Shareholders' Equity and Dividend Availability

12 Months Ended

Dec. 31, 2012

Shareholders' Equity and Dividend Availability disclosure

Shareholders' Equity and Dividend Availability disclosure [Text Block]

9. SHAREHOLDERS' EQUITY AND DIVIDEND AVAILABILITY

Common Stock

        The Company is governed by the Minnesota Business Corporation Act. All authorized shares of voting common stock have no par value. Shares of common stock reacquired are considered authorized and unissued shares. The number of authorized shares of the company is 1.75 billion, consisting of 1.745 billion shares of voting common stock and five million undesignated shares. The Company's articles of incorporation authorize the board of directors to establish, from the undesignated shares, one or more classes and series of shares, and to further designate the type of shares and terms thereof.

Treasury Stock

        The Company's board of directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise. The authorizations do not have a stated expiration date. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company's financial position, earnings, common share price, catastrophe losses, 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), market conditions and other factors. The following table summarizes repurchase activity in 2012 and remaining repurchase capacity at December 31, 2012.

Quarterly Period Ending (in millions, except per share amounts)	Number of shares purchased		Cost of shares repurchased		Average price paid per share		Remaining capacity under share repurchase authorization
March 31, 2012		6.0	$	350	$	58.73	$	3,259
June 30, 2012		5.6		350	$	62.40	$	2,909
September 30, 2012		5.4		350	$	65.00	$	2,559
December 31, 2012		5.4		400	$	73.00	$	2,159
Total		22.4	$	1,450	$	64.64	$	2,159

        The Company's Amended and Restated 2004 Stock Incentive Plan provides settlement alternatives to employees in which the Company retains shares to cover tax withholding costs and exercise costs. During the years ended December 31, 2012 and 2011, the Company acquired $55 million and $82 million, respectively, of its common stock under this plan.

        Common shares acquired are reported as treasury stock in the consolidated balance sheet.

Preferred Stock

        The Company's preferred shareholders' equity at December 31, 2010 represented the par value of preferred shares outstanding related to a legacy Stock Ownership Plan (SOP) Trust which was subsequently merged into The Travelers 401(k) Savings Plan (the Savings Plan). The SOP Trust could at any time convert any or all of the preferred shares into shares of the Company's common stock at a rate of eight shares of common stock for each preferred share. In May 2011, the Company's board of directors authorized the redemption of the Company's preferred stock held by the Savings Plan and gave notice of that redemption to the appropriate fiduciaries of the Savings Plan. Following a fiduciary review, the Savings Plan exercised its right to convert each preferred share into eight shares of the Company's common stock. As a result, all preferred shares outstanding on June 7, 2011 (190,083 shares) were converted into a total of 1.52 million shares of the Company's common stock.

Dividend Availability

        The Company's U.S. insurance subsidiaries, domiciled principally in the state of Connecticut, are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid by each insurance subsidiary to its respective parent company without prior approval of insurance regulatory authorities. A maximum of $2.05 billion is available by the end of 2013 for such dividends without prior approval of the Connecticut Insurance Department. The Company may choose to accelerate the timing within 2013 and/or increase the amount of dividends from its insurance subsidiaries in 2013, which could result in certain dividends being subject to approval by the Connecticut Insurance Department.

        The holding company 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 not material and are intended to be permanently reinvested in those operations.

        The holding company received $1.96 billion of dividends in 2012, all of which was received from its U.S. insurance subsidiaries.

Statutory Net Income and Policyholder Surplus

        Statutory net income of the Company's domestic and international insurance subsidiaries was $2.84 billion, $1.50 billion and $3.69 billion for the years ended December 31, 2012, 2011 and 2010, respectively. Policyholder surplus of the Company's domestic and international insurance subsidiaries was $20.05 billion and $19.17 billion at December 31, 2012 and 2011, respectively.