Consolidating Financial Statements (Unaudited)

6 Months Ended

Jun. 30, 2012

Consolidating Financial Statements of The Travelers Companies, Inc. and Subsidiaries (Unaudited) disclosure

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

13.CONSOLIDATING FINANCIAL STATEMENTS OF THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

The following consolidating financial statements of the Company have been prepared pursuant to Rule 3-10 of Regulation S-X. These consolidating financial statements have been prepared from the Company’s financial information on the same basis of accounting as the consolidated financial statements. The Travelers Companies, Inc. has fully and unconditionally guaranteed certain debt obligations of TPC, its wholly-owned subsidiary, which totaled $1.20 billion at June 30, 2012.

Prior to the merger of TPC and SPC in 2004, TPC fully and unconditionally guaranteed the payment of all principal, premiums, if any, and interest on certain debt obligations of its wholly-owned subsidiary, Travelers Insurance Group Holdings, Inc. (TIGHI). The Travelers Companies, Inc. has fully and unconditionally guaranteed such guarantee obligations of TPC. TPC is deemed to have no assets or operations independent of TIGHI.  Consolidating financial information for TIGHI has not been presented herein because such financial information would be substantially the same as the financial information provided for TPC.

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended June 30, 2012

(in millions)	TPC		OtherSubsidiaries		Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	3,745	$	1,784	$	—		$	—		$	5,529
Net investment income	507		229		2			—			738
Fee income	58		1		—			—			59
Net realized investment gains	3		1		—			—			4
Other revenues	22		7		—			—			29
Total revenues	4,335		2,022		2			—			6,359
Claims and expenses
Claims and claim adjustment expenses	2,549		1,237		—			—			3,786
Amortization of deferred acquisition costs	647		329		—			—			976
General and administrative expenses	608		284		1			—			893
Interest expense	18		—		78			—			96
Total claims and expenses	3,822		1,850		79			—			5,751
Income (loss) before income taxes	513		172		(77		)	—			608
Income tax expense (benefit)	119		27		(37		)	—			109
Equity in net income of subsidiaries	—		—		539			(539		)	—
Net income	$	394	$	145	$	499		$	(539	)	$	499

(in millions)	TPC			OtherSubsidiaries			Travelers (1)		Eliminations		Consolidated
Net Realized Investment Gains
Other-than-temporary impairment losses:
Total gains (losses)	$	(1	)	$	12		$	—	$	—	$	11
Non-credit component of impairments recognized in accumulated other comprehensive income	(2		)	(13		)	—		—		(15		)
Other-than-temporary impairment losses	(3		)	(1		)	—		—		(4		)
Other net realized investment gains	6			2			—		—		8
Net realized investment gains	$	3		$	1		$	—	$	—	$	4

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

CONSOLIDATING STATEMENT OF INCOME (LOSS) (Unaudited)

For the three months ended June 30, 2011

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

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

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the six months ended June 30, 2012

(in millions)	TPC		OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	7,488	$	3,564		$	—		$	—		$	11,052
Net investment income	1,001		473			4			—			1,478
Fee income	140		1			—			—			141
Net realized investment gains (losses)	15		(1		)	—			—			14
Other revenues	49		17			—			—			66
Total revenues	8,693		4,054			4			—			12,751
Claims and expenses
Claims and claim adjustment expenses	4,821		2,329			—			—			7,150
Amortization of deferred acquisition costs	1,293		654			—			—			1,947
General and administrative expenses	1,207		566			4			—			1,777
Interest expense	36		—			156			—			192
Total claims and expenses	7,357		3,549			160			—			11,066
Income (loss) before income taxes	1,336		505			(156		)	—			1,685
Income tax expense (benefit)	324		111			(55		)	—			380
Equity in net income of subsidiaries	—		—			1,406			(1,406		)	—
Net income	$	1,012	$	394		$	1,305		$	(1,406	)	$	1,305

(in millions)	TPC			OtherSubsidiaries			Travelers (1)		Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains	$	—		$	11		$	—	$	—	$	11
Non-credit component of impairments recognized in accumulated other comprehensive income	(6		)	(13		)	—		—		(19		)
Other-than-temporary impairment losses	(6		)	(2		)	—		—		(8		)
Other net realized investment gains (losses)	21			1			—		—		22
Net realized investment gains (losses)	$	15		$	(1	)	$	—	$	—	$	14

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the six months ended June 30, 2011

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

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

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended June 30, 2012

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Net income	$	394		$	145		$	499		$	(539	)	$	499
Other comprehensive income:
Change in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	167			52			216			(219		)	216
Having credit losses recognized in the consolidated statement of income	5			—			5			(5		)	5
Net changes in benefit plan assets and obligations	—			1			22			(1		)	22
Net changes in unrealized foreign currency translation and other changes	(54		)	(32		)	(86		)	86			(86		)
Other comprehensive income before income taxes	118			21			157			(139		)	157
Income tax expense	43			16			66			(59		)	66
Other comprehensive income, net of taxes	75			5			91			(80		)	91
Comprehensive income	$	469		$	150		$	590		$	(619	)	$	590

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended June 30, 2011

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Net loss	$	(144	)	$	(146	)	$	(364	)	$	290		$	(364	)
Other comprehensive income:
Change in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income (loss)	441			204			645			(645		)	645
Having credit losses recognized in the consolidated statement of income (loss)	(8		)	(2		)	(10		)	10			(10		)
Net changes in benefit plan assets and obligations	—			—			19			—			19
Net changes in unrealized foreign currency translation and other changes	13			4			16			(17		)	16
Other comprehensive income before income taxes	446			206			670			(652		)	670
Income tax expense	154			71			231			(225		)	231
Other comprehensive income, net of taxes	292			135			439			(427		)	439
Comprehensive income (loss)	$	148		$	(11	)	$	75		$	(137	)	$	75

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the six months ended June 30, 2012

(in millions)	TPC			OtherSubsidiaries		Travelers (1)			Eliminations			Consolidated
Net income	$	1,012		$	394	$	1,305		$	(1,406	)	$	1,305
Other comprehensive income:
Change in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	113			20		139			(133		)	139
Having credit losses recognized in the consolidated statement of income	21			9		30			(30		)	30
Net changes in benefit plan assets and obligations	—			—		42			—			42
Net changes in unrealized foreign currency translation and other changes	(33		)	11		(22		)	22			(22		)
Other comprehensive income before income taxes	101			40		189			(141		)	189
Income tax expense	36			11		64			(47		)	64
Other comprehensive income, net of taxes	65			29		125			(94		)	125
Comprehensive income	$	1,077		$	423	$	1,430		$	(1,500	)	$	1,430

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the six months ended June 30, 2011

(in millions)	TPC		OtherSubsidiaries		Travelers (1)		Eliminations			Consolidated
Net income	$	456	$	43	$	475	$	(499	)	$	475
Other comprehensive income:
Change in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income (loss)	371		165		539		(536		)	539
Having credit losses recognized in the consolidated statement of income (loss)	2		16		18		(18		)	18
Net changes in benefit plan assets and obligations	—		—		37		—			37
Net changes in unrealized foreign currency translation and other changes	35		51		86		(86		)	86
Other comprehensive income before income taxes	408		232		680		(640		)	680
Income tax expense	140		70		224		(210		)	224
Other comprehensive income, net of taxes	268		162		456		(430		)	456
Comprehensive income	$	724	$	205	$	931	$	(929	)	$	931

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

CONSOLIDATING BALANCE SHEET (Unaudited)

At June 30, 2012

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,313)	$	44,014	$	20,657	$	34		$	—		$	64,705
Equity securities, available for sale, at fair value (cost $436)	147		348		100			—			595
Real estate investments	33		866		—			—			899
Short-term securities	1,095		269		1,911			—			3,275
Other investments	2,395		1,074		1			—			3,470
Total investments	47,684		23,214		2,046			—			72,944
Cash	110		116		4			—			230
Investment income accrued	509		242		—			—			751
Premiums receivable	4,130		2,067		—			—			6,197
Reinsurance recoverables	6,825		3,579		—			—			10,404
Ceded unearned premiums	670		204		—			—			874
Deferred acquisition costs	1,586		253		—			—			1,839
Contractholder receivables	3,563		1,340		—			—			4,903
Goodwill	2,411		954		—			—			3,365
Other intangible assets	283		122		—			—			405
Investment in subsidiaries	—		—		28,353			(28,353		)	—
Other assets	2,064		22		332			—			2,418
Total assets	$	69,835	$	32,113	$	30,735		$	(28,353	)	$	104,330
Liabilities
Claims and claim adjustment expense reserves	$	33,415	$	17,378	$	—		$	—		$	50,793
Unearned premium reserves	7,835		3,614		—			—			11,449
Contractholder payables	3,563		1,340		—			—			4,903
Payables for reinsurance premiums	198		215		—			—			413
Deferred taxes	229		93		(128		)	—			194
Debt	1,191		—		5,158			—			6,349
Other liabilities	3,869		645		666			—			5,180
Total liabilities	50,300		23,285		5,696			—			79,281
Shareholders’ equity
Common stock (1,750.0 shares authorized; 386.0 shares issued and outstanding)	—		390		20,970			(390		)	20,970
Additional paid-in capital	11,135		6,501		—			(17,636		)	—
Retained earnings	6,408		1,067		20,531			(7,465		)	20,541
Accumulated other comprehensive income	1,992		870		2,130			(2,862		)	2,130
Treasury stock, at cost (361.4 shares)	—		—		(18,592		)	—			(18,592		)
Total shareholders’ equity	19,535		8,828		25,039			(28,353		)	25,049
Total liabilities and shareholders’ equity	$	69,835	$	32,113	$	30,735		$	(28,353	)	$	104,330

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

CONSOLIDATING BALANCE SHEET (Unaudited)

At December 31, 2011

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $59,994)	$	43,438		$	20,761		$	33		$	—		$	64,232
Equity securities, available for sale, at fair value (cost $414)	146			319			94			—			559
Real estate investments	33			832			—			—			865
Short-term securities	879			376			2,339			—			3,594
Other investments	2,446			1,004			1			—			3,451
Total investments	46,942			23,292			2,467			—			72,701
Cash	114			98			2			—			214
Investment income accrued	517			251			—			—			768
Premiums receivable	3,865			1,865			—			—			5,730
Reinsurance recoverables	7,372			3,783			—			—			11,155
Ceded unearned premiums	656			172			—			—			828
Deferred acquisition costs	1,536			250			—			—			1,786
Deferred taxes	(82		)	(47		)	136			—			7
Contractholder receivables	3,891			1,295			—			—			5,186
Goodwill	2,411			954			—			—			3,365
Other intangible assets	297			136			—			—			433
Investment in subsidiaries	—			—			27,565			(27,565		)	—
Other assets	1,983			52			367			—			2,402
Total assets	$	69,502		$	32,101		$	30,537		$	(27,565	)	$	104,575
Liabilities
Claims and claim adjustment expense reserves	$	33,727		$	17,665		$	—		$	—		$	51,392
Unearned premium reserves	7,644			3,458			—			—			11,102
Contractholder payables	3,891			1,295			—			—			5,186
Payables for reinsurance premiums	178			211			—			—			389
Debt	1,190			—			5,415			—			6,605
Other liabilities	3,910			859			655			—			5,424
Total liabilities	50,540			23,488			6,070			—			80,098
Shareholders’ equity
Common stock (1,750.0 shares authorized; 392.8 shares issued and outstanding)	—			390			20,732			(390		)	20,732
Additional paid-in capital	11,135			6,501			—			(17,636		)	—
Retained earnings	5,900			882			19,569			(6,772		)	19,579
Accumulated other comprehensive income	1,927			840			2,005			(2,767		)	2,005
Treasury stock, at cost (349.0 shares)	—			—			(17,839		)	—			(17,839		)
Total shareholders’ equity	18,962			8,613			24,467			(27,565		)	24,477
Total liabilities and shareholders’ equity	$	69,502		$	32,101		$	30,537		$	(27,565	)	$	104,575

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

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the six months ended June 30, 2012

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	1,012		$	394		$	1,305		$	(1,406	)	$	1,305
Net adjustments to reconcile net income to net cash provided by operating activities	109			(283		)	(560		)	694			(40		)
Net cash provided by operating activities	1,121			111			745			(712		)	1,265
Cash flows from investing activities
Proceeds from maturities of fixed maturities	2,817			1,350			—			—			4,167
Proceeds from sales of investments:
Fixed maturities	368			173			1			—			542
Equity securities	15			7			—			—			22
Real estate	—			3			—			—			3
Other investments	297			89			—			—			386
Purchases of investments:
Fixed maturities	(3,744		)	(1,454		)	(2		)	—			(5,200		)
Equity securities	(2		)	(30		)	(1		)	—			(33		)
Real estate	—			(58		)	—			—			(58		)
Other investments	(139		)	(82		)	—			—			(221		)
Net sales (purchases) of short-term securities	(176		)	115			428			—			367
Securities transactions in course of settlement	87			(10		)	—			—			77
Other	(144		)	11			—			—			(133		)
Net cash provided by (used in) investing activities	(621		)	114			426			—			(81		)
Cash flows from financing activities
Payment of debt	—			—			(258		)	—			(258		)
Dividends paid to shareholders	—			—			(341		)	—			(341		)
Issuance of common stock — employee share options	—			—			170			—			170
Treasury shares acquired — share repurchase authorization	—			—			(707		)	—			(707		)
Treasury shares acquired — net employee share-based compensation	—			—			(52		)	—			(52		)
Excess tax benefits from share-based payment arrangements	—			—			19			—			19
Dividends paid to parent company	(504		)	(208		)	—			712			—
Net cash used in financing activities	(504		)	(208		)	(1,169		)	712			(1,169		)
Effect of exchange rate changes on cash	—			1			—			—			1
Net increase (decrease) in cash	(4		)	18			2			—			16
Cash at beginning of year	114			98			2			—			214
Cash at end of period	$	110		$	116		$	4		$	—		$	230
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	286		$	113		$	(103	)	$	—		$	296
Interest paid	$	36		$	—		$	155		$	—		$	191

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

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the six months ended June 30, 2011

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

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