10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________

FORM 10-Q

_________________________________________________________

ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

or

oTRANSITION 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)

 _________________________________________________________

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 ý    No o

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 ý    No o

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 Exchange Act:

Large accelerated filer	ý	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No ý

The number of shares of the Registrant’s Common Stock, without par value, outstanding at April 15, 2019 was 261,908,210.

The Travelers Companies, Inc.

Quarterly Report on Form 10-Q

For Quarterly Period Ended March 31, 2019

_________________________________________________________

TABLE OF CONTENTS

		Page
	Part I — Financial Information
Item 1.	Financial Statements:
	Consolidated Statement of Income (Unaudited) — Three Months Ended March 31, 2019 and 2018	3
	Consolidated Statement of Comprehensive Income (Unaudited) — Three Months Ended March 31, 2019 and 2018	4
	Consolidated Balance Sheet — March 31, 2019 (Unaudited) and December 31, 2018	5
	Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) — Three Months Ended March 31, 2019 and 2018	6
	Consolidated Statement of Cash Flows (Unaudited) — Three Months Ended March 31, 2019 and 2018	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 4.	Controls and Procedures	63
	Part II — Other Information
Item 1.	Legal Proceedings	63
Item 1A.	Risk Factors	63
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 5.	Other Information	64
Item 6.	Exhibits	65
	SIGNATURES	66

2

PART 1 — FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

(in millions, except per share amounts)

	Three Months Ended March 31,
	2019		2018
Revenues
Premiums	$	6,855	$	6,537
Net investment income	582		603
Fee income	109		103
Net realized investment gains (losses) (1)	53		(11		)
Other revenues	72		54
Total revenues	7,671		7,286
Claims and expenses
Claims and claim adjustment expenses	4,442		4,296
Amortization of deferred acquisition costs	1,117		1,061
General and administrative expenses	1,057		1,062
Interest expense	88		89
Total claims and expenses	6,704		6,508
Income before income taxes	967		778
Income tax expense	171		109
Net income	$	796	$	669
Net income per share
Basic	$	3.01	$	2.45
Diluted	$	2.99	$	2.42
Weighted average number of common shares outstanding
Basic	262.9		271.0
Diluted	264.8		273.9
Cash dividends declared per common share	$	0.77	$	0.72

________________________________________________________

(1) Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively.  Of total OTTI, credit losses of $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively, were recognized in net realized investment gains (losses).  In addition, unrealized gains (losses) from other changes in total OTTI of $0 for each of the three months ended March 31, 2019 and 2018, respectively, were recognized in other comprehensive income (loss) as part of changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income.

The accompanying notes are an integral part of the consolidated financial statements.

3

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(in millions)

	Three Months Ended March 31,
	2019		2018
Net income	$	796	$	669
Other comprehensive income (loss)
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	1,416		(1,203		)
Having credit losses recognized in the consolidated statement of income	5		(2		)
Net changes in benefit plan assets and obligations	12		22
Net changes in unrealized foreign currency translation	50		6
Other comprehensive income (loss) before income taxes	1,483		(1,177		)
Income tax expense (benefit)	306		(244		)
Other comprehensive income (loss), net of taxes	1,177		(933		)
Comprehensive income (loss)	$	1,973	$	(264	)

The accompanying notes are an integral part of the consolidated financial statements.

4

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)

	March 31, 2019			December 31, 2018
	(Unaudited)
Assets
Fixed maturities, available for sale, at fair value (amortized cost $64,216 and $63,601)	$	65,500		$	63,464
Equity securities, at fair value(cost $375 and $382)	400			368
Real estate investments	969			904
Short-term securities	4,094			3,985
Other investments	3,554			3,557
Total investments	74,517			72,278
Cash	357			373
Investment income accrued	591			624
Premiums receivable	7,947			7,506
Reinsurance recoverables	8,281			8,370
Ceded unearned premiums	935			578
Deferred acquisition costs	2,190			2,120
Deferred taxes	115			445
Contractholder receivables	4,811			4,785
Goodwill	3,949			3,937
Other intangible assets	341			345
Other assets	3,212			2,872
Total assets	$	107,246		$	104,233
Liabilities
Claims and claim adjustment expense reserves	$	50,718		$	50,668
Unearned premium reserves	14,122			13,555
Contractholder payables	4,811			4,785
Payables for reinsurance premiums	635			289
Debt	7,057			6,564
Other liabilities	5,563			5,478
Total liabilities	82,906			81,339
Shareholders’ equity
Common stock (1,750.0 shares authorized; 262.0 and 263.7 shares issued, 261.9 and 263.6 shares outstanding)	23,243			23,144
Retained earnings	35,795			35,204
Accumulated other comprehensive loss	(682		)	(1,859		)
Treasury stock, at cost (514.2 and 510.9 shares)	(34,016		)	(33,595		)
Total shareholders’ equity	24,340			22,894
Total liabilities and shareholders’ equity	$	107,246		$	104,233

The accompanying notes are an integral part of the consolidated financial statements.

5

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(in millions)

	Three Months Ended March 31,
	2019			2018
Common stock
Balance, beginning of year	$	23,144		$	22,886
Employee share-based compensation	54			65
Compensation amortization under share-based plans and other changes	45			44
Balance, end of period	23,243			22,995
Retained earnings
Balance, beginning of year	35,204			33,462
Cumulative effect of adoption of updated accounting guidance for equity financial instruments at January 1, 2018	—			22
Reclassification of certain tax effects from accumulated other comprehensive income at January 1, 2018	—			24
Net income	796			669
Dividends	(204		)	(197		)
Other	(1		)	1
Balance, end of period	35,795			33,981
Accumulated other comprehensive loss, net of tax
Balance, beginning of year	(1,859		)	(343		)
Cumulative effect of adoption of updated accounting guidance for equity financial instruments at January 1, 2018	—			(22		)
Reclassification of certain tax effects from accumulated other comprehensive income at January 1, 2018	—			(24		)
Other comprehensive income (loss)	1,177			(933		)
Balance, end of period	(682		)	(1,322		)
Treasury stock, at cost
Balance, beginning of year	(33,595		)	(32,274		)
Treasury stock acquired — share repurchase authorization	(375		)	(350		)
Net shares acquired related to employee share-based compensation plans	(46		)	(51		)
Balance, end of period	(34,016		)	(32,675		)
Total shareholders’ equity	$	24,340		$	22,979
Common shares outstanding
Balance, beginning of year	263.6			271.4
Treasury stock acquired — share repurchase authorization	(2.9		)	(2.5		)
Net shares issued under employee share-based compensation plans	1.2			1.3
Balance, end of period	261.9			270.2

The accompanying notes are an integral part of the consolidated financial statements.

6

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(in millions)

	Three Months Ended
	March 31,
	2019			2018
Cash flows from operating activities
Net income	$	796		$	669
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment (gains) losses	(53		)	11
Depreciation and amortization	211			212
Deferred federal income tax expense (benefit)	32			(56		)
Amortization of deferred acquisition costs	1,117			1,061
Equity in income from other investments	(34		)	(95		)
Premiums receivable	(434		)	(397		)
Reinsurance recoverables	98			5
Deferred acquisition costs	(1,185		)	(1,124		)
Claims and claim adjustment expense reserves	(2		)	180
Unearned premium reserves	551			518
Other	(458		)	(430		)
Net cash provided by operating activities	639			554
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,556			1,950
Proceeds from sales of investments:
Fixed maturities	769			1,085
Equity securities	39			26
Real estate investments	—			—
Other investments	105			114
Purchases of investments:
Fixed maturities	(2,914		)	(3,920		)
Equity securities	(22		)	(20		)
Real estate investments	(77		)	(33		)
Other investments	(146		)	(142		)
Net sales (purchases) of short-term securities	(109		)	410
Securities transactions in course of settlement	295			202
Other	(82		)	(53		)
Net cash used in investing activities	(586		)	(381		)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorization	(375		)	(350		)
Treasury stock acquired — net employee share-based compensation	(46		)	(51		)
Dividends paid to shareholders	(205		)	(197		)
Payment of debt	—			(100		)
Issuance of debt	492			491
Issuance of common stock — employee share options	63			85
Net cash used in financing activities	(71		)	(122		)
Effect of exchange rate changes on cash	2			2
Net increase (decrease) in cash	(16		)	53
Cash at beginning of year	373			344
Cash at end of period	$	357		$	397
Supplemental disclosure of cash flow information
Income taxes paid	$	5		$	56
Interest paid	$	50		$	39

 The accompanying notes are an integral part of the consolidated financial statements.

7

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Basis of Presentation

The interim consolidated financial statements include the accounts of The Travelers Companies, Inc. (together with its subsidiaries, the Company). These financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP) and are unaudited.  In the opinion of the Company’s management, all adjustments necessary for a fair presentation have been reflected.  Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted.  All material intercompany transactions and balances have been eliminated.  The accompanying interim consolidated financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the Company’s 2018 Annual Report).

The preparation of the interim consolidated financial statements in conformity with 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 interim consolidated financial statements and the reported amounts of revenues and claims and expenses during the reporting period.  Actual results could differ from those estimates.

Adoption of Accounting Standards

Leases

Effective for the quarter ended March 31, 2019, the Company adopted the updated guidance for leases and elected to utilize a cumulative-effect adjustment to the opening balance of retained earnings for the year of adoption.  Accordingly, the Company’s reporting for the comparative periods prior to adoption continue to be presented in the financial statements in accordance with previous lease accounting guidance.  The Company also elected to apply all practical expedients applicable to the Company in the updated guidance for transition for leases in effect at adoption, including using hindsight to determine the lease term of existing leases, the option to not reassess whether an existing contract is a lease or contains a lease and whether the lease is an operating or finance lease. The adoption of the updated guidance resulted in the Company recognizing a right-of-use asset of $320 million as part of other assets and a lease liability of $384 million as part of other liabilities in the consolidated balance sheet, as well as de-recognizing the liability for deferred rent that was required under the previous guidance, for its corporate real estate agreements at March 31, 2019.  The cumulative effect adjustment to the opening balance of retained earnings was zero. The adoption of the updated guidance did not have a material effect on the Company’s results of operations or liquidity.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

Effective for the quarter ended March 31, 2019, the Company adopted the updated guidance regarding Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, and applied the guidance prospectively.  The updated guidance requires an entity to determine the stage of a project that the implementation activity relates to and the nature of the associated costs in order to determine whether those costs should be expensed as incurred or capitalized.  The updated guidance also requires the entity to amortize the capitalized implementation costs as an expense over the term of the hosting arrangement. The adoption of the updated guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

For additional information regarding accounting standards that the Company adopted during the periods presented, see note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

Accounting Standards Not Yet Adopted

For information regarding accounting standards that the Company has not yet adopted, see the “Other Accounting Standards Not Yet Adopted” section of note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

8

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

1.    BASIS OF PRESENTATION AND ACCOUNTING POLICIES, Continued

Nature of Operations

The Company’s results are reported in the following three business segments — Business Insurance, Bond & Specialty Insurance and Personal Insurance. These segments reflect the manner in which the Company’s businesses are currently managed and represent an aggregation of products and services based on the type of customer, how the business is marketed and the manner in which risks are underwritten. For more information regarding the Company’s nature of operations, see the “Nature of Operations” section of note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

2.    SEGMENT INFORMATION

The following tables summarize the components of the Company’s revenues, income and total assets by reportable business segments:

(For the three months ended March 31, in millions)	Business Insurance		Bond & Specialty Insurance		Personal Insurance		Total Reportable Segments
2019
Premiums	$	3,742	$	606	$	2,507	$	6,855
Net investment income	427		56		99		582
Fee income	104		—		5		109
Other revenues	43		6		22		71
Total segment revenues (1)	$	4,316	$	668	$	2,633	$	7,617
Segment income (1)	$	414	$	138	$	278	$	830
2018
Premiums	$	3,568	$	582	$	2,387	$	6,537
Net investment income	446		58		99		603
Fee income	99		—		4		103
Other revenues	31		6		17		54
Total segment revenues (1)	$	4,144	$	646	$	2,507	$	7,297
Segment income (1)	$	452	$	173	$	129	$	754

_________________________________________________________

(1) Segment revenues for reportable business segments exclude net realized investment gains (losses). Segment income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains (losses).

9

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2.    SEGMENT INFORMATION, Continued

Business Segment Reconciliations

	Three Months Ended March 31,
(in millions)	2019			2018
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation	$	972		$	971
Commercial automobile	628			562
Commercial property	460			438
General liability	567			521
Commercial multi-peril	840			805
Other	8			7
Total Domestic	3,475			3,304
International	267			264
Total Business Insurance	3,742			3,568
Bond & Specialty Insurance:
Domestic:
Fidelity and surety	246			246
General liability	257			242
Other	52			47
Total Domestic	555			535
International	51			47
Total Bond & Specialty Insurance	606			582
Personal Insurance:
Domestic:
Automobile	1,297			1,225
Homeowners and Other	1,039			995
Total Domestic	2,336			2,220
International	171			167
Total Personal Insurance	2,507			2,387
Total earned premiums	6,855			6,537
Net investment income	582			603
Fee income	109			103
Other revenues	71			54
Total segment revenues	7,617			7,297
Other revenues	1			—
Net realized investment gains (losses)	53			(11		)
Total revenues	$	7,671		$	7,286
Income reconciliation, net of tax
Total segment income	$	830		$	754
Interest Expense and Other (1)	(75		)	(76		)
Core income	755			678
Net realized investment gains (losses)	41			(9		)
Net income	$	796		$	669

_________________________________________________________

(1) The primary component of Interest Expense and Other was after-tax interest expense of $70 million for both the three months ended March 31, 2019 and 2018.

10

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2.    SEGMENT INFORMATION, Continued

(in millions)	March 31, 2019		December 31, 2018
Asset reconciliation
Business Insurance	$	82,022	$	78,965
Bond & Specialty Insurance	8,363		8,693
Personal Insurance	16,288		15,943
Total assets by reportable segment	106,673		103,601
Other assets (1)	573		632
Total consolidated assets	$	107,246	$	104,233

_________________________________________________________

(1) The primary components of other assets at both March 31, 2019 and December 31, 2018 were accrued over-funded benefit plan assets related to the Company’s qualified domestic pension plan and other intangible assets.

3.INVESTMENTS

Fixed Maturities

The amortized cost and fair value of investments in fixed maturities classified as available for sale were as follows:

	Amortized		Gross Unrealized				Fair
(at March 31, 2019, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,029	$	7	$	6	$	2,030
Obligations of states, municipalities and political subdivisions:
Local general obligation	14,879		468		14		15,333
Revenue	9,757		336		8		10,085
State general obligation	1,300		37		2		1,335
Pre-refunded	2,515		79		—		2,594
Total obligations of states, municipalities and political subdivisions	28,451		920		24		29,347
Debt securities issued by foreign governments	1,184		12		2		1,194
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,601		64		16		2,649
All other corporate bonds	29,873		482		156		30,199
Redeemable preferred stock	78		3		—		81
Total	$	64,216	$	1,488	$	204	$	65,500

11

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3.    INVESTMENTS, Continued

	Amortized		Gross Unrealized				Fair
(at December 31, 2018, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,076	$	4	$	16	$	2,064
Obligations of states, municipalities and political subdivisions:
Local general obligation	14,473		219		120		14,572
Revenue	9,755		172		74		9,853
State general obligation	1,329		18		13		1,334
Pre-refunded	2,772		80		—		2,852
Total obligations of states, municipalities and political subdivisions	28,329		489		207		28,611
Debt securities issued by foreign governments	1,255		7		5		1,257
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,557		54		38		2,573
All other corporate bonds	29,307		156		583		28,880
Redeemable preferred stock	77		2		—		79
Total	$	63,601	$	712	$	849	$	63,464

Pre-refunded bonds of $2.59 billion and $2.85 billion at March 31, 2019 and December 31, 2018, respectively, were bonds for which 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.

Proceeds from sales of fixed maturities classified as available for sale were $769 million and $1.09 billion during the three months ended March 31,2019 and 2018, respectively. Gross gains of $21 million and $6 million and gross losses of $4 million and $6 million were realized on those sales during the three months ended March 31,2019 and 2018, respectively.

Equity Securities

The cost and fair value of investments in equity securities were as follows:

							Fair
(at March 31, 2019, in millions)	Cost		Gross Gains		Gross Losses		Value
Public common stock	$	339	$	24	$	6	$	357
Non-redeemable preferred stock	36		7		—		43
Total	$	375	$	31	$	6	$	400

							Fair
(at December 31, 2018, in millions)	Cost		Gross Gains		Gross Losses		Value
Public common stock	$	338	$	2	$	24	$	316
Non-redeemable preferred stock	44		8		—		52
Total	$	382	$	10	$	24	$	368

For the three months ended March 31,2019, the Company recognized $39 million of net gains on equity securities still held as of March 31, 2019. For the three months ended March 31,2018, the Company recognized $13 million of net losses on equity securities still held as of March 31, 2018.

12

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3.    INVESTMENTS, Continued

Unrealized Investment Losses

The following tables summarize, for all investments in an unrealized loss position at March 31, 2019 and December 31, 2018, the aggregate fair value and gross unrealized loss by 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 herein and in note 4 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.  The Company also relies upon estimates of several factors in its review and evaluation of individual investments, using the process described in note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report to determine whether such investments are other-than-temporarily impaired.

	Less than 12 months				12 months or longer				Total
(at March 31, 2019, 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	$	51	$	—	$	1,056	$	6	$	1,107	$	6
Obligations of states, municipalities and political subdivisions	103		—		2,464		24		2,567		24
Debt securities issued by foreign governments	15		—		255		2		270		2
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	32		—		1,333		16		1,365		16
All other corporate bonds	551		7		9,622		149		10,173		156
Total fixed maturities	$	752	$	7	$	14,730	$	197	$	15,482	$	204

	Less than 12 months				12 months or longer				Total
(at December 31, 2018, 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	$	484	$	5	$	1,011	$	11	$	1,495	$	16
Obligations of states, municipalities and political subdivisions	5,241		82		3,298		125		8,539		207
Debt securities issued by foreign governments	96		—		328		5		424		5
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	593		9		1,070		29		1,663		38
All other corporate bonds	12,622		303		6,872		280		19,494		583
Total fixed maturities	$	19,036	$	399	$	12,579	$	450	$	31,615	$	849

At March 31, 2019, the amount of gross unrealized losses for all fixed maturity investments reported at fair value for which fair value was less than 80% of amortized cost was not significant.

Impairment Charges

Impairment charges included in net realized investment gains (losses) in the consolidated statement of income were $1 million and $0 for the three months ended March 31, 2019 and 2018, respectively.

13

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3.    INVESTMENTS, Continued

The cumulative amount of credit losses on fixed maturities held at March 31, 2019 and 2018 that were recognized in the consolidated statement of income from other-than-temporary impairments (OTTI) and for which a portion of the OTTI was recognized in other comprehensive income (loss) in the consolidated balance sheet was $56 million and $75 million, respectively.  These credit losses represent 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 dates.  There were no significant changes in the credit component of OTTI during the three months ended March 31,2019 and 2018 compared to what was disclosed in note 3 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

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.

Valuation of Investments Reported at Fair Value in Financial Statements

The Company utilized a pricing service to estimate fair value measurements for approximately 99% of its fixed maturities at both March 31, 2019 and December 31, 2018.

While the vast majority of the Company’s fixed maturities are included in Level 2, the Company holds a number of municipal bonds and corporate bonds which are not valued by the pricing service and also estimates the fair value of these bonds using another internal pricing matrix that includes some unobservable inputs that are significant to the valuation.  Due to the limited amount of observable market information, the Company includes the fair value estimates for these particular bonds in Level 3.  The fair value of the fixed maturities for which the Company used this internal pricing matrix was $96 million and $82 million at March 31, 2019 and December 31, 2018, respectively.  Additionally, the Company holds a small amount of other fixed maturity investments that have characteristics that make them unsuitable for matrix pricing.  For these fixed maturities, the Company obtains a quote from a broker (primarily the market maker).  The fair value of the fixed maturities for which the Company received a broker quote was $19 million and $104 million at March 31, 2019 and December 31, 2018, respectively.  Due to the disclaimers on the quotes that indicate that the price is indicative only, the Company includes these fair value estimates in Level 3.

For more information regarding the valuation of the Company’s fixed maturities, equity securities and other investments, see note 4 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

Other Liabilities

The Company has a put/call option that was entered into in connection with a business acquisition that allows the Company to acquire the remaining shares of the acquired company at a future date. The fair value of the put/call at both March 31, 2019 and December 31, 2018 was $10 million and was determined using an internal model and is based on the acquired company's financial

14

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4.    FAIR VALUE MEASUREMENTS, Continued

performance, adjusted for a risk margin and discounted to present value. The Company includes the fair value estimate of the put/call in Level 3.

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 March 31, 2019, 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	$	2,030	$	2,030	$	—	$	—
Obligations of states, municipalities and political subdivisions	29,347		—		29,335		12
Debt securities issued by foreign governments	1,194		—		1,194		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,649		—		2,649		—
All other corporate bonds	30,199		4		30,092		103
Redeemable preferred stock	81		3		78		—
Total fixed maturities	65,500		2,037		63,348		115
Equity securities
Public common stock	357		356		1		—
Non-redeemable preferred stock	43		14		29		—
Total equity securities	400		370		30		—
Other investments	58		16		—		42
Total	$	65,958	$	2,423	$	63,378	$	157
Other liabilities	$	10	$	—	$	—	$	10

15

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4.    FAIR VALUE MEASUREMENTS, Continued

(at December 31, 2018, 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	$	2,064	$	2,064	$	—	$	—
Obligations of states, municipalities and political subdivisions	28,611		—		28,599		12
Debt securities issued by foreign governments	1,257		—		1,257		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,573		—		2,554		19
All other corporate bonds	28,880		—		28,725		155
Redeemable preferred stock	79		3		76		—
Total fixed maturities	63,464		2,067		61,211		186
Equity securities
Public common stock	316		316		—		—
Non-redeemable preferred stock	52		30		22		—
Total equity securities	368		346		22		—
Other investments	52		16		—		36
Total	$	63,884	$	2,429	$	61,233	$	222
Other liabilities	$	10	$	—	$	—	$	10

There was no significant activity in Level 3 of the hierarchy during the three months ended March 31,2019 or the year ended December 31, 2018.

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 March 31, 2019, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Short-term securities	$	4,094	$	4,094	$	483	$	3,567	$	44
Financial liabilities
Debt	$	6,957	$	7,984	$	—	$	7,984	$	—
Commercial paper	$	100	$	100	$	—	$	100	$	—

(at December 31, 2018, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Short-term securities	$	3,985	$	3,985	$	632	$	3,316	$	37
Financial liabilities
Debt	$	6,464	$	7,128	$	—	$	7,128	$	—
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 three months ended March 31, 2019 or year ended December 31, 2018.

16

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

5.    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.

(in millions)	March 31, 2019		December 31, 2018
Business Insurance	$	2,594	$	2,585
Bond & Specialty Insurance	550		550
Personal Insurance	779		776
Other	26		26
Total	$	3,949	$	3,937

Other Intangible Assets

The following tables present a summary of the Company’s other intangible assets by major asset class.

(at March 31, 2019, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	100	$	15	$	85
Contract-based (1)	204		174		30
Total subject to amortization	304		189		115
Not subject to amortization	226		—		226
Total	$	530	$	189	$	341

(at December 31, 2018, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	98	$	12	$	86
Contract-based (1)	208		175		33
Total subject to amortization	306		187		119
Not subject to amortization	226		—		226
Total	$	532	$	187	$	345

 _________________________________________________________

(1) 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.

Amortization expense of intangible assets was $4 million for both the three months ended March 31, 2019 and 2018.  Intangible asset amortization expense is estimated to be $12 million for the remainder of 2019, $15 million in 2020, $14 million in 2021, $13 million in 2022 and $12 million in 2023. Amortization expense for intangible assets arising from insurance contracts acquired

17

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

5.    GOODWILL AND OTHER INTANGIBLE ASSETS, continued

in a business combination is estimated to be $4 million for the remainder of 2019, $5 million in 2020, $4 million in 2021, $3 million in 2022 and $3 million in 2023.

6.    INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:

(in millions)	March 31, 2019		December 31, 2018
Property-casualty	$	50,704	$	50,653
Accident and health	14		15
Total	$	50,718	$	50,668

The following table presents a reconciliation of beginning and ending property casualty reserve balances for claims and claim adjustment expenses:

	Three Months Ended March 31,
(in millions)	2019			2018
Claims and claim adjustment expense reserves at beginning of year	$	50,653		$	49,633
Less reinsurance recoverables on unpaid losses	8,182			8,123
Net reserves at beginning of year	42,471			41,510
Estimated claims and claim adjustment expenses for claims arising in the current year	4,435			4,391
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(16		)	(116		)
Total increases	4,419			4,275
Claims and claim adjustment expense payments for claims arising in:
Current year	970			1,009
Prior years	3,320			3,040
Total payments	4,290			4,049
Unrealized foreign exchange (gain) loss	41			(10		)
Net reserves at end of period	42,641			41,726
Plus reinsurance recoverables on unpaid losses	8,063			8,068
Claims and claim adjustment expense reserves at end of period	$	50,704		$	49,794

Gross claims and claim adjustment expense reserves at March 31, 2019 increased by $51 million from December 31, 2018, primarily reflecting the impacts of (i) higher volumes of insured exposures and loss cost trends for the current accident year and (ii) catastrophe losses in the first three months of 2019, partially offset by the impacts of (iii) payments related to catastrophe losses incurred in 2018 and (iv) net favorable prior year reserve development.

Reinsurance recoverables on unpaid losses at March 31, 2019 decreased by $119 million from December 31, 2018, primarily reflecting the impact of cash collections in the first three months of 2019.

Prior Year Reserve Development

The following disclosures regarding reserve development are on a “net of reinsurance” basis.

For the three months ended March 31,2019 and 2018, estimated claims and claim adjustment expenses incurred included $16 million and $116 million, respectively, of net favorable development for claims arising in prior years, including $51 million and

18

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

6.    INSURANCE CLAIM RESERVES, Continued

$150 million, respectively, of net favorable prior year reserve development and $12 million and $13 million, respectively, of accretion of discount that impacted the Company's results of operations.

Business Insurance. Net unfavorable prior year reserve development in the first quarter of 2019 totaled $21 million, primarily driven by higher than expected loss experience in the segment's domestic operations in (i) the general liability product line for multiple accident years, primarily for years prior to 2009, due to the enactment by New York State of the Child Victims Act (“CVA”) on February 14, 2019 and (ii) the commercial multi-peril product line for recent accident years, partially offset by (iii) better than expected loss experience in the segment's domestic operations in the workers’ compensation product line for multiple accident years. The CVA extends the statute of limitations for claimants asserting childhood sexual molestation, including a “reviver” component that allows claimants of any age to file a civil claim during a one-year window beginning six months after the CVA took effect. Net favorable prior year reserve development in the first quarter of 2018 totaled $66 million, primarily driven by better than expected loss experience in the segment's domestic operations in (i) the workers’ compensation product line for recent accident years and (ii) the commercial property product line for accident year 2016, partially offset by (iii) higher than expected loss experience in the commercial automobile product line for recent accident years.

Bond & Specialty Insurance.  Net favorable prior year reserve development in the first quarter of 2019 of $3 million was not significant. Net favorable prior year reserve development in the first quarter of 2018 totaled $35 million, primarily driven by better than expected loss experience in the segment's domestic operations in the general liability product line for multiple accident years.

Personal Insurance.  Net favorable prior year reserve development in the first quarter of 2019 totaled $69 million, primarily driven by better than expected loss experience in the segment's domestic operations in the automobile product line for recent accident years. Net favorable prior year reserve development in the first quarter of 2018 totaled $49 million, primarily driven by better than expected loss experience in the segment's domestic operations in the homeowners and other product line for accident years 2016 and 2017 and in the automobile product line for accident year 2017.

19

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

7. OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in the Company’s accumulated other comprehensive income (loss) (AOCI) for the three months ended March 31,2019.

	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, 2018	$	(306	)	$	193	$	(873	)	$	(873	)	$	(1,859	)
Other comprehensive income (OCI) before reclassifications, net of tax	1,129			4		—			47			1,180
Amounts reclassified from AOCI, net of tax	(13		)	—		10			—			(3		)
Net OCI, current period	1,116			4		10			47			1,177
Balance, March 31, 2019	$	810		$	197	$	(863	)	$	(826	)	$	(682	)

The following table presents the pre-tax components of the Company’s other comprehensive income (loss) and the related income tax expense (benefit).

	Three Months Ended March 31,
(in millions)	2019		2018
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	1,416	$	(1,203	)
Income tax expense (benefit)	300		(253		)
Net of taxes	1,116		(950		)
Having credit losses recognized in the consolidated statement of income	5		(2		)
Income tax expense (benefit)	1		(1		)
Net of taxes	4		(1		)
Net changes in benefit plan assets and obligations	12		22
Income tax expense	2		5
Net of taxes	10		17
Net changes in unrealized foreign currency translation	50		6
Income tax expense	3		5
Net of taxes	47		1
Total other comprehensive income (loss)	1,483		(1,177		)
Total income tax expense (benefit)	306		(244		)
Total other comprehensive income (loss), net of taxes	$	1,177	$	(933	)

20

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

7. OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME, Continued

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.

	Three Months Ended March 31,
(in millions)	2019			2018
Reclassification adjustments related to unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)	$	(16	)	$	—
Income tax expense (2)	(3		)	—
Net of taxes	(13		)	—
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 (3)	5			9
General and administrative expenses (3)	8			13
Total	13			22
Income tax benefit (2)	3			5
Net of taxes	10			17
Reclassification adjustment related to foreign currency translation (1)	—			—
Income tax benefit (2)	—			—
Net of taxes	—			—
Total reclassifications	(3		)	22
Total income tax (expense) benefit	—			5
Total reclassifications, net of taxes	$	(3	)	$	17

 _________________________________________________________

(1)   (Increases) decreases net realized investment gains (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.

8.DEBT

Debt Issuance.  On March 4, 2019, the Company issued $500 million aggregate principal amount of 4.10% senior notes that will mature on March 4, 2049.  The net proceeds of the issuance, after the deduction of the underwriting discount and expenses payable by the Company, totaled approximately $492 million.  Interest on the senior notes is payable semi-annually in arrears on March 4 and September 4.  Prior to September 4, 2048, 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 September 4, 2048 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 20 basis points.  On or after September 4, 2048, 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.

Commercial Paper.  The Company had $100 million of commercial paper outstanding at both March 31, 2019 and December 31, 2018.

21

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

9.COMMON SHARE REPURCHASES

During the three months ended March 31, 2019, the Company repurchased 2.9 million shares under its share repurchase authorization, for a total cost of $375 million.  The average cost per share repurchased was $129.42.  In addition, the Company acquired 0.4 million shares for a total cost of $46 million during the three months ended March 31, 2019 that were not part of the publicly announced share repurchase authorization.  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 price of certain stock options that were exercised. At March 31, 2019, the Company had $2.91 billion of capacity remaining under its share repurchase authorization.

10.EARNINGS PER SHARE

The following is a reconciliation of the net income and share data used in the basic and diluted earnings per share computations for the periods presented:

	Three Months Ended March 31,
(in millions, except per share amounts)	2019			2018
Basic and Diluted
Net income, as reported	$	796		$	669
Participating share-based awards — allocated income	(5		)	(5		)
Net income available to common shareholders — basic and diluted	$	791		$	664
Common Shares
Basic
Weighted average shares outstanding	262.9			271.0
Diluted
Weighted average shares outstanding	262.9			271.0
Weighted average effects of dilutive securities — stock options and performance shares	1.9			2.9
Total	264.8			273.9
Net Income per Common Share
Basic	$	3.01		$	2.45
Diluted	$	2.99		$	2.42

11.SHARE-BASED INCENTIVE COMPENSATION

The following information relates to fully vested stock option awards at March 31, 2019:

Stock Options	Number	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining	Aggregate Intrinsic Value ($ in millions)
Vested at end of period (1)	7,029,165	$	103.80	5.8 years	$	237
Exercisable at end of period	5,124,196	$	94.88	4.7 years	$	217

_________________________________________________________

(1) Represents awards for which the requisite service has been rendered, including those that are retirement eligible.

22

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

11.    SHARE-BASED INCENTIVE COMPENSATION, Continued

The total compensation cost for all share-based incentive compensation awards recognized in earnings was $45 million and $44 million for the three months ended March 31, 2019 and 2018, respectively. The related tax benefits recognized in the consolidated statement of income were $8 million for both the three months ended March 31, 2019 and 2018.

The total unrecognized compensation cost related to all nonvested share-based incentive compensation awards at March 31, 2019 was $235 million, which is expected to be recognized over a weighted-average period of 2.2 years.

12.    PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS

The following table summarizes the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans recognized in the consolidated statement of income for the three months ended March 31, 2019 and 2018.

	Pension Plans						Postretirement Benefit Plans
(for the three months ended March 31, in millions)	2019			2018			2019			2018
Net Periodic Benefit Cost:
Service cost	$	30		$	33		$	—		$	—
Non-service cost:
Interest cost on benefit obligation	35			31			2			2
Expected return on plan assets	(69		)	(66		)	—			—
Amortization of unrecognized:
Prior service benefit	—			—			(1		)	(1		)
Net actuarial loss	14			23			—			—
Total non-service cost (benefit)	(20		)	(12		)	1			1
Net periodic benefit cost	$	10		$	21		$	1		$	1

The following table indicates the line items in which the respective service costs and non-service cost (benefit) are presented in the consolidated statement of income for the three months ended March 31, 2019 and 2018.

	Pension Plans						Postretirement Benefit Plans
(for the three months ended March 31, in millions)	2019			2018			2019		2018
Service Cost:
Claims and claim adjustment expenses	$	12		$	13		$	—	$	—
General and administrative expenses	18			20			—		—
Total service cost	30			33			—		—
Non-Service Cost (Benefit):
Claims and claim adjustment expenses	(8		)	(5		)	—		—
General and administrative expenses	(12		)	(7		)	1		1
Total non-service cost (benefit)	(20		)	(12		)	1		1
Net periodic benefit cost	$	10		$	21		$	1	$	1

13.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. See note 1 - Adoption of Accounting Standards - Leases for additional information regarding the accounting for leases.

23

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

13.    LEASES, Continued

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, 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:

(in millions)	Three Months Ended March 31, 2019
Lease cost
Operating leases	$	22
Short-term leases (1)	4
Lease expense	26
Less: sublease income (2)	—
Net lease cost	$	26
Other information on operating leases
Cash payments included in the measurement of lease liabilities reported in operating cash flows	$	24
Right-of-use assets obtained in exchange for new lease liabilities	$	8
Weighted average discount rate	3.07		%
Weighted average remaining lease term in years	5.2 years

_________________________________________________________

(1) Leases with an initial term of twelve months or less are not recorded on the 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
Remainder of 2019	$	73
2020	95
2021	82
2022	61
2023	41
Thereafter	62
Total undiscounted lease payments	414
Less: present value adjustment	30
Operating lease liability	$	384

14.    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.

24

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

14.    CONTINGENCIES, COMMITMENTS AND GUARANTEES, Continued

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 and real estate partnerships in which it invests.  These commitments totaled $1.56 billion and $1.60 billion at March 31, 2019 and December 31, 2018, respectively.

Guarantees

The maximum amount of the Company’s contingent obligation for indemnifications related to the sale of businesses that are quantifiable was $358 million at March 31, 2019.

The maximum amount of the Company’s obligation for guarantees of certain investments and third-party loans related to certain investments that are quantifiable was $0 at March 31, 2019. 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 March 31, 2019, all of which is indemnified by a third party.  For more information regarding Company guarantees, see note 16 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

15. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

The following consolidating financial statements of the Company have been prepared pursuant to Rule 3-10 of Regulation S-X. These consolidating financial statements have been prepared from the Company’s financial information on the same basis of accounting as the consolidated financial statements. The Travelers Companies, Inc. (excluding its subsidiaries, TRV) has fully and unconditionally guaranteed certain debt obligations of Travelers Property Casualty Corp. (TPC) and Travelers Insurance Group Holdings, Inc. (TIGHI), which totaled $700 million at March 31, 2019.

Prior to the merger of TPC and The St. Paul Companies, Inc. in 2004, TPC fully and unconditionally guaranteed the payment of all principal, premiums, if any, and interest on certain debt obligations of its wholly-owned subsidiary, TIGHI. Concurrent with the merger, TRV fully and unconditionally assumed such guarantee obligations of TPC. TPC is deemed to have no assets or

25

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

15. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES, Continued

operations independent of TIGHI. Consolidating financial information for TIGHI has not been presented herein because such financial information would be substantially the same as the financial information provided for TPC.

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended March 31, 2019

(in millions)	TPC		Other Subsidiaries		TRV			Eliminations			Consolidated
Revenues
Premiums	$	4,689	$	2,166	$	—		$	—		$	6,855
Net investment income	416		155		11			—			582
Fee income	109		—		—			—			109
Net realized investment gains (1)	22		15		16			—			53
Other revenues	38		34		—			—			72
Total revenues	5,274		2,370		27			—			7,671
Claims and expenses
Claims and claim adjustment expenses	3,024		1,418		—			—			4,442
Amortization of deferred acquisition costs	745		372		—			—			1,117
General and administrative expenses	722		330		5			—			1,057
Interest expense	12		—		76			—			88
Total claims and expenses	4,503		2,120		81			—			6,704
Income (loss) before income taxes	771		250		(54		)	—			967
Income tax expense (benefit)	146		42		(17		)	—			171
Net income of subsidiaries	—		—		833			(833		)	—
Net income	$	625	$	208	$	796		$	(833	)	$	796

____________________________________________________

(1) Total other-than-temporary impairments (OTTI) for the three months ended March 31, 2019, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			Other Subsidiaries		TRV		Eliminations		Consolidated
Total OTTI losses	$	(1	)	$	—	$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains	$	(1	)	$	—	$	—	$	—	$	(1	)
OTTI losses recognized in OCI	$	—		$	—	$	—	$	—	$	—

26

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

15. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES, Continued

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended March 31, 2018

(in millions)	TPC		Other Subsidiaries			TRV			Eliminations			Consolidated
Revenues
Premiums	$	4,468	$	2,069		$	—		$	—		$	6,537
Net investment income	412		185			6			—			603
Fee income	103		—			—			—			103
Net realized investment gains (losses) (1)	2		(12		)	(1		)	—			(11		)
Other revenues	27		28			—			(1		)	54
Total revenues	5,012		2,270			5			(1		)	7,286
Claims and expenses
Claims and claim adjustment expenses	2,910		1,386			—			—			4,296
Amortization of deferred acquisition costs	705		356			—			—			1,061
General and administrative expenses	729		328			6			(1		)	1,062
Interest expense	11		—			78			—			89
Total claims and expenses	4,355		2,070			84			(1		)	6,508
Income (loss) before income taxes	657		200			(79		)	—			778
Income tax expense (benefit)	106		32			(29		)	—			109
Net income of subsidiaries	—		—			719			(719		)	—
Net income	$	551	$	168		$	669		$	(719	)	$	669

_________________________________________________________

(1) Total other-than-temporary impairments (OTTI) for the three months ended March 31, 2018, and the amounts comprising total OTTI that were recognized in net realized investment gains (losses) and in other comprehensive income (loss) (OCI) were as follows:

(in millions)	TPC		Other Subsidiaries		TRV		Eliminations		Consolidated
Total OTTI losses	$	—	$	—	$	—	$	—	$	—
OTTI losses recognized in net realized investment gains (losses)	$	—	$	—	$	—	$	—	$	—
OTTI gains recognized in OCI	$	—	$	—	$	—	$	—	$	—

27

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

15. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES, Continued

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended March 31, 2019

(in millions)	TPC		Other Subsidiaries		TRV		Eliminations			Consolidated
Net income	$	625	$	208	$	796	$	(833	)	$	796
Other comprehensive income:
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	979		435		2		—			1,416
Having credit losses recognized in the consolidated statement of income	4		1		—		—			5
Net changes in benefit plan assets and obligations	—		—		12		—			12
Net changes in unrealized foreign currency translation	19		31		—		—			50
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	1,002		467		14		—			1,483
Income tax expense	208		93		5		—			306
Other comprehensive income, net of taxes, before other comprehensive income of subsidiaries	794		374		9		—			1,177
Other comprehensive income of subsidiaries	—		—		1,168		(1,168		)	—
Other comprehensive income	794		374		1,177		(1,168		)	1,177
Comprehensive income	$	1,419	$	582	$	1,973	$	(2,001	)	$	1,973

28

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

15. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES, Continued

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For the three months ended March 31, 2018

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Net income	$	551		$	168		$	669		$	(719	)	$	669
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	(838		)	(364		)	(1		)	—			(1,203		)
Having credit losses recognized in the consolidated statement of income	(1		)	(1		)	—			—			(2		)
Net changes in benefit plan assets and obligations	—			—			22			—			22
Net changes in unrealized foreign currency translation	(25		)	31			—			—			6
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(864		)	(334		)	21			—			(1,177		)
Income tax expense (benefit)	(175		)	(77		)	8			—			(244		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(689		)	(257		)	13			—			(933		)
Other comprehensive loss of subsidiaries	—			—			(946		)	946			—
Other comprehensive loss	(689		)	(257		)	(933		)	946			(933		)
Comprehensive loss	$	(138	)	$	(89	)	$	(264	)	$	227		$	(264	)

29

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

15. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES, Continued

CONSOLIDATING BALANCE SHEET (Unaudited)

At March 31, 2019

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $64,216)	$	45,336		$	20,079		$	85		$	—		$	65,500
Equity securities, at fair value (cost $375)	105			106			189			—			400
Real estate investments	1			968			—			—			969
Short-term securities	1,645			581			1,868			—			4,094
Other investments	2,772			781			1			—			3,554
Total investments	49,859			22,515			2,143			—			74,517
Cash	150			207			—			—			357
Investment income accrued	406			182			3			—			591
Premiums receivable	5,356			2,591			—			—			7,947
Reinsurance recoverables	6,496			1,785			—			—			8,281
Ceded unearned premiums	838			97			—			—			935
Deferred acquisition costs	1,987			203			—			—			2,190
Deferred taxes	(76		)	222			(31		)	—			115
Contractholder receivables	4,801			10			—			—			4,811
Goodwill	2,581			1,377			—			(9		)	3,949
Other intangible assets	222			119			—			—			341
Investment in subsidiaries	—			—			28,475			(28,475		)	—
Other assets	2,470			393			349			—			3,212
Total assets	$	75,090		$	29,701		$	30,939		$	(28,484	)	$	107,246
Liabilities
Claims and claim adjustment expense reserves	$	34,800		$	15,918		$	—		$	—		$	50,718
Unearned premium reserves	9,872			4,250			—			—			14,122
Contractholder payables	4,801			10			—			—			4,811
Payables for reinsurance premiums	380			255			—			—			635
Debt	693			—			6,364			—			7,057
Other liabilities	4,287			1,049			227			—			5,563
Total liabilities	54,833			21,482			6,591			—			82,906
Shareholders’ equity
Common stock (1,750.0 shares authorized; 262.0 shares issued and 261.9 shares outstanding)	—			401			23,243			(401		)	23,243
Additional paid-in capital	11,634			7,083			—			(18,717		)	—
Retained earnings	8,390			807			35,803			(9,205		)	35,795
Accumulated other comprehensive income (loss)	233			(72		)	(682		)	(161		)	(682		)
Treasury stock, at cost (514.2 shares)	—			—			(34,016		)	—			(34,016		)
Total shareholders’ equity	20,257			8,219			24,348			(28,484		)	24,340
Total liabilities and shareholders’ equity	$	75,090		$	29,701		$	30,939		$	(28,484	)	$	107,246

30

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

15. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES, Continued

CONSOLIDATING BALANCE SHEET (Unaudited)

At December 31, 2018

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $63,601)	$	43,683		$	19,697		$	84		$	—		$	63,464
Equity securities, available for sale, at fair value (cost $382)	105			92			171			—			368
Real estate investments	2			902			—			—			904
Short-term securities	1,855			759			1,371			—			3,985
Other investments	2,746			810			1			—			3,557
Total investments	48,391			22,260			1,627			—			72,278
Cash	181			192			—			—			373
Investment income accrued	434			187			3			—			624
Premiums receivable	5,089			2,417			—			—			7,506
Reinsurance recoverables	5,904			2,466			—			—			8,370
Ceded unearned premiums	522			56			—			—			578
Deferred acquisition costs	1,930			190			—			—			2,120
Deferred taxes	167			302			(24		)	—			445
Contractholder receivables	3,867			918			—			—			4,785
Goodwill	2,578			1,368			—			(9		)	3,937
Other intangible assets	224			121			—			—			345
Investment in subsidiaries	—			—			26,993			(26,993		)	—
Other assets	2,220			15			669			(32		)	2,872
Total assets	$	71,507		$	30,492		$	29,268		$	(27,034	)	$	104,233
Liabilities
Claims and claim adjustment expense reserves	$	34,093		$	16,575		$	—		$	—		$	50,668
Unearned premium reserves	9,414			4,141			—			—			13,555
Contractholder payables	3,867			918			—			—			4,785
Payables for reinsurance premiums	169			120			—			—			289
Debt	693			32			5,871			(32		)	6,564
Other liabilities	4,133			849			496			—			5,478
Total liabilities	52,369			22,635			6,367			(32		)	81,339
Shareholders’ equity
Common stock (1,750.0 shares authorized; 263.7 shares issued and 263.6 shares outstanding)	—			401			23,144			(401		)	23,144
Additional paid-in capital	11,634			7,023			—			(18,657		)	—
Retained earnings	8,065			879			35,211			(8,951		)	35,204
Accumulated other comprehensive loss	(561		)	(446		)	(1,859		)	1,007			(1,859		)
Treasury stock, at cost (510.9 shares)	—			—			(33,595		)	—			(33,595		)
Total shareholders’ equity	19,138			7,857			22,901			(27,002		)	22,894
Total liabilities and shareholders’ equity	$	71,507		$	30,492		$	29,268		$	(27,034	)	$	104,233

31

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

15. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES, Continued

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the three months ended March 31, 2019

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	625		$	208		$	796		$	(833	)	$	796
Net adjustments to reconcile net income to net cash provided by operating activities	(110		)	(42		)	(227		)	222			(157		)
Net cash provided by operating activities	515			166			569			(611		)	639
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,043			508			5			—			1,556
Proceeds from sales of investments:
Fixed maturities	551			218			—			—			769
Equity securities	19			20			—			—			39
Real estate investments	—			—			—			—			—
Other investments	90			15			—			—			105
Purchases of investments:
Fixed maturities	(2,228		)	(682		)	(4		)	—			(2,914		)
Equity securities	(1		)	(20		)	(1		)	—			(22		)
Real estate investments	—			(77		)	—			—			(77		)
Other investments	(134		)	(12		)	—			—			(146		)
Net sales (purchases) of short-term securities	210			178			(497		)	—			(109		)
Securities transactions in course of settlement	283			13			(1		)	—			295
Other	(80		)	(2		)	—			—			(82		)
Net cash provided by (used in) investing activities	(247		)	159			(498		)	—			(586		)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorization	—			—			(375		)	—			(375		)
Treasury stock acquired — net employee share-based compensation	—			—			(46		)	—			(46		)
Dividends paid to shareholders	—			—			(205		)	—			(205		)
Payment of debt	—			(32		)	—			32			—
Issuance of debt	—			—			492			—			492
Issuance of common stock — employee share options	—			—			63			—			63
Dividends paid to parent company	(300		)	(279		)	—			579			—
Net cash used in financing activities	(300		)	(311		)	(71		)	611			(71		)
Effect of exchange rate changes on cash	1			1			—			—			2
Net increase (decrease) in cash	(31		)	15			—			—			(16		)
Cash at beginning of year	181			192			—			—			373
Cash at end of period	$	150		$	207		$	—		$	—		$	357
Supplemental disclosure of cash flow information
Income taxes paid	$	4		$	1		$	—		$	—		$	5
Interest paid	$	16		$	—		$	34		$	—		$	50

32

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

15. CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES, Continued

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the three months ended March 31, 2018

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	551		$	168		$	669		$	(719	)	$	669
Net adjustments to reconcile net income to net cash provided by operating activities	(126		)	(57		)	(22		)	90			(115		)
Net cash provided by operating activities	425			111			647			(629		)	554
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,453			493			4			—			1,950
Proceeds from sales of investments:
Fixed maturities	729			356			—			—			1,085
Equity securities	8			18			—			—			26
Real estate investments	—			—			—			—			—
Other investments	76			38			—			—			114
Purchases of investments:
Fixed maturities	(2,836		)	(1,078		)	(6		)	—			(3,920		)
Equity securities	(1		)	(18		)	(1		)	—			(20		)
Real estate investments	—			(33		)	—			—			(33		)
Other investments	(115		)	(27		)	—			—			(142		)
Net sales (purchases) of short-term securities	729			201			(520		)	—			410
Securities transactions in course of settlement	147			56			(1		)	—			202
Other	(52		)	(1		)	—			—			(53		)
Net cash provided by (used in) investing activities	138			5			(524		)	—			(381		)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorization	—			—			(350		)	—			(350		)
Treasury stock acquired — net employee share-based compensation	—			—			(51		)	—			(51		)
Dividends paid to shareholders	—			—			(197		)	—			(197		)
Payment of debt	—			—			(100		)	—			(100		)
Issuance of debt	—			—			491			—			491
Issuance of common stock — employee share options	—			—			85			—			85
Dividends paid to parent company	(544		)	(85		)	—			629			—
Net cash used in financing activities	(544		)	(85		)	(122		)	629			(122		)
Effect of exchange rate changes on cash	(1		)	3			—			—			2
Net increase in cash	18			34			1			—			53
Cash at beginning of year	157			187			—			—			344
Cash at end of period	$	175		$	221		$	1		$	—		$	397
Supplemental disclosure of cash flow information
Income taxes paid	$	13		$	43		$	—		$	—		$	56
Interest paid	$	16		$	—		$	23		$	—		$	39

33

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

Item 2.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.

FINANCIAL HIGHLIGHTS

2019First Quarter Consolidated Results of Operations

• Net income of $796 million, or $3.01 per share basic and $2.99 per share diluted

• Net earned premiums of $6.86 billion

• Catastrophe losses of $193 million ($152 million after-tax)

• Net favorable prior year reserve development of $51 million ($41 million after-tax)

• Combined ratio of 93.7%

• Net investment income of $582 million ($496 million after-tax)

• Operating cash flows of $639 million

2019First Quarter Consolidated Financial Condition

• Total investments of $74.52 billion; fixed maturities and short-term securities comprised 93% of total investments

• Total assets of $107.25 billion

• Total debt of $7.06 billion, resulting in a debt-to-total capital ratio of 22.5% (23.2% excluding net unrealized investment gains, net of tax)

• Repurchased 3.3 million common shares for total cost of $421 million and paid $205 million of dividends to shareholders

• Shareholders’ equity of $24.34 billion

• Net unrealized investment gains of $1.28 billion ($1.01 billion after-tax)

• Book value per common share of $92.94

• Holding company liquidity of $1.92 billion

34

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

CONSOLIDATED OVERVIEW

Consolidated Results of Operations

	Three Months Ended March 31,
(in millions, except ratio and per share amounts)	2019			2018
Revenues
Premiums	$	6,855		$	6,537
Net investment income	582			603
Fee income	109			103
Net realized investment gains (losses)	53			(11		)
Other revenues	72			54
Total revenues	7,671			7,286
Claims and expenses
Claims and claim adjustment expenses	4,442			4,296
Amortization of deferred acquisition costs	1,117			1,061
General and administrative expenses	1,057			1,062
Interest expense	88			89
Total claims and expenses	6,704			6,508
Income before income taxes	967			778
Income tax expense	171			109
Net income	$	796		$	669
Net income per share
Basic	$	3.01		$	2.45
Diluted	$	2.99		$	2.42
Combined ratio
Loss and loss adjustment expense ratio	64.0		%	64.9		%
Underwriting expense ratio	29.7			30.6
Combined ratio	93.7		%	95.5		%

The following discussions of the Company’s net income and segment income are presented on an after-tax basis.  Discussions of the components of net income and segment income 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 $2.99 in the first quarter of 2019 increased by 24% over diluted net income per share of $2.42 in the same period of 2018.  Net income of $796 million in the first quarter of 2019 increased by 19% over net income of $669 million in the same period of 2018.  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) lower catastrophe losses, (ii) higher underlying margins excluding catastrophe losses and prior year reserve development ("underlying underwriting margins") and (iii) net realized investment gains versus net realized investment losses in the same period of 2018, partially offset by (iv) lower net favorable prior year reserve development and (v) lower net investment income. Catastrophe losses in the first quarters of 2019 and 2018 were $193 million and $354 million, respectively.  Net favorable prior year reserve development in the first quarters of 2019 and 2018 was $51 million and $150 million, respectively.  Underlying underwriting margins were higher in each segment, primarily in Personal Insurance and Business Insurance, in the first quarter of 2019 compared to the same period of 2018. Income tax expense in the first quarter of 2019 was higher than in the same period of 2018, reflecting the impacts of the increase in income before income taxes in the first quarter of 2019 and lower tax expense in the first quarter of 2018 related to unrecognized tax benefits and employee equity compensation plans.

35

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

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 and Colombia, primarily through joint ventures.  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 three months ended March 31, 2019 and 2018, 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 for the periods reported.

Revenues

Earned Premiums

Earned premiums in the first quarter of 2019 increased in all segments and were $6.86 billion, $318 million or 5% higher than in the same period of 2018.  The increase in earned premiums in 2019 was reduced by the earned impact of the Company's new Underlying Property Aggregate Catastrophe Excess-of-Loss Reinsurance Treaty entered into effective January 1, 2019. In Business Insurance, earned premiums in the first quarter of 2019 increased by 5% over the same period of 2018.  In Bond & Specialty Insurance, earned premiums in the first quarter of 2019 increased by 4% over the same period of 2018.  In Personal Insurance, earned premiums in the first quarter of 2019 increased by 5% over the same period of 2018.  Factors contributing to the increases in earned premiums in each segment 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.

	Three Months Ended March 31,
(dollars in millions)	2019			2018
Average investments (1)	$	74,040		$	72,524
Pre-tax net investment income	582			603
After-tax net investment income	496			513
Average pre-tax yield (2)	3.1		%	3.3		%
Average after-tax yield (2)	2.7		%	2.8		%

_________________________________________________________ 

(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 the first quarter of 2019 was $582 million, $21 million or 3% lower than in the same period of 2018.  Net investment income from fixed maturity investments in the first quarter of 2019 was $511 million, $30 million higher than in the same period of 2018. The increase in the first quarter of 2019 primarily resulted from higher long-term reinvestment rates available in the market and a higher average level of fixed maturity investments. Net investment income from short-term securities in the first quarter of 2019 was $28 million, $9 million higher than in the same period of 2018. The increase primarily resulted from higher short-term interest rates. Net investment income generated by the Company's remaining investment portfolios in the first quarter of 2019 was $53 million, $60 million lower than in the same period of 2018, primarily due to lower returns from private equity limited partnerships.

Fee Income

Fee income in the first quarter of 2019 was $109 million, $6 million or 6% higher than in the same period of 2018. 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.

36

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

Net Realized Investment Gains (Losses)

The following table sets forth information regarding the Company’s net realized investment gains (losses).

	Three Months Ended March 31,
(in millions)	2019			2018
Other-than-temporary impairment losses	$	(1	)	$	—
Net realized investment gains (losses) on equity securities still held	39			(13		)
Other net realized investment gains, including from sales	15			2
Total	$	53		$	(11	)

Other Revenues

Other revenues in the first quarters of 2019 and 2018 included installment premium charges and revenues from Simply Business.

Claims and Expenses

Claims and Claim Adjustment Expenses

Claims and claim adjustment expenses in the first quarter of 2019 were $4.44 billion, $146 million or 3% higher than in the same period of 2018, primarily reflecting the impacts of (i) higher business volumes, (ii) loss cost trends and (iii) lower net favorable prior year reserve development, partially offset by (iv) lower catastrophe losses.  Catastrophe losses in the first quarter of 2019 primarily resulted from winter storms and wind storms in several regions of the United States. Catastrophe losses in the first quarter of 2018 primarily resulted from winter storms in the eastern United States, a wind and hail storm in the southern United States and mudslides in California.

Factors contributing to net favorable prior year reserve development during the first quarters of 2019 and 2018 are discussed in more detail in note 6 of notes to the unaudited consolidated financial statements.

Significant Catastrophe Losses

There were no significant catastrophes incurred during the three months ended March 31, 2019. The following table presents the amount of losses recorded by the Company for significant catastrophes that occurred in the three months ended March 31, 2018, the amount of net unfavorable (favorable) prior year reserve development recognized in the three months ended March 31, 2019 and 2018 for significant catastrophes that occurred in 2018 and 2017, and the estimate of ultimate losses for those catastrophes at March 31, 2019 and December 31, 2018.  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.  The Company's threshold for disclosing catastrophes is primarily determined at the reportable segment level and for 2019 ranged from approximately $19 million to $30 million of losses before reinsurance and taxes. For the Company’s definition of a catastrophe, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations— Consolidated Overview” in the Company’s 2018 Annual Report.

37

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

	Losses Incurred/Unfavorable (Favorable) Prior Year Reserve Development
	Three Months Ended March 31,
					Estimated Ultimate Losses
(in millions, pre-tax and net of reinsurance)	2019		2018		March 31, 2019	December 31, 2018
2017
PCS Serial Number:
22 — Severe wind and hail storms	(1	)	—		108	109
32 — Severe wind and hail storms	—		1		229	229
43 — Hurricane Harvey	(11	)	(20	)	219	230
44 — Hurricane Irma	(9	)	(11	)	150	159
48 — California wildfire — Tubbs fire	3		4		511	508
2018
PCS Serial Number:
15 — Winter storm	—		135		144	144
17 — Severe wind and hail storms	(2	)	110		109	111
33 — Severe wind and hail storms	(5	)	n/a		112	117
52 — Hurricane Florence	(3	)	n/a		103	106
57 — Hurricane Michael	3		n/a		161	158
59 — California wildfire - Camp fire	(2	)	n/a		332	334
60 — California wildfire - Woosley fire	—		n/a		119	119

_________________________________________________________

n/a: not applicable.

Amortization of Deferred Acquisition Costs

Amortization of deferred acquisition costs in the first quarter of 2019 was $1.12 billion, $56 million or 5% higher than in the same period of 2018.  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 the first quarter of 2019 were $1.06 billion, comparable with the same period of 2018. General and administrative expenses are discussed in more detail in the segment discussions that follow.

Interest Expense

Interest expense in the first quarters of 2019 and 2018 was $88 million and $89 million, respectively.

Income Tax Expense

Income tax expense in the first quarter of 2019 was $171 million, $62 million or 57% higher than in the same period of 2018, primarily reflecting the impacts of the $189 million increase in income before income taxes in the first quarter of 2019 and lower tax expense in the first quarter of 2018 related to unrecognized tax benefits and employee equity compensation plans.

The Company’s effective tax rate was 18% and 14% in the first quarters of 2019 and 2018, respectively.  The effective tax rates were lower than the statutory rate of 21% in both periods, primarily due to the impact of tax-exempt investment income on the calculation of the Company’s income tax provision.

38

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

Combined Ratio

The combined ratio of 93.7% in the first quarter of 2019 was 1.8 points lower than the combined ratio of 95.5% in the same period of 2018.  The loss and loss adjustment expense ratio of 64.0% in the first quarter of 2019 was 0.9 points lower than the loss and loss adjustment expense ratio of 64.9% in the same period of 2018.  The underwriting expense ratio of 29.7% for the first quarter of 2019 was 0.9 points lower than the underwriting expense ratio of 30.6% in the same period of 2018. 

Catastrophe losses in the first quarters of 2019 and 2018 accounted for 2.8 points and 5.4 points, respectively, of the combined ratio.  Net favorable prior year reserve development in the first quarters of 2019 and 2018 provided 0.7 points and 2.3 points of benefit, respectively, to the combined ratio.  The combined ratio excluding prior year reserve development and catastrophe losses (“underlying combined ratio”) in the first quarter of 2019 was 0.8 points lower than the 2018 ratio on the same basis.

Written Premiums

Consolidated gross and net written premiums were as follows:

	Gross Written Premiums
	Three Months Ended March 31,
(in millions)	2019		2018
Business Insurance	$	4,730	$	4,471
Bond & Specialty Insurance	662		638
Personal Insurance	2,447		2,309
Total	$	7,839	$	7,418

	Net Written Premiums
	Three Months Ended March 31,
(in millions)	2019		2018
Business Insurance	$	4,163	$	3,994
Bond & Specialty Insurance	587		574
Personal Insurance	2,307		2,256
Total	$	7,057	$	6,824

Gross and net written premiums in the first quarter of 2019 reflected growth in all segments. Gross written premiums in the first quarter of 2019 increased by 6% over the same period of 2018. Net written premiums increased at a lower rate of 3% in the first quarter of 2019, primarily reflecting ceded written premiums related to the new catastrophe reinsurance treaty. Factors contributing to the increases in gross and net written premiums in each segment are discussed in more detail in the segment discussions that follow.

39

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

RESULTS OF OPERATIONS BY SEGMENT

Business Insurance

Results of Business Insurance were as follows:

	Three Months Ended March 31,
(dollars in millions)	2019			2018
Revenues
Earned premiums	$	3,742		$	3,568
Net investment income	427			446
Fee income	104			99
Other revenues	43			31
Total revenues	4,316			4,144
Total claims and expenses	3,827			3,622
Segment income before income taxes	489			522
Income tax expense	75			70
Segment income	$	414		$	452
Loss and loss adjustment expense ratio	67.6		%	65.7		%
Underwriting expense ratio	30.5			31.8
Combined ratio	98.1		%	97.5		%

Overview

Segment income in the first quarter of 2019 was $414 million, $38 million or 8% lower than segment income of $452 million in the same period of 2018. The decrease in segment income before income taxes primarily reflected the pre-tax impacts of (i) net unfavorable prior year reserve development versus net favorable prior year reserve development in the same period of 2018 and (ii) lower net investment income, partially offset by (iii) lower catastrophe losses and (iv) higher underlying underwriting margins. Catastrophe losses in the first quarters of 2019 and 2018 were $95 million and $138 million, respectively.  Net unfavorable prior year reserve development in the first quarter of 2019 was $21 million, compared with net favorable prior year reserve development of $66 million in 2018. The higher underlying underwriting margins primarily resulted from the impacts of (i) higher business volumes, (ii) lower general and administrative expenses and (iii) lower non-catastrophe weather-related losses, partially offset by (iv) a small number of large losses in the International business, (v) higher loss estimates in the commercial automobile product line consistent with the re-estimates recorded in the fourth quarter of 2018 and (vi) the impact on earned premiums related to the Company's new catastrophe reinsurance treaty. Income tax expense in the first quarter of 2019 was higher than in the same period of 2018, primarily reflecting the impacts of lower tax expense in the first quarter of 2018 related to unrecognized tax benefits and employee equity compensation plans, partially offset by the impact of the decrease in segment income before income taxes in the first quarter of 2019.

Revenues

Earned Premiums

Earned premiums in the first quarter of 2019 were $3.74 billion, $174 million or 5% higher than in the same period of 2018. The increase in 2019 primarily reflected the increase in net written premiums over the preceding twelve months. The increase in earned premiums in 2019 was reduced by the earned impact of the new catastrophe reinsurance treaty.

Net Investment Income

Net investment income in the first quarter of 2019 was $427 million, $19 million or 4% lower than in the same period of 2018.   Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion herein for a description of the factors contributing to the decrease in the Company’s consolidated net investment income in the first quarter of 2019 compared

40

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

with the same period of 2018.  In addition, refer to note 2 of notes to the consolidated financial statements in the Company’s 2018 Annual Report 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 claims and policy management services to workers' compensation residual market pools.  Fee income in the first quarter of 2019 was $104 million, $5 million or 5% higher than in the same period of 2018. The increase in 2019 reflected higher claim volume under administration associated with its service businesses.

Other Revenues

Other revenues in the first quarters of both 2019 and 2018 included installment premium charges and other policyholder service charges, as well as revenues from Simply Business.  Other revenues in the first quarter of 2019 of $43 million increased $12 million or 39% over the same period of 2018, primarily resulting from Simply Business revenue growth.

Claims and Expenses

Claims and Claim Adjustment Expenses

Claims and claim adjustment expenses in the first quarter of 2019 were $2.58 billion, $188 million or 8% higher than in the same period of 2018, primarily reflecting the impacts of (i) higher business volumes, (ii) net unfavorable prior year reserve development in the first quarter of 2019, versus net favorable prior year reserve development in the same period of 2018, (iii) loss cost trends, (iv) a small number of large losses in the International business and (v) higher loss estimates in the commercial automobile product line consistent with the re-estimates recorded in the fourth quarter of 2018, partially offset by (vi) lower catastrophe losses and (vii) lower non-catastrophe weather-related losses.

Factors contributing to net prior year reserve development during the first quarters of 2019 and 2018 are discussed in more detail in note 6 of notes to the unaudited consolidated financial statements.

Amortization of Deferred Acquisition Costs

Amortization of deferred acquisition costs in the first quarter of 2019 was $615 million, $35 million or 6% higher than in the same period of 2018.  The increase in the first quarter of 2019 was generally consistent with the increases in earned premiums.

General and Administrative Expenses

General and administrative expenses in the first quarter of 2019 were $632 million, $18 million or 3% lower than in the same period of 2018, primarily reflecting the impacts of (i) a benefit related to a state assessment, partially offset by (ii) expenses related to the expansion of Simply Business.

Income Tax Expense

Income tax expense in the first quarter of 2019 was $75 million, $5 million, or 7% higher than in the same period of 2018, primarily reflecting the impacts of (i) lower tax expense in the first quarter of 2018 related to unrecognized tax benefits and employee equity compensation plans, partially offset by (ii) the $33 million decrease in segment income before income taxes in the first quarter of 2019.

Combined Ratio

The combined ratio of 98.1% in the first quarter of 2019 was 0.6 points higher than the combined ratio of 97.5% in the same period of 2018.  The loss and loss adjustment expense ratio of 67.6% in the first quarter of 2019 was 1.9 points higher than the loss and loss adjustment expense ratio of 65.7% in the same period of 2018. The underwriting expense ratio of 30.5% for the first quarter of 2019 was 1.3 points lower than the underwriting expense ratio of 31.8% in the same period of 2018. 

Catastrophe losses in the first quarters of 2019 and 2018 accounted for 2.5 points and 3.9 points, respectively, of the combined ratio.  Net unfavorable prior year reserve development in the first quarter of 2019 accounted for 0.6 points of the combined ratio. Net favorable prior year reserve development in the first quarter of 2018 provided 1.9 points of benefit to the combined ratio. The underlying combined ratio in the first quarter of 2019 was 0.5 points lower than the 2018 ratio on the same basis, primarily reflecting the impacts of (i) the benefit of lower general and administrative expenses and higher levels of earned premiums on the underwriting expense ratio and (ii) lower non-catastrophe weather-related losses, partially offset by (iii) a small number of large losses in the

41

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

International business, (iv) higher loss estimates in the commercial automobile product line consistent with the re-estimates recorded in the fourth quarter of 2018 and (v) the impact on earned premiums related to the Company's new catastrophe reinsurance treaty.

Written Premiums

Business Insurance’s gross and net written premiums by market were as follows:

	Gross Written Premiums
	Three Months Ended March 31,
(in millions)	2019		2018
Domestic:
Select Accounts	$	813	$	782
Middle Market	2,536		2,359
National Accounts	507		521
National Property and Other	509		463
Total Domestic	4,365		4,125
International	365		346
Total Business Insurance	$	4,730	$	4,471

	Net Written Premiums
	Three Months Ended March 31,
(in millions)	2019		2018
Domestic:
Select Accounts	$	785	$	773
Middle Market	2,410		2,262
National Accounts	304		309
National Property and Other	387		380
Total Domestic	3,886		3,724
International	277		270
Total Business Insurance	$	4,163	$	3,994

Gross written premiums in the first quarter of 2019 increased by 6% over the same period of 2018. Net written premiums increased at a lower rate of 4% in the first quarter of 2019, primarily reflecting the Company's new catastrophe reinsurance treaty.

Select Accounts.  Net written premiums of $785 million in the first quarter of 2019 increased by 2% over the same period of 2018. Net written premiums in the first quarter of 2019 were reduced by the new catastrophe reinsurance treaty. Business retention rates remained strong in the first quarter of 2019.  Renewal premium changes in the first quarter of 2019 remained positive and were higher than in the same period of 2018.  New business premiums in the first quarter of 2019 decreased slightly from the same period of 2018.

Middle Market.  Net written premiums of $2.41 billion in the first quarter of 2019 increased by 7% over the same period of 2018.  Net written premiums in the first quarter of 2019 were reduced by the new catastrophe reinsurance treaty. Business retention rates remained strong in the first quarter of 2019.  Renewal premium changes in the first quarter of 2019 remained positive and were higher than in the same period of 2018.  New business premiums in the first quarter of 2019 increased over the same period of 2018.

National Accounts.  Net written premiums of $304 million in the first quarter of 2019 decreased by 2% from the same period of 2018.  Business retention rates remained strong in the first quarter of 2019.  Renewal premium changes in the first quarter of 2019 were slightly negative, compared to positive in the same period of 2018. New business premiums in the first quarter of 2019 increased over the same period of 2018.

42

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

National Property and Other.  Net written premiums of $387 million in the first quarter of 2019 increased by 2% over the same period of 2018.  Net written premiums in the first quarter of 2019 were reduced by the new catastrophe reinsurance treaty. Business retention rates remained strong in the first quarter of 2019.  Renewal premium changes in the first quarter of 2019 remained positive but were lower than in the same period of 2018. New business premiums in the first quarter of 2019 increased over the same period of 2018.

International.  Net written premiums of $277 million in the first quarter of 2019 increased by 3% over the same period of 2018. Net written premiums in the first quarter of 2019 were reduced by the new catastrophe reinsurance treaty. The increase in the first quarter of 2019 was primarily driven by increases in Canada, partially offset by the impact of changes in foreign currency exchange rates.

Bond & Specialty Insurance

Results of Bond & Specialty Insurance were as follows:

	Three Months Ended March 31,
(dollars in millions)	2019			2018
Revenues
Earned premiums	$	606		$	582
Net investment income	56			58
Other revenues	6			6
Total revenues	668			646
Total claims and expenses	495			438
Segment income before income taxes	173			208
Income tax expense	35			35
Segment income	$	138		$	173
Loss and loss adjustment expense ratio	43.5		%	36.6		%
Underwriting expense ratio	37.6			38.1
Combined ratio	81.1		%	74.7		%

Overview

Segment income in the first quarter of 2019 was $138 million, $35 million or 20% lower than segment income of $173 million in the same period of 2018. The decrease in segment income before income taxes primarily reflected the pre-tax impact of lower net favorable prior year reserve development. Net favorable prior year reserve development in the first quarters of 2019 and 2018 was $3 million and $35 million, respectively.  Catastrophe losses in the first quarters of 2019 and 2018 were $3 million and $0, respectively.  Income tax expense in the first quarter of 2019 was level with the same period of 2018, primarily reflecting the impacts of lower tax expense in the first quarter of 2018 related to unrecognized tax benefits and employee equity compensation plans, largely offset by the impact of the decrease in segment income before income taxes in the first quarter of 2019.

Revenues

Earned Premiums

Earned premiums in the first quarter of 2019 were $606 million, $24 million or 4% higher than in the same period of 2018. The increase in 2019 primarily reflected the increase in net written premiums over the preceding twelve months.

Net Investment Income

Net investment income in the first quarter of 2019 was $56 million, $2 million or 3% lower than in the same period of 2018. 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 “Consolidated Results of Operations” herein for a discussion of the decrease in the Company’s consolidated net investment

43

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

income in the first quarter of 2019 compared with the same period of 2018.  In addition, refer to note 2 of notes to the consolidated financial statements in the Company’s 2018 Annual Report 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 the first quarter of 2019 were $266 million, $50 million or 23% higher than in the same period of 2018, primarily reflecting the impacts of (i) lower net favorable prior year reserve development and (ii) higher business volumes.

Factors contributing to net favorable prior year reserve development during the first quarter of 2018 are discussed in more detail in note 6 of notes to the unaudited consolidated financial statements.

Amortization of Deferred Acquisition Costs

Amortization of deferred acquisition costs in the first quarter of 2019 was $112 million, $5 million or 5% higher than in the same period of 2018.  The increase in 2019 was generally consistent with the increase in earned premiums.

General and Administrative Expenses

General and administrative expenses in the first quarter of 2019 were $117 million, $2 million or 2% higher than in the same period of 2018, primarily reflecting the impact of higher business volumes.

Income Tax Expense

Income tax expense in the first quarter of 2019 was $35 million, level with the same period of 2018, primarily reflecting the impacts of lower tax expense in the first quarter of 2018 related to unrecognized tax benefits and employee equity compensation plans, largely offset by the impact of the $35 million decrease in segment income before income taxes in the first quarter of 2019.

Combined Ratio

The combined ratio of 81.1% in the first quarter of 2019 was 6.4 points higher than the combined ratio of 74.7% in the same period of 2018.  The loss and loss adjustment expense ratio of 43.5% in the first quarter of 2019 was 6.9 points higher than the loss and loss adjustment expense ratio of 36.6% in the same period of 2018. The underwriting expense ratio of 37.6% in the first quarter of 2019 was 0.5 points lower than the underwriting expense ratio of 38.1% in the same period of 2018.  

Net favorable prior year reserve development in the first quarters of 2019 and 2018 provided 0.5 points and 6.0 points of benefit, respectively, to the combined ratio.  Catastrophe losses in the first quarters of 2019 and 2018 accounted for 0.5 points and 0.0 points, respectively, of the combined ratio.  The underlying combined ratio in the first quarter of 2019 was 0.4 points higher than the 2018 ratio on the same basis.

Written Premiums

The Bond & Specialty Insurance segment’s gross and net written premiums were as follows:

	Gross Written Premiums
	Three Months Ended March 31,
(in millions)	2019		2018
Domestic:
Management Liability	$	389	$	364
Surety	222		218
Total Domestic	611		582
International	51		56
Total Bond & Specialty Insurance	$	662	$	638

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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

	Net Written Premiums
	Three Months Ended March 31,
(in millions)	2019		2018
Domestic:
Management Liability	$	367	$	348
Surety	184		185
Total Domestic	551		533
International	36		41
Total Bond & Specialty Insurance	$	587	$	574

Gross written premiums in the first quarter of 2019 increased by 4% over the same period of 2018. Net written premiums increased at a lower rate of 2% in the first quarter of 2019, reflecting higher ceded written premiums for several reinsurance treaties, including those related to the new catastrophe reinsurance treaty.

Domestic.  Net written premiums of $551 million in the first quarter of 2019 increased by 3% over the same period of 2018.  Excluding the surety line of business, for which the following are not relevant measures, business retention rates remained strong in the first quarter of 2019.  Renewal premium changes in the first quarter of 2019 remained positive and were comparable with the same period of 2018. New business premiums in the first quarter of 2019 increased over the same period of 2018.

International.  Net written premiums of $36 million in the first quarter of 2019 decreased by 12% from the same period of 2018. The decrease in the first quarter of 2019 was primarily driven by decreases in the United Kingdom and the impact of changes in foreign currency exchange rates.

Personal Insurance

Results of Personal Insurance were as follows:

	Three Months Ended March 31,
(dollars in millions)	2019			2018
Revenues
Earned premiums	$	2,507		$	2,387
Net investment income	99			99
Fee income	5			4
Other revenues	22			17
Total revenues	2,633			2,507
Total claims and expenses	2,286			2,350
Segment income before income taxes	347			157
Income tax expense	69			28
Segment income	$	278		$	129
Loss and loss adjustment expense ratio	63.7		%	70.7		%
Underwriting expense ratio	26.4			26.8
Combined ratio	90.1		%	97.5		%

Overview

Segment income in the first quarter of 2019 was $278 million, $149 million or 116% higher than segment income of $129 million in the same period of 2018. The increase in segment income before income taxes primarily reflected the pre-tax impacts of (i) lower catastrophe losses, (ii) higher underlying underwriting margins and (iii) higher net favorable prior year reserve development.

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MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

Catastrophe losses in the first quarters of 2019 and 2018 were $95 million and $216 million, respectively.  Net favorable prior year reserve development in the first quarters of 2019 and 2018 was $69 million and $49 million, respectively. The higher underlying underwriting margins primarily resulted from the impacts of (i) earned pricing that exceeded loss cost trends in Agency Automobile and (ii) higher business volumes, partially offset by (iii) the impact on earned premiums related to the Company's new catastrophe reinsurance treaty, mostly impacting Agency Homeowners and Other. Income tax expense in the first quarter of 2019 was higher than in the same period of 2018, primarily reflecting the impact of the increase in the segment income before income taxes.

Revenues

Earned Premiums

Earned premiums in the first quarter of 2019 were $2.51 billion, $120 million or 5% higher than in the same period of 2018.  The increase in 2019 primarily reflected the increase in net written premiums over the preceding twelve months. The increase in earned premiums in 2019 was reduced by the earned impact of the new catastrophe reinsurance treaty.

Net Investment Income

Net investment income in the first quarter of 2019 was $99 million, level with the same period of 2018. Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion herein for a description of the factors contributing to the decrease in the Company’s consolidated net investment income in the first quarter of 2019 compared with the same period of 2018.  In addition, refer to note 2 of notes to the consolidated financial statements in the Company’s 2018 Annual Report for a discussion of the Company’s net investment income allocation methodology.

Other Revenues

Other revenues in the first quarters of 2019 and 2018 primarily consisted of installment premium charges.

Claims and Expenses

Claims and Claim Adjustment Expenses

Claims and claim adjustment expenses in the first quarter of 2019 were $1.60 billion, $92 million or 5% lower than in the same period of 2018, primarily reflecting the impacts of (i) lower catastrophe losses and (ii) higher net favorable prior year reserve development, partially offset by (iii) higher business volumes and (iv) loss cost trends.

Factors contributing to net favorable prior year reserve development during the first quarters of 2019 and 2018 are discussed in more detail in note 6 of notes to the unaudited consolidated financial statements.

Amortization of Deferred Acquisition Costs

Amortization of deferred acquisition costs in the first quarter of 2019 was $390 million, $16 million or 4% higher than in the same period of 2018.  The increase was generally consistent with the increase in earned premiums.

General and Administrative Expenses

General and administrative expenses in the first quarter of 2019 were $300 million, $12 million or 4% higher than in the same period of 2018, primarily reflecting the impact of higher business volumes.

Income Tax Expense

Income tax expense in the first quarter of 2019 was $69 million, $41 million or 146% higher than in the same period of 2018, primarily reflecting the impact of the $190 million increase in segment income before income taxes.

Combined Ratio

The combined ratio of 90.1% in the first quarter of 2019 was 7.4 points lower than the combined ratio of 97.5% in the same period of 2018.  The loss and loss adjustment expense ratio of 63.7% in the first quarter of 2019 was 7.0 points lower than the loss and loss adjustment expense ratio of 70.7% in the same period of 2018.  The underwriting expense ratio of 26.4% for the first quarter of 2019 was 0.4 points lower than the underwriting expense ratio of 26.8% in the same period of 2018. 

Catastrophe losses in the first quarters of 2019 and 2018 accounted for 3.8 points and 9.0 points, respectively, of the combined ratio. Net favorable prior year reserve development in the first quarters of 2019 and 2018 provided 2.8 points and 2.0 points of benefit, respectively, to the combined ratio. The underlying combined ratio in the first quarter of 2019 was 1.4 points lower than

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MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

the 2018 ratio on the same basis, primarily reflecting the impacts of (i) earned pricing that exceeded loss cost trends in Agency Automobile, partially offset by (ii) the impact on earned premiums related to the new catastrophe reinsurance treaty, mostly impacting Agency Homeowners and Other.

Written Premiums

Personal Insurance’s gross and net written premiums were as follows:

	Gross Written Premiums
	Three Months Ended March 31,
(in millions)	2019		2018
Domestic:
Agency:
Automobile	$	1,240	$	1,192
Homeowners and Other	954		873
Total Agency	2,194		2,065
Direct-to-Consumer	98		93
Total Domestic	2,292		2,158
International	155		151
Total Personal Insurance	$	2,447	$	2,309

	Net Written Premiums
	Three Months Ended March 31,
(in millions)	2019		2018
Domestic:
Agency:
Automobile	$	1,224	$	1,183
Homeowners and Other	837		832
Total Agency	2,061		2,015
Direct-to-Consumer	95		92
Total Domestic	2,156		2,107
International	151		149
Total Personal Insurance	$	2,307	$	2,256

Domestic Agency Written Premiums

Personal Insurance’s domestic Agency business comprises business written through agents, brokers and other intermediaries.

Domestic Agency gross written premiums in the first quarter of 2019 increased by 6% over the same period of 2018. Domestic Agency net written premiums increased at a lower rate of 2% in the first quarter of 2019, primarily reflecting the new catastrophe reinsurance treaty.

Domestic Agency Automobile net written premiums of $1.22 billion in the first quarter of 2019 increased by 3% over the same period of 2018.  Net written premiums in the first quarter of 2019 were reduced by the new catastrophe reinsurance treaty. Business retention rates remained strong in the first quarter of 2019.  Renewal premium changes in the first quarter of 2019 remained positive but were lower than in the same period of 2018.  New business premiums in the first quarter of 2019 increased over the same period of 2018.

Domestic Agency Homeowners and Other net written premiums of $837 million in the first quarter of 2019 increased by 1% over the same period of 2018.  Net written premiums in the first quarter of 2019 were reduced by the new catastrophe reinsurance treaty.

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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

Business retention rates remained strong in the first quarter of 2019.  Renewal premium changes in the first quarter of 2019 remained positive and were higher than in the same period of 2018.  New business premiums in the first quarter of 2019 increased over the same period of 2018.

For its Domestic Agency business, the Personal Insurance segment had approximately 7.2 million and 7.0 million active policies at March 31,2019 and 2018, respectively.

Direct-to-Consumer and International Written Premiums

Direct-to-Consumer net written premiums of $95 million in the first quarter of 2019 increased by 3% over the same period of 2018, primarily reflecting growth in both automobile and homeowners and other. Net written premiums in the first quarter of 2019 were reduced by the new catastrophe reinsurance treaty.

International net written premiums of $151 million in the first quarter of 2019 increased by 1% over the same period of 2018. The increase was primarily driven by growth in automobile net written premiums, partially offset by the impact of changes in foreign currency exchange rates. Net written premiums in the first quarter of 2019 were reduced by the new catastrophe reinsurance treaty.

For its international and direct-to-consumer business, Personal Insurance had approximately 902,000 and 883,000 active policies at March 31,2019 and 2018, respectively.

Interest Expense and Other

	Three Months Ended March 31,
(in millions)	2019			2018
Income (loss)	$	(75	)	$	(76	)

The Income (loss) for Interest Expense and Other in the first quarters of 2019 and 2018 was $(75) million and $(76) million, respectively.  Pre-tax interest expense in the first quarters of 2019 and 2018 was $88 million and $89 million respectively. After-tax interest expense in the first quarters of both 2019 and 2018 was $70 million.

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 who were not traditionally primary targets of asbestos litigation. The focus on these defendants is primarily the result of the number of traditional asbestos defendants who have sought bankruptcy protection in previous years.  The bankruptcy of many traditional defendants has also caused increased settlement demands against those policyholders who are not in bankruptcy but remain in the tort system. 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.

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MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

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.   It is possible that the filing of other direct actions against insurers, including the Company, could be made 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.

Because each policyholder presents different liability and coverage issues, the Company generally reviews the exposure presented by each policyholder at least annually.  Among the factors which 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; the jurisdictions involved; 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’s quarterly asbestos reserve reviews include an analysis of exposure and claim payment patterns by policyholder category, as well as recent settlements, policyholder bankruptcies, judicial rulings and legislative actions.  The Company also analyzes developing payment patterns among policyholders in the home office and field office category and the assumed reinsurance and other category 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. 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 underlyingasbestos environment is essentially unchanged from recent periods and there remains a high degree of uncertainty with respect to future exposure to asbestos claims.

Net asbestos paid loss and loss expenses in the first three months of 2019 and 2018 were $38 million and $33 million, respectively. Net asbestos reserves were $1.24 billion at March 31, 2019, compared with $1.25 billion at March 31, 2018.

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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

The following table displays activity for asbestos losses and loss expenses and reserves:

(at and for the three months ended March 31, in millions)	2019			2018
Beginning reserves:
Gross	$	1,608		$	1,538
Ceded	(327		)	(257		)
Net	1,281			1,281
Incurred losses and loss expenses:
Gross	—			—
Ceded	—			—
Net	—			—
Paid loss and loss expenses:
Gross	44			56
Ceded	(6		)	(23		)
Net	38			33
Foreign exchange and other:
Gross	—			1
Ceded	—			—
Net	—			1
Ending reserves:
Gross	1,564			1,483
Ceded	(321		)	(234		)
Net	$	1,243		$	1,249

_________________________________________________________

See “—Uncertainty Regarding Adequacy of Asbestos and Environmental Reserves.”

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 their alleged disposition of toxic substances. 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.

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 have interpreted the insurance coverage to be broader than the original intent of the insurers and policyholders. These decisions often pertain to insurance policies that were issued by the Company prior to the mid-1980s. These decisions continue to be inconsistent and vary from jurisdiction to jurisdiction. Environmental claims, when submitted, rarely indicate the monetary amount being sought by the claimant from the policyholder, and the Company does not keep track of the monetary amount being sought in those few claims which indicate a monetary amount.

The resolution of environmental exposures by the Company generally occurs through settlements with policyholders as opposed to claimants. Generally, the Company strives to extinguish any obligations it may have under any policy issued to the policyholder for past, present and future environmental liabilities and extinguish any pending coverage litigation dispute with the policyholder.  This form of settlement is commonly referred to as a “buy-back” of policies for future environmental liability. In addition, many of the agreements have also extinguished any insurance obligation which the Company may have for other claims, including, but not limited to, asbestos and other cumulative injury claims.  The Company and its policyholders may also agree to settlements which only extinguish any liability arising from known specified sites or claims.  In many instances, these agreements also include indemnities and hold harmless provisions to protect the Company.  The Company’s general purpose in executing these agreements

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MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

is to reduce the Company’s potential environmental exposure and eliminate the risks presented by coverage litigation with the policyholder and related costs.

In establishing environmental reserves, the Company evaluates the exposure presented by each policyholder and the anticipated cost of resolution, if any. In the course of this 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. Conventional actuarial methods are not used to estimate these reserves.

The Company continues to receive notices from policyholders tendering claims for the first time, frequently under policies issued prior to the mid-1980s. These policyholders continue to present smaller exposures, have fewer sites and are lower tier defendants.  Further, in many instances, clean-up costs have been reduced because regulatory agencies are willing to accept risk-based site analyses and more efficient clean-up technologies. 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 and in the number of pending declaratory judgment actions relating to environmental matters. However, the degree to which those favorable trends have continued has been less than anticipated. In addition, reserve development on existing environmental claims has been greater than anticipated, driven by claims and legal developments in a limited number of jurisdictions.

Net environmental paid loss and loss expenses in the first three months of 2019 and 2018 were $20 million and $13 million, respectively. At March 31, 2019, approximately 94% of the net environmental reserve (approximately $295 million) was carried in a bulk reserve and included unresolved environmental claims, incurred but not reported environmental claims and the anticipated cost of coverage litigation disputes relating to these claims. The bulk reserve the Company carries is established and adjusted based upon the aggregate volume of in-process environmental claims and the Company’s experience in resolving those claims. The balance, approximately 6% of the net environmental reserve (approximately $19 million), consists of case reserves.

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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

The following table displays activity for environmental losses and loss expenses and reserves:

(at and for the three months ended March 31, in millions)	2019			2018
Beginning reserves:
Gross	$	358		$	373
Ceded	(24		)	(13		)
Net	334			360
Incurred losses and loss expenses:
Gross	—			—
Ceded	—			—
Net	—			—
Paid loss and loss expenses:
Gross	20			17
Ceded	—			(4		)
Net	20			13
Foreign exchange and other:
Gross	—			—
Ceded	—			—
Net	—			—
Ending reserves:
Gross	338			356
Ceded	(24		)	(9		)
Net	$	314		$	347

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. Changes in the legal, regulatory and legislative environment may impact the 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 insurance 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.

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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

INVESTMENT PORTFOLIO

The Company’s invested assets at March 31, 2019 were $74.52 billion, of which 93% was invested in fixed maturity and short-term investments, 1% in equity securities, 1% in real estate investments and 5% in other investments.  Because the primary purpose of the investment portfolio is to fund future claims payments, the Company employs a conservative investment philosophy.  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 U.S. municipal and taxable corporate and U.S. agency mortgage-backed bonds.

The carrying value of the Company’s fixed maturity portfolio at March 31, 2019 was $65.50 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 March 31, 2019 and December 31, 2018.  Below investment grade securities represented 2.4% and 2.3% of the total fixed maturity investment portfolio at March 31, 2019 and December 31, 2018, respectively. The weighted average effective duration of fixed maturities and short-term securities was 4.4 (4.6 excluding short-term securities) at March 31, 2019 and 4.5 (4.7 excluding short-term securities) at December 31, 2018.

Obligations of States, Municipalities and Political Subdivisions

The Company’s fixed maturity investment portfolio at March 31, 2019 and December 31, 2018 included $29.35 billion and $28.61 billion, respectively, of securities which are obligations of 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 March 31, 2019 and December 31, 2018 were $2.59 billion and $2.85 billion, respectively, of pre-refunded bonds, which are bonds for which 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 been pre-refunded and therefore are defeased by U.S. Treasury securities.

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 both March 31, 2019 and December 31, 2018.

Mortgage-Backed Securities, Collateralized Mortgage Obligations and Pass-Through Securities

The Company’s fixed maturity investment portfolio at March 31, 2019 and December 31, 2018 included $2.65 billion and $2.57 billion, respectively, of residential mortgage-backed securities, which include 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.  Included in the totals at March 31, 2019 and December 31, 2018 were $942 million and $859 million, 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 $1.71 billion at both March 31, 2019 and December 31, 2018. Approximately 51% and 52% of the Company’s CMO holdings at March 31, 2019 and December 31, 2018, respectively, were guaranteed by or fully collateralized by securities issued by GNMA, FNMA or FHLMC.  The weighted average credit rating of the $843 million and $828 million of non-guaranteed CMO holdings at both March 31, 2019 and December 31, 2018 was "Aa1." The weighted average credit rating of all of the above securities was "Aaa/Aa1" at both March 31, 2019 and December 31, 2018.  For further discussion regarding the Company’s investments in residential CMOs, see “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Investment Portfolio” in the Company’s 2018 Annual Report.

Equity Securities, Real Estate and Short-Term Investments

See note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report for further information about these invested asset classes.

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MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

Other Investments

The Company also invests in private equity limited partnerships, hedge funds and real estate partnerships and joint ventures.  Also included in other investments are non-public common and preferred equities and derivatives.  These asset classes have historically provided a higher return than fixed maturities but are subject to more volatility.  At March 31, 2019 and December 31, 2018, the carrying value of the Company’s other investments was $3.55 billion and $3.56 billion, respectively.

REINSURANCE RECOVERABLES

For a description of the Company’s reinsurance recoverables, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reinsurance Recoverables” in the Company’s 2018 Annual Report.

The following table summarizes the composition of the Company’s reinsurance recoverables:

(in millions)	March 31, 2019			December 31, 2018
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses	$	3,427		$	3,485
Allowance for uncollectible reinsurance	(109		)	(110		)
Net reinsurance recoverables	3,318			3,375
Mandatory pools and associations	1,993			2,005
Structured settlements	2,970			2,990
Total reinsurance recoverables	$	8,281		$	8,370

Net reinsurance recoverables at March 31, 2019 decreased by $57 million from December 31, 2018, primarily reflecting the impacts of cash collections in the first three months of 2019.

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 life 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.  Property and casualty insurance market conditions are expected to remain competitive.  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 retention levels (the amount of expiring premium that renews, before the impact of renewal premium changes) will remain strong by historical standards during the remainder of 2019. In Business Insurance, the Company expects that domestic renewal premium changes during the remainder of 2019 will remain positive and will be slightly higher than the levels attained in the same period of 2018. In Bond & Specialty Insurance, the Company expects that renewal premium changes with respect to domestic management liability business during the remainder of 2019 will remain positive and will be broadly consistent with the levels attained in the same period of 2018. In Personal Insurance, the Company expects that domestic Agency Automobile renewal premium changes during the remainder of 2019 will remain positive but will be lower than the levels attained in the same period of 2018. The Company expects that domestic Agency Homeowners and Other renewal premium changes during the remainder of 2019 will remain positive and will be higher than the levels attained in the same period of 2018. The need for state regulatory approval for changes to personal and many commercial property and casualty insurance prices, as well as competitive market conditions, may impact the timing and extent of renewal premium changes.  With regard to the Company's international business, the Company expects that renewal premium changes during the remainder of 2019 in aggregate will remain positive and will be higher than the levels attained in the same period of 2018. Given the relatively smaller amount of premium

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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

that the Company generates from outside the United States and the transactional nature of some of those markets, particularly Lloyd’s, international renewal premium changes in each segment can be more volatile and therefore difficult to predict.

Property and casualty insurance market conditions are expected to remain competitive during the remainder of 2019 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.

Economic conditions in the United States and elsewhere could change, due to a variety of factors, including the political and regulatory environment, changes to fiscal stimulus programs, inflation or deflation (including the impact of rapid changes in wages and/or commodity prices), the imposition of tariffs or other barriers to international trade, fluctuations in interest rates and foreign currency exchange rates, high levels of global debt after an extended period of low interest rates, the United Kingdom’s withdrawal from the European Union, a shutdown of the U.S. government, the failure by the U.S. government to raise the debt ceiling, changes to the U.S. Federal budget and further potential changes in tax laws in the United States or modification of the Affordable Care Act. The resulting changes in levels of economic activity could positively or negatively impact exposure changes at renewal and the Company’s ability to write business at acceptable rates. Additionally, changes in levels of economic activity could positively or negatively impact audit premium adjustments, policy endorsements and mid-term cancellations after policies are written.  All of the foregoing, in turn, could positively or negatively impact net written premiums during the remainder of 2019, and because earned premiums are a function of net written premiums, earned premiums could be impacted on a lagging basis.

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 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.

For a number of years, 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 higher or lower levels of favorable prior year reserve development, no favorable prior year reserve development or unfavorable prior year reserve development in future periods. 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 could lead to higher or lower inflation than the Company had 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, regulatory and economic environments in which the Company operates, our financial results could be materially and adversely affected” in the Company’s 2018 Annual Report.

In Business Insurance, the Company expects underlying underwriting margins during the remainder of 2019 in aggregate will be higher than in the same period of 2018, and the underlying combined ratio during the remainder of 2019 in aggregate will be lower than in the same period of 2018, assuming loss activity, primarily large losses, returns to lower and more normal levels.

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In Bond & Specialty Insurance, the Company expects that underlying underwriting margins and the underlying combined ratio during the remainder of 2019 in aggregate will be broadly consistent with the same period of 2018.

In Personal Insurance, the Company expects underlying underwriting margins during the remainder of 2019 in aggregate will be higher than in the same period of 2018, and the underlying combined ratio during the remainder of 2019 in aggregate will be lower than in the same period of 2018. In Agency Automobile, the Company expects underlying underwriting margins during the remainder of 2019 in aggregate will be lower than in the same period of 2018, and the underlying combined ratio during the remainder of 2019 in aggregate will be higher than in the same period of 2018. In Agency Homeowners and Other, the Company expects underlying underwriting margins during the remainder of 2019 in aggregate will be higher than in the same period of 2018, and the underlying combined ratio during the remainder of 2019 in aggregate will be lower than in the same period of 2018, assuming non-catastrophe weather-related losses and non-weather related losses return to lower and more normal levels. In all cases, the expected aggregate variances to the prior year period will be driven by results in the second half of 2019 as compared to the same period of 2018.

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 4.4 (4.6 excluding short-term securities) at March 31, 2019.  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 March 31, 2019, the Company had no open U.S. Treasury futures contracts.  The Company continually 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 U.S. municipal and taxable corporate and U.S. agency mortgage-backed bonds.

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 the potential for higher degrees of risk, including less stable rates of return and less liquidity.

Net investment income is a material contributor to the Company’s results of operations. Based on the impacts of (i) slightly higher levels of fixed income investments (fixed maturity and short-term investments) and (ii) slightly higher embedded yields on the fixed income portfolio, the Company expects that during the remainder of 2019, after-tax net investment income from those portfolios will be approximately $20 million higher on a quarterly basis as compared to the corresponding quarters of 2018. The impact of future market conditions on net investment income from the Company's remaining investment portfolios during the remainder of 2019 is hard to predict. If general economic conditions and/or investment market conditions change, the Company could experience an increase or decrease in net investment income and/or significant realized investment gains or losses (including impairments) compared with same period of 2018.

The Company had a net pre-tax unrealized investment gain of $1.28 billion ($1.01 billion after-tax) in its fixed maturity investment portfolio at March 31, 2019.  While the Company does not attempt to predict future interest rate movements, a rising interest rate environment would reduce the market value of fixed maturity investments and, therefore, reduce shareholders’ equity, and a declining interest rate environment would have the opposite effects. 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 "Changes in U.S. tax laws or in the tax laws of other jurisdictions in which we operate could adversely impact us" included in “Part I—Item 1A—Risk Factors” in the Company’s 2018 Annual Report.

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” in the Company’s 2018 Annual Report.  For a discussion of the risks to the Company’s investments from foreign currency exchange rate fluctuations, see the risk factor entitled “We are also subject to a number of additional risks associated with our business outside the United States” included in “Part I—Item 1A—Risk Factors” in the Company’s 2018 Annual Report and see “Part II—Item 7A—Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Exchange Rate Risk” in the Company’s 2018 Annual Report.

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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.  The Company expects that, generally over time, the combination of dividends to common shareholders and common share repurchases will likely not exceed net income.  In addition, 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 commensurate with the Company’s desired ratings from independent rating agencies, changes in levels of written premiums, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions and other factors.  For information regarding the Company’s common share repurchases in 2019, see “Liquidity and Capital Resources.” 

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 Brazil, the Company’s capital is also subject to the effects of changes in foreign currency exchange rates (including with respect to the valuation of the Company's foreign investments and interests in joint ventures).  For example, strengthening of the U.S. dollar in comparison to other currencies could result in a reduction of 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” in the Company’s 2018 Annual Report.

Many of the statements in this “Outlook” section 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” in the Company’s 2018 Annual Report 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.  For further discussion of operating company liquidity, see “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in the Company’s 2018 Annual Report.

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 March 31, 2019, TRV held total cash and short-term invested assets in the United States aggregating $1.92 billion and having a weighted average maturity of 51 days.  TRV has established a holding company liquidity target equal to its estimated annual pre-tax interest expense and common shareholder dividends (currently approximately $1.18 billion).  TRV’s holding company liquidity of $1.92 billion at March 31, 2019 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 March 31, 2019.

TRV has a shelf registration statement filed with the Securities and Exchange Commission (SEC) that expires on June 17, 2019 which permits it to issue securities from time to time.  The Company intends to file a new shelf registration statement in the second quarter of 2019. TRV also has a $1.0 billion line of credit facility with a syndicate of financial institutions that expires on June 4, 2023. At March 31, 2019, 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 utilized uncollateralized letters of credit issued by major banks with an aggregate limit of approximately $341 million to provide a portion of the capital needed to support its obligations at Lloyd’s at March 31, 2019. 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

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MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

have to seek alternative means of supporting its obligations at Lloyd’s, which could include utilizing holding company funds on hand.

Operating Activities

Net cash provided by operating activities in the first three months of 2019 and 2018 was $639 million and $554 million, respectively.  The increase in cash flows in the first three months of 2019 primarily reflected (i) higher levels of collected premiums and (ii) lower income tax payments, partially offset by the impacts of higher levels of payments for (iii) claims and claim adjustment expenses and (iv) commission expenses.

Investing Activities

Net cash used in investing activities in the first three months of 2019 and 2018 was $586 million and $381 million, respectively.  The Company’s consolidated total investments at March 31, 2019 increased by $2.24 billion, or 3% over year-end 2018, primarily reflecting the impacts of (i) net unrealized gains on investments at March 31, 2019 as compared with net unrealized losses on investments at December 31, 2018, as a result of decreases in market interest rates during the first quarter of 2019 and (ii) net cash flows provided by operating activities, partially offset by (iii) common share repurchases and (iv) dividends paid to shareholders.

Financing Activities

Net cash used in financing activities in the first three months of 2019 and 2018 was $71 million and $122 million, respectively.  The totals in both periods primarily reflected common share repurchases and dividends paid to shareholders, partially offset by the issuance of debt and the net proceeds from employee stock option exercises. The total in the first quarter of 2018 also included the payment of debt. Common share repurchases in the first three months of 2019 and 2018 were $421 million and $401 million, respectively. 

Dividends.  Dividends paid to shareholders were $205 million and $197 million in the first three months of 2019 and 2018, 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 April 18, 2019, the Company announced that it would increase its regular quarterly dividend from $0.77 per share to $0.82 per share, a 6.5% increase. The increased dividend is payable June 28, 2019 to shareholders of record on June 10, 2019.

Share Repurchase Authorization.  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 commensurate with the Company’s desired ratings from independent rating agencies, 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 and other factors.  During the three months ended March 31, 2019, the Company repurchased 2.9 million shares under its share repurchase authorization, for a total cost of $375 million.  The average cost per share repurchased was $129.42.  At March 31, 2019, the Company had $2.91 billion of capacity remaining under the share repurchase authorization.

Capital Structure.  The following table summarizes the components of the Company’s capital structure at March 31, 2019 and December 31, 2018.

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(in millions)	March 31, 2019			December 31, 2018
Debt:
Short-term	$	600		$	600
Long-term	6,504			6,004
Net unamortized fair value adjustments and debt issuance costs	(47		)	(40		)
Total debt	7,057			6,564
Shareholders’ equity:
Common stock and retained earnings, less treasury stock	25,022			24,753
Accumulated other comprehensive loss	(682		)	(1,859		)
Total shareholders’ equity	24,340			22,894
Total capitalization	$	31,397		$	29,458

On March 4, 2019, the Company issued $500 million aggregate principal amount of 4.10% senior notes that will mature on March 4, 2049.  See note 8 of notes to the unaudited consolidated financial statements for further discussion regarding the terms of the senior notes. 

The following table provides a reconciliation of total capitalization presented in the foregoing table to total capitalization excluding net unrealized gains (losses) on investments, net of taxes, included in shareholders' equity.

(dollars in millions)	March 31, 2019			December 31, 2018
Total capitalization	$	31,397		$	29,458
Less: net unrealized gains (losses) on investments, net of taxes, included in shareholders' equity	1,007			(113		)
Total capitalization excluding net unrealized gains (losses) on investments, net of taxes, included in shareholders' equity	$	30,390		$	29,571
Debt-to-total capital ratio	22.5		%	22.3		%
Debt-to-total capital ratio excluding net unrealized gains (losses) on investments, net of taxes, included in shareholders' equity	23.2		%	22.2		%

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 gains (losses) included in shareholders’ equity of 23.2% at March 31, 2019 was within the Company’s target range of 15% to 25%.

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 Standard & Poor’s (S&P).  The following rating agency actions were taken with respect to the Company since February 14, 2019, the date on which the Company’s 2018 Annual Report was filed with the SEC.   For additional discussion of ratings, see “Part I—Item 1—Business—Ratings” in the Company’s 2018 Annual Report.

• On February 28, 2019, A.M. Best assigned a financial strength rating of "A++" to the Company's newly established insurance subsidiary in the Republic of Ireland, Travelers Insurance Designated Activity Company. The outlook for this rating is stable.

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MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

CRITICAL ACCOUNTING ESTIMATES

For a description of the Company’s critical accounting estimates, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in the Company’s 2018 Annual Report.  The Company considers its most significant accounting estimates to be those applied to claims and claim adjustment expense reserves and related reinsurance recoverables, investment valuation and impairments, and goodwill and other intangible assets impairments. Except as shown in the table below, there have been no material changes to the Company’s critical accounting estimates since December 31, 2018.

Claims and Claim Adjustment Expense Reserves

The table below displays the Company’s gross claims and claim adjustment expense reserves by product line.  Because the establishment of claims and claim adjustment expense reserves is an inherently uncertain process involving estimates, 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.  These changes in estimates could result in income statement charges that could be material to the Company’s operating results in future periods.  In particular, a portion of the Company’s gross claims and claim adjustment expense reserves (totaling $1.90 billion at March 31, 2019) are for asbestos and environmental claims and related litigation.  Asbestos and environmental reserves are included in the General liability, Commercial multi-peril and International and other lines in the summary table below.  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 reserves by an amount that could be material to the Company’s future operating results. 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” in this report.

Gross claims and claim adjustment expense reserves by product line were as follows:

	March 31, 2019						December 31, 2018
(in millions)	Case		IBNR		Total		Case		IBNR		Total
General liability	$	4,794	$	7,039	$	11,833	$	4,780	$	7,092	$	11,872
Commercial property	1,078		344		1,422		1,157		297		1,454
Commercial multi-peril	2,063		1,951		4,014		2,089		1,886		3,975
Commercial automobile	2,395		1,648		4,043		2,339		1,661		4,000
Workers’ compensation	10,260		9,329		19,589		10,299		9,216		19,515
Fidelity and surety	244		313		557		280		288		568
Personal automobile	2,002		1,355		3,357		2,038		1,400		3,438
Homeowners and personal—other	889		867		1,756		942		884		1,826
International and other	2,643		1,490		4,133		2,574		1,431		4,005
Property-casualty	26,368		24,336		50,704		26,498		24,155		50,653
Accident and health	14		—		14		15		—		15
Claims and claim adjustment expense reserves	$	26,382	$	24,336	$	50,718	$	26,513	$	24,155	$	50,668

The $50 million increase in gross claims and claim adjustment expense reserves since December 31, 2018 primarily reflected the impacts of (i) higher volumes of insured exposures and loss cost trends for the current accident year and (ii) catastrophe losses in the first three months of 2019, largely offset by the impacts of (iii)  payments related to catastrophe losses incurred in 2018 and (iv) net favorable prior year reserve development.

FUTURE APPLICATION OF ACCOUNTING STANDARDS

See note 1 of notes to the unaudited consolidated financial statements contained in this quarterly report and in the Company’s 2018 Annual Report for a discussion of recently issued accounting pronouncements.

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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,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “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 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);

• share repurchase plans;

• future pension plan contributions;

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

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

• the cost and availability of reinsurance coverage;

• catastrophe losses;

• the impact of investment (including changes in interest rates), economic (including inflation, recent changes in tax law, rapid changes in commodity prices and fluctuations in foreign currency exchange rates) and underwriting market conditions;

• strategic and operational initiatives to improve profitability and competitiveness;

• the Company's competitive advantages;

• new product offerings;

• the impact of new or potential regulations imposed or to be imposed by the United States or other nations, including tariffs or other barriers to international trade; and

• the impact of legislation enacted or to be enacted by states allowing victims of sexual abuse to file or proceed with claims that otherwise would have been time-barred.

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

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

• catastrophe losses could materially and adversely affect the Company’s results of operations, its financial position and/or liquidity, and could adversely impact the Company’s ratings, the Company’s ability to raise capital and the availability and cost of reinsurance;

• if actual claims exceed the Company’s 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, regulatory and economic environments in which the Company operates, the Company’s financial results could be materially and adversely affected;

• during or following a period of financial market disruption or an economic downturn, the Company’s business could be materially and adversely affected;

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

• the Company’s business could be harmed because of its potential exposure to asbestos and environmental claims and related litigation;

• the intense competition that the Company faces, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which the Company operates, could harm its ability to maintain or increase its business volumes and its profitability;

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

• the Company is exposed to, and may face adverse developments involving, mass tort claims such as those relating to exposure to potentially harmful products or substances;

• the effects of emerging claim and coverage issues on the Company’s business are uncertain;

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FORWARD-LOOKING STATEMENTS, Continued

• the Company may not be able to collect all amounts due to it from reinsurers, reinsurance coverage may not be available to the Company in the future at commercially reasonable rates or at all and the Company is exposed to credit risk related to its structured settlements;

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

• within the United States, the Company’s businesses are heavily regulated by the states in which it conducts business, including licensing, market conduct and financial supervision, and changes in regulation may reduce the Company’s profitability and limit its growth;

• a downgrade in the Company’s claims-paying and financial strength ratings could adversely impact the Company’s business volumes, adversely impact the Company’s ability to access the capital markets and increase the Company’s borrowing costs;

• the inability of the Company’s insurance subsidiaries to pay dividends to the Company’s holding company in sufficient amounts would harm the Company’s ability to meet its obligations, pay future shareholder dividends and/or make future share repurchases;

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

• the Company may be adversely affected if its pricing and capital models provide materially different indications than actual results;

• the Company’s business success and profitability depend, in part, on effective information technology systems and on continuing to develop and implement improvements in technology, particularly as its business processes become more digital;

• if the Company experiences difficulties with technology, data and network security (including as a result of cyber attacks), outsourcing relationships or cloud-based technology, the Company’s ability to conduct its business could be negatively impacted;

• the Company is also subject to a number of additional risks associated with its business outside the United States, such as foreign currency exchange fluctuations (including with respect to the valuation of the Company's foreign investments and interests in joint ventures) and restrictive regulations as well as the risks and uncertainties associated with the United Kingdom's withdrawal from the European Union;

• regulatory changes outside of the United States, including in Canada, the United Kingdom, the Republic of Ireland and the European Union, could adversely impact the Company’s results of operations and limit its growth;

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

• acquisitions and integration of acquired businesses may result in operating difficulties and other unintended consequences;

• the Company could be adversely affected if its controls designed to ensure compliance with guidelines, policies and legal and regulatory standards are not effective;

• the Company’s businesses may be adversely affected if it is unable to hire and retain qualified employees;

• intellectual property is important to the Company’s business, and the Company may be unable to protect and enforce its own intellectual property or the Company may be subject to claims for infringing the intellectual property of others;

• changes in federal regulation could impose significant burdens on the Company and otherwise adversely impact the Company’s results;

• changes in U.S. tax laws or in the tax laws of other jurisdictions where the Company operates could adversely impact the Company; and

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

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 forward-looking statements.  For a more detailed discussion of these factors, see the information under the captions “Part I—Item 1A—Risk Factors” in the Company’s 2018 Annual Report filed with the SEC and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein and in the Company’s 2018 Annual Report as updated by the Company's periodic filings with the SEC.

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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

WEBSITE AND SOCIAL MEDIA DISCLOSURE

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

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For the Company’s disclosures about market risk, please see “Part II—Item 7A—Quantitative and Qualitative Disclosures About Market Risk” in the Company’s 2018 Annual Report filed with the SEC.  There have been no material changes to the Company’s disclosures about market risk in Part II—Item 7A of the Company’s 2018 Annual Report.

Item 4. 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 March 31, 2019.  Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2019, 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 that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s 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.

PART II — OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

The information required with respect to this item can be found under “Contingencies” in note 14 of notes to the unaudited consolidated financial statements contained in this quarterly report and is incorporated by reference into this Item 1.

Item 1A.  RISK FACTORS

For a discussion of the Company’s potential risks or uncertainties, please see “Part I—Item 1A—Risk Factors” in the Company’s 2018 Annual Report filed with the SEC.  In addition, please see “Part I—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook” and “—Critical Accounting Estimates” herein and in the Company’s 2018 Annual Report.  There have been no material changes to the risk factors disclosed in Part I—Item 1A of the Company’s 2018 Annual Report.

63

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

Item 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below sets forth information regarding repurchases by the Company of its common stock during the periods indicated.

ISSUER PURCHASES OF EQUITY SECURITIES

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)
January 1, 2019	January 31, 2019	441,631	$	124.70	439,870	$	3,231
February 1, 2019	February 28, 2019	1,800,955	$	128.28	1,443,470	$	3,046
March 1, 2019	March 31, 2019	1,014,415	$	132.80	1,014,360	$	2,911
Total		3,257,001	$	129.20	2,897,700	$	2,911

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 most recent authorization was approved by the Board of Directors in April 2017 and added $5.0 billion of repurchase capacity to the $709 million capacity remaining at that 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 commensurate with the Company’s desired ratings from independent rating agencies, 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 and other factors.

The Company acquired 359,301 shares for a total cost of $46 million during the three months ended March 31, 2019 that were not part of the publicly announced share repurchase authorization.  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 price of certain stock options that were exercised.

For additional information regarding the Company’s share repurchases, see “Part I—Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Item 5.OTHER INFORMATION

Executive Ownership and Sales. All of the Company’s executive officers are subject to the Company’s executive stock ownership policy. For a summary of this policy as currently in effect, see “Compensation Discussion and Analysis - Additional Compensation Information - Stock Ownership Guidelines, Anti-Hedging and Pledging Policies, and Other Trading Restrictions” in the Company’s proxy statement filed with the SEC on April 5, 2019 (Proxy Statement). From time to time, some of the Company’s executives may determine that it is advisable to diversify their investments for personal financial planning reasons, or may seek liquidity for other reasons, and may, in compliance with the stock ownership policy, sell shares of common stock of the Company on the open market, in private transactions or to the Company. To effect such sales, from time to time, some of the Company’s executives may enter into trading plans designed to comply with the Company’s Securities Trading Policy and the provisions of Rule 10b5-1 under the Securities Exchange Act of 1934. The trading plans will not reduce any of the executives’ ownership of the Company’s shares below the applicable executive stock ownership guidelines. The Company does not undertake any obligation to report Rule 10b5-1 plans that may be adopted by any employee or director of the Company in the future, or to report any modifications or termination of any publicly announced plan. As of the date of this report, none of the Company's named executive officers (i.e. an executive officer included in the compensation disclosures in the Company's Proxy Statement) have entered into a Rule 10b5-1 trading plan that remains in effect.

64

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

Item 6.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 November 3, 2016 were filed as Exhibit 3.2 to the Company’s current report on Form 8-K filed on November 9, 2016, and are incorporated herein by reference.
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, Executive Vice President and 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, Executive Vice President and Chief Financial Officer of the Company, as required by Section 906 of the Sarbanes-Oxley Act of 2002.
101.1†	The following financial information from The Travelers Companies, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 formatted in XBRL: (i) Consolidated Statement of Income for the three months ended March 31, 2019 and 2018; (ii) Consolidated Statement of Comprehensive Income for the three months ended March 31, 2019 and 2018; (iii) Consolidated Balance Sheet at March 31, 2019 and December 31, 2018; (iv) Consolidated Statement of Changes in Shareholders’ Equity for the three months ended March 31, 2019 and 2018; (v) Consolidated Statement of Cash Flows for the three months ended March 31, 2019 and 2018; and (vi) Notes to Consolidated Financial Statements.

 _________________________________________________________

† Filed herewith.

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 except for the terms of the agreements or other documents themselves, and you should not rely on them for other than 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 do not apply in any other context or at any time other than the date they were made.

65

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements 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: April 18, 2019	By	/S/   CHRISTINE K. KALLA
		Christine K. Kalla Executive Vice President and General Counsel (Authorized Signatory)
Date: April 18, 2019	By	/S/    DOUGLAS K. RUSSELL
		Douglas K. Russell Senior Vice President and Corporate Controller(Principal Accounting Officer)

66

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Alan D. Schnitzer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 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:	April 18, 2019	By:	/S/ ALAN D. SCHNITZER
			Alan D. Schnitzer Chairman and Chief Executive Officer

1

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Daniel S. Frey, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 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:	April 18, 2019	By:	/S/ DANIEL S. FREY
			Daniel S. Frey Executive Vice President and Chief Financial Officer

1

EX-32.1

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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 (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:	April 18, 2019	By:	/S/ ALAN D. SCHNITZER
			Alan D. Schnitzer Chairman and Chief Executive Officer

1

EX-32.2

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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 (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:	April 18, 2019	By:	/S/ DANIEL S. FREY
			Daniel S. Frey  Executive Vice President and Chief Financial Officer

1

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 15, 2019
Document and Entity Information
Registrant name	Travelers Companies, Inc.
Central index key	0000086312
Document type	10-Q
Document period end date	Mar. 31, 2019
Amendment flag	false
Current fiscal year end date	--12-31
Filer category	Large Accelerated Filer
Entity emerging growth company	false
Entity small business	false
Common stock shares outstanding		261,908,210
Document fiscal year focus	2019
Document fiscal period focus	Q1

XML

Consolidated Statement of Income (Unaudited) - USD ($) shares in Millions, $ in Millions		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Revenues
Premiums		$ 6,855	$ 6,537
Net investment income		582	603
Fee income		109	103
Net realized investment gains (losses)	[1]	53	(11)
Other revenues		72	54
Total revenues		7,671	7,286
Claims and expenses
Claims and claim adjustment expenses		4,442	4,296
Amortization of deferred acquisition costs		1,117	1,061
General and administrative expenses		1,057	1,062
Interest expense		88	89
Total claims and expenses		6,704	6,508
Income before income taxes		967	778
Income tax expense		171	109
Net income		$ 796	$ 669
Net income per share
Basic (in dollars per share)		$ 3.01	$ 2.45
Diluted (in dollars per share)		$ 2.99	$ 2.42
Weighted average number of common shares outstanding
Basic (in shares)		262.9	271.0
Diluted (in shares)		264.8	273.9
Cash dividends declared per common share (in dollars per share)		$ 0.77	$ 0.72

[1] Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively. Of total OTTI, credit losses of $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively, were recognized in net realized investment gains (losses). In addition, unrealized gains (losses) from other changes in total OTTI of $0 for each of the three months ended March 31, 2019 and 2018, respectively, were recognized in other comprehensive income (loss) as part of changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income.

XML

Consolidated Statement of Income Parentheticals (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Total other-than-temporary impairment gains (losses)	$ (1,000,000)	$ 0
Other-than-temporary impairment, credit losses recognized in net realized investment gains (losses)	(1,000,000)	0
Unrealized gains from other changes in total other-than-temporary impairments recognized in other comprehensive income (loss) as part of changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income		$ 0
Unrealized (losses) from other changes in total other-than-temporary impairments recognized in other comprehensive income (loss) as part of changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income	$ 0

XML

Consolidated Statement of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 796	$ 669
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on investment securities having no credit losses recognized in the consolidated statement of income	1,416	(1,203)
Changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income	5	(2)
Net changes in benefit plan assets and obligations	12	22
Net changes in unrealized foreign currency translation	50	6
Other comprehensive income (loss) before income taxes	1,483	(1,177)
Income tax expense (benefit)	306	(244)
Other comprehensive income (loss), net of taxes	1,177	(933)
Comprehensive income (loss)	$ 1,973	$ (264)

XML

Consolidated Balance Sheet (Unaudited at March 31, 2019) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Assets
Fixed maturities, available for sale, at fair value (amortized cost $64,216 and $63,601)	$ 65,500	$ 63,464
Equity securities, at fair value (cost $375 and $382)	400	368
Real estate investments	969	904
Short-term securities	4,094	3,985
Other investments	3,554	3,557
Total investments	74,517	72,278
Cash	357	373	$ 397	$ 344
Investment income accrued	591	624
Premiums receivable	7,947	7,506
Reinsurance recoverables	8,281	8,370
Ceded unearned premiums	935	578
Deferred acquisition costs	2,190	2,120
Deferred taxes	115	445
Contractholder receivables	4,811	4,785
Goodwill	3,949	3,937
Other intangible assets	341	345
Other assets	3,212	2,872
Total assets	107,246	104,233
Liabilities
Claims and claim adjustment expense reserves	50,718	50,668
Unearned premium reserves	14,122	13,555
Contractholder payables	4,811	4,785
Payables for reinsurance premiums	635	289
Debt	7,057	6,564
Other liabilities	5,563	5,478
Total liabilities	82,906	81,339
Shareholders’ equity
Common stock (1,750.0 shares authorized; 262.0 and 263.7 shares issued, 261.9 and 263.6 shares outstanding)	23,243	23,144
Retained earnings	35,795	35,204
Accumulated other comprehensive loss	(682)	(1,859)
Treasury stock, at cost (514.2 and 510.9 shares)	(34,016)	(33,595)
Total shareholders’ equity	24,340	22,894	$ 22,979
Total liabilities and shareholders’ equity	$ 107,246	$ 104,233

XML

Consolidated Balance Sheet Parentheticals (Unaudited at March 31, 2019) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Fixed maturities, available for sale, amortized cost	$ 64,216	$ 63,601
Equity securities, cost	$ 375	$ 382
Common stock, shares authorized (in shares)	1,750,000,000	1,750,000,000.0
Common stock, shares issued (in shares)	262,000,000	263,700,000
Common stock, shares outstanding (in shares)	261,900,000	263,600,000
Treasury stock, at cost (in shares)	514,200,000	510,900,000

XML

Consolidated Statement of Changes in Shareholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions	Total	Common stock [Member]	Retained earnings [Member]	Accumulated other comprehensive loss, net of tax [Member]	Treasury stock, at cost [Member]	Common shares outstanding [Member]
Shareholders' Equity [Roll Forward]
Cumulative effect of adoption of updated accounting guidance for equity financial instruments			$ 22	$ (22)
Balance, beginning of year at Dec. 31, 2017		$ 22,886	33,462	(343)	$ (32,274)
Shareholders' Equity [Roll Forward]
Employee share-based compensation		65
Compensation amortization under share-based plans and other changes		44
Reclassification of certain tax effects from adoption of updated accounting guidance			24	(24)
Net income	$ 669		669
Dividends			(197)
Other			1
Other comprehensive income (loss)	(933)			(933)
Treasury stock acquired — share repurchase authorization					(350)
Net shares acquired related to employee share-based compensation plans					(51)
Balance, end of period at Mar. 31, 2018	22,979	22,995	33,981	(1,322)	(32,675)
Balance, beginning of year (in shares) at Dec. 31, 2017						271.4
Common shares outstanding
Treasury stock acquired - share repurchase authorization (in shares)						(2.5)
Net shares issued under employee share-based compensation plans (in shares)						1.3
Balance, end of period (in shares) at Mar. 31, 2018						270.2
Balance, beginning of year at Dec. 31, 2018	22,894	23,144	35,204	(1,859)	(33,595)
Shareholders' Equity [Roll Forward]
Employee share-based compensation		54
Compensation amortization under share-based plans and other changes		45
Net income	796		796
Dividends			(204)
Other			(1)
Other comprehensive income (loss)	1,177			1,177
Treasury stock acquired — share repurchase authorization	(375)				(375)
Net shares acquired related to employee share-based compensation plans	(46)				(46)
Balance, end of period at Mar. 31, 2019	$ 24,340	$ 23,243	$ 35,795	$ (682)	$ (34,016)
Balance, beginning of year (in shares) at Dec. 31, 2018	263.6					263.6
Common shares outstanding
Treasury stock acquired - share repurchase authorization (in shares)	(2.9)					(2.9)
Net shares issued under employee share-based compensation plans (in shares)						1.2
Balance, end of period (in shares) at Mar. 31, 2019	261.9					261.9

XML

Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities
Net income		$ 796	$ 669
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment (gains) losses	[1]	(53)	11
Depreciation and amortization		211	212
Deferred federal income tax expense (benefit)		32	(56)
Amortization of deferred acquisition costs		1,117	1,061
Equity in income from other investments		(34)	(95)
Premiums receivable		(434)	(397)
Reinsurance recoverables		98	5
Deferred acquisition costs		(1,185)	(1,124)
Claims and claim adjustment expense reserves		(2)	180
Unearned premium reserves		551	518
Other operating activities		(458)	(430)
Net cash provided by operating activities		639	554
Cash flows from investing activities
Proceeds from maturities of fixed maturities		1,556	1,950
Proceeds from sales of investments:
Fixed maturities		769	1,085
Equity securities		39	26
Other investments		105	114
Purchases of investments:
Fixed maturities		(2,914)	(3,920)
Equity securities		(22)	(20)
Real estate investments		(77)	(33)
Other investments		(146)	(142)
Net sales (purchases) of short-term securities		(109)	410
Securities transactions in course of settlement		295	202
Other investing activities		(82)	(53)
Net cash used in investing activities		(586)	(381)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorization		(375)	(350)
Treasury stock acquired — net employee share-based compensation		(46)	(51)
Dividends paid to shareholders		(205)	(197)
Payment of debt			(100)
Issuance of debt		492	491
Issuance of common stock — employee share options		63	85
Net cash used in financing activities		(71)	(122)
Effect of exchange rate changes on cash		2	2
Net increase (decrease) in cash		(16)	53
Cash at beginning of year		373	344
Cash at end of period		357	397
Supplemental disclosure of cash flow information
Income taxes paid		5	56
Interest paid		$ 50	$ 39

[1] Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively. Of total OTTI, credit losses of $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively, were recognized in net realized investment gains (losses). In addition, unrealized gains (losses) from other changes in total OTTI of $0 for each of the three months ended March 31, 2019 and 2018, respectively, were recognized in other comprehensive income (loss) as part of changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income.

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Basis of Presentation and Accounting Policies

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Accounting Policies

BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Basis of Presentation

The interim consolidated financial statements include the accounts of The Travelers Companies, Inc. (together with its subsidiaries, the Company). These financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP) and are unaudited.  In the opinion of the Company’s management, all adjustments necessary for a fair presentation have been reflected.  Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted.  All material intercompany transactions and balances have been eliminated.  The accompanying interim consolidated financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the Company’s 2018 Annual Report).

The preparation of the interim consolidated financial statements in conformity with 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 interim consolidated financial statements and the reported amounts of revenues and claims and expenses during the reporting period.  Actual results could differ from those estimates.

Adoption of Accounting Standards

Leases

Effective for the quarter ended March 31, 2019, the Company adopted the updated guidance for leases and elected to utilize a cumulative-effect adjustment to the opening balance of retained earnings for the year of adoption.  Accordingly, the Company’s reporting for the comparative periods prior to adoption continue to be presented in the financial statements in accordance with previous lease accounting guidance.  The Company also elected to apply all practical expedients applicable to the Company in the updated guidance for transition for leases in effect at adoption, including using hindsight to determine the lease term of existing leases, the option to not reassess whether an existing contract is a lease or contains a lease and whether the lease is an operating or finance lease. The adoption of the updated guidance resulted in the Company recognizing a right-of-use asset of $320 million as part of other assets and a lease liability of $384 million as part of other liabilities in the consolidated balance sheet, as well as de-recognizing the liability for deferred rent that was required under the previous guidance, for its corporate real estate agreements at March 31, 2019.  The cumulative effect adjustment to the opening balance of retained earnings was zero. The adoption of the updated guidance did not have a material effect on the Company’s results of operations or liquidity.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

Effective for the quarter ended March 31, 2019, the Company adopted the updated guidance regarding Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, and applied the guidance prospectively.  The updated guidance requires an entity to determine the stage of a project that the implementation activity relates to and the nature of the associated costs in order to determine whether those costs should be expensed as incurred or capitalized.  The updated guidance also requires the entity to amortize the capitalized implementation costs as an expense over the term of the hosting arrangement. The adoption of the updated guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

For additional information regarding accounting standards that the Company adopted during the periods presented, see note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

Accounting Standards Not Yet Adopted

For information regarding accounting standards that the Company has not yet adopted, see the “Other Accounting Standards Not Yet Adopted” section of note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

Nature of Operations

The Company’s results are reported in the following three business segments — Business Insurance, Bond & Specialty Insurance and Personal Insurance. These segments reflect the manner in which the Company’s businesses are currently managed and represent an aggregation of products and services based on the type of customer, how the business is marketed and the manner in which risks are underwritten. For more information regarding the Company’s nature of operations, see the “Nature of Operations” section of note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

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Segment Information

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The following tables summarize the components of the Company’s revenues, income and total assets by reportable business segments:

(For the three months ended March 31, in millions)	Business Insurance		Bond & Specialty Insurance		Personal Insurance		Total Reportable Segments
2019
Premiums	$	3,742	$	606	$	2,507	$	6,855
Net investment income	427		56		99		582
Fee income	104		—		5		109
Other revenues	43		6		22		71
Total segment revenues (1)	$	4,316	$	668	$	2,633	$	7,617
Segment income (1)	$	414	$	138	$	278	$	830
2018
Premiums	$	3,568	$	582	$	2,387	$	6,537
Net investment income	446		58		99		603
Fee income	99		—		4		103
Other revenues	31		6		17		54
Total segment revenues (1)	$	4,144	$	646	$	2,507	$	7,297
Segment income (1)	$	452	$	173	$	129	$	754

_________________________________________________________

(1) Segment revenues for reportable business segments exclude net realized investment gains (losses). Segment income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains (losses).

Business Segment Reconciliations

	Three Months Ended March 31,
(in millions)	2019			2018
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation	$	972		$	971
Commercial automobile	628			562
Commercial property	460			438
General liability	567			521
Commercial multi-peril	840			805
Other	8			7
Total Domestic	3,475			3,304
International	267			264
Total Business Insurance	3,742			3,568
Bond & Specialty Insurance:
Domestic:
Fidelity and surety	246			246
General liability	257			242
Other	52			47
Total Domestic	555			535
International	51			47
Total Bond & Specialty Insurance	606			582
Personal Insurance:
Domestic:
Automobile	1,297			1,225
Homeowners and Other	1,039			995
Total Domestic	2,336			2,220
International	171			167
Total Personal Insurance	2,507			2,387
Total earned premiums	6,855			6,537
Net investment income	582			603
Fee income	109			103
Other revenues	71			54
Total segment revenues	7,617			7,297
Other revenues	1			—
Net realized investment gains (losses)	53			(11		)
Total revenues	$	7,671		$	7,286
Income reconciliation, net of tax
Total segment income	$	830		$	754
Interest Expense and Other (1)	(75		)	(76		)
Core income	755			678
Net realized investment gains (losses)	41			(9		)
Net income	$	796		$	669

_________________________________________________________

(1) The primary component of Interest Expense and Other was after-tax interest expense of $70 million for both the three months ended March 31, 2019 and 2018.

(in millions)	March 31, 2019		December 31, 2018
Asset reconciliation
Business Insurance	$	82,022	$	78,965
Bond & Specialty Insurance	8,363		8,693
Personal Insurance	16,288		15,943
Total assets by reportable segment	106,673		103,601
Other assets (1)	573		632
Total consolidated assets	$	107,246	$	104,233

_________________________________________________________

(1) The primary components of other assets at both March 31, 2019 and December 31, 2018 were accrued over-funded benefit plan assets related to the Company’s qualified domestic pension plan and other intangible assets.

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Investments

3 Months Ended

Mar. 31, 2019

Investments [Abstract]

Investments

INVESTMENTS

Fixed Maturities

The amortized cost and fair value of investments in fixed maturities classified as available for sale were as follows:

	Amortized		Gross Unrealized				Fair
(at March 31, 2019, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,029	$	7	$	6	$	2,030
Obligations of states, municipalities and political subdivisions:
Local general obligation	14,879		468		14		15,333
Revenue	9,757		336		8		10,085
State general obligation	1,300		37		2		1,335
Pre-refunded	2,515		79		—		2,594
Total obligations of states, municipalities and political subdivisions	28,451		920		24		29,347
Debt securities issued by foreign governments	1,184		12		2		1,194
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,601		64		16		2,649
All other corporate bonds	29,873		482		156		30,199
Redeemable preferred stock	78		3		—		81
Total	$	64,216	$	1,488	$	204	$	65,500

	Amortized		Gross Unrealized				Fair
(at December 31, 2018, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,076	$	4	$	16	$	2,064
Obligations of states, municipalities and political subdivisions:
Local general obligation	14,473		219		120		14,572
Revenue	9,755		172		74		9,853
State general obligation	1,329		18		13		1,334
Pre-refunded	2,772		80		—		2,852
Total obligations of states, municipalities and political subdivisions	28,329		489		207		28,611
Debt securities issued by foreign governments	1,255		7		5		1,257
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,557		54		38		2,573
All other corporate bonds	29,307		156		583		28,880
Redeemable preferred stock	77		2		—		79
Total	$	63,601	$	712	$	849	$	63,464

Pre-refunded bonds of $2.59 billion and $2.85 billion at March 31, 2019 and December 31, 2018, respectively, were bonds for which 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.

Proceeds from sales of fixed maturities classified as available for sale were $769 million and $1.09 billion during the three months ended March 31,2019 and 2018, respectively. Gross gains of $21 million and $6 million and gross losses of $4 million and $6 million were realized on those sales during the three months ended March 31,2019 and 2018, respectively.

Equity Securities

The cost and fair value of investments in equity securities were as follows:

							Fair
(at March 31, 2019, in millions)	Cost		Gross Gains		Gross Losses		Value
Public common stock	$	339	$	24	$	6	$	357
Non-redeemable preferred stock	36		7		—		43
Total	$	375	$	31	$	6	$	400

							Fair
(at December 31, 2018, in millions)	Cost		Gross Gains		Gross Losses		Value
Public common stock	$	338	$	2	$	24	$	316
Non-redeemable preferred stock	44		8		—		52
Total	$	382	$	10	$	24	$	368

For the three months ended March 31,2019, the Company recognized $39 million of net gains on equity securities still held as of March 31, 2019. For the three months ended March 31,2018, the Company recognized $13 million of net losses on equity securities still held as of March 31, 2018.

Unrealized Investment Losses

The following tables summarize, for all investments in an unrealized loss position at March 31, 2019 and December 31, 2018, the aggregate fair value and gross unrealized loss by 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 herein and in note 4 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.  The Company also relies upon estimates of several factors in its review and evaluation of individual investments, using the process described in note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report to determine whether such investments are other-than-temporarily impaired.

	Less than 12 months				12 months or longer				Total
(at March 31, 2019, 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	$	51	$	—	$	1,056	$	6	$	1,107	$	6
Obligations of states, municipalities and political subdivisions	103		—		2,464		24		2,567		24
Debt securities issued by foreign governments	15		—		255		2		270		2
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	32		—		1,333		16		1,365		16
All other corporate bonds	551		7		9,622		149		10,173		156
Total fixed maturities	$	752	$	7	$	14,730	$	197	$	15,482	$	204

	Less than 12 months				12 months or longer				Total
(at December 31, 2018, 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	$	484	$	5	$	1,011	$	11	$	1,495	$	16
Obligations of states, municipalities and political subdivisions	5,241		82		3,298		125		8,539		207
Debt securities issued by foreign governments	96		—		328		5		424		5
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	593		9		1,070		29		1,663		38
All other corporate bonds	12,622		303		6,872		280		19,494		583
Total fixed maturities	$	19,036	$	399	$	12,579	$	450	$	31,615	$	849

At March 31, 2019, the amount of gross unrealized losses for all fixed maturity investments reported at fair value for which fair value was less than 80% of amortized cost was not significant.

Impairment Charges

Impairment charges included in net realized investment gains (losses) in the consolidated statement of income were $1 million and $0 for the three months ended March 31, 2019 and 2018, respectively.

The cumulative amount of credit losses on fixed maturities held at March 31, 2019 and 2018 that were recognized in the consolidated statement of income from other-than-temporary impairments (OTTI) and for which a portion of the OTTI was recognized in other comprehensive income (loss) in the consolidated balance sheet was $56 million and $75 million, respectively.  These credit losses represent 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 dates.  There were no significant changes in the credit component of OTTI during the three months ended March 31,2019 and 2018 compared to what was disclosed in note 3 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

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.

Valuation of Investments Reported at Fair Value in Financial Statements

The Company utilized a pricing service to estimate fair value measurements for approximately 99% of its fixed maturities at both March 31, 2019 and December 31, 2018.

While the vast majority of the Company’s fixed maturities are included in Level 2, the Company holds a number of municipal bonds and corporate bonds which are not valued by the pricing service and also estimates the fair value of these bonds using another internal pricing matrix that includes some unobservable inputs that are significant to the valuation.  Due to the limited amount of observable market information, the Company includes the fair value estimates for these particular bonds in Level 3.  The fair value of the fixed maturities for which the Company used this internal pricing matrix was $96 million and $82 million at March 31, 2019 and December 31, 2018, respectively.  Additionally, the Company holds a small amount of other fixed maturity investments that have characteristics that make them unsuitable for matrix pricing.  For these fixed maturities, the Company obtains a quote from a broker (primarily the market maker).  The fair value of the fixed maturities for which the Company received a broker quote was $19 million and $104 million at March 31, 2019 and December 31, 2018, respectively.  Due to the disclaimers on the quotes that indicate that the price is indicative only, the Company includes these fair value estimates in Level 3.

For more information regarding the valuation of the Company’s fixed maturities, equity securities and other investments, see note 4 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

Other Liabilities

The Company has a put/call option that was entered into in connection with a business acquisition that allows the Company to acquire the remaining shares of the acquired company at a future date. The fair value of the put/call at both March 31, 2019 and December 31, 2018 was $10 million and was determined using an internal model and is based on the acquired company's financial performance, adjusted for a risk margin and discounted to present value. The Company includes the fair value estimate of the put/call in Level 3.

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 March 31, 2019, 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	$	2,030	$	2,030	$	—	$	—
Obligations of states, municipalities and political subdivisions	29,347		—		29,335		12
Debt securities issued by foreign governments	1,194		—		1,194		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,649		—		2,649		—
All other corporate bonds	30,199		4		30,092		103
Redeemable preferred stock	81		3		78		—
Total fixed maturities	65,500		2,037		63,348		115
Equity securities
Public common stock	357		356		1		—
Non-redeemable preferred stock	43		14		29		—
Total equity securities	400		370		30		—
Other investments	58		16		—		42
Total	$	65,958	$	2,423	$	63,378	$	157
Other liabilities	$	10	$	—	$	—	$	10

(at December 31, 2018, 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	$	2,064	$	2,064	$	—	$	—
Obligations of states, municipalities and political subdivisions	28,611		—		28,599		12
Debt securities issued by foreign governments	1,257		—		1,257		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,573		—		2,554		19
All other corporate bonds	28,880		—		28,725		155
Redeemable preferred stock	79		3		76		—
Total fixed maturities	63,464		2,067		61,211		186
Equity securities
Public common stock	316		316		—		—
Non-redeemable preferred stock	52		30		22		—
Total equity securities	368		346		22		—
Other investments	52		16		—		36
Total	$	63,884	$	2,429	$	61,233	$	222
Other liabilities	$	10	$	—	$	—	$	10

There was no significant activity in Level 3 of the hierarchy during the three months ended March 31,2019 or the year ended December 31, 2018.

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 March 31, 2019, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Short-term securities	$	4,094	$	4,094	$	483	$	3,567	$	44
Financial liabilities
Debt	$	6,957	$	7,984	$	—	$	7,984	$	—
Commercial paper	$	100	$	100	$	—	$	100	$	—

(at December 31, 2018, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Short-term securities	$	3,985	$	3,985	$	632	$	3,316	$	37
Financial liabilities
Debt	$	6,464	$	7,128	$	—	$	7,128	$	—
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 three months ended March 31, 2019 or year ended December 31, 2018.

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

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.

(in millions)	March 31, 2019		December 31, 2018
Business Insurance	$	2,594	$	2,585
Bond & Specialty Insurance	550		550
Personal Insurance	779		776
Other	26		26
Total	$	3,949	$	3,937

Other Intangible Assets

The following tables present a summary of the Company’s other intangible assets by major asset class.

(at March 31, 2019, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	100	$	15	$	85
Contract-based (1)	204		174		30
Total subject to amortization	304		189		115
Not subject to amortization	226		—		226
Total	$	530	$	189	$	341

(at December 31, 2018, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	98	$	12	$	86
Contract-based (1)	208		175		33
Total subject to amortization	306		187		119
Not subject to amortization	226		—		226
Total	$	532	$	187	$	345

 _________________________________________________________

(1) 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.

Amortization expense of intangible assets was $4 million for both the three months ended March 31, 2019 and 2018.  Intangible asset amortization expense is estimated to be $12 million for the remainder of 2019, $15 million in 2020, $14 million in 2021, $13 million in 2022 and $12 million in 2023. Amortization expense for intangible assets arising from insurance contracts acquired in a business combination is estimated to be $4 million for the remainder of 2019, $5 million in 2020, $4 million in 2021, $3 million in 2022 and $3 million in 2023.

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Insurance Claim Reserves

3 Months Ended

Mar. 31, 2019

Insurance Loss Reserves [Abstract]

Insurance Claim Reserves

INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:

(in millions)	March 31, 2019		December 31, 2018
Property-casualty	$	50,704	$	50,653
Accident and health	14		15
Total	$	50,718	$	50,668

The following table presents a reconciliation of beginning and ending property casualty reserve balances for claims and claim adjustment expenses:

	Three Months Ended March 31,
(in millions)	2019			2018
Claims and claim adjustment expense reserves at beginning of year	$	50,653		$	49,633
Less reinsurance recoverables on unpaid losses	8,182			8,123
Net reserves at beginning of year	42,471			41,510
Estimated claims and claim adjustment expenses for claims arising in the current year	4,435			4,391
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(16		)	(116		)
Total increases	4,419			4,275
Claims and claim adjustment expense payments for claims arising in:
Current year	970			1,009
Prior years	3,320			3,040
Total payments	4,290			4,049
Unrealized foreign exchange (gain) loss	41			(10		)
Net reserves at end of period	42,641			41,726
Plus reinsurance recoverables on unpaid losses	8,063			8,068
Claims and claim adjustment expense reserves at end of period	$	50,704		$	49,794

Gross claims and claim adjustment expense reserves at March 31, 2019 increased by $51 million from December 31, 2018, primarily reflecting the impacts of (i) higher volumes of insured exposures and loss cost trends for the current accident year and (ii) catastrophe losses in the first three months of 2019, partially offset by the impacts of (iii) payments related to catastrophe losses incurred in 2018 and (iv) net favorable prior year reserve development.

Reinsurance recoverables on unpaid losses at March 31, 2019 decreased by $119 million from December 31, 2018, primarily reflecting the impact of cash collections in the first three months of 2019.

Prior Year Reserve Development

The following disclosures regarding reserve development are on a “net of reinsurance” basis.

For the three months ended March 31,2019 and 2018, estimated claims and claim adjustment expenses incurred included $16 million and $116 million, respectively, of net favorable development for claims arising in prior years, including $51 million and $150 million, respectively, of net favorable prior year reserve development and $12 million and $13 million, respectively, of accretion of discount that impacted the Company's results of operations.

Business Insurance. Net unfavorable prior year reserve development in the first quarter of 2019 totaled $21 million, primarily driven by higher than expected loss experience in the segment's domestic operations in (i) the general liability product line for multiple accident years, primarily for years prior to 2009, due to the enactment by New York State of the Child Victims Act (“CVA”) on February 14, 2019 and (ii) the commercial multi-peril product line for recent accident years, partially offset by (iii) better than expected loss experience in the segment's domestic operations in the workers’ compensation product line for multiple accident years. The CVA extends the statute of limitations for claimants asserting childhood sexual molestation, including a “reviver” component that allows claimants of any age to file a civil claim during a one-year window beginning six months after the CVA took effect. Net favorable prior year reserve development in the first quarter of 2018 totaled $66 million, primarily driven by better than expected loss experience in the segment's domestic operations in (i) the workers’ compensation product line for recent accident years and (ii) the commercial property product line for accident year 2016, partially offset by (iii) higher than expected loss experience in the commercial automobile product line for recent accident years.

Bond & Specialty Insurance.  Net favorable prior year reserve development in the first quarter of 2019 of $3 million was not significant. Net favorable prior year reserve development in the first quarter of 2018 totaled $35 million, primarily driven by better than expected loss experience in the segment's domestic operations in the general liability product line for multiple accident years.

Personal Insurance.  Net favorable prior year reserve development in the first quarter of 2019 totaled $69 million, primarily driven by better than expected loss experience in the segment's domestic operations in the automobile product line for recent accident years. Net favorable prior year reserve development in the first quarter of 2018 totaled $49 million, primarily driven by better than expected loss experience in the segment's domestic operations in the homeowners and other product line for accident years 2016 and 2017 and in the automobile product line for accident year 2017.

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Other Comprehensive Income and Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2019

Other Comprehensive Income and Accumulated Other Comprehensive Income disclosure

Other Comprehensive Income and Accumulated Other Comprehensive Income

OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in the Company’s accumulated other comprehensive income (loss) (AOCI) for the three months ended March 31,2019.

	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, 2018	$	(306	)	$	193	$	(873	)	$	(873	)	$	(1,859	)
Other comprehensive income (OCI) before reclassifications, net of tax	1,129			4		—			47			1,180
Amounts reclassified from AOCI, net of tax	(13		)	—		10			—			(3		)
Net OCI, current period	1,116			4		10			47			1,177
Balance, March 31, 2019	$	810		$	197	$	(863	)	$	(826	)	$	(682	)

The following table presents the pre-tax components of the Company’s other comprehensive income (loss) and the related income tax expense (benefit).

	Three Months Ended March 31,
(in millions)	2019		2018
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	1,416	$	(1,203	)
Income tax expense (benefit)	300		(253		)
Net of taxes	1,116		(950		)
Having credit losses recognized in the consolidated statement of income	5		(2		)
Income tax expense (benefit)	1		(1		)
Net of taxes	4		(1		)
Net changes in benefit plan assets and obligations	12		22
Income tax expense	2		5
Net of taxes	10		17
Net changes in unrealized foreign currency translation	50		6
Income tax expense	3		5
Net of taxes	47		1
Total other comprehensive income (loss)	1,483		(1,177		)
Total income tax expense (benefit)	306		(244		)
Total other comprehensive income (loss), net of taxes	$	1,177	$	(933	)

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.

	Three Months Ended March 31,
(in millions)	2019			2018
Reclassification adjustments related to unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)	$	(16	)	$	—
Income tax expense (2)	(3		)	—
Net of taxes	(13		)	—
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 (3)	5			9
General and administrative expenses (3)	8			13
Total	13			22
Income tax benefit (2)	3			5
Net of taxes	10			17
Reclassification adjustment related to foreign currency translation (1)	—			—
Income tax benefit (2)	—			—
Net of taxes	—			—
Total reclassifications	(3		)	22
Total income tax (expense) benefit	—			5
Total reclassifications, net of taxes	$	(3	)	$	17

 _________________________________________________________

(1)   (Increases) decreases net realized investment gains (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.

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Debt

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Debt

DEBT

Debt Issuance.  On March 4, 2019, the Company issued $500 million aggregate principal amount of 4.10% senior notes that will mature on March 4, 2049.  The net proceeds of the issuance, after the deduction of the underwriting discount and expenses payable by the Company, totaled approximately $492 million.  Interest on the senior notes is payable semi-annually in arrears on March 4 and September 4.  Prior to September 4, 2048, 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 September 4, 2048 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 20 basis points.  On or after September 4, 2048, 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.

Commercial Paper.  The Company had $100 million of commercial paper outstanding at both March 31, 2019 and December 31, 2018.

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Common Share Repurchases

3 Months Ended

Mar. 31, 2019

Treasury Stock Transactions, Excluding Value of Shares Reissued [Abstract]

Common Share Repurchases

COMMON SHARE REPURCHASES

During the three months ended March 31, 2019, the Company repurchased 2.9 million shares under its share repurchase authorization, for a total cost of $375 million.  The average cost per share repurchased was $129.42.  In addition, the Company acquired 0.4 million shares for a total cost of $46 million during the three months ended March 31, 2019 that were not part of the publicly announced share repurchase authorization.  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 price of certain stock options that were exercised. At March 31, 2019, the Company had $2.91 billion of capacity remaining under its share repurchase authorization.

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Earnings per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share Reconciliation [Abstract]

Earnings per Share

EARNINGS PER SHARE

The following is a reconciliation of the net income and share data used in the basic and diluted earnings per share computations for the periods presented:

	Three Months Ended March 31,
(in millions, except per share amounts)	2019			2018
Basic and Diluted
Net income, as reported	$	796		$	669
Participating share-based awards — allocated income	(5		)	(5		)
Net income available to common shareholders — basic and diluted	$	791		$	664
Common Shares
Basic
Weighted average shares outstanding	262.9			271.0
Diluted
Weighted average shares outstanding	262.9			271.0
Weighted average effects of dilutive securities — stock options and performance shares	1.9			2.9
Total	264.8			273.9
Net Income per Common Share
Basic	$	3.01		$	2.45
Diluted	$	2.99		$	2.42

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Share-Based Incentive Compensation

3 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Incentive Compensation

SHARE-BASED INCENTIVE COMPENSATION

The following information relates to fully vested stock option awards at March 31, 2019:

Stock Options	Number	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining	Aggregate Intrinsic Value ($ in millions)
Vested at end of period (1)	7,029,165	$	103.80	5.8 years	$	237
Exercisable at end of period	5,124,196	$	94.88	4.7 years	$	217

_________________________________________________________

(1) Represents awards for which the requisite service has been rendered, including those that are retirement eligible.

The total compensation cost for all share-based incentive compensation awards recognized in earnings was $45 million and $44 million for the three months ended March 31, 2019 and 2018, respectively. The related tax benefits recognized in the consolidated statement of income were $8 million for both the three months ended March 31, 2019 and 2018.

The total unrecognized compensation cost related to all nonvested share-based incentive compensation awards at March 31, 2019 was $235 million, which is expected to be recognized over a weighted-average period of 2.2 years.

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Pension Plans, Retirement Benefits and Savings Plans

3 Months Ended

Mar. 31, 2019

Retirement Benefits [Abstract]

Pension Plans, Retirement Benefits and Savings Plans

PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS

The following table summarizes the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans recognized in the consolidated statement of income for the three months ended March 31, 2019 and 2018.

	Pension Plans						Postretirement Benefit Plans
(for the three months ended March 31, in millions)	2019			2018			2019			2018
Net Periodic Benefit Cost:
Service cost	$	30		$	33		$	—		$	—
Non-service cost:
Interest cost on benefit obligation	35			31			2			2
Expected return on plan assets	(69		)	(66		)	—			—
Amortization of unrecognized:
Prior service benefit	—			—			(1		)	(1		)
Net actuarial loss	14			23			—			—
Total non-service cost (benefit)	(20		)	(12		)	1			1
Net periodic benefit cost	$	10		$	21		$	1		$	1

The following table indicates the line items in which the respective service costs and non-service cost (benefit) are presented in the consolidated statement of income for the three months ended March 31, 2019 and 2018.

	Pension Plans						Postretirement Benefit Plans
(for the three months ended March 31, in millions)	2019			2018			2019		2018
Service Cost:
Claims and claim adjustment expenses	$	12		$	13		$	—	$	—
General and administrative expenses	18			20			—		—
Total service cost	30			33			—		—
Non-Service Cost (Benefit):
Claims and claim adjustment expenses	(8		)	(5		)	—		—
General and administrative expenses	(12		)	(7		)	1		1
Total non-service cost (benefit)	(20		)	(12		)	1		1
Net periodic benefit cost	$	10		$	21		$	1	$	1

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

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. See note 1 - Adoption of Accounting Standards - Leases for additional information regarding the accounting for leases.

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, 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:

(in millions)	Three Months Ended March 31, 2019
Lease cost
Operating leases	$	22
Short-term leases (1)	4
Lease expense	26
Less: sublease income (2)	—
Net lease cost	$	26
Other information on operating leases
Cash payments included in the measurement of lease liabilities reported in operating cash flows	$	24
Right-of-use assets obtained in exchange for new lease liabilities	$	8
Weighted average discount rate	3.07		%
Weighted average remaining lease term in years	5.2 years

_________________________________________________________

(1) Leases with an initial term of twelve months or less are not recorded on the 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
Remainder of 2019	$	73
2020	95
2021	82
2022	61
2023	41
Thereafter	62
Total undiscounted lease payments	414
Less: present value adjustment	30
Operating lease liability	$	384

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Contingencies, Commitments and Guarantees

3 Months Ended

Mar. 31, 2019

Contingencies, Commitments and Guarantees [Abstract]

Contingencies, Commitments and Guarantees

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.

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 and real estate partnerships in which it invests.  These commitments totaled $1.56 billion and $1.60 billion at March 31, 2019 and December 31, 2018, respectively.

Guarantees

The maximum amount of the Company’s contingent obligation for indemnifications related to the sale of businesses that are quantifiable was $358 million at March 31, 2019.

The maximum amount of the Company’s obligation for guarantees of certain investments and third-party loans related to certain investments that are quantifiable was $0 at March 31, 2019. 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 March 31, 2019, all of which is indemnified by a third party.  For more information regarding Company guarantees, see note 16 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

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Consolidating Financial Statements (Unaudited)

3 Months Ended

Mar. 31, 2019

Consolidating Financial Statements of The Travelers Companies, Inc. and Subsidiaries (Unaudited) disclosure

Consolidating Financial Statements of The Travelers Companies, Inc. and Subsidiaries (Unaudited)

CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

The following consolidating financial statements of the Company have been prepared pursuant to Rule 3-10 of Regulation S-X. These consolidating financial statements have been prepared from the Company’s financial information on the same basis of accounting as the consolidated financial statements. The Travelers Companies, Inc. (excluding its subsidiaries, TRV) has fully and unconditionally guaranteed certain debt obligations of Travelers Property Casualty Corp. (TPC) and Travelers Insurance Group Holdings, Inc. (TIGHI), which totaled $700 million at March 31, 2019.

Prior to the merger of TPC and The St. Paul Companies, Inc. in 2004, TPC fully and unconditionally guaranteed the payment of all principal, premiums, if any, and interest on certain debt obligations of its wholly-owned subsidiary, TIGHI. Concurrent with the merger, TRV fully and unconditionally assumed such guarantee obligations of TPC. TPC is deemed to have no assets or operations independent of TIGHI. Consolidating financial information for TIGHI has not been presented herein because such financial information would be substantially the same as the financial information provided for TPC.

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended March 31, 2019

(in millions)	TPC		Other Subsidiaries		TRV			Eliminations			Consolidated
Revenues
Premiums	$	4,689	$	2,166	$	—		$	—		$	6,855
Net investment income	416		155		11			—			582
Fee income	109		—		—			—			109
Net realized investment gains (1)	22		15		16			—			53
Other revenues	38		34		—			—			72
Total revenues	5,274		2,370		27			—			7,671
Claims and expenses
Claims and claim adjustment expenses	3,024		1,418		—			—			4,442
Amortization of deferred acquisition costs	745		372		—			—			1,117
General and administrative expenses	722		330		5			—			1,057
Interest expense	12		—		76			—			88
Total claims and expenses	4,503		2,120		81			—			6,704
Income (loss) before income taxes	771		250		(54		)	—			967
Income tax expense (benefit)	146		42		(17		)	—			171
Net income of subsidiaries	—		—		833			(833		)	—
Net income	$	625	$	208	$	796		$	(833	)	$	796

____________________________________________________

(1) Total other-than-temporary impairments (OTTI) for the three months ended March 31, 2019, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			Other Subsidiaries		TRV		Eliminations		Consolidated
Total OTTI losses	$	(1	)	$	—	$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains	$	(1	)	$	—	$	—	$	—	$	(1	)
OTTI losses recognized in OCI	$	—		$	—	$	—	$	—	$	—

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended March 31, 2018

(in millions)	TPC		Other Subsidiaries			TRV			Eliminations			Consolidated
Revenues
Premiums	$	4,468	$	2,069		$	—		$	—		$	6,537
Net investment income	412		185			6			—			603
Fee income	103		—			—			—			103
Net realized investment gains (losses) (1)	2		(12		)	(1		)	—			(11		)
Other revenues	27		28			—			(1		)	54
Total revenues	5,012		2,270			5			(1		)	7,286
Claims and expenses
Claims and claim adjustment expenses	2,910		1,386			—			—			4,296
Amortization of deferred acquisition costs	705		356			—			—			1,061
General and administrative expenses	729		328			6			(1		)	1,062
Interest expense	11		—			78			—			89
Total claims and expenses	4,355		2,070			84			(1		)	6,508
Income (loss) before income taxes	657		200			(79		)	—			778
Income tax expense (benefit)	106		32			(29		)	—			109
Net income of subsidiaries	—		—			719			(719		)	—
Net income	$	551	$	168		$	669		$	(719	)	$	669

_________________________________________________________

(1) Total other-than-temporary impairments (OTTI) for the three months ended March 31, 2018, and the amounts comprising total OTTI that were recognized in net realized investment gains (losses) and in other comprehensive income (loss) (OCI) were as follows:

(in millions)	TPC		Other Subsidiaries		TRV		Eliminations		Consolidated
Total OTTI losses	$	—	$	—	$	—	$	—	$	—
OTTI losses recognized in net realized investment gains (losses)	$	—	$	—	$	—	$	—	$	—
OTTI gains recognized in OCI	$	—	$	—	$	—	$	—	$	—

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended March 31, 2019

(in millions)	TPC		Other Subsidiaries		TRV		Eliminations			Consolidated
Net income	$	625	$	208	$	796	$	(833	)	$	796
Other comprehensive income:
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	979		435		2		—			1,416
Having credit losses recognized in the consolidated statement of income	4		1		—		—			5
Net changes in benefit plan assets and obligations	—		—		12		—			12
Net changes in unrealized foreign currency translation	19		31		—		—			50
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	1,002		467		14		—			1,483
Income tax expense	208		93		5		—			306
Other comprehensive income, net of taxes, before other comprehensive income of subsidiaries	794		374		9		—			1,177
Other comprehensive income of subsidiaries	—		—		1,168		(1,168		)	—
Other comprehensive income	794		374		1,177		(1,168		)	1,177
Comprehensive income	$	1,419	$	582	$	1,973	$	(2,001	)	$	1,973

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For the three months ended March 31, 2018

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Net income	$	551		$	168		$	669		$	(719	)	$	669
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	(838		)	(364		)	(1		)	—			(1,203		)
Having credit losses recognized in the consolidated statement of income	(1		)	(1		)	—			—			(2		)
Net changes in benefit plan assets and obligations	—			—			22			—			22
Net changes in unrealized foreign currency translation	(25		)	31			—			—			6
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(864		)	(334		)	21			—			(1,177		)
Income tax expense (benefit)	(175		)	(77		)	8			—			(244		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(689		)	(257		)	13			—			(933		)
Other comprehensive loss of subsidiaries	—			—			(946		)	946			—
Other comprehensive loss	(689		)	(257		)	(933		)	946			(933		)
Comprehensive loss	$	(138	)	$	(89	)	$	(264	)	$	227		$	(264	)

CONSOLIDATING BALANCE SHEET (Unaudited)

At March 31, 2019

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $64,216)	$	45,336		$	20,079		$	85		$	—		$	65,500
Equity securities, at fair value (cost $375)	105			106			189			—			400
Real estate investments	1			968			—			—			969
Short-term securities	1,645			581			1,868			—			4,094
Other investments	2,772			781			1			—			3,554
Total investments	49,859			22,515			2,143			—			74,517
Cash	150			207			—			—			357
Investment income accrued	406			182			3			—			591
Premiums receivable	5,356			2,591			—			—			7,947
Reinsurance recoverables	6,496			1,785			—			—			8,281
Ceded unearned premiums	838			97			—			—			935
Deferred acquisition costs	1,987			203			—			—			2,190
Deferred taxes	(76		)	222			(31		)	—			115
Contractholder receivables	4,801			10			—			—			4,811
Goodwill	2,581			1,377			—			(9		)	3,949
Other intangible assets	222			119			—			—			341
Investment in subsidiaries	—			—			28,475			(28,475		)	—
Other assets	2,470			393			349			—			3,212
Total assets	$	75,090		$	29,701		$	30,939		$	(28,484	)	$	107,246
Liabilities
Claims and claim adjustment expense reserves	$	34,800		$	15,918		$	—		$	—		$	50,718
Unearned premium reserves	9,872			4,250			—			—			14,122
Contractholder payables	4,801			10			—			—			4,811
Payables for reinsurance premiums	380			255			—			—			635
Debt	693			—			6,364			—			7,057
Other liabilities	4,287			1,049			227			—			5,563
Total liabilities	54,833			21,482			6,591			—			82,906
Shareholders’ equity
Common stock (1,750.0 shares authorized; 262.0 shares issued and 261.9 shares outstanding)	—			401			23,243			(401		)	23,243
Additional paid-in capital	11,634			7,083			—			(18,717		)	—
Retained earnings	8,390			807			35,803			(9,205		)	35,795
Accumulated other comprehensive income (loss)	233			(72		)	(682		)	(161		)	(682		)
Treasury stock, at cost (514.2 shares)	—			—			(34,016		)	—			(34,016		)
Total shareholders’ equity	20,257			8,219			24,348			(28,484		)	24,340
Total liabilities and shareholders’ equity	$	75,090		$	29,701		$	30,939		$	(28,484	)	$	107,246

CONSOLIDATING BALANCE SHEET (Unaudited)

At December 31, 2018

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $63,601)	$	43,683		$	19,697		$	84		$	—		$	63,464
Equity securities, available for sale, at fair value (cost $382)	105			92			171			—			368
Real estate investments	2			902			—			—			904
Short-term securities	1,855			759			1,371			—			3,985
Other investments	2,746			810			1			—			3,557
Total investments	48,391			22,260			1,627			—			72,278
Cash	181			192			—			—			373
Investment income accrued	434			187			3			—			624
Premiums receivable	5,089			2,417			—			—			7,506
Reinsurance recoverables	5,904			2,466			—			—			8,370
Ceded unearned premiums	522			56			—			—			578
Deferred acquisition costs	1,930			190			—			—			2,120
Deferred taxes	167			302			(24		)	—			445
Contractholder receivables	3,867			918			—			—			4,785
Goodwill	2,578			1,368			—			(9		)	3,937
Other intangible assets	224			121			—			—			345
Investment in subsidiaries	—			—			26,993			(26,993		)	—
Other assets	2,220			15			669			(32		)	2,872
Total assets	$	71,507		$	30,492		$	29,268		$	(27,034	)	$	104,233
Liabilities
Claims and claim adjustment expense reserves	$	34,093		$	16,575		$	—		$	—		$	50,668
Unearned premium reserves	9,414			4,141			—			—			13,555
Contractholder payables	3,867			918			—			—			4,785
Payables for reinsurance premiums	169			120			—			—			289
Debt	693			32			5,871			(32		)	6,564
Other liabilities	4,133			849			496			—			5,478
Total liabilities	52,369			22,635			6,367			(32		)	81,339
Shareholders’ equity
Common stock (1,750.0 shares authorized; 263.7 shares issued and 263.6 shares outstanding)	—			401			23,144			(401		)	23,144
Additional paid-in capital	11,634			7,023			—			(18,657		)	—
Retained earnings	8,065			879			35,211			(8,951		)	35,204
Accumulated other comprehensive loss	(561		)	(446		)	(1,859		)	1,007			(1,859		)
Treasury stock, at cost (510.9 shares)	—			—			(33,595		)	—			(33,595		)
Total shareholders’ equity	19,138			7,857			22,901			(27,002		)	22,894
Total liabilities and shareholders’ equity	$	71,507		$	30,492		$	29,268		$	(27,034	)	$	104,233

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the three months ended March 31, 2019

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	625		$	208		$	796		$	(833	)	$	796
Net adjustments to reconcile net income to net cash provided by operating activities	(110		)	(42		)	(227		)	222			(157		)
Net cash provided by operating activities	515			166			569			(611		)	639
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,043			508			5			—			1,556
Proceeds from sales of investments:
Fixed maturities	551			218			—			—			769
Equity securities	19			20			—			—			39
Real estate investments	—			—			—			—			—
Other investments	90			15			—			—			105
Purchases of investments:
Fixed maturities	(2,228		)	(682		)	(4		)	—			(2,914		)
Equity securities	(1		)	(20		)	(1		)	—			(22		)
Real estate investments	—			(77		)	—			—			(77		)
Other investments	(134		)	(12		)	—			—			(146		)
Net sales (purchases) of short-term securities	210			178			(497		)	—			(109		)
Securities transactions in course of settlement	283			13			(1		)	—			295
Other	(80		)	(2		)	—			—			(82		)
Net cash provided by (used in) investing activities	(247		)	159			(498		)	—			(586		)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorization	—			—			(375		)	—			(375		)
Treasury stock acquired — net employee share-based compensation	—			—			(46		)	—			(46		)
Dividends paid to shareholders	—			—			(205		)	—			(205		)
Payment of debt	—			(32		)	—			32			—
Issuance of debt	—			—			492			—			492
Issuance of common stock — employee share options	—			—			63			—			63
Dividends paid to parent company	(300		)	(279		)	—			579			—
Net cash used in financing activities	(300		)	(311		)	(71		)	611			(71		)
Effect of exchange rate changes on cash	1			1			—			—			2
Net increase (decrease) in cash	(31		)	15			—			—			(16		)
Cash at beginning of year	181			192			—			—			373
Cash at end of period	$	150		$	207		$	—		$	—		$	357
Supplemental disclosure of cash flow information
Income taxes paid	$	4		$	1		$	—		$	—		$	5
Interest paid	$	16		$	—		$	34		$	—		$	50

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the three months ended March 31, 2018

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	551		$	168		$	669		$	(719	)	$	669
Net adjustments to reconcile net income to net cash provided by operating activities	(126		)	(57		)	(22		)	90			(115		)
Net cash provided by operating activities	425			111			647			(629		)	554
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,453			493			4			—			1,950
Proceeds from sales of investments:
Fixed maturities	729			356			—			—			1,085
Equity securities	8			18			—			—			26
Real estate investments	—			—			—			—			—
Other investments	76			38			—			—			114
Purchases of investments:
Fixed maturities	(2,836		)	(1,078		)	(6		)	—			(3,920		)
Equity securities	(1		)	(18		)	(1		)	—			(20		)
Real estate investments	—			(33		)	—			—			(33		)
Other investments	(115		)	(27		)	—			—			(142		)
Net sales (purchases) of short-term securities	729			201			(520		)	—			410
Securities transactions in course of settlement	147			56			(1		)	—			202
Other	(52		)	(1		)	—			—			(53		)
Net cash provided by (used in) investing activities	138			5			(524		)	—			(381		)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorization	—			—			(350		)	—			(350		)
Treasury stock acquired — net employee share-based compensation	—			—			(51		)	—			(51		)
Dividends paid to shareholders	—			—			(197		)	—			(197		)
Payment of debt	—			—			(100		)	—			(100		)
Issuance of debt	—			—			491			—			491
Issuance of common stock — employee share options	—			—			85			—			85
Dividends paid to parent company	(544		)	(85		)	—			629			—
Net cash used in financing activities	(544		)	(85		)	(122		)	629			(122		)
Effect of exchange rate changes on cash	(1		)	3			—			—			2
Net increase in cash	18			34			1			—			53
Cash at beginning of year	157			187			—			—			344
Cash at end of period	$	175		$	221		$	1		$	—		$	397
Supplemental disclosure of cash flow information
Income taxes paid	$	13		$	43		$	—		$	—		$	56
Interest paid	$	16		$	—		$	23		$	—		$	39

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Basis of Presentation and Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation [Policy Text Block]

Basis of Presentation

The interim consolidated financial statements include the accounts of The Travelers Companies, Inc. (together with its subsidiaries, the Company). These financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP) and are unaudited.  In the opinion of the Company’s management, all adjustments necessary for a fair presentation have been reflected.  Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted.  All material intercompany transactions and balances have been eliminated.  The accompanying interim consolidated financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the Company’s 2018 Annual Report).

The preparation of the interim consolidated financial statements in conformity with 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 interim consolidated financial statements and the reported amounts of revenues and claims and expenses during the reporting period.  Actual results could differ from those estimates.

Adoption of Accounting Standards [Policy Text Block]

Adoption of Accounting Standards

Leases

Effective for the quarter ended March 31, 2019, the Company adopted the updated guidance for leases and elected to utilize a cumulative-effect adjustment to the opening balance of retained earnings for the year of adoption.  Accordingly, the Company’s reporting for the comparative periods prior to adoption continue to be presented in the financial statements in accordance with previous lease accounting guidance.  The Company also elected to apply all practical expedients applicable to the Company in the updated guidance for transition for leases in effect at adoption, including using hindsight to determine the lease term of existing leases, the option to not reassess whether an existing contract is a lease or contains a lease and whether the lease is an operating or finance lease. The adoption of the updated guidance resulted in the Company recognizing a right-of-use asset of $320 million as part of other assets and a lease liability of $384 million as part of other liabilities in the consolidated balance sheet, as well as de-recognizing the liability for deferred rent that was required under the previous guidance, for its corporate real estate agreements at March 31, 2019.  The cumulative effect adjustment to the opening balance of retained earnings was zero. The adoption of the updated guidance did not have a material effect on the Company’s results of operations or liquidity.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

Effective for the quarter ended March 31, 2019, the Company adopted the updated guidance regarding Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, and applied the guidance prospectively.  The updated guidance requires an entity to determine the stage of a project that the implementation activity relates to and the nature of the associated costs in order to determine whether those costs should be expensed as incurred or capitalized.  The updated guidance also requires the entity to amortize the capitalized implementation costs as an expense over the term of the hosting arrangement. The adoption of the updated guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

For additional information regarding accounting standards that the Company adopted during the periods presented, see note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Company's revenues and income by segment [Table Text Block]

(For the three months ended March 31, in millions)	Business Insurance		Bond & Specialty Insurance		Personal Insurance		Total Reportable Segments
2019
Premiums	$	3,742	$	606	$	2,507	$	6,855
Net investment income	427		56		99		582
Fee income	104		—		5		109
Other revenues	43		6		22		71
Total segment revenues (1)	$	4,316	$	668	$	2,633	$	7,617
Segment income (1)	$	414	$	138	$	278	$	830
2018
Premiums	$	3,568	$	582	$	2,387	$	6,537
Net investment income	446		58		99		603
Fee income	99		—		4		103
Other revenues	31		6		17		54
Total segment revenues (1)	$	4,144	$	646	$	2,507	$	7,297
Segment income (1)	$	452	$	173	$	129	$	754

_________________________________________________________

(1) Segment revenues for reportable business segments exclude net realized investment gains (losses). Segment income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains (losses).

Business segment reconciliations of revenue and income, net of tax [Table Text Block]

	Three Months Ended March 31,
(in millions)	2019			2018
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation	$	972		$	971
Commercial automobile	628			562
Commercial property	460			438
General liability	567			521
Commercial multi-peril	840			805
Other	8			7
Total Domestic	3,475			3,304
International	267			264
Total Business Insurance	3,742			3,568
Bond & Specialty Insurance:
Domestic:
Fidelity and surety	246			246
General liability	257			242
Other	52			47
Total Domestic	555			535
International	51			47
Total Bond & Specialty Insurance	606			582
Personal Insurance:
Domestic:
Automobile	1,297			1,225
Homeowners and Other	1,039			995
Total Domestic	2,336			2,220
International	171			167
Total Personal Insurance	2,507			2,387
Total earned premiums	6,855			6,537
Net investment income	582			603
Fee income	109			103
Other revenues	71			54
Total segment revenues	7,617			7,297
Other revenues	1			—
Net realized investment gains (losses)	53			(11		)
Total revenues	$	7,671		$	7,286
Income reconciliation, net of tax
Total segment income	$	830		$	754
Interest Expense and Other (1)	(75		)	(76		)
Core income	755			678
Net realized investment gains (losses)	41			(9		)
Net income	$	796		$	669

_________________________________________________________

(1) The primary component of Interest Expense and Other was after-tax interest expense of $70 million for both the three months ended March 31, 2019 and 2018.

Asset reconciliation [Table Text Block]

(in millions)	March 31, 2019		December 31, 2018
Asset reconciliation
Business Insurance	$	82,022	$	78,965
Bond & Specialty Insurance	8,363		8,693
Personal Insurance	16,288		15,943
Total assets by reportable segment	106,673		103,601
Other assets (1)	573		632
Total consolidated assets	$	107,246	$	104,233

_________________________________________________________

(1) The primary components of other assets at both March 31, 2019 and December 31, 2018 were accrued over-funded benefit plan assets related to the Company’s qualified domestic pension plan and other intangible assets.

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Investments (Tables)

3 Months Ended

Mar. 31, 2019

Investments [Abstract]

Amortized cost and fair value of investments in fixed maturities [Table Text Block]

The amortized cost and fair value of investments in fixed maturities classified as available for sale were as follows:

	Amortized		Gross Unrealized				Fair
(at March 31, 2019, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,029	$	7	$	6	$	2,030
Obligations of states, municipalities and political subdivisions:
Local general obligation	14,879		468		14		15,333
Revenue	9,757		336		8		10,085
State general obligation	1,300		37		2		1,335
Pre-refunded	2,515		79		—		2,594
Total obligations of states, municipalities and political subdivisions	28,451		920		24		29,347
Debt securities issued by foreign governments	1,184		12		2		1,194
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,601		64		16		2,649
All other corporate bonds	29,873		482		156		30,199
Redeemable preferred stock	78		3		—		81
Total	$	64,216	$	1,488	$	204	$	65,500

	Amortized		Gross Unrealized				Fair
(at December 31, 2018, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,076	$	4	$	16	$	2,064
Obligations of states, municipalities and political subdivisions:
Local general obligation	14,473		219		120		14,572
Revenue	9,755		172		74		9,853
State general obligation	1,329		18		13		1,334
Pre-refunded	2,772		80		—		2,852
Total obligations of states, municipalities and political subdivisions	28,329		489		207		28,611
Debt securities issued by foreign governments	1,255		7		5		1,257
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,557		54		38		2,573
All other corporate bonds	29,307		156		583		28,880
Redeemable preferred stock	77		2		—		79
Total	$	63,601	$	712	$	849	$	63,464

Cost and fair value of investments in equity securities [Table Text Block]

The cost and fair value of investments in equity securities were as follows:

							Fair
(at March 31, 2019, in millions)	Cost		Gross Gains		Gross Losses		Value
Public common stock	$	339	$	24	$	6	$	357
Non-redeemable preferred stock	36		7		—		43
Total	$	375	$	31	$	6	$	400

							Fair
(at December 31, 2018, in millions)	Cost		Gross Gains		Gross Losses		Value
Public common stock	$	338	$	2	$	24	$	316
Non-redeemable preferred stock	44		8		—		52
Total	$	382	$	10	$	24	$	368

Unrealized investment losses [Table Text Block]

The following tables summarize, for all investments in an unrealized loss position at March 31, 2019 and December 31, 2018, the aggregate fair value and gross unrealized loss by 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 herein and in note 4 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.  The Company also relies upon estimates of several factors in its review and evaluation of individual investments, using the process described in note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report to determine whether such investments are other-than-temporarily impaired.

	Less than 12 months				12 months or longer				Total
(at March 31, 2019, 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	$	51	$	—	$	1,056	$	6	$	1,107	$	6
Obligations of states, municipalities and political subdivisions	103		—		2,464		24		2,567		24
Debt securities issued by foreign governments	15		—		255		2		270		2
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	32		—		1,333		16		1,365		16
All other corporate bonds	551		7		9,622		149		10,173		156
Total fixed maturities	$	752	$	7	$	14,730	$	197	$	15,482	$	204

	Less than 12 months				12 months or longer				Total
(at December 31, 2018, 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	$	484	$	5	$	1,011	$	11	$	1,495	$	16
Obligations of states, municipalities and political subdivisions	5,241		82		3,298		125		8,539		207
Debt securities issued by foreign governments	96		—		328		5		424		5
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	593		9		1,070		29		1,663		38
All other corporate bonds	12,622		303		6,872		280		19,494		583
Total fixed maturities	$	19,036	$	399	$	12,579	$	450	$	31,615	$	849

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Level within the fair value hierarchy at which the Company's financial assets and financial liabilities reported at fair value are measured on a recurring basis [Table Text Block]

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 March 31, 2019, 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	$	2,030	$	2,030	$	—	$	—
Obligations of states, municipalities and political subdivisions	29,347		—		29,335		12
Debt securities issued by foreign governments	1,194		—		1,194		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,649		—		2,649		—
All other corporate bonds	30,199		4		30,092		103
Redeemable preferred stock	81		3		78		—
Total fixed maturities	65,500		2,037		63,348		115
Equity securities
Public common stock	357		356		1		—
Non-redeemable preferred stock	43		14		29		—
Total equity securities	400		370		30		—
Other investments	58		16		—		42
Total	$	65,958	$	2,423	$	63,378	$	157
Other liabilities	$	10	$	—	$	—	$	10

(at December 31, 2018, 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	$	2,064	$	2,064	$	—	$	—
Obligations of states, municipalities and political subdivisions	28,611		—		28,599		12
Debt securities issued by foreign governments	1,257		—		1,257		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,573		—		2,554		19
All other corporate bonds	28,880		—		28,725		155
Redeemable preferred stock	79		3		76		—
Total fixed maturities	63,464		2,067		61,211		186
Equity securities
Public common stock	316		316		—		—
Non-redeemable preferred stock	52		30		22		—
Total equity securities	368		346		22		—
Other investments	52		16		—		36
Total	$	63,884	$	2,429	$	61,233	$	222
Other liabilities	$	10	$	—	$	—	$	10

Carrying value and fair value of financial instruments disclosed, but not carried, at fair value and the level within the fair value hierarchy at which such financial instruments are categorized [Table Text Block]

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 March 31, 2019, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Short-term securities	$	4,094	$	4,094	$	483	$	3,567	$	44
Financial liabilities
Debt	$	6,957	$	7,984	$	—	$	7,984	$	—
Commercial paper	$	100	$	100	$	—	$	100	$	—

(at December 31, 2018, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Short-term securities	$	3,985	$	3,985	$	632	$	3,316	$	37
Financial liabilities
Debt	$	6,464	$	7,128	$	—	$	7,128	$	—
Commercial paper	$	100	$	100	$	—	$	100	$	—

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill by segment [Table Text Block]

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.

(in millions)	March 31, 2019		December 31, 2018
Business Insurance	$	2,594	$	2,585
Bond & Specialty Insurance	550		550
Personal Insurance	779		776
Other	26		26
Total	$	3,949	$	3,937

Other intangible assets subject to amortization [Table Text Block]

The following tables present a summary of the Company’s other intangible assets by major asset class.

(at March 31, 2019, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	100	$	15	$	85
Contract-based (1)	204		174		30
Total subject to amortization	304		189		115
Not subject to amortization	226		—		226
Total	$	530	$	189	$	341

(at December 31, 2018, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	98	$	12	$	86
Contract-based (1)	208		175		33
Total subject to amortization	306		187		119
Not subject to amortization	226		—		226
Total	$	532	$	187	$	345

 _________________________________________________________

(1) 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.

Other intangible assets not subject to amortization [Table Text Block]

The following tables present a summary of the Company’s other intangible assets by major asset class.

(at March 31, 2019, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	100	$	15	$	85
Contract-based (1)	204		174		30
Total subject to amortization	304		189		115
Not subject to amortization	226		—		226
Total	$	530	$	189	$	341

(at December 31, 2018, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	98	$	12	$	86
Contract-based (1)	208		175		33
Total subject to amortization	306		187		119
Not subject to amortization	226		—		226
Total	$	532	$	187	$	345

 _________________________________________________________

(1) 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.

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Insurance Claim Reserves (Tables)

3 Months Ended

Mar. 31, 2019

Insurance Loss Reserves [Abstract]

Claims and claim adjustment expense reserves [Table Text Block]

Claims and claim adjustment expense reserves were as follows:

(in millions)	March 31, 2019		December 31, 2018
Property-casualty	$	50,704	$	50,653
Accident and health	14		15
Total	$	50,718	$	50,668

Reconciliation of beginning and ending property casualty reserve balances for claims and claim adjustment expenses [Table Text Block]

The following table presents a reconciliation of beginning and ending property casualty reserve balances for claims and claim adjustment expenses:

	Three Months Ended March 31,
(in millions)	2019			2018
Claims and claim adjustment expense reserves at beginning of year	$	50,653		$	49,633
Less reinsurance recoverables on unpaid losses	8,182			8,123
Net reserves at beginning of year	42,471			41,510
Estimated claims and claim adjustment expenses for claims arising in the current year	4,435			4,391
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(16		)	(116		)
Total increases	4,419			4,275
Claims and claim adjustment expense payments for claims arising in:
Current year	970			1,009
Prior years	3,320			3,040
Total payments	4,290			4,049
Unrealized foreign exchange (gain) loss	41			(10		)
Net reserves at end of period	42,641			41,726
Plus reinsurance recoverables on unpaid losses	8,063			8,068
Claims and claim adjustment expense reserves at end of period	$	50,704		$	49,794

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Other Comprehensive Income and Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2019

Other Comprehensive Income and Accumulated Other Comprehensive Income disclosure

Changes in accumulated other comprehensive income (loss) (AOCI) [Table Text Block]

The following table presents the changes in the Company’s accumulated other comprehensive income (loss) (AOCI) for the three months ended March 31,2019.

	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, 2018	$	(306	)	$	193	$	(873	)	$	(873	)	$	(1,859	)
Other comprehensive income (OCI) before reclassifications, net of tax	1,129			4		—			47			1,180
Amounts reclassified from AOCI, net of tax	(13		)	—		10			—			(3		)
Net OCI, current period	1,116			4		10			47			1,177
Balance, March 31, 2019	$	810		$	197	$	(863	)	$	(826	)	$	(682	)

Pre-tax components of other comprehensive income (loss) and the related income tax expense (benefit) for each component [Table Text Block]

The following table presents the pre-tax components of the Company’s other comprehensive income (loss) and the related income tax expense (benefit).

	Three Months Ended March 31,
(in millions)	2019		2018
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	1,416	$	(1,203	)
Income tax expense (benefit)	300		(253		)
Net of taxes	1,116		(950		)
Having credit losses recognized in the consolidated statement of income	5		(2		)
Income tax expense (benefit)	1		(1		)
Net of taxes	4		(1		)
Net changes in benefit plan assets and obligations	12		22
Income tax expense	2		5
Net of taxes	10		17
Net changes in unrealized foreign currency translation	50		6
Income tax expense	3		5
Net of taxes	47		1
Total other comprehensive income (loss)	1,483		(1,177		)
Total income tax expense (benefit)	306		(244		)
Total other comprehensive income (loss), net of taxes	$	1,177	$	(933	)

Pre-tax and related income tax (expense) benefit components of the amounts reclassified from accumulated other comprehensive income to the consolidated statement of income [Table Text Block]

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.

	Three Months Ended March 31,
(in millions)	2019			2018
Reclassification adjustments related to unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)	$	(16	)	$	—
Income tax expense (2)	(3		)	—
Net of taxes	(13		)	—
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 (3)	5			9
General and administrative expenses (3)	8			13
Total	13			22
Income tax benefit (2)	3			5
Net of taxes	10			17
Reclassification adjustment related to foreign currency translation (1)	—			—
Income tax benefit (2)	—			—
Net of taxes	—			—
Total reclassifications	(3		)	22
Total income tax (expense) benefit	—			5
Total reclassifications, net of taxes	$	(3	)	$	17

 _________________________________________________________

(1)   (Increases) decreases net realized investment gains (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.

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Earnings per Share (Table)

3 Months Ended

Mar. 31, 2019

Earnings Per Share Reconciliation [Abstract]

Earnings per share reconciliation [Table Text Block]

The following is a reconciliation of the net income and share data used in the basic and diluted earnings per share computations for the periods presented:

	Three Months Ended March 31,
(in millions, except per share amounts)	2019			2018
Basic and Diluted
Net income, as reported	$	796		$	669
Participating share-based awards — allocated income	(5		)	(5		)
Net income available to common shareholders — basic and diluted	$	791		$	664
Common Shares
Basic
Weighted average shares outstanding	262.9			271.0
Diluted
Weighted average shares outstanding	262.9			271.0
Weighted average effects of dilutive securities — stock options and performance shares	1.9			2.9
Total	264.8			273.9
Net Income per Common Share
Basic	$	3.01		$	2.45
Diluted	$	2.99		$	2.42

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Share-Based Incentive Compensation (Table)

3 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Information for fully vested stock option awards [Table Text Block]

The following information relates to fully vested stock option awards at March 31, 2019:

Stock Options	Number	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining	Aggregate Intrinsic Value ($ in millions)
Vested at end of period (1)	7,029,165	$	103.80	5.8 years	$	237
Exercisable at end of period	5,124,196	$	94.88	4.7 years	$	217

_________________________________________________________

(1) Represents awards for which the requisite service has been rendered, including those that are retirement eligible.

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Pension Plans, Retirement Benefits and Savings Plans (Tables)

3 Months Ended

Mar. 31, 2019

Retirement Benefits [Abstract]

Summary of the components of net periodic benefit cost for the Company's pension and postretirement benefit plans recognized in the consolidated statement of income [Table Text Block]

The following table summarizes the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans recognized in the consolidated statement of income for the three months ended March 31, 2019 and 2018.

	Pension Plans						Postretirement Benefit Plans
(for the three months ended March 31, in millions)	2019			2018			2019			2018
Net Periodic Benefit Cost:
Service cost	$	30		$	33		$	—		$	—
Non-service cost:
Interest cost on benefit obligation	35			31			2			2
Expected return on plan assets	(69		)	(66		)	—			—
Amortization of unrecognized:
Prior service benefit	—			—			(1		)	(1		)
Net actuarial loss	14			23			—			—
Total non-service cost (benefit)	(20		)	(12		)	1			1
Net periodic benefit cost	$	10		$	21		$	1		$	1

Consolidated statement of income line items impacted by service costs and non-service benefit costs [Table Text Block]

The following table indicates the line items in which the respective service costs and non-service cost (benefit) are presented in the consolidated statement of income for the three months ended March 31, 2019 and 2018.

	Pension Plans						Postretirement Benefit Plans
(for the three months ended March 31, in millions)	2019			2018			2019		2018
Service Cost:
Claims and claim adjustment expenses	$	12		$	13		$	—	$	—
General and administrative expenses	18			20			—		—
Total service cost	30			33			—		—
Non-Service Cost (Benefit):
Claims and claim adjustment expenses	(8		)	(5		)	—		—
General and administrative expenses	(12		)	(7		)	1		1
Total non-service cost (benefit)	(20		)	(12		)	1		1
Net periodic benefit cost	$	10		$	21		$	1	$	1

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Additional information regarding real estate operating leases

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:

(in millions)	Three Months Ended March 31, 2019
Lease cost
Operating leases	$	22
Short-term leases (1)	4
Lease expense	26
Less: sublease income (2)	—
Net lease cost	$	26
Other information on operating leases
Cash payments included in the measurement of lease liabilities reported in operating cash flows	$	24
Right-of-use assets obtained in exchange for new lease liabilities	$	8
Weighted average discount rate	3.07		%
Weighted average remaining lease term in years	5.2 years

_________________________________________________________

(1) Leases with an initial term of twelve months or less are not recorded on the 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.

Contractual maturities of lease liabilities

The following table presents the contractual maturities of the Company's lease liabilities:

(in millions)	Real Estate Lease Liability
Remainder of 2019	$	73
2020	95
2021	82
2022	61
2023	41
Thereafter	62
Total undiscounted lease payments	414
Less: present value adjustment	30
Operating lease liability	$	384

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Consolidating Financial Statements (Unaudited) (Tables)

3 Months Ended

Mar. 31, 2019

Consolidating Financial Statements of The Travelers Companies, Inc. and Subsidiaries (Unaudited) disclosure

Consolidating Statement of Income (Unaudited) [Table Text Block]

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended March 31, 2019

(in millions)	TPC		Other Subsidiaries		TRV			Eliminations			Consolidated
Revenues
Premiums	$	4,689	$	2,166	$	—		$	—		$	6,855
Net investment income	416		155		11			—			582
Fee income	109		—		—			—			109
Net realized investment gains (1)	22		15		16			—			53
Other revenues	38		34		—			—			72
Total revenues	5,274		2,370		27			—			7,671
Claims and expenses
Claims and claim adjustment expenses	3,024		1,418		—			—			4,442
Amortization of deferred acquisition costs	745		372		—			—			1,117
General and administrative expenses	722		330		5			—			1,057
Interest expense	12		—		76			—			88
Total claims and expenses	4,503		2,120		81			—			6,704
Income (loss) before income taxes	771		250		(54		)	—			967
Income tax expense (benefit)	146		42		(17		)	—			171
Net income of subsidiaries	—		—		833			(833		)	—
Net income	$	625	$	208	$	796		$	(833	)	$	796

____________________________________________________

(1) Total other-than-temporary impairments (OTTI) for the three months ended March 31, 2019, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			Other Subsidiaries		TRV		Eliminations		Consolidated
Total OTTI losses	$	(1	)	$	—	$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains	$	(1	)	$	—	$	—	$	—	$	(1	)
OTTI losses recognized in OCI	$	—		$	—	$	—	$	—	$	—

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended March 31, 2018

(in millions)	TPC		Other Subsidiaries			TRV			Eliminations			Consolidated
Revenues
Premiums	$	4,468	$	2,069		$	—		$	—		$	6,537
Net investment income	412		185			6			—			603
Fee income	103		—			—			—			103
Net realized investment gains (losses) (1)	2		(12		)	(1		)	—			(11		)
Other revenues	27		28			—			(1		)	54
Total revenues	5,012		2,270			5			(1		)	7,286
Claims and expenses
Claims and claim adjustment expenses	2,910		1,386			—			—			4,296
Amortization of deferred acquisition costs	705		356			—			—			1,061
General and administrative expenses	729		328			6			(1		)	1,062
Interest expense	11		—			78			—			89
Total claims and expenses	4,355		2,070			84			(1		)	6,508
Income (loss) before income taxes	657		200			(79		)	—			778
Income tax expense (benefit)	106		32			(29		)	—			109
Net income of subsidiaries	—		—			719			(719		)	—
Net income	$	551	$	168		$	669		$	(719	)	$	669

_________________________________________________________

(1) Total other-than-temporary impairments (OTTI) for the three months ended March 31, 2018, and the amounts comprising total OTTI that were recognized in net realized investment gains (losses) and in other comprehensive income (loss) (OCI) were as follows:

(in millions)	TPC		Other Subsidiaries		TRV		Eliminations		Consolidated
Total OTTI losses	$	—	$	—	$	—	$	—	$	—
OTTI losses recognized in net realized investment gains (losses)	$	—	$	—	$	—	$	—	$	—
OTTI gains recognized in OCI	$	—	$	—	$	—	$	—	$	—

Consolidating Statement of Comprehensive Income (Loss) (Unaudited) [Table Text Block]

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended March 31, 2019

(in millions)	TPC		Other Subsidiaries		TRV		Eliminations			Consolidated
Net income	$	625	$	208	$	796	$	(833	)	$	796
Other comprehensive income:
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	979		435		2		—			1,416
Having credit losses recognized in the consolidated statement of income	4		1		—		—			5
Net changes in benefit plan assets and obligations	—		—		12		—			12
Net changes in unrealized foreign currency translation	19		31		—		—			50
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	1,002		467		14		—			1,483
Income tax expense	208		93		5		—			306
Other comprehensive income, net of taxes, before other comprehensive income of subsidiaries	794		374		9		—			1,177
Other comprehensive income of subsidiaries	—		—		1,168		(1,168		)	—
Other comprehensive income	794		374		1,177		(1,168		)	1,177
Comprehensive income	$	1,419	$	582	$	1,973	$	(2,001	)	$	1,973

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For the three months ended March 31, 2018

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Net income	$	551		$	168		$	669		$	(719	)	$	669
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	(838		)	(364		)	(1		)	—			(1,203		)
Having credit losses recognized in the consolidated statement of income	(1		)	(1		)	—			—			(2		)
Net changes in benefit plan assets and obligations	—			—			22			—			22
Net changes in unrealized foreign currency translation	(25		)	31			—			—			6
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(864		)	(334		)	21			—			(1,177		)
Income tax expense (benefit)	(175		)	(77		)	8			—			(244		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(689		)	(257		)	13			—			(933		)
Other comprehensive loss of subsidiaries	—			—			(946		)	946			—
Other comprehensive loss	(689		)	(257		)	(933		)	946			(933		)
Comprehensive loss	$	(138	)	$	(89	)	$	(264	)	$	227		$	(264	)

Consolidating Balance Sheet (Unaudited) [Table Text Block]

CONSOLIDATING BALANCE SHEET (Unaudited)

At March 31, 2019

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $64,216)	$	45,336		$	20,079		$	85		$	—		$	65,500
Equity securities, at fair value (cost $375)	105			106			189			—			400
Real estate investments	1			968			—			—			969
Short-term securities	1,645			581			1,868			—			4,094
Other investments	2,772			781			1			—			3,554
Total investments	49,859			22,515			2,143			—			74,517
Cash	150			207			—			—			357
Investment income accrued	406			182			3			—			591
Premiums receivable	5,356			2,591			—			—			7,947
Reinsurance recoverables	6,496			1,785			—			—			8,281
Ceded unearned premiums	838			97			—			—			935
Deferred acquisition costs	1,987			203			—			—			2,190
Deferred taxes	(76		)	222			(31		)	—			115
Contractholder receivables	4,801			10			—			—			4,811
Goodwill	2,581			1,377			—			(9		)	3,949
Other intangible assets	222			119			—			—			341
Investment in subsidiaries	—			—			28,475			(28,475		)	—
Other assets	2,470			393			349			—			3,212
Total assets	$	75,090		$	29,701		$	30,939		$	(28,484	)	$	107,246
Liabilities
Claims and claim adjustment expense reserves	$	34,800		$	15,918		$	—		$	—		$	50,718
Unearned premium reserves	9,872			4,250			—			—			14,122
Contractholder payables	4,801			10			—			—			4,811
Payables for reinsurance premiums	380			255			—			—			635
Debt	693			—			6,364			—			7,057
Other liabilities	4,287			1,049			227			—			5,563
Total liabilities	54,833			21,482			6,591			—			82,906
Shareholders’ equity
Common stock (1,750.0 shares authorized; 262.0 shares issued and 261.9 shares outstanding)	—			401			23,243			(401		)	23,243
Additional paid-in capital	11,634			7,083			—			(18,717		)	—
Retained earnings	8,390			807			35,803			(9,205		)	35,795
Accumulated other comprehensive income (loss)	233			(72		)	(682		)	(161		)	(682		)
Treasury stock, at cost (514.2 shares)	—			—			(34,016		)	—			(34,016		)
Total shareholders’ equity	20,257			8,219			24,348			(28,484		)	24,340
Total liabilities and shareholders’ equity	$	75,090		$	29,701		$	30,939		$	(28,484	)	$	107,246

CONSOLIDATING BALANCE SHEET (Unaudited)

At December 31, 2018

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $63,601)	$	43,683		$	19,697		$	84		$	—		$	63,464
Equity securities, available for sale, at fair value (cost $382)	105			92			171			—			368
Real estate investments	2			902			—			—			904
Short-term securities	1,855			759			1,371			—			3,985
Other investments	2,746			810			1			—			3,557
Total investments	48,391			22,260			1,627			—			72,278
Cash	181			192			—			—			373
Investment income accrued	434			187			3			—			624
Premiums receivable	5,089			2,417			—			—			7,506
Reinsurance recoverables	5,904			2,466			—			—			8,370
Ceded unearned premiums	522			56			—			—			578
Deferred acquisition costs	1,930			190			—			—			2,120
Deferred taxes	167			302			(24		)	—			445
Contractholder receivables	3,867			918			—			—			4,785
Goodwill	2,578			1,368			—			(9		)	3,937
Other intangible assets	224			121			—			—			345
Investment in subsidiaries	—			—			26,993			(26,993		)	—
Other assets	2,220			15			669			(32		)	2,872
Total assets	$	71,507		$	30,492		$	29,268		$	(27,034	)	$	104,233
Liabilities
Claims and claim adjustment expense reserves	$	34,093		$	16,575		$	—		$	—		$	50,668
Unearned premium reserves	9,414			4,141			—			—			13,555
Contractholder payables	3,867			918			—			—			4,785
Payables for reinsurance premiums	169			120			—			—			289
Debt	693			32			5,871			(32		)	6,564
Other liabilities	4,133			849			496			—			5,478
Total liabilities	52,369			22,635			6,367			(32		)	81,339
Shareholders’ equity
Common stock (1,750.0 shares authorized; 263.7 shares issued and 263.6 shares outstanding)	—			401			23,144			(401		)	23,144
Additional paid-in capital	11,634			7,023			—			(18,657		)	—
Retained earnings	8,065			879			35,211			(8,951		)	35,204
Accumulated other comprehensive loss	(561		)	(446		)	(1,859		)	1,007			(1,859		)
Treasury stock, at cost (510.9 shares)	—			—			(33,595		)	—			(33,595		)
Total shareholders’ equity	19,138			7,857			22,901			(27,002		)	22,894
Total liabilities and shareholders’ equity	$	71,507		$	30,492		$	29,268		$	(27,034	)	$	104,233

Consolidating Statement of Cash Flows (Unaudited) [Table Text Block]

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the three months ended March 31, 2019

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	625		$	208		$	796		$	(833	)	$	796
Net adjustments to reconcile net income to net cash provided by operating activities	(110		)	(42		)	(227		)	222			(157		)
Net cash provided by operating activities	515			166			569			(611		)	639
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,043			508			5			—			1,556
Proceeds from sales of investments:
Fixed maturities	551			218			—			—			769
Equity securities	19			20			—			—			39
Real estate investments	—			—			—			—			—
Other investments	90			15			—			—			105
Purchases of investments:
Fixed maturities	(2,228		)	(682		)	(4		)	—			(2,914		)
Equity securities	(1		)	(20		)	(1		)	—			(22		)
Real estate investments	—			(77		)	—			—			(77		)
Other investments	(134		)	(12		)	—			—			(146		)
Net sales (purchases) of short-term securities	210			178			(497		)	—			(109		)
Securities transactions in course of settlement	283			13			(1		)	—			295
Other	(80		)	(2		)	—			—			(82		)
Net cash provided by (used in) investing activities	(247		)	159			(498		)	—			(586		)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorization	—			—			(375		)	—			(375		)
Treasury stock acquired — net employee share-based compensation	—			—			(46		)	—			(46		)
Dividends paid to shareholders	—			—			(205		)	—			(205		)
Payment of debt	—			(32		)	—			32			—
Issuance of debt	—			—			492			—			492
Issuance of common stock — employee share options	—			—			63			—			63
Dividends paid to parent company	(300		)	(279		)	—			579			—
Net cash used in financing activities	(300		)	(311		)	(71		)	611			(71		)
Effect of exchange rate changes on cash	1			1			—			—			2
Net increase (decrease) in cash	(31		)	15			—			—			(16		)
Cash at beginning of year	181			192			—			—			373
Cash at end of period	$	150		$	207		$	—		$	—		$	357
Supplemental disclosure of cash flow information
Income taxes paid	$	4		$	1		$	—		$	—		$	5
Interest paid	$	16		$	—		$	34		$	—		$	50

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the three months ended March 31, 2018

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	551		$	168		$	669		$	(719	)	$	669
Net adjustments to reconcile net income to net cash provided by operating activities	(126		)	(57		)	(22		)	90			(115		)
Net cash provided by operating activities	425			111			647			(629		)	554
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,453			493			4			—			1,950
Proceeds from sales of investments:
Fixed maturities	729			356			—			—			1,085
Equity securities	8			18			—			—			26
Real estate investments	—			—			—			—			—
Other investments	76			38			—			—			114
Purchases of investments:
Fixed maturities	(2,836		)	(1,078		)	(6		)	—			(3,920		)
Equity securities	(1		)	(18		)	(1		)	—			(20		)
Real estate investments	—			(33		)	—			—			(33		)
Other investments	(115		)	(27		)	—			—			(142		)
Net sales (purchases) of short-term securities	729			201			(520		)	—			410
Securities transactions in course of settlement	147			56			(1		)	—			202
Other	(52		)	(1		)	—			—			(53		)
Net cash provided by (used in) investing activities	138			5			(524		)	—			(381		)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorization	—			—			(350		)	—			(350		)
Treasury stock acquired — net employee share-based compensation	—			—			(51		)	—			(51		)
Dividends paid to shareholders	—			—			(197		)	—			(197		)
Payment of debt	—			—			(100		)	—			(100		)
Issuance of debt	—			—			491			—			491
Issuance of common stock — employee share options	—			—			85			—			85
Dividends paid to parent company	(544		)	(85		)	—			629			—
Net cash used in financing activities	(544		)	(85		)	(122		)	629			(122		)
Effect of exchange rate changes on cash	(1		)	3			—			—			2
Net increase in cash	18			34			1			—			53
Cash at beginning of year	157			187			—			—			344
Cash at end of period	$	175		$	221		$	1		$	—		$	397
Supplemental disclosure of cash flow information
Income taxes paid	$	13		$	43		$	—		$	—		$	56
Interest paid	$	16		$	—		$	23		$	—		$	39

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Basis of Presentation and Accounting Policies (Details) - USD ($)	Mar. 31, 2019	Jan. 01, 2019	Dec. 31, 2017
New Accounting Pronouncements
Operating lease liability	$ 384,000,000
Retained earnings [Member]
New Accounting Pronouncements
Cumulative effect adjustment			$ 22,000,000
Accounting Standards Update 2016-02 [Member]
New Accounting Pronouncements
Right-of-use asset	320,000,000
Operating lease liability	$ 384,000,000
Accounting Standards Update 2016-02 [Member] | Retained earnings [Member]
New Accounting Pronouncements
Cumulative effect adjustment		$ 0

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Basis of Presentation and Accounting Policies (Details) - Reportable Segments	3 Months Ended
	Mar. 31, 2019 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable business segments	3

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Segment Information (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Segment reporting information
Premiums		$ 6,855	$ 6,537
Net investment income		582	603
Fee income		109	103
Other revenues		72	54
Net realized investment gains (losses)	[1]	53	(11)
Total revenues		7,671	7,286
Core income (loss)		755	678
Net realized investment gains (losses), net of tax		41	(9)
Net income		796	669
Reportable Segments [Member]
Segment reporting information
Premiums		6,855	6,537
Net investment income		582	603
Fee income		109	103
Other revenues		71	54
Total segment revenues		7,617	7,297
Core income (loss)		830	754
Reportable Segments [Member] | Business Insurance [Member]
Segment reporting information
Premiums		3,742	3,568
Net investment income		427	446
Fee income		104	99
Other revenues		43	31
Total segment revenues		4,316	4,144
Core income (loss)		414	452
Reportable Segments [Member] | Business Insurance [Member] | Domestic [Member]
Segment reporting information
Premiums		3,475	3,304
Reportable Segments [Member] | Business Insurance [Member] | Domestic [Member] | Workers' compensation [Member]
Segment reporting information
Premiums		972	971
Reportable Segments [Member] | Business Insurance [Member] | Domestic [Member] | Automobile [Member]
Segment reporting information
Premiums		628	562
Reportable Segments [Member] | Business Insurance [Member] | Domestic [Member] | Commercial property [Member]
Segment reporting information
Premiums		460	438
Reportable Segments [Member] | Business Insurance [Member] | Domestic [Member] | General liability [Member]
Segment reporting information
Premiums		567	521
Reportable Segments [Member] | Business Insurance [Member] | Domestic [Member] | Commercial multi-peril [Member]
Segment reporting information
Premiums		840	805
Reportable Segments [Member] | Business Insurance [Member] | Domestic [Member] | Other [Member]
Segment reporting information
Premiums		8	7
Reportable Segments [Member] | Business Insurance [Member] | International [Member]
Segment reporting information
Premiums		267	264
Reportable Segments [Member] | Bond & Specialty Insurance [Member]
Segment reporting information
Premiums		606	582
Net investment income		56	58
Other revenues		6	6
Total segment revenues		668	646
Core income (loss)		138	173
Reportable Segments [Member] | Bond & Specialty Insurance [Member] | Domestic [Member]
Segment reporting information
Premiums		555	535
Reportable Segments [Member] | Bond & Specialty Insurance [Member] | Domestic [Member] | General liability [Member]
Segment reporting information
Premiums		257	242
Reportable Segments [Member] | Bond & Specialty Insurance [Member] | Domestic [Member] | Fidelity and surety [Member]
Segment reporting information
Premiums		246	246
Reportable Segments [Member] | Bond & Specialty Insurance [Member] | Domestic [Member] | Other [Member]
Segment reporting information
Premiums		52	47
Reportable Segments [Member] | Bond & Specialty Insurance [Member] | International [Member]
Segment reporting information
Premiums		51	47
Reportable Segments [Member] | Personal Insurance [Member]
Segment reporting information
Premiums		2,507	2,387
Net investment income		99	99
Fee income		5	4
Other revenues		22	17
Total segment revenues		2,633	2,507
Core income (loss)		278	129
Reportable Segments [Member] | Personal Insurance [Member] | Domestic [Member]
Segment reporting information
Premiums		2,336	2,220
Reportable Segments [Member] | Personal Insurance [Member] | Domestic [Member] | Automobile [Member]
Segment reporting information
Premiums		1,297	1,225
Reportable Segments [Member] | Personal Insurance [Member] | Domestic [Member] | Homeowners and Other [Member]
Segment reporting information
Premiums		1,039	995
Reportable Segments [Member] | Personal Insurance [Member] | International [Member]
Segment reporting information
Premiums		171	167
Other [Member]
Segment reporting information
Other revenues		1
Core income (loss)		(75)	(76)
After-tax interest expense		$ 70	$ 70

[1] Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively. Of total OTTI, credit losses of $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively, were recognized in net realized investment gains (losses). In addition, unrealized gains (losses) from other changes in total OTTI of $0 for each of the three months ended March 31, 2019 and 2018, respectively, were recognized in other comprehensive income (loss) as part of changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income.

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Segment Information (Details) - Assets by Segment - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Assets by segment
Total assets	$ 107,246	$ 104,233
Reportable Segments [Member]
Assets by segment
Total assets	106,673	103,601
Reportable Segments [Member] | Business Insurance [Member]
Assets by segment
Total assets	82,022	78,965
Reportable Segments [Member] | Bond & Specialty Insurance [Member]
Assets by segment
Total assets	8,363	8,693
Reportable Segments [Member] | Personal Insurance [Member]
Assets by segment
Total assets	16,288	15,943
Other assets [Member]
Assets by segment
Total assets	$ 573	$ 632

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Investments (Details) - Investment Information, Debt Securities - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Investment disclosure details
Fixed maturities, amortized cost	$ 64,216		$ 63,601
Gross unrealized gains	1,488		712
Gross unrealized losses	204		849
Fixed maturities, at fair value	65,500		63,464
Proceeds from sales of fixed maturities classified as available for sale	769	$ 1,085
Gross realized gains	21	6
Gross realized losses	4	$ 6
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities [Member]
Investment disclosure details
Fixed maturities, amortized cost	2,029		2,076
Gross unrealized gains	7		4
Gross unrealized losses	6		16
Fixed maturities, at fair value	2,030		2,064
Obligations of states, municipalities and political subdivisions [Member]
Investment disclosure details
Fixed maturities, amortized cost	28,451		28,329
Gross unrealized gains	920		489
Gross unrealized losses	24		207
Fixed maturities, at fair value	29,347		28,611
Obligations of states, municipalities and political subdivisions, local general obligation [Member]
Investment disclosure details
Fixed maturities, amortized cost	14,879		14,473
Gross unrealized gains	468		219
Gross unrealized losses	14		120
Fixed maturities, at fair value	15,333		14,572
Obligations of states, municipalities and political subdivisions, revenue [Member]
Investment disclosure details
Fixed maturities, amortized cost	9,757		9,755
Gross unrealized gains	336		172
Gross unrealized losses	8		74
Fixed maturities, at fair value	10,085		9,853
Obligations of states, municipalities and political subdivisions, state general obligation [Member]
Investment disclosure details
Fixed maturities, amortized cost	1,300		1,329
Gross unrealized gains	37		18
Gross unrealized losses	2		13
Fixed maturities, at fair value	1,335		1,334
Obligations of states, municipalities and political subdivisions, pre-refunded [Member]
Investment disclosure details
Fixed maturities, amortized cost	2,515		2,772
Gross unrealized gains	79		80
Fixed maturities, at fair value	2,594		2,852
Debt securities issued by foreign governments [Member]
Investment disclosure details
Fixed maturities, amortized cost	1,184		1,255
Gross unrealized gains	12		7
Gross unrealized losses	2		5
Fixed maturities, at fair value	1,194		1,257
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member]
Investment disclosure details
Fixed maturities, amortized cost	2,601		2,557
Gross unrealized gains	64		54
Gross unrealized losses	16		38
Fixed maturities, at fair value	2,649		2,573
All other corporate bonds [Member]
Investment disclosure details
Fixed maturities, amortized cost	29,873		29,307
Gross unrealized gains	482		156
Gross unrealized losses	156		583
Fixed maturities, at fair value	30,199		28,880
Redeemable preferred stock [Member]
Investment disclosure details
Fixed maturities, amortized cost	78		77
Gross unrealized gains	3		2
Fixed maturities, at fair value	$ 81		$ 79

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Investments (Details) - Investment Information, Equity Securities - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Investment disclosure details
Equity securities, cost	$ 375		$ 382
Gross gains	31		10
Gross losses	6		24
Equity securities, at fair value	400		368
Net recognized gains (losses) on equity securities still held	39	$ (13)
Public common stock [Member]
Investment disclosure details
Equity securities, cost	339		338
Gross gains	24		2
Gross losses	6		24
Equity securities, at fair value	357		316
Non-redeemable preferred stock [Member]
Investment disclosure details
Equity securities, cost	36		44
Gross gains	7		8
Equity securities, at fair value	$ 43		$ 52

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Investments (Details) - Investment Information, Losses - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Investment disclosure details
Continuous unrealized loss position, less than 12 months, fair value	$ 752,000,000		$ 19,036,000,000
Continuous unrealized loss position, less than 12 months, gross unrealized losses	7,000,000		399,000,000
Continuous unrealized loss position, 12 months or longer, fair value	14,730,000,000		12,579,000,000
Continuous unrealized loss position, 12 months or longer, gross unrealized losses	197,000,000		450,000,000
Continuous unrealized loss position, total, fair value	15,482,000,000		31,615,000,000
Continuous unrealized loss position, total, gross unrealized losses	204,000,000		849,000,000
Impairment charges	1,000,000	$ 0
Cumulative OTTI credit losses recognized for securities held	$ 56,000,000	$ 75,000,000
Cumulative credit component of other-than-temporary impairments (OTTI) on fixed maturities recognized in the consolidated statement of income for which a portion of the OTTI was recognized in other comprehensive income (loss) for fixed maturities held, as a percentage of the fixed maturity portfolio on a pre-tax basis (less than)	1.00%	1.00%
Cumulative credit component of other-than-temporary impairments (OTTI) on fixed maturities recognized in the consolidated statement of income for which a portion of the OTTI was recognized in other comprehensive income (loss) for fixed maturities held, as a percentage of shareholders' equity on an after-tax basis (less than)	1.00%	1.00%
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities [Member]
Investment disclosure details
Continuous unrealized loss position, less than 12 months, fair value	$ 51,000,000		484,000,000
Continuous unrealized loss position, less than 12 months, gross unrealized losses			5,000,000
Continuous unrealized loss position, 12 months or longer, fair value	1,056,000,000		1,011,000,000
Continuous unrealized loss position, 12 months or longer, gross unrealized losses	6,000,000		11,000,000
Continuous unrealized loss position, total, fair value	1,107,000,000		1,495,000,000
Continuous unrealized loss position, total, gross unrealized losses	6,000,000		16,000,000
Obligations of states, municipalities and political subdivisions [Member]
Investment disclosure details
Continuous unrealized loss position, less than 12 months, fair value	103,000,000		5,241,000,000
Continuous unrealized loss position, less than 12 months, gross unrealized losses			82,000,000
Continuous unrealized loss position, 12 months or longer, fair value	2,464,000,000		3,298,000,000
Continuous unrealized loss position, 12 months or longer, gross unrealized losses	24,000,000		125,000,000
Continuous unrealized loss position, total, fair value	2,567,000,000		8,539,000,000
Continuous unrealized loss position, total, gross unrealized losses	24,000,000		207,000,000
Debt securities issued by foreign governments [Member]
Investment disclosure details
Continuous unrealized loss position, less than 12 months, fair value	15,000,000		96,000,000
Continuous unrealized loss position, 12 months or longer, fair value	255,000,000		328,000,000
Continuous unrealized loss position, 12 months or longer, gross unrealized losses	2,000,000		5,000,000
Continuous unrealized loss position, total, fair value	270,000,000		424,000,000
Continuous unrealized loss position, total, gross unrealized losses	2,000,000		5,000,000
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member]
Investment disclosure details
Continuous unrealized loss position, less than 12 months, fair value	32,000,000		593,000,000
Continuous unrealized loss position, less than 12 months, gross unrealized losses			9,000,000
Continuous unrealized loss position, 12 months or longer, fair value	1,333,000,000		1,070,000,000
Continuous unrealized loss position, 12 months or longer, gross unrealized losses	16,000,000		29,000,000
Continuous unrealized loss position, total, fair value	1,365,000,000		1,663,000,000
Continuous unrealized loss position, total, gross unrealized losses	16,000,000		38,000,000
All other corporate bonds [Member]
Investment disclosure details
Continuous unrealized loss position, less than 12 months, fair value	551,000,000		12,622,000,000
Continuous unrealized loss position, less than 12 months, gross unrealized losses	7,000,000		303,000,000
Continuous unrealized loss position, 12 months or longer, fair value	9,622,000,000		6,872,000,000
Continuous unrealized loss position, 12 months or longer, gross unrealized losses	149,000,000		280,000,000
Continuous unrealized loss position, total, fair value	10,173,000,000		19,494,000,000
Continuous unrealized loss position, total, gross unrealized losses	$ 156,000,000		$ 583,000,000

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Fair Value Measurements (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Percent of fixed maturities for which a pricing service estimates fair value	99.00%	99.00%
Fair value of the fixed maturities for which the Company used an internal pricing matrix	$ 96	$ 82
Fair value of the fixed maturities for which the Company received a broker quote	19	104
Estimated fair value of put/call option	$ 10	$ 10

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Fair Value Measurements (Details) - Fair Value Hierarchy - Recurring basis [Member] - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	$ 65,958	$ 63,884
Other liabilities measured on a recurring basis	10	10
Fixed maturities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	65,500	63,464
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	2,030	2,064
Obligations of states, municipalities and political subdivisions [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	29,347	28,611
Debt securities issued by foreign governments [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	1,194	1,257
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	2,649	2,573
All other corporate bonds [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	30,199	28,880
Redeemable preferred stock [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	81	79
Equity securities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	400	368
Public common stock [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	357	316
Non-redeemable preferred stock [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	43	52
Other Investments [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	58	52
Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	2,423	2,429
Level 1 [Member] | Fixed maturities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	2,037	2,067
Level 1 [Member] | U.S. Treasury securities and obligations of U.S. government and government agencies and authorities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	2,030	2,064
Level 1 [Member] | All other corporate bonds [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	4
Level 1 [Member] | Redeemable preferred stock [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	3	3
Level 1 [Member] | Equity securities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	370	346
Level 1 [Member] | Public common stock [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	356	316
Level 1 [Member] | Non-redeemable preferred stock [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	14	30
Level 1 [Member] | Other Investments [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	16	16
Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	63,378	61,233
Level 2 [Member] | Fixed maturities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	63,348	61,211
Level 2 [Member] | Obligations of states, municipalities and political subdivisions [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	29,335	28,599
Level 2 [Member] | Debt securities issued by foreign governments [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	1,194	1,257
Level 2 [Member] | Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	2,649	2,554
Level 2 [Member] | All other corporate bonds [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	30,092	28,725
Level 2 [Member] | Redeemable preferred stock [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	78	76
Level 2 [Member] | Equity securities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	30	22
Level 2 [Member] | Public common stock [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	1
Level 2 [Member] | Non-redeemable preferred stock [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	29	22
Level 3 [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	157	222
Other liabilities measured on a recurring basis	10	10
Level 3 [Member] | Fixed maturities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	115	186
Level 3 [Member] | Obligations of states, municipalities and political subdivisions [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	12	12
Level 3 [Member] | Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis		19
Level 3 [Member] | All other corporate bonds [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	103	155
Level 3 [Member] | Other Investments [Member]
Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured
Total invested assets measured on a recurring basis	$ 42	$ 36

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Fair Value Measurements (Details) - Financial Instruments - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Financial Instruments
Short-term securities	$ 4,094	$ 3,985
Commercial paper	100	100
Carrying Value [Member]
Financial Instruments
Short-term securities	4,094	3,985
Debt	6,957	6,464
Commercial paper	100	100
Fair Value [Member]
Financial Instruments
Short-term securities	4,094	3,985
Debt	7,984	7,128
Commercial paper	100	100
Fair Value [Member] | Level 1 [Member]
Financial Instruments
Short-term securities	483	632
Fair Value [Member] | Level 2 [Member]
Financial Instruments
Short-term securities	3,567	3,316
Debt	7,984	7,128
Commercial paper	100	100
Fair Value [Member] | Level 3 [Member]
Financial Instruments
Short-term securities	$ 44	$ 37

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Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Goodwill by segment
Goodwill	$ 3,949	$ 3,937
Reportable Segments [Member] | Business Insurance [Member]
Goodwill by segment
Goodwill	2,594	2,585
Reportable Segments [Member] | Bond & Specialty Insurance [Member]
Goodwill by segment
Goodwill	550	550
Reportable Segments [Member] | Personal Insurance [Member]
Goodwill by segment
Goodwill	779	776
Other [Member]
Goodwill by segment
Goodwill	$ 26	$ 26

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Goodwill and Other Intangible Assets (Details) - Other Intangible Assets - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Other intangible assets by major asset class
Intangible assets subject to amortization, gross carrying amount	$ 304		$ 306
Intangible assets subject to amortization, accumulated amortization	189		187
Intangible assets subject to amortization, net	115		119
Intangible assets not subject to amortization	226		226
Total other intangible assets, gross carrying amount	530		532
Total other intangible assets, net	341		345
Amortization expense of intangible assets	4	$ 4
Estimated intangible asset amortization expense, remainder of 2019	12
Estimated intangible asset amortization expense, 2020	15
Estimated intangible asset amortization expense, 2021	14
Estimated intangible asset amortization expense, 2022	13
Estimated intangible asset amortization expense, 2023	12
Customer-related [Member]
Other intangible assets by major asset class
Intangible assets subject to amortization, gross carrying amount	100		98
Intangible assets subject to amortization, accumulated amortization	15		12
Intangible assets subject to amortization, net	85		86
Contract-based [Member]
Other intangible assets by major asset class
Intangible assets subject to amortization, gross carrying amount	204		208
Intangible assets subject to amortization, accumulated amortization	174		175
Intangible assets subject to amortization, net	30		$ 33
Insurance Contracts Acquired in Business Combination [Member]
Other intangible assets by major asset class
Estimated intangible asset amortization expense, remainder of 2019	4
Estimated intangible asset amortization expense, 2020	5
Estimated intangible asset amortization expense, 2021	4
Estimated intangible asset amortization expense, 2022	3
Estimated intangible asset amortization expense, 2023	$ 3

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Insurance Claim Reserves (Details) - Reserve Detail for Claims and Claim Adjustment Expenses - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Reconciliation of beginning and ending reserve balances for claims and claim adjustment expenses [Roll Forward]
Claims and claim adjustment expense reserves at beginning of year	$ 50,668
Claims and claim adjustment expense reserves at end of period	50,718
Property-casualty [Member]
Reconciliation of beginning and ending reserve balances for claims and claim adjustment expenses [Roll Forward]
Claims and claim adjustment expense reserves at beginning of year	50,653	$ 49,633
Reinsurance recoverables on unpaid losses	8,182	8,123
Net reserves at beginning of year	42,471	41,510
Estimated claims and claim adjustment expenses for claims arising in the current year	4,435	4,391
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(16)	(116)
Total increases	4,419	4,275
Claims and claim adjustment expense payments for claims arising in current year	970	1,009
Claims and claim adjustment expense payments for claims arising in prior years	3,320	3,040
Total payments	4,290	4,049
Unrealized foreign exchange (gain) loss	41	(10)
Net reserves at end of period	42,641	41,726
Reinsurance recoverables on unpaid losses	8,063	8,068
Claims and claim adjustment expense reserves at end of period	50,704	$ 49,794
Amount of increase in gross claims and claim adjustment expense reserves	51
Amount of decrease in reinsurance recoverables on unpaid losses	(119)
Accident and health [Member]
Reconciliation of beginning and ending reserve balances for claims and claim adjustment expenses [Roll Forward]
Claims and claim adjustment expense reserves at beginning of year	15
Claims and claim adjustment expense reserves at end of period	$ 14

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Insurance Claim Reserves (Details) - Prior Year Reserve Development - Property-casualty [Member] - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Liability for claims and claim adjustment expense
Net favorable prior year reserve development included in estimated claims and claim adjustment expenses incurred for claims arising in prior years	$ 16	$ 116
Net favorable (unfavorable) prior year reserve development impacting the Company's results of operations	51	150
Accretion expense	12	13
Business Insurance [Member]
Liability for claims and claim adjustment expense
Net favorable (unfavorable) prior year reserve development impacting the Company's results of operations	(21)	66
Bond & Specialty Insurance [Member]
Liability for claims and claim adjustment expense
Net favorable (unfavorable) prior year reserve development impacting the Company's results of operations	3	35
Personal Insurance [Member]
Liability for claims and claim adjustment expense
Net favorable (unfavorable) prior year reserve development impacting the Company's results of operations	$ 69	$ 49

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Other Comprehensive Income and Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Accumulated other comprehensive income [Roll Forward]
Balance, beginning of year	$ 22,894
Other comprehensive income (loss), net of taxes	1,177	$ (933)
Balance, end of period	24,340	22,979
Pre-tax components of other comprehensive income (loss) and related tax expense (benefit)
Other comprehensive income (loss) before income taxes	1,483	(1,177)
Income tax expense (benefit)	306	(244)
Other comprehensive income (loss), net of taxes	1,177	(933)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated other comprehensive income [Roll Forward]
Balance, beginning of year	(1,859)	(343)
Other comprehensive income (loss) before reclassifications	1,180
Amounts reclassified from accumulated other comprehensive income	(3)
Other comprehensive income (loss), net of taxes	1,177	(933)
Balance, end of period	(682)	(1,322)
Pre-tax components of other comprehensive income (loss) and related tax expense (benefit)
Other comprehensive income (loss) before income taxes	1,483	(1,177)
Income tax expense (benefit)	306	(244)
Other comprehensive income (loss), net of taxes	1,177	(933)
Changes in Net Unrealized Gains (Losses) on Investment Securities Having No Credit Losses Recognized in the Consolidated Statement of Income [Member]
Accumulated other comprehensive income [Roll Forward]
Balance, beginning of year	(306)
Other comprehensive income (loss) before reclassifications	1,129
Amounts reclassified from accumulated other comprehensive income	(13)
Other comprehensive income (loss), net of taxes	1,116	(950)
Balance, end of period	810
Pre-tax components of other comprehensive income (loss) and related tax expense (benefit)
Other comprehensive income (loss) before income taxes	1,416	(1,203)
Income tax expense (benefit)	300	(253)
Other comprehensive income (loss), net of taxes	1,116	(950)
Changes in Net Unrealized Gains (Losses) on Investment Securities Having Credit Losses Recognized in the Consolidated Statement of Income [Member]
Accumulated other comprehensive income [Roll Forward]
Balance, beginning of year	193
Other comprehensive income (loss) before reclassifications	4
Other comprehensive income (loss), net of taxes	4	(1)
Balance, end of period	197
Pre-tax components of other comprehensive income (loss) and related tax expense (benefit)
Other comprehensive income (loss) before income taxes	5	(2)
Income tax expense (benefit)	1	(1)
Other comprehensive income (loss), net of taxes	4	(1)
Net Benefit Plan Assets and Obligations Recognized in Shareholders' Equity [Member]
Accumulated other comprehensive income [Roll Forward]
Balance, beginning of year	(873)
Amounts reclassified from accumulated other comprehensive income	10
Other comprehensive income (loss), net of taxes	10	17
Balance, end of period	(863)
Pre-tax components of other comprehensive income (loss) and related tax expense (benefit)
Other comprehensive income (loss) before income taxes	12	22
Income tax expense (benefit)	2	5
Other comprehensive income (loss), net of taxes	10	17
Net Unrealized Foreign Currency Translation [Member]
Accumulated other comprehensive income [Roll Forward]
Balance, beginning of year	(873)
Other comprehensive income (loss) before reclassifications	47
Other comprehensive income (loss), net of taxes	47	1
Balance, end of period	(826)
Pre-tax components of other comprehensive income (loss) and related tax expense (benefit)
Other comprehensive income (loss) before income taxes	50	6
Income tax expense (benefit)	3	5
Other comprehensive income (loss), net of taxes	$ 47	$ 1

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Other Comprehensive Income and Accumulated Other Comprehensive Income (Details) - Reclassifications - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Reclassification adjustment impacting net realized investment gains (losses) on the income statement	[1]	$ (53)	$ 11
Reclassification adjustment impacting claims and claim adjustment expenses on the income statement		4,442	4,296
Reclassification adjustment impacting general and administrative expense on the income statement		1,057	1,062
Total reclassifications		(967)	(778)
Income tax (expense) benefit		(171)	(109)
Amounts reclassified from accumulated other comprehensive income, net of taxes		(796)	(669)
Accumulated Other Comprehensive Income (Loss) [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Total reclassifications		(3)	22
Income tax (expense) benefit			5
Amounts reclassified from accumulated other comprehensive income, net of taxes		(3)	17
Changes in Net Unrealized Gains (Losses) on Investment Securities Having No Credit Losses Recognized in the Consolidated Statement of Income [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Reclassification adjustment impacting net realized investment gains (losses) on the income statement		(16)
Income tax (expense) benefit		(3)
Amounts reclassified from accumulated other comprehensive income, net of taxes		(13)
Net Benefit Plan Assets and Obligations Recognized in Shareholders' Equity [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Reclassification adjustment impacting claims and claim adjustment expenses on the income statement		5	9
Reclassification adjustment impacting general and administrative expense on the income statement		8	13
Total reclassifications		13	22
Income tax (expense) benefit		3	5
Amounts reclassified from accumulated other comprehensive income, net of taxes		$ 10	$ 17

[1] Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively. Of total OTTI, credit losses of $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively, were recognized in net realized investment gains (losses). In addition, unrealized gains (losses) from other changes in total OTTI of $0 for each of the three months ended March 31, 2019 and 2018, respectively, were recognized in other comprehensive income (loss) as part of changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income.

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Debt (Details) - USD ($)		3 Months Ended
	Mar. 04, 2019	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Debt Instrument
Net proceeds of issuance, after the deduction of the underwriting discount and expenses		$ 492,000,000	$ 491,000,000
Commercial paper outstanding		$ 100,000,000		$ 100,000,000
Senior Notes [Member] | 4.10% Senior notes due March 4, 2049 [Member]
Debt Instrument
Debt, principal amount	$ 500,000,000
Interest rate (percent)	4.10%
Net proceeds of issuance, after the deduction of the underwriting discount and expenses	$ 492,000,000
Percentage of principal amount at which redemption price may be set	100.00%
Basis points added to current Treasury rate used in calculation of alternative redemption price	0.20%

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Common Share Repurchases (Details) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($) $ / shares shares
Treasury Stock Transactions, Excluding Value of Shares Reissued [Abstract]
Number of shares repurchased (in shares) | shares	2.9
Cost of shares repurchased	$ 375
Average cost per share repurchased (in dollars per share) | $ / shares	$ 129.42
Number of shares acquired to cover tax withholding costs and exercise costs (in shares) | shares	0.4
Cost of shares acquired to cover tax withholding costs and exercise costs	$ 46
Remaining capacity under share repurchase authorization	$ 2,910

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Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share Reconciliation [Abstract]
Net income	$ 796	$ 669
Participating share-based awards — allocated income	(5)	(5)
Net income available to common shareholders -- basic	791	664
Net income available to common shareholders -- diluted	$ 791	$ 664
Weighted average shares outstanding, basic (in shares)	262.9	271.0
Weighted average effects of dilutive securities - stock options and performance shares (in shares)	1.9	2.9
Weighted average shares outstanding, diluted (in shares)	264.8	273.9
Net income per common share, basic (in dollars per share)	$ 3.01	$ 2.45
Net income per common share, diluted (in dollars per share)	$ 2.99	$ 2.42

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Share-Based Incentive Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock options vested at end of period, number (in shares)	7,029,165
Stock options vested at end of period, weighted average exercise price (in dollars per share)	$ 103.80
Stock options vested at end of period, weighted average contractual life remaining (in years)	5 years 9 months 18 days
Stock options vested at end of period, aggregate intrinsic value	$ 237
Stock options exercisable at end of period, number (in shares)	5,124,196
Stock options exercisable at end of period, weighted average exercise price (in dollars per share)	$ 94.88
Stock options exercisable at end of period, weighted average contractual life remaining (in years)	4 years 8 months 12 days
Stock options exercisable at end of period, aggregate intrinsic value	$ 217
Total compensation cost recognized in earnings for all share-based incentive compensation awards	45	$ 44
Tax benefit recognized in earnings related to compensation costs	8	$ 8
Total unrecognized compensation cost related to all nonvested share-based incentive compensation awards	$ 235
Weighted-average period of recognition for unrecognized compensation cost (in years)	2 years 2 months 12 days

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Pension Plans, Retirement Benefits and Savings Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Pension Plans [Member]
Defined benefit plan disclosure
Service cost	$ 30	$ 33
Interest cost on benefit obligation	35	31
Expected return on plan assets	(69)	(66)
Net periodic benefit cost, amortization of unrecognized net actuarial loss	14	23
Total non-service cost (benefit)	(20)	(12)
Net periodic benefit cost	10	21
Pension Plans [Member] | Claims and claim adjustment expenses [Member]
Defined benefit plan disclosure
Service cost	12	13
Total non-service cost (benefit)	(8)	(5)
Pension Plans [Member] | General and administrative expenses [Member]
Defined benefit plan disclosure
Service cost	18	20
Total non-service cost (benefit)	(12)	(7)
Postretirement Benefit Plans [Member]
Defined benefit plan disclosure
Interest cost on benefit obligation	2	2
Net periodic benefit cost, amortization of unrecognized prior service benefit	(1)	(1)
Total non-service cost (benefit)	1	1
Net periodic benefit cost	1	1
Postretirement Benefit Plans [Member] | General and administrative expenses [Member]
Defined benefit plan disclosure
Total non-service cost (benefit)	$ 1	$ 1

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Leases (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating leases	$ 22
Short-term leases	4
Lease expense	26
Net lease cost	26
Cash payments included in the measurement of lease liabilities reported in operating cash flows	24
Right-of-use assets obtained in exchange for new lease liabilities	$ 8
Weighted average discount rate (percent)	3.07%
Weighted average remaining lease term (in years)	5 years 2 months 12 days

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Leases (Details) - Contractual Maturities of Lease Liabilities $ in Millions	Mar. 31, 2019 USD ($)
Leases [Abstract]
Lease payments due, remainder of 2019	$ 73
Lease payments due, 2020	95
Lease payments due, 2021	82
Lease payments due, 2022	61
Lease payments due, 2023	41
Lease payments due, thereafter	62
Total undiscounted lease payments	414
Less: present value adjustment	30
Operating lease liability	$ 384

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Contingencies, Commitments and Guarantees (Details) - Commitments - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Contingencies, Commitments and Guarantees [Abstract]
Unfunded commitments to private equity limited partnerships and real estate partnerships	$ 1,560	$ 1,600

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Contingencies, Commitments and Guarantees (Details) - Guarantees	Mar. 31, 2019 USD ($)
Indemnifications related to the sale of businesses [Member]
Guarantor obligations
Maximum amount of contingent obligation	$ 358,000,000
Guarantees of certain investments and third-party loans [Member]
Guarantor obligations
Maximum amount of contingent obligation	0
Guarantees of certain insurance policy obligations [Member]
Guarantor obligations
Maximum amount of contingent obligation	480,000,000
Amount indemnified by a third party	$ 480,000,000

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Consolidating Financial Statements (Unaudited) (Details) $ in Millions	Mar. 31, 2019 USD ($)
Consolidating Financial Statements of The Travelers Companies, Inc. and Subsidiaries (Unaudited) disclosure
Amount of certain debt obligations of Travelers Property Casualty Corp. (TPC) and Travelers Insurance Group Holdings, Inc. (TIGHI) that are fully and unconditionally guaranteed by The Travelers Companies, Inc.	$ 700

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Consolidating Financial Statements (Details) - Consolidating Statement of Income (Unaudited) - USD ($)		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Consolidating Statement of Income
Premiums		$ 6,855,000,000	$ 6,537,000,000
Net investment income		582,000,000	603,000,000
Fee income		109,000,000	103,000,000
Net realized investment gains (losses)	[1]	53,000,000	(11,000,000)
Other revenues		72,000,000	54,000,000
Total revenues		7,671,000,000	7,286,000,000
Claims and claim adjustment expenses		4,442,000,000	4,296,000,000
Amortization of deferred acquisition costs		1,117,000,000	1,061,000,000
General and administrative expenses		1,057,000,000	1,062,000,000
Interest expense		88,000,000	89,000,000
Total claims and expenses		6,704,000,000	6,508,000,000
Income before income taxes		967,000,000	778,000,000
Income tax expense (benefit)		171,000,000	109,000,000
Net income		796,000,000	669,000,000
Total other-than-temporary impairment gains (losses)		(1,000,000)	0
Other-than-temporary impairment losses recognized in net realized investment gains (losses)		(1,000,000)	0
Other-than-temporary impairment losses recognized in other comprehensive income (loss)		0
Other-than-temporary impairment gains recognized in other comprehensive income (loss)			0
Reportable Legal Entities [Member] | TPC [Member]
Consolidating Statement of Income
Premiums		4,689,000,000	4,468,000,000
Net investment income		416,000,000	412,000,000
Fee income		109,000,000	103,000,000
Net realized investment gains (losses)		22,000,000	2,000,000
Other revenues		38,000,000	27,000,000
Total revenues		5,274,000,000	5,012,000,000
Claims and claim adjustment expenses		3,024,000,000	2,910,000,000
Amortization of deferred acquisition costs		745,000,000	705,000,000
General and administrative expenses		722,000,000	729,000,000
Interest expense		12,000,000	11,000,000
Total claims and expenses		4,503,000,000	4,355,000,000
Income before income taxes		771,000,000	657,000,000
Income tax expense (benefit)		146,000,000	106,000,000
Net income		625,000,000	551,000,000
Total other-than-temporary impairment gains (losses)		(1,000,000)
Other-than-temporary impairment losses recognized in net realized investment gains (losses)		(1,000,000)
Reportable Legal Entities [Member] | Other Subsidiaries [Member]
Consolidating Statement of Income
Premiums		2,166,000,000	2,069,000,000
Net investment income		155,000,000	185,000,000
Net realized investment gains (losses)		15,000,000	(12,000,000)
Other revenues		34,000,000	28,000,000
Total revenues		2,370,000,000	2,270,000,000
Claims and claim adjustment expenses		1,418,000,000	1,386,000,000
Amortization of deferred acquisition costs		372,000,000	356,000,000
General and administrative expenses		330,000,000	328,000,000
Total claims and expenses		2,120,000,000	2,070,000,000
Income before income taxes		250,000,000	200,000,000
Income tax expense (benefit)		42,000,000	32,000,000
Net income		208,000,000	168,000,000
Reportable Legal Entities [Member] | TRV [Member]
Consolidating Statement of Income
Net investment income		11,000,000	6,000,000
Net realized investment gains (losses)		16,000,000	(1,000,000)
Total revenues		27,000,000	5,000,000
General and administrative expenses		5,000,000	6,000,000
Interest expense		76,000,000	78,000,000
Total claims and expenses		81,000,000	84,000,000
Income before income taxes		(54,000,000)	(79,000,000)
Income tax expense (benefit)		(17,000,000)	(29,000,000)
Net income of subsidiaries		833,000,000	719,000,000
Net income		796,000,000	669,000,000
Eliminations [Member]
Consolidating Statement of Income
Other revenues			(1,000,000)
Total revenues			(1,000,000)
General and administrative expenses			(1,000,000)
Total claims and expenses			(1,000,000)
Net income of subsidiaries		(833,000,000)	(719,000,000)
Net income		$ (833,000,000)	$ (719,000,000)

[1] Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively. Of total OTTI, credit losses of $(1) million and $0 for the three months ended March 31, 2019 and 2018, respectively, were recognized in net realized investment gains (losses). In addition, unrealized gains (losses) from other changes in total OTTI of $0 for each of the three months ended March 31, 2019 and 2018, respectively, were recognized in other comprehensive income (loss) as part of changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income.

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Consolidating Financial Statements (Details) - Consolidating Statement of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Consolidating Statement of Comprehensive Income
Net income	$ 796	$ 669
Changes in net unrealized gains (losses) on investment securities having no credit losses recognized in the consolidated statement of income	1,416	(1,203)
Changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income	5	(2)
Net changes in benefit plan assets and obligations	12	22
Net changes in unrealized foreign currency translation	50	6
Other comprehensive income (loss) before income taxes	1,483	(1,177)
Income tax expense (benefit)	306	(244)
Other comprehensive income (loss), net of taxes, before other comprehensive income (loss) of subsidiaries	1,177	(933)
Other comprehensive income (loss), net of taxes	1,177	(933)
Comprehensive income (loss)	1,973	(264)
Reportable Legal Entities [Member] | TPC [Member]
Consolidating Statement of Comprehensive Income
Net income	625	551
Changes in net unrealized gains (losses) on investment securities having no credit losses recognized in the consolidated statement of income	979	(838)
Changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income	4	(1)
Net changes in unrealized foreign currency translation	19	(25)
Other comprehensive income (loss) before income taxes	1,002	(864)
Income tax expense (benefit)	208	(175)
Other comprehensive income (loss), net of taxes, before other comprehensive income (loss) of subsidiaries	794	(689)
Other comprehensive income (loss), net of taxes	794	(689)
Comprehensive income (loss)	1,419	(138)
Reportable Legal Entities [Member] | Other Subsidiaries [Member]
Consolidating Statement of Comprehensive Income
Net income	208	168
Changes in net unrealized gains (losses) on investment securities having no credit losses recognized in the consolidated statement of income	435	(364)
Changes in net unrealized gains (losses) on investment securities having credit losses recognized in the consolidated statement of income	1	(1)
Net changes in unrealized foreign currency translation	31	31
Other comprehensive income (loss) before income taxes	467	(334)
Income tax expense (benefit)	93	(77)
Other comprehensive income (loss), net of taxes, before other comprehensive income (loss) of subsidiaries	374	(257)
Other comprehensive income (loss), net of taxes	374	(257)
Comprehensive income (loss)	582	(89)
Reportable Legal Entities [Member] | TRV [Member]
Consolidating Statement of Comprehensive Income
Net income	796	669
Changes in net unrealized gains (losses) on investment securities having no credit losses recognized in the consolidated statement of income	2	(1)
Net changes in benefit plan assets and obligations	12	22
Other comprehensive income (loss) before income taxes	14	21
Income tax expense (benefit)	5	8
Other comprehensive income (loss), net of taxes, before other comprehensive income (loss) of subsidiaries	9	13
Other comprehensive income (loss) of subsidiaries	1,168	(946)
Other comprehensive income (loss), net of taxes	1,177	(933)
Comprehensive income (loss)	1,973	(264)
Eliminations [Member]
Consolidating Statement of Comprehensive Income
Net income	(833)	(719)
Other comprehensive income (loss) of subsidiaries	(1,168)	946
Other comprehensive income (loss), net of taxes	(1,168)	946
Comprehensive income (loss)	$ (2,001)	$ 227

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Consolidating Financial Statements (Details) - Consolidating Balance Sheet (Unaudited) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Consolidating Balance Sheet
Fixed maturities, at fair value	$ 65,500	$ 63,464
Equity securities, at fair value	400	368
Real estate investments	969	904
Short-term securities	4,094	3,985
Other investments	3,554	3,557
Total investments	74,517	72,278
Cash	357	373	$ 397	$ 344
Investment income accrued	591	624
Premiums receivable	7,947	7,506
Reinsurance recoverables	8,281	8,370
Ceded unearned premiums	935	578
Deferred acquisition costs	2,190	2,120
Deferred taxes	115	445
Contractholder receivables	4,811	4,785
Goodwill	3,949	3,937
Other intangible assets	341	345
Other assets	3,212	2,872
Total assets	107,246	104,233
Claims and claim adjustment expense reserves	50,718	50,668
Unearned premium reserves	14,122	13,555
Contractholder payables	4,811	4,785
Payables for reinsurance premiums	635	289
Debt	7,057	6,564
Other liabilities	5,563	5,478
Total liabilities	82,906	81,339
Common stock	23,243	23,144
Retained earnings	35,795	35,204
Accumulated other comprehensive income (loss)	(682)	(1,859)
Treasury stock, at cost	(34,016)	(33,595)
Total shareholders’ equity	24,340	22,894	22,979
Total liabilities and shareholders’ equity	107,246	104,233
Fixed maturities, available for sale, amortized cost	64,216	63,601
Equity securities, cost	$ 375	$ 382
Common stock, shares authorized (in shares)	1,750,000,000	1,750,000,000.0
Common stock, shares issued (in shares)	262,000,000	263,700,000
Common stock, shares outstanding (in shares)	261,900,000	263,600,000
Treasury stock, at cost (in shares)	514,200,000	510,900,000
Reportable Legal Entities [Member] | TPC [Member]
Consolidating Balance Sheet
Fixed maturities, at fair value	$ 45,336	$ 43,683
Equity securities, at fair value	105	105
Real estate investments	1	2
Short-term securities	1,645	1,855
Other investments	2,772	2,746
Total investments	49,859	48,391
Cash	150	181	175	157
Investment income accrued	406	434
Premiums receivable	5,356	5,089
Reinsurance recoverables	6,496	5,904
Ceded unearned premiums	838	522
Deferred acquisition costs	1,987	1,930
Deferred taxes	(76)	167
Contractholder receivables	4,801	3,867
Goodwill	2,581	2,578
Other intangible assets	222	224
Other assets	2,470	2,220
Total assets	75,090	71,507
Claims and claim adjustment expense reserves	34,800	34,093
Unearned premium reserves	9,872	9,414
Contractholder payables	4,801	3,867
Payables for reinsurance premiums	380	169
Debt	693	693
Other liabilities	4,287	4,133
Total liabilities	54,833	52,369
Additional paid-in capital	11,634	11,634
Retained earnings	8,390	8,065
Accumulated other comprehensive income (loss)	233	(561)
Total shareholders’ equity	20,257	19,138
Total liabilities and shareholders’ equity	75,090	71,507
Reportable Legal Entities [Member] | Other Subsidiaries [Member]
Consolidating Balance Sheet
Fixed maturities, at fair value	20,079	19,697
Equity securities, at fair value	106	92
Real estate investments	968	902
Short-term securities	581	759
Other investments	781	810
Total investments	22,515	22,260
Cash	207	192	221	$ 187
Investment income accrued	182	187
Premiums receivable	2,591	2,417
Reinsurance recoverables	1,785	2,466
Ceded unearned premiums	97	56
Deferred acquisition costs	203	190
Deferred taxes	222	302
Contractholder receivables	10	918
Goodwill	1,377	1,368
Other intangible assets	119	121
Other assets	393	15
Total assets	29,701	30,492
Claims and claim adjustment expense reserves	15,918	16,575
Unearned premium reserves	4,250	4,141
Contractholder payables	10	918
Payables for reinsurance premiums	255	120
Debt		32
Other liabilities	1,049	849
Total liabilities	21,482	22,635
Common stock	401	401
Additional paid-in capital	7,083	7,023
Retained earnings	807	879
Accumulated other comprehensive income (loss)	(72)	(446)
Total shareholders’ equity	8,219	7,857
Total liabilities and shareholders’ equity	29,701	30,492
Reportable Legal Entities [Member] | TRV [Member]
Consolidating Balance Sheet
Fixed maturities, at fair value	85	84
Equity securities, at fair value	189	171
Short-term securities	1,868	1,371
Other investments	1	1
Total investments	2,143	1,627
Cash			$ 1
Investment income accrued	3	3
Deferred taxes	(31)	(24)
Investment in subsidiaries	28,475	26,993
Other assets	349	669
Total assets	30,939	29,268
Debt	6,364	5,871
Other liabilities	227	496
Total liabilities	6,591	6,367
Common stock	23,243	23,144
Retained earnings	35,803	35,211
Accumulated other comprehensive income (loss)	(682)	(1,859)
Treasury stock, at cost	(34,016)	(33,595)
Total shareholders’ equity	24,348	22,901
Total liabilities and shareholders’ equity	30,939	29,268
Eliminations [Member]
Consolidating Balance Sheet
Goodwill	(9)	(9)
Investment in subsidiaries	(28,475)	(26,993)
Other assets		(32)
Total assets	(28,484)	(27,034)
Debt		(32)
Total liabilities		(32)
Common stock	(401)	(401)
Additional paid-in capital	(18,717)	(18,657)
Retained earnings	(9,205)	(8,951)
Accumulated other comprehensive income (loss)	(161)	1,007
Total shareholders’ equity	(28,484)	(27,002)
Total liabilities and shareholders’ equity	$ (28,484)	$ (27,034)

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Consolidating Financial Statements (Details) - Consolidating Statement of Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Consolidating Statement of Cash Flows
Net income	$ 796	$ 669
Net adjustments to reconcile net income to net cash provided by operating activities	(157)	(115)
Net cash provided by operating activities	639	554
Proceeds from maturities of fixed maturities	1,556	1,950
Proceeds from sales of investments:
Fixed maturities	769	1,085
Equity securities	39	26
Other investments	105	114
Purchases of investments:
Fixed maturities	(2,914)	(3,920)
Equity securities	(22)	(20)
Real estate investments	(77)	(33)
Other investments	(146)	(142)
Net sales (purchases) of short-term securities	(109)	410
Securities transactions in course of settlement	295	202
Other investing activities	(82)	(53)
Net cash used in investing activities	(586)	(381)
Treasury stock acquired — share repurchase authorization	(375)	(350)
Treasury stock acquired — net employee share-based compensation	(46)	(51)
Dividends paid to shareholders	(205)	(197)
Payment of debt		(100)
Issuance of debt	492	491
Issuance of common stock — employee share options	63	85
Net cash used in financing activities	(71)	(122)
Effect of exchange rate changes on cash	2	2
Net increase (decrease) in cash	(16)	53
Cash at beginning of year	373	344
Cash at end of period	357	397
Income taxes paid	5	56
Interest paid	50	39
Reportable Legal Entities [Member] | TPC [Member]
Consolidating Statement of Cash Flows
Net income	625	551
Net adjustments to reconcile net income to net cash provided by operating activities	(110)	(126)
Net cash provided by operating activities	515	425
Proceeds from maturities of fixed maturities	1,043	1,453
Proceeds from sales of investments:
Fixed maturities	551	729
Equity securities	19	8
Other investments	90	76
Purchases of investments:
Fixed maturities	(2,228)	(2,836)
Equity securities	(1)	(1)
Other investments	(134)	(115)
Net sales (purchases) of short-term securities	210	729
Securities transactions in course of settlement	283	147
Other investing activities	(80)	(52)
Net cash used in investing activities	(247)	138
Dividends paid to parent company	(300)	(544)
Net cash used in financing activities	(300)	(544)
Effect of exchange rate changes on cash	1	(1)
Net increase (decrease) in cash	(31)	18
Cash at beginning of year	181	157
Cash at end of period	150	175
Income taxes paid	4	13
Interest paid	16	16
Reportable Legal Entities [Member] | Other Subsidiaries [Member]
Consolidating Statement of Cash Flows
Net income	208	168
Net adjustments to reconcile net income to net cash provided by operating activities	(42)	(57)
Net cash provided by operating activities	166	111
Proceeds from maturities of fixed maturities	508	493
Proceeds from sales of investments:
Fixed maturities	218	356
Equity securities	20	18
Other investments	15	38
Purchases of investments:
Fixed maturities	(682)	(1,078)
Equity securities	(20)	(18)
Real estate investments	(77)	(33)
Other investments	(12)	(27)
Net sales (purchases) of short-term securities	178	201
Securities transactions in course of settlement	13	56
Other investing activities	(2)	(1)
Net cash used in investing activities	159	5
Payment of debt	(32)
Dividends paid to parent company	(279)	(85)
Net cash used in financing activities	(311)	(85)
Effect of exchange rate changes on cash	1	3
Net increase (decrease) in cash	15	34
Cash at beginning of year	192	187
Cash at end of period	207	221
Income taxes paid	1	43
Reportable Legal Entities [Member] | TRV [Member]
Consolidating Statement of Cash Flows
Net income	796	669
Net adjustments to reconcile net income to net cash provided by operating activities	(227)	(22)
Net cash provided by operating activities	569	647
Proceeds from maturities of fixed maturities	5	4
Purchases of investments:
Fixed maturities	(4)	(6)
Equity securities	(1)	(1)
Net sales (purchases) of short-term securities	(497)	(520)
Securities transactions in course of settlement	(1)	(1)
Net cash used in investing activities	(498)	(524)
Treasury stock acquired — share repurchase authorization	(375)	(350)
Treasury stock acquired — net employee share-based compensation	(46)	(51)
Dividends paid to shareholders	(205)	(197)
Payment of debt		(100)
Issuance of debt	492	491
Issuance of common stock — employee share options	63	85
Net cash used in financing activities	(71)	(122)
Net increase (decrease) in cash		1
Cash at end of period		1
Interest paid	34	23
Eliminations [Member]
Consolidating Statement of Cash Flows
Net income	(833)	(719)
Net adjustments to reconcile net income to net cash provided by operating activities	222	90
Net cash provided by operating activities	(611)	(629)
Purchases of investments:
Payment of debt	32
Dividends paid to parent company	579	629
Net cash used in financing activities	$ 611	$ 629