Consolidating Financial Statements

6 Months Ended

Jun. 30, 2011

Consolidating Financial Statements disclosure

Consolidating Financial Statements of The Travelers Companies, Inc. and Subsidiaries disclosure [Text Block]

11. 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. has fully and unconditionally guaranteed certain debt obligations of TPC, its wholly-owned subsidiary, which totaled $1.20 billion at June 30, 2011.

Prior to the merger of TPC and SPC 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, Travelers Insurance Group Holdings, Inc. (TIGHI). The Travelers Companies, Inc. has fully and unconditionally guaranteed 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 (LOSS) (Unaudited)

For the three months ended June 30, 2011

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations		Consolidated
Revenues
Premiums	$	3,710		$	1,793		$	—		$	—	$	5,503
Net investment income	511			245			2			—		758
Fee income	73			1			—			—		74
Net realized investment gains (losses)	12			11			(4		)	—		19
Other revenues	27			7			—			—		34
Total revenues	4,333			2,057			(2		)	—		6,388
Claims and expenses
Claims and claim adjustment expenses	3,431			1,710			—			—		5,141
Amortization of deferred acquisition costs	641			329			—			—		970
General and administrative expenses	591			290			26			—		907
Interest expense	18			—			79			—		97
Total claims and expenses	4,681			2,329			105			—		7,115
Loss before income taxes	(348		)	(272		)	(107		)	—		(727		)
Income tax benefit	(204		)	(126		)	(33		)	—		(363		)
Equity in net loss of subsidiaries	—			—			(290		)	290		—
Net loss	$	(144	)	$	(146	)	$	(364	)	$	290	$	(364	)

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains (losses)	$	(3	)	$	8		$	—		$	—	$	5
Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources	—			(9		)	—			—		(9		)
Other-than-temporary impairment losses	(3		)	(1		)	—			—		(4		)
Other net realized investment gains (losses)	15			12			(4		)	—		23
Net realized investment gains (losses)	$	12		$	11		$	(4	)	$	—	$	19

(1) The Travelers Companies, Inc., excluding its subsidiaries.

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended June 30, 2010

(in millions)	TPC		OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	3,610	$	1,730		$	—		$	—		$	5,340
Net investment income	517		242			3			—			762
Fee income	76		—			—			—			76
Net realized investment gains (losses)	8		(25		)	(14		)	—			(31		)
Other revenues	27		5			—			—			32
Total revenues	4,238		1,952			(11		)	—			6,179
Claims and expenses
Claims and claim adjustment expenses	2,277		1,142			—			—			3,419
Amortization of deferred acquisition costs	629		321			—			—			950
General and administrative expenses	566		264			2			—			832
Interest expense	19		—			78			—			97
Total claims and expenses	3,491		1,727			80			—			5,298
Income (loss) before income taxes	747		225			(91		)	—			881
Income tax expense (benefit)	176		66			(31		)	—			211
Equity in net income of subsidiaries	—		—			730			(730		)	—
Net income	$	571	$	159		$	670		$	(730	)	$	670

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains	$	2		$	—		$	—		$	—	$	2
Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources	(4		)	(2		)	—			—		(6		)
Other-than-temporary impairment losses	(2		)	(2		)	—			—		(4		)
Other net realized investment gains (losses)	10			(23		)	(14		)	—		(27		)
Net realized investment gains (losses)	$	8		$	(25	)	$	(14	)	$	—	$	(31	)

(1) The Travelers Companies, Inc., excluding its subsidiaries.

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the six months ended June 30, 2011

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	7,335		$	3,539		$	—		$	—		$	10,874
Net investment income	1,043			489			5			—			1,537
Fee income	147			1			—			—			148
Net realized investment gains (losses)	21			23			(5		)	—			39
Other revenues	57			11			—			—			68
Total revenues	8,603			4,063			—			—			12,666
Claims and expenses
Claims and claim adjustment expenses	5,665			2,858			—			—			8,523
Amortization of deferred acquisition costs	1,267			651			—			—			1,918
General and administrative expenses	1,187			580			23			—			1,790
Interest expense	36			—			157			—			193
Total claims and expenses	8,155			4,089			180			—			12,424
Income (loss) before income taxes	448			(26		)	(180		)	—			242
Income tax benefit	(8		)	(69		)	(156		)	—			(233		)
Equity in net income of subsidiaries	—			—			499			(499		)	—
Net income	$	456		$	43		$	475		$	(499	)	$	475

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains (losses)	$	(1	)	$	8		$	—		$	—	$	7
Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources	(5		)	(10		)	—			—		(15		)
Other-than-temporary impairment losses	(6		)	(2		)	—			—		(8		)
Other net realized investment gains (losses)	27			25			(5		)	—		47
Net realized investment gains (losses)	$	21		$	23		$	(5	)	$	—	$	39

(1)           The Travelers Companies, Inc., excluding its subsidiaries.

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the six months ended June 30, 2010

(in millions)	TPC		OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	7,133	$	3,437		$	—		$	—		$	10,570
Net investment income	1,036		473			6			—			1,515
Fee income	155		—			—			—			155
Net realized investment gains (losses)	29		(11		)	(24		)	—			(6		)
Other revenues	55		9			—			—			64
Total revenues	8,408		3,908			(18		)	—			12,298
Claims and expenses
Claims and claim adjustment expenses	4,502		2,305			—			—			6,807
Amortization of deferred acquisition costs	1,245		634			—			—			1,879
General and administrative expenses	1,140		531			8			—			1,679
Interest expense	37		—			158			—			195
Total claims and expenses	6,924		3,470			166			—			10,560
Income (loss) before income taxes	1,484		438			(184		)	—			1,738
Income tax expense (benefit)	347		115			(41		)	—			421
Equity in net income of subsidiaries	—		—			1,460			(1,460		)	—
Net income	$	1,137	$	323		$	1,317		$	(1,460	)	$	1,317

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains (losses)	$	5		$	(4	)	$	—		$	—	$	1
Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources	(10		)	(5		)	—			—		(15		)
Other-than-temporary impairment losses	(5		)	(9		)	—			—		(14		)
Other net realized investment gains (losses)	34			(2		)	(24		)	—		8
Net realized investment gains (losses)	$	29		$	(11	)	$	(24	)	$	—	$	(6	)

(1)           The Travelers Companies, Inc., excluding its subsidiaries.

CONSOLIDATING BALANCE SHEET (Unaudited)

At June 30, 2011

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (including $94 subject to securities lending) (amortized cost $59,767)	$	42,712	$	20,243	$	21		$	—		$	62,976
Equity securities, available for sale, at fair value (cost $461)	214		287		99			—			600
Real estate	33		821		—			—			854
Short-term securities	1,704		941		2,379			—			5,024
Other investments	2,526		1,012		1			—			3,539
Total investments	47,189		23,304		2,500			—			72,993
Cash	85		186		2			—			273
Investment income accrued	519		249		—			—			768
Premiums receivable	4,037		2,006		—			—			6,043
Reinsurance recoverables	7,801		3,979		—			—			11,780
Ceded unearned premiums	596		206		—			—			802
Deferred acquisition costs	1,568		272		—			—			1,840
Deferred tax asset	14		86		28			—			128
Contractholder receivables	4,073		1,297		—			—			5,370
Goodwill	2,411		954		—			—			3,365
Other intangible assets	312		153		—			—			465
Investment in subsidiaries	—		—		27,998			(27,998		)	—
Other assets	2,252		58		379			(48		)	2,641
Total assets	$	70,857	$	32,750	$	30,907		$	(28,046	)	$	106,468
Liabilities
Claims and claim adjustment expense reserves	$	34,427	$	18,169	$	—		$	—		$	52,596
Unearned premium reserves	7,704		3,635		—			—			11,339
Contractholder payables	4,073		1,297		—			—			5,370
Payables for reinsurance premiums	204		205		—			—			409
Debt	1,190		—		5,462			(48		)	6,604
Other liabilities	3,982		712		448			—			5,142
Total liabilities	51,580		24,018		5,910			(48		)	81,460
Shareholders’ equity
Common stock (1,748.6 shares authorized; 419.5 shares issued and outstanding)	—		390		20,607			(390		)	20,607
Additional paid-in capital	11,135		7,016		—			(18,151		)	—
Retained earnings	6,600		620		18,955			(7,209		)	18,966
Accumulated other changes in equity from nonowner sources	1,542		706		1,711			(2,248		)	1,711
Treasury stock, at cost (320.8 shares)	—		—		(16,276		)	—			(16,276		)
Total shareholders’ equity	19,277		8,732		24,997			(27,998		)	25,008
Total liabilities and shareholders’ equity	$	70,857	$	32,750	$	30,907		$	(28,046	)	$	106,468

(1) The Travelers Companies, Inc., excluding its subsidiaries.

CONSOLIDATING BALANCE SHEET (Unaudited)

At December 31, 2010

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (including $186 subject to securities lending) (amortized cost $60,170)	$	42,415	$	20,385	$	20		$	—		$	62,820
Equity securities, available for sale, at fair value (cost $372)	190		263		66			—			519
Real estate	1		837		—			—			838
Short-term securities	1,596		436		3,584			—			5,616
Other investments	1,982		946		1			—			2,929
Total investments	46,184		22,867		3,671			—			72,722
Cash	86		110		4			—			200
Investment income accrued	532		259		—			—			791
Premiums receivable	3,691		1,806		—			—			5,497
Reinsurance recoverables	7,868		4,126		—			—			11,994
Ceded unearned premiums	648		165		—			—			813
Deferred acquisition costs	1,511		271		—			—			1,782
Deferred tax asset	294		125		74			—			493
Contractholder receivables	4,050		1,293		—			—			5,343
Goodwill	2,411		954		—			—			3,365
Other intangible assets	326		176		—			—			502
Investment in subsidiaries	—		—		27,422			(27,422		)	—
Other assets	1,904		237		60			(47		)	2,154
Total assets	$	69,505	$	32,389	$	31,231		$	(27,469	)	$	105,656
Liabilities
Claims and claim adjustment expense reserves	$	33,770	$	17,836	$	—		$	—		$	51,606
Unearned premium reserves	7,478		3,443		—			—			10,921
Contractholder payables	4,050		1,293		—			—			5,343
Payables for reinsurance premiums	214		193		—			—			407
Debt	1,189		9		5,460			(47		)	6,611
Other liabilities	3,906		1,089		298			—			5,293
Total liabilities	50,607		23,863		5,758			(47		)	80,181
Shareholders’ equity
Preferred Stock Savings Plan—convertible preferred stock (0.2 shares issued and outstanding)	—		—		68			—			68
Common stock (1,748.6 shares authorized; 434.6 shares issued and outstanding)	—		390		20,162			(390		)	20,162
Additional paid-in capital	11,135		7,016		—			(18,151		)	—
Retained earnings	6,489		576		18,845			(7,063		)	18,847
Accumulated other changes in equity from nonowner sources	1,274		544		1,255			(1,818		)	1,255
Treasury stock, at cost (296.6 shares)	—		—		(14,857		)	—			(14,857		)
Total shareholders’ equity	18,898		8,526		25,473			(27,422		)	25,475
Total liabilities and shareholders’ equity	$	69,505	$	32,389	$	31,231		$	(27,469	)	$	105,656

(1) The Travelers Companies, Inc., excluding its subsidiaries.

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the six months ended June 30, 2011

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	456		$	43		$	475		$	(499	)	$	475
Net adjustments to reconcile net income to net cash provided by operating activities	355			99			(174		)	146			426
Net cash provided by operating activities	811			142			301			(353		)	901
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,969			1,265			—			—			3,234
Proceeds from sales of investments:
Fixed maturities	382			353			1			—			736
Equity securities	15			32			—			—			47
Other investments	183			102			—			—			285
Purchases of investments:
Fixed maturities	(2,342		)	(1,204		)	(1		)	—			(3,547		)
Equity securities	—			(74		)	(29		)	—			(103		)
Real estate	(24		)	(11		)	—			—			(35		)
Other investments	(549		)	(80		)	—			—			(629		)
Net sales (purchases) of short-term securities	(108		)	(500		)	1,205			—			597
Securities transactions in course of settlement	150			63			—			—			213
Other	(135		)	(8		)	—			—			(143		)
Net cash provided by (used in) investing activities	(459		)	(62		)	1,176			—			655
Cash flows from financing activities
Payment of debt	—			(8		)	—			—			(8		)
Dividends paid to shareholders	—			—			(329		)	—			(329		)
Issuance of common stock — employee share options	—			—			245			—			245
Treasury shares acquired — share repurchase authorization	—			—			(1,360		)	—			(1,360		)
Treasury shares acquired — net employee share-based compensation	—			—			(46		)	—			(46		)
Excess tax benefits from share-based payment arrangements	—			—			11			—			11
Dividends paid to parent company	(353		)	—			—			353			—
Net cash used in financing activities	(353		)	(8		)	(1,479		)	353			(1,487		)
Effect of exchange rate changes on cash	—			4			—			—			4
Net increase (decrease) in cash	(1		)	76			(2		)	—			73
Cash at beginning of year	86			110			4			—			200
Cash at end of period	$	85		$	186		$	2		$	—		$	273
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	199		$	114		$	(22	)	$	—		$	291
Interest paid	$	36		$	—		$	155		$	—		$	191

(1)           The Travelers Companies, Inc., excluding its subsidiaries.

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the six months ended June 30, 2010

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	1,137		$	323		$	1,317		$	(1,460	)	$	1,317
Net adjustments to reconcile net income to net cash provided by operating activities	(164		)	(494		)	2,434			(2,042		)	(266		)
Net cash provided by (used in) operating activities	973			(171		)	3,751			(3,502		)	1,051
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,540			928			10			—			2,478
Proceeds from sales of investments:
Fixed maturities	1,647			1,134			—			—			2,781
Equity securities	19			8			—			—			27
Real estate	—			10			—			—			10
Other investments	136			53			—			—			189
Purchases of investments:
Fixed maturities	(2,432		)	(1,508		)	—			—			(3,940		)
Equity securities	(1		)	(18		)	—			—			(19		)
Real estate	—			(8		)	—			—			(8		)
Other investments	(133		)	(94		)	—			—			(227		)
Net sales (purchases) of short-term securities	1,147			432			(529		)	—			1,050
Securities transactions in course of settlement	6			(4		)	—			—			2
Other	(143		)	(2		)	—			—			(145		)
Net cash provided by (used in) investing activities	1,786			931			(519		)	—			2,198
Cash flows from financing activities
Payment of debt	—			—			(250		)	—			(250		)
Dividends paid to shareholders	—			—			(343		)	—			(343		)
Issuance of common stock — employee share options	—			—			199			—			199
Treasury shares acquired — share repurchase authorization	—			—			(2,804		)	—			(2,804		)
Treasury shares acquired — net employee share-based compensation	—			—			(40		)	—			(40		)
Excess tax benefits from share-based payment arrangements	—			—			5			—			5
Dividends paid to parent company	(2,782		)	(721		)	—			3,503			—
Capital contributions and loans between subsidiaries	—			—			1			(1		)	—
Net cash used in financing activities	(2,782		)	(721		)	(3,232		)	3,502			(3,233		)
Effect of exchange rate changes on cash	—			(5		)	—			—			(5		)
Net increase (decrease) in cash	(23		)	34			—			—			11
Cash at beginning of year	132			122			1			—			255
Cash at end of period	$	109		$	156		$	1		$	—		$	266
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	235		$	119		$	(45	)	$	—		$	309
Interest paid	$	36		$	—		$	164		$	—		$	200

(1)           The Travelers Companies, Inc., excluding its subsidiaries.