Consolidating Financial Statements

9 Months Ended

Sep. 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 September 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 (Unaudited)

For the three months ended September 30, 2011

(in millions)	TPC			OtherSubsidiaries		Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	3,780		$	1,825	$	—		$	—		$	5,605
Net investment income	460			228		2			—			690
Fee income	78			1		—			—			79
Net realized investment gains (losses)	(13		)	15		—			—			2
Other revenues	24			7		—			—			31
Total revenues	4,329			2,076		2			—			6,407
Claims and expenses
Claims and claim adjustment expenses	2,815			1,321		—			—			4,136
Amortization of deferred acquisition costs	654			328		—			—			982
General and administrative expenses	579			279		2			—			860
Interest expense	19			—		78			—			97
Total claims and expenses	4,067			1,928		80			—			6,075
Income (loss) before income taxes	262			148		(78		)	—			332
Income tax expense (benefit)	8			18		(27		)	—			(1		)
Equity in net income of subsidiaries	—			—		384			(384		)	—
Net income	$	254		$	130	$	333		$	(384	)	$	333

(in millions)	TPC			OtherSubsidiaries			Travelers (1)		Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains (losses)	$	13		$	(4	)	$	—	$	—	$	9
Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources	(19		)	(2		)	—		—		(21		)
Other-than-temporary impairment losses	(6		)	(6		)	—		—		(12		)
Other net realized investment gains (losses)	(7		)	21			—		—		14
Net realized investment gains (losses)	$	(13	)	$	15		$	—	$	—	$	2

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended September 30, 2010

(in millions)	TPC		OtherSubsidiaries		Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	3,653	$	1,769	$	—		$	—		$	5,422
Net investment income	488		244		3			—			735
Fee income	63		1		—			—			64
Net realized investment gains	8		188		30			—			226
Other revenues	31		5		—			(1		)	35
Total revenues	4,243		2,207		33			(1		)	6,482
Claims and expenses
Claims and claim adjustment expenses	2,161		1,052		—			—			3,213
Amortization of deferred acquisition costs	648		318		—			—			966
General and administrative expenses	569		265		3			—			837
Interest expense	18		—		78			(1		)	95
Total claims and expenses	3,396		1,635		81			(1		)	5,111
Income (loss) before income taxes	847		572		(48		)	—			1,371
Income tax expense (benefit)	218		158		(10		)	—			366
Equity in net income of subsidiaries	—		—		1,043			(1,043		)	—
Net income	$	629	$	414	$	1,005		$	(1,043	)	$	1,005

(in millions)	TPC			OtherSubsidiaries			Travelers (1)		Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains	$	5		$	3		$	—	$	—	$	8
Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources	(9		)	(5		)	—		—		(14		)
Other-than-temporary impairment losses	(4		)	(2		)	—		—		(6		)
Other net realized investment gains	12			190			30		—		232
Net realized investment gains	$	8		$	188		$	30	$	—	$	226

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the nine months ended September 30, 2011

(in millions)	TPC		OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	11,115	$	5,364		$	—		$	—		$	16,479
Net investment income	1,503		717			7			—			2,227
Fee income	225		2			—			—			227
Net realized investment gains (losses)	8		38			(5		)	—			41
Other revenues	81		18			—			—			99
Total revenues	12,932		6,139			2			—			19,073
Claims and expenses
Claims and claim adjustment expenses	8,480		4,179			—			—			12,659
Amortization of deferred acquisition costs	1,921		979			—			—			2,900
General and administrative expenses	1,766		859			25			—			2,650
Interest expense	55		—			235			—			290
Total claims and expenses	12,222		6,017			260			—			18,499
Income (loss) before income taxes	710		122			(258		)	—			574
Income tax benefit	—		(51		)	(183		)	—			(234		)
Equity in net income of subsidiaries	—		—			883			(883		)	—
Net income	$	710	$	173		$	808		$	(883	)	$	808

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains	$	12		$	4		$	—		$	—	$	16
Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources	(24		)	(12		)	—			—		(36		)
Other-than-temporary impairment losses	(12		)	(8		)	—			—		(20		)
Other net realized investment gains (losses)	20			46			(5		)	—		61
Net realized investment gains (losses)	$	8		$	38		$	(5	)	$	—	$	41

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the nine months ended September 30, 2010

(in millions)	TPC		OtherSubsidiaries		Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	10,786	$	5,206	$	—		$	—		$	15,992
Net investment income	1,524		717		9			—			2,250
Fee income	218		1		—			—			219
Net realized investment gains	37		177		6			—			220
Other revenues	86		14		—			(1		)	99
Total revenues	12,651		6,115		15			(1		)	18,780
Claims and expenses
Claims and claim adjustment expenses	6,663		3,357		—			—			10,020
Amortization of deferred acquisition costs	1,893		952		—			—			2,845
General and administrative expenses	1,709		796		11			—			2,516
Interest expense	55		—		236			(1		)	290
Total claims and expenses	10,320		5,105		247			(1		)	15,671
Income (loss) before income taxes	2,331		1,010		(232		)	—			3,109
Income tax expense (benefit)	565		273		(51		)	—			787
Equity in net income of subsidiaries	—		—		2,503			(2,503		)	—
Net income	$	1,766	$	737	$	2,322		$	(2,503	)	$	2,322

(in millions)	TPC			OtherSubsidiaries			Travelers (1)		Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains (losses)	$	10		$	(1	)	$	—	$	—	$	9
Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources	(19		)	(10		)	—		—		(29		)
Other-than-temporary impairment losses	(9		)	(11		)	—		—		(20		)
Other net realized investment gains	46			188			6		—		240
Net realized investment gains	$	37		$	177		$	6	$	—	$	220

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

CONSOLIDATING BALANCE SHEET (Unaudited)

At September 30, 2011

(in millions)	TPC		Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (including $149 subject to securities lending) (amortized cost $60,056)	$	43,327	$	20,651		$	22		$	—		$	64,000
Equity securities, available for sale, at fair value (cost $467)	203		280			87			—			570
Real estate	33		818			—			—			851
Short-term securities	1,542		900			2,355			—			4,797
Other investments	2,436		997			1			—			3,434
Total investments	47,541		23,646			2,465			—			73,652
Cash	106		120			5			—			231
Investment income accrued	495		242			—			—			737
Premiums receivable	4,000		1,932			—			—			5,932
Reinsurance recoverables	7,709		4,034			—			—			11,743
Ceded unearned premiums	750		172			—			—			922
Deferred acquisition costs	1,605		264			—			—			1,869
Contractholder receivables	4,074		1,301			—			—			5,375
Goodwill	2,411		954			—			—			3,365
Other intangible assets	305		144			—			—			449
Investment in subsidiaries	—		—			28,183			(28,183		)	—
Other assets	2,196		97			413			(48		)	2,658
Total assets	$	71,192	$	32,906		$	31,066		$	(28,231	)	$	106,933
Liabilities
Claims and claim adjustment expense reserves	$	34,249	$	18,066		$	—		$	—		$	52,315
Unearned premium reserves	7,946		3,578			—			—			11,524
Contractholder payables	4,074		1,301			—			—			5,375
Payables for reinsurance premiums	281		238			—			—			519
Deferred taxes	154		(40		)	(23		)	—			91
Debt	1,190		—			5,462			(48		)	6,604
Other liabilities	4,051		817			465			—			5,333
Total liabilities	51,945		23,960			5,904			(48		)	81,761
Shareholders’ equity
Common stock (1,750.0 shares authorized; 412.8 shares issued and outstanding)	—		390			20,664			(390		)	20,664
Additional paid-in capital	11,135		7,026			—			(18,161		)	—
Retained earnings	6,329		749			19,117			(7,068		)	19,127
Accumulated other changes in equity from nonowner sources	1,783		781			2,032			(2,564		)	2,032
Treasury stock, at cost (328.1 shares)	—		—			(16,651		)	—			(16,651		)
Total shareholders’ equity	19,247		8,946			25,162			(28,183		)	25,172
Total liabilities and shareholders’ equity	$	71,192	$	32,906		$	31,066		$	(28,231	)	$	106,933

(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 taxes	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 nine months ended September 30, 2011

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	710		$	173		$	808		$	(883	)	$	808
Net adjustments to reconcile net income to net cash provided by operating activities	764			214			17			15			1,010
Net cash provided by operating activities	1,474			387			825			(868		)	1,818
Cash flows from investing activities
Proceeds from maturities of fixed maturities	3,490			1,751			—			—			5,241
Proceeds from sales of investments:
Fixed maturities	452			389			1			—			842
Equity securities	15			36			—			—			51
Real estate	1			—			—			—			1
Other investments	301			181			—			—			482
Purchases of investments:
Fixed maturities	(4,131		)	(2,092		)	(1		)	—			(6,224		)
Equity securities	(6		)	(73		)	(39		)	—			(118		)
Real estate	(24		)	(17		)	—			—			(41		)
Other investments	(622		)	(136		)	—			—			(758		)
Net sales (purchases) of short-term securities	54			(470		)	1,229			—			813
Securities transactions in course of settlement	128			68			—			—			196
Other	(234		)	(14		)	—			—			(248		)
Net cash provided by (used in) investing activities	(576		)	(377		)	1,190			—			237
Cash flows from financing activities
Payment of debt	—			(8		)	—			—			(8		)
Dividends paid to shareholders	—			—			(500		)	—			(500		)
Issuance of common stock — employee share options	—			—			270			—			270
Treasury shares acquired — share repurchase authorization	—			—			(1,755		)	—			(1,755		)
Treasury shares acquired — net employee share-based compensation	—			—			(46		)	—			(46		)
Excess tax benefits from share-based payment arrangements	—			—			17			—			17
Dividends paid to parent company	(878		)	—			—			878			—
Capital contributions, loans and other transactions between subsidiaries	—			10			—			(10		)	—
Net cash provided by (used in) financing activities	(878		)	2			(2,014		)	868			(2,022		)
Effect of exchange rate changes on cash	—			(2		)	—			—			(2		)
Net increase in cash	20			10			1			—			31
Cash at beginning of year	86			110			4			—			200
Cash at end of period	$	106		$	120		$	5		$	—		$	231
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	221		$	83		$	(27	)	$	—		$	277
Interest paid	$	65		$	—		$	161		$	—		$	226

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

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the nine months ended September 30, 2010

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	1,766		$	737		$	2,322		$	(2,503	)	$	2,322
Net adjustments to reconcile net income to net cash provided by operating activities	191			(548		)	2,596			(2,169		)	70
Net cash provided by operating activities	1,957			189			4,918			(4,672		)	2,392
Cash flows from investing activities
Proceeds from maturities of fixed maturities	2,507			1,364			10			—			3,881
Proceeds from sales of investments:
Fixed maturities	2,045			1,236			—			—			3,281
Equity securities	30			127			—			—			157
Real estate	—			10			—			—			10
Other investments	213			213			—			—			426
Purchases of investments:
Fixed maturities	(3,212		)	(1,947		)	(8		)	—			(5,167		)
Equity securities	(3		)	(26		)	—			—			(29		)
Real estate	—			(15		)	—			—			(15		)
Other investments	(221		)	(152		)	—			—			(373		)
Net sales (purchases) of short-term securities	826			38			(930		)	—			(66		)
Securities transactions in course of settlement	23			(263		)	—			—			(240		)
Other	(216		)	(4		)	—			—			(220		)
Net cash provided by (used in) investing activities	1,992			581			(928		)	—			1,645
Cash flows from financing activities
Payment of debt	(4		)	—			(271		)	—			(275		)
Dividends paid to shareholders	—			—			(512		)	—			(512		)
Issuance of common stock — employee share options	—			—			267			—			267
Treasury shares acquired — share repurchase authorization	—			—			(3,441		)	—			(3,441		)
Treasury shares acquired — net employee share-based compensation	—			—			(40		)	—			(40		)
Excess tax benefits from share-based payment arrangements	—			—			6			—			6
Dividends paid to parent company	(3,952		)	(721		)	—			4,673			—
Capital contributions, loans and other transactions between subsidiaries	11			(12		)	2			(1		)	—
Net cash used in financing activities	(3,945		)	(733		)	(3,989		)	4,672			(3,995		)
Effect of exchange rate changes on cash	—			1			—			—			1
Net increase in cash	4			38			1			—			43
Cash at beginning of year	132			122			1			—			255
Cash at end of period	$	136		$	160		$	2		$	—		$	298
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	399		$	186		$	(74	)	$	—		$	511
Interest paid	$	65		$	—		$	198		$	—		$	263

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