Consolidating Financial Statements (Unaudited)

9 Months Ended

Sep. 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 September 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 September 30, 2012

(in millions)	TPC		OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	3,845	$	1,821		$	—		$	—		$	5,666
Net investment income	443		277			2			—			722
Fee income	92		—			—			—			92
Net realized investment gains (losses)	2		(4		)	—			—			(2		)
Other revenues	21		13			—			—			34
Total revenues	4,403		2,107			2			—			6,512
Claims and expenses
Claims and claim adjustment expenses	2,292		1,067			—			—			3,359
Amortization of deferred acquisition costs	660		326			—			—			986
General and administrative expenses	622		284			(2		)	—			904
Interest expense	19		—			74			—			93
Total claims and expenses	3,593		1,677			72			—			5,342
Income (loss) before income taxes	810		430			(70		)	—			1,170
Income tax expense (benefit)	212		120			(26		)	—			306
Equity in net income of subsidiaries	—		—			908			(908		)	—
Net income	$	598	$	310		$	864		$	(908	)	$	864

(in millions)	TPC			OtherSubsidiaries			Travelers (1)		Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains	$	15		$	2		$	—	$	—	$	17
Non-credit component of impairments recognized in accumulated other comprehensive income	(17		)	(3		)	—		—		(20		)
Other-than-temporary impairment losses	(2		)	(1		)	—		—		(3		)
Other net realized investment gains (losses)	4			(3		)	—		—		1
Net realized investment gains (losses)	$	2		$	(4	)	$	—	$	—	$	(2	)

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended September 30, 2011

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

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

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the nine months ended September 30, 2012

(in millions)	TPC		OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Revenues
Premiums	$	11,333	$	5,385		$	—		$	—		$	16,718
Net investment income	1,444		750			6			—			2,200
Fee income	232		1			—			—			233
Net realized investment gains (losses)	17		(5		)	—			—			12
Other revenues	70		30			—			—			100
Total revenues	13,096		6,161			6			—			19,263
Claims and expenses
Claims and claim adjustment expenses	7,113		3,396			—			—			10,509
Amortization of deferred acquisition costs	1,953		980			—			—			2,933
General and administrative expenses	1,829		850			2			—			2,681
Interest expense	55		—			230			—			285
Total claims and expenses	10,950		5,226			232			—			16,408
Income (loss) before income taxes	2,146		935			(226		)	—			2,855
Income tax expense (benefit)	536		231			(81		)	—			686
Equity in net income of subsidiaries	—		—			2,314			(2,314		)	—
Net income	$	1,610	$	704		$	2,169		$	(2,314	)	$	2,169

(in millions)	TPC			OtherSubsidiaries			Travelers (1)		Eliminations		Consolidated
Net Realized Investment Gains (Losses)
Other-than-temporary impairment losses:
Total gains	$	15		$	13		$	—	$	—	$	28
Non-credit component of impairments recognized in accumulated other comprehensive income	(23		)	(16		)	—		—		(39		)
Other-than-temporary impairment losses	(8		)	(3		)	—		—		(11		)
Other net realized investment gains (losses)	25			(2		)	—		—		23
Net realized investment gains (losses)	$	17		$	(5	)	$	—	$	—	$	12

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the nine months ended September 30, 2011

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

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

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended September 30, 2012

(in millions)	TPC		OtherSubsidiaries		Travelers (1)		Eliminations			Consolidated
Net income	$	598	$	310	$	864	$	(908	)	$	864
Other comprehensive income:
Change in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	338		127		470		(465		)	470
Having credit losses recognized in the consolidated statement of income	28		13		41		(41		)	41
Net changes in benefit plan assets and obligations	1		—		22		(1		)	22
Net changes in unrealized foreign currency translation and other changes	13		52		65		(65		)	65
Other comprehensive income before income taxes	380		192		598		(572		)	598
Income tax expense	129		54		192		(183		)	192
Other comprehensive income, net of taxes	251		138		406		(389		)	406
Comprehensive income	$	849	$	448	$	1,270	$	(1,297	)	$	1,270

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended September 30, 2011

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Net income	$	254		$	130		$	333		$	(384	)	$	333
Other comprehensive income:
Change in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	500			198			687			(698		)	687
Having credit losses recognized in the consolidated statement of income	(9		)	—			(9		)	9			(9		)
Net changes in benefit plan assets and obligations	—			1			20			(1		)	20
Net changes in unrealized foreign currency translation and other changes	(110		)	(70		)	(180		)	180			(180		)
Other comprehensive income before income taxes	381			129			518			(510		)	518
Income tax expense	140			54			197			(194		)	197
Other comprehensive income, net of taxes	241			75			321			(316		)	321
Comprehensive income	$	495		$	205		$	654		$	(700	)	$	654

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the nine months ended September 30, 2012

(in millions)	TPC			OtherSubsidiaries		Travelers (1)		Eliminations			Consolidated
Net income	$	1,610		$	704	$	2,169	$	(2,314	)	$	2,169
Other comprehensive income:
Change in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	451			147		609		(598		)	609
Having credit losses recognized in the consolidated statement of income	49			22		71		(71		)	71
Net changes in benefit plan assets and obligations	1			—		64		(1		)	64
Net changes in unrealized foreign currency translation and other changes	(20		)	63		43		(43		)	43
Other comprehensive income before income taxes	481			232		787		(713		)	787
Income tax expense	165			65		256		(230		)	256
Other comprehensive income, net of taxes	316			167		531		(483		)	531
Comprehensive income	$	1,926		$	871	$	2,700	$	(2,797	)	$	2,700

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the nine months ended September 30, 2011

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Net income	$	710		$	173		$	808		$	(883	)	$	808
Other comprehensive income:
Change in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	871			363			1,226			(1,234		)	1,226
Having credit losses recognized in the consolidated statement of income	(7		)	16			9			(9		)	9
Net changes in benefit plan assets and obligations	—			1			57			(1		)	57
Net changes in unrealized foreign currency translation and other changes	(75		)	(19		)	(94		)	94			(94		)
Other comprehensive income before income taxes	789			361			1,198			(1,150		)	1,198
Income tax expense	280			124			421			(404		)	421
Other comprehensive income, net of taxes	509			237			777			(746		)	777
Comprehensive income	$	1,219		$	410		$	1,585		$	(1,629	)	$	1,585

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

CONSOLIDATING BALANCE SHEET (Unaudited)

At September 30, 2012

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $61,003)	$	44,883	$	20,951	$	39		$	—		$	65,873
Equity securities, available for sale, at fair value (cost $439)	152		372		105			—			629
Real estate investments	33		860		—			—			893
Short-term securities	1,185		481		1,975			—			3,641
Other investments	2,374		1,079		1			—			3,454
Total investments	48,627		23,743		2,120			—			74,490
Cash	118		101		1			—			220
Investment income accrued	481		223		1			—			705
Premiums receivable	4,074		1,966		—			—			6,040
Reinsurance recoverables	6,695		3,545		—			—			10,240
Ceded unearned premiums	809		178		—			—			987
Deferred acquisition costs	1,618		242		—			—			1,860
Contractholder receivables	3,573		1,313		—			—			4,886
Goodwill	2,411		954		—			—			3,365
Other intangible assets	275		118		—			—			393
Investment in subsidiaries	—		—		29,150			(29,150		)	—
Other assets	1,886		11		362			—			2,259
Total assets	$	70,567	$	32,394	$	31,634		$	(29,150	)	$	105,445
Liabilities
Claims and claim adjustment expense reserves	$	33,063	$	17,195	$	—		$	—		$	50,258
Unearned premium reserves	8,060		3,564		—			—			11,624
Contractholder payables	3,573		1,313		—			—			4,886
Payables for reinsurance premiums	244		235		—			—			479
Deferred taxes	427		157		(97		)	—			487
Debt	1,191		—		5,159			—			6,350
Other liabilities	3,975		804		677			—			5,456
Total liabilities	50,533		23,268		5,739			—			79,540
Shareholders’ equity
Common stock (1,750.0 shares authorized; 382.0 shares issued and outstanding)	—		390		21,085			(390		)	21,085
Additional paid-in capital	11,135		6,501		—			(17,636		)	—
Retained earnings	6,656		1,228		21,216			(7,874		)	21,226
Accumulated other comprehensive income	2,243		1,007		2,536			(3,250		)	2,536
Treasury stock, at cost (366.8 shares)	—		—		(18,942		)	—			(18,942		)
Total shareholders’ equity	20,034		9,126		25,895			(29,150		)	25,905
Total liabilities and shareholders’ equity	$	70,567	$	32,394	$	31,634		$	(29,150	)	$	105,445

(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 nine months ended September 30, 2012

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	1,610		$	704		$	2,169		$	(2,314	)	$	2,169
Net adjustments to reconcile net income to net cash provided by operating activities	552			(136		)	(921		)	1,102			597
Net cash provided by operating activities	2,162			568			1,248			(1,212		)	2,766
Cash flows from investing activities
Proceeds from maturities of fixed maturities	4,123			1,731			1			—			5,855
Proceeds from sales of investments:
Fixed maturities	494			228			2			—			724
Equity securities	18			13			—			—			31
Real estate investments	—			3			—			—			3
Other investments	389			127			—			—			516
Purchases of investments:
Fixed maturities	(5,645		)	(2,023		)	(9		)	—			(7,677		)
Equity securities	(1		)	(37		)	(1		)	—			(39		)
Real estate investments	—			(62		)	—			—			(62		)
Other investments	(187		)	(105		)	—			—			(292		)
Net sales (purchases) of short-term securities	(306		)	(99		)	364			—			(41		)
Securities transactions in course of settlement	46			7			—			—			53
Other	(235		)	6			—			—			(229		)
Net cash provided by (used in) investing activities	(1,304		)	(211		)	357			—			(1,158		)
Cash flows from financing activities
Payment of debt	—			—			(258		)	—			(258		)
Dividends paid to shareholders	—			—			(519		)	—			(519		)
Issuance of common stock — employee share options	—			—			247			—			247
Treasury shares acquired — share repurchase authorization	—			—			(1,056		)	—			(1,056		)
Treasury shares acquired — net employee share-based compensation	—			—			(52		)	—			(52		)
Excess tax benefits from share-based payment arrangements	—			—			32			—			32
Dividends paid to parent company	(854		)	(358		)	—			1,212			—
Net cash used in financing activities	(854		)	(358		)	(1,606		)	1,212			(1,606		)
Effect of exchange rate changes on cash	—			4			—			—			4
Net increase (decrease) in cash	4			3			(1		)	—			6
Cash at beginning of year	114			98			2			—			214
Cash at end of period	$	118		$	101		$	1		$	—		$	220
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	343		$	110		$	(143	)	$	—		$	310
Interest paid	$	65		$	—		$	161		$	—		$	226

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

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the nine months ended September 30, 2011

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

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