8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 19, 2012

The Travelers Companies, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	001-10898	41-0518860
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification
incorporation)		Number)

485 Lexington Avenue
New York, New York	10017
(Address of principal executive offices)	(Zip Code)

(917) 778-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On July 19, 2012, The Travelers Companies, Inc. (the “Company”) issued a press release announcing the results of the Company’s operations for the quarter ended June 30, 2012, and the availability of the Company’s second quarter financial supplement on the Company’s web site.  The press release and the financial supplement are furnished as Exhibits 99.1 and 99.2 to this Report and are hereby incorporated by reference in this Item 2.02.

As provided in General Instruction B.2 of Form 8-K, the information and exhibits contained in this Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01.  Financial Statements and Exhibits.

(d)Exhibits.

Exhibit No.	Description
99.1	Press Release, dated July 19, 2012, reporting results of operations (This exhibit is furnished and not filed.)
99.2	Second Quarter 2012 Financial Supplement of The Travelers Companies, Inc. (This exhibit is furnished and not filed.)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 19, 2012	THE TRAVELERS COMPANIES, INC.
	By:	/s/ Matthew S. Furman
		Name:	Matthew S. Furman
		Title:	Senior Vice President

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated July 19, 2012, reporting results of operations (This exhibit is furnished and not filed.)
99.2	Second Quarter 2012 Financial Supplement of The Travelers Companies, Inc. (This exhibit is furnished and not filed.)

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EX-99.1

Exhibit 99.1

	The Travelers Companies, Inc.
	485 Lexington Avenue
	New York, NY 10017-2630
	www.travelers.com

NYSE: TRV

Travelers Reports Second Quarter Net Income of $499 Million or $1.26 per Diluted Share After Catastrophe Losses of $357 Million or $0.90 per Diluted Share

·Operating income of $495 million or $1.26 per diluted share generated an operating return on equity of 9%.

·Quarter reflected underlying underwriting margin improvement across all segments and strong net investment income given the continuing low interest rate environment.

·Written rate gains continued across all segments.

·Book value per share of $64.90, up 9% from end of prior year quarter and 4% from year-end 2011.

·Board of Directors approved quarterly dividend per share of $0.46.

New York, July 19, 2012 — The Travelers Companies, Inc. today reported net income of $499 million, or $1.26 per diluted share, for the quarter ended June 30, 2012, compared to a net loss of $364 million, or $0.88 per diluted share, in the prior year quarter. Operating income in the current quarter was $495 million, or $1.26 per diluted share, compared to an operating loss of $377 million, or $0.91 per diluted share, in the prior year quarter. Catastrophe losses in the current quarter were $357 million after tax ($549 million pre tax), compared to $1.085 billion after tax ($1.668 billion pre tax) in the prior year quarter.

Consolidated Highlights

($ in millions, except for per share amounts, and after tax,	Three Months Ended June 30,								Six Months Ended June 30,
except for premiums & revenues)	2012			2011			Change		2012			2011			Change
Net written premiums	$	5,868		$	5,817		1	%	$	11,365		$	11,254		1	%
Total revenues	$	6,359		$	6,388		—		$	12,751		$	12,666		1
Operating income (loss)	$	495		$	(377	)	NM		$	1,296		$	449		189
per diluted share	$	1.26		$	(0.91	)	NM		$	3.27		$	1.04		214
Net income (loss)	$	499		$	(364	)	NM		$	1,305		$	475		175
per diluted share	$	1.26		$	(0.88	)	NM		$	3.29		$	1.10		199
Diluted weighted average shares outstanding	391.6			418.6			(6	)	393.5			429.1			(8	)
GAAP combined ratio	100.5		%	125.0		%	(24.5	)pts	96.3		%	110.1		%	(13.8	)pts
Operating return on equity	9.0		%	(6.6		)%	15.6	pts	11.8		%	3.9		%	7.9	pts
Return on equity	8.0		%	(5.8		)%	13.8	pts	10.5		%	3.8		%	6.7	pts
									As of June 30,
									2012			2011			Change
Book value per share									$	64.90		$	59.62		9	%
Adjusted book value per share									$	57.18		$	54.32		5

See Glossary of Financial Measures for definitions and the statistical supplement for additional financial data.

NM = Not Meaningful.

“Our second quarter net income of $499 million benefited from meaningful improvement in our underlying underwriting margins as well as strong net investment income given the continuing low interest rate environment,” commented Jay Fishman, Chairman and Chief Executive Officer. “However, earnings were also impacted by weather-related losses which, while much lower than in the prior year quarter, were considerably higher than we would have expected based on historical experience.

“We continue to be very pleased with pricing trends across our businesses.  In Business Insurance, renewal rate change exceeded 7%, with stable retentions, demonstrating the success of our active pricing strategy and our continued focus on improving profitability. In Financial, Professional and International Insurance, renewal rate change

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continued to improve from recent quarters. Notably, renewal rate change in Management Liability not only improved from recent quarters but also accelerated within the quarter.  In Personal Insurance, renewal premium change, which includes changes in exposure, increased to 6% in Agency Auto and 11% in Agency Homeowners & Other and also accelerated within the quarter.

“We remain committed to our strategy of improved profitability through actively and selectively seeking rate and improvements in terms and conditions given the persistent low interest rate environment and continuing unusual weather patterns,” concluded Mr. Fishman.

Second Quarter 2012 Consolidated Results

	Three Months Ended June 30,
	2012			2011			2012			2011
($ in millions)	Pre-tax						After-tax
Underwriting loss	$	(62	)	$	(1,411	)	$	(47	)	$	(924	)
Underwriting loss includes:
Net favorable prior year reserve development	221			168			147			111
Catastrophes, net of reinsurance	(549		)	(1,668		)	(357		)	(1,085		)
Net investment income	738			758			589			606
Other, including interest expense	(72		)	(93		)	(47		)	(59		)
Operating income (loss)	604			(746		)	495			(377		)
Net realized investment gains	4			19			4			13
Income (loss) before income taxes	$	608		$	(727	)
Net income (loss)							$	499		$	(364	)
GAAP combined ratio	100.5		%	125.0		%
GAAP combined ratio excluding incremental impact of direct to consumer initiative	99.8		%	124.1		%
Impact on GAAP combined ratio
Net favorable prior year reserve development	(4.0		)pts	(3.1		)pts
Catastrophes, net of reinsurance	10.0		pts	30.3		pts

Operating income of $495 million after tax increased $872 million from the prior year quarter due to an $877 million after-tax improvement in the underwriting loss.

The underwriting loss in the current quarter reflected a GAAP combined ratio of 100.5 percent, as compared to 125.0 percent in the prior year quarter. This improvement of 24.5 points in the combined ratio was primarily due to a $1.119 billion pre-tax decrease in catastrophe losses (improvement of 20.3 points) and a $53 million pre-tax increase in net favorable prior year reserve development (improvement of 0.9 points). Catastrophe losses in the current quarter primarily resulted from wind and hail storms in several regions of the United States. Net favorable prior year reserve development in the current quarter occurred in all three segments.

The current quarter underlying underwriting gain, which excludes net favorable prior year reserve development and catastrophe losses, reflected a GAAP combined ratio of 94.5 percent, as compared to 97.8 percent in the prior year quarter.  This improvement of 3.3 points primarily resulted from earned rate increases outpacing loss cost trends as well as a lower level of large losses and non-catastrophe weather-related losses.

Total revenues of $6.359 billion in the current quarter approximated the prior year quarter. Within total revenues, earned premiums increased $26 million, while net investment income decreased $20 million. The slight decrease in net investment income was primarily driven by lower reinvestment rates in the fixed income portfolio.

Net written premiums of $5.868 billion in the current quarter increased 1 percent from the prior year quarter. Renewal rate gains continued across all segments.  Retention rates remained strong across each segment and were consistent with recent quarters. New business volumes decreased from the prior year quarter in all segments, largely as a result of the company’s pricing strategy. Net written premiums in Business Insurance benefited from continued positive exposure change at renewal, as well as a meaningfully higher level of positive audit premiums compared to the prior year quarter.

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Capital Management

“During the quarter, we repaid $250 million of maturing debt from existing holding company liquidity as planned,” commented Jay S. Benet, Vice Chairman and Chief Financial Officer, “We successfully renewed our catastrophe reinsurance program on July 1 and obtained reinsurance through a new $250 million catastrophe bond in June. Further, all of our capital ratios remained at or above target.”

During the second quarter of 2012, the company repurchased 5.6 million common shares under its existing share repurchase authorization for a total cost of $350 million and dividends were $181 million. Shareholders’ equity was $25.049 billion at the end of the second quarter of 2012, a 2 percent increase from the end of the prior year. Included in shareholders’ equity at the end of the second quarter of 2012 were after-tax net unrealized investment gains of $2.980 billion, compared to $2.871 billion at year-end 2011. Statutory surplus was $19.841 billion, up modestly from the beginning of the year. The company’s debt-to-capital ratio (excluding after-tax net unrealized investment gains) was 22.3 percent, well within its target range, and holding company liquidity was $1.976 billion.

The Board of Directors declared a quarterly dividend of $0.46 per common share. This dividend is payable September 28, 2012 to shareholders of record as of the close of business September 10, 2012.

Business Insurance Segment Financial Results

“In Business Insurance, we are pleased to report meaningfully higher underlying underwriting margins in the quarter primarily as a result of earned rate increases exceeding loss cost trends”, commented Brian MacLean, President and Chief Operating Officer. “We continued to achieve broad based rate increases across the segment along with stable retentions. We remain optimistic about our ability to continue to execute our targeted pricing strategy.  Given our current view of pricing and underlying loss cost trends, we expect higher underlying underwriting margins for the remainder of the year as compared to the first half of 2012 assuming weather patterns consistent with our expectations.”

	Three Months Ended June 30,
	2012			2011			2012			2011
($ in millions)	Pre-tax						After-tax
Underwriting loss	$	(100	)	$	(652	)	$	(71	)	$	(429	)
Underwriting loss includes:
Net favorable prior year reserve development	58			27			38			18
Catastrophes, net of reinsurance	(252		)	(697		)	(164		)	(453		)
Net investment income	536			541			428			433
Other	8			10			5			7
Operating income (loss)	$	444		$	(101	)	$	362		$	11
GAAP combined ratio	103.0		%	122.9		%
Impact on GAAP combined ratio
Net favorable prior year reserve development	(2.0		)pts	(1.0		)pts
Catastrophes, net of reinsurance	8.8		pts	24.9		pts

Operating income of $362 million after tax increased $351 million from the prior year quarter due to a $358 million after-tax improvement in the underwriting loss.

The underwriting loss in the current quarter reflected a GAAP combined ratio of 103.0 percent, as compared to 122.9 percent in the prior year quarter. This improvement of 19.9 points in the combined ratio was primarily due to a $445 million pre-tax decrease in catastrophe losses (improvement of 16.1 points) and $31 million pre-tax increase in net favorable prior year reserve development (improvement of 1.0 point). Net favorable prior year reserve development in the current quarter primarily resulted from better than expected loss experience in the workers’ compensation product line for accident years 2008 and prior, better than expected loss experience in the property product line related to catastrophe losses incurred in 2011 and lower than expected claim department expenses. This improvement was partially offset by a $59 million after tax ($90 million pre tax) increase to environmental reserves in the current quarter.

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The current quarter underlying underwriting gain, which excludes net favorable prior year reserve development and catastrophe losses, reflected a GAAP combined ratio of 96.2 percent, as compared to 99.0 percent in the prior year quarter. This improvement of 2.8 points primarily resulted from earned rate increases outpacing loss cost trends as well as a lower level of large losses.

Business Insurance net written premiums of $3.026 billion in the current quarter increased 5 percent from the prior year quarter primarily driven by continued increases in renewal rate change. While retention rates and new business volumes were lower than the prior year quarter, both were improved from recent quarters and consistent with the company’s pricing strategy. Net written premiums also benefited from continued positive exposure change at renewal, as well as a meaningfully higher level of positive audit premiums compared to the prior year quarter.

Select Accounts

·Net written premiums of $721 million decreased 2 percent from the prior year quarter.

·Renewal premium change was positive for the thirteenth consecutive quarter and increased from recent quarters to its highest level since the first quarter 2004 on business from both TravelersExpressSM, the company’s enhanced quote-to-issue agency platform and multivariate pricing program for smaller businesses, and larger accounts served by Select.

·Retention rates improved slightly from the most recent quarter but were lower than the prior year quarter primarily due to lower retention rates in larger accounts.

·While new business volumes from TravelersExpressSM remained strong, overall Select new business volumes decreased from the prior year quarter.

Commercial Accounts

·Net written premiums of $717 million increased 9 percent from the prior year quarter primarily due to increased renewal premium change as well as a higher level of positive audit premiums.

·Renewal premium change was positive for the seventh consecutive quarter and was generally consistent with recent quarters.

·Retention rates remained strong and increased from recent quarters.

·New business volumes decreased from the prior year quarter.

Other Business Insurance

Includes Industry-Focused Underwriting, Target Risk Underwriting and Specialized Distribution

·Net written premiums of $1.364 billion increased 5 percent from the prior year quarter primarily due to increased renewal premium change as well as a higher level of positive audit premiums.

·Renewal premium change was positive for the fourth consecutive quarter and continued to increase from recent quarters.

·Retention rates remained strong and improved slightly from recent quarters.

·New business volumes decreased from the prior year quarter but improved from recent quarters.

National Accounts

·Net written premiums of $226 million increased 20 percent from the prior year quarter primarily due to increased renewal premium change driven by payroll exposure growth and strong retention rates. In addition, the re-population of workers’ compensation residual market pools contributed to premium growth in the second quarter 2012.

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Financial, Professional & International Insurance Segment Financial Results

“Financial, Professional & International Insurance once again reported strong results as our underlying loss ratios, which exclude catastrophe losses and net favorable prior year reserve development, improved for the sixth consecutive quarter,” commented MacLean. “We are very pleased with the success of our pricing strategy and efforts to improve the balance of risk and reward in certain lines of business. We are particularly pleased that we have experienced accelerating rate increases in our Management Liability business over the past six months and are encouraged that retention rates remain high. Given our current view of pricing and underlying loss cost trends, we expect higher underlying underwriting margins for the remainder of the year as compared to the first half of 2012.”

	Three Months Ended June 30,
	2012			2011			2012			2011
($ in millions)	Pre-tax						After-tax
Underwriting gain	$	151		$	120		$	99		$	78
Underwriting gain includes:
Net favorable prior year reserve development	96			96			66			64
Catastrophes, net of reinsurance	(4		)	(14		)	(3		)	(10		)
Net investment income	99			105			79			82
Other	5			6			4			4
Operating income	$	255		$	231		$	182		$	164
GAAP combined ratio	80.0		%	84.8		%
Impact on GAAP combined ratio
Net favorable prior year reserve development	(12.5		)pts	(11.7		)pts
Catastrophes, net of reinsurance	0.4		pts	1.7		pts

Operating income of $182 million after tax increased $18 million from the prior year quarter due to a $21 million after-tax increase in the underwriting gain.

The underwriting gain in the current quarter reflected a GAAP combined ratio of 80.0 percent, as compared to 84.8 percent in the prior year quarter. This improvement of 4.8 points in the combined ratio was partly due to a $10 million pre-tax decrease in catastrophe losses (improvement of 1.3 points). While net favorable prior year reserve development of $96 million pre tax was consistent with the prior year quarter, the favorable impact on the GAAP combined ratio in the current quarter was 0.8 points greater than the prior year quarter due to lower earned premiums.  Net favorable prior year reserve development in the current quarter primarily resulted from better than expected loss experience in both Bond & Financial Products and International across multiple lines of business and accident years.

The current quarter underlying underwriting gain, which excludes net favorable prior year reserve development and catastrophe losses, reflected a GAAP combined ratio of 92.1 percent, as compared to 94.8 percent in the prior year quarter. This improvement of 2.7 points primarily resulted from earned rate increases outpacing loss cost trends as well as a lower level of large losses and non-catastrophe weather-related losses within International, partially offset by an increase in the expense ratio primarily as a result of lower earned premiums.

Financial, Professional & International Insurance net written premiums of $840 million decreased 4 percent from the prior year quarter.

Retention rates, renewal premium changes and new business volumes, as discussed below, exclude the surety line of business as surety products are generally sold on a non-recurring, project-specific basis.

Bond & Financial Products

·Net written premiums of $524 million decreased 2 percent from the prior year quarter primarily due to the timing of certain reinsurance transactions and lower business volumes in construction surety reflecting the continued slowdown in construction spending, partially offset by growth in Management Liability business volume.

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·Renewal premium change remained positive and increased for the third consecutive quarter primarily due to positive renewal rate change and higher insured exposures.

·Retention rates remained very strong and generally consistent with recent quarters.

·New business volumes increased modestly from the prior year quarter.

International

·Net written premiums of $316 million decreased 9 percent from the prior year quarter. Adjusting for the impact of changes in foreign exchange rates, net written premiums decreased 6 percent from the prior year quarter primarily due to the company’s exit from the personal insurance business in Ireland.

·Renewal premium change was positive due to the impact of continued positive renewal rate change.

·Retention rates were down slightly from the most recent quarter but were significantly improved from the prior year quarter.

·New business volumes decreased from the prior year quarter.

Personal Insurance Segment Financial Results

“In Personal Insurance, we are very pleased with the pricing gains that we continue to achieve in both Auto and Homeowners, as well as the acceleration of these pricing gains in the quarter,” commented MacLean.  “However, weather-related losses in Homeowners and loss trends in Auto, primarily severity, remain at levels that necessitate further action.  Accordingly, we will continue to seek improved pricing, terms and conditions in order to improve returns.”

	Three Months Ended June 30,
	2012			2011			2012			2011
($ in millions)	Pre-tax						After-tax
Underwriting loss	$	(113	)	$	(879	)	$	(75	)	$	(573	)
Underwriting loss includes:
Net favorable prior year reserve development	67			45			43			29
Catastrophes, net of reinsurance	(293		)	(957		)	(190		)	(622		)
Net investment income	103			112			82			91
Other	16			18			10			11
Operating income (loss)	$	6		$	(749	)	$	17		$	(471	)
GAAP combined ratio	104.8		%	145.5		%
GAAP combined ratio excluding incremental impact of direct to consumer initiative	102.9		%	143.2		%
Impact on GAAP combined ratio
Net favorable prior year reserve development	(3.5		)pts	(2.4		)pts
Catastrophes, net of reinsurance	15.3		pts	50.7		pts

Operating income of $17 million after tax increased $488 million from the prior year quarter due to a $498 million after-tax improvement in the underwriting loss.

The underwriting loss in the current quarter reflected a GAAP combined ratio of 104.8 percent, as compared to 145.5 percent in the prior year quarter. This improvement of 40.7 points in the combined ratio was driven by a $664 million pre-tax decrease in catastrophe losses (improvement of 35.4 points) and a $22 million pre-tax increase in net favorable prior year reserve development (improvement of 1.1 points). The net favorable prior year reserve development in the current quarter primarily resulted from better than expected loss experience in Homeowners & Other related to catastrophe losses incurred in 2011 and in the umbrella product line for accident years 2007 to 2011.

The current quarter underlying underwriting gain, which excludes net favorable prior year reserve development and catastrophe losses, reflected a GAAP combined ratio of 93.0 percent, as compared to 97.2 percent in the prior year quarter. This improvement of 4.2 points was primarily due to a lower level of non-catastrophe weather-related losses and fire-related losses.

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Personal Insurance net written premiums of $2.002 billion decreased 3 percent from the prior year quarter primarily due to lower new business volumes in both Automobile and Homeowners & Other.

Agency Automobile and Agency Homeowners & Other, as discussed below, represent business sold through agents, brokers and other intermediaries and exclude direct to consumer.

Agency Automobile

·Net written premiums of $899 million decreased 5 percent from the prior year quarter primarily as a result of lower new business levels.

·Policies in force decreased 3 percent from the prior year quarter.

·Renewal premium change remained positive and increased from recent quarters.

·Retention rates remained strong but down slightly from recent quarters.

·New business volumes were lower than the prior year quarter.

Agency Homeowners & Other

·Net written premiums of $1.064 billion decreased 1 percent from the prior year quarter.

·Policies in force decreased 2 percent from the prior year quarter.

·Renewal premium change remained positive and continued to increase from recent quarters.

·Retention rates remained very strong and generally consistent with recent quarters.

·New business volumes were lower than the prior year quarter.

Year-to-Date 2012 Consolidated Financial Results

	Six Months Ended June 30,
	2012			2011			2012			2011
($ in millions)	Pre-tax						After-tax
Underwriting gain (loss)	$	331		$	(1,164	)	$	201		$	(675	)
Underwriting gain (loss) includes:
Net favorable prior year reserve development	525			405			347			266
Catastrophes, net of reinsurance	(717		)	(1,854		)	(466		)	(1,207		)
Resolution of prior year tax matters										100
Net investment income	1,478			1,537			1,182			1,228
Other, including interest expense	(138		)	(170		)	(87		)	(104		)
Other also includes:
Resolution of prior year tax matters										4
Operating income	1,671			203			1,296			449
Net realized investment gains	14			39			9			26
Income before income taxes	$	1,685		$	242
Net income							$	1,305		$	475
GAAP combined ratio	96.3		%	110.1		%
GAAP combined ratio excluding incremental impact of direct to consumer initiative	95.6		%	109.1		%
Impact on GAAP combined ratio
Net favorable prior year reserve development	(4.8		)pts	(3.7		)pts
Catastrophes, net of reinsurance	6.5		pts	17.1		pts

Operating income of $1.296 billion after tax increased $847 million from the prior year period primarily due to an $876 million after-tax increase in underwriting results, partially offset by a $46 million after-tax decrease in net investment income.

The underwriting gain in the current period reflected a GAAP combined ratio of 96.3 percent, as compared to 110.1 percent in the prior year period. This improvement of 13.8 points in the combined ratio was primarily due to a $1.137 billion pre-tax decrease in catastrophe losses (improvement of 10.6 points) and $120 million pre-tax increase in net favorable prior year reserve development (improvement of 1.1 points).

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The current period underlying underwriting gain, which excludes net favorable prior year reserve development and catastrophe losses, reflected a GAAP combined ratio of 94.6 percent, as compared to 96.7 percent in the prior year period.  This improvement of 2.1 points primarily resulted from earned rate increases outpacing loss cost trends as well as a lower level of large losses and non-catastrophe weather-related losses.

Financial Supplement and Conference Call

The information in this press release should be read in conjunction with a financial supplement that is available on our website at www.travelers.com. Travelers management will discuss the contents of this release and other relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on Thursday, July 19, 2012. Prior to the webcast, a slide presentation pertaining to the quarterly earnings will be available on the company’s website. Following the live event, an audio playback of the webcast and the slide presentation will be available on the company’s website.

To view the slides or to listen to the webcast or the playback, visit the “Webcasts & Presentations” section of the Travelers investor relations website at http://investor.travelers.com.

About Travelers

The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. The company’s diverse business lines offer its customers a wide range of coverage sold primarily through independent agents and brokers. A component of the Dow Jones Industrial Average, Travelers has more than 30,000 employees and operations in the United States and selected International markets. For more information, visit www.travelers.com.

From time to time, Travelers may use its website as a channel of distribution of material company information. Financial and other material information regarding the company is routinely posted on and accessible at http://investor.travelers.com. In addition, you may automatically receive email alerts and other information about Travelers by enrolling your email by visiting the “Email Alert Service” section at http://investor.travelers.com.

Travelers has organized its businesses into the following reportable business segments:

Business Insurance: The Business Insurance segment offers a broad array of property and casualty insurance and insurance-related services to its clients primarily in the United States. Business Insurance is organized into the following six groups, which collectively comprise Business Insurance Core operations: Select Accounts; Commercial Accounts; National Accounts; Industry-Focused Underwriting including Construction, Technology, Public Sector Services, Oil & Gas and Agribusiness; Target Risk Underwriting including National Property, Inland Marine, Ocean Marine, Excess Casualty, Boiler & Machinery and Global Partner Services; and Specialized Distribution including Northland and National Programs. Business Insurance also includes the Special Liability Group (which manages the company’s asbestos and environmental liabilities) and the assumed reinsurance and certain international and other runoff operations, which collectively are referred to as Business Insurance Other.

Financial, Professional & International Insurance: The Financial, Professional & International Insurance segment includes surety and financial liability coverages, which primarily use credit-based underwriting processes, as well as property and casualty products that are primarily marketed on a domestic basis in the United Kingdom, Canada and the Republic of Ireland, and on an international basis through Lloyd’s. The businesses in Financial, Professional & International Insurance are Bond & Financial Products and International.

Personal Insurance: The Personal Insurance segment writes a broad range of property and casualty insurance covering individuals’ personal risks. The primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.

* * * * *

Forward-Looking Statement

This press release contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as “may”, “will”, “should”, “likely”, “anticipates”, “expects”, “intends”, “plans”, “projects”, “believes”, “estimates” and similar expressions are used to identify these forward-looking statements. Specifically, statements about the company’s share repurchase plans, expected margin improvement, future pension

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plan contributions and the potential impact of investment markets and other economic conditions on the company’s investment portfolio and underwriting results, among others, are forward looking, and the company may also make forward-looking statements about, among other things:

·its results of operations and financial condition (including, among other things, premium volume, premium rates, net and operating income, investment income and performance, return on equity, and expected current returns and combined ratios);

·the sufficiency of the company’s asbestos and other reserves;

·the impact of emerging claims issues as well as other insurance and non-insurance litigation;

·the cost and availability of reinsurance coverage;

·catastrophe losses;

·the impact of investment, economic and underwriting market conditions; and

·strategic initiatives.

The company cautions investors that such statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond the company’s control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Some of the factors that could cause actual results to differ include, but are not limited to, the following:

·catastrophe losses could materially and adversely affect the company’s results of operations, its financial position and/or liquidity, and could adversely impact the company’s ratings, the company’s ability to raise capital and the availability and cost of reinsurance;

·during or following a period of financial market disruption or economic downturn, the company’s business could be materially and adversely affected;

·if actual claims exceed the company’s claims and claim adjustment expense reserves, or if changes in the estimated level of claims and claim adjustment expense reserves are necessary, the company’s financial results could be materially and adversely affected;

·the company’s investment portfolio may suffer reduced returns or material realized or unrealized losses;

·the company’s business could be harmed because of its potential exposure to asbestos and environmental claims and related litigation;

·the company is exposed to, and may face adverse developments involving, mass tort claims such as those relating to exposure to potentially harmful products or substances;

·the effects of emerging claim and coverage issues on the company’s business are uncertain;

·the intense competition that the company faces could harm its ability to maintain or increase its business volumes, its pricing levels and/or its profitability;

·the company may not be able to collect all amounts due to it from reinsurers, and reinsurance coverage may not be available to the company in the future at commercially reasonable rates or at all;

·the company is exposed to credit risk in certain of its business operations;

·within the United States, the company’s businesses are heavily regulated by the states in which it conducts business, including licensing and supervision, and changes in regulation may reduce the company’s profitability and limit its growth;

·changes in federal regulation could impose significant burdens on the company and otherwise adversely impact its results;

·a downgrade in the company’s claims-paying and financial strength ratings could adversely impact the company’s business volumes, adversely impact the company’s ability to access the capital markets and increase the company’s borrowing costs;

·the inability of the company’s insurance subsidiaries to pay dividends to the company’s holding company in sufficient amounts would harm the company’s ability to meet its obligations, pay future shareholder dividends or make future share repurchases;

·disruptions to the company’s relationships with its independent agents and brokers could adversely affect the company;

·the company’s efforts to develop new products or expand in targeted markets may not be successful and may create enhanced risks;

·any net deferred tax asset could be adversely affected by a reduction in the U.S. Federal corporate income tax rate;

·the company may be adversely affected if its pricing and capital models provide materially different indications than actual results;

9

·the company is subject to a number of risks associated with its business outside the United States;

·new regulations outside of the U.S., including in the European Union, could adversely impact the company’s results of operations and limit its growth;

·the company’s business success and profitability depend, in part, on effective information technology systems and on continuing to develop and implement improvements in technology;

·if the company experiences difficulties with technology, data security and/or outsourcing relationships, the company’s ability to conduct its business could be negatively impacted;

·acquisitions and integration of acquired businesses may result in operating difficulties and other unintended consequences;

·changes to existing accounting standards may adversely impact the company’s reported results;

·the company could be adversely affected if its controls designed to ensure compliance with guidelines, policies and legal and regulatory standards are not effective;

·the company’s businesses may be adversely affected if it is unable to hire and retain qualified employees;

·loss of or significant restriction on the use of credit scoring in the pricing and underwriting of Personal Insurance products could reduce the company’s future profitability; and

·the company’s repurchase plans 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.

Our forward-looking statements speak only as of the date of this press release or as of the date they are made, and we undertake no obligation to update forward-looking statements. For a more detailed discussion of these factors, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent annual report on Form 10-K and our quarterly report on Form 10-Q filed with the Securities and Exchange Commission.

*****

GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF NON-GAAP MEASURES TO GAAP MEASURES

The following measures are used by the company’s management to evaluate financial performance against historical results and establish targets on a consolidated basis. In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure. Reconciliations of non-GAAP measures to their most directly comparable GAAP measures also follow.

In the opinion of the company’s management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the company’s periodic results of operations and how management evaluates the company’s financial performance.  Internally, the company’s management uses these measures to evaluate performance against historical results, to establish financial targets on a consolidated basis and for other reasons, which are discussed below.

Some of these measures exclude net realized investment gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends.

Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the company’s management.

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RECONCILIATION OF OPERATING INCOME (LOSS) AND CERTAIN OTHER NON-GAAP MEASURES TO NET INCOME (LOSS)

Operating income (loss) is net income (loss) excluding the after-tax impact of net realized investment gains (losses) and discontinued operations. Management uses operating income (loss) to analyze each segment’s performance and as a tool in making business decisions. Financial statement users also consider operating income when analyzing the results and trends of insurance companies. Operating earnings (loss) per share is operating income (loss) on a per common share basis.

Reconciliation of Operating Income (Loss) less Preferred Dividends and Net Income (Loss) less Preferred Dividends to Net Income (Loss)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
($ in millions, after-tax)	2012		2011			2012		2011
Operating income (loss), less preferred dividends	$	495	$	(377	)	$	1,296	$	448
Preferred dividends	—		—			—		1
Operating income (loss)	495		(377		)	1,296		449
Net realized investment gains	4		13			9		26
Net income (loss)	$	499	$	(364	)	$	1,305	$	475
Net income (loss), less preferred dividends	$	499	$	(364	)	$	1,305	$	474
Preferred dividends	—		—			—		1
Net income (loss)	$	499	$	(364	)	$	1,305	$	475

	Twelve Months Ended December 31,
($ in millions, after-tax)	2011		2010		2009		2008			2007		2006		2005
Operating income, less preferred dividends	$	1,389	$	3,040	$	3,597	$	3,191		$	4,496	$	4,195	$	2,020
Preferred dividends	1		3		3		4			4		5		6
Operating income	1,390		3,043		3,600		3,195			4,500		4,200		2,026
Net realized investment gains (losses)	36		173		22		(271		)	101		8		35
Income from continuing operations	1,426		3,216		3,622		2,924			4,601		4,208		2,061
Discontinued operations	—		—		—		—			—		—		(439		)
Net income	$	1,426	$	3,216	$	3,622	$	2,924		$	4,601	$	4,208	$	1,622

Reconciliation of Operating Earnings (Loss) per Share to Net Income (Loss) per Share on a Basic and Diluted Basis

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2012		2011			2012		2011
Basic earnings per share
Operating income (loss)	$	1.27	$	(0.91	)	$	3.30	$	1.05
Net realized investment gains	—		0.03			0.02		0.06
Net income (loss)	$	1.27	$	(0.88	)	$	3.32	$	1.11
Diluted earnings per share
Operating income (loss)	$	1.26	$	(0.91	)	$	3.27	$	1.04
Net realized investment gains	—		0.03			0.02		0.06
Net income (loss)	$	1.26	$	(0.88	)	$	3.29	$	1.10

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Reconciliation of Operating Income (Loss) by Segment to Total Operating Income (Loss)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in millions, after-tax)	2012			2011			2012			2011
Business Insurance	$	362		$	11		$	974		$	615
Financial, Professional & International Insurance	182			164			331			284
Personal Insurance	17			(471		)	125			(301		)
Total segment operating income (loss)	561			(296		)	1,430			598
Interest Expense and Other	(66		)	(81		)	(134		)	(149		)
Total operating income (loss)	$	495		$	(377	)	$	1,296		$	449

RECONCILIATION OF ADJUSTED SHAREHOLDERS’ EQUITY TO SHAREHOLDERS’ EQUITY AND OPERATING RETURN ON EQUITY TO RETURN ON EQUITY

Average shareholders’ equity is (a) the sum of total shareholders’ equity excluding preferred stock at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two. Adjusted shareholders’ equity is shareholders’ equity excluding net unrealized investment gains (losses), net of tax, net realized investment gains (losses), net of tax, for the period presented, preferred stock and discontinued operations. Adjusted average shareholders’ equity is average shareholders’ equity excluding net unrealized investment gains (losses), net of tax, for all quarters included in the calculation and, for each quarterly period included in the calculation, that quarter’s net realized investment gains (losses), net of tax.

Reconciliation of Adjusted Shareholders’ Equity to Shareholders’ Equity

	As of June 30,
($ in millions)	2012		2011
Adjusted shareholders’ equity	$	22,060	$	22,760
Net unrealized investment gains, net of tax	2,980		2,222
Net realized investment gains, net of tax	9		26
Shareholders’ equity	$	25,049	$	25,008

	As of December 31,
($ in millions)	2011		2010		2009		2008			2007		2006		2005			2004
Adjusted shareholders’ equity	$	21,570	$	23,375	$	25,458	$	25,647		$	25,783	$	24,545	$	22,227		$	20,087
Net unrealized investment gains (losses), net of tax	2,871		1,859		1,856		(146		)	620		453		327			866
Net realized investment gains (losses), net of tax	36		173		22		(271		)	101		8		35			(28		)
Preferred stock	—		68		79		89			112		129		153			188
Discontinued operations	—		—		—		—			—		—		(439		)	88
Shareholders’ equity	$	24,477	$	25,475	$	27,415	$	25,319		$	26,616	$	25,135	$	22,303		$	21,201

Return on equity is the ratio of annualized net income (loss) less preferred dividends to average shareholders’ equity for the periods presented. Operating return on equity is the ratio of annualized operating income (loss) less preferred dividends to adjusted average shareholders’ equity for the periods presented. In the opinion of the company’s management, these are important indicators of how well management creates value for its shareholders through its operating activities and its capital management.

12

Calculation of Operating Return on Equity and Return on Equity

	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in millions, after-tax)	2012			2011			2012			2011
Annualized operating income (loss), less preferred dividends	$	1,982		$	(1,511	)	$	2,592		$	896
Adjusted average shareholders’ equity	22,050			23,073			21,934			23,263
Operating return on equity	9.0		%	(6.6		)%	11.8		%	3.9		%
Annualized net income (loss), less preferred dividends	$	1,993		$	(1,460	)	$	2,609		$	947
Average shareholders’ equity	24,961			25,093			24,818			25,193
Return on equity	8.0		%	(5.8		)%	10.5		%	3.8		%

Average annual operating return on equity over a period is the ratio of:

a) the sum of operating income (loss) less preferred dividends for the periods presented to

b) the sum of: 1) the sum of the adjusted average shareholders’ equity for all full years in the period presented, and 2) for partial years in the period presented, the number of quarters in that partial year divided by four, multiplied by the adjusted average shareholders’ equity of the partial year.

Calculation of Average Annual Operating Return on Equity from January 1, 2005 through June 30, 2012

	Six Months Ended
	June 30,						Twelve Months Ended December 31,
($ in millions)	2012			2011			2011			2010			2009			2008			2007			2006			2005
Operating income, less preferred dividends	$	1,296		$	448		$	1,389		$	3,040		$	3,597		$	3,191		$	4,496		$	4,195		$	2,020
Operating income, less preferred dividends - annualized	2,592			896
Adjusted average shareholders’ equity	21,934			23,263			22,806			24,285			25,777			25,668			25,350			23,381			21,118
Operating return on equity	11.8		%	3.9		%	6.1		%	12.5		%	14.0		%	12.4		%	17.7		%	17.9		%	9.6		%
Average annual operating return on equity for the period January 1, 2005 through June 30, 2012	12.9		%

RECONCILIATION OF PRE-TAX UNDERWRITING GAIN EXCLUDING CERTAIN ITEMS TO NET INCOME (LOSS)

Underwriting gain (loss) is net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses. In the opinion of the company’s management, it is important to measure the profitability of each segment excluding the results of investing activities, which are managed separately from the insurance business. This measure is used to assess each segment’s business performance and as a tool in making business decisions.  Pre-tax underwriting gain, excluding the impact of catastrophes and net favorable prior year loss reserve development, is the underwriting gain (loss) adjusted to exclude claims, claim adjustment expenses, and reinstatement premiums and assessments related to catastrophes and loss reserve development related to time periods prior to the current year. In the opinion of the company’s management, this measure is meaningful to users of the financial statements to understand the company’s periodic earnings and the variability of earnings caused by the unpredictable nature (i.e., the timing and amount) of catastrophes and loss reserve development. This measure is also referred to as underlying underwriting margin or underlying underwriting gain (loss).

A catastrophe is a severe loss, resulting from natural and man-made events, including risks such as fire, earthquake, windstorm, explosion, terrorism and other similar events. Each catastrophe has unique characteristics, and catastrophes are not predictable as to timing or amount. Their effects are included in net and operating income (loss) and claims and claim adjustment expense reserves upon occurrence. A catastrophe may result in the payment of reinsurance reinstatement premiums and assessments from various pools. In the opinion of the company’s management, a discussion of the impact of catastrophes is meaningful to users of the financial statements to understand the company’s periodic earnings and the variability in periodic earnings caused by the unpredictable nature of catastrophes.

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Net favorable (unfavorable) prior year loss reserve development is the increase or decrease in incurred claims and claim adjustment expenses as a result of the re-estimation of claims and claim adjustment expense reserves at successive valuation dates for a given group of claims, which may be related to one or more prior years. In the opinion of the company’s management, a discussion of loss reserve development is meaningful to users of the financial statements as it allows them to assess the impact between prior and current year development on incurred claims and claim adjustment expenses, net and operating income (loss), and changes in claims and claim adjustment expense reserve levels from period to period.

Reconciliation of Pre-tax Underwriting Gain (Excluding the Impact of Catastrophes and Net Favorable Prior Year Loss Reserve Development) to Net Income (Loss)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in millions, after-tax except as noted)	2012			2011			2012			2011
Pre-tax underwriting gain excluding the impact of catastrophes and net favorable prior year loss reserve development	$	266		$	89		$	523		$	285
Pre-tax impact of catastrophes	(549		)	(1,668		)	(717		)	(1,854		)
Pre-tax impact of net favorable prior year loss reserve development	221			168			525			405
Pre-tax underwriting gain (loss)	(62		)	(1,411		)	331			(1,164		)
Income tax expense (benefit) on underwriting results	(15		)	(487		)	130			(489		)
Underwriting gain (loss)	(47		)	(924		)	201			(675		)
Net investment income	589			606			1,182			1,228
Other, including interest expense	(47		)	(59		)	(87		)	(104		)
Operating income (loss)	495			(377		)	1,296			449
Net realized investment gains	4			13			9			26
Net income (loss)	$	499		$	(364	)	$	1,305		$	475

Reconciliation of Net Income per Diluted Share Excluding the Impact of Catastrophes to Net Income per Diluted Share

	Three Months
	Ended
	June 30, 2012
Net income per diluted share, excluding the impact of catastrophes	$	2.16
Impact of catastrophes	(0.90		)
Net income per diluted share	$	1.26

ADJUSTMENT TO THE GAAP COMBINED RATIO FOR THE INCREMENTAL IMPACT OF THE DIRECT TO CONSUMER INITIATIVE

GAAP combined ratio is the sum of the loss and loss adjustment expense ratio (loss and LAE ratio) and the underwriting expense ratio. For GAAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses reduced by an allocation of fee income to net earned premiums. The underwriting expense ratio is the ratio of underwriting expenses incurred reduced by an allocation of fee income, and billing and policy fees to net earned premiums. A GAAP combined ratio under 100% generally indicates an underwriting profit.  A GAAP combined ratio over 100% generally indicates an underwriting loss. The GAAP combined ratio is an operating statistic that includes GAAP measures in the numerator and the denominator.

14

Calculation of the GAAP Combined Ratio

	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in millions, pre-tax)	2012			2011			2012			2011
Loss and loss adjustment expense ratio
Claims and claim adjustment expenses	$	3,786		$	5,141		$	7,150		$	8,523
Less:
Policyholder dividends	11			8			23			18
Allocated fee income	11			34			46			67
Loss ratio numerator	$	3,764		$	5,099		$	7,081		$	8,438
Underwriting expense ratio
Amortization of deferred acquisition costs	$	976		$	970		$	1,947		$	1,918
General and administrative expenses	893			907			1,777			1,790
Less:
G&A included in Interest Expense and Other	5			30			12			45
Allocated fee income	48			40			95			81
Billing and policy fees	25			25			52			51
Expense ratio numerator	$	1,791		$	1,782		$	3,565		$	3,531
Earned premium	$	5,529		$	5,503		$	11,052		$	10,874
GAAP combined ratio (1)
Loss and loss adjustment expense ratio	68.1		%	92.6		%	64.1		%	77.6		%
Underwriting expense ratio	32.4		%	32.4		%	32.2		%	32.5		%
Combined ratio	100.5		%	125.0		%	96.3		%	110.1		%

(1)For purposes of computing GAAP ratios, billing and policy fees (which are a component of other revenues) are allocated as a reduction of underwriting expenses.  In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses.

GAAP combined ratio excluding the incremental impact of the direct to consumer initiative is the GAAP combined ratio adjusted to exclude the direct, variable impact of the company’s direct-to-consumer initiative in Personal Insurance. In the opinion of the company’s management, this is useful in an analysis of the profitability of the company’s ongoing agency business.

Reconciliation of the Consolidated and Personal Insurance GAAP Combined Ratios (Excluding the Incremental Impact of the Direct to Consumer Initiative) to the Consolidated and Personal Insurance GAAP Combined Ratios

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Personal Insurance
GAAP combined ratio excluding incremental impact of direct to consumer initiative	102.9	%	143.2	%	99.3	%	117.5	%
Incremental impact of direct to consumer initiative	1.9	%	2.3	%	2.0	%	2.6	%
GAAP combined ratio	104.8	%	145.5	%	101.3	%	120.1	%
Consolidated
GAAP combined ratio excluding incremental impact of direct to consumer initiative	99.8	%	124.1	%	95.6	%	109.1	%
Incremental impact of direct to consumer initiative	0.7	%	0.9	%	0.7	%	1.0	%
GAAP combined ratio	100.5	%	125.0	%	96.3	%	110.1	%

15

ADJUSTMENT TO NET WRITTEN PREMIUMS FOR THE IMPACT OF CHANGES IN FOREIGN EXCHANGE RATES

Adjusting for the impact of changes in foreign exchange rates allows the effect of foreign exchange rate differences to be isolated in the analysis of changes in various financial statement line items that are translated from a local currency to the company’s reporting currency, U.S. dollars. The impact is determined by assuming constant foreign exchange rates between periods as illustrated in the reconciliation below. In the opinion of the company’s management, this is useful in an analysis of the results of the International market and the FP&II segment.

Reconciliation of the Impact of Changes in Foreign Exchange Rates on International Net Written Premiums to International Net Written Premiums

	Three Months Ended							Six Months Ended
	June 30,							June 30,
($ in millions)	2012			2011		Change		2012			2011		Change
Net written premiums - holding foreign exchange rates constant	$	324		$	346	(6	)%	$	575		$	601	(4	)%
Impact of changes in foreign exchange rates	(8		)					(12		)
Net written premiums	$	316		$	346	(9	)%	$	563		$	601	(6	)%

Reconciliation of the Impact of Changes in Foreign Exchange Rates on FP&II Net Written Premiums to FP&II Net Written Premiums

	Three Months Ended							Six Months Ended
	June 30,							June 30,
($ in millions)	2012			2011		Change		2012			2011		Change
Net written premiums - holding foreign exchange rates constant	$	848		$	879	(4	)%	$	1,456		$	1,503	(3	)%
Impact of changes in foreign exchange rates	(8		)					(12		)
Net written premiums	$	840		$	879	(4	)%	$	1,444		$	1,503	(4	)%

RECONCILIATION OF CERTAIN NON-GAAP MEASURES TO BOOK VALUE PER SHARE AND SHAREHOLDERS’ EQUITY

Book value per share is total common shareholders’ equity divided by the number of common shares outstanding. Adjusted book value per share is total common shareholders’ equity excluding the after-tax impact of net unrealized investment gains and losses divided by the number of common shares outstanding. In the opinion of the company’s management, adjusted book value is useful in an analysis of a property casualty company’s book value as it removes the effect of changing prices on invested assets (i.e., net unrealized investment gains (losses), net of tax), which do not have an equivalent impact on unpaid claims and claim adjustment expense reserves. Tangible book value per share is adjusted book value per share excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding. In the opinion of the company’s management, tangible book value per share is useful in an analysis of a property casualty company’s book value on a nominal basis as it removes certain effects of purchase accounting (i.e., goodwill and other intangible assets), in addition to the effect of changing prices on invested assets.

16

Reconciliation of Tangible and Adjusted Common Shareholders’ Equity to Shareholders’ Equity

	As of
	June 30,			December 31,			June 30,
($ in millions, except per share amounts)	2012			2011			2011
Tangible shareholders’ equity	$	18,346		$	17,856		$	19,006
Goodwill	3,365			3,365			3,365
Other intangible assets	405			433			465
Less: Impact of deferred tax on other intangible assets	(47		)	(48		)	(50		)
Adjusted shareholders’ equity	22,069			21,606			22,786
Net unrealized investment gains, net of tax	2,980			2,871			2,222
Shareholders’ equity	$	25,049		$	24,477		$	25,008
Common shares outstanding	386.0			392.8			419.5
Tangible book value per share	$	47.53		$	45.46		$	45.31
Adjusted book value per share	57.18			55.01			54.32
Book value per share	64.90			62.32			59.62

RECONCILIATION OF CERTAIN NON-GAAP MEASURES TO TOTAL CAPITALIZATION

Total capitalization is the sum of total shareholders’ equity and debt. Debt-to-capital ratio excluding net unrealized gain on investments is the ratio of debt to total capitalization excluding the after-tax impact of net unrealized investment gains and losses. In the opinion of the company’s management, the debt to capital ratio is useful in an analysis of the company’s financial leverage.

Reconciliation of Total Debt and Equity Excluding Net Unrealized Investment Gain to Total Capital

	As of
	June 30,			December 31,			June 30,
($ in millions)	2012			2011			2011
Debt	$	6,349		$	6,605		$	6,604
Shareholders’ equity	25,049			24,477			25,008
Total capitalization	31,398			31,082			31,612
Net unrealized investment gains, net of tax	2,980			2,871			2,222
Total capitalization excluding net unrealized gain on investments, net of tax	$	28,418		$	28,211		$	29,390
Debt-to-capital ratio	20.2		%	21.3		%	20.9		%
Debt-to-capital ratio excluding net unrealized investment gains, net of tax	22.3		%	23.4		%	22.5		%

OTHER DEFINITIONS

Gross written premiums reflect the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the insurance contract. Net written premiums reflect gross written premiums less premiums ceded to reinsurers. These are GAAP measures.

For the Business Insurance and Financial, Professional and International Insurance segments, retention is the amount of premium available for renewal that was retained, excluding rate and exposure changes. For the Personal Insurance segment, retention is the ratio of the expected number of renewal policies that will be retained throughout the annual policy period to the number of available renewal base policies. For all of the segments, renewal rate change represents the estimated change in average premium on policies that renew, excluding exposure changes. Exposure is the measure of risk used in the pricing of an insurance product. The change in exposure is the amount of change in premium on policies that renew attributable to the change in portfolio risk. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes.

17

New business volume is the amount of written premium related to new policyholders and additional products sold to existing policyholders.  These are operating statistics, which are subject to change based upon a number of factors, including changes in actuarial estimates.  For the Business Insurance segment, retention, renewal premium change and new business volumes exclude National Accounts and Business Insurance-Other.

An insurance company’s statutory surplus represents the excess of its assets over its liabilities in accordance with the statutory accounting practices required by state laws and regulations.

Holding company liquidity is the total funds available at the holding company level to fund general corporate purposes, primarily the payment of shareholder dividends and debt service.  These funds consist of cash, short-term invested assets and readily marketable securities held by the holding company.

For a glossary of other financial terms used in this press release, we refer you to the company’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission.

###

Contacts

Media:	Institutional Investors:	Individual Investors:
Shane Boyd	Gabriella Nawi	Marc Parr
917.778.6267, or	917.778.6844, or	860.277.0779
Jennifer Wislocki	Andrew Hersom
860.277.7458	860.277.0902

18

EX-99.2

Exhibit 99.2

The Travelers Companies, Inc. Financial Supplement - Second Quarter 2012

	Page Number
Consolidated Results
Financial Highlights	1
Reconciliation to Net Income (Loss) and Earnings Per Share	2
Statement of Income (Loss)	3
Net Income (Loss) by Major Component and Combined Ratio	4
Operating Income (Loss)	5
Selected Statistics - Property and Casualty Operations	6
Written and Earned Premiums - Property and Casualty Operations	7
Business Insurance
Operating Income	8
Operating Income by Major Component and Combined Ratio	9
Selected Statistics	10
Net Written Premiums	11
Financial, Professional & International Insurance
Operating Income	12
Operating Income by Major Component and Combined Ratio	13
Selected Statistics	14
Net Written Premiums	15
Personal Insurance
Operating Income (Loss)	16
Operating Income (Loss) by Major Component and Combined Ratio	17
Selected Statistics	18
Selected Statistics - Agency Automobile	19
Selected Statistics - Agency Homeowners and Other	20
Selected Statistics - Direct to Consumer	21
Supplemental Detail
Interest Expense and Other	22
Consolidated Balance Sheet	23
Investment Portfolio	24
Investment Portfolio - Fixed Maturities Data	25
Investment Income	26
Net Realized and Unrealized Investment Gains	27
Reinsurance Recoverables	28
Net Reserves for Losses and Loss Adjustment Expense	29
Asbestos and Environmental Reserves	30
Capitalization	31
Statutory to GAAP Shareholders’ Equity Reconciliation	32
Statement of Cash Flows	33
Statement of Cash Flows (continued)	34
Glossary of Financial Measures and Description of Reportable Business Segments	35

The information included in the Financial Supplement is unaudited.  This document should be read in conjunction with the Company’s Form 10-Q which will be filed with the Securities and Exchange Commission.

Index

The Travelers Companies, Inc.
Financial Highlights
($ and shares in millions, except per share data)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Net income (loss)	$	839		$	(364	)	$	333		$	618		$	806		$	499		$	475		$	1,305
Net income (loss) per share:
Basic	$	1.94		$	(0.88	)	$	0.80		$	1.52		$	2.04		$	1.27		$	1.11		$	3.32
Diluted	$	1.92		$	(0.88	)	$	0.79		$	1.51		$	2.02		$	1.26		$	1.10		$	3.29
Operating income (loss)	$	826		$	(377	)	$	332		$	609		$	801		$	495		$	449		$	1,296
Operating income (loss) per share:
Basic	$	1.91		$	(0.91	)	$	0.79		$	1.50		$	2.03		$	1.27		$	1.05		$	3.30
Diluted	$	1.89		$	(0.91	)	$	0.79		$	1.48		$	2.01		$	1.26		$	1.04		$	3.27
Return on equity	13.3		%	(5.8		)%	5.3		%	10.0		%	13.1		%	8.0		%	3.8		%	10.5		%
Operating return on equity	14.1		%	(6.6		)%	5.9		%	11.1		%	14.7		%	9.0		%	3.9		%	11.8		%
Total assets, at period end	$	105,227		$	106,443		$	106,906		$	104,575		$	104,838		$	104,330		$	106,443		$	104,330
Total equity, at period end	$	25,243		$	25,008		$	25,172		$	24,477		$	24,872		$	25,049		$	25,008		$	25,049
Book value per share, at period end	$	59.91		$	59.62		$	60.98		$	62.32		$	63.81		$	64.90		$	59.62		$	64.90
Less: Net unrealized investment gains, net of tax	4.30			5.30			6.45			7.31			7.28			7.72			5.30			7.72
Adjusted book value per share, at period end	$	55.61		$	54.32		$	54.53		$	55.01		$	56.53		$	57.18		$	54.32		$	57.18
Weighted average number of common shares outstanding (basic)	428.2			418.6			415.0			403.0			392.0			388.0			423.3			390.0
Weighted average number of common shares outstanding and common stock equivalents (diluted)	434.4			418.6			418.5			407.0			395.8			391.6			429.1			393.5
Common shares outstanding at period end	420.3			419.5			412.8			392.8			389.8			386.0			419.5			386.0
Common stock dividends declared	$	155		$	175		$	173		$	166		$	162		$	181		$	330		$	343
Common stock repurchased:
Under Board of Director authorization
Shares	18.9			3.9			7.3			20.9			6.0			5.6			22.8			11.6
Cost	$	1,100		$	237		$	375		$	1,188		$	350		$	350		$	1,337		$	700
Other
Shares	0.8			0.6			—			—			0.8			—			1.4			0.8
Cost	$	46		$	36		$	—		$	—		$	52		$	1		$	82		$	53

Certain prior period amounts have been restated to conform to the 2012 presentation.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

1

The Travelers Companies, Inc. Reconciliation to Net Income (Loss) and Earnings Per Share ($ and shares in millions, except earnings per share)

														YTD		YTD
	1Q		2Q			3Q		4Q		1Q		2Q		2Q		2Q
	2011		2011			2011		2011		2012		2012		2011		2012
Net income (loss)
Operating income (loss)	$	826	$	(377	)	$	332	$	609	$	801	$	495	$	449	$	1,296
Net realized investment gains	13		13			1		9		5		4		26		9
Net income (loss)	$	839	$	(364	)	$	333	$	618	$	806	$	499	$	475	$	1,305
Basic earnings per share
Operating income (loss)	$	1.91	$	(0.91	)	$	0.79	$	1.50	$	2.03	$	1.27	$	1.05	$	3.30
Net realized investment gains	0.03		0.03			0.01		0.02		0.01		—		0.06		0.02
Net income (loss)	$	1.94	$	(0.88	)	$	0.80	$	1.52	$	2.04	$	1.27	$	1.11	$	3.32
Diluted earnings per share
Operating income (loss)	$	1.89	$	(0.91	)	$	0.79	$	1.48	$	2.01	$	1.26	$	1.04	$	3.27
Net realized investment gains	0.03		0.03			—		0.03		0.01		—		0.06		0.02
Net income (loss)	$	1.92	$	(0.88	)	$	0.79	$	1.51	$	2.02	$	1.26	$	1.10	$	3.29

Adjustments to net income (loss) and weighted average shares for net income (loss) EPS calculations: (1)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Basic
Net income (loss), as reported	$	839		$	(364	)	$	333		$	618		$	806		$	499		$	475		$	1,305
Preferred stock dividends	(1		)	—			—			—			—			—			(1		)	—
Participating share-based awards - allocated income	(7		)	(2		)	(2		)	(5		)	(6		)	(4		)	(4		)	(10		)
Net income (loss) available to common shareholders - basic	$	831		$	(366	)	$	331		$	613		$	800		$	495		$	470		$	1,295
Diluted
Net income (loss) available to common shareholders - basic	$	831		$	(366	)	$	331		$	613		$	800		$	495		$	470		$	1,295
Effect of dilutive securities:
Convertible preferred stock	1			—			—			—			—			—			1			—
Net income (loss) available to common shareholders - diluted	$	832		$	(366	)	$	331		$	613		$	800		$	495		$	471		$	1,295
Common Shares
Basic
Weighted average shares outstanding	428.2			418.6			415.0			403.0			392.0			388.0			423.3			390.0
Diluted
Weighted average shares outstanding	428.2			418.6			415.0			403.0			392.0			388.0			423.3			390.0
Weighted average effects of dilutive securities:
Convertible preferred stock	1.6			—			—			—			—			—			1.4			—
Stock options and performance shares	4.6			—			3.5			4.0			3.8			3.6			4.4			3.5
Diluted weighted average shares outstanding	434.4			418.6			418.5			407.0			395.8			391.6			429.1			393.5

(1)  Adjustments to net income and weighted average shares for net income EPS calculations can also be used for the operating income EPS calculations.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

2

The Travelers Companies, Inc. Statement of Income (Loss) - Consolidated ($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Revenues
Premiums	$	5,371		$	5,503		$	5,605		$	5,611		$	5,523		$	5,529		$	10,874		$	11,052
Net investment income	779			758			690			652			740			738			1,537			1,478
Fee income	74			74			79			69			82			59			148			141
Net realized investment gains	20			19			2			14			10			4			39			14
Other revenues	34			34			31			27			37			29			68			66
Total revenues	6,278			6,388			6,407			6,373			6,392			6,359			12,666			12,751
Claims and expenses
Claims and claim adjustment expenses	3,382			5,141			4,136			3,617			3,364			3,786			8,523			7,150
Amortization of deferred acquisition costs	948			970			982			976			971			976			1,918			1,947
General and administrative expenses	883			907			860			906			884			893			1,790			1,777
Interest expense	96			97			97			96			96			96			193			192
Total claims and expenses	5,309			7,115			6,075			5,595			5,315			5,751			12,424			11,066
Income (loss) before income taxes	969			(727		)	332			778			1,077			608			242			1,685
Income tax expense (benefit)	130			(363		)	(1		)	160			271			109			(233		)	380
Net income (loss)	$	839		$	(364	)	$	333		$	618		$	806		$	499		$	475		$	1,305
Net realized investment gains
Other-than-temporary impairment losses:
Total gains	$	2		$	5		$	9		$	14		$	—		$	11		$	7		$	11
Non-credit component of impairments recognized in accumulated other comprehensive income	(6		)	(9		)	(21		)	(19		)	(4		)	(15		)	(15		)	(19		)
Other-than-temporary impairment losses	(4		)	(4		)	(12		)	(5		)	(4		)	(4		)	(8		)	(8		)
Other net realized investment gains	24			23			14			19			14			8			47			22
Net realized investment gains	$	20		$	19		$	2		$	14		$	10		$	4		$	39		$	14
Other statistics
Effective tax rate on net investment income	20.2		%	20.1		%	18.6		%	16.9		%	19.9		%	20.2		%	20.1		%	20.0		%
Net investment income (after-tax)	$	622		$	606		$	561		$	541		$	593		$	589		$	1,228		$	1,182
Catastrophes, net of reinsurance:
Pre-tax	$	186		$	1,668		$	606		$	102		$	168		$	549		$	1,854		$	717
After-tax	$	122		$	1,085		$	394		$	68		$	109		$	357		$	1,207		$	466

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

3

The Travelers Companies, Inc.
Net Income (Loss) by Major Component and Combined Ratio - Consolidated
($ in millions, net of tax)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Underwriting gain (loss)	$	249		$	(924	)	$	(185	)	$	115		$	248		$	(47	)	$	(675	)	$	201
Net investment income	622			606			561			541			593			589			1,228			1,182
Other, including interest expense	(45		)	(59		)	(44		)	(47		)	(40		)	(47		)	(104		)	(87		)
Operating income (loss)	826			(377		)	332			609			801			495			449			1,296
Net realized investment gains	13			13			1			9			5			4			26			9
Net income (loss)	$	839		$	(364	)	$	333		$	618		$	806		$	499		$	475		$	1,305
GAAP Combined ratio (1) (2)
Loss and loss adjustment expense ratio	62.1		%	92.6		%	72.9		%	63.7		%	60.1		%	68.1		%	77.6		%	64.1		%
Underwriting expense ratio	32.6		%	32.4		%	31.6		%	32.2		%	32.1		%	32.4		%	32.5		%	32.2		%
Combined ratio	94.7		%	125.0		%	104.5		%	95.9		%	92.2		%	100.5		%	110.1		%	96.3		%
GAAP combined ratio excluding incremental impact of direct to consumer initiative	93.8		%	124.1		%	103.6		%	95.1		%	91.4		%	99.8		%	109.1		%	95.6		%
Impact of catastrophes on combined ratio	3.4		%	30.3		%	10.8		%	1.8		%	3.1		%	10.0		%	17.1		%	6.5		%
Impact of prior year reserve development on combined ratio	-4.4		%	-3.1		%	-3.3		%	-2.3		%	-5.5		%	-4.0		%	-3.7		%	-4.8		%

(1)Before policyholder dividends.

(2)   Billing and policy fees, which are a component of other revenues, are allocated as a reduction of underwriting expenses.  In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:

													YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		2Q		2Q
	2011		2011		2011		2011		2012		2012		2011		2012
Billing and policy fees	$	26	$	25	$	26	$	25	$	27	$	25	$	51	$	52
Fee income:
Loss and loss adjustment expenses	$	33	$	34	$	38	$	28	$	35	$	11	$	67	$	46
Underwriting expenses	41		40		41		41		47		48		81		95
Total fee income	$	74	$	74	$	79	$	69	$	82	$	59	$	148	$	141

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

4

The Travelers Companies, Inc.
Operating Income (Loss) - Consolidated
($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Revenues
Premiums	$	5,371		$	5,503		$	5,605		$	5,611		$	5,523		$	5,529		$	10,874		$	11,052
Net investment income	779			758			690			652			740			738			1,537			1,478
Fee income	74			74			79			69			82			59			148			141
Other revenues	34			34			31			27			37			29			68			66
Total revenues	6,258			6,369			6,405			6,359			6,382			6,355			12,627			12,737
Claims and expenses
Claims and claim adjustment expenses	3,382			5,141			4,136			3,617			3,364			3,786			8,523			7,150
Amortization of deferred acquisition costs	948			970			982			976			971			976			1,918			1,947
General and administrative expenses	883			907			860			906			884			893			1,790			1,777
Interest expense	96			97			97			96			96			96			193			192
Total claims and expenses	5,309			7,115			6,075			5,595			5,315			5,751			12,424			11,066
Operating income (loss) before income taxes	949			(746		)	330			764			1,067			604			203			1,671
Income tax expense (benefit)	123			(369		)	(2		)	155			266			109			(246		)	375
Operating income (loss)	$	826		$	(377	)	$	332		$	609		$	801		$	495		$	449		$	1,296
Other statistics
Effective tax rate on net investment income	20.2		%	20.1		%	18.6		%	16.9		%	19.9		%	20.2		%	20.1		%	20.0		%
Net investment income (after-tax)	$	622		$	606		$	561		$	541		$	593		$	589		$	1,228		$	1,182
Catastrophes, net of reinsurance:
Pre-tax	$	186		$	1,668		$	606		$	102		$	168		$	549		$	1,854		$	717
After-tax	$	122		$	1,085		$	394		$	68		$	109		$	357		$	1,207		$	466

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

5

The Travelers Companies, Inc.
Selected Statistics - Property and Casualty Operations
($ in millions)

																		YTD			YTD
	1Q		2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011		2011			2011			2011			2012			2012			2011			2012
Statutory underwriting
Gross written premiums	$	5,961	$	6,124		$	6,226		$	5,576		$	6,073		$	6,240		$	12,085		$	12,313
Net written premiums	$	5,437	$	5,817		$	5,672		$	5,261		$	5,497		$	5,868		$	11,254		$	11,365
Net earned premiums	$	5,371	$	5,503		$	5,605		$	5,611		$	5,523		$	5,529		$	10,874		$	11,052
Losses and loss adjustment expenses	3,342		5,100			4,094			3,570			3,318			3,791			8,442			7,109
Underwriting expenses	1,772		1,837			1,812			1,735			1,797			1,838			3,609			3,635
Statutory underwriting gain (loss)	257		(1,434		)	(301		)	306			408			(100		)	(1,177		)	308
Policyholder dividends	10		8			11			15			12			11			18			23
Statutory underwriting gain (loss) after policyholder dividends	$	247	$	(1,442	)	$	(312	)	$	291		$	396		$	(111	)	$	(1,195	)	$	285
Other statutory statistics
Reserves for losses and loss adjustment expenses	$	40,301	$	41,482		$	41,238		$	40,899		$	40,791		$	40,925		$	41,482		$	40,925
Increase (decrease) in reserves	$	66	$	1,181		$	(244	)	$	(339	)	$	(108	)	$	134		$	1,247		$	26
Statutory surplus	$	20,588	$	20,224		$	19,842		$	19,174		$	19,867		$	19,841		$	20,224		$	19,841
Net written premiums/surplus (1)	1.06:1		1.09:1			1.12:1			1.16:1			1.12:1			1.12:1			1.09:1			1.12:1

(1)  Based on 12 months of rolling net written premiums.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

6

The Travelers Companies, Inc.
Written and Earned Premiums - Property and Casualty Operations
($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Written premiums
Gross	$	5,961		$	6,124		$	6,226		$	5,576		$	6,073		$	6,240		$	12,085		$	12,313
Ceded	(524		)	(307		)	(554		)	(315		)	(576		)	(372		)	(831		)	(948		)
Net	$	5,437		$	5,817		$	5,672		$	5,261		$	5,497		$	5,868		$	11,254		$	11,365
Earned premiums
Gross	$	5,804		$	5,920		$	6,031		$	6,032		$	5,973		$	5,985		$	11,724		$	11,958
Ceded	(433		)	(417		)	(426		)	(421		)	(450		)	(456		)	(850		)	(906		)
Net	$	5,371		$	5,503		$	5,605		$	5,611		$	5,523		$	5,529		$	10,874		$	11,052

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

7

The Travelers Companies, Inc.
Operating Income - Business Insurance
($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Revenues
Premiums	$	2,745		$	2,802		$	2,890		$	2,890		$	2,876		$	2,860		$	5,547		$	5,736
Net investment income	556			541			487			457			532			536			1,097			1,068
Fee income	74			74			78			69			82			58			148			140
Other revenues	9			10			8			4			14			8			19			22
Total revenues	3,384			3,427			3,463			3,420			3,504			3,462			6,811			6,966
Claims and expenses
Claims and claim adjustment expenses	1,773			2,579			2,204			1,891			1,709			2,049			4,352			3,758
Amortization of deferred acquisition costs	444			457			460			454			467			465			901			932
General and administrative expenses	473			492			471			508			498			504			965			1,002
Total claims and expenses	2,690			3,528			3,135			2,853			2,674			3,018			6,218			5,692
Operating income (loss) before federal income taxes	694			(101		)	328			567			830			444			593			1,274
Income tax expense (benefit)	90			(112		)	34			122			218			82			(22		)	300
Operating income	$	604		$	11		$	294		$	445		$	612		$	362		$	615		$	974
Other statistics
Effective tax rate on net investment income	20.0		%	19.9		%	18.2		%	17.1		%	20.0		%	20.3		%	20.0		%	20.2		%
Net investment income (after-tax)	$	445		$	433		$	398		$	379		$	425		$	428		$	878		$	853
Catastrophes, net of reinsurance:
Pre-tax	$	112		$	697		$	195		$	14		$	53		$	252		$	809		$	305
After-tax	$	73		$	453		$	127		$	9		$	34		$	164		$	526		$	198

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

8

The Travelers Companies, Inc. Operating Income by Major Component and Combined Ratio - Business Insurance ($ in millions, net of tax)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Underwriting gain (loss)	$	153		$	(429	)	$	(110	)	$	63		$	177		$	(71	)	$	(276	)	$	106
Net investment income	445			433			398			379			425			428			878			853
Other	6			7			6			3			10			5			13			15
Operating income	$	604		$	11		$	294		$	445		$	612		$	362		$	615		$	974
GAAP Combined ratio (1) (2)
Loss and loss adjustment expense ratio	63.1		%	90.6		%	74.8		%	64.1		%	57.8		%	71.0		%	77.0		%	64.4		%
Underwriting expense ratio	31.8		%	32.3		%	30.6		%	31.7		%	31.8		%	32.0		%	32.0		%	31.9		%
Combined ratio	94.9		%	122.9		%	105.4		%	95.8		%	89.6		%	103.0		%	109.0		%	96.3		%
Impact of catastrophes on combined ratio	4.1		%	24.9		%	6.8		%	0.5		%	1.8		%	8.8		%	14.6		%	5.3		%
Impact of prior year reserve development on combined ratio	-5.2		%	-1.0		%	-0.9		%	-1.7		%	-8.6		%	-2.0		%	-3.1		%	-5.3		%

(1)  Before policyholder dividends.

(2)  Billing and policy fees, which are a component of other revenues, are allocated as a reduction of underwriting expenses.  In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:

													YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		2Q		2Q
	2011		2011		2011		2011		2012		2012		2011		2012
Billing and policy fees	$	5	$	4	$	5	$	5	$	5	$	5	$	9	$	10
Fee income:
Loss and loss adjustment expenses	$	33	$	34	$	37	$	28	$	35	$	10	$	67	$	45
Underwriting expenses	41		40		41		41		47		48		81		95
Total fee income	$	74	$	74	$	78	$	69	$	82	$	58	$	148	$	140

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

9

The Travelers Companies, Inc. Selected Statistics - Business Insurance ($ in millions)

																YTD			YTD
	1Q		2Q			3Q			4Q		1Q		2Q			2Q			2Q
	2011		2011			2011			2011		2012		2012			2011			2012
Statutory underwriting
Gross written premiums	$	3,306	$	3,094		$	3,205		$	2,813	$	3,429	$	3,280		$	6,400		$	6,709
Net written premiums	$	3,020	$	2,879		$	2,826		$	2,615	$	3,100	$	3,026		$	5,899		$	6,126
Net earned premiums	$	2,745	$	2,802		$	2,890		$	2,890	$	2,876	$	2,860		$	5,547		$	5,736
Losses and loss adjustment expenses	1,736		2,540			2,167			1,846		1,663		2,057			4,276			3,720
Underwriting expenses	899		918			898			864		940		928			1,817			1,868
Statutory underwriting gain (loss)	110		(656		)	(175		)	180		273		(125		)	(546		)	148
Policyholder dividends	7		5			7			13		10		8			12			18
Statutory underwriting gain (loss) after policyholder dividends	$	103	$	(661	)	$	(182	)	$	167	$	263	$	(133	)	$	(558	)	$	130

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

10

The Travelers Companies, Inc. Net Written Premiums - Business Insurance ($ in millions)

														YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q			2Q		2Q
	2011		2011		2011		2011		2012		2012			2011		2012
Net written premiums by market
Select Accounts	$	732	$	738	$	666	$	648	$	718	$	721		$	1,470	$	1,439
Commercial Accounts	822		659		747		662		861		717			1,481		1,578
National Accounts	211		188		176		207		235		226			399		461
Industry-Focused Underwriting	628		579		649		551		648		636			1,207		1,284
Target Risk Underwriting	413		468		356		350		429		486			881		915
Specialized Distribution	209		246		231		194		208		242			455		450
Total core	3,015		2,878		2,825		2,612		3,099		3,028			5,893		6,127
Business Insurance other	5		1		1		3		1		(2		)	6		(1		)
Total	$	3,020	$	2,879	$	2,826	$	2,615	$	3,100	$	3,026		$	5,899	$	6,126
Net written premiums by product line
Commercial multi-peril	$	841	$	780	$	743	$	732	$	819	$	777		$	1,621	$	1,596
Workers’ compensation	854		678		750		677		944		800			1,532		1,744
Commercial automobile	493		505		515		442		489		499			998		988
Property	414		468		354		359		416		481			882		897
General liability	415		442		448		400		426		464			857		890
Other	3		6		16		5		6		5			9		11
Total	$	3,020	$	2,879	$	2,826	$	2,615	$	3,100	$	3,026		$	5,899	$	6,126
National accounts
Additions to claim volume under administration (1)	$	540	$	416	$	412	$	490	$	639	$	472		$	956	$	1,111
Written fees	$	73	$	63	$	63	$	64	$	88	$	77		$	136	$	165

(1)  Includes new and renewal business.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

11

The Travelers Companies, Inc. Operating Income - Financial, Professional & International Insurance ($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Revenues
Premiums	$	773		$	810		$	799		$	792		$	737		$	766		$	1,583		$	1,503
Net investment income	106			105			101			102			104			99			211			203
Fee income	—			—			1			—			—			1			—			1
Other revenues	7			6			6			7			8			5			13			13
Total revenues	886			921			907			901			849			871			1,807			1,720
Claims and expenses
Claims and claim adjustment expenses	433			378			297			379			341			302			811			643
Amortization of deferred acquisition costs	147			152			154			150			143			149			299			292
General and administrative expenses	160			160			162			166			165			165			320			330
Total claims and expenses	740			690			613			695			649			616			1,430			1,265
Operating income before federal income taxes	146			231			294			206			200			255			377			455
Income tax expense	26			67			83			54			51			73			93			124
Operating income	$	120		$	164		$	211		$	152		$	149		$	182		$	284		$	331
Other statistics
Effective tax rate on net investment income	21.2		%	21.2		%	20.8		%	15.8		%	18.9		%	19.7		%	21.2		%	19.3		%
Net investment income (after-tax)	$	84		$	82		$	81		$	85		$	85		$	79		$	166		$	164
Catastrophes, net of reinsurance:
Pre-tax	$	21		$	14		$	3		$	17		$	—		$	4		$	35		$	4
After-tax	$	15		$	10		$	2		$	13		$	—		$	3		$	25		$	3

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

12

The Travelers Companies, Inc. Operating Income by Major Component and Combined Ratio - Financial, Professional & International Insurance ($ in millions, net of tax)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Underwriting gain	$	32		$	78		$	126		$	63		$	59		$	99		$	110		$	158
Net investment income	84			82			81			85			85			79			166			164
Other	4			4			4			4			5			4			8			9
Operating income	$	120		$	164		$	211		$	152		$	149		$	182		$	284		$	331
GAAP Combined ratio (1) (2)
Loss and loss adjustment expense ratio	55.6		%	46.2		%	36.8		%	47.3		%	46.0		%	39.1		%	50.8		%	42.5		%
Underwriting expense ratio	39.7		%	38.6		%	39.4		%	40.0		%	41.8		%	40.9		%	39.1		%	41.3		%
Combined ratio	95.3		%	84.8		%	76.2		%	87.3		%	87.8		%	80.0		%	89.9		%	83.8		%
Impact of catastrophes on combined ratio	2.7		%	1.7		%	0.4		%	2.2		%	0.0		%	0.4		%	2.2		%	0.2		%
Impact of prior year reserve development on combined ratio	-5.1		%	-11.7		%	-19.1		%	-9.0		%	-6.1		%	-12.5		%	-8.6		%	-9.4		%

(1) Before policyholder dividends.

(2) Fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:

													YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		2Q		2Q
	2011		2011		2011		2011		2012		2012		2011		2012
Fee income:
Loss and loss adjustment expenses	$	—	$	—	$	1	$	—	$	—	$	1	$	—	$	1
Underwriting expenses	—		—		—		—		—		—		—		—
Total fee income	$	—	$	—	$	1	$	—	$	—	$	1	$	—	$	1

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

13

The Travelers Companies, Inc. Selected Statistics - Financial, Professional & International Insurance ($ in millions)

													YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		2Q		2Q
	2011		2011		2011		2011		2012		2012		2011		2012
Statutory underwriting
Gross written premiums	$	810	$	910	$	854	$	834	$	791	$	882	$	1,720	$	1,673
Net written premiums	$	624	$	879	$	808	$	791	$	604	$	840	$	1,503	$	1,444
Net earned premiums	$	773	$	810	$	799	$	792	$	737	$	766	$	1,583	$	1,503
Losses and loss adjustment expenses	430		375		294		375		341		299		805		640
Underwriting expenses	309		312		303		300		316		319		621		635
Statutory underwriting gain	34		123		202		117		80		148		157		228
Policyholder dividends	3		3		4		2		2		3		6		5
Statutory underwriting gain after policyholder dividends	$	31	$	120	$	198	$	115	$	78	$	145	$	151	$	223

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

14

The Travelers Companies, Inc. Net Written Premiums - Financial, Professional & International Insurance ($ in millions)

													YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		2Q		2Q
	2011		2011		2011		2011		2012		2012		2011		2012
Net written premiums by market
Bond & Financial Products	$	369	$	533	$	538	$	513	$	357	$	524	$	902	$	881
International	255		346		270		278		247		316		601		563
Total	$	624	$	879	$	808	$	791	$	604	$	840	$	1,503	$	1,444
Net written premiums by product line
General liability	$	135	$	234	$	230	$	237	$	143	$	236	$	369	$	379
Fidelity & surety	196		264		260		237		172		248		460		420
International	255		346		270		278		247		316		601		563
Other	38		35		48		39		42		40		73		82
Total	$	624	$	879	$	808	$	791	$	604	$	840	$	1,503	$	1,444

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

15

The Travelers Companies, Inc. Operating Income (Loss) - Personal Insurance ($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Revenues
Premiums	$	1,853		$	1,891		$	1,916		$	1,929		$	1,910		$	1,903		$	3,744		$	3,813
Net investment income	117			112			102			93			104			103			229			207
Other revenues	18			18			17			17			19			16			36			35
Total revenues	1,988			2,021			2,035			2,039			2,033			2,022			4,009			4,055
Claims and expenses
Claims and claim adjustment expenses	1,176			2,184			1,635			1,347			1,314			1,435			3,360			2,749
Amortization of deferred acquisition costs	357			361			368			372			361			362			718			723
General and administrative expenses	235			225			222			226			214			219			460			433
Total claims and expenses	1,768			2,770			2,225			1,945			1,889			2,016			4,538			3,905
Operating income (loss) before federal income taxes	220			(749		)	(190		)	94			144			6			(529		)	150
Income tax expense (benefit)	50			(278		)	(82		)	17			36			(11		)	(228		)	25
Operating income (loss)	$	170		$	(471	)	$	(108	)	$	77		$	108		$	17		$	(301	)	$	125
Other statistics
Effective tax rate on net investment income	20.0		%	19.9		%	18.5		%	17.5		%	20.1		%	20.4		%	19.9		%	20.3		%
Net investment income (after-tax)	$	93		$	91		$	82		$	77		$	83		$	82		$	184		$	165
Catastrophes, net of reinsurance:
Pre-tax	$	53		$	957		$	408		$	71		$	115		$	293		$	1,010		$	408
After-tax	$	34		$	622		$	265		$	46		$	75		$	190		$	656		$	265

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

16

The Travelers Companies, Inc. Operating Income (Loss) by Major Component and Combined Ratio - Personal Insurance ($ in millions, net of tax)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Underwriting gain (loss)	$	64		$	(573	)	$	(201	)	$	(11	)	$	12		$	(75	)	$	(509	)	$	(63	)
Net investment income	93			91			82			77			83			82			184			165
Other	13			11			11			11			13			10			24			23
Operating income (loss)	$	170		$	(471	)	$	(108	)	$	77		$	108		$	17		$	(301	)	$	125
GAAP Combined ratio (1)
Loss and loss adjustment expense ratio	63.4		%	115.6		%	85.3		%	69.9		%	68.8		%	75.4		%	89.8		%	72.1		%
Underwriting expense ratio	30.8		%	29.9		%	29.7		%	29.9		%	29.0		%	29.4		%	30.3		%	29.2		%
Combined ratio	94.2		%	145.5		%	115.0		%	99.8		%	97.8		%	104.8		%	120.1		%	101.3		%
GAAP combined ratio excluding incremental impact of direct to consumer initiative	91.4		%	143.2		%	112.5		%	97.4		%	95.7		%	102.9		%	117.5		%	99.3		%
Impact of catastrophes on combined ratio	2.8		%	50.7		%	21.3		%	3.7		%	6.0		%	15.3		%	27.0		%	10.7		%
Impact of prior year reserve development on combined ratio	-3.0		%	-2.4		%	-0.3		%	-0.3		%	-0.5		%	-3.5		%	-2.7		%	-2.1		%

(1)  Billing and policy fees, which are a component of other revenues, are allocated as a reduction of underwriting expenses.  Billing and policy fees are as follows:

													YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		2Q		2Q
	2011		2011		2011		2011		2012		2012		2011		2012
Billing and policy fees	$	21	$	21	$	21	$	20	$	22	$	20	$	42	$	42

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

17

The Travelers Companies, Inc. Selected Statistics - Personal Insurance ($ in millions)

																YTD			YTD
	1Q		2Q			3Q			4Q		1Q		2Q			2Q			2Q
	2011		2011			2011			2011		2012		2012			2011			2012
Statutory underwriting
Gross written premiums	$	1,845	$	2,120		$	2,167		$	1,929	$	1,853	$	2,078		$	3,965		$	3,931
Net written premiums	$	1,793	$	2,059		$	2,038		$	1,855	$	1,793	$	2,002		$	3,852		$	3,795
Net earned premiums	$	1,853	$	1,891		$	1,916		$	1,929	$	1,910	$	1,903		$	3,744		$	3,813
Losses and loss adjustment expenses	1,176		2,185			1,633			1,349		1,314		1,435			3,361			2,749
Underwriting expenses	564		607			611			571		541		591			1,171			1,132
Statutory underwriting gain (loss)	$	113	$	(901	)	$	(328	)	$	9	$	55	$	(123	)	$	(788	)	$	(68	)
Policies in force (in thousands)
Automobile	2,559		2,570			2,574			2,571		2,554		2,505			2,570			2,505
Homeowners and other	5,183		5,210			5,226			5,225		5,195		5,133			5,210			5,133

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

18

The Travelers Companies, Inc. Selected Statistics - Personal Insurance (Agency Automobile) (1) ($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Statutory underwriting
Gross written premiums	$	923		$	952		$	950		$	881		$	904		$	903		$	1,875		$	1,807
Net written premiums	$	918		$	948		$	946		$	876		$	900		$	899		$	1,866		$	1,799
Net earned premiums	$	896		$	908		$	912		$	913		$	902		$	891		$	1,804		$	1,793
Losses and loss adjustment expenses	620			722			707			757			641			674			1,342			1,315
Underwriting expenses	249			249			245			237			235			238			498			473
Statutory underwriting gain (loss)	$	27		$	(63	)	$	(40	)	$	(81	)	$	26		$	(21	)	$	(36	)	$	5
Other statistics
GAAP Combined ratio (2):
Loss and loss adjustment expense ratio	69.2		%	79.5		%	77.5		%	82.9		%	71.1		%	75.6		%	74.3		%	73.3		%
Underwriting expense ratio	26.6		%	26.2		%	25.8		%	26.0		%	25.4		%	25.9		%	26.4		%	25.7		%
Combined ratio	95.8		%	105.7		%	103.3		%	108.9		%	96.5		%	101.5		%	100.7		%	99.0		%
Impact of catastrophes on combined ratio	0.1		%	6.8		%	2.1		%	1.0		%	1.0		%	3.8		%	3.5		%	2.4		%
Impact of prior year reserve development on combined ratio	-0.1		%	-0.3		%	2.2		%	3.7		%	-0.2		%	0.0		%	-0.2		%	-0.1		%
Catastrophe losses, net of reinsurance:
Pre-tax	$	1		$	61		$	20		$	8		$	9		$	34		$	62		$	43
After-tax	$	—		$	41		$	12		$	6		$	6		$	22		$	41		$	28
Policies in force (in thousands)	2,497			2,502			2,501			2,494			2,473			2,423
Change from prior year quarter	2.0		%	1.4		%	0.8		%	0.2		%	-1.0		%	-3.2		%
Change from prior quarter	0.3		%	0.2		%	0.0		%	-0.3		%	-0.8		%	-2.0		%

(1)  Represents Automobile policies sold through agents, brokers and other intermediaries, and excludes direct to consumer.

(2)  Billing and policy fees, which are a component of other revenues, are allocated as a reduction of underwriting expenses. Billing and policy fees are as follows:

													YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		2Q		2Q
	2011		2011		2011		2011		2012		2012		2011		2012
Billing and policy fees	$	12	$	11	$	11	$	11	$	12	$	10	$	23	$	22

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

19

The Travelers Companies, Inc. Selected Statistics - Personal Insurance (Agency Homeowners and Other) (1) ($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Statutory underwriting
Gross written premiums	$	891		$	1,136		$	1,179		$	1,015		$	912		$	1,135		$	2,027		$	2,047
Net written premiums	$	845		$	1,078		$	1,056		$	944		$	855		$	1,064		$	1,923		$	1,919
Net earned premiums	$	932		$	954		$	974		$	982		$	973		$	976		$	1,886		$	1,949
Losses and loss adjustment expenses	532			1,428			899			564			643			730			1,960			1,373
Underwriting expenses	263			308			312			282			262			309			571			571
Statutory underwriting gain (loss)	$	137		$	(782	)	$	(237	)	$	136		$	68		$	(63	)	$	(645	)	$	5
Other statistics
GAAP Combined ratio (2):
Loss and loss adjustment expense ratio	57.1		%	149.7		%	92.3		%	57.4		%	66.0		%	74.8		%	104.0		%	70.4		%
Underwriting expense ratio	30.0		%	29.3		%	28.8		%	29.3		%	29.0		%	29.4		%	29.6		%	29.2		%
Combined ratio	87.1		%	179.0		%	121.1		%	86.7		%	95.0		%	104.2		%	133.6		%	99.6		%
Impact of catastrophes on combined ratio	5.6		%	92.9		%	39.6		%	6.3		%	10.7		%	26.1		%	49.8		%	18.4		%
Impact of prior year reserve development on combined ratio	-6.1		%	-4.7		%	-2.8		%	-4.0		%	-1.1		%	-6.9		%	-5.4		%	-4.0		%
Catastrophe losses, net of reinsurance:
Pre-tax	$	52		$	887		$	385		$	62		$	104		$	256		$	939		$	360
After-tax	$	34		$	576		$	251		$	40		$	68		$	166		$	610		$	234
Policies in force (in thousands)	5,135			5,157			5,167			5,162			5,128			5,061
Change from prior year quarter	2.7		%	1.8		%	1.3		%	0.8		%	-0.1		%	-1.9		%
Change from prior quarter	0.3		%	0.4		%	0.2		%	-0.1		%	-0.7		%	-1.3		%

(1)   Represents Homeowners and Other Lines sold through agents, brokers and other intermediaries, and excludes direct to consumer.

(2)   Billing and policy fees, which are a component of other revenues, are allocated as a reduction of underwriting expenses. Billing and policy fees are as follows:

													YTD		YTD
	1Q		2Q		3Q		4Q		1Q		2Q		2Q		2Q
	2011		2011		2011		2011		2012		2012		2011		2012
Billing and policy fees	$	9	$	9	$	9	$	9	$	10	$	8	$	18	$	18

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

20

The Travelers Companies, Inc.
Selected Statistics - Direct to Consumer (1)
($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Net written premiums
Automobile	$	24		$	24		$	27		$	25		$	29		$	28		$	48		$	57
Homeowners and other	6			9			9			10			9			11			15			20
Total net written premiums	$	30		$	33		$	36		$	35		$	38		$	39		$	63		$	77
Revenues
Premiums	$	25		$	29		$	30		$	34		$	35		$	36		$	54		$	71
Other revenues	1			—			1			—			—			—			1			—
Total revenues	26			29			31			34			35			36			55			71
Claims and expenses
Claims and claim adjustment expenses	23			36			28			27			31			31			59			62
Amortization of deferred acquisition costs	1			—			1			1			1			1			1			2
General and administrative expenses	53			48			54			51			42			42			101			84
Total claims and expenses	77			84			83			79			74			74			161			148
Operating loss before federal income taxes	(51		)	(55		)	(52		)	(45		)	(39		)	(38		)	(106		)	(77		)
Income taxes	(18		)	(19		)	(18		)	(16		)	(14		)	(13		)	(37		)	(27		)
Operating loss	$	(33	)	$	(36	)	$	(34	)	$	(29	)	$	(25	)	$	(25	)	$	(69	)	$	(50	)
Other statistics
Policies in force (in thousands)
Automobile	62			68			73			77			81			82
Homeowners and other	48			53			59			63			67			72
Unfavorable prior year reserve development	$	3		$	2		$	2		$	—		$	2		$	1		$	5		$	3
Catastrophes, net of reinsurance:
Pre-tax	$	—		$	9		$	3		$	1		$	2		$	3		$	9		$	5
After-tax	$	—		$	5		$	2		$	—		$	1		$	2		$	5		$	3

(1)   Represents incremental premiums, other revenues and claims and expenses of Direct to Consumer business activities included in Personal Insurance operating income (loss).

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

21

The Travelers Companies, Inc.
Interest Expense and Other
($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Revenues
Other revenues	$	—		$	—		$	—		$	(1	)	$	(4	)	$	—		$	—		$	(4	)
Claims and expenses
Interest expense	96			97			97			96			96			96			193			192
General and administrative expenses	15			30			5			6			7			5			45			12
Total claims and expenses	111			127			102			102			103			101			238			204
Operating loss before federal income tax benefit	(111		)	(127		)	(102		)	(103		)	(107		)	(101		)	(238		)	(208		)
Income taxes	(43		)	(46		)	(37		)	(38		)	(39		)	(35		)	(89		)	(74		)
Operating loss	$	(68	)	$	(81	)	$	(65	)	$	(65	)	$	(68	)	$	(66	)	$	(149	)	$	(134	)

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

22

The Travelers Companies, Inc.
Consolidated Balance Sheet
(in millions)

	June 30,			December 31,
	2012 (1)			2011
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,313 and $59,994)	$	64,705		$	64,232
Equity securities, available for sale, at fair value (cost $436 and $414)	595			559
Real estate investments	899			865
Short-term securities	3,275			3,594
Other investments	3,470			3,451
Total investments	72,944			72,701
Cash	230			214
Investment income accrued	751			768
Premiums receivable	6,197			5,730
Reinsurance recoverables	10,404			11,155
Ceded unearned premiums	874			828
Deferred acquisition costs	1,839			1,786
Deferred taxes	—			7
Contractholder receivables	4,903			5,186
Goodwill	3,365			3,365
Other intangible assets	405			433
Other assets	2,418			2,402
Total assets	$	104,330		$	104,575
Liabilities
Claims and claim adjustment expense reserves	$	50,793		$	51,392
Unearned premium reserves	11,449			11,102
Contractholder payables	4,903			5,186
Payables for reinsurance premiums	413			389
Deferred taxes	194			—
Debt	6,349			6,605
Other liabilities	5,180			5,424
Total liabilities	79,281			80,098
Shareholders’ equity
Common stock (1,750.0 shares authorized; 386.0 and 392.8 shares issued and outstanding)	20,970			20,732
Retained earnings	20,541			19,579
Accumulated other comprehensive income	2,130			2,005
Treasury stock, at cost (361.4 and 349.0 shares)	(18,592		)	(17,839		)
Total shareholders’ equity	25,049			24,477
Total liabilities and shareholders’ equity	$	104,330		$	104,575

(1)   Preliminary.

Certain prior period amounts have been restated to conform to the 2012 presentation.

23

The Travelers Companies, Inc. Investment Portfolio (at carrying value, $ in millions)

	June 30,		Pre-tax Book		December 31,		Pre-tax Book
	2012		Yield (1)		2011		Yield (1)
Investment portfolio
Taxable fixed maturities (including redeemable preferred stock)	$	26,241	4.16	%	$	25,711	4.33	%
Tax-exempt fixed maturities	38,464		3.96	%	38,521		4.01	%
Total fixed maturities	64,705		4.04	%	64,232		4.14	%
Non-redeemable preferred stocks	128		6.32	%	131		6.30	%
Common stocks	467				428
Total equity securities	595				559
Real estate investments	899				865
Short-term securities	3,275		0.21	%	3,594		0.13	%
Private equities	1,933				1,827
Hedge funds	453				535
Real estate partnerships	615				601
Mortgage loans	35		6.34	%	36		6.28	%
Trading securities	25				25
Other investments	409				427
Total other investments	3,470				3,451
Total investments	$	72,944			$	72,701
Net unrealized investment gains, net of tax, included in shareholders’ equity	$	2,980			$	2,871

(1)  Yields are provided for those investments with an embedded book yield.

24

The Travelers Companies, Inc. Investment Portfolio - Fixed Maturities Data (at carrying value, $ in millions)

	June 30,		December 31,
	2012		2011
Fixed maturities
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	2,157	$	2,497
Obligations of states and political subdivisions:
Pre-refunded	8,305		7,332
All other	30,646		31,690
Total	38,951		39,022
Debt securities issued by foreign governments	2,334		2,318
Mortgage-backed securities - principally obligations of U.S. Government agencies	3,318		3,515
Corporates (including redeemable preferreds)	17,945		16,880
Total fixed maturities	$	64,705	$	64,232

Fixed Maturities

Quality Characteristics (1)

	June 30, 2012
	Amount		% of Total
Quality Ratings
Aaa	$	28,211	43.6	%
Aa	20,655		31.9
A	8,259		12.8
Baa	5,579		8.6
Total investment grade	62,704		96.9
Ba	944		1.5
B	511		0.8
Caa and lower	546		0.8
Total below investment grade	2,001		3.1
Total fixed maturities	$	64,705	100.0	%
Average weighted quality	Aa2, AA
Average duration of fixed maturities and short-term securities, net of securities lending activities and net receivables and payables on investment sales and purchases	3.3

(1)  Rated using external rating agencies or by Travelers when a public rating does not exist.  Below investment grade assets refer to securities rated “Ba” or below.

25

The Travelers Companies, Inc.
Investment Income
($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Gross investment income
Fixed maturities	$	642		$	634		$	633		$	634		$	620		$	611		$	1,276		$	1,231
Short-term securities	4			3			3			2			2			3			7			5
Other	140			129			62			24			128			133			269			261
	786			766			698			660			750			747			1,552			1,497
Investment expenses	7			8			8			8			10			9			15			19
Net investment income, pre-tax	779			758			690			652			740			738			1,537			1,478
Income taxes	157			152			129			111			147			149			309			296
Net investment income, after-tax	$	622		$	606		$	561		$	541		$	593		$	589		$	1,228		$	1,182
Effective tax rate	20.2		%	20.1		%	18.6		%	16.9		%	19.9		%	20.2		%	20.1		%	20.0		%
Average invested assets (1)	$	70,771		$	70,476		$	70,474		$	70,067		$	69,494		$	69,623		$	70,659		$	69,555
Average yield pre-tax (1)	4.4		%	4.3		%	3.9		%	3.7		%	4.3		%	4.2		%	4.4		%	4.2		%
Average yield after-tax	3.5		%	3.4		%	3.2		%	3.1		%	3.4		%	3.4		%	3.5		%	3.4		%

(1)  Excludes net unrealized investment gains, net of tax, and is adjusted for cash, receivables for investment sales, payables on investment purchases and accrued investment income.

26

The Travelers Companies, Inc.
Net Realized and Unrealized Investment Gains
($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Net realized investment gains
Fixed maturities	$	10		$	14		$	—		$	11		$	8		$	17		$	24		$	25
Equity securities	1			26			(4		)	17			3			2			27			5
Other (1)	9			(21		)	6			(14		)	(1		)	(15		)	(12		)	(16		)
Realized investment gains before tax	20			19			2			14			10			4			39			14
Related taxes	7			6			1			5			5			—			13			5
Net realized investment gains	$	13		$	13		$	1		$	9		$	5		$	4		$	26		$	9
Gross investment gains (1)	$	109		$	102		$	132		$	107		$	121		$	78		$	211		$	199
Gross investment losses before impairments (1)	(85		)	(79		)	(118		)	(88		)	(107		)	(70		)	(164		)	(177		)
Net investment gains before impairments	24			23			14			19			14			8			47			22
Other-than-temporary impairment losses:
Total gains	2			5			9			14			—			11			7			11
Non-credit component of impairments recognized in accumulated other comprehensive income	(6		)	(9		)	(21		)	(19		)	(4		)	(15		)	(15		)	(19		)
Other-than-temporary impairment losses	(4		)	(4		)	(12		)	(5		)	(4		)	(4		)	(8		)	(8		)
Net realized investment gains before tax	20			19			2			14			10			4			39			14
Related taxes	7			6			1			5			5			—			13			5
Net realized investment gains	$	13		$	13		$	1		$	9		$	5		$	4		$	26		$	9
	March 31,			June 30,			September 30,			December 31,			March 31,			June 30,
	2011			2011			2011			2011			2012			2012
Net unrealized investment gains, net of tax, by asset type
Fixed maturities	$	2,556		$	3,209		$	3,944		$	4,238		$	4,166		$	4,392
Equity securities & other	193			176			118			161			181			176
Unrealized investment gains before tax	2,749			3,385			4,062			4,399			4,347			4,568
Related taxes	943			1,163			1,398			1,528			1,509			1,588
Balance, end of period	$	1,806		$	2,222		$	2,664		$	2,871		$	2,838		$	2,980

(1)      Includes the following gross investment gains and gross investment losses related to U.S. Treasury futures, which are settled daily:

Gross investment Treasury future gains	$	47	$	32	$	46	$	47	$	47	$	25	$	79	$	72
Gross investment Treasury future losses	$	47	$	53	$	77	$	57	$	41	$	38	$	100	$	79

The Company entered into these arrangements as part of its strategy to shorten the duration of the fixed maturity portfolio. In a changing interest rate environment, the change in the value of the futures contracts can be expected to partially offset changes in the value of the fixed maturity portfolio.

27

The Travelers Companies, Inc. Reinsurance Recoverables ($ in millions)

	June 30,			December 31,
	2012			2011
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses	$	5,522		$	6,255
Allowance for uncollectible reinsurance	(270		)	(345		)
Net reinsurance recoverables	5,252			5,910
Mandatory pools and associations	1,961			2,020
Structured settlements	3,191			3,225
Total reinsurance recoverables	$	10,404		$	11,155

The Company’s top five reinsurer groups, including retroactive reinsurance, by reinsurance recoverable is as follows:

	A.M. Best Rating of Group’s	June 30,		December 31,
Reinsurer	Predominant Reinsurer	2012		2011
Munich Re Group	A+ second highest of 16 ratings	$	588	$	670
Swiss Re Group	A+ second highest of 16 ratings	585		626
Alleghany Group (1)	A third highest of 16 ratings	302		349
XL Capital Group	A third highest of 16 ratings	285		281
Berkshire Hathaway Group	A++ highest of 16 ratings	267		289

The gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses represent the current and estimated future amounts due from reinsurers on known and unasserted claims.  The ceded reserves are estimated in a manner consistent with the underlying direct and assumed reserves.  Although this total comprises recoverables due from nearly one thousand different reinsurance entities, about half is attributable to 10 reinsurer groups.

The net reinsurance recoverables reflect an allowance for uncollectible reinsurance that is based upon the Company’s ongoing review of amounts outstanding, reinsurer solvency, the Company’s experience, current economic conditions, and other relevant factors.  Of the total net recoverables due from reinsurers at June 30, 2012, after deducting mandatory pools and associations and structured settlement balances, $4.2 billion, or 80%, were rated by A.M. Best Company.  Of the total rated by A.M. Best Company, 98% were rated A- or better.  The remaining 20% net recoverables from reinsurers were comprised of the following:  6% related to the Company’s participation in voluntary pools, 11% related to recoverables from captive insurance companies and 3% were balances from other companies not rated by A.M. Best Company.  In addition, $1.6 billion of the net recoverables were collateralized by letters of credit, funds held and trust agreements at June 30, 2012.

The mandatory pools and associations represent various involuntary assigned risk pools that the Company is required to participate in.  These pools principally involve workers’ compensation and automobile insurance, which provide various insurance coverages to insureds that otherwise are unable to purchase coverage in the open market.  The costs of these mandatory pools in most states are usually charged back to the participating members in proportion to voluntary writings of related business in that state.  In the event that a member of the pool becomes insolvent, the remaining members assume an additional pro rata share of the pool’s liabilities.

Included in reinsurance recoverables are certain amounts related to structured settlements, which comprise annuities purchased from various life insurance companies to settle certain personal physical injury claims, of which workers’ compensation claims comprise a significant portion.  In cases where the Company did not receive a release from the claimant, the amount due from the life insurance company related to the structured settlement is included in the Company’s consolidated balance sheet as a liability and as a reinsurance recoverable, as the Company retains the contingent liability to pay the claimant in the event that the life insurance company fails to make the required annuity payments.  The Company would be required to make such payments, to the extent the purchased annuities are not covered by state guaranty associations.

The Company’s top five groups by structured settlement is as follows:

	A.M. Best Rating of Group’s	June 30,		December 31,
Group	Predominant Insurer	2012		2011
Fidelity and Guaranty Life	B++ fifth highest of 16 ratings	$	991	$	1,007
Metlife	A+ second highest of 16 ratings	475		488
Genworth Financial Group	A third highest of 16 ratings	443		449
Symetra Financial Corporation	A third highest of 16 ratings	261		264
John Hancock Group	A+ second highest of 16 ratings	190		189

(1)  In 1Q 2012, Alleghany Corporation and Transatlantic Holdings, Inc. completed their merger.  As a result, Transatlantic became an operating subsidiary of Alleghany.

Certain prior period amounts have been restated to conform to the 2012 presentation.

28

The Travelers Companies, Inc. Net Reserves for Losses and Loss Adjustment Expense ($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Statutory Basis Reserves for Losses and Loss Adjustment Expenses
Business Insurance
Beginning of period	$	30,505		$	30,489		$	31,158		$	31,253		$	31,131		$	31,006		$	30,505		$	31,131
Incurred	1,736			2,540			2,167			1,846			1,663			2,057			4,276			3,720
Paid	(1,759		)	(1,874		)	(2,059		)	(1,968		)	(1,792		)	(1,932		)	(3,633		)	(3,724		)
Foreign exchange and other	7			3			(13		)	—			4			(5		)	10			(1		)
End of period	$	30,489		$	31,158		$	31,253		$	31,131		$	31,006		$	31,126		$	31,158		$	31,126
Financial, Professional & International Insurance
Beginning of period	$	6,068		$	6,267		$	6,297		$	6,076		$	6,019		$	6,045		$	6,068		$	6,019
Incurred	430			375			294			375			341			299			805			640
Paid	(294		)	(357		)	(412		)	(428		)	(361		)	(307		)	(651		)	(668		)
Foreign exchange and other	63			12			(103		)	(4		)	46			(45		)	75			1
End of period	$	6,267		$	6,297		$	6,076		$	6,019		$	6,045		$	5,992		$	6,297		$	5,992
Personal Insurance
Beginning of period	$	3,662		$	3,545		$	4,027		$	3,909		$	3,749		$	3,740		$	3,662		$	3,749
Incurred	1,176			2,185			1,633			1,349			1,314			1,435			3,361			2,749
Paid	(1,293		)	(1,703		)	(1,751		)	(1,509		)	(1,323		)	(1,368		)	(2,996		)	(2,691		)
End of period	$	3,545		$	4,027		$	3,909		$	3,749		$	3,740		$	3,807		$	4,027		$	3,807
Total
Beginning of period	$	40,235		$	40,301		$	41,482		$	41,238		$	40,899		$	40,791		$	40,235		$	40,899
Incurred	3,342			5,100			4,094			3,570			3,318			3,791			8,442			7,109
Paid	(3,346		)	(3,934		)	(4,222		)	(3,905		)	(3,476		)	(3,607		)	(7,280		)	(7,083		)
Foreign exchange and other	70			15			(116		)	(4		)	50			(50		)	85			—
End of period	$	40,301		$	41,482		$	41,238		$	40,899		$	40,791		$	40,925		$	41,482		$	40,925
Prior Year Reserve Development: Unfavorable (Favorable)
Business Insurance
Asbestos	$	—		$	—		$	175		$	—		$	—		$	—		$	—		$	—
Environmental	—			76			—			—			—			90			76			90
All other	(143		)	(103		)	(201		)	(49		)	(248		)	(148		)	(246		)	(396		)
Prior year development excluding accretion of discount	(143		)	(27		)	(26		)	(49		)	(248		)	(58		)	(170		)	(306		)
Accretion of discount	11			12			11			11			12			13			23			25
Total Business Insurance	(132		)	(15		)	(15		)	(38		)	(236		)	(45		)	(147		)	(281		)
Financial, Professional & International Insurance	(39		)	(96		)	(153		)	(72		)	(46		)	(96		)	(135		)	(142		)
Personal Insurance	(55		)	(45		)	(5		)	(5		)	(10		)	(67		)	(100		)	(77		)
Total	$	(226	)	$	(156	)	$	(173	)	$	(115	)	$	(292	)	$	(208	)	$	(382	)	$	(500	)

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

29

The Travelers Companies, Inc.
Asbestos and Environmental Reserves
($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Asbestos reserves
Beginning reserves:
Direct	$	2,941		$	2,876		$	2,808		$	2,921		$	2,780		$	2,724		$	2,941		$	2,780
Ceded	(393		)	(374		)	(370		)	(388		)	(341		)	(340		)	(393		)	(341		)
Net	2,548			2,502			2,438			2,533			2,439			2,384			2,548			2,439
Incurred losses and loss expenses:
Direct	—			—			195			—			—			—			—			—
Ceded	—			—			(20		)	—			—			—			—			—
Losses paid:
Direct	65			68			82			141			56			64			133			120
Ceded	(19		)	(4		)	(2		)	(47		)	(1		)	(5		)	(23		)	(6		)
Ending reserves:
Direct	2,876			2,808			2,921			2,780			2,724			2,660			2,808			2,660
Ceded	(374		)	(370		)	(388		)	(341		)	(340		)	(335		)	(370		)	(335		)
Net	$	2,502		$	2,438		$	2,533		$	2,439		$	2,384		$	2,325		$	2,438		$	2,325
Environmental reserves
Beginning reserves:
Direct	$	354		$	339		$	394		$	373		$	346		$	321		$	354		$	346
Ceded	(3		)	(3		)	(6		)	(6		)	(5		)	(4		)	(3		)	(5		)
Net	351			336			388			367			341			317			351			341
Incurred losses and loss expenses:
Direct	—			80			—			—			—			96			80			96
Ceded	—			(4		)	—			—			—			(6		)	(4		)	(6		)
Losses paid:
Direct	15			25			21			27			25			21			40			46
Ceded	—			(1		)	—			(1		)	(1		)	(1		)	(1		)	(2		)
Ending reserves:
Direct	339			394			373			346			321			396			394			396
Ceded	(3		)	(6		)	(6		)	(5		)	(4		)	(9		)	(6		)	(9		)
Net	$	336		$	388		$	367		$	341		$	317		$	387		$	388		$	387

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

30

The Travelers Companies, Inc.
Capitalization
($ in millions)

	June 30,			December 31,
Debt	2012			2011
Short-term debt
Commercial paper	$	100		$	100
5.375% Senior notes due June 15, 2012	—			250
5.00% Senior notes due March 15, 2013 (1)	500			—
Total short-term debt	600			350
Long-term debt
5.00% Senior notes due March 15, 2013 (1)	—			500
5.50% Senior notes due December 1, 2015 (1)	400			400
6.25% Senior notes due June 20, 2016 (1)	400			400
5.75% Senior notes due December 15, 2017 (1)	450			450
5.80% Senior notes due May 15, 2018 (1)	500			500
5.90% Senior notes due June 2, 2019 (1)	500			500
3.90% Senior notes due November 1, 2020 (1)	500			500
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 (1)	500			500
6.75% Senior notes due June 20, 2036 (1)	400			400
6.25% Senior notes due June 15, 2037 (1)	800			800
5.35% Senior notes due November 1, 2040 (1)	750			750
8.50% Junior subordinated debentures due December 15, 2045	56			56
8.312% Junior subordinated debentures due July 1, 2046	73			73
6.25% Fixed-to-floating rate junior subordinated debentures due March 15, 2067 (1)	107			115
Total long-term debt	5,761			6,269
Unamortized fair value adjustment	53			53
Unamortized debt issuance costs	(65		)	(67		)
	5,749			6,255
Total debt	6,349			6,605
Common equity (excluding net unrealized investment gains, net of tax)	22,069			21,606
Total capital (excluding net unrealized investment gains, net of tax)	$	28,418		$	28,211
Total debt to capital (excluding net unrealized investment gains, net of tax)	22.3		%	23.4		%

(1)  Redeemable anytime with “make-whole” premium.

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

31

The Travelers Companies, Inc. Statutory to GAAP Shareholders’ Equity Reconciliation ($ in millions)

	June 30,			December 31,
	2012 (1)			2011
Statutory surplus	$	19,841		$	19,174
GAAP adjustments
Goodwill and intangible assets	3,595			3,621
Investments	5,076			4,883
Noninsurance companies	(4,420		)	(4,219		)
Deferred acquisition costs	1,839			1,786
Deferred federal income tax	(2,059		)	(1,946		)
Current federal income tax	(9		)	(40		)
Reinsurance recoverables	242			242
Furniture, equipment & software	674			708
Employee benefits	7			(9		)
Agents balances	146			140
Other	117			137
Total GAAP adjustments	5,208			5,303
GAAP shareholders’ equity	$	25,049		$	24,477

(1) Estimated and Preliminary

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

32

The Travelers Companies, Inc. Statement of Cash Flows - Preliminary ($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Cash flows from operating activities
Net income (loss)	$	839		$	(364	)	$	333		$	618		$	806		$	499		$	475		$	1,305
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net realized investment gains	(20		)	(19		)	(2		)	(14		)	(10		)	(4		)	(39		)	(14		)
Depreciation and amortization	208			197			194			203			216			196			405			412
Deferred federal income tax expense (benefit)	153			(16		)	22			(96		)	119			6			137			125
Amortization of deferred acquisition costs	948			970			982			976			971			976			1,918			1,947
Equity in income from other investments	(122		)	(109		)	(48		)	(2		)	(114		)	(114		)	(231		)	(228		)
Premiums receivable	(167		)	(375		)	103			202			(151		)	(317		)	(542		)	(468		)
Reinsurance recoverables	218			7			21			563			495			257			225			752
Deferred acquisition costs	(964		)	(1,009		)	(1,015		)	(893		)	(984		)	(1,016		)	(1,973		)	(2,000		)
Claims and claim adjustment expense reserves	(251		)	1,140			(149		)	(894		)	(504		)	(95		)	889			(599		)
Unearned premium reserves	175			220			217			(424		)	117			229			395			346
Other	(384		)	(374		)	259			112			(147		)	(166		)	(758		)	(313		)
Net cash provided by operating activities	633			268			917			351			814			451			901			1,265
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,849			1,385			2,007			2,163			1,615			2,552			3,234			4,167
Proceeds from sales of investments:
Fixed maturities	490			246			106			319			223			319			736			542
Equity securities	8			39			4			84			15			7			47			22
Real estate investments	—			—			1			—			—			3			—			3
Other investments	161			124			197			112			203			183			285			386
Purchases of investments:
Fixed maturities	(1,824		)	(1,723		)	(2,677		)	(2,480		)	(2,604		)	(2,596		)	(3,547		)	(5,200		)
Equity securities	(51		)	(52		)	(15		)	(13		)	(10		)	(23		)	(103		)	(33		)
Real estate investments	(30		)	(5		)	(6		)	(25		)	(5		)	(53		)	(35		)	(58		)
Other investments	(107		)	(522		)	(129		)	(131		)	(114		)	(107		)	(629		)	(221		)
Net sales (purchases) of short-term securities	(31		)	628			216			1,205			226			141			597			367
Securities transactions in course of settlement	134			79			(17		)	(196		)	248			(171		)	213			77
Other	(69		)	(74		)	(105		)	(123		)	(92		)	(41		)	(143		)	(133		)
Net cash provided by (used in) investing activities	530			125			(418		)	915			(295		)	214			655			(81		)

Certain prior period amounts have been restated to conform to the 2012 presentation.

33

The Travelers Companies, Inc. Statement of Cash Flows - Preliminary (Continued) ($ in millions)

																			YTD			YTD
	1Q			2Q			3Q			4Q			1Q			2Q			2Q			2Q
	2011			2011			2011			2011			2012			2012			2011			2012
Cash flows from financing activities
Payment of debt	—			(8		)	—			—			—			(258		)	(8		)	(258		)
Dividends paid to shareholders	(155		)	(174		)	(171		)	(165		)	(161		)	(180		)	(329		)	(341		)
Issuance of common stock - employee share options	168			77			25			44			77			93			245			170
Treasury stock acquired - share repurchase authorization	(1,104		)	(256		)	(395		)	(1,164		)	(354		)	(353		)	(1,360		)	(707		)
Treasury stock acquired - net employee share-based compensation	(44		)	(2		)	—			—			(52		)	—			(46		)	(52		)
Excess tax benefits from share-based payment arrangements	7			4			6			1			12			7			11			19
Net cash used in financing activities	(1,128		)	(359		)	(535		)	(1,284		)	(478		)	(691		)	(1,487		)	(1,169		)
Effect of exchange rate changes on cash	4			—			(6		)	1			3			(2		)	4			1
Net increase (decrease) in cash	39			34			(42		)	(17		)	44			(28		)	73			16
Cash at beginning of period	200			239			273			231			214			258			200			214
Cash at end of period	$	239		$	273		$	231		$	214		$	258		$	230		$	273		$	230
Income taxes paid (received)	$	112		$	179		$	(14	)	$	(59	)	$	20		$	276		$	291		$	296
Interest paid	$	35		$	156		$	35		$	156		$	35		$	156		$	191		$	191

34

The Travelers Companies, Inc. Financial Supplement - Second Quarter 2012 Glossary of Financial Measures and Description of Reportable Business Segments

The following measures are used by the Company’s management to evaluate financial performance against historical results and establish targets on a consolidated basis.  In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure.

In the opinion of the Company’s management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the Company’s periodic results of operations and how management evaluates the Company’s financial performance.  Internally, the Company’s management uses these measures to evaluate performance against historical results and establish financial targets on a consolidated basis.

Some of these measures exclude net realized gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends.

Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Company’s management.

Operating income (loss) is net income (loss) excluding the after-tax impact of net realized investment gains (losses).  Management uses operating income (loss) to analyze each segment’s performance and as a tool in making business decisions.  Financial statement users also consider operating income when analyzing the results and trends of insurance companies.  Operating earnings (loss) per share is operating income (loss) on a per common share basis.

Average shareholders’ equity is (a) the sum of total shareholders’ equity excluding preferred stock at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two.  Adjusted shareholders’ equity is shareholders’ equity excluding net unrealized investment gains (losses), net of tax, net realized investment gains (losses), net of tax, for the period presented and preferred stock.  Adjusted average shareholders’ equity is average shareholders’ equity excluding net unrealized investment gains (losses), net of tax, for all quarters included in the calculation and, for each quarterly period included in the calculation that quarter’s net realized investment gains (losses), net of tax.

Return on equity is the ratio of annualized net income (loss) less preferred dividends to average shareholders’ equity for the periods presented.  Operating return on equity is the ratio of annualized operating income (loss) less preferred dividends to adjusted average shareholders’ equity for the periods presented.  In the opinion of the Company’s management, these are important indicators of how well management creates value for its shareholders through its operating activities and its capital management.

Underwriting gain (loss) is net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses.  In the opinion of the Company’s management, it is important to measure the profitability of each segment excluding the results of investing activities, which are managed separately from the insurance business.  This measure is used to assess each segment’s business performance and as a tool in making business decisions.

A catastrophe is a severe loss, resulting from natural and man-made events, including risks such as fire, earthquake, windstorm, explosion, terrorism and other similar events.  Each catastrophe has unique characteristics, and catastrophes are not predictable as to timing or amount.  Their effects are included in net and operating income and claims and claim adjustment expense reserves upon occurrence.  A catastrophe may result in the payment of reinsurance reinstatement premiums and assessments from various pools.  In the opinion of the Company’s management, a discussion of the impact of catastrophes is meaningful to users of the financial statements to understand the Company’s periodic earnings and the variability in periodic earnings caused by the unpredictable nature of catastrophes.

Net favorable (unfavorable) prior year loss reserve development is the increase or decrease in incurred claims and claim adjustment expenses as a result of the re-estimation of claims and claim adjustment expense reserves at successive valuation dates for a given group of claims, which may be related to one or more prior years.  In the opinion of the Company’s management, a discussion of loss reserve development is meaningful to users of the financial statements as it allows them to assess the impact between prior and current year development on incurred claims and claim adjustment expenses, net and operating income (loss), and changes in claims and claim adjustment expense reserve levels from period to period.

GAAP combined ratio is the sum of the loss and loss adjustment expense ratio (loss and LAE ratio) and the underwriting expense ratio.  For GAAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses reduced by an allocation of fee income to net earned premiums.  The underwriting expense ratio is the ratio of underwriting expenses incurred reduced by an allocation of fee income, and billing and policy fees to net earned premiums. A GAAP combined ratio under 100% generally indicates an underwriting profit. A GAAP combined ratio over 100% generally indicates an underwriting loss. The GAAP combined ratio is an operating statistic that includes GAAP measures in the numerator and the denominator.

GAAP combined ratio excluding the incremental impact of the direct to consumer initiative is the GAAP combined ratio adjusted to exclude the direct, variable impact of the company’s direct-to-consumer initiative in Personal Insurance.  In the opinion of the company’s management, this is useful in an analysis of the profitability of the company’s ongoing agency business.

Gross written premiums reflect the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the insurance contract.  Net written premiums reflect gross written premiums less premiums ceded to reinsurers.

Book value per share is total common shareholders’ equity divided by the number of common shares outstanding.  Adjusted book value per share is total common shareholders’ equity excluding the after-tax impact of net unrealized investment gains and losses, divided by the number of common shares outstanding. In the opinion of the Company’s management, adjusted book value is useful in an analysis of a property casualty company’s book value as it removes the effect of changing prices on invested assets, (i.e., net unrealized investment gains (losses), net of tax) which do not have an equivalent impact on unpaid claims and claim adjustment expense reserves.

Total capital is the sum of total shareholders’ equity and debt.  Debt-to-capital ratio excluding net unrealized gain (loss) on investments is the ratio of debt to total capital excluding the after-tax impact of net unrealized investment gains and losses.  In the opinion of the company’s management, the debt to capital ratio is useful in an analysis of the company’s financial leverage.

Statutory surplus represents the excess of an insurance company’s assets over its liabilities in accordance with the statutory accounting practices required by state laws and regulations.

Travelers has organized its businesses into the following reportable business segments:

Business Insurance - The Business Insurance segment offers a broad array of property and casualty insurance and insurance-related services to its clients primarily in the United States.  Business Insurance is organized into the following six groups, which collectively comprise Business Insurance Core operations: Select Accounts; Commercial Accounts; National Accounts; Industry-Focused Underwriting including Construction, Technology, Public Sector Services, Oil & Gas, and Agribusiness; Target Risk Underwriting including National Property, Inland Marine, Ocean Marine, Excess Casualty, Boiler & Machinery, and Global Partner Services; and Specialized Distribution including Northland and National Programs.  Business Insurance also includes the Special Liability Group (which manages the Company’s asbestos and environmental liabilities) and the assumed reinsurance, and certain international and other runoff operations, which collectively are referred to as Business Insurance Other.

Financial, Professional & International Insurance - The Financial, Professional & International Insurance segment includes surety and financial liability coverages, which primarily use credit-based underwriting processes, as well as property and casualty products that are primarily marketed on a domestic basis in the United Kingdom, Canada and the Republic of Ireland, and on an international basis through Lloyd’s.  The segment includes Bond & Financial Products as well as International.

Personal Insurance - The Personal Insurance segment writes a broad range of property and casualty insurance covering individuals’ personal risks.  The primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.

35