Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

DEBT

Debt outstanding was as follows:

(at December 31, in millions)	2022		2021
Short-term:
Commercial paper	$	100	$	100
Total short-term debt	100		100
Long-term:
7.75% Senior notes due April 15, 2026	200		200
7.625% Junior subordinated debentures due December 15, 2027	125		125
6.375% Senior notes due March 15, 2033	500		500
6.75% Senior notes due June 20, 2036	400		400
6.25% Senior notes due June 15, 2037	800		800
5.35% Senior notes due November 1, 2040	750		750
4.60% Senior notes due August 1, 2043	500		500
4.30% Senior notes due August 25, 2045	400		400
8.50% Junior subordinated debentures due December 15, 2045	56		56
3.75% Senior notes due May 15, 2046	500		500
8.312% Junior subordinated debentures due July 1, 2046	73		73
4.00% Senior notes due May 30, 2047	700		700
4.05% Senior notes due March 7, 2048	500		500
4.10% Senior notes due March 4, 2049	500		500
2.55% Senior notes due April 27, 2050	500		500
3.05% Senior notes due June 8, 2051	750		750
Total long-term debt	7,254		7,254
Total debt principal	7,354		7,354
Unamortized fair value adjustment	38		39
Unamortized debt issuance costs	(100)		(103)
Total debt	$	7,292	$	7,290

2021 Debt Issuance. On June 8, 2021, the Company issued $750 million aggregate principal amount of 3.05% senior notes that will mature on June 8, 2051. The net proceeds of the issuance, after the deduction of the underwriting discount and expenses payable by the Company, totaled approximately $739 million. Interest on the senior notes is payable semi-annually in arrears on June 8 and December 8. Prior to December 8, 2050, 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 December 8, 2050 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 15 basis points. On or after December 8, 2050, 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.

2020 Debt Issuance. On April 27, 2020, the Company issued $500 million aggregate principal amount of 2.55% senior notes that will mature on April 27, 2050. The net proceeds of the issuance, after the deduction of the underwriting discount and expenses payable by the Company, totaled approximately $490 million. Interest on the senior notes is payable semi-annually in arrears on April 27 and October 27. Prior to October 27, 2049, 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 October 27, 2049 on any senior notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the then current Treasury rate (as defined in the senior notes), plus 25 basis points. On or after October 27, 2049, 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.

2020 Debt Repayment. On November 1, 2020, the Company's $500 million, 3.90% notes matured and were fully paid.

Description of Debt

Commercial Paper—The Company maintains an $800 million commercial paper program. Interest rates on commercial paper issued in 2022 ranged from 0.10% to 4.29%, and in 2021 ranged from 0.09% to 0.12%.

Senior Notes—The Company’s various senior debt issues are unsecured obligations that rank equally with one another.  Interest payments are made semi-annually.  The Company generally may redeem some or all of the notes prior to maturity in accordance with terms unique to each debt instrument.

Junior Subordinated Debentures—The Company’s three junior subordinated debenture instruments are all similar in nature to each other.  Three separate business trusts issued preferred securities to investors and used the proceeds to purchase the Company’s junior subordinated debentures.  Interest on each of the instruments is paid semi-annually.

The Company’s consolidated balance sheet includes the debt instruments acquired in a business acquisition, which were recorded at fair value as of the acquisition date. The resulting fair value adjustment is being amortized over the remaining life of the respective debt instruments using the effective-interest method. The amortization of the fair value adjustment reduced interest expense by $1 million and $2 million for the years ended December 31, 2022 and 2021, respectively.

The following table presents merger-related unamortized fair value adjustments and the related effective interest rate:

				Unamortized Fair Value Purchase Adjustment at December 31,				Effective Interest Rate to Maturity
(in millions)	Issue Rate		Maturity Date	2022		2021
Junior subordinated debentures	7.625	%	Dec. 2027	$	7	$	8	6.147	%
	8.500	%	Dec. 2045	14		14		6.362	%
	8.312	%	Jul. 2046	17		17		6.362	%
Total				$	38	$	39

The Travelers Companies, Inc. fully and unconditionally guarantees the payment of all principal, premiums, if any, and interest on certain debt obligations of its subsidiaries Travelers Property Casualty Corp. (TPC) and Travelers Insurance Group Holdings Inc. (TIGHI). The guarantees pertain to the $200 million 7.75% notes due 2026 and the $500 million 6.375% notes due 2033.

Maturities—Other than commercial paper, the amount of debt obligations that become due in each of the next five years is as follows: 2023, $0; 2024, $0; 2025, $0; 2026, $200 million; and 2027, $125 million.

Credit Agreement

On June 15, 2022, the Company entered into to a five-year, $1.0 billion revolving credit agreement with a syndicate of financial institutions, replacing its five-year, $1.0 billion credit agreement that was due to expire on June 4, 2023. Pursuant to the credit agreement covenants, the Company must maintain a minimum consolidated net worth, defined as shareholders’ equity determined in accordance with GAAP (excluding accumulated other comprehensive income (loss)) plus (a) trust preferred securities (not to exceed 15% of total capital) and (b) mandatorily convertible securities (combined with trust preferred securities, not to exceed 25% of total capital), less goodwill and other intangible assets. That threshold is fixed during the term

of the credit agreement at an amount equal to $13.9 billion (57.5% of the Company's net worth at March 31, 2022). In addition, the credit agreement contains other customary restrictive covenants as well as certain customary events of default, including with respect to a change in control, which would occur upon the acquisition of 35% or more of the Company’s voting stock or certain changes in the composition of the Company’s Board of Directors.  At December 31, 2022, the Company was in compliance with these covenants.  Generally, the cost of borrowing under this agreement will range from the Secured Overnight Financing Rate (SOFR) plus 85 basis points (including a credit spread adjustment) to SOFR plus 147.5 basis points (including a credit spread adjustment), depending on the Company’s credit ratings.  At December 31, 2022, that cost would have been SOFR plus 110 basis points (including a credit spread adjustment), had there been any amounts outstanding under the credit agreement. 

The Company has uncollateralized letters of credit with an aggregate limit of $302 million at December 31, 2022, including $260 million that provides a portion of the capital needed to support the Company's obligations at Lloyd's.

Shelf Registration

The Company has a shelf registration statement filed with the Securities and Exchange Commission that expires on June 8, 2025 which permits it to issue securities from time to time at prices and on other terms to be determined at the time of offering.