The Company sponsors a qualified non-contributory defined benefit pension plan (the qualified domestic pension plan), which covers substantially all U.S. domestic employees and provides benefits under a cash balance formula, except that certain limited groups of legacy participants are covered by a prior traditional final average pay formula. In addition, the Company sponsors a nonqualified defined benefit pension plan which covers certain highly-compensated employees, pension plans for employees of its foreign subsidiaries, and a postretirement health and life insurance benefit plan for employees satisfying certain age and service requirements and for certain retirees.



(at and for the year ended December 31, in millions)	Qualified Domestic Pension Plan						Nonqualified and Foreign Pension Plans						Total
(at and for the year ended December 31, in millions)	2019			2018			2019			2018			2019			2018
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	3,444		$	3,679		$	215		$	230		$	3,659		$	3,909
Benefits earned	112			126			6			7			118			133
Interest cost on benefit obligation	134			119			7			7			141			126
Actuarial (gain) loss	451			(273		)	19			(11		)	470			(284		)
Benefits paid	(187		)	(207		)	(11		)	(12		)	(198		)	(219		)
Foreign currency exchange rate change	—			—			5			(6		)	5			(6		)
Benefit obligation at end of year	$	3,954		$	3,444		$	241		$	215		$	4,195		$	3,659
Change in plan assets:
Fair value of plan assets at beginning of year	$	3,771		$	3,957		$	103		$	113		$	3,874		$	4,070
Actual return on plan assets	686			(179		)	10			(1		)	696			(180		)
Company contributions	—			200			8			10			8			210
Benefits paid	(187		)	(207		)	(11		)	(12		)	(198		)	(219		)
Foreign currency exchange rate change	—			—			5			(7		)	5			(7		)
Fair value of plan assets at end of year	4,270			3,771			115			103			4,385			3,874
Funded status of plan at end of year	$	316		$	327		$	(126	)	$	(112	)	$	190		$	215
Amounts recognized in the consolidated balance sheet consist of:
Accrued over-funded benefit plan assets	$	316		$	327		$	1		$	4		$	317		$	331
Accrued under-funded benefit plan liabilities	—			—			(127		)	(116		)	(127		)	(116		)
Total	$	316		$	327		$	(126	)	$	(112	)	$	190		$	215
Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial loss	$	1,094		$	1,113		$	49		$	36		$	1,143		$	1,149
Prior service cost (benefit)	(3		)	(5		)	—			1			(3		)	(4		)
Total	$	1,091		$	1,108		$	49		$	37		$	1,140		$	1,145



	Postretirement Benefit Plans
(at and for the year ended December 31, in millions)	2019			2018
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	203		$	225
Benefits earned	—			—
Interest cost on benefit obligation	7			7
Actuarial gain	(31		)	(18		)
Benefits paid	(9		)	(10		)
Foreign currency exchange rate change	1			(1		)
Benefit obligation at end of year	$	171		$	203
Change in plan assets:
Fair value of plan assets at beginning of year	$	12		$	13
Actual return on plan assets	1			—
Company contributions	8			9
Benefits paid	(9		)	(10		)
Fair value of plan assets at end of year	12			12
Funded status of plan at end of year	$	(159	)	$	(191	)
Amounts recognized in the consolidated balance sheet consist of:
Accrued under-funded benefit plan liability	$	(159	)	$	(191	)
Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial gain	$	(49	)	$	(17	)
Prior service benefit	(21		)	(25		)
Total	$	(70	)	$	(42	)

The total accumulated benefit obligation for the Company’s defined benefit pension plans was $4.05 billion and $3.53 billion at December 31, 2019 and 2018, respectively. The qualified domestic pension plan accounted for $3.82 billion and $3.32 billion of the total accumulated benefit obligation at December 31, 2019 and 2018, respectively, whereas the nonqualified and foreign plans accounted for $0.23 billion and $0.21 billion of the total accumulated benefit obligation at December 31, 2019 and 2018, respectively.

For pension plans with a projected benefit obligation in excess of plan assets, the aggregate projected benefit obligation was $228 million and $203 million at December 31, 2019 and 2018, respectively, and the aggregate plan assets were $100 million and $87 million at December 31, 2019 and 2018, respectively. For pension plans with an accumulated benefit obligation in excess of plan assets, the aggregate accumulated benefit obligation was $218 million and $195 million at December 31, 2019 and 2018, respectively, and the aggregate plan assets were $100 million and $87 million at December 31, 2019 and 2018, respectively. For postretirement benefit plans with an accumulated benefit obligation in excess of plan assets, the aggregate accumulated benefit obligation was $171 million and $203 million at December 31, 2019 and 2018, respectively, and the aggregate plan assets were $12 million at both December 31, 2019 and 2018.

The $451 million actuarial loss experienced in 2019 for the qualified domestic pension plan was largely driven by the decrease in the assumed discount rate from the prior year that was used to determine the projected benefit obligation at December 31, 2019. The $273 million actuarial gain experienced in 2018 for the qualified domestic pension plan was largely driven by the increase in the assumed discount rate from the prior year that was used to determine the projected benefit obligation at December 31, 2018.

The Company has discretion regarding whether to provide additional funding and when to provide such funding to its qualified domestic pension plan. In 2019, 2018 and 2017, there were no required contributions to the qualified domestic pension plan. In 2019, the Company made no voluntary contributions to the qualified domestic pension plan. In 2018 and 2017, the Company voluntarily made contributions totaling $200 million and $300 million, respectively, to the qualified domestic pension plan. There



	Pension Plans									Postretirement Benefit Plans
(for the year ended December 31, in millions)	2019			2018			2017			2019			2018			2017
Net Periodic Benefit Cost:
Service cost	$	118		$	133		$	119		$	—		$	—		$	—
Non-service cost:
Interest cost on benefit obligation	141			126			127			7			7			7
Expected return on plan assets	(275		)	(264		)	(240		)	(1		)	—			—
Settlement	—			—			3			—			—			—
Amortization of unrecognized:
Prior service benefit	(1		)	(1		)	(1		)	(3		)	(4		)	(4		)
Net actuarial loss	56			91			85			—			—			—
Total non-service cost (benefit)	(79		)	(48		)	(26		)	3			3			3
Net periodic benefit cost	39			85			93			3			3			3
Other Changes in Benefit Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:
Prior service benefit	—			—			—			—			—			—
Net actuarial loss (gain)	49			160			40			(31		)	(18		)	13
Foreign currency exchange rate change	1			(1		)	2			—			—			(1		)
Settlement	—			—			(2		)	—			—			—
Amortization of prior service benefit	1			1			1			3			4			4
Amortization of net actuarial loss	(56		)	(91		)	(85		)	—			—			—
Total other changes recognized in other comprehensive income	(5		)	69			(44		)	(28		)	(14		)	16
Total other changes recognized in net periodic benefit cost and other comprehensive income	$	34		$	154		$	49		$	(25	)	$	(11	)	$	19



	Pension Plans									Postretirement Benefit Plans
(for the year ended December 31, in millions)	2019			2018			2017			2019		2018		2017
Service Cost:
Net investment income	$	1		$	1		$	—		$	—	$	—	$	—
Claims and claim adjustment expenses	48			54			48			—		—		—
General and administrative expenses	69			78			71			—		—		—
Total service cost	118			133			119			—		—		—

Non-Service Cost (Benefit):
Claims and claim adjustment expenses	(33		)	(19		)	(11		)	1		1		1
General and administrative expenses	(46		)	(29		)	(15		)	2		2		2
Total non-service cost (benefit)	(79		)	(48		)	(26		)	3		3		3
Net periodic benefit cost	$	39		$	85		$	93		$	3	$	3	$	3



(at and for the year ended December 31,)	2019		2018
Assumptions used to determine benefit obligations
Discount rate:
Qualified domestic pension plan	3.28	%	4.39	%
Nonqualified domestic pension plan	3.17	%	4.33	%
Domestic postretirement benefit plan	3.09	%	4.26	%
Cash balance interest crediting rate	4.01	%	4.01	%
Future compensation increase rate	4.00	%	4.00	%
Assumptions used to determine net periodic benefit cost
Discount rate:
Qualified domestic pension plan:
Service cost	4.57	%	3.87	%
Interest cost	4.02	%	3.34	%
Nonqualified domestic pension plan:
Service cost	4.40	%	3.73	%
Interest cost	3.95	%	3.26	%
Domestic postretirement benefit plan:
Interest cost	3.90	%	3.21	%
Expected long-term rate of return on assets:
Pension plan	7.00	%	7.00	%
Postretirement benefit plan	4.00	%	4.00	%
Assumed health care cost trend rates
Following year:
Medical (before age 65)	7.00	%	7.50	%
Medical (age 65 and older)	8.25	%	8.75	%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)	4.50	%	4.50	%
Year that the rate reaches the ultimate trend rate:
Medical (before age 65)	2026		2026
Medical (age 65 and older)	2026		2026

The discount rate assumption used to determine the benefit obligation is based on a yield-curve approach. Under this approach, individual spot rates from the yield curve of a hypothetical portfolio of high quality fixed maturity corporate bonds (rated Aa) available at the year-end valuation date, for which the timing and amount of cash outflows correspond with the timing and amount of the estimated benefit payouts of the Company’s benefit plan, are applied to expected future benefits payments in measuring the projected benefit obligation. The discount rate assumption used to determine benefit obligations disclosed above represents the weighted average of the individual spot rates.

The qualified domestic pension plan assets are invested for the exclusive benefit of the plan participants and beneficiaries and are intended, over time, to satisfy the benefit obligations under the plan. Risk tolerance is established through consideration of plan liabilities, plan funded status and corporate financial position. The asset mix guidelines have been established and are reviewed quarterly. These guidelines are intended to serve as tools to facilitate the investment of plan assets to maximize long-term total return and the ongoing oversight of the plan’s investment performance. Investment risk is measured and monitored on an ongoing basis through daily and monthly investment portfolio reviews, annual liability measurements and periodic asset/liability studies.

The Company’s overall investment strategy for the qualified domestic pension plan is to achieve a mix of approximately 85% to 90% of investments for long-term growth and 10% to 15% for near-term benefit payments with a diversification of asset types, fund strategies and fund managers. The current target allocations for plan assets are 55% to 65% equity securities and 20% to 40% fixed income securities, with the remainder allocated to short-term securities. Equity securities primarily include investments in large, medium and small-cap companies primarily located in the United States. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities, U.S. Treasury securities and debt securities issued by foreign governments.

Short-term securities are carried at fair value which approximates cost plus accrued interest or amortized discount. The fair value or market value of these is periodically compared to this amortized cost and is based on significant observable inputs as determined by an external pricing service. Accordingly, the estimates of fair value for such short-term securities, other than U.S. Treasury securities and money market mutual funds, provided by an external pricing service are included in the amount disclosed in Level 2 of the hierarchy. The estimated fair value of U.S. Treasury securities and money market mutual funds is included in the amount disclosed in Level 1 as the estimates are based on unadjusted market prices.



(at December 31, 2019, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
Obligations of states, municipalities and political subdivisions	$	3	$	—	$	3	$	—
Debt securities issued by foreign governments	30		—		30		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	30		—		30		—
All other corporate bonds	715		—		715		—
Total fixed maturities	778		—		778		—
Mutual funds
Equity mutual funds	1,585		1,578		7		—
Bond mutual funds	869		866		3		—
Total mutual funds	2,454		2,444		10		—
Equity securities	1,018		1,017		1		—
Other investments	2		—		—		2
Cash and short-term securities
U.S. Treasury securities	20		20		—		—
Money market mutual funds	27		27		—		—
Other	86		17		69		—
Total cash and short-term securities	133		64		69		—
Total	$	4,385	$	3,525	$	858	$	2



(at December 31, 2018, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
Obligations of states, municipalities and political subdivisions	$	3	$	—	$	3	$	—
Debt securities issued by foreign governments	27		—		27		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	30		—		30		—
All other corporate bonds	712		—		712		—
Total fixed maturities	772		—		772		—
Mutual funds
Equity mutual funds	1,288		1,282		6		—
Bond mutual funds	760		757		3		—
Total mutual funds	2,048		2,039		9		—
Equity securities	783		783		—		—
Other investments	1		—		—		1
Cash and short-term securities
U.S. Treasury securities	30		30		—		—
Money market mutual funds	—		—		—		—
Other	240		19		221		—
Total cash and short-term securities	270		49		221		—
Total	$	3,874	$	2,871	$	1,002	$	1

The Company’s overall investment strategy is to achieve a mix of approximately 35% to 65% of investments for long-term growth and 35% to 65% for near-term insurance payments with a wide diversification of asset types, fund strategies and fund managers. The current target allocations for plan assets are 25% to 75% fixed income securities, with the remainder allocated to short-term securities. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities and U.S. Treasuries.

The Company has a savings plan, The Travelers 401(k) Savings Plan (the Savings Plan), in which substantially all U.S. domestic Company employees are eligible to participate. Under the Savings Plan, the Company matches employee contributions up to 5% of eligible pay, with a maximum annual match of $6,500 which becomes 100% vested after three years of service. The Company’s matching contribution is made in cash and invested according to the employee’s current investment elections and can be reinvested into other investment options in accordance with the terms of the Savings Plan. The Company’s non-U.S. employees participate in separate savings plans. The total expense related to all of the savings plans was $123 million, $118 million and $119 million for the years ended December 31, 2019, 2018 and 2017, respectively.