding the Company’s Chairman and Chief Executive Officer, (i) the median of the
annual total compensation of all the Company’s employees was approximately $117,500, and (ii) the median of the annual total
compensation of the Company’s full-time U.S. employees who worked for the Company for the entire year, who comprised
approximately 90% of its U.S. workforce, was approximately $128,000.
The Company takes a holistic approach with respect to the physical, mental and financial well-being of its employees. The
Company offers comprehensive, flexible benefit options for its employees. In the United States, these include, among others:
Health and Wellness
•
Medical, dental, vision and prescription drug coverage;
•
Health savings and flexible spending accounts;
•
The myWellness platform, a mobile-friendly, easy-to-use application, which allows employees to track activity levels,
improve sleep, take self-guided courses and much more;
•
Round-the-clock access to the Company’s employee assistance program, which provides employees access to
professional counseling services, life coaching and support resources;
•
Included Health, a free service for employees and dependents enrolled in the Company’s medical plan that matches
members to top-ranked doctors, provides expert second opinions and assists in navigating the health care system; and
•
Caregiving Support from Wellthy, a benefit that helps employees navigate the challenges of caring for children, aging
family members or loved ones who are chronically ill.
Savings and Retirement
•
A 401(k) Savings Plan, through which the Company matches employee contributions dollar-for-dollar up to 5% of
eligible pay, with a maximum annual Company match of $7,500;
•
The Paying It Forward Savings Program, through which the Company supports employees with student loans by
making an annual contribution in the employee’s 401(k) account equal to the annual student loan payments. The
combined maximum of the 401(k) match and the Paying It Forward savings contribution is 5% of eligible pay, up to a
maximum of $7,500;
•
A Pension Plan that provides annual pay credits from 2% to 6% of eligible pay based on age and years of service, plus
quarterly interest credits;
•
Financial education program, free one on one guidance sessions, on-demand financial webinars and workshops; and
•
Investment advisory service that provides day-to-day management of employees 401(k) account.
32
Other
•
Life insurance;
•
Short- and long-term disability coverages;
•
Paid time-off, starting at 20 days per year, up to a maximum of 30 days per year based on years of service, plus the
ability to purchase up to six additional days per year;
•
Designated Company holidays plus floating holiday(s);
•
Paid parental and adoption leave;
•
Childcare discounts;
•
A Legal Services Plan;
•
An Educational Assistance Program;
•
A corporate discount program; and
•
Paid time off for volunteering.
Board Oversight of Human Capital Management
The Company’s Board of Directors takes an active role in overseeing the Company’s human capital management strategy,
including its diversity and inclusion efforts. The Chief Human Resources Officer and other senior executives present to the
Board regularly on human capital management matters, including the progress the Company has made over time. Additionally,
pursuant to its charter, the Nominating and Governance Committee of the Board meets regularly with senior management,
including the Chief Executive Officer and the Chief Human Resources Officer, to review and discuss the Company’s strategies
to encourage diversity and inclusion within the Company. Pursuant to its charter, the Compensation Committee of the Board,
which is advised by an independent compensation consultant, reviews and approves the Company’s general compensation
philosophy and objectives. In addition, the Compensation Committee meets with senior management on a regular basis to
discuss the Company’s practices designed to help ensure equitable pay across the organization.
Taxation
For a discussion of tax matters affecting the Company and its operations, see “Item 7—Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and note 13 of the notes to the consolidated financial statements.
Intellectual Property
The Company relies on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish
and protect its intellectual property. With respect to trademarks specifically, the Company has registrations in many countries,
including the United States, for its material trademarks, including the “Travelers” name and the Company’s iconic umbrella
logo. The Company has the right to retain its material trademark rights in perpetuity, so long as it satisfies the use and
registration requirements of all applicable countries. The Company regards its trademarks as highly valuable assets in
marketing its products and services and vigorously seeks to protect its trademarks against infringement. See “Item 1A—Risk
Factors—Intellectual property is important to our business, and we may be unable to protect and enforce our own intellectual
property or we may be subject to claims for infringing the intellectual property of others.”
Company Website, Social Media and Availability of SEC Filings
The Company’s internet website is travelers.com. Information on the Company’s website is not incorporated by reference
herein and is not a part of this Form 10-K. The Company makes available free of charge on its website or provides a link on its
website to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K,
and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC. To access
these filings, go to the Company’s website and under the “Investors” heading, click on “Financial Information” then “SEC
Filings.”
The Company may use its website and/or social media outlets, such as Facebook and X, as distribution channels of material
company information. Financial and other important information regarding the Company is routinely posted on and accessible
through the Company’s website at investor.travelers.com, its Facebook page at facebook.com/travelers and its X account
(@Travelers) at x.com/travelers. In addition, you may automatically receive email alerts and other information about the
Company when you enroll your email address by visiting “Email Notifications” under the “Investor Toolkit” section at
investor.travelers.com.
33
Glossary of Selected Insurance Terms
Accident year ...................................
The annual calendar accounting period in which loss events occurred,
regardless of when the losses are actually reported, booked or paid.
Adjusted unassigned surplus ............
Unassigned surplus as of the most recent statutory annual report reduced by
twenty-five percent of that year’s unrealized appreciation in value or
revaluation of assets or unrealized profits on investments, as defined in that
report.
Admitted insurer ..............................
A company licensed to transact insurance business within a state.
Agent ................................................
A licensed individual who sells and services insurance policies, receiving a
commission from the insurer for selling the business and a fee for servicing it.
An independent agent represents multiple insurance companies and searches
the market for the best product for its client.
Annuity ............................................
A contract that pays a periodic benefit over the remaining life of a person (the
annuitant), the lives of two or more persons or for a specified period of time.
Assigned risk pools ..........................
Reinsurance pools which cover risks for those unable to purchase insurance in
the voluntary market. Possible reasons for this inability include the risk being
too great or the profit being too small under the required insurance rate
structure. The costs of the risks associated with these pools are charged back to
insurance carriers in proportion to their direct writings.
Assumed reinsurance .......................
Insurance risks acquired from a ceding company.
Book value per share ........................
Total common shareholders’ equity divided by the number of common shares
outstanding.
Broker ..............................................
One who negotiates contracts of insurance or reinsurance on behalf of an
insured party, receiving a commission from the insurer or reinsurer for
placement and other services rendered.
Capacity ...........................................
The percentage of statutory capital and surplus, or the dollar amount of
exposure, that an insurer or reinsurer is willing or able to place at risk. Capacity
may apply to a single risk, a program, a line of business or an entire book of
business. Capacity may be constrained by legal restrictions, corporate
restrictions or indirect restrictions.
Captive .............................................
A closely-held insurance company whose primary purpose is to provide
insurance coverage to the company’s owners or their affiliates.
Case reserves ....................................
Claim department estimates of anticipated future payments to be made on each
specific individual reported claim.
Casualty insurance ...........................
Insurance which is primarily concerned with the losses caused by injuries to
third persons, i.e., not the insured, and the legal liability imposed on the insured
resulting therefrom. It includes, but is not limited to, employers’ liability,
workers’ compensation, public liability, automobile liability, personal liability
and aviation liability insurance. It excludes certain types of losses that by law
or custom are considered as being exclusively within the scope of other types
of insurance, such as fire or marine.
34
Catastrophe ......................................
A severe loss event designated, or reasonably expected by the Company to be
designated, a catastrophe by one or more industry 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 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 also result in the payment of
reinsurance reinstatement premiums and assessments from various pools and
associations. 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 reached 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. For 2024, the threshold ranged from approximately $20 million to
$30 million of losses before reinsurance and taxes.
Catastrophe loss ...............................
Loss and directly identified loss adjustment expenses from catastrophes, as
well as related reinsurance reinstatement premiums and assessments from
various pools.
Catastrophe reinsurance ...................
A form of excess-of-loss reinsurance which, subject to a specified limit,
indemnifies the ceding company for the amount of loss in excess of a specified
retention with respect to an accumulation of losses and related reinsurance
reinstatement premiums resulting from a catastrophic event. The actual
reinsurance document is called a “catastrophe cover.” These reinsurance
contracts are typically designed to cover property insurance losses but can be
written to cover casualty insurance losses such as from workers’ compensation
policies.
Cede; ceding company .....................
When an insurer reinsures its liability with another insurer or a “cession,” it
“cedes” business and is referred to as the “ceding company.”
Ceded reinsurance ............................
Insurance risks transferred to another company as reinsurance. See
“Reinsurance.”
Claim ................................................
Request by an insured for indemnification by an insurance company for loss
incurred from an insured peril.
Claim adjustment expenses ..............
See “Loss adjustment expenses (LAE).”
Claims and claim adjustment
expenses .......................................
See “Loss” and “Loss adjustment expenses (LAE).”
Claims and claim adjustment
expense reserves ...........................
See “Loss reserves.”
Cohort ..............................................
A group of items or individuals that share a particular statistical or
demographic characteristic. For example, all claims for a given product in a
given market for a given accident year would represent a cohort of claims.
35
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 report is the equivalent of, and is calculated in
the same manner as, the SAP combined ratio except that the SAP underwriting
expense ratio is based on net written premium and the underwriting expense
ratio as used in this report is based on net earned premiums.
The combined ratio is an indicator 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 a similarly titled measure may not be
comparable to the Company’s method of computing this ratio.
Commercial multi-peril policies ......
Refers to policies which cover both property and third-party liability
exposures.
Commutation agreement ..................
An agreement between a reinsurer and a ceding company whereby the
reinsurer pays an agreed-upon amount in exchange for a complete discharge of
all obligations, including future obligations, between the parties for reinsurance
losses incurred.
Core income (loss) ...........................
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 date, and cumulative effect of changes in
accounting principles when applicable. Financial statement users consider core
income when analyzing the results and trends of insurance companies.
Debt-to-total capital ratio .................
The ratio of debt to total capitalization.
Debt-to-total capital ratio excluding
net unrealized gain (loss) on
investments ...................................
The ratio of debt to total capitalization excluding the after-tax impact of net
unrealized investment gains and losses included in shareholders’ equity.
Deductible ........................................
The amount of loss that an insured retains.
Deferred acquisition costs (DAC) ....
Incremental direct costs of acquired and renewal insurance contracts,
consisting of commissions (other than contingent commissions) and premium-
related taxes that are deferred and amortized to achieve a matching of revenues
and expenses when reported in financial statements prepared in accordance
with U.S. Generally Accepted Accounting Principles (GAAP).
Deficiency ........................................
With regard to reserves for a given liability, a deficiency exists when it is
estimated or determined that the reserves are insufficient to pay the ultimate
settlement value of the related liabilities. Where the deficiency is the result of
an estimate, the estimated amount of deficiency (or even the finding of whether
or not a deficiency exists) may change as new information becomes available.
Demand surge ..................................
Significant short-term increases in building material and labor costs due to a
sharp increase in demand for those materials and services, commonly as a
result of a large catastrophe resulting in significant widespread property
damage.
Direct written premiums ..................
The amounts charged by an insurer to insureds in exchange for coverages
provided in accordance with the terms of an insurance contract. The amounts
exclude the impact of all reinsurance premiums, either assumed or ceded.
36
Earned premiums or premiums
earned ...........................................
That portion of property casualty premiums written that applies to the expired
portion of the policy term. Earned premiums are recognized as revenues under
both SAP and GAAP.
Earned pricing ..................................
The impact of renewal premium change on earned premiums relative to the
impact of loss cost trends and other related factors on loss and loss adjustment
expenses.
Excess and surplus lines insurance .........................
Insurance for risks not covered by standard insurance due to the unique nature
of the risk. Risks could be placed in excess and surplus lines markets due to
any number of characteristics, such as loss experience, unique or unusual
exposures, or insufficient experience in business. Excess and surplus lines are
less regulated by the states, allowing greater flexibility to design specific
insurance coverage and negotiate pricing based on the risks to be secured.
Excess liability .................................
Additional casualty coverage above a layer of insurance exposures.
Excess-of-loss reinsurance ...............
Reinsurance that indemnifies the reinsured against all or a specified portion of
losses over a specified dollar amount or “retention.”
Exposure ..........................................
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.
Facultative reinsurance ....................
The reinsurance of all or a portion of the insurance provided by a single policy.
Each policy reinsured is separately negotiated.
Fair Access to Insurance
Requirements (FAIR) Plan ...........
A residual market mechanism which provides property insurance to those
unable to obtain such insurance through the regular (voluntary) market. FAIR
plans are set up on a state-by-state basis to cover only those risks in that state.
For more information, see “residual market (involuntary business).”
Fidelity and surety programs ...........
Fidelity insurance coverage protects an insured for loss due to embezzlement
or misappropriation of funds by an employee. Surety is a three-party agreement
in which the insurer agrees to pay a third party or make complete an obligation
in response to the default, acts or omissions of an insured.
Gross written premiums ...................
The direct and assumed contractually determined amounts charged to the
policyholders for the effective period of the contract based on the terms and
conditions of the insurance contract.
Ground-up analysis ..........................
A method to estimate ultimate claim costs for a given cohort of claims such as
an accident year/product line component. It involves analyzing the exposure
and claim activity at an individual insured level and then through the use of
deterministic or stochastic scenarios and/or simulations, estimating the ultimate
losses for those insureds. The total losses for the cohort are then the sum of the
losses for each individual insured.
In practice, the method is sometimes simplified by performing the individual
insured analysis only for the larger insureds, with the costs for the smaller
insureds estimated via sampling approaches (extrapolated to the rest of the
smaller insured population) or aggregate approaches (using assumptions
consistent with the ground-up larger insured analysis).
Guaranteed-cost products ................
An insurance policy where the premiums charged will not be adjusted for
actual loss experience during the covered period.
37
Guaranty fund ..................................
A state-regulated mechanism that is financed by assessing insurers doing
business in those states. Should insolvencies occur, these funds are available to
meet some or all of the insolvent insurer’s obligations to policyholders.
Holding company liquidity ..............
Total cash, short-term invested assets and other readily marketable securities
held by the holding company.
Incurred but not reported (IBNR)
reserves .........................................
Reserves for estimated losses and LAE that have been incurred but not yet
reported to the insurer. This includes amounts for unreported claims,
development on known cases and re-opened claims.
Inland marine ...................................
A broad type of insurance generally covering articles that may be transported
from one place to another, as well as bridges, tunnels and other
instrumentalities of transportation. It includes goods in transit, generally other
than transoceanic, and may include policies for movable objects such as
personal effects, personal property, jewelry, furs, fine art and others.
Insurance Regulatory Information
System (IRIS) ratios .....................
Financial ratios calculated by the NAIC to assist state insurance departments in
monitoring the financial condition of insurance companies.
Large deductible policy ...................
An insurance policy where the customer assumes at least $25,000 or more of
each loss. Typically, the insurer is responsible for paying the entire loss under
those policies and then seeks reimbursement from the insured for the
deductible amount.
Lloyd’s .............................................
An insurance marketplace based in London, England, where brokers,
representing clients with insurable risks, deal with Lloyd’s underwriters, who
represent investors. The investors are grouped together into syndicates that
provide capital to insure the risks.
Loss ..................................................
An occurrence that is the basis for submission and/or payment of a claim.
Losses may be covered, limited or excluded from coverage, depending on the
terms of the policy.
Loss adjustment expenses (LAE) ....
The expenses of settling claims, including legal and other fees and the portion
of general expenses allocated to claim settlement costs.
Loss and LAE ratio ..........................
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 report is calculated
in the same manner as the SAP ratio.
The loss and LAE ratio is an indicator of the Company’s underwriting
discipline and underwriting profitability.
Other companies’ method of computing a similarly titled measure may not be
comparable to the Company’s method of computing this ratio.
Loss reserves ....................................
Liabilities established by insurers and reinsurers to reflect the estimated cost of
claims incurred that the insurer or reinsurer will ultimately be required to pay
in respect of insurance or reinsurance it has written. Reserves are established
for losses and for LAE, and consist of case reserves and IBNR reserves. As the
term is used in this document, “loss reserves” is meant to include reserves for
both losses and LAE.
38
Loss reserve development ................
The increase or decrease in incurred claims and claim adjustment expenses as a
result of the re-estimation of claims and claim adjustment expense reserves at
successive valuation dates for a given group of claims. Loss reserve
development may be related to prior year or current year development.
Losses incurred ................................
The total losses sustained by an insurance company under a policy or policies,
whether paid or unpaid. Incurred losses include a provision for IBNR.
National Association of Insurance
Commissioners (NAIC) ...............
An organization of the insurance commissioners or directors of all 50 states,
the District of Columbia and the five U.S. territories organized to promote
consistency of regulatory practice and statutory accounting standards
throughout the United States.
Net written premiums ......................
Direct written premiums plus assumed reinsurance premiums less premiums
ceded to reinsurers.
New business volume ......................
The amount of written premiums related to new policyholders and additional
products sold to existing policyholders.
Pool ..................................................
An organization of insurers or reinsurers through which particular types of
risks are underwritten with premiums, losses and expenses being shared in
agreed-upon percentages.
Premiums .........................................
The amount charged during the year on policies and contracts issued, renewed
or reinsured by an insurance company.
Probable maximum loss (PML) .......
The maximum amount of loss that the Company would be expected to incur on
a policy if a loss were to occur, giving effect to collateral, reinsurance and
other factors.
Property insurance ...........................
Insurance that provides coverage to a person or business with an insurable
interest in tangible property for that person’s or business’s property loss,
damage or loss of use.
Quota share reinsurance ...................
Reinsurance wherein the insurer cedes an agreed-upon fixed percentage of
liabilities, premiums and losses for each policy covered on a pro rata basis.
Rates .................................................
Amounts charged per unit of insurance.
Redundancy .....................................
With regard to reserves for a given liability, a redundancy exists when it is
estimated or determined that the reserves are greater than what will be needed
to pay the ultimate settlement value of the related liabilities. Where the
redundancy is the result of an estimate, the estimated amount of redundancy (or
even the finding of whether or not a redundancy exists) may change as new
information becomes available.
Reinstatement premiums ..................
Additional premiums payable to reinsurers to restore coverage limits that have
been exhausted as a result of reinsured losses under certain excess-of-loss
reinsurance treaties.
Reinsurance ......................................
The practice whereby one insurer, called the reinsurer, in consideration of a
premium paid to that insurer, agrees to indemnify another insurer, called the
ceding company, for part or all of the liability of the ceding company under
one or more policies or contracts of insurance which it has issued.
Reinsurance agreement ....................
A contract specifying the terms of a reinsurance transaction.
39
Renewal premium change ................
The estimated change in average premium on policies that renew, including
rate and exposure changes. Such statistics are subject to change based on a
number of factors, including changes in estimates.
Renewal rate change ........................
The estimated change in average premium on policies that renew, excluding
exposure changes. Such statistics are subject to change based on a number of
factors, including changes in estimates.
Residual market (involuntary
business) .......................................
Insurance market which provides coverage for risks for those unable to
purchase insurance in the voluntary market. Possible reasons for this inability
include the risks being too great or the profit potential too small under the
required insurance rate structure. Residual markets are frequently created by
state legislation either because of lack of available coverage such as: property
coverage in a windstorm prone area or protection of the accident victim as in
the case of workers’ compensation. The costs of the residual market are usually
charged back to the direct insurance carriers in proportion to the carriers’
voluntary market shares for the type of coverage involved.
Retention ..........................................
The amount of exposure a policyholder company retains on any one risk or
group of risks. The term may apply to an insurance policy, where the
policyholder is an individual, family or business, or a reinsurance policy, where
the policyholder is an insurance company.
Retention rate ...................................
The percentage of prior period premiums (excluding renewal premium
changes), accounts or policies available for renewal in the current period that
were renewed. Such statistics are subject to change based on a number of
factors, including changes in estimates.
Retrospective premiums ..................
Premiums related to retrospectively rated policies.
Retrospective rating .........................
A plan or method which permits adjustment of the final premium or
commission on the basis of actual loss experience, subject to certain minimum
and maximum limits.
Return on equity ...............................
The ratio of net income (loss) less preferred dividends to average shareholders’
equity.
Risk-based capital (RBC) ................
A measure adopted by the NAIC and enacted by states for determining the
minimum statutory policyholders’ surplus requirements of insurers. Insurers
having total adjusted capital less than that required by the RBC calculation will
be subject to varying degrees of regulatory action depending on the level of
capital inadequacy.
Risk retention group .........................
An alternative form of insurance in which members of a similar profession or
business band together to self insure their risks.
Runoff business ................................
An operation which has been determined to be nonstrategic; includes non-
renewals of in-force policies and a cessation of writing new business, where
allowed by law.
Salvage .............................................
The amount of money an insurer recovers through the sale of property
transferred to the insurer as a result of a loss payment.
40
Second-injury fund ..........................
The employer of an injured, impaired worker is responsible only for the
workers’ compensation benefit for the most recent injury; the second-injury
fund would cover the cost of any additional benefits for aggravation of a prior
condition. The cost is shared by the insurance industry and self-insureds,
funded through assessments to insurance companies and self-insureds based on
either premiums or losses.
Segment income (loss) .....................
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 segment income when analyzing the results and trends of
insurance companies.
Self-insured retentions .....................
That portion of the risk retained by an insured for its own account.
Servicing carrier ...............................
An insurance company that provides, for a fee, various services including
policy issuance, claims adjusting and customer service for insureds in a
reinsurance pool.
Statutory accounting practices
(SAP) ............................................
The practices and procedures prescribed or permitted by domiciliary state
insurance regulatory authorities in the United States for recording transactions
and preparing financial statements. SAP generally reflect a modified going
concern basis of accounting.
Statutory capital and surplus ............
The excess of an insurance company’s admitted assets over its liabilities,
including loss reserves, as determined in accordance with SAP. Admitted
assets are assets of an insurer prescribed or permitted by a state to be
recognized on the statutory balance sheet. Statutory capital and surplus is also
referred to as “statutory surplus” or “policyholders’ surplus.”
Statutory net income ........................
As determined under SAP, total revenues less total expenses and income taxes.
Structured settlement .......................
Periodic payments to an injured person or survivor for a determined number of
years or for life, typically in settlement of a claim under a liability policy,
usually funded through the purchase of an annuity.
Subrogation ......................................
A principle of law incorporated in insurance policies, which enables an
insurance company, after paying a claim under a policy, to recover the amount
of the loss from another person or entity who is legally liable for it.
Tenure impact ..................................
As new business volume increases and accounts for a greater percentage of
earned premiums, the loss and LAE ratio generally worsens initially, as the loss
and LAE ratio for new business is generally higher than the ratio for business
that has been retained for longer periods. As poorer performing business leaves
and pricing segmentation improves on renewal of the business that is retained,
the loss and LAE ratio is expected to improve in future years.
Third-party liability ..........................
A liability owed to a claimant (third party) who is not one of the two parties to
the insurance contract. Insured liability claims are referred to as third-party
claims.
Total capitalization ..........................
The sum of total shareholders’ equity and debt.
41
Treaty reinsurance ............................
The reinsurance of a specified type or category of risks defined in a reinsurance
agreement (a “treaty”) between a primary insurer or other reinsured and a
reinsurer. Typically, in treaty reinsurance, the primary insurer or reinsured is
obligated to offer and the reinsurer is obligated to accept a specified portion of
all that type or category of risks originally written by the primary insurer or
reinsured.
Umbrella coverage ...........................
A form of insurance protection against losses in excess of amounts covered by
other liability insurance policies or amounts not covered by the usual liability
policies.
Unassigned surplus ..........................
The undistributed and unappropriated amount of statutory capital and surplus.
Underlying combined ratio ..............
The underlying combined ratio is the sum of the underlying loss and LAE ratio
and the underlying underwriting expense ratio. The underlying combined ratio
is an indicator of the Company’s underwriting discipline and underwriting
profitability for the current accident year.
Underlying loss and LAE ratio ........
The underlying loss and LAE ratio is the loss and LAE ratio, adjusted to
exclude the impact of catastrophes and prior year reserve development. The
underlying loss and LAE ratio is an indicator of the Company’s underwriting
discipline and underwriting profitability for the current accident year.
Underlying underwriting expense
ratio ..............................................
The underlying underwriting expense ratio is the underwriting expense ratio
adjusted to exclude the impact of catastrophes.
Underlying underwriting margin .....
Net earned premiums and fee income less claims and claim adjustment
expenses (excluding catastrophe losses and prior year reserve development)
and insurance-related expenses.
Underwriter ......................................
An employee of an insurance company who examines, accepts or rejects risks
and classifies accepted risks in order to charge an appropriate premium for
each accepted risk. The underwriter is expected to select business that will
produce an average risk of loss no greater than that anticipated for the class of
business.
Underwriting ....................................
The insurer’s or reinsurer’s process of reviewing applications for insurance
coverage, and the decision as to whether to accept all or part of the coverage
and determination of the applicable premiums; also refers to the acceptance of
that coverage.
Underwriting expense ratio ..............
For SAP, the underwriting expense ratio is the ratio of underwriting expenses
incurred (including commissions paid), less certain administrative services fee
income and billing and policy fees, to net written premiums as defined in the
statutory financial statements required by insurance regulators. The
underwriting expense ratio as used in this report 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.
The underwriting expense ratio is an indicator of the Company’s efficiency in
acquiring and servicing its business.
Other companies’ method of computing a similarly titled measure may not be
comparable to the Company’s method of computing this ratio.
Underwriting gain or loss ................
Net earned premiums and fee income less claims and claim adjustment
expenses and insurance-related expenses.
42
Unearned premium ..........................
The portion of premiums written that is allocable to the unexpired portion of
the policy term.
Voluntary market .............................
The market in which a person seeking insurance obtains coverage without the
assistance of residual market mechanisms.
Wholesale broker .............................
An independent or exclusive agent that represents both admitted and non-
admitted insurers in market areas, which include standard, non-standard,
specialty and excess and surplus lines of insurance. The wholesaler does not
deal directly with the insurance consumer. The wholesaler deals with the retail
agent or broker.
Workers’ compensation ...................
A system (established under state and federal laws) under which employers
provide insurance for benefit payments to their employees for work-related
injuries, deaths and diseases, regardless of fault.
Item 1A. RISK FACTORS
You should carefully consider the following risks and all of the other information set forth in this report, including without
limitation our consolidated financial statements and the notes thereto and “Item 7—Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Critical Accounting Estimates.” The following risk factors have been
organized by category for ease of use; however, many of the risks may have impacts in more than one category.
Insurance-Related Risks
High levels of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in
catastrophe-prone areas and changing climate conditions, could materially and adversely affect our results of
operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital
and the availability and cost of reinsurance. Our property and casualty insurance operations expose us to claims arising out
of catastrophes in each of the geographies where we write business and to varying peak catastrophe perils in different countries
and regions. 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, solar flares and other
naturally-occurring events. Catastrophes can also be man-made, such as terrorist attacks and other destructive acts including
those involving cyber events, nuclear, biological, chemical and radiological events, civil unrest, explosions and destruction of
infrastructure.
The incidence and severity of catastrophes are inherently unpredictable, and it is possible that both the frequency and severity
of natural and man-made catastrophic events could increase. Severe weather events over the last two decades have underscored
the unpredictability of climate trends. For example, the frequency and/or severity of hurricane, tornado, hail and wildfire events
in the United States have been more volatile during this time period. The insurance industry has experienced increased
catastrophe losses due to a number of potential factors, including, in addition to weather/climate variability, aging
infrastructure, more people living in, and moving to, high-risk areas, population growth in areas with weaker enforcement of
building codes, urban expansion, an increase in the number of amenities included in, and the average size of, a home and higher
inflation, including as a result of post-event demand surge. We believe that changing climate conditions have also likely added
to the frequency and severity of natural disasters and created additional uncertainty as to future trends and exposures. Climate
studies by government agencies, academic institutions, catastrophe modeling organizations and other groups indicate that an
increase in the frequency and/or intensity of hurricanes, hail and severe convective storms, heavy precipitation events and
associated river, urban and flash flooding, sea level rise, droughts, heat waves and wildfires has occurred, and can be expected
into the future. See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Catastrophe Modeling” and “—Changing Climate Conditions.”
All of the catastrophe modeling tools that we use or rely on to evaluate our catastrophe exposures are based on significant
assumptions and judgments and are subject to error and mis-estimation. As a result, our estimated exposures could be
materially different than our actual results. See “Item 7—Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Catastrophe Modeling” and “—Changing Climate Conditions.” In addition, for newer and rapidly
evolving products, such as cyber insurance, limited historical loss experience and the potential for a widespread cyber event
decrease the efficacy of modeling tools and increase the level of uncertainty related to the product, and as a result, the inherent
potential for unexpected material economic loss.
43
The extent of losses from a catastrophe is a function of the total amount of insured exposure affected by the event, the severity
of the event and the coverage provided. For example, the specific location impacted by tornadoes is inherently random and
unpredictable, and the specific location impacted by a tornado may or may not be highly populated and may or may not have a
high concentration of our insured exposures. Similarly, the potential for losses from a cyber event can be magnified to the
extent that the event impacts geographies, platforms, systems or vulnerabilities shared by a large number of policyholders, such
as cloud-based software platforms. In addition, increases in the value and geographic concentration of insured property, the
number of policyholders exposed to certain events and the effects of inflation could increase the severity of claims resulting
from a catastrophe. For example, in recent years, the effects of inflation, including as a result of post-event demand surge, have
increased catastrophe losses, and this could occur again in the future. Disruptions to electrical power supplies have also
increased losses arising from natural events, a dynamic which may become more frequent as dependency on electricity
increases and/or if the reliability of the electric grid decreases. Disruptions to electrical power supplies could result from non-
natural events as well, including cyber events.
States have from time to time passed legislation, and regulators have taken action, that have the effect of limiting the ability of
insurers to manage catastrophe risk, such as by restricting insurers from reducing exposures or withdrawing from catastrophe-
prone areas or mandating that insurers participate in residual markets. Residual markets have resulted in, and may in the future
result in, significant losses or assessments to insurers, including us. For example, it is expected that the January 2025 California
wildfires will result in assessments to insurers from the California FAIR Plan. In addition, legislative, regulatory and legal
actions have sought to expand insurance coverage for catastrophe claims beyond the original intent of the policies, prevent the
application of deductibles or limit other rights of insurers. We may not be able to adjust terms or adequately raise prices to
offset the costs of catastrophes. See “Item 1—Business—U.S. State and Federal Regulation—Regulatory and Legislative
Responses to Catastrophes.”
The estimation of claims and claim adjustment expense reserves related to catastrophe losses can be affected by, among other
things, the nature of the information available at the time of estimation, coverage issues, and legal, regulatory and economic
uncertainties. The estimates related to catastrophe losses are adjusted in subsequent periods as actual claims emerge and
additional information becomes available, and these adjustments could be material.
Exposure to catastrophe losses could adversely affect our financial strength and claims-paying ratings and could impair our
ability to raise capital on acceptable terms or at all. Also, as a result of our exposure to catastrophe losses, rating agencies may
further increase capital requirements, which may require us to raise capital to maintain our ratings. A ratings downgrade could
hurt our ability to compete effectively or attract new business. In addition, catastrophic events could cause us to exhaust our
available reinsurance limits and could adversely impact the cost and availability of reinsurance on a going-forward basis. Such
events can also impact the credit of our reinsurers. For a discussion of our catastrophe reinsurance coverage, see “Item 1—
Business—Reinsurance—Catastrophe Reinsurance.” Catastrophic events could also adversely impact the credit of the issuers of
securities held in our investment portfolio, such as states or municipalities.
In addition, coverage in our reinsurance program for terrorism is limited. Although the Terrorism Risk Insurance Program
provides benefits in the event of certain acts of terrorism, those benefits are subject to a deductible and other limitations, and the
program is scheduled to expire on December 31, 2027. Under current provisions of this program, once our losses exceed 20%
of our eligible direct commercial earned premiums for the preceding calendar year, the federal government will reimburse us
for 80% of our losses attributable to certain acts of terrorism which exceed this deductible up to a total industry program cap of
$100 billion. Our estimated deductible under the program is $3.85 billion for 2025. For a further description of the Terrorism
Risk Insurance Program, see note 6 of the notes to the consolidated financial statements.
Because of the risks set forth above, catastrophes could materially and adversely affect our results of operations, financial
position and/or liquidity. Further, we may not have sufficient resources to respond to claims arising from a high frequency of
high-severity natural catastrophes and/or of man-made catastrophic events involving conventional means or claims arising out
of one or more man-made catastrophic events involving cyber, nuclear, biological, chemical or radiological means.
If actual claims exceed our claims and claim adjustment expense reserves, or if changes in the estimated level of claims
and claim adjustment expense reserves are necessary, including as a result of, among other things, changes in the legal/
tort, regulatory and economic environments in which the Company operates, our financial results could be materially
and adversely affected. Claims and claim adjustment expense reserves (“loss reserves”) represent management estimates of
what the ultimate settlement and administration of claims will cost, generally utilizing actuarial expertise and projection
techniques, at a given accounting date. The process of estimating loss reserves involves a high degree of judgment and is
subject to a number of variables and significant uncertainty. These variables can be affected by both internal and external
events, such as: changes in claims handling procedures, including automation; adverse changes in loss cost trends, including
inflationary pressures, technology or other changes that may impact medical, auto and home repair costs (e.g., more costly
technology in vehicles, labor shortages, supply chain disruptions, higher costs of used vehicles and parts, and increased demand
44
and decreased supply for raw materials, all of which results in increased severity of claims); economic conditions, including
general and wage inflation; legal trends, including adverse changes in the tort environment that have continued to persist at
elevated levels for a number of years (e.g., increased and more aggressive attorney involvement in insurance claims, increased
litigation, expanded theories of liability, higher jury awards, lawsuit abuse and third-party litigation finance, among others);
labor shortages, which can result in companies hiring less experienced workers; higher interest rates, which can result in higher
post-judgment interest costs; and legislative changes, among others. The impact of many of these items on ultimate costs for
loss reserves could be material and is difficult to estimate. Loss reserve estimation difficulties also differ significantly by
product line due to differences in claim complexity, the volume of claims, the potential severity of individual claims, the
determination of occurrence date for a claim and lags in reporting of events to insurers, among other factors.
Inflation in recent years significantly increased our loss costs in our personal and commercial businesses. Inflation higher than
at the levels that the Company anticipates could negatively impact our loss costs in future periods. It is possible that, among
other things, potential actions taken by the federal government, such as tax reform or changes in international trade regulation,
including tariffs, could lead to higher than anticipated inflation. The impact of inflation on loss costs could be more
pronounced for those lines of business that are considered “long tail,” such as general liability and workers’ compensation, as
they require a relatively long period of time to finalize and settle claims for a given accident year or require payouts over a long
period of time. In addition, a significant portion of claims costs, including those in “long tail” lines of business, consists of
medical costs. As a result, an increase in medical inflation could materially and adversely impact our loss costs and our claims
and claim adjustment expense reserves. Changes in the inflationary environment in recent years have impacted medical labor
and materials costs, the potential persistency of which could result in future loss costs which are higher than our current
expectations. In addition to the impact of inflation on reserves, on a going forward basis, we may not be able to offset the
impact of inflation on our loss costs with sufficient price increases. The estimation of loss reserves may also be more difficult
during extreme events, such as a pandemic, or during volatile or uncertain economic conditions, due to unexpected changes in
behavior of claimants and policyholders, including an increase in fraudulent reporting of exposures and/or losses, reduced
maintenance of insured properties, increased frequency of small claims or delays in the reporting or adjudication of claims.
We refine our loss reserve estimates as part of a regular, ongoing process as historical loss experience develops, additional
claims are reported and settled, and the legal, regulatory and economic environment evolves. Business judgment is applied
throughout the process, including the application of various individual experiences and expertise to multiple sets of data and
analyses. Different experts may apply different assumptions and judgments when faced with material uncertainty, based on
their individual backgrounds, professional experiences and areas of focus. As a result, these experts may at times produce
estimates materially different from each other. This risk may be exacerbated in the context of an extreme event or an
acquisition. Experts providing input to the various estimates and underlying assumptions include actuaries, underwriters, claim
personnel and lawyers, as well as other members of management. Therefore, management often considers varying individual
viewpoints as part of its estimation of loss reserves.
Due to the inherent uncertainty underlying loss reserve estimates, the final resolution of the estimated liability for claims and
claim adjustment expenses will likely be higher or lower than the related loss reserves at the reporting date. In addition, our
estimate of claims and claim adjustment expenses is likely to change. These additional liabilities or increases in estimates, or a
range of either, could vary significantly from period to period and could materially and adversely affect our results of
operations and/or our financial position. For a discussion of loss reserves by product line, including examples of common
factors that can affect reserves, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Critical Accounting Estimates—Claims and Claim Adjustment Expense Reserves.”
Our business could be harmed because of our continued exposure to asbestos and environmental claims and related
litigation. We continue to receive a significant number of asbestos claims. Factors underlying these claim filings include
continued intensive advertising by lawyers seeking asbestos claimants and the continued focus by plaintiffs on defendants, such
as manufacturers of talcum powder, who were not traditionally sued and/or primary targets of asbestos litigation. We also
continue to be involved in coverage litigation concerning a number of policyholders, some of whom have filed for bankruptcy,
who in some instances have asserted that all or a portion of their asbestos-related claims are not subject to aggregate limits on
coverage and/or that each individual bodily injury claim should be treated as a separate occurrence under the policy. To the
extent both issues are resolved in a policyholder’s favor and our other defenses are not successful, our coverage obligations
under the policies at issue would be materially increased and bounded only by the applicable per-occurrence limits and the
number of asbestos bodily injury claims against the policyholders. Although we have seen a moderation in the overall risk
associated with these lawsuits, it remains difficult to predict the ultimate cost of these claims. Further, in addition to claims
against policyholders, proceedings have been launched directly against insurers, including us, by individuals challenging
insurers’ conduct with respect to the handling of past asbestos claims and by individuals seeking damages arising from alleged
asbestos-related bodily injuries. It is possible that the filing of other direct actions against insurers, including us, could be made
in the future.
45
We also continue to receive claims from policyholders who allege that they are liable for injury or damage arising out of their
alleged disposition of toxic substances. Liability for investigation and cleanup of environmental contamination and for some
related losses under federal laws, such as the Comprehensive Environmental Response, Compensation and Liability Act, and
under similar state laws, may be imposed on certain parties even if they did not cause the release or threatened release of
hazardous substances and may be joint and several with other responsible parties.
The Company has been, and continues to be, involved in litigation involving insurance coverage issues pertaining to asbestos
and environmental claims. The Company believes that some court decisions have interpreted the insurance coverage to be
broader than the original intent of the insurers and policyholders. These decisions continue to be inconsistent and vary from
jurisdiction to jurisdiction. Uncertainties surrounding the final resolution of these asbestos and environmental claims continue,
and it is difficult to estimate our ultimate liability for such claims and related litigation. As a result, these reserves are subject to
revision as new information becomes available and as claims develop. It is also not possible to predict changes in the legal,
regulatory and legislative environment and their impact on the future development of asbestos and environmental claims. This
environment could be affected by changes in applicable legislation and future court and regulatory decisions and interpretations,
including the outcome of legal challenges to legislative and/or judicial reforms establishing medical criteria for the pursuit of
asbestos claims. It is also difficult to predict the ultimate outcome of complex coverage disputes until settlement negotiations
near completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is
particularly the case with policyholders in bankruptcy where negotiations often involve a large number of claimants and other
parties and require court approval to be effective.
It is possible that the outcome of the continued uncertainties regarding these claims could result in liability in future periods that
differs from current reserves by an amount that could materially and adversely affect our results of operations. See the
“Asbestos Claims and Litigation,” “Environmental Claims and Litigation” and “Uncertainty Regarding Adequacy of Asbestos
and Environmental Reserves” sections of “Item 7—Management’s Discussion and Analysis of Financial Condition and Results
of Operations.” Also see “Item 3—Legal Proceedings.”
We are exposed to, and may face adverse developments involving, mass tort claims such as those relating to exposure to
potentially harmful products or substances. We face exposure to mass tort claims, including claims related to exposure to
potentially harmful products or substances, such as perfluoroalkyl and polyfluoroalkyl substances (PFAS), talc, opioids and
lead. Establishing loss reserves for mass tort claims is subject to significant uncertainties because of many factors, including
adverse changes to the tort environment that have continued to persist at elevated levels for a number of years (e.g., increased
and more aggressive attorney involvement in insurance claims, increased litigation, expanded theories of liability, higher jury
awards, lawsuit abuse and third-party litigation finance, among others); evolving judicial interpretations, including application
of various theories of joint and several liabilities; disputes concerning medical causation with respect to certain diseases;
geographical concentration of the lawsuits asserting the claims; and the potential for a large rise in the total number of claims
without underlying epidemiological developments suggesting an increase in disease rates. Because of the uncertainties set forth
above, additional liabilities may arise for amounts significantly in excess of the current loss reserves. In addition, our estimate
of loss reserves may change. These additional liabilities or increases in estimates, or a range of either, could vary significantly
from period to period and could materially and adversely affect our results of operations and/or our financial position.
The effects of emerging claim and coverage issues on our business are uncertain, and court decisions or legislative
changes that take place after we issue our policies can result in an unexpected increase in the number of claims and have
a material adverse impact on our results of operations and/or our financial position. As industry practices and legal,
judicial, social and other environmental conditions change, unexpected and unintended issues related to claim and coverage are
likely to emerge. These issues may adversely affect our business, including by extending coverage beyond our underwriting
intent, by increasing the number, size or types of claims or by mandating changes to our underwriting practices. Examples of
such claims and coverage issues include, but are not limited to:
•
judicial expansion of policy coverage and the impact of new or expanded theories of liability;
•
plaintiffs targeting insurers in purported class action litigation relating to claims handling and other practices;
•
claims relating to construction defects, which often present complex coverage and damage valuation questions;
•
claims related to data and network security breaches, information system failures or cyber events, including cases
where coverage was not intended to be provided;
•
the assertion of “public nuisance” or similar theories of liability, pursuant to which plaintiffs, including governmental
entities, seek to recover monies spent to respond to harm caused to members of the public, abate hazards to public
health and safety and/or recover expenditures purportedly attributable to a “public nuisance,” such as litigation against
manufacturers or distributors of lead paint, opioids, perfluoroalkyl and polyfluoroalkyl substances (PFAS) and other
allegedly harmful products, and entities that caused or contributed to harm to the environment;
46
•
claims related to liability, business interruption or workers’ compensation arising out of infectious disease or
pandemic;
•
claims related to vaccine mandates;
•
claims relating to abuse by an employee or a volunteer of an insured;
•
claims that link health issues to particular causes (for example, cumulative traumatic head injury from sports or other
causes), resulting in liability or workers’ compensation claims;
•
claims arising out of modern techniques and practices used in connection with the extraction of natural resources, such
as hydraulic fracturing or wastewater injection;
•
claims arising out of the use of personal property in commercial transactions, such as ride or home sharing;
•
claims against fiduciaries of retirement plans, including allegations regarding excessive fees;
•
claims under laws protecting biometric and other personal data;
•
claims relating to consequences of current or new technologies, including generative AI or addictive software, or
business models or processes, including as a result of related behavioral changes;
•
claims relating to changing climate conditions, including claims alleging that our policyholders cause or contribute to
changing climate conditions; and
•
bankruptcies of policyholders or other insurers, which can lead to inflated numbers and values of claims.
In some instances, emerging issues may not become apparent for some time after we have issued the affected insurance
policies. As a result, the full extent of liability under our insurance policies may not be known for many years after the policies
are issued.
In addition, the passage of new legislation designed to expand the right to sue, to remove limitations on recovery, to deem by
statute the existence of a covered occurrence, to extend or eliminate the statutes of limitations or otherwise to repeal or weaken
tort reforms could have a material and adverse effect on our results of operations and/or our financial position. For example,
over the past decade, a number of states have enacted legislation allowing victims of sexual molestation to file or proceed with
claims that otherwise would have been time-barred, which have resulted in, and are expected to continue to result in, significant
claims payments by the Company, and additional states are considering similar legislative changes.
The effects of these and other unforeseen emerging claim and coverage issues are extremely hard to predict and could harm our
business and materially and adversely affect our results of operations and/or our financial position.
Financial, Economic and Credit Risks
During or following a period of financial market disruption or an economic downturn, our business could be materially
and adversely affected. If financial markets experience significant disruption or if economic conditions deteriorate, such as in
a period of recession or stagflation, our results of operations, financial position and/or liquidity likely would be adversely
impacted. For example, financial market disruptions and economic downturns in the past have resulted in, among other things,
reduced business volume, heightened credit risk, reduced valuations for certain of our investments and heightened vulnerability
for smaller vendors with whom we do business. Future actions or inactions of the United States government related to the
“debt-ceiling” could increase the actual or perceived risk that the United States may not ultimately pay its obligations when due.
This could result in downgrades to the credit rating of the United States and potential disruption to financial markets, including
capital markets.
Several of the risk factors discussed above and below identify risks that could result from, or be exacerbated by, financial
market disruption, an economic slowdown or economic uncertainty. These include risks discussed above related to our
estimates of claims and claim adjustment expense reserves and emerging claim and coverage issues, and those discussed below
related to our investment portfolio, the competitive environment, reinsurance arrangements, other credit exposures, regulatory
developments and the impact of rating agency actions. See also “Item 7—Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” particularly the “Outlook” section, for additional information about these risks and the
potential impact on our business.
Our investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material
realized or unrealized losses. Investment returns are an important part of our overall profitability. Fixed maturity and short-
term investments comprised approximately 94% of the carrying value of our investment portfolio as of December 31, 2024.
Changes in interest rates affect the carrying value of our fixed maturity investments and returns on our fixed maturity and short-
term investments. A decline in interest rates reduces the returns available on short-term investments and new fixed maturity
investments (including those purchased to re-invest maturities from the existing portfolio), thereby negatively impacting our net
investment income on a going-forward basis, while rising interest rates reduce the market value of existing fixed maturity
investments, thereby negatively impacting our book value. See also “Item 7—Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Outlook.” The value of our fixed maturity and short-term investments is also
47
subject to the risk that certain investments may default or become impaired due to a deterioration in the financial condition of
one or more issuers of the securities held in our portfolio, or due to a deterioration in the financial condition of an insurer that
guarantees an issuer’s payments of such investments. Such defaults and impairments could reduce our net investment income
and result in realized investment losses. During an economic downturn, fixed maturity and short-term investments could be
subject to a higher risk of default, and our non-fixed income investments could be negatively impacted as well.
A significant portion of our fixed maturity investment portfolio is invested in obligations of states, municipalities and political
subdivisions. This municipal bond portfolio could be subject to default or impairment. In particular:
•
Many state and local governments have from time to time operated under deficits or projected deficits, particularly
during and after a financial market disruption or economic downturn. The severity and duration of these deficits could
have an adverse impact on the collectability and valuation of our municipal bond portfolio. These deficits may also be
exacerbated by the impact of unfunded pension plan obligations and other postretirement obligations or by declining
municipal tax bases and revenues in times of financial stress.
•
Some municipal bond issuers may be unwilling to increase tax rates, or to reduce spending, to fund interest or principal
payments on their municipal bonds, or may be unable to access the municipal bond market to fund such payments.
The risk of widespread defaults may increase if some issuers voluntarily choose to default, instead of implementing
difficult fiscal measures, and the actual or perceived consequences are less severe than expected.
•
The risk of widespread defaults may also increase if there are changes in legislation that permit states, municipalities
and political subdivisions to file for bankruptcy protection where they were not permitted before. In addition, the
collectability and valuation of municipal bonds may be adversely affected if there are judicial interpretations in a
bankruptcy or other proceeding that lessen the value of structural protections. For example, debtors may challenge the
effectiveness of structural protections thought to be provided by municipal securities backed by a dedicated source of
revenue. The collectability and valuation may also be adversely affected if there are judicial interpretations in a
bankruptcy or other proceeding that question the payment priority of municipal bonds.
Our portfolio has benefited from tax exemptions (such as those related to interest from municipal bonds) and certain other tax
laws, including, but not limited to, those governing dividends-received deductions and tax credits. Changes in these laws could
adversely impact the value of our investment portfolio.
Our investment portfolio includes: residential mortgage-backed securities; collateralized mortgage obligations; pass-through
securities and asset-backed securities collateralized by sub-prime mortgages; commercial mortgage-backed securities; and
wholly-owned real estate and real estate partnerships, all of which could be adversely impacted by declines in real estate
valuations, including as a result of changes in the use of commercial office and retail space since the COVID-19 pandemic.
We also invest a portion of our assets in equity securities, private equity limited partnerships, hedge funds and, as noted above,
real estate partnerships, as well as strategic investments in private and/or public companies. From time to time, we may also
invest in other types of non-fixed maturity investments, including investments with exposure to commodity price risk. All of
these asset classes are subject to greater volatility in their investment returns than fixed maturity investments. General economic
and market conditions, changes in applicable tax laws and many other factors beyond our control can adversely affect the value
of our non-fixed maturity investments and the realization of net investment income, and/or result in realized investment losses.
As a result of these factors, we may realize reduced returns on these investments, incur losses on sales of these investments and
be required to write down the value of these investments, which could reduce our net investment income and result in realized
investment losses. From time to time, the Company enters into short positions in U.S. Treasury futures contracts to manage the
duration of its fixed maturity portfolio, which can result in realized investment losses.
Our investment portfolio is also subject to increased valuation uncertainties when investment markets are illiquid. The valuation
of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the
carrying amount) of the portion of the investment portfolio that is carried at fair value as reflected in our financial statements is
not reflective of prices at which actual transactions could occur.
We have in the past, and may in the future, depending on changes in circumstances, such as economic and market conditions
and relative asset valuations, make changes to the mix of investments in our investment portfolio as part of our ongoing efforts
to seek appropriate risk-adjusted returns. These changes may impact the duration, diversification, volatility, and risk of our
investment portfolio.
48
Because of the risks set forth above, the value of our investment portfolio could decrease, we could experience reduced net
investment income and we could experience realized and/or unrealized investment losses, which could materially and adversely
affect our results of operations, financial position and/or liquidity.
We may not be able to collect all amounts due to us from reinsurers, reinsurance coverage may not be available to us in
the future at commercially reasonable rates or at all and we are exposed to credit risk related to our structured
settlements. Although the reinsurer is liable to us to the extent of the reinsurance, we remain liable as the direct insurer on all
risks reinsured. As a result, reinsurance arrangements do not eliminate our obligation to pay claims. Accordingly, we are subject
to credit risk with respect to our ability to recover amounts due from reinsurers. In the past, certain reinsurers have ceased
writing business and entered into runoff. Some of our reinsurance claims may be disputed by the reinsurers, and we may
ultimately receive partial or no payment. This is a particular risk in the case of claims that relate to insurance policies written
many years ago, including those relating to asbestos and environmental claims. In addition, in a number of jurisdictions a
reinsurer is permitted to transfer a reinsurance arrangement to another reinsurer, which may be less creditworthy, without a
counterparty’s consent. Also, the reinsurance that we purchase may not cover all of the risks covered by the policies that we
issue.
Included in reinsurance recoverables are amounts related to certain structured settlements. Structured settlements are 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 we did not receive a release from the claimant, the
structured settlement is included in reinsurance recoverables and the related claim cost is included in the liability for loss
reserves, as we retain the contingent liability to the claimant. Some of the life insurance companies from which we have
purchased annuities have been downgraded to below investment grade credit ratings subsequent to the time of the purchase. If
it is expected that the life insurance company is not able to pay, we would recognize an impairment of the related reinsurance
recoverable if, and to the extent, the purchased annuities are not covered by state guaranty associations. In the event that the
life insurance company fails to make the required annuity payments, we would be required to make such payments. For a
discussion of the top five providers of our reinsurance and structured settlements, see “Item 7—Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Reinsurance Recoverables.”
The availability of reinsurance capacity, as well as its cost and terms, can be impacted, and in recent periods have been
impacted, by general economic conditions and conditions in the reinsurance market, such as the occurrence of significant
reinsured events or unexpected adverse trends. The availability, cost and terms of reinsurance could affect our business volume
and profitability. In addition, the Covered Agreements between the U.S. and each of the EU and U.K. eliminate the requirement
for European and U.K. reinsurers operating in the U.S. to provide collateral, which could make it more difficult for U.S.
companies, including us, to obtain collateral from European and U.K. reinsurers.
Because of the risks set forth above, we may not be able to collect all amounts due to us from reinsurers, and reinsurance
coverage may not be available to us in the future at commercially reasonable rates or terms, or at all, and/or life insurance
companies may fail to make required annuity payments, and thus our results of operations could be materially and adversely
affected.
We are exposed to credit risk in certain of our insurance operations and with respect to certain guarantee or
indemnification arrangements that we have with third parties. We are exposed to credit risk in several areas of our
business operations, including credit risk relating to policyholders, independent agents and brokers. To a significant degree, the
extent of the credit risk that we face is a function of the health of the economy; accordingly, we face an increased credit risk in
an economic downturn.
We are exposed to credit risk in our surety insurance operations, where we guarantee to a third party that our customer will
satisfy certain performance obligations (e.g., a construction contract) or certain financial obligations, including exposure to
large customers who may have obligations to multiple third parties. If our customer defaults, we may suffer losses and not be
reimbursed by that customer, even though we are entitled to indemnification from such customer. In addition, it is customary
practice for multiple insurers to participate as co-sureties on large surety bonds. Under these arrangements, the co-surety
obligations are typically joint and several, in which case we are also exposed to credit risk with respect to our co-sureties.
In addition, a portion of our business is written with large deductible insurance policies. Under casualty insurance contracts
with deductible features, we are obligated to pay the claimant the full amount of the settled claim. We are subsequently
reimbursed by the contractholder for the deductible amount, and, as a result, we are exposed to credit risk to the policyholder.
Moreover, certain policyholders purchase retrospectively rated policies (i.e., where premiums are adjusted after the policy
period based on the actual loss experience of the policyholder during the policy period). Retrospectively rated policies expose
us to additional credit risk to the extent that the adjusted premium is greater than the original premium.
49
Our efforts to mitigate the credit risk that we have to our insureds may not be successful. For example, we may not be able to
obtain collateral and any collateral obtained may subsequently have little or no value.
In accordance with industry practice, when policyholders purchase insurance policies from us through independent agents and
brokers, the premiums relating to those policies are often paid to the agents and brokers for payment to us. In most jurisdictions,
the premiums will be deemed to have been paid to us whether or not they are actually received by us. Consequently, we assume
a degree of credit risk associated with amounts due from independent agents and brokers.
We are also exposed to credit risk related to certain guarantee or indemnification arrangements that we have with third parties.
See note 17 of the notes to the consolidated financial statements. Our exposure to the above credit risks could materially and
adversely affect our results of operations.
A downgrade in our claims-paying and financial strength ratings could adversely impact our business volumes,
adversely impact our ability to access the capital markets and increase our borrowing costs. Claims-paying and financial
strength ratings are important to an insurer’s competitive position. A downgrade in one or more of our ratings could negatively
impact our business volumes or make it more difficult or costly for us to access the capital markets or borrow money. If
significant losses, including, but not limited to, those resulting from one or more major catastrophes, or significant reserve
additions or significant investment losses were to cause our capital position to deteriorate significantly, or if one or more rating
agencies substantially increase their capital requirements, we may need to raise equity capital in the future (which we may not
be able to do at a reasonable cost or at all, especially at a time of financial market disruption) in order to maintain our ratings or
limit the extent of a downgrade. A continued trend of more frequent and severe catastrophes or a prolonged financial market
disruption or economic downturn may lead rating agencies to substantially increase their capital requirements. See also “Item 1
—Business—Ratings.”
The inability of our insurance subsidiaries to pay dividends to our holding company in sufficient amounts would harm
our ability to meet our obligations, pay future shareholder dividends and/or make future share repurchases. Our holding
company relies on dividends from our U.S. insurance subsidiaries to meet our obligations for payment of interest and principal
on outstanding debt, to pay dividends to shareholders, to make contributions to our qualified domestic pension plan, to pay
other corporate expenses and to make share repurchases. The ability of our insurance subsidiaries to pay dividends to our
holding company in the future will depend on their statutory capital and surplus, earnings and regulatory restrictions.
We are subject to state insurance regulation as an insurance holding company system. Our U.S. insurance subsidiaries are
subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid to their parent
without prior approval of insurance regulatory authorities. In a time of prolonged economic downturn or otherwise, insurance
regulators may choose to further restrict the ability of insurance subsidiaries to make payments to their parent companies. The
ability of our insurance subsidiaries to pay dividends to our holding company is also restricted by regulations that set standards
of solvency that must be met and maintained.
The inability of our insurance subsidiaries to pay dividends to our holding company in an amount sufficient to meet our debt
service obligations and other cash requirements could harm our ability to meet our obligations, to pay future shareholder
dividends and to make share repurchases.
Business and Operational Risks
The intense competition that we face, including with respect to attracting and retaining employees, and the impact of
innovation, technological change and changing customer preferences on the insurance industry and the markets in
which we operate, could harm our ability to maintain or increase our business volumes and our profitability. The
property and casualty insurance industry is highly competitive, and we believe that it will remain highly competitive for the
foreseeable future. We compete with both domestic and foreign insurers, including start-ups, which may offer products at prices
and on terms that are not consistent with our economic standards in an effort to maintain or increase their business. The
competitive environment in which we operate could also be impacted by current general economic conditions, which could
reduce the volume of business available to us as well as to our competitors. Pension and hedge funds and other entities with
substantial available capital, more flexible legal structures and/or potentially lower return objectives have increasingly sought to
participate in the property and casualty insurance and reinsurance businesses. Well-capitalized new entrants to the property and
casualty insurance and reinsurance industries and existing competitors that receive substantial infusions of capital may conduct
business in ways that adversely impact our business volumes and profitability. In addition, the competitive environment could
be impacted by changes in customer preferences, including customer demand for direct distribution channels and/or greater
choice, not only in personal lines, but also in commercial lines (where direct writers may become a more significant source of
competition in the future, particularly in the small commercial market). Similarly, comparative rating technology has impacted
competition in personal lines and is now being used to access comparative rates for small commercial business as well, and that
50
trend is likely to continue and may accelerate. In recent years, there have been new entrants into the small commercial
business, and this trend may continue. Customer behavior could also evolve in the future towards buying insurance in point-of-
sale or other non-traditional distribution channels where we may not have a meaningful presence or which are designed to sell
products that we currently do not provide. Consolidation within the insurance industry also could impact our business volumes
and/or the rates or terms of our products.
Other technological changes also present competitive risks. For example, our competitive position could be impacted if we are
unable to deploy, in a cost effective and competitive manner, technology such as artificial intelligence and machine learning
that collects and analyzes a wide variety of data points (so-called “big data” analysis) to make underwriting or other decisions,
or if our competitors collect and use data which we do not have the ability to access or use or deploy artificial intelligence to
create efficiencies in ways that we do not. In addition, innovations, such as telematics and other usage-based methods of
determining premiums, can impact product design and pricing and are becoming an increasingly important competitive factor.
Competitive dynamics may impact the success of efforts to improve our underwriting margins on our insurance products. These
efforts could include seeking improved rates or improved terms and conditions, and could also include other initiatives, such as
reducing operating expenses and acquisition costs. These efforts may not be successful and/or may result in lower business
volumes. In addition, if our underwriting is not effective, further efforts to increase rates could also lead to “adverse selection”,
whereby accounts retained have higher losses, and are less profitable, than accounts lost. For more detail, see “Item 7—
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook.”
Similar to other industries, the insurance industry is undergoing rapid and significant technological and other change.
Traditional insurance industry participants, technology companies, “InsurTech” companies, some of which are supported by
traditional insurance industry participants, and others are focused on using technology and innovation to simplify and improve
the customer experience, increase efficiencies, redesign products, alter business or distribution models and effect other
potentially disruptive changes in the insurance industry. If we do not anticipate, keep pace with and adapt to technological and
other changes impacting the insurance industry, it will harm our ability to compete, decrease the value of our products to
customers, and materially and adversely affect our business. Furthermore, innovation, technological change and changing
customer preferences in the markets in which we operate also pose risks to our business. For example, technologies such as
driverless vehicles, assisted-driving or accident prevention technologies, technologies that facilitate ride, car or home sharing,
smart homes or automation could reduce the number of vehicles in use and/or the demand for, or profitability of, certain of our
products, create coverage issues or impact the frequency or severity of losses, and we may not be able to respond effectively.
While there is substantial uncertainty as to the timing of any impact, in the case of driverless vehicles in particular, new legal
frameworks or business practices could be adopted that reduce the size of the auto insurance market. If competition or
technological or other changes to the markets in which we operate limit our ability to retain existing business or write new
business at adequate rates or on appropriate terms, our results of operations could be materially and adversely affected. See
“Competition” sections of the discussion on business segments in “Item 1—Business.”
Technological change can impact us in other ways as well. For example, rapid changes in the sophistication and use of certain
types of cyber-attacks, such as ransomware and social engineering attacks, as well as other cyber incidents impacting our
insureds, have increased the frequency and severity of losses under our policies. The risk of cyber-attacks could be exacerbated
by geopolitical tensions, including hostile actions taken by nation-states and terrorist organizations. In addition, new
technology, such as artificial intelligence, could create unforeseen exposures or coverage issues under the policies we write and
aggravate claims fraud and cybercrime.
There is significant competition from within the property and casualty insurance industry and from businesses outside the
industry for qualified employees, especially those in key positions and those possessing highly specialized knowledge in areas
such as underwriting, data and analytics, technology, claims and artificial intelligence. This competition has continued in recent
periods and, with the ability for employees to work remotely, is taking place on a broad geographic scale. In addition, the
competition for talent and the difficulty in attracting and retaining employees has also increased due to retirements. This
dynamic has also impacted our agents, brokers, regulators, vendors and other business partners. If we and our business partners
are not able to successfully attract, train, retain and motivate our respective employees, our business, financial results and
reputation could be materially and adversely affected.
51
Disruptions to our relationships with our independent agents and brokers or our inability to manage effectively a
changing distribution landscape could adversely affect us. We market our insurance products primarily through
independent agents and brokers. An important part of our business is written through less than a dozen such intermediaries,
including the agency affiliate of GEICO, with whom we have had a distribution arrangement for homeowners’ business since
1995. Further, there has been a trend of increased consolidation by agents and brokers, and increased financing of agents and
brokers by private equity firms, which could impact our relationships with, and fees paid to, some agents and brokers, and/or
otherwise negatively impact the pricing or distribution of our products. Agents and brokers may increasingly compete with us
to the extent that markets increasingly provide them with direct access to providers of capital seeking exposure to insurance risk
or if they become affiliated with carriers that compete with us. In all of the foregoing situations, loss of all or a substantial
portion of the business provided through such agents and brokers could materially and adversely affect our future business
volume and results of operations.
Our efforts or the efforts of agents and brokers with respect to new products or markets, alternate distribution channels, changes
to commission terms as well as changes in the way agents and brokers utilize data and technology, including in ways that may
be in direct competition with us, could adversely impact our business relationship with independent agents and brokers who
currently market our products, resulting in a lower volume and/or profitability of business generated from these sources.
In certain markets, brokers increasingly have been packaging portfolios of risks together and offering them to fewer carriers or
segmenting individual risks among many carriers. In these and other situations, agents and brokers have an increased influence
over policy language and compensation structure which, if we participate on that basis, could adversely impact our ability to
profitably manage underwriting risk. It could also lead to commoditization of products, which could increase the focus on price
and cost management and decrease our ability to differentiate our products in the marketplace with customers based on other
factors.
Customers in the past have brought claims against us for the actions of our agents. Even with proper controls in place, actual or
alleged errors or inaccuracies by our agents could result in our involvement in disputes, litigation or regulatory actions.
Our efforts to develop new products or services, expand in targeted markets, improve business processes and workflows
or make acquisitions may not be successful and may create enhanced risks. From time to time, to protect and grow market
share and/or improve our productivity and efficiency, we invest in strategic initiatives and pursue acquisitions. These efforts
may require us to make substantial expenditures and not be successful, and even if successful, they may create additional risks:
•
Changes to our business processes or workflow, including the use of new technologies, may give rise to execution risk;
•
Models underlying automated underwriting and pricing decisions may not be effective;
•
Demand for new products or expansion into new markets may not meet our expectations;
•
New products or services and expansion into new markets may change our risk exposures, and the data and models we
use to manage such exposures may not be as effective as those we use in existing markets or with existing products;
•
Acquisitions may not be successfully integrated, resulting in substantial disruption, costs or delays and adversely
affecting our ability to compete, may not result in the benefits anticipated by us, and may also result in unforeseen
liabilities or impact our credit ratings; and
•
The conversion of policyholders to a new product could negatively impact retention and profit margins.
These efforts may require us to make substantial expenditures, which may negatively impact results in the near term, and if not
successful, could materially and adversely affect our results of operations.
We may be adversely affected if our pricing and capital models provide materially different indications than actual
results. Our profitability substantially depends on the extent to which our actual claims experience is consistent with the
assumptions we use in pricing our policies. We utilize proprietary and third-party models to help us price business in a manner
that is intended to be consistent, over time, with actual results and return objectives. We incorporate our historical loss
experience, external industry and other data, and economic indices into our modeling processes, and we use various methods,
including predictive modeling, forecasting and sophisticated simulation modeling techniques, to analyze loss trends and the
risks associated with our assets and liabilities. We also use these modeling processes, analyses and methods in making
underwriting, pricing and reinsurance decisions as part of managing our exposure to catastrophes and other extreme adverse
events. These modeling processes incorporate numerous assumptions and forecasts about the future level and variability of the
frequency and severity of losses, inflation, interest rates and capital requirements, among others, that are difficult to make and
may differ materially from actual results. In addition, as the number of third-party models increases, it becomes more difficult
to validate, manage and integrate such models as they evolve over time, and the risk associated with assimilating the output
from such models into our decisions increases.
52
If we fail to appropriately price the risks we insure or fail to change our pricing models to appropriately reflect our experience,
or if our claims experience is more frequent or severe than our underlying risk assumptions, for example due to inflation,
changing climate conditions, legislative or regulatory changes, changes in behavior such as distracted or faster driving or a
more aggressive tort environment, our profit margins may be negatively affected. If we underestimate the frequency and/or
severity of extreme adverse events occurring, our financial condition may be adversely affected. If we overestimate the risks we
are exposed to, we may overprice our products, and new business growth and retention of our existing business may be
adversely affected. See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Catastrophe Modeling.”
We are subject to additional risks associated with our business outside the United States. We conduct business outside the
United States primarily in Canada, the United Kingdom and the Republic of Ireland. In addition, we conduct business in Brazil
through a joint venture, and throughout other parts of the world, including as a corporate member of Lloyd’s and through our
quota share agreement with Fidelis. We may also explore opportunities in other countries. In conducting business outside of the
United States, we are subject to a number of risks, particularly in emerging economies. These risks include restrictions such as
price controls, capital controls, currency exchange limits, ownership limits and other restrictive or anti-competitive
governmental actions or requirements, which could have an adverse effect on our business and our reputation. A portion of our
premiums from outside of the United States is generated in Canada, a substantial portion of which consists of automobile
premiums from the provinces of Ontario and Alberta, which are highly regulated markets that can result in rate inadequacy. Our
business activities outside the United States may also subject us to currency risk and, in some markets, it may be difficult to
effectively hedge that risk, or we may choose not to hedge that risk. In addition, in some markets, we invest as part of a joint
venture with a local counterparty. Because our governance rights may be limited, we may not have control over the ability of
the joint venture to make certain decisions and/or mitigate risks it faces, and significant disagreements with a joint venture
counterparty may adversely impact our investment and/or reputation. Our business activities outside the United States could
subject us to increased volatility in earnings resulting from the need to recognize and subsequently revise a valuation allowance
associated with income taxes if we became unable to fully utilize any deferred tax assets, including loss carry-forwards from
those foreign operations. Also, political instability and geopolitical tensions have at times resulted, and may in the future result,
in inflation, reduced growth, supply chain and financial market disruption or an economic downturn in such regions. For
certain businesses, we give third parties binding authority to write direct and indirect business on our behalf, and in the case of
Fidelis, we assume a percentage of its business under a reinsurance agreement, which exposes us to additional risks, including
with respect to certain products, risks and geographies we do not normally cover.
Our business activities outside the United States also subject us to additional domestic and foreign laws and regulations,
including the Foreign Corrupt Practices Act and similar laws in other countries that prohibit the making of improper payments
to foreign officials. Although we have policies and controls in place that are designed to ensure compliance with these laws, if
those controls are ineffective and/or an employee or intermediary fails to comply with applicable laws and regulations, we
could suffer civil and criminal penalties and our business and our reputation could be adversely affected. Some countries,
particularly emerging economies, have laws and regulations that lack clarity and, even with local expertise and effective
controls, it can be difficult to determine the exact requirements of, and potential liability under, the local laws. In some
jurisdictions, including Brazil, parties to a joint venture may, in some circumstances, have liability for some obligations of the
venture, and that liability may extend beyond the capital invested. Failure to comply with local laws in a particular market may
result in substantial liability and could have a significant and negative effect not only on our business in that market but also on
our reputation generally.
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 our products could reduce our future profitability. Our
underwriting profitability depends in large part on our ability to competitively price our products at a level that will adequately
compensate us for the risks assumed. As a result, risk selection and pricing through the application of actuarially sound and
segmented underwriting criteria is critical. However, laws or regulations, or judicial or administrative findings, could
significantly curtail the use of particular types of underwriting criteria. For example, we may use credit scoring as a factor in
pricing decisions where allowed by state law. Some consumer groups and/or regulators have alleged that the use of credit
scoring violates the law by discriminating against persons belonging to a protected class and are calling for the prohibition or
restrictions on the use of credit scoring in underwriting and pricing. A variety of other underwriting criteria and other data or
methodologies used in personal and commercial insurance have been and continue to be criticized by regulators, government
agencies, consumer groups or individuals on similar or other grounds, such as the impact of external data sources, artificial
intelligence, algorithms and predictive models on protected classes of customers, and a number of states have begun rulemaking
efforts in response or are considering doing so. Resulting legislative or regulatory actions or litigation could result in negative
publicity and/or generate adverse rules or findings, such as curtailing the use of important underwriting criteria, or other data or
methodologies, which could materially and adversely affect our results of operations.
53
Future pandemics (including new variants of COVID-19), could materially affect our results of operations, financial
position and/or liquidity. COVID-19 presented, and any future pandemics (including new variants of COVID-19) could
present, the following risks, among others: inflation; supply chain disruption; labor shortages; backlogs in the court system
(which increase the time and costs to resolve claims); legal and regulatory demands for rate refunds; behavioral changes that
can result in the increased frequency and severity of claims, such as driving at faster speeds; medical conditions such as “long-
COVID” and other claims in our workers compensation line; litigation seeking business interruption coverage; reduced earned
premiums; higher claims and claim adjustment expenses in certain lines of business; adverse legislative or regulatory actions;
operational disruptions; increased general and administrative expenses; financial market disruption; and an economic downturn.
These risks could materially and adversely impact our results of operations, financial position and/or liquidity. For a further
discussion of risks that can impact us as a result of financial market disruption or an economic downturn, see “During or
following a period of financial market disruption or an economic downturn, our business could be materially and adversely
affected” above and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Outlook.”
Technology and Intellectual Property Risks
Our business success and profitability depend, in part, on effective information technology systems and on continuing to
develop and implement improvements in technology, particularly as our business processes become more digital. We
depend in large part on our technology systems for conducting business and processing claims, as well as for providing the data
and analytics we utilize to manage our business. As a result, our business success is dependent on maintaining the effectiveness
of existing technology systems and on continuing to develop and enhance technology systems that support our business
processes and strategic initiatives in an efficient manner, particularly as our business processes become more digital and seek to
incorporate artificial intelligence, and certain of our products, such as cyber insurance, are more technology-based. Some
system development projects are long-term in nature, may negatively impact our expense ratios as we invest in the projects and
may cost more than we expect to complete. In addition, system development projects may not deliver the benefits or perform as
expected, or may be replaced or become obsolete more quickly than expected, which could result in operational difficulties,
additional costs or accelerated recognition of expenses. Attracting and retaining technology personnel has also become
significantly more challenging in recent years. If we do not effectively and efficiently manage and upgrade our technology
portfolio, or if the costs of doing so are higher than we expect, our ability to provide competitive services to, and conduct
business with, new and existing customers in a cost effective manner and our ability to implement our strategic initiatives could
be adversely impacted.
If we experience difficulties with technology, data and network security (including as a result of cyber attacks),
outsourcing relationships or cloud-based technology, our ability to conduct our business could be negatively impacted.
A shut-down of, or inability to access, one or more of our facilities (including our primary data processing facility); a power
outage; or a failure of one or more of our systems could significantly impair our ability to perform necessary business functions
on a timely basis. In the event of a computer virus or natural or other disaster, our systems could be inaccessible for an extended
period of time, including as a result of hostile actions taken by nation-states or terrorist organizations. In addition, because our
systems increasingly interface with and depend on third-party systems, including cloud-based, we could experience service
denials or failures of controls if demand for our service exceeds capacity or a third-party system fails or experiences an
interruption. Business interruptions and failures of controls could also result if our internal systems do not interface with each
other as intended or if changes to such systems or our other business processes, such as new payment technologies, are not
effectively implemented. Business continuity can also be disrupted by an event, such as a pandemic, that renders large numbers
of a workforce unable to work as needed, particularly at critical locations. If our business continuity plans do not sufficiently
address a business interruption, system failure or service denial, this could result in a deterioration of our ability to write and
process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary
business functions. In addition, should internet disruptions occur, or frustration with our business platforms or distribution
initiatives develop among our independent agents and brokers, any resulting loss of business could materially and adversely
affect our future business volume and results of operations.
Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer
systems and networks. Computer viruses, hackers and employee or vendor misconduct, and other external hazards (such as
social engineering attacks), could expose our data systems to security breaches, cyber-attacks or other disruptions. Increased use
of data supplied by third parties in our business increases our exposure to this risk. While we attempt to develop secure
transmission capabilities with third-party vendors and others with whom we do business, we may not be successful and, in
addition, these third parties may not have appropriate controls in place to protect the confidentiality of the information.
Like other global companies, our computer systems are regularly subject to and will continue to be the target of computer
viruses, malware or other malicious codes (including ransomware), unauthorized access, cyber-attacks or other computer-
54
related penetrations. The Company, like other property and casualty insurers, may be under greater threat from cybercriminals
seeking sensitive personal or other insurance-related information. The risk of cyber attacks could be exacerbated by
geopolitical tensions, including hostile actions taken by nation-states or terrorist organizations.
While we have experienced cyber-attacks, to date, we are not aware that we have experienced a material cyber-security breach.
The sophistication of these threats continues to increase, and the preventative actions we take to reduce the risk of cyber
incidents and protect our systems and information may be insufficient. In addition, new technology that could result in greater
operational efficiency, including artificial intelligence, may further expose our computer systems to the risk of cyber-attacks.
Also, our increased use of open source software, cloud technology and software as a service can make it more difficult to
identify and remedy such situations due to the disparate location of code utilized in our operations.
We have outsourced certain technology and business process functions to third parties and may increasingly do so in the future.
If we do not effectively develop, implement and monitor our vendor relationships, if third party providers do not perform as
anticipated or experience financial difficulties, if we experience technological or other problems with a transition to a new
vendor, or if vendor relationships relevant to our business process functions are terminated, we may not realize expected
productivity improvements or cost efficiencies and may experience operational difficulties, increased costs and a loss of
business. Our outsourcing of certain technology and business process functions to third parties exposes us to increased risk
related to data and cyber security, service disruptions and the effectiveness of our control system. These risks could increase as
additional functions move to the cloud and as dependencies and interconnections with the third parties with whom we do
business increase and become more complex, particularly as those third parties incorporate new technologies, such as artificial
intelligence.
The increased risks identified above could expose us to data loss or manipulation, disruption of service, monetary and
reputational damages, competitive disadvantage and significant increases in compliance costs and costs to improve the security
and resiliency of our computer systems. The compromise of personal, confidential or proprietary information could also subject
us to significant legal liability or regulatory action under evolving cyber-security, data protection and privacy laws and
regulations enacted by the U.S. federal and state governments, Canada, the European Union or other jurisdictions or by various
regulatory organizations or exchanges. As a result, our ability to conduct our business and our results of operations might be
materially and adversely affected.
Intellectual property is important to our business, and we may be unable to protect and enforce our own intellectual
property or we may be subject to claims for infringing the intellectual property of others. Our success depends in part
upon our ability to protect our proprietary trademarks, technology and other intellectual property. See “Item 1—Business—
Other Information—Intellectual Property.” We may not, however, be able to protect our intellectual property from unauthorized
use and disclosure by others. Further, the intellectual property laws may not prevent our competitors from independently
developing trademarks, products and services that are similar to ours. We may incur significant costs in our efforts to protect
and enforce our intellectual property, including the initiation of expensive and protracted litigation, and we may not prevail.
Any inability to enforce our intellectual property rights could have a material adverse effect on our business and our ability to
compete.
We may be subject to claims by third parties from time to time that our products, services and technologies infringe on their
intellectual property rights. In recent years, certain entities have acquired patents in order to allege claims of infringement
against companies, including in some cases, us. Any intellectual property infringement claims brought against us could cause
us to spend significant time and money to defend ourselves, regardless of the merits of the claims. If we are found to infringe
any third-party intellectual property rights, it could result in reputational harm, payment of significant monetary damages or
fees and/or substantial time and expense to redesign our products, services or technologies to avoid the infringement. In
addition, we use third-party software in some of our products, services and technologies. If any of our software vendors or
licensors are faced with infringement claims, we may lose our ability to use such software until the dispute is resolved. If we
cannot successfully redesign an infringing product, service or technology (or procure a substitute version), this could have a
material adverse effect on our business and ability to compete.
55
Regulatory and Compliance Risks
Our businesses are heavily regulated by the states and countries in which we conduct business, including licensing,
market conduct and financial supervision, and changes in regulation, including changes in tax regulation, may reduce
our profitability and limit our growth. These regulatory systems are generally designed to protect the interests of
policyholders, and not necessarily the interests of insurers, their shareholders and other investors. For example, to protect
policyholders whose insurance company becomes financially insolvent, guaranty funds have been established in all 50 states to
pay the covered claims of policyholders in the event of an insolvency of an insurer, subject to applicable state limits. The
funding of guaranty funds is provided through assessments levied against remaining insurers in the marketplace. As a result,
the insolvency of one or more insurance companies or an increase in amounts paid by guaranty funds could result in additional
assessments levied against us.
These regulatory systems also address authorization for lines of business, statutory capital and surplus requirements, limitations
on the types and amounts of certain investments, underwriting limitations, transactions with affiliates, dividend limitations,
changes in control, premium rates and a variety of other financial and non-financial components of an insurer’s business
including, recently, cyber-security. In addition, many jurisdictions restrict the timing and/or the ability of an insurer to
discontinue writing a line of business or to cancel or non-renew certain policies. Insurance regulators may also increase the
statutory capital and surplus requirements for our insurance subsidiaries or, as has happened recently in certain states, reject or
delay rate increases or other changes to terms and conditions due to the economic environment or other factors and/or expand
FAIR plans or similar residual market mechanisms, including with respect to commercial lines. The adverse impacts of these
types of actions have caused some insurance companies to withdraw from certain states, resulting in market dislocations for
those insurance companies that remain. These market dislocations make it harder for the remaining companies to maintain their
market presence and manage their exposures and profitability. In addition, state tax laws that specifically impact the insurance
industry, such as premium taxes, or more general tax laws, such as U.S. federal corporate taxes, could be enacted or changed
and could have a material adverse impact on us. Other legislative actions could impact our business as well. For example,
changes to state law regarding workers’ compensation insurance or to requirements for other insurance products could impact
the demand for our products, and the legalization of cannabis in certain states has, according to some studies, resulted in more
automobile accidents. In addition, the potential repeal of the McCarran-Ferguson Act (which exempts insurance from most
federal regulation) or a change to the federal health care system that eliminates or reduces the need for the medical coverage
component of workers’ compensation insurance, could also significantly harm the insurance industry, including us. State,
federal and international regulators are also increasingly focused on imposing new reporting and other requirements, which in
some cases can be conflicting, on a multitude of topics. Changes in applicable legislation and regulations and future court and
regulatory decisions may be more restrictive and may result in lower revenues, higher costs of compliance and higher risk of
non-compliance and, as a result, could materially and adversely affect our results of operations. See also “Item 1 – Business –
Regulation.”
We could be adversely affected if our controls designed to ensure compliance with guidelines, policies and legal and
regulatory standards are not effective. Our business is highly dependent on our ability to engage on a real-time basis in a
large number of insurance underwriting, claim processing, treasury and investment activities, many of which are highly
complex and constantly evolving, including from a systems perspective. These activities, particularly when new technologies
such as artificial intelligence are incorporated, often require internal governance, guidelines and policies, and are subject to
legal and regulatory standards. A control system, no matter how well designed and operated, can provide only reasonable
assurance that the control system’s objectives will be met. If our controls, or the controls of our joint ventures or recently
acquired businesses, are not effective (including with respect to the prevention or identification of misconduct by employees or
others with whom we do business), it could lead to financial loss, unanticipated risk exposure (including underwriting, credit
and investment risk), errors in financial reporting, litigation, regulatory proceedings and/or damage to our reputation.
Item 1B. UNRESOLVED STAFF COMMENTS
NONE.
Item 1C. CYBERSECURITY
Risk management and strategy
The Company has implemented technologies and tools to evaluate its cybersecurity protections and maintain a cyber risk
management strategy related to its technology infrastructure that includes monitoring emerging cybersecurity threats and
assessing appropriate responsive measures.
56
Risk Identification
The Company’s Chief Information Security Officer (“CISO”) and Cybersecurity team are actively engaged within the
cybersecurity community in order to monitor emerging trends and developments and share best practices for identifying and
mitigating cyber threats. For example, the Company participates in threat intelligence information-sharing networks, such as
the Financial Services Information Sharing and Analysis Center (FS-ISAC). The Company also tracks industry and government
intelligence sources for information about evolving cyber threats and deploys updates to its systems, as appropriate. The
Company’s Cybersecurity team monitors and investigates suspicious events.
Risk Assessment
The Company performs an annual cybersecurity risk and control assessment as part of the Enterprise Risk Management team’s
risk assessment processes. The CISO and the Chief Financial Officer of the Company’s Technology group review and approve
the cybersecurity assessment. The Company’s Chief Technology and Operations Officer reviews and approves the list of
emerging, strategic and transformative risks upon which the Enterprise Risk Management team’s cybersecurity risk and control
assessment processes are based. In addition, as part of their regular responsibilities, the Company’s Governance, Risk and
Compliance officers within its Technology and Cybersecurity groups assess technology and cybersecurity risks by leveraging
the Company’s risk framework related to technology and cybersecurity, which aligns with the Company’s enterprise risk
management strategy.
On an annual basis, under the direction of the Company’s Chief Risk Officer, the Company’s Technology, Cybersecurity and
Business Resiliency groups also participate in the enterprise-wide Own Risk and Solvency Assessment (“ORSA”), which
outlines identified risks and describes the controls in place across the Company to address those risks. The ORSA is reviewed
with the Company’s lead regulator, the State of Connecticut Department of Insurance, which in turn performs periodic financial
examinations, including a technology control assessment.
In addition, the Company regularly self-assesses against its internal policies, using its internal risk assessment process and a
variety of frameworks, such as the New York Department of Financial Services Cybersecurity Requirements for Financial
Services Companies, the Insurance Data Security Model Law as adopted and modified by various states and the Payment Card
Industry Data Security Standard.
As the workforce, the work environment and the threat landscape continue to evolve, the Company seeks to evaluate related
risks and implement appropriate controls.
Risk Management
The Company maintains cybersecurity policies and standards which align with the International Organization for
Standardization (ISO) 27001 standard and the National Institute of Standards and Technology (NIST) Cybersecurity
Framework. The Company’s cybersecurity policies and standards have been developed in collaboration with groups across the
enterprise, such as Legal, Compliance, Technology, and each of its business segments. The Company’s policies include, for
example, Information and System Use policies for employee and non-employee system users. These policies reinforce the data
privacy and protection sections of the Company’s Code of Business Conduct and Ethics.
The Company uses technologies and tools, as appropriate, to enhance cybersecurity, such as multifactor authentication,
encryption, firewalls, intrusion detection and prevention systems, endpoint detection and response, vulnerability scanning,
penetration testing, patch management and identity and access management systems. These systems are designed, implemented
and maintained with the goal of identifying, assessing and managing cybersecurity risks. In addition to its internal
cybersecurity team, the Company uses internal and external auditors and, as appropriate, third-party consultants, service
providers and assessors to review and test its processes.
To help manage risk from potential cybersecurity threats, as part of the annual Code of Business Conduct and Ethics training,
all Company employees receive data protection and privacy training, which focuses on the need to appropriately protect and
secure confidential Company information. Additionally, the Company provides annual security awareness training that covers
a broad range of security topics. The Company also provides regular targeted training on topics such as artificial intelligence
(AI) related risks, phishing and secure application development, among others. In addition to online training, employees are
provided with cybersecurity information through a number of different methods, including awareness campaigns, gamified
activities, recognition programs, security presentations, intranet articles, videos, system-generated communications, email
publications and various simulation exercises.
57
The Company has a Security Incident Response Framework (Framework) in place. The Framework is a set of coordinated
procedures and tasks that the Company’s Incident Response team, under the direction of the CISO, executes with the goal of
ensuring timely and effective resolution of cybersecurity incidents. To maintain the robustness of the Framework, from time-to-
time the Company conducts cybersecurity tabletop testing exercises.
As part of the Company’s supplier risk management program, using a risk-based approach, the Cybersecurity team conducts
formal risk assessments with respect to certain of the Company’s third-party service providers. The assessment process
addresses aspects of the service providers’ data security controls and policies. The team also conducts reassessments of its
third-party service providers, the frequency of which is determined based on a risk assessment and rating process. Where
appropriate, the Company seeks to incorporate contractual language with third-party service providers that includes clear terms
involving the collection, use, sharing and retention of user data, as well as compliance with appropriate security terms.
Additionally, our Procurement group has a framework to help identify and mitigate supplier risks, as well as enable
management to make risk informed decisions.
To date, the Company does not believe that any risks from cybersecurity threats, including as a result of any previous
cybersecurity incidents, have materially affected the Company, including its business strategy, results of operations, or financial
condition. As discussed more fully under “Item 1A—Risk Factors”, the sophistication of cyber threats continues to increase,
and the preventative actions the Company takes to reduce the risk of cyber incidents and protect its systems and information
may be insufficient. No matter how well designed or implemented the Company’s cybersecurity controls are, it will not be able
to anticipate all security breaches, and it may not be able to implement effective preventive measures against cybersecurity
breaches in a timely manner. See “Item 1A—Risk Factors—If we experience difficulties with technology, data and network
security (including as a result of cyber attacks), outsourcing relationships or cloud-based technology, our ability to conduct our
business could be negatively impacted.”
Governance
The Risk Committee of the Board, consistent with its charter, reviews and discusses with management the strategies, processes
and controls pertaining to the management of the Company’s information technology operations, including cyber risks and
cybersecurity. The CISO typically provides quarterly updates regarding cybersecurity and cyber risk to executive management
and the Risk Committee of the Company’s Board of Directors.
The CISO leads the Company’s cybersecurity department. The CISO reports to the Chief Technology and Operations Officer
and is a member of the Enterprise Risk team and the Company’s Disclosure Committee. The CISO has over 20 years of
cybersecurity and information security risk compliance and threat analysis experience. Prior to joining the Company in 2023,
the CISO served as Chief Security Officer for a national telecommunications service provider. Under the direction of the
CISO, the Company’s Cybersecurity department analyzes cybersecurity and resiliency risks to the Company’s business,
considers industry trends and implements controls, as appropriate, to mitigate these risks. This analysis drives the Company’s
long- and short-term strategies, which are executed through a collaborative effort within Technology, Cybersecurity and
Business Resiliency and are communicated to the Risk Committee of the Board of Directors on a regular basis.
Item 2. PROPERTIES
The Company leases its principal executive offices in New York, New York, as well as approximately 160 field and claim
offices throughout the United States under leases or subleases with third parties. The Company also leases offices outside the
United States, including in Canada, the United Kingdom and the Republic of Ireland. The Company owns six buildings in
Hartford, Connecticut. The Company also owns buildings located in Windsor, Connecticut; Norcross, Georgia; St. Paul,
Minnesota; and Omaha, Nebraska.
In the opinion of the Company’s management, the Company’s properties are adequate and suitable for its business as presently
conducted and are adequately maintained.
Item 3. LEGAL PROCEEDINGS
The information required with respect to this item can be found under “Contingencies” in note 17 of the notes to the
consolidated financial statements in this annual report and is incorporated by reference into this Item 3.
Item 4. MINE SAFETY DISCLOSURES
NONE.
58
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Information about the Company’s executive officers is incorporated by reference from Part III—Item 10 of this annual report.
PART II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock is traded on the New York Stock Exchange under the symbol “TRV.” The number of holders
of record of the Company’s common stock was 29,387 as of February 7, 2025. This is not the actual number of beneficial
owners of the Company’s common stock as some shares are held in “street name” by brokers and others on behalf of individual
owners.
For information regarding dividends paid to shareholders in 2024 and 2023 and the declaration and payment of future
dividends, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity
and Capital Resources—Financing Activities—Dividends.”
59
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph shows a five-year comparison of the cumulative total return to shareholders for the Company’s common
stock and the common stock of companies included in the S&P 500 Index and the S&P 500 Property & Casualty Insurance
Index, which the Company believes is the most appropriate comparative index.
COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN TO
SHAREHOLDERS (1)
The Travelers Companies. Inc. (2)
S&P 500 Index
S&P 500 Property & Casualty Insurance Index (3)
2019
2020
2021
2022
2023
2024
$0
$50
$100
$150
$200
$250
As of December 31,
2019
2020
2021
2022
2023
2024
The Travelers Companies, Inc. ..........................
$ 100.00 $ 105.36 $ 120.08 $ 146.99 $ 152.77 $ 196.72
S&P 500 Index ..................................................
100.00 118.39 152.34 124.73 157.48 196.85
S&P 500 Property & Casualty Insurance Index
100.00 106.33 124.95 148.53 164.49 222.43
________________________________________
(1)
The cumulative total return to shareholders is a concept used to compare the performance of a company’s stock over time.
Cumulative total return to shareholders is calculated as the net stock price change for the specified time period plus the cumulative
amount of dividends (assuming dividend reinvestment on the respective dividend payment dates) divided by the stock price at the
beginning of the time period.
(2)
Assumes $100 invested in common shares of The Travelers Companies, Inc. on December 31, 2019.
(3)
Companies in the S&P 500 Property & Casualty Insurance Index as of December 31, 2024 were the following: The Travelers
Companies, Inc., Chubb Limited, Cincinnati Financial Corporation, The Progressive Corporation, The Allstate Corporation, Loews
Corporation (CNA), W.R. Berkley Corporation, Arch Capital Group Limited, The Hartford Financial Services Group, Inc., Erie
Indemnity Company and Assurant, Inc. Returns of each of the companies included in this index have been weighted according to
their respective market capitalizations.
A long-term perspective is particularly important in the property and casualty insurance industry, where the periodic
occurrences of significant catastrophes have historically produced results that can vary significantly year-to-year. Accordingly,
the Company manages with a long-term perspective. From January 1, 2007, the year prior to the financial crisis, through
60
December 31, 2024, the Company’s cumulative return to shareholders was 591% as compared to 490% for both the S&P 500
Index and the S&P 500 Property & Casualty Insurance Index.
ISSUER PURCHASES OF EQUITY SECURITIES
The table below sets forth information regarding repurchases by the Company of its common stock during the periods
indicated.
Period Beginning
Period Ending
Total number
of shares
purchased
Average
price paid
per share
Total number of
shares purchased
as part of
publicly announced
plans or programs
Approximate
dollar value of
shares that may
yet be purchased
under the
plans or programs
(in millions)
Oct. 1, 2024
Oct. 31, 2024
233,172 $
253.16
226,727 $
5,232
Nov. 1, 2024
Nov. 30, 2024
439,128 $
257.36
437,099 $
5,120
Dec. 1, 2024
Dec. 31, 2024
314,959 $
254.38
314,646 $
5,040
Total
987,259 $
255.41
978,472 $
5,040
The Company’s Board of Directors has approved common share repurchase authorizations under which repurchases may be
made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the
Securities Exchange Act of 1934, in private transactions or otherwise. The most recent authorization was approved by the
Board of Directors on April 19, 2023 and added $5.0 billion of repurchase capacity to the $1.60 billion capacity remaining at
that date. The authorizations do not have a stated expiration date. The timing and actual number of shares to be repurchased in
the future will depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe
losses, maintaining capital levels appropriate for the Company’s business operations, 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. The cost of treasury stock acquired pursuant to common
share repurchases includes the 1% excise tax imposed on common share repurchase activity, net of common share issuances, as
part of the Inflation Reduction Act of 2022.
The Company acquired 8,787 shares for a total cost of $2 million during the three months ended December 31, 2024 that were
not part of the publicly announced share repurchase authorizations. These shares consisted of shares retained to cover payroll
withholding taxes in connection with the vesting of restricted stock unit awards and performance share awards, and shares used
by employees to cover the exercise price, as well as the related payroll withholding taxes, with respect to certain stock options
that were exercised.
For additional information regarding the Company’s share repurchases, see “Item 7—Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
Information relating to compensation plans under which the Company’s equity securities are authorized for issuance is set forth
in “Part III—Item 12” of this Report.
Item 6. RESERVED
61
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following is a discussion and analysis of the Company’s financial condition and results of operations for the years ended
December 31, 2024 and 2023, including year-to-year comparisons between 2024 and 2023. Year-to-year comparisons between
2023 and 2022 have been omitted from this Form 10-K, but may be found in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2023.
FINANCIAL HIGHLIGHTS
2024 Consolidated Results of Operations
•
Net income of $5.00 billion, or $21.76 per share basic and $21.47 per share diluted
•
Net earned premiums of $41.94 billion
•
Catastrophe losses of $3.34 billion ($2.63 billion after-tax)
•
Net favorable prior year reserve development of $709 million ($559 million after-tax)
•
Combined ratio of 92.5%
•
Net investment income of $3.59 billion ($2.95 billion after-tax)
•
Net realized investment losses of $30 million ($26 million after-tax)
•
Operating cash flows of $9.07 billion
2024 Consolidated Financial Condition
•
Total investments of $94.22 billion; fixed maturities and short-term securities comprised 94% of total investments
•
Total assets of $133.19 billion
•
Total debt of $8.03 billion, resulting in a debt-to-total capital ratio of 22.4% (20.3% excluding net unrealized
investment losses, net of tax, included in shareholders’ equity)
•
Total capital returned to shareholders of $2.11 billion, comprising $1.15 billion of share repurchases and $962
million of dividends
•
Shareholders’ equity of $27.86 billion
•
Net unrealized investment losses of $4.61 billion ($3.64 billion after-tax)
•
Book value per common share of $122.97
•
Holding company liquidity of $1.80 billion
62
CONSOLIDATED OVERVIEW
Consolidated Results of Operations
(for the year ended December 31, in millions except ratio and per share amounts)
2024
2023
2022
Revenues
Premiums ...........................................................................................................
$
41,941
$
37,761
$ 33,763
Net investment income ......................................................................................
3,590
2,922
2,562
Fee income .........................................................................................................
473
433
412
Net realized investment losses ...........................................................................
(30)
(105)
(204)
Other revenues ...................................................................................................
449
353
351
Total revenues ...........................................................................................
46,423
41,364
36,884
Claims and expenses
Claims and claim adjustment expenses .............................................................
27,059
26,215
22,854
Amortization of deferred acquisition costs ........................................................
6,973
6,226
5,515
General and administrative expenses .................................................................
5,819
5,176
4,810
Interest expense ..................................................................................................
392
376
351
Total claims and expenses ........................................................................
40,243
37,993
33,530
Income before income taxes .........................................................................
6,180
3,371
3,354
Income tax expense ............................................................................................
1,181
380
512
Net income .....................................................................................................
$
4,999
$
2,991
$
2,842
Net income per share
Basic ................................................................................................................
$
21.76
$
12.93
$
11.91
Diluted .............................................................................................................
$
21.47
$
12.79
$
11.77
Combined ratio
Loss and loss adjustment expense ratio ..........................................................
64.0 %
68.9 %
67.1 %
Underwriting expense ratio .............................................................................
28.5
28.1
28.5
Combined ratio .........................................................................................
92.5 %
97.0 %
95.6 %
The following discussions of the Company’s net income and segment income (loss) are presented on an after-tax basis.
Discussions of the components of net income and segment income (loss) are presented on a pre-tax basis, unless otherwise
noted. Discussions of net income per common share are presented on a diluted basis.
Overview
Diluted net income per share of $21.47 in 2024 increased by 68% over diluted net income per share of $12.79 in 2023. Net
income of $5.00 billion in 2024 increased by 67% over net income of $2.99 billion in 2023. The higher rate of increase in
diluted net income per share reflected the impact of share repurchases in recent periods. The increase in income before income
taxes primarily reflected the pre-tax impacts of (i) higher underwriting margins excluding catastrophe losses and prior year
reserve development (“underlying underwriting margins”), (ii) higher net investment income, (iii) higher net favorable prior
year reserve development and (iv) lower net realized investment losses, partially offset by (v) higher catastrophe losses. Net
favorable prior year reserve development in 2024 and 2023 was $709 million and $143 million, respectively. Catastrophe
losses in 2024 and 2023 were $3.34 billion and $2.99 billion, respectively. The higher underlying underwriting margins in
2024 were driven by Personal Insurance and Business Insurance, partially offset by Bond & Specialty Insurance. Income tax
expense in 2024 was higher than in 2023, primarily reflecting the impact of the increase in income before income taxes,
partially offset by a one-time tax benefit of $211 million in the first quarter of 2023 due to the expiration of the statute of
limitations with respect to a tax item.
The Company has insurance operations in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of
the world as a corporate member of Lloyd’s, as well as in Brazil through a joint venture. Because these operations are
conducted in local currencies other than the U.S. dollar, the Company is subject to changes in foreign currency exchange rates.
For the years ended December 31, 2024 and 2023, changes in foreign currency exchange rates impacted reported line items in
the statement of income by insignificant amounts. The impact of these changes was not material to the Company’s net income
or segment income (loss) for the periods reported.
63
Revenues
Earned Premiums
Earned premiums in 2024 were $41.94 billion, $4.18 billion or 11% higher than in 2023. In Business Insurance, earned
premiums in 2024 increased by 11% over 2023. In Bond & Specialty Insurance, earned premiums in 2024 increased by 8%
over 2023. In Personal Insurance, earned premiums in 2024 increased by 11% over 2023. Factors contributing to the change in
earned premiums in each segment in 2024 as compared with 2023 are discussed in more detail in the segment discussions that
follow.
Net Investment Income
The following table sets forth information regarding the Company’s investments.
(for the year ended December 31, in millions)
2024
2023
2022
Average investments(1)
......................................................................................
$
97,012
$
90,941
$ 87,191
Pre-tax net investment income .........................................................................
3,590
2,922
2,562
After-tax net investment income ......................................................................
2,952
$
2,436
2,170
Average pre-tax yield(2)
....................................................................................
3.7 %
3.2 %
2.9 %
Average after-tax yield(2)
..................................................................................
3.0 %
2.7 %
2.5 %
___________________________________________
(1)
Excludes net unrealized investment gains and losses and reflects cash, receivables for investment sales, payables on investment
purchases and accrued investment income.
(2)
Excludes net realized and net unrealized investment gains and losses.
Net investment income in 2024 was $3.59 billion, $668 million or 23% higher than in 2023. Net investment income from fixed
maturity investments in 2024 was $2.95 billion, $476 million higher than in 2023. The increase primarily resulted from higher
long-term average yields and a higher average level of fixed maturity investments. Net investment income from short-term
securities in 2024 was $280 million, $39 million higher than in 2023. The increase primarily resulted from a higher level of
short-term investments and higher short-term average yields. The Company’s remaining investment portfolios had net
investment income of $409 million in 2024, $156 million higher than in 2023, primarily reflecting higher private equity
partnership returns. Included in other investments are private equity, hedge fund and real estate partnerships that are accounted
for under the equity method of accounting and typically report their financial statement information to the Company one month
to three months following the end of the reporting period. Accordingly, net investment income from these other investments is
generally reflected in the Company’s financial statements on a quarter lag basis.
Fee Income
Fee income in 2024 was $473 million, $40 million higher than in 2023. The National Accounts market in Business Insurance is
the primary source of the Company’s fee-based business and is discussed in the Business Insurance segment discussion that
follows.
64
Net Realized Investment Gains (Losses)
The following table sets forth information regarding the Company’s net pre-tax realized investment gains (losses).
(for the year ended December 31, in millions)
2024
2023
2022
Impairment gains (losses):
Fixed maturities ...........................................................................................
$
(5) $
(3) $
(26)
Real estate investments ................................................................................
(5)
(9)
(12)
Net realized investment gains (losses) on equity securities still held .............
89
16
(61)
Other net realized investment gains (losses), including from sales ................
(109)
(109)
(105)
Total ...........................................................................................................
$
(30) $
(105) $
(204)
Net realized investment gains on equity securities still held of $89 million in 2024 were driven by the impact of changes in fair
value attributable to favorable equity markets. Net realized investment gains on equity securities still held of $16 million in
2023 were driven by the impact of changes in fair value attributable to favorable equity markets, partially offset by a net
unfavorable change in fair value on an individual security held in the Company’s portfolio.
Other net realized investment losses in 2024 included $126 million of net realized investment losses related to fixed maturity
investments and $10 million of net realized investment losses related to other investments, partially offset by $17 million of net
realized investment gains related to real estate sales and $10 million of net realized investment gains related to equity securities
sold. Other net realized investment losses in 2023 included $93 million of net realized investment losses related to fixed
maturity investments, $7 million of net realized investment losses related to equity securities sold and $9 million of net realized
investment losses related to other investments.
Other Revenues
Other revenues in 2024 were $449 million, $96 million higher than 2023. Other revenues include revenues from Simply
Business, installment premium charges and other policyholder service charges.
Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in 2024 were $27.06 billion, $844 million or 3% higher than 2023, primarily reflecting
the impacts of (i) higher business volumes in all three segments, (ii) loss cost trends in Business Insurance and Bond &
Specialty Insurance, (iii) higher catastrophe losses in all three segments and (iv) higher other losses in Business Insurance,
partially offset by (v) lower physical damage losses in the automobile product line and lower non-weather and non-catastrophe
weather-related losses in the homeowners and other product line in Personal Insurance, (vi) higher net favorable prior year
reserve development, including net favorable prior year development compared to net unfavorable development in 2023 in
Business Insurance and higher net favorable prior year reserve development in Personal Insurance, partially offset by lower net
favorable prior year reserve development in Bond & Specialty Insurance and (vii) the comparison to an elevated level of losses
in 2023 from both a small number of surety accounts and loss activity related to the disruption in the banking sector in Bond &
Specialty Insurance. Catastrophes in 2024 primarily resulted from Hurricane Helene and numerous severe wind and hail storms
in multiple states. Catastrophes in 2023 primarily resulted from numerous severe wind and hail storms in multiple states.
Factors contributing to net prior year reserve development are discussed in more detail in note 8 of the notes to the consolidated
financial statements.
Significant Catastrophe Losses
The Company defines a catastrophe as a severe loss event designated, or reasonably expected by the Company to be designated,
a catastrophe by one or more industry 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 destructive acts, including those
involving nuclear, biological, chemical and radiological events, cyber events, explosions and destruction of infrastructure. The
effects of catastrophes are included in net income (loss) and core income (loss) and claims and claim adjustment expense
65
reserves upon occurrence. A catastrophe may also result in the payment of reinsurance reinstatement premiums and assessments
from various pools and associations.
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 reached 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 2024 ranged from
approximately $20 million to $30 million of losses before reinsurance and taxes.
The following table presents the amount of losses recorded by the Company for significant catastrophes that occurred in 2024,
2023 and 2022, the amount of net unfavorable (favorable) prior year reserve development recognized in 2024 and 2023 for
catastrophes that occurred in 2023 and 2022, and the estimate of ultimate losses for those catastrophes at December 31, 2024,
2023 and 2022. For purposes of the table, a significant catastrophe is an event for which the Company estimates its ultimate
losses will be $100 million or more after reinsurance and before taxes.
Losses Incurred / Unfavorable (Favorable)
Prior Year Reserve Development for the
Year Ended December 31,
Estimated Ultimate Losses at
December 31,
(in millions, pre-tax and net of reinsurance)(1)
2024
2023
2022
2024
2023
2022
2022
PCS Serial Number:
33 — Severe wind and hail storms ...............
(4)
1
137
134
138
137
35 — Severe wind and hail storms ...............
(3)
—
184
181
184
184
43 — Severe wind and hail storms ...............
1
(6)
122
117
116
122
61 — Hurricane Ian ......................................
(1)
(76)
227
150
151
227
73 — Winter storm .......................................
11
158
512
681
670
512
2023
PCS Serial Number:
25 — Severe wind and hail storms ...............
(6)
153
n/a
147
153
n/a
32 — Severe wind and hail storms ...............
(5)
140
n/a
135
140
n/a
33 — Severe wind and hail storms ...............
(10)
199
n/a
189
199
n/a
35 — Severe wind and hail storms ...............
—
140
n/a
140
140
n/a
38 — Severe wind and hail storms ...............
3
110
n/a
113
110
n/a
42 — Severe wind and hail storms ...............
4
133
n/a
137
133
n/a
48 — Severe wind and hail storms ...............
(6)
150
n/a
144
150
n/a
49 — Severe wind and hail storms ...............
2
133
n/a
135
133
n/a
51 — Severe wind and hail storms ...............
(34)
265
n/a
231
265
n/a
63 — Severe wind and hail storms ...............
5
125
n/a
130
125
n/a
75 — Severe wind and hail storms ...............
(17)
190
n/a
173
190
n/a
2024
PCS Serial Number:
26 — Severe wind and hail storms ...............
261
n/a
n/a
261
n/a
n/a
39 — Severe wind and hail storms ...............
250
n/a
n/a
250
n/a
n/a
42 — Severe wind and hail storms ...............
161
n/a
n/a
161
n/a
n/a
44 — Severe wind and hail storms ...............
171
n/a
n/a
171
n/a
n/a
45 — Severe wind and hail storms ...............
159
n/a
n/a
159
n/a
n/a
46 — Severe wind and hail storms ...............
182
n/a
n/a
182
n/a
n/a
61 — Severe wind and hail storms ...............
144
n/a
n/a
144
n/a
n/a
77 — Hurricane Helene ................................
733
n/a
n/a
733
n/a
n/a
___________________________________________
66
n/a: not applicable.
(1) Amounts are reported pre-tax and net of recoveries under all applicable reinsurance treaties, except for the Company’s 2022 Underlying
Property Aggregate Catastrophe Excess-of-Loss Treaties. That treaty covered the accumulation of certain property losses arising from
one or multiple occurrences (both catastrophe and non-catastrophe events) for the period January 1, 2022 through and including
December 31, 2022. As a result, the benefit from that treaty is not included in the table above as the allocation of the treaty’s benefit to
each identified catastrophe changes each time there are additional events or changes in estimated losses from any covered event.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in 2024 was $6.97 billion, $747 million or 12% higher than in 2023. The increase in
2024 was generally consistent with the increase in earned premiums. Amortization of deferred acquisition costs is discussed in
more detail in the segment discussions that follow.
General and Administrative Expenses
General and administrative expenses in 2024 were $5.82 billion, $643 million or 12% higher than in 2023, primarily reflecting
the impact of costs associated with higher business volumes. General and administrative expenses are discussed in more detail
in the segment discussions that follow.
Interest Expense
Interest expense in 2024 and 2023 was $392 million and $376 million, respectively.
Income Tax Expense
Income tax expense in 2024 was $1.18 billion, $801 million or 211% higher than in 2023, primarily reflecting the impact of the
$2.81 billion increase in income before income taxes in 2024 and the one-time tax benefit of $211 million in the first quarter of
2023 due to the expiration of the statute of limitations with respect to a tax item.
The Company’s effective tax rate was 19% and 11% in 2024 and 2023, respectively. The effective tax rate in 2023 was reduced
by the impact of the one-time tax benefit discussed above. The effective tax rates in both years reflected the impact of tax-
exempt investment income on the calculation of the Company’s income tax provision.
Combined Ratio
The combined ratio of 92.5% in 2024 was 4.5 points lower than the combined ratio of 97.0% in 2023. The loss and loss
adjustment expense ratio of 64.0% in 2024 was 4.9 points lower than the loss and loss adjustment expense ratio of 68.9% in
2023. The underwriting expense ratio of 28.5% in 2024 was 0.4 points higher than the underwriting expense ratio of 28.1% in
2023.
Catastrophe losses in 2024 and 2023 accounted for 8.0 points and 7.9 points, respectively, of the combined ratio. Net favorable
prior year reserve development in 2024 and 2023 provided 1.7 points and 0.4 points of benefit, respectively, to the combined
ratio. The combined ratio excluding prior year reserve development and catastrophe losses (“underlying combined ratio”) in
2024 was 3.3 points lower than the 2023 ratio on the same basis, primarily reflecting the impacts of (i) the benefit of earned
pricing in Personal Insurance and Business Insurance, partially offset by Bond & Specialty Insurance, (ii) lower physical
damage losses in the automobile product line and lower non-weather and non-catastrophe weather-related losses in the
homeowners and other product line in Personal Insurance and (iii) the comparison to an elevated level of losses in 2023 from
both a small number of surety accounts and loss activity related to the disruption in the banking sector in Bond & Specialty
Insurance, partially offset by (iv) higher other losses in Business Insurance.
The combined ratio continues to be impacted by the tort environment, including more aggressive attorney involvement in
insurance claims.
67
Written Premiums
Consolidated gross and net written premiums were as follows:
Gross Written Premiums
(for the year ended December 31, in millions)
2024
2023
2022
Business Insurance .......................................................................................... $
24,515 $
22,569 $
19,521
Bond & Specialty Insurance ............................................................................
4,519
4,187
4,082
Personal Insurance ...........................................................................................
17,516
16,216
14,273
Total ............................................................................................................. $
46,550 $
42,972 $
37,876
Net Written Premiums
(for the year ended December 31, in millions)
2024
2023
2022
Business Insurance .......................................................................................... $
22,078 $
20,430 $
17,635
Bond & Specialty Insurance ............................................................................
4,109
3,842
3,732
Personal Insurance ...........................................................................................
17,169
15,929
14,047
Total ............................................................................................................. $
43,356 $
40,201 $
35,414
Gross and net written premiums in 2024 both increased by 8% over 2023. Factors contributing to the changes in gross and net
written premiums in each segment are discussed in more detail in the segment discussions that follow.
RESULTS OF OPERATIONS BY SEGMENT
Business Insurance
Results of Business Insurance were as follows:
(for the year ended December 31, in millions)
2024
2023
2022
Revenues
Earned premiums ........................................................................................
$
21,345
$
19,144
$
17,095
Net investment income ................................................................................
2,560
2,085
1,864
Fee income ..................................................................................................
430
400
382
Other revenues ............................................................................................
322
232
248
Total revenues .......................................................................................
24,657
21,861
19,589
Total claims and expenses ...........................................................................
20,570
18,910
16,522
Segment income before income taxes ..................................................
4,087
2,951
3,067
Income tax expense ......................................................................................
781
368
536
Segment income ....................................................................................
$
3,306
$
2,583
$
2,531
Loss and loss adjustment expense ratio .........................................................
63.1 %
65.3 %
62.8 %
Underwriting expense ratio ............................................................................
29.4
29.4
29.7
Combined ratio .....................................................................................
92.5 %
94.7 %
92.5 %
Overview
Segment income in 2024 was $3.31 billion, $723 million or 28% higher than segment income of $2.58 billion in 2023. The
increase in segment income before income taxes primarily reflected the pre-tax impacts of (i) higher net investment income, (ii)
higher underlying underwriting margins and (iii) net favorable prior year reserve development compared to net unfavorable
prior year reserve development in 2023, partially offset by (iv) higher catastrophe losses. Net favorable prior year reserve
development in 2024 was $90 million. Net unfavorable prior year reserve development in 2023 was $289 million. Catastrophe
losses in 2024 and 2023 were $1.03 billion and $838 million, respectively. The higher underlying underwriting margins
primarily reflected the impacts of (i) higher business volumes and (ii) the benefit of earned pricing, partially offset by (iii)
higher other losses and (iv) higher general and administrative expenses. Income tax expense in 2024 was higher than in 2023,
68
primarily reflecting the impact of the increase in segment income before income taxes and a one-time tax benefit of $171
million in the first quarter of 2023.
Revenues
Earned Premiums
Earned premiums in 2024 were $21.35 billion, $2.20 billion or 11% higher than in 2023, primarily reflecting the increase in net
written premiums over the preceding twelve months.
Net Investment Income
Net investment income in 2024 was $2.56 billion, $475 million or 23% higher than in 2023. Refer to the “Net Investment
Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the
increase in the Company’s consolidated net investment income in 2024 compared with 2023. In addition, refer to note 2 of the
notes to the consolidated financial statements for a discussion of the Company’s net investment income allocation
methodology.
Fee Income
National Accounts is the primary source of fee income due to revenue from its large deductible policies and service businesses,
which include risk management, claims administration, loss control and risk management information services provided to third
parties, as well as policy issuance and claims management services to workers’ compensation residual market pools. Fee
income in 2024 was $430 million, $30 million or 8% higher than in 2023, primarily reflecting higher claim volume under
administration associated with large deductible policies and the service business.
Other Revenues
Other revenues in 2024 were $322 million, $90 million or 39% higher than in 2023, driven by growth in Simply Business.
Other revenues also include installment premium charges and other policyholder service charges.
Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in 2024 were $13.68 billion, $983 million or 8% higher than in 2023, primarily
reflecting the impacts of (i) higher business volumes, (ii) loss cost trends, (iii) higher other losses and (iv) higher catastrophe
losses, partially offset by (v) net favorable prior year reserve development compared to net unfavorable prior year reserve
development in 2023.
Factors contributing to net prior year reserve development are discussed in more detail in note 8 of the notes to the consolidated
financial statements.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in 2024 was $3.59 billion, $415 million or 13% higher than in 2023, generally
consistent with the increase in earned premiums.
General and Administrative Expenses
General and administrative expenses in 2024 were $3.30 billion, $262 million or 9% higher than in 2023. The increase in 2024
was primarily in support of business growth.
Income Tax Expense
Income tax expense in 2024 was $781 million, $413 million or 112% higher than in 2023, primarily reflecting the impact of the
$1.14 billion increase in segment income before income taxes in 2024 and the one-time tax benefit of $171 million in the first
quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.
69
Combined Ratio
The combined ratio of 92.5% in 2024 was 2.2 points lower than the combined ratio of 94.7% in 2023. The loss and loss
adjustment expense ratio of 63.1% in 2024 was 2.2 points lower than the loss and loss adjustment expense ratio of 65.3% in
2023. The underwriting expense ratio of 29.4% in 2024 was comparable with the underwriting expense ratio in 2023.
Catastrophe losses in 2024 and 2023 accounted for 4.8 points and 4.3 points, respectively, of the combined ratio. Net favorable
prior year reserve development in 2024 provided 0.4 points of benefit to the combined ratio. Net unfavorable prior year reserve
development in 2023 accounted for 1.5 points of the combined ratio. The underlying combined ratio in 2024 was 0.8 points
lower than the 2023 ratio on the same basis, primarily reflecting the impact of the benefit of earned pricing, partially offset by
higher other losses.
Written Premiums
Business Insurance’s gross and net written premiums by market were as follows:
Gross Written Premiums
(for the year ended December 31, in millions)
2024
2023
2022
Domestic:
Select Accounts ...........................................................................................
$
3,768 $
3,502 $
3,126
Middle Market .............................................................................................
12,971
11,800
10,532
National Accounts .......................................................................................
1,786
1,665
1,642
National Property and Other .......................................................................
3,828
3,630
2,942
Total Domestic ......................................................................................
22,353
20,597
18,242
International ...................................................................................................
2,162
1,972
1,279
Total Business Insurance .....................................................................
$
24,515 $
22,569 $
19,521
Net Written Premiums
(for the year ended December 31, in millions)
2024
2023
2022
Domestic:
Select Accounts ...........................................................................................
$
3,727 $
3,477 $
3,099
Middle Market .............................................................................................
12,023
11,045
9,923
National Accounts .......................................................................................
1,259
1,135
1,085
National Property and Other .......................................................................
3,134
3,008
2,467
Total Domestic ......................................................................................
20,143
18,665
16,574
International ...................................................................................................
1,935
1,765
1,061
Total Business Insurance .....................................................................
$
22,078 $
20,430 $
17,635
Gross and net written premiums in 2024 increased by 9% and 8%, respectively, over 2023.
Select Accounts. Net written premiums of $3.73 billion in 2024 increased by 7% over 2023. Retention rates remained strong in
2024 but decreased from 2023. Renewal premium changes in 2024 remained positive and were higher than in 2023. New
business premiums in 2024 increased over 2023.
Middle Market. Net written premiums of $12.02 billion in 2024 increased by 9% over 2023. Retention rates remained strong
in 2024 but decreased slightly from 2023. Renewal premium changes in 2024 remained positive and were higher than in 2023.
New business premiums in 2024 were comparable with 2023.
National Accounts. Net written premiums of $1.26 billion in 2024 increased by 11% over 2023. Retention rates remained strong
in 2024 and were comparable with 2023. Renewal premium changes in 2024 remained positive and were comparable with
2023. New business premiums in 2024 increased over 2023.
National Property and Other. Net written premiums of $3.13 billion in 2024 increased by 4% over 2023. Retention rates
remained strong in 2024 but decreased from 2023. Renewal premium changes in 2024 remained positive but were lower than
in 2023. New business premiums in 2024 increased over 2023.
70
International. Net written premiums of $1.94 billion in 2024 increased by 10% over 2023.
Bond & Specialty Insurance
Results of Bond & Specialty Insurance were as follows:
(for the year ended December 31, in millions)
2024
2023
2022
Revenues
Earned premiums ........................................................................................
$
3,958
$
3,655
$
3,418
Net investment income ................................................................................
390
328
258
Other revenues ............................................................................................
30
25
20
Total revenues ......................................................................................
4,378
4,008
3,696
Total claims and expenses ...........................................................................
3,362
2,839
2,593
Segment income before income taxes ..................................................
1,016
1,169
1,103
Income tax expense ......................................................................................
201
227
195
Segment income ....................................................................................
$
815
$
942
$
908
Loss and loss adjustment expense ratio .........................................................
44.4 %
40.1 %
39.9 %
Underwriting expense ratio ............................................................................
39.9
36.8
35.4
Combined ratio ......................................................................................
84.3 %
76.9 %
75.3 %
Overview
Segment income in 2024 was $815 million, $127 million or 13% lower than segment income of $942 million in 2023. The
decrease in segment income before income taxes primarily reflected the pre-tax impacts of (i) lower net favorable prior year
reserve development and (ii) lower underlying underwriting margins, partially offset by (iii) higher net investment income. Net
favorable prior year reserve development in 2024 and 2023 was $129 million and $285 million, respectively. Catastrophe losses
in 2024 and 2023 were $51 million and $37 million, respectively. The lower underlying underwriting margins primarily
reflected (i) higher general and administrative expenses and (ii) the impact of earned pricing, partially offset by (iii) higher
business volumes and (iv) the comparison to an elevated level of losses in 2023 from both a small number of surety accounts
and loss activity related to the disruption in the banking sector. Income tax expense in 2024 was lower than in 2023, primarily
reflecting the impact of the decrease in segment income before income taxes, partially offset by a one-time tax benefit of $9
million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.
Revenues
Earned Premiums
Earned premiums in 2024 were $3.96 billion, $303 million or 8% higher than in 2023, primarily reflecting an increase in net
written premiums, including the impact of longer duration surety bonds and multi-year management liability policies.
Net Investment Income
Net investment income in 2024 was $390 million, $62 million or 19% higher than in 2023. Included in Bond & Specialty
Insurance are certain legal entities whose invested assets and related net investment income are reported exclusively in this
segment and not allocated among all business segments. Refer to the “Net Investment Income” section of the “Consolidated
Results of Operations” discussion for a description of the factors contributing to the increase in the Company’s consolidated net
investment income in 2024 as compared with 2023. In addition, refer to note 2 of the notes to the consolidated financial
statements for a discussion of the Company’s net investment income allocation methodology.
Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in 2024 were $1.77 billion, $289 million or 19% higher than in 2023, primarily
reflecting the impacts of (i) lower net favorable prior year reserve development, (ii) higher business volumes, (iii) loss cost
71
trends and (iv) higher catastrophe losses, partially offset by (v) the comparison to an elevated level of losses in 2023 from both
a small number of surety accounts and loss activity related to the disruption in the banking sector.
Factors contributing to net prior year reserve development are discussed in more detail in note 8 of the notes to the consolidated
financial statements.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in 2024 was $756 million, $83 million or 12% higher than in 2023, generally
consistent with the increase in earned premiums.
General and Administrative Expenses
General and administrative expenses in 2024 were $832 million, $151 million or 22% higher than in 2023. The increase
primarily reflected the acquisition of Corvus in the first quarter of 2024, as well as higher employee and technology related
expenses.
Income Tax Expense
Income tax expense in 2024 was $201 million, $26 million or 11% lower than in 2023, primarily reflecting the impact of the
$153 million decrease in segment income before income taxes in 2024, partially offset by the one-time tax benefit of $9 million
in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.
Combined Ratio
The combined ratio of 84.3% in 2024 was 7.4 points higher than the combined ratio of 76.9% in 2023. The loss and loss
adjustment expense ratio of 44.4% in 2024 was 4.3 points higher than the loss and loss adjustment expense ratio of 40.1% in
2023. The underwriting expense ratio of 39.9% in 2024 was 3.1 points higher than the underwriting expense ratio of 36.8% in
2023.
Net favorable prior year reserve development in 2024 and 2023 provided 3.3 points and 7.8 points of benefit, respectively, to
the combined ratio. Catastrophe losses in 2024 and 2023 accounted for 1.3 points and 1.0 points, respectively, of the combined
ratio. The underlying combined ratio in 2024 was 2.6 points higher than the 2023 ratio on the same basis, primarily reflecting
(i) a higher expense ratio and (ii) the impact of earned pricing, partially offset by (iii) the comparison to an elevated level of
losses in 2023 from both small number of surety accounts and loss activity related to the disruption in the banking sector.
Written Premiums
Bond & Specialty Insurance’s gross and net written premiums were as follows:
Gross Written Premiums
(for the year ended December 31, in millions)
2024
2023
2022
Domestic:
Management Liability .................................................................................
$
2,599 $
2,391 $
2,361
Surety ..........................................................................................................
1,387
1,219
1,153
Total Domestic ......................................................................................
3,986
3,610
3,514
International ...................................................................................................
533
577
568
Total Bond & Specialty Insurance ......................................................
$
4,519 $
4,187 $
4,082
Net Written Premiums
(for the year ended December 31, in millions)
2024
2023
2022
Domestic:
Management Liability .................................................................................
$
2,309 $
2,156 $
2,112
Surety ..........................................................................................................
1,294
1,147
1,081
Total Domestic ......................................................................................
3,603
3,303
3,193
International ...................................................................................................
506
539
539
Total Bond & Specialty Insurance ......................................................
$
4,109 $
3,842 $
3,732
72
Gross written premiums and net written premiums in 2024 increased by 8% and 7%, respectively, over 2023.
Domestic. Net written premiums of $3.60 billion in 2024 increased by 9% over 2023. Excluding the surety line of business, for
which the following are not relevant measures, retention rates remained strong in 2024 and were comparable with 2023.
Renewal premium changes in 2024 remained positive but were lower than in 2023. New business premiums in 2024 increased
over 2023, driven by Corvus.
International. Net written premiums of $506 million in 2024 decreased by 6% from 2023, driven by decreases in the United
Kingdom and broader Europe, partially offset by increases in Canada.
Personal Insurance
Results of Personal Insurance were as follows:
(for the year ended December 31, in millions)
2024
2023
2022
Revenues
Earned premiums ........................................................................................
$
16,638
$
14,962
$
13,250
Net investment income ................................................................................
640
509
440
Fee income ..................................................................................................
43
33
30
Other revenues ............................................................................................
97
96
83
Total revenues ......................................................................................
17,418
15,600
13,803
Total claims and expenses ...........................................................................
15,875
15,831
14,033
Segment income (loss) before income taxes ........................................
1,543
(231)
(230)
Income tax expense (benefit) .......................................................................
294
(103)
(90)
Segment income (loss) ...........................................................................
$
1,249
$
(128)
$
(140)
Loss and loss adjustment expense ratio .........................................................
69.7 %
80.4 %
79.8 %
Underwriting expense ratio ............................................................................
24.7
24.4
25.1
Combined ratio ....................................................................................
94.4 %
104.8 %
104.9 %
Overview
Segment income in 2024 was $1.25 billion, compared with a segment loss of $128 million in 2023. The increase in segment
income before income taxes was driven by the pre-tax impacts of (i) higher underlying underwriting margins, (ii) higher net
favorable prior year reserve development and (iii) higher net investment income, partially offset by (iv) higher catastrophe
losses. Net favorable prior year reserve development in 2024 and 2023 was $490 million and $147 million, respectively.
Catastrophe losses in 2024 and 2023 were $2.25 billion and $2.12 billion, respectively. The higher underlying underwriting
margins primarily reflected the impacts of (i) the benefit of earned pricing, (ii) lower physical damage losses in the automobile
product line, (iii) lower non-weather and non-catastrophe weather-related losses in the homeowners and other product line and
(iv) higher business volumes. The segment recorded income tax expense in 2024 compared to an income tax benefit in 2023.
The change in income taxes primarily reflected the impact of the increase in segment income before income taxes and a one-
time tax benefit of $31 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax
item.
Revenues
Earned Premiums
Earned premiums in 2024 were $16.64 billion, $1.68 billion or 11% higher than in 2023, primarily reflecting the increase in net
written premiums over the preceding twelve months.
73
Net Investment Income
Net investment income in 2024 was $640 million, $131 million or 26% higher than in 2023. Refer to the “Net Investment
Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the
increase in the Company’s consolidated net investment income in 2024 as compared with 2023. In addition, refer to note 2 of
the notes to the consolidated financial statements for a discussion of the Company’s net investment income allocation
methodology.
Other Revenues
Other revenues in all years presented primarily consisted of installment premium charges.
Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in 2024 were $11.61 billion, $428 million or 4% lower than in 2023, primarily reflecting
the impacts of (i) higher net favorable prior year reserve development, (ii) lower physical damage losses in the automobile
product line and (iii) lower non-weather and non-catastrophe weather-related losses in the homeowners and other product line,
partially offset by (iv) higher business volumes and (v) higher catastrophe losses.
Factors contributing to net prior year reserve development are discussed in more detail in note 8 of the notes to the consolidated
financial statements.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in 2024 was $2.63 billion, $249 million or 10% higher than in 2023, generally
consistent with the increase in earned premiums.
General and Administrative Expenses
General and administrative expenses in 2024 were $1.64 billion, $223 million or 16% higher than in 2023. The increase
primarily reflected higher contingent commissions, as well as higher employee and technology related expenses.
Income Tax Expense (Benefit)
Income tax expense in 2024 was $294 million, compared with an income tax benefit of $103 million in 2023, primarily
reflecting the impact of the $1.77 billion increase in segment income before income taxes and the one-time tax benefit of $31
million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.
Combined Ratio
The combined ratio of 94.4% in 2024 was 10.4 points lower than the combined ratio of 104.8% in 2023. The loss and loss
adjustment expense ratio of 69.7% in 2024 was 10.7 points lower than the loss and loss adjustment expense ratio of 80.4% in
2023. The underwriting expense ratio of 24.7% in 2024 was 0.3 points higher than the underwriting expense ratio of 24.4% in
2023.
Catastrophe losses accounted for 13.5 points and 14.1 points of the combined ratio in 2024 and 2023, respectively. Net
favorable prior year reserve development in 2024 and 2023 provided 3.0 points and 1.0 points of benefit, respectively, to the
combined ratio. The underlying combined ratio in 2024 was 7.8 points lower than the 2023 ratio on the same basis, primarily
reflecting the impacts of (i) the benefit of earned pricing, (ii) lower physical damage losses in the automobile product line and
(iii) lower non-weather and non-catastrophe weather-related losses in the homeowners and other product line.
74
Written Premiums
Personal Insurance’s gross and net written premiums were as follows:
Gross Written Premiums
(for the year ended December 31, in millions)
2024
2023
2022
Domestic:
Automobile .............................................................................................
$
7,949 $
7,352 $
6,507
Homeowners and Other ..........................................................................
8,845
8,190
7,099
Total Domestic ..................................................................................
16,794
15,542
13,606
International ...................................................................................................
722
674
667
Total Personal Insurance .................................................................
$
17,516 $
16,216 $
14,273
Net Written Premiums
(for the year ended December 31, in millions)
2024
2023
2022
Domestic:
Automobile .............................................................................................
$
7,925 $
7,330 $
6,482
Homeowners and Other ..........................................................................
8,550
7,949
6,916
Total Domestic ..................................................................................
16,475
15,279
13,398
International ...................................................................................................
694
650
649
Total Personal Insurance .................................................................
$
17,169 $
15,929 $
14,047
Gross and net written premiums in 2024 both increased by 8% over 2023.
Domestic
Automobile net written premiums of $7.93 billion in 2024 increased by 8% over 2023. Retention rates remained strong in 2024
and were comparable with 2023. Renewal premium changes in 2024 remained positive but were lower than in 2023. New
business premiums in 2024 decreased from 2023.
Homeowners and Other net written premiums of $8.55 billion in 2024 increased by 8% over 2023. Retention rates remained
strong in 2024 and were comparable with 2023. Renewal premium changes in 2024 remained positive but were lower than in
2023. New business premiums in 2024 decreased from 2023.
For its Domestic business, Personal Insurance had approximately 8.8 million and 9.1 million active policies at December 31,
2024 and 2023, respectively.
International
International net written premiums of $694 million in 2024 increased by 7% over 2023, driven by increases in the automobile
and homeowners and other product lines, partially offset by the impact of changes in foreign currency exchange rates.
For its International business, Personal Insurance had approximately 425,000 and 450,000 active policies at December 31, 2024
and 2023, respectively.
Interest Expense and Other
(for the year ended December 31, in millions)
2024
2023
2022
Income (loss) ..................................................................................................
$
(345) $
(325) $
(301)
The income (loss) for Interest Expense and Other in 2024 and 2023 was $(345) million and $(325) million, respectively. Pre-tax
interest expense in 2024 and 2023 was $392 million and $376 million, respectively. After-tax interest expense in 2024 and
2023 was $310 million and $297 million, respectively.
75
ASBESTOS CLAIMS AND LITIGATION
The Company believes that the property and casualty insurance industry has suffered from court decisions and other trends that
have expanded insurance coverage for asbestos claims far beyond the original intent of insurers and policyholders. The
Company has received and continues to receive a significant number of asbestos claims. Factors underlying these claim filings
include continued intensive advertising by lawyers seeking asbestos claimants and the focus by plaintiffs on defendants, such as
manufacturers of talcum powder, who were not traditionally sued and/or primary targets of asbestos litigation. Many
defendants have also been subject to increased settlement demands, in part due to the bankruptcy of many traditional primary
targets of asbestos litigation. Currently, in many jurisdictions, those who allege very serious injury and who can present
credible medical evidence of their injuries are receiving priority trial settings in the courts, while those who have not shown any
credible disease manifestation are having their hearing dates delayed or placed on an inactive docket. Prioritizing claims
involving credible evidence of injuries, along with the focus on defendants who were not traditionally primary targets of
asbestos litigation, contributes to the claims and claim adjustment expense payment patterns experienced by the Company. The
Company’s asbestos-related claims and claim adjustment expense experience also has been impacted by the unavailability of
other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or through the
insolvency of other participating insurers.
The Company continues to be involved in disputes, including litigation, with a number of policyholders, some of whom are in
bankruptcy, over coverage for asbestos-related claims. Many coverage disputes with policyholders are only resolved through
settlement agreements. Because many policyholders make exaggerated demands, it is difficult to predict the outcome of
settlement negotiations. Settlements involving bankrupt policyholders may include extensive releases which are favorable to the
Company, but which could result in settlements for larger amounts than originally anticipated. Although the Company has seen
a reduction in the overall risk associated with these disputes, it remains difficult to predict the ultimate cost of these claims. As
in the past, the Company will continue to pursue settlement opportunities.
In addition to claims against policyholders, proceedings have been launched directly against insurers, including the Company,
by individuals challenging insurers’ conduct with respect to the handling of past asbestos claims and by individuals seeking
damages arising from alleged asbestos-related bodily injuries. While the number of direct actions has decreased significantly
over time, it is possible that additional direct actions against insurers, including the Company, could be filed in the future. It is
difficult to predict the outcome of these proceedings, including whether the plaintiffs would be able to sustain these actions
against insurers based on novel legal theories of liability. The Company believes it has meritorious defenses to any such claims
and has received favorable rulings in certain jurisdictions.
The Company’s net asbestos reserves at December 31, 2024 and 2023 were $1.34 billion and $1.38 billion, respectively, and
include case reserves, IBNR reserves and reserves for the costs of defending asbestos-related coverage litigation. IBNR reserves
include amounts for new claims and adverse development on existing policyholders, as well as reserves for claims from
policyholders reporting asbestos claims for the first time and for policyholders for which there is, or may be, litigation.
Asbestos reserves also include amounts related to certain policyholders with whom the Company has entered into permanent
settlement agreements, which are based on the expected payout for each policyholder under the applicable agreement.
Additionally, a portion of the asbestos reserves relates to assumed reinsurance contracts, primarily consisting of reinsurance of
excess coverage, including various pool participations.
Because each policyholder presents different liability and coverage issues, the Company generally conducts an in-depth
asbestos claim review on an annual basis, including a review of domestic policyholders with open claims and litigation cases
for potential product and “non-product” liability. Policyholders are identified for this review based upon, among other factors:
a combination of past payments and current case reserves in excess of a specified threshold (currently $100,000), perceived
level of exposure, number of reported claims, products/completed operations and potential “non-product” exposures, size of
policyholder and geographic distribution of products or services sold by the policyholder.
Among the factors the Company may consider in the course of this review are: available insurance coverage, including the role
of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an analysis of the
policyholder’s potential liability, including as a result of the bankruptcy of other defendants; the jurisdictions involved,
including any trends, judicial rulings or legislative actions in those jurisdictions; past and anticipated future claim activity and
loss development on pending claims; past settlement values of similar claims; allocated claim adjustment expense; the potential
role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and
applicable coverage defenses or determinations, if any, including the determination as to whether or not an asbestos claim is a
products/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim.
The Company also reviews its asbestos reserves quarterly. These reviews include, as appropriate, an analysis of exposure and
claim payment patterns by policyholder, as well as recent settlements, policyholder bankruptcies, judicial rulings and legislative
76
actions. The Company also analyzes developing payment patterns among policyholders and the assumed reinsurance
component of reserves, as well as projected reinsurance billings and recoveries. In addition, the Company reviews its historical
gross and net loss and expense paid experience, year-by-year, to assess any emerging trends, fluctuations, or characteristics
suggested by the aggregate paid activity. Conventional actuarial methods are not utilized to establish asbestos reserves, and the
Company’s evaluations have not resulted in a reliable method to determine a meaningful average asbestos defense or indemnity
payment.
During the third quarter of 2024, the Company completed its annual in-depth asbestos claim review. While the latest available
government data continue to reflect a declining trend in deaths caused by mesothelioma, the number of policyholders with open
asbestos claims was relatively flat compared to 2023. Net asbestos paid loss and loss adjustment expenses in 2024, 2023 and
2022 were $282 million, $212 million and $245 million, respectively. Payments on behalf of these policyholders continue to be
influenced by the factors described above, including an increase in severity for certain policyholders and a high level of
litigation activity in a limited number of jurisdictions where individuals alleging serious asbestos-related injury, primarily
mesothelioma, continue to target defendants who were not traditionally sued and/or primary targets of asbestos litigation. The
completion of the analyses described above and the annual review in the third quarters of 2024, 2023 and 2022 resulted in $242
million, $284 million and $212 million increases, respectively, to the Company’s net asbestos reserves. In each year, the
reserve increases were primarily driven by increases in the Company’s estimate of projected settlement and defense costs
related to a broad number of policyholders. The increase in the estimate of projected settlement and defense costs primarily
resulted from payment trends that continue to be higher than previously anticipated due to the continued high level of
mesothelioma claim filings and the impact of the current litigation environment surrounding those claims discussed above. The
2023 charge also included an additional increase to strengthen the Company’s carried reserve position relative to the range of
reasonable estimates.
Over the past decade, the property and casualty insurance industry, including the Company, has experienced net unfavorable
prior year reserve development with regard to asbestos reserves, but the Company believes that over that period there has been a
reduction in the volatility associated with the Company’s overall asbestos exposure as the overall asbestos environment has
evolved from one dominated by exposure to significant litigation risks, particularly coverage disputes relating to policyholders
in bankruptcy who were asserting that their claims were not subject to the aggregate limits contained in their policies, to an
environment primarily driven by a frequency of litigation related to individuals with mesothelioma. The Company’s overall
view of the current underlying asbestos environment is essentially unchanged from recent periods, and there remains a high
degree of uncertainty with respect to future exposure to asbestos claims.
77
The following table displays activity for asbestos losses and loss adjustment expenses and reserves:
(at and for the year ended December 31, in millions)
2024
2023
2022
Beginning reserves:
Gross ...........................................................................................................
$
1,768 $
1,674 $
1,687
Ceded ...........................................................................................................
(390)
(369)
(346)
Net ...............................................................................................................
1,378
1,305
1,341
Incurred losses and loss adjustment expenses:
Gross ...........................................................................................................
279
374
287
Ceded ...........................................................................................................
(37)
(90)
(75)
Net ...............................................................................................................
242
284
212
Paid loss and loss adjustment expenses:
Gross ...........................................................................................................
339
281
298
Ceded ...........................................................................................................
(57)
(69)
(53)
Net ...............................................................................................................
282
212
245
Foreign exchange and other:
Gross ...........................................................................................................
—
1
(2)
Ceded ...........................................................................................................
—
—
(1)
Net ...............................................................................................................
—
1
(3)
Ending reserves:
Gross ...........................................................................................................
1,708
1,768
1,674
Ceded ...........................................................................................................
(370)
(390)
(369)
Net ...............................................................................................................
$
1,338 $
1,378 $
1,305
ENVIRONMENTAL CLAIMS AND LITIGATION
The Company has received and continues to receive claims from policyholders who allege that they are liable for injury or
damage arising out of the alleged storage, emissions or disposal of toxic substances, frequently under policies issued prior to the
mid-1980s. These claims are mainly brought pursuant to various state or federal statutes that require a liable party to undertake
or pay for environmental remediation. For example, the Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA) enables private parties as well as federal and state governments to take action with respect to releases and
threatened releases of hazardous substances. This federal statute permits the recovery of response costs from some liable parties
and may require liable parties to undertake their own remedial action. Liability under these statutes may be joint and several
with other responsible parties. The Company has also been, and continues to be, involved in litigation involving insurance
coverage issues pertaining to environmental claims. The Company believes that some court decisions pertaining to
environmental claims have interpreted the insurance coverage to be broader than the original intent of the insurers and
policyholders. For more information regarding environmental claims and litigation, see note 8 of the notes to the consolidated
financial statements.
In 2024, 2023 and 2022, the Company increased its net environmental reserves by $78 million, $93 million and $132 million,
respectively. Net environmental paid loss and loss adjustment expenses in 2024, 2023 and 2022 were $80 million, $82 million
and $82 million, respectively. Net environmental reserves were $380 million, $382 million and $371 million at December 31,
2024, 2023 and 2022, respectively.
UNCERTAINTY REGARDING ADEQUACY OF ASBESTOS AND ENVIRONMENTAL RESERVES
As a result of the processes and procedures discussed above, management believes that the reserves carried for asbestos and
environmental claims are appropriately established based upon known facts, current law and management’s judgment.
However, the uncertainties surrounding the final resolution of these claims continue, and it is difficult to determine the ultimate
exposure for asbestos and environmental claims and related litigation. As a result, these reserves are subject to revision as new
information becomes available and as claims develop. The continuing uncertainties include, without limitation:
•
the risks and lack of predictability inherent in complex litigation;
78
•
a further increase in the cost to resolve, and/or the number of, asbestos and environmental claims beyond that which is
anticipated;
•
the emergence of a greater number of asbestos claims than anticipated as a result of extended life expectancies
resulting from medical advances and lifestyle improvements;
•
the continued application of more stringent cleanup standards on existing and emerging contaminants;
•
the role of any umbrella or excess policies we have issued;
•
the resolution or adjudication of disputes concerning coverage for asbestos and environmental claims in a manner
inconsistent with our previous assessment of these disputes;
•
the number and outcome of direct actions against us;
•
future developments pertaining to our ability to recover reinsurance for asbestos and environmental claims;
•
any impact on asbestos or environmental defendants we insure due to the bankruptcy of other asbestos or
environmental defendants;
•
the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of
policy limits or through the insolvency of other participating insurers; and
•
uncertainties arising from the insolvency or bankruptcy of policyholders.
Changes in the legal, regulatory and legislative environment may impact the future resolution of asbestos and environmental
claims and result in adverse loss reserve development. The emergence of a greater number of asbestos or environmental claims
beyond that which is anticipated may result in adverse loss reserve development. Changes in applicable legislation and future
court and regulatory decisions and interpretations, including the outcome of legal challenges to legislative and/or judicial
reforms establishing medical criteria for the pursuit of asbestos claims, could affect the settlement of asbestos and
environmental claims. It is also difficult to predict the ultimate outcome of complex coverage disputes until settlement
negotiations near completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated.
This is particularly the case with policyholders in bankruptcy where negotiations often involve a large number of claimants and
other parties and require court approval to be effective. As part of its continuing analysis of asbestos and environmental
reserves, the Company continues to study the implications of these and other developments.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the Company’s current
reserves. In addition, the Company’s estimate of claims and claim adjustment expenses may change. These additional
liabilities or increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income
statement charges that could be material to the Company’s operating results in future periods.
INVESTMENT PORTFOLIO
The Company’s invested assets at December 31, 2024 were $94.22 billion, of which 94% was invested in fixed maturity and
short-term investments, 1% in equity securities, 1% in real estate investments and 4% in other investments. Because the
primary purpose of the investment portfolio is to fund future claims payments, the Company employs a thoughtful investment
philosophy that focuses on appropriate risk-adjusted returns. A significant majority of funds available for investment are
deployed in a widely diversified portfolio of high quality, liquid, taxable U.S. government, tax-exempt and taxable U.S.
municipal and taxable corporate and U.S. agency mortgage-backed bonds.
The carrying value of the Company’s fixed maturity portfolio at December 31, 2024 was $83.67 billion. The Company closely
monitors the duration of its fixed maturity investments, and investment purchases and sales are executed with the objective of
having adequate funds available to satisfy the Company’s insurance and debt obligations. The weighted average credit quality
of the Company’s fixed maturity portfolio, both including and excluding U.S. Treasury securities, was “Aa2” at both
December 31, 2024 and 2023. Below investment grade securities represented 1.2% and 1.3% of the total fixed maturity
investment portfolio at December 31, 2024 and 2023, respectively. The weighted average effective duration of fixed maturities
and short-term securities was 4.3 (4.5 excluding short-term securities) at December 31, 2024 and 4.1 (4.4 excluding short-term
securities) at December 31, 2023.
79
The carrying values of investments in fixed maturities classified as available for sale at December 31, 2024 and 2023 were as
follows:
2024
2023
(at December 31, in millions)
Carrying Value
Weighted
Average Credit
Quality (1)
Carrying Value
Weighted
Average Credit
Quality (1)
U.S. Treasury securities and obligations of U.S.
government and government agencies and authorities ...
$
5,570
Aaa/Aa1
$
6,368
Aaa/Aa1
Obligations of U.S. states, municipalities and political
subdivisions:
Local general obligation ..................................................
17,023
Aaa/Aa1
17,199
Aaa/Aa1
Revenue ...........................................................................
8,580
Aaa/Aa1
9,184
Aaa/Aa1
State general obligation ...................................................
1,010
Aaa/Aa1
1,157
Aaa/Aa1
Pre-refunded ....................................................................
572
Aaa/Aa1
966
Aaa/Aa1
Total obligations of U.S. states, municipalities and
political subdivisions ...............................................
27,185
28,506
Debt securities issued by foreign governments ..................
909
Aaa/Aa1
1,006
Aaa/Aa1
Mortgage-backed securities, collateralized mortgage
obligations and pass-through securities ..........................
12,605
Aaa/Aa1
7,818
Aaa/Aa1
Corporate and all other bonds:
Financial:
Bank ............................................................................
4,425
A1
4,658
A1
Insurance .....................................................................
2,404
Aa2
2,084
Aa2
Finance/leasing ............................................................
41
Ba3
63
Ba2
Brokerage and asset management ...............................
165
A2
139
A1
Total financial .........................................................
7,035
6,944
Industrial ..........................................................................
21,940
A3
19,037
A3
Public utility ....................................................................
4,522
A2
4,338
A2
Canadian municipal securities .........................................
1,641
Aa1
1,604
Aa1
Sovereign corporate securities (2)
.....................................
635
Aaa
584
Aaa
Commercial mortgage-backed securities and project
loans (3)
.........................................................................
1,152
Aaa
1,038
Aaa
Asset-backed and other ....................................................
472
Aa2
564
Aa1
Total corporate and all other bonds ........................
37,397
34,109
Total fixed maturities ..............................................
$
83,666
Aa2
$
77,807
Aa2
___________________________________________
(1)
Rated using external rating agencies or by the Company when a public rating does not exist.
(2)
Sovereign corporate securities include corporate securities that are backed by a government and include sovereign banks and securities
issued under the Federal Ship Financing Programs.
(3)
Included in commercial mortgage-backed securities and project loans at December 31, 2024 and 2023 were $327 million and $116
million of securities guaranteed by the U.S. government, respectively.
80
The following table sets forth the Company’s fixed maturity investment portfolio rated using external ratings agencies or by the
Company when a public rating does not exist:
(at December 31, 2024, in millions)
Carrying
Value
Percent of Total
Carrying Value
Quality Rating:
Aaa ..........................................................................................................................................
$
40,411
48.3 %
Aa ............................................................................................................................................
15,278
18.3
A ..............................................................................................................................................
16,181
19.3
Baa ..........................................................................................................................................
10,816
12.9
Total investment grade ........................................................................................................
82,686
98.8
Below investment grade ..........................................................................................................
980
1.2
Total fixed maturities ..........................................................................................................
$
83,666
100.0 %
Obligations of U.S. States, Municipalities and Political Subdivisions
The Company’s fixed maturity investment portfolio at December 31, 2024 and 2023 included $27.19 billion and $28.51 billion,
respectively, of securities which are obligations of U.S. states, municipalities and political subdivisions (collectively referred to
as the municipal bond portfolio). The municipal bond portfolio is diversified across the United States, the District of Columbia
and Puerto Rico and includes general obligation and revenue bonds issued by states, cities, counties, school districts and similar
issuers. Included in the municipal bond portfolio at December 31, 2024 and 2023 were $572 million and $966 million,
respectively, of pre-refunded bonds, which are bonds for which U.S. states or municipalities have established irrevocable trusts,
almost exclusively comprised of U.S. Treasury securities and obligations of U.S. government and government agencies and
authorities. These trusts were created to fund the payment of principal and interest due under the bonds. The irrevocable trusts
are verified as to their sufficiency by an independent verification agent of the underwriter, issuer or trustee. All of the
Company’s holdings of securities issued by Puerto Rico and related entities have either been pre-refunded and therefore are
defeased by U.S. Treasury securities or have FHA guarantees subject to federal appropriation.
81
The following table shows the geographic distribution of the $26.61 billion of municipal bonds at December 31, 2024 that were
not pre-refunded:
(at December 31, 2024, in millions)
State General
Obligation
Local General
Obligation
Revenue
Total Carrying
Value
Weighted
Average
Credit
Quality(1)
State:
Texas ....................................................
$
83 $
3,285 $
1,075 $
4,443
Aaa
California .............................................
—
1,992
321
2,313
Aaa/Aa1
Virginia ................................................
40
903
813
1,756
Aaa
North Carolina ......................................
167
652
420
1,239
Aaa
Wisconsin .............................................
170
852
69
1,091
Aa1
Minnesota .............................................
104
815
148
1,067
Aaa/Aa1
Washington ..........................................
88
752
186
1,026
Aaa/Aa1
Colorado ...............................................
—
598
325
923
Aa1
Tennessee .............................................
—
837
51
888
Aa1
Maryland ..............................................
—
748
113
861
Aaa/Aa1
Georgia .................................................
152
597
66
815
Aaa/Aa1
Massachusetts .......................................
—
216
505
721
Aaa/Aa1
Florida ..................................................
38
182
486
706
Aaa/Aa1
All others (2)
..........................................
168
4,594
4,002
8,764
Aaa/Aa1
Total ................................................
$
1,010 $
17,023 $
8,580 $
26,613
Aaa/Aa1
___________________________________________
(1)
Rated using external rating agencies or by the Company when a public rating does not exist. Ratings shown are the higher of the
rating of the underlying issuer or the insurer in the case of securities enhanced by third-party insurance for the payment of principal
and interest in the event of issuer default.
(2)
No other single state accounted for 2.5% or more of the total non-pre-refunded municipal bonds.
82
The following table displays the funding sources for the $8.58 billion of municipal bonds identified as revenue bonds in the
foregoing table at December 31, 2024:
(at December 31, 2024, in millions)
Carrying
Value
Weighted
Average
Credit
Quality(1)
Source:
Water .......................................................................................................................................
$
2,606
Aaa/Aa1
Higher education .....................................................................................................................
2,095
Aaa/Aa1
Sewer ......................................................................................................................................
872
Aaa/Aa1
Power utilities .........................................................................................................................
480
Aa1
Special tax ...............................................................................................................................
407
Aaa/Aa1
Transit .....................................................................................................................................
225
Aa1
Fuel sales .................................................................................................................................
196
Aaa/Aa1
Health care ..............................................................................................................................
173
Aa2
Housing ...................................................................................................................................
164
Aaa
Highway tolls ..........................................................................................................................
150
Aa2
Lease .......................................................................................................................................
28
Aaa/Aa1
Port, airport and marina ..........................................................................................................
8
Aa2
Industrial .................................................................................................................................
8
Aaa/Aa1
Natural gas ..............................................................................................................................
6
Aa2
Lottery .....................................................................................................................................
3
Aa1
Other revenue sources .............................................................................................................
1,159
Aaa/Aa1
Total ...................................................................................................................................
$
8,580
Aaa/Aa1
___________________________________________
(1)
Rated using external rating agencies or by the Company when a public rating does not exist. Ratings shown are the higher of the
rating of the underlying issuer or the insurer in the case of securities enhanced by third-party insurance for the payment of principal
and interest in the event of issuer default.
The Company bases its investment decision on the underlying credit characteristics of the municipal security. The weighted
average credit rating of the municipal bond portfolio was “Aaa/Aa1” at December 31, 2024.
Debt Securities Issued by Foreign Governments
The following table shows the geographic distribution of the Company’s long-term fixed maturity investments in debt securities
issued by foreign governments at December 31, 2024:
(at December 31, 2024, in millions)
Carrying
Value
Weighted
Average Credit
Quality (1)
Foreign Government:
Canada ....................................................................................................................................
$
793
Aaa/Aa1
United Kingdom .....................................................................................................................
96
Aa3
All others (2,3)
...........................................................................................................................
20
Aa2
Total ...................................................................................................................................
$
909
Aaa/Aa1
___________________________________________
(1)
Rated using external rating agencies or by the Company when a public rating does not exist.
(2)
The Company does not have direct exposure to sovereign debt issued by the Republic of Ireland, Italy, Greece, Portugal or Spain.
(3)
No other country accounted for 2.5% or more of total debt securities issued by foreign governments.
The following table shows the Company’s Eurozone exposure at December 31, 2024 to all debt securities issued by foreign
governments, financial companies, sovereign corporations (including sovereign banks) whose securities are backed by the
83
respective country’s government and all other corporate securities (comprised of industrial corporations and utility companies)
which could be affected if economic conditions deteriorated due to a prolonged recession:
Corporate Securities
Debt Securities Issued
by Foreign Governments
Financial
Sovereign Corporates
All Other
(at December 31, 2024, in millions)
Carrying
Value
Weighted
Average
Credit
Quality (1)
Carrying
Value
Weighted
Average
Credit
Quality (1)
Carrying
Value
Weighted
Average
Credit
Quality (1)
Carrying
Value
Weighted
Average
Credit
Quality (1)
Eurozone Periphery
Spain .........................................
$
—
— $
58
Aa3 $
—
— $
3
Baa3
Ireland .......................................
—
—
—
—
—
—
176
Baa2
Italy ...........................................
—
—
—
—
—
—
—
—
Greece .......................................
—
—
—
—
—
—
—
—
Portugal ....................................
—
—
—
—
—
—
—
—
Subtotal ..................................
—
58
—
179
Eurozone Non-Periphery
Germany ...................................
12
Aaa
—
—
624
Aaa/Aa1
653
A2
France .......................................
—
—
—
—
—
—
356
A2
Netherlands ...............................
—
—
140
A1
81
Aaa
257
A2
Finland ......................................
—
—
86
Aa3
—
—
—
—
Belgium ....................................
—
—
—
—
19
Aa1
120
A3
Austria ......................................
—
—
—
—
64
Aa2
—
—
Subtotal ..................................
12
226
788
1,386
Total ..................................
$
12
$
284
$
788
$ 1,565
___________________________________________
(1)
Rated using external rating agencies or by the Company when a public rating does not exist. The table includes $631 million of
short-term securities which have the highest ratings issued by external rating agencies for short-term issuances. For purposes of this
table, the short-term securities, which are rated “A-1+” and/or “P-1,” are included as “Aaa” rated securities.
In addition to fixed maturities noted in the foregoing table, the Company has exposure totaling $279 million to private equity
limited partnerships and real estate partnerships (both of which are included in other investments in the Company’s
consolidated balance sheet) whose primary investing focus is across Europe. The Company has unfunded commitments
totaling $168 million to these partnerships.
Mortgage-Backed Securities, Collateralized Mortgage Obligations and Pass-Through Securities
The Company’s fixed maturity investment portfolio at December 31, 2024 and 2023 included $12.61 billion and $7.82 billion,
respectively, of residential mortgage-backed securities, including pass-through-securities and collateralized mortgage
obligations (CMOs), all of which are subject to prepayment risk (either shortening or lengthening of duration). While
prepayment risk for securities and its effect on income cannot be fully controlled, particularly when interest rates move
dramatically, the Company’s investment strategy generally favors securities that reduce this risk within expected interest rate
ranges. The Company makes investments in residential CMOs that are either guaranteed by GNMA, FNMA or FHLMC, or if
not guaranteed, are senior or super-senior positions within their respective securitizations. Both guaranteed and non-guaranteed
residential CMOs allocate the distribution of payments from the underlying mortgages among different classes of bondholders.
In addition, non-guaranteed residential CMOs provide structures that allocate the impact of credit losses to different classes of
bondholders. Senior and super-senior CMOs are protected, to varying degrees, from credit losses as those losses are initially
allocated to subordinated bondholders. The Company’s investment strategy is to purchase CMO tranches that are expected to
offer the most favorable return given the Company’s assessment of associated risks. The Company does not purchase residual
interests in CMOs. For more information regarding the Company’s investments in residential mortgage-backed securities, see
note 3 of the notes to the consolidated financial statements.
84
Commercial Mortgage-Backed Securities and Project Loans
At December 31, 2024 and 2023, the Company held commercial mortgage-backed securities (including FHA project loans) of
$1.15 billion and $1.04 billion, respectively. For more information regarding the Company’s investments in commercial
mortgage-backed securities, see note 3 of the notes to the consolidated financial statements.
Equity Securities, Real Estate and Short-Term Investments
See note 1 of the notes to the consolidated financial statements for further information about these invested asset classes.
Other Investments
The Company also invests in private equity, hedge fund and real estate partnerships, and joint ventures. These asset classes
have historically provided a higher return than investments in fixed maturities but are subject to more volatility. The Company
also enters into certain derivative financial instruments from time to time that are reported as part of other investments. At
December 31, 2024 and 2023, the carrying value of the Company’s other investments was $4.20 billion and $4.30 billion,
respectively. The Company has unfunded commitments to private equity limited partnerships, real estate partnerships and
others in which it invests. These commitments totaled $1.49 billion and $2.05 billion at December 31, 2024 and 2023,
respectively. It is the opinion of the Company’s management that the Company has adequate liquidity to meet these
commitments.
Securities Lending
The Company has, from time to time, engaged in securities lending activities from which it generates net investment income by
lending certain of its investments to other institutions for short periods of time. At December 31, 2024 and 2023, the Company
had $586 million and $421 million, respectively, of securities on loan, respectively, as part of a tri-party lending agreement. The
average monthly balance of securities on loan during 2024 and 2023 was $555 million and $400 million, respectively.
Borrowers of these securities provide collateral equal to at least 102% of the market value of the loaned securities plus accrued
interest. The Company did not incur any investment losses in its securities lending program for the years ended December 31,
2024 and 2023.
Lloyd’s Trust Deposits
The Company meets its capital requirements to support its underwriting at Lloyd’s using a combination of the share capital and
retained earnings of the Company’s subsidiaries participating in Lloyd’s, trust deposits and uncollateralized letters of credit.
Securities with a fair value of approximately $13 million and $31 million held by a wholly-owned subsidiary at December 31,
2024 and 2023, respectively, and $86 million and $85 million held by TRV at December 31, 2024 and 2023, respectively, were
pledged into Lloyd’s trust accounts to provide a portion of the Lloyd’s capital requirements. For more information regarding
the Company’s utilization of uncollateralized letters of credit, see “Liquidity and Capital Resources” herein.
Net Unrealized Investment Gains (Losses)
The net unrealized investment losses that were included in shareholders’ equity were as follows:
(at December 31, in millions)
2024
2023
2022
Fixed maturities .............................................................................................
$
(4,609) $
(3,969) $
(6,217)
Other ..............................................................................................................
—
(1)
(3)
Unrealized investment losses before tax .....................................................
(4,609)
(3,970)
(6,220)
Tax benefit .....................................................................................................
(969)
(841)
(1,322)
Net unrealized investment losses included in shareholders’ equity at
end of year .............................................................................................
$
(3,640) $
(3,129) $
(4,898)
Net unrealized investment losses included in shareholders’ equity were $3.64 billion at December 31, 2024 compared with
$3.13 billion at December 31, 2023. At December 31, 2024, the Company had $1.12 billion fixed maturity investments
reported at fair value for which fair value was less than 80% of amortized cost. At December 31, 2023, the Company had $726
million fixed maturity investments reported at fair value for which fair value was less than 80% of amortized cost. These year-
over-year changes were driven by changes in interest rates. Since the Company generally holds its high-quality fixed maturity
investments to maturity, these net unrealized losses are considered temporary in nature and are not expected to result in
significant realized losses. In addition, given the temporary nature of net unrealized losses combined with the Company’s
strong operating cash flows, which include income received on investments and the proceeds received upon maturity of the
85
investments, the net unrealized investment loss is not expected to meaningfully impact the Company’s assessment of capital
adequacy or liquidity. Equity securities, which include common and non-redeemable preferred stocks, are reported at fair value
with changes in fair value recognized in net income.
For fixed maturity investments where fair value is less than the carrying value and the Company did not reach a decision to
impair, the Company continues to have the intent and ability to hold such investments to a projected recovery in value, which
may not be until maturity.
At December 31, 2024 and 2023, below investment grade securities comprised 1.2% and 1.3%, respectively, of the fair value
of the Company’s fixed maturity investment portfolio. Included in below investment grade securities at December 31, 2024
were securities in an unrealized loss position that, in the aggregate, had an amortized cost of $661 million and a fair value of
$622 million, resulting in a net pre-tax unrealized investment loss of $39 million. These securities in an unrealized loss position
represented less than 1% of both the amortized cost and fair value of the fixed maturity portfolio at December 31, 2024 and
accounted for less than 1% of the total gross pre-tax unrealized investment loss in the fixed maturity portfolio at December 31,
2024.
Impairment Charges
Impairment charges included in net realized investment losses in the consolidated statement of income were $10 million, $12
million and $38 million for the years ended December 31, 2024, 2023 and 2022, respectively. See note 3 of the notes to the
consolidated financial statements for further information.
Purchases and Sales of Investment Securities
Purchases and sales of investments are based on cash requirements, the characteristics of the insurance liabilities and current
market conditions. The Company identifies investments to be sold to achieve its primary investment goals of assuring the
Company’s ability to meet policyholder obligations as well as to optimize investment returns, given these obligations.
During the year ended December 31, 2024, the Company incurred pre-tax realized losses of $62 million on the sale of fixed
maturity investments having a fair value of $1.27 billion.
CATASTROPHE MODELING
The Company uses various analyses and methods, including proprietary and third-party modeling processes, to make
underwriting and reinsurance decisions designed to manage its exposure to catastrophic events. There are no industry-standard
methodologies or assumptions for projecting catastrophe exposure. Accordingly, catastrophe estimates provided by different
insurers may not be comparable.
The Company actively monitors and evaluates changes in third-party models and, when necessary, calibrates the catastrophe
risk model estimates delivered via its own proprietary modeling processes. The Company considers historical loss experience,
recent events, underwriting practices, market share analyses, external scientific analysis and various other factors, including
non-modeled losses, to refine its proprietary view of catastrophe risk. These proprietary models are updated regularly as new
information and techniques emerge.
Based on the proprietary and third-party models utilized by the Company, the tables below set forth, as of December 31, 2024,
the probabilities that estimated losses, comprising claims and allocated claim adjustment expenses (but excluding unallocated
claim adjustment expenses), from a single event occurring in a one-year timeframe will equal or exceed the indicated loss
amounts (expressed in dollars, net of tax, and as a percentage of the Company’s common equity). For example, on the basis
described below the tables, the Company estimates that there is a one percent chance that the Company’s loss from a single
U.S. and Canadian hurricane in a one-year timeframe would equal or exceed $2.4 billion, or 8% of the Company’s common
equity at December 31, 2024.
Dollars (in billions)
Likelihood of Exceedance (1)
Single U.S. and
Canadian
Hurricane
Single U.S. and
Canadian
Earthquake
2.0% (1-in-50) ...........................................................................................................................
$
2.0 $
0.7
1.0% (1-in-100) .........................................................................................................................
$
2.4 $
1.2
0.4% (1-in-250) .........................................................................................................................
$
3.7 $
2.0
0.1% (1-in-1,000) ......................................................................................................................
$
9.0 $
3.2
86
Percentage of Common Equity (2)
Likelihood of Exceedance
Single U.S. and
Canadian
Hurricane
Single U.S. and
Canadian
Earthquake
2.0% (1-in-50) ...........................................................................................................................
6 %
2 %
1.0% (1-in-100) .........................................................................................................................
8 %
4 %
0.4% (1-in-250) .........................................................................................................................
12 %
6 %
0.1% (1-in-1,000) ......................................................................................................................
29 %
10 %
___________________________________________
(1)
An event that has, for example, a 2% likelihood of exceedance is sometimes described as a “1-in-50 year event.” As noted above,
however, the probabilities in the table represent the likelihood of losses from a single event equaling or exceeding the indicated
threshold loss amount in a one-year timeframe, not over a multi-year timeframe. Also, because the probabilities relate to a single
event, the probabilities do not address the likelihood of more than one event occurring in a particular period, and, therefore, the
amounts do not address potential aggregate catastrophe losses occurring in a one-year timeframe.
(2)
The percentage of common equity is calculated by dividing (a) indicated loss amounts in dollars by (b) total common equity
excluding net unrealized investment gains and losses, net of taxes, included in shareholders’ equity. Net unrealized investment
gains and losses can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of
operating trends. Accordingly, the Company’s management uses the percentage of common equity calculated on this basis as a
metric to evaluate the potential impact of a single hurricane or single earthquake on the Company’s financial position for purposes
of making underwriting and reinsurance decisions.
The loss amounts included in the tables above are based on the Company’s in-force portfolio of direct exposures and do not
include assumed business. Additionally, the amounts are as of December 31, 2024, reflect the reinsurance program in place at
January 1, 2025, are net of reinsurance, after-tax, and exclude unallocated claim adjustment expenses, which historically have
been less than 10% of loss estimates. For further information regarding the Company’s reinsurance, see “Item 1—Business—
Reinsurance.” The amounts for hurricanes reflect U.S. and Canadian exposures and include property exposures, property
residual market exposures and an adjustment for certain non-property exposures. The hurricane loss amounts are based on the
Company’s catastrophe risk model estimates and include losses from the hurricane hazards of wind and storm surge. The
amounts for earthquakes reflect U.S. and Canadian property and workers’ compensation exposures. These loss amounts
include the effects of exposure growth, inflation and modeling updates based on recent trends and scientific analysis. The
Company does not believe that the inclusion of hurricane or earthquake losses arising from other geographical areas or other
exposures would materially change the estimated loss amounts.
Catastrophe modeling relies upon inputs based on experience, science, engineering and history. These inputs reflect a
significant amount of judgment and are subject to changes which may result in volatility in the modeled output. Catastrophe
modeling output may also fail to account for risks that are outside the range of normal probability or are otherwise
unforeseeable. Catastrophe modeling assumptions include, among others, the portion of purchased reinsurance that is
collectible after a catastrophic event, which may prove to be materially incorrect. Consequently, catastrophe modeling
estimates are subject to significant uncertainty. In the tables above, the uncertainty associated with the estimated threshold loss
amounts increases significantly as the likelihood of exceedance decreases. In other words, in the case of a relatively more
remote event (e.g., 1-in-1,000), the estimated threshold loss amount is relatively less reliable. Actual losses from an event
could materially exceed the indicated threshold loss amount. In addition, more than one such event could occur in any period.
Moreover, the Company is exposed to the risk of material losses from other than property and workers’ compensation
coverages arising out of hurricanes and earthquakes, and it is exposed to catastrophe losses from perils other than hurricanes
and earthquakes, such as tornadoes and other windstorms, hail, wildfires, severe winter weather, floods, tsunamis, volcanic
eruptions, solar flares and other naturally-occurring events, as well as acts of terrorism and cyber events.
In addition, compared to models for hurricanes, models for earthquakes are less reliable due to there being a more limited
number of significant historical events to analyze, while models for tornadoes, hail storms, wildfires and winter storms are
newer and may be less reliable due to the highly random geographic nature and size of these events. Accordingly, these models
may be less accurate in predicting risks and estimating losses. Further, changes in climate conditions could cause our
underlying modeling data to be less predictive, thus limiting our ability to effectively evaluate and manage catastrophe risk. As
compared to natural catastrophes, modeling for man-made catastrophes, such as terrorism and cyber events, is even more
difficult and less reliable, and for some events (both natural and man-made), models are either in early stages of development
and, therefore, not widely adopted, or are not available.
87
For more information about the Company’s exposure to catastrophe losses, see “Item 1A—Risk Factors—High levels of
catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone
areas and changing climate conditions, could materially and adversely affect our results of operations, our financial position
and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance”
and “Item 1A—Risk Factors—We may be adversely affected if our pricing and capital models provide materially different
indications than actual results.”
CHANGING CLIMATE CONDITIONS
Severe weather events over the last two decades underscore the unpredictability of climate trends. For example, the frequency
and/or severity of hurricane, tornado, hail and wildfire events in the United States have been more volatile during this time
period. The insurance industry has experienced increased catastrophe losses due to a number of potential causal factors,
including, in addition to weather/climate variability, aging infrastructure, more people living in, and moving to, high-risk areas,
population growth in areas with weaker enforcement of building codes, urban expansion, an increase in the number of amenities
included in, and average size of, a home and increased inflation, including as a result of post-event demand surge. We believe
that changing climate conditions have also likely added to the frequency and severity of natural disasters and created additional
uncertainty as to future trends and exposures. Climate studies by government agencies, academic institutions, catastrophe
modeling organizations and other groups indicate that an increase in frequency and/or intensity of hurricanes, hail and severe
convective storms, heavy precipitation events and associated river, urban and flash flooding, sea level rise, droughts, heat waves
and wildfires has occurred, and can be expected into the future. Understanding the potential impacts of changing climate
conditions is important to the Company’s business. Changing climate conditions are expected to evolve over decades.
Importantly, because most of its policies renew annually, the Company is able to respond to these changes over time through
adjustments to its underwriting strategy, product pricing and related policy terms and conditions, as appropriate. As an
example, in recent years the Company has focused on enhancing the strategic management of its catastrophe exposure, adding
experts in data science, meteorology, including climate and flood science, wind and structural engineering and geophysics,
among others, to its catastrophe management organization. The Company has also established dedicated teams for each
catastrophe peril, with the goal of developing industry-leading scientific and underwriting expertise. This expertise has been
incorporated into the Company’s product development, risk selection, pricing, capital allocation and claim response.
The Company discusses how changing climate conditions may present other issues for its business under “Item 1A—Risk
Factors.” and “Outlook.” For example, among other things:
•
Increasingly unpredictable and severe weather conditions could result in increased frequency and severity of claims
under policies issued by the Company. See “Item 1A—Risk Factors—High levels of catastrophe losses, including as a
result of factors such as increased concentrations of insured exposures in catastrophe-prone areas and changing climate
conditions, could materially and adversely affect our results of operations, our financial position and/or liquidity, and
could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance” and “—
Outlook—Underwriting Gain/Loss.” Moreover, the Company’s catastrophe models may be less reliable due to the
increased unpredictability in frequency and severity of severe weather events, emerging trends in climate conditions
and regulatory responses to catastrophe events not being appropriately reflected in the models, in addition to the other
factors mentioned above. Accordingly, the Company may be subject to increased losses from catastrophes and other
weather-related events.
•
Changing climate conditions could also impact the creditworthiness of issuers of securities in which the Company
invests. For example, water supply adequacy could impact the creditworthiness of bond issuers with significant assets
or business activities in the Southwestern United States; more frequent and/or severe hurricanes could impact the
creditworthiness of issuers with significant assets or business activities in the Southeastern United States, among other
areas; and increased regulation adopted in response to potential changes in climate conditions could impact the
creditworthiness of issuers affected by such regulations. In addition, as issuers of securities in which the Company
invests become increasingly focused on mitigating the potential environmental impact of their operations, the costs
associated with such initiatives could affect the business models and realized returns of such issuers. See “Item 1A—
Risk Factors—Our investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns
or material realized or unrealized losses.”
•
Increased regulation adopted in response to potential changes in climate conditions may impact the Company and its
customers, including state insurance regulations that could impact the Company’s ability to manage property
exposures in areas vulnerable to significant climate driven losses. For example, state laws have been passed that
restrict a carrier’s ability to cancel or non-renew certain policies within or adjacent to declared state of emergency zip
codes and mandate discounts for risk mitigation practices that may not be effective. If the Company is unable to
88
implement risk-based pricing, modify policy terms or reduce exposures to the extent necessary to address rising losses
related to catastrophes and smaller scale weather events (should those increased losses occur), its business may be
adversely affected. See “Item 1—Business—Regulation—U.S. State and Federal Regulation—Regulatory and
Legislative Responses to Catastrophes.” In addition, climate change regulation could increase the Company’s
customers’ costs of doing business. For example, insureds faced with carbon management regulatory requirements
may have less available capital for investment in loss prevention and safety features which may, over time, increase
loss exposures. Increased regulation may also result in reduced economic activity, which would decrease the amount
of insurable assets and businesses, and increased claim costs, to the extent such regulations require that damaged
homes or businesses be rebuilt according to more expensive specifications.
•
The full range of potential liability exposures related to changing climate conditions continues to evolve. For example,
from time to time third parties sue our policyholders alleging that they caused or contributed to losses associated with
changing climate conditions. In the event any such policyholders were found to be responsible, it could result in them
seeking recovery under policies issued by the Company. Through the Company’s Enterprise Casualty Emerging Risk
Committee and its Committee on Climate, Energy and the Environment, the Company works with its business units
and corporate groups, as appropriate, to identify and try to assess climate change-related liability issues, which are
continually evolving and often hard to fully evaluate. The Company regularly reviews emerging issues, including
changing climate conditions, to consider potential changes to its modeling and the use of such modeling, as well as to
help determine the need for new underwriting strategies, coverage modifications or new products. See “Item 1A—Risk
Factors—The effects of emerging claim and coverage issues on our business are uncertain, and court decisions or
legislative changes that take place after we issue our policies can result in an unexpected increase in the number of
claims and have a material adverse impact on our results of operations and/or our financial position.”
REINSURANCE RECOVERABLES
The Company reinsures a portion of the risks it underwrites in order to control its exposure to losses. For additional discussion
regarding the Company’s reinsurance coverage, see “Part I—Item 1—Business—Reinsurance.”
The following table summarizes the composition of the Company’s reinsurance recoverables:
(at December 31, in millions)
2024
2023
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses .
$
3,962 $
3,895
Gross structured settlements ...................................................................................................
2,626
2,707
Mandatory pools and associations ..........................................................................................
1,531
1,659
Gross reinsurance recoverables .......................................................................................
8,119
8,261
Allowance for estimated uncollectible reinsurance ................................................................
(119)
(118)
Net reinsurance recoverables ...........................................................................................
$
8,000 $
8,143
The following table presents the Company’s top five reinsurer groups by reinsurance recoverable at December 31, 2024 (in
millions). Also included is the A.M. Best rating of the Company’s predominant reinsurer from each such reinsurer group at
February 13, 2025:
Reinsurer Group
Reinsurance
Recoverable
A.M. Best Rating of Group’s Predominant
Reinsurer
Swiss Re Group ........................................
$
685 A+
second highest of 16 ratings
Berkshire Hathaway .................................
458 A++
highest of 16 ratings
Munich Re Group .....................................
332 A+
second highest of 16 ratings
Axa Group ................................................
173 A+
second highest of 16 ratings
Fairfax Financial Group ...........................
137 A+
second highest of 16 ratings
At December 31, 2024, the Company held $922 million of collateral in the form of letters of credit, funds and trust agreements
held to fully or partially collateralize certain reinsurance recoverables.
Included in net reinsurance recoverables are amounts related to structured settlements, which are annuities purchased from
various life insurance companies to settle certain personal physical injury claims, of which workers’ compensation claims
comprise a significant portion. In cases where the Company did not receive a release from the claimant, the amount due from
the life insurance company related to the structured settlement is included in the Company’s consolidated balance sheet as a
reinsurance recoverable and the related claim cost is included in the liability for claims and claim adjustment expense reserves,
89
as the Company retains the contingent liability to the claimant. If it is expected that the life insurance company is not able to
pay, the Company would recognize an impairment of the related reinsurance recoverable if, and to the extent, the purchased
annuities are not covered by state guaranty associations. In the event that the life insurance company fails to make the required
annuity payments, the Company would be required to make such payments. The following table presents the Company’s top
five groups by structured settlements at December 31, 2024 (in millions). Also included is the A.M. Best rating of the
Company’s predominant insurer from each such insurer group at February 13, 2025:
Group
Structured
Settlements
A.M. Best Rating of Group’s Predominant
Insurer
Fidelity & Guaranty Life Group .............................
$
663 A
third highest of 16 ratings
Genworth Financial Group .....................................
320 B-
eighth highest of 16 ratings
John Hancock Group ..............................................
218 A+
second highest of 16 ratings
Symetra Financial Corporation ...............................
200 A
third highest of 16 ratings
Brighthouse Financial, Inc. ....................................
175 A
third highest of 16 ratings
The Company considers the ratings and related outlook assigned to reinsurance companies and life insurance companies by
various independent ratings agencies in assessing the adequacy of its allowance for uncollectible amounts.
OUTLOOK
The following discussion provides outlook information for certain key drivers of the Company’s results of operations and
capital position.
Premiums. The Company’s earned premiums are a function of net written premium volume. Net written premiums comprise
both renewal business and new business and are recognized as earned premium over the term of the underlying policies. When
business renews, the amount of net written premiums associated with that business may increase or decrease (renewal premium
change) as a result of increases or decreases in rate and/or insured exposures, which the Company considers as a measure of
units of exposure (such as the number and value of vehicles or properties insured). Net written premiums from both renewal
and new business, and therefore earned premiums, are impacted by competitive market conditions as well as general economic
conditions, which, particularly in the case of Business Insurance, affect audit premium adjustments, policy endorsements and
mid-term cancellations. Net written premiums may also be impacted by the structure of reinsurance programs and related costs,
as well as changes in foreign currency exchange rates.
Overall, the Company expects that retention levels (the amount of expiring premium that renews, before the impact of renewal
premium changes) will remain strong by historical standards during 2025.
Property and casualty insurance market conditions are expected to remain competitive during 2025 for new business. In each of
the Company’s business segments, new business generally has less of an impact on underwriting profitability than renewal
business, given the volume of new business relative to renewal business. However, in periods of meaningful increases in new
business, despite its positive impact on underwriting gains over time, the impact of higher new business levels may negatively
impact the combined ratio for a period of time. In periods of meaningful decreases in new business, despite its negative impact
on underwriting gains over time, the impact of lower new business levels may positively impact the combined ratio for a period
of time.
Effective January 1, 2025, the Company renewed a quota share reinsurance agreement with subsidiaries of Fidelis Insurance
Holdings Limited (Fidelis) for 2025 pursuant to which the Company assumes 20% of the subject gross written premiums of
Fidelis on a risk-attaching basis, subject to a loss ratio cap. The Company’s portion of premiums from Fidelis is reported as part
of the International results of Business Insurance. The Company also has a minority investment in Fidelis.
Underwriting Gain/Loss. The Company’s underwriting gain/loss can be significantly impacted by catastrophe losses and net
favorable or unfavorable prior year reserve development, as well as underlying underwriting margins. Underlying underwriting
margins can be impacted by a number of factors, including variability in non-catastrophe weather, large loss and other loss
activity; changes in current period loss estimates resulting from prior period loss development; changes in loss cost trends;
changes in business mix; changes in reinsurance coverages and/or costs; premium adjustments; and variability in expenses and
assessments.
Catastrophe losses and non-catastrophe weather-related losses are inherently unpredictable from period to period. The
Company’s results of operations could be adversely impacted if significant catastrophe and non-catastrophe weather-related
losses were to occur.
90
On average for the ten-year period ended December 31, 2024, the Company experienced approximately 38% of its annual
catastrophe losses during the second quarter, primarily arising out of severe wind and hail storms, including tornadoes.
Hurricanes, wildfires and winter storms tend to happen at other times of the year and can also have a material impact on the
Company’s results of operations. Catastrophe losses incurred in a particular quarter in any given year may differ materially
from historical experience. In addition, most of the Company’s reinsurance programs renew on January 1 or July 1 of each
year, and, therefore, any changes to the availability, cost or coverage terms of such programs will be effective after such dates.
Beginning in early January 2025, there were a series of severe wildfires that impacted the Pacific Palisades neighborhood and
Eaton Canyon area in Southern California. The Company’s preliminary pre-tax estimate of catastrophe losses from these
wildfires, including assessments from the California FAIR Plan, and net of estimated recoveries from reinsurance, is
$1.7 billion. The catastrophe losses from these wildfires will be reflected in the Company’s first quarter 2025 earnings.
Over much of the past decade, the Company’s results have included significant amounts of net favorable prior year reserve
development driven by better than expected loss experience. However, given the inherent uncertainty in estimating claims and
claim adjustment expense reserves, loss experience could develop such that the Company recognizes in future periods higher or
lower levels of favorable prior year reserve development, no favorable prior year reserve development or unfavorable prior year
reserve development. In addition, the ongoing review of prior year claims and claim adjustment expense reserves, or other
changes in current period circumstances, may result in the Company revising current year loss estimates upward or downward
in future periods of the current year.
It is possible that changes in economic conditions, the supply chain, international trade, the labor market and geopolitical
tensions, as well as steps taken by federal, state and/or local governments and the Federal Reserve could lead to higher or lower
inflation than the Company anticipated, which could in turn lead to an increase or decrease in the Company’s loss costs and the
need to strengthen or reduce claims and claim adjustment expense reserves. These impacts of inflation on loss costs and claims
and claim adjustment expense reserves could be more pronounced for those lines of business that require a relatively longer
period of time to finalize and settle claims for a given accident year and, accordingly, are relatively more inflation sensitive. For
a further discussion, see “Part I—Item 1A—Risk Factors—If actual claims exceed our claims and claim adjustment expense
reserves, or if changes in the estimated level of claims and claim adjustment expense reserves are necessary, including as a
result of, among other things, changes in the legal/tort, regulatory and economic environments in which the Company operates,
our financial results could be materially and adversely affected.”
The Company’s results of operations may be impacted by a number of other factors, including an economic slowdown, a
recession, financial market volatility, monetary and fiscal policy measures, heightened geopolitical tensions, fluctuations in
interest rates and foreign currency exchange rates, the political and regulatory environment, changes to the U.S. Federal budget
and potential changes in tax laws.
Investment Portfolio. The Company expects to continue to focus its investment strategy on maintaining a high-quality
investment portfolio and a relatively short average effective duration. The weighted average effective duration of fixed
maturities and short-term securities was 4.3 (4.5 excluding short-term securities) at December 31, 2024. From time to time, the
Company enters into short positions in U.S. Treasury futures contracts to manage the duration of its fixed maturity portfolio.
At December 31, 2024, the Company had no open U.S. Treasury futures contracts. The Company regularly evaluates its
investment alternatives and mix. Currently, the majority of the Company’s investments are comprised of a widely diversified
portfolio of high-quality, liquid, taxable U.S. government, tax-exempt and taxable U.S. municipal, taxable corporate and U.S.
agency mortgage-backed bonds.
The Company also invests much smaller amounts in equity securities, real estate and private equity, hedge fund and real estate
partnerships, and joint ventures. These investment classes have the potential for higher returns but also the potential for greater
volatility and higher degrees of risk, including less stable rates of return and less liquidity.
Approximately 30% of the fixed maturity portfolio is expected to mature over the next three years (including the early
redemption of bonds, assuming interest rates (including credit spreads) do not rise significantly by applicable call dates). As a
result, the overall yield on and composition of its portfolio could be meaningfully impacted by the types of investments
available for reinvestment with the proceeds of maturing bonds.
Net investment income is a material contributor to the Company’s results of operations. Based on the Company’s current
expectations for the impact of expected higher reinvestment yields on the Company’s fixed income investments and higher
levels of fixed income investments, the Company expects that after-tax net investment income from that portfolio will be
approximately $710 million in the first quarter of 2025, increasing to approximately $790 million in the fourth quarter of 2025.
This expectation could be impacted by the direction of interest rates and disruptions in global financial markets. Included in
other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity method of
91
accounting and typically report their financial statement information to the Company one month to three months following the
end of the reporting period. Accordingly, net investment income or loss from these other investments is generally reflected in
the Company’s financial statements on a quarter lag basis. The Company’s net investment income in future periods from its
non-fixed income investment portfolio will be impacted, positively or negatively, by the performance of global financial
markets.
The Company had net pre-tax realized investment losses of $30 million in 2024. Changes in global financial markets could
result in net realized investment gains or losses in the Company’s investment portfolio.
The Company had a net pre-tax unrealized investment loss of $4.61 billion ($3.64 billion after-tax) in its fixed maturity
investment portfolio at December 31, 2024, compared to $3.97 billion ($3.13 billion after-tax) at December 31, 2023. The net
unrealized investment loss is primarily due to the impact of movements in interest rates. The increase in the net unrealized
investment loss in 2024 was due to increases in interest rates. While the Company does not attempt to predict future interest
rate movements, a rising interest rate environment reduces the market value of fixed maturity investments and, therefore,
reduces shareholders’ equity, and a declining interest rate environment has the opposite effects. The net unrealized loss
discussed above is considered temporary in nature as it is not due to credit impairments, there is no impact on expected
contractual cash flows from fixed maturities, and the Company generally holds its fixed maturity investments to maturity. In
addition, given the temporary nature of net unrealized losses combined with the Company’s strong operating cash flows (which
include income received on investments and the proceeds received upon maturity of the investments), the net unrealized
investment loss is not expected to meaningfully impact the Company’s assessment of capital adequacy or liquidity. Equity
securities, which include common and non-redeemable preferred stocks, are reported at fair value with changes in fair value
recognized in net income.
Additionally, disruptions in global financial markets could also impact the market value of the Company’s investment portfolio.
The Company’s investment portfolio has benefited from certain tax exemptions (primarily those related to interest from
municipal bonds) and certain other tax laws, including, but not limited to, those governing dividends-received deductions and
tax credits (such as foreign tax credits). Changes in these laws could adversely impact the value of the Company’s investment
portfolio. See “Our businesses are heavily regulated by the states and countries in which we conduct business, including
licensing, market conduct and financial supervision, and changes in regulation, including changes in tax regulation, may reduce
our profitability and limit our growth” included in “Part I—Item 1A—Risk Factors.”
For further discussion of the Company’s investment portfolio, see “Investment Portfolio.” For a discussion of the risks to the
Company’s business during or following a financial market disruption and risks to the Company’s investment portfolio, see the
risk factors entitled “During or following a period of financial market disruption or an economic downturn, our business could
be materially and adversely affected” and “Our investment portfolio is subject to credit and interest rate risk, and may suffer
reduced or low returns or material realized or unrealized losses” included in “Part I—Item 1A—Risk Factors.” For a discussion
of the risks to the Company’s investments from foreign currency exchange rate fluctuations, see the risk factor entitled “We are
subject to additional risks associated with our business outside the United States” included in “Part I—Item 1A—Risk Factors”
and see “Part II—Item 7A—Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Exchange Rate
Risk.”
Capital Position. The Company believes it has a strong capital position and, as part of its ongoing efforts to create shareholder
value, expects to continue to return capital not needed to support its business operations to its shareholders, subject to the
considerations described below. The Company expects that, generally over time, the combination of dividends to common
shareholders and common share repurchases will likely not exceed net income. The Company also expects that to the extent
that it continues to grow premium volumes, the level of capital to support the Company’s financial strength ratings will also
increase, and accordingly, the amount of capital returned to shareholders relative to earnings would be somewhat less than it
otherwise would have been absent the growth in premium volumes. The timing and actual number of shares to be repurchased
in the future will depend on a variety of additional factors, including the Company’s financial position, earnings, share price,
catastrophe losses, maintaining capital levels appropriate for the Company’s business operations, 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. For information regarding the Company’s common share
repurchases in 2024, see “Liquidity and Capital Resources” herein.
As a result of the Company’s business outside of the United States, primarily in Canada, the United Kingdom (including
Lloyd’s), the Republic of Ireland and in Brazil through a joint venture, the Company’s capital is also subject to the effects of
changes in foreign currency exchange rates. Strengthening of the U.S. dollar in comparison to other currencies could result in a
reduction in shareholders’ equity, while a weakening of the U.S. dollar in comparison to other currencies could result in an
92
increase in shareholders’ equity. For additional discussion of the Company’s foreign exchange market risk exposure, see “Part
II—Item 7A—Quantitative and Qualitative Disclosures About Market Risk.”
Many of the statements in this “Outlook” section and in “Liquidity and Capital Resources” are forward-looking statements,
which are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control. Actual results
could differ materially from those expressed or implied by such forward-looking statements. Further, such forward-looking
statements speak only as of the date of this report and the Company undertakes no obligation to update them. See “—Forward
Looking Statements.” For a discussion of potential risks and uncertainties that could impact the Company’s results of
operations or financial position, see “Part I—Item 1A—Risk Factors” and “Critical Accounting Estimates.”
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is a measure of a company’s ability to generate sufficient cash flows to meet the cash requirements of its business
operations and to satisfy general corporate purposes when needed.
Operating Company Liquidity. The liquidity requirements of the Company’s insurance subsidiaries are met primarily by funds
generated from premiums, fees, income received on investments and investment maturities. Cash provided from these sources
is used primarily for claims and claim adjustment expense payments and operating expenses. The insurance subsidiaries’
liquidity requirements can be impacted by, among other factors, the timing and amount of catastrophe claims, which are
inherently unpredictable, as well as the timing and amount of reinsurance recoveries, which may be affected by reinsurer
solvency and reinsurance coverage disputes. Additionally, the variability of asbestos-related claim payments, as well as the
volatility of potential judgments and settlements arising out of litigation, may also result in increased liquidity requirements.
While an environment of higher interest rates during 2023 and 2024 resulted in significant net unrealized investment losses, the
net unrealized loss is considered temporary in nature as it is not due to credit impairments, there is no impact on expected
contractual cash flows from fixed maturities, and the Company generally holds its high-quality fixed maturity investments to
maturity. In addition, given the temporary nature of net unrealized losses combined with the Company’s strong operating cash
flows (which include income received on investments and the proceeds received upon maturity of the investments), the net
unrealized investment loss is not expected to meaningfully impact the Company’s assessment of capital adequacy or liquidity.
It is the opinion of the Company’s management that the insurance subsidiaries’ future liquidity needs will be adequately met
from all of the sources described above. Subject to the restrictions imposed by states in which the Company’s insurance
subsidiaries are domiciled, the Company’s principal insurance subsidiaries pay dividends to their respective parent companies,
which, in turn, pay dividends to the corporate holding (parent) company (TRV). For further information regarding restrictions
on dividends paid by the Company’s insurance subsidiaries, see “Part I—Item 1—Business—Regulation.”
Holding Company Liquidity. TRV’s liquidity requirements primarily include shareholder dividends, debt servicing, common
share repurchases and, from time to time, contributions to its qualified domestic pension plan. At December 31, 2024, TRV
held total cash and short-term invested assets in the United States aggregating $1.80 billion and having a weighted average
maturity of 22 days. TRV has established a holding company liquidity target equal to its estimated annual pre-tax interest
expense and common shareholder dividends (currently approximately $1.33 billion). TRV’s holding company liquidity of $1.80
billion at December 31, 2024 exceeded this target, and it is the opinion of the Company’s management that these assets are
sufficient to meet TRV’s current liquidity requirements.
TRV is not dependent on dividends or other forms of repatriation from its foreign operations to support its liquidity needs. The
undistributed earnings of the Company’s foreign operations are intended to be permanently reinvested in those operations, and
such earnings were not material to the Company’s financial position or liquidity at December 31, 2024.
TRV has a shelf registration statement filed with the Securities and Exchange Commission that expires on June 8, 2025 which
permits it to issue securities from time to time. TRV also has a $1.0 billion line of credit facility with a syndicate of financial
institutions that expires on June 15, 2027. At December 31, 2024, the Company had $100 million of commercial paper
outstanding. TRV is not reliant on its commercial paper program to meet its operating cash flow needs. The Company has no
senior notes or junior subordinated debentures maturing until April 2026, at which time $200 million of senior notes will
mature.
The Company utilized uncollateralized letters of credit issued by major banks with an aggregate limit of $260 million to provide
a portion of the capital needed to support its obligations at Lloyd’s at December 31, 2024. If uncollateralized letters of credit
are not available at a reasonable price or at all in the future, the Company can collateralize these letters of credit or may have to
seek alternative means of supporting its obligations at Lloyd’s, which could include utilizing holding company funds on hand.
93
Operating Activities
Net cash provided by operating activities was $9.07 billion and $7.71 billion in 2024 and 2023, respectively. The increase in
cash flows in 2024 primarily reflected the impacts of higher levels of cash received for premiums, partially offset by higher
levels of payments for income taxes, claims and claim adjustment expenses, general and administrative expenses and
commissions. The increase in cash paid for claims and claim adjustment expenses in 2024 was impacted by business growth
and higher loss costs. The increase in cash received for premiums in 2024 compared to the prior year was impacted by business
growth including the impact of positive renewal premium changes.
Investing Activities
Net cash used in investing activities was $7.26 billion and $6.82 billion in 2024 and 2023, respectively. The Company’s
consolidated total investments at December 31, 2024 increased by $5.41 billion, or 6% over December 31, 2023, primarily
reflecting the impacts of (i) net cash flows provided by operating activities, partially offset by (ii) net cash used in financing
activities, (iii) higher net unrealized investment losses on investments due to the impact of higher interest rates during 2024 and
(iv) the cost of acquiring Corvus.
The Company’s investment portfolio is managed to support its insurance operations; accordingly, the portfolio is positioned to
meet obligations to policyholders. As such, the primary goals of the Company’s asset-liability management process are to
satisfy the insurance liabilities and maintain sufficient liquidity to cover fluctuations in projected liability cash flows.
Generally, the expected principal and interest payments produced by the Company’s fixed maturity portfolio adequately fund
the estimated runoff of the Company’s insurance reserves. Although this is not an exact cash flow match in each period, the
substantial amount by which the market value of the fixed maturity portfolio exceeds the value of the net insurance liabilities, as
well as the positive cash flow from newly sold policies and the large amount of high quality liquid bonds, contributes to the
Company’s ability to fund claim payments without having to sell illiquid assets or access credit facilities.
Financing Activities
Net cash used in financing activities was $1.75 billion and $1.05 billion in 2024 and 2023, respectively. The totals in both 2024
and 2023 reflected common share repurchases and dividends paid to shareholders, partially offset by the net proceeds from
employee stock option exercises. The total in 2023 also included net proceeds from the issuance of debt. Common share
repurchases in 2024 and 2023 were $1.12 billion and $1.02 billion, respectively.
Debt Transactions.
2023. On May 25, 2023, the Company issued $750 million aggregate principal amount of 5.45% senior notes that will mature
on May 25, 2053. The net proceeds of the issuance, after the deduction of the underwriting discount and expenses payable by
the Company, totaled approximately $738 million. Interest on the senior notes is payable semi-annually in arrears on May 25
and November 25. Prior to November 25, 2052, the senior notes may be redeemed, in whole or in part, at the Company’s
option, at any time or from time to time, at a redemption price equal to the greater of (a) 100% of the principal amount of any
senior notes to be redeemed or (b) the sum of the present values of the remaining scheduled payments of principal and interest
to but excluding November 25, 2052 on any senior notes to be redeemed (exclusive of interest accrued to the date of
redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the then current Treasury rate (as defined in the senior notes), plus 25 basis points. On or after November 25, 2052,
the senior notes may be redeemed, in whole or in part, at the Company’s option, at any time or from time to time, at a
redemption price equal to 100% of the principal amount of any senior notes to be redeemed, plus accrued and unpaid interest to,
but excluding, the redemption date.
Dividends. Dividends paid to shareholders were $951 million and $908 million in 2024 and 2023, respectively. The
declaration and payment of future dividends to holders of the Company’s common stock will be at the discretion of the
Company’s Board of Directors and will depend upon many factors, including the Company’s financial position, earnings,
capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints and other factors as the
Board of Directors deems relevant. Dividends will be paid by the Company only if declared by its Board of Directors out of
funds legally available, subject to any other restrictions that may be applicable to the Company. On January 22, 2025, the
Company announced that its Board of Directors declared a regular quarterly dividend of $1.05 per share, payable March 31,
2025, to shareholders of record on March 10, 2025.
Share Repurchases. The Company’s Board of Directors has approved common share repurchase authorizations under which
repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of
Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise. The authorizations do not have a
94
stated expiration date. The most recent authorization was approved by the Board of Directors on April 19, 2023 and added $5.0
billion of repurchase capacity to the $1.60 billion of capacity remaining at that date. The Company expects that, generally over
time, the combination of dividends to common shareholders and common share repurchases will likely not exceed net income.
The Company also expects that to the extent that it continues to grow premium volumes, the amount of capital returned to
shareholders relative to earnings would be somewhat less than it otherwise would have been absent the growth in premium
volumes. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including
the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels appropriate for the
Company’s business operations, 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. During 2024, the Company repurchased 4.4 million shares under its share repurchase authorizations, for a total of
$1.00 billion. The average cost per share repurchased was $225.44. Common share repurchases in 2024 were higher than the
total of $965 million in 2023. The cost of treasury stock acquired pursuant to common share repurchases includes the 1%
excise tax imposed as part of the Inflation Reduction Act of 2022. At December 31, 2024, the Company had $5.04 billion of
capacity remaining under its share repurchase authorizations.
From the inception of the first authorization on May 2, 2006 through December 31, 2024, the Company has repurchased a
cumulative total of 548.3 million shares for a total of $40.96 billion, or an average of $74.71 per share.
In 2024 and 2023, the Company acquired 0.7 million and 0.3 million shares of common stock, respectively, from employees as
treasury stock primarily to cover payroll withholding taxes in connection with the vesting of restricted stock unit awards and
performance share awards, and shares used by employees to cover the exercise price, as well as the related payroll withholding
taxes, with respect to certain stock options that were exercised.
Capital Resources
Capital resources reflect the overall financial strength of the Company and its ability to borrow funds at competitive rates and
raise new capital to meet its needs. The following table summarizes the components of the Company’s capital structure at
December 31, 2024 and 2023:
(at December 31, in millions)
2024
2023
Debt:
Short-term ...............................................................................................................................
$
100 $
100
Long-term ...............................................................................................................................
8,004
8,004
Net unamortized fair value adjustments and debt issuance costs ...........................................
(71)
(73)
Total debt ............................................................................................................................
8,033
8,031
Shareholders’ equity:
Common stock and retained earnings, less treasury stock ......................................................
32,831
29,392
Accumulated other comprehensive loss .................................................................................
(4,967)
(4,471)
Total shareholders’ equity ..................................................................................................
27,864
24,921
Total capitalization ........................................................................................................
$
35,897 $
32,952
Total capitalization at December 31, 2024 was $35.90 billion, $2.95 billion higher than at December 31, 2023, primarily
reflecting the impacts of (i) net income of $5.00 billion and (ii) proceeds from the exercise of employee share options of $321
million, partially offset by (iii) common share repurchases totaling $1.00 billion under the Company’s share repurchase
authorizations, (iv) shareholder dividends of $962 million and (v) an other comprehensive loss of $496 million, primarily
reflecting an increase in net unrealized losses on investments due to a change in interest rates during 2024.
95
The following table provides a reconciliation of total capitalization presented in the foregoing table to total capitalization
excluding net unrealized losses on investments, net of taxes, included in shareholders’ equity:
(at December 31, dollars in millions)
2024
2023
Total capitalization ....................................................................................................................
$
35,897
$
32,952
Less: net unrealized losses on investments, net of taxes, included in shareholders’ equity ......
(3,640)
(3,129)
Total capitalization excluding net unrealized losses on investments, net of taxes, included
in shareholders’ equity ........................................................................................................
$
39,537
$
36,081
Debt-to-total capital ratio ........................................................................................................
22.4 %
24.4 %
Debt-to-total capital ratio excluding net unrealized losses on investments, net of taxes,
included in shareholders’ equity .........................................................................................
20.3 %
22.3 %
The debt-to-total capital ratio excluding net unrealized gains (losses) on investments, net of taxes, included in shareholders’
equity, is calculated by dividing (a) debt by (b) total capitalization excluding net unrealized gains and losses on investments, net
of taxes, included in shareholders’ equity. Net unrealized gains and losses on investments can be significantly impacted by
both interest rate movements and other economic factors. Accordingly, in the opinion of the Company’s management, the debt-
to-total capital ratio calculated on this basis provides another useful metric for investors to understand the Company’s financial
leverage position. The Company’s ratio of debt-to-total capital excluding after-tax net unrealized investment losses included in
shareholders’ equity of 20.3% at December 31, 2024 was within the Company’s target range of 15% to 25%.
Credit Agreement. The Company is a party to a five-year, $1.0 billion revolving credit agreement with a syndicate of financial
institutions that expires on June 15, 2027. Terms of the credit agreement are discussed in more detail in note 9 of the notes to
the consolidated financial statements.
Shelf Registration. The Company has filed a universal shelf registration statement with the Securities and Exchange
Commission that expires on June 8, 2025 for the potential offering and sale of securities. The Company may offer these
securities from time to time at prices and on other terms to be determined at the time of offering.
Share Repurchase Authorizations. At December 31, 2024, the Company had $5.04 billion of capacity remaining under its share
repurchase authorizations approved by the Board of Directors.
Cash Requirements from Contractual and Other Obligations
The following table summarizes, as of December 31, 2024, the Company’s estimated future payments under material
contractual obligations and estimated claims and claim-related payments. The table includes only obligations at December 31,
2024 that are expected to be settled in cash.
The table below includes the amount and estimated future timing of claims and claim-related payments. The amounts do not
represent the exact liability, but instead represent estimates, generally utilizing actuarial projection techniques, at a given
accounting date. These estimates include expectations of what the ultimate settlement and administration of claims will cost
based on the Company’s assessment of facts and circumstances known, review of historical settlement patterns, estimates of
trends in claims severity, frequency, legal theories of liability and other factors. Variables in the reserve estimation process can
be affected by both internal and external events, such as changes in claims handling procedures, economic inflation or deflation,
legal trends and legislative changes. Many of these items are not directly quantifiable, particularly on a prospective basis.
Additionally, there may be significant reporting lags between the occurrence of the policyholder event and the time it is actually
reported to the insurer. The future cash flows related to the items contained in the table below required estimation of both
amount (including severity considerations) and timing. Amount and timing are frequently estimated separately. An estimation
of both amount and timing of future cash flows related to claims and claim-related payments has unavoidable estimation
uncertainty.
96
The material cash requirements from contractual and other obligations at December 31, 2024 were as follows:
Payments Due by Period (in millions)
Total
Less than
1 Year
1-3
Years
3-5
Years
After 5
Years
Debt
Senior notes ......................................................
$
7,750 $
— $
200 $
— $
7,550
Junior subordinated debentures ........................
254
—
125
—
129
Total debt principal .......................................
8,004
—
325
—
7,679
Interest ............................................................
7,039
389
755
728
5,167
Total long-term debt obligations (1)
..........
15,043
389
1,080
728
12,846
Real estate and other operating leases (2)
........
358
79
129
83
67
Information systems-related commitments (3)
915
503
378
34
—
Unfunded investment commitments (4)
...........
1,490
295
463
509
223
Estimated claims and claim-related
payments
Claims and claim adjustment expenses (5)
........
62,537
15,045
15,888
8,516
23,088
Claims from large deductible policies (6)
.........
—
—
—
—
—
Total estimated claims and claim-related
payments ......................................................
62,537
15,045
15,888
8,516
23,088
Total ............................................................
$
80,343 $
16,311 $
17,938 $
9,870 $
36,224
________________________________________
(1)
See note 9 of the notes to the consolidated financial statements for a further discussion of outstanding indebtedness. Because the
amounts reported in the foregoing table include principal and interest, the total long-term debt obligations will not agree with the
amounts reported in note 9.
(2)
Represents agreements entered into in the ordinary course of business to lease office space, equipment and furniture.
(3)
Includes agreements with vendors to purchase system software (including software as a service), software maintenance services and
technology-related costs.
(4)
Represents estimated timing for fulfilling unfunded commitments for private equity limited partnerships, real estate partnerships
and other investments.
(5)
The amounts in “Claims and claim adjustment expenses” in the table above represent the estimated timing of future payments for
both reported and unreported claims incurred and related claim adjustment expenses, gross of reinsurance recoverables, excluding
structured settlements expected to be paid by annuity companies.
The Company has entered into reinsurance agreements to manage its exposure to losses and protect its capital as described in note 6
of the notes to the consolidated financial statements.
In order to qualify for reinsurance accounting, a reinsurance agreement must indemnify the insurer from insurance risk, i.e., the
agreement must transfer amount and timing risk. Since the timing and amount of cash inflows from such reinsurance agreements
are directly related to the underlying payment of claims and claim adjustment expenses by the insurer, reinsurance recoverables are
recognized in a manner consistent with the liabilities (the estimated liability for claims and claim adjustment expenses) relating to
the underlying reinsured contracts. The presence of any feature that can delay timely reimbursement of claims by a reinsurer results
in the reinsurance contract being accounted for as a deposit rather than reinsurance. The assumptions used in estimating the amount
and timing of the reinsurance recoverables are consistent with those used in estimating the amount and timing of the related
liabilities.
The estimated future cash inflows from the Company’s reinsurance contracts that qualify for reinsurance accounting are as follows:
(in millions)
Total
Less than 1
Year
1-3
Years
3-5
Years
After 5
Years
Reinsurance recoverables ...........................
$
5,090
$
927
$
1,034
$
610
$
2,519
97
The Company manages its business and evaluates its liabilities for claims and claim adjustment expenses on a net of reinsurance
basis. The estimated cash flows on a net of reinsurance basis are as follows:
(in millions)
Total
Less than 1
Year
1-3
Years
3-5
Years
After 5
Years
Claims and claim adjustment expenses,
net ..............................................................
$
57,447
$
14,118
$
14,854
$
7,906
$
20,569
For business underwritten by non-U.S. operations, future cash flows related to reported and unreported claims incurred and related
claim adjustment expenses were translated at the spot rate on December 31, 2024.
The amounts reported in the table above and in the table of reinsurance recoverables above are presented on a nominal basis and
have not been adjusted to reflect the time value of money. Accordingly, the amounts above will differ from the Company’s balance
sheet to the extent that the liability for claims and claim adjustment expenses and the related reinsurance recoverables have been
discounted in the balance sheet. See note 1 of the notes to the consolidated financial statements.
(6)
Workers’ compensation large deductible policies provide third-party coverage in which the Company typically is responsible for
paying the entire loss under such policies and then seeks reimbursement from the insured for the deductible amount. “Claims from
large deductible policies” represent the estimated future payment for claims and claim related expenses below the deductible
amount, net of the estimated recovery of the deductible. The liability and the related deductible receivable for unpaid claims are
presented in the consolidated balance sheet as “contractholder payables” and “contractholder receivables,” respectively. Most
deductibles for such policies are paid directly from the policyholder’s escrow, which is periodically replenished by the policyholder.
The payment of the loss amounts above the deductible are reported within “Claims and claim adjustment expenses” in the above
table. Because the timing of the collection of the deductible (contractholder receivables) occurs shortly after the payment of the
deductible to a claimant (contractholder payables), these cash flows offset each other in the table.
The estimated timing of the payment of the contractholder payables and the collection of contractholder receivables (net of
allowance for expected credit losses) for workers’ compensation policies is presented below:
(in millions)
Total
Less than 1
Year
1-3
Years
3-5
Years
After 5
Years
Contractholder payables/receivables .......
$
3,171
$
1,023
$
967
$
416
$
765
The above table does not include an analysis of liabilities reported for structured settlements for which the Company has
purchased annuities and remains contingently liable in the event of default by the company issuing the annuity. The Company is
not reasonably likely to incur material future payment obligations under such agreements. In addition, the Company is not
currently subject to any minimum funding requirements for its qualified pension plan. Accordingly, future contributions are not
included in the foregoing table.
The Company believes that the combination of operating company liquidity, holding company liquidity, its investment portfolio
and its capital resources are sufficient to meet its contractual obligations.
Dividend Availability
The Company’s principal insurance subsidiaries are domiciled in the State of Connecticut. The insurance holding company
laws of Connecticut applicable to the Company’s subsidiaries requires notice to, and approval by, the state insurance
commissioner for the declaration or payment of any dividend that, together with other distributions made within the preceding
twelve months, exceeds the greater of 10% of the insurer’s statutory capital and surplus as of the preceding December 31, or the
insurer’s net income for the twelve-month period ending the preceding December 31, in each case determined in accordance
with statutory accounting practices and by state regulation. This declaration or payment is further limited by adjusted
unassigned surplus, as determined in accordance with statutory accounting practices. The insurance holding company laws of
other states in which the Company’s subsidiaries are domiciled generally contain similar, although in some instances somewhat
more restrictive, limitations on the payment of dividends. A maximum of $4.17 billion is available by the end of 2025 for such
dividends to ultimately be paid to the holding company, TRV, without prior approval of the Connecticut Insurance Department.
The Company may choose to accelerate the timing within 2025 and/or increase the amount of dividends from its insurance
subsidiaries in 2025, which could result in certain dividends being subject to approval by the Connecticut Insurance Department
prior to payment.
In addition to the regulatory restrictions on the amount of dividends that can be paid by the Company’s U.S. insurance
subsidiaries, the maximum amount of dividends that may be paid to the Company’s shareholders is also limited, to a lesser
degree, by certain covenants contained in its line of credit agreement with a syndicate of financial institutions that require the
98
Company to maintain a minimum consolidated net worth as described in note 9 of the notes to the consolidated financial
statements.
TRV is not dependent on dividends or other forms of repatriation from its foreign operations to support its liquidity needs. The
undistributed earnings of the Company’s foreign operations are intended to be permanently reinvested in those operations, and
such earnings were not material to the Company’s financial position or liquidity at December 31, 2024.
The U.S. insurance subsidiaries paid dividends of $2.00 billion and $1.17 billion during 2024 and 2023, respectively.
Pension and Other Postretirement Benefit Plans
The Company sponsors a qualified non-contributory defined benefit pension plan (the qualified domestic pension plan), which
covers substantially all U.S. domestic employees and provides benefits primarily under a cash balance formula. In addition, the
Company sponsors a nonqualified defined benefit pension plan which covers certain highly-compensated employees, pension
plans for employees of its foreign subsidiaries, and a postretirement health and life insurance benefit plan for employees
satisfying certain age and service requirements and for certain retirees.
The qualified domestic pension plan is subject to regulations under the Employee Retirement Income Security Act of 1974 as
amended (ERISA), which requires plans to meet minimum standards of funding and requires such plans to subscribe to plan
termination insurance through the Pension Benefit Guaranty Corporation (PBGC). The Company does not have a minimum
funding requirement for the qualified domestic pension plan for 2025 and does not anticipate having a minimum funding
requirement in 2026. The Company has significant discretion in making contributions above those necessary to satisfy the
minimum funding requirements. In 2024, 2023 and 2022, there was no minimum funding requirement for the qualified
domestic pension plan. In 2024, 2023 and 2022, the Company made no voluntary contributions to the qualified domestic
pension plan. The qualified domestic pension plan had a funded status of 130% and 120% at December 31, 2024 and 2023,
respectively. Based on its funded status at December 31, 2024, the Company does not currently anticipate making a voluntary
contribution to the qualified domestic pension plan in 2025. In determining future contributions, the Company will consider the
performance of the plan’s investment portfolio, the effects of interest rates on the projected benefit obligation of the plan and
the Company’s other capital requirements.
The qualified domestic pension plan assets are managed to maximize long-term total return while maintaining an appropriate
level of risk. The Company’s overall investment strategy is to achieve a mix of approximately 85% to 90% of investments for
long-term growth and 10% to 15% for near-term benefit payments with a diversification of asset types, fund strategies and fund
managers. The current target allocations for plan assets are 55% to 65% equity securities and 20% to 40% fixed income
securities, with the remainder allocated to short-term securities. For 2025, the Company plans to apply an expected long-term
rate of return on plan assets of 7.00%, comparable with 2024. The expected rate of return reflects the Company’s current
expectations with regard to long-term returns in the capital markets, taking into account the pension plan’s asset allocation
targets, the historical performance and current valuation of U.S. and international equities, and the level of long term interest
rate and inflation expectations.
For further discussion of the pension and other postretirement benefit plans, see note 15 of the notes to the consolidated
financial statements.
Risk-Based Capital
The NAIC has an RBC requirement for most property and casualty insurance companies, which determines minimum capital
requirements and is intended to raise the level of protection for policyholder obligations. The Company’s U.S. insurance
subsidiaries are subject to these NAIC RBC requirements based on laws that have been adopted by individual states. These
requirements subject insurers having policyholders’ surplus less than that required by the RBC calculation to varying degrees of
regulatory action, depending on the level of capital inadequacy. Each of the Company’s U.S. insurance subsidiaries had
policyholders’ surplus at December 31, 2024 significantly above the level at which any RBC regulatory action would occur.
Regulators in the jurisdictions in which the Company’s foreign insurance subsidiaries are located require insurance companies
to maintain certain levels of capital depending on, among other things, the type and amount of insurance policies written. Each
of the Company’s foreign insurance subsidiaries had capital significantly above their respective regulatory requirements at
December 31, 2024.
99
Off-Balance Sheet Arrangements
The Company has entered into certain contingent obligations for guarantees related to selling businesses to third parties, certain
investments, certain insurance policy obligations of former insurance subsidiaries and various other indemnifications. See note
17 of the notes to the consolidated financial statements. The Company does not believe it is reasonably likely that these
arrangements will have a material current or future effect on the Company’s financial position, changes in financial position,
revenues and expenses, results of operations, liquidity, capital expenditures or capital resources.
CRITICAL ACCOUNTING ESTIMATES
The Company considers its most significant accounting estimates to be those applied to claims and claim adjustment expense
reserves and related reinsurance recoverables, and impairments of investments, goodwill and other intangible assets.
Claims and Claim Adjustment Expense Reserves
Gross claims and claim adjustment expense reserves by product line were as follows:
December 31, 2024
December 31, 2023
(in millions)
Case
IBNR
Total
Case
IBNR
Total
General liability ...............................................
$
5,845 $
11,349 $
17,194 $
5,658 $
10,214 $
15,872
Commercial property ......................................
1,384
342
1,726
1,447
281
1,728
Commercial multi-peril ...................................
3,015
3,438
6,453
2,869
2,905
5,774
Commercial automobile ..................................
2,749
3,195
5,944
2,661
2,773
5,434
Workers’ compensation ..................................
9,980
8,749
18,729
10,004
9,203
19,207
Fidelity and surety ...........................................
210
571
781
265
466
731
Personal automobile ........................................
2,315
2,588
4,903
2,245
2,460
4,705
Personal homeowners and other ......................
1,238
1,833
3,071
1,217
2,004
3,221
International and other ....................................
2,561
2,726
5,287
2,620
2,329
4,949
Property-casualty ..........................................
29,297
34,791
64,088
28,986
32,635
61,621
Accident and health .........................................
5
—
5
6
—
6
Claims and claim adjustment expense
reserves ....................................................
$
29,302 $
34,791 $
64,093 $
28,992 $
32,635 $
61,627
The $2.47 billion increase in gross claims and claim adjustment expense reserves since December 31, 2023 primarily reflected
the impacts of (i) catastrophe losses in 2024, (ii) higher volumes of insured exposures and (iii) loss cost trends for the current
accident year, partially offset by (iv) claim payments made during 2024 and (v) net favorable prior year reserve development.
Asbestos and environmental reserves are included in the General liability, Commercial multi-peril and International and other
lines in the foregoing summary table. Asbestos and environmental reserves are discussed separately; see “Asbestos Claims and
Litigation,” “Environmental Claims and Litigation” and “Uncertainty Regarding Adequacy of Asbestos and Environmental
Reserves” herein.
Claims and claim adjustment expense reserves represent management’s estimate of the ultimate liability for unpaid losses and
loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported (IBNR) as
of the balance sheet date. Claims and claim adjustment expense reserves do not represent an exact calculation of liability, but
instead represent management estimates, primarily utilizing actuarial expertise and projection methods. These estimates are
expectations of what the ultimate settlement and administration of claims will cost upon final resolution in the future, based on
the Company’s assessment of facts and circumstances then known, review of historical settlement patterns, estimates of trends
in claims severity and frequency, expected interpretations of legal theories of liability and other factors. In establishing gross
claims and claim adjustment expense reserves, the Company also considers salvage and subrogation. Estimated recoveries from
reinsurance are included in “Reinsurance Recoverables” as an asset on the Company’s consolidated balance sheet. The claims
and claim adjustment expense reserves are reviewed regularly by qualified actuaries employed by the Company.
The process of estimating claims and claim adjustment expense reserves involves a high degree of judgment and is subject to a
number of variables. These variables can be affected by both internal and external events, such as changes in claims handling
procedures, changes in individuals involved in the reserve estimation process, economic inflation, changes in the tort
environment, legal trends and legislative changes, among others. The impact of many of these items on ultimate costs for claims
100
and claim adjustment expenses is difficult to estimate. Estimation difficulties also differ significantly by product line due to
differences in claim complexity, the volume of claims, the potential severity of individual claims, the determination of
occurrence date for a claim and reporting lags (the time between the occurrence of the policyholder event and when it is
actually reported to the insurer). Informed judgment is applied throughout the process, including the application of various
individual experiences and expertise to multiple sets of data and analyses. The Company refines its estimates in a regular
ongoing process as historical loss experience develops and additional claims are reported and settled. The Company rigorously
attempts to consider all significant facts and circumstances known at the time claims and claim adjustment expense reserves are
established. Due to the inherent uncertainty underlying these estimates including, but not limited to, the future settlement
environment, final resolution of the estimated liability for claims and claim adjustment expenses may be higher or lower than
the related claims and claim adjustment expense reserves at the reporting date. Therefore, actual paid losses, as claims are
settled in the future, may be materially different than the amount currently recorded-favorable or unfavorable. Because
establishment of claims and claim adjustment expense reserves is an inherently uncertain process involving estimates and the
application of judgment, currently established claims and claim adjustment expense reserves may change. The Company
reflects adjustments to the reserves in the results of operations in the period the estimates are changed.
There are also additional risks which impact the estimation of ultimate costs for catastrophes. For example, the estimation of
reserves related to hurricanes, tornadoes, wildfires and other catastrophic events can be affected by the inability of the Company
and its insureds to access portions of the impacted areas, the complexity of factors contributing to the losses, the legal and
regulatory uncertainties, including the interpretation of policy terms and conditions, and the nature of the information available
to establish the reserves. Complex factors include, but are not limited to: determining whether damage was caused by flooding
versus wind; evaluating general liability and pollution exposures; estimating additional living expenses; estimating the impact
of demand surge, infrastructure disruption, fraud, the effect of mold damage and business interruption costs; and reinsurance
collectibility. The timing of a catastrophe, such as at or near the end of a reporting period, can also affect the information
available to the Company in estimating reserves for that reporting period. The estimates related to catastrophes are adjusted as
actual claims emerge.
A portion of the Company’s gross claims and claim adjustment expense reserves (totaling $2.11 billion at December 31, 2024)
are for asbestos and environmental claims and related litigation. While the ongoing review of asbestos and environmental
claims and associated liabilities considers the inconsistencies of court decisions as to coverage, plaintiffs’ expanded theories of
liability and the risks inherent in complex litigation and other uncertainties, in the opinion of the Company’s management, it is
possible that the outcome of the continued uncertainties regarding these claims could result in liability in future periods that
differs from current insurance reserves by an amount that could be material to the Company’s future operating results. See the
preceding discussion of “Asbestos Claims and Litigation” and “Environmental Claims and Litigation.”
General Discussion
The process for estimating the liabilities for claims and claim adjustment expenses begins with the collection and analysis of
claim data. Data on individual reported claims, both current and historical, including paid amounts and individual claim adjuster
estimates, are grouped by common characteristics (components) and evaluated by actuaries in their analyses of ultimate claim
liabilities. Such data is occasionally supplemented with external data as available and when appropriate. The process of
analyzing reserves for a component is undertaken on a regular basis, generally quarterly, in light of continually updated
information.
Multiple estimation methods are available for the analysis of ultimate claim liabilities. Each estimation method has its own set
of assumption variables and its own advantages and disadvantages, with no single estimation method being better than the
others in all situations and no one set of assumption variables being meaningful for all product line components. The relative
strengths and weaknesses of the particular estimation methods when applied to a particular group of claims can also change
over time. Therefore, the actual choice of estimation method(s) can change with each evaluation. The estimation method(s)
chosen are those that are believed to produce the most reliable indication at that particular evaluation date for the claim
liabilities being evaluated.
In most cases, multiple estimation methods will be valid for the particular facts and circumstances of the claim liabilities being
evaluated. This will result in a range of reasonable estimates for any particular claim liability. The Company uses such range
analyses to back test whether previously established estimates for reserves by reporting segments are reasonable, given
available information. Reported values found to be closer to the endpoints of a range of reasonable estimates are subject to
further detailed reviews. These reviews may substantiate the validity of management’s recorded estimate or lead to a change in
the reported estimate.
The exact boundary points of these ranges are more qualitative than quantitative in nature, as no clear line of demarcation exists
to determine when the set of underlying assumptions for an estimation method switches from being reasonable to unreasonable.
101
As a result, the Company does not believe that the endpoints of these ranges are or would be comparable across companies. In
addition, potential interactions among the different estimation assumptions for different product lines make the aggregation of
individual ranges a highly judgmental and inexact process.
Property-casualty insurance policies are either written on a “claims-made” or on an “occurrence” basis. Claims-made policies
generally cover, subject to requirements in individual policies, claims reported during the policy period. Policies that are
written on an occurrence basis require that the insured demonstrate that a loss occurred in the policy period, even if the insured
reports the loss many years later.
Most general liability policies are written on an occurrence basis. These policies are subject to substantial loss development
over time as facts and circumstances change in the years following the policy issuance. The occurrence form, which accounts
for much of the reserve development in asbestos and environmental exposures, is also used to provide coverage for construction
general liability, including construction defect. Occurrence-based forms of insurance for general liability exposures require
substantial projection of loss trends, which can be influenced by a number of factors, including future inflation, judicial
interpretations and societal litigation trends (e.g., size of jury awards and propensity of individuals to pursue litigation), among
others.
A basic premise in most actuarial analyses is that past patterns demonstrated in the data will repeat themselves in the future,
absent a material change in the associated risk factors discussed below. To the extent a material change affecting the ultimate
claim liability is known, such change is estimated to the extent possible through an analysis of internal company data and, if
available and when appropriate, external data. Such a measurement is specific to the facts and circumstances of the particular
claim portfolio and the known change being evaluated. Significant structural changes to the available data, product mix or
organization can materially impact the reserve estimation process. In addition, the introduction of new products creates a
unique risk as historical company data would typically not be available.
Informed judgment is applied throughout the reserving process. This includes the application of various individual experiences
and expertise to multiple sets of data and analyses. In addition to actuaries, experts involved with the reserving process also
include underwriting and claims personnel and lawyers, as well as other company management. Therefore, management may
have to consider varying individual viewpoints as part of its estimation of claims and claim adjustment expense reserves. It is
also likely that during periods of significant change, such as a merger, consistent application of informed judgment becomes
even more complicated and difficult.
The variables discussed above in this general discussion have different impacts on reserve estimation uncertainty for a given
product line, depending on the length of the claim tail, the reporting lag, the impact of individual claims and the complexity of
the claim process for a given product line.
Product lines are generally classifiable as either long tail or short tail, based on the average length of time between the event
triggering claims under a policy and the final resolution of those claims. Short tail claims are reported and settled quickly,
resulting in less estimation variability. The longer the time to final claim resolution, the greater the exposure to estimation risks
and hence the greater the estimation uncertainty.
A major component of the claim tail is the reporting lag. The reporting lag, which is the time between the event triggering a
claim and the reporting of the claim to the insurer, makes estimating IBNR inherently more uncertain. In addition, the greater
the reporting lag, the greater the proportion of IBNR to the total claim liability for the product line. Writing new products with
material reporting lags can result in adding several years’ worth of IBNR claim exposure before the reporting lag exposure
becomes clearly observable, thereby increasing the risk associated with estimating the liabilities for claims and claim
adjustment expenses for such products. The most extreme example of claim liabilities with long reporting lags are asbestos
claims.
For some lines, the impact of large individual claims can be material to the analysis. These lines are generally referred to as
being “low frequency/high severity,” while lines without this “large claim” sensitivity are referred to as “high frequency/low
severity.” Estimates of claim liabilities for low frequency/high severity lines can be sensitive to the impact of a small number
of potentially large claims. As a result, the role of judgment is much greater for these reserve estimates. In contrast, for high
frequency/low severity lines the impact of individual claims is relatively minor and the range of reasonable reserve estimates is
likely narrower and more stable.
Claim complexity can also greatly affect the estimation process by impacting the number of assumptions needed to produce the
estimate, the potential stability of the underlying data and claim process, and the ability to gain an understanding of the data.
Product lines with greater claim complexity, such as for certain surety and construction exposures, have inherently greater
estimation uncertainty.
102
Actuaries have to exercise a considerable degree of judgment in the evaluation of all these factors in their analysis of reserves.
The human element in the application of actuarial judgment is unavoidable when faced with material uncertainty. Different
actuaries may choose different assumptions when faced with such uncertainty, based on their individual backgrounds,
professional experiences and areas of focus. Hence, the estimates selected by the various actuaries may differ materially from
each other.
Lastly, significant structural changes to the available data, product mix or organization can also materially impact the reserve
estimation process. Events such as mergers increase the inherent uncertainty of reserve estimates for a period of time, until
stable trends re-establish themselves within the new organization.
Risk Factors
The major causes of material uncertainty (“risk factors”) generally will vary for each product line, as well as for each separately
analyzed component of the product line. In a few cases, such risk factors are explicit assumptions of the estimation method, but
in most cases, they are implicit. For example, a method may explicitly assume that a certain percentage of claims will close
each year, but will implicitly assume that the legal interpretation of existing contract language will remain unchanged. Actual
results will likely vary from expectations for each of these assumptions, causing actual paid losses, as claims are settled in the
future, to be different in amount than the reserves being estimated currently.
Some risk factors will affect more than one product line. Examples include changes in claim department practices, changes in
the tort environment, changes in settlement patterns, regulatory and legislative actions, court actions, timeliness of claim
reporting, state mix of claimants, medical utilization and degree of claimant fraud. The extent of the impact of a risk factor will
also vary by components within a product line. Individual risk factors are also subject to interactions with other risk factors
within product line components.
The effect of a particular risk factor on estimates of claim liabilities cannot be isolated in most cases. For example, estimates of
potential claim settlements may be impacted by the risk associated with potential court rulings, but the final settlement
agreement typically does not delineate how much of the settled amount is due to this and other factors.
The evaluation of data is also subject to distortion from extreme events or structural shifts, sometimes in unanticipated ways.
For example, the timing of claims payments in one geographic region may be impacted if claim adjusters are temporarily
reassigned from that region to help settle catastrophe claims in another region.
While some changes in the claim environment are sudden in nature (such as a new court ruling affecting the interpretation of all
contracts in that jurisdiction), others are more evolutionary. Evolutionary changes can occur when multiple factors affect final
claim values, with the uncertainty surrounding each factor being resolved separately, in stepwise fashion. The final impact is
not known until all steps have occurred.
Sudden changes generally cause a one-time shift in claim liability estimates, although there may be some lag in reliable
quantification of their impact. Evolutionary changes generally cause a series of shifts in claim liability estimates, as each
component of the evolutionary change becomes evident and estimable.
Actuarial Methods for Analyzing and Estimating Claims and Claim Adjustment Expense Reserves
The principal estimation and analysis methods utilized by the Company’s actuaries to evaluate management’s existing estimates
for prior accident periods are the paid loss development method, the case incurred development method, the Bornhuetter-
Ferguson (BF) method, and average value analysis combined with the reported claim development method. The BF method is
usually utilized for more recent accident periods, with a transition to other methods as the underlying claim data becomes more
voluminous and therefore more credible. These estimation and analysis methods are typically referred to as conventional
actuarial methods. (See note 8 of the notes to the consolidated financial statements for an explanation of these methods).
While the Company utilizes these conventional actuarial methods to estimate the claims liability for its various businesses,
Company actuaries evaluating a particular component for a product line may select from the full range of methods developed
within the casualty actuarial profession. The Company’s actuaries are also regularly monitoring developments within the
profession for advances in existing techniques or the creation of new techniques that might improve current and future
estimates.
Some components of a product line may be susceptible to infrequent large claims or not be subject to conventional methods. In
such cases, the Company’s actuarial analysis will isolate such components for review. The reserves excluding such large
claims are generally analyzed using the conventional methods described above. The reserves associated with large claims are
then analyzed utilizing various methods, such as:
103
•
Estimating the number of large claims and their average values based on historical trends from prior accident periods,
adjusted for the current environment and supplemented with actual data for the accident year analyzed to the extent
available.
•
Utilizing individual claim adjuster estimates of the large claims, combined with continual monitoring of the aggregate
accuracy of such claim adjuster estimates. (This monitoring may lead to supplemental adjustments to the aggregate of
such claim estimates).
•
Utilizing historic longer-term average ratios of large claims to small claims, and applying such ratios to the estimated
ultimate small claims from conventional analysis.
•
Ground-up analysis of the underlying exposure (typically used for asbestos and environmental).
The results of such methodologies are subjected to various reasonability and diagnostic tests, including implied incurred-loss-
to-earned-premium ratios, non-zero claim severity trends and paid-to-incurred loss ratios. An actual versus expected analysis is
also performed comparing actual loss development to expected development embedded within management’s estimate.
Additional analyses may be performed based on the results of these diagnostics, including the investigation of other actuarial
methods.
The methods described above are generally utilized to evaluate management’s estimate for prior accident periods. For the
initial estimate of the current accident year, however, the available claim data is typically insufficient to produce a reliable
indication. As a result, the initial estimate for an accident year is generally based on an exposure-based method using either the
loss ratio projection method or the expected loss method. The loss ratio projection method, which is typically used for
guaranteed-cost business, develops an initial estimate for an accident year by multiplying earned premiums for the accident year
by a projected loss ratio. The projected loss ratio is determined by analyzing prior period experience, and adjusting for loss cost
trends, rate level differences, mix of business changes and other known or observed factors influencing the current accident
year relative to prior accident years. The exact number of prior accident years utilized varies by product line component, based
on the stability and consistency of the individual accident year estimates. The expected loss method, which is typically used for
loss sensitive business, develops an initial estimate of ultimate claims and claim adjustment expenses for an accident year by
analyzing exposures by account.
Management’s Estimates
At least once per quarter, members of Company management meet with the Company’s actuaries to review the latest claims and
claim adjustment expense reserve analyses. Based on these analyses, management determines whether its ultimate claim
liability estimates should be changed from the prior period. In doing so, it must evaluate whether the new data provided
represents credible actionable information or an anomaly that will have no effect on estimated ultimate claim liability. For
example, as described above, payments may have decreased in one geographic region due to fewer claim adjusters being
available to process claims. The resulting claim payment patterns would be analyzed to determine whether or not the change in
payment pattern represents a change in ultimate claim liability.
This type of assessment requires considerable judgment. It is frequently not possible to determine whether a change in the data
is an anomaly until sometime after the event. Even if a change is determined to be permanent, it is not always possible to
reliably determine the extent of the change until sometime later. The overall detailed analyses supporting such an effort can take
several months to perform as the underlying causes of the trends observed need to be evaluated, which may require the
gathering or assembling of data not previously available. It may also include interviews with experts involved with the
underlying processes. As a result, there can be a time lag between the emergence of a change and a determination that the
change should be reflected in the Company’s estimated claim liabilities. The final estimate selected by management in a
reporting period is based on these various detailed analyses of past data, adjusted to reflect any new actionable information.
The Audit Committee of the Board of Directors reviews the process by which the Company establishes reserves for the purpose
of the Company’s financial statements.
Discussion of Product Lines
The following section details reserving considerations and common risk factors by product line. There are many additional risk
factors that may impact ultimate claim costs. Each risk factor presented will have a different impact on required reserves. Also,
risk factors can have offsetting or compounding effects on required reserves. For example, in workers’ compensation, the use of
expensive medical procedures that result in medical cost inflation may enable workers to return to work faster, thereby lowering
indemnity costs. Thus, in almost all cases, it is impossible to discretely measure the effect of a single risk factor and construct a
meaningful sensitivity expectation.
104
In order to provide information on reasonably possible reserving changes by product line, the historical changes in year-end
claims and claim adjustment expense reserves over a one-year period are provided for the U.S. product lines. This information
is provided for both the Company and the industry for the nine most recent years, and is based on the most recent publicly
available data for the reported line(s) that most closely match the individual product line being discussed. These changes were
calculated, net of reinsurance, from statutory annual statement data found in Schedule P of those statements, and represent the
reported reserve development on the beginning-of-the-year claim liabilities divided by the beginning claim liabilities, all
accident years combined, excluding non-defense related claim adjustment expense. Data presented for the Company includes
history for the entire Travelers group (U.S. companies only), as required by the statutory reporting instructions promulgated by
state regulatory authorities for Schedule P. Comparable data for non-U.S. companies is not available.
General Liability
General liability is generally considered a long tail line, as it takes a relatively long period of time to finalize and settle claims
from a given accident year. The speed of claim reporting and claim settlement is a function of the characteristics of claims,
including specific coverage provided, the jurisdiction and specific policy provisions such as self-insured retentions, among
others. There are numerous components underlying the general liability product line. Some of these have relatively moderate
payment patterns (with most of the claims for a given accident year closed within five to seven years), while others can have
extreme lags in both reporting and payment of claims (e.g., a reporting lag of a decade or more for “construction defect”
claims).
While the majority of general liability coverages are written on an “occurrence” basis, certain general liability coverages (such
as those covering management and professional liability, including cyber coverages) are typically insured on a “claims-made”
basis.
General liability reserves are generally analyzed as two components: primary and excess/umbrella, with the primary component
generally analyzed separately for bodily injury and property damage. Bodily injury liability payments reimburse the claimant
for damages pertaining to physical injury as a result of the policyholder’s legal obligation arising from non-intentional acts such
as negligence, subject to the insurance policy provisions. In some cases the damages can include future wage loss (which is a
function of future earnings power and wage inflation) and future medical treatment costs. Property damage liability payments
result from damages to the claimant’s private property arising from the policyholder’s legal obligation for non-intentional acts.
In most cases, property damage losses are a function of costs as of the loss date, or soon thereafter.
In addition, sizable or unique exposures are reviewed separately. These exposures include asbestos, environmental, other mass
torts, construction defect and large unique accounts that would otherwise distort the analysis. These unique categories often
require a very high degree of judgment and require reserve analyses that do not rely on conventional actuarial methods.
Defense costs are also a part of the insured costs covered by liability policies and can be significant, sometimes greater than the
cost of the actual paid claims. For some products this risk is mitigated by policy language such that the insured portion of
defense costs is included in the policy limit available to pay the claim. Such “defense within the limits” policies are most
common for “claims-made” products. When defense costs are outside of the policy limits, the full amount of the policy limit is
available to pay claims and the amounts paid for defense costs have no contractual limit.
This line is typically the largest source of reserve estimate uncertainty in the United States (excluding assumed reinsurance
contracts covering the same risk). Major contributors to this reserve estimate uncertainty include the reporting lag (i.e., the
length of time between the event triggering coverage and the actual reporting of the claim), the number of parties involved in
the underlying tort action, whether the “event” triggering coverage is confined to only one time period or is spread over
multiple time periods, the potential dollars involved (in the individual claim actions), whether such claims were reasonably
foreseeable and intended to be covered at the time the contracts were written (i.e., coverage dispute potential), and the potential
for mass claim actions. Claims with longer reporting lags result in greater estimation uncertainty. This is especially true for
alleged claims with a latency feature, particularly where courts have ruled that coverage is spread over multiple policy years,
hence involving multiple defendants (and their insurers and reinsurers) and multiple policies (thereby increasing the potential
dollars involved and the underlying settlement complexity). Claims with long latencies also increase the potential recognition
lag (i.e., the lag between writing a type of policy in a certain market and the recognition that such policies have potential mass
tort and/or latent claim exposure).
The amount of reserve estimate uncertainty also varies significantly by component for the general liability product line. The
components in this product line with the longest latency, longest reporting lags, largest potential dollars involved and greatest
claim settlement complexity are asbestos and environmental. Components that include latency, reporting lag and/or complexity
issues, but to a materially lesser extent than asbestos and environmental, include construction defect and other mass tort actions.
Many components of general liability are not subject to material latency or claim complexity risks and hence have materially
105
less uncertainty than the previously mentioned components. In general, components with shorter reporting lags, fewer parties
involved in settlement negotiations, only one policy potentially triggered per claim, fewer potential settlement dollars,
reasonably foreseeable (and stable) potential hazards/claims and no mass tort potential result in much less reserve estimate
uncertainty than components without those characteristics.
In addition to the conventional actuarial methods mentioned in the general discussion section, the company utilizes various
report year development methods for the construction defect components of this product line. The Construction Defect report
year development analysis is supplemented with projected claim counts and average values for IBNR claim counts. For
components with greater lags in claim reporting, such as excess and umbrella components of this product line, the Company
relies more heavily on the BF method than on the paid and case incurred development methods.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required general liability
reserves (beyond those included in the general discussion section) include:
General liability risk factors
•
Changes in claim handling philosophies
•
Changes in policy provisions or court interpretation of such provisions
•
New or expanded theories of liability
•
Trends in jury awards
•
Changes in the propensity to sue, in general with specificity to particular issues
•
Changes in the propensity to litigate rather than settle a claim
•
Increases in attorney involvement in, or impact on, claims
•
Changes in statutes of limitations
•
Changes in the underlying court system
•
Distortions from losses resulting from large single accounts or single issues
•
Changes in tort law
•
Shifts in lawsuit mix between federal and state courts
•
Changes in claim adjuster processes or reporting which may cause distortions in the data being analyzed
•
The impact of inflation on loss costs
•
Changes in settlement patterns
General liability book of business risk factors
•
Changes in policy provisions (e.g., deductibles, policy limits, endorsements)
•
Changes in underwriting standards
•
Product mix (e.g., size of account, industries insured, jurisdiction mix)
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk
factors could have on reserves for general liability (excluding asbestos and environmental), a 1% increase (decrease) in
incremental paid loss development for each future calendar year could result in a 1.5% increase (decrease) in claims and claim
adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line, excluding estimated asbestos and environmental
amounts, over the last nine years has varied from -4% to 6% (averaging 1%) for the Company, and from -2% to 3% (averaging
1%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the
year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in
reserve estimates for this product line. General liability reserves (excluding asbestos and environmental) represent
approximately 24% of the Company’s total claims and claim adjustment expense reserves.
The Company’s change in reserve estimate for this product line related to the last nine accident years, which excludes the
impacts of increases in asbestos and environmental reserves, the extension of the statute of limitations for childhood sexual
molestation claims and increases in reserves in the Company’s runoff operations, was 4% for 2024, 4% for 2023 and 2% for
2022. The 2024 change primarily reflected higher than expected loss experience in Business Insurance for accident years 2021
through 2023. The 2023 change primarily reflected higher than expected loss experience in Business Insurance for accident
years 2017 through 2020. The 2022 change primarily reflected higher than expected loss experience in Business Insurance for
accident years 2017 through 2019.
106
Commercial Property
Commercial property is generally considered a short tail line with a simpler and faster claim reporting and adjustment process
than liability coverages, and less uncertainty in the reserve setting process (except for more complex business interruption
claims). It is generally viewed as a moderate frequency, low to moderate severity line, except for catastrophes and coverage
related to large properties. The claim reporting and settlement process for property coverage claim reserves is generally
restricted to the insured and the insurer. Overall, the claim liabilities for this line create a low estimation risk, except possibly
for catastrophes and business interruption claims.
Commercial property reserves are typically analyzed in two components, one for catastrophic or other large single events, and
another for all other events. Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the
required property reserves (beyond those included in the general discussion section) include:
Commercial property risk factors
•
Physical concentration of policyholders
•
Availability and cost of local contractors
•
Inflation and materials shortages
•
For the more severe catastrophic events, “demand surge” inflation, which refers to significant short-term increases in
building material and labor costs due to a sharp increase in demand for those materials and services
•
Local building codes
•
Amount of time to return property to full usage (for business interruption claims)
•
Frequency of claim re-openings on claims previously closed
•
Court interpretation of policy provisions (such as occurrence definition, wind versus flooding or communicable
disease exclusions)
•
Lags in reporting claims (e.g., winter damage to summer homes, hidden damage after an earthquake, hail damage to
roofs and/or equipment on roofs)
•
Court or legislative changes to the statute of limitations
•
Weather/climate variability
Commercial property book of business risk factors
•
Policy provisions mix (e.g., deductibles, policy limits, endorsements)
•
Changes in underwriting standards
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk
factors could have on reserves for property, a 1% increase (decrease) in incremental paid loss development for each future
calendar year could result in a 1.1% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -11% to
2% (averaging -7%) for the Company, and from -10% to -2% (averaging -6%) for the industry overall. The Company’s year-
to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of
historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line.
Commercial property reserves represent approximately 3% of the Company’s total claims and claim adjustment expense
reserves.
Since commercial property is considered a short tail coverage, the one year change for commercial property can be more
volatile than that for the longer tail product lines. This is due to the fact that the majority of the reserve for commercial property
relates to the most recent accident year, which is subject to the most uncertainty for all product lines. This recent accident year
uncertainty is relevant to commercial property because weather-related events that occur in the second half of the year may not
be completely resolved until the following year. Reserve estimates associated with catastrophes may take even longer to
resolve. The reserve estimates for this product line are also potentially subject to material changes due to uncertainty in
measuring ultimate losses for significant catastrophes such as hurricanes, tornadoes, hail storms and wildfires.
The Company’s change in reserve estimate for this product line was -3% for 2024, 2% for 2023 and -8% for 2022. The 2024
change primarily reflected better than expected loss experience related to both catastrophe and non-catastrophe losses for
accident years 2018 through 2020 and 2023. The 2023 change primarily reflected higher than expected loss experience related
to both catastrophe and non-catastrophe losses for accident year 2022. The 2022 change primarily reflected better than expected
loss experience related to both catastrophe and non-catastrophe losses for accident years 2020 and 2021.
107
Commercial Multi-Peril
Commercial multi-peril provides a combination of property and liability coverage typically for small businesses and, therefore,
includes both short and long tail coverages. For property coverage, it generally takes a relatively short period of time to close
claims, while for the other coverages, generally for the liability coverages, it takes a longer period of time to close claims.
The reserving risk for this line is dominated by the liability coverage portion of this product, except occasionally in the event of
catastrophic or other large single loss events. The reserving risk for this line differs from that of the general liability product line
and the property product line due to the nature of the customer. Commercial multi-peril is generally sold to small- to mid-sized
accounts, while the customer profile for general liability and commercial property includes larger customers.
See “Commercial property risk factors” and “General liability risk factors,” discussed above, with regard to reserving risk for
commercial multi-peril.
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk
factors could have on reserves for commercial multi-peril (excluding asbestos and environmental), a 1% increase (decrease) in
incremental paid loss development for each future calendar year could result in a 1.4% increase (decrease) in claims and claim
adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line, excluding estimated asbestos and environmental
amounts, over the last nine years has varied from -5% to 4% (averaging 0%) for the Company, and from -3% to 3% (averaging
0%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the
year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in
reserve estimates for this product line. Commercial multi-peril reserves (excluding asbestos and environmental reserves)
represent approximately 10% of the Company’s total claims and claim adjustment expense reserves.
As discussed above, this line combines general liability and commercial property coverages and it has been impacted in the past
by many of the same events as those two lines.
The Company’s change in reserve estimate for this product line related to the last nine accident years, which excludes the
impacts of increases in asbestos and environmental reserves and increases in reserves in the Company’s runoff operations, was
1% for 2024, 0% for 2023 and -2% for 2022. The 2024 change primarily reflected higher than expected loss experience for
liability coverages for accident years 2021 through 2023. In 2023, higher than expected loss experience for liability coverages
for accident year 2022 was mostly offset by better than expected loss experience for liability coverages for accident years 2017
and 2020. The 2022 change primarily reflected better than expected loss experience for property coverages for accident year
2021.
Commercial Automobile
The commercial automobile product line is a mix of property and liability coverages and, therefore, includes both short and
long tail coverages. The payments that are made quickly typically pertain to auto physical damage (property) claims and
property damage (liability) claims. The payments that take longer to finalize and are more difficult to estimate relate to bodily
injury claims. In general, claim reporting lags are generally short, claim complexity is not a major issue, and the line is viewed
as high frequency, low to moderate severity. Overall, the claim liabilities for this line create a moderate estimation risk.
Recently, the Company has seen more of an increase in the rate of attorney involvement than it had anticipated and a
lengthening of the claim development pattern. As a consequence, the Company has experienced a higher level of bodily injury
severity than it had anticipated.
Commercial automobile reserves are typically analyzed in four components: bodily injury liability; property damage liability;
collision claims; and comprehensive claims. These last two components have minimum reserve risk and fast payouts and,
accordingly, separate risk factors are not presented.
The Company utilizes the conventional actuarial methods mentioned in the general discussion above in estimating claim
liabilities for this line. This is supplemented with detailed custom analyses where needed.
108
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required commercial
automobile reserves (beyond those included in the general discussion section) include:
Bodily injury and property damage liability risk factors
•
Trends in jury awards
•
Changes in the underlying court system
•
Changes in case law
•
Litigation trends
•
Increases in attorney involvement in, or impact on, claims
•
Frequency of claims with payment capped by policy limits
•
Change in average severity of accidents, or proportion of severe accidents, including the impact of inflation
•
Changes in auto safety technology
•
Subrogation opportunities
•
Changes in claim handling philosophies
•
Frequency of visits to health providers
•
Number of medical procedures given during visits to health providers
•
Types of health providers used
•
Types of medical treatments received
•
Changes in cost of medical treatments
•
Degree of patient responsiveness to treatment
Commercial automobile book of business risk factors
•
Changes in policy provisions (e.g., deductibles, policy limits, endorsements, etc.)
•
Changes in mix of insured vehicles (e.g., long haul trucks versus local and smaller vehicles, fleet risks versus non-
fleets)
•
Changes in underwriting standards
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk
factors could have on reserves for commercial automobile, a 1% increase (decrease) in incremental paid loss development for
each future calendar year could result in a 1.3% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -2% to
11% (averaging 3%) for the Company, and from 2% to 7% (averaging 5%) for the industry overall. The Company’s year-to-
year changes are driven by, and are based on, observed events during the year. The Company believes that its range of
historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line.
Commercial automobile reserves represent approximately 9% of the Company’s total claims and claim adjustment expense
reserves.
The Company’s change in reserve estimate for this product line was 0% for 2024, 4% for 2023 and 0% for 2022. In 2024, better
than expected loss experience for physical damage coverages for accident year 2023 was largely offset by higher than expected
loss experience for liability coverages for accident years 2021 through 2023. The 2023 change primarily reflected higher than
expected loss experience for liability coverages for accident years 2021 and 2022. In 2022, higher than expected loss experience
for liability coverages for accident years 2017 through 2019 and 2021 was largely offset by better than expected loss experience
for physical damage coverages for accident year 2021 and for liability coverages for accident year 2020.
Workers’ Compensation
Workers’ compensation is generally considered a long tail coverage, as it takes a relatively long period of time to finalize
claims from a given accident year. While certain payments such as initial medical treatment or temporary wage replacement for
the injured worker are made quickly, some other payments are made over the course of several years, such as awards for
permanent partial injuries. In addition, some payments can run as long as the injured worker’s life, such as permanent disability
benefits and on-going medical care. Despite the possibility of long payment tails, the reporting lags are generally short,
payment obligations are generally not complex, and most of the liability can be considered high frequency with moderate
severity. The largest reserve risk generally comes from the low frequency, high severity claims providing lifetime coverage for
medical expense arising from a worker’s injury, as such claims are subject to greater inflation risk. Overall, the claim liabilities
for this line create a somewhat greater than moderate estimation risk.
Workers’ compensation reserves are typically analyzed in three components: indemnity losses, medical losses and claim
adjustment expenses.
109
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required workers’
compensation reserves (beyond those included in the general discussion section) include:
Indemnity risk factors
•
Time required to recover from the injury
•
Degree of available transitional jobs
•
Degree of legal involvement
•
Changes in the interpretations and processes of the administrative bodies that oversee workers’ compensation claims
•
Future wage inflation for states that index benefits
•
Changes in the administrative policies of second injury funds
Medical risk factors
•
Changes in the cost of medical treatments (including prescription drugs) and underlying fee schedules (“inflation”)
•
Availability of medical providers and medical wage impacts
•
Frequency of visits to health providers
•
Number of medical procedures given during visits to health providers
•
Types of health providers used
•
Type of medical treatments received
•
Use of preferred provider networks and other medical cost containment practices
•
Availability of new medical processes and equipment
•
Changes in the use of pharmaceutical drugs, including drugs for pain management
•
Degree of patient responsiveness to treatment
General workers’ compensation risk factors
•
Frequency of reopening claims previously closed
•
Mortality trends of injured workers with lifetime benefits and medical treatment
•
Changes in statutory benefits, including due to presumption laws
•
The impact, if any, of potential future changes to government health insurance legislation
Workers’ compensation book of business risk factors
•
Product mix
•
Injury type mix
•
Changes in underwriting standards
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk
factors could have on reserves for workers’ compensation, a 1% increase (decrease) in incremental paid loss development for
each future calendar year could result in a 1.1% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -5% to
-2% (averaging -4%) for the Company, and from -5% to -2% (averaging -4%) for the industry overall. The Company’s year-to-
year changes are driven by, and are based on, observed events during the year. The Company believes that its range of
historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Workers’
compensation reserves represent approximately 29% of the Company’s total claims and claim adjustment expense reserves.
The Company’s change in reserve estimate for this product line was -5% for 2024, -5% for 2023 and -4% for 2022. The 2024
change primarily reflected better than expected loss experience for accident years 2022 and prior. The 2023 change primarily
reflected better than expected loss experience for accident years 2021 and prior. The 2022 change primarily reflected better than
expected loss experience for accident years 2021 and prior.
Fidelity and Surety
Fidelity is generally considered a short tail coverage. It takes a relatively short period of time to finalize and settle most fidelity
claims. The volatility of fidelity reserves is generally related to the type of business of the insured, the size and complexity of
the insured’s business operations, amount of policy limit and attachment point of coverage. The uncertainty surrounding
reserves for small, commercial insureds is typically less than the uncertainty for large commercial or financial institutions. The
high frequency, low severity nature of small commercial fidelity losses provides for stability in loss estimates, whereas the low
frequency, high severity nature of losses for large insureds results in a wider range of ultimate loss outcomes. Actuarial
techniques that rely on a stable pattern of loss development are generally not applicable to low frequency, high severity claims.
110
Surety has certain components that are generally considered short tail coverages with short reporting lags, although large
individual construction and commercial surety contracts can result in a long settlement tail, based on the length and complexity
of the construction project(s) or commercial transaction being bonded. The frequency of losses in surety generally has a lagging
correlation with economic cycles as the primary cause of surety loss is the inability of an insured to fulfill its contractual
obligations. The Company actively seeks to mitigate this exposure to loss through disciplined risk selection, adherence to
underwriting standards and ongoing monitoring of contractor progress in significant construction projects. The volatility of
surety losses is generally related to the type of business performed by the bonded party, the type of bonded obligation, the
amount of limit exposed to loss and the amount of assets available to the surety company to mitigate losses, such as unbilled
contract funds, collateral, first and third party indemnity, and other security positions of a bonded party’s assets. Certain classes
of surety claims are very high severity, low frequency in nature. These can include large construction contractors involved with
one or multiple large, complex projects as well as certain large commercial surety exposures. Other claim factors affecting
reserve variability of surety include litigation related to amounts owed by the bonded party and due to the surety company (e.g.,
salvage and subrogation efforts), the results of financial restructuring of a bonded party and the availability and cost of
replacement contractors, labor and materials.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required fidelity and surety
reserves (beyond those included in the general discussion section) include:
Fidelity risk factors
•
Type of business of insured
•
Policy limit and attachment points
•
Third-party claims
•
Coverage litigation
•
Complexity of claims
•
Growth in insureds’ operations
Surety risk factors
•
Economic trends, including the general level of construction activity
•
Concentration of reserves in a relatively few large claims
•
Type of business bonded
•
Type of obligation bonded
•
Cumulative limits of liability for the bonded party
•
Assets available to mitigate loss
•
Defective workmanship/latent defects
•
Financial strategy of the bonded party
•
Changes in statutory obligations
•
Geographic spread of business
Fidelity and Surety book of business risk factors
•
Changes in policy provisions (e.g., deductibles, limits, endorsements)
•
Changes in underwriting standards
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk
factors could have on reserves for fidelity and surety, a 1% increase (decrease) in incremental paid loss development for each
future calendar year could result in a 1.7% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -36% to
-10% (averaging -20%) for the Company, and from -21% to 0% (averaging -13%) for the industry overall. The Company’s
year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of
historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Fidelity
and surety reserves represent approximately 1% of the Company’s total claims and claim adjustment expense reserves.
In general, developments on single large claims (both adverse and favorable) are a primary source of changes in reserve
estimates for this product line.
The Company’s change in reserve estimate for this product line was -14% for 2024, -26% for 2023 and -30% for 2022. The
2024 change primarily reflected higher than expected loss experience in the fidelity and surety product line for accident year
2022. The 2023 change primarily reflected better than expected loss experience in the fidelity and surety product line for
accident years 2021 and 2022. The 2022 change primarily reflected better than expected loss experience in the fidelity and
surety product line for accident years 2015 through 2019 and 2021.
111
Personal Automobile
Personal automobile includes both short and long tail coverages. The payments that are made quickly typically pertain to auto
physical damage (property) claims and property damage (liability) claims. The payments that take longer to finalize and are
more difficult to estimate relate to bodily injury claims. Reporting lags are relatively short and the claim settlement process for
personal automobile liability generally is the least complex of the liability products. It is generally viewed as a high frequency,
low to moderate severity product line. Overall, the claim liabilities for this line create a moderate estimation risk.
Personal automobile reserves are typically analyzed in five components: bodily injury liability, property damage liability, no-
fault losses, collision claims and comprehensive claims. These last two components have minimum reserve risk and fast
payouts and, accordingly, separate factors are not presented.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required personal automobile
reserves (beyond those included in the general reserve discussion section) include:
Bodily injury, property damage liability and no-fault risk factors
•
Trends in jury awards
•
Changes in the underlying court system and its philosophy
•
Changes in case law
•
Litigation trends
•
Increases in attorney involvement in, or impact on, claims
•
Frequency of claims with payment capped by policy limits
•
Change in frequency trends, including the impact of changes in driving behavior and customer coverage elections
•
Change in average severity of accidents, or proportion of severe accidents, including the impact of inflation, changes
in driving behavior and the involvement of pedestrians
•
Changes in auto technology, including safety features
•
Subrogation opportunities
•
Frequency of visits to health providers
•
Number of medical procedures given during visits to health providers
•
Types of health providers used
•
Types of medical treatments received
•
Changes in cost of medical treatments
•
Effectiveness of no-fault laws
•
Degree of patient responsiveness to treatment
•
Changes in claim handling philosophies
Personal automobile book of business risk factors
•
Changes in policy provisions (e.g., deductibles, policy limits, endorsements, etc.)
•
Changes in underwriting standards
•
Changes in the use of permissible data for rating and underwriting
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk
factors could have on reserves for personal automobile, a 1% increase (decrease) in incremental paid loss development for each
future calendar year could result in a 1.1% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -5% to 3%
(averaging -1%) for the Company, and from -2% to 4% (averaging 1%) for the industry overall. The Company’s year-to-year
changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical
outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Personal automobile
reserves represent approximately 8% of the Company’s total claims and claim adjustment expense reserves.
The Company’s change in reserve estimate for this product line was -5% for 2024, 0% for 2023 and 0% for 2022. The 2024
change primarily reflected better than expected loss experience for liability coverages for accident years 2020 through 2023 and
for physical damage coverages for accident year 2023. In 2023, better than expected loss experience for physical damage
coverages for accident years 2021 and 2022 was largely offset by higher than expected loss experience for liability coverages
for accident years 2020 and 2021. In 2022, higher than expected loss experience for liability coverages for accident year 2021
was largely offset by better than expected loss experience for physical damage coverages for accident year 2021 and for liability
coverages for accident years 2018 through 2020.
112
Personal Homeowners and Other
Homeowners is generally considered a short tail coverage. Most payments are related to the property portion of the policy,
where the claim reporting and settlement process is generally restricted to the insured and the insurer. Claims on property
coverage are typically reported soon after the actual damage occurs, although delays of several months are not unusual. The
resulting settlement process is typically fairly short term, although exceptions do exist.
The liability portion of the homeowners policy generates claims which take longer to pay due to the involvement of litigation
and negotiation, but with generally small reporting lags. Personal Insurance Other products include personal umbrella policies,
among others. See “general liability reserving risk factors,” discussed above, for reserving risk factors related to umbrella
coverages.
Overall, the line is generally high frequency, low to moderate severity (except for catastrophes), with simple to moderate claim
complexity.
Homeowners reserves are typically analyzed in two components: non-catastrophe related losses and catastrophe losses.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required homeowners reserves
(beyond those included in the general discussion section) include:
Homeowners and Other risk factors
•
Weather/climate variability
•
Inflation and materials costs and shortages
•
For the more severe catastrophic events, “demand surge” inflation, which refers to significant short-term increases in
building material and labor costs due to a sharp increase in demand for those materials and services
•
Amount of time to return property to residential use
•
Lags in reporting claims (e.g., winter damage to summer homes, hidden damage after an earthquake, hail damage to
roofs and/or equipment on roofs)
•
Availability and cost of local contractors
•
Quality of construction of insured homes
•
Local building codes
•
Litigation trends
•
Trends in jury awards
•
Court interpretation of policy provisions (such as occurrence definition, or wind versus flooding)
•
Court or legislative changes to the statute of limitations
•
Salvage and subrogation opportunities
Homeowners and Other book of business risk factors
•
Policy provisions mix (e.g., deductibles, policy limits, endorsements, etc.)
•
Degree of concentration of policyholders
•
Changes in underwriting standards
•
Changes in the use of permissible data for rating and underwriting
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk
factors could have on reserves for personal homeowners and other, a 1% increase (decrease) in incremental paid loss
development for each future calendar year could result in a 1.1% increase (decrease) in claims and claim adjustment expense
reserves.
Historically, the one-year change in the reserve estimate for this product line (excluding Personal Insurance Other, which for
statutory reporting purposes is included with other lines of business) over the last nine years has varied from -28% to 3%
(averaging -7%) for the Company, and from -3% to 2% (averaging -1%) for the industry overall. The Company’s year-to-year
changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical
outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Personal
homeowners and other reserves represent approximately 5% of the Company’s total claims and claim adjustment expense
reserves.
This line combines both liability and property coverages; however, the majority of the reserves relate to property. While
property is considered a short tail coverage, the one year change for property can be more volatile than that for the longer tail
product lines. This is due to the fact that the majority of the reserve for property relates to the most recent accident year, which
is subject to the most uncertainty for all product lines. This recent accident year uncertainty is relevant to property because
113
weather-related events in the second half of the year may not be completely resolved until the following year. Reserve
estimates associated with catastrophes, including wildfires in recent years, may take even longer to resolve.
The Company’s change in reserve estimate for this product line (excluding Personal Insurance Other) was -12% for 2024, -9%
for 2023 and -2% for 2022. The 2024 change primarily reflected better than expected loss experience for catastrophe and non-
catastrophe losses for accident years 2017 through 2023. The 2023 change primarily reflected better than expected loss
experience for catastrophe and non-catastrophe losses for accident years 2017 through 2022. The 2022 change primarily
reflected better than expected loss experience for catastrophe and non-catastrophe losses for accident years 2018 through 2020.
International and Other
International and other includes products written by the Company’s international operations, as well as all other products not
explicitly discussed above. The principal component of “other” claim reserves is assumed reinsurance written on an excess-of-
loss basis, which may include reinsurance of non-U.S. exposures, and is runoff business.
International and other claim liabilities result from a mix of coverages, currencies and jurisdictions/countries. The common
characteristic is the need to customize the analysis to the individual component, and the inability to rely on data
characterizations and reporting requirements in the U.S. statutory reporting framework.
Due to changes in the business mix for this product line over time, incurred claim liabilities for more recent years are generally
shorter-tailed (due to both the products and the jurisdictions involved, e.g., Canada, the Republic of Ireland and the United
Kingdom), compared to the older liabilities from runoff operations that are extremely long tail (e.g., U.S. excess liabilities
reinsured through the London market, and several underwriting pools in runoff). The speed of claim reporting and claim
settlement is a function of the specific coverage provided, the jurisdiction, the distribution system (e.g., underwriting pool
versus direct) and the proximity of the insurance sale to the insured hazard (e.g., insured and insurer located in different
countries). In particular, liabilities arising from the underwriting pools in runoff may result in significant reporting lags,
settlement lags and claim complexity, due to the need to coordinate with other pool members or co-insurers through a broker or
lead-insurer for claim settlement purposes.
International reserves are generally analyzed by country and general coverage category (e.g., General Liability in Canada,
Commercial Property in the United Kingdom, etc.). The business is also generally split by direct versus assumed reinsurance
for a given coverage. Where the underlying insured hazard is outside the United States, the underlying coverages are generally
similar to those described under the Homeowners, Personal Automobile, Commercial Automobile, General Liability,
Commercial Property and Surety discussions above, taking into account differences in the legal environment and differences in
terms and conditions. However, statutory coverage differences exist amongst various jurisdictions. For example, in some
jurisdictions there are no aggregate policy limits on certain liability coverages.
Other reserves, primarily assumed reinsurance in runoff, are generally analyzed by program/pool, treaty type, and general
coverage category (e.g., General Liability — excess of loss reinsurance). Excess exposure requires the insured to “prove” not
only claims under the policy, but also the prior payment of claims reaching up to the excess policy’s attachment point.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required International and
other reserves (beyond those included in the general discussion section, and in the Personal Automobile, Homeowners, General
Liability, Commercial Property, Commercial Automobile and Surety discussions above) include:
International and other risk factors
•
Changes in claim handling procedures, including those of the primary carriers
•
Changes in policy provisions or court interpretation of such provision
•
Economic trends
•
New theories of liability
•
Trends in jury awards
•
Changes in the propensity to sue
•
Changes in statutes of limitations
•
Changes in the underlying court system
•
Distortions from losses resulting from large single accounts or single issues
•
Changes in tort law
•
Changes in claim adjuster office structure (causing distortions in the data)
•
Changes in foreign currency exchange rates
114
International and other book of business risk factors
•
Changes in policy provisions (e.g., deductibles, policy limits, endorsements, “claims-made” language)
•
Changes in underwriting standards
•
Product mix (e.g., size of account, industries insured, jurisdiction mix)
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk
factors could have on reserves for International and other (excluding asbestos and environmental), a 1% increase (decrease) in
incremental paid loss development for each future calendar year could result in a 1.4% increase (decrease) in claims and claim
adjustment expense reserves. International and other reserves (excluding asbestos and environmental) represent approximately
8% of the Company’s total claims and claim adjustment expense reserves.
International and other represents a combination of different product lines, some of which are in runoff. Comparative historical
information is not available for international product lines as insurers domiciled outside of the United States do not file U.S.
statutory reports. Comparative historical information on runoff business is not indicative of reasonably possible one-year
changes in the reserve estimate for this mix of runoff business. Accordingly, the Company has not included comparative
analyses for International and other.
Reinsurance Recoverables
Amounts recoverable from reinsurers are estimated in a manner consistent with the associated claim liability. The Company
evaluates and monitors the financial condition of its reinsurers under voluntary reinsurance arrangements to minimize its
exposure to significant losses from reinsurer insolvencies. In addition, in the ordinary course of business, the Company
becomes involved in coverage disputes with its reinsurers. Some of these disputes could result in lawsuits and arbitrations
brought by or against the reinsurers to determine the Company’s rights and obligations under the various reinsurance
agreements. The Company employs dedicated specialists and comprehensive strategies to manage reinsurance collections and
disputes.
The Company has entered into a reinsurance contract in connection with catastrophe bonds issued by Long Point Re IV. This
contract meets the requirements to be accounted for as reinsurance in accordance with guidance for accounting for reinsurance
contracts. The catastrophe bonds are described in more detail in “Item 1-Business-Catastrophe Reinsurance.”
Recoverables attributable to structured settlements relate primarily to personal injury claims, of which workers’ compensation
claims comprise a significant portion, for which the Company has purchased annuities and remains contingently liable in the
event of a default by the companies issuing the annuities. Recoverables attributable to mandatory pools and associations relate
primarily to workers’ compensation service business. These recoverables are supported by the participating insurance
companies’ obligation to pay a pro rata share based on each company’s voluntary market share of written premium in each state
in which it is a pool participant. In the event a member of a mandatory pool or association defaults on its share of the pool’s or
association’s obligations, the other members’ share of such obligation increases proportionally.
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. Amounts deemed to be uncollectible, including amounts due from
known insolvent reinsurers, are written off against the allowance. Changes in the allowance, as well as any subsequent
collections of amounts previously written off, are reported as part of claims and claim adjustment expenses. The Company
evaluates and monitors the financial condition of its reinsurers under voluntary reinsurance arrangements to minimize its
exposure to significant losses from reinsurer insolvencies.
Impairments
Investment Impairments
See note 1 of the notes to the consolidated financial statements for a discussion of investment impairments.
Due to the subjective nature of the Company’s analysis and estimates of future cash flows, along with the judgment that must
be applied in the analysis, it is possible that the Company could reach a different conclusion whether or not to impair a security
115
if it had access to additional information about the issuer. Additionally, it is possible that the issuer’s actual ability to meet
contractual obligations may be different than what the Company determined during its analysis, which may lead to a different
impairment conclusion in future periods.
Goodwill and Other Intangible Assets Impairments
The Company performs a review, on at least an annual basis, of goodwill held by the reporting units which are the Company’s
three operating and reportable segments: Business Insurance; Bond & Specialty Insurance; and Personal Insurance. The
Company uses a discounted cash flow model to estimate the fair value of its reporting units that incorporates multiple inputs
into discounted cash flow calculations, including assumptions that market participants may make in valuing the reporting unit.
The discounted cash flow model is an income approach to valuation that is based on a detailed cash flow analysis for deriving a
current fair value of reporting units and is representative of the Company’s reporting units’ current and expected future
financial performance. The assumptions used include earnings projections, including projected growth, projected levels of
economic capital needed to support the business, and the weighted average cost of capital used for purposes of discounting the
projected cash flows. Changes in the estimates of projected earnings, business growth, economic capital, and the weighted
average cost of capital will directly impact the estimated fair value of the reporting units and, depending on the directional
change of inputs, may increase the risk of impairment of goodwill. Once the Company estimates the fair value of its reporting
units, those estimates are compared to their carrying values. If the carrying values of the reporting units were to exceed their fair
value, the amount of the impairment would be calculated, and goodwill adjusted accordingly.
Other indefinite-lived intangible assets held by the Company are also reviewed for impairment on at least an annual basis. The
Company uses various methods for estimating the fair value of the intangible assets and relies on inputs such as replacement
cost, projected earnings, including projected growth of earnings, and market royalty rates applied to the projected earnings.
See note 1 of the notes to the consolidated financial statements for a discussion of impairments of goodwill and other intangible
assets.
OTHER UNCERTAINTIES
For a discussion of other risks and uncertainties that could impact the Company’s results of operations or financial position, see
note 17 of the notes to the consolidated financial statements and “Item 1A—Risk Factors.”
FORWARD-LOOKING STATEMENTS
This report 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,” “probably,” “anticipates,” “expects,” “intends,” “plans,”
“projects,” “believes,” “views,” “ensures,” “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
(including, among other things, anticipated premium volume, premium rates, renewal premium changes, underwriting
margins and underlying underwriting margins, net and core income, investment income and performance, loss costs,
return on equity, core return on equity and expected current returns, and combined ratios and underlying combined
ratios);
•
the impact of legislative or regulatory actions or court decisions;
•
share repurchase plans;
•
future pension plan contributions;
•
the sufficiency of the Company’s reserves, including asbestos;
•
the impact of emerging claims issues as well as other insurance and non-insurance litigation;
•
the cost and availability of reinsurance coverage;
•
catastrophe losses (including the January 2025 California wildfires) and modeling, including statements about
probabilities or likelihood of exceedance;
•
the impact of investment (including changes in interest rates), economic (including inflation, changes in tax laws,
changes in commodity prices and fluctuations in foreign currency exchange rates) and underwriting market conditions;
•
the Company’s approach to managing its investment portfolio;
•
the impact of changing climate conditions;
•
strategic and operational initiatives to improve growth, profitability and competitiveness;
116
•
the Company’s competitive advantages and innovation agenda, including executing on that agenda with respect to
artificial intelligence;
•
the Company’s cybersecurity policies and practices;
•
new product offerings;
•
the impact of developments in the tort environment, such as increased attorney involvement in insurance claims;
•
the impact of developments in the geopolitical environment; and
•
the impact of the Company’s acquisition of Corvus Insurance Holdings, Inc.
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.
For a discussion of some of the factors that could cause actual results to differ, see “Item 1A—Risk Factors” and “Item 7—
Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The Company’s forward-looking statements speak only as of the date of this report or as of the date they are made, and the
Company undertakes no obligation to update its forward-looking statements.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISK
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates (inclusive of credit
spreads), foreign currency exchange rates and other relevant market rate or price changes. Market risk is directly influenced by
the volatility and liquidity in the markets in which the related underlying assets are traded. The following is a discussion of the
Company’s primary market risk exposures and how those exposures are managed as of December 31, 2024. The Company’s
market risk sensitive instruments, including derivatives, are primarily entered into for purposes other than trading.
The carrying value of the Company’s investment portfolio at December 31, 2024 and 2023 was $94.22 billion and $88.81
billion, respectively, of which 89% and 87%, respectively, was invested in fixed maturity securities. At December 31, 2024 and
2023, approximately 6.8% and 7.2%, respectively, of the Company’s invested assets were denominated in foreign currencies.
The Company’s exposure to equity price risk is not significant. The Company has no direct commodity risk and is not a party to
any credit default swaps.
The primary market risks to the investment portfolio are interest rate risk and credit risk associated with investments in fixed
maturity securities. The portfolio duration is primarily managed through cash market transactions and treasury futures
transactions. For additional information regarding the Company’s investments, see notes 3 and 4 of the notes to the
consolidated financial statements as well as the “Investment Portfolio” and “Outlook” sections of “Item 7—Management’s
Discussion and Analysis of Financial Condition and Results of Operations.”
The primary market risk for all of the Company’s debt is interest rate risk at the time of refinancing. The Company monitors the
interest rate environment and evaluates refinancing opportunities as maturity dates approach. For additional information
regarding the Company’s debt, see note 9 of the notes to the consolidated financial statements as well as the “Liquidity and
Capital Resources” section of “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”
The Company’s foreign exchange market risk exposure is concentrated in the Company’s invested assets, insurance reserves
and shareholders’ equity denominated in foreign currencies. Cash flows from the Company’s foreign operations are the primary
source of funds for the purchase of investments denominated in foreign currencies. The Company purchases these investments
primarily to fund insurance reserves and other liabilities denominated in the same currency, effectively reducing its foreign
currency exchange rate exposure. Invested assets denominated in the Canadian dollar comprised approximately 3.8% and 4.1%
of the total invested assets at December 31, 2024 and 2023, respectively. Invested assets denominated in the British Pound
Sterling comprised approximately 2.4% of total invested assets at both December 31, 2024 and 2023. Invested assets
denominated in other currencies at December 31, 2024 and 2023 were not material.
There were no other significant changes in the Company’s primary market risk exposures or in how those exposures were
managed for the year ended December 31, 2024 compared to the year ended December 31, 2023. The Company does not
currently anticipate significant changes in its primary market risk exposures or in how those exposures are managed in future
reporting periods based upon what is known or expected to be in effect in future reporting periods.
117
SENSITIVITY ANALYSIS
Sensitivity analysis is defined as the measurement of potential loss in future earnings, fair values or cash flows of market
sensitive instruments resulting from one or more selected hypothetical changes in interest rates and other market rates or prices
over a selected period of time. In the Company’s sensitivity analysis model, a hypothetical change in market rates is selected
that is expected to reflect reasonably possible near-term changes in those rates. “Near-term” means a period of time going
forward up to one year from the date of the consolidated financial statements. Actual results may differ from the hypothetical
change in market rates assumed in this disclosure, especially since this sensitivity analysis does not reflect the results of any
actions that would be taken by the Company to mitigate such hypothetical losses in fair value.
Interest Rate Risk
In this sensitivity analysis model, the Company uses fair values to measure its potential loss. The sensitivity analysis model
includes the following financial instruments entered into for purposes other than trading: fixed maturities, non-redeemable
preferred stocks, mortgage loans, short-term securities and debt and derivative financial instruments. The primary market risk to
the Company’s market sensitive instruments is interest rate risk (inclusive of credit spreads). The sensitivity analysis model
uses various basis point changes in interest rates to measure the hypothetical change in fair value of financial instruments
included in the model.
For invested assets with primary exposure to interest rate risk, estimates of portfolio duration and convexity are used to model
the loss of fair value that would be expected to result from a parallel increase in interest rates. Durations on invested assets are
adjusted for call, put and interest rate reset features. Durations on tax-exempt securities are adjusted for the fact that the yields
on such securities do not normally move in lockstep with changes in the U.S. Treasury curve. Fixed maturity portfolio durations
are calculated on a market value-weighted basis, including accrued interest, using holdings as of December 31, 2024 and 2023.
For debt, the change in fair value is determined by calculating hypothetical December 31, 2024 and 2023 ending prices based
on yields adjusted to reflect a 100 basis point change, comparing such hypothetical ending prices to actual ending prices, and
multiplying the difference by the par or securities outstanding.
The sensitivity analysis model used by the Company produces a loss in fair value of market sensitive instruments of
approximately $3.06 billion and $2.58 billion based on a 100 basis point increase in interest rates at December 31, 2024 and
2023, respectively.
The loss estimates do not take into account the impact of possible interventions that the Company might reasonably undertake
in order to mitigate or avoid losses that would result from emerging interest rate trends. In addition, the loss value only reflects
the impact of an interest rate increase on the fair value of the Company’s financial instruments.
Foreign Currency Exchange Rate Risk
The Company uses fair values of investment securities to measure its potential loss from foreign denominated investments. A
hypothetical 10% reduction in value of foreign denominated investments is used to estimate the impact on the market value of
the foreign denominated holdings. The Company’s analysis indicates that a hypothetical 10% reduction in the value of foreign
denominated investments would be expected to produce a loss in fair value of approximately $643 million and $638 million at
December 31, 2024 and 2023, respectively.
118
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Page
Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY, Auditor Firm ID: 185) ........
120
Consolidated Financial Statements:
Statement of Income for the years ended December 31, 2024, 2023 and 2022 ..........................................................
122
Statement of Comprehensive Income (Loss) for the years ended December 31, 2024, 2023 and 2022 .....................
123
Balance Sheet as of December 31, 2024 and 2023 .....................................................................................................
124
Statement of Changes in Shareholders’ Equity for the years ended December 31, 2024, 2023 and 2022 .................
125
Statement of Cash Flows for the years ended December 31, 2024, 2023 and 2022 ...................................................
126
Notes to Consolidated Financial Statements ......................................................................................................................
127
Schedules:
Schedule II - Condensed Financial Information of Registrant (Parent Company Only) ............................................
216
Schedule III - Supplementary Insurance Information .................................................................................................
221
Schedule V - Valuation and Qualifying Accounts ......................................................................................................
222
Schedule VI - Supplementary Information Concerning Property-Casualty Insurance Operations ............................
223
119
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
The Travelers Companies, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of The Travelers Companies, Inc. and subsidiaries (the
Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss),
changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the
related notes and financial statement schedules as listed in the accompanying index to consolidated financial statements and
schedules (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its
operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with
U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 13, 2025 expressed an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of the estimate of claims and claim adjustment expense reserves
As discussed in Notes 1 and 8 to the consolidated financial statements, the claims and claim adjustment expense reserves
represent the Company’s estimate of the ultimate liability for unpaid claims and claim adjustment expenses for claims
that have been reported and claims that have been incurred but not yet reported as of the balance sheet date. The
Company derives estimates of claims and claim adjustment expense reserves principally utilizing actuarial expertise and
various projection methods. The Company’s claims and claim adjustment expense reserves balance at December 31,
2024 was $64.1 billion.
We identified the evaluation of the estimate of claims and claim adjustment expense reserves as a critical audit matter.
The process of evaluating the estimate of claims and claim adjustment expense reserves involves significant auditor
judgment due to the inherent uncertainty in the ultimate amounts and timing of claim payments, which may be affected
by a number of internal and external considerations.
120
Evaluating the impact of these considerations on the ultimate costs of claims and claim adjustment expenses requires
specialized skills and knowledge.
The following are the primary procedures we performed to address this critical audit matter. We, with involvement of
actuarial professionals with specialized skills and knowledge, evaluated the design and tested the operating effectiveness
of certain internal controls over the Company’s reserving process for claims and claim adjustment expense reserves. This
included controls related to the actuarial analyses and the determination of the Company’s estimate of the claims and
claim adjustment expense reserves. We also involved actuarial professionals, who assisted in:
•
assessing the methodologies underlying the Company’s claims and claim adjustment expense reserve estimate
and comparing to generally accepted actuarial practices
•
evaluating for certain lines of business, the Company’s estimates by performing independent analyses of
claims and claim adjustment expense reserves using Company historical loss experience and industry data
•
assessing, for selected other lines of business, the Company’s internally prepared actuarial projection methods
and key assumptions in comparison to the Company’s internal experience and related industry trends
•
developing a range of reserve estimates and assessing the position and movement within the range of the
Company’s recorded reserves in order to evaluate the Company’s consolidated reserves.
/s/ KPMG LLP
KPMG LLP
We have served as the Company’s auditor since 1994.
New York, New York
February 13, 2025
121
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share amounts)
For the year ended December 31,
2024
2023
2022
Revenues
Premiums .......................................................................................................
$
41,941 $
37,761 $
33,763
Net investment income ..................................................................................
3,590
2,922
2,562
Fee income .....................................................................................................
473
433
412
Net realized investment losses .......................................................................
(30)
(105)
(204)
Other revenues ...............................................................................................
449
353
351
Total revenues ..........................................................................................
46,423
41,364
36,884
Claims and expenses
Claims and claim adjustment expenses ..........................................................
27,059
26,215
22,854
Amortization of deferred acquisition costs ....................................................
6,973
6,226
5,515
General and administrative expenses .............................................................
5,819
5,176
4,810
Interest expense ..............................................................................................
392
376
351
Total claims and expenses .......................................................................
40,243
37,993
33,530
Income before income taxes .....................................................................
6,180
3,371
3,354
Income tax expense ........................................................................................
1,181
380
512
Net income ..................................................................................................
$
4,999 $
2,991 $
2,842
Net income per share
Basic ............................................................................................................
$
21.76 $
12.93 $
11.91
Diluted .........................................................................................................
$
21.47 $
12.79 $
11.77
Weighted average number of common shares outstanding
Basic ............................................................................................................
228.0
229.7
237.0
Diluted .........................................................................................................
231.1
232.2
239.7
The accompanying notes are an integral part of the consolidated financial statements.
122
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(in millions)
For the year ended December 31,
2024
2023
2022
Net income ....................................................................................................
$
4,999 $
2,991 $
2,842
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of
income .....................................................................................................
(644)
2,249
(9,276)
Having credit losses recognized in the consolidated statement of income .
5
1
(4)
Net changes in benefit plan assets and obligations ........................................
296
106
(87)
Net changes in unrealized foreign currency translation .................................
(232)
138
(273)
Other comprehensive income (loss) before income taxes ..................
(575)
2,494
(9,640)
Income tax expense (benefit) .........................................................................
(79)
520
(2,002)
Other comprehensive income (loss), net of taxes ...............................
(496)
1,974
(7,638)
Comprehensive income (loss) ...............................................................
$
4,503 $
4,965 $
(4,796)
The accompanying notes are an integral part of the consolidated financial statements.
123
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
As of December 31,
2024
2023
Assets
Fixed maturities, available for sale, at fair value (amortized cost $88,277 and $81,781;
allowance for expected credit losses of $2 and $5) ...................................................................
$
83,666 $
77,807
Equity securities, at fair value (cost $544 and $553) ................................................................
687
608
Real estate investments ..............................................................................................................
902
959
Short-term securities ..................................................................................................................
4,766
5,137
Other investments ......................................................................................................................
4,202
4,299
Total investments ................................................................................................................
94,223
88,810
Cash (including restricted cash of $131 and $150) ...................................................................
699
650
Investment income accrued .......................................................................................................
752
688
Premiums receivable (net of allowance for expected credit losses
of $58 and $69) .......................................................................................................................
11,110
10,282
Reinsurance recoverables (net of allowance for estimated uncollectible
reinsurance of $119 and $118) ...............................................................................................
8,000
8,143
Ceded unearned premiums ........................................................................................................
1,202
1,150
Deferred acquisition costs .........................................................................................................
3,494
3,306
Deferred taxes ............................................................................................................................
1,762
1,504
Contractholder receivables (net of allowance for expected credit losses
of $18 and $20) .........................................................................................................................
3,171
3,249
Goodwill ....................................................................................................................................
4,233
3,976
Other intangible assets ...............................................................................................................
360
277
Other assets ................................................................................................................................
4,183
3,943
Total assets ...........................................................................................................................
$
133,189 $
125,978
Liabilities
Claims and claim adjustment expense reserves .........................................................................
$
64,093 $
61,627
Unearned premium reserves ......................................................................................................
22,289
20,872
Contractholder payables ............................................................................................................
3,189
3,269
Payables for reinsurance premiums ...........................................................................................
550
518
Debt ...........................................................................................................................................
8,033
8,031
Other liabilities ..........................................................................................................................
7,171
6,740
Total liabilities .....................................................................................................................
105,325
101,057
Shareholders’ equity
Common stock (1,750.0 shares authorized; 226.6 and 228.2 shares
issued and outstanding) ...........................................................................................................
25,452
24,906
Retained earnings ......................................................................................................................
49,630
45,591
Accumulated other comprehensive loss ....................................................................................
(4,967)
(4,471)
Treasury stock, at cost (564.3 and 559.2 shares) .......................................................................
(42,251)
(41,105)
Total shareholders’ equity ..................................................................................................
27,864
24,921
Total liabilities and shareholders’ equity ..........................................................................
$
133,189 $
125,978
The accompanying notes are an integral part of the consolidated financial statements.
124
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(in millions)
For the year ended December 31,
2024
2023
2022
Common stock
Balance, beginning of year ............................................................................
$
24,906 $
24,565 $
24,154
Employee share-based compensation ............................................................
286
125
227
Compensation amortization under share-based plans and other changes ......
260
216
184
Balance, end of year ...................................................................................
25,452
24,906
24,565
Retained earnings
Balance, beginning of year ............................................................................
45,591
43,516
41,555
Net income .....................................................................................................
4,999
2,991
2,842
Dividends .......................................................................................................
(962)
(915)
(880)
Other ..............................................................................................................
2
(1)
(1)
Balance, end of year ...................................................................................
49,630
45,591
43,516
Accumulated other comprehensive income (loss), net of tax
Balance, beginning of year ............................................................................
(4,471)
(6,445)
1,193
Other comprehensive income (loss) ...............................................................
(496)
1,974
(7,638)
Balance, end of year ...................................................................................
(4,967)
(4,471)
(6,445)
Treasury stock, at cost
Balance, beginning of year ............................................................................
(41,105)
(40,076)
(38,015)
Treasury stock acquired — share repurchase authorizations .........................
(1,000)
(965)
(2,000)
Net shares acquired related to employee share-based compensation plans ...
(146)
(64)
(61)
Balance, end of year ...................................................................................
(42,251)
(41,105)
(40,076)
Total shareholders’ equity ..........................................................................
$
27,864 $
24,921 $
21,560
Common shares outstanding
Balance, beginning of year ............................................................................
228.2
232.1
241.2
Treasury stock acquired — share repurchase authorizations .........................
(4.4)
(5.4)
(11.6)
Net shares issued under employee share-based compensation plans .............
2.8
1.5
2.5
Balance, end of year ...................................................................................
226.6
228.2
232.1
The accompanying notes are an integral part of the consolidated financial statements.
125
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
For the year ended December 31,
2024
2023
2022
Cash flows from operating activities
Net income ...................................................................................................................................
$
4,999
$
2,991
$
2,842
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment losses ............................................................................................
30
105
204
Depreciation and amortization ............................................................................................
715
722
826
Deferred federal income tax benefit ...................................................................................
(152)
(163)
(186)
Amortization of deferred acquisition costs .........................................................................
6,973
6,226
5,515
Equity in income from other investments ...........................................................................
(294)
(157)
(336)
Premiums receivable ...........................................................................................................
(859)
(1,341)
(877)
Reinsurance recoverables ....................................................................................................
111
(63)
344
Deferred acquisition costs ...................................................................................................
(7,173)
(6,689)
(5,824)
Claims and claim adjustment expense reserves ..................................................................
2,680
2,843
2,050
Unearned premium reserves ...............................................................................................
1,488
2,590
1,862
Other ...................................................................................................................................
556
647
45
Net cash provided by operating activities .....................................................................
9,074
7,711
6,465
Cash flows from investing activities
Proceeds from maturities of fixed maturities ...............................................................................
8,537
6,371
6,837
Proceeds from sales of investments:
Fixed maturities ........................................................................................................................
1,634
4,981
5,657
Equity securities .......................................................................................................................
143
138
138
Real estate investments .............................................................................................................
64
—
10
Other investments .....................................................................................................................
422
255
302
Purchases of investments:
Fixed maturities ........................................................................................................................
(17,132)
(15,690)
(15,908)
Equity securities .......................................................................................................................
(124)
(105)
(136)
Real estate investments .............................................................................................................
(48)
(67)
(41)
Other investments .....................................................................................................................
(396)
(495)
(574)
Net sales (purchases) of short-term securities .............................................................................
370
(1,664)
355
Securities transactions in the course of settlement ......................................................................
56
(83)
21
Acquisitions, net of cash acquired ...............................................................................................
(382)
—
(4)
Other ............................................................................................................................................
(408)
(462)
(385)
Net cash used in investing activities .............................................................................
(7,264)
(6,821)
(3,728)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorizations .......................................................
(1,003)
(958)
(2,000)
Treasury stock acquired — net employee share-based compensation .........................................
(114)
(64)
(61)
Dividends paid to shareholders ....................................................................................................
(951)
(908)
(875)
Issuance of debt ............................................................................................................................
—
738
—
Issuance of common stock — employee share options ...............................................................
321
141
267
Net cash used in financing activities .............................................................................
(1,747)
(1,051)
(2,669)
Effect of exchange rate changes on cash and restricted cash .......................................................
(14)
12
(30)
Net increase (decrease) in cash and restricted cash .....................................................................
49
(149)
38
Cash and restricted cash at beginning of year ..............................................................................
650
799
761
Cash and restricted cash at end of year ...................................................................................
$
699
$
650
$
799
Supplemental disclosure of cash flow information
Income taxes paid ........................................................................................................................
$
1,310
$
201
$
817
Interest paid ..................................................................................................................................
$
390
$
370
$
349
The accompanying notes are an integral part of the consolidated financial statements.
126
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of The Travelers Companies, Inc. (together with its subsidiaries, the
Company). The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting
principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates. All
material intercompany transactions and balances have been eliminated. To the extent that the Company changes its accounting
for or presentation of items in the financial statements, the presentation of such amounts in prior periods is changed to conform
to the current period presentation, if appropriate, and a disclosure is provided, if material.
On January 2, 2024, the Company completed its previously announced acquisition of all issued and outstanding shares of
Corvus Insurance Holdings, Inc. and its subsidiaries (Corvus), a cyber insurance managing general underwriter, for
consideration transferred of approximately $427 million. The acquisition provides the Company the opportunity to renew
Corvus’s book of business and to leverage Corvus’s capabilities to enhance the return profile of Travelers’ existing cyber
portfolio. At the acquisition date, the Company recorded at fair value $478 million of assets acquired and $51 million of
liabilities assumed as part of purchase accounting, including $390 million of identifiable intangible assets and goodwill. The
assets acquired from Corvus were included in the Company’s Bond & Specialty Insurance segment, effective at the acquisition
date. The Company funded this transaction from internal resources. A provisional amount of $19 million was recorded as a
deferred tax asset and included on the consolidated balance sheet on January 2, 2024, and was later increased by an
insignificant amount when the 2023 tax return for Corvus was finalized.
Accounting Policies
Investments
Fixed Maturities
Fixed maturities include bonds, notes and redeemable preferred stocks. Fixed maturities, including instruments subject to
securities lending agreements, are classified as available for sale and reported at fair value, with unrealized investment gains
and losses, net of income taxes, charged or credited directly to other comprehensive income.
Equity Securities
Equity securities, which include public and non-public common and non-redeemable preferred stocks, are reported at fair value
with changes in fair value recognized in net realized investment gains (losses).
Real Estate Investments
The Company’s real estate investments include warehouses, office buildings and other commercial land and properties that are
directly owned. Real estate is recorded on the purchase date at the purchase price, which generally represents fair value, and is
supported by internal analysis or external appraisals that use discounted cash flow analyses and other acceptable valuation
techniques. Real estate held for investment purposes is subsequently carried at cost less accumulated depreciation.
Buildings are depreciated on a straight-line basis over the shorter of the expected useful life of the building or 39 years. Real
estate held for sale is carried at lower of cost or fair value, less estimated costs to sell.
Short-term Securities
Short-term securities have an original maturity of less than one year and are carried at amortized cost, which approximates fair
value.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
127
Other Investments
Investments in Private Equity Limited Partnerships, Hedge Funds and Real Estate Partnerships
The Company uses the equity method of accounting for investments in private equity limited partnerships, hedge funds and real
estate partnerships. The partnerships and the hedge funds generally report investments on their balance sheet at fair value. The
financial statements prepared by the investee are received by the Company on a lag basis, with the lag period generally
dependent upon the type of underlying investments. The private equity and real estate partnerships provide financial
information quarterly which is generally available to investors, including the Company, within three months following the date
of the reporting period. The hedge funds provide financial information monthly, which is generally available to investors
within one month following the date of the reporting period. The Company regularly requests financial information from the
partnerships prior to the receipt of the partnerships’ financial statements and records any material information obtained from
these requests in its consolidated financial statements.
Other
Derivatives are also included in other investments. The Company’s derivative financial instruments are carried at fair value,
with the changes in fair value reflected in the consolidated statement of income in net realized investment gains (losses). For a
further discussion of the derivatives used by the Company, see note 3.
Net Investment Income
Investment income from fixed maturities is recognized based on the constant effective yield method which includes an
adjustment for estimated principal pre-payments, if any. The effective yield used to determine amortization for fixed maturities
subject to prepayment risk (e.g., asset-backed, loan-backed and structured securities) is recalculated and adjusted periodically
based upon actual historical and/or projected future cash flows, which are obtained from a widely-accepted securities data
provider. The adjustments to the yield for highly rated prepayable fixed maturities are accounted for using the retrospective
method. The adjustments to the yield for non-highly rated prepayable fixed maturities are accounted for using the prospective
method. Dividends on equity securities (including those with transfer restrictions) are recognized in income when declared.
Rental income on real estate is recognized on a straight-line basis over the lease term. See the section titled: Real Estate in note
3 for further discussion. Investments in private equity limited partnerships, hedge funds, real estate partnerships and joint
ventures are accounted for using the equity method of accounting, whereby the Company’s share of the investee’s earnings or
losses in the fund is reported in net investment income.
Accrual of income is suspended on non-securitized fixed maturities that are in default, or on which it is likely that future
payments will not be made as scheduled. Interest income on investments in default is recognized only when payments are
received. Investments included in the consolidated balance sheet that were not income-producing for the preceding 12 months
were not material.
Net Realized Investment Gains and Losses
Net realized investment gains and losses include net realized gains (losses) from the sale of investments, credit impairment
losses on investment assets, impairments of real estate investments, changes in the fair value of equity securities, foreign
currency transaction gains and losses and changes in the fair value of derivative financial instruments. Net realized investment
gains (losses) on the sale of investments are included as a component of pre-tax revenues based upon specific identification of
the investments sold on the trade date.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
128
Investment Impairments
The Company conducts a periodic review to identify and evaluate invested assets that may have credit impairments.
Credit Impairments Related to Fixed Maturity Investments
Some of the factors considered in assessing impairment of fixed maturity investments due to credit-related factors include: (1)
the extent to which the fair value has been less than amortized cost; (2) the financial condition, near-term and long-term
prospects for the issuer, including the relevant industry conditions and trends, and implications of rating agency actions and
offering prices; (3) the likelihood of the recoverability of principal and interest; and (4) whether it is more likely than not that
the Company will be required to sell the investment prior to an anticipated recovery in value.
For fixed maturity investments that the Company does not intend to sell or for which it is more likely than not that the
Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss
component of the impairment from the amount related to all other factors and reports the credit loss component in net realized
investment gains (losses). The impairment related to all other factors (non-credit factors) is reported in other comprehensive
income. The allowance is adjusted for any additional credit losses and subsequent recoveries. Upon recognizing a credit loss,
the cost basis is not adjusted.
For fixed maturity investments where the Company records a credit loss, a determination is made as to the cause of the
impairment and whether the Company expects a recovery in the value. For fixed maturity investments where the Company
expects a recovery in value, the constant effective yield method is utilized, and the investment is amortized to par.
For fixed maturity investments the Company intends to sell or for which it is more likely than not that the Company will be
required to sell before an anticipated recovery in value, the full amount of the impairment is included in net realized investment
gains (losses). The new cost basis of the investment is the previous amortized cost basis less the impairment recognized in net
realized investment gains (losses). The new cost basis is not adjusted for any subsequent recoveries in fair value.
The Company reports investment income accrued separately from fixed maturity investments, available for sale, and has elected
not to measure an allowance for credit losses for investment income accrued. Investment income accrued is written off through
net realized investment gains (losses) at the time the issuer of the bond defaults or is expected to default on payments.
Uncollectible available-for-sale debt securities are written-off when the Company determines that no additional payments of
principal or interest will be received.
Determination of Credit Loss — Fixed Maturities
The Company determines the credit loss component of fixed maturity investments by utilizing discounted cash flow modeling
to determine the present value of the security and comparing the present value with the amortized cost of the security. If the
amortized cost is greater than the present value of the expected cash flows, the difference is considered a credit loss and
recognized as an impairment loss in net realized investment gains (losses).
For non-structured fixed maturities (U.S. Treasury securities, obligations of U.S. government and government agencies and
authorities, obligations of states, municipalities and political subdivisions, debt securities issued by foreign governments and
certain corporate debt), the estimate of expected cash flows is determined by projecting a recovery value and a recovery time
frame and assessing whether further principal and interest will be received. The determination of recovery value incorporates
an issuer valuation assumption utilizing one or a combination of valuation methods as deemed appropriate by the Company.
The Company determines the undiscounted recovery value by allocating the estimated value of the issuer to the Company’s
assessment of the priority of claims. The present value of the cash flows is determined by applying the effective yield of the
security at the date of acquisition (or the most recent implied rate used to accrete the security if the implied rate has changed as
a result of a previous impairment) and an estimated recovery time frame. Generally, that time frame for securities for which the
issuer is in bankruptcy is 12 months. For securities for which the issuer is financially troubled but not in bankruptcy, that time
frame is generally 24 months. Included in the present value calculation are expected principal and interest payments; however,
for securities for which the issuer is classified as bankrupt or in default, the present value calculation assumes no interest
payments and a single recovery amount.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
129
In estimating the recovery value, significant judgment is involved in the development of assumptions relating to a myriad of
factors related to the issuer including, but not limited to, revenue, margin and earnings projections, the likely market or
liquidation values of assets, potential additional debt to be incurred pre- or post-bankruptcy/restructuring, the ability to shift
existing or new debt to different priority layers, the amount of restructuring/bankruptcy expenses, the size and priority of
unfunded pension obligations, litigation or other contingent claims, the treatment of intercompany claims and the likely
outcome with respect to inter-creditor conflicts.
For structured fixed maturity securities (primarily residential and commercial mortgage-backed securities and asset-backed
securities), the Company estimates the present value of the security by projecting future cash flows of the assets underlying the
securitization, allocating the flows to the various tranches based on the structure of the securitization and determining the
present value of the cash flows using the effective yield of the security at the date of acquisition (or the most recent implied rate
used to accrete the security if the implied rate has changed as a result of a previous impairment or changes in expected cash
flows). The Company incorporates levels of delinquencies, defaults and severities as well as credit attributes of the remaining
assets in the securitization, along with other economic data, to arrive at its estimate of the parameters applied to the assets
underlying the securitization.
Real Estate Investments
On at least an annual basis, the Company obtains independent appraisals for substantially all of its real estate investments. In
addition, the carrying value of all real estate investments is reviewed for impairment on a quarterly basis or when events or
changes in circumstances indicate that the carrying amount may not be recoverable. The review for impairment considers the
valuation from the independent appraisal, when applicable, and incorporates an estimate of the undiscounted cash flows
expected to result from the use and eventual disposition of the real estate property. An impairment loss is recognized if the
expected future undiscounted cash flows are less than the carrying value of the real estate property. The impairment loss is the
amount by which the carrying amount exceeds fair value.
Other Investments
The Company reviews its investments in private equity limited partnerships, hedge funds and real estate partnerships for
impairment no less frequently than quarterly and monitors the performance throughout the year through discussions with the
managers/general partners. If the Company becomes aware of an impairment of a partnership’s investments at the balance
sheet date prior to receiving the partnership’s financial statements, it will recognize an impairment by recording a reduction in
the carrying value of the partnership with a corresponding charge to net investment income.
Changes in Intent to Sell Temporarily Impaired Assets
The Company may, from time to time, sell invested assets subsequent to the balance sheet date that it did not intend to sell at
the balance sheet date. Conversely, the Company may not sell invested assets that it asserted that it intended to sell at the
balance sheet date. Such changes in intent are due to events occurring subsequent to the balance sheet date. The types of
events that may result in a change in intent include, but are not limited to, significant changes in the economic facts and
circumstances related to the invested asset (e.g., a downgrade or upgrade from a rating agency), significant unforeseen changes
in liquidity needs, or changes in tax laws or the regulatory environment.
Securities Lending
The Company has, from time to time, engaged in securities lending activities from which it generates net investment income by
lending certain of its investments to other institutions for short periods of time. Borrowers of these securities provide collateral
equal to at least 102% of the market value of the loaned securities plus accrued interest. This collateral is held by a third-party
custodian, and the Company has the right to access the collateral only in the event that the institution borrowing the Company’s
securities is in default under the lending agreement (i.e., the Company is not permitted to re-pledge or sell any such collateral).
Therefore, the Company does not recognize the receipt of the collateral held by the third-party custodian or the obligation to
return the collateral. The loaned securities remain a recorded asset of the Company. The Company accepts only cash as
collateral for securities on loan and restricts the manner in which that cash is invested.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
130
Restricted Cash
Restricted cash represents funds that are legally or contractually restricted as to withdrawal or usage. These restrictions
primarily relate to certain wholly-owned subsidiaries of the Company providing brokerage and other insurance-related services.
Reinsurance Recoverables
Amounts recoverable from reinsurers are estimated in a manner consistent with the associated claim liability. Included in
reinsurance recoverables are amounts related to certain structured settlements. The Company reports its reinsurance
recoverables net of an allowance for amounts that are estimated to be uncollectible. 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. Amounts deemed to be uncollectible, including amounts due from known insolvent
reinsurers, are written off against the allowance. Changes in the allowance, as well as any subsequent collections of amounts
previously written off, are reported as part of claims and claim adjustment expenses. The Company evaluates and monitors the
financial condition of its reinsurers under voluntary reinsurance arrangements to minimize its exposure to significant losses
from reinsurer insolvencies.
Deferred Acquisition Costs
Incremental direct costs of acquired, new and renewal insurance contracts, consisting of commissions (other than contingent
commissions) and premium-related taxes, are capitalized and charged to expense pro rata over the contract periods in which the
related premiums are earned. Deferred acquisition costs are reviewed to determine if they are recoverable from future income
and, if not, are charged to expense. Future investment income attributable to related premiums is taken into account in
measuring the recoverability of the carrying value of this asset. All other acquisition expenses are charged to operations as
incurred.
Contractholder Receivables and Payables
Under certain workers’ compensation insurance contracts with deductible features, the Company is obligated to pay the
claimant for the full amount of the claim. The Company is subsequently reimbursed by the policyholder for the deductible
amount. These amounts are included on a gross basis in the consolidated balance sheet in both contractholder payables and
contractholder receivables. Contractholder receivables are reported net of an allowance for expected credit losses. The
allowance is based upon the Company’s ongoing review of amounts outstanding, changes in policyholder credit standing, and
other relevant factors. A probability-of-default methodology, which reflects current and forecasted economic conditions, is
used to estimate the allowance for expected credit losses.
Goodwill and Other Intangible Assets
The Company performs a review, on at least an annual basis, of goodwill held by the reporting units which are the Company’s
three operating and reportable segments: Business Insurance; Bond & Specialty Insurance; and Personal Insurance. The
Company estimates the fair value of its reporting units and compares it to their carrying value, including goodwill. If the
carrying values of the reporting units were to exceed their fair value, the amount of the impairment would be calculated and
goodwill adjusted accordingly.
The Company uses a discounted cash flow model to estimate the fair value of its reporting units. The discounted cash flow
model is an income approach to valuation that is based on a detailed cash flow analysis for deriving a current fair value of
reporting units and is representative of the Company’s reporting units’ current and expected future financial performance. The
discount rate assumptions reflect the Company’s assessment of the risks inherent in the projected future cash flows and the
Company’s weighted-average cost of capital, and are compared against available market data for reasonableness.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
131
Other indefinite-lived intangible assets held by the Company are also reviewed for impairment on at least an annual basis. The
classification of the asset as indefinite-lived is reassessed and an impairment is recognized if the carrying amount of the asset
exceeds its fair value.
Intangible assets that are deemed to have a finite useful life are amortized over their useful lives. The carrying amount of
intangible assets with a finite useful life is regularly reviewed for indicators of impairment in value. Impairment is recognized
only if the carrying amount of the intangible asset is not recoverable from its undiscounted cash flows and is measured as the
difference between the carrying amount and the fair value of the asset.
As a result of the reviews performed for the years ended December 31, 2024, 2023 and 2022, the Company determined that the
estimated fair value substantially exceeded the respective carrying value of its reporting units for those years and that goodwill
was not impaired. The Company also determined during its reviews for each year that its other indefinite-lived intangible assets
and finite-lived intangible assets were not impaired.
Internal-Use Software
In the ordinary course of business, the Company develops and purchases software as well as enters into arrangements to utilize
software as a service under cloud computing arrangements. These software costs and any costs related to the implementation
and set-up of the cloud computing arrangements are capitalized and reported within other assets in the consolidated balance
sheet.
Claims and Claim Adjustment Expense Reserves
Claims and claim adjustment expense reserves represent management’s estimate of the ultimate liability for unpaid losses and
loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported (IBNR) as
of the balance sheet date. The reserves are adjusted regularly based upon experience. Included in the claims and claim
adjustment expense reserves in the consolidated balance sheet are reserves for long-term disability and annuity claim payments,
primarily arising from workers’ compensation insurance and workers’ compensation excess insurance policies, that are
discounted to the present value of estimated future payments.
The Company performs a continuing review of its claims and claim adjustment expense reserves, including its reserving
techniques and the impact of reinsurance. The reserves are also reviewed regularly by qualified actuaries employed by the
Company. Since the reserves are based on estimates, the ultimate liability may be more or less than such reserves. The effects
of changes in such estimated reserves are included in the results of operations in the period in which the estimates are changed.
Such changes in estimates could occur in a future period and may be material to the Company’s results of operations and
financial position in such period.
Other Liabilities
Included in other liabilities in the consolidated balance sheet is the Company’s estimate of its liability for guaranty fund and
other insurance-related assessments. The liability for expected state guaranty fund and other premium-based assessments is
recognized as the Company writes or becomes obligated to write or renew the premiums on which the assessments are expected
to be based. The liability for loss-based assessments is recognized as the related losses are incurred. At December 31, 2024 and
2023, the Company had a liability of $182 million and $183 million, respectively, for guaranty fund and other insurance-related
assessments and related recoverables of $29 million and $26 million, respectively. The liability for such assessments and the
related recoverables are not discounted for the time value of money. The loss-based assessments are expected to be paid over a
period ranging from one year to the life expectancy of certain workers’ compensation claimants and the recoveries are expected
to occur over the same period of time.
Also included in other liabilities is an accrual for policyholder dividends. Certain insurance contracts, primarily workers’
compensation, are participating whereby dividends are paid to policyholders in accordance with contract provisions. Net written
premiums for participating dividend policies were approximately 1% of total net written premiums for each of the years ended
December 31, 2024, 2023 and 2022. Policyholder dividends are accrued against earnings using best available estimates of
amounts to be paid. The liability accrued for policyholder dividends totaled $81 million and $77 million at December 31, 2024
and 2023, respectively.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
132
Treasury Stock
The cost of common stock repurchased by the Company is reported as treasury stock and represents authorized and unissued
shares of the Company under the Minnesota Business Corporation Act.
Statutory Accounting Practices
The Company’s U.S. insurance subsidiaries, domiciled principally in the State of Connecticut, are required to prepare statutory
financial statements in accordance with the accounting practices prescribed or permitted by the insurance departments of the
states of domicile. Prescribed statutory accounting practices are those practices that are incorporated directly or by reference in
state laws, regulations, and general administrative rules applicable to all insurance enterprises domiciled in a particular state.
The State of Connecticut requires insurers domiciled in Connecticut to prepare their statutory financial statements in accordance
with National Association of Insurance Commissioners’ (NAIC) statutory accounting practices.
Permitted statutory accounting practices are those practices that differ either from state-prescribed statutory accounting
practices or NAIC statutory accounting practices.
The Company does not apply any statutory accounting practices that would be considered a prescribed or permitted statutory
accounting practice that differs from NAIC statutory accounting practices.
The Company’s non-U.S. insurance subsidiaries file financial statements prepared in accordance with the regulatory reporting
requirements of their respective local jurisdiction.
Premiums and Unearned Premium Reserves
Premiums are recognized as revenues over the period of the contract in proportion to the amount of insurance protection
provided, which is generally pro rata over the policy period. Unearned premium reserves represent the unexpired portion of
policy premiums. Accrued retrospective premiums are included in premium balances receivable. Premium balances receivable
are reported net of an allowance for expected credit losses. The allowance is based upon the Company’s ongoing review of
amounts outstanding, historical loss data, including delinquencies and write-offs, current and forecasted economic conditions
and other relevant factors. Credit risk is partially mitigated by the Company’s ability to cancel the policy if the policyholder
does not pay the premium.
The cost of reinsurance premiums (ceded reinsurance premiums) is generally reflected in income (as a charge to income) in a
manner consistent with the recognition of premium on the underlying reinsurance contracts. For catastrophe coverage, the cost
of reinsurance premiums is generally recognized ratably over the contract period to the extent coverage remains available.
Ceded unearned premiums represent the unexpired portion of premiums ceded to reinsurers and are reported as an asset on the
consolidated balance sheet.
Fee Income
Fee income includes revenues from risk and claims management services provided to the Company’s insureds and third-party
non-insureds, as well as policy issuance and claims management services to workers’ compensation residual market pools. Fee
income is earned over the policy period for the services provided to the Company’s insureds, and either over the contract period
or as the Company completes its service obligations for the services provided to third-party non-insureds.
Other Revenues
Other revenues include revenues from premium installment charges, which are recognized as collected, gains and losses on
dispositions of assets and redemption of debt, and other miscellaneous revenues, including gains recognized as a result of
settlements of reinsurance disputes and claim-related legal matters.
Other revenues also include revenues from noninsurance subsidiaries (other than fee income) for insurance-related services and
on-line insurance brokerage services and is recognized as the service is provided to the customer.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
133
Income Taxes
The Company recognizes deferred income tax assets and liabilities for the expected future tax effects attributable to temporary
differences between the financial statement and tax return bases of assets and liabilities, based on enacted tax rates and other
provisions of the tax law. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized in
income in the period in which such change is enacted. Deferred tax assets are reduced by a valuation allowance if it is more
likely than not that all or some portion of the deferred tax assets will not be realized.
Foreign Currency
The Company assigns functional currencies to its foreign operations, which are generally the currencies of the local operating
environment. Foreign currency amounts are remeasured to the functional currency, and the resulting foreign exchange gains or
losses are reported in net realized investment gains (losses). Functional currency amounts are then translated into U.S. dollars.
The foreign currency remeasurement and translation are calculated using current exchange rates for items reported in the
balance sheet and average exchange rates for items recorded in earnings. The change in unrealized foreign currency translation
gain or loss during the year, net of tax, is a component of other comprehensive income.
Foreign currency gains and losses related to the changes in fair value of available-for-sale fixed maturities are reported in other
comprehensive income. All other foreign currency transaction gains and losses are reported in earnings.
Share-Based Compensation
The Company has an employee stock incentive compensation plan that permits grants of nonqualified stock options, incentive
stock options, stock appreciation rights, restricted stock, deferred stock, stock units, performance awards and other share-based
or share-denominated awards with respect to the Company’s common stock.
Compensation cost is measured based on the grant-date fair value of an award, utilizing the assumptions discussed in note 14.
Compensation cost is recognized for financial reporting purposes over the period in which the employee is required to provide
service in exchange for the award (generally the vesting period). In connection with certain share-based awards, participants
are entitled to receive dividends during the vesting period, either in cash or dividend equivalent shares, commensurate with the
dividends paid to common shareholders. Dividends and dividend equivalent shares on awards that are expected to vest are
recorded in retained earnings. Dividends paid on awards that are not expected to vest as part of the Company’s forfeiture
estimate are recorded as compensation expense.
Nature of Operations
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,
including as a corporate member of Lloyd’s. Business Insurance is organized as follows:
Domestic
•
Select Accounts provides small businesses with property and casualty insurance products and services, including
commercial multi-peril, workers’ compensation, commercial automobile, general liability and commercial property.
•
Middle Market provides mid-sized businesses with property and casualty insurance products and services, including
workers’ compensation, general liability, commercial multi-peril, commercial automobile and commercial property, as
well as risk management, claims handling and other services. Middle Market generally provides these products to
mid-sized businesses through Commercial Accounts, as well as to targeted industries through Construction,
Technology & Life Sciences, Public Sector Services and Energy, and additionally, provides mono-line umbrella and
excess coverage insurance through Excess Casualty. Middle Market also provides insurance for goods in transit and
movable objects, as well as builders’ risk insurance, through Inland Marine; insurance for the marine transportation
industry and related services, as well as other businesses involved in international trade, through Ocean Marine; and
comprehensive breakdown for equipment, including property and business interruption, through Boiler & Machinery.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
134
•
National Accounts provides large companies with casualty insurance products and services, including workers’
compensation, commercial automobile and general liability, generally utilizing loss-sensitive products, on both a
bundled and unbundled basis, as well as risk management, claims administration and other insurance-related services.
National Accounts also includes the Company’s commercial residual market business, which primarily offers workers’
compensation claims, policy management and other administrative services related to the involuntary market.
National Accounts also offers insurance-related services, such as claims administration, risk management, loss control
and risk management information services through Constitution State Services LLC, a wholly-owned subsidiary of the
Company.
•
National Property and Other provides traditional and customized commercial property insurance programs to large
and mid-sized customers through National Property, as well as insurance coverages and programs provided by
Northland Transportation, Agribusiness, Northfield and National Programs. Northland Transportation provides
insurance coverage for the commercial trucking industry. Agribusiness serves small- to medium-sized agricultural
businesses, including farms, ranches and other agricultural-related operations. Northfield includes commercial
property and general liability policies for small, difficult to place commercial business primarily on an excess and
surplus lines basis. National Programs offers tailored property and casualty insurance programs on an admitted basis
for customers with common risk characteristics or coverage requirements.
International
•
International, through its operations in Canada, the United Kingdom and the Republic of Ireland, provides property
and casualty insurance and risk management services to several customer groups, including, among others, those in the
technology, manufacturing, public services and commercial real estate industry sectors. International also provides
insurance for both the foreign exposures of United States organizations and the United States exposures of foreign
organizations through Global Services. At its Lloyd’s syndicate (Syndicate 5000), for which the Company provides
100% of the capital, International underwrites five principal businesses — marine, energy, property, aviation and
special risks.
Business Insurance also includes Simply Business, a leading provider of small business insurance policies primarily in the
United Kingdom, and Business Insurance Other, which primarily comprises the Company’s asbestos and environmental
liabilities and other runoff operations, including certain assumed reinsurance arrangements.
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, the Republic of Ireland and Brazil (through a joint venture, as described
below), in each case utilizing various degrees of financially-based underwriting approaches. The range of coverages includes
performance, payment and commercial surety bonds for construction and general commercial enterprises; management liability
coverages including directors’ and officers’ liability, employment practices liability, fidelity 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; in the United States
only, property, workers’ compensation, auto and general liability for financial institutions; and transactional liability coverages
to public and private companies.
Bond & Specialty Insurance’s surety business in Brazil is conducted through Junto Holding Brasil S.A. (Junto). The Company
owns 49.5% of Junto, a market leader in surety coverages in Brazil. This joint venture investment is accounted for using the
equity method and is included in “other investments” on the consolidated balance sheet.
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. Personal Insurance’s primary products of automobile and
homeowners insurance are complemented by a broad suite of related coverages.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
135
Automobile policies provide coverage for liability to others for both bodily injury and property damage, uninsured motorist
protection, and for physical damage to an insured’s own vehicle from collision, fire, flood, hail and theft. In addition, many
states require policies to provide first-party personal injury protection, frequently referred to as no-fault coverage.
Homeowners and Other policies provide protection against losses to dwellings and contents from a variety of perils (excluding
flooding) as well as coverage for personal liability. The Company writes homeowners insurance for dwellings, condominiums
and tenants, and rental properties. The Company also writes coverage for boats and yachts, valuable personal items such as
jewelry, umbrella liability, and weddings and special events.
2. SEGMENT INFORMATION
The accounting policies used to prepare the segment reporting data for the Company’s three reportable business segments are
the same as those described in the Summary of Significant Accounting Policies in note 1.
The chief operating decision maker (CODM) is the Company’s Chairman and Chief Executive Officer. The CODM reviews the
financial performance of the reportable business segments to assess the efficiency with which capital is employed, the effective
management of risk, the achievement of strategic initiatives, and how to allocate resources to reportable business segments
based on the segment’s historical and projected financial performance. The significant measures of the reportable business
segments’ financial performance include segment revenues, consisting of premiums, net investment income, fee income and
other revenues, less segment expenses, consisting of claims and claim adjustment expenses, deferred acquisition costs, and
general and administrative expenses.
Except as described below for certain legal entities, the Company allocates its invested assets and the related net investment
income to its reportable business segments. Pre-tax net investment income is allocated based upon an investable funds concept,
which takes into account liabilities (net of non-invested assets) and appropriate capital considerations for each segment. For
investable funds, a benchmark investment yield is developed that reflects the estimated duration of the loss reserves’ future cash
flows, the interest rate environment at the time the losses were incurred and A+ rated corporate debt instrument yields. For
capital, a benchmark investment yield is developed that reflects the average yield on the total investment portfolio. The
benchmark investment yields are applied to each segment’s investable funds and capital, respectively, to produce a total
notional investment income by segment. The Company’s actual net investment income is allocated to each segment in
proportion to the respective segment’s notional investment income to total notional investment income. There are certain legal
entities within the Company that are dedicated to specific reportable business segments. The invested assets and related net
investment income from these legal entities are reported in the applicable business segment and are not allocated among the
other business segments.
The cost of the Company’s catastrophe treaty program is included in the Company’s ceded premiums and is allocated among
reportable business segments based on an estimate of actual market reinsurance pricing using expected losses calculated by the
Company’s catastrophe model, adjusted for any experience adjustments.
The following tables summarize the components of the Company’s revenues, income (loss), net written premiums and total
assets by reportable business segments.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
136
(for the year ended December 31, in millions)
Business
Insurance
Bond &
Specialty
Insurance
Personal
Insurance
Total
Reportable
Segments
2024
Premiums ............................................................................
$
21,345 $
3,958 $
16,638 $
41,941
Net investment income .......................................................
2,560
390
640
3,590
Fee income ..........................................................................
430
—
43
473
Other revenues ....................................................................
322
30
97
449
Total segment revenues (1)
................................................
24,657
4,378
17,418
46,453
Claims and claim adjustment expenses ..............................
13,679
1,774
11,606
27,059
Amortization of deferred acquisition costs .........................
3,588
756
2,629
6,973
General and administrative expenses..................................
3,303
832
1,640
5,775
Income tax expense ............................................................
781
201
294
1,276
Segment income (1)
.............................................................
$
3,306 $
815 $
1,249 $
5,370
2023
Premiums ............................................................................
$
19,144 $
3,655 $
14,962 $
37,761
Net investment income .......................................................
2,085
328
509
2,922
Fee income ..........................................................................
400
—
33
433
Other revenues ....................................................................
232
25
96
353
Total segment revenues (1)
................................................
21,861
4,008
15,600
41,469
Claims and claim adjustment expenses ..............................
12,696
1,485
12,034
26,215
Amortization of deferred acquisition costs .........................
3,173
673
2,380
6,226
General and administrative expenses..................................
3,041
681
1,417
5,139
Income tax expense (benefit) ..............................................
368
227
(103)
492
Segment income (loss) (1)
....................................................
$
2,583 $
942 $
(128) $
3,397
2022
Premiums ............................................................................
$
17,095 $
3,418 $
13,250 $
33,763
Net investment income .......................................................
1,864
258
440
2,562
Fee income ..........................................................................
382
—
30
412
Other revenues ....................................................................
248
20
83
351
Total segment revenues (1)
................................................
19,589
3,696
13,803
37,088
Claims and claim adjustment expenses ..............................
10,907
1,378
10,569
22,854
Amortization of deferred acquisition costs .........................
2,788
625
2,102
5,515
General and administrative expenses..................................
2,827
590
1,362
4,779
Income tax expense (benefit) ..............................................
536
195
(90)
641
Segment income (loss) (1)
....................................................
$
2,531 $
908 $
(140) $
3,299
_________________________________________
(1)
Segment revenues for reportable business segments exclude net realized investment gains (losses) and revenues included in
“interest expense and other.” Segment income (loss) for reportable business segments excludes the after-tax impact of net realized
investment gains (losses) and income (loss) from “interest expense and other.”
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SEGMENT INFORMATION (Continued)
137
Prior year reserve development and catastrophe losses included in claims and claim adjustment expenses in the table above by
reportable business segments were as follows:
(for the year ended December 31, in millions)
Business
Insurance
Bond &
Specialty
Insurance
Personal
Insurance
Total
Reportable
Segments
2024
Net favorable prior year reserve development ....................
$
90 $
129 $
490 $
709
Catastrophe losses ...............................................................
$
1,032 $
51 $
2,252 $
3,335
2023
Net favorable (unfavorable) prior year reserve
development ........................................................................
$
(289) $
285 $
147 $
143
Catastrophe losses ...............................................................
$
838 $
37 $
2,116 $
2,991
2022
Net favorable prior year reserve development ....................
$
381 $
222 $
46 $
649
Catastrophe losses ...............................................................
$
654 $
25 $
1,198 $
1,877
The following table presents the Company’s amortization and depreciation expense by reportable business segment:
(for the year ended December 31, in millions)
2024
2023
2022
Business Insurance ..........................................................................................
$
4,014 $
3,640 $
3,344
Bond & Specialty Insurance ............................................................................
842
744
697
Personal Insurance ..........................................................................................
2,826
2,558
2,293
Total .............................................................................................................
$
7,682 $
6,942 $
6,334
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SEGMENT INFORMATION (Continued)
138
Net written premiums by market were as follows:
(for the year ended December 31, in millions)
2024
2023
2022
Business Insurance:
Domestic:
Select Accounts .......................................................................................
$
3,727 $
3,477 $
3,099
Middle Market .........................................................................................
12,023
11,045
9,923
National Accounts ...................................................................................
1,259
1,135
1,085
National Property and Other ...................................................................
3,134
3,008
2,467
Total Domestic ...................................................................................
20,143
18,665
16,574
International .................................................................................................
1,935
1,765
1,061
Total Business Insurance ....................................................................
22,078
20,430
17,635
Bond & Specialty Insurance:
Domestic:
Management Liability .............................................................................
2,309
2,156
2,112
Surety ......................................................................................................
1,294
1,147
1,081
Total Domestic ...................................................................................
3,603
3,303
3,193
International .................................................................................................
506
539
539
Total Bond & Specialty Insurance .....................................................
4,109
3,842
3,732
Personal Insurance:
Domestic:
Automobile .........................................................................................
7,925
7,330
6,482
Homeowners and Other ......................................................................
8,550
7,949
6,916
Total Domestic ...................................................................................
16,475
15,279
13,398
International .................................................................................................
694
650
649
Total Personal Insurance ....................................................................
17,169
15,929
14,047
Total consolidated net written premiums ................................................
$
43,356 $
40,201 $
35,414
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SEGMENT INFORMATION (Continued)
139
Business Segment Reconciliations
(for the year ended December 31, in millions)
2024
2023
2022
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation ..................................................................................
$
3,470
$
3,467
$
3,425
Commercial automobile .................................................................................
3,590
3,215
2,976
Commercial property ......................................................................................
3,616
3,154
2,611
General liability ..............................................................................................
3,464
3,146
2,875
Commercial multi-peril ..................................................................................
5,269
4,686
4,109
Other ...............................................................................................................
73
76
76
Total Domestic ............................................................................................
19,482
17,744
16,072
International .........................................................................................................
1,863
1,400
1,023
Total Business Insurance .............................................................................
21,345
19,144
17,095
Bond & Specialty Insurance:
Domestic:
Fidelity and surety ..........................................................................................
1,416
1,290
1,173
General liability ..............................................................................................
1,778
1,639
1,556
Other ...............................................................................................................
231
225
222
Total Domestic ............................................................................................
3,425
3,154
2,951
International .........................................................................................................
533
501
467
Total Bond & Specialty Insurance ...............................................................
3,958
3,655
3,418
Personal Insurance:
Domestic:
Automobile .....................................................................................................
7,767
6,923
6,170
Homeowners and Other ..................................................................................
8,208
7,404
6,426
Total Domestic ............................................................................................
15,975
14,327
12,596
International .........................................................................................................
663
635
654
Total Personal Insurance .............................................................................
16,638
14,962
13,250
Total earned premiums ................................................................................
41,941
37,761
33,763
Net investment income ................................................................................................
3,590
2,922
2,562
Fee income ...................................................................................................................
473
433
412
Other revenues .............................................................................................................
449
353
351
Total segment revenues ...............................................................................
46,453
41,469
37,088
Net realized investment losses .....................................................................................
(30)
(105)
(204)
Total revenues ...............................................................................................
$
46,423
$
41,364
$
36,884
Income reconciliation, net of tax
Total segment income ..................................................................................................
$
5,370
$
3,397
$
3,299
Interest Expense and Other (1)
.....................................................................................
(345)
(325)
(301)
Core income ..................................................................................................
5,025
3,072
2,998
Net realized investment losses .....................................................................................
(26)
(81)
(156)
Net income ....................................................................................................
$
4,999
$
2,991
$
2,842
______________________________________
(1) The primary component of Interest Expense and Other was after-tax interest expense of $310 million, $297 million and $277 million in
2024, 2023 and 2022, respectively.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SEGMENT INFORMATION (Continued)
140
(at December 31, in millions)
2024
2023
Asset reconciliation:
Business Insurance ..................................................................................................................
$
98,311 $
93,565
Bond & Specialty Insurance ....................................................................................................
12,628
11,478
Personal Insurance ..................................................................................................................
21,138
20,072
Total assets for reportable segments ...................................................................................
132,077
125,115
Other assets (1)
.........................................................................................................................
1,112
863
Total consolidated assets ................................................................................................
$
133,189 $
125,978
___________________________________________
(1) The primary components of other assets at both December 31, 2024 and 2023, were the over-funded benefit plan assets related to the
Company’s qualified domestic pension plan and other intangible assets.
Enterprise-Wide Disclosures
The Company does not have revenue from transactions with a single customer amounting to 10 percent or more of its revenues.
The following table presents revenues of the Company’s operations based on location:
(for the year ended December 31, in millions)
2024
2023
2022
U.S. .................................................................................................................
$
43,924 $
39,086 $
34,822
Non-U.S.:
Canada .........................................................................................................
1,359
1,281
1,300
Other Non-U.S. ............................................................................................
1,140
997
762
Total Non-U.S. ........................................................................................
2,499
2,278
2,062
Total revenues .........................................................................................
$
46,423 $
41,364 $
36,884
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SEGMENT INFORMATION (Continued)
141
3. INVESTMENTS
Fixed Maturities
The amortized cost and fair value of investments in fixed maturities classified as available for sale were as follows:
Amortized Cost
Allowance for
Expected Credit
Losses
Gross Unrealized
Fair Value
(at December 31, 2024, in millions)
Gains
Losses
U.S. Treasury securities and obligations
of U.S. government and government
agencies and authorities .......................
$
5,735 $
— $
4 $
169 $
5,570
Obligations of U.S. states,
municipalities and political
subdivisions:
Local general obligation .......................
18,604
—
23
1,604
17,023
Revenue ................................................
9,268
—
16
704
8,580
State general obligation ........................
1,081
—
2
73
1,010
Pre-refunded .........................................
573
—
2
3
572
Total obligations of U.S. states,
municipalities and political
subdivisions ..................................
29,526
—
43
2,384
27,185
Debt securities issued by foreign
governments .........................................
917
—
5
13
909
Mortgage-backed securities,
collateralized mortgage obligations
and pass-through securities ..................
12,888
—
53
336
12,605
Corporate and all other bonds .................
39,211
2
118
1,930
37,397
Total .................................................
$
88,277 $
2 $
223 $
4,832 $
83,666
Amortized Cost
Allowance for
Expected Credit
Losses
Gross Unrealized
Fair Value
(at December 31, 2023, in millions)
Gains
Losses
U.S. Treasury securities and obligations
of U.S. government and government
agencies and authorities .......................
$
6,591 $
— $
8 $
231 $
6,368
Obligations of U.S. states,
municipalities and political
subdivisions:
Local general obligation .......................
18,374
—
90
1,265
17,199
Revenue ................................................
9,748
—
52
616
9,184
State general obligation ........................
1,209
—
7
59
1,157
Pre-refunded .........................................
963
—
5
2
966
Total obligations of U.S. states,
municipalities and political
subdivisions ..................................
30,294
—
154
1,942
28,506
Debt securities issued by foreign
governments .........................................
1,035
—
2
31
1,006
Mortgage-backed securities,
collateralized mortgage obligations
and pass-through securities ..................
7,874
—
120
176
7,818
Corporate and all other bonds .................
35,987
5
187
2,060
34,109
Total .................................................
$
81,781 $
5 $
471 $
4,440 $
77,807
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
142
The amortized cost and fair value of fixed maturities by contractual maturity follow. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment
penalties.
(at December 31, 2024, in millions)
Amortized
Cost
Fair
Value
Due in one year or less ...............................................................................................................
$
7,357 $
7,328
Due after 1 year through 5 years ................................................................................................
23,640
22,965
Due after 5 years through 10 years ............................................................................................
22,647
20,897
Due after 10 years ......................................................................................................................
21,745
19,871
75,389
71,061
Mortgage-backed securities, collateralized mortgage obligations
and pass-through securities ...................................................................................................
12,888
12,605
Total ........................................................................................................................................
$
88,277 $
83,666
Pre-refunded bonds of $572 million and $966 million at December 31, 2024 and 2023, respectively, were bonds for which U.S.
states or municipalities have established irrevocable trusts that are almost exclusively comprised of U.S. Treasury securities and
obligations of U.S. government and government agencies and authorities. These trusts were created to fund the payment of
principal and interest due under the bonds.
The Company’s fixed maturity investment portfolio at December 31, 2024 and 2023 included $12.61 billion and $7.82 billion,
respectively, of residential mortgage-backed securities, which include pass-through securities and collateralized mortgage
obligations (CMOs). Included in the totals at December 31, 2024 and 2023 were $9.93 billion and $6.23 billion, respectively,
of GNMA, FNMA, FHLMC (excluding FHA project loans) and Canadian government guaranteed residential mortgage-backed
pass-through securities classified as available for sale. Also included in those totals were residential CMOs classified as
available for sale with a fair value of $2.68 billion and $1.59 billion at December 31, 2024 and 2023, respectively.
Approximately 43% and 33% of the Company’s CMO holdings at December 31, 2024 and 2023, respectively, were guaranteed
by or fully collateralized by securities issued by GNMA, FNMA or FHLMC. The weighted average credit rating of the $1.53
billion and $1.07 billion of non-guaranteed CMO holdings was "Aaa" at both December 31, 2024 and 2023. The weighted
average credit rating of all of the above securities was “Aaa/Aa1” at both December 31, 2024 and 2023.
At December 31, 2024 and 2023, the Company held commercial mortgage-backed securities (CMBS, including FHA project
loans) of $1.15 billion and $1.04 billion, respectively, which are included in “Corporate and all other bonds” in the tables
above. At December 31, 2024 and 2023, approximately $327 million and $116 million of these securities, respectively, or the
loans backing such securities, contained guarantees by the U.S. government or a government-sponsored enterprise. The
weighted average credit rating of the $825 million and $922 million of non-guaranteed securities at December 31, 2024 and
2023, respectively, was “Aaa” at both dates. The CMBS portfolio is supported by loans that are diversified across economic
sectors and geographical areas. The weighted average credit rating of the CMBS portfolio was "Aaa/Aa1" and “Aaa” at
December 31, 2024 and 2023, respectively.
At December 31, 2024 and 2023, the Company had $586 million and $421 million, respectively, of securities on loan as part of
a tri-party lending agreement.
Proceeds from the sales of fixed maturities classified as available for sale were $1.63 billion, $4.98 billion and $5.66 billion in
2024, 2023 and 2022, respectively. Gross gains of $2 million, $26 million and $27 million and gross losses of $62 million,
$119 million and $99 million were realized on those sales in 2024, 2023 and 2022, respectively. Included in net realized
investment losses in 2024, 2023 and 2022 were $66 million, $0 million and $0 million, respectively, of losses resulting from the
early redemption of fixed maturities by the issuer prior to the bonds' maturity date.
At December 31, 2024 and 2023, the Company’s insurance subsidiaries had $3.96 billion and $4.04 billion, respectively, of
securities on deposit at financial institutions in certain states pursuant to the respective states’ insurance regulatory
requirements. Funds deposited with third parties to be used as collateral to secure various liabilities on behalf of insureds,
cedants and other creditors had a fair value of $46 million and $54 million at December 31, 2024 and 2023, respectively. In
addition, the Company utilizes Lloyd’s trust deposits, whereby owned securities with a fair value of approximately $13 million
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVESTMENTS (Continued)
143
and $31 million held by a wholly-owned subsidiary at December 31, 2024 and 2023, respectively, and $86 million and $85
million held by TRV at December 31, 2024 and 2023, respectively, were pledged into Lloyd’s trust accounts to provide a
portion of the capital needed to support the Company’s obligations at Lloyd’s.
Equity Securities
The cost and fair value of investments in equity securities were as follows:
(at December 31, 2024, in millions)
Cost
Gross Gains
Gross Losses
Fair Value
Common stock ....................................................................
$
500 $
150 $
11 $
639
Non-redeemable preferred stock ........................................
44
4
—
48
Total .................................................................................
$
544 $
154 $
11 $
687
(at December 31, 2023, in millions)
Cost
Gross Gains
Gross Losses
Fair Value
Common stock ....................................................................
$
508 $
93 $
41 $
560
Non-redeemable preferred stock ........................................
45
3
—
48
Total .................................................................................
$
553 $
96 $
41 $
608
The Company recognized $89 million and $16 million of net gains on equity securities still held as of December 31, 2024 and
2023, respectively.
Real Estate
The Company’s real estate investments include warehouses, office buildings and other commercial land and properties that are
directly owned. The Company negotiates commercial leases with individual tenants through unrelated, licensed real estate
brokers. Negotiated terms and conditions include, among others, rental rates, length of lease period and improvements to the
premises to be provided by the Company.
Proceeds from the sales of real estate investments were $64 million in 2024, $0 million in 2023 and $10 million in 2022. Gains
of $17 million and $4 million were realized on those sales in 2024 and 2022, respectively. Net realized investment losses in
2024, 2023 and 2022 included $5 million, $9 million and $12 million, respectively, of impairment charges related to real estate.
Accumulated depreciation on real estate held for investment purposes was $581 million and $556 million at December 31, 2024
and 2023, respectively.
Future minimum rental income on operating leases relating to the Company’s real estate properties is expected to be $118
million, $107 million, $93 million, $72 million and $46 million for 2025, 2026, 2027, 2028 and 2029, respectively, and $87
million for 2030 and thereafter.
Short-term Securities
The Company’s short-term securities consist of Aaa-rated registered money market funds, U.S. Treasury securities, high-quality
commercial paper (primarily A1/P1) and high-quality corporate securities purchased within a year to their maturity with a
combined average of 23 days to maturity at December 31, 2024. The amortized cost of these securities, which totaled $4.77
billion and $5.14 billion at December 31, 2024 and 2023, respectively, approximated their fair value.
Other Investments
Included in other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity
method of accounting and typically report their financial statement information to the Company one month to three months
following the end of the reporting period. Accordingly, net investment income from these other investments is generally
reflected in the Company’s financial statements on a quarter lag basis.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVESTMENTS (Continued)
144
Variable Interest Entities
Entities which do not have sufficient equity at risk to allow the entity to finance its activities without additional financial
support or in which the equity investors, as a group, do not have the characteristic of a controlling financial interest are referred
to as variable interest entities (VIE). A VIE is consolidated by the variable interest holder that is determined to have the
controlling financial interest (primary beneficiary) as a result of having both the power to direct the activities of a VIE that most
significantly impact the VIE’s economic performance and the obligation to absorb losses or right to receive benefits from the
VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity
subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s
operations and purpose and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially
involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis.
The Company is a passive investor in limited partner equity interests issued by third party VIEs. These include certain of the
Company’s investments in private equity limited partnerships, hedge funds and real estate partnerships where the Company is
not related to the general partner. These investments are generally accounted for under the equity method and reported in the
Company’s consolidated balance sheet as other investments unless the Company is deemed the primary beneficiary. These
equity interests generally cannot be redeemed. Distributions from these investments are received by the Company as a result of
liquidation of the underlying investments of the funds and/or as income distribution. The Company’s maximum exposure to
loss with respect to these investments is limited to the investment carrying amounts reported in the Company’s consolidated
balance sheet and any unfunded commitment. The Company considers an investment in a VIE in which it has a 20% or greater
equity interest as a significant VIE. Neither the Company’s carrying amounts nor the unfunded commitments related to these
significant VIE’s are material individually or in the aggregate.
Unrealized Investment Losses
The following tables summarize, for all fixed maturities classified as available for sale in an unrealized loss position at
December 31, 2024 and 2023, the aggregate fair value and gross unrealized loss by the length of time those securities have been
continuously in an unrealized loss position. The fair value amounts reported in the tables are estimates that are prepared using
the process described in note 4. The Company also relies upon estimates of several factors in its review and evaluation of
individual investments, using the process described in note 1, in determining whether a credit loss impairment exists.
Less than 12 months
12 months or longer
Total
(at December 31, 2024, in millions)
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fixed maturities
U.S. Treasury securities and
obligations of U.S. government and
government agencies and
authorities .........................................
$
557 $
1 $
2,830 $
168 $
3,387 $
169
Obligations of U.S. states,
municipalities and political
subdivisions .....................................
8,584
160
15,007
2,224
23,591
2,384
Debt securities issued by foreign
governments .....................................
113
1
454
12
567
13
Mortgage-backed securities,
collateralized mortgage obligations
and pass-through securities ..............
7,359
148
1,419
188
8,778
336
Corporate and all other bonds .............
7,341
144
21,999
1,786
29,340
1,930
Total .................................................
$
23,954 $
454 $
41,709 $
4,378 $
65,663 $
4,832
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVESTMENTS (Continued)
145
Less than 12 months
12 months or longer
Total
(at December 31, 2023, in millions)
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fixed maturities
U.S. Treasury securities and
obligations of U.S. government and
government agencies and
authorities .........................................
$
1,864 $
7 $
2,985 $
224 $
4,849 $
231
Obligations of U.S. states,
municipalities and political
subdivisions .....................................
3,868
31
14,351
1,911
18,219
1,942
Debt securities issued by foreign
governments .....................................
30
—
763
31
793
31
Mortgage-backed securities,
collateralized mortgage obligations
and pass-through securities ..............
1,215
9
1,433
167
2,648
176
Corporate and all other bonds .............
1,016
9
26,444
2,051
27,460
2,060
Total .................................................
$
7,993 $
56 $
45,976 $
4,384 $
53,969 $
4,440
The following tables summarize, for all fixed maturities reported at fair value for which fair value was less than 80% of
amortized cost at December 31, 2024 and 2023, the gross unrealized investment loss by length of time those securities have
continuously been in an unrealized loss position of greater than 20% of amortized cost:
Period For Which Fair Value is Less Than 80% of Amortized Cost
(at December 31, 2024, in millions)
3 months or less
Greater than 3
months, 6
months or less
Greater than 6
months, 12
months or less
Greater than 12
months
Total
Fixed maturities
U.S. Treasury securities and obligations
of U.S. government and government
agencies and authorities ........................
$
— $
— $
— $
— $
—
Obligations of U.S. states, municipalities
and political subdivisions ......................
366
—
43
635
1,044
Debt securities issued by foreign
governments ..........................................
—
—
—
—
—
Mortgage-backed securities,
collateralized mortgage obligations
and pass-through securities ...................
58
—
—
—
58
Corporate and all other bonds ...................
13
—
—
3
16
Total ..................................................
$
437 $
— $
43 $
638 $
1,118
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVESTMENTS (Continued)
146
Period For Which Fair Value is Less Than 80% of Amortized Cost
(at December 31, 2023, in millions)
3 months or less
Greater than 3
months, 6
months or less
Greater than 6
months, 12
months or less
Greater than 12
months
Total
Fixed maturities
U.S. Treasury securities and obligations
of U.S. government and government
agencies and authorities ........................
$
— $
— $
— $
— $
—
Obligations of U.S. states, municipalities
and political subdivisions ......................
—
2
31
642
675
Debt securities issued by foreign
governments ..........................................
—
—
—
—
—
Mortgage-backed securities,
collateralized mortgage obligations
and pass-through securities ...................
—
—
—
—
—
Corporate and all other bonds ...................
1
3
22
25
51
Total ..................................................
$
1 $
5 $
53 $
667 $
726
Increases in interest rates resulted in the gross unrealized investment losses disclosed in the tables above; however, the net
unrealized loss is considered temporary in nature as the decrease in value is not due to credit impairments and there is no impact
on expected contractual cash flows from fixed maturities.
Impairment Charges
Credit impairment charges included in net realized investment losses in the consolidated statement of income were as follows:
(for the year ended December 31, in millions)
2024
2023
2022
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and
government agencies and authorities .......................................................
$
— $
— $
12
Obligations of U.S. states, municipalities and political subdivisions ..........
—
1
14
Debt securities issued by foreign governments ...........................................
—
—
—
Mortgage-backed securities, collateralized mortgage obligations and
pass-through securities .............................................................................
—
—
—
Corporate and all other bonds ......................................................................
5
2
—
Total fixed maturities ..............................................................................
$
5 $
3 $
26
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVESTMENTS (Continued)
147
The following table presents changes in the allowance for expected credit losses on fixed maturities classified as available for
sale for the category of Corporate and All Other Bonds (no other categories of fixed maturities currently have an allowance for
expected credit losses):
Fixed Maturities
Corporate and All Other Bonds
(in millions)
At and For the
Twelve Months
Ended December
31, 2024
At and For the
Twelve Months
Ended December
31, 2023
Balance, beginning of period ...................................................................................................
$
5 $
3
Additions for expected credit losses on securities where no credit losses were previously
recognized ............................................................................................................................
5
1
Additions (reductions) for expected credit losses on securities where credit losses were
previously recognized ..........................................................................................................
(1)
1
Reductions due to sales/defaults of credit-impaired securities ................................................
(7)
—
Reductions for impairments of securities which the Company intends to sell or more likely
than not will be required to sell ...........................................................................................
—
—
Balance, end of period ..............................................................................................................
$
2 $
5
Total net impairment charges, including credit impairments, reported in net realized investment losses in the consolidated
statement of income, were $10 million, $12 million and $38 million for the years ended December 31, 2024, 2023 and 2022,
respectively. Net realized investment losses in 2024, 2023 and 2022 included $5 million, $9 million and $12 million,
respectively, of realized losses related to real estate. Credit losses related to the fixed maturity portfolio for 2024 and 2023
represented less than 1% of the fixed maturity portfolio on a pre-tax basis and less than 1% of shareholders’ equity on an after-
tax basis at both December 31, 2024 and 2023.
Concentrations and Credit Quality
Concentrations of credit risk arise from exposure to counterparties that are engaged in similar activities and have similar
economic characteristics that could cause their ability to meet contractual obligations to be similarly affected by changes in
economic or other conditions. The Company seeks to mitigate credit risk by actively monitoring the creditworthiness of
counterparties, obtaining collateral as deemed appropriate and applying controls that include credit approvals, limits of credit
exposure and other monitoring procedures.
At December 31, 2024 and 2023, other than U.S. Treasury securities and obligations of U.S. government and government
agencies and authorities, the Company was not exposed to any concentration of credit risk of a single issuer greater than 5% of
the Company’s shareholders’ equity.
Included in fixed maturities are below investment grade securities totaling $980 million and $982 million at December 31, 2024
and 2023, respectively. The Company defines its below investment grade securities as those securities rated below investment
grade by external rating agencies, or the equivalent by the Company when a public rating does not exist. Such securities
include below investment grade bonds that are publicly traded and certain other privately issued bonds that are classified as
below investment grade loans.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVESTMENTS (Continued)
148
Net Investment Income
(for the year ended December 31, in millions)
2024
2023
2022
Gross investment income
Fixed maturities ..............................................................................................
$
2,948 $
2,472 $
2,113
Equity securities .............................................................................................
21
18
17
Short-term securities ......................................................................................
280
241
73
Real estate investments ..................................................................................
70
64
66
Other investments ...........................................................................................
318
171
336
Gross investment income ............................................................................
3,637
2,966
2,605
Investment expenses .......................................................................................
47
44
43
Net investment income ................................................................................
$
3,590 $
2,922 $
2,562
Changes in net unrealized gains (losses) on investment securities that are included as a separate component of other
comprehensive income (loss) were as follows:
(at and for the year ended December 31, in millions)
2024
2023
2022
Changes in net unrealized investment gains (losses)
Fixed maturities ..............................................................................................
$
(640) $
2,248 $
(9,279)
Other investments ...........................................................................................
1
2
(1)
Change in net pre-tax unrealized gains (losses) on investment securities ...
(639)
2,250
(9,280)
Related tax expense (benefit) .........................................................................
(128)
481
(1,967)
Change in net unrealized gains (losses) on investment securities ...............
(511)
1,769
(7,313)
Balance, beginning of year .............................................................................
(3,129)
(4,898)
2,415
Balance, end of year ....................................................................................
$
(3,640) $
(3,129) $
(4,898)
Derivative Financial Instruments
From time to time, the Company enters into certain derivative financial instruments that are reported on the balance sheet at fair
value. The change in fair value of these investments is reported in net realized investment gains and losses.
4. FAIR VALUE MEASUREMENTS
The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in the
fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted
prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair
value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are
observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to
unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant
market assumptions. The level in the fair value hierarchy within which the fair value measurement is reported is based on the
lowest level input that is significant to the measurement in its entirety. The three levels of the hierarchy are as follows:
•
Level 1 - Unadjusted quoted market prices for identical assets or liabilities in active markets that the Company
has the ability to access.
•
Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar
assets or liabilities in inactive markets; or valuations based on models where the significant inputs are
observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be
corroborated by observable market data.
•
Level 3 - Valuations based on models where significant inputs are not observable. The unobservable inputs
reflect the Company’s own assumptions about the inputs that market participants would use.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. INVESTMENTS (Continued)
149
Valuation of Investments Reported at Fair Value in Financial Statements
The fair value of a financial instrument is the estimated amount at which the instrument could be exchanged in an orderly
transaction between knowledgeable, unrelated, willing parties, i.e., not in a forced transaction. The estimated fair value of a
financial instrument may differ from the amount that could be realized if the security was sold in an immediate sale, e.g., a
forced transaction. Additionally, the valuation of investments is more subjective when markets are less liquid due to the lack of
market based inputs, which may increase the potential that the estimated fair value of an investment is not reflective of the price
at which an actual transaction would occur.
For investments that have quoted market prices in active markets, the Company uses the unadjusted quoted market prices as fair
value and includes these prices in the amounts disclosed in Level 1 of the hierarchy. The Company receives the quoted market
prices from third party, nationally recognized pricing services. When quoted market prices are unavailable, the Company
utilizes these pricing services to determine an estimate of fair value. The fair value estimates provided from these pricing
services are included in the amount disclosed in Level 2 of the hierarchy. If quoted market prices and an estimate from a
pricing service are unavailable, the Company produces an estimate of fair value based on internally developed valuation
techniques, which, depending on the level of observable market inputs, will render the fair value estimate as Level 2 or Level
3. The Company bases all of its estimates of fair value for assets on the bid price as it represents what a third-party market
participant would be willing to pay in an arm’s length transaction.
Fixed Maturities
The Company utilized a pricing service to estimate fair value measurements for approximately 99% of its fixed maturities at
both December 31, 2024 and 2023. The pricing service utilizes market quotations for fixed maturity securities that have quoted
prices in active markets. Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the
pricing service prepares estimates of fair value measurements for these securities using its proprietary pricing applications,
which include available relevant market information, benchmark curves, benchmarking of like securities, sector groupings and
matrix pricing. Additionally, the pricing service uses an Option Adjusted Spread model to develop prepayment and interest rate
scenarios.
The pricing service evaluates each asset class based on relevant market information, relevant credit information, perceived
market movements and sector news. The market inputs utilized in the pricing evaluation, listed in the approximate order of
priority, include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark
securities, bids, offers, reference data, and industry and economic events. The extent of the use of each market input depends
on the asset class and the market conditions. Depending on the security, the priority of the use of inputs may change or some
market inputs may not be relevant. For some securities, additional inputs may be necessary.
The pricing service utilized by the Company has indicated that it will only produce an estimate of fair value if there is
objectively verifiable information to produce a valuation. If the pricing service discontinues pricing an investment, the
Company would be required to produce an estimate of fair value using some of the same methodologies as the pricing service
but would have to make assumptions for any market-based inputs that were unavailable due to market conditions. The
Company reviews the estimates of fair value provided by the pricing service and compares the estimates to the Company’s
knowledge of the market to determine if the estimates obtained are representative of the prices in the market. In addition, the
Company has periodic discussions with the pricing service to discuss and understand any changes in process and their
responsiveness to changes occurring in the markets. The Company also monitors all monthly price changes and further
evaluates any securities whose value changed more than 10% from the prior month. The Company has implemented various
other processes including randomly selecting purchased or sold securities and comparing execution prices to the estimates from
the pricing service as well as reviewing securities whose valuation did not change from their previous valuation (stale price
review). The Company also uses a second independent pricing service to further test the primary pricing service’s valuation of
the Company’s fixed maturity portfolio. These processes have not highlighted any significant issues with the fair value
estimates received from the primary pricing service.
The fair value estimates of most fixed maturity investments are based on observable market information rather than market
quotes. Accordingly, the estimates of fair value for such fixed maturities, other than U.S. Treasury securities, provided by the
pricing service are included in the amount disclosed in Level 2 of the hierarchy. The estimated fair value of U.S. Treasury
securities is included in the amount disclosed in Level 1 as the estimates are based on unadjusted market prices.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. FAIR VALUE MEASUREMENTS (Continued)
150
The Company also holds certain fixed maturity investments which are not priced by the pricing service and, accordingly,
estimates the fair value of such fixed maturities using an internal matrix that is based on market information regarding interest
rates, credit spreads and liquidity. The underlying source data for calculating the matrix of credit spreads relative to the U.S.
Treasury curve are observable market-based indices that relate to corporate and high-yield fixed maturity investments. The
Company includes the fair value estimates of these corporate bonds in Level 2, since all significant inputs are market
observable.
While the vast majority of the Company’s fixed maturities are included in Level 2, the Company holds a number of corporate
bonds which are not valued by the pricing service and estimates the fair value of these bonds using either another internal
pricing matrix, a present value income approach, or a broker quote (collectively, the other methodologies). The other
methodologies include some unobservable inputs that are significant to the valuation. Due to the limited amount of observable
market information available in the estimation of fair value, the Company includes the fair value estimates for bonds that are
valued using the other methodologies in Level 3.
Equity Securities — Common Stock and Non-Redeemable Preferred Stock
For public common stock and non-redeemable preferred stocks, the Company receives prices from pricing services that are
based on observable market transactions and includes these estimates in the amount disclosed in Level 1. When current market
quotes in active markets are unavailable for certain non-redeemable preferred stocks held by the Company, the Company
receives an estimate of fair value from the pricing services. The services utilize similar methodologies to price the non-
redeemable preferred stocks as they do for the fixed maturities. The Company includes the fair value estimate for these non-
redeemable preferred stocks in the amount disclosed in Level 2.
For certain investments in non-public common and preferred equity securities, the fair value estimate is determined either
internally or by an external fund manager based on the impact of recent observable transactions related to the investment, recent
filings, operating results, balance sheet stability, growth and other business and market sector fundamentals. Due to the
significant unobservable inputs in these valuations, the Company included the fair value estimate of $37 million for these
investments at both December 31, 2024 and 2023 in the amounts disclosed in Level 3.
Other Investments
The Company holds investments in various publicly-traded securities which are reported in other investments. These
investments include mutual funds and other small holdings. The $20 million and $18 million fair value of these investments at
December 31, 2024 and 2023, respectively, was disclosed in Level 1.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. FAIR VALUE MEASUREMENTS (Continued)
151
Fair Value Hierarchy
The following tables present the level within the fair value hierarchy at which the Company’s financial assets and financial
liabilities are measured on a recurring basis.
(at December 31, 2024, in millions)
Total
Level 1
Level 2
Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S.
government and government agencies and authorities .
$
5,570 $
5,570 $
— $
—
Obligations of U.S. states, municipalities and political
subdivisions ..................................................................
27,185
—
27,185
—
Debt securities issued by foreign governments ...............
909
—
909
—
Mortgage-backed securities, collateralized mortgage
obligations and pass-through securities ........................
12,605
—
12,602
3
Corporate and all other bonds ..........................................
37,397
—
37,151
246
Total fixed maturities ..................................................
83,666
5,570
77,847
249
Equity securities
Common stock ....................................................................
639
631
—
8
Non-redeemable preferred stock ........................................
48
16
3
29
Total equity securities .................................................
687
647
3
37
Other investments .............................................................
20
20
—
—
Total .......................................................................
$
84,373 $
6,237 $
77,850 $
286
(at December 31, 2023, in millions)
Total
Level 1
Level 2
Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S.
government and government agencies and authorities .
$
6,368 $
6,368 $
— $
—
Obligations of U.S. states, municipalities and political
subdivisions ..................................................................
28,506
—
28,506
—
Debt securities issued by foreign governments ...............
1,006
—
1,006
—
Mortgage-backed securities, collateralized mortgage
obligations and pass-through securities ........................
7,818
—
7,818
—
Corporate and all other bonds ..........................................
34,109
—
33,851
258
Total fixed maturities ..................................................
77,807
6,368
71,181
258
Equity securities
Common stock ....................................................................
560
553
—
7
Non-redeemable preferred stock ........................................
48
16
2
30
Total equity securities .................................................
608
569
2
37
Other investments .............................................................
18
18
—
—
Total .......................................................................
$
78,433 $
6,955 $
71,183 $
295
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. FAIR VALUE MEASUREMENTS (Continued)
152
The following tables present the changes in the Level 3 fair value category for the years ended December 31, 2024 and 2023.
(in millions)
Fixed
Maturities
Equity
Securities
Other
Investments
Total
Balance at December 31, 2023 ...........................................
$
258 $
37 $
— $
295
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (losses) (1)
......
—
1
—
1
Reported in other comprehensive income (loss) ..............
(1)
—
—
(1)
Purchases, sales and settlements/maturities:
Purchases ..........................................................................
85
2
—
87
Sales .................................................................................
—
(3)
—
(3)
Settlements/maturities ......................................................
(25)
—
—
(25)
Gross transfers into Level 3 ................................................
—
—
—
—
Gross transfers out of Level 3 .............................................
(68)
—
—
(68)
Balance at December 31, 2024 ....................................
$
249 $
37 $
— $
286
Amount of total realized investment gains (losses) for the
period included in the consolidated statement of
income attributable to changes in the fair value of
assets still held at the reporting date ................................
$
— $
1 $
— $
1
___________________________________________
(1)
Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.
(in millions)
Fixed
Maturities
Equity
Securities
Other
Investments
Total
Balance at December 31, 2022 ...........................................
$
303 $
371 $
1 $
675
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (losses) (1)
......
(1)
(5)
—
(6)
Reported in other comprehensive income (loss) ..............
6
—
—
6
Purchases, sales and settlements/maturities:
Purchases ..........................................................................
25
4
—
29
Sales .................................................................................
—
—
(1)
(1)
Settlements/maturities ......................................................
(26)
—
—
(26)
Gross transfers into Level 3 ................................................
—
—
—
—
Gross transfers out of Level 3 .............................................
(49)
(333)
—
(382)
Balance at December 31, 2023 ....................................
$
258 $
37 $
— $
295
Amount of total realized investment gains (losses) for the
period included in the consolidated statement of
income attributable to changes in the fair value of
assets still held at the reporting date ................................
$
— $
— $
— $
—
___________________________________________
(1)
Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.
Transfers out of Level 3 during the year ended December 31, 2023 included $182 million of privately held common stock that
the Company exchanged during the first quarter of 2023 for shares in an investment that is reported using the equity method of
accounting (and as a result is excluded from the December 31, 2023 table above), and $151 million of common stock in a
company that had been privately held but became publicly traded during the second quarter of 2023, valued using an unadjusted
quoted market price and now disclosed in Level 1. There was no other significant activity in Level 3 of the hierarchy during the
year ended December 31, 2023.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. FAIR VALUE MEASUREMENTS (Continued)
153
Financial Instruments Disclosed, But Not Carried, At Fair Value
The following tables present the carrying value and fair value of the Company’s financial assets and financial liabilities
disclosed, but not carried, at fair value, and the level within the fair value hierarchy at which such assets and liabilities are
categorized.
(at December 31, 2024, in millions)
Carrying
Value
Fair
Value
Level 1
Level 2
Level 3
Financial assets:
Short-term securities ...............................
$
4,766 $
4,766 $
1,933 $
2,788 $
45
Financial liabilities:
Debt .........................................................
$
7,933 $
7,095 $
— $
7,095 $
—
Commercial paper ...................................
100
100
—
100
—
(at December 31, 2023, in millions)
Carrying
Value
Fair
Value
Level 1
Level 2
Level 3
Financial assets:
Short-term securities ...............................
$
5,137 $
5,137 $
1,171 $
3,912 $
54
Financial liabilities:
Debt .........................................................
$
7,931 $
7,645 $
— $
7,645 $
—
Commercial paper ...................................
100
100
—
100
—
The Company had no material assets or liabilities that were measured at fair value on a non-recurring basis during the years
ended December 31, 2024 and 2023.
5. ALLOWANCE FOR EXPECTED CREDIT LOSSES
Premiums Receivable
The following table presents the balances of premiums receivable, net of the allowance for expected credit losses, at
December 31, 2024 and 2023, and the changes in the allowance for expected credit losses for the twelve months ended
December 31, 2024 and 2023.
At and For the Twelve Months
Ended December 31, 2024
At and For the Twelve Months
Ended December 31, 2023
(in millions)
Premiums
Receivable, Net
of Allowance
for Expected
Credit Losses
Allowance for
Expected
Credit Losses
Premiums
Receivable, Net
of Allowance
for Expected
Credit Losses
Allowance for
Expected
Credit Losses
Balance, beginning of period ......................................................
$
10,282 $
69 $
8,922 $
77
Current period change for expected credit losses .........................
50
42
Write-offs of uncollectible premiums receivable .........................
61
50
Balance, end of period ................................................................
$
11,110 $
58 $
10,282 $
69
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. FAIR VALUE MEASUREMENTS (Continued)
154
Reinsurance Recoverables
The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible
reinsurance, at December 31, 2024 and 2023, and the changes in the allowance for estimated uncollectible reinsurance for the
twelve months ended December 31, 2024 and 2023.
At and For the Twelve Months
Ended December 31, 2024
At and For the Twelve Months
Ended December 31, 2023
(in millions)
Reinsurance
Recoverables,
Net of
Allowance for
Estimated
Uncollectible
Reinsurance
Allowance for
Estimated
Uncollectible
Reinsurance
Reinsurance
Recoverables,
Net of
Allowance for
Estimated
Uncollectible
Reinsurance
Allowance for
Estimated
Uncollectible
Reinsurance
Balance, beginning of period .....................................................
$
8,143 $
118 $
8,063 $
132
Current period change for estimated uncollectible reinsurance ...
1
(14)
Write-offs of uncollectible reinsurance recoverables ...................
—
—
Balance, end of period ................................................................
$
8,000 $
119 $
8,143 $
118
Of the total reinsurance recoverables at December 31, 2024, $5.79 billion, or 88%, were rated by A.M. Best Company, after
deducting mandatory pools and associations and before allowances for estimated uncollectible reinsurance. 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 12% of reinsurance recoverables were comprised of the following: 6%
related to captive insurance companies 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.
Contractholder Receivables
The following table presents the balances of contractholder receivables, net of the allowance for expected credit losses, at
December 31, 2024 and 2023, and the changes in the allowance for expected credit losses for the twelve months ended
December 31, 2024 and 2023.
At and For the Twelve Months
Ended December 31, 2024
At and For the Twelve Months
Ended December 31, 2023
(in millions)
Contractholder
Receivables,
Net of
Allowance for
Expected
Credit Losses
Allowance for
Expected
Credit Losses
Contractholder
Receivables,
Net of
Allowance for
Expected
Credit Losses
Allowance for
Expected
Credit Losses
Balance, beginning of period .....................................................
$
3,249 $
20 $
3,579 $
17
Current period change for expected credit losses .........................
(2)
3
Write-offs of uncollectible contractholder receivables ................
—
—
Balance, end of period ................................................................
$
3,171 $
18 $
3,249 $
20
6. REINSURANCE
The Company’s consolidated financial statements reflect the effects of assumed and ceded reinsurance transactions. Assumed
reinsurance refers to the acceptance of certain insurance risks that other insurance companies have underwritten. Ceded
reinsurance involves transferring certain insurance risks (along with the related written and earned premiums) the Company has
underwritten to other insurance companies who agree to share these risks. The primary purpose of ceded reinsurance is to
protect the Company, at a cost, from losses in excess of the amount it is prepared to accept and to protect the Company’s
capital. Reinsurance is placed on both a quota-share and excess-of-loss basis. Ceded reinsurance arrangements do not discharge
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. ALLOWANCE FOR EXPECTED CREDIT LOSSES (Continued)
155
the Company as the primary insurer, except for instances where the primary policy or policies have been novated, such as in
certain structured settlement agreements.
The Company utilizes a corporate catastrophe excess-of-loss reinsurance treaty with unaffiliated reinsurers to manage its
exposure to losses resulting from catastrophes and to protect its capital. In addition to the coverage provided under this treaty,
the Company also utilizes a reinsurance agreement entered into in connection with catastrophe bonds issued by Long Point Re
IV to protect against certain weather-related and earthquake losses in the Northeastern United States and a Northeast property
catastrophe excess-of-loss reinsurance treaty to protect against losses resulting from weather-related and earthquake
catastrophes in the Northeastern United States. The Company also utilizes excess-of-loss treaties to protect against earthquake
losses up to a certain threshold in Business Insurance (for certain markets) and for Personal Insurance, and several reinsurance
treaties specific to its international operations.
The Company monitors the financial condition of its reinsurers under voluntary reinsurance arrangements to evaluate the
collectability of amounts due from reinsurers and as a basis for determining the reinsurers with which the Company conducts
ongoing business. In addition, in the ordinary course of business, the Company may become involved in coverage disputes
with its reinsurers. Some of these disputes could result in lawsuits and arbitrations brought by or against the reinsurers to
determine the Company’s rights and obligations under the various reinsurance agreements. The Company employs dedicated
specialists and strategies to manage reinsurance collections and disputes.
Included in reinsurance recoverables are amounts related to involuntary reinsurance arrangements. The Company is required to
participate in various involuntary reinsurance arrangements through assumed reinsurance, principally with regard to residual
market mechanisms in workers’ compensation and automobile insurance, as well as homeowners’ insurance in certain coastal
areas. In addition, the Company provides services for several of these involuntary arrangements (mandatory pools and
associations) under which it writes such residual market business directly, then cedes 100% of this business to the mandatory
pool. Such participations and servicing arrangements are arranged to mitigate credit risk to the Company, as any ceded
balances are jointly backed by all the pool members.
Also included in reinsurance recoverables are amounts related to certain structured settlements. Structured settlements are
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 structured settlement is included in reinsurance recoverables and the related claim cost is included in the liability for claims
and claim adjustment expense reserves, as the Company retains the contingent liability to the claimant. If it is expected that the
life insurance company is not able to pay, the Company would recognize an impairment of the related reinsurance recoverable
if, and to the extent, the purchased annuities are not covered by state guaranty associations. In the event that the life insurance
company fails to make the required annuity payments, the Company would be required to make such payments.
The following is a summary of reinsurance financial data reflected in the consolidated statement of income:
(for the year ended December 31, in millions)
2024
2023
2022
Written premiums
Direct ..............................................................................................................
$
44,377
$
40,983
$
36,648
Assumed .........................................................................................................
2,173
1,989
1,228
Ceded ..............................................................................................................
(3,194)
(2,771)
(2,462)
Total net written premiums .........................................................................
$
43,356
$
40,201
$
35,414
Earned premiums
Direct ..............................................................................................................
$
42,983
$
38,796
$
34,948
Assumed .........................................................................................................
2,095
1,614
1,145
Ceded ..............................................................................................................
(3,137)
(2,649)
(2,330)
Total net earned premiums ..........................................................................
$
41,941
$
37,761
$
33,763
Percentage of assumed earned premiums to net earned premiums ........
5.0 %
4.3 %
3.4 %
Ceded claims and claim adjustment expenses incurred ...........................
$
1,249
$
1,462
$
1,187
Ceded premiums include the premiums paid for coverage provided by the Company’s catastrophe bonds.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. REINSURANCE (Continued)
156
Reinsurance recoverables include amounts recoverable on both paid and unpaid claims and claim adjustment expenses and were
as follows:
(at December 31, in millions)
2024
2023
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses ....
$
3,962 $
3,895
Gross structured settlements ......................................................................................................
2,626
2,707
Mandatory pools and associations .............................................................................................
1,531
1,659
Gross reinsurance recoverables ............................................................................................
8,119
8,261
Allowance for estimated uncollectible reinsurance ...................................................................
(119)
(118)
Net reinsurance recoverables .................................................................................................
$
8,000 $
8,143
Terrorism Risk Insurance Program
The Terrorism Risk Insurance Program is a Federal program administered by the Department of the Treasury authorized
through December 31, 2027 that provides for a system of shared public and private compensation for certain insured losses
resulting from certified acts of terrorism.
In order for a loss to be covered under the program (subject losses), the loss must meet certain aggregate industry loss
minimums and must be the result of an event that is certified as an act of terrorism by the U.S. Secretary of the Treasury, in
consultation with the Secretary of Homeland Security and the Attorney General of the United States. The annual aggregate
industry loss minimum under the program is $200 million. The program excludes from participation the following types of
insurance: Federal crop insurance, private mortgage insurance, financial guaranty insurance, medical malpractice insurance,
health or life insurance, flood insurance, reinsurance, commercial automobile, professional liability (other than directors’ and
officers’), surety, burglary and theft, and farm-owners multi-peril. In the case of a war declared by Congress, only workers’
compensation losses are covered by the program. All commercial property and casualty insurers licensed in the United States
are generally required to participate in the program. Under the program, a participating insurer, in exchange for making
terrorism insurance available, is entitled to be reimbursed by the Federal Government for 80% of subject losses, after an insurer
deductible, subject to an annual cap.
The deductible for any calendar year is equal to 20% of the insurer’s direct earned premiums for covered lines for the preceding
calendar year. The Company’s estimated deductible under the program is $3.85 billion for 2025. The annual cap limits the
amount of aggregate subject losses for all participating insurers to $100 billion. Once subject losses have reached the $100
billion aggregate during a program year, participating insurers will not be liable under the program for additional covered
terrorism losses for that program year. There have been no terrorism-related losses that have triggered program coverage since
the program was established. Given that the law establishing the program remains untested, there is substantial uncertainty as
to how it will be applied if an act of terrorism is certified under the program. In addition, application of the program to a
specific event will depend upon whether the government has designated such event as a covered event. It is also possible that
future legislative action could change or eliminate the program. Further, given the unpredictable frequency and severity of
terrorism losses, as well as the limited terrorism coverage in the Company’s own reinsurance program, future losses from acts
of terrorism, particularly involving nuclear, biological, chemical or radiological events, could be material to the Company’s
operating results, financial position and/or liquidity in future periods. In addition, the Company may not have sufficient
resources to respond to claims arising from a high frequency of high severity natural catastrophes and/or of man-made
catastrophic events involving conventional means. While the Company seeks to manage its exposure to man-made catastrophic
events involving conventional means, the Company may not have sufficient resources to respond to claims arising out of one or
more man-made catastrophic events involving cyber, nuclear, biological, chemical or radiological means.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. REINSURANCE (Continued)
157
7. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The following table presents the carrying amount of the Company’s goodwill by segment. Each reportable segment includes
goodwill associated with the Company’s international business which is subject to the impact of changes in foreign currency
exchange rates.
(at December 31, in millions)
2024
2023
Business Insurance .....................................................................................................................
$
2,572 $
2,585
Bond & Specialty Insurance (1)
..................................................................................................
834
550
Personal Insurance .....................................................................................................................
801
815
Other ..........................................................................................................................................
26
26
Total ........................................................................................................................................
$
4,233 $
3,976
________________________________________________________
(1)
Goodwill at December 31, 2024 included $284 million associated with the acquisition of Corvus in the first quarter of 2024, which is
primarily attributable to Corvus’s cyber underwriting and support capabilities and workforce and is not deductible for tax purposes.
Other Intangible Assets
The following tables present a summary of the Company’s other intangible assets by major asset class:
(at December 31, 2024, in millions)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Subject to amortization
Customer-related (1)
......................................................................................
$
185 $
74 $
111
Contract-based (2)
..........................................................................................
204
196
8
Marketing-related (3)
.....................................................................................
18
3
15
Total subject to amortization ......................................................................
407
273
134
Not subject to amortization ..........................................................................
226
—
226
Total ........................................................................................................
$
633 $
273 $
360
(at December 31, 2023, in millions)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Subject to amortization
Customer-related .........................................................................................
$
100 $
59 $
41
Contract-based (2)
.........................................................................................
204
194
10
Total subject to amortization .....................................................................
304
253
51
Not subject to amortization .........................................................................
226
—
226
Total .............................................................................................................
$
530 $
253 $
277
___________________________________________
(1)
Customer-related intangibles of $87 million were recorded in connection with the acquisition of Corvus in the first quarter of 2024.
The customer-related intangible assets include Corvus’s broker and policyholder relationships and were valued using the excess
earnings method income approach, a valuation technique that provides an estimate of fair value based on the cash flows that the
asset can be expected to generate over its remaining useful life. Broker relationships represent the relationships Corvus has with its
existing brokers through which new business is placed with policyholders. Policyholder relationships represent the renewal of
existing policies. Significant inputs to the fair valuation include estimates of revenue growth, broker retention rates, policyholder
attrition rates and weighted average cost of capital.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
158
(2)
Contract-based intangible assets subject to amortization are comprised of fair value adjustments on claims and claim adjustment
expense reserves, reinsurance recoverables and other contract-related intangible assets. Fair value adjustments recorded in
connection with insurance acquisitions were based on management’s estimate of nominal claims and claim adjustment expense
reserves and reinsurance recoverables. The method used calculated a risk adjustment to a risk-free discounted reserve that would, if
reserves ran off as expected, produce results that yielded the assumed cost-of-capital on the capital supporting the loss reserves.
The fair value adjustments are reported as other intangible assets on the consolidated balance sheet, and the amounts measured in
accordance with the acquirer’s accounting policies for insurance contracts have been reported as part of the claims and claim
adjustment expense reserves and reinsurance recoverables. The intangible assets are being recognized into income over the
expected payment pattern. Because the time value of money and the risk adjustment (cost of capital) components of the intangible
assets run off at different rates, the amount recognized in income may be a net benefit in some periods and a net expense in other
periods.
(3)
Marketing-related intangibles of $18 million were recorded in connection with the acquisition of Corvus in the first quarter of 2024.
The marketing-related intangible assets include trade names and a non-compete agreement. The trade names were valued using a
relief from royalty method, a valuation technique which estimates the fair value of an asset based on the present value of the
royalties saved because the company owns the asset. Significant inputs to the fair valuation include estimates of future revenue,
appropriate rates of return associated with certain assets and weighted average cost of capital. The fair value of the non-compete
agreement is based on an estimate of the income that would be lost if the agreement were not in place and the individual chose to
compete. Significant inputs to the fair valuation include estimates of projected cash flows and weighted average cost of capital.
Amortization expense of intangible assets was $21 million, $12 million and $13 million for the years ended December 31,
2024, 2023 and 2022, respectively. Amortization expense for all intangible assets subject to amortization is estimated to be $21
million in 2025, $20 million in 2026, $17 million in 2027, $9 million in 2028 and $9 million in 2029. Amortization expense for
intangible assets arising from insurance contracts acquired in a business combination is estimated to be $2 million in 2025, $1
million in 2026, $1 million in 2027, $1 million in 2028 and $1 million in 2029.
The following table presents a summary of the other intangible assets recorded in connection with the acquisition of Corvus by
major asset class as of the acquisition date.
(in millions)
Amount
Weighted Average
Amortization Period
Subject to amortization
Customer-related ................................................................................................................
$
87
14 years
Marketing-related ...............................................................................................................
18
7 years
Total ..............................................................................................................................
$
105
13 years
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)
159
8. INSURANCE CLAIM RESERVES
Claims and claim adjustment expense reserves were as follows:
(at December 31, in millions)
2024
2023
Property-casualty .......................................................................................................................
$
64,088 $
61,621
Accident and health ...................................................................................................................
5
6
Total ........................................................................................................................................
$
64,093 $
61,627
The following table presents a reconciliation of beginning and ending property casualty reserve balances for claims and claim
adjustment expenses:
(at and for the year ended December 31, in millions)
2024
2023
2022
Claims and claim adjustment expense reserves at beginning of year ............
$
61,621 $
58,643 $
56,897
Less reinsurance recoverables on unpaid losses ............................................
7,817
7,790
8,209
Net reserves at beginning of year ............................................................
53,804
50,853
48,688
Estimated claims and claim adjustment expenses for claims arising in the
current year .................................................................................................
27,508
26,159
23,308
Estimated decrease in claims and claim adjustment expenses for claims
arising in prior years ...................................................................................
(548)
(38)
(537)
Total increases .........................................................................................
26,960
26,121
22,771
Claims and claim adjustment expense payments for claims arising in:
Current year .................................................................................................
10,924
10,852
9,406
Prior years ....................................................................................................
13,227
12,424
10,945
Total payments ........................................................................................
24,151
23,276
20,351
Unrealized foreign exchange (gain) loss ........................................................
(194)
106
(255)
Net reserves at end of year ......................................................................
56,419
53,804
50,853
Plus reinsurance recoverables on unpaid losses .............................................
7,669
7,817
7,790
Claims and claim adjustment expense reserves at end of year ......................
$
64,088 $
61,621 $
58,643
Gross claims and claim adjustment expense reserves at December 31, 2024 increased by $2.47 billion over December 31, 2023,
primarily reflecting the impacts of (i) catastrophe losses in 2024, (ii) higher volumes of insured exposures and (iii) loss cost
trends for the current accident year, partially offset by (iv) claim payments made during 2024 and (v) net favorable prior year
reserve development. Gross claims and claim adjustment expense reserves at December 31, 2023 increased by $2.98 billion
over December 31, 2022, primarily reflecting the impacts of (i) catastrophe losses in 2023, (ii) higher volumes of insured
exposures and (iii) loss cost trends for the current accident year, partially offset by (iv) claim payments made during 2023 and
(v) net favorable prior year reserve development.
Reinsurance recoverables on unpaid losses at December 31, 2024 decreased by $148 million over December 31, 2023,
primarily reflecting a decrease in structured settlements and recoverables from mandatory pools and associations, partially
offset by the impact of catastrophe losses. Reinsurance recoverables on unpaid losses at December 31, 2023 increased by $27
million over December 31, 2022, primarily reflecting the impact of catastrophe losses in 2023 and a higher level of recoverables
from mandatory pools and associations, partially offset by cash collections and a decrease in structured settlements.
Included in the claims and claim adjustment expense reserves are reserves for long-term disability and annuity claim payments,
primarily arising from workers’ compensation insurance and workers’ compensation excess insurance policies, that are
discounted to the present value of the estimated future payments. The discount rates used were a range of 3.5% to 5.0% at both
December 31, 2024 and 2023. Total reserves net of the discount were $2.65 billion and $2.68 billion, and the related amount of
discount was $1.07 billion and $1.10 billion, at December 31, 2024 and 2023, respectively. Accretion of the discount is
reported as part of “claims and claim adjustment expenses” in the consolidated statement of income and was $44 million, $45
million and $46 million for the years ended December 31, 2024, 2023 and 2022.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
160
Prior Year Reserve Development
The following disclosures regarding reserve development are on a “net of reinsurance” basis.
2024
In 2024, estimated claims and claim adjustment expenses incurred included $548 million of net favorable development for
claims arising in prior years, including $709 million of net favorable prior year reserve development and $44 million of
accretion of discount that impacted the Company’s results of operations.
Business Insurance. Net favorable prior year reserve development in 2024 totaled $90 million, primarily driven by (i) better
than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years,
partially offset by (ii) higher than expected loss experience in the general liability product line (excluding asbestos) for recent
accident years, (iii) an addition to asbestos reserves of $242 million and (iv) additions to other reserves related to run-off
operations.
Bond & Specialty Insurance. Net favorable prior year reserve development in 2024 totaled $129 million, primarily driven by
better than expected loss experience in the domestic operations’ fidelity and surety product lines for multiple accident years.
Personal Insurance. Net favorable prior year reserve development in 2024 totaled $490 million, primarily driven by better than
expected loss experience in the domestic operations’ homeowners and other and automobile product lines for recent accident
years.
2023
In 2023, estimated claims and claim adjustment expenses incurred included $38 million of net favorable development for
claims arising in prior years, including $143 million of net favorable prior year reserve development and $45 million of
accretion of discount that impacted the Company’s results of operations.
Business Insurance. Net unfavorable prior year reserve development in 2023 totaled $289 million, primarily driven by (i)
higher than expected loss experience in the domestic operations’ general liability product line (excluding asbestos) for multiple
accident years, including additions to reserves attributable to childhood sexual molestation and environmental claims in the
Company’s run-off operations, (ii) an addition to asbestos reserves of $284 million and (iii) higher than expected loss
experience in the domestic operations’ commercial automobile product line for recent accident years, partially offset by (iv)
better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident
years.
Bond & Specialty Insurance. Net favorable prior year reserve development in 2023 totaled $285 million, primarily driven by
better than expected loss experience in the domestic operations’ fidelity and surety product lines and in the general liability
product line for management liability coverages for recent accident years.
Personal Insurance. Net favorable prior year reserve development in 2023 totaled $147 million, primarily driven by better than
expected loss experience in the domestic operations' homeowners and other product line for recent accident years.
2022
In 2022, estimated claims and claim adjustment expenses incurred included $537 million of net favorable development for
claims arising in prior years, including $649 million of net favorable prior year reserve development and $46 million of
accretion of discount that impacted the Company’s results of operations.
Business Insurance. Net favorable prior year reserve development in 2022 totaled $381 million, primarily driven by the
following:
•
Workers’ compensation - better than expected loss experience in domestic operations for multiple accident years;
•
Commercial property - better than expected loss experience in domestic operations for recent accident years; and
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
161
•
Commercial multi-peril (excluding asbestos and environmental) - better than expected loss experience in domestic
operations for recent accident years;
Partially offset by:
•
Asbestos reserves - an addition of $212 million, primarily in the domestic operations’ general liability product line;
•
General liability (excluding asbestos and environmental) - higher than expected loss experience in domestic operations
for excess coverages for multiple accident years, as well as an increase to general liability reserves in the Company’s
run-off operations; and
•
Environmental reserves - an addition primarily in the domestic operations’ general liability product line.
Bond & Specialty Insurance. Net favorable prior year reserve development in 2022 totaled $222 million, primarily driven by
better than expected loss experience in the domestic operations’ fidelity and surety product lines for recent accident years.
Personal Insurance. Net favorable prior year reserve development in 2022 totaled $46 million.
Subsequent Event
Beginning in early January 2025, there were a series of severe wildfires that impacted the Pacific Palisades neighborhood and
Eaton Canyon area in Southern California. The Company’s preliminary pre-tax estimate of catastrophe losses from these
wildfires, including assessments from the California FAIR Plan, and net of estimated recoveries from reinsurance, is
$1.7 billion. The catastrophe losses from these wildfires will be reflected in the Company’s first quarter 2025 earnings.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
162
Claims Development
The following is a summary of claims and claim adjustment expense reserves, including certain components, for the
Company’s major product lines by reporting segment at December 31, 2024.
(at December 31, 2024, in millions)
Net Undiscounted
Claims and Claim
Adjustment Expense
Reserves
Discount
(Net of
Reinsurance)
Subtotal:
Net Claims and
Claim Adjustment
Expense Reserves
Reinsurance
Recoverables on
Unpaid Losses
(4)
Claims and Claim
Adjustment
Expense
Reserves
Business Insurance
General liability ............................
$
11,100 $
(124) $
10,976 $
1,140 $
12,116
Commercial property ....................
1,266
—
1,266
358
1,624
Commercial multi-peril ................
5,758
—
5,758
318
6,076
Commercial automobile ...............
4,791
—
4,791
298
5,089
Workers’ compensation (1)
...........
15,757
(900)
14,857
554
15,411
Bond & Specialty Insurance
General liability ............................
2,681
—
2,681
339
3,020
Fidelity and surety ........................
714
—
714
8
722
Personal Insurance
Automobile ...................................
4,302
—
4,302
320
4,622
Homeowners (excluding Other) ...
2,275
—
2,275
37
2,312
International - Canada ..................
795
—
795
14
809
Subtotal — claims and allocated
claim adjustment expenses for
the products presented in the
development tables below ........
49,439
(1,024)
48,415
3,386
51,801
Other insurance contracts (2)
............
5,036
(4)
5,032
1,735
6,767
Unallocated loss adjustment
expense reserves ..........................
2,880
—
2,880
17
2,897
Structured settlements (3)
.................
—
—
—
2,583
2,583
Other ...............................................
92
—
92
(52)
40
Total property-casualty .............
57,447
(1,028)
56,419
7,669
64,088
Accident and health ......................
—
—
—
5
5
Total .............................................
$
57,447 $
(1,028) $
56,419 $
7,674 $
64,093
___________________________________________
(1)
Net discount amount includes discount of $42 million on reinsurance recoverables for long-term disability and annuity claim
payments.
(2)
Primarily includes residual market, international (other than operations in Canada within the Personal Insurance segment) and
runoff assumed reinsurance business.
(3)
Includes structured settlements in cases where the Company did not receive a release from the claimant.
(4)
Total reinsurance recoverables (on paid and unpaid losses) at December 31, 2024 were $8.00 billion.
The claim development tables that follow present, by accident year, incurred and cumulative paid claims and allocated claim
adjustment expense on a historical basis. This claim development information is presented on an undiscounted, net of
reinsurance basis for ten years, or the number of years for which claims incurred typically remain outstanding if less than ten
years. The claim development tables also provide the historical average annual percentage payout of incurred claims by age,
net of reinsurance, as supplementary information (identified as unaudited in the tables below). The historical average annual
percentage payout for incurred claims is subject to variability due to the impact of both large claim activity and subrogation
recoveries, among other items.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
163
Business Insurance
General Liability
(dollars in millions)
For the Years Ended December 31,
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Unaudited
Accident
Year
IBNR
Reserves
Dec 31,
2024
Cumulative
Number of
Reported
Claims
2015
$ 998 $ 956 $ 923 $ 967 $ 1,057 $ 1,087 $ 1,072 $ 1,082 $ 1,110 $ 1,100 $
70
22,069
2016
1,075 1,058 1,087 1,187 1,204 1,179 1,185 1,183 1,173
99
20,947
2017
1,133 1,143 1,196 1,234 1,226 1,243 1,288 1,306
117
19,913
2018
1,253 1,312 1,344 1,395 1,477 1,530 1,571
134
20,059
2019
1,447 1,486 1,498 1,567 1,706 1,698
216
19,730
2020
1,467 1,493 1,470 1,577 1,568
322
19,208
2021
1,591 1,589 1,628 1,711
575
15,694
2022
1,696 1,736 1,916
851
18,258
2023
1,998 2,060 1,432
16,973
2024
2,340 2,120
12,629
Total
$ 16,443
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident
Year
Unaudited
2015
$
36 $ 137 $ 336 $ 558 $ 740 $ 828 $ 875 $ 927 $ 975 $ 1,002
2016
35
191
421
649
758
858
951
991 1,031
2017
40
180
378
552
724
914 1,029 1,111
2018
42
202
441
709
939 1,146 1,270
Liability for Claims
2019
51
233
482
816 1,074 1,276
And Allocated Claim
2020
61
244
458
770 1,031
Adjustment Expenses,
2021
67
231
493
826
Net of Reinsurance
2022
81
302
668
2023
54
280
2015 -
Before
2024
55
2024
2015
Total
$ 8,550 $ 7,893 $
3,207
Total net liability
$ 11,100
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Unaudited
Years
1
2
3
4
5
6
7
8
9
10
3.2 %
10.9 %
16.4 %
18.4 %
14.3 %
11.2 %
7.2 %
4.8 %
3.9 %
2.5 %
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
164
Commercial Property
(dollars in millions)
For the Years Ended December 31,
2020
2021
2022
2023
2024
Incurred Claims and Allocated Claims Adjustment Expenses, Net of Reinsurance
Unaudited
Accident Year
IBNR
Reserves
December
31, 2024
Cumulative
Number of
Reported
Claims
2020
$
1,107 $
1,025 $
1,005 $
993 $
983 $
33
25,713
2021
1,236
1,190
1,190
1,201
(5)
25,796
2022
1,309
1,369
1,372
3
28,896
2023
1,268
1,244
7
29,166
2024
1,474
201
25,257
Total
$
6,274
Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance
Unaudited
Liability for Claims
Accident Year
And Allocated Claim
2020
$
580 $
857 $
907 $
932 $
939
Adjustment Expenses,
2021
645
1,068
1,141
1,169
Net of Reinsurance
2022
624
1,113
1,247
2023
614
1,049
2020 -
Before
2024
702
2024
2020
Total
$
5,106 $
1,168 $
98
Total net liability
$
1,266
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
Unaudited
Years
1
2
3
4
5
51.0 %
33.5 %
7.0 %
2.5 %
0.7 %
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
165
Commercial Multi-Peril
(dollars in millions)
For the Years Ended December 31,
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Unaudited
Accident
Year
IBNR
Reserves
December
31, 2024
Cumulative
Number of
Reported
Claims
2015
$ 1,568 $ 1,625 $ 1,593 $ 1,597 $ 1,606 $ 1,593 $ 1,584 $ 1,571 $ 1,563 $ 1,564 $
14
73,061
2016
1,662 1,623 1,598 1,590 1,601 1,587 1,579 1,578
1,590
19
69,612
2017
1,872 1,928 1,956 1,919 1,935 1,943 1,930
1,928
43
72,767
2018
1,976 2,114 2,092 2,112 2,121 2,127
2,125
56
80,273
2019
2,017 2,087 2,089 2,103 2,103
2,110
78
75,593
2020
2,142 2,141 2,126 2,111
2,061
216
70,726
2021
2,164 2,097 2,097
2,107
238
58,432
2022
2,502 2,533
2,569
436
54,444
2023
2,781
2,811
716
52,398
2024
2,946
1,255
42,267
Total
$ 21,811
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident
Year
Unaudited
2015
$ 595 $ 970 $ 1,144 $ 1,310 $ 1,409 $ 1,452 $ 1,489 $ 1,512 $ 1,523 $ 1,535
2016
585
950 1,133 1,278 1,373 1,437 1,477 1,510 1,547
2017
716 1,199 1,388 1,531 1,674 1,763 1,815 1,843
2018
792 1,302 1,500 1,669 1,815 1,917 1,986
Liability for Claims
2019
707 1,187 1,423 1,628 1,801 1,916
And Allocated Claim
2020
791 1,180 1,373 1,547 1,687
Adjustment Expenses,
2021
744 1,206 1,437 1,616
Net of Reinsurance
2022
817 1,476 1,752
2023
935 1,603
2015 -
Before
2024
906
2024
2015
Total
$ 16,391 $ 5,420 $
338
Total net liability
$
5,758
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Unaudited
Years
1
2
3
4
5
6
7
8
9
10
35.2 %
23.2 %
10.5 %
8.8 %
6.9 %
4.3 %
2.7 %
1.7 %
1.5 %
0.8 %
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
166
Commercial Automobile
(dollars in millions)
For the Years Ended December 31,
2020
2021
2022
2023
2024
Incurred Claims and Allocated Claims Adjustment
Expenses, Net of Reinsurance
Unaudited
Accident Year
IBNR
Reserves
December
31, 2024
Cumulative
Number of
Reported Claims
2020
$
1,788 $
1,677 $
1,621 $
1,558 $
1,551 $
102
143,151
2021
1,741
1,757
1,786
1,800
181
149,164
2022
1,939
2,040
2,050
365
160,389
2023
2,245
2,222
744
166,691
2024
2,544
1,493
150,376
Total
$
10,167
Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance
Unaudited
Liability for Claims
Accident Year
And Allocated Claim
2020
$
437 $
696 $
958 $
1,192 $
1,345
Adjustment Expenses,
2021
453
800
1,135
1,405
Net of Reinsurance
2022
540
966
1,324
2023
589
1,006
2020 -
Before
2024
604
2024
2020
Total
$
5,684 $
4,483 $
308
Total net liability
$
4,791
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
Unaudited
Years
1
2
3
4
5
26.0 %
18.9 %
17.7 %
15.0 %
9.8 %
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
167
Workers’ Compensation
(dollars in millions)
For the Years Ended December 31,
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Unaudited
Accident
Year
IBNR
Reserves
December
31, 2024
Cumulative
Number of
Reported
Claims
2015
$ 2,644 $ 2,585 $ 2,505 $ 2,441 $ 2,372 $ 2,279 $ 2,220 $ 2,155 $ 2,097 $ 2,050 $
292 131,266
2016
2,768 2,690 2,569 2,473 2,372 2,300 2,235 2,151
2,111
262 132,057
2017
2,779 2,681 2,584 2,483 2,439 2,342 2,243
2,190
338 129,935
2018
2,744 2,687 2,599 2,503 2,416 2,318
2,245
381 132,125
2019
2,680 2,714 2,699 2,632 2,521
2,424
463 126,972
2020
2,559 2,530 2,433 2,271
2,152
519
98,066
2021
2,356 2,349 2,294
2,237
555
95,805
2022
2,293 2,294
2,226
676 103,114
2023
2,373
2,365
836
97,620
2024
2,352
1,363
86,556
Total
$ 22,352
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident
Year
Unaudited
2015
$ 430 $ 893 $ 1,154 $ 1,310 $ 1,411 $ 1,470 $ 1,520 $ 1,547 $ 1,574 $ 1,592
2016
421 873 1,118 1,272 1,367 1,433 1,486 1,522
1,553
2017
433
890 1,154 1,314 1,418 1,490 1,544
1,585
2018
440
919 1,169 1,330 1,440 1,516
1,578
Liability for Claims
2019
466
951 1,229 1,402 1,518
1,593
And Allocated Claim
2020
389
794 1,017 1,164
1,273
Adjustment Expenses,
2021
427
848 1,076
1,234
Net of Reinsurance
2022
388
830
1,081
2023
444
925
2015 -
Before
2024
443
2024
2015
Total
$ 12,857 $ 9,495 $ 6,262
Total net liability
$ 15,757
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Unaudited
Years
1
2
3
4
5
6
7
8
9
10
19.2 %
20.4 %
11.4 %
7.2 %
4.8 %
3.1 %
2.6 %
1.6 %
1.4 %
0.9 %
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
168
Bond & Specialty Insurance
General Liability
(dollars in millions)
For the Years Ended December 31,
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Unaudited
Accident
Year
IBNR
Reserves
December
31, 2024
Cumulative
Number of
Reported
Claims
2015
$ 528 $ 524 $ 486 $ 437 $ 395 $ 414 $ 413 $ 414 $ 407 $
411 $
8
4,235
2016
512
511
504
520
514
510
511
509
512
20
4,419
2017
534
517
526
493
524
554
565
582
43
4,623
2018
530
548
585
595
605
612
636
42
4,890
2019
588
653
665
670
662
654
47
5,503
2020
772
753
741
698
684
108
5,501
2021
812
756
683
659
151
5,712
2022
803
763
727
264
5,098
2023
862
888
422
5,730
2024
1,001
716
4,772
Total
$ 6,754
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident
Year
Unaudited
2015
$
38 $ 141 $ 234 $ 310 $ 338 $ 348 $ 381 $ 383 $ 387 $
392
2016
30
141
233
313
378
446
463
472
479
2017
38
155
262
340
404
450
488
513
2018
49
182
290
383
458
504
559
Liability for Claims
2019
51
189
323
410
513
554
And Allocated Claim
2020
52
210
333
447
525
Adjustment Expenses,
2021
78
210
316
401
Net of Reinsurance
2022
69
212
335
2023
90
274
2015 -
Before
2024
115
2024
2015
Total
$ 4,147 $ 2,607 $
74
Total net liability
$ 2,681
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Unaudited
Years
1
2
3
4
5
6
7
8
9
10
8.8 %
21.4 %
18.4 %
15.0 %
11.6 %
7.4 %
6.6 %
2.2 %
1.0 %
1.2 %
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
169
Fidelity and Surety
(dollars in millions)
For the Years Ended December 31,
2020
2021
2022
2023
2024
IBNR Reserves
December 31,
2024
Cumulative
Number of
Reported Claims
Incurred Claims and Allocated Claims Adjustment
Expenses, Net of Reinsurance
Accident Year
Unaudited
2020
$
274 $
203 $
219 $
222 $
206 $
49
816
2021
284
172
93
87
28
609
2022
310
261
187
71
744
2023
353
374
104
948
2024
363
311
783
Total
$
1,217
Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance
Accident Year
Unaudited
Liability for Claims
And Allocated Claim
2020
$
50 $
79 $
110 $
125 $
139
Adjustment Expenses,
2021
25
50
57
58
Net of Reinsurance
2022
36
82
99
2023
96
202
2020 -
Before
2024
39
2024
2020
Total
$
537 $
680 $
34
Total net liability
$
714
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
Unaudited
Years
1
2
3
4
5
21.8 %
23.9 %
10.5 %
4.3 %
6.9 %
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
170
Personal Insurance
Automobile
(dollars in millions)
For the Years Ended December 31,
2020
2021
2022
2023
2024
IBNR Reserves
December 31,
2024
Cumulative
Number of
Reported Claims
Incurred Claims and Allocated Claims Adjustment
Expenses, Net of Reinsurance
Accident Year
Unaudited
2020
$
2,829 $
2,764 $
2,729 $
2,717 $
2,695 $
26
811,007
2021
3,716
3,770
3,751
3,724
82
1,000,923
2022
4,755
4,784
4,729
219
1,131,357
2023
5,206
5,133
593
1,109,494
2024
5,179
1,561
945,540
Total
$
21,460
Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance
Accident Year
Unaudited
Liability for Claims
And Allocated Claim
2020
$
1,571 $
2,126 $
2,411 $
2,561 $
2,631
Adjustment Expenses,
2021
2,062
2,981
3,350
3,541
Net of Reinsurance
2022
2,683
3,855
4,278
2023
2,888
4,068
2020 -
Before
2024
2,838
2024
2020
Total
$
17,356 $
4,104 $
198
Total net liability
$
4,302
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
Unaudited
Years
1
2
3
4
5
56.3 %
23.3 %
9.8 %
5.3 %
2.6 %
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
171
Homeowners (excluding Other)
(dollars in millions)
For the Years Ended December 31,
2020
2021
2022
2023
2024
IBNR Reserves
December 31,
2024
Cumulative
Number of
Reported Claims
Incurred Claims and Allocated Claims Adjustment
Expenses, Net of Reinsurance
Accident Year
Unaudited
2020
$
3,019 $
2,967 $
2,909 $
2,869 $
2,859 $
16
221,346
2021
3,463
3,486
3,444
3,423
22
233,960
2022
4,277
4,184
4,146
43
235,908
2023
5,171
5,018
214
267,031
2024
5,021
1,129
212,797
Total $
20,467
Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance
Accident Year
Unaudited
Liability for Claims
And Allocated Claim
2020
$
2,019 $
2,673 $
2,755 $
2,802 $
2,823
Adjustment Expenses,
2021
2,334
3,235
3,344
3,372
Net of Reinsurance
2022
2,537
3,828
4,018
2023
3,369
4,608
2020 -
Before
2024
3,402
2024
2020
Total
$
18,223 $
2,244 $
31
Total net liability
$
2,275
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
Unaudited
Years
1
2
3
4
5
67.0 %
26.3 %
3.6 %
1.2 %
0.7 %
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
172
International - Canada
(dollars in millions)
For the Years Ended December 31,
IBNR
Reserves
December
31, 2024
Cumulative
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Number of
Accident
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Reported
Year
Unaudited
Claims
2015
$ 325 $ 325 $ 324 $ 321 $ 322 $ 322 $ 317 $ 317 $ 318 $ 318 $
(1)
44,956
2016
325
369
369
377
377
376
378
379
380
(2)
45,503
2017
312
343
363
363
363
366
369
363
(3)
46,522
2018
396
416
418
422
425
427
424
(3)
50,329
2019
401
396
415
418
419
424
9
47,920
2020
313
301
288
283
281
10
30,038
2021
314
302
295
292
23
28,054
2022
349
356
360
35
33,023
2023
410
434
74
32,737
2024
462
128
31,642
Total
$ 3,738
Accident
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Year
Unaudited
2015
$ 146 $ 203 $ 228 $ 255 $ 276 $ 290 $ 302 $ 309 $ 311 $ 314
2016
190
255
279
310
331
347
358
364
370
2017
164
231
267
289
313
332
344
352
2018
197
275
306
342
370
386
399
Liability for Claims
2019
194
260
293
328
356
380
And Allocated Claim
2020
130
175
196
214
233
Adjustment Expenses,
2021
115
170
197
216
Net of Reinsurance
2022
152
220
248
2023
184
262
2015 -
Before
2024
188
2024
2015
Total
$ 2,962 $
776 $
19
Total net liability
$
795
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Unaudited
Years
1
2
3
4
5
6
7
8
9
10
44.4 %
17.7 %
8.0 %
7.4 %
6.6 %
4.6 %
3.3 %
1.9 %
1.2 %
0.9 %
The incurred and paid amounts have been translated from the local currency to U.S. dollars using the December 31, 2024 spot
rate for all years presented in the table above in order to isolate changes in foreign exchange rates from loss development.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
173
Methodology for Estimating Incurred But Not Reported (IBNR) Reserves
Claims and claim adjustment expense reserves represent management’s estimate of the ultimate liability for unpaid losses and
loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported (IBNR) as
of the balance sheet date. Claims and claim adjustment expense reserves do not represent an exact calculation of the liability,
but instead represent management estimates, primarily utilizing actuarial expertise and projection methods that develop
estimates for the ultimate cost of claims and claim adjustment expenses. Because the establishment of claims and claim
adjustment expense reserves is an inherently uncertain process involving estimates and judgment, currently estimated claims
and claim adjustment expense reserves may change. The Company reflects changes to the reserves in the results of operations
in the period the estimates are changed.
Cumulative amounts paid and case reserves held as of the balance sheet date are subtracted from the estimate of the ultimate
cost of claims and claim adjustment expenses to derive incurred but not reported (IBNR) reserves. Accordingly, IBNR reserves
include the cost of unreported claims, development on known claims and re-opened claims. This approach to estimating IBNR
reserves has been in place for many years, with no material changes in methodology in the past year.
Detailed claim data is typically insufficient to produce a reliable indication of the initial estimate for ultimate claims and claim
adjustment expenses for an accident year. As a result, the initial estimate for an accident year is generally based on an
exposure-based method using either the loss ratio projection or the expected loss method. The loss ratio projection method,
which is typically used for guaranteed-cost business, develops an initial estimate of ultimate claims and claim adjustment
expenses for an accident year by multiplying earned premium for the accident year by a projected loss ratio. The projected loss
ratio is determined by analyzing prior period experience, and adjusting for loss cost trends, rate level differences, mix of
business changes and other known or observed factors influencing the accident year relative to prior accident years. The
expected loss method, which is typically used for loss sensitive business, develops an initial estimate of ultimate claims and
claim adjustment expenses for an accident year by analyzing exposures by account.
For prior accident years, the following estimation and analysis methods are principally used by the Company’s actuaries to
estimate the ultimate cost of claims and claim adjustment expenses. These estimation and analysis methods are typically
referred to as conventional actuarial methods.
•
The paid loss development method assumes that the future change (positive or negative) in cumulative paid losses
for a given cohort of claims will occur in a stable, predictable pattern from year-to-year, consistent with the
pattern observed in past cohorts.
•
The case incurred development method is the same as the paid loss development method but is based on
cumulative case-incurred losses rather than paid losses.
•
The Bornhuetter-Ferguson method uses an initial estimate of ultimate losses for a given product line reserve
component, typically expressed as a ratio to earned premium. The method assumes that the ratio of additional
claim activity to earned premium for that component is relatively stable and predictable over time and that actual
claim activity to date is not a credible predictor of further activity for that component. The method is used most
often for more recent accident years where claim data is sparse and/or volatile, with a transition to other methods
as the underlying claim data becomes more voluminous and therefore more credible.
•
The average value analysis combined with the reported claim development method assumes that average claim
values are stable and predictable over time for a particular cohort of claims. It is typically limited to analysis at
more granular levels, such as coverage or hazard/peril, where a more homogeneous subset of claims produce a
more stable and fairly predictable average value. The reported claim development method is the same as the paid
loss development method but uses changes in cumulative claim counts to produce estimates of ultimate claim
counts rather than ultimate dollars. The resulting estimate of ultimate claim counts by cohort is multiplied by an
average value per claim from an average value analysis to obtain estimated ultimate claims and claim adjustment
expenses.
While these are the principal methods utilized, the Company’s actuaries have available to them the full range of actuarial
methods developed by the casualty actuarial profession. The Company’s actuaries are also regularly monitoring developments
within the profession for advances in existing techniques or the creation of new techniques that might improve current and
future estimates. Most actuarial methods assume that past patterns demonstrated in the data will repeat themselves in the
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
174
future. For certain reserve components where this assumption may not hold, such as asbestos and environmental reserves,
conventional actuarial methods are not utilized by the Company.
Methodology for Determining Cumulative Number of Reported Claims
A claim file is created when the Company is notified of an actual demand for payment, notified of an event that may lead to a
demand for payment or when it is determined that a demand for payment could possibly lead to a future demand for payment on
another coverage on the same policy or on another policy. Claim files are generally created for a policy at the claimant by
coverage level, depending on the particular facts and circumstances of the underlying event.
For Business Insurance and for Personal Insurance, claim file information is summarized such that the Company generally
recognizes one count for each policy claim event by internal regulatory line of business, regardless of the number of claimants
or coverages involved. The claims counts are then accumulated and reported by product line. While the methodology is
generally consistent within each segment for the product lines displayed, there are some minor differences between and within
segments. For Bond & Specialty Insurance, the Company generally recognizes one count per coverage per policy claim event
and one count per bond per surety claim event.
For purposes of the claims development tables above, claims reported for direct business are counted even if they eventually
close with no loss payment, except in the case of (i) deductible business, where the claim is not counted until the case incurred
claim estimate is above the deductible and (ii) International-Canada reported claim counts where claims closed with no loss
payment are not counted. Note that claims with zero claim dollars may still generate some level of claim adjustment expenses.
Claim counts for assumed business are included only to the extent such counts are available. The Company generally does not
receive claim count information for which the underlying claim activity is handled by others, including pools and associations.
The Company does not generate claim counts for ceded business. The methods used to summarize claim counts have not
changed significantly over the time periods reported in the tables above.
The Company cautions against using the summarized claim count information provided in this disclosure in attempting to
project ultimate loss payouts by product line. The Company generally finds claim count data to be useful only on a more
granular basis than the aggregated basis disclosed in the claim development tables above, as the risks, average values and other
dynamics of the claim process can vary materially by the cause of loss and coverage within product line. For example, in
Personal Automobile, the introduction of roadside assistance coverage resulted in a significant increase in claim counts with a
low average claim cost. For this reason the Company varies its approach to, and in many cases the level of aggregation for,
counting claims for internal analysis purposes depending on the particular granular analysis performed.
Asbestos and Environmental Reserves
At December 31, 2024 and 2023, the Company’s claims and claim adjustment expense reserves included $1.72 billion and
$1.76 billion, respectively, for asbestos and environmental-related claims, net of reinsurance.
It is difficult to estimate the reserves for asbestos and environmental-related claims due to the vagaries of court coverage
decisions, plaintiffs’ expanded theories of liability, the risks inherent in complex litigation and other uncertainties, including,
without limitation, those which are set forth below.
Asbestos Reserves. Because each policyholder presents different liability and coverage issues, the Company generally conducts
an in-depth asbestos claim review on an annual basis, including a review of domestic policyholders with open claims and
litigation cases for potential product and “non-product” liability. Policyholders are identified for this review based upon,
among other factors: a combination of past payments and current case reserves in excess of a specified threshold (currently
$100,000), perceived level of exposure, number of reported claims, products/completed operations and potential “non-product”
exposures, size of policyholder and geographic distribution of products or services sold by the policyholder.
Among the factors the Company may consider in the course of this review are: available insurance coverage, including the role
of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an analysis of the
policyholder’s potential liability, including as a result of the bankruptcy of other defendants; the jurisdictions involved,
including any trends, judicial rulings or legislative actions in those jurisdictions; past and anticipated future claim activity and
loss development on pending claims; past settlement values of similar claims; allocated claim adjustment expense; the potential
role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
175
applicable coverage defenses or determinations, if any, including the determination as to whether or not an asbestos claim is a
products/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim.
The Company also reviews its asbestos reserves quarterly. These reviews include, as appropriate, an analysis of exposure and
claim payment patterns by policyholder, as well as recent settlements, policyholder bankruptcies, judicial rulings and legislative
actions. The Company also analyzes developing payment patterns among policyholders and the assumed reinsurance
component of reserves, as well as projected reinsurance billings and recoveries. In addition, the Company reviews its historical
gross and net loss and expense paid experience, year-by-year, to assess any emerging trends, fluctuations, or characteristics
suggested by the aggregate paid activity. Conventional actuarial methods are not utilized to establish asbestos reserves, and the
Company’s evaluations have not resulted in a reliable method to determine a meaningful average asbestos defense or indemnity
payment.
During the third quarter of 2024, the Company completed its annual in-depth asbestos claim review. While the latest available
government data continue to reflect a declining trend in deaths caused by mesothelioma, the number of policyholders with open
asbestos claims was relatively flat compared to 2023. Net asbestos paid claims and claim adjustment expenses in 2024, 2023
and 2022 were $282 million, $212 million and $245 million, respectively. Payments on behalf of these policyholders continue
to be influenced by the factors described above, including an increase in severity for certain policyholders and a high level of
litigation activity in a limited number of jurisdictions where individuals alleging serious asbestos-related injury, primarily
mesothelioma, continue to target defendants who were not traditionally sued and/or primary targets of asbestos litigation. The
completion of the analyses described above and the annual review in the third quarters of 2024, 2023 and 2022 resulted in $242
million, $284 million and $212 million increases, respectively, to the Company’s net asbestos reserves. In each year, the
reserve increases were primarily driven by increases in the Company’s estimate of projected settlement and defense costs
related to a broad number of policyholders. The increase in the estimate of projected settlement and defense costs primarily
resulted from payment trends that continue to be higher than previously anticipated due to the continued high level of
mesothelioma claim filings and the impact of the current litigation environment surrounding those claims discussed above. The
2023 charge also included an additional increase to strengthen the Company’s carried reserve position relative to the range of
reasonable estimates.
Over the past decade, the property and casualty insurance industry, including the Company, has experienced net unfavorable
prior year reserve development with regard to asbestos reserves, but the Company believes that over that period there has been a
reduction in the volatility associated with the Company’s overall asbestos exposure as the overall asbestos environment has
evolved from one dominated by exposure to significant litigation risks, particularly coverage disputes relating to policyholders
in bankruptcy who were asserting that their claims were not subject to the aggregate limits contained in their policies, to an
environment primarily driven by a frequency of litigation related to individuals with mesothelioma. The Company’s overall
view of the current underlying asbestos environment is essentially unchanged from recent periods, and there remains a high
degree of uncertainty with respect to future exposure to asbestos claims.
Environmental Reserves. In establishing environmental reserves, the Company evaluates the exposure presented by each
policyholder and the anticipated cost of resolution, if any. These claims are mainly brought pursuant to various state or federal
statutes that require a liable party to undertake or pay for environmental remediation. Liability under these statutes may be joint
and several with other responsible parties. In the course of its analysis, the Company generally considers the probable liability,
available coverage and relevant judicial interpretations. In addition, the Company considers the many variables presented, such
as: the nature of the alleged activities of the policyholder at each site; the number of sites; the total number of potentially
responsible parties at each site; the nature of the alleged environmental harm and the corresponding remedy at each site; the
nature of government enforcement activities at each site; the ownership and general use of each site; the overall nature of the
insurance relationship between the Company and the policyholder, including the role of any umbrella or excess insurance the
Company has issued to the policyholder; the involvement of other insurers; the potential for other available coverage, including
the number of years of coverage; the role, if any, of non-environmental claims or potential non-environmental claims in any
resolution process; and the applicable law in each jurisdiction. The evaluation of the exposure presented by a policyholder can
change as information concerning that policyholder and the many variables presented is developed. Conventional actuarial
methods are not used to estimate these reserves.
Over the past several years, the Company has experienced generally favorable trends in the number of new policyholders
tendering environmental claims for the first time, the number of policyholders with open environmental claims and the number
of pending declaratory judgment actions relating to environmental matters. These policyholders continue to present smaller
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
176
exposures, are involved in fewer hazardous waste sites and are lower tier defendants than policyholders presenting such claims
in the past. Moreover, more efficient clean-up technologies have reduced clean-up costs in many instances depending on the
remedy chosen at sites. However, the degree to which those favorable trends have continued has been less than anticipated. In
addition, inflationary impacts on consulting and contractor costs, increased involvement of regulatory agencies and costs of
their involvement, and the application of more stringent cleanup standards, including on emerging contaminants, has
contributed to reserve development on existing environmental claims. Additionally, the costs associated with coverage litigation
on environmental matters has been greater than anticipated, driven by claims and legal developments in a limited number of
jurisdictions. As a result of these factors, in 2024, 2023 and 2022, the Company increased its net environmental reserves by
$78 million, $93 million and $132 million, respectively.
Asbestos and Environmental Reserves. As a result of the processes and procedures discussed above, management believes that
the reserves carried for asbestos and environmental claims are appropriately established based upon known facts, current law
and management’s judgment. However, the uncertainties surrounding the final resolution of these claims continue, and it is
difficult to determine the ultimate exposure for asbestos and environmental claims and related litigation. As a result, these
reserves are subject to revision as new information becomes available and as claims develop. Changes in the legal, regulatory
and legislative environment may impact the future resolution of asbestos and environmental claims and result in adverse loss
reserve development. The emergence of a greater number of asbestos or environmental claims beyond that which is anticipated
may result in adverse loss reserve development. Changes in applicable legislation and future court and regulatory decisions and
interpretations, including the outcome of legal challenges to legislative and/or judicial reforms establishing medical criteria for
the pursuit of asbestos claims, could affect the settlement of asbestos and environmental claims. It is also difficult to predict the
ultimate outcome of complex coverage disputes until settlement negotiations near completion and significant legal questions are
resolved or, failing settlement, until the dispute is adjudicated. This is particularly the case with policyholders in bankruptcy
where negotiations often involve a large number of claimants and other parties and require court approval to be effective. As
part of its continuing analysis of asbestos and environmental reserves, the Company continues to study the implications of these
and other developments.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the Company’s current
reserves. In addition, the Company’s estimate of claims and claim adjustment expenses may change. These additional
liabilities or increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income
statement charges that could be material to the Company’s operating results in future periods.
Catastrophe Exposure
The Company has geographic exposure to catastrophe losses, which include hurricanes, tornadoes and other windstorms,
earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions, solar flares and other naturally-
occurring events. Catastrophes can also result from terrorist attacks and other intentionally destructive acts including those
involving cyber events, nuclear, biological, chemical and radiological events, civil unrest, explosions and destruction of
infrastructure. The incidence and severity of catastrophes are inherently unpredictable. The extent of losses from a catastrophe
is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Most
catastrophes are restricted to small geographic areas; however, hurricanes, earthquakes, wildfires and cyber attacks may
produce significant damage in larger areas, especially those that are heavily populated. The Company generally seeks to
mitigate its exposure to catastrophes through individual risk selection and the purchase of catastrophe reinsurance.
There are also risks which impact the estimation of ultimate costs for catastrophes. For example, the estimation of reserves
related to hurricanes can be affected by the inability of the Company and its insureds to access portions of the impacted areas,
the complexity of factors contributing to the losses, the legal and regulatory uncertainties and the nature of the information
available to establish the reserves. Complex factors include, but are not limited to: determining whether damage was caused by
flooding versus wind; evaluating general liability and pollution exposures; estimating additional living expenses; the impact of
demand surge; the potential impact of changing climate conditions, including higher frequency and severity of weather-related
events; infrastructure disruption; fraud; the effect of mold damage and business income interruption costs; and reinsurance
collectibility. The timing of a catastrophe’s occurrence, such as at or near the end of a reporting period, can also affect the
information available to the Company in estimating reserves for that reporting period. The estimates related to catastrophes are
adjusted as actual claims emerge.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INSURANCE CLAIM RESERVES (Continued)
177
9. DEBT
Debt outstanding was as follows:
(at December 31, in millions)
2024
2023
Short-term:
Commercial paper ..............................................................................................................................
$
100 $
100
Total short-term debt
100
100
Long-term:
7.75% Senior notes due April 15, 20261
............................................................................................
200
200
7.625% Junior subordinated debentures due December 15, 2027 (effective interest rate 6.147%) ...
125
125
6.375% Senior notes due March 15, 20331
........................................................................................
500
500
6.75% Senior notes due June 20, 20361
.............................................................................................
400
400
6.25% Senior notes due June 15, 20371
.............................................................................................
800
800
5.35% Senior notes due November 1, 20401
......................................................................................
750
750
4.60% Senior notes due August 1, 20431
...........................................................................................
500
500
4.30% Senior notes due August 25, 20451
.........................................................................................
400
400
8.50% Junior subordinated debentures due December 15, 2045 (effective interest rate 6.362%) .....
56
56
3.75% Senior notes due May 15, 20461
.............................................................................................
500
500
8.312% Junior subordinated debentures due July 1, 2046 (effective interest rate 6.362%) ..............
73
73
4.00% Senior notes due May 30, 20471
.............................................................................................
700
700
4.05% Senior notes due March 7, 20481
............................................................................................
500
500
4.10% Senior notes due March 4, 20491
............................................................................................
500
500
2.55% Senior notes due April 27, 20501
............................................................................................
500
500
3.05% Senior notes due June 8, 20511
...............................................................................................
750
750
5.45% Senior notes due May 25, 20531
.............................................................................................
750
750
Total long-term debt
8,004
8,004
Total debt principal ..........................................................................................................................
8,104
8,104
Unamortized fair value adjustment ....................................................................................................
34
35
Unamortized debt issuance costs ........................................................................................................
(105)
(108)
Total debt .........................................................................................................................................
$
8,033 $
8,031
________________________________________________________
(1)
The effective interest rate to maturity does not differ materially from the issued rate.
2023 Debt Issuance. On May 25, 2023, the Company issued $750 million aggregate principal amount of 5.45% senior notes
that will mature on May 25, 2053. The net proceeds of the issuance, after the deduction of the underwriting discount and
expenses payable by the Company, totaled approximately $738 million. Interest on the senior notes is payable semi-annually in
arrears on May 25 and November 25. Prior to November 25, 2052, the senior notes may be redeemed, in whole or in part, at the
Company’s option, at any time or from time to time, at a redemption price equal to the greater of (a) 100% of the principal
amount of any senior notes to be redeemed or (b) the sum of the present values of the remaining scheduled payments of
principal and interest to but excluding November 25, 2052 on any senior notes to be redeemed (exclusive of interest accrued to
the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the then current Treasury rate (as defined in the senior notes), plus 25 basis points. On or after
November 25, 2052, the senior notes may be redeemed, in whole or in part, at the Company’s option, at any time or from time
to time, at a redemption price equal to 100% of the principal amount of any senior notes to be redeemed, plus accrued and
unpaid interest to, but excluding, the redemption date.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
178
Description of Debt
Commercial Paper—The Company maintains an $800 million commercial paper program. Interest rates on commercial paper
issued in 2024 ranged from 4.59% to 5.36%, and in 2023 ranged from 4.29% to 5.34%.
Senior Notes—The Company’s various senior debt issues are unsecured obligations that rank equally with one another. Interest
payments are made semi-annually. The Company generally may redeem some or all of the notes prior to maturity in
accordance with terms unique to each debt instrument.
The Travelers Companies, Inc. fully and unconditionally guarantees the payment of all principal, premiums, if any, and interest
on certain debt obligations of its subsidiaries Travelers Property Casualty Corp. (TPC) and Travelers Insurance Group Holdings
Inc. (TIGHI). The guarantees pertain to the $200 million 7.75% notes due 2026 and the $500 million 6.375% notes due 2033.
Junior Subordinated Debentures—The Company’s three junior subordinated debenture instruments are all similar in nature to
each other. Three separate business trusts issued preferred securities to investors and used the proceeds to purchase the
Company’s junior subordinated debentures. Interest on each of the instruments is paid semi-annually.
The Company’s consolidated balance sheet includes the debt instruments acquired in a business acquisition, which were
recorded at fair value as of the acquisition date. The resulting fair value adjustment is being amortized over the remaining life of
the respective debt instruments using the effective-interest method. The amortization of the fair value adjustment reduced
interest expense by $1 million and $3 million for the years ended December 31, 2024 and 2023, respectively.
The following table presents merger-related unamortized fair value adjustments:
Unamortized Fair Value
Purchase Adjustment at December 31,
(in millions)
Issue Rate
Maturity Date
2024
2023
Junior subordinated debentures
7.625 %
Dec. 2027
$
5 $
6
8.500 %
Dec. 2045
13
13
8.312 %
Jul. 2046
16
16
Total
$
34 $
35
Maturities—Other than commercial paper, the amount of debt obligations that become due in each of the next five years is as
follows: 2025, $0; 2026, $200 million; 2027, $125 million; 2028, $0; and 2029, $0.
Credit Agreement
On June 15, 2022, the Company entered into to a five-year, $1.0 billion revolving credit agreement with a syndicate of financial
institutions, replacing its five-year, $1.0 billion credit agreement that was due to expire on June 4, 2023. Pursuant to the credit
agreement covenants, the Company must maintain a minimum consolidated net worth, defined as shareholders’ equity
determined in accordance with GAAP (excluding accumulated other comprehensive income (loss)) plus (a) trust preferred
securities (not to exceed 15% of total capital) and (b) mandatorily convertible securities (combined with trust preferred
securities, not to exceed 25% of total capital), less goodwill and other intangible assets. That threshold is fixed during the term
of the credit agreement at an amount equal to $13.9 billion (57.5% of the Company’s net worth at March 31, 2022). In
addition, the credit agreement contains other customary restrictive covenants as well as certain customary events of default,
including with respect to a change in control, which would occur upon the acquisition of 35% or more of the Company’s voting
stock or certain changes in the composition of the Company’s Board of Directors. At December 31, 2024, the Company was in
compliance with these covenants. Generally, the cost of borrowing under this agreement will range from the Secured Overnight
Financing Rate (SOFR) plus 85 basis points (including a credit spread adjustment) to SOFR plus 147.5 basis points (including a
credit spread adjustment), depending on the Company’s credit ratings. At December 31, 2024, that cost would have been
SOFR plus 110 basis points (including a credit spread adjustment), had there been any amounts outstanding under the credit
agreement.
The Company has uncollateralized letters of credit with an aggregate limit of $306 million at December 31, 2024, including
$260 million that provides a portion of the capital needed to support the Company’s obligations at Lloyd’s.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. DEBT (Continued)
179
Shelf Registration
The Company has a shelf registration statement filed with the Securities and Exchange Commission that expires on June 8,
2025 which permits it to issue securities from time to time at prices and on other terms to be determined at the time of offering.
10. SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY
Authorized Shares
The number of authorized shares of the Company is 1.755 billion, consisting of five million shares of preferred stock, 1.745
billion shares of voting common stock and five million undesignated shares. The Company’s Articles of Incorporation
authorize the Board of Directors to establish, from the undesignated shares, one or more classes and series of shares, and to
further designate the type of shares and terms thereof.
Preferred Stock
The Company’s Articles of Incorporation provide authority to issue up to five million shares of preferred stock.
Common Stock
The Company is governed by the Minnesota Business Corporation Act. All authorized shares of voting common stock have no
par value. Shares of common stock reacquired are considered authorized and unissued shares.
Treasury Stock
The Company’s Board of Directors has approved common share repurchase authorizations under which repurchases may be
made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the
Securities Exchange Act of 1934, in private transactions or otherwise. The authorizations do not have a stated expiration date.
The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the
Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels appropriate for the
Company’s business operations, 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. In April 2023, the Board of Directors approved a share repurchase authorization that added an additional $5.0 billion of
repurchase capacity. During 2024, the Company repurchased 4.4 million shares under its share repurchase authorizations, for a
total of $1.0 billion. The average cost per share repurchased was $225.44. Included in the cost of treasury stock acquired
pursuant to common share repurchases is the 1% excise tax imposed on common share repurchase activity, net of common
share issuances, as part of the Inflation Reduction Act of 2022. At December 31, 2024, the Company had $5.04 billion of
capacity remaining under its share repurchase authorizations.
The Company’s Amended and Restated 2014 Stock Incentive Plan and the 2023 Stock Incentive Plan provide settlement
alternatives to employees in which the Company retains shares to cover payroll withholding taxes in connection with the
vesting of restricted stock unit awards and performance share awards, and shares used by employees to cover the exercise price,
as well as the related payroll withholding taxes, with respect to certain stock options that were exercised. During the years
ended December 31, 2024 and 2023, the Company acquired $146 million and $64 million, respectively, of its common stock
under these plans.
Common shares acquired are reported as treasury stock in the consolidated balance sheet.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. DEBT (Continued)
180
Dividend Availability
The Company’s U.S. insurance subsidiaries, domiciled principally in the State of Connecticut, are subject to various regulatory
restrictions that limit the maximum amount of dividends available to be paid by each insurance subsidiary to its respective
parent company without prior approval of insurance regulatory authorities. A maximum of $4.17 billion is available by the end
of 2025 for such dividends to ultimately be paid to the holding company, TRV, without prior approval of the Connecticut
Insurance Department. The Company may choose to accelerate the timing within 2025 and/or increase the amount of dividends
from its insurance subsidiaries in 2025, which could result in certain dividends being subject to approval by the Connecticut
Insurance Department prior to payment.
Each of the Company’s U.S. insurance subsidiaries had policyholders’ surplus at December 31, 2024 significantly above the
level at which any regulatory action would occur. Regulators in the jurisdictions in which the Company’s foreign insurance
subsidiaries are located require insurance companies to maintain certain levels of capital depending on, among other things, the
type and amount of insurance policies written. Each of the Company’s foreign insurance subsidiaries also had capital
significantly above their respective regulatory requirements at December 31, 2024.
In addition to the regulatory restrictions on the amount of dividends that can be paid by the Company’s U.S. insurance
subsidiaries, the maximum amount of dividends that may be paid to the Company’s shareholders is also limited, to a lesser
degree, by certain covenants contained in its line of credit agreement with a syndicate of financial institutions that require the
Company to maintain a minimum consolidated net worth as described in note 9.
TRV is not dependent on dividends or other forms of repatriation from its foreign operations to support its liquidity needs. The
undistributed earnings of the Company’s foreign operations are intended to be permanently reinvested in those operations, and
such earnings were not material to the Company’s financial position or liquidity at December 31, 2024.
The U.S. insurance subsidiaries paid dividends of $2.00 billion, $1.17 billion and $2.90 billion during 2024, 2023 and 2022,
respectively.
For the years ended December 31, 2024, 2023 and 2022, TRV declared cash dividends per common share of $4.15, $3.93 and
$3.67, respectively, and paid cash dividends of $951 million, $908 million and $875 million, respectively.
Statutory Net Income and Statutory Capital and Surplus
Statutory net income of the Company’s domestic and international insurance subsidiaries was $4.74 billion, $2.85 billion and
$2.62 billion for the years ended December 31, 2024, 2023 and 2022, respectively. Statutory capital and surplus of the
Company’s domestic and international insurance subsidiaries was $27.72 billion and $25.11 billion at December 31, 2024 and
2023, respectively.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY (Continued)
181
11. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE
INCOME (LOSS)
The following table presents the changes in the Company’s accumulated other comprehensive income (loss) (AOCI) for the
years ended December 31, 2024, 2023 and 2022.
Changes in Net Unrealized Gains (Losses) on
Investment Securities
(in millions)
Having No Credit
Losses Recognized in
the Consolidated
Statement of Income
Having Credit Losses
Recognized in the
Consolidated
Statement of Income
Net Benefit Plan
Assets and
Obligations
Recognized in
Shareholders’ Equity
Net Unrealized
Foreign Currency
Translation
Total Accumulated
Other
Comprehensive
Income (Loss)
Balance, December 31, 2021 ...
$
2,233
$
182
$
(473) $
(749) $
1,193
Other comprehensive income
(loss) (OCI) before
reclassifications, net of tax ....
(7,387)
(3)
(102)
(256)
(7,748)
Amounts reclassified from
AOCI, net of tax ....................
77
—
33
—
110
Net OCI, current period ..........
(7,310)
(3)
(69)
(256)
(7,638)
Balance, December 31, 2022 ...
(5,077)
179
(542)
(1,005)
(6,445)
OCI before reclassifications, net
of tax ......................................
1,692
1
94
121
1,908
Amounts reclassified from
AOCI, net of tax ....................
76
—
(10)
—
66
Net OCI, current period ..........
1,768
1
84
121
1,974
Balance, December 31, 2023 ...
(3,309)
180
(458)
(884)
(4,471)
OCI before reclassifications, net
of tax ......................................
(619)
4
238
(219)
(596)
Amounts reclassified from
AOCI, net of tax ....................
104
—
(4)
—
100
Net OCI, current period ..........
(515)
4
234
(219)
(496)
Balance, December 31, 2024 ...
$
(3,824) $
184
$
(224) $
(1,103) $
(4,967)
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
182
The following table presents the pre-tax components of the Company’s other comprehensive income (loss) and the related
income tax expense (benefit).
(for the year ended December 31, in millions)
2024
2023
2022
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of
income ......................................................................................................
$
(644) $
2,249 $
(9,276)
Income tax expense (benefit) .......................................................................
(129)
481
(1,966)
Net of taxes .............................................................................................
(515)
1,768
(7,310)
Having credit losses recognized in the consolidated statement of income ..
5
1
(4)
Income tax expense (benefit) .......................................................................
1
—
(1)
Net of taxes .............................................................................................
4
1
(3)
Net changes in benefit plan assets and obligations ........................................
296
106
(87)
Income tax expense (benefit) .......................................................................
62
22
(18)
Net of taxes .............................................................................................
234
84
(69)
Net changes in unrealized foreign currency translation .................................
(232)
138
(273)
Income tax expense (benefit) .........................................................................
(13)
17
(17)
Net of taxes .............................................................................................
(219)
121
(256)
Total other comprehensive income (loss) ...............................................
(575)
2,494
(9,640)
Income tax expense (benefit) .......................................................................
(79)
520
(2,002)
Total other comprehensive income (loss), net of taxes ..................
$
(496) $
1,974 $
(7,638)
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE
INCOME (LOSS) (Continued)
183
The following table presents the pre-tax and related income tax (expense) benefit components of the amounts reclassified from
the Company’s AOCI to the Company’s consolidated statement of income.
(for the year ended December 31, in millions)
2024
2023
2022
Reclassification adjustments related to unrealized gains (losses) on
investment securities:
Having no credit losses recognized in the consolidated statement of
income (1)
..................................................................................................
$
131 $
96 $
98
Income tax benefit (2)
...................................................................................
27
20
21
Net of taxes .............................................................................................
104
76
77
Having credit losses recognized in the consolidated
statement of income (1)
.............................................................................
—
—
—
Income tax benefit (2)
...................................................................................
—
—
—
Net of taxes .............................................................................................
—
—
—
Reclassification adjustment related to benefit plan
assets and obligations: ..............................................................................
Claims and claim adjustment expenses (benefit) (3)
...................................
(2)
(5)
17
General and administrative expenses (benefit) (3)
.......................................
(3)
(8)
24
Total ........................................................................................................
(5)
(13)
41
Income tax (expense) benefit (2)
.....................................................................
(1)
(3)
8
Net of taxes .............................................................................................
(4)
(10)
33
Reclassification adjustment related to foreign currency translation (1)
..........
—
—
—
Income tax benefit (2)
......................................................................................
—
—
—
Net of taxes .............................................................................................
—
—
—
Total reclassifications .............................................................................
126
83
139
Total income tax benefit .........................................................................
26
17
29
Total reclassifications, net of taxes ..................................................
$
100 $
66 $
110
___________________________________________
(1)
(Increases) decreases net realized investment losses on the consolidated statement of income.
(2)
(Increases) decreases income tax expense on the consolidated statement of income.
(3)
Increases (decreases) expenses on the consolidated statement of income.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE
INCOME (LOSS) (Continued)
184
12. EARNINGS PER SHARE
Basic earnings per share was computed by dividing net income available to common shareholders by the weighted average
number of common shares outstanding during the period. The computation of diluted earnings per share reflected the effect of
potentially dilutive securities and excludes the effect of any anti-dilutive shares.
Potentially dilutive securities include restricted stock units, deferred stock units, stock options and performance share awards
related to the employee share-based incentive compensation programs. The restricted stock units and deferred stock units
contain non-forfeitable rights to dividends and are included as participating securities in the calculation of basic and diluted
earnings per share using the two-class method. Stock option and performance share awards are included in the calculation of
diluted earnings per share using the treasury stock method.
The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations:
(for the year ended December 31, in millions, except per share amounts)
2024
2023
2022
Basic and Diluted
Net income, as reported ..................................................................................
$
4,999 $
2,991 $
2,842
Participating share-based awards — allocated income ..................................
(38)
(22)
(20)
Net income available to common shareholders — basic and diluted .....
$
4,961 $
2,969 $
2,822
Common Shares
Basic
Weighted average shares outstanding ............................................................
228.0
229.7
237.0
Diluted
Weighted average shares outstanding ............................................................
228.0
229.7
237.0
Weighted average effects of dilutive securities:
Stock options and performance shares ........................................................
3.1
2.5
2.7
Total ....................................................................................................
231.1
232.2
239.7
Net income Per Common Share
0
Basic ...............................................................................................................
$
21.76 $
12.93 $
11.91
Diluted ............................................................................................................
$
21.47 $
12.79 $
11.77
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
185
13. INCOME TAXES
Components of Income Tax Expense
The following table presents the components of income tax expense (benefit) included in the amounts reported in the
Company’s consolidated financial statements:
(for the year ended December 31, in millions)
2024
2023
2022
Composition of income tax expense included in the consolidated
statement of income
Current expense:
Federal .........................................................................................................
$
1,252 $
477 $
636
Foreign .........................................................................................................
70
20
97
State .............................................................................................................
14
7
8
Total current tax expense ........................................................................
1,336
504
741
Deferred expense (benefit):
Federal .........................................................................................................
(152)
(163)
(186)
Foreign .........................................................................................................
(3)
39
(43)
Total deferred tax benefit ........................................................................
(155)
(124)
(229)
Total income tax expense included in the consolidated
statement of income ...................................................................................
1,181
380
512
Composition of income tax expense (benefit) included
in shareholders’ equity
Expense (benefit) relating to changes in the unrealized gain (loss) on
investments, unrealized loss on foreign exchange and other items in
other comprehensive income (loss) ............................................................
(79)
520
(2,002)
Total income tax expense (benefit) included in the
consolidated financial statements ............................................................
$
1,102 $
900 $
(1,490)
The following is a reconciliation of income tax expense at the U.S. federal statutory income tax rate to the income tax expense
reported in the Company’s consolidated statement of income:
(for the year ended December 31, in millions)
2024
2023
2022
Income before income taxes
U.S. .................................................................................................................
$
5,947
$
3,122
$
3,101
Foreign ...........................................................................................................
233
249
253
Total income before income taxes ...............................................................
6,180
3,371
3,354
Effective tax rate
Statutory tax rate ............................................................................................
21 %
21 %
21 %
Expected federal income tax expense ............................................................
1,298
708
704
Tax effect of:
Nontaxable investment income ...................................................................
(122)
(132)
(149)
Audit reserve ...............................................................................................
9
(205)
(40)
Other, net .....................................................................................................
(4)
9
(3)
Total income tax expense ...............................................................................
$
1,181
$
380
$
512
Effective tax rate ............................................................................................
19 %
11 %
15 %
The Company recognized a one-time tax benefit of $211 million in the first quarter of 2023 due to the expiration of the statute
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
186
of limitations with respect to a tax item impacted by the repeal of Internal Revenue Code Section 847, which related to the
discounting of property-casualty loss reserves. This amount is included in the Audit reserve line in the table above.
The Company paid income taxes of $1.31 billion, $201 million and $817 million during the years ended December 31, 2024,
2023 and 2022, respectively. The current income tax payable of $301 million and $285 million at December 31, 2024 and
2023, respectively, was included in other liabilities in the consolidated balance sheet.
Deferred Tax Asset
The net deferred tax asset comprises the tax effects of temporary differences related to the following assets and liabilities:
(at December 31, in millions)
2024
2023
Deferred tax assets
Investments ................................................................................................................................
$
659 $
532
Claims and claim adjustment expense reserves .........................................................................
708
665
Unearned premium reserves ......................................................................................................
833
772
Internally developed software ....................................................................................................
303
204
Other ..........................................................................................................................................
261
258
Total gross deferred tax assets ................................................................................................
2,764
2,431
Less: valuation allowance .......................................................................................................
38
35
Adjusted gross deferred tax assets ..........................................................................................
2,726
2,396
Deferred tax liabilities
Deferred acquisition costs ..........................................................................................................
673
627
Intangibles ..................................................................................................................................
87
70
Depreciation ...............................................................................................................................
118
125
Other ..........................................................................................................................................
86
70
Total gross deferred tax liabilities ...........................................................................................
964
892
Net deferred tax asset ..............................................................................................................
$
1,762 $
1,504
If the Company determines that any of its deferred tax assets will not result in future tax benefits, a valuation allowance must be
established for the portion of these assets that are not expected to be realized. The net change in the valuation allowance for
deferred tax assets was an increase of $3 million in 2024, driven by an increase in the Company’s Canadian subsidiary. Based
upon a review of the Company’s anticipated future taxable income, and also including all other available evidence, both
positive and negative, the Company’s management concluded that it is more likely than not that the net deferred tax assets will
be realized.
U.S. income taxes have not been recognized on any undistributed earnings that are intended to be permanently reinvested. Any
potential U.S. income tax on these amounts is immaterial.
The Organization for Economic Cooperation and Development (OECD) has developed guidance known as base erosion and
profit shifting as part of its initiative to address corporate tax planning strategies used by some multinationals to shift profits
from higher-tax jurisdictions to lower-tax jurisdictions or no-tax locations. This guidance generally imposes rules with a global
minimum tax of 15%, which is effective in 2024 for several of the jurisdictions in which the Company operates. The Company
was not subject to any global minimum taxes imposed by these rules in 2024.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. INCOME TAXES (Continued)
187
Net Operating Losses
For tax return purposes, as of December 31, 2024, the Company had net operating loss (NOL) carryforwards in the United
States, Canada, the Republic of Ireland and the United Kingdom. The amount and timing of realizing the benefits of NOL
carryforwards depend on future taxable income and limitations imposed by tax laws. All of the benefits of the United Kingdom
NOL carryforwards, substantially all of the benefits of the United States NOL carryforwards, and a portion of the benefits of the
Canada NOL carryforwards have been recognized in the consolidated financial statements and are included in net deferred tax
assets. None of the Republic of Ireland NOL carryforwards have been recognized in the consolidated financial statements. The
NOL amounts by jurisdiction and year of expiration are as follows:
(in millions)
Amount
Year of
expiration
United States ..............................................................................................................................
$
63
2035-2036
Canada .......................................................................................................................................
$
147
2035-2044
Republic of Ireland ....................................................................................................................
$
114
None
United Kingdom ........................................................................................................................
$
189
None
Uncertain Tax Positions
The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended
December 31, 2024 and 2023:
(in millions)
2024
2023
Balance at January 1 ..................................................................................................................
$
14 $
9
Additions for tax positions of prior years ..................................................................................
1
3
Reductions for tax positions of prior years ................................................................................
(1)
—
Additions based on tax positions related to current year ...........................................................
4
3
Expiration of statute of limitations ............................................................................................
(1)
(1)
Balance at December 31 ..........................................................................................................
$
17 $
14
Included in the balances at December 31, 2024 and 2023 were $17 million and $12 million, respectively, of unrecognized tax
benefits that, if recognized, would affect the annual effective tax rate. Also included in the balances at those dates were $0
million and $2 million, respectively, of tax positions for which the ultimate deductibility is certain, but for which there is
uncertainty about the timing of deductibility. The timing of such deductibility could affect the annual effective tax rate
depending on the year of deduction and tax rate at the time.
The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in income taxes. During
the years ended December 31, 2024, 2023 and 2022, the Company recognized approximately $5 million, $3 million and $(13)
million in interest, respectively. The Company had approximately $11 million and $6 million accrued for the payment of
interest at December 31, 2024 and 2023, respectively.
The IRS has completed examination of the Company’s U.S. income tax returns for all years through 2018. The statute of
limitations for federal income tax purposes has closed for all tax years prior to 2021. The Company does not expect any
significant changes to its liability for unrecognized tax benefits during the next twelve months.
14. SHARE-BASED INCENTIVE COMPENSATION
The Company has a share-based incentive compensation plan, The Travelers Companies, Inc. 2023 Stock Incentive Plan (the
2023 Incentive Plan), the purposes of which are to align the interests of the Company’s non-employee directors, executive
officers and other employees with those of the Company’s shareholders and to attract and retain personnel by providing
incentives in the form of share-based awards. The 2023 Incentive Plan permits grants of nonqualified stock options, incentive
stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, deferred stock units, performance
awards and other share-based or share-denominated awards with respect to the Company’s common stock. The Company has a
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. INCOME TAXES (Continued)
188
policy of issuing new shares to settle the exercise of stock option awards under the various settlement alternatives allowed
under the 2023 Incentive Plan, and the vesting of other equity awards.
In connection with the adoption of the 2023 Incentive Plan, The Travelers Companies, Inc. Amended and Restated 2014 Stock
Incentive Plan, as amended (the 2014 Incentive Plan) was terminated, joining several other legacy share-based incentive
compensation plans that had been terminated in prior years (together, the legacy plans). Outstanding grants were not affected by
the termination of the legacy plans. The 2023 Incentive Plan is currently the only plan pursuant to which future stock-based
awards may be granted.
The number of shares of the Company’s common stock initially authorized for grant under the 2023 Incentive Plan was
5,789,184 shares. The following are not counted towards the combined 5,789,184 shares available and will be available for
future grants under the 2023 Incentive Plan: (i) shares of common stock subject to awards that expire unexercised, that are
forfeited, terminated or canceled, that are settled in cash or other forms of property, or otherwise do not result in the issuance of
shares of common stock, in whole or in part; (ii) shares that are used to pay the exercise price of stock options and shares used
to pay withholding taxes on awards generally; and (iii) shares purchased by the Company on the open market using cash option
exercise proceeds; provided, however, that the increase in the number of shares of common stock available for grant pursuant to
such market purchases shall not be greater than the number that could be repurchased at fair market value on the date of
exercise of the stock option giving rise to such option proceeds. In addition, the 5,789,184 shares authorized by shareholders
for issuance under the 2023 Incentive Plan will be increased by any shares subject to awards under the 2014 Incentive Plan that
were outstanding as of May 24, 2023 and subsequently expire, are forfeited, canceled, settled in cash or otherwise terminate
without the issuance of shares.
The Company also has a compensation program for non-employee directors (the Director Compensation Program). Under the
Director Compensation Program, non-employee directors’ compensation consists of an annual retainer, a deferred stock award,
committee chair fees and a lead director fee. Each non-employee director may choose to receive all or a portion of his or her
annual retainer, committee chair fee and lead director fee, as applicable, in the form of cash or deferred stock units which vest
upon grant. The annual deferred stock awards vest in full one day prior to the date of the Company’s annual meeting of
shareholders occurring in the year following the year of the grant date, subject to continued service. The annual deferred stock
awards, including dividend equivalents, accumulate until distribution either in a lump sum or, if the director so elects, in annual
installments, in each case beginning at least six months following termination of service as a director. The deferred stock units
issued under the Director Compensation Program are awarded under the 2023 Incentive Plan.
Stock Option Awards
Stock option awards granted to eligible officers and key employees have a ten-year term. All stock options are granted with an
exercise price equal to the closing price of the Company’s common stock on the date of grant. The stock options granted
generally vest upon meeting certain years of service criteria. Except as the Compensation Committee of the Board of Directors
may allow in the future, stock options cannot be sold or transferred by the participant. Stock options outstanding under the
2023 Incentive Plan and the 2014 Incentive Plan generally vest three years after grant date (cliff vest).
The fair value of each option award is estimated on the date of grant by application of a variation of the Black-Scholes option
pricing model using the assumptions noted in the following table. The expected term of newly granted stock options is the time
to vest plus half the remaining time to expiration. This considers the vesting restrictions and represents an even pattern of
exercise behavior over the remaining term. The expected volatility assumption is based on the historical volatility of the
Company’s common stock for the same period as the estimated option term generally using the volatility of the week prior to
the stock option grant. The expected dividend is based upon the Company’s current quarter dividend annualized and assumed
to be constant over the expected option term. The risk-free interest rate for each option is the interpolated market yield of a U.S.
Treasury bill with a term comparable to the expected option term for the same week used for measuring volatility. The
following table provides information about options granted:
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. SHARE-BASED INCENTIVE COMPENSATION (Continued)
189
(for the year ended December 31,)
2024
2023
2022
Assumptions used in estimating fair value of options
on grant date
Expected term of stock options ............................................
6 years
6 years
6 years
Expected volatility of Company’s stock ..............................
25.80 %
25.63% - 25.99%
24.81 %
Weighted average volatility .................................................
25.80 %
25.63 %
24.81 %
Expected annual dividend per share ....................................
$4.00
$3.72
$3.52
Risk-free rate ........................................................................
3.99 %
3.63% - 3.89%
1.83 %
Additional information
Weighted average grant-date fair value of
options granted (per share) ..............................................
$
56.45
$
47.77
$
35.70
Total intrinsic value of options exercised
during the year (in millions) ............................................
$
205
$
58
$
110
A summary of stock option activity under the 2023 Incentive Plan and the legacy plans as of and for the year ended
December 31, 2024 is as follows:
Stock Options
Number
Weighted
Average
Exercise
Price
Weighted
Average
Contractual
Life
Remaining
Aggregate
Intrinsic
Value
($ in millions)
Outstanding, beginning of year ..............................................
8,422,982 $
141.82
Original grants ........................................................................
770,664
213.01
Exercised ................................................................................
(2,152,345)
127.33
Forfeited or expired ................................................................
(35,554)
185.48
Outstanding, end of year .........................................................
7,005,747 $
153.89
5.7 years
$
610
Vested at end of year (1)
..........................................................
6,241,970 $
149.36
5.4 years
$
571
Exercisable at end of year .......................................................
4,558,301 $
134.65
4.5 years
$
484
___________________________________________
(1)
Represents awards for which the requisite service has been rendered, including those that are retirement eligible.
Subsequent to the balance sheet date, on February 4, 2025, the Company granted 648,808 stock option awards under the 2023
Incentive Plan with an exercise price of $244.06 per share. The fair value attributable to the stock option awards on the date of
grant was $68.92 per share.
Restricted Stock Units, Deferred Stock Units and Performance Share Award Programs
The Company issues restricted stock unit awards to eligible officers and key employees under the Equity Awards program
pursuant to the 2023 Incentive Plan. A restricted stock unit represents the right to receive a share of common stock. These
restricted stock unit awards are granted at market price, generally vest three years from the date of grant, do not have voting
rights and the underlying shares of common stock are not issued until the vesting criteria is satisfied. In addition, members of
the Company’s Board of Directors can be issued deferred stock units from (i) an annual award; (ii) deferred compensation (in
lieu of cash retainer, committee chair fees and lead director fees); and (iii) dividend equivalents earned on outstanding deferred
compensation.
The Company also has a Performance Share Awards program pursuant to the 2023 Incentive Plan. Under the program, the
Company may issue performance share awards to certain employees of the Company who hold positions of Vice President (or
its equivalent) or above. The performance share awards provide the recipient the right to earn shares of the Company’s common
stock based upon the Company’s attainment of certain performance goals and the recipient meeting certain years of service
criteria. The performance goals for performance share awards are based on the Company’s adjusted return on equity over a
three-year performance period. Vesting of performance shares is contingent upon the Company attaining the relevant
performance period minimum threshold return on equity and the recipient meeting certain years of service criteria, generally
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. SHARE-BASED INCENTIVE COMPENSATION (Continued)
190
three years for full vesting. If the performance period return on equity is below the minimum threshold, none of the
performance shares will vest. If performance meets or exceeds the minimum performance threshold, a range of performance
shares will vest (50% to 200% for awards granted in 2023 and 2024), depending on the actual return on equity attained.
The fair value of restricted stock units, deferred stock units and performance shares was measured at the market price of the
Company stock at date of grant. Under terms of the 2023 Incentive Plan, holders of deferred stock units and performance
shares may receive dividend equivalents.
The total fair value of shares that vested during the years ended December 31, 2024, 2023 and 2022 was $253 million, $164
million and $159 million, respectively.
A summary of restricted stock units, deferred stock units and performance share activity under the 2023 Incentive Plan and the
legacy plans as of and for the year ended December 31, 2024 is as follows:
Restricted and Deferred Stock
Units
Performance Shares
Other Equity Instruments
Number
Weighted
Average
Grant-Date
Fair Value
Number
Weighted Average
Grant-Date Fair
Value
Nonvested, beginning of year ..............................
1,025,695
$
167.98
1,004,799
$
180.87
Granted ..............................................................
632,770
210.23
282,921
213.01
Vested ................................................................
(500,718) (1)
164.60
(575,266) (2)
172.50
Forfeited ............................................................
(56,758)
186.74
(9,156)
189.68
Performance-based adjustment .........................
—
—
452,350 (3)
200.86
Nonvested, end of year ........................................
1,100,989
$
192.83
1,155,648
$
200.66
___________________________________________
(1)
Represents awards for which the requisite service has been rendered.
(2)
Reflects the number of performance shares attributable to the performance goals attained over the completed performance period
(three years) and for which service conditions have been met.
(3)
Represents the current year change in estimated performance shares to reflect the attainment of performance goals for the awards
that were granted in each of the years 2022 through 2024.
In addition to the nonvested shares presented in the above table, there are related nonvested dividend equivalent shares. The
number of nonvested dividend equivalent shares related to deferred stock units was 260 at the beginning of the year and 165 at
the end of the year and the number of nonvested dividend equivalent shares related to performance shares was 33,757 at the
beginning of the year and 35,112 at the end of the year. The dividend equivalent shares are subject to the same vesting terms as
the deferred stock units and performance shares.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. SHARE-BASED INCENTIVE COMPENSATION (Continued)
191
Share-Based Compensation Cost Recognition
The amount of compensation cost for awards subject to a service condition is based on the number of shares expected to be
issued and is recognized over the time period for which service is to be provided (requisite service period), generally the vesting
period. Awards granted to retiree-eligible employees or to employees who become retiree-eligible before an award’s vesting
date are considered to have met the requisite service condition if the vesting terms are accelerated upon retirement. The
compensation cost for awards subject to a performance condition is based upon the probable outcome of the performance
condition, which on the grant date reflects an estimate of attaining 100% of the performance shares granted. The compensation
cost reflects an estimated annual forfeiture rate from 1.5% to 3.5% over the requisite service period of the awards. That estimate
is revised if subsequent information indicates that the actual number of instruments expected to vest is likely to differ from
previous estimates. Compensation costs for awards are recognized on a straight-line basis over the requisite service period. For
awards that have graded vesting terms, the compensation cost is recognized on a straight-line basis over the requisite service
period for each separate vesting portion of the award as if the award was, in substance, multiple awards. The total compensation
cost for all share-based incentive compensation awards recognized in earnings for the years ended December 31, 2024, 2023
and 2022 was $260 million, $214 million and $183 million, respectively. Included in these amounts are compensation cost
adjustments of $68 million, $39 million and $23 million, for the years ended December 31, 2024, 2023 and 2022, respectively,
that reflected the cost associated with the updated estimate of performance shares due to attaining certain performance levels
from the date of the initial grant of the performance awards. The related tax benefits recognized in earnings were $43 million,
$36 million and $31 million for the years ended December 31, 2024, 2023 and 2022, respectively.
At December 31, 2024, there was $248 million of total unrecognized compensation cost related to all nonvested share-based
incentive compensation awards. This includes stock options, restricted and deferred stock units and performance shares granted
under the 2023 Incentive Plan. The unrecognized compensation cost is expected to be recognized over a weighted-average
period of 1.8 years. Cash received from the exercise of employee stock options under share-based compensation plans totaled
$321 million, $141 million and $267 million in 2024, 2023 and 2022, respectively. The tax benefit for tax deductions from
employee stock options exercised during 2024, 2023 and 2022 totaled $39 million, $11 million and $22 million, respectively.
Awards Made Subsequent to the Balance Sheet Date
On February 4, 2025, the Company granted 685,943 common stock awards in the form of restricted stock units, deferred stock
units and performance share awards under the 2023 Incentive Plan to participating officers, non-employee directors and other
key employees.
Included in the total common stock awards granted were 432,987 shares of restricted stock units and deferred stock units with a
fair value per share attributable to the units of $244.06.
The remaining common stock awards granted were 252,956 performance share awards, which are settled in common stock and
are contingent on the Company’s attainment of certain performance and market-based goals over the performance period and
the recipient meeting certain years of service. The percentage of shares that may vest at the end of the performance period is
subject to the attainment of identified return-on-equity (ROE) performance goals, and is adjusted (up or down) based on the
Company’s total shareholder return relative to the S&P Financials Index. The range of performance shares that may vest under
the Plan is 0% to 200%. The fair value per share of the performance awards at grant date was $251.19.
15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS
The Company sponsors a qualified non-contributory defined benefit pension plan (the qualified domestic pension plan), which
covers substantially all U.S. domestic employees and provides benefits under a cash balance formula, except that certain limited
groups of legacy participants are covered by a prior traditional final average pay formula. In addition, the Company sponsors a
nonqualified defined benefit pension plan which covers certain highly-compensated employees, pension plans for employees of
its foreign subsidiaries, and a postretirement health and life insurance benefit plan for employees satisfying certain age and
service requirements and for certain retirees.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. SHARE-BASED INCENTIVE COMPENSATION (Continued)
192
Obligations and Funded Status
The following tables summarize the funded status, obligations and amounts recognized in the consolidated balance sheet for the
Company’s benefit plans. The Company uses a December 31 measurement date for its pension and postretirement benefit plans.
(at and for the year ended December 31,
in millions)
Qualified Domestic
Pension Plan
Nonqualified and Foreign
Pension Plans
Total
2024
2023
2024
2023
2024
2023
Change in projected benefit
obligation:
Benefit obligation at beginning of
year ...................................................
$
3,454 $
3,400 $
184 $
180 $
3,638 $
3,580
Benefits earned ....................................
111
104
5
4
116
108
Interest cost on benefit obligation .......
163
167
9
9
172
176
Actuarial (gain) loss ............................
(159)
123
4
1
(155)
124
Benefits paid ........................................
(324)
(340)
(14)
(13)
(338)
(353)
Foreign currency exchange rate
change ..............................................
—
—
(2)
3
(2)
3
Benefit obligation at end of year ......
$
3,245 $
3,454 $
186 $
184 $
3,431 $
3,638
Change in plan assets:
Fair value of plan assets at beginning
of year ..............................................
$
4,149 $
3,938 $
97 $
95 $
4,246 $
4,033
Actual return on plan assets .................
409
551
8
(2)
417
549
Company contributions .......................
—
—
12
13
12
13
Benefits paid ........................................
(324)
(340)
(14)
(13)
(338)
(353)
Foreign currency exchange rate
change ..............................................
—
—
(3)
4
(3)
4
Fair value of plan assets at end
of year ...............................................
4,234
4,149
100
97
4,334
4,246
Funded status of plan at end
of year ..............................................
$
989 $
695 $
(86) $
(87) $
903 $
608
Amounts recognized in the
consolidated balance sheet consist
of:
Accrued over-funded benefit plan
assets ................................................
$
989 $
695 $
32 $
27 $
1,021 $
722
Accrued under-funded benefit plan
liabilities ...........................................
—
—
(118)
(114)
(118)
(114)
Total .................................................
$
989 $
695 $
(86) $
(87) $
903 $
608
Amounts recognized in
accumulated other
comprehensive loss consist of:
Net actuarial loss .................................
$
381 $
663 $
14 $
13 $
395 $
676
Prior service cost (benefit) ..................
—
—
1
1
1
1
Total .................................................
$
381 $
663 $
15 $
14 $
396 $
677
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
193
Postretirement
Benefit Plans
(at and for the year ended December 31, in millions)
2024
2023
Change in accumulated benefit obligation:
Benefit obligation at beginning of year .....................................................................................
$
92 $
99
Benefits earned ..........................................................................................................................
—
—
Interest cost on benefit obligation ..............................................................................................
4
5
Actuarial gain .............................................................................................................................
(28)
(6)
Benefits paid ..............................................................................................................................
(5)
(6)
Foreign currency exchange rate change .....................................................................................
(1)
—
Benefit obligation at end of year .............................................................................................
$
62 $
92
Change in plan assets:
Fair value of plan assets at beginning of year ............................................................................
$
7 $
8
Actual return on plan assets .......................................................................................................
—
—
Company contributions ..............................................................................................................
4
5
Benefits paid ..............................................................................................................................
(5)
(6)
Fair value of plan assets at end of year ...................................................................................
6
7
Funded status of plan at end of year ...................................................................................
$
(56) $
(85)
Amounts recognized in the consolidated balance sheet consist of:
Accrued under-funded benefit plan liability ...........................................................................
$
(56) $
(85)
Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial gain ....................................................................................................................
$
(110) $
(91)
Prior service benefit ................................................................................................................
(4)
(8)
Total ........................................................................................................................................
$
(114) $
(99)
The total accumulated benefit obligation for the Company’s defined benefit pension plans was $3.27 billion and $3.47 billion at
December 31, 2024 and 2023, respectively. The qualified domestic pension plan accounted for $3.09 billion and $3.30 billion
of the total accumulated benefit obligation at December 31, 2024 and 2023, respectively, whereas the nonqualified and foreign
plans accounted for $180 million and $176 million of the total accumulated benefit obligation at December 31, 2024 and 2023,
respectively.
For pension plans with a projected benefit obligation in excess of plan assets, the aggregate projected benefit obligation was
$118 million and $114 million at December 31, 2024 and 2023, respectively, and the aggregate plan assets were $0 million at
both December 31, 2024 and 2023. For pension plans with an accumulated benefit obligation in excess of plan assets, the
aggregate accumulated benefit obligation was $112 million and $106 million at December 31, 2024 and 2023, respectively, and
the aggregate plan assets were $0 million at both December 31, 2024 and 2023. For postretirement benefit plans with an
accumulated benefit obligation in excess of plan assets, the aggregate accumulated benefit obligation was $62 million and $92
million at December 31, 2024 and 2023, respectively, and the aggregate plan assets were $6 million and $7 million at
December 31, 2024 and 2023, respectively.
The $159 million actuarial gain experienced in 2024 for the qualified domestic pension plan was largely driven by the increase
in the assumed discount rate from the prior year that was used to determine the projected benefit obligation at December 31,
2024. The $123 million actuarial loss experienced in 2023 for the qualified domestic pension plan was largely driven by the
decrease in the assumed discount rate from the prior year that was used to determine the projected benefit obligation at
December 31, 2023.
The Company has discretion regarding whether to provide additional funding and when to provide such funding to its qualified
domestic pension plan. In 2024, 2023 and 2022, there were no required or voluntary contributions to the qualified domestic
pension plan. There is no required contribution to the qualified domestic pension plan during 2025, and the Company has not
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
194
determined whether additional funding will be made during 2025. With respect to the Company’s foreign pension plans, there
are no significant required contributions in 2025.
The following table summarizes the components of net periodic benefit cost (benefit) and other amounts recognized in other
comprehensive income (loss) related to the benefit plans.
Pension Plans
Postretirement Benefit
Plans
(for the year ended December 31, in millions)
2024
2023
2022
2024
2023
2022
Net Periodic Benefit Cost (Benefit):
Service cost ......................................................
$
116 $
108 $
145 $
— $
— $
—
Non-service cost (benefit):
Interest cost on benefit obligation .................
172
176
101
4
5
3
Expected return on plan assets .......................
(298)
(311)
(296)
—
—
—
Amortization of unrecognized:
Prior service benefit ....................................
—
(1)
(1)
(3)
(3)
(3)
Net actuarial (gain) loss ..............................
7
—
49
(9)
(9)
(4)
Total non-service cost (benefit) ................
(119)
(136)
(147)
(8)
(7)
(4)
Net periodic benefit cost (benefit) ............
(3)
(28)
(2)
(8)
(7)
(4)
Other Changes in Benefit Plan Assets and
Benefit Obligations Recognized in Other
Comprehensive Income (Loss):
Prior service benefit .........................................
—
—
—
—
—
—
Net actuarial (gain) loss ...................................
(274)
(114)
174
(28)
(6)
(45)
Foreign currency exchange rate change ..........
—
—
(2)
1
—
1
Amortization of prior service benefit ..............
—
1
1
3
3
3
Amortization of net actuarial gain (loss) .........
(7)
—
(49)
9
9
4
Total other changes recognized in
other comprehensive income (loss) ...
(281)
(113)
124
(15)
6
(37)
Total other changes recognized in net
periodic benefit cost (benefit) and
other comprehensive income (loss) ...
$
(284) $
(141) $
122 $
(23) $
(1) $
(41)
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
195
The following table indicates the line items in which the respective service cost and non-service cost (benefit) are presented in
the consolidated statement of income for the years ended December 31, 2024, 2023 and 2022.
Pension Plans
Postretirement Benefit
Plans
(for the year ended December 31, in millions)
2024
2023
2022
2024
2023
2022
Service Cost:
Net investment income ....................................
$
1 $
— $
1 $
— $
— $
—
Claims and claim adjustment expenses ...........
45
44
58
—
—
—
General and administrative expenses ..............
70
64
86
—
—
—
Total service cost ..........................................
116
108
145
—
—
—
Non-Service Cost (Benefit):
Net investment income ....................................
(1)
(1)
(1)
—
—
—
Claims and claim adjustment expenses ...........
(45)
(54)
(59)
(3)
(3)
(2)
General and administrative expenses ..............
(73)
(81)
(87)
(5)
(4)
(2)
Total non-service cost (benefit) ....................
(119)
(136)
(147)
(8)
(7)
(4)
Net periodic benefit cost (benefit) ................
$
(3) $
(28) $
(2) $
(8) $
(7) $
(4)
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
196
Assumptions
The following table summarizes assumptions used with regard to the Company’s qualified and nonqualified domestic pension
plans and the domestic postretirement benefit plans.
(at and for the year ended December 31,)
2024
2023
Assumptions used to determine benefit obligations
Discount rate:
Qualified domestic pension plan .............................................................................................
5.69 %
5.02 %
Nonqualified domestic pension plan .......................................................................................
5.51 %
4.94 %
Domestic postretirement benefit plan .....................................................................................
5.48 %
4.88 %
Cash balance interest crediting rate ...........................................................................................
4.01 %
4.01 %
Future compensation increase rate .............................................................................................
4.00 %
4.00 %
Assumptions used to determine net periodic benefit cost
Discount rate:
Qualified domestic pension plan:
Service cost .........................................................................................................................
5.10 %
5.27 %
Interest cost .........................................................................................................................
4.91 %
5.18 %
Nonqualified domestic pension plan:
Service cost .........................................................................................................................
4.98 %
5.16 %
Interest cost .........................................................................................................................
4.86 %
5.11 %
Domestic postretirement benefit plan:
Interest cost .........................................................................................................................
4.84 %
5.03 %
Expected long-term rate of return on assets:
Qualified domestic pension plan .............................................................................................
7.00 %
7.00 %
Domestic postretirement benefit plan .....................................................................................
4.00 %
4.00 %
Assumed health care cost trend rates (1)
Following year ...........................................................................................................................
(18.04) %
(2.78) %
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) ............................
4.50 %
4.50 %
Year that the rate reaches the ultimate trend rate .......................................................................
2033
2033
___________________________________________
(1)
The 2025 assumed health care cost trend rate of (18.04)% reflects known negotiated medical premium rate changes and expected
drug reimbursements to the Company’s baseline health care cost trend rate of 10.00%. After 2025, assumed health care cost trend
rates are expected to increase in the subsequent year and then are expected to decrease in a linear pattern until the rate reaches the
ultimate trend rate of 4.50% in 2033. The 2024 assumed health care cost trend rate of (2.78)% reflects known negotiated medical
premium rate changes to the Company’s baseline health care cost trend rate of 8.00%.
The discount rate assumption used to determine the benefit obligation is based on a yield-curve approach. Under this approach,
individual spot rates from the yield curve of a hypothetical portfolio of high quality fixed maturity corporate bonds (rated Aa)
available at the year-end valuation date, for which the timing and amount of cash outflows correspond with the timing and
amount of the estimated benefit payouts of the Company’s benefit plan, are applied to expected future benefits payments in
measuring the projected benefit obligation. The discount rate assumption used to determine benefit obligations disclosed above
represents the weighted average of the individual spot rates.
The discount rate assumption used to determine the net periodic benefit cost is the single weighted average discount rate
derived from the yield curve used to measure the benefit obligation at the beginning of the year.
In choosing the expected long-term rate of return on plan assets, the Company selected the rate that reflected the Company’s
current expectations with regard to long-term returns in the capital markets, taking into account the pension plan’s asset
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
197
allocation targets, the historical performance and current valuation of U.S. and international equities, and the level of long term
interest rate and inflation expectations.
The assumptions made for the Company’s foreign pension and foreign postretirement benefit plans are not materially different
from those of the Company’s qualified domestic pension plan and the domestic postretirement benefit plan.
Plan Assets
The qualified domestic pension plan assets are invested for the exclusive benefit of the plan participants and beneficiaries and
are intended, over time, to satisfy the benefit obligations under the plan. Risk tolerance is established through consideration of
plan liabilities, plan funded status and corporate financial position. The asset mix guidelines have been established and are
reviewed quarterly. These guidelines are intended to serve as tools to facilitate the investment of plan assets to maximize long-
term total return and the ongoing oversight of the plan’s investment performance. Investment risk is measured and monitored
on an ongoing basis through daily and monthly investment portfolio reviews, annual liability measurements and periodic asset/
liability studies.
The Company’s overall investment strategy for the qualified domestic pension plan is to achieve a mix of approximately 85%
to 90% of investments for long-term growth and 10% to 15% for near-term benefit payments with a diversification of asset
types, fund strategies and fund managers. The current target allocations for plan assets are 55% to 65% equity securities and
20% to 40% fixed income securities, with the remainder allocated to short-term securities. Equity securities primarily include
investments in large, medium and small-cap companies primarily located in the United States. Fixed income securities include
corporate bonds of companies from diversified industries, mortgage-backed securities, U.S. Treasury securities and debt
securities issued by foreign governments.
Assets of the Company’s foreign pension plans are not significant.
Fair Value Measurement — Pension Plans and Other Postretirement Benefit Assets
For a discussion of the methods employed by the Company to measure the fair value of invested assets, see note 4. The
following discussion of fair value measurements applies exclusively to the Company’s pension plans and other postretirement
benefit assets.
Fair value estimates for equity and bond mutual funds held by the pension plans reflect prices received from an external pricing
service that are based on observable market transactions. These estimates are primarily included in Level 1.
Short-term securities are carried at fair value which approximates cost plus accrued interest or amortized discount. The fair
value or market value of these is periodically compared to this amortized cost and is based on significant observable inputs as
determined by an external pricing service. Accordingly, the estimates of fair value for such short-term securities, other than
U.S. Treasury securities and money market mutual funds, provided by an external pricing service are included in the amount
disclosed in Level 2 of the hierarchy. The estimated fair value of U.S. Treasury securities and money market mutual funds is
included in the amount disclosed in Level 1 as the estimates are based on unadjusted market prices.
Fair Value Hierarchy — Pension Plans
The following tables present the level within the fair value hierarchy at which the financial assets of the Company’s pension
plans are measured on a recurring basis.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
198
(at December 31, 2024, in millions)
Total
Level 1
Level 2
Level 3
Invested assets:
Fixed maturities
Obligations of U.S. states, municipalities and political
subdivisions ..................................................................
$
109 $
— $
109 $
—
Debt securities issued by foreign governments ...............
34
—
34
—
Mortgage-backed securities, collateralized mortgage
obligations and pass-through securities ........................
8
—
8
—
Corporate and all other bonds ..........................................
751
—
751
—
Total fixed maturities ..............................................
902
—
902
—
Mutual funds
Equity mutual funds .........................................................
1,178
1,172
6
—
Bond mutual funds ...........................................................
667
636
31
—
Total mutual funds ..................................................
1,845
1,808
37
—
Equity securities ................................................................
1,401
1,401
—
—
Other investments ............................................................
1
—
—
1
Cash and short-term securities
U.S. Treasury securities ...................................................
108
108
—
—
Other ................................................................................
77
62
15
—
Total cash and short-term securities .......................
185
170
15
—
Total .....................................................................
$
4,334 $
3,379 $
954 $
1
(at December 31, 2023, in millions)
Total
Level 1
Level 2
Level 3
Invested assets:
Fixed maturities
Obligations of U.S. states, municipalities and political
subdivisions ..................................................................
$
105 $
— $
105 $
—
Debt securities issued by foreign governments ...............
32
—
32
—
Mortgage-backed securities, collateralized mortgage
obligations and pass-through securities ........................
8
—
8
—
Corporate and all other bonds ..........................................
776
—
776
—
Total fixed maturities ..............................................
921
—
921
—
Mutual funds
Equity mutual funds .........................................................
1,207
1,201
6
—
Bond mutual funds ...........................................................
658
655
3
—
Total mutual funds ..................................................
1,865
1,856
9
—
Equity securities ................................................................
1,302
1,302
—
—
Other investments ............................................................
1
—
—
1
Cash and short-term securities
U.S. Treasury securities ...................................................
—
—
—
—
Other ................................................................................
157
114
43
—
Total cash and short-term securities .......................
157
114
43
—
Total .....................................................................
$
4,246 $
3,272 $
973 $
1
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
199
Other Postretirement Benefit Plans
The Company’s overall investment strategy is to achieve a mix of approximately 35% to 65% of investments for long-term
growth and 35% to 65% for near-term insurance payments with a wide diversification of asset types, fund strategies and fund
managers. The current target allocations for plan assets are 25% to 75% fixed income securities, with the remainder allocated
to short-term securities. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-
backed securities and U.S. Treasuries.
Fair Value — Other Postretirement Benefit Plans
The Company’s other postretirement benefit plans had financial assets of $6 million and $7 million at December 31, 2024 and
2023, respectively, which are measured at fair value on a recurring basis. The assets are primarily corporate bonds, which are
categorized as level 2 in the fair value hierarchy.
Estimated Future Benefit Payments
The following table presents the estimated benefits expected to be paid by the Company’s pension and postretirement benefit
plans for the next ten years (reflecting estimated future employee service).
Benefits Expected to be Paid
(in millions)
Pension Plans
Postretirement
Benefit Plans
2025 ...........................................................................................................................................
$
283 $
5
2026 ...........................................................................................................................................
289
6
2027 ...........................................................................................................................................
295
6
2028 ...........................................................................................................................................
299
6
2029 ...........................................................................................................................................
296
6
2030 through 2034 .....................................................................................................................
1,427
27
Savings Plan
Substantially all U.S. domestic Company employees are eligible to participate in The Travelers 401(k) Savings Plan (the
Savings Plan). Eligible employees can contribute to the Savings Plan, and the Company makes a matching contribution into the
employee’s Savings Plan account, subject to limitations described below. In addition, when an eligible U.S. employee makes a
payment toward their student loans, the Company makes a contribution of that amount into the employee’s Savings Plan
account, subject to limitations described below. The total annual amount of the Company’s matching contributions, student
loan repayment contributions or a combination of both is the lesser of 5% of eligible pay or $7,500, which becomes 100%
vested after three years of service. All Company contributions to the Savings Plan are made in cash and invested according to
the employee’s current investment elections and can be reinvested into other investment options in accordance with the terms of
the Savings Plan. The Company’s non-U.S. employees and certain domestic employees participate in separate savings plans.
The total expense related to all of the savings plans was $170 million, $154 million and $139 million for the years ended
December 31, 2024, 2023 and 2022, respectively.
All common shares held by the Savings Plan are considered outstanding for basic and diluted EPS computations and dividends
paid on all shares are charged to retained earnings.
16. LEASES
The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of
business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over
the term of the lease, and a right-of-use asset and lease liability is recognized as part of other assets and other liabilities,
respectively, in the consolidated balance sheet.
Most leases include an option to extend or renew the lease term. The exercise of the renewal option is at the Company’s
discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if the
Company is reasonably certain of exercising those options. The Company, in determining the present value of lease payments,
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
200
utilizes either the rate implicit in the lease, if that rate is readily determinable, or the Company’s incremental secured borrowing
rate commensurate with the term of the underlying lease.
Lease expense is included in general and administrative expenses in the consolidated statement of income. Additional
information regarding the Company’s real estate operating leases is as follows:
(for the year ended December 31, in millions)
2024
2023
2022
Lease cost
Operating leases .................................................................................................
$
73
$
76
$
81
Short-term leases (1)
............................................................................................
3
3
2
Lease expense .................................................................................................
76
79
83
Less: sublease income (2)
....................................................................................
—
—
—
Net lease cost ..................................................................................................
$
76
$
79
$
83
Other information on operating leases
Cash payments to settle a lease liability reported in cash flows ............................
$
79
$
87
$
93
Right-of-use assets obtained in exchange for new lease liabilities .......................
$
95
$
37
$
30
Weighted average discount rate .............................................................................
3.82 %
2.79 %
Weighted average remaining lease term ................................................................
5.7 years
4.1 years
_________________________________________________________
(1) Leases with a term of twelve months or less are not recorded on the consolidated balance sheet.
(2) Sublease income consists of rent from third parties of office space and is recognized as part of other revenues in the consolidated
statement of income.
The following table presents the contractual maturities of the Company’s lease liabilities:
(in millions)
Real Estate Lease
Liability
2025 ................................................................................................................................................................
$
71
2026 ................................................................................................................................................................
64
2027 ................................................................................................................................................................
54
2028 ................................................................................................................................................................
45
2029 ................................................................................................................................................................
32
Thereafter .......................................................................................................................................................
67
Total undiscounted lease payments ............................................................................................................
333
Less: present value adjustment .......................................................................................................................
58
Operating lease liability ..............................................................................................................................
$
275
17. CONTINGENCIES, COMMITMENTS AND GUARANTEES
Contingencies
The major pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or
any of its subsidiaries is a party or to which any of the Company’s properties is subject are described below.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. LEASES (Continued)
201
Asbestos and Environmental Claims and Litigation
In the ordinary course of its insurance business, the Company has received and continues to receive claims for insurance arising
under policies issued by the Company asserting alleged injuries and damages from asbestos- and environmental-related
exposures that are the subject of related coverage litigation. The Company is defending asbestos- and environmental-related
litigation vigorously and believes that it has meritorious defenses; however, the outcomes of these disputes are uncertain. In
this regard, the Company employs dedicated specialists and comprehensive resolution strategies to manage asbestos and
environmental loss exposure, including settling litigation under appropriate circumstances. Currently, it is not possible to
predict legal outcomes and their impact on future loss development for claims and litigation relating to asbestos and
environmental claims. Any such development could be affected by future court decisions and interpretations, as well as future
changes, if any, in applicable legislation. Because of these uncertainties, additional liabilities may arise for amounts in excess of
the Company’s current insurance reserves. In addition, the Company’s estimate of ultimate claims and claim adjustment
expenses may change. These additional liabilities or changes in estimates, or a range of either, cannot now be reasonably
estimated and could result in income statement charges that could be material to the Company’s results of operations in future
periods.
Other Proceedings Not Arising Under Insurance Contracts or Reinsurance Agreements
The Company is involved in other lawsuits, including lawsuits alleging extra-contractual damages relating to insurance
contracts or reinsurance agreements, that do not arise under insurance contracts or reinsurance agreements. The legal costs
associated with such lawsuits are expensed in the period in which the costs are incurred. Based upon currently available
information, the Company does not believe it is reasonably possible that any such lawsuit or related lawsuits would be material
to the Company’s results of operations or would have a material adverse effect on the Company’s financial position or liquidity.
Other Commitments and Guarantees
Commitments
Investment Commitments — The Company has unfunded commitments to private equity limited partnerships, real estate
partnerships and other investments. These commitments totaled $1.49 billion and $2.05 billion at December 31, 2024 and
2023, respectively.
Guarantees
In the ordinary course of selling businesses to third parties, the Company has agreed to indemnify purchasers for losses arising
out of breaches of representations and warranties, obligations arising from certain liabilities and any breach or failure to
perform certain covenants with respect to the businesses being sold. Such indemnification provisions generally are applicable
from the closing date to the expiration of the relevant statutes of limitations, although, in some cases, there may be agreed upon
term limitations or no term limitations. Certain of these contingent obligations are subject to deductibles which have to be
incurred by the obligee before the Company is obligated to make payments. The maximum amount of the Company’s
contingent obligation for indemnifications related to the sale of businesses that are quantifiable was $351 million at
December 31, 2024.
The Company also has contingent obligations for guarantees related to certain investments, certain insurance policy obligations
of former insurance subsidiaries and various other indemnifications. The Company also provides standard indemnifications
that it utilizes with service providers in the normal course of business. The indemnification clauses are often standard
contractual terms. The maximum amount of the Company’s obligation related to the guarantee of certain insurance policy
obligations of a former insurance subsidiary was $480 million at December 31, 2024, all of which is indemnified by a third
party.
Certain of the guarantees and indemnifications described above have no stated or notional amounts or limitation to the
maximum potential future payments, and, accordingly, the Company is unable to provide an estimate of the maximum potential
payments for such arrangements. The Company does not expect to make any material payments related to these guarantees.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. CONTINGENCIES, COMMITMENTS AND GUARANTEES (Continued)
202
18. NONCASH INVESTING AND FINANCING ACTIVITIES
During 2024, the Massachusetts Property Insurance Underwriting Association, a FAIR Plan of which the Company was a
member, was restructured from a partnership that shares profits and losses with Member Companies to a joint underwriting
association, or JUA, that is a stand-alone, risk-bearing entity. This restructuring included a noncash exchange of the
Company’s share of undistributed members’ equity for a beneficial interest in a new Fair Plan Trust which resulted in noncash
investing activity totaling $32 million. In unrelated transactions, the Company issued common stock during 2024 in connection
with its stock compensation plan which resulted in noncash financing transactions totaling $32 million from the net share
settlement of employee stock options.
There were no other material noncash financing or investing activities during the years ended December 31, 2024, 2023 and
2022.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
203
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not Applicable.
Item 9A. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (Exchange Act)) that are designed to ensure that information required to be
disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives. The Company’s management, with the participation of the
Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of
the Company’s disclosure controls and procedures as of December 31, 2024. Consistent with guidance issued by the SEC that
an assessment of internal controls over financial reporting of a recently acquired business may be omitted from management’s
evaluation of disclosure controls and procedures, management is excluding an assessment of such internal controls for Corvus
Insurance Holdings, Inc. (Corvus) from its evaluation of the effectiveness of the Company’s disclosure controls and procedures.
The Company acquired all of the issued and outstanding shares of Corvus on January 2, 2024. Corvus represented less than 1%
of the Company’s consolidated total assets, consolidated total revenues and net income as of and for the year ended
December 31, 2024. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded
that, as of December 31, 2024, the design and operation of the Company’s disclosure controls and procedures were effective to
accomplish their objectives at the reasonable assurance level.
In addition, there was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2024 that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company is in the process of
reviewing the internal control structure of Corvus and, if necessary, will make appropriate changes as it integrates Corvus into
the Company’s overall internal control over financial reporting.
The Company regularly seeks to identify, develop and implement improvements to its technology systems and business
processes, some of which may affect its internal control over financial reporting. These changes may include such activities as
implementing new, more efficient systems, updating existing systems or platforms, automating manual processes or utilizing
technology developed by third parties. These systems changes are often phased in over multiple periods in order to limit the
implementation risk in any one period, and as each change is implemented the Company monitors its effectiveness as part of its
internal control over financial reporting.
204
Management’s Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.
The Company’s internal control over financial reporting is designed to provide reasonable assurances regarding the reliability
of financial reporting and the preparation of the consolidated financial statements of the Company in accordance with U.S.
generally accepted accounting principles. The Company’s accounting policies and internal controls over financial reporting,
established and maintained by management, are under the general oversight of the Company’s Audit Committee.
The Company’s internal control over financial reporting includes those policies and procedures that:
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
•
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made
only in accordance with authorizations of the Company’s management and directors; and
•
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the Company’s internal control over financial reporting as of December 31, 2024. The standard
measures adopted by management in making its evaluation are the measures in the Internal Control - Integrated Framework
(2013) published by the Committee of Sponsoring Organizations of the Treadway Commission.
Based upon its assessment, management has concluded that the Company’s internal control over financial reporting was
effective at December 31, 2024, and that there were no material weaknesses in the Company’s internal control over financial
reporting as of that date.
KPMG LLP, an independent registered public accounting firm, which has audited and reported on the consolidated financial
statements contained in this Form 10-K, has issued its report on the effectiveness of the Company’s internal control over
financial reporting which follows this report.
205
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
The Travelers Companies, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited The Travelers Companies, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheet of the Company as of December 31, 2024 and 2023, the related consolidated
statements of income, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the
three-year period ended December 31, 2024, and the related notes and financial statement schedules as listed in the index to
consolidated financial statements and schedules (collectively, the consolidated financial statements), and our report dated
February 13, 2025 expressed an unqualified opinion on those consolidated financial statements.
The Company acquired Corvus Insurance Holdings, Inc. (Corvus) during 2024, and management excluded an assessment of
Corvus’ internal control from its assessment of the effectiveness of the Company’s internal control over financial reporting as
of December 31, 2024. Corvus represented less than 1% of the Company’s consolidated total assets, consolidated total revenues
and net income as of and for the year ended December 31, 2024. Our audit of internal control over financial reporting of the
Company also excluded an evaluation of the internal control over financial reporting of Corvus.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
206
/s/ KPMG LLP
KPMG LLP
New York, New York
February 13, 2025
207
Item 9B. OTHER INFORMATION
During the three months ended December 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of
the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1
trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers of the Company
Set forth below is information concerning the Company’s executive officers as of February 13, 2025.
Name
Age
Office
Alan D. Schnitzer .................
59 Chairman of the Board of Directors and Chief Executive Officer
William H. Heyman .............
76 Vice Chairman and Chairman of the Investment Policy Committee
Avrohom J. Kess ..................
56 Vice Chairman and Chief Legal Officer
Daniel S. Frey ......................
60 Executive Vice President and Chief Financial Officer
Andy F. Bessette ..................
71 Executive Vice President and Chief Administrative Officer
Michael F. Klein ...................
57 Executive Vice President and President, Personal Insurance
Jeffrey P. Klenk ....................
55 Executive Vice President and President, Bond & Specialty Insurance
Diane Kurtzman ...................
55 Executive Vice President and Chief Human Resources Officer
Mojgan M. Lefebvre ............
59 Executive Vice President and Chief Technology & Operations Officer
Maria Olivo ..........................
60 Executive Vice President, Strategic Development and President, International
David D. Rowland ................
59 Executive Vice President and Co-Chief Investment Officer
Gregory C. Toczydlowski ....
58 Executive Vice President and President, Business Insurance
Daniel T.H. Yin ....................
59 Executive Vice President and Co-Chief Investment Officer
Alan D. Schnitzer, 59, has been Chairman of the Board of Directors since August 2017 and Chief Executive Officer and
Director since December 2015. He previously served as Vice Chairman and Chief Executive Officer, Business and
International Insurance from July 2014. Mr. Schnitzer was Vice Chairman - Financial, Professional & International Insurance
and Field Management; Chief Legal Officer from May 2012 until July 2014 and Vice Chairman and Chief Legal Officer and
Executive Vice President - Financial, Professional and International Insurance from May 2008 until May 2012. He was Vice
Chairman and Chief Legal Officer from April 2007 until May 2008. Prior to joining the Company, he was a partner at the law
firm of Simpson Thacher & Bartlett LLP.
William H. Heyman, 76, has been Vice Chairman and Chairman of the Investment Policy Committee since August 2019.
Prior to that, Mr. Heyman was Vice Chairman and Chief Investment Officer since May 2005. He previously served as
Executive Vice President and Chief Investment Officer from May 2002. Mr. Heyman held various positions with Citigroup
from 1995 until 2002, including the position of chairman of Citigroup Investments from 2000 until 2002. Prior to joining
Citigroup in 1995, Mr. Heyman was, successively: a managing director of Salomon Brothers; Director of the Division of
Market Regulation of the U.S. Securities and Exchange Commission; and a managing director of Smith Barney.
Avrohom J. Kess, 56, has been Vice Chairman and Chief Legal Officer since December 2016. Prior to that, Mr. Kess was a
partner, member of the Corporate Department and Head of the Public Company Advisory Practice at the law firm of Simpson
Thacher & Bartlett LLP, which he joined in 1995.
208
Daniel S. Frey, 60, has been Executive Vice President and Chief Financial Officer since September 2018. Mr. Frey has held
various financial management roles since joining a predecessor to the Company in 2003, including Senior Vice President and
Chief Financial Officer, Personal Insurance from September 2014, Senior Vice President Finance, Business Insurance from
August 2010 and Senior Vice President and Chief Financial Officer, Claim Services from June 2006. Prior to that, Mr. Frey
held the position of Chief Financial Officer at Spalding Sports Worldwide from 1999 to 2003 and held various financial
management positions at Duracell International, Inc. from 1994 to 1999. Mr. Frey began his career at Deloitte in 1986.
Andy F. Bessette, 71, has been Executive Vice President and Chief Administrative Officer since January 2002. Mr. Bessette
previously held various management positions with predecessors of the Company since 1980, including Vice President,
Corporate Real Estate and Services at Travelers Property Casualty Corp.
Michael F. Klein, 57, has been Executive Vice President and President, Personal Insurance since July 2015, and was also Head
of Enterprise Business Intelligence & Analytics from May 2016 to May 2018. He previously served as Executive Vice
President and Co-President, Business Insurance from July 2014, Executive Vice President, Middle Market from November
2012, President of Middle Market from March 2010, President of Commercial Accounts from September 2007, and Senior Vice
President, Industry and Product Group from June 2006. Prior to that, Mr. Klein held various positions with the Company since
1990.
Jeffrey P. Klenk, 55, has been Executive Vice President and President, Bond & Specialty Insurance since September 2021.
Mr. Klenk joined the Company in 1999 and previously since 2016, he served as Executive Vice President, Management
Liability, Bond & Specialty Insurance.
Diane Kurtzman, 55, has been Executive Vice President and Chief Human Resources Officer since August 2020. She was
previously Senior Vice President, Human Resources from July 2018 and Vice President, Human Resources, International &
Corporate from July 2014. Prior to that, Ms. Kurtzman held various positions with the Company or its predecessors since 1991.
Mojgan M. Lefebvre, 59, has been Executive Vice President and Chief Technology & Operations Officer since May 2019.
Prior to that, Ms. Lefebvre was Executive Vice President and Chief Information Officer, Enterprise Operations and eBusiness
since joining the Company in September 2018. Ms. Lefebvre previously held various information technology roles at Liberty
Mutual, where she was most recently Senior Vice President and Chief Information Officer for the Global Risk Solutions
business, from 2010 to 2018, at bioMerieux from 2007 to 2010 and at TeleTech Holdings from 2004 to 2007.
Maria Olivo, 60, has been Executive Vice President, Strategic Development and President, International since October 2018.
Prior to that, she was Executive Vice President, Strategic Development and Corporate Treasurer since July 2010. She
previously served as Executive Vice President and Treasurer from June 2009 and Executive Vice President, Market
Development from October 2007. Prior to that Ms. Olivo held various positions with the Company or its predecessors since
2002, including leading Corporate Development, Investor Relations and Corporate Communications. Ms. Olivo was deputy
head of Strategic Investments at Swiss Re Capital Partners from April 2000 until June 2002. Prior to joining Swiss Re Capital
Partners, she was a director in Salomon Smith Barney’s Investment Bank.
David D. Rowland, 59, has been Executive Vice President and Co-Chief Investment Officer since August 2019. He previously
served as Executive Vice President and Deputy Chief Investment Officer since October 2017 and prior to that he was Executive
Vice President, Fixed Income. Mr. Rowland joined the Company in 1996 from Piper Jaffray Companies, where he was Vice
President in the fixed income group.
Gregory C. Toczydlowski, 58, has been Executive Vice President and President, Business Insurance since June 2016. He
previously served as Executive Vice President and President, Small Commercial and Business Insurance Technology and
Operations from July 2015 and Executive Vice President and President, Personal Insurance from July 2009. Prior to that, Mr.
Toczydlowski held various positions with the Company or its predecessors since 1990, including Chief Operating Officer of
Personal Insurance and Chief Financial Officer for the independent agency distribution channel within Personal Insurance.
Daniel T.H. Yin, 59, has been Executive Vice President and Co-Chief Investment Officer since August 2019. He previously
served as Executive Vice President and Deputy Chief Investment Officer since October 2017 and prior to that he was Executive
Vice President, Alternative Investments. Mr. Yin joined the Company in 2002 from ACE Asset Management, the investment
arm of what is now Chubb, Ltd., where he was responsible for implementing investment strategies across a global portfolio.
209
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics (Code of Ethics) that applies to all employees, including
executive officers, and to directors. The Code of Ethics is available on the Corporate Governance page of the Company’s
website at travelers.com. If the Company ever were to amend or waive any provision of its Code of Ethics that applies to the
Company’s principal executive officer, principal financial officer, principal accounting officer or any person performing similar
functions, the Company intends to satisfy its disclosure obligations, if any, with respect to any such waiver or amendment by
posting such information on its website set forth above rather than by filing a Current Report on Form 8-K.
Other
The following sections of the Company’s definitive Proxy Statement relating to its 2025 Annual Meeting of Shareholders,
which will be filed with the SEC no later than 120 days after the end of the Company’s fiscal year on December 31, 2024 (the
Proxy Statement), are incorporated herein by reference: “Nominees for Election of Directors,” “Governance of Your Company
- Specific Considerations Regarding the 2025 Nominees,” “Governance of Your Company - Committees of the Board and
Meetings - Audit Committee,” “Governance of Your Company - Securities Trading Policy,” “Share Ownership Information -
Delinquent Section 16(a) Reports” and “Other Information - Shareholder Proposals for 2026 Annual Meeting” to the extent
applicable.
Item 11. EXECUTIVE COMPENSATION
The following sections of the Proxy Statement are incorporated herein by reference: “Compensation Discussion and Analysis,”
“Compensation Committee Report,” “Summary Compensation Table,” “Grants of Plan-Based Awards in 2024,” “Narrative
Supplement to Summary Compensation Table and Grants of Plan-Based Awards in 2024,” “Option Exercises and Stock Vested
in 2024,” “Outstanding Equity Awards at December 31, 2024,” “Post-Employment Compensation,” “Potential Payments to
Named Executive Officers Upon Termination of Employment or Change in Control,” “Non-Employee Director
Compensation,” “Governance of Your Company - Risk Management and Compensation” and “CEO Pay Ratio.”
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
The “Share Ownership Information - 5% Owners” and “Share Ownership Information - Directors and Executive Officers”
sections of the Proxy Statement are incorporated herein by reference.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2024 regarding the Company’s equity compensation plans. The
only plan pursuant to which the Company may currently make additional equity grants is The Travelers Companies, Inc. 2023
Stock Incentive Plan (the 2023 Incentive Plan).
Plan Category
Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights
(a)
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected in
column (a))
(c)
Equity compensation plans approved by security
holders (1)................................................................
9,732,432 (2) $ 153.46 per share (3)
4,236,219 (4)
___________________________________________
(1)
In addition to the 2023 Incentive Plan, also included are The Travelers Companies, Inc. Amended and Restated 2014 Stock
Incentive Plan, as amended (the 2014 Incentive Plan), which was replaced by the 2023 Incentive Plan and The Travelers
Companies, Inc. Amended and Restated 2004 Stock Incentive Plan, as amended (the 2004 Incentive Plan), which was replaced by
the 2014 Incentive Plan, and certain plans for employees in the United Kingdom and the Republic of Ireland and The Travelers
Deferred Compensation Plan for Non-Employee Directors. Shares delivered under these plans are issued pursuant to the 2004
Incentive Plan, the 2014 Incentive Plan and the 2023 Incentive Plan.
(2)
Total includes (i) 7,098,132 stock options, (ii) 918,183 performance shares and dividend equivalents accrued thereon (assuming
issuance of 100% of performance shares granted), (iii) 1,541,388 restricted stock units, (iv) 159,324 director deferred stock awards
and dividend equivalents accrued thereon and (v) 15,405 common stock units credited to the deferred compensation accounts of
certain non-employee directors in lieu of cash compensation, at the election of such directors.
210
(3)
The weighted average exercise prices for the 2004 Incentive Plan, the 2014 Incentive Plan and the 2023 Incentive Plan relate only
to stock options. The calculation of the weighted average exercise price does not include outstanding equity awards that are
received or exercised for no consideration and also does not include common stock units credited to the deferred compensation
accounts of certain non-employee directors at fair market value in lieu of cash compensation at the election of such directors.
(4)
These shares are available for grant as of December 31, 2024 under the 2023 Incentive Plan pursuant to which the Compensation
Committee of the Board of Directors may make various stock-based awards including nonqualified stock options, incentive stock
options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, deferred stock units, performance awards
and other stock-based or stock-denominated awards with respect to the Company’s common stock. This includes 5,789,184 shares
initially authorized for issuance under the 2023 Incentive Plan and shares subject to awards under the 2014 Incentive Plan that
expired, were cancelled, forfeited, settled in cash or otherwise terminated without the issuance of shares.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The “Governance of Your Company—Transactions with Related Persons,” “Nominees for Election of Directors” and
“Governance of Your Company—Director Independence and Independence Determinations” sections of the Proxy Statement
are incorporated herein by reference.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The “Audit and Non-Audit Fees” section of the Proxy Statement is incorporated herein by reference.
PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Documents filed as a part of the report:
(1) Financial Statements and Schedules. See Index to Consolidated Financial Statements and Schedules on page 119
hereof.
(2) Exhibits:
Exhibit
Number
Description of Exhibit
3.1
Amended and Restated Articles of Incorporation of The Travelers Companies, Inc. (the “Company”), as
amended and restated May 23, 2013, were filed as Exhibit 3.1 to the Company’s current report on Form 8-
K filed on May 24, 2013, and are incorporated herein by reference.
3.2
Bylaws of The Travelers Companies, Inc. as Amended and Restated December 7, 2022, were filed as
Exhibit 3.2 to the Company’s current report on Form 8-K filed on December 12, 2022, and are incorporated
herein by reference.
4.1
Description of Common Stock was filed as Exhibit 4.1 to the Company’s annual report on Form 10-K for
the fiscal year ended December 31, 2019, and is incorporated herein by reference.
10.1
Revolving Credit Agreement, dated June 15, 2022, between the Company and a syndicate of financial
institutions, was filed as Exhibit 10.1 to the Company’s current report on Form 8-K filed on June 17, 2022,
and is incorporated herein by reference.
10.2*
The Travelers Companies, Inc. Policy Regarding Executive Incentive Compensation Recoupment was filed
as Exhibit 10.42 to the Company’s annual report on Form 10-K for the fiscal year ended December 31,
2009, and is incorporated herein by reference.
10.3*
Letter Agreement between Alan D. Schnitzer and the Company, dated April 15, 2007, was filed as Exhibit
10.1 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2007, and is
incorporated herein by reference.
10.4*
Letter Agreement between Alan D. Schnitzer and the Company, dated August 4, 2015, was filed as Exhibit
10.2 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2015, and
is incorporated herein by reference.
10.5*
Time Sharing Agreement, dated September 2, 2015, by and between the Company and Alan D. Schnitzer,
was filed as Exhibit 10.3 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended
September 30, 2015, and is incorporated herein by reference.
10.6*
Letter Agreement between Avrohom J. Kess and the Company, dated December 19, 2016, was filed as
Exhibit 10.49 to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2016,
and is incorporated by reference.
211
10.7*
The Travelers Companies, Inc. 2023 Stock Incentive Plan was filed as Exhibit 4.3 to the Company’s
Registration Statement on Form S-8 (Registration No. 333-272161) dated May 24, 2023 and is incorporated
herein by reference.
10.8*
The Travelers Companies, Inc. Amended and Restated 2014 Stock Incentive Plan was filed as Exhibit 10.1
to the Company’s current report on Form 8-K filed on May 25, 2021, and is incorporated herein by
reference.
10.9*
The Travelers Companies, Inc. Amended and Restated 2004 Stock Incentive Plan was filed as Exhibit
10.28 to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2008, and is
incorporated herein by reference.
10.10*
Amendment to The Travelers Companies, Inc. Amended and Restated 2004 Stock Incentive Plan was filed
as Exhibit 10.7 to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2012,
and is incorporated herein by reference.
10.11*
Travelers Property Casualty Corp. (“TPC”) 2002 Stock Incentive Plan, as amended effective January 23,
2003, was filed as Exhibit 10.22 to TPC’s annual report on Form 10-K for the fiscal year ended December
31, 2002, and is incorporated herein by reference.
10.12*
Amendment to the TPC 2002 Stock Incentive Plan, as amended effective January 23, 2003, was filed as
Exhibit 10.9 to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2012,
and is incorporated herein by reference.
10.13*
Current Director Compensation Program, effective as of May 24, 2023, was filed as Exhibit 10.2 to the
Company’s quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2023, and is incorporated
herein by reference.
10.14*
The Company’s Amended and Restated Deferred Compensation Plan for Non-Employee Directors was
filed as Exhibit 10.1 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended
September 30, 2023, and is incorporated herein by reference.
10.15*
TPC Compensation Plan for Non-Employee Directors, as amended on January 22, 2004, was filed as
Exhibit 10.16 to TPC’s annual report on Form 10-K for the fiscal year ended December 31, 2003, and is
incorporated herein by reference.
10.16*
The Travelers Severance Plan (as Amended and Restated, effective January 1, 2022) was filed as Exhibit
10.1 to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2022, and is
incorporated herein by reference.
10.17*
The Company’s Senior Executive Performance Plan was filed as Exhibit 10.1 to the Company’s quarterly
report on Form 10-Q for the fiscal quarter ended March 31, 2005, and is incorporated herein by reference.
10.18*
First Amendment to the Company’s Senior Executive Performance Plan was filed as Exhibit 10.40 to the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2009, and is incorporated
herein by reference.
10.19*
The Travelers Deferred Compensation Plan, as Amended and Restated, effective January 1, 2009, was filed
as Exhibit 99.1 to the Company’s Registration Statement on Form S-8 (Registration No. 333-157091) dated
February 4, 2009, and is incorporated herein by reference.
10.20*
First Amendment to The Travelers Deferred Compensation Plan was filed as Exhibit 10.37 to the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2009, and is incorporated
herein by reference.
10.21*
TPC Deferred Compensation Plan was filed as Exhibit 10.23 to TPC’s annual report on Form 10-K for the
fiscal year ended December 31, 2002, and is incorporated herein by reference.
10.22*
The Travelers Benefit Equalization Plan, as Amended and Restated effective as of January 1, 2016, was
filed as Exhibit 10.29 to the Company’s annual report on Form 10-K for the fiscal year ended December 31,
2015, and is incorporated herein by reference.
10.23*
TPC Benefit Equalization Plan was filed as Exhibit 10.24 to TPC’s annual report on Form 10-K for the
fiscal year ended December 31, 2002, and is incorporated herein by reference.
10.24*
The St. Paul Companies, Inc. Benefit Equalization Plan-2001 Revision and the first and second
amendments thereto were filed as Exhibit 10.27 to the Company’s annual report on Form 10-K for the
fiscal year ended December 31, 2004, and are incorporated herein by reference.
10.25*
Form of Non-Competition Agreement was filed as Exhibit 10.43 to the Company’s annual report on Form
10-K for the fiscal year ended December 31, 2009, and is incorporated herein by reference.
10.26*
Form of Amended and Restated Non-Solicitation and Non-Disclosure Agreement for Executive Officers
was filed as Exhibit 10.35 to the Company’s annual report on Form 10-K for the fiscal year ended
December 31, 2016, and is incorporated herein by reference.
10.27*
Form of Restricted Stock Unit Award Notification and Agreement (For Management Committee Member
Executing Non-Compete) was filed as Exhibit 10.37 to the Company’s annual report on Form 10-K for the
fiscal year ended December 31, 2014, and is incorporated herein by reference.
212
10.28†*
Form of Stock Option Grant Notification and Agreement.
10.29†*
Form of Restricted Stock Unit Award Notification and Agreement.
10.30*
Form of Performance Share Award Notification and Agreement (2022) was filed as Exhibit 10.34 to the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2021, and is incorporated
herein by reference.
10.31*
Form of Performance Share Award Notification and Agreement (2023) was filed as Exhibit 10.34 to the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022, and is incorporated
herein by reference.
10.32*
Form of Performance Share Award Notification and Agreement (2024) was filed as Exhibit 10.35 to the
Company’s annual report on Form 10-K for the fiscal year ended December 31, 2023, and is incorporated
herein by reference.
10.33†*
Form of Performance Share Award Notification and Agreement (2025).
10.34†*
Form of Non-Employee Director Notification and Agreement of Annual Deferred Stock Award.
19.1†
Securities Trading Policy.
21.1†
A list of the subsidiaries of the Company.
23.1†
Consent of KPMG LLP, Independent Registered Public Accounting Firm, with respect to the incorporation
by reference of KPMG LLP’s audit reports into Registration Statements of the Company on Form S-8 and
Form S-3.
24.1†
Power of Attorney.
31.1†
Certification of Alan D. Schnitzer, Chairman and Chief Executive Officer of the Company, as required by
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2†
Certification of Daniel S. Frey, Chief Financial Officer of the Company, as required by Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1†
Certification of Alan D. Schnitzer, Chairman and Chief Executive Officer of the Company, as required by
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2†
Certification of Daniel S. Frey, Chief Financial Officer of the Company, as required by Section 906 of the
Sarbanes-Oxley Act of 2002.
97.1*
The Travelers Companies, Inc. Policy Regarding Recovery of Executive Compensation Based on Financial
Reporting Measures effective December 1, 2023 was filed as Exhibit 97.1 to the Company’s annual report
on Form 10-K for the fiscal year ended December 31, 2023, and is incorporated herein by reference.
101.1†
The following information from The Travelers Companies, Inc.’s Annual Report on Form 10-K for the year
ended December 31, 2024 formatted in Inline XBRL: (i) Consolidated Statement of Income for the years
ended December 31, 2024, 2023 and 2022; (ii) Consolidated Statement of Comprehensive Income (Loss)
for the years ended December 31, 2024, 2023 and 2022; (iii) Consolidated Balance Sheet as of
December 31, 2024 and 2023; (iv) Consolidated Statement of Changes in Shareholders’ Equity for the
years ended December 31, 2024, 2023 and 2022; (v) Consolidated Statement of Cash Flows for the years
ended December 31, 2024, 2023 and 2022; (vi) Notes to Consolidated Financial Statements; (vii) Financial
Statement Schedules; and (viii) the cover page.
104.1
Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit
101.1).
_________________________________________
†
Filed herewith.
*
Management contract or compensatory plan in which directors and/or executive officers are eligible to participate.
The total amount of securities authorized pursuant to any instrument defining rights of holders of long-term debt of the
Company does not exceed 10% of the total assets of the Company and its consolidated subsidiaries. Therefore, the Company is
not filing any instruments evidencing long-term debt. However, the Company will furnish copies of any such instrument to the
Securities and Exchange Commission upon request.
Copies of any of the exhibits referred to above will be furnished to security holders who make written request therefor to The
Travelers Companies, Inc., 385 Washington Street, Saint Paul, MN, 55102, Attention: Corporate Secretary.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other
disclosure other than the terms of the agreements or other documents themselves, and you should not rely on them for that
purpose. In particular, any representations and warranties made by the Company in these agreements or other documents were
made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs at
the date they were made or at any other time.
213
Item 16. FORM 10-K SUMMARY
None.
214
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, The Travelers Companies, Inc. has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE TRAVELERS COMPANIES, INC.
(Registrant)
Date: February 13, 2025 By
/s/ CHRISTINE K. KALLA
Christine K. Kalla
Executive Vice President and General Counsel
(Authorized Signatory)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of The Travelers Companies, Inc. and in the capacities and on the dates indicated.
Date
By
/s/ ALAN D. SCHNITZER
Director, Chairman and Chief Executive Officer (Principal
Executive Officer)
February 13, 2025
Alan D. Schnitzer
By
/s/ DANIEL S. FREY
Executive Vice President and Chief Financial Officer (Principal
Financial Officer)
February 13, 2025
Daniel S. Frey
By
/s/ PAUL E. MUNSON
Senior Vice President and Corporate Controller (Principal
Accounting Officer)
February 13, 2025
Paul E. Munson
By
*
Director
February 13, 2025
Russell G. Golden
By
*
Director
February 13, 2025
William J. Kane
By
*
Director
February 13, 2025
Thomas B. Leonardi
By
*
Director
February 13, 2025
Clarence Otis Jr.
By
*
Director
February 13, 2025
Elizabeth E. Robinson
By
*
Director
February 13, 2025
Rafael Santana
By
*
Director
February 13, 2025
Todd C. Schermerhorn
By
*
Director
February 13, 2025
Laurie J. Thomsen
By
*
Director
February 13, 2025
Bridget van Kralingen
By
*
Director
February 13, 2025
David S. Williams
/s/ CHRISTINE K. KALLA
February 13, 2025
Christine K. Kalla,
Attorney-in-fact
215
FINANCIAL STATEMENT SCHEDULES
SCHEDULE II
THE TRAVELERS COMPANIES, INC.
(Parent Company Only)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(in millions)
CONDENSED STATEMENT OF INCOME
For the year ended December 31,
2024
2023
2022
Revenues
Net investment income ..................................................................................
$
92 $
92 $
30
Net realized investment gains (losses) ...........................................................
34
37
(51)
Total revenues ............................................................................................
126
129
(21)
Expenses
Interest ............................................................................................................
344
328
303
Other ..............................................................................................................
3
(18)
13
Total expenses ............................................................................................
347
310
316
Loss before income taxes and net income of subsidiaries .....................
(221)
(181)
(337)
Income tax benefit ..........................................................................................
(88)
(58)
(99)
Loss before net income of subsidiaries ...................................................
(133)
(123)
(238)
Net income of subsidiaries .............................................................................
5,132
3,114
3,080
Net income .................................................................................................
$
4,999 $
2,991 $
2,842
The condensed financial statements should be read in conjunction with the notes to the condensed financial information of the
registrant, as well as the consolidated financial statements and notes thereto.
See the Report of Independent Registered Public Accounting Firm.
216
SCHEDULE II
THE TRAVELERS COMPANIES, INC.
(Parent Company Only)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(in millions)
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the year ended December 31,
2024
2023
2022
Net income ....................................................................................................
$
4,999 $
2,991 $
2,842
Other comprehensive income (loss)—parent company:
Changes in net unrealized gains (losses) on investment securities having
no credit losses recognized in the condensed statement of income .........
(1)
3
(12)
Net changes in benefit plan assets and obligations .....................................
294
111
(105)
Other comprehensive income (loss) before income taxes and
other comprehensive income (loss) of subsidiaries .......................
293
114
(117)
Income tax expense (benefit) .........................................................................
61
30
(38)
Other comprehensive income (loss), net of taxes, before other
comprehensive income (loss) of subsidiaries .................................
232
84
(79)
Other comprehensive income (loss) of subsidiaries ...............................
(728)
1,890
(7,559)
Other comprehensive income (loss) ....................................................
(496)
1,974
(7,638)
Comprehensive income (loss) ...............................................................
$
4,503 $
4,965 $
(4,796)
The condensed financial statements should be read in conjunction with the notes to the condensed financial information of the
registrant, as well as the consolidated financial statements and notes thereto.
See the Report of Independent Registered Public Accounting Firm.
217
SCHEDULE II
THE TRAVELERS COMPANIES, INC.
(Parent Company Only)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(in millions)
CONDENSED BALANCE SHEET
As of December 31,
2024
2023
Assets
Fixed maturities .........................................................................................................................
$
186 $
182
Equity securities ........................................................................................................................
284
241
Short-term securities ..................................................................................................................
1,748
1,494
Investment in subsidiaries .........................................................................................................
32,374
29,946
Other assets ................................................................................................................................
774
549
Total assets .............................................................................................................................
$
35,366 $
32,412
Liabilities
Debt ...........................................................................................................................................
$
7,337 $
7,336
Other liabilities ..........................................................................................................................
158
146
Total liabilities .......................................................................................................................
7,495
7,482
Shareholders’ equity
Common stock (1,750.0 shares authorized; 226.6 and 228.2 shares issued and outstanding) ..
25,452
24,906
Retained earnings ......................................................................................................................
49,637
45,600
Accumulated other comprehensive loss ....................................................................................
(4,967)
(4,471)
Treasury stock, at cost (564.3 and 559.2 shares) .......................................................................
(42,251)
(41,105)
Total shareholders’ equity ...................................................................................................
27,871
24,930
Total liabilities and shareholders’ equity ...........................................................................
$
35,366 $
32,412
The condensed financial statements should be read in conjunction with the notes to the condensed financial information of the
registrant, as well as the consolidated financial statements and notes thereto.
See the Report of Independent Registered Public Accounting Firm.
218
SCHEDULE II
THE TRAVELERS COMPANIES, INC.
(Parent Company Only)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(in millions)
CONDENSED STATEMENT OF CASH FLOWS
For the year ended December 31,
2024
2023
2022
Cash flows from operating activities
Net income .....................................................................................................
$
4,999 $
2,991 $
2,842
Adjustments to reconcile net income to net cash provided by operating
activities:
Equity in net income of subsidiaries ...........................................................
(5,132)
(3,114)
(3,080)
Dividends received from consolidated subsidiaries ....................................
1,964
1,125
2,860
Capital received from subsidiaries ..............................................................
48
18
—
Deferred federal income tax expense ..........................................................
9
17
14
Change in income taxes payable .................................................................
(7)
(2)
(13)
Other ............................................................................................................
130
142
7
Net cash provided by operating activities ...............................................
2,011
1,177
2,630
Cash flows from investing activities
Net sales (purchases) of short-term securities ...............................................
(254)
(88)
73
Other investments, net ...................................................................................
(8)
(37)
(35)
Net cash provided by (used in) investing activities .................................
(262)
(125)
38
Cash flows from financing activities
Treasury stock acquired—share repurchase authorizations ...........................
(1,003)
(958)
(2,000)
Treasury stock acquired—net employee share-based compensation .............
(114)
(64)
(61)
Dividends paid to shareholders ......................................................................
(951)
(908)
(875)
Issuance of debt ..............................................................................................
—
738
—
Issuance of common stock—employee share options ...................................
321
141
267
Net cash used in financing activities ........................................................
(1,747)
(1,051)
(2,669)
Net increase (decrease) in cash ......................................................................
2
1
(1)
Cash at beginning of year ..............................................................................
1
—
1
Cash at end of year ......................................................................................
$
3 $
1 $
—
Supplemental disclosure of cash flow information
Cash received during the year for taxes .........................................................
$
122 $
73 $
100
Cash paid during the year for interest ............................................................
$
343 $
322 $
301
Supplemental disclosure of noncash financing activities
Issuance of common stock — net share settlement of employee stock
options ............................................................................................................
$
32 $
— $
—
The condensed financial statements should be read in conjunction with the notes to the condensed financial information of the
registrant, as well as the consolidated financial statements and notes thereto.
See the Report of Independent Registered Public Accounting Firm.
219
SCHEDULE II
THE TRAVELERS COMPANIES, INC.
(Parent Company Only)
NOTES TO THE CONDENSED FINANCIAL INFORMATION OF REGISTRANT
1.
GUARANTEES
The Travelers Companies, Inc. (TRV) fully and unconditionally guarantees the payment of all principal, premiums, if any, and
interest on certain debt obligations of its subsidiaries TPC and TIGHI. The guarantees pertain to the $200 million 7.75% notes
due 2026 and the $500 million 6.375% notes due 2033.
TRV also has contingent obligations for guarantees in connection with the selling of businesses to third parties; certain
insurance, reinsurance and banking facility obligations of certain subsidiaries and various indemnifications including
indemnifications that it utilizes with service providers in the normal course of business. The guarantees and indemnification
clauses are often standard contractual terms and include indemnifications for breaches of representations and warranties and in
some cases obligations arising from certain liabilities. The terms of these provisions vary in duration and nature.
Certain of the guarantees and indemnifications described above have no stated or notional amounts or limitation to the
maximum potential future payments. Accordingly, TRV is unable to provide an estimate of the maximum potential payments
for such arrangements; the likelihood for any payment under these guarantees is remote.
220
SCHEDULE III
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
Supplementary Insurance Information
2022-2024
(in millions)
Segment
Deferred
Acquisition
Costs
Claims and
Claim
Adjustment
Expense
Reserves
Unearned
Premiums
Earned
Premiums
Net
Investment
Income (1)
Claims and
Claim
Adjustment
Expenses
Amortization
of Deferred
Acquisition
Costs
Other
Operating
Expenses (2)
Net
Written
Premiums
2024
Business Insurance .............................................
$
1,698 $
49,731 $
10,831 $
21,345 $
2,560 $
13,679 $
3,588 $
3,303 $
22,078
Bond & Specialty Insurance ...............................
502
5,365
3,012
3,958
390
1,774
756
832
4,109
Personal Insurance .............................................
1,294
8,992
8,446
16,638
640
11,606
2,629
1,640
17,169
Total—Reportable Segments ..........................
3,494
64,088
22,289
41,941
3,590
27,059
6,973
5,775
43,356
Other ...................................................................
—
5
—
—
—
—
—
436
—
Consolidated ...................................................
$
3,494 $
64,093 $
22,289 $
41,941 $
3,590 $
27,059 $
6,973 $
6,211 $
43,356
2023
Business Insurance .............................................
$
1,580 $
47,739 $
10,068 $
19,144 $
2,085 $
12,696 $
3,173 $
3,041 $
20,430
Bond & Specialty Insurance ...............................
477
4,945
2,861
3,655
328
1,485
673
681
3,842
Personal Insurance .............................................
1,249
8,937
7,943
14,962
509
12,034
2,380
1,417
15,929
Total—Reportable Segments ..........................
3,306
61,621
20,872
37,761
2,922
26,215
6,226
5,139
40,201
Other ...................................................................
—
6
—
—
—
—
—
413
—
Consolidated ...................................................
$
3,306 $
61,627 $
20,872 $
37,761 $
2,922 $
26,215 $
6,226 $
5,552 $
40,201
2022
Business Insurance .............................................
$
1,315 $
45,909 $
8,619 $
17,095 $
1,864 $
10,907 $
2,788 $
2,827 $
17,635
Bond & Specialty Insurance ...............................
430
4,482
2,679
3,418
258
1,378
625
590
3,732
Personal Insurance .............................................
1,091
8,252
6,942
13,250
440
10,569
2,102
1,362
14,047
Total—Reportable Segments ..........................
2,836
58,643
18,240
33,763
2,562
22,854
5,515
4,779
35,414
Other ...................................................................
—
6
—
—
—
—
—
382
—
Consolidated ...................................................
$
2,836 $
58,649 $
18,240 $
33,763 $
2,562 $
22,854 $
5,515 $
5,161 $
35,414
___________________________________________
(1)
See note 2 of the notes to the consolidated financial statements for discussion of the method used to allocate net investment income and invested assets to the identified segments.
(2)
Expense allocations are determined in accordance with prescribed statutory accounting practices. These practices make a reasonable allocation of all expenses to those product lines
with which they are associated.
See the Report of Independent Registered Public Accounting Firm.
221
SCHEDULE V
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
(in millions)
Balance at
beginning
of period
Charged to
costs and
expenses
Charged to
other
accounts
Deductions (1)
Balance at
end of
period
2024
Reinsurance recoverables .......................
$
118 $
1 $
— $
— $
119
Allowance for uncollectible:
Premiums receivable from
underwriting activities ........................
$
69 $
50 $
— $
61 $
58
Deductibles ...........................................
$
29 $
(1) $
— $
— $
28
2023
Reinsurance recoverables ......................
$
132 $
(14) $
— $
— $
118
Allowance for uncollectible:
Premiums receivable from
underwriting activities ........................
$
77 $
42 $
— $
50 $
69
Deductibles ...........................................
$
25 $
5 $
— $
1 $
29
2022
Reinsurance recoverables .......................
$
141 $
(9) $
— $
— $
132
Allowance for uncollectible:
Premiums receivable from
underwriting activities ........................
$
107 $
56 $
(2) $
84 $
77
Deductibles ...........................................
$
29 $
(3) $
— $
1 $
25
___________________________________________
(1)
Credited to the related asset account.
See the Report of Independent Registered Public Accounting Firm.
222
SCHEDULE VI
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
Supplementary Information Concerning Property-Casualty Insurance Operations (1)
2022-2024
(in millions)
Claims and Claim
Adjustment
Expenses Incurred
Related to:
Amortization
of Deferred
Acquisition
Costs
Paid Claims
and Claim
Adjustment
Expenses
Affiliation
with
Registrant(2)
Deferred
Acquisition
Costs
Claims and
Claim Adjustment
Expense Reserves
Discount from
Reserves for
Unpaid Claims(3)
Unearned
Premiums
Earned
Premiums
Net
Investment
Income
Current
Year
Prior Year
Net Written
Premiums
2024 ...........
$
3,494 $
64,088 $
1,070 $ 22,289 $
41,941 $
3,590 $
27,508 $
(548) $
6,973 $
24,151 $
43,356
2023 ...........
$
3,306 $
61,621 $
1,096 $ 20,872 $
37,761 $
2,922 $
26,159 $
(38) $
6,226 $
23,276 $
40,201
2022 ...........
$
2,836 $
58,643 $
1,124 $ 18,240 $
33,763 $
2,562 $
23,308 $
(537) $
5,515 $
20,351 $
35,414
___________________________________________
(1)
Excludes accident and health insurance business.
(2)
Consolidated property-casualty insurance operations.
(3)
For a discussion of types of reserves discounted and discount rates used, see note 8 of the notes to the consolidated financial statements.
See the Report of Independent Registered Public Accounting Firm.
223
Exhibit 31.1
CERTIFICATION
I, Alan D. Schnitzer, certify that:
1.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2024 of The Travelers
Companies, Inc. (the Company);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the
periods presented in this report;
4.
The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c)
evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d)
disclosed in this report any change in the Company's internal control over financial reporting that occurred
during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control
over financial reporting; and
5.
The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the Company's auditors and the audit committee of the Company's Board of Directors (or
persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Company's ability to record, process,
summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role
in the Company's internal control over financial reporting.
Date: February 13, 2025
By:
/s/ ALAN D. SCHNITZER
Alan D. Schnitzer
Chairman and Chief Executive Officer
224
Exhibit 31.2
CERTIFICATION
I, Daniel S. Frey, certify that:
1.
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2024 of The Travelers
Companies, Inc. (the Company);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the
periods presented in this report;
4.
The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c)
evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d)
disclosed in this report any change in the Company's internal control over financial reporting that occurred
during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control
over financial reporting; and
5.
The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the Company's auditors and the audit committee of the Company's Board of Directors (or
persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Company's ability to record, process,
summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role
in the Company's internal control over financial reporting.
Date: February 13, 2025
By:
/s/ DANIEL S. FREY
Daniel S. Frey
Executive Vice President and Chief Financial
Officer
225
Exhibit 32.1
THE TRAVELERS COMPANIES, INC.
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, the
undersigned officer of The Travelers Companies, Inc. (the "Company") hereby certifies that the Company's Annual Report on
Form 10-K for the year ended December 31, 2024 (the "Report") fully complies with the requirements of Section 13(a) or 15(d)
of the Exchange Act and that the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: February 13, 2025
By:
/s/ ALAN D. SCHNITZER
Name: Alan D. Schnitzer
Title: Chairman and Chief Executive Officer
226
Exhibit 32.2
THE TRAVELERS COMPANIES, INC.
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, the
undersigned officer of The Travelers Companies, Inc. (the "Company") hereby certifies that the Company's Annual Report on
Form 10-K for the year ended December 31, 2024 (the "Report") fully complies with the requirements of Section 13(a) or 15(d)
of the Exchange Act and that the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: February 13, 2025
By:
/s/ DANIEL S. FREY
Name: Daniel S. Frey
Title: Executive Vice President and Chief Financial
Officer
227
This page intentionally left blank
This page intentionally left blank
SHAREHOLDERS’ INFORMATION
Your dividends
The Travelers Companies, Inc. has paid cash dividends without interruption
for 153 years. Our most recent quarterly dividend of $1.05 per share was
declared on January 22, 2025, payable March 31, 2025, to shareholders of
record as of March 10, 2025.
Automatic dividend reinvestment program
This program provides a convenient opportunity for our shareholders to
increase their holding of Travelers common stock. An explanatory brochure
and enrollment card may be obtained by calling our stock transfer agent,
Equiniti Trust Company, at 888-326-5102, or by mailing a request to the
address below.
For address changes, dividend checks, direct deposits of dividends, account
consolidations, registration changes, lost stock certificates and general
stock holding questions, please contact:
Stock transfer agent and registrar
Equiniti Trust Company, LLC
EQ Shareowner Services
P.O. Box 64854
Saint Paul, MN 55164-0854
Toll Free: 888-326-5102
Outside U.S. and Canada: 651-450-4064
shareowneronline.com
Financial information available
Travelers makes available, free of charge on its website, all of its filings that
are made electronically to the SEC, including Forms 10-K, 10-Q and 8-K. To
access these filings, go to travelers.com > Investors > Financial Information
> SEC Filings.
Requests for additional information may be directed to:
The Travelers Companies, Inc.
485 Lexington Avenue
New York, NY 10017-2630
Investor Relations, NY08EX
Attn: Abbe Goldstein
917-778-6263
Annual Meeting of Shareholders
The Annual Meeting of Shareholders will be held on May 21, 2025, at
Hartford Marriott Downtown, 200 Columbus Boulevard, Hartford, CT
06103-2807.
On or about April 4, 2025, we plan to send proxy materials, or a notice of
internet availability of proxy materials, to shareholders of record as of the
close of business on March 24, 2025. The notice will provide instructions on
where to access our Proxy Statement and Annual Report as well as how to
vote your shares electronically. The notice also includes instructions on how
to request a printed copy of our proxy materials.
Stock price and dividends declared
The Travelers Companies, Inc. common stock is listed on the New York Stock
Exchange (NYSE) and is publicly traded under the ticker symbol “TRV”.
The following tables set forth the quarterly high and low closing sales prices
of The Travelers Companies, Inc. common stock, as well as the amount of
quarterly cash dividends declared per share for 2024 and 2023.
2024
High
Low
Cash Dividend
Declared
First Quarter
$230.14
$191.30
$1.00
Second Quarter
230.89
203.34
1.05
Third Quarter
242.26
201.87
1.05
Fourth Quarter
266.66
225.97
1.05
2023
High
Low
Cash Dividend
Declared
First Quarter
$193.92
$163.86
$0.93
Second Quarter
183.75
168.37
1.00
Third Quarter
174.87
159.89
1.00
Fourth Quarter
190.49
157.92
1.00
Additional information
We have included the tables below and on the next pages to provide
reconciliations of certain GAAP financial measures to non-GAAP financial
measures as follows: (i) a reconciliation of net income per share to core
income per share on a diluted basis, (ii) a reconciliation of shareholders’
equity to adjusted shareholders’ equity, which are components of the return
on equity and core return on equity ratios, (iii) a calculation of return on
equity and core return on equity, (iv) a calculation of book value per share
and adjusted book value per share, (v) a reconciliation of net income to core
income, and core income to after-tax underlying underwriting income (also
known as underlying underwriting gain) and (vi) a reconciliation of invested
assets to invested assets excluding net unrealized investment gains (losses).
For the year ended December 31,
2024
2023
Reconciliation of net income per share to core income per share
on a diluted basis
Net income
$21.47
$12.79
Adjustments:
Net realized investment losses, after-tax
0.11
0.34
Core income
$21.58
$13.13
As of December 31,
(Dollars in millions)
2024
2023
2022
2021
2020
2019
Reconciliation of shareholders’ equity to adjusted shareholders’ equity
Shareholders’ equity
$ 27,864 $ 24,921
$ 21,560
$ 28,887
$29,201
$25,943
Adjustments:
Net unrealized investment (gains) losses, net of tax,
included in shareholders’ equity
3,640
3,129
4,898
(2,415)
(4,074)
(2,246)
Net realized investment (gains) losses, net of tax
26
81
156
(132)
(11)
(85)
Impact of changes in tax laws and/or tax rates 1
—
—
—
(8)
—
—
Adjusted shareholders’ equity
$ 31,530 $ 28,131
$26,614
$26,332
$25,116
$23,612
For the year ended December 31,
(Dollars in millions, after-tax)
2024
2023
2022
2021
2020
Calculation of return on equity and core return on equity
Net income
$ 4,999 $ 2,991
$ 2,842
$ 3,662
$ 2,697
Average shareholders’ equity
$ 25,993 $ 22,031
$ 23,384
$ 28,735
$ 26,892
Return on equity
19.2%
13.6 %
12.2 %
12.7 %
10.0 %
Core income
$ 5,025 $ 3,072
$ 2,998
$ 3,522
$ 2,686
Adjusted average shareholders’ equity
$ 29,295 $ 26,772
$ 26,588
$ 25,718
$ 23,790
Core return on equity
17.2%
11.5 %
11.3 %
13.7 %
11.3 %
As of December 31,
(Dollars in millions, except per
share amounts)
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
Calculation of book value per share and adjusted book value per share
Shareholders’ equity
$ 27,864 $24,921
$21,560
$ 28,887 $ 29,201
$25,943 $ 22,894 $ 23,731 $ 23,221 $ 23,598
Less: Net unrealized investment gains
(losses), net of tax, included in
shareholders’ equity
(3,640)
(3,129)
(4,898)
2,415
4,074
2,246
(113)
1,112
730
1,289
Shareholders’ equity, excluding net
unrealized investment gains (losses),
net of tax, included in shareholders’
equity
$31,504 $28,050
$26,458
$ 26,472 $ 25,127 $ 23,697 $ 23,007 $ 22,619 $ 22,491 $ 22,309
Common shares outstanding
226.6
228.2
232.1
241.2
252.4
255.5
263.6
271.4
279.6
295.9
Book value per share
$122.97 $ 109.19 $ 92.90 $ 119.77 $ 115.68 $ 101.55 $ 86.84 $ 87.46 $ 83.05 $ 79.75
Adjusted book value per share
139.04
122.90
114.00
109.76
99.54
92.76
87.27
83.36
80.44
75.39
For the year ended December 31,
(Dollars in millions, after-
tax)
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
Reconciliation of net income to core income, and core income to after-tax underlying underwriting income (also known as underlying
underwriting gain)
Net income
$ 4,999 $ 2,991 $ 2,842 $ 3,662 $ 2,697 $ 2,622 $ 2,523 $ 2,056 $ 3,014 $ 3,439 $ 3,692 $ 3,673 $ 2,473
Net realized investment
(gains) losses
26
81
156
(132)
(11)
(85)
(93)
(142)
(47)
(2)
(51)
(106)
(32)
Impact of changes in tax
laws and/or tax rates 1,2
—
—
—
(8)
—
—
—
129
—
—
—
—
—
Core income
5,025
3,072
2,998
3,522
2,686
2,537
2,430
2,043
2,967
3,437
3,641
3,567
2,441
Net investment income
(2,952)
(2,436)
(2,170)
(2,541)
(1,908)
(2,097)
(2,102)
(1,872)
(1,846)
(1,905)
(2,216)
(2,186)
(2,316)
Other (income) expense,
including interest expense
308
337
277
235
232
214
248
179
78
193
159
61
171
Underwriting income
2,381
973
1,105
1,216
1,010
654
576
350
1,199
1,725
1,584
1,442
296
Impact of net (favorable)
unfavorable prior year
reserve development
(559)
(113)
(512)
(424)
(276)
47
(409)
(378)
(510)
(617)
(616)
(552)
(622)
Impact of catastrophes
2,632
2,361
1,480
1,459
1,274
699
1,355
1,267
576
338
462
387
1,214
Underlying underwriting
income
$ 4,454 $ 3,221 $ 2,073 $ 2,251 $ 2,008 $ 1,400 $ 1,522 $ 1,239 $ 1,265 $ 1,446 $ 1,430 $ 1,277 $
888
As of December 31,
(Dollars in millions)
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
Reconciliation of invested assets to invested assets excluding net unrealized investment gains (losses)
Invested assets
$ 94,223 $ 88,810 $ 80,454 $ 87,375 $ 84,423 $ 77,884 $ 72,278 $ 72,502 $ 70,488 $ 70,470 $ 73,261 $ 73,160 $ 73,838
Less: Net unrealized
investment gains
(losses), pre-tax
(4,609)
(3,970)
(6,220)
3,060
5,175
2,853
(137)
1,414
1,112
1,974
3,008
2,030
4,761
Invested assets excluding
net unrealized investment
gains (losses)
$ 98,832 $ 92,780 $ 86,674 $ 84,315 $ 79,248 $ 75,031 $ 72,415 $ 71,088 $ 69,376 $ 68,496 $ 70,253 $ 71,130 $ 69,077
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).
Underlying underwriting income is net earned premiums and fee income less claims and claim adjustment expenses (excluding catastrophe losses and prior year reserve
development) and insurance-related expenses.
Average shareholders’ equity is (a) the sum of total shareholders’ equity at the beginning and end of each of the quarters for the period presented divided by (b) the
number of quarters in the period presented times two.
Adjusted shareholders’ equity is shareholders’ equity excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity, net realized
investment gains (losses), net of tax, for the period 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 adjusted shareholders’ equity at the beginning and end of each of the
quarters for the period presented divided by (b) the number of quarters in the period presented times two.
Return on equity is the ratio of (a) net income for the period presented to (b) average shareholders’ equity for the period presented. Core return on equity is the ratio of
(a) core income for the period presented to (b) adjusted average shareholders’ equity for the period presented.
Definitions of other terms used in this Annual Report are included in the Glossary of Selected Insurance Terms portion of the Form 10-K.
This Annual Report contains forward-looking statements within the meaning of the federal securities laws. Actual results could differ materially from those expressed in
such statements due to a variety of factors. These factors are described under “Forward-Looking Statements” in the 2024 Form 10-K included in this Annual Report.
© 2025 The Travelers Indemnity Company.
All rights reserved.
The Travelers Companies, Inc.
485 Lexington Avenue
New York, NY 10017-2630
800-328-2189
NYSE: TRV
travelers.com
@travelers
@TravelersInsurance
@Travelers
@Travelers
@travelersinsurance