10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

or

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 001-10898

The Travelers Companies, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	41-0518860
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

485 Lexington Avenue

New York, NY 10017

(Address of principal executive offices) (Zip Code)

(917) 778-6000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer  x	Accelerated filer  o
Non-accelerated filer o	Smaller reporting company  o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o    No x

The number of shares of the Registrant’s Common Stock, without par value, outstanding at July 19, 2013 was 373,469,340.

The Travelers Companies, Inc.

Quarterly Report on Form 10-Q

For Quarterly Period Ended June 30, 2013

TABLE OF CONTENTS

		Page
	Part I – Financial Information
Item 1.	Financial Statements:
	Consolidated Statement of Income (Unaudited) — Three Months and Six Months Ended June 30, 2013 and 2012	3
	Consolidated Statement of Comprehensive Income (Loss) (Unaudited) — Three Months and Six Months Ended June 30, 2013 and 2012	4
	Consolidated Balance Sheet — June 30, 2013 (Unaudited) and December 31, 2012	5
	Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) — Six Months Ended June 30, 2013 and 2012	6
	Consolidated Statement of Cash Flows (Unaudited) — Six Months Ended June 30, 2013 and 2012	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	80
Item 4.	Controls and Procedures	80
	Part II – Other Information
Item 1.	Legal Proceedings	80
Item 1A.	Risk Factors	80
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	81
Item 5.	Other Information	81
Item 6.	Exhibits	82
	SIGNATURES	82
	EXHIBIT INDEX	83

2

PART 1 — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

(in millions, except per share amounts)

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Revenues
Premiums	$	5,603	$	5,529	$	11,120	$	11,052
Net investment income	687		738		1,357		1,478
Fee income	82		59		179		141
Net realized investment gains (1)	167		4		177		14
Other revenues	135		29		169		66
Total revenues	6,674		6,359		13,002		12,751
Claims and expenses
Claims and claim adjustment expenses	3,530		3,786		6,683		7,150
Amortization of deferred acquisition costs	950		976		1,898		1,947
General and administrative expenses	931		893		1,846		1,777
Interest expense	86		96		178		192
Total claims and expenses	5,497		5,751		10,605		11,066
Income before income taxes	1,177		608		2,397		1,685
Income tax expense	252		109		576		380
Net income	$	925	$	499	$	1,821	$	1,305
Net income per share
Basic	$	2.44	$	1.27	$	4.80	$	3.32
Diluted	$	2.41	$	1.26	$	4.75	$	3.29
Weighted average number of common shares outstanding
Basic	375.9		388.0		376.8		390.0
Diluted	379.9		391.6		380.8		393.5

(1)Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $11 million for the three months ended June 30, 2013 and 2012, respectively, and $(1) million and $11 million for the six months ended June 30, 2013 and 2012, respectively. Of total OTTI, credit losses of $(2) million and $(4) million for the three months ended June 30, 2013 and 2012, respectively, and $(7) million and $(8) million for the six months ended June 30, 2013 and 2012, respectively, were recognized in net realized investment gains. In addition, unrealized gains from other changes in total OTTI of $1 million and $15 million for the three months ended June 30, 2013 and 2012, respectively, and $6 million and $19 million for the six months ended June 30, 2013 and 2012, respectively, were recognized in other comprehensive income as part of change in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income.

The accompanying notes are an integral part of the consolidated financial statements.

3

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Net income	$	925		$	499		$	1,821		$	1,305
Other comprehensive income (loss):
Change in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(1,790		)	216			(2,166		)	139
Having credit losses recognized in the consolidated statement of income	(5		)	5			4			30
Net changes in benefit plan assets and obligations	26			22			54			42
Net changes in unrealized foreign currency translation	(73		)	(86		)	(169		)	(22		)
Other comprehensive income (loss) before income taxes	(1,842		)	157			(2,277		)	189
Income tax expense (benefit)	(636		)	66			(761		)	64
Other comprehensive income (loss), net of taxes	(1,206		)	91			(1,516		)	125
Comprehensive income (loss)	$	(281	)	$	590		$	305		$	1,430

The accompanying notes are an integral part of the consolidated financial statements.

4

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)

	June 30,2013			December 31, 2012
	(Unaudited)
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,494 and $60,829)	$	62,843		$	65,393
Equity securities, available for sale, at fair value (cost $463 and $462)	701			645
Real estate investments	921			883
Short-term securities	3,394			3,483
Other investments	3,408			3,434
Total investments	71,267			73,838
Cash	308			330
Investment income accrued	734			752
Premiums receivable	6,268			5,872
Reinsurance recoverables	9,887			10,712
Ceded unearned premiums	913			856
Deferred acquisition costs	1,802			1,792
Deferred taxes	257			—
Contractholder receivables	4,448			4,806
Goodwill	3,365			3,365
Other intangible assets	358			381
Other assets	2,293			2,234
Total assets	$	101,900		$	104,938
Liabilities
Claims and claim adjustment expense reserves	$	49,620		$	50,922
Unearned premium reserves	11,557			11,241
Contractholder payables	4,448			4,806
Payables for reinsurance premiums	395			346
Deferred taxes	—			338
Debt	5,852			6,350
Other liabilities	5,138			5,530
Total liabilities	77,010			79,533
Shareholders’ equity
Common stock (1,750.0 shares authorized; 373.5 and 377.4 shares issued and outstanding)	21,367			21,161
Retained earnings	22,806			21,352
Accumulated other comprehensive income	720			2,236
Treasury stock, at cost (380.3 and 372.3 shares)	(20,003		)	(19,344		)
Total shareholders’ equity	24,890			25,405
Total liabilities and shareholders’ equity	$	101,900		$	104,938

The accompanying notes are an integral part of the consolidated financial statements.

5

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(in millions)

For the six months ended June 30,	2013			2012
Common stock
Balance, beginning of year	$	21,161		$	20,732
Employee share-based compensation	106			149
Compensation amortization under share-based plans and other changes	100			89
Balance, end of period	21,367			20,970
Retained earnings
Balance, beginning of year	21,352			19,579
Net income	1,821			1,305
Dividends	(367		)	(343		)
Balance, end of period	22,806			20,541
Accumulated other comprehensive income, net of tax
Balance, beginning of year	2,236			2,005
Other comprehensive income (loss)	(1,516		)	125
Balance, end of period	720			2,130
Treasury stock (at cost)
Balance, beginning of year	(19,344		)	(17,839		)
Treasury stock acquired — share repurchase authorization	(600		)	(700		)
Net shares acquired related to employee share-based compensation plans	(59		)	(53		)
Balance, end of period	(20,003		)	(18,592		)
Total shareholders’ equity	$	24,890		$	25,049
Common shares outstanding
Balance, beginning of year	377.4			392.8
Treasury stock acquired — share repurchase authorization	(7.3		)	(11.6		)
Net shares issued under employee share-based compensation plans	3.4			4.8
Balance, end of period	373.5			386.0

The accompanying notes are an integral part of the consolidated financial statements.

6

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(in millions)

For the six months ended June 30,	2013			2012
Cash flows from operating activities
Net income	$	1,821		$	1,305
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment gains	(177		)	(14		)
Depreciation and amortization	435			412
Deferred federal income tax expense	151			125
Amortization of deferred acquisition costs	1,898			1,947
Equity in income from other investments	(175		)	(228		)
Premiums receivable	(403		)	(468		)
Reinsurance recoverables	747			752
Deferred acquisition costs	(1,912		)	(2,000		)
Claims and claim adjustment expense reserves	(1,128		)	(599		)
Unearned premium reserves	345			346
Other	(350		)	(313		)
Net cash provided by operating activities	1,252			1,265
Cash flows from investing activities
Proceeds from maturities of fixed maturities	3,901			4,167
Proceeds from sales of investments:
Fixed maturities	572			542
Equity securities	50			22
Real estate investments	—			3
Other investments	381			386
Purchases of investments:
Fixed maturities	(4,488		)	(5,200		)
Equity securities	(40		)	(33		)
Real estate investments	(59		)	(58		)
Other investments	(209		)	(221		)
Net sales of short-term securities	81			367
Securities transactions in course of settlement	60			77
Other	(157		)	(133		)
Net cash provided by (used in) investing activities	92			(81		)
Cash flows from financing activities
Payment of debt	(500		)	(258		)
Dividends paid to shareholders	(366		)	(341		)
Issuance of common stock — employee share options	139			170
Treasury stock acquired — share repurchase authorization	(600		)	(707		)
Treasury stock acquired — net employee share-based compensation	(59		)	(52		)
Excess tax benefits from share-based payment arrangements	29			19
Net cash used in financing activities	(1,357		)	(1,169		)
Effect of exchange rate changes on cash	(9		)	1
Net increase (decrease) in cash	(22		)	16
Cash at beginning of year	330			214
Cash at end of period	$	308		$	230
Supplemental disclosure of cash flow information
Income taxes paid	$	495		$	296
Interest paid	$	184		$	191

The accompanying notes are an integral part of the consolidated financial statements.

7

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Basis of Presentation

The interim consolidated financial statements include the accounts of The Travelers Companies, Inc. (together with its subsidiaries, the Company). These financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP) and are unaudited. In the opinion of the Company’s management, all adjustments necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. All material intercompany transactions and balances have been eliminated. The accompanying interim consolidated financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s 2012 Annual Report on Form 10-K.

The preparation of the interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates.

Adoption of Accounting Standards Updates

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

In February 2013, the Financial Accounting Standards Board (FASB) issued updated guidance to improve the reporting of reclassifications out of accumulated other comprehensive income. The guidance requires an entity to present, either on the face of the statement of income or in the notes, separately for each component of comprehensive income, the current period reclassifications out of accumulated other comprehensive income by the respective line items of net income affected by the reclassification.

The updated guidance is effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted the updated guidance effective March 31, 2013, and such adoption did not have any effect on the Company’s results of operations, financial position or liquidity.

Accounting Standard Not Yet Adopted

Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity

In March 2013, the FASB issued updated guidance to resolve diversity in practice concerning the release of the cumulative foreign currency translation adjustment into net income when a parent sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets within a foreign entity. When a company ceases to have a controlling financial interest in a subsidiary within a foreign entity, the company should recognize any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary had resided. Upon the partial sale of an equity method investment that is a foreign entity, the company should release into earnings a pro rata portion of the cumulative translation adjustment. Upon the partial sale of an equity method investment that is not a foreign entity, the company should release into earnings the cumulative translation adjustment if the partial sale represents a complete or substantially complete liquidation of the foreign entity that holds the equity method investment. The updated guidance is effective for the quarter ending March 31, 2014. Early adoption is permitted. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

8

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), (Continued)

1.BASIS OF PRESENTATION AND ACCOUNTING POLICIES, Continued

Nature of Operations

The Company is organized into three reportable business segments: Business Insurance; Financial, Professional & International Insurance; and Personal Insurance. These segments reflect the manner in which the Company’s businesses are currently managed and represent an aggregation of products and services based on type of customer, how the business is marketed and the manner in which risks are underwritten. The specific business segments are as follows:

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; Target Risk Underwriting; and Specialized Distribution.

Business Insurance also includes the Special Liability Group (which manages the Company’s asbestos and environmental liabilities) and the assumed reinsurance and certain 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. In addition, the Company owns 49.5% of the common stock of J. Malucelli Participações em Seguros e Resseguros S.A. (JMalucelli), its joint venture in Brazil. JMalucelli is currently the market leader in surety in Brazil based on market share, and commenced writing other property and casualty insurance business in 2012. The Company’s investment in JMalucelli is accounted for using the equity method and is included in “other investments” on the consolidated balance sheet.

On June 10, 2013, the Company entered into a definitive agreement to acquire all of the issued and outstanding shares of The Dominion of Canada General Insurance Company (The Dominion) from E-L Financial Corporation Limited (E-L Financial) for an aggregate cash purchase price of C$1.125 billion (approximately US$1.1 billion), subject to adjustment to reflect changes in shareholder’s equity prior to the closing, including a downward adjustment to reflect an anticipated pre-closing dividend. The transaction is expected to close in the fourth quarter of 2013, subject to regulatory approvals and other customary closing conditions. The Dominion primarily markets personal lines and small commercial insurance business in Canada.

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.

9

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), (Continued)

2.             SEGMENT INFORMATION

The following tables summarize the components of the Company’s revenues, operating income and total assets by reportable business segments:

(for the three monthsended June 30,in millions)	BusinessInsurance		Financial, Professional & International Insurance		PersonalInsurance		TotalReportableSegments
2013
Premiums	$	3,018	$	751	$	1,834	$	5,603
Net investment income	502		91		94		687
Fee income	82		—		—		82
Other revenues	114		5		15		134
Total operating revenues (1)	$	3,716	$	847	$	1,943	$	6,506
Operating income (1)	$	579	$	154	$	142	$	875
2012
Premiums	$	2,860	$	766	$	1,903	$	5,529
Net investment income	536		99		103		738
Fee income	58		1		—		59
Other revenues	8		5		16		29
Total operating revenues (1)	$	3,462	$	871	$	2,022	$	6,355
Operating income (1)	$	362	$	182	$	17	$	561

(1)Operating revenues for reportable business segments exclude net realized investment gains (losses). Operating income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains (losses).

(for the six monthsended June 30,in millions)	BusinessInsurance		Financial, Professional & International Insurance		PersonalInsurance		TotalReportableSegments
2013
Premiums	$	5,960	$	1,486	$	3,674	$	11,120
Net investment income	989		183		185		1,357
Fee income	179		—		—		179
Other revenues	127		10		33		170
Total operating revenues (1)	$	7,255	$	1,679	$	3,892	$	12,826
Operating income (1)	$	1,169	$	317	$	339	$	1,825
2012
Premiums	$	5,736	$	1,503	$	3,813	$	11,052
Net investment income	1,068		203		207		1,478
Fee income	140		1		—		141
Other revenues	22		13		35		70
Total operating revenues (1)	$	6,966	$	1,720	$	4,055	$	12,741
Operating income (1)	$	974	$	331	$	125	$	1,430

(1)Operating revenues for reportable business segments exclude net realized investment gains (losses). Operating income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains (losses).

10

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2.SEGMENT INFORMATION, Continued

Business Segment Reconciliations

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2013			2012			2013			2012
Revenue reconciliation
Earned premiums
Business Insurance:
Workers’ compensation	$	897		$	754		$	1,744		$	1,537
Commercial automobile	474			488			949			974
Commercial property	418			401			827			793
General liability	444			437			881			869
Commercial multi-peril	776			773			1,541			1,548
Other	9			7			18			15
Total Business Insurance	3,018			2,860			5,960			5,736
Financial, Professional & International Insurance:
Fidelity and surety	228			236			448			459
General liability	221			210			434			417
International	258			278			516			544
Other	44			42			88			83
Total Financial, Professional & International Insurance	751			766			1,486			1,503
Personal Insurance:
Automobile	864			918			1,736			1,846
Homeowners and other	970			985			1,938			1,967
Total Personal Insurance	1,834			1,903			3,674			3,813
Total earned premiums	5,603			5,529			11,120			11,052
Net investment income	687			738			1,357			1,478
Fee income	82			59			179			141
Other revenues	134			29			170			70
Total operating revenues for reportable segments	6,506			6,355			12,826			12,741
Other revenues	1			—			(1		)	(4		)
Net realized investment gains	167			4			177			14
Total consolidated revenues	$	6,674		$	6,359		$	13,002		$	12,751
Income reconciliation, net of tax
Total operating income for reportable segments	$	875		$	561		$	1,825		$	1,430
Interest Expense and Other (1)	(59		)	(66		)	(122		)	(134		)
Total operating income	816			495			1,703			1,296
Net realized investment gains	109			4			118			9
Total consolidated net income	$	925		$	499		$	1,821		$	1,305

(1)The primary component of Interest Expense and Other is after-tax interest expense of $56 million and $63 million in the three months ended June 30, 2013 and 2012, respectively, and $116 million and $125 million in the six months ended June 30, 2013 and 2012, respectively.

11

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2.SEGMENT INFORMATION, Continued

(in millions)	June 30,2013		December 31,2012
Asset reconciliation:
Business Insurance	$	75,187	$	76,972
Financial, Professional & International Insurance	13,035		13,452
Personal Insurance	13,160		14,195
Total assets for reportable segments	101,382		104,619
Other assets (1)	518		319
Total consolidated assets	$	101,900	$	104,938

(1)The primary components of other assets at June 30, 2013 were deferred taxes and other intangible assets.  The primary component of other assets at December 31, 2012 was other intangible assets.

3.INVESTMENTS

Fixed Maturities

The amortized cost and fair value of investments in fixed maturities classified as available for sale were as follows:

	Amortized		Gross Unrealized				Fair
(at June 30, 2013, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,058	$	53	$	8	$	2,103
Obligations of states, municipalities and political subdivisions:
Pre-refunded	9,395		538		1		9,932
All other	26,224		1,215		303		27,136
Total obligations of states, municipalities and political subdivisions	35,619		1,753		304		37,068
Debt securities issued by foreign governments	2,039		44		4		2,079
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,410		197		12		2,595
All other corporate bonds	18,342		858		234		18,966
Redeemable preferred stock	26		6		—		32
Total	$	60,494	$	2,911	$	562	$	62,843

	Amortized		Gross Unrealized				Fair
(at December 31, 2012, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,148	$	75	$	1	$	2,222
Obligations of states, municipalities and political subdivisions:
Pre-refunded	8,458		567		—		9,025
All other	27,405		2,262		11		29,656
Total obligations of states, municipalities and political subdivisions	35,863		2,829		11		38,681
Debt securities issued by foreign governments	2,185		72		—		2,257
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,744		255		2		2,997
All other corporate bonds	17,863		1,360		20		19,203
Redeemable preferred stock	26		7		—		33
Total	$	60,829	$	4,598	$	34	$	65,393

12

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3.INVESTMENTS, Continued

Pre-refunded bonds of $9.93 billion and $9.03 billion at June 30, 2013 and December 31, 2012, respectively, were bonds for which an irrevocable trust (almost exclusively comprised of U.S. Treasury securities) has been established to fund the remaining payments of principal and interest.

Equity Securities

The cost and fair value of investments in equity securities were as follows:

			Gross Unrealized				Fair
(at June 30, 2013, in millions)	Cost		Gains		Losses		Value
Common stock	$	373	$	206	$	2	$	577
Non-redeemable preferred stock	90		34		—		124
Total	$	463	$	240	$	2	$	701

			Gross Unrealized				Fair
(at December 31, 2012, in millions)	Cost		Gains		Losses		Value
Common stock	$	366	$	148	$	4	$	510
Non-redeemable preferred stock	96		39		—		135
Total	$	462	$	187	$	4	$	645

Unrealized Investment Losses

The following tables summarize, for all investments in an unrealized loss position at June 30, 2013 and December 31, 2012, the aggregate fair value and gross unrealized loss by length of time those securities have been continuously in an unrealized loss position.  The fair value amounts reported in the tables are estimates that are prepared using the process described in note 4.

	Less than 12 months				12 months or longer				Total
(at June 30, 2013, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	760	$	8	$	—	$	—	$	760	$	8
Obligations of states, municipalities and political subdivisions	4,585		303		29		1		4,614		304
Debt securities issued by foreign governments	551		4		—		—		551		4
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	425		10		23		2		448		12
All other corporate bonds	5,348		224		67		10		5,415		234
Total fixed maturities	11,669		549		119		13		11,788		562
Equity securities
Common stock	48		2		—		—		48		2
Non-redeemable preferred stock	36		—		—		—		36		—
Total equity securities	84		2		—		—		84		2
Total	$	11,753	$	551	$	119	$	13	$	11,872	$	564

13

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3.INVESTMENTS, Continued

	Less than 12 months				12 months or longer				Total
(at December 31, 2012, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	589	$	1	$	—	$	—	$	589	$	1
Obligations of states, municipalities and political subdivisions	611		9		45		2		656		11
Debt securities issued by foreign governments	186		—		2		—		188		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	70		—		36		2		106		2
All other corporate bonds	1,097		13		89		7		1,186		20
Total fixed maturities	2,553		23		172		11		2,725		34
Equity securities
Common stock	40		4		—		—		40		4
Non-redeemable preferred stock	13		—		—		—		13		—
Total equity securities	53		4		—		—		53		4
Total	$	2,606	$	27	$	172	$	11	$	2,778	$	38

The following table summarizes, for all fixed maturities and equity securities reported at fair value for which fair value is less than 80% of amortized cost at June 30, 2013, the gross unrealized investment loss by length of time those securities have continuously been in an unrealized loss position of greater than 20% of amortized cost:

	Period For Which Fair Value Is Less Than 80% of Amortized Cost
(in millions)	3 Months or Less		Greater Than 3 Months, 6 Months or Less		Greater Than 6 Months, 12 Months or Less		Greater Than 12 Months		Total
Fixed maturities
Mortgage-backed securities	$	—	$	—	$	—	$	—	$	—
Other	2		—		—		4		6
Total fixed maturities	2		—		—		4		6
Equity securities	—		—		—		—		—
Total	$	2	$	—	$	—	$	4	$	6

These unrealized losses at June 30, 2013 represented less than 1% of the combined fixed maturity and equity security portfolios on a pretax basis and less than 1% of shareholders’ equity on an after-tax basis.

14

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3.INVESTMENTS, Continued

Impairment Charges

Impairment charges included in net realized investment gains in the consolidated statement of income were as follows:

	Three Months Ended  June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	—	$	—	$	—	$	—
Obligations of states, municipalities and political subdivisions	—		—		—		—
Debt securities issued by foreign governments	—		—		—		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1		2		2		3
All other corporate bonds	—		1		—		3
Redeemable preferred stock	—		—		—		—
Total fixed maturities	1		3		2		6
Equity securities
Common stock	1		—		1		—
Non-redeemable preferred stock	—		—		—		—
Total equity securities	1		—		1		—
Other investments	—		1		4		2
Total	$	2	$	4	$	7	$	8

The following tables present the changes during the reporting period in the credit component of other-than-temporary impairments (OTTI) on fixed maturities recognized in the consolidated statement of income for which a portion of the OTTI was recognized in other comprehensive income:

15

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3.INVESTMENTS, Continued

	2013
(for the three months ended June 30, in millions )	Cumulative OTTI Credit Losses Recognized for Securities Held, Beginning of Period		Additions for OTTI Securities Where No Credit Losses Were Previously Recognized		Additions for OTTI Securities Where Credit Losses Have Been Previously Recognized		Reductions Due to Sales/Defaults of Credit- Impaired Securities		Adjustments to Book Value of Credit- Impaired Securities due to Changes in Cash Flows		Cumulative OTTI Credit Losses Recognized for Securities Still Held, End of Period
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	65	$	—	$	1	$	—	$	1	$	67
All other corporate bonds	103		—		—		—		1		104
Total fixed maturities	$	168	$	—	$	1	$	—	$	2	$	171

(for the six months ended June 30, in millions )
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	63	$	—	$	2	$	—	$	2	$	67
All other corporate bonds	102		—		—		—		2		104
Total fixed maturities	$	165	$	—	$	2	$	—	$	4	$	171

	2012
(for the three months ended June 30, in millions )	Cumulative OTTI Credit Losses Recognized for Securities Held, Beginning of Period		Additions for OTTI Securities Where No Credit Losses Were Previously Recognized		Additions for OTTI Securities Where Credit Losses Have Been Previously Recognized		Reductions Due to Sales/Defaults of Credit- Impaired Securities		Adjustments to Book Value of Credit- Impaired Securities due to Changes in Cash Flows		Cumulative OTTI Credit Losses Recognized for Securities Still Held, End of Period
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	59	$	—	$	2	$	—	$	—	$	61
All other corporate bonds	97		—		1		—		1		99
Total fixed maturities	$	156	$	—	$	3	$	—	$	1	$	160

(for the six months ended June 30, in millions )
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	58	$	—	$	3	$	—	$	—	$	61
All other corporate bonds	94		—		3		—		2		99
Total fixed maturities	$	152	$	—	$	6	$	—	$	2	$	160

16

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3.INVESTMENTS, Continued

Derivative Financial Instruments

The Company uses U.S. Treasury note futures transactions to modify the effective duration of specific assets within the investment portfolio.  The Company enters into 90-day futures contracts on U.S. Treasury notes which require a daily mark-to-market and settlement with the broker.  At June 30, 2013, March 31, 2013 and December 31, 2012, the Company had $0, $2.0 billion and $800 million notional value of open U.S. Treasury futures contracts, respectively. During the second quarter of 2013, the notional value of U.S. Treasury futures contracts entered into by the Company reached $2.7 billion.  Net realized investment gains in the three months ended June 30, 2013 and 2012 included net gains of $134 million and net losses of $13 million, respectively, related to U.S. Treasury futures contracts.  Net realized investment gains in the six months ended June 30, 2013 and 2012 included net gains of $115 million and net losses of $7 million, respectively, related to U.S. Treasury futures contracts.

4.     FAIR VALUE MEASUREMENTS

The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance.  The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available.  The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable.  In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions.  The level in the fair value hierarchy within which the fair value measurement is reported is based on the lowest level input that is significant to the measurement in its entirety.  The three levels of the hierarchy are as follows:

·Level 1 - Unadjusted quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access.

·Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.

·Level 3 - Valuations based on models where significant inputs are not observable.  The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.

Valuation of Investments Reported at Fair Value in Financial Statements

The fair value of a financial instrument is the estimated amount at which the instrument could be exchanged in an orderly transaction between knowledgeable, unrelated, willing parties, i.e., not in a forced transaction.  The estimated fair value of a financial instrument may differ from the amount that could be realized if the security was sold in an immediate sale, e.g., a forced transaction.  Additionally, the valuation of investments is more subjective when markets are less liquid due to the lack of market based inputs, which may increase the potential that the estimated fair value of an investment is not reflective of the price at which an actual transaction would occur.

For investments that have quoted market prices in active markets, the Company uses the unadjusted quoted market prices as fair value and includes these prices in the amounts disclosed in Level 1 of the hierarchy.  The Company receives the quoted market prices from a third party, nationally recognized pricing service (pricing service).  When quoted market prices are unavailable, the Company utilizes a pricing service to determine an estimate of fair value, which is mainly used for its fixed maturity investments.  The fair value estimates provided from this pricing service are included in the amount disclosed in Level 2 of the hierarchy.  If quoted market prices and an estimate from a pricing service are unavailable, the Company produces an estimate of fair value based on internally developed valuation techniques, which, depending on the level of observable market inputs, will render the fair value estimate as Level 2 or Level 3.  The Company bases all of its estimates of fair value for assets on the bid price as it represents what a third-party market participant would be willing to pay in an arm’s length transaction.

17

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4.     FAIR VALUE MEASUREMENTS, Continued

Fixed Maturities

The Company utilized a pricing service to estimate fair value measurements for approximately 98% of its fixed maturities at both June 30, 2013 and December 31, 2012.  The pricing service utilizes market quotations for fixed maturity securities that have quoted prices in active markets.  Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements for these securities using its proprietary pricing applications, which include available relevant market information, benchmark curves, benchmarking of like securities, sector groupings and matrix pricing.  Additionally, the pricing service uses an Option Adjusted Spread model to develop prepayment and interest rate scenarios.

The pricing service evaluates each asset class based on relevant market information, relevant credit information, perceived market movements and sector news.  The market inputs utilized in the pricing evaluation, listed in the approximate order of priority, include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events.  The extent of the use of each market input depends on the asset class and the market conditions.  Depending on the security, the priority of the use of inputs may change or some market inputs may not be relevant.  For some securities, additional inputs may be necessary.

The pricing service utilized by the Company has indicated that it will only produce an estimate of fair value if there is objectively verifiable information to produce a valuation.  If the pricing service discontinues pricing an investment, the Company would be required to produce an estimate of fair value using some of the same methodologies as the pricing service but would have to make assumptions for market-based inputs that are unavailable due to market conditions.

The fair value estimates of most fixed maturity investments are based on observable market information rather than market quotes.  Accordingly, the estimates of fair value for such fixed maturities, other than U.S. Treasury securities, provided by the pricing service are included in the amount disclosed in Level 2 of the hierarchy.  The estimated fair value of U.S. Treasury securities is included in the amount disclosed in Level 1 as the estimates are based on unadjusted market prices.

The Company also holds certain fixed maturity investments which are not priced by the pricing service and, accordingly, estimates the fair value of such fixed maturities using an internal matrix that is based on market information regarding interest rates, credit spreads and liquidity.  The underlying source data for calculating the matrix of credit spreads relative to the U.S. Treasury curve are the BofA Merrill Lynch U.S. Corporate Index and the BofA Merrill Lynch High Yield BB Rated Index.  The Company includes the fair value estimates of these corporate bonds in Level 2, since all significant inputs are market observable.

While the vast majority of the Company’s municipal bonds and corporate bonds are included in Level 2, the Company holds a number of municipal bonds and corporate bonds which are not valued by the pricing service and estimates the fair value of these bonds using an internal pricing matrix with some unobservable inputs that are significant to the valuation.  Due to the limited amount of observable market information, the Company includes the fair value estimates for these particular bonds in Level 3.  The fair value of the fixed maturities for which the Company used an internal pricing matrix was $80 million at June 30, 2013 and $102 million at December 31, 2012. Additionally, the Company holds a small amount of other fixed maturity investments that have characteristics that make them unsuitable for matrix pricing.  For these fixed maturities, the Company obtains a quote from a broker (primarily the market maker).  The fair value of the fixed maturities for which the Company received a broker quote was $145 million and $128 million at June 30, 2013 and December 31, 2012, respectively. Due to the disclaimers on the quotes that indicate that the price is indicative only, the Company includes these fair value estimates in Level 3.

Equities — Public Common and Preferred

For public common and preferred stocks, the Company receives prices from a nationally recognized pricing service that are based on observable market transactions and includes these estimates in the amount disclosed in Level 1.  When current market quotes in active markets are unavailable for certain non-redeemable preferred stocks held by the Company, the Company receives an estimate of fair value from the pricing service that provides fair value estimates for the Company’s fixed maturities. The service utilizes some of the same methodologies to price the non-redeemable preferred stocks as it does for the fixed maturities. The Company includes the fair value estimate for these non-redeemable preferred stocks in the amount disclosed in Level 2.

18

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4.     FAIR VALUE MEASUREMENTS, Continued

Other Investments

The Company holds investments in various publicly-traded securities which are reported in other investments.  These investments include securities in the Company’s trading portfolio, mutual funds and other small holdings.  The $17 million and $46 million fair value of these investments at June 30, 2013 and December 31, 2012, respectively, was disclosed in Level 1.  At June 30, 2013 and December 31, 2012, the Company held investments in non-public common and preferred equity securities, with fair value estimates of $33 million and $54 million, respectively, reported in other investments, where the fair value estimate is determined either internally or by an external fund manager based on recent filings, operating results, balance sheet stability, growth and other business and market sector fundamentals.  Due to the significant unobservable inputs in these valuations, the Company includes the total fair value estimate for all of these investments at June 30, 2013 and December 31, 2012 in the amount disclosed in Level 3.

Derivatives

At June 30, 2013 and December 31, 2012, the Company held $19 million and $21 million, respectively, of convertible bonds containing embedded conversion options that are valued separately from the host bond contract in the amount disclosed in Level 2 — fixed maturities.

Fair Value Hierarchy

The following tables present the level within the fair value hierarchy at which the Company’s financial assets and financial liabilities reported at fair value are measured on a recurring basis at June 30, 2013 and December 31, 2012.  An investment transferred between levels during a period is transferred at its fair value as of the beginning of that period.

(at June 30, 2013, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,103	$	2,086	$	17	$	—
Obligations of states, municipalities and political subdivisions	37,068		—		37,042		26
Debt securities issued by foreign governments	2,079		—		2,079		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,595		—		2,590		5
All other corporate bonds	18,966		—		18,772		194
Redeemable preferred stock	32		—		32		—
Total fixed maturities	62,843		2,086		60,532		225
Equity securities
Common stock	577		577		—		—
Non-redeemable preferred stock	124		32		92		—
Total equity securities	701		609		92		—
Other investments	50		17		—		33
Total	$	63,594	$	2,712	$	60,624	$	258

During the six months ended June 30, 2013, the Company had transfers of $32 million of redeemable preferred stock and $54 million of non-redeemable preferred stock from Level 1 to Level 2. The Company also had transfers of $3 million of non-redeemable preferred stock from Level 2 to Level 1.

19

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4.     FAIR VALUE MEASUREMENTS, Continued

(at December 31, 2012, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,222	$	2,205	$	17	$	—
Obligations of states, municipalities and political subdivisions	38,681		—		38,653		28
Debt securities issued by foreign governments	2,257		—		2,257		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,997		—		2,992		5
All other corporate bonds	19,203		—		19,006		197
Redeemable preferred stock	33		32		1		—
Total fixed maturities	65,393		2,237		62,926		230
Equity securities
Common stock	510		510		—		—
Non-redeemable preferred stock	135		92		43		—
Total equity securities	645		602		43		—
Other investments	100		46		—		54
Total	$	66,138	$	2,885	$	62,969	$	284

During the year ended December 31, 2012, the Company had transfers of $4 million of non-redeemable preferred stock from Level 1 to Level 2.

The following tables present the changes in the Level 3 fair value category during the three months and six months ended June 30, 2013 and the twelve months ended December 31, 2012.

Three Months Ended June 30, 2013 (in millions)	FixedMaturities			OtherInvestments			Total
Balance at March 31, 2013	$	254		$	49		$	303
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (1)	1			13			14
Reported in increases (decreases) in other comprehensive income	(3		)	(12		)	(15		)
Purchases, sales and settlements/maturities:
Purchases	35			—			35
Sales	(24		)	(17		)	(41		)
Settlements/maturities	(27		)	—			(27		)
Gross transfers into Level 3	13			—			13
Gross transfers out of Level 3	(24		)	—			(24		)
Balance at June 30, 2013	$	225		$	33		$	258
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date	$	—		$	—		$	—

(1)Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.

20

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4.     FAIR VALUE MEASUREMENTS, Continued

Six Months Ended June 30, 2013 (in millions)	FixedMaturities			OtherInvestments			Total
Balance at December 31, 2012	$	230		$	54		$	284
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (1)	2			13			15
Reported in increases (decreases) in other comprehensive income	(2		)	(1		)	(3		)
Purchases, sales and settlements/maturities:
Purchases	77			—			77
Sales	(24		)	(33		)	(57		)
Settlements/maturities	(47		)	—			(47		)
Gross transfers into Level 3	13			—			13
Gross transfers out of Level 3	(24		)	—			(24		)
Balance at June 30, 2013	$	225		$	33		$	258
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date	$	—		$	—		$	—

(1)   Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.

Twelve Months Ended December 31, 2012 (in millions)	FixedMaturities			OtherInvestments		Total
Balance at December 31, 2011	$	250		$	44	$	294
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (1)	4			5		9
Reported in increases (decreases) in other comprehensive income	5			2		7
Purchases, sales and settlements/maturities:
Purchases	79			3		82
Sales	—			—		—
Settlements/maturities	(94		)	—		(94		)
Gross transfers into Level 3	10			—		10
Gross transfers out of Level 3	(24		)	—		(24		)
Balance at December 31, 2012	$	230		$	54	$	284
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date	$	—		$	—	$	—

(1)     Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.

21

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4.     FAIR VALUE MEASUREMENTS, Continued

Financial Instruments Disclosed, But Not Carried, At Fair Value

The Company uses various financial instruments in the normal course of its business. The Company’s insurance contracts are excluded from fair value of financial instruments accounting guidance and, therefore, are not included in the amounts discussed below.  The following tables present the carrying value and fair value of the Company’s financial assets and financial liabilities disclosed, but not carried, at fair value at June 30, 2013 and December 31, 2012, and the level within the fair value hierarchy at which such assets and liabilities are measured on a recurring basis.

(at June 30, 2013, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Short-term securities	$	3,394	$	3,394	$	1,343	$	1,990	$	61
Financial liabilities:
Debt	$	5,752	$	6,724	$	—	$	6,724	$	—
Commercial paper	$	100	$	100	$	—	$	100	$	—

(at December 31, 2012, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Short-term securities	$	3,483	$	3,483	$	1,448	$	1,957	$	78
Financial liabilities:
Debt	$	6,250	$	7,715	$	—	$	7,715	$	—
Commercial paper	$	100	$	100	$	—	$	100	$	—

The Company utilized a pricing service to estimate fair value for approximately 94% and 95% of short-term securities at June 30, 2013 and December 31, 2012, respectively.  A description of the process and inputs used by the pricing service to estimate fair value is discussed in the “Fixed Maturities” section above.  Estimates of fair value for U.S. Treasury securities and money market funds are based on market quotations received from the pricing service and are disclosed in Level 1 of the hierarchy.  The fair value of other short-term fixed maturity securities is estimated by the pricing service using observable market inputs and is disclosed in Level 2 of the hierarchy.  For short-term securities where an estimate is not obtained from the pricing service, the carrying value approximates fair value and is included in Level 3 of the hierarchy.

The Company utilized a pricing service to estimate fair value for 100% of its debt, including commercial paper, at both June 30, 2013 and December 31, 2012.  The pricing service utilizes market quotations for debt that have quoted prices in active markets.  Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the fair value estimates are based on market observable inputs and disclosed in Level 2 of the hierarchy.

The Company had no material assets or liabilities that were measured at fair value on a non-recurring basis during the six months ended June 30, 2013 or twelve months ended December 31, 2012.

5.GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The following table presents the carrying amount of the Company’s goodwill by segment at June 30, 2013 and December 31, 2012:

(in millions)	June 30,2013		December 31, 2012
Business Insurance	$	2,168	$	2,168
Financial, Professional & International Insurance	557		557
Personal Insurance	613		613
Other	27		27
Total	$	3,365	$	3,365

22

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

5.GOODWILL AND OTHER INTANGIBLE ASSETS, Continued

Other Intangible Assets

The following presents a summary of the Company’s other intangible assets by major asset class at June 30, 2013 and December 31, 2012:

(at June 30, 2013, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Intangibles subject to amortization
Customer-related	$	455	$	398	$	57
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables (1)	191		106		85
Total intangible assets subject to amortization	646		504		142
Intangible assets not subject to amortization	216		—		216
Total other intangible assets	$	862	$	504	$	358

(at December 31, 2012, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Intangibles subject to amortization
Customer-related	$	455	$	383	$	72
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables (1)	191		98		93
Total intangible assets subject to amortization	646		481		165
Intangible assets not subject to amortization	216		—		216
Total other intangible assets	$	862	$	481	$	381

(1)    The time value of money and the risk margin (cost of capital) components of the intangible asset run off at different rates, and, as such, the amount recognized in income may be a net benefit in some periods and a net expense in other periods.

The following presents a summary of the Company’s amortization expense for other intangible assets by major asset class:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Customer-related	$	8	$	7	$	15	$	18
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables	4		5		8		10
Total amortization expense	$	12	$	12	$	23	$	28

Intangible asset amortization expense is estimated to be $22 million for the remainder of 2013, $43 million in 2014, $23 million in 2015, $9 million in 2016, and $8 million in 2017.

23

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

6.OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in the Company’s accumulated other comprehensive income (AOCI) for the six months ended June 30, 2013.

(in millions)	Changes in Net  Unrealized Gains on Investment Securities Having No Credit Losses  Recognized in the  Consolidated Statement of Income			Changes in Net  Unrealized Gains on Investment Securities Having Credit Losses Recognized in the Consolidated Statement of Income		Net Benefit Plan  Assets and Obligations  Recognized in  Shareholders’ Equity			Net Unrealized Foreign Currency Translation			Total Accumulated  Other Comprehensive Income
Balance, December 31, 2012	$	2,908		$	195	$	(857	)	$	(10	)	$	2,236
Other comprehensive income (loss) (OCI) before reclassifications	(1,381		)	2		1			(137		)	(1,515		)
Amounts reclassified from AOCI	(33		)	1		34			(3		)	(1		)
Net OCI, current period	(1,414		)	3		35			(140		)	(1,516		)
Balance, June 30, 2013	$	1,494		$	198	$	(822	)	$	(150	)	$	720

The following table presents the pretax and related income tax expense (benefit) components of the amounts reclassified from the Company’s AOCI to the Company’s consolidated statement of income for the three months and six months ended June 30, 2013.

(in millions)	Three Months Ended June 30, 2013			Six MonthsEnded June 30, 2013
Reclassification adjustments related to unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)	$	(34	)	$	(51	)
Income tax expense (2)	(12		)	(18		)
Net of taxes	(22		)	(33		)
Having credit losses recognized in the consolidated statement of income (1)	1			2
Income tax benefit (2)	1			1
Net of taxes	—			1
Reclassification adjustment related to benefit plan assets and obligations (3)	25			52
Income tax benefit (2)	8			18
Net of taxes	17			34
Reclassification adjustment related to foreign currency translation (1)	—			(3		)
Income tax benefit (2)	—			—
Net of taxes	—			(3		)
Total reclassifications	(8		)	—
Total income tax (expense) benefit	(3		)	1
Total reclassifications, net of taxes	$	(5	)	$	(1	)

(1)(Increases) decreases net realized investment gains on the consolidated statement of income.

(2)(Increases) decreases income tax expense on the consolidated statement of income.

(3)Increases (decreases) general and administrative expenses on the consolidated statement of income.

24

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

6.OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME, Continued

The following tables present the pretax components of other comprehensive income (loss) and related income tax expense (benefit) for the three months and six months ended June 30, 2013 and 2012.

(for the three months ended June 30, in millions)	2013			2012
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	(1,790	)	$	216
Income tax expense (benefit)	(621		)	77
Net of taxes	(1,169		)	139
Having credit losses recognized in the consolidated statement of income	(5		)	5
Income tax expense (benefit)	(2		)	1
Net of taxes	(3		)	4
Net changes in benefit plan assets and obligations	26			22
Income tax expense	9			8
Net of taxes	17			14
Net changes in unrealized foreign currency translation	(73		)	(86		)
Income tax benefit	(22		)	(20		)
Net of taxes	(51		)	(66		)
Total other comprehensive income (loss)	(1,842		)	157
Total income tax expense (benefit)	(636		)	66
Total other comprehensive income (loss), net of taxes	$	(1,206	)	$	91

25

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

6.OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME, Continued

(for the six months ended June 30, in millions)	2013			2012
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	(2,166	)	$	139
Income tax expense (benefit)	(752		)	50
Net of taxes	(1,414		)	89
Having credit losses recognized in the consolidated statement of income	4			30
Income tax expense	1			10
Net of taxes	3			20
Net changes in benefit plan assets and obligations	54			42
Income tax expense	19			15
Net of taxes	35			27
Net changes in unrealized foreign currency translation	(169		)	(22		)
Income tax benefit	(29		)	(11		)
Net of taxes	(140		)	(11		)
Total other comprehensive income (loss)	(2,277		)	189
Total income tax expense (benefit)	(761		)	64
Total other comprehensive income (loss), net of taxes	$	(1,516	)	$	125

7.DEBT

Debt Payment.  On March 15, 2013, the Company’s $500 million, 5.00% senior notes matured and were fully paid.

Credit Agreement.  On June 7, 2013, the Company entered into a five-year, $1.0 billion revolving credit agreement with a syndicate of financial institutions, replacing its three-year $1.0 billion credit agreement that was due to expire on June 10, 2013.  Pursuant to the credit agreement covenants, the Company must maintain a minimum consolidated net worth, defined as shareholders’ equity determined in accordance with GAAP plus (a) trust preferred securities (not to exceed 15% of total capital) and (b) mandatorily convertible securities (combined with trust preferred securities, not to exceed 25%  of total capital) less goodwill and other intangible assets.  That threshold is adjusted downward by an amount equal to 70% of the aggregate amount of common stock repurchased by the Company after March 31, 2013, up to a maximum deduction of $1.75 billion.  The threshold was $15.27 billion at June 30, 2013 and could decline to a minimum of $13.73 billion during the term of the credit agreement, subject to the Company repurchasing an additional $2.20 billion of its common stock.  In addition, the credit agreement contains other customary restrictive covenants as well as certain customary events of default, including with respect to a change in control, which is defined to include the acquisition of 35% or more of the Company’s voting stock and certain changes in the composition of the Company’s board of directors.  At June 30, 2013, the Company was in compliance with these covenants.  Generally, the cost of borrowing under this agreement will range from LIBOR plus 87.5 basis points to LIBOR plus 150 basis points, depending on the Company’s credit ratings.  At June 30, 2013, that cost would have been LIBOR plus 112.5 basis points, had there been any amounts outstanding under the credit agreement.  This credit agreement also supports the Company’s commercial paper program.

26

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

8.SHAREHOLDERS’ EQUITY

Share Repurchase Authorization.  The Company’s board of directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise.  The authorizations do not have a stated expiration date.  The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company’s desired ratings from independent rating agencies, 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 and related financings), market conditions and other factors.  During the three months and six months ended June 30, 2013, the Company repurchased 3.6 million and 7.3 million shares, respectively, under its share repurchase authorization, for a total cost of $300 million and $600 million, respectively.  The average cost per share repurchased was $82.99 and $81.99, respectively.  At June 30, 2013, the Company had $1.56 billion of capacity remaining under the share repurchase authorization.

Shelf Registration Statement.  At the Company’s Annual Meeting of Shareholders held on May 22, 2013, the Company’s shareholders voted to amend the Company’s Articles of Incorporation to provide authority to issue up to five million additional shares of preferred stock.  Subsequent to this amendment of the Company’s Articles of Incorporation, the Company filed a shelf registration statement with the Securities and Exchange Commission in June 2013 pursuant to which it may publicly sell securities, including the new preferred stock, from time to time. The new shelf registration statement replaced the Company’s prior shelf registration statement.

9.EARNINGS PER SHARE

The following is a reconciliation of the net income and share data used in the basic and diluted earnings per share computations for the periods presented:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share amounts)	2013			2012			2013			2012
Basic and Diluted
Net income, as reported	$	925		$	499		$	1,821		$	1,305
Participating share-based awards — allocated income	(7		)	(4		)	(14		)	(10		)
Net income available to common shareholders — basic and diluted	$	918		$	495		$	1,807		$	1,295
Common Shares
Basic
Weighted average shares outstanding	375.9			388.0			376.8			390.0
Diluted
Weighted average shares outstanding	375.9			388.0			376.8			390.0
Weighted average effects of dilutive securities — stock options and performance shares	4.0			3.6			4.0			3.5
Total	379.9			391.6			380.8			393.5
Net Income per Common Share
Basic	$	2.44		$	1.27		$	4.80		$	3.32
Diluted	$	2.41		$	1.26		$	4.75		$	3.29

27

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

10.SHARE-BASED INCENTIVE COMPENSATION

The following information relates to fully vested stock option awards at June 30, 2013:

Stock Options	Number	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining	AggregateIntrinsic Value($ in millions)
Vested at end of period (1)	8,658,131	$	52.58	5.9 years	$	237
Exercisable at end of period	5,743,635	$	46.80	4.6 years	$	190

(1) Represents awards for which the requisite service has been rendered, including those that are retirement eligible.

The total compensation cost for all share-based incentive compensation awards recognized in earnings was $29 million and $28 million for the three months ended June 30, 2013 and 2012, respectively, and $70 million and $66 million for the six months ended June 30, 2013 and 2012, respectively.  The related tax benefits recognized in the consolidated statement of income were $10 million for each of the three months ended June 30, 2013 and 2012, and $24 million and $23 million for the six months ended June 30, 2013 and 2012, respectively.

The total unrecognized compensation cost related to all nonvested share-based incentive compensation awards at June 30, 2013 was $166 million, which is expected to be recognized over a weighted-average period of 2.0 years. The total unrecognized compensation cost related to all nonvested share-based incentive compensation awards at December 31, 2012 was $112 million, which was expected to be recognized over a weighted-average period of 1.7 years.

11.PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS

The following tables summarize the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans recognized in the consolidated statement of income.

	Pension Plans						Postretirement Benefit Plans
(for the three months ended June 30, in millions)	2013			2012			2013			2012
Net Periodic Benefit Cost:
Service cost	$	30		$	29		$	—		$	—
Interest cost on benefit obligation	33			34			2			3
Expected return on plan assets	(52		)	(47		)	—			(1		)
Amortization of unrecognized:
Prior service benefit	—			—			(1		)	—
Net actuarial loss	26			23			—			—
Net benefit expense	$	37		$	39		$	1		$	2

	Pension Plans						Postretirement Benefit Plans
(for the six months ended June 30, in millions)	2013			2012			2013			2012
Net Periodic Benefit Cost:
Service cost	$	59		$	57		$	—		$	—
Interest cost on benefit obligation	66			69			4			6
Expected return on plan assets	(104		)	(94		)	—			(1		)
Amortization of unrecognized:
Prior service benefit	—			—			(1		)	—
Net actuarial loss	53			45			—			—
Net benefit expense	$	74		$	77		$	3		$	5

28

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

12.CONTINGENCIES, COMMITMENTS AND GUARANTEES

Contingencies

The major pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or to which any of the Company’s properties is subject are described below.

Asbestos- and Environmental-Related Proceedings

In the ordinary course of its insurance business, the Company has received and continues to receive claims for insurance arising under policies issued by the Company asserting alleged injuries and damages from asbestos- and environmental-related exposures that are the subject of related coverage litigation, including, among others, the litigation described below.  The Company is defending asbestos- and environmental-related litigation vigorously and believes that it has meritorious defenses; however, the outcomes of these disputes are uncertain.  In this regard, the Company employs dedicated specialists and aggressive resolution strategies to manage asbestos and environmental loss exposure, including settling litigation under appropriate circumstances.

Asbestos Direct Action Litigation — In October 2001 and April 2002, two purported class action suits (Wise v. Travelers and Meninger v. Travelers) were filed against Travelers Property Casualty Corp. (TPC), a wholly-owned subsidiary of the Company, and other insurers (not including The St. Paul Companies, Inc. (SPC), which was acquired by TPC in 2004) in state court in West Virginia.  These and other cases subsequently filed in West Virginia were consolidated into a single proceeding in the Circuit Court of Kanawha County, West Virginia. The plaintiffs allege that the insurer defendants engaged in unfair trade practices in violation of state statutes by inappropriately handling and settling asbestos claims. The plaintiffs seek to reopen large numbers of settled asbestos claims and to impose liability for damages, including punitive damages, directly on insurers.  Similar lawsuits alleging inappropriate handling and settling of asbestos claims were filed in Massachusetts and Hawaii state courts.  These suits are collectively referred to as the Statutory and Hawaii Actions.

In March 2002, the plaintiffs in consolidated asbestos actions pending before a mass tort panel of judges in West Virginia state court amended their complaint to include TPC as a defendant, alleging that TPC and other insurers breached alleged duties to certain users of asbestos products.  The plaintiffs seek damages, including punitive damages. Lawsuits seeking similar relief and raising similar allegations, primarily violations of purported common law duties to third parties, have also been asserted in various state courts against TPC and SPC. The claims asserted in these suits are collectively referred to as the Common Law Claims.

In response to these claims, TPC moved to enjoin the Statutory Actions and the Common Law Claims in the federal bankruptcy court that had presided over the bankruptcy of TPC’s former policyholder Johns-Manville Corporation on the ground that the suits violated injunctions entered in connection with confirmation of the Johns-Manville bankruptcy (the “1986 Orders”).  The bankruptcy court issued a temporary restraining order and referred the parties to mediation.  In November 2003, the parties reached a settlement of the Statutory and Hawaii Actions, which included a lump-sum payment of up to $412 million by TPC, subject to a number of significant contingencies. In May 2004, the parties reached a settlement resolving substantially all pending and similar future Common Law Claims against TPC, which included a payment of up to $90 million by TPC, subject to similar contingencies.  Among the contingencies for each of these settlements was that the bankruptcy court issue an order, which must become a final order, clarifying that all of these claims, and similar future asbestos-related claims against TPC, as well as related contribution claims, are barred by the 1986 Orders.

On August 17, 2004, the bankruptcy court entered an order approving the settlements and clarifying that the 1986 Orders barred the pending Statutory and Hawaii Actions and substantially all Common Law Claims pending against TPC (the “Clarifying Order”). The Clarifying Order also applies to similar direct action claims that may be filed in the future.  Although the District Court substantially affirmed the Clarifying Order, on February 15, 2008, the Second Circuit issued an opinion vacating on jurisdictional grounds the District Court’s approval of the Clarifying Order.

29

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

12.CONTINGENCIES, COMMITMENTS AND GUARANTEES, Continued

On December 12, 2008, the United States Supreme Court granted TPC’s Petition for Writ of Certiorari and, on June 18, 2009, the Supreme Court reversed the Second Circuit’s February 15, 2008 decision, finding, among other things, that the 1986 Orders are final and therefore may not be collaterally challenged on jurisdictional grounds.  The Supreme Court further ruled that the bankruptcy court had jurisdiction to issue the Clarifying Order.  However, since the Second Circuit had not ruled on certain additional issues, principally related to procedural matters and the adequacy of notice provided to certain parties, the Supreme Court remanded the case to the Second Circuit for further proceedings on those specific issues.

On March 22, 2010, the Second Circuit issued an opinion in which it found that the notice of the 1986 Orders provided to one remaining objector was insufficient to bar contribution claims by that objector against TPC. TPC’s Petition for Rehearing and Rehearing En Banc was denied May 25, 2010 and its Petition for Writ of Certiorari and Petition for a Writ of Mandamus were denied by the United States Supreme Court on November 29, 2010.

The plaintiffs in the Statutory and Hawaii actions and the Common Law Claims actions thereafter filed motions in the bankruptcy court to compel TPC to make payment under the settlement agreements, arguing that all conditions precedent to the settlements had been met.  On December 16, 2010, the bankruptcy court granted the plaintiffs’ motions and ruled that TPC was required to fund the settlements.  The court entered judgment against TPC on January 20, 2011 in accordance with this ruling and ordered TPC to pay the settlement amounts plus prejudgment interest.  The bankruptcy court’s judgment was reversed by the district court on March 1, 2012, the district court having found that the conditions to the settlements had not been met in view of the Second Circuit’s March 22, 2010 ruling permitting the filing of contribution claims against TPC.  The plaintiffs appealed the district court’s March 1, 2012 decision to the Second Circuit Court of Appeals.  Oral argument before the Second Circuit took place on January 10, 2013, and the parties await the court’s decision.

SPC, which is not covered by the Manville bankruptcy court rulings or the settlements described above, from time to time has been named as a defendant in direct action cases in Texas state court asserting common law claims.  All such cases that are still pending and in which SPC has been served are currently on the inactive docket in Texas state court.  If any of those cases becomes active, SPC intends to litigate those cases vigorously.  SPC was previously a defendant in similar direct actions in Ohio state court, which have been dismissed following favorable rulings by Ohio trial and appellate courts.  From time to time, SPC and/or its subsidiaries have been named in similar individual direct actions in other jurisdictions.

Outcome and Impact of Asbestos and Environmental Claims and Litigation.  Currently, it is not possible to predict legal outcomes and their impact on the future development of claims and litigation relating to asbestos and environmental claims. Any such development will be affected by future court decisions and interpretations, as well as changes in applicable legislation. Because of these uncertainties, additional liabilities may arise for amounts in excess of the Company’s current reserves. In addition, the Company’s estimate of ultimate claims and claim adjustment expenses may change. These additional liabilities or increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company’s results of operations in future periods.

Other Proceedings Not Arising Under Insurance Contracts or Reinsurance Agreements

The Company is involved in other lawsuits, including lawsuits alleging extra-contractual damages relating to insurance contracts or reinsurance agreements, that do not arise under insurance contracts or reinsurance agreements.  Based upon currently available information, the Company does not believe it is reasonably possible that any such lawsuit or related lawsuits would be material to the Company’s results of operations or have a material adverse effect on the Company’s financial position or liquidity.

Gain Contingencies

On August 17, 2010, in a reinsurance dispute in New York state court captioned United States Fidelity & Guaranty Company v. American Re-Insurance Company, et al., the trial court granted summary judgment for United States Fidelity and Guaranty Company (USF&G), a subsidiary of the Company, and denied summary judgment for American Re-Insurance Company, a subsidiary of Munich Re (American Re), and three other reinsurers.  By order dated October 22, 2010, the trial court

30

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

12.CONTINGENCIES, COMMITMENTS AND GUARANTEES, Continued

corrected certain clerical errors and made certain clarifications to the August 17, 2010 order.  On October 25, 2010, judgment was entered against American Re and the other three insurers, awarding USF&G $420 million, comprising $251 million ceded under the terms of the disputed reinsurance contract plus interest of 9% amounting to $169 million as of that date.  The judgment, including the award of interest, was appealed by the reinsurers to the New York Supreme Court, Appellate Division, First Department.  On January 24, 2012, the Appellate Division affirmed the judgment.  On January 30, 2012, the reinsurers filed a motion with the Appellate Division seeking permission to appeal its decision to the New York Court of Appeals, and on March 12, 2012, the Appellate Division granted the reinsurers’ motion.  On February 7, 2013, the Court of Appeals issued an opinion that largely affirmed the summary judgment in USF&G’s favor, while modifying in part the summary judgment with respect to two discrete issues and remanding the case to the trial court for determination of those issues.  The Company believes it has a meritorious position on each of these issues and intends to pursue its claim vigorously.  On March 8, 2013, the reinsurers filed motions with the Court of Appeals to reargue one issue that was decided in USF&G’s favor.  On March 18, 2013, USF&G filed its opposition to the reinsurers’ motions to reargue.  On May 2, 2013, the Court of Appeals denied the reinsurers’ motions for re-argument.  At June 30, 2013, the claim totaled $482 million, comprising the $251 million of reinsurance recoverable plus interest amounting to $231 million as of that date.  Interest will continue to accrue at 9% until the claim is paid. The $251 million of reinsurance recoverable owed to USF&G under the terms of the disputed reinsurance contract has been reported as part of reinsurance recoverables in the Company’s consolidated balance sheet.  The interest that would be owed as part of any judgment ultimately entered in favor of USF&G is treated for accounting purposes as a gain contingency in accordance with FASB Topic 450, Contingencies, and accordingly has not been recognized in the Company’s consolidated financial statements.

In an unrelated action, The Travelers Indemnity Company is one of the Settlement Class plaintiffs and a class member in a class action lawsuit captioned Safeco Insurance Company of America, et al. v American International Group, Inc. et al. (U.S. District Court, N.D. Ill.) in which the defendants are alleged to have engaged in the under-reporting of workers’ compensation premium in connection with a workers’ compensation reinsurance pool in which several subsidiaries of the Company participate.  On July 26, 2011, the court granted preliminary approval of a class settlement pursuant to which the defendants agreed to pay $450 million to the class.  On December 21, 2011, the court entered an order granting final approval of the settlement, and on February 28, 2012, the district court issued a written opinion approving the settlement.  On March 27, 2012, three parties who objected to the settlement appealed the court’s orders approving the settlement to the U.S. Court of Appeals for the Seventh Circuit.  On January 11, 2013, all parties, including the three parties who had objected to the settlement, filed a Stipulation of Dismissal indicating that there were no longer any objections to the settlement.  On March 25, 2013, the Seventh Circuit dismissed the appeals.  On April 16, 2013, the Seventh Circuit issued its mandate returning the case to the district court for administration of the settlement.  Prior to receiving payment, the Company accounted for its anticipated allocation from the settlement fund as a gain contingency in accordance with FASB Topic 450, Contingencies.  On June 26, 2013, the Company received payment of approximately $91 million, comprising 98% of its allocation from the settlement fund. The Company anticipates receiving payment of the remaining 2% (approximately $2 million, less any additional fees and expenses to be paid from the settlement fund), prior to December 31, 2013.  The $91 million received by the Company in June 2013 was recorded as a gain and is reported in “Other revenues” in the consolidated statement of income in the Company’s consolidated financial statements.

Other Commitments and Guarantees

Commitments

Investment Commitments — The Company has unfunded commitments to private equity limited partnerships and real estate partnerships in which it invests.  These commitments totaled $1.40 billion and $1.27 billion at June 30, 2013 and December 31, 2012, respectively.

Guarantees

In the ordinary course of selling business entities to third parties, the Company has agreed to indemnify purchasers for losses arising out of breaches of representations and warranties with respect to the business entities being sold, covenants and obligations of the Company and/or its subsidiaries following the closing, and in certain cases obligations arising from undisclosed liabilities, adverse reserve development, imposition of additional taxes due to either a change in the tax law or an

31

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

12.CONTINGENCIES, COMMITMENTS AND GUARANTEES, Continued

adverse interpretation of the tax law, or certain named litigation.  Such indemnification provisions generally survive for periods ranging from seven years following the applicable closing date to the expiration of the relevant statutes of limitations, although, in some cases, there may be other agreed upon term limitations or no term limitations.  Certain of these contingent obligations are subject to deductibles which have to be incurred by the obligee before the Company is obligated to make payments.  The maximum amount of the Company’s contingent obligation for indemnifications related to the sale of business entities that are quantifiable was $471 million at June 30, 2013, of which $8 million was recognized on the balance sheet at that date.

The Company also has contingent obligations for guarantees related to certain investments, third-party loans related to certain investments, certain insurance policy obligations of former insurance subsidiaries, and various other indemnifications.  The Company also provides standard indemnifications to service providers in the normal course of business.  The indemnification clauses are often standard contractual terms.  Certain of these guarantees and indemnifications have no stated or notional amounts or limitation to the maximum potential future payments, and, accordingly, the Company is unable to develop an estimate of the maximum potential payments for such arrangements.  The maximum amount of the Company’s obligation for guarantees of certain investments and third-party loans related to certain investments that are quantifiable was $129 million at June 30, 2013, approximately $63 million of which is indemnified by a third party.  The maximum amount of the Company’s obligation related to the guarantee of certain insurance policy obligations of a former insurance subsidiary was $480 million at June 30, 2013, all of which is indemnified by a third party.

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, which totaled $700 million at June 30, 2013.

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). Concurrent with the merger, The Travelers Companies, Inc. fully and unconditionally assumed 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.

On June 10, 2013, in connection with the definitive agreement to acquire all of the issued and outstanding shares of The Dominion of Canada General Insurance Company (The Dominion) from E-L Financial Corporation Limited (E-L Financial), The Travelers Companies, Inc. (TRV) provided customary representations and warranties, as well as an unconditional guarantee to E-L Financial of the full and prompt payment of the purchase price when due and the performance of all agreements, covenants, and obligations under the agreement by TRV’s subsidiary that was formed to complete the purchase.  See Financial, Professional & International Insurance in note 1 to the Company’s consolidated financial statements for further information regarding the transaction.

32

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended June 30, 2013

(in millions)	TPC		OtherSubsidiaries		Travelers (2)			Eliminations			Consolidated
Revenues
Premiums	$	3,804	$	1,799	$	—		$	—		$	5,603
Net investment income	457		229		1			—			687
Fee income	82		—		—			—			82
Net realized investment gains (1)	124		43		—			—			167
Other revenues	103		32		—			—			135
Total revenues	4,570		2,103		1			—			6,674
Claims and expenses
Claims and claim adjustment expenses	2,339		1,191		—			—			3,530
Amortization of deferred acquisition costs	635		315		—			—			950
General and administrative expenses	639		289		3			—			931
Interest expense	12		—		74			—			86
Total claims and expenses	3,625		1,795		77			—			5,497
Income (loss) before income taxes	945		308		(76		)	—			1,177
Income tax expense (benefit)	203		77		(28		)	—			252
Net income of subsidiaries	—		—		973			(973		)	—
Net income	$	742	$	231	$	925		$	(973	)	$	925

(1) Total other-than-temporary impairment (OTTI) for the three months ended June 30, 2013, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains (losses)	$	(1	)	$	—		$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains	$	(1	)	$	(1	)	$	—	$	—	$	(2	)
OTTI gains recognized in OCI	$	—		$	1		$	—	$	—	$	1

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

33

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended June 30, 2012

(in millions)	TPC		OtherSubsidiaries		Travelers (2)			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 (1)	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
Net income of subsidiaries	—		—		539			(539		)	—
Net income	$	394	$	145	$	499		$	(539	)	$	499

(1) Total other-than-temporary impairment (OTTI) for the three months ended June 30, 2012, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains (losses)	$	(1	)	$	12		$	—	$	—	$	11
OTTI losses recognized in net realized investment gains	$	(3	)	$	(1	)	$	—	$	—	$	(4	)
OTTI gains recognized in OCI	$	2		$	13		$	—	$	—	$	15

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

34

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the six months ended June 30, 2013

(in millions)	TPC		OtherSubsidiaries		Travelers (2)			Eliminations			Consolidated
Revenues
Premiums	$	7,545	$	3,575	$	—		$	—		$	11,120
Net investment income	912		442		3			—			1,357
Fee income	178		1		—			—			179
Net realized investment gains (1)	117		59		1			—			177
Other revenues	132		37		—			—			169
Total revenues	8,884		4,114		4			—			13,002
Claims and expenses
Claims and claim adjustment expenses	4,470		2,213		—			—			6,683
Amortization of deferred acquisition costs	1,272		626		—			—			1,898
General and administrative expenses	1,269		575		2			—			1,846
Interest expense	29		—		149			—			178
Total claims and expenses	7,040		3,414		151			—			10,605
Income (loss) before income taxes	1,844		700		(147		)	—			2,397
Income tax expense (benefit)	452		176		(52		)	—			576
Net income of subsidiaries	—		—		1,916			(1,916		)	—
Net income	$	1,392	$	524	$	1,821		$	(1,916	)	$	1,821

(1) Total other-than-temporary impairment (OTTI) for the six months ended June 30, 2013, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains (losses)	$	(4	)	$	3		$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains	$	(5	)	$	(2	)	$	—	$	—	$	(7	)
OTTI gains recognized in OCI	$	1		$	5		$	—	$	—	$	6

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

35

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the six months ended June 30, 2012

(in millions)	TPC		OtherSubsidiaries			Travelers (2)			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) (1)	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
Net income of subsidiaries	—		—			1,406			(1,406		)	—
Net income	$	1,012	$	394		$	1,305		$	(1,406	)	$	1,305

(1) Total other-than-temporary impairment (OTTI) for the six months ended June 30, 2012, and the amounts comprising total OTTI that were recognized in net realized investment gains (losses) and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains	$	—		$	11		$	—	$	—	$	11
OTTI losses recognized in net realized investment gains (losses)	$	(6	)	$	(2	)	$	—	$	—	$	(8	)
OTTI gains recognized in OCI	$	6		$	13		$	—	$	—	$	19

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

36

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For the three months ended June 30, 2013

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Net income	$	742		$	231		$	925		$	(973	)	$	925
Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(1,282		)	(509		)	1			—			(1,790		)
Having credit losses recognized in the consolidated statement of income	(2		)	(3		)	—			—			(5		)
Net changes in benefit plan assets and obligations	—			1			25			—			26
Net changes in unrealized foreign currency translation	(51		)	(22		)	—			—			(73		)
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(1,335		)	(533		)	26			—			(1,842		)
Income tax expense (benefit)	(462		)	(183		)	9			—			(636		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(873		)	(350		)	17			—			(1,206		)
Other comprehensive loss of subsidiaries	—			—			(1,223		)	1,223			—
Other comprehensive loss	(873		)	(350		)	(1,206		)	1,223			(1,206		)
Comprehensive loss	$	(131	)	$	(119	)	$	(281	)	$	250		$	(281	)

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

37

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

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:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	167			52			(3		)	—			216
Having credit losses recognized in the consolidated statement of income	5			—			—			—			5
Net changes in benefit plan assets and obligations	—			1			21			—			22
Net changes in unrealized foreign currency translation	(54		)	(32		)	—			—			(86		)
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	118			21			18			—			157
Income tax expense	43			16			7			—			66
Other comprehensive income net of taxes, before other comprehensive income of subsidiaries	75			5			11			—			91
Other comprehensive income of subsidiaries	—			—			80			(80		)	—
Other comprehensive income	75			5			91			(80		)	91
Comprehensive income	$	469		$	150		$	590		$	(619	)	$	590

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

38

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the six months ended June 30, 2013

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Net income	$	1,392		$	524		$	1,821		$	(1,916	)	$	1,821
Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(1,597		)	(576		)	7			—			(2,166		)
Having credit losses recognized in the consolidated statement of income	5			(1		)	—			—			4
Net changes in benefit plan assets and obligations	1			3			50			—			54
Net changes in unrealized foreign currency translation	(61		)	(108		)	—			—			(169		)
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(1,652		)	(682		)	57			—			(2,277		)
Income tax expense (benefit)	(570		)	(211		)	20			—			(761		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(1,082		)	(471		)	37			—			(1,516		)
Other comprehensive loss of subsidiaries	—			—			(1,553		)	1,553			—
Other comprehensive loss	(1,082		)	(471		)	(1,516		)	1,553			(1,516		)
Comprehensive income	$	310		$	53		$	305		$	(363	)	$	305

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

39

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

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:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	113			20		6		—			139
Having credit losses recognized in the consolidated statement of income	21			9		—		—			30
Net changes in benefit plan assets and obligations	—			—		42		—			42
Net changes in unrealized foreign currency translation	(33		)	11		—		—			(22		)
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	101			40		48		—			189
Income tax expense	36			11		17		—			64
Other comprehensive income, net of taxes, before other comprehensive income of subsidiaries	65			29		31		—			125
Other comprehensive income of subsidiaries	—			—		94		(94		)	—
Other comprehensive income	65			29		125		(94		)	125
Comprehensive income	$	1,077		$	423	$	1,430	$	(1,500	)	$	1,430

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

40

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

CONSOLIDATING BALANCE SHEET (Unaudited)

At June 30, 2013

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,494)	$	43,198	$	19,607	$	38		$	—		$	62,843
Equity securities, available for sale, at fair value (cost $463)	153		433		115			—			701
Real estate investments	32		889		—			—			921
Short-term securities	1,369		252		1,773			—			3,394
Other investments	2,431		976		1			—			3,408
Total investments	47,183		22,157		1,927			—			71,267
Cash	152		155		1			—			308
Investment income accrued	498		232		4			—			734
Premiums receivable	4,196		2,072		—			—			6,268
Reinsurance recoverables	6,468		3,419		—			—			9,887
Ceded unearned premiums	736		177		—			—			913
Deferred acquisition costs	1,567		235		—			—			1,802
Deferred taxes	100		53		104			—			257
Contractholder receivables	3,231		1,217		—			—			4,448
Goodwill	2,411		954		—			—			3,365
Other intangible assets	253		105		—			—			358
Investment in subsidiaries	—		—		28,358			(28,358		)	—
Other assets	1,983		32		278			—			2,293
Total assets	$	68,778	$	30,808	$	30,672		$	(28,358	)	$	101,900
Liabilities
Claims and claim adjustment expense reserves	$	32,681	$	16,939	$	—		$	—		$	49,620
Unearned premium reserves	7,935		3,622		—			—			11,557
Contractholder payables	3,231		1,217		—			—			4,448
Payables for reinsurance premiums	183		212		—			—			395
Debt	692		—		5,160			—			5,852
Other liabilities	3,817		689		632			—			5,138
Total liabilities	48,539		22,679		5,792			—			77,010
Shareholders’ equity
Common stock (1,750.0 shares authorized; 373.5 shares issued and outstanding)	—		390		21,367			(390		)	21,367
Additional paid-in capital	11,635		6,501		—			(18,136		)	—
Retained earnings	7,580		786		22,796			(8,356		)	22,806
Accumulated other comprehensive income	1,024		452		720			(1,476		)	720
Treasury stock, at cost (380.3 shares)	—		—		(20,003		)	—			(20,003		)
Total shareholders’ equity	20,239		8,129		24,880			(28,358		)	24,890
Total liabilities and shareholders’ equity	$	68,778	$	30,808	$	30,672		$	(28,358	)	$	101,900

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

41

  THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

CONSOLIDATING BALANCE SHEET (Unaudited)

At December 31, 2012

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,829)	$	44,336	$	21,019	$	38		$	—		$	65,393
Equity securities, available for sale, at fair value (cost $462)	153		386		106			—			645
Real estate investments	33		850		—			—			883
Short-term securities	1,187		338		1,958			—			3,483
Other investments	2,443		990		1			—			3,434
Total investments	48,152		23,583		2,103			—			73,838
Cash	177		151		2			—			330
Investment income accrued	507		240		5			—			752
Premiums receivable	3,944		1,928		—			—			5,872
Reinsurance recoverables	7,112		3,600		—			—			10,712
Ceded unearned premiums	698		158		—			—			856
Deferred acquisition costs	1,560		232		—			—			1,792
Contractholder receivables	3,540		1,266		—			—			4,806
Goodwill	2,411		954		—			—			3,365
Other intangible assets	268		113		—			—			381
Investment in subsidiaries	—		—		28,562			(28,562		)	—
Other assets	1,930		286		18			—			2,234
Total assets	$	70,299	$	32,511	$	30,690		$	(28,562	)	$	104,938
Liabilities
Claims and claim adjustment expense reserves	$	33,598	$	17,324	$	—		$	—		$	50,922
Unearned premium reserves	7,751		3,490		—			—			11,241
Contractholder payables	3,540		1,266		—			—			4,806
Payables for reinsurance premiums	151		195		—			—			346
Deferred taxes	316		123		(101		)	—			338
Debt	1,191		—		5,159			—			6,350
Other liabilities	4,107		1,186		237			—			5,530
Total liabilities	50,654		23,584		5,295			—			79,533
Shareholders’ equity
Common stock (1,750.0 shares authorized; 377.4 shares issued and outstanding)	—		390		21,161			(390		)	21,161
Additional paid-in capital	11,135		6,501		—			(17,636		)	—
Retained earnings	6,404		1,113		21,342			(7,507		)	21,352
Accumulated other comprehensive income	2,106		923		2,236			(3,029		)	2,236
Treasury stock, at cost (372.3 shares)	—		—		(19,344		)	—			(19,344		)
Total shareholders’ equity	19,645		8,927		25,395			(28,562		)	25,405
Total liabilities and shareholders’ equity	$	70,299	$	32,511	$	30,690		$	(28,562	)	$	104,938

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

42

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the six months ended June 30, 2013

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	1,392		$	524		$	1,821		$	(1,916	)	$	1,821
Net adjustments to reconcile net income to net cash provided by operating activities	(807		)	37			(1,148		)	1,349			(569		)
Net cash provided by operating activities	585			561			673			(567		)	1,252
Cash flows from investing activities
Proceeds from maturities of fixed maturities	2,570			1,330			1			—			3,901
Proceeds from sales of investments:
Fixed maturities	300			267			5			—			572
Equity securities	18			32			—			—			50
Other investments	224			157			—			—			381
Purchases of investments:
Fixed maturities	(3,062		)	(1,419		)	(7		)	—			(4,488		)
Equity securities	(15		)	(24		)	(1		)	—			(40		)
Real estate investments	—			(59		)	—			—			(59		)
Other investments	(150		)	(59		)	—			—			(209		)
Net sales (purchases) of short-term securities	(182		)	78			185			—			81
Securities transactions in course of settlement	59			1			—			—			60
Other	(155		)	(2		)	—			—			(157		)
Net cash provided by (used in) investing activities	(393		)	302			183			—			92
Cash flows from financing activities
Payment of debt	(500		)	—			—			—			(500		)
Dividends paid to shareholders	—			—			(366		)	—			(366		)
Issuance of common stock — employee share options	—			—			139			—			139
Treasury stock acquired — share repurchase authorization	—			—			(600		)	—			(600		)
Treasury stock acquired — net employee share-based compensation	—			—			(59		)	—			(59		)
Excess tax benefits from share-based payment arrangements	—			—			29			—			29
Capital contributions	500			—			—			(500		)	—
Dividends paid to parent company	(217		)	(850		)	—			1,067			—
Net cash used in financing activities	(217		)	(850		)	(857		)	567			(1,357		)
Effect of exchange rate changes on cash	—			(9		)	—			—			(9		)
Net increase (decrease) in cash	(25		)	4			(1		)	—			(22		)
Cash at beginning of year	177			151			2			—			330
Cash at end of period	$	152		$	155		$	1		$	—		$	308
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	479		$	178		$	(162	)	$	—		$	495
Interest paid	$	36		$	—		$	148		$	—		$	184

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

43

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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

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 investments	—			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 investments	—			(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 stock acquired — share repurchase authorization	—			—			(707		)	—			(707		)
Treasury stock 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.

44

Item 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following is a discussion and analysis of the Company’s financial condition and results of operations.

FINANCIAL HIGHLIGHTS

2013 Second Quarter Consolidated Results of Operations

·Net income of $925 million, or $2.44 per share basic and $2.41 per share diluted

·Net earned premiums of $5.60 billion

·Catastrophe losses of $340 million ($221 million after-tax)

·Net favorable prior year reserve development of $192 million ($125 million after-tax)

·GAAP combined ratio of 94.3%

·Net investment income of $687 million ($551 million after-tax)

·Benefit of $91 million ($59 million after-tax) from settlement of legal matter

·Benefit of $63 million from resolution of prior year tax matters

·Operating cash flows of $722 million

·Net realized investment gains of $167 million ($109 million after-tax)

2013 Second Quarter Consolidated Financial Condition

·Total investments of $71.27 billion; fixed maturities and short-term securities comprised 93% of total investments

·Total assets of $101.90 billion

·Total debt of $5.85 billion, resulting in a debt-to-total capital ratio of 19.0% (20.1% excluding net unrealized investment gains, net of tax)

·Repurchased 3.6 million common shares for total cost of $300 million under share repurchase authorization

·Shareholders’ equity of $24.89 billion

·Book value per common share of $66.65

·Holding company liquidity of $2.05 billion

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CONSOLIDATED OVERVIEW

Consolidated Results of Operations

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except ratio and per share amounts)	2013			2012			2013			2012
Revenues
Premiums	$	5,603		$	5,529		$	11,120		$	11,052
Net investment income	687			738			1,357			1,478
Fee income	82			59			179			141
Net realized investment gains	167			4			177			14
Other revenues	135			29			169			66
Total revenues	6,674			6,359			13,002			12,751
Claims and expenses
Claims and claim adjustment expenses	3,530			3,786			6,683			7,150
Amortization of deferred acquisition costs	950			976			1,898			1,947
General and administrative expenses	931			893			1,846			1,777
Interest expense	86			96			178			192
Total claims and expenses	5,497			5,751			10,605			11,066
Income before income taxes	1,177			608			2,397			1,685
Income tax expense	252			109			576			380
Net income	$	925		$	499		$	1,821		$	1,305
Net income per share
Basic	$	2.44		$	1.27		$	4.80		$	3.32
Diluted	$	2.41		$	1.26		$	4.75		$	3.29
GAAP combined ratio
Loss and loss adjustment expense ratio	62.3		%	68.1		%	59.3		%	64.1		%
Underwriting expense ratio	32.0			32.4			32.1			32.2
GAAP combined ratio	94.3		%	100.5		%	91.4		%	96.3		%
Incremental impact of direct to consumer initiative on GAAP combined ratio	0.5		%	0.7		%	0.6		%	0.7		%

The following discussions of the Company’s net income and segment operating income are presented on an after-tax basis.  Discussions of the components of net income and segment operating income are presented on a pretax basis, unless otherwise noted.  Discussions of net income per common share are presented on a diluted basis.

Overview

Diluted net income per share of $2.41 in the second quarter of 2013 increased by 91% over diluted net income per share of $1.26 in the same period of 2012.  Net income of $925 million in the second quarter of 2013 increased by 85% over net income of $499 million in the same period of 2012.  The higher rate of increase in diluted net income per share reflected the impact of share repurchases.  The increase in net income in the second quarter of 2013 compared with the same period of 2012 primarily reflected the pretax impacts of (i) a decline in catastrophe losses, (ii) higher underwriting margins excluding catastrophe losses and prior year reserve development (“underlying underwriting margins”), (iii) an increase in net realized investment gains and (iv) a gain from the settlement of a legal proceeding, partially offset by modest declines in (v) net investment income and (vi) net favorable prior year reserve development.  The improvement in underlying underwriting

46

margins primarily resulted from the impact of earned pricing that exceeded loss cost trends in each of the Company’s business segments.  Partially offsetting this net pretax improvement was the related tax expense.  Additionally, net income in the second quarter of 2013 benefited from a reduction in income tax expense resulting from the resolution of prior year tax matters.  The effective tax rate in the second quarter of 2013 was higher than in the same period in 2012.  This resulted from interest on municipal bonds, which is effectively taxed at a rate that is lower than the corporate tax rate of 35%, comprising a lower percentage of pretax income in the second quarter of 2013 due to an increase in the underwriting gain, partially offset by the resolution of prior year tax matters discussed above.  Catastrophe losses in the second quarters of 2013 and 2012 were $340 million and $549 million, respectively.  Net favorable prior year reserve development in the second quarters of 2013 and 2012 was $192 million and $221 million, respectively.

Diluted net income per share in the first six months of 2013 was $4.75, compared with diluted net income per share of $3.29 in the same period of 2012, reflecting net income in the first six months of 2013 of $1.82 billion, compared with net income of $1.31 billion in the same period of 2012 and the favorable impact of common share repurchases.  The increase in net income primarily reflected the same factors discussed above.  Catastrophe losses in the first six months of 2013 were $439 million, compared with $717 million in the same period of 2012.  Net favorable prior year reserve development in the first six months of 2013 was $423 million, compared with $525 million in the same period of 2012.

Revenues

Earned Premiums

Earned premiums in the second quarter of 2013 were $5.60 billion, $74 million or 1% higher than in the same period of 2012.  Earned premiums in the first six months of 2013 were $11.12 billion, $68 million or less than 1% higher than in the same period of 2012.  In the Business Insurance segment, earned premiums in the second quarter and first six months of 2013 increased by 6% and 4% over the respective periods of 2012.  In the Financial, Professional & International Insurance segment, earned premiums in the second quarter and first six months of 2013 decreased by 2% and 1% from the respective periods of 2012.  In the Personal Insurance segment, earned premiums in both the second quarter and first six months of 2013 decreased by 4% from the respective periods of 2012.  Factors contributing to the changes in earned premiums in each segment are discussed in more detail in the segment discussions that follow.

Net Investment Income

The following table sets forth information regarding the Company’s investments.

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2013			2012			2013			2012
Average investments (a)	$	69,701		$	69,623		$	69,903		$	69,555
Pretax net investment income	687			738			1,357			1,478
After-tax net investment income	551			589			1,093			1,182
Average pretax yield (b)	3.9		%	4.2		%	3.9		%	4.2		%
Average after-tax yield (b)	3.2		%	3.4		%	3.1		%	3.4		%

(a)Excludes net unrealized investment gains and losses, net of tax, and reflects cash, receivables for investment sales, payables on investment purchases and accrued investment income.

(b)Excludes net realized investment gains and losses and net unrealized investment gains and losses, net of tax.

47

Net investment income in the second quarter of 2013 was $687 million, $51 million or 7% lower than in the same period of 2012.  Net investment income in the first six months of 2013 was $1.36 billion, $121 million or 8% lower than in the same period of 2012.  Net investment income from fixed maturity investments in the second quarter and first six months of 2013 was $574 million and $1.16 billion, respectively, $37 million and $71 million lower, respectively, than in the same periods of 2012, primarily resulting from lower long-term reinvestment yields available in the market.  Net investment income from non-fixed maturity investments in the second quarter and first six months of 2013 was $120 million and $212 million, respectively, $13 million and $49 million lower, respectively, than in the same periods of 2012, primarily reflecting lower results in the Company’s private equity limited partnership investments.  The average pretax yield on the total investment portfolio was 3.9% for both the second quarter and first six months of 2013, compared with 4.2% for both of the same periods of 2012, primarily reflecting the decline in both fixed maturity and non-fixed maturity investment income.

Fee Income

The National Accounts market in the Business Insurance segment is the primary source of the Company’s fee-based business.  The $23 million and $38 million increases in fee income in the second quarter and first six months of 2013, respectively, compared with the same periods of 2012 are discussed in the Business Insurance segment discussion that follows.

Net Realized Investment Gains

The following table sets forth information regarding the Company’s net realized investment gains.

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2013			2012			2013			2012
Net Realized Investment Gains
Other-than-temporary impairment losses	$	(2	)	$	(4	)	$	(7	)	$	(8	)
Other net realized investment gains	169			8			184			22
Net realized investment gains	$	167		$	4		$	177		$	14

Included in other net realized investment gains in the second quarter and first six months of 2013 were $134 million and $115 million, respectively, of net realized gains associated with U.S. Treasury futures contracts (which require daily mark-to-market settlement and are used to shorten the duration of the Company’s fixed maturity investment portfolio).  At June 30, 2013, the Company had no open Treasury futures contracts.

Other Revenues

Other revenues in the second quarter and first six months of 2013 included a $91 million gain from the settlement of a legal proceeding.  See note 12 of notes to the unaudited consolidated financial statements in this report for further discussion.  The remainder of other revenues in all periods presented primarily consisted of premium installment charges.

Claims and Expenses

Claims and Claim Adjustment Expenses

Claims and claim adjustment expenses in the second quarter of 2013 were $3.53 billion, $256 million or 7% lower than in the same period of 2012.  The decrease primarily reflected (i) a decline in catastrophe losses and (ii) the impact of lower business volume, partially offset by (iii) the impact of loss cost trends and (iv) lower net favorable prior year reserve development.  Catastrophe losses in the second quarters of 2013 and 2012 were $340 million and $549 million, respectively.  Catastrophe losses in the second quarters of both 2013 and 2012 primarily resulted from wind and hail storms in several regions of the United States.  In addition, catastrophe losses in the second quarter of 2013 included losses from floods in Alberta, Canada.  Net favorable prior year reserve development in the second quarters of 2013 and 2012 was $192 million and $221 million, respectively.

Claims and claim adjustment expenses in the first six months of 2013 were $6.68 billion, $467 million or 7% lower than in the same period of 2012, primarily reflecting the same factors described above.  Catastrophe losses in the first six months of 2013 and 2012 were $439 million and $717 million, respectively.  Catastrophe losses in the first six months of 2013 included the second quarter storms in the United States and floods in Canada described above, as well as tornadoes and hail storms in the Southeastern United States in the first quarter of 2013.  Catastrophe losses in the first six months of 2012 included the second quarter storms described above, as well as tornadoes and hail storms in the Midwest and Southeast regions of the United States in the

48

first quarter of 2012.  Net favorable prior year reserve development in the first six months of 2013 and 2012 was $423 million and $525 million, respectively.  Net favorable prior year reserve development in the first six months of 2013 was reduced by a $42 million charge that was precipitated by legislation in New York enacted during the first quarter of 2013 related to the New York Fund for Reopened Cases for workers’ compensation.  Factors contributing to net favorable prior year reserve development in each segment during these periods are discussed in more detail in the segment discussions that follow.

Amortization of Deferred Acquisition Costs

Amortization of deferred acquisition costs in the second quarter of 2013 was $950 million, $26 million or 3% lower than in the same period of 2012.  The amortization of deferred acquisition costs in the first six months of 2013 was $1.90 billion, $49 million or 3% lower than in the same 2012 period.  Amortization of deferred acquisition costs is discussed in more detail in the segment discussions that follow.

General and Administrative Expenses

General and administrative expenses in the second quarter of 2013 were $931 million, $38 million or 4% higher than in the same period of 2012.  General and administrative expenses in the first six months of 2013 were $1.85 billion, $69 million or 4% higher than in the same period of 2012.  General and administrative expenses are discussed in more detail in the segment discussions that follow.

Interest Expense

Interest expense in the second quarter and first six months of 2013 was $86 million and $178 million, respectively, 10% and 7% lower than the respective periods of 2012, reflecting lower average levels of debt outstanding as a result of debt repayments over the previous twelve months.

Income Tax Expense

Income tax expense in the second quarter of 2013 was $252 million, $143 million or 131% higher than in the same period of 2012, primarily reflecting the $343 million increase in underwriting margins (including the impact of decreases in catastrophe losses and net favorable prior year reserve development), partially offset by a reduction in income tax expense of $63 million resulting from the resolution of prior year tax matters.  Income tax expense in the first six months of 2013 was $576 million, $196 million or 52% higher than in the same period of 2012, primarily reflecting the $552 million increase in underwriting margins (including the impact of decreases in catastrophe losses and net favorable prior year reserve development), partially offset by the resolution of prior year tax matters in the second quarter of 2013.

The Company’s effective tax rates in the second quarter and first six months of 2013 were 21% and 24%, respectively.  In the second quarter and first six months of 2012, the Company’s effective tax rates were 18% and 23%, respectively.   The effective tax rates in all periods were lower than the statutory rate of 35% primarily due to the impact of tax-exempt investment income on the calculation of the Company’s income tax provision.  In addition, income tax expense in the second quarter and first six months of 2013 was reduced by $63 million as a result of the resolution of prior year tax matters.

GAAP Combined Ratio

The consolidated GAAP combined ratio of 94.3% in the second quarter of 2013 was 6.2 points lower than the consolidated GAAP combined ratio of 100.5% in the same period of 2012.  The consolidated GAAP combined ratio of 91.4% in the first six months of 2013 was 4.9 points lower than the consolidated GAAP combined ratio of 96.3% in the same period of 2012.

The consolidated loss and loss adjustment expense ratio of 62.3% in the second quarter of 2013 was 5.8 points lower than the consolidated loss and loss adjustment expense ratio of 68.1% in the same period of 2012.  Catastrophe losses accounted for 6.1 points and 10.0 points of the 2013 and 2012 second quarter loss and loss adjustment expense ratios, respectively.  The 2013 and 2012 second quarter loss and loss adjustment expense ratios included 3.5 and 4.0 points of benefit from net favorable prior year reserve development, respectively.  The consolidated loss and loss adjustment expense ratio excluding catastrophe losses and prior year reserve development (“underlying loss and loss adjustment expense ratio”) in the second quarter of 2013 was 2.4 points lower than the 2012 second quarter ratio on the same basis, primarily reflecting the improvement in underlying underwriting margins discussed in the “Overview” section above.

49

The consolidated loss and loss adjustment expense ratio of 59.3% in the first six months of 2013 was 4.8 points lower than the consolidated loss and loss adjustment expense ratio of 64.1% in the same period of 2012.  Catastrophe losses accounted for 3.9 points and 6.5 points of the 2013 and 2012 six-month loss and loss adjustment expense ratios, respectively.  The 2013 and 2012 six-month loss and loss adjustment expense ratios included 3.8 and 4.8 points of benefit from net favorable prior year reserve development, respectively.  The 2013 six-month underlying loss and loss adjustment expense ratio was 3.2 points lower than the 2012 six-month ratio on the same basis, reflecting the same factors discussed above for the second quarter of 2013.

The consolidated underwriting expense ratio of 32.0% for the second quarter of 2013 was 0.4 points lower than the consolidated underwriting expense ratio of 32.4% in the same period of 2012.  In the first six months of 2013, the consolidated underwriting expense ratio of 32.1% was 0.1 points lower than the consolidated underwriting expense ratio of 32.2% in the same 2012 period.

Written Premiums

Consolidated gross and net written premiums were as follows:

	Gross Written Premiums
	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Business Insurance	$	3,344	$	3,280	$	6,970	$	6,709
Financial, Professional & International Insurance	906		882		1,705		1,673
Personal Insurance	1,997		2,078		3,760		3,931
Total	$	6,247	$	6,240	$	12,435	$	12,313

	Net Written Premiums
	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Business Insurance	$	3,068	$	3,026	$	6,328	$	6,126
Financial, Professional & International Insurance	849		840		1,496		1,444
Personal Insurance	1,907		2,002		3,597		3,795
Total	$	5,824	$	5,868	$	11,421	$	11,365

Gross written premiums in the second quarter of 2013 were virtually level with the same period of 2012.  Net written premiums in the second quarter of 2013 were slightly lower than in the same period of 2012.  Gross and net written premiums in the first six months of 2013 increased slightly over the same period of 2012.  Factors contributing to the changes in gross and net written premiums in each segment are discussed in more detail in the segment discussions that follow.

50

RESULTS OF OPERATIONS BY SEGMENT

Business Insurance

Results of the Company’s Business Insurance segment were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2013			2012			2013			2012
Revenues
Earned premiums	$	3,018		$	2,860		$	5,960		$	5,736
Net investment income	502			536			989			1,068
Fee income	82			58			179			140
Other revenues	114			8			127			22
Total revenues	$	3,716		$	3,462		$	7,255		$	6,966
Total claims and expenses	$	3,000		$	3,018		$	5,741		$	5,692
Operating income	$	579		$	362		$	1,169		$	974
Loss and loss adjustment expense ratio	65.3		%	71.0		%	61.6		%	64.4		%
Underwriting expense ratio	30.9			32.0			31.3			31.9
GAAP combined ratio	96.2		%	103.0		%	92.9		%	96.3		%

Overview

Operating income in the second quarter of 2013 was $579 million, $217 million or 60% higher than operating income of $362 million in the same period of 2012.  The increase in operating income in the second quarter of 2013 compared with the same period of 2012 primarily reflected the pretax impacts of (i) a decline in catastrophe losses, (ii) higher underlying underwriting margins primarily resulting from earned pricing that exceeded loss cost trends and (iii) a gain from the settlement of a legal proceeding, partially offset by (iv) a decline in net investment income.  Partially offsetting this net pretax increase was the related tax expense.  Additionally, operating income in the second quarter of 2013 benefited from a reduction in income tax expense resulting from the resolution of prior year tax matters.  The effective tax rate in the second quarter of 2013 increased over the same period of 2012.  This resulted from interest on municipal bonds, which is effectively taxed at a rate that is lower than the corporate tax rate of 35%, comprising a lower percentage of pretax income due to an increase in the underwriting gain, partially offset by the resolution of prior year tax matters described above. Catastrophe losses in the second quarter of 2013 were $148 million, compared with $252 million in the same period of 2012.  Net favorable prior year reserve development was $55 million in the second quarter of 2013, compared with $58 million in the same period of 2012.

Operating income in the first six months of 2013 was $1.17 billion, $195 million or 20% higher than operating income of $974 million in the same period of 2012, primarily reflecting the same factors described above, as well as a decline in net favorable prior year reserve development.  Catastrophe losses in the first six months of 2013 were $183 million, compared with $305 million in the same period of 2012.  Net favorable prior year reserve development in the first six months of 2013 was $168 million, compared with $306 million in the same period of 2012.  Net favorable prior year reserve development in the first six months of 2013 was reduced by a $42 million charge that was precipitated by legislation in New York as described above.

Earned Premiums

Earned premiums in the second quarter of 2013 were $3.02 billion, $158 million or 6% higher than in the same period of 2012.  Earned premiums in the first six months of 2013 were $5.96 billion, $224 million or 4% higher than in the same period of 2012.  The increases in both periods of 2013 primarily reflected the impact of an increase in net written premiums over the preceding twelve months.

51

Net Investment Income

Net investment income in the second quarter of 2013 was $502 million, $34 million or 6% lower than in the same 2012 period.  Net investment income in the first six months of 2013 was $989 million, $79 million or 7% lower than in the same period of 2012.  Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion herein for a description of the factors contributing to the decline in the Company’s consolidated net investment income in the second quarter and first six months of 2013 compared with the same periods of 2012.  In addition, refer to note 2 of notes to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of the Company’s net investment income allocation methodology.

Fee Income

National Accounts is the primary source of fee income due to its service businesses, which include claim and loss prevention services to large companies that choose to self-insure a portion of their insurance risks, as well as claims and policy management services to workers’ compensation residual market pools.  Fee income in the second quarter and first six months of 2013 increased by $24 million and $39 million over the respective periods of 2012, primarily reflecting the impact of higher serviced premium volume in workers’ compensation residual market pools and higher claim volume in the large deductible business.

Other Revenues

Other revenues in the second quarter and first six months of 2013 included a $91 million gain from the settlement of a legal proceeding.

Claims and Expenses

Claims and Claim Adjustment Expenses

Claims and claim adjustment expenses in the second quarter of 2013 were $2.01 billion, $41 million or 2% lower than in the same period of 2012, primarily reflecting (i) a decline in catastrophe losses and (ii) the impact of a modest decline in business volume, partially offset by (iii) the impact of loss cost trends.  Catastrophe losses in the second quarter of 2013 were $148 million, compared with $252 million in the same period of 2012.  Net favorable prior year reserve development in the second quarter of 2013 was $55 million, compared with $58 million in the same period of 2012.  Net favorable prior year reserve development in the second quarter of 2013 was primarily driven by better than expected loss experience in the excess coverages of the general liability product line for accident years 2004 through 2009, reflecting more favorable legal and judicial environments than what the Company previously expected.  Net favorable prior year reserve development in the second quarter of 2012 reflected better than expected loss experience in the property product line related to catastrophe losses incurred in 2011 and lower than expected claim department expenses.  These factors contributing to net favorable prior year reserve development in the second quarters of 2013 and 2012 were partially offset by $65 million and $90 million increases, respectively, to environmental reserves, which are discussed in further detail in the “Environmental Claims and Litigation” section herein.

Claims and claim adjustment expenses in the first six months of 2013 were $3.76 billion, virtually level with the same 2012 period.  Claims and claim adjustment expenses in the first six months of 2013 were impacted by the same factors described above for the second quarter of 2013, but those impacts were offset by a decline in net favorable prior year reserve development.  Catastrophe losses in the first six months of 2013 were $183 million, compared with $305 million in the same period of 2012.  Net favorable prior year reserve development in the first six months of 2013 was $168 million, compared with $306 million in the same period of 2012.  Net favorable prior year reserve development in the first six months of 2013 was primarily driven by the same factors described above and by better than expected loss experience for the property product line.  Net favorable prior year reserve development in the first six months of 2013 was also reduced by a $42 million workers’ compensation charge that was precipitated by legislation in New York.  Net favorable prior year reserve development in the first six months of 2012 was primarily driven by the same factors described above and by better than expected loss experience in the general liability product line for accident years 2004 through 2009, which reflected what the Company believes are more favorable legal and judicial environments than the Company previously expected.

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Amortization of Deferred Acquisition Costs

Amortization of deferred acquisition costs in the second quarter of 2013 was $481 million, $16 million or 3% higher than in the same period of 2012.  Amortization of deferred acquisition costs in the first six months of 2013 was $956 million, $24 million or 3% higher than in the same 2012 period.

General and Administrative Expenses

General and administrative expenses in the second quarter of 2013 were $511 million, $7 million or 1% higher than in the same period of 2012.  General and administrative expenses in the first six months of 2013 were $1.03 billion, $26 million or 3% higher than in the same period of 2012.  The increases in both periods of 2013 were primarily driven by increases in employee- and technology-related expenses.

Income Tax Expense

Income tax expense in the second quarter of 2013 was $137 million, $55 million or 67% higher than in the same period of 2012, primarily reflecting the $200 million increase in underwriting margins (including the impact of decreases in catastrophe losses and net favorable prior year reserve development), partially offset by a reduction in income tax expense of $43 million resulting from the resolution of prior year tax matters.  Income tax expense in the first six months of 2013 was $345 million, $45 million or 15% higher than in the same period of 2012, primarily reflecting the $214 million increase in underwriting margins, partially offset by the resolution of prior year tax matters in the second quarter of 2013.

GAAP Combined Ratio

The GAAP combined ratio of 96.2% in the second quarter of 2013 was 6.8 points lower than the GAAP combined ratio of 103.0% in the same period of 2012.  The GAAP combined ratio of 92.9% in the first six months of 2013 was 3.4 points lower than the GAAP combined ratio of 96.3% in the same period of 2012.

The loss and loss adjustment expense ratio of 65.3% in the second quarter of 2013 was 5.7 points lower than the loss and loss adjustment expense ratio of 71.0% in the same period of 2012.  Catastrophe losses in the second quarters of 2013 and 2012 accounted for 4.9 points and 8.8 points, respectively, of the loss and loss adjustment expense ratio.  Net favorable prior year reserve development in the second quarters of 2013 and 2012 provided 1.8 points and 2.0 points of benefit, respectively, to the loss and loss adjustment expense ratio. The 2013 second quarter underlying loss and loss adjustment expense ratio was 2.0 points lower than the 2012 ratio on the same basis, reflecting the improvement in underlying underwriting margins discussed in the “Overview” section above.

The loss and loss adjustment expense ratio of 61.6% in the first six months of 2013 was 2.8 points lower than the loss and loss adjustment expense ratio of 64.4% in the same period of 2012.  Catastrophe losses in the first six months of 2013 and 2012 accounted for 3.1 points and 5.3 points, respectively, of the loss and loss adjustment expense ratio.  Net favorable prior year reserve development in the first six months of 2013 and 2012 provided 2.8 points and 5.3 points of benefit, respectively, to the loss and loss adjustment expense ratio.  The underlying loss and loss adjustment expense ratio in the first six months of 2013 was 3.1 points lower than the 2012 ratio on the same basis, reflecting the improvement in underlying underwriting margins discussed in the “Overview” section above.

The underwriting expense ratio of 30.9% for the second quarter of 2013 was 1.1 points lower than the underwriting expense ratio of 32.0% in the same period of 2012.  In the first six months of 2013, the underwriting expense ratio of 31.3% was 0.6 points lower than the underwriting expense ratio of 31.9% in the same 2012 period, primarily reflecting the impact of growth in earned premiums in both periods of 2013.

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Written Premiums

The Business Insurance segment’s gross and net written premiums by market were as follows:

	Gross Written Premiums
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2013			2012			2013			2012
Select Accounts	$	722		$	730		$	1,460		$	1,461
Commercial Accounts	761			748			1,715			1,652
National Accounts	361			328			807			700
Industry-Focused Underwriting	664			646			1,396			1,331
Target Risk Underwriting	608			591			1,158			1,118
Specialized Distribution	232			243			437			451
Total Business Insurance Core	3,348			3,286			6,973			6,713
Business Insurance Other	(4		)	(6		)	(3		)	(4		)
Total Business Insurance	$	3,344		$	3,280		$	6,970		$	6,709

	Net Written Premiums
	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2013		2012			2013		2012
Select Accounts	$	709	$	721		$	1,433	$	1,439
Commercial Accounts	732		717			1,640		1,578
National Accounts	242		226			519		461
Industry-Focused Underwriting	653		636			1,352		1,284
Target Risk Underwriting	500		486			948		915
Specialized Distribution	232		242			436		450
Total Business Insurance Core	3,068		3,028			6,328		6,127
Business Insurance Other	—		(2		)	—		(1		)
Total Business Insurance	$	3,068	$	3,026		$	6,328	$	6,126

In Business Insurance Core, gross and net written premiums in the second quarter of 2013 increased by 2% and 1%, respectively, over the same period of 2012.  Gross and net written premiums in the first six months of 2013 increased by 4% and 3%, respectively, over the same period of 2012.  The increases in gross and net written premiums in both periods of 2013 were concentrated in National Accounts, Industry-Focused Underwriting, Commercial Accounts and Target Risk Underwriting and were driven by rate increases.  Overall business retention rates in the second quarter of 2013 remained strong but slightly lower than in the same period of 2012.  In the first six months of 2013, business retention rates remained strong and were level with the same period of 2012.  Renewal premium changes — comprising both renewal rate changes and insured exposure growth — and new business levels were virtually level with the second quarter and first six months of 2012.  Renewal rate changes continued to exceed expected loss cost trends.

Select Accounts.  Net written premiums of $709 million in the second quarter of 2013 decreased by 2% from the same period of 2012.  Net written premiums of $1.43 billion in the first six months of 2013 decreased by less than 1% from the same period of 2012.  Business retention rates in the second quarter and first six months of 2013 remained strong and were slightly higher than in the same periods of 2012.  Renewal premium changes remained positive in the second quarter and were level with the same period of 2012.  Renewal premium changes for the first six months of 2013 increased over the same period of 2012, primarily due to renewal rate increases.  New business volume in the second quarter and first six months of 2013 declined from the same periods of 2012.

Commercial Accounts.  Net written premiums of $732 million in the second quarter of 2013 increased by 2% over the same period of 2012.  Net written premiums of $1.64 billion in the first six months of 2013 increased by 4% over the same period of 2012.  Business retention rates in the second quarter of 2013 remained strong and were slightly lower than in the second

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quarter of 2012.  In the first six months of 2013, business retention rates remained strong and were level with the same period of 2012.  Renewal premium changes in the second quarter of 2013 increased over the same period of 2012.  Renewal premium changes in the first six months of 2013 were virtually level with the same period of 2012.  New business volumes in the second quarter and first six months of 2013 increased compared with the same periods of 2012.

National Accounts.  Net written premiums of $242 million in the second quarter of 2013 increased by 7% over the same period of 2012.  Net written premiums of $519 million in the first six months of 2013 increased by 13% over the same period of 2012.  Business retention rates remained strong in the second quarter and first six months of 2013 but were lower than in the same periods of 2012.  Renewal premium changes in the second quarter and first six months of 2013 remained positive but were slightly lower than in the same periods of 2012.  New business volumes in the second quarter and first six months of 2013 increased over the same period of 2012.  Growth in workers’ compensation residual market pools also contributed to premium growth in both periods of 2013.

Industry-Focused Underwriting.  Net written premiums of $653 million in the second quarter of 2013 increased by 3% over the same period of 2012.  Net written premiums of $1.35 billion in the first six months of 2013 increased by 5% over the same period of 2012.  Premium increases in both periods of 2013 were concentrated in the Construction business unit.

Target Risk Underwriting.  Net written premiums of $500 million in the second quarter of 2013 increased by 3% over the same period of 2012.  Net written premiums of $948 million in the first six months of 2013 increased by 4% over the same period of 2012.  Premium growth in the second quarter of 2013 was concentrated in the National Property business unit, whereas net written premium growth in the first six months of 2013 was concentrated in the Inland Marine and National Property business units.

Specialized Distribution.  Net written premiums of $232 million in the second quarter of 2013 declined by 4% from the same period of 2012.  Net written premiums of $436 million in the first six months of 2013 declined by 3% from the same period of 2012.

Financial, Professional & International Insurance

Results of the Company’s Financial, Professional & International Insurance segment were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2013			2012			2013			2012
Revenues
Earned premiums	$	751		$	766		$	1,486		$	1,503
Net investment income	91			99			183			203
Fee income	—			1			—			1
Other revenues	5			5			10			13
Total revenues	$	847		$	871		$	1,679		$	1,720
Total claims and expenses	$	651		$	616		$	1,258		$	1,265
Operating income	$	154		$	182		$	317		$	331
Loss and loss adjustment expense ratio	43.9		%	39.1		%	42.4		%	42.5		%
Underwriting expense ratio	42.4			40.9			41.9			41.3
GAAP combined ratio	86.3		%	80.0		%	84.3		%	83.8		%

Overview

Operating income in the second quarter of 2013 was $154 million, $28 million or 15% lower than operating income of $182 million in the second quarter of 2012, primarily reflecting the pretax impact of (i) an increase in catastrophe losses, (ii) lower net favorable prior year reserve development and (iii) a decline in net investment income, partially offset by (iv) higher

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underlying underwriting margins.  The increase in underlying underwriting margins were driven by earned pricing increases that exceeded loss cost trends and a lower level of what the Company defines as large losses, partially offset by the impact of lower business volume and higher general and administrative expenses.  Partially offsetting this net pretax decrease was the related tax benefit.  Additionally, operating income in the second quarter of 2013 benefited from a reduction in income tax expense resulting from the resolution of prior year tax matters.  The effective tax rate in the second quarter of 2013 decreased from the same period of 2012. This resulted from the impact of the resolution of prior year tax matters discussed above, and interest on municipal bonds, which is effectively taxed at a rate that is lower than the corporate tax rate of 35%, comprising a higher percentage of pretax income due to a decrease in the underwriting gain.  Catastrophe losses in the second quarters of 2013 and 2012 were $46 million and $4 million, respectively.  Catastrophe losses in the second quarter of 2013 primarily resulted from floods in Alberta, Canada.  Net favorable prior year reserve development in the second quarter of 2013 was $72 million, compared with $96 million in the same period of 2012.

Operating income in the first six months of 2013 was $317 million, $14 million or 4% lower than operating income of $331 million in the same period of 2012, primarily reflecting the same factors described above.  Catastrophe losses in the first six months of 2013 were $46 million, compared with $4 million in the same period of 2012.  Net favorable prior year reserve development in the first six months of 2013 was $130 million, compared with $142 million in the same period of 2012.

Earned Premiums

Earned premiums in the second quarter of 2013 were $751 million, $15 million or 2% lower than in the same period of 2012.  Earned premiums in the first six months of 2013 were $1.49 billion, $17 million or 1% lower than in the same period of 2012.  The declines in both periods of 2013 primarily reflected the impact of a decrease in net written premiums over the preceding twelve months.

Net Investment Income

Net investment income in the second quarter of 2013 was $91 million, $8 million or 8% lower than in the same period of 2012.  Net investment income in the first six months of 2013 was $183 million, $20 million or 10% lower than in the same period of 2012.  Included in the Financial, Professional & International Insurance segment are certain legal entities whose invested assets and related net investment income are reported exclusively in this segment and not allocated among all business segments.  Refer to the “Net Investment Income” section of “Consolidated Results of Operations” herein for a discussion of the decline in the Company’s consolidated net investment income in the second quarter and first six months of 2013 as compared with the same periods of 2012.  In addition, refer to note 2 of notes to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of the Company’s net investment income allocation methodology.

Claims and Expenses

Claims and Claim Adjustment Expenses

Claims and claim adjustment expenses in the second quarter of 2013 were $332 million, $30 million or 10% higher than in the same period of 2012, primarily reflecting (i) an increase in catastrophe losses and (ii) a decline in net favorable prior year reserve development, partially offset by (iii) reduced loss cost trends, (iv) the impact of lower business volume and (v) lower levels of large losses.  Catastrophe losses in the second quarter of 2013 were $46 million, primarily resulting from floods in Alberta, Canada, compared with $4 million in the same period of 2012.  Net favorable prior year reserve development in the second quarter of 2013 was $72 million, compared with $96 million in the same period of 2012.  Net favorable prior year reserve development in the second quarter of 2013 was concentrated in Bond & Financial Products and primarily reflected better than expected results for the surety business for accident years 2003 and prior, 2006 through 2008, and 2010.  In Bond & Financial Products in the second quarter of 2012, net favorable prior year reserve development primarily reflected better than expected results for the surety business for accident years 2008 through 2010 and better than expected results for the management liability business for accident years 2007 and prior.  In International in the second quarter of 2012, net favorable prior year reserve development primarily reflected better than expected loss experience in the Company’s operation at Lloyd’s in the marine and aviation business units across multiple accident years.

Claims and claim adjustment expenses in the first six months of 2013 were $634 million, $9 million or 1% lower than in the same 2012 period, primarily reflecting (i) reduced loss cost trends, (ii) the impact of lower business volume and (iii) lower levels of large losses, largely offset by (iv) an increase in catastrophe losses and (v) a decline in net favorable prior year reserve development.  Catastrophe losses in the first six months of 2013 were $46 million, compared with $4 million in the

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same period of 2012.  Net favorable prior year reserve development in the first six months of 2013 was $130 million and was driven by the factors described above for the second quarter in Bond & Financial Products, as well as better than expected loss experience in the first quarter of 2013 in Canada and in the Company’s operations at Lloyd’s. Net favorable prior year reserve development in the first six months of 2012 was $142 million and was driven by the factors described above for the second quarter, as well as net favorable prior year reserve development in the first quarter of 2012 in both Bond & Financial Products and International.  In Bond & Financial Products, net favorable prior year reserve development in the first quarter of 2012 primarily reflected better than expected results for accident years 2006 through 2008 for the contract surety business.  In International, net favorable prior year reserve development in the first quarter of 2012 reflected better than expected loss experience in Canada, primarily in the surety and property lines of business for recent accident years and better than expected development in the Company’s operation at Lloyd’s in the marine and accident and special risks business units for recent accident years.

Amortization of Deferred Acquisition Expenses

Amortization of deferred acquisition costs in the second quarter of 2013 was $147 million, $2 million or 1% lower than in the same period of 2012.  Amortization of deferred acquisition costs in the first six months of 2013 was $290 million, $2 million or less than 1% lower than in the same 2012 period.

General and Administrative Expenses

General and administrative expenses in the second quarter of 2013 were $172 million, $7 million or 4% higher than in the same period of 2012.  General and administrative expenses in the first six months of 2013 were $334 million, $4 million or 1% higher than in the same period of 2012.  The increase in both periods of 2013 primarily resulted from legal expenses related to the Company’s recently announced agreement to acquire The Dominion of Canada General Insurance Company.

Income Tax Expense

Income tax expense in the second quarter of 2013 was $42 million, $31 million or 42% lower than in the same period of 2012, primarily reflecting the $51 million decrease in underwriting margins and a reduction in income tax expense of $15 million resulting from the resolution of prior year tax matters.  Income tax expense in the first six months of 2013 was $104 million, $20 million or 16% lower than in the same period of 2012, primarily reflecting the reduction in income tax expense resulting from the resolution of prior year tax matters in the second quarter of 2013 and the $11 million decrease in underwriting margins.

GAAP Combined Ratio

The GAAP combined ratio of 86.3% in the second quarter of 2013 was 6.3 points higher than the GAAP combined ratio of 80.0% in the same period of 2012.  The GAAP combined ratio of 84.3% in the first six months of 2013 was 0.5 points higher than the GAAP combined ratio of 83.8% in the same period of 2012.

The loss and loss adjustment expense ratio of 43.9% in the second quarter of 2013 was 4.8 points higher than the loss and loss adjustment expense ratio of 39.1% in the same period of 2012.  Catastrophe losses in the second quarters of 2013 and 2012 accounted for 6.1 points and 0.4 points, respectively, of the loss and loss adjustment expense ratio.  The 2013 and 2012 second quarter ratios included 9.7 points and 12.5 points of benefit, respectively, from net favorable prior year reserve development.  The 2013 second quarter underlying loss and loss adjustment expense ratio was 3.7 points lower than the 2012 ratio on the same basis, reflecting the improvement in underlying underwriting margins discussed in the “Overview” section above.

The loss and loss adjustment expense ratio of 42.4% in the first six months of 2013 was 0.1 points lower than the loss and loss adjustment expense ratio of 42.5% in the same period of 2012.  Catastrophe losses in the first six months of 2013 and 2012 accounted for 3.1 points and 0.2 points, respectively, of the loss and loss adjustment expense ratio.  The 2013 and 2012 year-to-date ratios included 8.8 points and 9.4 points of benefit, respectively, from net favorable prior year reserve development.  The underlying loss and loss adjustment expense ratio in the first six months of 2013 was 3.6 points lower than the 2012 ratio on the same basis, reflecting the improvement in underlying underwriting margins discussed in the “Overview” section above.

The underwriting expense ratio of 42.4% in the second quarter of 2013 was 1.5 points higher than the underwriting expense ratio of 40.9% in the same period of 2012.  In the first six months of 2013, the underwriting expense ratio of 41.9% was 0.6 points higher than the underwriting expense ratio of 41.3% in the same period of 2012.  The increases in both periods of 2013

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primarily reflected the legal expenses related to the Company’s recently announced agreement to acquire The Dominion of Canada General Insurance Company, as well as the decline in earned premiums.

Written Premiums

The Financial, Professional & International Insurance segment’s gross and net written premiums by market were as follows:

	Gross Written Premiums
	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Bond & Financial Products	$	542	$	525	$	1,040	$	1,010
International	364		357		665		663
Total Financial, Professional & International Insurance	$	906	$	882	$	1,705	$	1,673

	Net Written Premiums
	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Bond & Financial Products	$	531	$	524	$	926	$	881
International	318		316		570		563
Total Financial, Professional & International Insurance	$	849	$	840	$	1,496	$	1,444

The Financial, Professional & International Insurance segment’s gross and net written premiums in the second quarter of 2013 increased by 3% and 1%, respectively, over the same period of 2012.  In the first six months of 2013, gross and net written premiums increased by 2% and 4%, respectively, over the same period of 2012.  The higher rate of growth in gross written premiums compared with growth in net written premiums in the second quarter of 2013 primarily reflected the impact of an increase in ceded premiums related to certain contract surety business in Bond & Financial Products for which a higher proportion of premiums is ceded to reinsurers.  The lower rate of growth in gross written premiums compared with growth in net written premiums in the first six months of 2013 compared with the same period of 2012 primarily reflected the impact of lower reinsurance costs (resulting from price decreases and slightly higher retention levels) in Bond & Financial Products in the first quarter of 2013, partially offset by the higher ceded premiums in the second quarter of 2013 discussed above.

Net written premiums in Bond & Financial Products in the second quarter of 2013 were $531 million, $7 million or 1% higher than in the same period of 2012, primarily driven by higher contract surety volume and rate increases in the management liability business.  Net written premiums in the first six months of 2013 were $926 million, $45 million or 5% higher than in the same period of 2012, primarily driven by the same factors impacting the second quarter, as well as the lower reinsurance costs discussed above.  Excluding the surety line of business, for which the following are not relevant measures, business retention rates in the second quarter and first six months of 2013 remained strong but were lower than in the same periods of 2012.  Renewal premium changes in the second quarter and first six months of 2013 remained positive and were higher than in the same periods of 2012, primarily driven by positive renewal rate changes that exceeded expected loss cost trends.  New business volume in the second quarter and first six months of 2013 declined from the same periods of 2012.

Net written premiums in International in the second quarter of 2013 were $318 million, virtually level with the same period of 2012.  Net written premiums in the first six months of 2013 were $570 million, $7 million or 1% higher than in the same period of 2012.  Excluding the surety line of business, for which the following are not relevant measures, business retention rates in the second quarter of 2013 remained strong and were virtually level with the same period of 2012. In the first six months of 2013, business retention rates remained strong and were slightly higher than in the same period of 2012.  Renewal premium changes in the second quarter and first six months of 2013 were positive and increased over the same periods of 2012, as renewal rate changes remained positive but were lower than in the same periods of 2012, while insured exposures increased over the same periods of 2012.  New business volume in the second quarter and first six months of 2013 increased compared with the same periods of 2012.

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Personal Insurance

Results of the Company’s Personal Insurance segment were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)	2013			2012			2013			2012
Revenues
Earned premiums	$	1,834		$	1,903		$	3,674		$	3,813
Net investment income	94			103			185			207
Other revenues	15			16			33			35
Total revenues	$	1,943		$	2,022		$	3,892		$	4,055
Total claims and expenses	$	1,753		$	2,016		$	3,417		$	3,905
Operating income	$	142		$	17		$	339		$	125
Loss and loss adjustment expense ratio	64.9		%	75.4		%	62.4		%	72.1		%
Underwriting expense ratio	29.6			29.4			29.5			29.2
GAAP combined ratio	94.5		%	104.8		%	91.9		%	101.3		%
Incremental impact of direct to consumer initiative on GAAP combined ratio	1.6		%	1.9		%	1.7		%	2.0		%

Overview

Operating income in the second quarter of 2013 was $142 million, $125 million higher than operating income of $17 million in the same period of 2012.  The improvement in operating income primarily reflected the pretax impacts of (i) a decline in catastrophe losses and (ii) higher underlying underwriting margins, partially offset by (iii) a decline in net investment income.  The higher underlying underwriting margins resulted from the impact of earned pricing that exceeded loss cost trends and lower non-catastrophe weather-related losses. Partially offsetting this net pretax improvement was the related tax expense.  Additionally, operating income in the second quarter of 2013 benefited from a reduction in income tax expense resulting from the resolution of prior year tax matters. The effective tax rate in the second quarter of 2013 increased from the same period of 2012.  This resulted from interest on municipal bonds, which is effectively taxed at a rate that is lower than the corporate tax rate of 35%, comprising a lower percentage of pretax income due to an increase in the underwriting gain, partially offset by the resolution of prior year tax matters in the second quarter of 2013.  Catastrophe losses in the second quarters of 2013 and 2012 were $146 million and $293 million, respectively.  Net favorable prior year reserve development in the second quarters of 2013 and 2012 was $65 million and $67 million, respectively.

Operating income in the first six months of 2013 was $339 million, $214 million higher than operating income of $125 million in the same period of 2012.  The improvement was driven by the same factors described above for the second quarter of 2013, as well as an increase in net favorable prior year reserve development.  Catastrophe losses in the first six months of 2013 were $210 million, compared with $408 million in the same period of 2012.  Net favorable prior year reserve development in the first six months of 2013 was $125 million, compared with $77 million in the same period of 2012.

Earned Premiums

Earned premiums in the second quarter of 2013 were $1.83 billion, $69 million or 4% lower than in the same period of 2012.  Earned premiums in the first six months of 2013 were $3.67 billion, $139 million or 4% lower than in the same period of 2012.  The decreases in both periods of 2013 reflected lower net written premiums over the preceding twelve months.

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Net Investment Income

Net investment income in the second quarter of 2013 was $94 million, $9 million or 9% lower than in the same period of 2012.  Net investment income in the first six months of 2013 was $185 million, $22 million or 11% lower than in the same period of 2012.  Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion herein for a description of the factors contributing to the decline in the Company’s consolidated net investment income in the second quarter and first six months of 2013 compared with the same periods of 2012.  In addition, refer to note 2 of notes to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of the Company’s net investment income allocation methodology.

Claims and Expenses

Claims and Claim Adjustment Expenses

Claims and claim adjustment expenses in the second quarter of 2013 were $1.19 billion, $245 million or 17% lower than in the same period of 2012.  The decrease primarily reflected (i) a decline in catastrophe losses, (ii) lower non-catastrophe weather-related losses and (iii) the impact of lower business volume, partially offset by (iv) the impact of loss cost trends.  Catastrophe losses in the second quarter of 2013 were $146 million, compared with $293 million in the same period of 2012.  Net favorable prior year reserve development in the second quarter of 2013 was $65 million, compared with $67 million in the same period of 2012. Net favorable prior year reserve development in the second quarter of 2013 was primarily driven by better than expected loss experience in the Homeowners and Other product line for accident year 2012 for both catastrophe and non-catastrophe weather-related losses and other non-weather-related losses. Net favorable prior year reserve development in the second quarter of 2012 was primarily driven by better than expected loss experience related to catastrophe losses incurred in 2011, as well as favorable loss experience in accident years 2007 through 2011 for the umbrella line of business in the Homeowners and Other product line.

Claims and claim adjustment expenses in the first six months of 2013 were $2.29 billion, $457 million or 17% lower than in the same period of 2012, primarily reflecting the same factors described above, as well as an increase in net favorable prior year reserve development.  Catastrophe losses in the first six months of 2013 and 2012 were $210 million and $408 million, respectively.  Net favorable prior year reserve development in the first six months of 2013 and 2012 was $125 million and $77 million, respectively, driven by the same factors described above, as well as net favorable development in the first quarter of 2013 in the Homeowners and Other product line for accident year 2011 for both non-catastrophe weather-related losses and catastrophe losses.

Amortization of Deferred Acquisition Costs

Amortization of deferred acquisition costs in the second quarter of 2013 was $322 million, $40 million or 11% lower than in the same period of 2012.  Amortization of deferred acquisition costs in the first six months of 2013 was $652 million, $71 million or 10% lower than in the same period of 2012.  The decrease in both periods of 2013 reflected the decline in earned premiums compared with the same periods of 2012, a reclassification of fee income related to the National Flood Insurance Program from general and administrative expenses to a component of acquisition costs to conform to the presentation prescribed by insurance regulators, and lower fixed-value commission expense.

General and Administrative Expenses

General and administrative expenses in the second quarter of 2013 were $241 million, $22 million or 10% higher than in the same period of 2012.  General and administrative expenses in the first six months of 2013 were $473 million, $40 million or 9% higher than in the same period of 2012.  The increase in both periods of 2013 included an increase in contingent commission expense due to the increase in the number of agents reverting to a contingent commission compensation program and the impact of the reclassification of fee income described above, partially offset by a decline in other operating expenses.

Income Tax Expense

Income tax expense in the second quarter of 2013 was $48 million, $59 million higher than in the same period of 2012, primarily reflecting the $194 million increase in underwriting margins (including the impact of a decrease in catastrophe losses and a decrease in net favorable prior year reserve development) compared with the same period of 2012, partially offset by a reduction in income tax expense of $5 million resulting from the resolution of prior year tax matters.  Income tax expense in the first six months of 2013 was $136 million, $111 million higher than in the same period of 2012, primarily reflecting the $349 million increase in underwriting margins, partially offset by the resolution of prior year tax matters in the second quarter of 2013.

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GAAP Combined Ratio

The GAAP combined ratio of 94.5% in the second quarter of 2013 was 10.3 points lower than the GAAP combined ratio of 104.8% in the same period of 2012.  The GAAP combined ratio of 91.9% in the first six months of 2013 was 9.4 points lower than the GAAP combined ratio of 101.3% in the same period of 2012.

The loss and loss adjustment expense ratio of 64.9% in the second quarter of 2013 was 10.5 points lower than the loss and loss adjustment expense ratio of 75.4% in the same period of 2012.  Catastrophe losses accounted for 8.0 points and 15.3 points of the loss and loss adjustment expense ratios in the second quarters of 2013 and 2012, respectively.  The loss and loss adjustment expense ratio for the second quarters of 2013 and 2012 both included 3.5 points of benefit from net favorable prior year reserve development.  The 2013 second quarter underlying loss and loss adjustment expense ratio was 3.2 points lower than the 2012 ratio on the same basis, reflecting the improvement in underlying underwriting margins discussed in the “Overview” section above.

The loss and loss adjustment expense ratio of 62.4% in the first six months of 2013 was 9.7 points lower than the loss and loss adjustment expense ratio of 72.1% in the same period of 2012.  Catastrophe losses accounted for 5.7 points and 10.7 points of the loss and loss adjustment expense ratios in the first six months of 2013 and 2012, respectively.  The loss and loss adjustment expense ratio for the first six months of 2013 and 2012 included 3.4 points and 2.1 points of benefit, respectively, from net favorable prior year reserve development.  The 2013 six-month underlying loss and loss adjustment expense ratio was 3.4 points lower than the 2012 ratio on the same basis, reflecting the improvement in underlying underwriting margins discussed in the “Overview” section above.

The underwriting expense ratio of 29.6% for the second quarter of 2013 was 0.2 points higher than the underwriting expense ratio of 29.4% in the same period of 2012.  In the first six months of 2013, the underwriting expense ratio of 29.5% was 0.3 points higher than the underwriting expense ratio of 29.2% in the same 2012 period.  The increases in both periods of 2013 primarily reflected the decrease in earned premiums discussed above.

Agency Written Premiums

Personal Insurance’s gross and net written premiums by product line were as follows for its Agency business, which comprises business written through agents, brokers and other intermediaries and represents almost all of the Personal Insurance segment’s gross and net written premiums:

	Gross Written Premiums
	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Agency Automobile	$	838	$	903	$	1,673	$	1,807
Agency Homeowners and Other	1,119		1,135		2,008		2,047
Total Agency Personal Insurance	$	1,957	$	2,038	$	3,681	$	3,854

	Net Written Premiums
	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Agency Automobile	$	834	$	899	$	1,665	$	1,799
Agency Homeowners and Other	1,033		1,064		1,853		1,919
Total Agency Personal Insurance	$	1,867	$	1,963	$	3,518	$	3,718

In both the second quarter and first six months of 2013, gross agency net written premiums were 4% lower than in the respective periods of 2012.  In both the second quarter and first six months of 2013, net agency written premiums were 5% lower than in the respective periods of 2012.  Renewal rate changes continued to exceed expected loss cost trends, assuming weather patterns consistent with the company’s expectations.

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In both the second quarter and first six months of 2013 in the Agency Automobile line of business, net written premiums were 7% lower than in the same periods of 2012.  Business retention rates remained strong in both periods of 2013 but were slightly lower than in the respective periods of 2012.  Renewal premium changes remained positive in the second quarter and first six months of 2013 and increased over the same periods of 2012, primarily driven by renewal rate changes.  New business levels in the second quarter and first six months of 2013 declined from the same periods of 2012.

In both the second quarter and first six months of 2013 in the Agency Homeowners and Other line of business, net written premiums were 3% lower than in the same periods of 2012.  Business retention rates remained strong in both periods of 2013 but were slightly lower than in the respective periods of 2012.  Renewal premium changes remained positive in the second quarter and first six months of 2013 and increased over the same periods of 2012, primarily driven by renewal rate changes.  New business levels in the second quarter and first six months of 2013 declined from the same periods of 2012.

For its Agency business, the Personal Insurance segment had approximately 6.8 million and 7.5 million active policies at June 30, 2013 and 2012, respectively.

Direct to Consumer Written Premiums

In its direct to consumer business, net written premiums in the second quarter and first six months of 2013 were $40 million and $79 million, respectively, slightly higher than in the respective periods of 2012.  The direct to consumer business had 162,000 active policies at June 30, 2013, an increase of 5% over the same date in 2012.

Interest Expense and Other

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2013			2012			2013			2012
Operating loss	$	(59	)	$	(66	)	$	(122	)	$	(134	)

The operating loss for Interest Expense and Other in the second quarter of 2013 was $59 million, compared with $66 million in the same period of 2012.  The operating loss for Interest Expense and Other in the first six months of 2013 was $122 million, compared with $134 million in the same period of 2012.  After-tax interest expense in the second quarter and first six months of 2013 was $56 million and $116 million, respectively, compared with $63 million and $125 million, respectively, in the same periods of 2012.  The declines in both periods of 2013 reflected lower average levels of debt outstanding as a result of debt repayments over the previous twelve months.

ASBESTOS CLAIMS AND LITIGATION

The Company believes that the property and casualty insurance industry has suffered from court decisions and other trends that have expanded insurance coverage for asbestos claims far beyond the original intent of insurers and policyholders. The Company has received and continues to receive a significant number of asbestos claims from the Company’s policyholders (which includes others seeking coverage under a policy).  Factors underlying these claim filings include intensive advertising by lawyers seeking asbestos claimants and the continued focus by plaintiffs on previously peripheral defendants.  The focus on these defendants is primarily the result of the number of traditional asbestos defendants who have sought bankruptcy protection in previous years.  In addition to contributing to the overall number of claims, bankruptcy proceedings may increase the volatility of asbestos-related losses by initially delaying the reporting of claims and later by significantly accelerating and increasing loss payments by insurers, including the Company. The bankruptcy of many traditional defendants has also caused increased settlement demands against those policyholders who are not in bankruptcy but remain in the tort system. Currently, in many jurisdictions, those who allege very serious injury and who can present credible medical evidence of their injuries are receiving priority trial settings in the courts, while those who have not shown any credible disease manifestation are having their hearing dates delayed or placed on an inactive docket.  Prioritizing claims involving credible evidence of injuries, along with the focus on previously peripheral defendants, contributes to the claims

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and claim adjustment expense payment patterns experienced by the Company.  The Company’s asbestos-related claims and claim adjustment expense experience also has been impacted by the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or through the insolvency of other participating insurers.

The Company continues to be involved in coverage litigation concerning a number of policyholders, some of whom have filed for bankruptcy, who in some instances have asserted that all or a portion of their asbestos-related claims are not subject to aggregate limits on coverage. In these instances, policyholders also may assert that each individual bodily injury claim should be treated as a separate occurrence under the policy. It is difficult to predict whether these policyholders will be successful on both issues. To the extent both issues are resolved in a policyholder’s favor and other Company defenses are not successful, the Company’s coverage obligations under the policies at issue would be materially increased and bounded only by the applicable per-occurrence limits and the number of asbestos bodily injury claims against the policyholders.  Although the Company has seen a moderation in the overall risk associated with these lawsuits, it remains difficult to predict the ultimate cost of these claims.

Many coverage disputes with policyholders are only resolved through settlement agreements. Because many policyholders make exaggerated demands, it is difficult to predict the outcome of settlement negotiations. Settlements involving bankrupt policyholders may include extensive releases which are favorable to the Company but which could result in settlements for larger amounts than originally anticipated. There also may be instances where a court may not approve a proposed settlement, which may result in additional litigation and potentially less beneficial outcomes for the Company. As in the past, the Company will continue to pursue settlement opportunities.

In addition to claims against policyholders, proceedings have been launched directly against insurers, including the Company, by individuals challenging insurers’ conduct with respect to the handling of past asbestos claims and by individuals seeking damages arising from alleged asbestos-related bodily injuries.  It is possible that the filing of other direct actions against insurers, including the Company, could be made in the future.  It is difficult to predict the outcome of these proceedings, including whether the plaintiffs will be able to sustain these actions against insurers based on novel legal theories of liability. The Company believes it has meritorious defenses to these claims and has received favorable rulings in certain jurisdictions.

TPC had entered into settlement agreements, which are subject to a number of contingencies, in connection with a number of these direct action claims (Direct Action Settlements).  For a full discussion of these settlement agreements, see the “Asbestos Direct Action Litigation” section of note 12 of notes to the unaudited consolidated financial statements in this report.

The Company’s quarterly asbestos reserve reviews include an analysis of exposure and claim payment patterns by policyholder category, as well as recent settlements, policyholder bankruptcies, judicial rulings and legislative actions.  The Company also analyzes developing payment patterns among policyholders in the Home Office, Field Office and Assumed Reinsurance and Other categories as well as projected reinsurance billings and recoveries.  In addition, the Company reviews its historical gross and net loss and expense paid experience, year-by-year, to assess any emerging trends, fluctuations, or characteristics suggested by the aggregate paid activity.  Conventional actuarial methods are not utilized to establish asbestos reserves nor have the Company’s evaluations resulted in any way of determining a meaningful average asbestos defense or indemnity payment.

Because each policyholder presents different liability and coverage issues, the Company generally reviews the exposure presented by each policyholder at least annually.  Among the factors which the Company may consider in the course of this review are: available insurance coverage, including the role of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an analysis of the policyholder’s potential liability; the jurisdictions involved; past and anticipated future claim activity and loss development on pending claims; past settlement values of similar claims; allocated claim adjustment expense; potential role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and applicable coverage defenses or determinations, if any, including the determination as to whether or not an asbestos claim is a products/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim.

Net asbestos paid losses in the first six months of 2013 were $100 million, compared with $114 million in the same period of 2012.  Net asbestos reserves were $2.28 billion at June 30, 2013, compared with $2.33 billion at June 30, 2012.

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The following table displays activity for asbestos losses and loss expenses and reserves:

(at and for the six months ended June 30, in millions)	2013			2012
Beginning reserves:
Gross	$	2,689		$	2,780
Ceded	(311		)	(341		)
Net	2,378			2,439
Incurred losses and loss expenses:
Gross	—			—
Ceded	—			—
Net	—			—
Losses paid:
Gross	123			120
Ceded	(23		)	(6		)
Net	100			114
Ending reserves:
Gross	2,566			2,660
Ceded	(288		)	(335		)
Net	$	2,278		$	2,325

See “—Uncertainty Regarding Adequacy of Asbestos and Environmental Reserves.”

ENVIRONMENTAL CLAIMS AND LITIGATION

The Company has received and continues to receive claims from policyholders who allege that they are liable for injury or damage arising out of their alleged disposition of toxic substances. Mostly, these claims are due to various legislative as well as regulatory efforts aimed at environmental remediation. For instance, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), enacted in 1980 and later modified, enables private parties as well as federal and state governments to take action with respect to releases and threatened releases of hazardous substances. This federal statute permits the recovery of response costs from some liable parties and may require liable parties to undertake their own remedial action. Liability under CERCLA may be joint and several with other responsible parties.

The Company has been, and continues to be, involved in litigation involving insurance coverage issues pertaining to environmental claims. The Company believes that some court decisions have interpreted the insurance coverage to be broader than the original intent of the insurers and policyholders. These decisions often pertain to insurance policies that were issued by the Company prior to the mid-1980s. These decisions continue to be inconsistent and vary from jurisdiction to jurisdiction. Environmental claims when submitted rarely indicate the monetary amount being sought by the claimant from the policyholder, and the Company does not keep track of the monetary amount being sought in those few claims which indicate a monetary amount.

The resolution of environmental exposures by the Company generally occurs through settlements with policyholders as opposed to claimants.  Generally, the Company strives to extinguish any obligations it may have under any policy issued to the policyholder for past, present and future environmental liabilities and extinguish any pending coverage litigation dispute with the policyholder.  This form of settlement is commonly referred to as a “buy-back” of policies for future environmental liability. In addition, many of the agreements have also extinguished any insurance obligation which the Company may have for other claims, including but not limited to asbestos and other cumulative injury claims.  The Company and its policyholders may also agree to settlements which extinguish any liability arising from known specified sites or claims.  Where appropriate, these agreements also include indemnities and hold harmless provisions to protect the Company.  The Company’s general purpose in executing these agreements is to reduce the Company’s potential environmental exposure and eliminate the risks presented by coverage litigation with the policyholder and related costs.

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In establishing environmental reserves, the Company evaluates the exposure presented by each policyholder and the anticipated cost of resolution, if any. In the course of this analysis, the Company generally considers the probable liability, available coverage, relevant judicial interpretations and historical value of similar exposures. In addition, the Company considers the many variables presented, such as: the nature of the alleged activities of the policyholder at each site; the number of sites; the total number of potentially responsible parties at each site; the nature of the alleged environmental harm and the corresponding remedy at each site; the nature of government enforcement activities at each site; the ownership and general use of each site; the overall nature of the insurance relationship between the Company and the policyholder, including the role of any umbrella or excess insurance the Company has issued to the policyholder; the involvement of other insurers; the potential for other available coverage, including the number of years of coverage; the role, if any, of non-environmental claims or potential non-environmental claims in any resolution process; and the applicable law in each jurisdiction.  The evaluation of the exposure presented by a policyholder can change as information concerning that policyholder and the many variables presented is developed.  Conventional actuarial techniques are not used to estimate these reserves.

In its review of environmental reserves, the Company considers: past settlement payments; changing judicial and legislative trends; its reserves for the costs of litigating environmental coverage matters; the potential for policyholders with smaller exposures to be named in new clean-up actions for both on- and off-site waste disposal activities; the potential for adverse development; the potential for additional new claims beyond previous expectations; and the potential higher costs for new settlements.

The duration of the Company’s investigation and review of these claims and the extent of time necessary to determine an appropriate estimate, if any, of the value of the claim to the Company vary significantly and are dependent upon a number of factors. These factors include, but are not limited to, the cooperation of the policyholder in providing claim information, the pace of underlying litigation or claim processes, the pace of coverage litigation between the policyholder and the Company and the willingness of the policyholder and the Company to negotiate, if appropriate, a resolution of any dispute pertaining to these claims. Because these factors vary from claim-to-claim and policyholder-by-policyholder, the Company cannot provide a meaningful average of the duration of an environmental claim. However, based upon the Company’s experience in resolving these claims, the duration may vary from months to several years.

The Company continues to receive notices from policyholders tendering claims for the first time, frequently under policies issued prior to the mid-1980’s.  These policyholders continue to present smaller exposures, have fewer sites and are lower tier defendants.  Further, in many instances, clean-up costs have been reduced because regulatory agencies are willing to accept risk-based site analyses and more efficient clean-up technologies.  Over the past several years, the Company has experienced generally favorable trends in the number of new policyholders tendering environmental claims for the first time and in the number of pending declaratory judgment actions relating to environmental matters.  However, the degree to which those favorable trends have continued has been less than anticipated.  In addition, reserve development on existing environmental claims has been greater than anticipated.  As a result of these factors, the Company increased its net environmental reserves by $65 million and $90 million in the second quarters of 2013 and 2012, respectively.

Net environmental paid losses in the first six months of 2013 and 2012 were $24 million and $44 million, respectively.  At June 30, 2013, approximately 94% of the net environmental reserve (approximately $365 million) was carried in a bulk reserve and included unresolved environmental claims, incurred but not reported environmental claims and the anticipated cost of coverage litigation disputes relating to these claims. The bulk reserve the Company carries is established and adjusted based upon the aggregate volume of in-process environmental claims and the Company’s experience in resolving those claims. The balance, approximately 6% of the net environmental reserve (approximately $23 million), consists of case reserves.

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The following table displays activity for environmental losses and loss expenses and reserves:

(at and for the six months ended June 30, in millions)	2013			2012
Beginning reserves:
Gross	$	352		$	346
Ceded	(5		)	(5		)
Net	347			341
Incurred losses and loss expenses:
Gross	72			96
Ceded	(7		)	(6		)
Net	65			90
Losses paid:
Gross	25			46
Ceded	(1		)	(2		)
Net	24			44
Ending reserves:
Gross	399			396
Ceded	(11		)	(9		)
Net	$	388		$	387

UNCERTAINTY REGARDING ADEQUACY OF ASBESTOS AND ENVIRONMENTAL RESERVES

As a result of the processes and procedures discussed above, management believes that the reserves carried for asbestos and environmental claims at June 30, 2013 are appropriately established based upon known facts, current law and management’s judgment. However, the uncertainties surrounding the final resolution of these claims continue, and it is difficult to determine the ultimate exposure for asbestos and environmental claims and related litigation. As a result, these reserves are subject to revision as new information becomes available and as claims develop. The continuing uncertainties include, without limitation, the risks and lack of predictability inherent in complex litigation, any impact from the bankruptcy protection sought by various asbestos producers and other asbestos defendants, a further increase or decrease in the cost to resolve, and/or the number of, asbestos and environmental claims beyond that which is anticipated, the role of any umbrella or excess policies the Company has issued, the resolution or adjudication of disputes pertaining to the amount of available coverage for asbestos and environmental claims in a manner inconsistent with the Company’s previous assessment of these claims, the number and outcome of direct actions against the Company, future developments pertaining to the Company’s ability to recover reinsurance for asbestos and environmental claims and the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or through the insolvency of other participating insurers.  In addition, uncertainties arise from the insolvency or bankruptcy of policyholders and other defendants.  It is also not possible to predict changes in the legal, regulatory and legislative environment and their impact on the future development of asbestos and environmental claims.  This environment could be affected by changes in applicable legislation and future court and regulatory decisions and interpretations, including the outcome of legal challenges to legislative and/or judicial reforms establishing medical criteria for the pursuit of asbestos claims.  It is also difficult to predict the ultimate outcome of complex coverage disputes until settlement negotiations near completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is particularly the case with policyholders in bankruptcy where negotiations often involve a large number of claimants and other parties and require court approval to be effective. As part of its continuing analysis of asbestos and environmental reserves, the Company continues to study the implications of these and other developments.  (Also see note 12 of notes to the unaudited consolidated financial statements in this report).

Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the Company’s current reserves.  In addition, the Company’s estimate of claims and claim adjustment expenses may change.  These additional liabilities or increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company’s operating results in future periods.

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INVESTMENT PORTFOLIO

The Company’s invested assets at June 30, 2013 were $71.27 billion, of which 93% was invested in fixed maturity and short-term investments, 1% in equity securities, 1% in real estate and 5% in other investments.  Because the primary purpose of the investment portfolio is to fund future claims payments, the Company employs a conservative investment philosophy.  A significant majority of funds available for investment are deployed in a widely diversified portfolio of high quality, liquid taxable U.S. government, tax-exempt U.S. municipal and taxable corporate and U.S. agency mortgage-backed bonds.

The carrying value of the Company’s fixed maturity portfolio at June 30, 2013 was $62.84 billion.  The Company closely monitors the duration of its fixed maturity investments, and investment purchases and sales are executed with the objective of having adequate funds available to satisfy the Company’s insurance and debt obligations.  The weighted average credit quality of the Company’s fixed maturity portfolio, both including and excluding U.S. Treasury securities, was “Aa2” at both June 30, 2013 and December 31, 2012.  Below investment grade securities represented 3.2% and 3.1% of the total fixed maturity investment portfolio at June 30, 2013 and December 31, 2012, respectively.  The average effective duration of fixed maturities and short-term securities was 3.6 (3.8 excluding short-term securities) at June 30, 2013 and 3.2 (3.4 excluding short-term securities) at December 31, 2012.  The increase in the average effective duration of the Company’s fixed maturities and short-term securities at June 30, 2013 when compared to year-end 2012 primarily reflected an increase in interest rates during the first six months of 2013.  See the “Outlook” section in “Item 2 —Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Obligations of States, Municipalities and Political Subdivisions

The Company’s fixed maturity investment portfolio at June 30, 2013 and December 31, 2012 included $37.07 billion and $38.68 billion, respectively, of securities which are obligations of states, municipalities and political subdivisions (collectively referred to as the municipal bond portfolio).  The municipal bond portfolio is diversified across the United States, the District of Columbia and Puerto Rico and includes general obligation and revenue bonds issued by states, cities, counties, school districts and similar issuers.  Included in the municipal bond portfolio at June 30, 2013 and December 31, 2012 were $9.93 billion and $9.03 billion, respectively, of advance refunded or escrowed-to-maturity bonds (collectively referred to as pre-refunded bonds), which are bonds for which an irrevocable trust has been established to fund the remaining payments of principal and interest.  Such escrow accounts are verified as to their sufficiency by an independent verification agent of the underwriter, issuer or trustee and are almost exclusively comprised of U.S. Treasury securities.  Moody’s Investors Service has assigned negative outlooks to municipal securities in both the state sector and local government sector within the United States.

The Company bases its investment decision on the underlying credit characteristics of the municipal security.  While its municipal bond portfolio includes a number of securities that were enhanced by third-party insurance for the payment of principal and interest in the event of an issuer default, the Company does not rely on enhanced credit characteristics provided by such third-party insurance as part of its investing decisions.  The downgrade during 2008 and 2009 of credit ratings of insurers of these securities resulted in a corresponding downgrade in the ratings of many such securities to the underlying rating of the respective security.  Of the insured municipal securities in the Company’s investment portfolio at June 30, 2013, approximately 99% were rated at A3 or above, and approximately 91% were rated at Aa3 or above, without the benefit of insurance.  The Company believes that a loss of the benefit of insurance would not result in a material adverse impact on the Company’s results of operations, financial position or liquidity, due to the underlying credit strength of the issuers of the securities, as well as the Company’s ability and intent to hold the securities.  The average credit rating of the underlying issuers of these securities was “Aa2” at June 30, 2013.  The average credit rating of the entire municipal bond portfolio was “Aa1” at June 30, 2013 with and without the enhancement provided by third-party insurance.

Mortgage-Backed Securities, Collateralized Mortgage Obligations and Pass-Through Securities

The Company’s fixed maturity investment portfolio at June 30, 2013 and December 31, 2012 included $2.60 billion and $3.00 billion, respectively, of residential mortgage-backed securities including pass-through-securities and collateralized mortgage obligations (CMOs), all of which are subject to prepayment risk (either shortening or lengthening of duration).

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While prepayment risk for securities and its effect on income cannot be fully controlled, particularly when interest rates move dramatically, the Company’s investment strategy generally favors securities that reduce this risk within expected interest rate ranges.  Included in the totals at June 30, 2013 and December 31, 2012 were $1.19 billion and $1.44 billion, respectively, of GNMA, FNMA and FHLMC (excluding FHA project loans) guaranteed residential mortgage-backed pass-through securities classified as available for sale.  Also included in those totals were residential CMOs classified as available for sale with a fair value of $1.41 billion and $1.56 billion, at June 30, 2013 and December 31, 2012, respectively. Approximately 43% of the Company’s CMO holdings at both June 30, 2013 and December 31, 2012 were guaranteed by or fully collateralized by securities issued by GNMA, FNMA or FHLMC.  The average credit rating of the $805 million and $893 million of non-guaranteed CMO holdings at June 30, 2013 and December 31, 2012, respectively, was “B1” and “B2,” respectively. The average credit rating of all of the above securities was “A1” at both June 30, 2013 and December 31, 2012.

The Company makes investments in residential CMOs that are either guaranteed by GNMA, FNMA or FHLMC, or if not guaranteed, are senior or super-senior positions within their respective securitizations.  Both guaranteed and non-guaranteed residential CMOs allocate the distribution of payments from the underlying mortgages among different classes of bondholders.  In addition, non-guaranteed residential CMOs provide structures that allocate the impact of credit losses to different classes of bondholders.  Senior and super-senior CMOs are protected, to varying degrees, from credit losses as those losses are initially allocated to subordinated bondholders.  The Company’s investment strategy is to purchase CMO tranches that are expected to offer the most favorable return given the Company’s assessment of associated risks.  The Company does not purchase residual interests in CMOs.

Alternative Documentation Mortgages and Sub-Prime Mortgages

At June 30, 2013 and December 31, 2012, the Company’s fixed maturity investment portfolio included collateralized mortgage obligations backed by alternative documentation mortgages and asset-backed securities collateralized by sub-prime mortgages with a collective fair value of $325 million and $347 million, respectively (comprising less than 1% of the Company’s total fixed maturity investments at both dates).  The Company defines sub-prime mortgage-backed securities as investments in which the underlying loans primarily exhibit one or more of the following characteristics: low FICO scores, above-prime interest rates, high loan-to-value ratios or high debt-to-income ratios.  Alternative documentation securitizations are those in which the underlying loans primarily meet the government-sponsored entities’ requirements for credit score but do not meet the government-sponsored entities’ guidelines for documentation, property type, debt and loan-to-value ratios.  The average credit rating on these securities and obligations held by the Company was “Ba2” and “Ba1” at June 30, 2013 and December 31, 2012, respectively.

Commercial Mortgage-Backed Securities and Project Loans

At June 30, 2013 and December 31, 2012, the Company held commercial mortgage-backed securities (including FHA project loans) of $485 million and $453 million, respectively.  The Company does not believe this portfolio exposes it to a material adverse impact on its results of operations, financial position or liquidity, due to the portfolio’s relatively small size and the underlying credit strength of these securities.

Equity Securities Available for Sale, Real Estate and Short-Term Investments

See note 1 of notes to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for further information about these invested asset classes.

Other Investments

At June 30, 2013 and December 31, 2012, the carrying value of the Company’s other investments was $3.41 billion and $3.43 billion, respectively.  The Company’s other investments are primarily comprised of private equity limited partnerships, hedge funds, real estate partnerships, joint ventures, mortgage loans, venture capital (through direct ownership and limited partnerships) and trading securities, which are subject to more volatility than the Company’s fixed maturity investments.  These asset classes have historically provided a higher return than fixed maturities but are subject to more volatility.

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CATASTROPHE REINSURANCE COVERAGE

The Company’s catastrophe reinsurance coverage is discussed in the “Reinsurance” section of “Part I — Item 1 — Business” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  Except as discussed below, there have been no material changes to the Company’s catastrophe reinsurance coverage from that reported in the Annual Report.

General Catastrophe Reinsurance Treaty.  The Company utilizes a general catastrophe reinsurance treaty with unaffiliated reinsurers to help manage its exposure to losses resulting from catastrophes.  The general catastrophe reinsurance treaty covers the accumulation of net property losses arising out of one occurrence.  The treaty covers all of the Company’s exposures in the United States and Canada and their possessions, and waters contiguous thereto, the Caribbean and Mexico.  The treaty only provides coverage for terrorism events in limited circumstances and excludes entirely losses arising from nuclear, biological, chemical or radiological attacks.

The following table summarizes the Company’s coverage under its General Catastrophe Reinsurance Treaty, effective for the period July 1, 2013 through June 30, 2014, as well as certain other catastrophe-related coverages, other than coverage related to the General Catastrophe Aggregate Excess of Loss Treaty which is described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Layer of Loss	Reinsurance Coverage In-Force
$0 - $1.5 billion	Loss 100% retained by the Company, except for certain losses covered by the Earthquake Excess-of-Loss Reinsurance Treaty as described below.
$1.5 billion - $2.25 billion	53.3% ($400 million) of loss covered by treaty; 46.7% ($350 million) of loss retained by the Company. Additionally, certain losses incurred in the Northeastern United States are covered by the reinsurance agreements related to the Catastrophe Bonds as described below.
Greater than $2.25 billion	100% of loss retained by the Company, except for certain losses incurred in the Northeastern United States, which are covered by the reinsurance agreements related to the Catastrophe Bonds and Northeast General Catastrophe Reinsurance Treaty as described below.

Catastrophe Bonds. The Company has catastrophe protection through a reinsurance agreement with Longpoint Re II that expires in December 2013, and two reinsurance agreements with Long Point Re III that expire in June 2015 and May 2016, respectively.  In connection with each reinsurance agreement, Longpoint Re II or Long Point Re III (as applicable) issued notes (generally referred to as “catastrophe bonds”) to investors in an amount equal to the full coverage provided under the respective reinsurance agreement as described below.

The attachment point for index-based losses and the maximum limit under the Company’s reinsurance agreement with Longpoint Re II that expires in December 2013 were reset in April 2013. Accordingly, for the period May 1, 2013 through December 18, 2013, the Company will be entitled to begin recovering amounts under the reinsurance agreement if the index-based losses in the covered area for a single occurrence reach an initial attachment amount of $3.393 billion. The full $250 million coverage amount of the reinsurance agreement is available on a proportional basis until such index-based losses reach a maximum $4.234 billion. Covered losses under the agreement are limited to losses from hurricanes in the following geographic locations: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.

The attachment point, maximum limit and insurance percentage under the Company’s reinsurance agreement with Long Point Re III that expires in June 2015 were reset in April 2013. Accordingly, for the period May 1, 2013 through April 30, 2014, the Company will be entitled to begin recovering amounts under the reinsurance agreement if the losses in the covered

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area for a single occurrence reach an initial attachment amount of $1.817 billion.  The full $250 million coverage amount is available on a proportional basis until covered losses reach a maximum $2.427 billion.  Covered losses under the agreement are limited to losses from hurricanes in the following geographic locations: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and Vermont. The coverage is limited to specified property and related coverages in the Company’s Personal Insurance segment, and within the “Select Accounts” and “Commercial Accounts” market groups within the Company’s Business Insurance segment.

On May 16, 2013, Long Point Re III successfully completed a second offering to unrelated investors of $300 million aggregate principal amount of catastrophe bonds. In connection with the offering, the Company and Long Point Re III entered into a three-year reinsurance agreement providing for coverage up to $300 million for losses from a northeast hurricane. The business covered by the reinsurance agreement is a subset of the Company’s overall insurance portfolio, comprising property insurance and related coverages spread across the following geographic locations: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and Vermont. The coverage is limited to specified property coverage written in the Company’s Personal Insurance segment, and within the “Select Accounts” and the “Commercial Accounts” market groups within the Company’s Business Insurance segment. Coverage under the agreement is limited to losses from hurricanes and is initially subject to a $1.25 billion retention, after which the Company is entitled to recover up to $300 million on a proportional basis until covered losses reach a maximum $1.80 billion limit. The attachment point and maximum limit will be reset annually, with the ability of the Company to adjust the expected loss of the coverage layer (the difference between the attachment point and the maximum limit) within a predetermined range. Similar to the first arrangement with Long Point Re III, the proceeds of the offering were deposited in a separate reinsurance trust account. The permitted investments for such proceeds are materially the same type as in the first offering by Long Point Re III.

Long Point Re III is structured similarly to Longpoint Re II but uses an indemnity reinsurance agreement instead of an index-based dual trigger reinsurance agreement. The Company is not the primary beneficiary of either Longpoint Re II or Long Point Re III and accordingly, does not consolidate these entities in the Company’s consolidated financial statements. The reinsurance agreements are accounted for as reinsurance.

See the “Catastrophe Reinsurance” section of “Part I — Item 1 — Business” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for more details, including a discussion of the structure of and accounting for both Longpoint Re II and Long Point Re III.

Other Catastrophe Reinsurance Treaties.  In addition to its general catastrophe treaty and its multi-year catastrophe bond program, the Company also is party to a northeast general catastrophe reinsurance treaty, a general catastrophe aggregate excess-of-loss reinsurance treaty, an earthquake excess-of-loss reinsurance treaty and several international reinsurance treaties.

·Northeast General Catastrophe Reinsurance Treaty.  The northeast general catastrophe treaty provides up to $600 million of coverage, subject to a $2.25 billion retention, for certain losses arising from hurricanes, tornados, hail storms, earthquakes and winter storm or freeze losses from Virginia to Maine for the period July 1, 2013 through June 30, 2014.  Losses from a covered event (occurring over several days) anywhere in the United States, Canada, the Caribbean and Mexico and waters contiguous thereto may be used to satisfy the retention.  Recoveries under the catastrophe bond programs (if any) would be first applied to reduce losses subject to this treaty.

·General Catastrophe Aggregate Excess-of-Loss Reinsurance Treaty — See “Reinsurance” section of “Part I — Item 1 — Business” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

·Earthquake Excess-of-Loss Reinsurance Treaty. The earthquake excess-of-loss treaty provides for up to $200 million of coverage, subject to a $160 million retention, for earthquake losses incurred under policies written by the National Property, Technology and Public Sector business units and the Commercial Accounts market group in the Company’s Business Insurance segment for the period July 1, 2013 through June 30, 2014.

The Company regularly reviews its catastrophe reinsurance coverage and may adjust such coverage in the future.

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REINSURANCE RECOVERABLES

For a description of the Company’s reinsurance recoverables, refer to “Reinsurance Recoverables” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

The following table summarizes the composition of the Company’s reinsurance recoverables:

(in millions)	June 30,2013			December 31, 2012
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses	$	5,029		$	5,256
Allowance for uncollectible reinsurance	(247		)	(258		)
Net reinsurance recoverables	4,782			4,998
Mandatory pools and associations	1,950			2,549
Structured settlements	3,155			3,165
Total reinsurance recoverables	$	9,887		$	10,712

The $216 million decline in net reinsurance recoverables since December 31, 2012 primarily reflected the impact of cash collections, including commutation agreements, and the impact of net favorable prior year reserve development in the first six months of 2013.

OUTLOOK

The following discussion provides outlook information for certain key drivers of the Company’s results of operations and capital position.

Premiums.  The Company’s earned premiums are a function of net written premium volume.  Net written premiums comprise both renewal business and new business and are recognized as earned premium over the life of the underlying policies. When business renews, the amount of net written premiums associated with that business may increase or decrease (renewal premium change) as a result of increases or decreases in rate and/or insured exposures, which the Company considers as a measure of units of exposure (such as the number and value of vehicles or properties insured).  Net written premiums from both renewal and new business, and therefore earned premiums, are impacted by competitive market conditions as well as general economic conditions, which, particularly in the case of the Business Insurance segment, affect audit premium adjustments, policy endorsements and mid-term cancellations.  Net written premiums are also impacted by the structure of reinsurance programs and related costs.

Given the possibility that more active weather patterns such as the Company experienced in a number of recent periods may continue, as well as the possibility that interest rates may remain low for some period of time, along with the current level of profitability in certain of its product lines, the Company has undertaken various efforts, and expects to undertake additional efforts, to improve its underwriting margins. These efforts include seeking improved rates where the Company believes it is appropriate, as well as improved terms and conditions, on many of its insurance products, and also include other initiatives, such as reducing operating expenses and acquisition costs. In particular, in the Agency Automobile line of business, given new business levels, the Company has undertaken various actions, and expects to undertake additional actions, to reduce expenses and costs in order to improve underwriting margins and enable it to have a more competitively-priced product.  The Agency Automobile line of business has been negatively impacted by various factors, including the use of price comparison technology by agents and brokers as discussed below.  The Company’s actions include, among other things, an announced plan to reduce certain claim and other insurance expenses, with the majority of the impact in the Agency Automobile line of business.  That plan is intended to result in annualized savings of $140 million pre-tax in 2015 when fully implemented.  It is also expected to result in a restructuring charge of approximately $16 million, $10 million of which is expected to be incurred in the third quarter of 2013.

These and other actions with respect to Agency Automobile or our other business units may not be successful and/or may result in lower retention and new business levels and therefore lower business volumes. If these actions are not effective, the Company may need to explore other actions or initiatives to improve its competitive position and profitability. Refer to “Part I—Item 1A—Risk Factors—The intense competition that we face could harm our ability to maintain or increase our business volumes and our profitability” and “—Disruptions to our relationships with our independent agents and brokers could adversely affect us” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Overall, the Company expects retention levels (the amount of expiring premium that renews, before the impact of renewal premium changes) will remain strong relative to historical experience.  The Company also expects to continue to achieve, in the aggregate, price increases on renewal business during the remainder of 2013 and into 2014 that generally exceed loss cost trends.  In the Business Insurance segment, the Company expects that renewal premium changes during the remainder of 2013 and into 2014 will be broadly consistent with the levels attained in the first six months of 2013 and will be driven by both positive renewal rate changes and, subject to the economic uncertainties discussed below, growth in insured exposures.  In the

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Financial, Professional & International Insurance segment, the Company expects that renewal premium changes during the remainder of 2013 and into 2014 will be broadly consistent with the first six months of 2013.  With respect to surety, the Company expects written premium volume in 2013 and into 2014 to be broadly consistent with the levels attained in 2012.  In the Personal Insurance segment, the Company expects both Agency Automobile and Agency Homeowners and Other renewal premium changes during the remainder of 2013 and into 2014 will decline as compared to the first six months of 2013, but the Company expects such renewal premium changes will remain positive and exceed underlying loss cost trends, assuming weather patterns and other loss trends consistent with the Company’s expectations.  Renewal premium changes for both Agency Automobile and Agency Homeowners and Other in the remainder of 2013 and into 2014 are expected to be driven by both positive renewal rate changes (based on the Company’s actions to file for rate increases) and, subject to the economic uncertainties discussed below, growth in insured exposures.  The need for state regulatory approval for changes to personal property and casualty insurance prices, as well as competitive market conditions, may impact the timing and extent of renewal premium changes.

The pricing environment for new business generally has less of an impact on underwriting profitability than renewal rate changes, given the volume of new business relative to renewal business.  Property and casualty insurance market conditions are expected to remain competitive during the remainder of 2013 and into 2014 for new business, not only in Business Insurance and Financial, Professional & International Insurance, but especially in Personal Insurance, where price comparison technology used by agents and brokers, sometimes referred to as “comparative raters,”  has facilitated the process of generating multiple quotes, thereby increasing price comparison on new business and, increasingly, on renewal business.

Modest economic growth in the United States experienced in 2011 and 2012, as well as in the first six months of 2013, may or may not continue, or may continue at a slower rate for an extended period of time. In addition, some economic conditions, such as employment rates, may continue to be weak.  Future actions or inactions of the United States government, such as a failure to increase the government debt limit or a shutdown of the federal government, could increase the actual or perceived risk that the U.S. may not ultimately pay its obligations when due and may disrupt financial markets. Further, general uncertainty regarding the U.S. Federal budget and taxes has added to the uncertainty regarding economic conditions generally.

If weak economic conditions persist or deteriorate, the resulting low levels of economic activity could impact exposure changes at renewal and the Company’s ability to write business at acceptable rates. Additionally, low levels of economic activity could adversely impact audit premium adjustments, policy endorsements and mid-term cancellations after policies are written. All of the foregoing, in turn, could adversely impact net written premiums during the remainder of 2013 and into 2014 and, since earned premiums lag net written premiums, earned premiums could be adversely impacted later in 2013 and into 2014.

Underwriting Gain/Loss.  The Company’s underwriting gain/loss can be significantly impacted by catastrophe losses and net favorable or unfavorable prior year reserve development, as well as underlying underwriting margins.

Catastrophe and other weather-related losses are inherently unpredictable from period to period.  The Company experienced significant catastrophe and other weather-related losses in a number of recent periods which adversely impacted its results of operations. The Company’s results of operations would continue to be adversely impacted if significant catastrophe and other weather-related losses were to occur during the remainder of 2013 and into 2014.

For the last several years, the Company’s results have included significant amounts of net favorable prior year reserve development, although at lower levels in some recent years, driven by better than expected loss experience in all of the Company’s segments.  The lower level of net favorable prior year reserve development in a number of recent periods may have been in part due to the Company’s reserve estimation process incorporating those factors that led to the higher levels of net favorable prior year reserve development in previous years.  If that trend continues, the better than expected loss experience may continue at these recent lower levels, or even lower levels.  However, given the inherent uncertainty in estimating claims and claim adjustment expense reserves, loss experience could develop such that the Company recognizes higher or lower levels of favorable prior year reserve development, no favorable prior year reserve development or unfavorable prior year reserve development in future periods.  In addition, the ongoing review of prior year claims and claim adjustment expense reserves, or other changes in current period circumstances, may result in the Company revising current year loss estimates upward or downward in future periods of the current year.

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In Business Insurance, the Company expects that the anticipated impact of increases in renewal premium changes, partially offset by consistent modest loss cost trends, and assuming weather patterns consistent with the Company’s expectations, will likely result in underlying underwriting margins during the remainder of 2013 and into 2014 that are higher than in 2012 and the first six months of 2013.  In Financial, Professional & International Insurance, the Company expects that the anticipated impact of lower underlying losses due to recent underwriting actions in the segment and positive renewal premium changes in Bond & Financial Products will likely result in underlying underwriting margins during the remainder of 2013 and into 2014 that are broadly consistent with the first six months of 2013.  In Personal Insurance, the Company anticipates underlying underwriting margins during the remainder of 2013 and into 2014 that are broadly consistent with 2012 and the first six months of 2013.  In Agency Automobile, the Company anticipates an improvement in underlying underwriting margins during the remainder of 2013 and into 2014 compared to 2012 and the first six months of 2013 due to the anticipated impact of continued positive renewal premium changes, partially offset by loss cost trends.  In Agency Homeowners and Other, the Company anticipates a modest decline in underlying underwriting margins during the remainder of 2013 and into 2014 compared to 2012 and the first six months of 2013, reflecting a return to non-catastrophe weather-related loss levels and loss cost trends consistent with the Company’s expectations, partially offset by the anticipated impact of continued positive renewal premium changes.  Also in Personal Insurance, the Company’s direct to consumer initiative, the distribution channel that the Company launched in 2009, while intended to enhance the Company’s long-term ability to compete successfully in a consumer-driven marketplace, is expected to remain unprofitable for a number of years as this book of business grows and matures.

Investment Portfolio.  The Company expects to continue to focus its investment strategy on maintaining a high-quality investment portfolio and a relatively short average effective duration.  The average effective duration of fixed maturities and short-term securities was 3.6 (3.8 excluding short-term securities) at June 30, 2013.  By the end of the second quarter of 2013, based upon the outlook for interest rates as compared to the carrying cost of these positions, the Company closed all of its short positions in U.S. Treasury futures, which it uses to manage the duration of its fixed maturity portfolio to reduce the Company’s exposure to a decrease in its book value resulting from an increase in interest rates.  The Company may once again enter into short positions in U.S. Treasury futures in future periods. The Company continually evaluates its investment alternatives and mix.  Currently, the majority of the Company’s investments are comprised of a widely diversified portfolio of high-quality, liquid taxable U.S. government, tax-exempt U.S. municipal and taxable corporate and U.S. agency mortgage-backed bonds.

The Company also invests much smaller amounts in equity securities, real estate, private equity limited partnerships, hedge funds, real estate partnerships, joint ventures, mortgage loans, venture capital (through direct ownership and limited partnerships) and trading securities.  These investment classes have the potential for higher returns but also the potential for higher degrees of risk, including less stable rates of return and less liquidity.

Net investment income is a material contributor to the Company’s results of operations.  Interest rates remain at very low levels by historical standards.  Based on the current interest rate environment, the Company estimates that the impact of lower reinvestment yields on the Company’s fixed maturity portfolio could, in the remainder of 2013 and into 2014, result in approximately $25 million of lower after-tax net investment income from that portfolio on a quarterly basis as compared to the corresponding prior year quarter.  Given recent general economic and investment market conditions, the Company expects investment income from the non-fixed maturity portfolio for the remainder of 2013 will be lower than the second half of 2012.  If general economic conditions and/or investment market conditions deteriorate in the remainder of 2013, the Company could also experience a further reduction in net investment income and/or significant realized investment losses, including impairments.  For further discussion of the Company’s investment portfolio, see “Investment Portfolio” in this report.  For a discussion of the risks to the Company’s business during or following a financial market disruption and risks to the Company’s investment portfolio, see the risk factors entitled “During or following a period of financial market disruption or economic downturn, our business could be materially and adversely affected” and “Our investment portfolio may suffer reduced returns or material realized or unrealized losses” included in “Part I—Item 1A—Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Capital Position. The Company believes it has a strong capital position and, as part of its ongoing efforts to create shareholder value, expects to continue to return capital not needed to support its business operations to its shareholders.  The Company expects that, generally over time, the combination of dividends to common shareholders and common share repurchases will likely not exceed operating income.  In addition, the timing and actual number of shares to be repurchased in the future will depend on a variety of additional factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company’s desired ratings from independent rating

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agencies, 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 and related financings), market conditions and other factors.  For information regarding the Company’s common share repurchases in 2013, see “Liquidity and Capital Resources” in this report.

The Company had a net after-tax unrealized investment gain of $1.53 billion in its fixed maturity investment portfolio at June 30, 2013.  While the Company does not attempt to predict future interest rate movements, a rising interest rate environment would reduce the market value of fixed maturity investments and, therefore, reduce shareholders’ equity, and a declining interest rate environment would have the opposite effects.  For a discussion of the risks to the Company’s business during or following a financial market disruption and risks to the Company’s investment portfolio, see the risk factors entitled “During or following a period of financial market disruption or economic downturn, our business could be materially and adversely affected” and “Our investment portfolio may suffer reduced returns or material realized or unrealized losses” included in “Part I—Item 1A—Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

On June 10, 2013, the Company entered into a definitive agreement to acquire all of the issued and outstanding shares of The Dominion of Canada General Insurance Company (The Dominion) from E-L Financial Corporation Limited for an aggregate cash purchase price of C$1.125 billion (approximately US$1.1 billion), subject to adjustment to reflect changes in shareholder’s equity prior to the closing, including a downward adjustment to reflect an anticipated pre-closing dividend. The transaction is expected to close in the fourth quarter of 2013, subject to regulatory approvals and other customary closing conditions.  The Dominion primarily markets personal lines and small commercial insurance business in Canada.  The Company is expected to fund the transaction, subject to market conditions, through a combination of debt and/or preferred stock financing and internal resources.

Many of the statements in this “Outlook” section are forward-looking statements, which are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control.  Actual results could differ materially from those expressed or implied by such forward-looking statements.  Further, such forward-looking statements speak only as of the date of this report and the Company undertakes no obligation to update them.  See “—Forward Looking Statements.”  For a discussion of potential risks and uncertainties that could impact the Company’s results of operations or financial position, see “Item 1A—Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in this report.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is a measure of a company’s ability to generate sufficient cash flows to meet the cash requirements of its business operations and to satisfy general corporate purposes when needed.  The liquidity requirements of the Company have been met primarily by funds generated from premiums, fees, income received on investments and investment maturities.  Cash provided from these sources is used primarily for claims and claim adjustment expense payments, operating expenses, debt servicing, taxes, shareholder dividends and, in recent years, for common share repurchases.  The timing and amount of catastrophe claims are inherently unpredictable.  Such claims increase liquidity requirements.  The timing and amount of reinsurance recoveries may be affected by reinsurer solvency and reinsurance coverage disputes.  Additionally, the variability of asbestos-related claim payments, as well as the volatility of potential judgments and settlements arising out of litigation, may also result in increased liquidity requirements.  It is the opinion of the Company’s management that the Company’s future liquidity needs will be adequately met from all of the above sources.

At June 30, 2013, total cash and short-term invested assets aggregating $2.05 billion and having a weighted average maturity of 54 days were held in the United States by the holding company.  These assets are sufficient to meet the holding company’s current liquidity requirements and are in excess of the Company’s minimum target level, comprising the Company’s estimated annual pretax interest expense and common shareholder dividends, and currently totaling approximately $1.1 billion.  These liquidity requirements primarily include shareholder dividends, debt service and, from time to time, contributions to its qualified domestic pension plan.

The holding company is not dependent on dividends or other forms of repatriation from its foreign operations to support its liquidity needs.  U.S. income taxes have not been recognized on substantially all of the Company’s foreign operations’ undistributed earnings as of June 30, 2013, as such earnings are intended to be permanently reinvested in those operations. Furthermore, taxes paid to foreign governments on these earnings may be used as credits against the U.S. tax on dividend distributions if such earnings were to be distributed to the holding company.  The amount of undistributed earnings from foreign operations and related taxes on those undistributed earnings were not material to the Company’s financial position or liquidity at June 30, 2013.

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On June 7, 2013, the Company entered into a five-year, $1.0 billion revolving credit agreement with a syndicate of financial institutions, replacing its three-year $1.0 billion credit agreement that was due to expire on June 10, 2013.  For additional information regarding terms and covenants in this credit agreement, see note 7 of notes to the unaudited consolidated financial statements in this report.  This credit agreement also supports the Company’s $800 million commercial paper program, of which $100 million was outstanding at June 30, 2013.  The Company is not reliant on its commercial paper program to meet its operating cash flow needs.

On June 19, 2013, the Company filed a shelf registration statement with the Securities and Exchange Commission.  For additional information regarding this shelf registration statement, see note 8 of notes to the unaudited consolidated financial statements in this report.

The Company currently utilizes uncollateralized letters of credit issued by major banks with an aggregate limit of approximately $382 million to provide much of the capital needed to support its obligations at Lloyd’s.  If uncollateralized letters of credit are not available at a reasonable price or at all in the future, the Company can collateralize these letters of credit or may have to seek alternative means of supporting its obligations at Lloyd’s, which could include utilizing holding company funds on hand.

Operating Activities

Net cash flows provided by operating activities in the first six months of 2013 and 2012 were $1.25 billion and $1.27 billion, respectively.

Investing Activities

Net cash flows provided by investing activities were $92 million in the first six months of 2013, compared with net cash flows used in investing activities of $81 million in the same period of 2012.  The Company’s consolidated total investments at June 30, 2013 decreased by $2.57 billion or 3% from year-end 2012, primarily reflecting the impact of a decline in net unrealized appreciation of investments due to an increase in interest rates.

Financing Activities

Net cash flows used in financing activities in the first six months of 2013 and 2012 were $1.36 billion and $1.17 billion, respectively.  The totals in both periods primarily reflected common share repurchases, dividends to shareholders and debt repayments, partially offset by the proceeds from employee stock option exercises.

Dividends.  Dividends paid to shareholders were $366 million and $341 million in the first six months of 2013 and 2012, respectively.  The declaration and payment of future dividends to holders of the Company’s common stock will be at the discretion of the Company’s board of directors and will depend upon many factors, including the Company’s financial position, earnings, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints and other factors as the board of directors deems relevant.  Dividends will be paid by the Company only if declared by its board of directors out of funds legally available, subject to any other restrictions that may be applicable to the Company.  On July 23, 2013, the Company announced that it declared a regular quarterly dividend of $0.50 per share, payable September 30, 2013, to shareholders of record on September 10, 2013.

Share Repurchase Authorization.  The Company’s board of directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise.  The authorizations do not have a stated expiration date.  The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company’s desired ratings from independent rating agencies, 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 and related financings), market conditions and other factors.  During the three months and six months ended June 30, 2013, the Company repurchased 3.6 million and 7.3 million shares, respectively, under its share repurchase authorization, for a total cost of $300 million and $600 million, respectively.  The average cost per share repurchased was $82.99 and $81.99, respectively.  At June 30, 2013, the Company had $1.56 billion of capacity remaining under the share repurchase authorization.

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Capital Structure.  The following table summarizes the components of the Company’s capital structure at June 30, 2013 and December 31, 2012.

(in millions)	June 30,2013			December 31, 2012
Debt:
Short-term	$	100		$	600
Long-term	5,761			5,761
Net unamortized fair value adjustments and debt issuance costs	(9		)	(11		)
Total debt	5,852			6,350
Shareholders’ equity:
Common stock and retained earnings, less treasury stock	24,170			23,169
Accumulated other comprehensive income	720			2,236
Total shareholders’ equity	24,890			25,405
Total capitalization	$	30,742		$	31,755

The following table provides a reconciliation of total capitalization excluding net unrealized gain on investments to total capitalization presented in the foregoing table.

(dollars in millions)	June 30,2013			December 31, 2012
Total capitalization excluding net unrealized gain on investments	$	29,050		$	28,652
Net unrealized gain on investments, net of taxes	1,692			3,103
Total capitalization	$	30,742		$	31,755
Debt-to-total capital ratio	19.0		%	20.0		%
Debt-to-total capital ratio excluding net unrealized gain on investments	20.1		%	22.2		%

The debt-to-total capital ratio excluding net unrealized gain on investments is calculated by dividing (a) debt by (b) total capitalization excluding net unrealized gains and losses on investments, net of taxes.  Net unrealized gains and losses on investments can be significantly impacted by both interest rate movements and other economic factors.  Accordingly, in the opinion of the Company’s management, the debt-to-total capital ratio calculated on this basis provides another useful metric for investors to understand the Company’s financial leverage position.  The Company’s ratio of debt-to-total capital (excluding after-tax net unrealized investment gains) was 20.1% at June 30, 2013, within the Company’s target range of 15% to 25%.

RATINGS

Ratings are an important factor in assessing the Company’s competitive position in the insurance industry.  The Company receives ratings from the following major rating agencies: A.M. Best Company (A.M. Best), Fitch Ratings (Fitch), Moody’s Investors Service (Moody’s) and Standard & Poor’s (S&P).  The following rating agency actions were taken with respect to the Company since April 23, 2013, the date on which the Company’s Form 10-Q for the quarter ended March 31, 2013 was filed with the Securities and Exchange Commission.  For additional discussion of ratings, see the “Ratings” section of “Part I — Item 1 — Business” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

·On May 22, 2013, S&P affirmed all ratings of the Company.  The outlook for all ratings is stable.

·On May 30, 2013, A.M. Best affirmed all ratings of the Company.  The outlook for all ratings of the Company was revised to positive from stable (except the outlooks for The Premier Insurance Company of Massachusetts, First Trenton Indemnity Company and First Floridian Auto and Home Insurance Company, all of which remained stable).

·On June 10, 2013, Fitch affirmed all ratings of the Company.  The outlook for all ratings is stable.

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CRITICAL ACCOUNTING ESTIMATES

For a description of the Company’s critical accounting estimates, refer to “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  The Company considers its most significant accounting estimates to be those applied to claims and claim adjustment expense reserves and related reinsurance recoverables, investment valuation and impairments, and goodwill and other intangible assets impairments. Except as shown in the table below, there have been no material changes to the Company’s critical accounting estimates since December 31, 2012.

Claims and Claim Adjustment Expense Reserves

The table below displays the Company’s gross claims and claim adjustment expense reserves by product line.  Additional liabilities may arise for amounts in excess of the current related reserves.  In addition, the Company’s estimate of claims and claim adjustment expenses may change. These additional liabilities or increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company’s operating results in future periods. In particular, a portion of the Company’s gross claims and claim adjustment expense reserves (totaling $2.97 billion at June 30, 2013) are for asbestos and environmental claims and related litigation. While the ongoing review of asbestos and environmental claims and associated liabilities considers the inconsistencies of court decisions as to coverage, plaintiffs’ expanded theories of liability and the risks inherent in complex litigation and other uncertainties, in the opinion of the Company’s management, it is possible that the outcome of the continued uncertainties regarding these claims could result in liability in future periods that differs from current reserves by an amount that could be material to the Company’s future operating results. See the preceding discussion of “Asbestos Claims and Litigation” and “Environmental Claims and Litigation.”

Gross claims and claim adjustment expense reserves by product line were as follows:

	June 30, 2013						December 31, 2012
(in millions)	Case		IBNR		Total		Case		IBNR		Total
General liability	$	5,512	$	8,842	$	14,354	$	5,525	$	9,109	$	14,634
Commercial property	799		713		1,512		992		638		1,630
Commercial multi-peril	1,999		1,736		3,735		2,018		1,723		3,741
Commercial automobile	2,331		1,216		3,547		2,343		1,241		3,584
Workers’ compensation	9,784		7,763		17,547		9,684		7,589		17,273
Fidelity and surety	425		935		1,360		479		934		1,413
Personal automobile	1,923		681		2,604		1,980		722		2,702
Homeowners and personal—other	690		735		1,425		1,335		809		2,144
International and other	2,026		1,478		3,504		2,216		1,551		3,767
Property-casualty	25,489		24,099		49,588		26,572		24,316		50,888
Accident and health	32		—		32		34		—		34
Claims and claim adjustment expense reserves	$	25,521	$	24,099	$	49,620	$	26,606	$	24,316	$	50,922

The $1.30 billion decrease in gross claims and claim adjustment expense reserves since December 31, 2012 primarily reflected payments related to significant catastrophe losses incurred in 2012, the impact of net favorable prior year reserve development and payments related to operations in runoff, including asbestos and environmental claims.

Asbestos and environmental reserves are included in the General liability, Commercial multi-peril and International and other lines in the summary table above.  Asbestos and environmental reserves are discussed separately; see “Asbestos Claims and Litigation”, “Environmental Claims and Litigation” and “Uncertainty Regarding Adequacy of Asbestos and Environmental Reserves.”

FUTURE APPLICATION OF ACCOUNTING STANDARDS

See note 1 of notes to the Company’s unaudited consolidated financial statements contained in this quarterly report for a discussion of recently issued accounting pronouncements.

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FORWARD-LOOKING STATEMENTS

This report 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 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, loss costs, 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;

·strategic initiatives, including initiatives to improve profitability and competitiveness; and

·the potential closing date and impact of its merger and acquisition transactions, including the acquisition of The Dominion of Canada General Insurance Company (The Dominion), and the financing plans related to such transactions.

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 and 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 the Company’s results;

78

·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;

·changes in U.S. tax laws or in the tax laws of other jurisdictions in which the Company operates could adversely impact the Company;

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

·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;

·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;

·acquisitions and integration of acquired businesses, including the Company’s planned acquisition of The Dominion, 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 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;

·the Company’s repurchase plans depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company’s desired ratings from independent rating agencies, 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 and related financings), market conditions and other factors;

·the Company may not achieve the anticipated benefits of its transactions or its strategic initiatives, including in Personal Insurance, or complete a transaction that is subject to closing conditions; and

·conditions in the capital markets may not be suitable for the Company to incur additional indebtedness and/or to issue preferred stock to finance its merger and acquisition transactions, including the acquisition of The Dominion.

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

WEBSITE AND SOCIAL MEDIA DISCLOSURE

From time to time, the Company may use its website and/or social media outlets, such as Facebook and Twitter, as distribution channels of material company information.  Financial and other important information regarding the Company is routinely accessible through and posted on the Company’s website at http://investor.travelers.com, its Facebook page at https://www.facebook.com/travelers and its Twitter account (@TRV_Insurance) at https://twitter.com/TRV_Insurance.  In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the “Email Alert Service” section at http://investor.travelers.com.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For the Company’s disclosures about market risk, please see “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of the Company’s 2012 Annual Report on Form 10-K filed with the Securities and Exchange Commission.  There have been no material changes to the Company’s disclosures about market risk in Part II, Item 7A of the Company’s 2012 Annual Report on Form 10-K.

Item 4. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.  Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.  The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 30, 2013.  Based upon that evaluation and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2013, the design and operation of the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

In addition, there was no change in the Company’s internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2013 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

The information required with respect to this item can be found under “Contingencies” in note 12 of notes to the Company’s unaudited consolidated financial statements contained in this quarterly report and is incorporated by reference into this Item 1.

Item 1A.  RISK FACTORS

For a discussion of the Company’s potential risks or uncertainties, please see “Risk Factors” in Part I, Item 1A of the Company’s 2012 Annual Report on Form 10-K filed with the Securities and Exchange Commission.  In addition, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Outlook” and “— Critical Accounting Estimates” herein and in the 2012 Form 10-K.  Other than described below, there have been no material changes to the risk factors disclosed in Part I, Item 1A of the Company’s 2012 Annual Report on Form 10-K.

Changes to existing accounting standards may adversely impact our reported results.  As a U.S.-based SEC reporting company, we are currently required to prepare our financial statements in accordance with U.S. Generally Accepted Accounting Principles (US GAAP), as promulgated by the Financial Accounting Standards Board (FASB).  During the last several years, the Securities and Exchange Commission (SEC) has been evaluating whether, when and how International Financial Reporting Standards (IFRS) should be incorporated into the U.S. financial reporting system, including for companies such as us.  The FASB and the International Accounting Standards Board (IASB) have also embarked on a long-term project to converge US GAAP and IFRS.  In June 2012, the FASB issued a statement that indicated that based on the nature and totality of differences between the FASB’s and IASB’s views, it is not likely that the two boards will achieve convergence on their joint project on the accounting for insurance contracts. The FASB further noted that the FASB and IASB have very different perspectives on the project.  In June 2013, each board issued for comment an exposure draft on the accounting for insurance contracts that has significant differences from the other board’s draft as well as from current US GAAP.  Both exposure drafts propose changes that, if ultimately adopted, could significantly impact the accounting by insurers, including the Company, for premiums and unearned premium reserves, the liability for claims and claims adjustment expenses, reinsurance, and deferred acquisition costs.  Upon completion of the comment period, both boards will review the comments received and will re-deliberate the guidance before issuing a final standard.  As a result of this, it is currently unclear what changes, if any, may be

80

made to the accounting for insurance contracts under US GAAP as a result of this project, and we are not able to predict whether we will choose to, or be required to, adopt IFRS or how the adoption of IFRS (or the convergence of US GAAP and IFRS, including the project on the accounting for insurance contracts) may impact our financial statements in the future.  Changes in accounting standards, particularly those that specifically apply to insurance company operations, may impact the content and presentation of our reported financial results and could cause increased volatility in reported earnings and other adverse consequences to our reported financial results, and decrease comparability of our reported results with other insurers.

Item 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below sets forth information regarding repurchases by the Company of its common stock during the periods indicated.

ISSUER PURCHASES OF EQUITY SECURITIES

Period Beginning	Period Ending	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs
April 1, 2013	April 30, 2013	4,720	$	84.68	—	$	1,859,184,125
May 1, 2013	May 31, 2013	716,315	$	84.00	713,152	$	1,799,283,403
June 1, 2013	June 30, 2013	2,901,900	$	82.74	2,901,760	$	1,559,178,027
Total		3,622,935	$	83.00	3,614,912	$	1,559,178,027

The Company’s board of directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise.  The authorizations do not have a stated expiration date.  The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company’s desired ratings from independent rating agencies, 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.

The Company acquired 8,023 shares during the three months ended June 30, 2013 that were not part of the publicly announced share repurchase authorization.  These shares consisted of shares retained to cover payroll withholding taxes in connection with the vesting of restricted stock awards and shares used by employees to cover the exercise price of certain stock options that were exercised.

Item 5.OTHER INFORMATION

Executive Ownership and Sales.  All of the Company’s executive officers hold equity in the Company in excess of the required level under the Company’s executive stock ownership policy.  For a summary of this policy as currently in effect, see “Compensation Discussion and Analysis—Stock Ownership Guidelines” in the Company’s proxy statement filed with the Securities and Exchange Commission on April 9, 2013.  From time to time, some of the Company’s executives may determine that it is advisable to diversify their investments for personal financial planning reasons, or may seek liquidity for other reasons, and may sell shares of common stock of the Company in the open market, in private transactions or to the Company.  To effect such sales, some of the Company’s executives have entered into, and may in the future enter into, trading plans designed to comply with the Company’s Securities Trading Policy and the provisions of Rule 10b5-1 under the Securities Exchange Act of 1934.  The trading plans will not reduce any of the executives’ ownership of the Company’s shares below the applicable executive stock ownership guidelines.  The Company does not undertake any obligation to report Rule 10b5-1 plans that may be adopted by any employee or director of the Company in the future, or to report any modifications or termination of any publicly announced plan. As of the date of this report, none of the Company’s “named executive officers” (i.e., an executive officer named in the compensation disclosures in the Company’s proxy statement) has a Rule 10b5-1 trading plan that remains in effect.

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Item 6.EXHIBITS

See Exhibit Index.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, The Travelers Companies, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		THE TRAVELERS COMPANIES, INC.
	(Registrant)
Date: July 23, 2013	By	/S/   MATTHEW S. FURMAN
		Matthew S. Furman
		Senior Vice President
		(Authorized Signatory)
Date: July 23, 2013	By	/S/    DOUGLAS K. RUSSELL
		Douglas K. Russell
		Senior Vice President and Corporate Controller
		(Principal Accounting Officer)

82

EXHIBIT INDEX

Exhibit Number		Description of Exhibit
3.1		Amended and Restated Articles of Incorporation of The Travelers Companies, Inc. (the Company), as amended and restated May 23, 2013, were filed as Exhibit 3.1 to the Company’s current report on Form 8-K filed on May 24, 2013, and are incorporated herein by reference.
3.2		Amended and Restated Bylaws of the Company, effective as of February 18, 2009, were filed as Exhibit 3.2 to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2008, and are incorporated herein by reference.
10.1	†	Revolving Credit Agreement, dated June 7, 2013.
12.1	†	Statement regarding the computation of the ratio of earnings to fixed charges.
31.1	†	Certification of Jay S. Fishman, Chairman and Chief Executive Officer of the Company, as required by Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	†	Certification of Jay S. Benet, Vice Chairman and Chief Financial Officer of the Company, as required by Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	†	Certification of Jay S. Fishman, Chairman and Chief Executive Officer of the Company, as required by Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	†	Certification of Jay S. Benet, Vice Chairman and Chief Financial Officer of the Company, as required by Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	†	The following financial information from The Travelers Companies, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 formatted in XBRL: (i) Consolidated Statement of Income for the three months and six months ended June 30, 2013 and 2012; (ii) Consolidated Statement of Comprehensive Income for the three months and six months ended June 30, 2013 and 2012; (iii) Consolidated Balance Sheet at June 30, 2013 and December 31, 2012; (iv) Consolidated Statement of Changes in Shareholders’ Equity for the six months ended June 30, 2013 and 2012; (v) Consolidated Statement of Cash Flows for the six months ended June 30, 2013 and 2012; and (vi) Notes to Consolidated Financial Statements.

†Filed herewith.

The total amount of securities authorized pursuant to any instrument defining rights of holders of long-term debt of the Company does not exceed 10% of the total assets of the Company and its consolidated subsidiaries.  Therefore, the Company is not filing any instruments evidencing long-term debt.  However, the Company will furnish copies of any such instrument to the Securities and Exchange Commission upon request.

Copies of any of the exhibits referred to above will be furnished to security holders who make written request therefor to The Travelers Companies, Inc., 385 Washington Street, Saint Paul, MN 55102, Attention: Corporate Secretary.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than the terms of the agreements or other documents themselves, and you should not rely on them for that purpose.  In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs at the date they were made or at any other time.

83

EX-10.1

Exhibit 10.1

CONFORMED*
EXECUTION VERSION

U.S. $1,000,000,000

FIVE YEAR CREDIT AGREEMENT*

Dated as of June 7, 2013

among

THE TRAVELERS COMPANIES, INC.

as Borrower

and

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

and

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Administrative Agent

and

WELLS FARGO SECURITIES, LLC

CITIGROUP GLOBAL MARKETS INC.

J.P. MORGAN SECURITIES LLC

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

U.S. BANK NATIONAL ASSOCIATION

as Joint Lead Arrangers and Joint Bookrunners

and

BANK OF AMERICA, N.A.

CITIBANK, N.A.

JPMORGAN CHASE BANK, N.A.

U.S. BANK NATIONAL ASSOCIATION

as Co-Syndication Agents

and

HSBC BANK USA, NATIONAL ASSOCIATION

as Documentation Agent

* Conformed to show signatures

TABLE OF CONTENTS

		Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01.	Certain Defined Terms	1
SECTION 1.02.	Computation of Time Periods	16
SECTION 1.03.	Accounting Terms	16
ARTICLE II
AMOUNTS AND TERMS OF THE REVOLVING CREDIT ADVANCES AND LETTERS OF CREDIT
SECTION 2.01.	The Revolving Credit Advances and Letters of Credit	16
SECTION 2.02.	Making the Revolving Credit Advances	18
SECTION 2.03.	Issuance of and Drawings and Reimbursement Under Letters of Credit	20
SECTION 2.04.	Fees	24
SECTION 2.05.	Optional Termination or Reduction of the Commitments	25
SECTION 2.06.	Repayment of Revolving Credit Advances	25
SECTION 2.07.	Interest on Revolving Credit Advances	26
SECTION 2.08.	Interest Rate Determination	27
SECTION 2.09.	Optional Conversion of Revolving Credit Advances	28
SECTION 2.10.	Prepayments of Revolving Credit Advances	28
SECTION 2.11.	Increased Costs	28
SECTION 2.12.	Illegality	30
SECTION 2.13.	Payments and Computations	30
SECTION 2.14.	Taxes	31
SECTION 2.15.	Sharing of Payments, Etc.	33
SECTION 2.16.	Evidence of Debt	34
SECTION 2.17.	Use of Proceeds	34
SECTION 2.18.	Increase in the Aggregate Commitments	35
SECTION 2.19.	Extension of Termination Date	36
SECTION 2.20.	Replacement of Lenders	38
SECTION 2.21.	Cash Collateral	38
SECTION 2.22.	Defaulting Lenders	39
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01.	Conditions Precedent to Effectiveness of Section 2.01	41
SECTION 3.02.	Conditions Precedent to Each Revolving Credit Borrowing, Issuance, Commitment Increase and Extension of the Termination Date	42
SECTION 3.03.	Determinations Under Section 3.01	43

i

TABLE OF CONTENTS

(continued)

		Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01.	Representations and Warranties of the Borrower	43
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01.	Affirmative Covenants	45
SECTION 5.02.	Negative Covenants	47
SECTION 5.03.	Financial Covenant	49
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01.	Events of Default	50
SECTION 6.02.	Actions in Respect of the Letters of Credit upon Default	52
SECTION 6.03.	Application of Funds	52
ARTICLE VII
THE AGENT
SECTION 7.01.	Authorization and Action	53
SECTION 7.02.	Agent’s Reliance, Etc.	54
SECTION 7.03.	Delegation of Duties	55
SECTION 7.04.	Rights as a Lender	55
SECTION 7.05.	Lender Credit Decision	55
SECTION 7.06.	Indemnification	55
SECTION 7.07.	Successor Agent	56
SECTION 7.08.	Other Agents	57
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01.	Amendments, Etc.	57
SECTION 8.02.	Notices, Etc.	58
SECTION 8.03.	No Waiver; Remedies	59
SECTION 8.04.	Costs; Expenses; and Indemnification	60
SECTION 8.05.	Right of Set-off	61
SECTION 8.06.	Binding Effect; Integration	61
SECTION 8.07.	Assignments and Participations	62
SECTION 8.08.	Confidentiality	64
SECTION 8.09.	Governing Law	65

ii

TABLE OF CONTENTS

(continued)

		Page
SECTION 8.10.	Execution in Counterparts	65
SECTION 8.11.	Jurisdiction, Etc.	65
SECTION 8.12.	No Liability of the Issuing Banks	66
SECTION 8.13.	No Advisory or Fiduciary Responsibility	66
SECTION 8.14.	Survival of Representations and Warranties	66
SECTION 8.15.	Patriot Act	66
SECTION 8.16.	Waiver of Jury Trial	67

iii

Schedules
Schedule 1.01 — Lender Commitments
Schedule 4.01(e) — Accounting Matters
Schedule 5.02(a) — Existing Liens
Schedule 8.02 — Notice Information
Exhibits
Exhibit A	-	Form of Revolving Credit Note
Exhibit B	-	Form of Notice of Revolving Credit Borrowing
Exhibit C	-	Form of Assignment and Assumption
Exhibit D	-	Form of Opinion of Counsel for the Borrower

iv

FIVE YEAR CREDIT AGREEMENT

Dated as of June 7, 2013

THE TRAVELERS COMPANIES, INC., a Minnesota corporation (the “Borrower”), the banks, financial institutions and other institutional lenders party hereto (the “Initial Lenders”), BANK OF AMERICA, N.A., CITIBANK, N.A., JPMORGAN CHASE BANK, N.A. and U.S. BANK NATIONAL ASSOCIATION, as co-syndication agents, WELLS FARGO SECURITIES, LLC, CITIGROUP GLOBAL MARKETS INC., J.P. MORGAN SECURITIES LLC, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and U.S. BANK NATIONAL ASSOCIATION, as joint lead arrangers (the “Joint Lead Arrangers”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent (the “Agent”) for the Lenders (as hereinafter defined), agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01.  Certain Defined Terms.  As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Administrative Questionnaire” means an Administrative Questionnaire in the form from time to time in use by the Agent.

“Agreement” means this Five Year Credit Agreement dated as of June 7, 2013 among the Borrower, the Initial Lenders, the Agent and each Lender from time to time party hereto, together with all amendments, modifications, restatements, or supplements thereof.

“Agent” has the meaning specified in the preamble hereto.

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person.

“Agent’s Account” means the account of the Agent set forth on Schedule 8.02 maintained by the Agent at Wells Fargo, or such other account as the Agent may from time to time notify the Borrower and the Lenders.

“Applicable Anniversary” has the meaning specified in Section 2.19(a).

“Applicable Lending Office” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of a Base Rate Advance and such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

“Applicable Margin” means for Base Rate Advances and Eurodollar Rate Advances, as of any date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:

Public Debt Rating S&P/Moody’s	Applicable Margin for Eurodollar Rate Advances		Applicable Margin for Base Rate Advances
Level 1 At least AA- or Aa3	0.795	%	0.00	%
Level 2 Lower than Level 1 but at least A+ or A1	0.900	%	0.00	%
Level 3 Lower than Level 2 but at least A or A2	1.000	%	0.00	%
Level 4 Lower than Level 3 but at least A- or A3	1.100	%	0.10	%
Level 5 Lower than Level 4	1.300	%	0.30	%

“Applicable Percentage” means, as of any date a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:

Public Debt Rating S&P/Moody’s	Applicable Percentage
Level 1 At least AA- or Aa3	0.080	%
Level 2 Lower than Level 1 but at least A+ or A1	0.100	%
Level 3 Lower than Level 2 but at least A or A2	0.125	%
Level 4 Lower than Level 3 but at least A- or A3	0.150	%
Level 5 Lower than Level 4	0.200	%

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit C hereto.

“Assuming Lender” has the meaning specified in Section 2.18(d).

“Assumption Agreement” has the meaning specified in Section 2.18(d)(ii).

“Auto-Extension Letter of Credit” has the meaning specified in Section 2.03(a)(iv).

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“Available Amount” of any Letter of Credit means, at any time, unless otherwise specified herein, the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuing Bank Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Wells Fargo as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%.  The “prime rate” is a rate set by Wells Fargo based upon various factors including Wells Fargo’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such prime rate announced by Wells Fargo shall take effect at the opening of business on the day specified in the public announcement of such change.

“Base Rate Advance” means a Revolving Credit Advance that bears interest as provided in Section 2.07(a)(i).

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Business Day” means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market.

“Cash Collateral Account” has the meaning specified in Section 2.21(b).

“Cash Collateralize” means to pledge and deposit with or deliver to the Agent, for the benefit of the Agent or an Issuing Bank (as applicable) and the Lenders, as collateral for L/C Obligations (other than L/C Obligations owing in connection with a Secured Letter of Credit) or obligations of Lenders to fund participations in respect thereof (as the context may require), cash or deposit account balances or, if each of the Borrower and the Issuing Bank benefitting from such collateral shall agree, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to (a) the Agent, (b) the applicable Issuing Bank, and (c) the Borrower.  “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“Commitment” means a Revolving Credit Commitment or a Letter of Credit Commitment.

“Commitment Date” has the meaning specified in Section 2.18(b).

“Commitment Increase” has the meaning specified in Section 2.18(a).

“Commitment Letter” the Commitment Letter dated as of May 6, 2013 among the Borrower, Wells Fargo, Wells Fargo Securities, LLC, Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC and U.S. Bank National Association.

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“Confidential Information” means all non-public information that the Borrower furnishes to the Agent or any Lender, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Agent or such Lender from a source other than the Borrower, provided such source is reasonably believed by the Agent or such Lender, as applicable, not to be in violation of a confidentiality agreement with the Borrower.

“Consenting Lender” has the meaning specified in Section 2.19(b).

“Consolidated” refers to the consolidation of accounts in accordance with GAAP.

“Convert”, “Conversion” and “Converted” each refers to a conversion of Revolving Credit Advances of one Type into Revolving Credit Advances of the other Type pursuant to Section 2.08 or 2.09.

“Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of such Person’s business that (x) are not overdue by more than 120 days or (y) are being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that are or should be, in accordance with GAAP, recorded as capital leases (the amount of Debt attributable thereto to be the capitalized amount thereof in accordance with GAAP), (f) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (g) all reimbursement obligations of such Person in respect of drawings or payments made under letters of credit or similar extensions of credit, (h) all obligations of such Person in respect of Hedge Agreements, (i) all Debt of others referred to in clauses (a) through (h) above or clause (j) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (1) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) for the purpose of enabling the debtor to make payment of such Debt or (4) otherwise to assure the holder of any such Debt against loss, and (j) all Debt of others referred to in clauses (a) through (i) above secured by any Lien on property (including, without limitation, accounts and contract rights) owned by such Person (the amount of Debt attributable thereto to be equal to the lesser of (i) the amount of such Debt and (ii) the fair market value of the property subject to such Lien), even though such Person has not assumed or become liable for the payment of such Debt.  For purposes of calculating the amount of Debt pursuant to clause (h) of the foregoing definition, such amount shall be equal to the amount that would be payable (giving effect to netting arrangements) by the relevant Person if the Hedge Agreement were terminated at such time.  Notwithstanding anything herein to the contrary, none of the following shall constitute “Debt”: (A) surety bonds, fidelity bonds and other similar insurance products and (B) instruments issued by financial institutions at the request of the Borrower or one of its Subsidiaries with respect to which the Borrower or one of its Subsidiaries has a reimbursement or indemnification obligation to such financial institution and

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any agreement relating to the issuance of such instruments, which in each case is accounted for, or would be accounted for upon issuance, as an insurance liability.

“Default” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both, in each case, as specified in Section 6.01.

“Defaulting Lender” means, subject to Section 2.22(b), any Lender that, as reasonably determined by the Agent (which determination shall be made either at the Agent’s discretion or promptly at the request of the Borrower), (a) has failed to perform any of its funding obligations hereunder, including in respect of its Revolving Credit Advances or participations in respect of Letters of Credit (other than Secured Letters of Credit), within three Business Days of the date required to be funded by it hereunder unless such failure is the result of one or more conditions precedent to funding not having been satisfied (provided that such Lender notifies the Borrower and the Agent in writing of such failure and specifically identifies in such writing each of the conditions precedent, together with any Default, that have not been satisfied), (b) has notified the Borrower or the Agent that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit unless such position is the result of one or more conditions precedent to funding not having been satisfied (provided that such Lender notifies the Borrower and the Agent in writing of such failure and specifically identifies each of the conditions precedent, together with any Default, that have not been satisfied), (c) has failed, within three Business Days after request by the Agent (which request shall be made either at the Agent’s discretion or promptly at the request of the Borrower), to confirm in a manner reasonably satisfactory to the Agent that it will comply with its funding obligations (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a governmental authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such governmental authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by the Agent (which determination shall be made either at the Agent’s discretion or promptly at the request of the Borrower) that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.22(b)) upon delivery of written notice of such determination to the Borrower, each Issuing Bank and each Lender.

“Disclosed Litigation” has the meaning specified in Section 3.01(b).

“Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” in such Lender’s Administrative Questionnaire or in the Assumption Agreement or the Assignment and Assumption pursuant to which it became a

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Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent.

“Effective Date” has the meaning specified in Section 3.01.

“Eligible Assignee” means (i) a Lender; (ii) an Affiliate of a Lender; and (iii) any other Person approved by the Agent, each Issuing Bank and, unless an Event of Default has occurred and is continuing at the time any assignment is effected in accordance with Section 8.07, the Borrower, such approval not to be unreasonably withheld or delayed, provided, that if an Event of Default has occurred and is continuing such that the Borrower does not have a right of approval with respect to any Eligible Assignee under this clause (iii), such Person shall be a commercial bank organized or licensed under the laws of the United States, or any State thereof, or organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and having a combined capital and surplus of at least $500,000,000; provided, that such bank is acting through a branch agency located and licensed in the United States (unless the Borrower otherwise approves such Eligible Assignee); provided, however, that none of the Borrower, any Affiliate of the Borrower or any natural person shall qualify as an Eligible Assignee.

“Environmental Law” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of hazardous materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of the Borrower’s controlled group, or under common control with the Borrower, within the meaning of Section 414 of the Internal Revenue Code.

“ERISA Event” means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC or would have been waived under the regulations in effect under Section 4043 of ERISA as of the date of this Agreement, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA are met with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding standard waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of the Borrower or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA that is treated as a withdrawal under such Section; (e) the withdrawal by the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the imposition of a lien under Section 303(k) of ERISA with respect to any Plan; (g) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, a Plan,

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provided, however, that the event or condition described in Section 4042(a)(4) shall be an ERISA Event only if the PBGC shall have notified the Borrower or any ERISA Affiliate that it intends to terminate, or appoint a trustee to administer, a Plan on such basis; (h) the determination that any Plan is considered an at risk plan within the meaning of Section 303 of ERISA or Section 430 of the Internal Revenue Code; or (i) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.

“Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” in such Lender’s Administrative Questionnaire or in the Assumption Agreement or the Assignment and Assumption pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or in each such case, such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent.

“Eurodollar Rate” means:

(a)           for any Interest Period with respect to a Eurodollar Rate Advance, the rate per annum equal to the British Bankers Association LIBOR Rate or the successor thereto if the British Bankers Association is no longer making such a rate available (“LIBOR”), as published by Reuters (or such other commercially available source providing quotations of LIBOR as may be designated by the Agent from time to time) at approximately 11:00 A.M. (London time) two London Banking Days prior to the commencement of such Interest Period, for U.S. dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.  If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such Interest Period shall be the rate per annum equal to the average of the Quoted Rates supplied to the Agent by the Reference Banks; and

(b)           for any interest calculation with respect to a Base Rate Advance on any date, the rate per annum equal to (i) LIBOR, at approximately 11:00 A.M. (London time) determined two London Banking Days prior to such date for U.S. dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (ii) if such published rate is not available at such time for any reason, the rate per annum determined by the Agent to be the rate at which deposits in U.S. dollars for delivery on the date of determination in same day funds in the approximate amount of the Base Rate Advance being made or maintained and with a term equal to one month would be offered by Wells Fargo’s London Branch to major banks in the London interbank eurodollar market at their request at the date and time of determination.

“Eurodollar Rate Advance” means a Revolving Credit Advance that bears interest as provided in Section 2.07(a)(ii).

“Events of Default” has the meaning specified in Section 6.01.

“Excluded Taxes” shall mean, with respect to a Lender, Agent or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder or under the Revolving Credit Notes, (i) Taxes imposed on its overall net income, branch profits taxes and franchise and similar taxes imposed on it in lieu of net income taxes, by a jurisdiction as a result of the recipient’s present or former connection with such jurisdiction (other than a connection

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arising solely from the transactions contemplated herein), including the jurisdiction in which an Applicable Lending Office is located, (ii) any U.S. withholding taxes imposed on amounts payable with respect to such Lender on the date on which (a) such Lender becomes a party to this agreement (other than pursuant to an assignment request by Borrower pursuant to Section 2.20), or (b) such Lender changes its Applicable Lending Office to which payments by or on behalf of the Borrower is made and which relocation occurs after such Lender becomes a Lender (other than changes in such Lender’s Eurodollar Lending Office to mitigate certain increased costs or funding restrictions imposed upon such Lender referred to in Section 2.11), except in each case to the extent that, pursuant to Section 2.14, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changes its Applicable Lending Office, (iii) Taxes imposed as a result of a Lender’s failure to comply with Section 2.14(f), except as provided in Section 2.14(g), and (iv) any withholding Taxes imposed under FATCA.

“Extension Date” has the meaning specified in Section 2.19(b).

“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Wells Fargo on such day on such transactions as determined by the Agent.

“Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to an Issuing Bank, such Defaulting Lender’s Ratable Share of the outstanding L/C Obligations other than L/C Obligations owing in connection with a Secured Letter of Credit or as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“GAAP” has the meaning specified in Section 1.03.

“Hedge Agreements” means interest rate swap, basis swaps, credit derivative transactions, forward rate transactions, cap, floor or collar agreements, interest rate future or option contracts, currency swap agreements, cross-currency rate swap transactions, currency future or option contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, and other similar agreements or any combination of the foregoing (including any options to enter into any of the foregoing).

“Honor Date” has the meaning specified in Section 2.03(c)(i).

“Increase Date” has the meaning specified in Section 2.18(a).

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“Increasing Lender” has the meaning specified in Section 2.18(b).

“Indemnified Taxes” means (i) all Taxes imposed with respect to a payment made pursuant to this Agreement other than Excluded Taxes and (ii) to the extent not otherwise described in (i), Other Taxes.

“Initial Lenders” has the meaning specified in the preamble hereto.

“Insurance Subsidiary” means any Subsidiary of the Borrower that is licensed by any governmental authority to engage in the insurance business by issuing insurance policies or entering into Reinsurance Agreements.

“Interest Period” means, for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to Eurodollar Rate Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below.  The duration of each such Interest Period shall be one, two, three or six months (or such other period as may be requested by the Borrower and acceptable to the Agent and each Lender), as the Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:

(a)the Borrower may not select any Interest Period that ends after the Termination Date;

(b)Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Revolving Credit Borrowing shall be of the same duration;

(c)whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and

(d)whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“Invested Assets” means cash, cash equivalents, short term investments, investments held for sale and any other assets which are treated as investments under GAAP.

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“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of Issuance).

“Issuance” means, with respect to any Letter of Credit, the issuance, amendment (to the extent that same increases the Available Amount thereunder), renewal or extension of such Letter of Credit (other than an extension of an Auto-Extension Letter of Credit).

“Issuing Bank” means each of Wells Fargo, U.S. Bank National Association and any other Lender designated as an “Issuing Bank” hereunder by written notice to such effect to the Agent by the Borrower and such Lender so long as such Lender expressly agrees to perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as an Issuing Bank and notifies the Agent of its Applicable Lending Office (which information shall be recorded by the Agent in the Register).

“Issuing Bank Documents” means, with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the applicable Issuing Bank and the Borrower (or any Subsidiary) or in favor of the applicable Issuing Bank and relating to such Letter of Credit.

“L/C Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts.  For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with the definition of “Available Amount”.  For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“L/C Related Documents” has the meaning specified in Section 2.06(b)(i).

“Lenders” means, on any date of determination, each Initial Lender, each Issuing Bank, each Assuming Lender, and each Person that has become a party hereto pursuant to Section 8.07, which are party hereto on such date.

“Letter of Credit” has the meaning specified in Section 2.01(b)(i).

“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the applicable Issuing Bank.

“Letter of Credit Commitment” means, at any time, with respect to each Issuing Bank, the obligation of such Issuing Bank to issue Letters of Credit for the account of the Borrower and its specified Subsidiaries in (a) the amount set forth opposite the Issuing Bank’s name on Schedule 1.01 hereto or (b) in the notice designating such Issuing Bank as an Issuing Bank hereunder, in each case as such amount may be increased at or prior to such time pursuant to Section 2.18 or reduced at or prior to such time pursuant to Section 2.05.

“Letter of Credit Facility” means, at any time, an amount equal to the least of (a) the aggregate amount of the Issuing Banks’ Letter of Credit Commitments at such time, (b) $100,000,000, as such amount may be increased at or prior to such time pursuant to

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Section 2.18 and (c) the aggregate amount of the Revolving Credit Commitments, as such amount may be reduced or increased at or prior to such time pursuant to Section 2.05 or 2.18.

“Letter of Credit Fee” has the meaning specified in Section 2.04(b).

“Lien” means any lien, security interest or other charge or encumbrance of any kind, including, without limitation, the lien or retained security title of a conditional vendor and mortgage, deed of trust or other encumbrance on title to real property.

“London Banking Day” means any day on which dealings in U.S. dollar deposits are conducted by and between banks in the London interbank eurodollar market.

“Mandatory Convertible Securities” means, as of any date, debt issued by the Borrower that is mandatorily convertible into common equity so long as the Borrower provides satisfactory evidence to the Agent and the Required Lenders that such debt is afforded equity capital credit by S&P.

“Margin Stock” has the meaning assigned to such term in Regulation U.

“Material Adverse Change” means any material adverse change in the business, financial condition or results of operations of the Borrower and its Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business, financial condition or operations of the Borrower and its Subsidiaries taken as a whole, (b) the legality, validity or enforceability of this Agreement or any Revolving Credit Note or (c) the ability of the Borrower to perform its payment obligations under this Agreement or any Revolving Credit Note.

“Moody’s” means Moody’s Investors Service, Inc.

“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

“Multiple Employer Plan” means, at a particular time, a Single Employer Plan, as defined in Section 4001(a)(15) of ERISA, (a) that is maintained for employees of the Borrower or any ERISA Affiliate and at least one contributing sponsor of such plan is a Person other than the Borrower and the ERISA Affiliates or (b) in respect of which the Borrower or any ERISA Affiliate would under Section 4064 or 4069 of ERISA be deemed to be a “contributing sponsor” as defined in Section 4001(a)(13) of ERISA if such plan were terminated at such time.

“Net Worth” of the Borrower means, as of any date, its total shareholders’ equity determined in accordance with GAAP plus (a) the amount of Trust Preferred Securities to the extent that the amount of Trust Preferred Securities do not exceed 15% of Total Capital plus (b) the amount of Mandatory Convertible Securities to the extent that the amount of Mandatory Convertible Securities plus Trust Preferred Securities do not in the aggregate exceed 25% of Total Capital.

“Non-Consenting Lender” has the meaning specified in Section 2.19(b).

“Non-Extension Notice Date” has the meaning specified in Section 2.03(a)(iv).

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“Non-U.S. Lender” has the meaning specified in Section 2.14(f).

“Notice of Revolving Credit Borrowing” has the meaning specified in Section 2.02(a).

“Other Taxes” means any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Revolving Credit Notes or any other documents to be delivered hereunder or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Revolving Credit Notes or any other documents to be delivered hereunder.

“Participant Register” has the meaning specified in Section 8.07(h).

“Patriot Act” has the meaning specified in Section 8.15.

“PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

“Permitted Liens” means:  (a) Liens for taxes, imposts, duties, assessments and governmental charges, withholdings imposed by any governmental authority or levies to the extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than 60 days; (c) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (d) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes; (e) Liens consisting of pledges or deposits of cash or securities made to secure the performance of bids, trade contracts (other than for borrowed money), leases or subleases, statutory obligations, utilities, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; and (f) Liens consisting of pledges or deposits of cash or securities made to secure swaps and other derivatives entered into by the Borrower or any of its Subsidiaries to hedge against risks arising in the ordinary course of business in connection with transactions not prohibited under this Agreement (and not entered into for speculative purposes).

“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

“Platform” has the meaning specified in Section 8.02(b).

“Primary Policies” means any insurance policies issued by an Insurance Subsidiary.

“Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P or Moody’s, as the case may be, for non-credit enhanced long-term senior unsecured debt issued by the Borrower.  For purposes of the foregoing, (a) if only one of S&P and Moody’s shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage shall be determined by reference to the available rating; (b) if neither S&P nor Moody’s shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage will be set in accordance with Level 5 under the definition of “Applicable Margin” or

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“Applicable Percentage”, as the case may be; (c) if the ratings established by S&P and Moody’s shall fall within different levels, the Applicable Margin and the Applicable Percentage shall be based upon the higher rating unless such ratings differ by two or more levels, in which case the applicable level will be one level below the higher of such levels; (d) if any rating established by S&P or Moody’s shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change; and (e) if S&P or Moody’s shall change the basis on which ratings are established, each reference to the Public Debt Rating announced by S&P or Moody’s, as the case may be, shall refer to the then equivalent rating by S&P or Moody’s, as the case may be.

“Public Filings” means the public filings of the Borrower.

“Quotation Day” means, in respect of the determination of the Eurodollar Rate for any Interest Period, the day on which quotations would normally be given by prime banks in the London interbank market for U.S. Dollar deposits for delivery on the first day of such Interest Period; provided that if quotations would normally be given on more than one date, the Quotation Day for such Interest Period shall be the last of such dates.

“Quoted Rate” means, with respect to any Revolving Credit Borrowing, Conversion or continuation, the rate at which U.S. dollar deposits for delivery on the first day of the relevant Interest Period in immediately available funds in the approximate amount of the Eurodollar Rate Borrowing being made, Converted or continued are offered by the applicable Reference Bank in the London interbank market at 11:00 A.M. (London time) on the Quotation Day prior to the commencement of such Interest Period.

“Ratable Share” of any amount means, with respect to any Lender at any time, subject to adjustment as provided in Section 2.22, the product of such amount times a fraction the numerator of which is the amount of such Lender’s Revolving Credit Commitment at such time (or, if the Revolving Credit Commitments shall have been terminated pursuant to Section 2.05 or 6.01, such Lender’s Revolving Credit Commitment as in effect immediately prior to such termination) and the denominator of which is the aggregate amount of all Revolving Credit Commitments at such time (or, if the Revolving Credit Commitments shall have been terminated pursuant to Section 2.05 or 6.01, the aggregate amount of all Revolving Credit Commitments as in effect immediately prior to such termination).

“Reference Banks” means Wells Fargo, Bank of America, N.A., Citibank, N.A., JPMorgan Chase Bank, N.A., and U.S. Bank National Association.

“Register” has the meaning specified in Section 8.07(e).

“Regulation U” means Regulation U of the Board as from time to time in effect.

“Reinsurance Agreements” means any agreement, contract, treaty, certificate or other arrangement whereby the Borrower or any Subsidiary agrees to assume from or reinsure an insurer or reinsurer all or part of the liability of such insurer or reinsurer under a policy or policies of insurance issued by such insurer or reinsurer.

“Required Lenders” means at any time Lenders owed more than 50% in interest of the then aggregate unpaid principal amount of the Revolving Credit Advances and L/C Obligations owing to Lenders, or, if no such principal amount is then outstanding, Lenders having more than 50% of the Revolving Credit Commitments.

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“Restricted Margin Stock” means Margin Stock owned by the Borrower or any Subsidiary which represents not more than 25% of the aggregate value (determined in accordance with Regulation U), on a Consolidated basis, of the property and assets of the Borrower and the Subsidiaries that is subject to the provisions of Section 5.02(a).

“Revolving Credit Advance” means an advance by a Lender to the Borrower as part of a Revolving Credit Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a “Type” of Revolving Credit Advance).

“Revolving Credit Borrowing” means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by each of the Lenders pursuant to Section 2.01.

“Revolving Credit Commitment” means as to any Lender (a) the amount set forth opposite such Lender’s name on Schedule 1.01 hereto as such Lender’s “Revolving Credit Commitment”, (b) if such Lender has become a Lender hereunder pursuant to an Assumption Agreement, the amount set forth in such Assumption Agreement or (c) if such Lender has entered into an Assignment and Assumption, the amount set forth for such Lender in the Register maintained by the Agent pursuant to Section 8.07(e), as such amount may be reduced pursuant to Section 2.05 or increased pursuant to Section 2.18.

“Revolving Credit Note” means a promissory note of the Borrower payable to the order of any Lender, delivered pursuant to a request made under Section 2.16 in substantially the form of Exhibit A hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Revolving Credit Advances made by such Lender, together with all amendments, modifications, restatements, or supplements thereof.

“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc., and any successor thereto.

“Secured L/C Account” means an interest bearing deposit account, over which the Agent shall have control (as determined in accordance with the Uniform Commercial Code) upon terms as may be reasonably satisfactory to the Agent and the Borrower, to be established and maintained by the Borrower with the Agent or another financial institution selected by the Borrower.

“Secured Letter of Credit” means a Letter of Credit irrevocably designated as such by the Borrower for which the Borrower maintains on deposit in the Secured L/C Account cash in an amount equal to the Available Amount of such Letter of Credit.  The Borrower may by notice to the Agent from time to time pursuant to Section 2.03(g) designate which outstanding Letters of Credit at such time shall be “Secured Letters of Credit.”

“SEC” means the Securities and Exchange Commission, or any governmental authority succeeding to any of its principal functions.

“Significant Subsidiary” means any Subsidiary that constitutes a “significant subsidiary” under Regulation S-X promulgated by the Securities and Exchange Commission, as in effect from time to time.

“Single Employer Plan” means, at a particular time, a single employer plan, as defined in Section 4001(a)(15) of ERISA, (a) that is maintained for employees of the Borrower or any ERISA Affiliate and no Person other than the Borrower and the ERISA Affiliates is a

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contributing sponsor of such plan or (b) in respect of which the Borrower or any ERISA Affiliate would under Section 4069 of ERISA be deemed to be a “contributing sponsor” as defined in Section 4001(a)(13) of ERISA if such plan were terminated at such time.

“St. Paul Fire” means St. Paul Fire and Marine Insurance Company, a Minnesota corporation.

“Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of the issued and outstanding capital interests having ordinary voting power to elect a majority of the Board of Directors or comparable governing body of such entity (irrespective of whether at the time capital interests of any other class or classes of such entity shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any governmental authority, including any interest, additions to tax or penalties applicable thereto.

“Termination Date” means, for any Lender, the earlier of (a) June 7, 2018, subject to the extension thereof for such Lender pursuant to Section 2.19 or, if such date is not a Business Day, the immediately preceding Business Day and (b) the date of termination in whole of the Commitments pursuant to Section 2.05 or 6.01; provided, however, that the Termination Date of any Lender that is a Non-Consenting Lender to any requested extension pursuant to Section 2.19 shall be the Termination Date of such Lender in effect immediately prior to the applicable Extension Date for all purposes of this Agreement.

“Total Capital” means the sum, without duplication, of (a) all items that would, in accordance with GAAP, be classified as indebtedness on a Consolidated balance sheet of the Borrower and its consolidated Subsidiaries, (b) total Consolidated shareholders’ equity of the Borrower and its consolidated Subsidiaries determined in accordance with GAAP, (c) Trust Preferred Securities and (d) Mandatory Convertible Securities.

“Trust Preferred Securities” means, as of any date, all items in respect of trust preferred securities that would, in accordance with GAAP, be classified as indebtedness on a Consolidated balance sheet (or the footnotes thereto) of the Borrower and its consolidated Subsidiaries.

“Unissued Letter of Credit Commitment” means, with respect to any Issuing Bank, the obligation of such Issuing Bank to issue Letters of Credit for the account of the Borrower or its specified Subsidiaries in an amount equal to the excess of (a) the amount of its Letter of Credit Commitment over (b) the aggregate Available Amount of all Letters of Credit issued by such Issuing Bank.

“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

“Unrestricted Margin Stock” means any Margin Stock owned by the Borrower or any Subsidiary which is not Restricted Margin Stock.

“Unused Commitment” means, with respect to each Lender at any time, (a) such Lender’s Revolving Credit Commitment at such time minus (b) the sum of (i) the aggregate

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principal amount of all Revolving Credit Advances made by such Lender (in its capacity as a Lender) and outstanding at such time, plus (ii) such Lender’s Ratable Share of (A) the aggregate Available Amount of all the Letters of Credit outstanding at such time and (B) the aggregate principal amount of all Revolving Credit Advances made by each Issuing Bank pursuant to Section 2.03(c) that have not been ratably funded by such Lender and outstanding at such time.

“Voting Stock” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

“Wells Fargo” means Wells Fargo Bank, National Association and its permitted successors and assigns.

SECTION 1.02.  Computation of Time Periods.  In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.

SECTION 1.03.  Accounting Terms.  All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles as in effect from time to time (“GAAP”); provided that, if the Borrower notifies the Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change in GAAP or in the application thereof shall have become effective (“Fixed GAAP”) until such notice shall have been withdrawn or such provision amended in accordance herewith; provided that after the initial quarter in which such change in GAAP or in the application thereof occurs, such provision shall only be required to be interpreted on the basis of Fixed GAAP as described above to the extent reasonably practicable as determined in good faith by the Borrower (and then only until such notice shall have been withdrawn or such provision amended in accordance herewith); provided, further that in the event that Borrower determines in good faith that interpreting such provision on the basis of Fixed GAAP after the initial quarter in which such change in GAAP or in the application thereof occurs is not reasonably practicable, then the Borrower and the Agent shall negotiate in good faith to amend such provision within 90 days of the request for such amendment (it being understood that if the Borrower and the Agent are unable to agree on an amendment within such a time period, the Agreement shall continue in full force and effect and the Borrower and the Agent shall continue in good faith to seek agreement on an amendment).

ARTICLE II

AMOUNTS AND TERMS OF THE REVOLVING CREDIT ADVANCES AND LETTERS OF CREDIT

SECTION 2.01.  The Revolving Credit Advances and Letters of Credit.

(a)Revolving Credit Advances.  Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Revolving Credit Advances in United States dollars to the Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date for such Lender in an amount not to exceed such Lender’s Unused Commitment

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(immediately prior to the making of such Revolving Credit Advance).  Each Revolving Credit Borrowing shall be in an aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Revolving Credit Advances of the same Type made, or continued as or Converted into Eurodollar Rate Advances or Base Rate Advances, on the same day by the Lenders ratably according to their respective Revolving Credit Commitments.  Within the limits of each Lender’s Revolving Credit Commitment, the Borrower may borrow under this Section 2.01(a), prepay pursuant to Section 2.10 and reborrow under this Section 2.01(a).

(b)Letters of Credit.

(i)Each Issuing Bank severally agrees, on the terms and conditions hereinafter set forth, in reliance upon the agreements of the other Lenders set forth in this Agreement, to issue and amend standby letters of credit (each, a “Letter of Credit”) for the account of the Borrower and its specified Subsidiaries from time to time on any Business Day during the period from the Effective Date until the seventh Business Day prior to the Termination Date for such Issuing Bank in an aggregate Available Amount (i) for all Letters of Credit not to exceed at any time the Letter of Credit Facility at such time, (ii) for all Letters of Credit issued by such Issuing Bank not to exceed at any time such Issuing Bank’s Letter of Credit Commitment at such time and (iii) for each such Letter of Credit not to exceed an amount equal to the Unused Commitments (immediately prior to such Issuance) of the Lenders at such time.  No Letter of Credit shall have an expiration date (including all rights of the Borrower or the beneficiary to require renewal) later than five Business Days prior to the Termination Date, unless all Lenders have approved such expiration date.  Within the limits referred to above, the Borrower may from time to time request the Issuance of Letters of Credit under this Section 2.01(b).

(ii)Subject to Section 2.03(a)(iv), unless otherwise agreed by the Issuing Bank and all the Lenders, no Issuing Bank shall issue any Letter of Credit if the expiry date of the requested Letter of Credit would occur more than twelve months after the date of issuance.

(iii)No Issuing Bank shall be under any obligation to issue any Letter of Credit if:

(A)any order, judgment or decree of any governmental authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing the Letter of Credit, or any law applicable to such Issuing Bank or any directive (whether or not having the force of law) from any governmental authority with jurisdiction over such Issuing Bank shall prohibit, or direct that such Issuing Bank refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon such Issuing Bank with respect to the Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise entitled to be compensated hereunder) not in effect on the Effective Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Effective Date (and for which such Issuing Bank is not otherwise entitled to be compensated hereunder) and which, in each case, such Issuing Bank in good faith deems material to it;

(B)the Issuance of such Letter of Credit would violate one or more policies of such Issuing Bank applicable to Letters of Credit generally, so long as such policies are consistently applied by such Issuing Bank to its customers and to letters of credit issued by it, such policies are not unusual to similarly situated financial institutions and such policies are not contrary to the express contractual obligations of such Issuing Bank under this Agreement;

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(C)except as otherwise agreed by the Agent and such Issuing Bank, the Letter of Credit is in an initial stated amount less than $500,000;

(D)the Letter of Credit is to be denominated in a currency other than U.S. dollars; or

(E)any Lender is at that time a Defaulting Lender, unless such Issuing Bank has entered into arrangements, including the delivery of Cash Collateral, satisfactory to such Issuing Bank (in its reasonable discretion) with the Borrower or such Lender to eliminate such Issuing Bank’s actual or potential Fronting Exposure (after giving effect to Section 2.22(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which such Issuing Bank has actual or potential Fronting Exposure, as it may elect in its reasonable discretion;

(iv)An Issuing Bank shall, subject to clauses (i), (ii), and (iii) above, amend any Letter of Credit at the request of the Borrower if such Issuing Bank would be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof; provided, that if such Issuing Bank would not be permitted to issue the Letter of Credit in its amended form, it may amend such Letter of Credit so long as such amendment does not increase the amount of such Letter of Credit, extend the expiration date (including all rights of the Borrower or the beneficiary to require renewal) later than seven Business Days prior to the Termination Date, or provide for an expiry date of such Letter of Credit more than twelve months after the date of such amendment, and further so long as the beneficiary of the Letter of Credit accepts the proposed amendment to the Letter of Credit.

(v)Each Issuing Bank shall act on behalf of the Lenders with respect to any Letters of Credit issued by such Issuing Bank and the Issuing Bank Documents associated therewith, and such Issuing Bank shall have all of the benefits and immunities (A) provided to the Agent in Article VII with respect to any acts taken or omissions suffered by such Issuing Bank in connection with Letters of Credit issued by it or proposed to be issued by it and Issuing Bank Documents pertaining to such Letters of Credit as fully as if the term “Agent” as used in Article VII included such Issuing Bank with respect to such acts or omissions, and (B) as additionally provided herein with respect to the such Issuing Bank.

SECTION 2.02.  Making the Revolving Credit Advances.

(a)Except as otherwise provided in Section 2.03(c), each Revolving Credit Borrowing shall be made on notice, given not later than (x) 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances or (y) 11:00 A.M. (New York City time) on the date of the proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Base Rate Advances, by the Borrower to the Agent, which shall give to each Lender prompt notice thereof by facsimile, telecopier or other electronic means.  Each such notice of a Revolving Credit Borrowing (a “Notice of Revolving Credit Borrowing”) shall be by telephone, confirmed immediately in writing, or facsimile or telecopier in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Revolving Credit Borrowing, (ii) Type of Revolving Credit Advances comprising such Revolving Credit Borrowing, (iii) aggregate amount of such Revolving Credit Borrowing, and (iv) in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Revolving Credit Advance.  Each Lender shall, before 1:00 P.M. (New York City time) on the date of such Revolving Credit Borrowing, make available for the

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account of its Applicable Lending Office to the Agent at the Agent’s Account, in same day funds, such Lender’s ratable portion of such Revolving Credit Borrowing.  After the Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will promptly make such funds available to the Borrower at the Agent’s address referred to in Section 8.02.

(b)Anything in Section 2.02(a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Revolving Credit Borrowing if the aggregate amount of such Revolving Credit Borrowing is less than $10,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the Eurodollar Rate Advances may not be outstanding as part of more than twelve separate Revolving Credit Borrowings.

(c)In the case of any Revolving Credit Borrowing that the related Notice of Revolving Credit Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure of the Borrower to borrow such funds on the date specified in such Notice of Revolving Credit Borrowing, whether as a result of any failure to fulfill on or before the date specified in such Notice of Revolving Credit Borrowing for such Revolving Credit Borrowing the applicable conditions set forth in Section 3.02 or otherwise, including, without limitation, any loss (excluding loss of anticipated profits, indirect losses and special or consequential damages), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Revolving Credit Advance to be made by such Lender as part of such Revolving Credit Borrowing when such Revolving Credit Advance, as a result of such failure, is not made on such date.

(d)Unless the Agent shall have received notice from a Lender prior to the date of any Revolving Credit Borrowing of Eurodollar Rate Advances (or in the case of any Revolving Credit Borrowing of Base Rate Advances, prior to 1:00 P.M. (New York City time) on the date of such Revolving Credit Borrowing) that such Lender will not make available to the Agent such Lender’s ratable portion of such Revolving Credit Borrowing, the Agent may assume that such Lender has made or will make such portion available to the Agent on the date of such Revolving Credit Borrowing in accordance with Section 2.02(a) and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount.  If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Revolving Credit Advances comprising such Revolving Credit Borrowing and (ii) in the case of such Lender, the Federal Funds Rate.  If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Revolving Credit Advance as part of such Revolving Credit Borrowing for purposes of this Agreement.

(e)The failure of any Lender to make the Revolving Credit Advance to be made by it as part of any Revolving Credit Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Revolving Credit Advance on the date of such Revolving Credit Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Revolving Credit Advance to be made by such other Lender on the date of any Revolving Credit Borrowing.

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SECTION 2.03.  Issuance of and Drawings and Reimbursement Under Letters of Credit.

(a)Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.

(i)Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the applicable Issuing Bank (with a copy to the Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a duly authorized officer of the Borrower.  Such Letter of Credit Application must be received by the applicable Issuing Bank and the Agent not later than 11:00 A.M. at least two Business Days (or such later date and time as the Agent and such Issuing Bank may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be.  In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the applicable Issuing Bank: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the applicable Issuing Bank may reasonably request.

(ii)In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the applicable Issuing Bank (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as such Issuing Bank may reasonably request.  Additionally, the Borrower shall furnish to each Issuing Bank and the Agent such other documents and information pertaining to such requested Letter of Credit Issuance, including any Issuing Bank Documents, as such Issuing Bank or the Agent may reasonably request.

(iii)Promptly after receipt of any Letter of Credit Application, the applicable Issuing Bank will confirm with the Agent (by telephone or in writing) that the Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, such Issuing Bank will provide the Agent with a copy thereof.  Unless the applicable Issuing Bank has received written notice from any Lender, the Agent or the Borrower, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Section 3.02 shall not then be satisfied, then, subject to the terms and conditions hereof, such Issuing Bank shall, on the requested date, issue a Letter of Credit for the account of the Borrower or its applicable Subsidiary or enter into the applicable amendment, as the case may be, in each case in a format that is consistent with such Issuing Bank’s usual and customary business practices.

(iv)If the Borrower so requests in any applicable Letter of Credit Application, the applicable Issuing Bank may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the applicable Issuing Bank to prevent any such extension at least once in each twelve-month period (commencing with the date of Issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued.  Unless otherwise directed by the applicable Issuing Bank, the Borrower shall not be required to make a specific request to such Issuing Bank for any such

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extension.  Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the applicable Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date not more than twelve months after the date of such extension, and not later than seven days prior to the Termination Date; provided, however, that the applicable Issuing Bank shall not permit any such extension if (A) such Issuing Bank has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.01(b) or otherwise), or (B) an Event of Default has occurred and is continuing and it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date from the Agent that the Required Lenders have elected not to permit such extension.

(v)Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable Issuing Bank will also deliver to the Borrower and the Agent a true and complete copy of such Letter of Credit or amendment.

(b)Participations.  Immediately upon the Issuance of each Letter of Credit (or an amendment to a Letter of Credit increasing or decreasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or any Lender, such Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Ratable Share of the Available Amount of such Letter of Credit.  The Borrower hereby agrees to each such participation.  Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.03(b) in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Credit Commitments, and that each such payment in respect of the purchase of such participations shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Lender further acknowledges and agrees that its participation in each Letter of Credit will be automatically adjusted to reflect such Lender’s Ratable Share of the Available Amount of such Letter of Credit at each time such Lender’s Revolving Credit Commitment is amended pursuant to a Commitment Increase in accordance with Section 2.18, an assignment in accordance with Section 8.07 or otherwise pursuant to this Agreement.

(c)Drawing and Reimbursements; Funding of Participations.

(i)Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the applicable Issuing Bank shall promptly notify the Borrower and the Agent thereof.  Not later than 1:00 P.M. (New York City time) on the date of any payment by the applicable Issuing Bank under a Letter of Credit (each such date, an “Honor Date”), the Borrower shall reimburse such Issuing Bank through the Agent in an amount equal to the amount of such drawing; provided that the applicable Issuing Bank has notified the Borrower by 10:00 A.M. (New York City time) on the Honor Date that such drawing is to be paid on the Honor Date, otherwise the Borrower shall reimburse such Issuing Bank, together with interest at the Base Rate plus the Applicable Margin, on the Business Day immediately following the day that the Borrower receives such notice from such Issuing Bank.  If the Borrower fails to so reimburse such Issuing Bank by such time, such Issuing Bank shall so notify the Agent and the Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Ratable Share thereof.  In such event (but subject to the parenthetical at the end of the last sentence of this Section 2.03(c)(i)), payment of such drawing shall be deemed to be a Revolving Credit

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Borrowing consisting of Base Rate Advances disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to (A) whether the making of such a Revolving Credit Advance would exceed such Issuing Bank’s Unused Commitment or (B) the satisfaction of the conditions set forth in Section 3.02.  Any notice given by an Issuing Bank or the Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.  Any Revolving Credit Borrowing deemed to be made pursuant to this Section 2.03(c)(i) to reimburse the Issuing Bank for any Unreimbursed Amount shall relieve the Borrower of its obligations to reimburse such Unreimbursed Amount (except that such Unreimbursed Amount will not be deemed to be a Revolving Credit Borrowing and the Borrower shall not be relieved of its obligation to reimburse such Unreimbursed Amount, if an Event of Default under Section 6.01(e) shall have occurred, and this Section 2.03(c)(i) shall not relieve the Borrower’s obligations under any Revolving Credit Borrowing).

(ii)Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available (and the Agent may apply Cash Collateral or, as provided in Section 2.03(g), cash on deposit in the Secured L/C Account for this purpose) for the account of the applicable Issuing Bank at the Agent’s Account in an amount equal to its Ratable Share of any Unreimbursed Amount not later than 1:00 P.M. (New York City time) on the Business Day (which may be the Honor Date) specified in such notice by the Agent, whereupon, each Lender that so makes funds available shall be deemed to have made a Revolving Credit Advance to the Borrower in such amount, or, if an Event of Default under Section 6.01(e) shall have occurred, such Lender shall be deemed to have purchased a participation in such Unreimbursed Amount.  The Agent shall remit the funds so received to the applicable Issuing Bank.

(iii)Until each Lender funds its Revolving Credit Advance or participation in any Unreimbursed Amount pursuant to this Section 2.03(c) to reimburse the applicable Issuing Bank for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Ratable Share of such amount shall be solely for the account of such Issuing Bank.

(iv)Each Lender’s obligation to make Revolving Credit Advances or purchase participations in any Unreimbursed Amounts to reimburse the applicable Issuing Bank for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against such Issuing Bank, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, (C) the failure to satisfy the conditions set forth in Section 3.02, or (D) any other occurrence, event or condition, whether or not similar to any of the foregoing.

(v)If any Lender fails to make available to the Agent for the account of the applicable Issuing Bank any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), then, without limiting the other provisions of this Agreement, such Issuing Bank shall be entitled to recover from such Lender (acting through the Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to such Issuing Bank at a rate per annum equal to the Federal Funds Rate, plus any administrative, processing or similar fees customarily charged by such Issuing Bank in connection with the foregoing.  If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Base Rate Advance included in the relevant Revolving Credit Borrowing.  A certificate of the applicable Issuing Bank submitted to

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any Lender (through the Agent) with respect to any amounts owing under this Section 2.03(c)(v) shall be conclusive absent manifest error.

(d)Repayment of Participations.

(i)At any time after an Issuing Bank has made a payment under any Letter of Credit and has received from any Lender such Lender’s participation purchase in respect of such payment in accordance with Section 2.03(c), if the Agent receives for the account of such Issuing Bank any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral or, as provided in Section 2.03(g), applied thereto by the Agent), the Agent will distribute to such Lender its Ratable Share thereof in the same funds as those received by the Agent.

(ii)If any payment received by the Agent for the account of the applicable Issuing Bank pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 2.14 (including pursuant to any settlement entered into by such Issuing Bank in its discretion), each Lender shall pay to the Agent for the account of such Issuing Bank its Ratable Share thereof on demand of the Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under this Section 2.03(d)(ii) shall survive the payment in full of all amounts owing hereunder and the termination of this Agreement.

(e)Applicability of ISP.  Unless otherwise expressly agreed by the applicable Issuing Bank and the Borrower when a Letter of Credit is issued the rules of the ISP shall apply to each Letter of Credit.

(f)Failure to Make Revolving Credit Advances.  The failure of any Lender to make the Revolving Credit Advance to be made by it or to purchase the participation to be purchased by it on the date specified in Section 2.03(c) shall not relieve any other Lender of its obligation hereunder to make its Revolving Credit Advance or to purchase its participation on such date, but no Lender shall be responsible for the failure of any other Lender to make the Revolving Credit Advance to be made by such other Lender or to purchase the participation to be purchased by it on such date.

(g)Secured Letters of Credit.  The Borrower may from time to time irrevocably designate any Letter of Credit to be a Secured Letter of Credit by notice to the Agent (with a copy to the applicable Issuing Bank).  Upon any drawing under any Secured Letter of Credit, to the extent cash is on deposit in the Secured L/C Account, such cash shall, at the Borrower’s option, be applied to reimburse the applicable Issuing Bank to the extent permitted by applicable law and to the extent the Borrower elects not to reimburse such drawing as provided in Section 2.03(c).  Subject to Section 6.02, to the extent any Secured Letters of Credit shall have expired or been drawn upon, any excess amounts in such Secured L/C Account shall be returned to the Borrower at the Borrower’s request.

(h)Letters of Credit Issued for Subsidiaries.  Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse such Issuing Bank hereunder for any and all drawings under such Letter of Credit.  The Borrower hereby acknowledges that the Issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.

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SECTION 2.04.  Fees.

(a)Facility Fee.  Subject to adjustment as provided in Section 2.22, the Borrower agrees to pay to the Agent for the account of each Lender a facility fee on the aggregate amount of such Lender’s Commitment from the date hereof in the case of each Initial Lender and from the effective date specified in the Assumption Agreement or in the Assignment and Assumption pursuant to which it became a Lender in the case of each other Lender until the Termination Date of such Lender at a rate per annum equal to the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, commencing June 30, 2013, and on the Termination Date of such Lender and on the date after the Termination Date of such Lender on which all Revolving Credit Advances and L/C Obligations owing to such Lender cease to be outstanding.

(b)Letter of Credit Fees.

(i)The Borrower shall pay to the Agent for the account of each Lender in accordance with its Ratable Share a Letter of Credit fee (the “Letter of Credit Fee”) for (A) the average daily aggregate Available Amount of all Secured Letters of Credit issued and outstanding from time to time at a rate per annum equal to 0.50% and (B) the average daily aggregate Available Amount of all other Letters of Credit issued and outstanding from time to time at a rate per annum equal to the Applicable Margin for Eurodollar Rate Advances in effect from time to time; provided that, any Letter of Credit Fees otherwise payable for the account of a Defaulting Lender with respect to any Letter of Credit (other than a Secured Letter of Credit) as to which such Defaulting Lender has not provided Cash Collateral satisfactory to the applicable Issuing Bank pursuant to this Section 2.04 shall be payable, to the maximum extent permitted by applicable law, to the other Lenders in accordance with the upward adjustments in their respective Ratable Shares allocable to such Letter of Credit pursuant to Section 2.22(a)(iv), and to such Issuing Bank for its own account to the extent of such Issuing Bank’s Fronting Exposure with the balance of such fee being retained by the Borrower.  Letter of Credit Fees shall be (A) due and payable to each Lender on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the Issuance of such Letter of Credit, on the Termination Date of such Lender and thereafter on the date that any Letter of Credit expiring after the Termination Date of such Lender ceases to be outstanding and (B) computed on a quarterly basis in arrears.  In calculating the Letter of Credit Fee, if there is any change in the Applicable Margin during any quarter, the daily Available Amount under each Letter of Credit shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect.

(ii)The Borrower shall pay directly to the applicable Issuing Bank for its own account a fronting fee with respect to each Letter of Credit issued by such Issuing Bank, at such rate and at such times as are separately agreed in writing between the Borrower and such Issuing Bank.  In addition, the Borrower shall pay directly to the applicable Issuing Bank for its own account the customary issuance, presentation, amendment and other processing fees, and other standard out-of-pocket costs and charges, of such Issuing Bank relating to letters of credit as from time to time in effect as the Borrower and such Issuing Bank shall agree.  Such customary fees and standard costs and charges shall be reasonably documented and shall be due and payable promptly upon receipt of an invoice and are nonrefundable.

(c)Agent’s Fees.  The Borrower shall pay to the Agent for its own account such fees as may from time to time be separately agreed between the Borrower and the Agent.

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SECTION 2.05.  Optional Termination or Reduction of the Commitments.  The Borrower shall have the right, upon at least three Business Days’ notice to the Agent, to terminate in whole or permanently reduce ratably in part the Unused Commitments or the Unissued Letter of Credit Commitments of the Lenders, provided that each partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof; provided further that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Agent on or prior to the specified effective date) if such condition is not satisfied.

SECTION 2.06.  Repayment of Revolving Credit Advances.

(a)Revolving Credit Advances.  The Borrower shall repay to the Agent for the account of each Lender on its Termination Date the aggregate principal amount of the Revolving Credit Advances then outstanding and owing to such Lender.

(b)Letter of Credit Drawings.  The obligation of the Borrower to reimburse drawings under any Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following circumstances (it being understood that any such payment by the Borrower is without prejudice to, and does not constitute a waiver of, any rights the Borrower might have or might acquire as a result of the payment by any Lender of any draft or the reimbursement by the Borrower thereof, including, without limitation, pursuant to Section 8.12):

(i)any lack of validity or enforceability of this Agreement, any Revolving Credit Note, any Letter of Credit Application, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the “L/C Related Documents”);

(ii)any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents;

(iii)the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for which any such beneficiary or any such transferee may be acting), any Issuing Bank, the Agent, any Lender or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction;

(iv)any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(v)payment by any Issuing Bank under a Letter of Credit against presentation of a draft or certificate that does not comply with the terms of such Letter of Credit;

(vi)any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Borrower in respect of the L/C Related Documents; or

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(vii)without prejudice to the other provisions of this Agreement, any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor.

The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance by the applicable Issuing Bank with the Borrower’s instructions with respect to such Letter of Credit or other irregularity with respect to such Letter of Credit, the Borrower will promptly notify the applicable Issuing Bank.

In the event and to the extent that the provisions of any Letter of Credit Application shall conflict with this Agreement, the provisions of this Agreement shall govern (and in no event shall any provisions of any such Letter of Credit Application regarding representations, warranties, covenants, events of default, set-off rights or collateral be effective).

SECTION 2.07.  Interest on Revolving Credit Advances.

(a)Scheduled Interest.  The Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance owing to each Lender from the date of such Revolving Credit Advance until such principal amount shall be paid in full, at the following rates per annum:

(i)Base Rate Advances.  During such periods as such Revolving Credit Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) the Base Rate in effect from time to time plus (y) the Applicable Margin in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full.

(ii)Eurodollar Rate Advances.  During such periods as such Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Revolving Credit Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Revolving Credit Advance plus (y) the Applicable Margin in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full.

(b)Default Interest.  Upon the occurrence and during the continuance of an Event of Default, the Agent may, and upon the request of the Required Lenders shall, require the Borrower to pay interest (“Default Interest”) on (i) the overdue and unpaid principal amount of each Revolving Credit Advance owing to each Lender which is not paid when due whether at stated maturity, upon acceleration or otherwise, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Revolving Credit Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee, including any Letter of Credit Fees, or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum (the “Default Rate”) equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to clause (a)(i) above; provided, however, that following acceleration of the Revolving Credit Advances pursuant to Section 6.01, Default Interest shall accrue and be payable hereunder whether or not previously required by the Agent.

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SECTION 2.08.  Interest Rate Determination.

(a)If with respect to any determination of the Eurodollar Rate the Agent determines (which determination shall be conclusive absent manifest error) that LIBOR will not be available on a Quotation Day using Reuters or another commercially available source providing quotations of LIBOR, the Agent shall promptly request that each Reference Bank supply it with its Quoted Rate, and the Eurodollar Rate to be used to determine the interest rate applicable to the relevant Revolving Credit Borrowing, Conversion or continuation shall be the average of the Quoted Rates supplied to the Agent by the Reference Banks.  If the Agent makes such request and one or more Reference Banks fails to supply its Quoted Rate to the Agent by 11:30 A.M. (London time) on a Quotation Day, the applicable Eurodollar Rate shall (subject to Section 2.08(f)) be determined on the basis of the Quoted Rates supplied by the remaining Reference Banks.  The Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.07(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank for the purpose of determining the interest rate under Section 2.07(a)(ii).

(b)If the Required Lenders reasonably determine that for any reason in connection with any request for a Eurodollar Rate Loan or a Conversion thereto or continuation thereof that (i) U.S. dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Advance, (ii) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Advance or in connection with an existing or proposed Base Rate Advance, or (iii) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Advance does not adequately and fairly reflect the cost to such Lenders of funding such Advance, the Agent will promptly so notify the Borrower and each Lender.  Thereafter, (A) the obligation of the Lenders to make or maintain Eurodollar Rate Advances shall be suspended, and (B) in the event of a determination described in the preceding sentence with respect to the Eurodollar Rate component of the Base Rate, the utilization of the Eurodollar Rate component in determining the Base Rate shall be suspended, in each case until the Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, Conversion to or continuation of Eurodollar Rate Advance or, failing that, will be deemed to have converted such request into a request for a Revolving Credit Borrowing of Base Rate Advances in the amount specified therein.

(c)If the Borrower shall fail to select the duration of any Interest Period for any outstanding Eurodollar Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Agent will forthwith so notify the Borrower and the Lenders and such Revolving Credit Advances will automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Advances.

(d)On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Revolving Credit Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $10,000,000, such Eurodollar Rate Advances shall automatically Convert into Base Rate Advances.

(e)If an Event of Default has occurred and is continuing and the Required Lenders through the Agent so notify the Borrower, then, so long as such Event of Default is continuing (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Eurodollar Rate Advances into, Eurodollar Rate Advances shall be suspended.

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(f)Without limitation of the provisions of Section 2.08(b), if, with respect to any Revolving Credit Borrowing, Conversion or continuation for which the Eurodollar Rate is to be determined by reference to the Quoted Rates supplied to the Agent by the Reference Banks in accordance with Section 2.08(a), no Reference Banks supply the Agent with a Quoted Rate, then the Agent shall give notice thereof to the Borrower and the Lenders in writing as promptly as practicable thereafter, and the interest rate applicable to such Revolving Credit Borrowing, Conversion or continuation shall be the Base Rate plus the Applicable Margin.

SECTION 2.09.  Optional Conversion of Revolving Credit Advances.  The Borrower may on any Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12, Convert all Revolving Credit Advances of one Type comprising the same Revolving Credit Borrowing into Revolving Credit Advances of the other Type; provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be subject to Section 2.02(b) and no Conversion of any Revolving Credit Advances shall result in more separate Revolving Credit Borrowings than permitted under Section 2.02(b).  Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Revolving Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each such Revolving Credit Advance.  Each notice of Conversion shall be irrevocable and binding on the Borrower.

SECTION 2.10.  Prepayments of Revolving Credit Advances.  The Borrower may, upon notice at least two Business Days’ prior to the date of such prepayment, in the case of Eurodollar Rate Advances, and not later than 11:00 A.M. (New York City time) on the date of such prepayment, in the case of Base Rate Advances, to the Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given, the Borrower shall prepay the outstanding principal amount of the Revolving Credit Advances comprising part of the same Revolving Credit Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Borrowing, the Borrower shall be entitled to select the Eurodollar Rate Borrowings to be prepaid and shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c).

SECTION 2.11.  Increased Costs.

(a)If any governmental authority shall have in effect at any time during the term of this Agreement any reserve, liquid asset or similar requirement with respect to any category of deposits or liabilities customarily used to fund Eurodollar Rate Advances or by reference to which interest rates applicable to Eurodollar Rate Advances are determined, and the result of such requirement shall be to increase the cost to any Lender of making, funding or maintaining any Eurodollar Rate Advances (excluding for purposes of this Section 2.11 any such increased costs resulting from (i) Indemnified Taxes (as to which Section 2.14 shall govern) and Excluded Taxes and (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender is organized or has its Applicable Lending Office, or any political subdivision thereof) and such Lender shall have requested, by notice to the Borrower and the Agent (which notice shall specify the costs applicable to such Lender), compensation under this paragraph, then the Borrower will pay to such Lender following delivery of such notice (until the earlier of the date such Lender shall advise the Borrower that such requirement is no longer in effect or the date

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such Lender shall withdraw such request) such additional amounts as shall be necessary to compensate such Lender for such increased costs;

(b)If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with (A) any guideline or request from any central bank or other governmental authority (whether or not having the force of law) after the date hereof or (B) (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act or any request, rule, guideline or directive thereunder or issued in connection therewith or (y) any request, rule, guidelines or directive promulgated by the Bank of International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case under this clause (y) pursuant to Basel III, there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of issuing or maintaining or participating in Letters of Credit (excluding for purposes of this Section 2.11 any such increased costs resulting from (i) Indemnified Taxes (as to which Section 2.14 shall govern), or (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender is organized or has its Applicable Lending Office, or any political subdivision thereof) then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost (provided that the compensation sought from the Borrower shall be proportionate to the amounts that such Lender is generally seeking from similarly situated borrowers in connection with similar credit facilities);

(c)If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital or liquidity required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital or liquidity is increased by or based upon the existence of such Lender’s commitment to lend or to issue or participate in Letters of Credit hereunder and other commitments of such type or the Issuance or maintenance of or participation in the Letters of Credit, then, upon demand by such Lender (with a copy of such demand to the Agent), the Borrower shall pay to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital or liquidity to be allocable to the existence of such Lender’s commitment to lend or to issue or participate in Letters of Credit hereunder or to the Issuance or maintenance of or participation in any Letters of Credit (provided that the compensation sought from the Borrower shall be proportionate to the amounts that such Lender is generally seeking from similarly situated borrowers in connection with similar credit facilities);

provided, however, that with respect to clauses (a), (b), and (c) above, before delivering such notice or making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such a designation would avoid the need for, or reduce the amount of, such increased cost or increase in capital or liquidity and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.  In the case of clauses (b) and (c) above, a certificate as to such amounts, submitted to the Borrower and the Agent by such Lender, shall constitute prima facie evidence of the amounts required to be paid by the Borrower in respect thereof, absent manifest error.

(d)Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.11 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate such Lender pursuant to this Section 2.11 for any increased costs or reductions incurred more than 180 days prior to the date that such Lender

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notifies the Borrower of the change in or in the interpretation of law or regulation giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefore; provided further that, if the change in or in the interpretation of law or regulation giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.12.  Illegality.  Notwithstanding any other provision of this Agreement, if any Lender shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, (a) each Eurodollar Rate Advance will automatically, upon such demand, Convert into a Base Rate Advance or a Revolving Credit Advance that bears interest at the rate set forth in Section 2.07(a)(i), as the case may be, and (b) the obligation of the Lenders to make Eurodollar Rate Advances or to Convert Revolving Credit Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist; provided, however, that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Eurodollar Lending Office if the making of such a designation would allow such Lender or its Eurodollar Lending Office to continue to perform its obligations to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender.

SECTION 2.13.  Payments and Computations.

(a)All payments to be made by the Borrower hereunder shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Unless otherwise expressly provided herein, the Borrower shall make each payment or prepayment hereunder not later than 12:00 noon (New York City time) on the day when due in U.S. Dollars to the Agent at the Agent’s Account in same day funds.  The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest, fees or commissions ratably (other than amounts payable pursuant to Section 2.04(b) or (c), 2.11, 2.14 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement.  Upon any Assuming Lender becoming a Lender hereunder as a result of a Commitment Increase pursuant to Section 2.18 or an extension of the Termination Date pursuant to Section 2.19, and upon the Agent’s receipt of such Lender’s Assumption Agreement and recording of the information contained therein in the Register, from and after the applicable Increase Date or Extension Date, as the case may be, the Agent shall make all payments hereunder and under any Revolving Credit Notes issued in connection therewith in respect of the interest assumed thereby to the Assuming Lender.  Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(e), from and after the effective date specified in such Assignment and Assumption, the Agent shall make all payments hereunder and under the Revolving Credit Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b)All computations of interest based on the Base Rate (including at such time as the Base Rate is determined by reference to the Eurodollar Rate) shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of interest based on the Eurodollar Rate or in respect of facility fees and Letter of Credit Fees shall be made by the

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Agent on the basis of a year of 360 days and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).  Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(c)Whenever any payment hereunder or under the Revolving Credit Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest, fee or commission, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

(d)Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Agent for the account of the Lenders or an Issuing Bank hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date in accordance herewith and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent the Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate.

SECTION 2.14.  Taxes.

(a)Any and all payments by the Borrower to or for the account of any Lender or the Agent hereunder or under the Revolving Credit Notes or any other documents to be delivered hereunder shall be made, in accordance with Section 2.13 or the applicable provisions of such other documents, free and clear of and without deduction for any Indemnified Taxes, provided that if the Borrower shall be required by law to deduct any Indemnified Taxes from or in respect of any sum payable hereunder or under any Revolving Credit Note or any other documents to be delivered hereunder to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.14) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

(b)In addition, the Borrower shall pay, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.

(c)The Borrower shall indemnify each Lender and the Agent for and hold it harmless against the full amount of any Indemnified Taxes (including, without limitation, Taxes of any kind imposed or asserted by any jurisdiction on amounts payable under this Section 2.14) imposed on or paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; provided, however, that the Borrower shall not be obligated to make payment to any Lender in respect of penalties, interest and other similar liabilities attributable to such Indemnified Taxes if such penalties, interest or other similar liabilities are reasonably attributable to the conduct of, or any failure to act by, such Lender, except as permitted under this Agreement.  This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor.  The Lender or Agent requesting indemnification pursuant to this Section 2.14(c) shall provide the Borrower with evidence reasonably satisfactory to the

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Borrower documenting the payment by the Lender or Agent of such Taxes for which they are requesting indemnification pursuant to this Section 2.14(c).

(d)Each Lender shall severally indemnify the Agent for and hold it harmless against (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.07 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Agent in connection with this Agreement or any Revolving Credit Note, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant governmental authority.  This indemnification shall be made within 30 days from the date the Agent makes written demand therefor.  A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any Revolving Credit Note or otherwise payable by the Agent to the Lender from any other source against any amount due to the Agent under this Section 2.14(d).

(e)Within 30 days after receiving written request from the Agent following the payment of any Indemnified Taxes, the Borrower shall furnish to the Agent, at its address referred to in Section 8.02, the original or a certified copy of a receipt evidencing the payment of such Indemnified Taxes to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Agent.

(f)Each Lender (or Assignee) that is a U.S. Person shall deliver to the Borrower and the Agent (or, in the case of a participant, to the Lender from which the related participation shall have been purchased) on or before the date it becomes a party to this Agreement (or, in the case of any participant, on or before the date such participant purchases the related participation) and from time to time thereafter upon the request of the Borrower or the Agent, executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding Tax.  Each Lender (or Assignee) that is not a “U.S. Person” as defined in Section 7701(a)(30) of the Internal Revenue Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the Agent (or, in the case of a participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service (“IRS”) Form W-8BEN, Form W-8ECI, Form W-8IMY or any other form or documentation prescribed by FATCA as a basis for claiming exemption from withholding, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding Tax under Section 871(h) or 881(c) of the Internal Revenue Code with respect to payments of “portfolio interest”, a certificate to the effect that such Non U.S. Lender is not (i) a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (ii) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or (iii) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code and the applicable IRS Form W-8, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding Tax on all payments by the Borrower under this Agreement and any Revolving Credit Note.  Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any participant, on or before the date such participant purchases the related participation) and from time to time thereafter upon the request of the Borrower or the Agent.  In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify the Borrower and the Agent at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose).

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Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 2.14(f) that such Non-U.S. Lender is not legally able to deliver.

(g)For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form, certificate or other document described in Section 2.14(f) (other than if such failure is due to a change in law, or in the interpretation or application thereof, occurring subsequent to the date on which a form, certificate or other document originally was required to be provided, or if such form, certificate or other document otherwise is not required under Section 2.14(f)), such Lender shall not be entitled to indemnification under Section 2.14(a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender become subject to Taxes because of its failure to deliver a form, certificate or other document required hereunder, the Borrower shall take such steps as the Lender shall reasonably request to assist the Lender to recover such Taxes.

(h)Any Lender claiming any additional amounts payable pursuant to this Section 2.14 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such Indemnified Taxes that it may thereafter be entitled to and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

(i)If the Agent or any Lender determines, in its sole discretion, that it is entitled to a refund or credit with respect to any Indemnified Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.14 it shall pay over such refund or credit to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.14 with respect to the Indemnified Taxes giving rise to such refund), net of all out-of-pocket expenses of the Agent or such Lender and without interest (other than any interest paid by the relevant governmental authority with respect to such refund); provided, that the Borrower, upon the request of the Agent or such Lender, agrees to repay the amount paid over to the Borrower to the Agent or such Lender in the event the Agent or such Lender is required to repay such refund (plus any interest imposed by the relevant governmental authority) to such governmental authority.  This paragraph shall not be construed to require the Agent or any Lender to make available its Tax returns (or any other information relating to its Taxes which it deems confidential) to the Borrower or any other Person.

SECTION 2.15.  Sharing of Payments, Etc.  If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Revolving Credit Advances or L/C Obligations owing to it (other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its Ratable Share of payments on account of the Revolving Credit Advances or L/C Obligations obtained by all the Lenders, such Lender shall notify the Agent of such fact and forthwith purchase from the other Lenders such participations or subparticipations in the Revolving Credit Advances or L/C Obligations owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that (i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and (ii) the provisions of this Section 2.15 shall not be construed to apply to (A) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (B) the application of Cash Collateral provided for in Section 2.21, or (C) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Revolving Credit Advances or subparticipations in L/C Obligations to any assignee or participant, other than an assignment to the Borrower or any Subsidiary thereof (as to which the provisions of this Section 2.15 shall apply).

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The Borrower agrees that any Lender so purchasing a participation or subparticipation from another Lender pursuant to this Section 2.15 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off provided in Section 8.05) with respect to such participation or subparticipation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation or subparticipation.

To the extent that any payment by or on behalf of the Borrower is made to the Agent, any Issuing Bank or any Lender, or the Agent, any Issuing Bank or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent, such Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or otherwise, then (i) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (ii) each Lender and each Issuing Bank severally agrees to pay to the Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders and the Issuing Banks under clause (ii) of the preceding sentence shall survive the payment in full of all obligations owing under this Agreement or any Revolving Credit Note and the termination of this Agreement.

SECTION 2.16.  Evidence of Debt.

(a)The Revolving Credit Advances made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Agent in the ordinary course of business.  Entries made in good faith in the accounts or records maintained by the Agent and each Lender shall be conclusive absent manifest error of the amount of the Revolving Credit Advances made by the Lenders to the Borrower and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Agent in respect of such matters, the accounts and records of the Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Agent, the Borrower shall execute and deliver to such Lender (through the Agent) a Revolving Credit Note, which shall evidence such Lender’s Revolving Credit Advances in addition to such accounts or records.  Each Lender may attach schedules to its Revolving Credit Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

(b)In addition to the accounts and records referred to in Section 2.16(a), each Lender and the Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit.  In the event of any conflict between the accounts and records maintained by the Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Agent shall control in the absence of manifest error.

SECTION 2.17.  Use of Proceeds.  The proceeds of the Revolving Credit Advances shall be available (and the Borrower agrees that it shall use such proceeds) solely for general corporate purposes of the Borrower and its Subsidiaries, including commercial paper back up, not in contravention of this Agreement or any Revolving Credit Note.

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SECTION 2.18.  Increase in the Aggregate Commitments.

(a)The Borrower may, at any time after the Effective Date and prior to the Termination Date, by notice to the Agent, request that the aggregate amount of the Revolving Credit Commitments be increased (with, at the Borrower’s option and subject to the agreement of an Issuing Bank (not to be unreasonably withheld or delayed), a proportionate increase in the Letter of Credit Facility) by an amount of $10,000,000 or an integral multiple of $10,000,000 in excess thereof (each a “Commitment Increase”) to be effective as of a date that is at least 90 days prior to the latest scheduled Termination Date then in effect (the “Increase Date”) as specified in the related notice to the Agent; provided, however that (i) in no event shall the aggregate amount of the Revolving Credit Commitments at any time exceed $1,500,000,000 and (ii) on the date of any request by the Borrower for a Commitment Increase and on the related Increase Date the applicable conditions set forth in Section 3.02 shall be satisfied.

(b)The Agent shall promptly notify one or more Lenders (as requested by the Borrower) of a request by the Borrower for a Commitment Increase, which notice shall include (i) the proposed amount of such requested Commitment Increase, (ii) the proposed Increase Date and (iii) the date by which the applicable Lenders wishing to participate in the Commitment Increase must commit to an increase in the amount of their respective Revolving Credit Commitments (the “Commitment Date”).  Each applicable Lender that is willing to participate in such requested Commitment Increase (each an “Increasing Lender”) shall, in its sole discretion, give written notice to the Agent on or prior to the Commitment Date of the amount by which it is willing to increase its Revolving Credit Commitment.  If the applicable Lenders notify the Agent that they are willing to increase the amount of their respective Revolving Credit Commitments by an aggregate amount that exceeds the amount of the requested Commitment Increase, the requested Commitment Increase shall be allocated among the applicable Lenders willing to participate therein in such amounts as are agreed between the Borrower and the Agent.  If any Lender shall fail to notify the Agent and the Borrower in writing of its consent to any such request for a Commitment Increase on or prior to the Commitment Date, such Lender shall be deemed to have declined such request.

(c)Promptly following each Commitment Date, the Agent shall notify the Borrower as to the amount, if any, by which the applicable Lenders are willing to participate in the requested Commitment Increase.  If the aggregate amount by which the applicable Lenders are willing to participate in any requested Commitment Increase on any such Commitment Date is less than the requested Commitment Increase, then the Borrower may extend offers to one or more Eligible Assignees to participate in any portion of the requested Commitment Increase that has not been committed to by the applicable Lenders as of the applicable Commitment Date; provided, however, that the Revolving Credit Commitment of each such Eligible Assignee shall be in an amount of $20,000,000 or an integral multiple of $1,000,000 in excess thereof.

(d)On each Increase Date, each Eligible Assignee that accepts an offer to participate in a requested Commitment Increase in accordance with Section 2.18(b) (each such Eligible Assignee and each Eligible Assignee that agrees to an extension of the Termination Date in accordance with Section 2.19(c), an “Assuming Lender”) shall become a Lender party to this Agreement as of such Increase Date and the Revolving Credit Commitment of each Increasing Lender for such requested Commitment Increase shall be so increased by such amount (or by the amount allocated to such Lender pursuant to the last sentence of Section 2.18(b)) as of such Increase Date; provided, however, that the Agent shall have received on or before such Increase Date the following, each dated such date:

(i)(A) certified copies of resolutions of the Board of Directors or committee thereof of the Borrower or the Executive Committee of such Board approving the Commitment Increase

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and the corresponding modifications to this Agreement and (B) if requested by the Agent, an opinion of counsel for the Borrower (which may be in-house counsel) in substantially the form of Exhibit D hereto;

(ii)an assumption agreement from each Assuming Lender, if any, in form and substance satisfactory to the Borrower and the Agent (each an “Assumption Agreement”), duly executed by such Eligible Assignee, the Agent and the Borrower; and

(iii)confirmation from each Increasing Lender of the increase in the amount of its Commitment in a writing satisfactory to the Borrower and the Agent.

On each Increase Date, upon fulfillment of the conditions set forth in the immediately preceding sentence of this Section 2.18(d), the Agent shall notify the Lenders (including, without limitation, each Assuming Lender) and the Borrower, on or before 1:00 P.M. (New York City time), by facsimile or telecopier, of the occurrence of the Commitment Increase to be effected on such Increase Date and shall record in the Register the relevant information with respect to each Increasing Lender and each Assuming Lender on such date.

(e)On the Increase Date, if any Revolving Credit Advances are then outstanding, the Borrower shall borrow from all or certain of the Lenders and/or (subject to compliance by the Borrower with Section 8.04(c)) prepay Revolving Credit Advances of all or certain of the Lenders such that, after giving effect thereto, the Revolving Credit Advances (including, without limitation, the Types and Interest Periods thereof) shall be held by the Lenders (including for such purposes the Increasing Lenders and the Assuming Lenders) ratably in accordance with their respective Revolving Credit Commitments.  On and after each Increase Date, the Ratable Share of each Lender’s participation in Letters of Credit and in Revolving Credit Advances from draws under Letters of Credit shall be calculated after giving effect to each such Commitment Increase.

SECTION 2.19.  Extension of Termination Date.

(a)At least 60 days but not more than 90 days prior to the first and/or second anniversary of the Effective Date (the “Applicable Anniversary”), the Borrower, by written notice to the Agent, may request an extension of the Termination Date in effect at such time by one year from its then scheduled expiration (which request may be conditioned on a minimum level of Revolving Credit Commitments from Consenting Lenders and Assuming Lenders).  The Agent shall promptly notify each Lender of such request, and each Lender shall in turn, in its sole discretion, not later than 30 days prior to the Applicable Anniversary, notify the Borrower and the Agent in writing as to whether such Lender will consent to such extension.  If any Lender shall fail to notify the Agent and the Borrower in writing of its consent to any such request for extension of the Termination Date at least 30 days prior to the Applicable Anniversary, such Lender shall be deemed to be a Non-Consenting Lender with respect to such request.  The Agent shall notify the Borrower not later than 25 days prior to the Applicable Anniversary of the decision of the Lenders regarding the Borrower’s request for an extension of the Termination Date.

(b)If all the Lenders consent in writing to any such request in accordance with Section 2.19(a), the Termination Date in effect at such time shall, effective as at the Applicable Anniversary (the “Extension Date”), be extended for one year; provided that on each Extension Date the applicable conditions set forth in Section 3.02 shall be satisfied.  If less than all of the Lenders consent in writing to any such request in accordance with Section 2.19(a), the Termination Date in effect at such time shall, effective as at the applicable Extension Date and subject to Section 2.19(d), be extended as to those Lenders that so consented (each a “Consenting Lender”) but shall not be extended as to any other Lender (each a “Non-Consenting Lender”).  To the extent that the Termination Date is not extended as to

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any Lender pursuant to this Section 2.19 and the Revolving Credit Commitment of such Lender is not assumed in accordance with Section 2.19(c) on or prior to the applicable Extension Date, the Revolving Credit Commitment of such Non-Consenting Lender shall automatically terminate in whole on such unextended Termination Date without any further notice or other action by the Borrower, such Lender or any other Person; provided that such Non-Consenting Lender’s rights under Sections 2.11, 2.14 and 8.04, and its obligations under Section 7.06, shall survive the Termination Date for such Lender as to matters occurring prior to such date.  It is understood and agreed that no Lender shall have any obligation whatsoever to agree to any request made by the Borrower for any requested extension of the Termination Date.

(c)If less than all of the Lenders consent to any such request pursuant to Section 2.19(a), the Agent shall promptly so notify the Consenting Lenders, and each Consenting Lender may, in its sole discretion, give written notice to the Agent not later than ten days prior to the Extension Date of the amount of the Non-Consenting Lenders’ Revolving Credit Commitments for which it is willing to accept an assignment.  If the Consenting Lenders notify the Agent that they are willing to accept assignments of Revolving Credit Commitments in an aggregate amount that exceeds the amount of the Revolving Credit Commitments of the Non-Consenting Lenders, such Revolving Credit Commitments shall be allocated among the Consenting Lenders willing to accept such assignments in such amounts as are agreed between the Borrower and the Agent.  If after giving effect to the assignments of Revolving Credit Commitments described above there remains any Revolving Credit Commitments of Non-Consenting Lenders, the Borrower may arrange for one or more Consenting Lenders or other Eligible Assignees as Assuming Lenders to assume, effective as of the Extension Date, any Non-Consenting Lender’s Revolving Credit Commitment and all of the obligations of such Non-Consenting Lender under this Agreement thereafter arising, without recourse to or warranty by, or expense to, such Non-Consenting Lender; provided, however, that the amount of the Revolving Credit Commitment of any such Assuming Lender as a result of such substitution shall in no event be less than $20,000,000 unless the amount of the Revolving Credit Commitment of such Non-Consenting Lender is less than $20,000,000, in which case such Assuming Lender shall assume all of such lesser amount; and provided further that:

(i)any such Consenting Lender or Assuming Lender shall have paid to such Non-Consenting Lender (A) the aggregate principal amount of, and any interest accrued and unpaid to the effective date of the assignment on, the outstanding Revolving Credit Advances, if any, of such Non-Consenting Lender plus (B) any accrued but unpaid facility fees owing to such Non-Consenting Lender as of the effective date of such assignment;

(ii)all additional costs reimbursements, expense reimbursements and indemnities payable to such Non-Consenting Lender, and all other accrued and unpaid amounts owing to such Non-Consenting Lender hereunder, as of the effective date of such assignment shall have been paid to such Non-Consenting Lender; and

(iii)with respect to any such Assuming Lender, the applicable processing and recordation fee required under Section 8.07(b) for such assignment shall have been paid;

provided further that such Non-Consenting Lender’s rights under Sections 2.11, 2.14 and 8.04, and its obligations under Section 7.06, shall survive such substitution as to matters occurring prior to the date of substitution.  At least five Business Days prior to any Extension Date, (A) each such Assuming Lender, if any, shall have delivered to the Borrower and the Agent an Assumption Agreement, duly executed by such Assuming Lender, such Non-Consenting Lender, the Borrower and the Agent and (B) any such Consenting Lender shall have delivered confirmation in writing satisfactory to the Borrower and the Agent as to the increase in the amount of its Commitment.  Upon the payment or prepayment of all

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amounts referred to in clauses (i), (ii) and (iii) of the immediately preceding sentence, each such Consenting Lender or Assuming Lender, as of the Extension Date, will be substituted for such Non-Consenting Lender under this Agreement and shall be a Lender for all purposes of this Agreement, without any further acknowledgment by or the consent of the other Lenders, and the obligations of each such Non-Consenting Lender hereunder shall, by the provisions hereof, be released and discharged.

(d)If (after giving effect to any assignments or assumptions pursuant to Section 2.19(c)) Lenders having Commitments equal to more than 50% of the Revolving Credit Commitments in effect immediately prior to the Extension Date consent in writing to a requested extension (whether by execution or delivery of an Assumption Agreement or otherwise) not later than one Business Day prior to such Extension Date, the Agent shall so notify the Borrower, and, subject to the satisfaction of the applicable conditions in Section 3.02, the Termination Date for each Consenting Lender and each Assuming Lender then in effect shall be extended for the additional one year period as described in Section 2.19(b); provided that the Termination Date for each Non-Consenting Lender shall not be so extended.  Promptly following each Extension Date, the Agent shall notify the Lenders (including, without limitation, each Assuming Lender) of the extension of the scheduled Termination Date in effect immediately prior thereto and shall thereupon record in the Register the relevant information with respect to each such Consenting Lender and each such Assuming Lender.  On and after each Extension Date, the Ratable Share of each Lender’s participation in Letters of Credit and in L/C Obligations shall be calculated after giving effect to the Revolving Credit Commitments of the Lenders after the occurrence of such Extension Date.

SECTION 2.20.  Replacement of Lenders.  If any Lender requests compensation under Section 2.11 or notifies the Agent under Section 2.12 that the making of Eurodollar Rate Advances would be unlawful, or if the Borrower is required to pay any additional amount to any Lender or any governmental authority for the account of any Lender pursuant to Section 2.14, or if any Lender becomes a Defaulting Lender or fails to approve any amendment to this Agreement which requires, by the terms hereof, the approval of all affected Lenders and is approved by the Required Lenders, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 8.07), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) if the assignee is not a Lender, the Borrower shall have received the prior written consent of the Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Revolving Credit Advances, accrued interest thereon, accrued fees and all other amounts then due and payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.11 or payments required to be made pursuant to Section 2.14, such assignment will result in a reduction in such compensation or payments at the time of such assignment, or in the case of any such assignment resulting from a Lender failing to approve an amendment to this Agreement, such assignee shall have approved such amendment.  A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.21.  Cash Collateral.

(a)Certain Credit Support Events.  Upon the occurrence of an Event of Default that is continuing, at the request of the Agent with the consent of the Required Lenders, or at the request of the Required Lenders, as contemplated by Section 6.02, the Borrower shall immediately pay to the Agent in same day funds at the office of the Agent set forth on Schedule 8.02, for deposit in the Cash Collateral

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Account, an amount equal to the then outstanding amount of all L/C Obligations.  At any time that there shall exist a Defaulting Lender, promptly upon the request of the Agent or an Issuing Bank, the Borrower shall deliver to the Agent Cash Collateral in an amount sufficient to cover all Fronting Exposure (after giving effect to Section 2.22(a)(iv) and any Cash Collateral provided by the Defaulting Lender).

(b)Grant of Security Interest.  All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, interest bearing deposit accounts at Wells Fargo (the “Cash Collateral Account”).  The Borrower, and to the extent provided by any Lender, such Lender, hereby grants to (and subjects to the control of) the Agent, for the benefit of the Agent, the Issuing Banks and the Lenders, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.21(c).  If at any time the Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable Fronting Exposure and other obligations secured thereby, the Borrower or the relevant Defaulting Lender will, promptly upon demand by the Agent, pay or provide to the Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.

(c)Application.  Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.21 or Sections 2.03, 2.22 or 6.02 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.

(d)Release.  Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly (i) following the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 8.07)) or (ii) if there exists any excess Cash Collateral; provided, however, (x) that Cash Collateral which the Borrower shall have furnished pursuant to Section 6.02 shall not be released during the continuance of an Event of Default (and following application as provided in this Section 2.21 may be otherwise applied in accordance with Section 6.03), and (y) any Lender providing Cash Collateral and an Issuing Bank, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

SECTION 2.22.  Defaulting Lenders.

(a)Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

(i)Waivers and Amendments.  That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 8.01.

(ii)Reallocation of Payments.  Any payment of principal, interest, fees or other amounts received by the Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VI or otherwise, and including any amounts made available to the Agent by that Defaulting Lender pursuant to Section 8.05), shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any

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amounts owing by that Defaulting Lender to the Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to any Issuing Bank hereunder; third, if so determined by the Agent or requested by any Issuing Bank, to be held as Cash Collateral for Fronting Exposure of that Defaulting Lender; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Revolving Credit Advance in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; fifth, if so determined by the Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Revolving Credit Advance under this Agreement and to serve as Cash Collateral for future Fronting Exposure of that Defaulting Lender; sixth, to the payment of any amounts owing to the Lenders or the Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender or any Issuing Bank against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction, provided that if (A) such payment referred to in this clause “eighth” is a payment of the principal amount of any Revolving Credit Advance in respect of which that Defaulting Lender has not fully funded its appropriate share and (B) such Revolving Credit Advance was made at a time when the conditions set forth in Section 3.02 were satisfied or waived, or such Revolving Credit Advance was made pursuant to Section 2.03(c), such payment shall be applied solely to pay the Revolving Credit Advances of all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Revolving Credit Advances of that Defaulting Lender.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.22(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

(iii)Certain Fees.  That Defaulting Lender (A) shall be entitled to receive any facility fee pursuant to Section 2.04(a) for any period during which that Lender is a Defaulting Lender only to extent allocable to the sum of (1) aggregate outstanding amount of the Revolving Credit Advances funded by it and (2) its Ratable Share of the stated amount of Letters of Credit for which such Defaulting Lender has provided Cash Collateral pursuant to Section 2.22(a)(ii) (and the Borrower shall (x) be required to pay to each Issuing Bank the amount of such fee allocable to its Fronting Exposure arising from that Defaulting Lender and (y) not be required to pay the remaining amount of such fee that otherwise would have been required to have been paid to that Defaulting Lender) and (B) shall be limited in its right to receive Letter of Credit Fees as provided in Section 2.04(b).

(iv)Reallocation of Ratable Shares to Reduce Fronting Exposure.  During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit (other than Secured Letters of Credit) pursuant to Section 2.03, the “Ratable Share” of each non-Defaulting Lender shall be computed without giving effect to the Commitment of that Defaulting Lender; provided, that, (A) each such reallocation shall be given effect only if, at the date the applicable Lender becomes a Defaulting Lender, no Default or Event of Default exists (provided that such reallocation shall occur when the applicable Default or Event of Default has been cured or waived); and (B) the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit shall not exceed the positive difference, if any, of

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(1) the Revolving Credit Commitment of that non-Defaulting Lender minus (2) the aggregate outstanding amount of the Revolving Credit Advances funded by that Lender.

(v)Non-Pro Rata Commitment Reduction.  During any period in which a Lender is a Defaulting Lender, the Borrower may (in its discretion) apply all or any portion to be specified by the Borrower of any optional reduction of unused Commitments under Section 2.06 to the unused Commitments of any one or more Defaulting Lenders specified by the Borrower before applying any remaining reduction to all Lenders in the manner otherwise specified in Section 2.06.

(b)Defaulting Lender Cure.  If the Borrower, the Agent, and the Issuing Banks agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Revolving Credit Advances of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Revolving Credit Advances and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Lenders in accordance with their Ratable Shares (without giving effect to Section 2.22(a)(iv)), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01.  Conditions Precedent to Effectiveness of Section 2.01.  Section 2.01 shall become effective on and as of the first date (the “Effective Date”) on which the following conditions precedent have been satisfied:

(a)Except as disclosed in the Public Filings, there shall have occurred no Material Adverse Change since December 31, 2012.

(b)The Borrower shall have notified each Lender and the Agent in writing as to the proposed Effective Date, and the Agent shall have confirmed to the Borrower in writing that the Effective Date has occurred.

(c)The Borrower shall have paid all accrued fees and expenses of the Agent, the Joint Lead Arrangers, and the Lenders (including the accrued fees and expenses of counsel to the Agent) that have been invoiced at least two Business Days prior to the proposed Effective Date.

(d)On the Effective Date, the following statements shall be true and the Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated the Effective Date, stating that:

(i)The representations and warranties contained in Section 4.01 are correct on and as of the Effective Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date, and

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(ii)No event has occurred and is continuing that constitutes a Default.

(e)The Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Agent and (except for the Revolving Credit Notes) in sufficient copies for each Lender:

(i)The Revolving Credit Notes to the order of the Lenders to the extent requested by any Lender pursuant to Section 2.16.

(ii)Certified copies of the resolutions of the Board of Directors of the Borrower approving this Agreement, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement.

(iii)A certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the Revolving Credit Notes and the other documents to be delivered hereunder.

(iv)One or more favorable opinions of counsel to the Borrower, substantially in the form of Exhibit D hereto and as to such other matters as any Lender through the Agent may reasonably request.

(f)The Borrower shall have terminated the commitments (or such commitments shall have been terminated in accordance with their terms), and paid in full all Debt, interest, fees and other amounts then due and payable, under the Three Year Credit Agreement dated as of June 10, 2010, among the Borrower, the lenders and agents parties thereto and Bank of America, N.A., as administrative agent, and all letters of credit (if any) issued thereunder shall have been terminated or cancelled and each of the Lenders that is a party to such credit facility hereby waives, upon execution of this Agreement the requirement of prior notice under such credit facility relating to the termination of commitments thereunder.

(g)Each of the Agent and the Lenders shall have received from the Borrower all documentation and other information requested by the Agent or any Lender (through the Agent) that has been reasonably requested no less than three Business Days prior to the Effective Date and is required to satisfy applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act.

SECTION 3.02.  Conditions Precedent to Each Revolving Credit Borrowing, Issuance, Commitment Increase and Extension of the Termination Date.  The obligation of each Lender to make a Revolving Credit Advance (other than a Revolving Credit Advance made by any Issuing Bank or any Lender pursuant to Section 2.03(c)) on the occasion of each Revolving Credit Borrowing, the obligation of each Issuing Bank to Issue a Letter of Credit, each Commitment Increase and each extension of the Termination Date pursuant to Section 2.19 shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Revolving Credit Borrowing or such Issuance, such Commitment Increase or the applicable Extension Date the following statements shall be true (and each of the giving of the applicable Notice of Revolving Credit Borrowing, Letter of Credit Application, request for Commitment Increase or request for extension of the Termination Date and the acceptance by the Borrower of the proceeds of such Revolving Credit Borrowing or such Issuance shall constitute a representation and warranty by the Borrower that on the date of such Revolving Credit Borrowing, such Issuance, such Commitment Increase or such extension of the Termination Date such statements are true):

(a)the representations and warranties contained in Section 4.01 (except, in the case

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of Revolving Credit Borrowings or Issuances, the representations set forth in the last sentence of Section 4.01(e) and in Section 4.01(f)) are correct in all material respects on and as of such date, before and after giving effect to such Revolving Credit Borrowing, such Issuance, such Commitment Increase or such extension of the Termination Date and to the application of the proceeds therefrom, as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date;

(b)no event has occurred and is continuing, or would result from such Revolving Credit Borrowing, such Issuance, such Commitment Increase or such extension of the Termination Date or from the application of the proceeds therefrom, that constitutes a Default; and

(c)the Borrower is in pro forma compliance with Section 5.03 on and as of such date after giving effect to such Revolving Credit Borrowing and to the application of proceeds therefrom, such Commitment Increase or such extension of the Termination Date.

SECTION 3.03.  Determinations Under Section 3.01.  For purposes of determining compliance with the conditions specified in Section 3.01, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Effective Date, specifying its objection thereto.  The Agent shall promptly notify the Lenders of the occurrence of the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01.  Representations and Warranties of the Borrower.  The Borrower represents and warrants as follows:

(a)The Borrower (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota, (ii) has all corporate powers and authority required to carry on its business as now conducted and (iii) has all licenses, authorizations, consents and approvals required to carry on its business as now conducted, except where the failure to have any such license, authorization, consent or approval could not reasonably be expected to have a Material Adverse Effect.  Each of the Borrower and each Significant Subsidiary is duly qualified as a foreign corporation, licensed and in good standing in each jurisdiction where qualification or licensing is required by the nature of its business or the character and location of its property, business or customers, where the failure to be so qualified, licensed and/or in good standing could reasonably be expected to have a Material Adverse Effect.

(b)The execution, delivery and performance by the Borrower of this Agreement and the Revolving Credit Notes to be delivered by it, and the consummation of the transactions contemplated hereby, are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene the Borrower’s charter or by-laws, (ii) violate any law, rule, regulation, order, writ, judgment, decree, determination or award applicable to the Borrower if such violation could reasonably be expected to have a Material Adverse Effect or (iii) violate or constitute a default under any contractual restriction binding on or affecting the Borrower if such violation or default could reasonably

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be expected to have a Material Adverse Effect or subject the Lenders, Agent or the Joint Lead Arrangers to liability.

(c)No authorization or approval, and no notice to or filing with, any governmental authority or regulatory body or any other Person is required for the due execution, delivery and performance by the Borrower of this Agreement or the Revolving Credit Notes to be delivered by it, except for those that have been duly obtained, taken, given or made and are in full force and effect and except to the extent the failure to get any such authorization or approval or give any such notice or make any such filing could not be reasonably expected to have a Material Adverse Effect.

(d)This Agreement has been, and each of the Revolving Credit Notes to be delivered by it when delivered hereunder will have been, duly executed and delivered by the Borrower.  This Agreement is, and each of the Revolving Credit Notes when delivered hereunder will be, the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their respective terms, subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally, (ii) the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing.

(e)Except as disclosed on Schedule 4.01(e), (i) the Consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2012, and the related Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of KPMG LLP, independent public accountants, and (ii) the Consolidated balance sheet of the Borrower and its Subsidiaries as at March 31, 2013, which set forth the financial condition of the Borrower and is Subsidiaries, and the related Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the three months then ended, duly certified by the chief financial officer or chief accounting officer of the Borrower, copies of which have been furnished to each Lender, fairly present in all material respects, subject, in the case of said balance sheet as at March 31, 2013, and said statements of income and cash flows for the three months then ended, to year-end audit adjustments and the absence of certain notes, the Consolidated financial condition of the Borrower and its Subsidiaries as at such dates and the Consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on such dates, all in accordance with GAAP.  Except as otherwise disclosed in the Public Filings, since December 31, 2012, there has been no Material Adverse Change.

(f)There is no pending or, to the knowledge of the Borrower, threatened action, suit, investigation, litigation or proceeding, including, without limitation, under any Environmental Law, affecting the Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator that (i) except as disclosed in the Public Filings, could be reasonably likely to have a Material Adverse Effect, and there shall have been no additional claim made in respect of any action, suit, investigation, litigation or proceeding disclosed in the Public Filings that could be reasonably likely to have a Material Adverse Effect (except if such additional claim is disclosed in the Public Filings) or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Revolving Credit Note or the consummation of the transactions contemplated hereby.

(g)(i) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock that would result in or otherwise cause a violation of Regulation U with respect to any extensions of credit made by a Lender under this Agreement.

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(ii)The Borrower will not use the proceeds of any Revolving Credit Advance in any manner that would result in or otherwise cause of violation of Regulation U with respect to any extensions of credit made by a Lender under this Agreement.

(h)The Borrower is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

(i)The Borrower and each of its Subsidiaries is in compliance with all applicable laws, rules, regulations and orders, including, without limitation, compliance with ERISA, the Patriot Act, the U.S. Foreign Corrupt Practices Act of 1977 and all Environmental Laws, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect.  The Borrower and each of its Subsidiaries is in compliance with the Trading with the Enemy Act and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V) and any other enabling legislation or executive order relating thereto, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION 5.01.  Affirmative Covenants.  So long as any Revolving Credit Advance shall remain unpaid, any Letter of Credit is outstanding or any Lender shall have any Commitment hereunder, the Borrower will:

(a)Compliance with Laws, Etc.  Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and Environmental Laws, except to the extent that failure to so comply would not reasonably be expected to have a Material Adverse Effect.

(b)Payment of Taxes, Etc.  Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property that, if unpaid, might by law become a Lien or charge upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property (other than Permitted Liens); provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim (x) that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained or (y) the non-payment of which, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

(c)Maintenance of Insurance.  Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as the Borrower shall from time to time determine, based on its experience and knowledge of the industry, are of a character usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates; provided, however, that the Borrower and its Subsidiaries may self-insure to the extent consistent with prudent business practice.

(d)Preservation of Corporate Existence, Etc.  (i) Preserve and maintain its corporate existence (other than pursuant to any transaction permitted under Section 5.02(b)), (ii) cause each of its Significant Subsidiaries to preserve and maintain its corporate existence (other than pursuant to any merger or consolidation of a Significant Subsidiary with any other Person) except to the extent that failure

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to do so could not reasonably be expected to have a Material Adverse Effect and (iii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

(e)Visitation Rights.  Without limitation of Section 8.08, at any reasonable time and from time to time during normal business hours (but, so long as no Default has occurred and is continuing, no more than once per fiscal year of the Borrower), permit the Agent at the request of any of the Lenders or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants.

(f)Keeping of Books.  Except as disclosed on Schedule 4.01(e), the Borrower will keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets of the Borrower, and reported on a consolidated basis in accordance with GAAP.

(g)Maintenance of Properties, Etc.  Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition (ordinary wear and tear excepted) except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

(h)Transactions with Affiliates.  Conduct, and cause each of its Subsidiaries to conduct, all material transactions otherwise permitted under this Agreement with any of their Affiliates on terms that are fair and reasonable and no less favorable to the Borrower or such Subsidiary than it would obtain in a comparable arm’s-length transaction with a Person not an Affiliate, except for transactions between or among the Borrower and/or its Subsidiaries.

(i)Reporting Requirements.  Furnish to the Lenders:

(i)as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Borrower, the Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such quarter and Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer or chief accounting officer of the Borrower as having been prepared in accordance with GAAP and certificates of the chief financial officer or chief accounting officer of the Borrower as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, after notification of a request for an amendment as contemplated under Section 1.03, a statement of reconciliation conforming such financial statements to Fixed GAAP; provided further that the Borrower shall only be required to provide any such statement of reconciliation with respect to the initial quarter in which any such change in GAAP occurs and only if an amendment has not been agreed upon prior to the date the compliance certificate referred to above is delivered pursuant to this clause (i);

(ii)as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the annual audit report for such year for the Borrower and its

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Subsidiaries, containing the Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year, in each case accompanied by an opinion by KPMG LLP or other independent public accountants of nationally recognized standing and, in addition, the Borrower will provide a certificate of its chief financial officer or chief accounting officer setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, after notification of a request for an amendment as contemplated under Section 1.03, a statement of reconciliation conforming such financial statements to Fixed GAAP; provided further that the Borrower shall only be required to provide any such statement of reconciliation with respect to the initial quarter in which any such change in GAAP occurs and only if an amendment has not been agreed upon prior to the date the compliance certificate referred to above is delivered pursuant to this clause (ii);

(iii)as soon as possible and in any event within five days after any senior officer becomes aware or should have become aware of the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer or chief accounting officer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto;

(iv)promptly after the sending or filing thereof, copies of all reports and registration statements that the Borrower or any Subsidiary files with the SEC; and

(v)such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request.

Reports, financial statements and other information required to be delivered by Borrower pursuant to clauses (i), (ii), (iii), (iv) and (v) of this subsection (i) shall be deemed to have been delivered on the date on which the Borrower posts such reports, financial statements or other information on its website on the Internet at www.travelers.com, at www.sec.gov or at such other website identified by the Borrower in a notice to the Agent and the Lenders and that is accessible by the Lenders without charge; provided that the Borrower shall deliver paper copies of such information to any Lender promptly upon request of such Lender through the Agent and provided further that the Lenders shall be deemed to have received such information on the date such information is posted at the website pursuant to this sentence.

(j)Use of Proceeds.  Use the proceeds of any Revolving Credit Advance for general corporate purposes, including commercial paper backup, not in contravention of this Agreement or any Revolving Credit Note.

SECTION 5.02.  Negative Covenants.  So long as any Revolving Credit Advance shall remain unpaid, any Letter of Credit is outstanding or any Lender shall have any Commitment hereunder, the Borrower will not:

(a)Liens, Etc.  Create or suffer to exist, or permit any of its Subsidiaries to create or suffer to exist, any Lien on or with respect to any of its properties, whether now owned or hereafter acquired (other than Unrestricted Margin Stock), other than:

(i)Permitted Liens,

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(ii)purchase money Liens upon or in any real property or equipment acquired or held by the Borrower or any Subsidiary in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property) or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties of any character other than the real property or equipment being acquired (including the “products” and “proceeds” thereof, as each such term is defined in the Uniform Commercial Code of the State of New York), and no such extension, renewal or replacement shall extend to or cover any properties not theretofore subject to the Lien being extended, renewed or replaced,

(iii)the Liens described on Schedule 5.02(a) hereto,

(iv)Liens on property of a Person existing at the time such Person is merged into or consolidated with the Borrower or any Subsidiary of the Borrower or becomes a Subsidiary of the Borrower; provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person so merged into or consolidated with the Borrower or such Subsidiary or acquired by the Borrower or such Subsidiary,

(v)Liens arising in connection with capital lease obligations; provided, however, that no such Lien shall extend to or cover any property or assets other than the property and assets subject to such capital lease obligations,

(vi)Liens arising in connection with repurchase agreements, reverse purchase agreements and other similar agreements for the purchase, sale or loan of securities, in each case in the ordinary course of business; provided that no such Lien shall extend to or cover any property or assets other than the securities subject thereto,

(vii)Liens on accounts or notes receivable (whether such accounts or notes receivable constitute accounts, instruments, chattel paper or general intangibles) and other related assets, and sales or discounts on the foregoing, arising solely in connection with the securitization thereof (whether in one transaction or in a series of transactions); provided that no such Lien shall extend to or cover any property or assets other than the receivables and related assets subject to such securitization,

(viii)Liens on Invested Assets pursuant to trust, letter of credit, pledge or other security arrangements in connection with Reinsurance Agreements or Primary Policies or the Borrower’s Society of Lloyd’s insurance program (including syndicate 5000 and any other Lloyd’s syndicate which is managed by a Subsidiary of the Borrower or for which a Subsidiary of the Borrower acts as capital provider);

(ix)other Liens securing Debt and other obligations in an aggregate principal amount, which, together with, without duplication, all other Liens permitted by clauses (iv) through (viii) above and this clause (ix), secures Debt and other obligations in an aggregate principal amount at the time such Debt or other obligations are incurred not to exceed 15% of the Net Worth of the Borrower and its Subsidiaries on a consolidated basis as of the last day of the immediately preceding fiscal period for which financial statements have been delivered,

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(x)the replacement, extension or renewal of any Lien permitted by clause (iii) or (iv) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby,

(xi)Liens in favor of the Borrower which secure the obligation of any Subsidiary to the Borrower, and

(xii)any Lien on any asset of St. Paul Fire securing a reimbursement obligation arising from the issuance of a letter of credit for the account of St. Paul Fire (or one of its Affiliates) in the ordinary course of business.

(b)Mergers, Etc.  Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, except that (i) the Borrower may merge or consolidate with or into any other Person so long as (A) the Borrower is the surviving corporation or, (B) if it is not the surviving entity, (x) the surviving entity shall have assumed all of the obligations of the Borrower under this Agreement pursuant to documentation reasonably satisfactory to the Agent and shall thereafter be deemed to be the Borrower for all purposes hereunder, (y) immediately following the closing date of such consolidation or merger, the surviving entity shall have senior long-term unsecured debt ratings from at least two nationally recognized rating agencies that are at least equal to the Borrower’s ratings immediately preceding the closing date of such consolidation or merger, but in any event such rating shall not be lower than BBB- by S&P or lower than Baa3 by Moody’s, and (z) the surviving entity shall be an entity organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof, and (ii) and the Borrower may convey, transfer, lease or otherwise dispose of all or substantially all of its assets to any other Person, so long as (A) such other Person shall have assumed all of the obligations of the Borrower under this Agreement pursuant to documentation reasonably satisfactory to the Agent and shall thereafter be deemed to be the Borrower for all purposes hereunder (B) immediately following the closing date of such consolidation or merger, the acquiring entity shall have senior long-term unsecured debt ratings from at least two nationally recognized rating agencies that are at least equal to the Borrower’s ratings immediately preceding the closing date of such conveyance, but in any event no such rating shall be lower than BBB- by S&P or lower than Baa3 by Moody’s, transfer, lease or disposition and (C) the acquiring entity shall be an entity organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof; provided that, in all cases, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom.

(c)Accounting Changes.  Make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted by GAAP or statutory accounting principles.

(d)Use of Proceeds.  Use the proceeds of any Revolving Credit Advance to purchase or carry Margin Stock or to extend credit to others for the purpose of purchasing or carrying Margin Stock or to refund indebtedness originally incurred for such purpose, to the extent that such use of the proceeds would result in or otherwise cause a violation of Regulation U.

SECTION 5.03.  Financial Covenant.  So long as any Revolving Credit Advance shall remain unpaid, any Letter of Credit is outstanding or any Lender shall have any Commitment hereunder, the Borrower will maintain, as of the end of each fiscal quarter as calculated in each compliance certificate delivered pursuant to Section 5.01(i)(i) and (ii), or, in the case of Section 3.02(c), as of the date of and after giving effect to any Revolving Credit Borrowing and to the application of proceeds

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therefrom, any Commitment Increase or any extension of the Termination Date, an excess of Consolidated Net Worth over goodwill and other intangible assets of not less than (i) $15,480,500,000 minus (ii) 70.0% of the aggregate amount of repurchases of capital stock of the Borrower consummated by the Borrower since March 31, 2013; provided that the amount subtracted pursuant to this clause (ii) shall not exceed $1,750,000,000.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01.  Events of Default.  If any of the following events (“Events of Default”) shall occur and be continuing:

(a)The Borrower shall fail to pay any principal of any Revolving Credit Advance when the same becomes due and payable; or the Borrower shall fail to pay any interest on any Revolving Credit Advance or, to the extent any L/C Obligation is not deemed to be converted to a Revolving Credit Borrowing under the last sentence of Section 2.03(c)(i), any Unreimbursed Amount or make any other payment of fees or other amounts payable under this Agreement or any Revolving Credit Note within three Business Days after the same becomes due and payable; or

(b)Any representation or warranty made by the Borrower (or any of its officers) herein or in any Revolving Credit Note shall prove to have been incorrect in any material respect when made or deemed made; or

(c)(i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(d)(i), (h) or (i)(iii), 5.02 or 5.03, or (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed and such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Agent or any Lender, provided that it shall not be an Event of Default for a failure to provide a notice of Default under Section 5.01(i)(iii) with respect to a Default under clause (ii) of this Section 6.01(c) until the day which is 30 days after any senior officer becomes aware or should have become aware of the occurrence of such Default at which time the failure to provide such notice shall be an Event of Default; or

(d)(i) The Borrower or any of its Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal amount or, in the case of a Hedge Agreement, net amount, of at least $100,000,000 in the aggregate (but excluding Debt outstanding hereunder) of the Borrower or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue (A) after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt and (B) for two Business Days following receipt by Borrower of notice of such failure to pay when due and payable; or (ii) the Borrower or any of its Subsidiaries shall fail to observe, perform or comply with any other agreement or condition relating to any such Debt other than, with respect to Debt consisting of any Hedge Agreements, termination events or similar events pursuant to the terms of such Hedge Agreements, and such failure shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such failure to observe, conform or comply is to accelerate the maturity of such Debt or declare such Debt due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or

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(e)The Borrower or any of its Significant Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any of its Significant Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower or any of its Significant Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this Section 6.01(e); or

(f)Judgments or orders for the payment of money in excess of $100,000,000 in the aggregate shall be rendered against the Borrower or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment following a failure of the Borrower or any of its Subsidiaries to pay the amount of such order and such proceedings shall remain unstayed for 10 consecutive Business Days or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment or order shall not be an Event of Default under this Section 6.01(f) if and for so long as (i) the amount of such judgment or order is covered by a valid and binding policy of insurance between the defendant and the insurer covering payment thereof and (ii) such insurer, which shall be rated at least “A” by A.M. Best Company, has been notified of, and has not disputed the claim made for payment of, the amount of such judgment or order; or

(g)(i) Any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of the Borrower (or other securities convertible into such Voting Stock) representing 35% or more of the combined voting power of all Voting Stock of the Borrower; or (ii) during any period of up to 24 consecutive months, commencing before or after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Borrower (“Continuing Directors”) shall cease for any reason (other than due to death or disability) to constitute a majority of the board of directors of the Borrower; provided, however that individuals (x) appointed by a majority of the remaining members of the board of directors of the Borrower or (y) nominated for election by a majority of the remaining members of the board of directors of the Borrower and thereafter elected as directors by the shareholders of the Borrower, shall constitute Continuing Directors; or

(h)The Borrower or any of its ERISA Affiliates shall incur, or shall be reasonably likely to incur, liabilities relating to any Plans as a result of one or more of the following:  (i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan within the meaning of Part 1 of Subtitle E of Title IV of ERISA; or (iii) the reorganization (within the meaning of Section 4241 of ERISA) or the termination of a Multiemployer Plan pursuant to Section 4041A or 4042 of ERISA, which in the case of clause (i), (ii) and (iii) individually or in the aggregate would have a Material Adverse Effect; or

(i)(i) Any insurance commissioner or any other state insurance regulatory official shall intervene through legal proceedings and assume control of any portion of the business of the Borrower or any Significant Subsidiary, or (ii) any insurance commissioner or any State insurance

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regulatory official shall initiate any legal proceeding not dismissed or stayed within 90 days, with a view toward intervening, in the control of a portion of the business of the Borrower or any Significant Subsidiary, which actions in the foregoing clauses (i) or (ii) could be reasonably expected to result in a Material Adverse Effect with respect to the Borrower and its Significant Subsidiaries, taken as a whole; provided that the provisions of clauses (i) and (ii) shall not include normal regulatory practices, including the review and approval of rates and forms, market conduct examinations, financial examinations, and other routine examinations conducted in the ordinary course of business with respect to the Borrower and its Significant Subsidiaries;

then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Revolving Credit Advances (other than Revolving Credit Advances to be made by an Issuing Bank or a Lender pursuant to Section 2.03(c)) and of the Issuing Banks to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Revolving Credit Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Revolving Credit Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Revolving Credit Advances (other than Revolving Credit Advances to be made by an Issuing Bank or a Lender pursuant to Section 2.03(c)) and of the Issuing Banks to issue Letters of Credit shall automatically be terminated and (B) the Revolving Credit Advances, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

SECTION 6.02.  Actions in Respect of the Letters of Credit upon Default.  If any Event of Default shall have occurred and be continuing, the Agent may with the consent, or shall at the request, of the Required Lenders, require that the Borrower provide Cash Collateral pursuant to the terms of Section 2.21; provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective without further act of the Agent or any Lender.  If at any time thereafter the Agent determines that the funds held in the Secured L/C Account and the Cash Collateral Account are less than the then outstanding amount of all L/C Obligations, then the Borrower will, forthwith upon demand by the Agent, pay to the Agent, as additional funds, which the Agent determines to be free and clear of any right and claim, which additional funds shall be deposited and held in the Secured L/C Account or the Cash Collateral Account, as appropriate, an amount equal to the excess of (a) such then outstanding amount of all L/C Obligations over (b) the total amount of funds, if any, then held in the Secured L/C Account and the Cash Collateral Account.

SECTION 6.03.  Application of Funds.  After the exercise of remedies provided for in Sections 6.01 or 6.02 (or after the Revolving Credit Advances have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 6.02), any amounts received on account of the amounts owing under this Agreement or any Revolving Credit Note shall, subject to the provisions of Sections 2.03(g), 2.21 and 2.22, be applied by the Agent in the following order:

First, to payment of that portion of the obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Agent and

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amounts payable under Article III) payable under this Agreement or other writing to the Agent in its capacity as such;

Second, to payment of that portion of the obligations constituting amounts payable pursuant to the second sentence of Section 8.04(a) to the Lenders and the Issuing Banks (including fees, charges and disbursements of counsel to the respective Lenders and the Issuing Banks), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third, to payment of that portion of the obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Revolving Credit Borrowings and other obligations, ratably among the Lenders and the Issuing Banks in proportion to the respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of the obligations constituting unpaid principal of the Revolving Credit Borrowings, ratably among the Lenders and the Issuing Banks in proportion to the respective amounts described in this clause Fourth held by them;

Fifth, to payment of that portion of the obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees and amounts payable pursuant to clause Second above) payable under this Agreement to the Lenders and the Issuing Banks (including fees, charges and disbursements of counsel to the respective Lenders and the Issuing Banks and amounts payable under Section 2.13), ratably among them in proportion to the respective amounts described in this clause Fifth payable to them;

Sixth, to the Agent for the account of the Issuing Banks, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Sections 2.03 and 2.21;

Last, the balance, if any, after all of the obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by law.

Subject to Sections 2.03(c) and 2.22, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur.  Subject to Section 2.03(g), amounts deposited in the Secured L/C Account with respect to Secured Letters of Credit shall be applied to satisfy drawings under such Secured Letters of Credit as the occur.  After the exercise of remedies provided for in Sections 6.01 or 6.02, if any amount remains on deposit in the Cash Collateral Account or the Secured L/C Account after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other obligations, if any, in the order set forth above.

ARTICLE VII

THE AGENT

SECTION 7.01.  Authorization and Action.  Each Lender (in its capacities as a Lender and Issuing Bank, as applicable) hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto.  As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Revolving Credit Notes), the Agent shall not be required to exercise any discretion (other than such discretion as is delegated to the Agent under the terms of this Agreement, together with such

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powers as are reasonably incidental thereto) or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances), and such instructions shall be binding upon all Lenders and all holders of Revolving Credit Notes; provided, however, that the Agent shall not be required to take any action that, in its opinion or in the opinion of counsel to the Agent, exposes the Agent or its Affiliates and their officers, directors, employees, agents and advisors to personal liability or that is contrary to this Agreement or applicable law.  The Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement.  The provisions of this Article are solely for the benefit of the Agent, the Lenders, and the Issuing Banks, and the Borrower shall not have rights as a third party beneficiary of any of such provisions.

SECTION 7.02.  Agent’s Reliance, Etc.  Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct.  Without limitation of the generality of the foregoing, the Agent:  (i) may treat the Lender that made any Revolving Credit Advance as the holder of the Debt resulting therefrom until the Agent receives and accepts an Assumption Agreement entered into by an Assuming Lender as provided in Section 2.18 or 2.19, as the case may be, or an Assignment and Assumption entered into by such Lender, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance, observance or satisfaction of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or the existence at any time of any Default or to inspect the property (including the books and records) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other instrument or document furnished pursuant hereto; (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by electronic message, Internet website posting, telecopier, facsimile, or other distribution) believed by it to be genuine and signed or sent by the proper party or parties and may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon; (viii) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing; (ix) shall not be deemed to have knowledge of any Default unless and until notice describing such Default is given to the Agent by the Borrower, a Lender, or an Issuing Bank; (x) shall not be responsible for the contents of any certificate, report, or other document delivered hereunder or in connection herewith; and (xi) shall not be responsible for the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent; it being understood that in determining compliance with any condition hereunder to the making of a Revolving Credit Advance or the Issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Bank, the Agent may presume that such condition is satisfactory to such Lender or such Issuing Bank unless the Agent shall have received notice to the contrary from such Lender or such Issuing Bank prior to the making of such Revolving Credit Advance or the Issuance of such letter of Credit.  The Agent may consult with legal counsel, independent accountants, and other experts selected by it, as well as the Borrower and its representatives, and shall not be liable to the Lenders or the Issuing Banks for any action taken or not taken by it in accordance with the advice of any such counsel, accountants, or experts.

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SECTION 7.03.  Delegation of Duties.  The Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any Revolving Credit Note by or through any one or more sub-agents appointed by the Agent.  The Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective officers, directors, employees, agents and advisors.  The exculpatory provisions of this Article VII shall apply to any such sub-agent and to the respective officers, directors, employees, agents and advisors of the Agent and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

SECTION 7.04.  Rights as a Lender.  The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Lender under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, the Borrower, any of its Subsidiaries and any Person who may do business with or own securities of the Borrower or any Subsidiary or Affiliate thereof, all as if such Person were not the Agent and without any duty to account therefor to the Lenders.  The Agent shall have no duty to disclose information obtained or received by it or any of its Affiliates relating to the Borrower or its Subsidiaries to the extent such information was obtained or received in any capacity other than as Agent.

SECTION 7.05.  Lender Credit Decision.  Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.

SECTION 7.06.  Indemnification.

(a)Each Lender severally agrees to indemnify the Agent (to the extent not reimbursed by the Borrower), ratably according to the respective principal amounts of the Revolving Credit Advances (and any participations in Letter of Credit) then owed to each of them (or if no Revolving Credit Advances are at the time outstanding, ratably according to the respective amounts of their Revolving Credit Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under this Agreement (collectively, the “Indemnified Costs”), provided that no Lender shall be liable for any portion of the Indemnified Costs resulting from the Agent’s gross negligence or willful misconduct.  Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrower.  In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 7.06 applies whether any such investigation, litigation or proceeding is brought by the Agent, any Lender or a third party.

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(b)Each Lender severally agrees to indemnify the Issuing Banks (to the extent not promptly reimbursed by the Borrower) from and against such Lender’s Ratable Share of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against any such Issuing Bank in any way relating to or arising out of this Agreement, any Revolving Credit Note, or any action taken or omitted by such Issuing Bank hereunder or in connection herewith; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Issuing Bank’s gross negligence or willful misconduct.  Without limitation of the foregoing, each Lender agrees to reimburse any such Issuing Bank promptly upon demand for its Ratable Share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 8.04, to the extent that such Issuing Bank is not promptly reimbursed for such costs and expenses by the Borrower.

(c)The failure of any Lender to reimburse the Agent or any Issuing Bank promptly upon demand for its Ratable Share of any amount required to be paid by the Lenders to the Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Agent or any Issuing Bank for its Ratable Share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Agent or any Issuing Bank for such other Lender’s Ratable Share of such amount.  Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 7.06 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Revolving Credit Notes.  Each of the Agent and each Issuing Bank agrees to return to the Lenders their respective Ratable Shares of any amounts paid under this Section 7.06 that are subsequently reimbursed by the Borrower.

SECTION 7.07.  Successor Agent.

(a)The Agent may resign at any time by giving written notice thereof to the Lenders, the Issuing Banks, and the Borrower and may be removed at any time with cause by the Required Lenders.  Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent with the consent, if no Event of Default has occurred and is continuing, of the Borrower, which consent shall not be unreasonably withheld or delayed.  If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent’s giving of notice of resignation or the Required Lenders’ removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000; provided that if the Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (i) the retiring Agent shall be discharged from its duties and obligations hereunder and under any Revolving Credit Note and (ii) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender and each Issuing Bank directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this Section.  Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring or retired Agent, and the retiring or retired Agent shall be discharged from its duties and obligations under this Agreement (if not already discharged therefrom as provided above in this Section 7.07(a)).  After any retiring Agent’s resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Agent’s

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resignation hereunder and under any Revolving Credit Note, the provisions of this Article VII and Section 8.04 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective officers, directors, employees, agents and advisors in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.

(b)Any resignation by the Person then acting as Agent pursuant to this Section 7.07 shall also constitute, in the sole discretion of such Person, its resignation as an Issuing Bank with respect to any Letters of Credit issued after the date of such resignation.  Upon the acceptance of a successor’s appointment as Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the resigning Issuing Bank, (ii) the resigning Issuing Bank shall be discharged from all of its respective duties and obligations hereunder or under any Revolving Credit Note, and (iii) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the resigning Issuing Bank to effectively assume the obligations of the resigning Issuing Bank with respect to such Letters of Credit.

SECTION 7.08.  Other Agents.  Each Lender hereby acknowledges that no documentation agent or any other Lender designated as any “Agent” on the cover page hereof or in the preamble hereto (other than Wells Fargo in its capacity as Agent) shall have any powers, duties, or responsibilities under this Agreement, except in its capacity, as applicable, as the Agent, a Lender, or an Issuing Bank hereunder.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01.  Amendments, Etc.  No amendment or waiver of any provision of this Agreement or the Revolving Credit Notes, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing, signed by the Required Lenders, and the Borrower, and notice of such amendment or waiver shall be provided to the Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by each Lender directly affected thereby, do any of the following:  (a) waive any of the conditions specified in Section 3.01; (b) extend or increase the Commitments of the Lenders (or reinstate any Commitment terminated pursuant to Section 6.01), other than increases of Commitments as provided in Section 2.18 and extensions of Commitments as provided in Section 2.19; (c) reduce the principal of, or rate of interest on, any Revolving Credit Advance or (subject to clause (iii) of the last proviso in this Section 8.01) any fees or other amounts payable hereunder or under any Revolving Credit Note; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Interest” or “Default Rate” or to waive any obligation of the Borrower to pay Default Interest or interest or Letter of Credit Fees at the Default Rate; (d) change Section 6.03 in a manner that would alter the ratable sharing of payments required thereby; (e) postpone any date fixed by this Agreement or the Revolving Credit Notes for any payment or mandatory prepayment of principal, interest, fees, or other amounts due to the Lenders hereunder or under the Revolving Credit Notes, other than extensions of the Termination Date as provided in Section 2.19; (f) change the definition of “Required Lenders” or the percentage of the Revolving Credit Commitments or of the aggregate unpaid principal amount of the Revolving Credit Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder; (g) release any of the collateral in the Secured L/C Account, the Cash Collateral Account or other collateral pledged pursuant to this Agreement, other than releases in accordance with the terms hereof; or (h) amend this Section 8.01; and provided further that (i) no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take

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such action, affect the rights or duties of the Agent under this Agreement or any Revolving Credit Note; (ii) no amendment, waiver or consent shall, unless in writing and signed by each Issuing Bank adversely affected thereby in addition to the Lenders required above to take such action, affect the rights or obligations of such Issuing Bank in its capacity as such under this Agreement; and (iii) any fee letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Defaulting Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

SECTION 8.02.  Notices, Etc.

(a)All notices and other communications provided for hereunder shall be either (x) in writing (including telecopier or facsimile communication) and mailed, emailed, telecopied, facsimiled or delivered; provided that the foregoing, with respect to electronic communication, shall not apply to notices to the Borrower, to any Lender or to any Issuing Bank pursuant to Article II if the Borrower, such Lender or such Issuing Bank, as applicable, has notified the Agent that it is incapable of receiving notices under such Article by electronic communication or (y) as and to the extent set forth in Section 8.02(b) and in the proviso to this Section 8.02(a), (i) if to the Borrower, to the address, telecopier or facsimile number, electronic mail address or telephone number specified on Schedule 8.02 or such other address(es) as shall be designated by the Borrower in a written notice to the Agent, (ii) if to any Lender, to the address, telecopier or facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire, and (iii) if to the Agent or an Issuing Lender, to the address, telecopier or facsimile number, electronic mail address or telephone number specified for such Person on Schedule 8.02; or, as to the Agent, at such other address as shall be designated by such party in a written notice to the Borrower and the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Agent, provided that materials required to be delivered pursuant to Section 5.01(i)(i), (ii), (iii), (iv) or (v) shall, at the option of the Borrower, be delivered to the Agent as specified in Section 5.01 or 8.02(b).  All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by overnight courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four (4) Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; (D) if delivered by email, upon confirmation of receipt (provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient), except that notices and communications to the Agent pursuant to Article II, III or VII shall not be effective until received by the Agent; and (E) other than notices delivered pursuant to Section 5.01, if posted to an Internet or intranet website, upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (D) of notification that such notice or communication is available and identifying the website address therefore.  Delivery by telecopier or other electronic imaging means of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Revolving Credit Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof.

(b)So long as Wells Fargo or any of its Affiliates is the Agent, materials required to be delivered pursuant to Section 5.01(i)(i), (ii), (iii), (iv) and (v) may be delivered to the Agent in an

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electronic medium in a format acceptable to the Agent and the Lenders by e-mail at agencyservices.requests@wellsfargo.com.  The Borrower agrees that the Agent may make such materials, as well as any other written information, documents, instruments and other material relating to the Borrower, any of its Subsidiaries or any other materials or matters relating to this Agreement, the Revolving Credit Notes or any of the transactions contemplated hereby (collectively, the “Communications”) available to the Lenders by posting such notices on SyndTrak or a substantially similar electronic system (the “Platform”).

(c)Each Lender agrees that notice to it (as provided in the next sentence) (a “Notice”) specifying that any Communications have been posted to the Platform shall constitute effective delivery of such information, documents or other materials to such Lender for purposes of this Agreement; provided that if requested by any Lender the Agent shall deliver a copy of the Communications to such Lender by email, facsimile or telecopier.  Each Lender agrees (i) to notify the Agent in writing of such Lender’s e-mail address to which a Notice may be sent by electronic transmission (including by electronic communication) on or before the date such Lender becomes a party to this Agreement (and from time to time thereafter to ensure that the Agent has on record an effective e-mail address for such Lender) and (ii) that any Notice may be sent to such e-mail address.

(d)The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Agent or any of its officers, directors, employees, agents and advisors (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender, any Issuing Bank or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender, any Issuing Bank or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

SECTION 8.03.  No Waiver; Remedies.  No failure by any Lender, any Issuing Bank or the Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any Revolving Credit Note, the authority to enforce rights and remedies hereunder and under any Revolving Credit Note against the Borrower shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Agent in accordance with Section 6.01 for the benefit of all the Lenders and the Issuing Banks; provided, however, that the foregoing shall not prohibit (a) the Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Agent) hereunder and under any Revolving Credit Note,

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(b) each Issuing Bank from exercising the rights and remedies that inure to its benefit (solely in its capacity as Issuing Bank, as the case may be) hereunder and under any Revolving Credit Note, (c) any Lender from exercising setoff rights in accordance with Section 8.05 (subject to the terms of Section 2.14), (d) one or more Lenders appointed by the Required Lenders from exercising such lawful rights and remedies hereunder and under any Revolving Credit Note, as the Required Lenders may direct, in the event the Agent shall have been directed by the Required Lenders in writing to exercise such rights and remedies and shall have refused to do so, or (e) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to the Borrower under any law relating to bankruptcy, insolvency or reorganization or relief of debtors; and provided, further, that if at any time there is no Person acting as Agent hereunder and under any Revolving Credit Note, then (i) the Required Lenders shall have the rights otherwise ascribed to the Agent pursuant to Section 6.01 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.14, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

SECTION 8.04.  Costs; Expenses; and Indemnification.

(a)           The Borrower agrees to pay promptly all reasonable and documented costs and expenses of the Agent in connection with the preparation, syndication, execution, delivery, administration, modification and amendment of this Agreement, the Revolving Credit Notes and the other documents to be delivered hereunder, including, without limitation, the reasonable and documented fees and expenses of one counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under this Agreement.  The Borrower further agrees to pay promptly all costs and expenses of the Agent and the Lenders, if any, in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Revolving Credit Notes and the other documents to be delivered hereunder, including, without limitation, fees and expenses of one counsel for the Agent and the Lenders (including in connection with the enforcement of rights under this Section 8.04(a)), unless the Agent and the Lenders have conflicting interests that cannot reasonably be represented by one counsel, in which case such expenses shall include the reasonable fees and disbursements of no more than such number of counsels as are necessary to represent such conflicting interests).  All references in this clause (a) to fees and expenses shall be deemed to refer to invoiced and reasonably documented out-of-pocket fees and expenses.

(b)           The Borrower agrees to indemnify and hold harmless the Agent and each Lender and each of their respective Affiliates and their officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against any and all claims, damages, penalties, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel (limited in the case of legal fees and expenses to the reasonable fees and expenses of one counsel to the Indemnified Parties unless the Indemnified Parties have conflicting interests that cannot reasonably be represented by one counsel, in which case such expenses shall include the reasonable fees and disbursements of no more than such number of counsels as are necessary to represent such conflicting interests)) incurred by or asserted or awarded against any Indemnified Party in each case arising out of or in connection with or by reason of any investigation, litigation or proceeding (or preparation of a defense in connection therewith) by a third party with respect to the Revolving Credit Notes, this Agreement, the arrangement or syndication of this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Revolving Credit Advances or Letters of Credit, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from (i) such Indemnified Party’s gross negligence or willful misconduct or the gross negligence or willful misconduct of such Indemnified Party’s controlled Affiliates or its or their officers, directors or employees or (ii) a material breach by such Indemnified Party or its controlled Affiliates or officers, directors or employees of its express obligations under this Agreement.  Each party hereto agrees

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not to assert any claim for special, indirect, consequential or punitive damages against the Agent, any Lender, the Borrower, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, arising out of or otherwise relating to the Revolving Credit Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Revolving Credit Advances, provided that this sentence shall not relieve the Borrower from any of its obligations hereunder, including, without limitation any of its indemnification obligations set forth in this Agreement.  All references in this clause (b) to fees and expenses shall be deemed to refer to invoiced and reasonably documented out-of-pocket fees and expenses.

(c)           If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Revolving Credit Advance, as a result of a payment or Conversion pursuant to Section 2.08(d) or (e), 2.10 or 2.12, acceleration of the maturity of the Revolving Credit Notes pursuant to Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender other than on the last day of the Interest Period for such Revolving Credit Advance upon an assignment of rights and obligations under this Agreement pursuant to Section 8.07 as a result of a demand by the Borrower pursuant to Section 8.07(b), the Borrower shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (excluding loss of anticipated profits, indirect losses and special or consequential damages), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Revolving Credit Advance.

(d)           Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Revolving Credit Notes.

SECTION 8.05.  Right of Set-off.  Upon (i) the occurrence and during the continuance of any Event of Default under Section 6.01(a) and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Revolving Credit Advances due and payable pursuant to the provisions of Section 6.01, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and any Revolving Credit Note held by such Lender which are then due and payable.  Each Lender agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of each Lender and its Affiliates under this Section 8.05 are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its Affiliates may have.

SECTION 8.06.  Binding Effect; Integration.  This Agreement shall become effective (other than Section 2.01, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Borrower and the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders.  Upon the effectiveness of this Agreement, the reimbursement and indemnification obligations of the Borrower in the seventh and eighth paragraphs of the Commitment Letter and the representations, warranties and

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covenants of the Borrower in the sixth paragraph of the Commitment Letter shall automatically be terminated and be superseded by the applicable provisions of this Agreement.

SECTION 8.07.  Assignments and Participations.

(a)           No Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 8.07(b), (ii) by way of participation in accordance with the provisions of Section 8.07(f), or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 8.07(h) (and any other attempted assignment or transfer by any Lender shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, participants to the extent provided in Section 8.07(f) and, to the extent expressly contemplated hereby, the respective officers, directors, employees, agents and advisors of each of the Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)           Each Lender may and, if demanded by the Borrower in accordance with Section 2.20, upon at least five Business Days’ notice to such Lender and the Agent, will assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Revolving Credit Commitment, the Revolving Credit Advances owing to it, its participations in Letters of Credit and the Revolving Credit Note or Revolving Credit Notes held by it); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender’s rights and obligations under this Agreement, the amount of the Revolving Credit Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Assumption with respect to such assignment) shall in no event be less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof, unless the Borrower and the Agent otherwise agree, (iii) each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result of a demand by the Borrower in accordance with Section 2.20 shall be arranged by the Borrower after consultation with the Agent and shall be either an assignment of all of the rights and obligations of the assigning Lender under this Agreement or an assignment of a portion of such rights and obligations made concurrently with another such assignment or other such assignments that together cover all of the rights and obligations of the assigning Lender under this Agreement, (v) no Lender shall be obligated to make any such assignment as a result of a demand by the Borrower in accordance with Section 2.20 unless and until such Lender shall have received one or more payments from either the Borrower or one or more Eligible Assignees in an aggregate amount at least equal to the aggregate outstanding principal amount of the Revolving Credit Advances owing to such Lender, together with accrued interest thereon to the date of payment of such principal amount and all other amounts payable to such Lender under this Agreement, (vi) the consent of the Issuing Banks (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding), (vii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Assumption, together with an Administrative Questionnaire from any assignee that is not a Lender, and any Revolving Credit Note subject to such assignment and a processing and recordation fee of $3,500 payable by the assignor or the Eligible Assignee, as applicable, provided, however, that in the case of each assignment made as a result of a demand by the Borrower, such recordation fee shall be payable by the Borrower except that no such recordation fee shall be payable in the case of an assignment made at the request of the Borrower to an Eligible Assignee that is an existing Lender, and (viii) any Lender may, without the approval of the Borrower and the Agent, assign all or a portion of its rights to any of its Affiliates.  Upon such execution, delivery, acceptance and recording, from and after the effective date

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specified in each Assignment and Assumption, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Assumption, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Assumption, relinquish its rights (other than its rights under Section 2.11, 2.14 and 8.04 to the extent any claim thereunder relates to an event arising prior such assignment) and be released from its obligations (other than its obligations under Section 8.05 to the extent any claim thereunder relates to an event arising prior to such assignment) under this Agreement (and, in the case of an Assignment and Assumption covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

(c)           By executing and delivering an Assignment and Assumption, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows:  (i) other than as provided in such Assignment and Assumption, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Assumption; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender, including providing such documentation as is required under Section 2.14(f).

(d)           Upon its receipt of an Assignment and Assumption executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with any Revolving Credit Notes subject to such assignment, the Agent shall, if such Assignment and Assumption has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Assumption, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower.

(e)           The Agent shall maintain at its address referred to in Section 8.02 a copy of each Assumption Agreement and each Assignment and Assumption delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Revolving Credit Advances owing to, each Lender from time to time (the “Register”).  The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.

63

(f)            Each Lender may sell participations to one or more banks or other entities (other than the Borrower or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Revolving Credit Advances owing to it and any Revolving Credit Note or Revolving Credit Notes held by it); provided, however, that (i) such Lender’s obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Revolving Credit Note for all purposes of this Agreement, (iv) the Borrower, the Agent, the Issuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of this Agreement or any Revolving Credit Note, or any consent to any departure by the Borrower therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Revolving Credit Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Revolving Credit Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation.

(g)           Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information relating to the Borrower received by it from such Lender and the Borrower shall be a named third party beneficiary under such confidentiality agreement executed by such assignee or participant or proposed assignee or participant.

(h)           Each Lender that sells a participation, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Revolving Credit Notes or other obligations under this Agreement (the “Participant Register”), provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to the Borrower or any other Person (including the identity of any Participant or any information relating to a Participant’s interest in any Revolving Credit Advance or its other obligations under this Agreement or any Revolving Credit Note) except to the extent that such disclosure is necessary to establish that the Revolving Credit Advances or such other obligations are in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive, and such Lender, Borrower and the Agent shall treat each person whose name is recorded in the Participant Register pursuant to the terms hereof as the owner of such participation for all purposes of this Agreement, notwithstanding notice to the contrary.

(i)            Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Revolving Credit Advances owing to it and any Revolving Credit Note or Revolving Credit Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board or other central bank having jurisdiction over such Lender.

SECTION 8.08.  Confidentiality.  Neither the Agent nor any Lender shall disclose any Confidential Information to any other Person without the consent of the Borrower, other than (a) to the Agent’s or such Lender’s Affiliates and their officers, directors, employees, agents and advisors in connection with the performance of this Agreement with the Agent or such Lender being responsible for

64

compliance by the Agent’s or such Lender’s Affiliates and their officers, directors, employees, agents and advisors with the provisions of this Section 8.08 and, as contemplated by Section 8.07(g), to actual or prospective assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process, (c) as requested or required by any state, federal or foreign authority or examiner regulating banks, banking or other financial institutions or self-regulatory body, (d) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder and (e) with the consent of the Borrower.  The Agent and the Lenders shall use Confidential Information solely for the purposes contemplated by this Agreement and shall not use such information for any other purpose, including using such information in connection with trading in the securities of the Borrower and or its Affiliates.

SECTION 8.09.  Governing Law.  This Agreement and the other L/C Related Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other L/C Related Document shall be governed by, and construed in accordance with, the laws of the State of New York (including Sections 5-1401 and 5-1402 of the New York General Obligations Law, but excluding all other choice of law and conflicts of law rules); provided that each Letter of Credit shall be governed by, and construed in accordance with, the laws or rules designated in such Letter of Credit or application therefor or, if no such laws or rules are designated, the International Standby Practices of the International Chamber of Commerce, as in effect from time to time (the “ISP”), and, as to matters not governed by the ISP, the laws of the State of New York (including Sections 5-1401 and 5-1402 of the New York General Obligations Law, but excluding all other choice of law and conflicts of law rules).

SECTION 8.10.  Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 8.11.  Jurisdiction, Etc.

(a)           Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, Borough of Manhattan, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other L/C Related Document or the transactions contemplated hereby or thereby, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court.  The Borrower hereby irrevocably consents to the service of process in any action or proceeding in such courts by the mailing thereof by any parties hereto by registered or certified mail, postage prepaid, to the Borrower at its address specified pursuant to Section 8.02.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(b)           Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other L/C Related Document in any New York State or federal court.  Each of the parties hereto hereby irrevocably

65

waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 8.12.  No Liability of the Issuing Banks.  Subject to the next sentence, the Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit.  Neither an Issuing Bank nor any of its officers or directors shall be liable or responsible for:  (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the Borrower shall have a claim against such Issuing Bank, and such Issuing Bank shall be liable to the Borrower, to the extent of any direct, but not consequential, damages suffered by the Borrower that the Borrower proves were caused by such Issuing Bank’s willful misconduct or gross negligence when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  In furtherance and not in limitation of the foregoing, such Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; provided that nothing herein shall be deemed to excuse such Issuing Bank if it acts with gross negligence or willful misconduct in accepting such documents.

SECTION 8.13.  No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any Revolving Credit Note), the Borrower acknowledges and agrees that: (a) (i) the arranging and other services regarding this Agreement provided by the Agent, the Joint Lead Arrangers and the Lenders are arm’s-length commercial transactions between the Borrower, on the one hand, and the Agent, the Joint Lead Arrangers and the Lenders, on the other hand, (ii) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by any Revolving Credit Note; (b) (i) each of the Agent, the Joint Lead Arrangers and the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any Affiliate thereof and (ii) neither the Agent nor any of the Joint Lead Arrangers nor any of the Lenders has any obligation to the Borrower or any Affiliate thereof with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in any Revolving Credit Note; and (iii) the Agent, the Joint Lead Arrangers, the Lenders, and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Agent nor any of the Joint Lead Arrangers nor any of the Lenders has any obligation to disclose any of such interests to the Borrower or its Affiliates.

SECTION 8.14.  Survival of Representations and Warranties.  All representations and warranties made hereunder and in any Revolving Credit Note or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof and shall terminate when no Revolving Credit Advance shall remain unpaid, no Letter of Credit is outstanding and no Lender shall have any Commitment hereunder.

SECTION 8.15.  Patriot Act.  Each Lender that is subject to the Act (as hereinafter defined) and the Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law

66

October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.  The Borrower shall, promptly following a request by the Agent or any Lender, provide all documentation and other information that the Agent or such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.

SECTION 8.16.  Waiver of Jury Trial.  EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE REVOLVING CREDIT NOTES OR THE ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

[Remainder of page left blank intentionally]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

THE TRAVELERS COMPANIES, INC.
By:	/s/ Maria Olivo
	Name: Maria Olivo
	Title:   Executive Vice President, Strategic             Development, and Corporate Treasurer

Five Year Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION,
	as Agent, as an Issuing Bank and as a Lender
By:	/s/ Kimberly Shaffer
	Name: Kimberly Shaffer
	Title:   Managing Director

Five Year Credit Agreement

JPMORGAN CHASE BANK, N.A.,
	as a Lender
By:	/s/ Melvin Jackson
	Name: Melvin Jackson
	Title:   Executive Director

Five Year Credit Agreement

BANK OF AMERICA, N.A.,
	as a Lender
By:	/s/ Tiffany Burgess
	Name: Tiffany Burgess
	Title:   Vice President

Five Year Credit Agreement

CITIBANK, N.A.,
	as a Lender
By:	/s/ Maureen Maroney
	Name: Maureen Maroney
	Title:   Vice President

Five Year Credit Agreement

U.S. BANK NATIONAL ASSOCIATION,
	as an Issuing Bank and as a Lender
By:	/s/ Bonnie S. Wiskowski
	Name: Bonnie S. Wiskowski
	Title:   Vice President

Five Year Credit Agreement

HSBC BANK USA, NATIONAL ASSOCIATION,
	as a Lender
By:	/s/ Lawrence Karp
	Name: LAWRENCE KARP
	Title:   MANAGING DIRECTOR

Five Year Credit Agreement

BARCLAYS BANK PLC,
	as a Lender
By:	/s/ Alicia Borys
	Name: Alicia Borys
	Title:   Vice President

Five Year Credit Agreement

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
	as a Lender
By:	/s/ Doreen Barr
	Name: Doreen Barr
	Title:   Authorized Signatory
By:	/s/ Alex Verdone
	Name: Alex Verdone
	Title:   Authorized Signatory

Five Year Credit Agreement

DEUTSCHE BANK AG NEW YORK BRANCH,
	as a Lender
By:	/s/ Virginia Cosenza
	Name: Virginia Cosenza
	Title:   Vice President
By:	/s/ Mink K. Chu
	Name: Mink K. Chu
	Title:   Vice President

Five Year Credit Agreement

GOLDMAN SACHS BANK USA,
	as a Lender
By:	/s/ Mark Walton
	Name: Mark Walton
	Title:   Authorized Signatory

Five Year Credit Agreement

MORGAN STANLEY BANK, N.A.,
	as a Lender
By:	/s/ Michael King
	Name: Michael King
	Title:   Authorized Signatory

Five Year Credit Agreement

BRANCH BANKING & TRUST COMPANY,
	as a Lender
By:	/s/ Eric Searls
	Name: Eric Searls
	Title:   Senior Vice President

Five Year Credit Agreement

THE BANK OF NEW YORK MELLON,
	as a Lender
By:	/s/ Adim Offurum
	Name: Adim Offurum
	Title:   Vice President

Five Year Credit Agreement

Schedule 1.01 — Lender Commitments

Lender	Revolving Credit Commitment		Letter of Credit Commitment
Wells Fargo Bank, National Association	$	110,000,000	$	50,000,000
JPMorgan Chase Bank, N.A.	$	110,000,000	—
Bank of America, N.A.	$	110,000,000	—
Citibank, N.A.	$	110,000,000	—
U.S. Bank National Association	$	110,000,000	$	50,000,000
HSBC Bank USA, National Association	$	70,000,000	—
Barclays Bank plc	$	60,000,000	—
Credit Suisse AG, Cayman Islands Branch	$	60,000,000	—
Deutsche Bank AG New York Branch	$	60,000,000	—
Goldman Sachs Bank USA	$	60,000,000	—
Morgan Stanley Bank, N.A.	$	60,000,000	—
Branch Banking & Trust Company	$	40,000,000	—
The Bank of New York Mellon	$	40,000,000	—
Total	$	1,000,000,000.00	$	100,000,000.00

Schedule 4.01(e) — Accounting Matters

Comments from the SEC or any other Governmental Authority or third party that the Borrower may receive from time to time that do not result from material non-compliance with GAAP, and any other immaterial non-compliance with GAAP.

Schedule 5.02(a) — Existing Liens

None.

Schedule 8.02 — Notice Information

BORROWER’S OFFICE, AGENT’S OFFICE, AND ISSUING BANK’S OFFICE;
CERTAIN ADDRESSES FOR NOTICES

BORROWER:

The Travelers Companies, Inc.

485 Lexington Avenue, 8th Floor

New York, NY 10017

Attention: Corporate Treasurer

Fax Number: 917-778-7033

Telephone: 860 277-8330

Email: molivo@travelers.com

With a copy to

One Tower Square

Hartford, CT 06183

AND TO

The Travelers Companies, Inc.

485 Lexington Avenue, 8th Floor

New York, NY 10017

Attention: Corporate Secretary

Fax Number: 866-825-3699

Telephone: 917-778-6828

Email: mfurman@travelers.com

With a copy to

One Tower Square

Hartford, CT 06183

AGENT:

Wells Fargo Bank, National Association

1525 West W.T. Harris Blvd.

Mail Code: D1109-019

Charlotte, North Carolina 28262

Attention: Syndication Agency Services

Telephone: (704) 590 2706

Facsimile: (704) 590 2790

E-mail: agencyservices.requests@wellsfargo.com

ISSUING BANK:

Wells Fargo Bank, National Association

One South Broad Street, 8th Floor

MAC: Y1375-080

Philadelphia, Pennsylvania 19107

Attention: Kimberly Shaffer

Telephone:  (267) 321-7033

Facsimile: (267) 321-7101

U.S. Bank, National Association

400 City Center

Oshkosh, Wisconsin 54901

Attention: Ann Marie Rogers

Telephone: (920) 237-7370

Facsimile: (920) 237-7993

EXHIBIT A - FORM OF

REVOLVING CREDIT NOTE

U.S.$                           Dated:                          , 201  

FOR VALUE RECEIVED, the undersigned, THE TRAVELERS COMPANIES, INC., a Minnesota corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of                                                    (the “Lender”) for the account of its Applicable Lending Office on the Termination Date (each as defined in the Credit Agreement referred to below) of such Lender the principal sum of U.S.$[amount of the Lender’s Commitment in figures] or, if less, the aggregate principal amount of the outstanding and unpaid amount of the Revolving Credit Advances made by the Lender to the Borrower pursuant to the Five Year Credit Agreement dated as of June 7, 2013 among the Borrower, the Lender and certain other lenders parties thereto, Bank of America, N.A., Citibank, N.A., JPMorgan Chase Bank, N.A., and U.S. Bank National Association, as syndication agents, Wells Fargo Securities, LLC, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and U.S. Bank National Association, as joint lead arrangers, and Wells Fargo Bank, National Association, as Agent for the Lender and such other lenders (as amended or modified from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined) and outstanding on such date.

The Borrower promises to pay interest on the unpaid principal amount of each Revolving Credit Advance from the date of such Revolving Credit Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement.

Both principal and interest are payable in lawful money of the United States of America to Wells Fargo Bank, National Association, as Agent, at the Agent’s Account, in same day funds.  Each Revolving Credit Advance owing to the Lender by the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note.

This Promissory Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement.  The Credit Agreement, among other things, (i) provides for the making of Revolving Credit Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Revolving Credit Advance being evidenced by this Promissory Note and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.

THE TRAVELERS COMPANIES, INC.

By:

Name:

Title:

ADVANCES AND PAYMENTS OF PRINCIPAL

Date Amount of
Advance Amount of
Principal Paid
or Prepaid Unpaid Principal
Balance Notation
Made By

2

EXHIBIT B - FORM OF NOTICE OF

REVOLVING CREDIT BORROWING

Wells Fargo Bank, National Association, as Agent

for the Lenders parties

to the Credit Agreement

referred to below

1525 West W.T. Harris Blvd.

Mail Code:  D1109-019

Charlotte, NC  28262

Attention:  Syndication Agency Services

[Date]

Ladies and Gentlemen:

The undersigned, The Travelers Companies, Inc., refers to the Five Year Credit Agreement, dated as of June 7, 2013 (as amended or modified from time to time, the “Credit Agreement”, the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders parties thereto, Bank of America, N.A., Citibank, N.A., JPMorgan Chase Bank, N.A., and U.S. Bank National Association, as syndication agents, Wells Fargo Securities, LLC, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and U.S. Bank National Association, as joint lead arrangers, and Wells Fargo Bank, National Association, as Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Revolving Credit Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Revolving Credit Borrowing (the “Proposed Revolving Credit Borrowing”) as required by Section 2.02(a) of the Credit Agreement:

The Business Day of the Proposed Revolving Credit Borrowing is                               , 201 .

The Type of Revolving Credit Advances comprising the Proposed Revolving Credit Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].

The aggregate amount of the Proposed Revolving Credit Borrowing is $                              .

[(iv)       The initial Interest Period for each Eurodollar Rate Advance made as part of the Proposed Revolving Credit Borrowing is            month[s].]

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Revolving Credit Borrowing:

the representations and warranties contained in Section 4.01 of the Credit Agreement (except the representations set forth in the last sentence of Section 4.01(e) and in Section 4.01(f)) are correct in all material respects, before and after giving effect to the Proposed Revolving Credit Borrowing and to the application of the proceeds therefrom, as though made on and as of such date except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date;

no event has occurred and is continuing, or would result from such Proposed Revolving Credit Borrowing or from the application of the proceeds therefrom, that constitutes a Default; and

the Borrower is and will be in pro forma compliance with Section 5.03 of the Credit Agreement on and as of such date after giving effect to the Proposed Revolving Credit Borrowing and to the application of the proceeds therefrom.

Very truly yours,

THE TRAVELERS COMPANIES, INC.

By:

Name:

Title:

2

EXHIBIT C - FORM OF

ASSIGNMENT AND ASSUMPTION

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [the][each](1) Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each](2) Assignee identified in item 2 below ([the][each, an] “Assignee”).  [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees](3) hereunder are several and not joint.](4)  Capitalized terms used but not defined herein shall have the meanings given to them in the Five Year Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the Credit Agreement (including, without limitation, the participations in Letters of Credit held by the Assignor) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”).  Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

Assignor[s]:

(1)           For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language.  If the assignment is from multiple Assignors, choose the second bracketed language.

(2)           For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language.  If the assignment is to multiple Assignees, choose the second bracketed language.

(3)           Select as appropriate.

(4)           Include bracketed language if there are either multiple Assignors or multiple Assignees.

1

Assignee[s]:

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]

Borrower(s):  The Travelers Companies, Inc.

Administrative Agent:  Wells Fargo Bank, National Association, as the administrative agent under the Credit Agreement

Credit Agreement:  Five Year Credit Agreement dated as of June 7, 2013 among the Borrower, the Lender and certain other lenders parties thereto, Bank of America, N.A., Citibank, N.A., JPMorgan Chase Bank, N.A., and U.S. Bank National Association, as syndication agents, Wells Fargo Securities, LLC, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and U.S. Bank National Association, as joint lead arrangers, and Wells Fargo Bank, National Association, as Agent for the Lenders.

Assigned Interest[s]:

Assignor[s](5)	Assignee[s](6)	Aggregate Amount of Revolving Credit Commitment for all Lenders(7)	Amount of Revolving Credit Commitment Assigned	Percentage Assigned of Revolving Credit Commitment(8)
		$	$		%
		$	$		%
		$	$		%

[7.          Trade Date:                                       ]

Effective Date:                                     , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR
[NAME OF ASSIGNOR]
By:
	Name, Title:

(5)           List each Assignor, as appropriate.

(6)           List each Assignee, as appropriate.

(7)           Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

(8)           Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

2

ASSIGNEE
[NAME OF ASSIGNEE]
By:
	Name, Title:

[Consented to and](9) Accepted:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as

Administrative Agent

By:
		Name, Title:
		[Consented to:](10)
By:
		Name, Title:
By:
	Name, Title:

(9)            To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

(10)         To be added only if the consent of the Borrower and/or other parties (e.g. Issuing Banks) is required by the terms of the Credit Agreement.

3

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

Representations and Warranties.

Assignor.  [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other L/C Related Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the L/C Related Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any L/C Related Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any L/C Related Document.

Assignee.  [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 8.07(b) of the Credit Agreement (subject to such consents, if any, as may be required under Section 8.07(b) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.01(i)(i) and 5.01(i)(ii) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, (ii) confirms that it is an Eligible Assignee, and (iii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

4

General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile, telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York (including Sections 5-1401 and 5-1402 of the New York General Obligations Law, but excluding all other choice of law and conflicts of law rules).

5

EXHIBIT D - FORM OF

OPINION(S) OF COUNSEL

FOR THE BORROWER

June 7, 2013

Wells Fargo Bank, N.A., as Administrative
     Agent under the Credit Agreement, as hereinafter
     defined (the “Administrative Agent”)

and

The Lenders listed on Schedule I hereto

Re:Five Year Credit Agreement dated as of June 7, 2013 (the “Credit Agreement”) among The Travelers Companies, Inc., a Minnesota corporation (the “Company”), the lending institutions identified in the Credit Agreement (the “Lenders”) and the Administrative Agent

Ladies and Gentlemen:

We have acted as counsel to the Company in connection with the preparation, execution and delivery of the following documents: (i) the Credit Agreement and (ii) the Revolving Credit Notes delivered to the Lenders on the date hereof (the Revolving Credit Notes, together with the Credit Agreement, collectively the “Credit Documents”).  Unless otherwise indicated, capitalized terms used but not defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.  This opinion is furnished to you pursuant to Section 3.01(e)(iv) of the Credit Agreement.

We have examined the following:

(i)the Credit Agreement, signed by the Company and by the Administrative Agent and certain of the Lenders; and

(ii)the Revolving Credit Notes, signed by the Company.

In addition, we have examined, and have relied as to matters of fact upon, the documents delivered to you at the closing, and upon originals, or duplicates or certified or conformed copies, of such corporate records, agreements, documents and other instruments and such certificates or comparable documents of public officials and of officers and representatives of the Company, and have made such other investigations, as we have deemed relevant and necessary in connection with the opinions hereinafter set forth.  In such examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all

documents submitted to us as originals, the conformity to original documents of all documents submitted to us as duplicates or certified or conformed copies and the authenticity of the originals of such latter documents.  In addition, we have relied as to certain matters of fact upon the representations made in the Credit Documents.

Based upon the foregoing, and subject to the assumptions, qualifications and limitations set forth herein, we are of the opinion that:

1.The execution and delivery of the Credit Agreement by the Company, its borrowings in accordance with the terms of the Credit Agreement and performance of its payment obligations thereunder will not result in any violation of, assuming that proceeds of borrowings will be used in accordance with the terms of the Credit Agreement, any federal or New York statute or any rule or regulation issued pursuant to any federal or New York statute.

2.Assuming that each of the Credit Documents is a valid and legally binding obligation of each of the parties thereto other than the Company and assuming that  (a) the Company is validly existing and in good standing under the laws of Minnesota, and has duly authorized, executed and delivered the Credit Documents in accordance with its organizational documents, (b) execution, delivery and performance by the Company of the Credit Documents do not violate the laws of the State of Minnesota or any other applicable laws (excepting the law of the State of New York and the federal laws of the United States) and (c) execution, delivery and performance by the Company of the Credit Documents do not constitute a breach of or default under any agreement or instrument which is binding upon the Company, each Credit Document constitutes the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms.

3.Assuming that the Company will comply with the provisions of the Credit Agreement relating to the use of proceeds, the execution and delivery of the Credit Agreement by the Company and the making of the Loans under the Credit Agreement will not violate Regulation T, U or X of the Board of Governors of the Federal Reserve System.

4.The Company is not an “investment company” within the meaning of, and subject to regulation under, the Investment Company Act of 1940, as amended.

Our opinion in paragraph 1 above is based on our review of only those statutes, regulations and rules that, in our experience, are customarily applicable to transactions of the type contemplated by the Credit Documents.

2

Our opinion in paragraph 2 above is subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing.

We express no opinion with respect to:

(i)the effect of any provision of the Credit Documents that is intended to permit modification thereof only by means of an agreement in writing signed by the parties thereto;

(ii)the effect of any provision of the Credit Documents insofar as it provides that any Person purchasing a participation from a Lender or other Person may exercise set-off or similar rights with respect to such participation or that any Lender or other Person may exercise set-off or similar rights other than in accordance with applicable law;

(iii)the effect of any provision of the Credit Documents imposing penalties or forfeitures;

(iv)the enforceability of any provision of the Credit Documents to the extent that such provision constitutes a waiver of illegality as a defense to the performance of contract obligations; and

(v)the effect of any provision of the Credit Documents relating to indemnification or exculpation in connection with violations of any securities laws or relating to indemnification, contribution or exculpation in connection with willful, reckless or criminal acts or gross negligence of the indemnified or exculpated Person or the Person receiving contribution.

In connection with the provisions of the Credit Documents whereby the parties submit to the jurisdiction of the courts of the United States of America located in the State and County of New York, we note the limitations of 28 U.S.C. Sections 1331 and 1332 on subject matter jurisdiction of the federal courts.  In connection with the provisions of the Credit Documents that relate to forum selection (including, without limitation, any waiver of any objection to venue or any objection that a court is an inconvenient forum), we note that under NYCPLR Section 510 a New York State court may have discretion to transfer the place of trial, and under 28 U.S.C. Section 1404(a) a United States district court has discretion to transfer an action from one federal court to another.

3

With respect to matters of the laws of the State of Minnesota, we understand that you are relying on the opinion of Wendy C. Skjerven, Deputy Corporate Secretary of the Company dated the date hereof.

We do not express any opinion herein concerning any law other than the federal law of the United States and the law of the State of New York.

This opinion letter is rendered to you in connection with the above described transactions.  This opinion letter may not be relied upon by you for any other purpose, or relied upon by, or furnished to, any other person, firm or corporation without our prior written consent; provided that this opinion letter may be furnished to, but may not be relied upon by (i) any person that purchases an interest or a participation in the Commitments or Loans, (ii) any auditor or regulatory authority having jurisdiction over a Lender and (iii) any other person pursuant to court order or judicial process.

Very truly yours,

SIMPSON THACHER & BARTLETT LLP

4

SCHEDULE I

THE LENDERS

Wells Fargo Bank, National Association

JPMorgan Chase Bank, N.A.

Bank of America, N.A.

Citibank, N.A.

U.S. Bank National Association

HSBC Bank USA, National Association

Barclays Bank plc

Credit Suisse AG, Cayman Islands Branch

Deutsche Bank AG New York Branch

Goldman Sachs Bank USA

Morgan Stanley Bank, N.A.

Branch Banking & Trust Company

The Bank of New York Mellon

June 7, 2013

To each of the Lenders parties
to the Credit Agreement dated
as of June 7, 2013
among The Travelers Companies, Inc.,
and said Lenders and
to Wells Fargo Bank, National Association, as Agent

The Travelers Companies, Inc.

Ladies and Gentlemen:

This opinion is furnished to you pursuant to Article III of the Five-Year Credit Agreement, dated as of June     , 2013 (the “Credit Agreement”), among The Travelers Companies, Inc. (the “Borrower”), the Lenders parties thereto, Wells Fargo Securities, LLC, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Merrill Lynch, Peirce, Fenner & Smith Incorporated and U.S. Bank National Association, as joint lead arrangers, and Wells Fargo Bank, National Association, as administrative agent for said Lenders. Terms defined in the Credit Agreement are used herein as therein defined.

I am an attorney licensed to practice law in the State of Minnesota, and I am also the Deputy Corporate Secretary of the Borrower. I am aware of the negotiation, execution and delivery of the Credit Agreement.

In that connection, I have examined or caused members of the Borrower’s legal department to examine:

(1)The Credit Agreement;

(2)The documents furnished by the Borrower pursuant to Article III of the Credit Agreement;

(3)The Amended and Restated Articles of Incorporation of the Borrower and all amendments thereto (the “Charter”);

(4)The bylaws of the Borrower and all amendments thereto (the “Bylaws”); and

(5)A certificate of the Secretary of State of Minnesota, dated June 3, 2013, attesting to the continued corporate existence and good standing of the Borrower in that State.

I have also examined the originals, or copies certified to my satisfaction, of such other corporate records of the Borrower, certificates of public officials and of officers of the Borrower, and agreements, instruments and other documents, as I have deemed necessary as a basis for the opinions expressed below. As to questions of fact material to such opinions, I have relied upon certificates of the Borrower or its officers or of public officials.  I have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Initial Lenders and the Agent.

My opinions expressed below are limited to the law of the State of Minnesota and the Federal law of the United States.

Based upon, and subject to, the foregoing, I am of the following opinion:

1.The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota.

2.The execution, delivery and performance by the Borrower of the Credit Agreement and the Notes, and the consummation of the transactions contemplated thereby by the Borrower, are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, and do not violate (i) the Charter or the Bylaws or (ii) any law, rule or regulation applicable to the Borrower if, in the case of (ii), such violation could reasonably be expected to have a Material Adverse Effect.  The Credit Agreement has been, and the Notes when executed will be, duly executed and delivered on behalf of the Borrower.

3.To the best of my knowledge, there are no pending or overtly threatened actions or proceedings against the Borrower before any court, governmental agency or arbitrator that purport to affect the legality, validity, binding effect or enforceability of the Credit Agreement or any of the Notes or the consummation of the transactions contemplated thereby.

Very truly yours,

Wendy C. Skjerven

Deputy Corporate Secretary

2

EX-12.1

Exhibit 12.1

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except ratios)	2013		2012		2013		2012
Income before income taxes	$	1,177	$	608	$	2,397	$	1,685
Interest	86		96		178		192
Portion of rentals deemed to be interest	16		16		32		32
Income available for fixed charges	$	1,279	$	720	$	2,607	$	1,909
Fixed charges:
Interest	$	86	$	96	$	178	$	192
Portion of rentals deemed to be interest	16		16		32		32
Total fixed charges	$	102	$	112	$	210	$	224
Ratio of earnings to fixed charges	12.52		6.42		12.39		8.51

The ratio of earnings to fixed charges is computed by dividing income available for fixed charges by the fixed charges. For purposes of this ratio, fixed charges consist of that portion of rentals deemed representative of the appropriate interest factor.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jay S. Fishman, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 of The Travelers Companies, Inc. (the Company);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date:	July 23, 2013	By:	/S/ JAY S. FISHMAN
			Jay S. Fishman Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jay S. Benet, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 of The Travelers Companies, Inc. (the Company);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date:	July 23, 2013	By:	/S/ JAY S. BENET
			Jay S. Benet Vice Chairman and Chief Financial Officer

EX-32.1

Exhibit 32.1

THE TRAVELERS COMPANIES, INC.

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. Section 1350, the undersigned officer of The Travelers Companies, Inc. (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 23, 2013	By:	/S/ JAY S. FISHMAN
			Name: Jay S. Fishman Title: Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.2

THE TRAVELERS COMPANIES, INC.

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. Section 1350, the undersigned officer of The Travelers Companies, Inc. (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 23, 2013	By:	/S/ JAY S. BENET
			Name: Jay S. Benet Title: Vice Chairman and Chief Financial Officer

1

XML

Earnings per Share

6 Months Ended

Jun. 30, 2013

Earnings per Share disclosure

Earnings per Share disclosure [Text Block]

9. EARNINGS PER SHARE

The following is a reconciliation of the net income and share data used in the basic and diluted earnings per share computations for the periods presented:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share amounts)	2013			2012			2013			2012
Basic and Diluted
Net income, as reported	$	925		$	499		$	1,821		$	1,305
Participating share-based awards — allocated income	(7		)	(4		)	(14		)	(10		)
Net income available to common shareholders — basic and diluted	$	918		$	495		$	1,807		$	1,295
Common Shares
Basic
Weighted average shares outstanding	375.9			388.0			376.8			390.0
Diluted
Weighted average shares outstanding	375.9			388.0			376.8			390.0
Weighted average effects of dilutive securities — stock options and performance shares	4.0			3.6			4.0			3.5
Total	379.9			391.6			380.8			393.5
Net Income per Common Share
Basic	$	2.44		$	1.27		$	4.80		$	3.32
Diluted	$	2.41		$	1.26		$	4.75		$	3.29

XML

Shareholders' Equity (details) - Repurchases (Board of Directors Approved Repurchase Authorizations [Member], USD $) Share data in Millions, except Per Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Board of Directors Approved Repurchase Authorizations [Member]
Repurchase activity
Number of shares repurchased (in shares)	3.6	7.3
Cost of shares repurchased	$ 300,000,000	$ 600,000,000
Average cost per share	$ 82.99	$ 81.99
Remaining capacity under share repurchase authorization		$ 1,560,000,000

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Consolidated Statement of Comprehensive Income (Loss) (Unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidated Statement of Comprehensive Income (Loss) (Unaudited)
Net income	$ 925	$ 499	$ 1,821	$ 1,305
Other comprehensive income (loss):
Changes in net unrealized gains on investment securities having no credit losses recognized in the consolidated statement of income	(1,790)	216	(2,166)	139
Changes in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income	(5)	5	4	30
Net changes in benefit plan assets and obligations	26	22	54	42
Net changes in unrealized foreign currency translation	(73)	(86)	(169)	(22)
Other comprehensive income (loss) before income taxes	(1,842)	157	(2,277)	189
Income tax expense (benefit)	(636)	66	(761)	64
Other comprehensive income (loss), net of taxes	(1,206)	91	(1,516)	125
Comprehensive income (loss)	$ (281)	$ 590	$ 305	$ 1,430

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Segment Information

6 Months Ended

Jun. 30, 2013

Segment Information disclosure

Segment Information disclosure [Text Block]

2.             SEGMENT INFORMATION

The following tables summarize the components of the Company’s revenues, operating income and total assets by reportable business segments:

(for the three monthsended June 30,in millions)	BusinessInsurance		Financial, Professional & International Insurance		PersonalInsurance		TotalReportableSegments
2013
Premiums	$	3,018	$	751	$	1,834	$	5,603
Net investment income	502		91		94		687
Fee income	82		—		—		82
Other revenues	114		5		15		134
Total operating revenues (1)	$	3,716	$	847	$	1,943	$	6,506
Operating income (1)	$	579	$	154	$	142	$	875
2012
Premiums	$	2,860	$	766	$	1,903	$	5,529
Net investment income	536		99		103		738
Fee income	58		1		—		59
Other revenues	8		5		16		29
Total operating revenues (1)	$	3,462	$	871	$	2,022	$	6,355
Operating income (1)	$	362	$	182	$	17	$	561

(1) Operating revenues for reportable business segments exclude net realized investment gains (losses). Operating income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains (losses).

(for the six monthsended June 30,in millions)	BusinessInsurance		Financial, Professional & International Insurance		PersonalInsurance		TotalReportableSegments
2013
Premiums	$	5,960	$	1,486	$	3,674	$	11,120
Net investment income	989		183		185		1,357
Fee income	179		—		—		179
Other revenues	127		10		33		170
Total operating revenues (1)	$	7,255	$	1,679	$	3,892	$	12,826
Operating income (1)	$	1,169	$	317	$	339	$	1,825
2012
Premiums	$	5,736	$	1,503	$	3,813	$	11,052
Net investment income	1,068		203		207		1,478
Fee income	140		1		—		141
Other revenues	22		13		35		70
Total operating revenues (1)	$	6,966	$	1,720	$	4,055	$	12,741
Operating income (1)	$	974	$	331	$	125	$	1,430

(1) Operating revenues for reportable business segments exclude net realized investment gains (losses). Operating income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains (losses).

Business Segment Reconciliations

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2013			2012			2013			2012
Revenue reconciliation
Earned premiums
Business Insurance:
Workers’ compensation	$	897		$	754		$	1,744		$	1,537
Commercial automobile	474			488			949			974
Commercial property	418			401			827			793
General liability	444			437			881			869
Commercial multi-peril	776			773			1,541			1,548
Other	9			7			18			15
Total Business Insurance	3,018			2,860			5,960			5,736
Financial, Professional & International Insurance:
Fidelity and surety	228			236			448			459
General liability	221			210			434			417
International	258			278			516			544
Other	44			42			88			83
Total Financial, Professional & International Insurance	751			766			1,486			1,503
Personal Insurance:
Automobile	864			918			1,736			1,846
Homeowners and other	970			985			1,938			1,967
Total Personal Insurance	1,834			1,903			3,674			3,813
Total earned premiums	5,603			5,529			11,120			11,052
Net investment income	687			738			1,357			1,478
Fee income	82			59			179			141
Other revenues	134			29			170			70
Total operating revenues for reportable segments	6,506			6,355			12,826			12,741
Other revenues	1			—			(1		)	(4		)
Net realized investment gains	167			4			177			14
Total consolidated revenues	$	6,674		$	6,359		$	13,002		$	12,751
Income reconciliation, net of tax
Total operating income for reportable segments	$	875		$	561		$	1,825		$	1,430
Interest Expense and Other (1)	(59		)	(66		)	(122		)	(134		)
Total operating income	816			495			1,703			1,296
Net realized investment gains	109			4			118			9
Total consolidated net income	$	925		$	499		$	1,821		$	1,305

(1) The primary component of Interest Expense and Other is after-tax interest expense of $56 million and $63 million in the three months ended June 30, 2013 and 2012, respectively, and $116 million and $125 million in the six months ended June 30, 2013 and 2012, respectively.

(in millions)	June 30,2013		December 31,2012
Asset reconciliation:
Business Insurance	$	75,187	$	76,972
Financial, Professional & International Insurance	13,035		13,452
Personal Insurance	13,160		14,195
Total assets for reportable segments	101,382		104,619
Other assets (1)	518		319
Total consolidated assets	$	101,900	$	104,938

(1) The primary components of other assets at June 30, 2013 were deferred taxes and other intangible assets.  The primary component of other assets at December 31, 2012 was other intangible assets.

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Investments (tables)

6 Months Ended

Jun. 30, 2013

Investments disclosure

Amortized cost and fair value of investments in fixed maturities [Table Text Block]

	Amortized		Gross Unrealized				Fair
(at June 30, 2013, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,058	$	53	$	8	$	2,103
Obligations of states, municipalities and political subdivisions:
Pre-refunded	9,395		538		1		9,932
All other	26,224		1,215		303		27,136
Total obligations of states, municipalities and political subdivisions	35,619		1,753		304		37,068
Debt securities issued by foreign governments	2,039		44		4		2,079
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,410		197		12		2,595
All other corporate bonds	18,342		858		234		18,966
Redeemable preferred stock	26		6		—		32
Total	$	60,494	$	2,911	$	562	$	62,843

	Amortized		Gross Unrealized				Fair
(at December 31, 2012, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,148	$	75	$	1	$	2,222
Obligations of states, municipalities and political subdivisions:
Pre-refunded	8,458		567		—		9,025
All other	27,405		2,262		11		29,656
Total obligations of states, municipalities and political subdivisions	35,863		2,829		11		38,681
Debt securities issued by foreign governments	2,185		72		—		2,257
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,744		255		2		2,997
All other corporate bonds	17,863		1,360		20		19,203
Redeemable preferred stock	26		7		—		33
Total	$	60,829	$	4,598	$	34	$	65,393

Cost and fair value of investments in equity securities [Table Text Block]

			Gross Unrealized				Fair
(at June 30, 2013, in millions)	Cost		Gains		Losses		Value
Common stock	$	373	$	206	$	2	$	577
Non-redeemable preferred stock	90		34		—		124
Total	$	463	$	240	$	2	$	701

			Gross Unrealized				Fair
(at December 31, 2012, in millions)	Cost		Gains		Losses		Value
Common stock	$	366	$	148	$	4	$	510
Non-redeemable preferred stock	96		39		—		135
Total	$	462	$	187	$	4	$	645

Unrealized investment losses [Table Text Block]

	Less than 12 months				12 months or longer				Total
(at June 30, 2013, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	760	$	8	$	—	$	—	$	760	$	8
Obligations of states, municipalities and political subdivisions	4,585		303		29		1		4,614		304
Debt securities issued by foreign governments	551		4		—		—		551		4
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	425		10		23		2		448		12
All other corporate bonds	5,348		224		67		10		5,415		234
Total fixed maturities	11,669		549		119		13		11,788		562
Equity securities
Common stock	48		2		—		—		48		2
Non-redeemable preferred stock	36		—		—		—		36		—
Total equity securities	84		2		—		—		84		2
Total	$	11,753	$	551	$	119	$	13	$	11,872	$	564

	Less than 12 months				12 months or longer				Total
(at December 31, 2012, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	589	$	1	$	—	$	—	$	589	$	1
Obligations of states, municipalities and political subdivisions	611		9		45		2		656		11
Debt securities issued by foreign governments	186		—		2		—		188		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	70		—		36		2		106		2
All other corporate bonds	1,097		13		89		7		1,186		20
Total fixed maturities	2,553		23		172		11		2,725		34
Equity securities
Common stock	40		4		—		—		40		4
Non-redeemable preferred stock	13		—		—		—		13		—
Total equity securities	53		4		—		—		53		4
Total	$	2,606	$	27	$	172	$	11	$	2,778	$	38

Securities continuously in an unrealized loss position of greater than 20% of amortized cost by length of time [Table Text Block]

	Period For Which Fair Value Is Less Than 80% of Amortized Cost
(in millions)	3 Months or Less		Greater Than 3 Months, 6 Months or Less		Greater Than 6 Months, 12 Months or Less		Greater Than 12 Months		Total
Fixed maturities
Mortgage-backed securities	$	—	$	—	$	—	$	—	$	—
Other	2		—		—		4		6
Total fixed maturities	2		—		—		4		6
Equity securities	—		—		—		—		—
Total	$	2	$	—	$	—	$	4	$	6

Impairment charges included in net realized investment gains [Table Text Block]

	Three Months Ended  June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	—	$	—	$	—	$	—
Obligations of states, municipalities and political subdivisions	—		—		—		—
Debt securities issued by foreign governments	—		—		—		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1		2		2		3
All other corporate bonds	—		1		—		3
Redeemable preferred stock	—		—		—		—
Total fixed maturities	1		3		2		6
Equity securities
Common stock	1		—		1		—
Non-redeemable preferred stock	—		—		—		—
Total equity securities	1		—		1		—
Other investments	—		1		4		2
Total	$	2	$	4	$	7	$	8

Roll-forward of the credit component of other-than-temporary impairments on fixed maturities recognized in the consolidated statement of income for which a portion of the other-than-temporary impairment was recognized in other comprehensive income [Table Text Block]

	2013
(for the three months ended June 30, in millions )	Cumulative OTTI Credit Losses Recognized for Securities Held, Beginning of Period		Additions for OTTI Securities Where No Credit Losses Were Previously Recognized		Additions for OTTI Securities Where Credit Losses Have Been Previously Recognized		Reductions Due to Sales/Defaults of Credit- Impaired Securities		Adjustments to Book Value of Credit- Impaired Securities due to Changes in Cash Flows		Cumulative OTTI Credit Losses Recognized for Securities Still Held, End of Period
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	65	$	—	$	1	$	—	$	1	$	67
All other corporate bonds	103		—		—		—		1		104
Total fixed maturities	$	168	$	—	$	1	$	—	$	2	$	171

(for the six months ended June 30, in millions )
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	63	$	—	$	2	$	—	$	2	$	67
All other corporate bonds	102		—		—		—		2		104
Total fixed maturities	$	165	$	—	$	2	$	—	$	4	$	171

	2012
(for the three months ended June 30, in millions )	Cumulative OTTI Credit Losses Recognized for Securities Held, Beginning of Period		Additions for OTTI Securities Where No Credit Losses Were Previously Recognized		Additions for OTTI Securities Where Credit Losses Have Been Previously Recognized		Reductions Due to Sales/Defaults of Credit- Impaired Securities		Adjustments to Book Value of Credit- Impaired Securities due to Changes in Cash Flows		Cumulative OTTI Credit Losses Recognized for Securities Still Held, End of Period
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	59	$	—	$	2	$	—	$	—	$	61
All other corporate bonds	97		—		1		—		1		99
Total fixed maturities	$	156	$	—	$	3	$	—	$	1	$	160

(for the six months ended June 30, in millions )
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	58	$	—	$	3	$	—	$	—	$	61
All other corporate bonds	94		—		3		—		2		99
Total fixed maturities	$	152	$	—	$	6	$	—	$	2	$	160

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Pension Plans, Retirement Benefits and Savings Plans (details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Pension Plans [Member]
Defined benefit plan disclosure
Service cost	$ 30	$ 29	$ 59	$ 57
Interest cost on benefit obligation	33	34	66	69
Expected return on plan assets	(52)	(47)	(104)	(94)
Amortization of unrecognized net actuarial loss	26	23	53	45
Net periodic benefit cost, net benefit expense	37	39	74	77
Postretirement Benefit Plans [Member]
Defined benefit plan disclosure
Interest cost on benefit obligation	2	3	4	6
Expected return on plan assets		(1)		(1)
Amortization of unrecognized prior service benefit	(1)		(1)
Net periodic benefit cost, net benefit expense	$ 1	$ 2	$ 3	$ 5

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Share-Based Incentive Compensation

6 Months Ended

Jun. 30, 2013

Share-Based Incentive Compensation disclosure

Share-Based Incentive Compensation disclosure [Text Block]

10. SHARE-BASED INCENTIVE COMPENSATION

The following information relates to fully vested stock option awards at June 30, 2013:

Stock Options	Number	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining	AggregateIntrinsic Value($ in millions)
Vested at end of period (1)	8,658,131	$	52.58	5.9 years	$	237
Exercisable at end of period	5,743,635	$	46.80	4.6 years	$	190

(1) Represents awards for which the requisite service has been rendered, including those that are retirement eligible.

The total compensation cost for all share-based incentive compensation awards recognized in earnings was $29 million and $28 million for the three months ended June 30, 2013 and 2012, respectively, and $70 million and $66 million for the six months ended June 30, 2013 and 2012, respectively.  The related tax benefits recognized in the consolidated statement of income were $10 million for each of the three months ended June 30, 2013 and 2012, and $24 million and $23 million for the six months ended June 30, 2013 and 2012, respectively.

The total unrecognized compensation cost related to all nonvested share-based incentive compensation awards at June 30, 2013 was $166 million, which is expected to be recognized over a weighted-average period of 2.0 years. The total unrecognized compensation cost related to all nonvested share-based incentive compensation awards at December 31, 2012 was $112 million, which was expected to be recognized over a weighted-average period of 1.7 years.

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Other Comprehensive Income and Accumulated Other Comprehensive Income (details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Accumulated other comprehensive income [Roll Forward]
Accumulated other comprehensive income, net of tax, balance, beginning of year			$ 2,236	$ 2,005
Other comprehensive income (loss) before reclassifications			(1,515)
Amounts reclassified from accumulated other comprehensive income			(1)
Net other comprehensive income (loss), current period	(1,206)	91	(1,516)	125
Accumulated other comprehensive income, net of tax, balance, end of period	720	2,130	720	2,130
Changes in net unrealized gains on investment securities having no credit losses recognized in the consolidated statement of income	(1,790)	216	(2,166)	139
Changes in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income	(5)	5	4	30
Net changes in benefit plan assets and obligations	26	22	54	42
Net changes in unrealized foreign currency translation	(73)	(86)	(169)	(22)
Other comprehensive income (loss) before income taxes	(1,842)	157	(2,277)	189
Income tax expense (benefit), other comprehensive income (loss)	(636)	66	(761)	64
Changes in Net Unrealized Gains on Investment Securities Having No Credit Losses Recognized in the Consolidated Statement of Income [Member]
Accumulated other comprehensive income [Roll Forward]
Accumulated other comprehensive income, net of tax, balance, beginning of year			2,908
Other comprehensive income (loss) before reclassifications			(1,381)
Amounts reclassified from accumulated other comprehensive income			(33)
Net other comprehensive income (loss), current period	(1,169)	139	(1,414)	89
Accumulated other comprehensive income, net of tax, balance, end of period	1,494		1,494
Changes in net unrealized gains on investment securities having no credit losses recognized in the consolidated statement of income	(1,790)	216	(2,166)	139
Income tax expense (benefit), other comprehensive income (loss)	(621)	77	(752)	50
Changes in Net Unrealized Gains on Investment Securities Having Credit Losses Recognized in the Consolidated Statement of Income [Member]
Accumulated other comprehensive income [Roll Forward]
Accumulated other comprehensive income, net of tax, balance, beginning of year			195
Other comprehensive income (loss) before reclassifications			2
Amounts reclassified from accumulated other comprehensive income			1
Net other comprehensive income (loss), current period	(3)	4	3	20
Accumulated other comprehensive income, net of tax, balance, end of period	198		198
Changes in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income	(5)	5	4	30
Income tax expense (benefit), other comprehensive income (loss)	(2)	1	1	10
Net Benefit Plan Assets and Obligations Recognized in Shareholders' Equity [Member]
Accumulated other comprehensive income [Roll Forward]
Accumulated other comprehensive income, net of tax, balance, beginning of year			(857)
Other comprehensive income (loss) before reclassifications			1
Amounts reclassified from accumulated other comprehensive income			34
Net other comprehensive income (loss), current period	17	14	35	27
Accumulated other comprehensive income, net of tax, balance, end of period	(822)		(822)
Net changes in benefit plan assets and obligations	26	22	54	42
Income tax expense (benefit), other comprehensive income (loss)	9	8	19	15
Net Unrealized Foreign Currency Translation [Member]
Accumulated other comprehensive income [Roll Forward]
Accumulated other comprehensive income, net of tax, balance, beginning of year			(10)
Other comprehensive income (loss) before reclassifications			(137)
Amounts reclassified from accumulated other comprehensive income			(3)
Net other comprehensive income (loss), current period	(51)	(66)	(140)	(11)
Accumulated other comprehensive income, net of tax, balance, end of period	(150)		(150)
Net changes in unrealized foreign currency translation	(73)	(86)	(169)	(22)
Income tax expense (benefit), other comprehensive income (loss)	$ (22)	$ (20)	$ (29)	$ (11)

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Contingencies, Commitments and Guarantees (details) (USD $)	0 Months Ended	6 Months Ended	7 Months Ended
	Jun. 26, 2013	Jun. 30, 2013	Apr. 30, 2002 item	Mar. 08, 2013 item	Feb. 07, 2013 item	Dec. 31, 2012	Mar. 27, 2012 item	Jul. 26, 2011	Oct. 25, 2010 item	Mar. 22, 2010 item
Contingencies and Commitments disclosure
Number of purported class action suits filed against TPC and other insurers in state court in West Virginia relative to asbestos direct action litigation			2
Maximum lump-sum payment included in the settlement reached in November 2003 relative to Statutory and Hawaii Actions		$ 412,000,000
Maximum payment required under May 2004 settlement resolving substantially all pending and similar future Common Law Claims relative to Statutory and Hawaii Actions		90,000,000
Number of remaining objectors to which the notice of the 1986 Orders were deemed insufficient to bar contribution claims against TPC										1
Number of other reinsurers beside American Re against which judgment was entered in a reinsurance dispute									3
Judgment amount awarded to Company in reinsurance dispute		251,000,000							251,000,000
Interest amount awarded to Company in reinsurance dispute		231,000,000							169,000,000
Number of discrete issues modified in part by the summary judgment in reinsurance dispute					2
Number of issues on which reinsurers filed motions to reargue in reinsurance dispute				1
Total judgment amount awarded to Company in reinsurance dispute		482,000,000							420,000,000
Interest rate accruing on judgment against non-settling defendants		9.00%
Preliminary class settlement amount approved by court in workers' compensation matter, amount payable by defendants								450,000,000
Number of parties who objected to the settlement and filed notices of appeal in workers' compensation matter							3
Payment received from settlement fund in workers' compensation matter	91,000,000
Percentage of Company's allocated settlement received in workers' compensation matter	98.00%
Approximate amount anticipated for receipt from settlement fund in workers' compensation matter	2,000,000
Percentage of Company's allocated settlement still to be paid in workers' compensation matter	2.00%
Unfunded commitments to private equity limited partnerships and real estate partnerships		$ 1,400,000,000				$ 1,270,000,000

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Investments (details) - Impairment Charges (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Impairment charges
Impairment charges	$ 2	$ 4	$ 7	$ 8
Fixed maturities [Member]
Impairment charges
Impairment charges	1	3	2	6
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member]
Impairment charges
Impairment charges	1	2	2	3
All other corporate bonds [Member]
Impairment charges
Impairment charges		1		3
Equity securities [Member]
Impairment charges
Impairment charges	1		1
Equity securities, common stock [Member]
Impairment charges
Impairment charges	1		1
Other investments [Member]
Impairment charges
Impairment charges		$ 1	$ 4	$ 2

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Other Comprehensive Income and Accumulated Other Comprehensive Income (tables)

6 Months Ended

Jun. 30, 2013

Other Comprehensive Income and Accumulated Other Comprehensive Income disclosure

Changes in accumulated other comprehensive income (AOCI) [Table Text Block]

(in millions)	Changes in Net  Unrealized Gains on Investment Securities Having No Credit Losses  Recognized in the  Consolidated Statement of Income			Changes in Net  Unrealized Gains on Investment Securities Having Credit Losses Recognized in the Consolidated Statement of Income		Net Benefit Plan  Assets and Obligations  Recognized in  Shareholders’ Equity			Net Unrealized Foreign Currency Translation			Total Accumulated  Other Comprehensive Income
Balance, December 31, 2012	$	2,908		$	195	$	(857	)	$	(10	)	$	2,236
Other comprehensive income (loss) (OCI) before reclassifications	(1,381		)	2		1			(137		)	(1,515		)
Amounts reclassified from AOCI	(33		)	1		34			(3		)	(1		)
Net OCI, current period	(1,414		)	3		35			(140		)	(1,516		)
Balance, June 30, 2013	$	1,494		$	198	$	(822	)	$	(150	)	$	720

Pretax components of the amounts reclassified from accumulated other comprehensive income and the related income tax expense (benefit) for each component [Table Text Block]

(in millions)	Three Months Ended June 30, 2013			Six MonthsEnded June 30, 2013
Reclassification adjustments related to unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)	$	(34	)	$	(51	)
Income tax expense (2)	(12		)	(18		)
Net of taxes	(22		)	(33		)
Having credit losses recognized in the consolidated statement of income (1)	1			2
Income tax benefit (2)	1			1
Net of taxes	—			1
Reclassification adjustment related to benefit plan assets and obligations (3)	25			52
Income tax benefit (2)	8			18
Net of taxes	17			34
Reclassification adjustment related to foreign currency translation (1)	—			(3		)
Income tax benefit (2)	—			—
Net of taxes	—			(3		)
Total reclassifications	(8		)	—
Total income tax (expense) benefit	(3		)	1
Total reclassifications, net of taxes	$	(5	)	$	(1	)

(1) (Increases) decreases net realized investment gains on the consolidated statement of income.

(2) (Increases) decreases income tax expense on the consolidated statement of income.

(3) Increases (decreases) general and administrative expenses on the consolidated statement of income.

Pretax components of other comprehensive income (loss) and the related income tax expense (benefit) for each component [Table Text Block]

(for the three months ended June 30, in millions)	2013			2012
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	(1,790	)	$	216
Income tax expense (benefit)	(621		)	77
Net of taxes	(1,169		)	139
Having credit losses recognized in the consolidated statement of income	(5		)	5
Income tax expense (benefit)	(2		)	1
Net of taxes	(3		)	4
Net changes in benefit plan assets and obligations	26			22
Income tax expense	9			8
Net of taxes	17			14
Net changes in unrealized foreign currency translation	(73		)	(86		)
Income tax benefit	(22		)	(20		)
Net of taxes	(51		)	(66		)
Total other comprehensive income (loss)	(1,842		)	157
Total income tax expense (benefit)	(636		)	66
Total other comprehensive income (loss), net of taxes	$	(1,206	)	$	91

(for the six months ended June 30, in millions)	2013			2012
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	(2,166	)	$	139
Income tax expense (benefit)	(752		)	50
Net of taxes	(1,414		)	89
Having credit losses recognized in the consolidated statement of income	4			30
Income tax expense	1			10
Net of taxes	3			20
Net changes in benefit plan assets and obligations	54			42
Income tax expense	19			15
Net of taxes	35			27
Net changes in unrealized foreign currency translation	(169		)	(22		)
Income tax benefit	(29		)	(11		)
Net of taxes	(140		)	(11		)
Total other comprehensive income (loss)	(2,277		)	189
Total income tax expense (benefit)	(761		)	64
Total other comprehensive income (loss), net of taxes	$	(1,516	)	$	125

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Goodwill and Other Intangible Assets (tables)

6 Months Ended

Jun. 30, 2013

Goodwill and Other Intangible Assets disclosure

Goodwill by segment [Table Text Block]

(in millions)	June 30,2013		December 31, 2012
Business Insurance	$	2,168	$	2,168
Financial, Professional & International Insurance	557		557
Personal Insurance	613		613
Other	27		27
Total	$	3,365	$	3,365

Other intangible assets by major asset class [Table Text Block]

(at June 30, 2013, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Intangibles subject to amortization
Customer-related	$	455	$	398	$	57
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables (1)	191		106		85
Total intangible assets subject to amortization	646		504		142
Intangible assets not subject to amortization	216		—		216
Total other intangible assets	$	862	$	504	$	358

(at December 31, 2012, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Intangibles subject to amortization
Customer-related	$	455	$	383	$	72
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables (1)	191		98		93
Total intangible assets subject to amortization	646		481		165
Intangible assets not subject to amortization	216		—		216
Total other intangible assets	$	862	$	481	$	381

(1)    The time value of money and the risk margin (cost of capital) components of the intangible asset run off at different rates, and, as such, the amount recognized in income may be a net benefit in some periods and a net expense in other periods.

Amortization expense for other intangible assets by major asset class [Table Text Block]

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Customer-related	$	8	$	7	$	15	$	18
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables	4		5		8		10
Total amortization expense	$	12	$	12	$	23	$	28

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Goodwill (details) - Goodwill by Segment (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Goodwill by segment
Goodwill	$ 3,365	$ 3,365
Reportable Segments [Member] | Business Insurance [Member]
Goodwill by segment
Goodwill	2,168	2,168
Reportable Segments [Member] | Financial, Professional & International Insurance [Member]
Goodwill by segment
Goodwill	557	557
Reportable Segments [Member] | Personal Insurance [Member]
Goodwill by segment
Goodwill	613	613
Other [Member]
Goodwill by segment
Goodwill	$ 27	$ 27

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Segment Information (details) (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Segment reporting information
Premiums	$ 5,603		$ 5,529		$ 11,120		$ 11,052
Net investment income	687		738		1,357		1,478
Fee income	82		59		179		141
Other revenues	135		29		169		66
Operating income	816		495		1,703		1,296
Net realized investment gains	167	[1]	4	[1]	177	[1]	14	[1]
Total revenues	6,674		6,359		13,002		12,751
Net realized investment gains, net of tax	109		4		118		9
Net income	925		499		1,821		1,305
Reportable Segments [Member]
Segment reporting information
Premiums	5,603		5,529		11,120		11,052
Net investment income	687		738		1,357		1,478
Fee income	82		59		179		141
Other revenues	134		29		170		70
Total operating revenues	6,506		6,355		12,826		12,741
Operating income	875		561		1,825		1,430
Reportable Segments [Member] | Business Insurance [Member]
Segment reporting information
Premiums	3,018		2,860		5,960		5,736
Net investment income	502		536		989		1,068
Fee income	82		58		179		140
Other revenues	114		8		127		22
Total operating revenues	3,716		3,462		7,255		6,966
Operating income	579		362		1,169		974
Reportable Segments [Member] | Business Insurance [Member] | Workers' compensation [Member]
Segment reporting information
Premiums	897		754		1,744		1,537
Reportable Segments [Member] | Business Insurance [Member] | Automobile [Member]
Segment reporting information
Premiums	474		488		949		974
Reportable Segments [Member] | Business Insurance [Member] | Commercial Property [Member]
Segment reporting information
Premiums	418		401		827		793
Reportable Segments [Member] | Business Insurance [Member] | General Liability [Member]
Segment reporting information
Premiums	444		437		881		869
Reportable Segments [Member] | Business Insurance [Member] | Commercial multi-peril [Member]
Segment reporting information
Premiums	776		773		1,541		1,548
Reportable Segments [Member] | Business Insurance [Member] | Other [Member]
Segment reporting information
Premiums	9		7		18		15
Reportable Segments [Member] | Financial, Professional & International Insurance [Member]
Segment reporting information
Premiums	751		766		1,486		1,503
Net investment income	91		99		183		203
Fee income			1				1
Other revenues	5		5		10		13
Total operating revenues	847		871		1,679		1,720
Operating income	154		182		317		331
Reportable Segments [Member] | Financial, Professional & International Insurance [Member] | General Liability [Member]
Segment reporting information
Premiums	221		210		434		417
Reportable Segments [Member] | Financial, Professional & International Insurance [Member] | Other [Member]
Segment reporting information
Premiums	44		42		88		83
Reportable Segments [Member] | Financial, Professional & International Insurance [Member] | Fidelity and surety [Member]
Segment reporting information
Premiums	228		236		448		459
Reportable Segments [Member] | Financial, Professional & International Insurance [Member] | International [Member]
Segment reporting information
Premiums	258		278		516		544
Reportable Segments [Member] | Personal Insurance [Member]
Segment reporting information
Premiums	1,834		1,903		3,674		3,813
Net investment income	94		103		185		207
Other revenues	15		16		33		35
Total operating revenues	1,943		2,022		3,892		4,055
Operating income	142		17		339		125
Reportable Segments [Member] | Personal Insurance [Member] | Automobile [Member]
Segment reporting information
Premiums	864		918		1,736		1,846
Reportable Segments [Member] | Personal Insurance [Member] | Homeowners and other [Member]
Segment reporting information
Premiums	970		985		1,938		1,967
Interest Expense & Other [Member]
Segment reporting information
Other revenues	1				(1)		(4)
Operating income	(59)		(66)		(122)		(134)
After-tax interest expense	$ 56		$ 63		$ 116		$ 125

[1] Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $11 million for the three months ended June 30, 2013 and 2012, respectively, and $(1) million and $11 million for the six months ended June 30, 2013 and 2012, respectively. Of total OTTI, credit losses of $(2) million and $(4) million for the three months ended June 30, 2013 and 2012, respectively, and $(7) million and $(8) million for the six months ended June 30, 2013 and 2012, respectively, were recognized in net realized investment gains. In addition, unrealized gains from other changes in total OTTI of $1 million and $15 million for the three months ended June 30, 2013 and 2012, respectively, and $6 million and $19 million for the six months ended June 30, 2013 and 2012, respectively, were recognized in other comprehensive income as part of change in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income.

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Investments (details) - Derivatives (USD $)	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012		Mar. 31, 2013	Dec. 31, 2012
Derivative
Net realized investment gain (loss)	$ 167,000,000	[1]	$ 4,000,000	[1]	$ 177,000,000	[1]	$ 14,000,000	[1]
Futures [Member] | U.S. Treasury notes contracts [Member]
Derivative
Notional value of open contracts	0				0				2,000,000,000	800,000,000
Net realized investment gain (loss)	134,000,000		(13,000,000)		115,000,000		(7,000,000)
Futures [Member] | U.S. Treasury notes contracts [Member] | Maxiumum [Member]
Derivative
Notional value of open contracts	$ 2,700,000,000				$ 2,700,000,000

[1] Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $11 million for the three months ended June 30, 2013 and 2012, respectively, and $(1) million and $11 million for the six months ended June 30, 2013 and 2012, respectively. Of total OTTI, credit losses of $(2) million and $(4) million for the three months ended June 30, 2013 and 2012, respectively, and $(7) million and $(8) million for the six months ended June 30, 2013 and 2012, respectively, were recognized in net realized investment gains. In addition, unrealized gains from other changes in total OTTI of $1 million and $15 million for the three months ended June 30, 2013 and 2012, respectively, and $6 million and $19 million for the six months ended June 30, 2013 and 2012, respectively, were recognized in other comprehensive income as part of change in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income.

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Other Comprehensive Income and Accumulated Other Comprehensive Income (details) - Reclassifications (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Income tax (expense) benefit	$ 252	$ 109	$ 576	$ 380
Amounts reclassified from accumulated other comprehensive income, net of taxes			(1)
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive income, before tax	(8)
Income tax (expense) benefit	(3)		1
Amounts reclassified from accumulated other comprehensive income, net of taxes	(5)		(1)
Changes in Net Unrealized Gains on Investment Securities Having No Credit Losses Recognized in the Consolidated Statement of Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive income, net of taxes			(33)
Changes in Net Unrealized Gains on Investment Securities Having No Credit Losses Recognized in the Consolidated Statement of Income [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive income, before tax	(34)		(51)
Income tax (expense) benefit	(12)		(18)
Amounts reclassified from accumulated other comprehensive income, net of taxes	(22)		(33)
Changes in Net Unrealized Gains on Investment Securities Having Credit Losses Recognized in the Consolidated Statement of Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive income, net of taxes			1
Changes in Net Unrealized Gains on Investment Securities Having Credit Losses Recognized in the Consolidated Statement of Income [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive income, before tax	1		2
Income tax (expense) benefit	1		1
Amounts reclassified from accumulated other comprehensive income, net of taxes			1
Net Benefit Plan Assets and Obligations Recognized in Shareholders' Equity [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive income, net of taxes			34
Net Benefit Plan Assets and Obligations Recognized in Shareholders' Equity [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive income, before tax	25		52
Income tax (expense) benefit	8		18
Amounts reclassified from accumulated other comprehensive income, net of taxes	17		34
Net Unrealized Foreign Currency Translation [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive income, net of taxes			(3)
Net Unrealized Foreign Currency Translation [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income
Amounts reclassified from accumulated other comprehensive income, before tax			(3)
Amounts reclassified from accumulated other comprehensive income, net of taxes			$ (3)

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Consolidating Financial Statements (Unaudited) (tables)

6 Months Ended

Jun. 30, 2013

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

Consolidating Statement of Income (Unaudited) [Table Text Block]

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended June 30, 2013

(in millions)	TPC		OtherSubsidiaries		Travelers (2)			Eliminations			Consolidated
Revenues
Premiums	$	3,804	$	1,799	$	—		$	—		$	5,603
Net investment income	457		229		1			—			687
Fee income	82		—		—			—			82
Net realized investment gains (1)	124		43		—			—			167
Other revenues	103		32		—			—			135
Total revenues	4,570		2,103		1			—			6,674
Claims and expenses
Claims and claim adjustment expenses	2,339		1,191		—			—			3,530
Amortization of deferred acquisition costs	635		315		—			—			950
General and administrative expenses	639		289		3			—			931
Interest expense	12		—		74			—			86
Total claims and expenses	3,625		1,795		77			—			5,497
Income (loss) before income taxes	945		308		(76		)	—			1,177
Income tax expense (benefit)	203		77		(28		)	—			252
Net income of subsidiaries	—		—		973			(973		)	—
Net income	$	742	$	231	$	925		$	(973	)	$	925

(1) Total other-than-temporary impairment (OTTI) for the three months ended June 30, 2013, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains (losses)	$	(1	)	$	—		$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains	$	(1	)	$	(1	)	$	—	$	—	$	(2	)
OTTI gains recognized in OCI	$	—		$	1		$	—	$	—	$	1

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended June 30, 2012

(in millions)	TPC		OtherSubsidiaries		Travelers (2)			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 (1)	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
Net income of subsidiaries	—		—		539			(539		)	—
Net income	$	394	$	145	$	499		$	(539	)	$	499

(1) Total other-than-temporary impairment (OTTI) for the three months ended June 30, 2012, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains (losses)	$	(1	)	$	12		$	—	$	—	$	11
OTTI losses recognized in net realized investment gains	$	(3	)	$	(1	)	$	—	$	—	$	(4	)
OTTI gains recognized in OCI	$	2		$	13		$	—	$	—	$	15

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the six months ended June 30, 2013

(in millions)	TPC		OtherSubsidiaries		Travelers (2)			Eliminations			Consolidated
Revenues
Premiums	$	7,545	$	3,575	$	—		$	—		$	11,120
Net investment income	912		442		3			—			1,357
Fee income	178		1		—			—			179
Net realized investment gains (1)	117		59		1			—			177
Other revenues	132		37		—			—			169
Total revenues	8,884		4,114		4			—			13,002
Claims and expenses
Claims and claim adjustment expenses	4,470		2,213		—			—			6,683
Amortization of deferred acquisition costs	1,272		626		—			—			1,898
General and administrative expenses	1,269		575		2			—			1,846
Interest expense	29		—		149			—			178
Total claims and expenses	7,040		3,414		151			—			10,605
Income (loss) before income taxes	1,844		700		(147		)	—			2,397
Income tax expense (benefit)	452		176		(52		)	—			576
Net income of subsidiaries	—		—		1,916			(1,916		)	—
Net income	$	1,392	$	524	$	1,821		$	(1,916	)	$	1,821

(1) Total other-than-temporary impairment (OTTI) for the six months ended June 30, 2013, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains (losses)	$	(4	)	$	3		$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains	$	(5	)	$	(2	)	$	—	$	—	$	(7	)
OTTI gains recognized in OCI	$	1		$	5		$	—	$	—	$	6

(2) 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 (2)			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) (1)	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
Net income of subsidiaries	—		—			1,406			(1,406		)	—
Net income	$	1,012	$	394		$	1,305		$	(1,406	)	$	1,305

(1) Total other-than-temporary impairment (OTTI) for the six months ended June 30, 2012, and the amounts comprising total OTTI that were recognized in net realized investment gains (losses) and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains	$	—		$	11		$	—	$	—	$	11
OTTI losses recognized in net realized investment gains (losses)	$	(6	)	$	(2	)	$	—	$	—	$	(8	)
OTTI gains recognized in OCI	$	6		$	13		$	—	$	—	$	19

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

Consolidating Statement of Comprehensive Income (Loss) (Unaudited) [Table Text Block]

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For the three months ended June 30, 2013

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Net income	$	742		$	231		$	925		$	(973	)	$	925
Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(1,282		)	(509		)	1			—			(1,790		)
Having credit losses recognized in the consolidated statement of income	(2		)	(3		)	—			—			(5		)
Net changes in benefit plan assets and obligations	—			1			25			—			26
Net changes in unrealized foreign currency translation	(51		)	(22		)	—			—			(73		)
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(1,335		)	(533		)	26			—			(1,842		)
Income tax expense (benefit)	(462		)	(183		)	9			—			(636		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(873		)	(350		)	17			—			(1,206		)
Other comprehensive loss of subsidiaries	—			—			(1,223		)	1,223			—
Other comprehensive loss	(873		)	(350		)	(1,206		)	1,223			(1,206		)
Comprehensive loss	$	(131	)	$	(119	)	$	(281	)	$	250		$	(281	)

(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:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	167			52			(3		)	—			216
Having credit losses recognized in the consolidated statement of income	5			—			—			—			5
Net changes in benefit plan assets and obligations	—			1			21			—			22
Net changes in unrealized foreign currency translation	(54		)	(32		)	—			—			(86		)
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	118			21			18			—			157
Income tax expense	43			16			7			—			66
Other comprehensive income net of taxes, before other comprehensive income of subsidiaries	75			5			11			—			91
Other comprehensive income of subsidiaries	—			—			80			(80		)	—
Other comprehensive income	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 six months ended June 30, 2013

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Net income	$	1,392		$	524		$	1,821		$	(1,916	)	$	1,821
Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(1,597		)	(576		)	7			—			(2,166		)
Having credit losses recognized in the consolidated statement of income	5			(1		)	—			—			4
Net changes in benefit plan assets and obligations	1			3			50			—			54
Net changes in unrealized foreign currency translation	(61		)	(108		)	—			—			(169		)
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(1,652		)	(682		)	57			—			(2,277		)
Income tax expense (benefit)	(570		)	(211		)	20			—			(761		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(1,082		)	(471		)	37			—			(1,516		)
Other comprehensive loss of subsidiaries	—			—			(1,553		)	1,553			—
Other comprehensive loss	(1,082		)	(471		)	(1,516		)	1,553			(1,516		)
Comprehensive income	$	310		$	53		$	305		$	(363	)	$	305

(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:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	113			20		6		—			139
Having credit losses recognized in the consolidated statement of income	21			9		—		—			30
Net changes in benefit plan assets and obligations	—			—		42		—			42
Net changes in unrealized foreign currency translation	(33		)	11		—		—			(22		)
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	101			40		48		—			189
Income tax expense	36			11		17		—			64
Other comprehensive income, net of taxes, before other comprehensive income of subsidiaries	65			29		31		—			125
Other comprehensive income of subsidiaries	—			—		94		(94		)	—
Other comprehensive income	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 Balance Sheet (Unaudited) [Table Text Block]

CONSOLIDATING BALANCE SHEET (Unaudited)

At June 30, 2013

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,494)	$	43,198	$	19,607	$	38		$	—		$	62,843
Equity securities, available for sale, at fair value (cost $463)	153		433		115			—			701
Real estate investments	32		889		—			—			921
Short-term securities	1,369		252		1,773			—			3,394
Other investments	2,431		976		1			—			3,408
Total investments	47,183		22,157		1,927			—			71,267
Cash	152		155		1			—			308
Investment income accrued	498		232		4			—			734
Premiums receivable	4,196		2,072		—			—			6,268
Reinsurance recoverables	6,468		3,419		—			—			9,887
Ceded unearned premiums	736		177		—			—			913
Deferred acquisition costs	1,567		235		—			—			1,802
Deferred taxes	100		53		104			—			257
Contractholder receivables	3,231		1,217		—			—			4,448
Goodwill	2,411		954		—			—			3,365
Other intangible assets	253		105		—			—			358
Investment in subsidiaries	—		—		28,358			(28,358		)	—
Other assets	1,983		32		278			—			2,293
Total assets	$	68,778	$	30,808	$	30,672		$	(28,358	)	$	101,900
Liabilities
Claims and claim adjustment expense reserves	$	32,681	$	16,939	$	—		$	—		$	49,620
Unearned premium reserves	7,935		3,622		—			—			11,557
Contractholder payables	3,231		1,217		—			—			4,448
Payables for reinsurance premiums	183		212		—			—			395
Debt	692		—		5,160			—			5,852
Other liabilities	3,817		689		632			—			5,138
Total liabilities	48,539		22,679		5,792			—			77,010
Shareholders’ equity
Common stock (1,750.0 shares authorized; 373.5 shares issued and outstanding)	—		390		21,367			(390		)	21,367
Additional paid-in capital	11,635		6,501		—			(18,136		)	—
Retained earnings	7,580		786		22,796			(8,356		)	22,806
Accumulated other comprehensive income	1,024		452		720			(1,476		)	720
Treasury stock, at cost (380.3 shares)	—		—		(20,003		)	—			(20,003		)
Total shareholders’ equity	20,239		8,129		24,880			(28,358		)	24,890
Total liabilities and shareholders’ equity	$	68,778	$	30,808	$	30,672		$	(28,358	)	$	101,900

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

CONSOLIDATING BALANCE SHEET (Unaudited)

At December 31, 2012

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,829)	$	44,336	$	21,019	$	38		$	—		$	65,393
Equity securities, available for sale, at fair value (cost $462)	153		386		106			—			645
Real estate investments	33		850		—			—			883
Short-term securities	1,187		338		1,958			—			3,483
Other investments	2,443		990		1			—			3,434
Total investments	48,152		23,583		2,103			—			73,838
Cash	177		151		2			—			330
Investment income accrued	507		240		5			—			752
Premiums receivable	3,944		1,928		—			—			5,872
Reinsurance recoverables	7,112		3,600		—			—			10,712
Ceded unearned premiums	698		158		—			—			856
Deferred acquisition costs	1,560		232		—			—			1,792
Contractholder receivables	3,540		1,266		—			—			4,806
Goodwill	2,411		954		—			—			3,365
Other intangible assets	268		113		—			—			381
Investment in subsidiaries	—		—		28,562			(28,562		)	—
Other assets	1,930		286		18			—			2,234
Total assets	$	70,299	$	32,511	$	30,690		$	(28,562	)	$	104,938
Liabilities
Claims and claim adjustment expense reserves	$	33,598	$	17,324	$	—		$	—		$	50,922
Unearned premium reserves	7,751		3,490		—			—			11,241
Contractholder payables	3,540		1,266		—			—			4,806
Payables for reinsurance premiums	151		195		—			—			346
Deferred taxes	316		123		(101		)	—			338
Debt	1,191		—		5,159			—			6,350
Other liabilities	4,107		1,186		237			—			5,530
Total liabilities	50,654		23,584		5,295			—			79,533
Shareholders’ equity
Common stock (1,750.0 shares authorized; 377.4 shares issued and outstanding)	—		390		21,161			(390		)	21,161
Additional paid-in capital	11,135		6,501		—			(17,636		)	—
Retained earnings	6,404		1,113		21,342			(7,507		)	21,352
Accumulated other comprehensive income	2,106		923		2,236			(3,029		)	2,236
Treasury stock, at cost (372.3 shares)	—		—		(19,344		)	—			(19,344		)
Total shareholders’ equity	19,645		8,927		25,395			(28,562		)	25,405
Total liabilities and shareholders’ equity	$	70,299	$	32,511	$	30,690		$	(28,562	)	$	104,938

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

Consolidating Statement of Cash Flows (Unaudited) [Table Text Block]

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the six months ended June 30, 2013

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	1,392		$	524		$	1,821		$	(1,916	)	$	1,821
Net adjustments to reconcile net income to net cash provided by operating activities	(807		)	37			(1,148		)	1,349			(569		)
Net cash provided by operating activities	585			561			673			(567		)	1,252
Cash flows from investing activities
Proceeds from maturities of fixed maturities	2,570			1,330			1			—			3,901
Proceeds from sales of investments:
Fixed maturities	300			267			5			—			572
Equity securities	18			32			—			—			50
Other investments	224			157			—			—			381
Purchases of investments:
Fixed maturities	(3,062		)	(1,419		)	(7		)	—			(4,488		)
Equity securities	(15		)	(24		)	(1		)	—			(40		)
Real estate investments	—			(59		)	—			—			(59		)
Other investments	(150		)	(59		)	—			—			(209		)
Net sales (purchases) of short-term securities	(182		)	78			185			—			81
Securities transactions in course of settlement	59			1			—			—			60
Other	(155		)	(2		)	—			—			(157		)
Net cash provided by (used in) investing activities	(393		)	302			183			—			92
Cash flows from financing activities
Payment of debt	(500		)	—			—			—			(500		)
Dividends paid to shareholders	—			—			(366		)	—			(366		)
Issuance of common stock — employee share options	—			—			139			—			139
Treasury stock acquired — share repurchase authorization	—			—			(600		)	—			(600		)
Treasury stock acquired — net employee share-based compensation	—			—			(59		)	—			(59		)
Excess tax benefits from share-based payment arrangements	—			—			29			—			29
Capital contributions	500			—			—			(500		)	—
Dividends paid to parent company	(217		)	(850		)	—			1,067			—
Net cash used in financing activities	(217		)	(850		)	(857		)	567			(1,357		)
Effect of exchange rate changes on cash	—			(9		)	—			—			(9		)
Net increase (decrease) in cash	(25		)	4			(1		)	—			(22		)
Cash at beginning of year	177			151			2			—			330
Cash at end of period	$	152		$	155		$	1		$	—		$	308
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	479		$	178		$	(162	)	$	—		$	495
Interest paid	$	36		$	—		$	148		$	—		$	184

(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 investments	—			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 investments	—			(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 stock acquired — share repurchase authorization	—			—			(707		)	—			(707		)
Treasury stock 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.

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Consolidating Financial Statements (details) - Consolidating Statement of Cash Flows (Unaudited) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Consolidating Statement of Cash Flows
Net income	$ 1,821	$ 1,305
Net adjustments to reconcile net income to net cash provided by operating activities	(569)	(40)
Net cash provided by operating activities	1,252	1,265
Proceeds from maturities of fixed maturities	3,901	4,167
Proceeds from sales of investments, fixed maturities	572	542
Proceeds from sales of investments, equity securities	50	22
Proceeds from sales of investments, real estate investments		3
Proceeds from sales of investments, other investments	381	386
Purchases of investments, fixed maturities	(4,488)	(5,200)
Purchases of investments, equity securities	(40)	(33)
Purchases of investments, real estate investments	(59)	(58)
Purchases of investments, other investments	(209)	(221)
Net sales (purchases) of short-term securities	81	367
Securities transactions in course of settlement	60	77
Other investing activities	(157)	(133)
Net cash provided by (used in) investing activities	92	(81)
Payment of debt	(500)	(258)
Dividends paid to shareholders	(366)	(341)
Issuance of common stock - employee share options	139	170
Treasury stock acquired - share repurchase authorization	(600)	(707)
Treasury stock acquired - net employee share-based compensation	(59)	(52)
Excess tax benefits from share-based payment arrangements	29	19
Net cash used in financing activities	(1,357)	(1,169)
Effect of exchange rate changes on cash	(9)	1
Net increase (decrease) in cash	(22)	16
Cash at beginning of year	330	214
Cash at end of period	308	230
Income taxes paid (received)	495	296
Interest paid	184	191
TPC [Member]
Consolidating Statement of Cash Flows
Net income	1,392	1,012
Net adjustments to reconcile net income to net cash provided by operating activities	(807)	109
Net cash provided by operating activities	585	1,121
Proceeds from maturities of fixed maturities	2,570	2,817
Proceeds from sales of investments, fixed maturities	300	368
Proceeds from sales of investments, equity securities	18	15
Proceeds from sales of investments, other investments	224	297
Purchases of investments, fixed maturities	(3,062)	(3,744)
Purchases of investments, equity securities	(15)	(2)
Purchases of investments, other investments	(150)	(139)
Net sales (purchases) of short-term securities	(182)	(176)
Securities transactions in course of settlement	59	87
Other investing activities	(155)	(144)
Net cash provided by (used in) investing activities	(393)	(621)
Payment of debt	(500)
Capital contributions	500
Dividends paid to parent company	(217)	(504)
Net cash used in financing activities	(217)	(504)
Net increase (decrease) in cash	(25)	(4)
Cash at beginning of year	177	114
Cash at end of period	152	110
Income taxes paid (received)	479	286
Interest paid	36	36
Other Subsidiaries [Member]
Consolidating Statement of Cash Flows
Net income	524	394
Net adjustments to reconcile net income to net cash provided by operating activities	37	(283)
Net cash provided by operating activities	561	111
Proceeds from maturities of fixed maturities	1,330	1,350
Proceeds from sales of investments, fixed maturities	267	173
Proceeds from sales of investments, equity securities	32	7
Proceeds from sales of investments, real estate investments		3
Proceeds from sales of investments, other investments	157	89
Purchases of investments, fixed maturities	(1,419)	(1,454)
Purchases of investments, equity securities	(24)	(30)
Purchases of investments, real estate investments	(59)	(58)
Purchases of investments, other investments	(59)	(82)
Net sales (purchases) of short-term securities	78	115
Securities transactions in course of settlement	1	(10)
Other investing activities	(2)	11
Net cash provided by (used in) investing activities	302	114
Dividends paid to parent company	(850)	(208)
Net cash used in financing activities	(850)	(208)
Effect of exchange rate changes on cash	(9)	1
Net increase (decrease) in cash	4	18
Cash at beginning of year	151	98
Cash at end of period	155	116
Income taxes paid (received)	178	113
Travelers [Member]
Consolidating Statement of Cash Flows
Net income	1,821	1,305
Net adjustments to reconcile net income to net cash provided by operating activities	(1,148)	(560)
Net cash provided by operating activities	673	745
Proceeds from maturities of fixed maturities	1
Proceeds from sales of investments, fixed maturities	5	1
Purchases of investments, fixed maturities	(7)	(2)
Purchases of investments, equity securities	(1)	(1)
Net sales (purchases) of short-term securities	185	428
Net cash provided by (used in) investing activities	183	426
Payment of debt		(258)
Dividends paid to shareholders	(366)	(341)
Issuance of common stock - employee share options	139	170
Treasury stock acquired - share repurchase authorization	(600)	(707)
Treasury stock acquired - net employee share-based compensation	(59)	(52)
Excess tax benefits from share-based payment arrangements	29	19
Net cash used in financing activities	(857)	(1,169)
Net increase (decrease) in cash	(1)	2
Cash at beginning of year	2	2
Cash at end of period	1	4
Income taxes paid (received)	(162)	(103)
Interest paid	148	155
Eliminations [Member]
Consolidating Statement of Cash Flows
Net income	(1,916)	(1,406)
Net adjustments to reconcile net income to net cash provided by operating activities	1,349	694
Net cash provided by operating activities	(567)	(712)
Capital contributions	(500)
Dividends paid to parent company	1,067	712
Net cash used in financing activities	$ 567	$ 712

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Fair Value Measurements (details) - Changes in Level 3 (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Changes in Level 3 fair value category [Roll Forward]
Level 3 fair value category, beginning balance	$ 303	$ 284	$ 294
Level 3 fair value category, total realized and unrealized investment gains (losses) reported in net realized investment gains	14	15	9
Level 3 fair value category, total unrealized investment gains (losses) reported in increases (decreases) in other comprehensive income	(15)	(3)	7
Level 3 fair value category purchases	35	77	82
Level 3 fair value category sales	(41)	(57)
Level 3 fair value category settlements/maturities	(27)	(47)	(94)
Gross transfers into Level 3	13	13	10
Gross transfers out of Level 3	(24)	(24)	(24)
Level 3 fair value category, ending balance	258	258	284
Fixed maturities [Member]
Changes in Level 3 fair value category [Roll Forward]
Level 3 fair value category, beginning balance	254	230	250
Level 3 fair value category, total realized and unrealized investment gains (losses) reported in net realized investment gains	1	2	4
Level 3 fair value category, total unrealized investment gains (losses) reported in increases (decreases) in other comprehensive income	(3)	(2)	5
Level 3 fair value category purchases	35	77	79
Level 3 fair value category sales	(24)	(24)
Level 3 fair value category settlements/maturities	(27)	(47)	(94)
Gross transfers into Level 3	13	13	10
Gross transfers out of Level 3	(24)	(24)	(24)
Level 3 fair value category, ending balance	225	225	230
Other investments [Member]
Changes in Level 3 fair value category [Roll Forward]
Level 3 fair value category, beginning balance	49	54	44
Level 3 fair value category, total realized and unrealized investment gains (losses) reported in net realized investment gains	13	13	5
Level 3 fair value category, total unrealized investment gains (losses) reported in increases (decreases) in other comprehensive income	(12)	(1)	2
Level 3 fair value category purchases			3
Level 3 fair value category sales	(17)	(33)
Level 3 fair value category, ending balance	$ 33	$ 33	$ 54

XML

Fair Value Measurements (tables)

6 Months Ended

Jun. 30, 2013

Fair Value Measurements disclosure

Level within the fair value hierarchy at which the Company's financial assets and financial liabilities are measured [Table Text Block]

(at June 30, 2013, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,103	$	2,086	$	17	$	—
Obligations of states, municipalities and political subdivisions	37,068		—		37,042		26
Debt securities issued by foreign governments	2,079		—		2,079		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,595		—		2,590		5
All other corporate bonds	18,966		—		18,772		194
Redeemable preferred stock	32		—		32		—
Total fixed maturities	62,843		2,086		60,532		225
Equity securities
Common stock	577		577		—		—
Non-redeemable preferred stock	124		32		92		—
Total equity securities	701		609		92		—
Other investments	50		17		—		33
Total	$	63,594	$	2,712	$	60,624	$	258

(at December 31, 2012, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,222	$	2,205	$	17	$	—
Obligations of states, municipalities and political subdivisions	38,681		—		38,653		28
Debt securities issued by foreign governments	2,257		—		2,257		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,997		—		2,992		5
All other corporate bonds	19,203		—		19,006		197
Redeemable preferred stock	33		32		1		—
Total fixed maturities	65,393		2,237		62,926		230
Equity securities
Common stock	510		510		—		—
Non-redeemable preferred stock	135		92		43		—
Total equity securities	645		602		43		—
Other investments	100		46		—		54
Total	$	66,138	$	2,885	$	62,969	$	284

Changes in the Level 3 fair value category [Table Text Block]

Three Months Ended June 30, 2013 (in millions)	FixedMaturities			OtherInvestments			Total
Balance at March 31, 2013	$	254		$	49		$	303
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (1)	1			13			14
Reported in increases (decreases) in other comprehensive income	(3		)	(12		)	(15		)
Purchases, sales and settlements/maturities:
Purchases	35			—			35
Sales	(24		)	(17		)	(41		)
Settlements/maturities	(27		)	—			(27		)
Gross transfers into Level 3	13			—			13
Gross transfers out of Level 3	(24		)	—			(24		)
Balance at June 30, 2013	$	225		$	33		$	258
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date	$	—		$	—		$	—

(1) Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.

Six Months Ended June 30, 2013 (in millions)	FixedMaturities			OtherInvestments			Total
Balance at December 31, 2012	$	230		$	54		$	284
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (1)	2			13			15
Reported in increases (decreases) in other comprehensive income	(2		)	(1		)	(3		)
Purchases, sales and settlements/maturities:
Purchases	77			—			77
Sales	(24		)	(33		)	(57		)
Settlements/maturities	(47		)	—			(47		)
Gross transfers into Level 3	13			—			13
Gross transfers out of Level 3	(24		)	—			(24		)
Balance at June 30, 2013	$	225		$	33		$	258
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date	$	—		$	—		$	—

(1)   Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.

Twelve Months Ended December 31, 2012 (in millions)	FixedMaturities			OtherInvestments		Total
Balance at December 31, 2011	$	250		$	44	$	294
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (1)	4			5		9
Reported in increases (decreases) in other comprehensive income	5			2		7
Purchases, sales and settlements/maturities:
Purchases	79			3		82
Sales	—			—		—
Settlements/maturities	(94		)	—		(94		)
Gross transfers into Level 3	10			—		10
Gross transfers out of Level 3	(24		)	—		(24		)
Balance at December 31, 2012	$	230		$	54	$	284
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date	$	—		$	—	$	—

(1)     Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.

Carrying value and fair value of financial instruments disclosed, but not carried, at fair value and the level within the fair value hierarchy at which such financial instruments are measured on a recurring basis [Table Text Block]

(at June 30, 2013, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Short-term securities	$	3,394	$	3,394	$	1,343	$	1,990	$	61
Financial liabilities:
Debt	$	5,752	$	6,724	$	—	$	6,724	$	—
Commercial paper	$	100	$	100	$	—	$	100	$	—

(at December 31, 2012, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Short-term securities	$	3,483	$	3,483	$	1,448	$	1,957	$	78
Financial liabilities:
Debt	$	6,250	$	7,715	$	—	$	7,715	$	—
Commercial paper	$	100	$	100	$	—	$	100	$	—

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Consolidated Balance Sheet Parentheticals (Unaudited at June 30, 2013) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheet (Unaudited at June 30, 2013)
Fixed maturities, available for sale, amortized cost	$ 60,494	$ 60,829
Equity securities, available for sale, cost	$ 463	$ 462
Common stock, shares authorized	1,750.0	1,750.0
Common stock, shares issued	373.5	377.4
Common stock, shares outstanding	373.5	377.4	386.0	392.8
Treasury stock, at cost, shares	380.3	372.3

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Consolidated Statement of Cash Flows (Unaudited) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012
Cash flows from operating activities
Net income	$ 1,821		$ 1,305
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment gains	(177)	[1]	(14)	[1]
Depreciation and amortization	435		412
Deferred federal income tax expense	151		125
Amortization of deferred acquisition costs	1,898		1,947
Equity in income from other investments	(175)		(228)
Change in premiums receivable	(403)		(468)
Change in reinsurance recoverables	747		752
Change in deferred acquisition costs	(1,912)		(2,000)
Change in claims and claim adjustment expense reserves	(1,128)		(599)
Change in unearned premium reserves	345		346
Other operating activities	(350)		(313)
Net cash provided by operating activities	1,252		1,265
Cash flows from investing activities
Proceeds from maturities of fixed maturities	3,901		4,167
Proceeds from sales of investments, fixed maturities	572		542
Proceeds from sales of investments, equity securities	50		22
Proceeds from sales of investments, real estate investments			3
Proceeds from sales of investments, other investments	381		386
Purchases of investments, fixed maturities	(4,488)		(5,200)
Purchases of investments, equity securities	(40)		(33)
Purchases of investments, real estate investments	(59)		(58)
Purchases of investments, other investments	(209)		(221)
Net sales of short-term securities	81		367
Securities transactions in course of settlement	60		77
Other investing activities	(157)		(133)
Net cash provided by (used in) investing activities	92		(81)
Cash flows from financing activities
Payment of debt	(500)		(258)
Dividends paid to shareholders	(366)		(341)
Issuance of common stock - employee share options	139		170
Treasury stock acquired - share repurchase authorization	(600)		(707)
Treasury stock acquired - net employee share-based compensation	(59)		(52)
Excess tax benefits from share-based payment arrangements	29		19
Net cash used in financing activities	(1,357)		(1,169)
Effect of exchange rate changes on cash	(9)		1
Net increase (decrease) in cash	(22)		16
Cash at beginning of year	330		214
Cash at end of period	308		230
Supplemental disclosure of cash flow information
Income taxes paid	495		296
Interest paid	$ 184		$ 191

[1] Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $11 million for the three months ended June 30, 2013 and 2012, respectively, and $(1) million and $11 million for the six months ended June 30, 2013 and 2012, respectively. Of total OTTI, credit losses of $(2) million and $(4) million for the three months ended June 30, 2013 and 2012, respectively, and $(7) million and $(8) million for the six months ended June 30, 2013 and 2012, respectively, were recognized in net realized investment gains. In addition, unrealized gains from other changes in total OTTI of $1 million and $15 million for the three months ended June 30, 2013 and 2012, respectively, and $6 million and $19 million for the six months ended June 30, 2013 and 2012, respectively, were recognized in other comprehensive income as part of change in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income.

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Investments

6 Months Ended

Jun. 30, 2013

Investments disclosure

Investments disclsoure [Text Block]

3. INVESTMENTS

Fixed Maturities

The amortized cost and fair value of investments in fixed maturities classified as available for sale were as follows:

	Amortized		Gross Unrealized				Fair
(at June 30, 2013, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,058	$	53	$	8	$	2,103
Obligations of states, municipalities and political subdivisions:
Pre-refunded	9,395		538		1		9,932
All other	26,224		1,215		303		27,136
Total obligations of states, municipalities and political subdivisions	35,619		1,753		304		37,068
Debt securities issued by foreign governments	2,039		44		4		2,079
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,410		197		12		2,595
All other corporate bonds	18,342		858		234		18,966
Redeemable preferred stock	26		6		—		32
Total	$	60,494	$	2,911	$	562	$	62,843

	Amortized		Gross Unrealized				Fair
(at December 31, 2012, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,148	$	75	$	1	$	2,222
Obligations of states, municipalities and political subdivisions:
Pre-refunded	8,458		567		—		9,025
All other	27,405		2,262		11		29,656
Total obligations of states, municipalities and political subdivisions	35,863		2,829		11		38,681
Debt securities issued by foreign governments	2,185		72		—		2,257
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,744		255		2		2,997
All other corporate bonds	17,863		1,360		20		19,203
Redeemable preferred stock	26		7		—		33
Total	$	60,829	$	4,598	$	34	$	65,393

Pre-refunded bonds of $9.93 billion and $9.03 billion at June 30, 2013 and December 31, 2012, respectively, were bonds for which an irrevocable trust (almost exclusively comprised of U.S. Treasury securities) has been established to fund the remaining payments of principal and interest.

Equity Securities

The cost and fair value of investments in equity securities were as follows:

			Gross Unrealized				Fair
(at June 30, 2013, in millions)	Cost		Gains		Losses		Value
Common stock	$	373	$	206	$	2	$	577
Non-redeemable preferred stock	90		34		—		124
Total	$	463	$	240	$	2	$	701

			Gross Unrealized				Fair
(at December 31, 2012, in millions)	Cost		Gains		Losses		Value
Common stock	$	366	$	148	$	4	$	510
Non-redeemable preferred stock	96		39		—		135
Total	$	462	$	187	$	4	$	645

Unrealized Investment Losses

The following tables summarize, for all investments in an unrealized loss position at June 30, 2013 and December 31, 2012, the aggregate fair value and gross unrealized loss by length of time those securities have been continuously in an unrealized loss position.  The fair value amounts reported in the tables are estimates that are prepared using the process described in note 4.

	Less than 12 months				12 months or longer				Total
(at June 30, 2013, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	760	$	8	$	—	$	—	$	760	$	8
Obligations of states, municipalities and political subdivisions	4,585		303		29		1		4,614		304
Debt securities issued by foreign governments	551		4		—		—		551		4
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	425		10		23		2		448		12
All other corporate bonds	5,348		224		67		10		5,415		234
Total fixed maturities	11,669		549		119		13		11,788		562
Equity securities
Common stock	48		2		—		—		48		2
Non-redeemable preferred stock	36		—		—		—		36		—
Total equity securities	84		2		—		—		84		2
Total	$	11,753	$	551	$	119	$	13	$	11,872	$	564

	Less than 12 months				12 months or longer				Total
(at December 31, 2012, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	589	$	1	$	—	$	—	$	589	$	1
Obligations of states, municipalities and political subdivisions	611		9		45		2		656		11
Debt securities issued by foreign governments	186		—		2		—		188		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	70		—		36		2		106		2
All other corporate bonds	1,097		13		89		7		1,186		20
Total fixed maturities	2,553		23		172		11		2,725		34
Equity securities
Common stock	40		4		—		—		40		4
Non-redeemable preferred stock	13		—		—		—		13		—
Total equity securities	53		4		—		—		53		4
Total	$	2,606	$	27	$	172	$	11	$	2,778	$	38

The following table summarizes, for all fixed maturities and equity securities reported at fair value for which fair value is less than 80% of amortized cost at June 30, 2013, the gross unrealized investment loss by length of time those securities have continuously been in an unrealized loss position of greater than 20% of amortized cost:

	Period For Which Fair Value Is Less Than 80% of Amortized Cost
(in millions)	3 Months or Less		Greater Than 3 Months, 6 Months or Less		Greater Than 6 Months, 12 Months or Less		Greater Than 12 Months		Total
Fixed maturities
Mortgage-backed securities	$	—	$	—	$	—	$	—	$	—
Other	2		—		—		4		6
Total fixed maturities	2		—		—		4		6
Equity securities	—		—		—		—		—
Total	$	2	$	—	$	—	$	4	$	6

These unrealized losses at June 30, 2013 represented less than 1% of the combined fixed maturity and equity security portfolios on a pretax basis and less than 1% of shareholders’ equity on an after-tax basis.

Impairment Charges

Impairment charges included in net realized investment gains in the consolidated statement of income were as follows:

	Three Months Ended  June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	—	$	—	$	—	$	—
Obligations of states, municipalities and political subdivisions	—		—		—		—
Debt securities issued by foreign governments	—		—		—		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1		2		2		3
All other corporate bonds	—		1		—		3
Redeemable preferred stock	—		—		—		—
Total fixed maturities	1		3		2		6
Equity securities
Common stock	1		—		1		—
Non-redeemable preferred stock	—		—		—		—
Total equity securities	1		—		1		—
Other investments	—		1		4		2
Total	$	2	$	4	$	7	$	8

The following tables present the changes during the reporting period in the credit component of other-than-temporary impairments (OTTI) on fixed maturities recognized in the consolidated statement of income for which a portion of the OTTI was recognized in other comprehensive income:

	2013
(for the three months ended June 30, in millions )	Cumulative OTTI Credit Losses Recognized for Securities Held, Beginning of Period		Additions for OTTI Securities Where No Credit Losses Were Previously Recognized		Additions for OTTI Securities Where Credit Losses Have Been Previously Recognized		Reductions Due to Sales/Defaults of Credit- Impaired Securities		Adjustments to Book Value of Credit- Impaired Securities due to Changes in Cash Flows		Cumulative OTTI Credit Losses Recognized for Securities Still Held, End of Period
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	65	$	—	$	1	$	—	$	1	$	67
All other corporate bonds	103		—		—		—		1		104
Total fixed maturities	$	168	$	—	$	1	$	—	$	2	$	171

(for the six months ended June 30, in millions )
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	63	$	—	$	2	$	—	$	2	$	67
All other corporate bonds	102		—		—		—		2		104
Total fixed maturities	$	165	$	—	$	2	$	—	$	4	$	171

	2012
(for the three months ended June 30, in millions )	Cumulative OTTI Credit Losses Recognized for Securities Held, Beginning of Period		Additions for OTTI Securities Where No Credit Losses Were Previously Recognized		Additions for OTTI Securities Where Credit Losses Have Been Previously Recognized		Reductions Due to Sales/Defaults of Credit- Impaired Securities		Adjustments to Book Value of Credit- Impaired Securities due to Changes in Cash Flows		Cumulative OTTI Credit Losses Recognized for Securities Still Held, End of Period
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	59	$	—	$	2	$	—	$	—	$	61
All other corporate bonds	97		—		1		—		1		99
Total fixed maturities	$	156	$	—	$	3	$	—	$	1	$	160

(for the six months ended June 30, in millions )
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	58	$	—	$	3	$	—	$	—	$	61
All other corporate bonds	94		—		3		—		2		99
Total fixed maturities	$	152	$	—	$	6	$	—	$	2	$	160

Derivative Financial Instruments

The Company uses U.S. Treasury note futures transactions to modify the effective duration of specific assets within the investment portfolio.  The Company enters into futures contracts on U.S. Treasury notes which require a daily mark-to-market and settlement with the broker.  At June 30, 2013, March 31, 2013 and December 31, 2012, the Company had $0, $2.0 billion and $800 million notional value of open U.S. Treasury futures contracts, respectively.  During the second quarter of 2013, the notional value of U.S. Treasury futures contracts entered into by the Company reached $2.7 billion.  Net realized investment gains in the three months ended June 30, 2013 and 2012 included net gains of $134 million and net losses of $13 million, respectively, related to U.S. Treasury futures contracts.  Net realized investment gains in the six months ended June 30, 2013 and 2012 included net gains of $115 million and net losses of $7 million, respectively, related to U.S. Treasury futures contracts.

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Basis of Presentation and Accounting Policies

6 Months Ended

Jun. 30, 2013

Basis of Presentation and Accounting Policies disclosure

Basis of Presentation and Accounting Policies disclosure [Text Block]

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Basis of Presentation

The interim consolidated financial statements include the accounts of The Travelers Companies, Inc. (together with its subsidiaries, the Company). These financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP) and are unaudited. In the opinion of the Company’s management, all adjustments necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. All material intercompany transactions and balances have been eliminated. The accompanying interim consolidated financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s 2012 Annual Report on Form 10-K.

The preparation of the interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates.

Adoption of Accounting Standards Updates

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

In February 2013, the Financial Accounting Standards Board (FASB) issued updated guidance to improve the reporting of reclassifications out of accumulated other comprehensive income. The guidance requires an entity to present, either on the face of the statement of income or in the notes, separately for each component of comprehensive income, the current period reclassifications out of accumulated other comprehensive income by the respective line items of net income affected by the reclassification.

The updated guidance is effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted the updated guidance effective March 31, 2013, and such adoption did not have any effect on the Company’s results of operations, financial position or liquidity.

Accounting Standard Not Yet Adopted

Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity

In March 2013, the FASB issued updated guidance to resolve diversity in practice concerning the release of the cumulative foreign currency translation adjustment into net income when a parent sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets within a foreign entity. When a company ceases to have a controlling financial interest in a subsidiary within a foreign entity, the company should recognize any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary had resided. Upon the partial sale of an equity method investment that is a foreign entity, the company should release into earnings a pro rata portion of the cumulative translation adjustment. Upon the partial sale of an equity method investment that is not a foreign entity, the company should release into earnings the cumulative translation adjustment if the partial sale represents a complete or substantially complete liquidation of the foreign entity that holds the equity method investment. The updated guidance is effective for the quarter ending March 31, 2014. Early adoption is permitted. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Nature of Operations

The Company is organized into three reportable business segments: Business Insurance; Financial, Professional & International Insurance; and Personal Insurance. These segments reflect the manner in which the Company’s businesses are currently managed and represent an aggregation of products and services based on type of customer, how the business is marketed and the manner in which risks are underwritten. The specific business segments are as follows:

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; Target Risk Underwriting; and Specialized Distribution.

Business Insurance also includes the Special Liability Group (which manages the Company’s asbestos and environmental liabilities) and the assumed reinsurance and certain 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. In addition, the Company owns 49.5% of the common stock of J. Malucelli Participações em Seguros e Resseguros S.A. (JMalucelli), its joint venture in Brazil. JMalucelli is currently the market leader in surety in Brazil based on market share, and commenced writing other property and casualty insurance business in 2012. The Company’s investment in JMalucelli is accounted for using the equity method and is included in “other investments” on the consolidated balance sheet.

On June 10, 2013, the Company entered into a definitive agreement to acquire all of the issued and outstanding shares of The Dominion of Canada General Insurance Company (The Dominion) from E-L Financial Corporation Limited (E-L Financial) for an aggregate cash purchase price of C$1.125 billion (approximately US$1.1 billion), subject to adjustment to reflect changes in shareholder’s equity prior to the closing, including a downward adjustment to reflect an anticipated pre-closing dividend. The transaction is expected to close in the fourth quarter of 2013, subject to regulatory approvals and other customary closing conditions. The Dominion primarily markets personal lines and small commercial insurance business in Canada.

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.

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Fair Value Measurements (details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value Measurements disclosure
Percent of fixed maturities for which a pricing service estimates fair value	98.00%	98.00%
Fair value of the fixed maturities for which the Company used an internal pricing matrix	$ 80	$ 102
Fair value of the fixed maturities for which the Company received a broker quote	145	128
Convertible bonds held containing embedded conversion options that are valued separately from the host bond contract and disclosed in Level 2	$ 19	$ 21
Percent of short-term securities for which a pricing service estimates fair value	94.00%	95.00%
Percent of debt, including commercial paper, for which a pricing service estimates fair value	100.00%	100.00%

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Earnings per Share (table)

6 Months Ended

Jun. 30, 2013

Earnings per Share disclosure

Earnings per share reconciliation [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share amounts)	2013			2012			2013			2012
Basic and Diluted
Net income, as reported	$	925		$	499		$	1,821		$	1,305
Participating share-based awards — allocated income	(7		)	(4		)	(14		)	(10		)
Net income available to common shareholders — basic and diluted	$	918		$	495		$	1,807		$	1,295
Common Shares
Basic
Weighted average shares outstanding	375.9			388.0			376.8			390.0
Diluted
Weighted average shares outstanding	375.9			388.0			376.8			390.0
Weighted average effects of dilutive securities — stock options and performance shares	4.0			3.6			4.0			3.5
Total	379.9			391.6			380.8			393.5
Net Income per Common Share
Basic	$	2.44		$	1.27		$	4.80		$	3.32
Diluted	$	2.41		$	1.26		$	4.75		$	3.29

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Basis of Presentation and Accounting Policies (details)	6 Months Ended
	Jun. 30, 2013 item
Basis of Presentation and Accounting Policies disclosure
Number of reportable business segments	3
Number of groups comprising Business Insurance Core	6
Percent of common stock owned, J. Malucelli - Brazilian joint venture	49.50%

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Investments (details) - Investment Information (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Investment disclosure details
Fixed maturities, amortized cost	$ 60,494	$ 60,829
Fixed maturities, at fair value	62,843	65,393
Equity securities, cost	463	462
Equity securities, at fair value	701	645
Continuous unrealized loss position less than 12 months, fair value	11,753	2,606
Continuous unrealized loss position less than 12 months, gross unrealized losses	551	27
Continuous unrealized loss position 12 months or longer, fair value	119	172
Continuous unrealized loss position 12 months or longer, gross unrealized losses	13	11
Continuous unrealized loss position, total, fair value	11,872	2,778
Continuous unrealized loss position, total, gross unrealized losses	564	38
Available-for-sale securities for which fair value is less than 80% of amortized cost, 3 months or less	2
Available-for-sale securities for which fair value is less than 80% of amortized cost, greater than 12 months	4
Available-for-sale securities for which fair value is less than 80% of amortized cost, total	6
Fixed maturities [Member]
Investment disclosure details
Fixed maturities, amortized cost	60,494	60,829
Gross unrealized gains	2,911	4,598
Gross unrealized losses	562	34
Fixed maturities, at fair value	62,843	65,393
Continuous unrealized loss position less than 12 months, fair value	11,669	2,553
Continuous unrealized loss position less than 12 months, gross unrealized losses	549	23
Continuous unrealized loss position 12 months or longer, fair value	119	172
Continuous unrealized loss position 12 months or longer, gross unrealized losses	13	11
Continuous unrealized loss position, total, fair value	11,788	2,725
Continuous unrealized loss position, total, gross unrealized losses	562	34
Available-for-sale securities for which fair value is less than 80% of amortized cost, 3 months or less	2
Available-for-sale securities for which fair value is less than 80% of amortized cost, greater than 12 months	4
Available-for-sale securities for which fair value is less than 80% of amortized cost, total	6
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities [Member]
Investment disclosure details
Fixed maturities, amortized cost	2,058	2,148
Gross unrealized gains	53	75
Gross unrealized losses	8	1
Fixed maturities, at fair value	2,103	2,222
Continuous unrealized loss position less than 12 months, fair value	760	589
Continuous unrealized loss position less than 12 months, gross unrealized losses	8	1
Continuous unrealized loss position, total, fair value	760	589
Continuous unrealized loss position, total, gross unrealized losses	8	1
Obligations of states, municipalities and political subdivisions [Member]
Investment disclosure details
Fixed maturities, amortized cost	35,619	35,863
Gross unrealized gains	1,753	2,829
Gross unrealized losses	304	11
Fixed maturities, at fair value	37,068	38,681
Continuous unrealized loss position less than 12 months, fair value	4,585	611
Continuous unrealized loss position less than 12 months, gross unrealized losses	303	9
Continuous unrealized loss position 12 months or longer, fair value	29	45
Continuous unrealized loss position 12 months or longer, gross unrealized losses	1	2
Continuous unrealized loss position, total, fair value	4,614	656
Continuous unrealized loss position, total, gross unrealized losses	304	11
Obligations of states, municipalities and political subdivisions, pre-refunded [Member]
Investment disclosure details
Fixed maturities, amortized cost	9,395	8,458
Gross unrealized gains	538	567
Gross unrealized losses	1
Fixed maturities, at fair value	9,932	9,025
Obligations of states, municipalities and political subdivisions, all other (not pre-refunded) [Member]
Investment disclosure details
Fixed maturities, amortized cost	26,224	27,405
Gross unrealized gains	1,215	2,262
Gross unrealized losses	303	11
Fixed maturities, at fair value	27,136	29,656
Debt securities issued by foreign governments [Member]
Investment disclosure details
Fixed maturities, amortized cost	2,039	2,185
Gross unrealized gains	44	72
Gross unrealized losses	4
Fixed maturities, at fair value	2,079	2,257
Continuous unrealized loss position less than 12 months, fair value	551	186
Continuous unrealized loss position less than 12 months, gross unrealized losses	4
Continuous unrealized loss position 12 months or longer, fair value		2
Continuous unrealized loss position, total, fair value	551	188
Continuous unrealized loss position, total, gross unrealized losses	4
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member]
Investment disclosure details
Fixed maturities, amortized cost	2,410	2,744
Gross unrealized gains	197	255
Gross unrealized losses	12	2
Fixed maturities, at fair value	2,595	2,997
Continuous unrealized loss position less than 12 months, fair value	425	70
Continuous unrealized loss position less than 12 months, gross unrealized losses	10
Continuous unrealized loss position 12 months or longer, fair value	23	36
Continuous unrealized loss position 12 months or longer, gross unrealized losses	2	2
Continuous unrealized loss position, total, fair value	448	106
Continuous unrealized loss position, total, gross unrealized losses	12	2
All other corporate bonds [Member]
Investment disclosure details
Fixed maturities, amortized cost	18,342	17,863
Gross unrealized gains	858	1,360
Gross unrealized losses	234	20
Fixed maturities, at fair value	18,966	19,203
Continuous unrealized loss position less than 12 months, fair value	5,348	1,097
Continuous unrealized loss position less than 12 months, gross unrealized losses	224	13
Continuous unrealized loss position 12 months or longer, fair value	67	89
Continuous unrealized loss position 12 months or longer, gross unrealized losses	10	7
Continuous unrealized loss position, total, fair value	5,415	1,186
Continuous unrealized loss position, total, gross unrealized losses	234	20
Other fixed maturities [Member]
Investment disclosure details
Available-for-sale securities for which fair value is less than 80% of amortized cost, 3 months or less	2
Available-for-sale securities for which fair value is less than 80% of amortized cost, greater than 12 months	4
Available-for-sale securities for which fair value is less than 80% of amortized cost, total	6
Redeemable preferred stock [Member]
Investment disclosure details
Fixed maturities, amortized cost	26	26
Gross unrealized gains	6	7
Fixed maturities, at fair value	32	33
Equity securities [Member]
Investment disclosure details
Equity securities, cost	463	462
Gross unrealized gains	240	187
Gross unrealized losses	2	4
Equity securities, at fair value	701	645
Continuous unrealized loss position less than 12 months, fair value	84	53
Continuous unrealized loss position less than 12 months, gross unrealized losses	2	4
Continuous unrealized loss position, total, fair value	84	53
Continuous unrealized loss position, total, gross unrealized losses	2	4
Equity securities, common stock [Member]
Investment disclosure details
Equity securities, cost	373	366
Gross unrealized gains	206	148
Gross unrealized losses	2	4
Equity securities, at fair value	577	510
Continuous unrealized loss position less than 12 months, fair value	48	40
Continuous unrealized loss position less than 12 months, gross unrealized losses	2	4
Continuous unrealized loss position, total, fair value	48	40
Continuous unrealized loss position, total, gross unrealized losses	2	4
Equity securities, non-redeemable preferred stock [Member]
Investment disclosure details
Equity securities, cost	90	96
Gross unrealized gains	34	39
Equity securities, at fair value	124	135
Continuous unrealized loss position less than 12 months, fair value	36	13
Continuous unrealized loss position, total, fair value	$ 36	$ 13

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Share-Based Incentive Compensation (details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Share-Based Incentive Compensation disclosure
Stock options vested at end of period, number (in shares)	8,658,131		8,658,131
Stock options vested at end of period, weighted average exercise price (per share)	$ 52.58		$ 52.58
Stock options vested at end of period, weighted average contractual life remaining (in years)			5 years 10 months 24 days
Stock options vested at end of period, aggregate intrinsic value	$ 237		$ 237
Stock options exercisable at end of period, number (in shares)	5,743,635		5,743,635
Stock options exercisable at end of period, weighted average exercise price (per share)	$ 46.80		$ 46.80
Stock options exercisable at end of period, weighted average contractual life remaining (in years)			4 years 7 months 6 days
Stock options exercisable at end of period, aggregate intrinsic value	190		190
Total compensation cost recognized in earnings for all share-based incentive compensation awards	29	28	70	66
Tax benefits recognized in earnings related to compensation costs	10	10	24	23
Total unrecognized compensation cost related to all nonvested share-based incentive compensation awards	$ 166		$ 166		$ 112
Weighted-average period of recognition for unrecognized compensation cost (in years)			2 years 0 months 0 days		1 year 8 months 12 days

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Debt (details) (5.00% Senior notes due March 15, 2013 [Member], USD $) In Millions, unless otherwise specified	0 Months Ended
	Mar. 15, 2013
5.00% Senior notes due March 15, 2013 [Member]
Debt repayment
Debt, principal amount repaid	$ 500
Interest rate (percent)	5.00%

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Goodwill (details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Goodwill and Other Intangible Assets disclosure
Intangible assets not subject to amortization	$ 216	$ 216
Total other intangible assets, gross carrying amount	862	862
Total other intangible assets, accumulated amortization	504	481
Total other intangible assets, net	358	381
Estimated intangible asset amortization expense, remainder of 2013	22
Estimated intangible asset amortization expense, 2014	43
Estimated intangible asset amortization expense, 2015	23
Estimated intangible asset amortization expense, 2016	9
Estimated intangible asset amortization expense, 2017	$ 8

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Consolidated Statement of Income Parentheticals (Unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidated Statement of Income (Unaudited)
Total other-than-temporary impairment gains (losses)	$ (1)	$ 11	$ (1)	$ 11
Other-than-temporary impairment, credit losses recognized in net realized investment gains	(2)	(4)	(7)	(8)
Unrealized gains from other changes in total other-than-temporary impairments recognized in other comprehensive income as part of changes in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income	$ 1	$ 15	$ 6	$ 19

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Other Comprehensive Income and Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2013

Other Comprehensive Income and Accumulated Other Comprehensive Income disclosure

Other Comprehensive Income and Accumulated Other Comprehensive Income disclosure [Text Block]

6. OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the changes in the Company’s accumulated other comprehensive income (AOCI) for the six months ended June 30, 2013.

(in millions)	Changes in Net  Unrealized Gains on Investment Securities Having No Credit Losses  Recognized in the  Consolidated Statement of Income			Changes in Net  Unrealized Gains on Investment Securities Having Credit Losses Recognized in the Consolidated Statement of Income		Net Benefit Plan  Assets and Obligations  Recognized in  Shareholders’ Equity			Net Unrealized Foreign Currency Translation			Total Accumulated  Other Comprehensive Income
Balance, December 31, 2012	$	2,908		$	195	$	(857	)	$	(10	)	$	2,236
Other comprehensive income (loss) (OCI) before reclassifications	(1,381		)	2		1			(137		)	(1,515		)
Amounts reclassified from AOCI	(33		)	1		34			(3		)	(1		)
Net OCI, current period	(1,414		)	3		35			(140		)	(1,516		)
Balance, June 30, 2013	$	1,494		$	198	$	(822	)	$	(150	)	$	720

The following table presents the pretax and related income tax expense (benefit) components of the amounts reclassified from the Company’s AOCI to the Company’s consolidated statement of income for the three months and six months ended June 30, 2013.

(in millions)	Three Months Ended June 30, 2013			Six MonthsEnded June 30, 2013
Reclassification adjustments related to unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)	$	(34	)	$	(51	)
Income tax expense (2)	(12		)	(18		)
Net of taxes	(22		)	(33		)
Having credit losses recognized in the consolidated statement of income (1)	1			2
Income tax benefit (2)	1			1
Net of taxes	—			1
Reclassification adjustment related to benefit plan assets and obligations (3)	25			52
Income tax benefit (2)	8			18
Net of taxes	17			34
Reclassification adjustment related to foreign currency translation (1)	—			(3		)
Income tax benefit (2)	—			—
Net of taxes	—			(3		)
Total reclassifications	(8		)	—
Total income tax (expense) benefit	(3		)	1
Total reclassifications, net of taxes	$	(5	)	$	(1	)

(1) (Increases) decreases net realized investment gains on the consolidated statement of income.

(2) (Increases) decreases income tax expense on the consolidated statement of income.

(3) Increases (decreases) general and administrative expenses on the consolidated statement of income.

The following tables present the pretax components of other comprehensive income (loss) and related income tax expense (benefit) for the three months and six months ended June 30, 2013 and 2012.

(for the three months ended June 30, in millions)	2013			2012
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	(1,790	)	$	216
Income tax expense (benefit)	(621		)	77
Net of taxes	(1,169		)	139
Having credit losses recognized in the consolidated statement of income	(5		)	5
Income tax expense (benefit)	(2		)	1
Net of taxes	(3		)	4
Net changes in benefit plan assets and obligations	26			22
Income tax expense	9			8
Net of taxes	17			14
Net changes in unrealized foreign currency translation	(73		)	(86		)
Income tax benefit	(22		)	(20		)
Net of taxes	(51		)	(66		)
Total other comprehensive income (loss)	(1,842		)	157
Total income tax expense (benefit)	(636		)	66
Total other comprehensive income (loss), net of taxes	$	(1,206	)	$	91

(for the six months ended June 30, in millions)	2013			2012
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	(2,166	)	$	139
Income tax expense (benefit)	(752		)	50
Net of taxes	(1,414		)	89
Having credit losses recognized in the consolidated statement of income	4			30
Income tax expense	1			10
Net of taxes	3			20
Net changes in benefit plan assets and obligations	54			42
Income tax expense	19			15
Net of taxes	35			27
Net changes in unrealized foreign currency translation	(169		)	(22		)
Income tax benefit	(29		)	(11		)
Net of taxes	(140		)	(11		)
Total other comprehensive income (loss)	(2,277		)	189
Total income tax expense (benefit)	(761		)	64
Total other comprehensive income (loss), net of taxes	$	(1,516	)	$	125

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Consolidated Balance Sheet (Unaudited at June 30, 2013) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,494 and $60,829)	$ 62,843	$ 65,393
Equity securities, available for sale, at fair value (cost $463 and $462)	701	645
Real estate investments	921	883
Short-term securities	3,394	3,483
Other investments	3,408	3,434
Total investments	71,267	73,838
Cash	308	330	230	214
Investment income accrued	734	752
Premiums receivable	6,268	5,872
Reinsurance recoverables	9,887	10,712
Ceded unearned premiums	913	856
Deferred acquisition costs	1,802	1,792
Deferred taxes	257
Contractholder receivables	4,448	4,806
Goodwill	3,365	3,365
Other intangible assets	358	381
Other assets	2,293	2,234
Total assets	101,900	104,938
Liabilities
Claims and claim adjustment expense reserves	49,620	50,922
Unearned premium reserves	11,557	11,241
Contractholder payables	4,448	4,806
Payables for reinsurance premiums	395	346
Deferred taxes		338
Debt	5,852	6,350
Other liabilities	5,138	5,530
Total liabilities	77,010	79,533
Shareholders' equity
Common stock (1,750.0 shares authorized; 373.5 and 377.4 shares issued and outstanding)	21,367	21,161	20,970	20,732
Retained earnings	22,806	21,352	20,541	19,579
Accumulated other comprehensive income	720	2,236	2,130	2,005
Treasury stock, at cost (380.3 and 372.3 shares)	(20,003)	(19,344)	(18,592)	(17,839)
Total shareholders' equity	24,890	25,405	25,049
Total liabilities and shareholders' equity	$ 101,900	$ 104,938

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Contingencies, Commitments and Guarantees (details) - Guarantees (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Guarantees of certain investments and third-party loans [Member]
Guarantor obligations
Maximum amount of contingent obligation	$ 129
Amount indemnified by a third party	63
Guarantees of certain insurance policy obligations [Member]
Guarantor obligations
Maximum amount of contingent obligation	480
Amount indemnified by a third party	480
Indemnifications related to the sale of business entities [Member]
Guarantor obligations
Period range for term of indemnification provisions arising from sales of business entities, minimum (in years)	7 years
Maximum amount of contingent obligation	471
Amount recognized on balance sheet for contingent obligation	$ 8

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Consolidated Statement of Income (Unaudited) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Revenues
Premiums	$ 5,603		$ 5,529		$ 11,120		$ 11,052
Net investment income	687		738		1,357		1,478
Fee income	82		59		179		141
Net realized investment gains	167	[1]	4	[1]	177	[1]	14	[1]
Other revenues	135		29		169		66
Total revenues	6,674		6,359		13,002		12,751
Claims and expenses
Claims and claim adjustment expenses	3,530		3,786		6,683		7,150
Amortization of deferred acquisition costs	950		976		1,898		1,947
General and administrative expenses	931		893		1,846		1,777
Interest expense	86		96		178		192
Total claims and expenses	5,497		5,751		10,605		11,066
Income before income taxes	1,177		608		2,397		1,685
Income tax expense	252		109		576		380
Net income	$ 925		$ 499		$ 1,821		$ 1,305
Net income per share
Net income per share, basic	$ 2.44		$ 1.27		$ 4.80		$ 3.32
Net income per share, diluted	$ 2.41		$ 1.26		$ 4.75		$ 3.29
Weighted average number of common shares outstanding
Weighted average number of common shares outstanding, basic	375.9		388.0		376.8		390.0
Weighted average number of common shares outstanding, diluted	379.9		391.6		380.8		393.5

[1] Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $11 million for the three months ended June 30, 2013 and 2012, respectively, and $(1) million and $11 million for the six months ended June 30, 2013 and 2012, respectively. Of total OTTI, credit losses of $(2) million and $(4) million for the three months ended June 30, 2013 and 2012, respectively, and $(7) million and $(8) million for the six months ended June 30, 2013 and 2012, respectively, were recognized in net realized investment gains. In addition, unrealized gains from other changes in total OTTI of $1 million and $15 million for the three months ended June 30, 2013 and 2012, respectively, and $6 million and $19 million for the six months ended June 30, 2013 and 2012, respectively, were recognized in other comprehensive income as part of change in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income.

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Debt (details) - Line of Credit (USD $) In Billions, unless otherwise specified	0 Months Ended	6 Months Ended		6 Months Ended	0 Months Ended
	Jun. 07, 2013 Line of credit [Member]	Jun. 30, 2013 Line of credit [Member]	Jun. 07, 2013 Line of credit [Member] Minimum [Member]	Jun. 30, 2013 Line of credit [Member] LIBOR [Member]	Jun. 07, 2013 Line of credit [Member] LIBOR [Member] Maxiumum [Member]	Jun. 07, 2013 Line of credit [Member] LIBOR [Member] Minimum [Member]	Jun. 10, 2013 Expired line of credit agreement [Member]
Line of credit
Credit agreement, term (in years)	5 years						3 years
Credit agreement, maximum borrowing capacity	$ 1.0						$ 1.0
Credit agreement, covenant terms	Pursuant to the credit agreement covenants, the Company must maintain a minimum consolidated net worth, defined as shareholders' equity determined in accordance with GAAP plus (a) trust preferred securities (not to exceed 15% of total capital) and (b) mandatorily convertible securities (combined with trust preferred securities, not to exceed 25% of total capital) less goodwill and other intangible assets. That threshold is adjusted downward by an amount equal to 70% of the aggregate amount of common stock repurchased by the Company after March 31, 2013, up to a maximum deduction of $1.75 billion. The threshold was $15.27 billion at June 30, 2013 and could decline to a minimum of $13.73 billion during the term of the credit agreement, subject to the Company repurchasing an additional $2.20 billion of its common stock. In addition, the credit agreement contains other customary restrictive covenants as well as certain customary events of default, including with respect to a change in control, which is defined to include the acquisition of 35% or more of the Company's voting stock and certain changes in the composition of the Company's board of directors.
Maximum percentage of trust preferred securities relative to total capital in determining consolidated net worth	15.00%
Maximum percentage of trust preferred securities and mandatorily convertible securities relative to total capital in determining consolidated net worth	25.00%
Percentage of aggregate amount of common stock repurchased by the Company after March 31, 2013 by which the threshold is adjusted downward	70.00%
Maximum downward adjustment to threshold relative to common stock repurchases	1.75
Credit agreement, threshold of consolidated net worth		15.27	13.73
Common stock repurchases required during the term of the credit agreement to reduce threshold net worth to minimum amount reported		$ 2.20
Percentage of Company's voting stock acquired by outside entity that would be considered a change in control	35.00%
Credit agreement, compliance		At June 30, 2013, the Company was in compliance with these covenants.
Credit agreement, cost of borrowing, basis points above LIBOR				1.125%	1.50%	0.875%

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Share-Based Incentive Compensation (table)

6 Months Ended

Jun. 30, 2013

Share-Based Incentive Compensation disclosure

Information for fully vested stock option awards [Table Text Block]

Stock Options	Number	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining	AggregateIntrinsic Value($ in millions)
Vested at end of period (1)	8,658,131	$	52.58	5.9 years	$	237
Exercisable at end of period	5,743,635	$	46.80	4.6 years	$	190

(1) Represents awards for which the requisite service has been rendered, including those that are retirement eligible.

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Segment Information (tables)

6 Months Ended

Jun. 30, 2013

Segment Information disclosure

Company's revenues and operating income by segment [Table Text Block]

(for the three monthsended June 30,in millions)	BusinessInsurance		Financial, Professional & International Insurance		PersonalInsurance		TotalReportableSegments
2013
Premiums	$	3,018	$	751	$	1,834	$	5,603
Net investment income	502		91		94		687
Fee income	82		—		—		82
Other revenues	114		5		15		134
Total operating revenues (1)	$	3,716	$	847	$	1,943	$	6,506
Operating income (1)	$	579	$	154	$	142	$	875
2012
Premiums	$	2,860	$	766	$	1,903	$	5,529
Net investment income	536		99		103		738
Fee income	58		1		—		59
Other revenues	8		5		16		29
Total operating revenues (1)	$	3,462	$	871	$	2,022	$	6,355
Operating income (1)	$	362	$	182	$	17	$	561

(1) Operating revenues for reportable business segments exclude net realized investment gains (losses). Operating income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains (losses).

(for the six monthsended June 30,in millions)	BusinessInsurance		Financial, Professional & International Insurance		PersonalInsurance		TotalReportableSegments
2013
Premiums	$	5,960	$	1,486	$	3,674	$	11,120
Net investment income	989		183		185		1,357
Fee income	179		—		—		179
Other revenues	127		10		33		170
Total operating revenues (1)	$	7,255	$	1,679	$	3,892	$	12,826
Operating income (1)	$	1,169	$	317	$	339	$	1,825
2012
Premiums	$	5,736	$	1,503	$	3,813	$	11,052
Net investment income	1,068		203		207		1,478
Fee income	140		1		—		141
Other revenues	22		13		35		70
Total operating revenues (1)	$	6,966	$	1,720	$	4,055	$	12,741
Operating income (1)	$	974	$	331	$	125	$	1,430

(1) Operating revenues for reportable business segments exclude net realized investment gains (losses). Operating income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains (losses).

Business segment reconciliations of revenue and income, net of tax [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2013			2012			2013			2012
Revenue reconciliation
Earned premiums
Business Insurance:
Workers’ compensation	$	897		$	754		$	1,744		$	1,537
Commercial automobile	474			488			949			974
Commercial property	418			401			827			793
General liability	444			437			881			869
Commercial multi-peril	776			773			1,541			1,548
Other	9			7			18			15
Total Business Insurance	3,018			2,860			5,960			5,736
Financial, Professional & International Insurance:
Fidelity and surety	228			236			448			459
General liability	221			210			434			417
International	258			278			516			544
Other	44			42			88			83
Total Financial, Professional & International Insurance	751			766			1,486			1,503
Personal Insurance:
Automobile	864			918			1,736			1,846
Homeowners and other	970			985			1,938			1,967
Total Personal Insurance	1,834			1,903			3,674			3,813
Total earned premiums	5,603			5,529			11,120			11,052
Net investment income	687			738			1,357			1,478
Fee income	82			59			179			141
Other revenues	134			29			170			70
Total operating revenues for reportable segments	6,506			6,355			12,826			12,741
Other revenues	1			—			(1		)	(4		)
Net realized investment gains	167			4			177			14
Total consolidated revenues	$	6,674		$	6,359		$	13,002		$	12,751
Income reconciliation, net of tax
Total operating income for reportable segments	$	875		$	561		$	1,825		$	1,430
Interest Expense and Other (1)	(59		)	(66		)	(122		)	(134		)
Total operating income	816			495			1,703			1,296
Net realized investment gains	109			4			118			9
Total consolidated net income	$	925		$	499		$	1,821		$	1,305

(1) The primary component of Interest Expense and Other is after-tax interest expense of $56 million and $63 million in the three months ended June 30, 2013 and 2012, respectively, and $116 million and $125 million in the six months ended June 30, 2013 and 2012, respectively.

Asset reconciliation [Table Text Block]

(in millions)	June 30,2013		December 31,2012
Asset reconciliation:
Business Insurance	$	75,187	$	76,972
Financial, Professional & International Insurance	13,035		13,452
Personal Insurance	13,160		14,195
Total assets for reportable segments	101,382		104,619
Other assets (1)	518		319
Total consolidated assets	$	101,900	$	104,938

(1) The primary components of other assets at June 30, 2013 were deferred taxes and other intangible assets.  The primary component of other assets at December 31, 2012 was other intangible assets.

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Fair Value Measurements Footnote (details) - Financial Instruments (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financial Instruments
Short-term securities	$ 3,394	$ 3,483
Fair Value [Member]
Financial Instruments
Short-term securities	3,394	3,483
Debt	6,724	7,715
Commercial paper	100	100
Fair Value [Member] | Level 1 [Member]
Financial Instruments
Short-term securities	1,343	1,448
Fair Value [Member] | Level 2 [Member]
Financial Instruments
Short-term securities	1,990	1,957
Debt	6,724	7,715
Commercial paper	100	100
Fair Value [Member] | Level 3 [Member]
Financial Instruments
Short-term securities	61	78
Carrying Value [Member]
Financial Instruments
Short-term securities	3,394	3,483
Debt	5,752	6,250
Commercial paper	$ 100	$ 100

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Earnings per Share (details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings per Share disclosure
Net income	$ 925	$ 499	$ 1,821	$ 1,305
Participating share-based awards - allocated income	(7)	(4)	(14)	(10)
Net income available to common shareholders -- basic	918	495	1,807	1,295
Net income available to common shareholders -- diluted	$ 918	$ 495	$ 1,807	$ 1,295
Weighted average shares outstanding, basic	375.9	388.0	376.8	390.0
Weighted average effects of dilutive securities, stock options and performance shares (in shares)	4.0	3.6	4.0	3.5
Weighted average shares outstanding, diluted	379.9	391.6	380.8	393.5
Net income per common share, basic	$ 2.44	$ 1.27	$ 4.80	$ 3.32
Net income per common share, diluted	$ 2.41	$ 1.26	$ 4.75	$ 3.29

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Investments (details) - OTTI Rollforward (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Roll-forward of the credit component of other-than-temporary impairments on fixed maturities recognized in the consolidated statement of income for which a portion of the other-than-temporary impairment was recognized in other comprehensive income [Roll Forward]
Cumulative OTTI credit losses recognized for securities held, beginning of period	$ 168	$ 156	$ 165	$ 152
Additions for OTTI securities where credit losses have been previously recognized	1	3	2	6
Adjustments to book value of credit-impaired securities due to changes in cash flows	2	1	4	2
Cumulative OTTI credit losses recognized for securities still held, end of period	171	160	171	160
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member]
Roll-forward of the credit component of other-than-temporary impairments on fixed maturities recognized in the consolidated statement of income for which a portion of the other-than-temporary impairment was recognized in other comprehensive income [Roll Forward]
Cumulative OTTI credit losses recognized for securities held, beginning of period	65	59	63	58
Additions for OTTI securities where credit losses have been previously recognized	1	2	2	3
Adjustments to book value of credit-impaired securities due to changes in cash flows	1		2
Cumulative OTTI credit losses recognized for securities still held, end of period	67	61	67	61
All other corporate bonds [Member]
Roll-forward of the credit component of other-than-temporary impairments on fixed maturities recognized in the consolidated statement of income for which a portion of the other-than-temporary impairment was recognized in other comprehensive income [Roll Forward]
Cumulative OTTI credit losses recognized for securities held, beginning of period	103	97	102	94
Additions for OTTI securities where credit losses have been previously recognized		1		3
Adjustments to book value of credit-impaired securities due to changes in cash flows	1	1	2	2
Cumulative OTTI credit losses recognized for securities still held, end of period	$ 104	$ 99	$ 104	$ 99

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Segment Information (details) - Assets by Segment (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets by segment
Total assets	$ 101,900	$ 104,938
Reportable Segments [Member]
Assets by segment
Total assets	101,382	104,619
Reportable Segments [Member] | Business Insurance [Member]
Assets by segment
Total assets	75,187	76,972
Reportable Segments [Member] | Financial, Professional & International Insurance [Member]
Assets by segment
Total assets	13,035	13,452
Reportable Segments [Member] | Personal Insurance [Member]
Assets by segment
Total assets	13,160	14,195
Interest Expense & Other [Member]
Assets by segment
Total assets	$ 518	$ 319

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Investments (details)	6 Months Ended
	Jun. 30, 2013
Investments disclosure
Unrealized investment losses for securities for which fair value is less than 80% of amortized cost, as a percentage of the combined fixed maturity and equity security portfolios on a pretax basis	less than 1%
Unrealized investment losses for securities for which fair value is less than 80% of amortized cost, as a percentage of shareholders' equity on an after-tax basis	less than 1%

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill and Other Intangible Assets disclosure

Goodwill and Other Intangible Assets disclosure [Text Block]

5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The following table presents the carrying amount of the Company’s goodwill by segment at June 30, 2013 and December 31, 2012:

(in millions)	June 30,2013		December 31, 2012
Business Insurance	$	2,168	$	2,168
Financial, Professional & International Insurance	557		557
Personal Insurance	613		613
Other	27		27
Total	$	3,365	$	3,365

Other Intangible Assets

The following presents a summary of the Company’s other intangible assets by major asset class at June 30, 2013 and December 31, 2012:

(at June 30, 2013, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Intangibles subject to amortization
Customer-related	$	455	$	398	$	57
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables (1)	191		106		85
Total intangible assets subject to amortization	646		504		142
Intangible assets not subject to amortization	216		—		216
Total other intangible assets	$	862	$	504	$	358

(at December 31, 2012, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Intangibles subject to amortization
Customer-related	$	455	$	383	$	72
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables (1)	191		98		93
Total intangible assets subject to amortization	646		481		165
Intangible assets not subject to amortization	216		—		216
Total other intangible assets	$	862	$	481	$	381

(1)    The time value of money and the risk margin (cost of capital) components of the intangible asset run off at different rates, and, as such, the amount recognized in income may be a net benefit in some periods and a net expense in other periods.

The following presents a summary of the Company’s amortization expense for other intangible assets by major asset class:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2013		2012		2013		2012
Customer-related	$	8	$	7	$	15	$	18
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables	4		5		8		10
Total amortization expense	$	12	$	12	$	23	$	28

Intangible asset amortization expense is estimated to be $22 million for the remainder of 2013, $43 million in 2014, $23 million in 2015, $9 million in 2016, and $8 million in 2017.

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Consolidating Financial Statements (details) - Consolidating Balance Sheet (Unaudited) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Consolidating Balance Sheet
Fixed maturities, available for sale, at fair value	$ 62,843	$ 65,393
Equity securities, available for sale, at fair value	701	645
Real estate investments	921	883
Short-term securities	3,394	3,483
Other investments	3,408	3,434
Total investments	71,267	73,838
Cash	308	330	230	214
Investment income accrued	734	752
Premiums receivable	6,268	5,872
Reinsurance recoverables	9,887	10,712
Ceded unearned premiums	913	856
Deferred acquisition costs	1,802	1,792
Deferred taxes	257
Contractholder receivables	4,448	4,806
Goodwill	3,365	3,365
Other intangible assets	358	381
Other assets	2,293	2,234
Total assets	101,900	104,938
Claims and claim adjustment expense reserves	49,620	50,922
Unearned premium reserves	11,557	11,241
Contractholder payables	4,448	4,806
Payables for reinsurance premiums	395	346
Deferred taxes		338
Debt	5,852	6,350
Other liabilities	5,138	5,530
Total liabilities	77,010	79,533
Common stock	21,367	21,161	20,970	20,732
Retained earnings	22,806	21,352	20,541	19,579
Accumulated other comprehensive income	720	2,236	2,130	2,005
Treasury stock, at cost	(20,003)	(19,344)	(18,592)	(17,839)
Total shareholders' equity	24,890	25,405	25,049
Total liabilities and shareholders' equity	101,900	104,938
Fixed maturities, available for sale, amortized cost	60,494	60,829
Equity securities, available for sale, cost	463	462
Common stock, shares authorized	1,750.0	1,750.0
Common stock, shares issued	373.5	377.4
Common stock, shares outstanding	373.5	377.4	386.0	392.8
Treasury stock, at cost, shares	380.3	372.3
TPC [Member]
Consolidating Balance Sheet
Fixed maturities, available for sale, at fair value	43,198	44,336
Equity securities, available for sale, at fair value	153	153
Real estate investments	32	33
Short-term securities	1,369	1,187
Other investments	2,431	2,443
Total investments	47,183	48,152
Cash	152	177	110	114
Investment income accrued	498	507
Premiums receivable	4,196	3,944
Reinsurance recoverables	6,468	7,112
Ceded unearned premiums	736	698
Deferred acquisition costs	1,567	1,560
Deferred taxes	100
Contractholder receivables	3,231	3,540
Goodwill	2,411	2,411
Other intangible assets	253	268
Other assets	1,983	1,930
Total assets	68,778	70,299
Claims and claim adjustment expense reserves	32,681	33,598
Unearned premium reserves	7,935	7,751
Contractholder payables	3,231	3,540
Payables for reinsurance premiums	183	151
Deferred taxes		316
Debt	692	1,191
Other liabilities	3,817	4,107
Total liabilities	48,539	50,654
Additional paid-in capital	11,635	11,135
Retained earnings	7,580	6,404
Accumulated other comprehensive income	1,024	2,106
Total shareholders' equity	20,239	19,645
Total liabilities and shareholders' equity	68,778	70,299
Other Subsidiaries [Member]
Consolidating Balance Sheet
Fixed maturities, available for sale, at fair value	19,607	21,019
Equity securities, available for sale, at fair value	433	386
Real estate investments	889	850
Short-term securities	252	338
Other investments	976	990
Total investments	22,157	23,583
Cash	155	151	116	98
Investment income accrued	232	240
Premiums receivable	2,072	1,928
Reinsurance recoverables	3,419	3,600
Ceded unearned premiums	177	158
Deferred acquisition costs	235	232
Deferred taxes	53
Contractholder receivables	1,217	1,266
Goodwill	954	954
Other intangible assets	105	113
Other assets	32	286
Total assets	30,808	32,511
Claims and claim adjustment expense reserves	16,939	17,324
Unearned premium reserves	3,622	3,490
Contractholder payables	1,217	1,266
Payables for reinsurance premiums	212	195
Deferred taxes		123
Other liabilities	689	1,186
Total liabilities	22,679	23,584
Common stock	390	390
Additional paid-in capital	6,501	6,501
Retained earnings	786	1,113
Accumulated other comprehensive income	452	923
Total shareholders' equity	8,129	8,927
Total liabilities and shareholders' equity	30,808	32,511
Travelers [Member]
Consolidating Balance Sheet
Fixed maturities, available for sale, at fair value	38	38
Equity securities, available for sale, at fair value	115	106
Short-term securities	1,773	1,958
Other investments	1	1
Total investments	1,927	2,103
Cash	1	2	4	2
Investment income accrued	4	5
Deferred taxes	104
Investment in subsidiaries	28,358	28,562
Other assets	278	18
Total assets	30,672	30,690
Deferred taxes		(101)
Debt	5,160	5,159
Other liabilities	632	237
Total liabilities	5,792	5,295
Common stock	21,367	21,161
Retained earnings	22,796	21,342
Accumulated other comprehensive income	720	2,236
Treasury stock, at cost	(20,003)	(19,344)
Total shareholders' equity	24,880	25,395
Total liabilities and shareholders' equity	30,672	30,690
Eliminations [Member]
Consolidating Balance Sheet
Investment in subsidiaries	(28,358)	(28,562)
Total assets	(28,358)	(28,562)
Common stock	(390)	(390)
Additional paid-in capital	(18,136)	(17,636)
Retained earnings	(8,356)	(7,507)
Accumulated other comprehensive income	(1,476)	(3,029)
Total shareholders' equity	(28,358)	(28,562)
Total liabilities and shareholders' equity	$ (28,358)	$ (28,562)

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Pension Plans, Retirement Benefits and Savings Plans (table)

6 Months Ended

Jun. 30, 2013

Pension Plans, Retirement Benefits and Savings Plans disclosure

Summary of the components of net periodic benefit cost for the Company's pension and postretirement benefit plans recognized in the consolidated statement of income [Table Text Block]

	Pension Plans						Postretirement Benefit Plans
(for the three months ended June 30, in millions)	2013			2012			2013			2012
Net Periodic Benefit Cost:
Service cost	$	30		$	29		$	—		$	—
Interest cost on benefit obligation	33			34			2			3
Expected return on plan assets	(52		)	(47		)	—			(1		)
Amortization of unrecognized:
Prior service benefit	—			—			(1		)	—
Net actuarial loss	26			23			—			—
Net benefit expense	$	37		$	39		$	1		$	2

	Pension Plans						Postretirement Benefit Plans
(for the six months ended June 30, in millions)	2013			2012			2013			2012
Net Periodic Benefit Cost:
Service cost	$	59		$	57		$	—		$	—
Interest cost on benefit obligation	66			69			4			6
Expected return on plan assets	(104		)	(94		)	—			(1		)
Amortization of unrecognized:
Prior service benefit	—			—			(1		)	—
Net actuarial loss	53			45			—			—
Net benefit expense	$	74		$	77		$	3		$	5

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Fair Value Measurements (details) - Fair Value Hierarchy (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	$ 63,594	$ 66,138
Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	2,712	2,885
Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	60,624	62,969
Level 3 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	258	284
Fixed maturities [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	62,843	65,393
Fixed maturities [Member] | Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	2,086	2,237
Fixed maturities [Member] | Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	60,532	62,926
Fixed maturities [Member] | Level 3 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	225	230
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	2,103	2,222
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities [Member] | Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	2,086	2,205
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities [Member] | Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	17	17
Obligations of states, municipalities and political subdivisions [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	37,068	38,681
Obligations of states, municipalities and political subdivisions [Member] | Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	37,042	38,653
Obligations of states, municipalities and political subdivisions [Member] | Level 3 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	26	28
Debt securities issued by foreign governments [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	2,079	2,257
Debt securities issued by foreign governments [Member] | Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	2,079	2,257
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	2,595	2,997
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member] | Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	2,590	2,992
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities [Member] | Level 3 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	5	5
All other corporate bonds [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	18,966	19,203
All other corporate bonds [Member] | Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	18,772	19,006
All other corporate bonds [Member] | Level 3 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	194	197
Redeemable preferred stock [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	32	33
Transfers from Level 1 to Level 2	32
Redeemable preferred stock [Member] | Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis		32
Redeemable preferred stock [Member] | Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	32	1
Equity securities [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	701	645
Equity securities [Member] | Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	609	602
Equity securities [Member] | Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	92	43
Equity securities, common stock [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	577	510
Equity securities, common stock [Member] | Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	577	510
Equity securities, non-redeemable preferred stock [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	124	135
Transfers from Level 1 to Level 2	54	4
Transfers from Level 2 to Level 1	3
Equity securities, non-redeemable preferred stock [Member] | Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	32	92
Equity securities, non-redeemable preferred stock [Member] | Level 2 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	92	43
Other investments [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	50	100
Other investments [Member] | Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	17	46
Other investments [Member] | Level 3 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	33	54
Investments in various publicly-traded securities, including securities in the Company's trading portfolio, mutual funds and other small holdings disclosed in Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	17	46
Investments in various publicly-traded securities, including securities in the Company's trading portfolio, mutual funds and other small holdings disclosed in Level 1 [Member] | Level 1 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	17	46
Investment in non-public common and preferred equity securities where the fair value estimate is determined either internally or by an external fund manager and therefore disclosed in Level 3 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	33	54
Investment in non-public common and preferred equity securities where the fair value estimate is determined either internally or by an external fund manager and therefore disclosed in Level 3 [Member] | Level 3 [Member]
Level within the fair value hierarchy at which the Company's financial assets are measured
Total invested assets measured on a recurring basis	$ 33	$ 54

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Shareholders' Equity

6 Months Ended

Jun. 30, 2013

Shareholders' Equity disclosure

Shareholders' Equity disclosure [Text Block]

8. SHAREHOLDERS’ EQUITY

Share Repurchase Authorization.  The Company’s board of directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise.  The authorizations do not have a stated expiration date.  The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company’s desired ratings from independent rating agencies, 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 and related financings), market conditions and other factors.  During the three months and six months ended June 30, 2013, the Company repurchased 3.6 million and 7.3 million shares, respectively, under its share repurchase authorization, for a total cost of $300 million and $600 million, respectively.  The average cost per share repurchased was $82.99 and $81.99, respectively.  At June 30, 2013, the Company had $1.56 billion of capacity remaining under the share repurchase authorization.

Shelf Registration Statement.  At the Company’s Annual Meeting of Shareholders held on May 22, 2013, the Company’s shareholders voted to amend the Company’s Articles of Incorporation to provide authority to issue up to five million additional shares of preferred stock.  Subsequent to this amendment of the Company’s Articles of Incorporation, the Company filed a shelf registration statement with the Securities and Exchange Commission in June 2013 pursuant to which it may publicly sell securities, including the new preferred stock, from time to time. The new shelf registration statement replaced the Company’s prior shelf registration statement.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Measurements disclosure

Fair Value Measurements disclosure [Text Block]

4.     FAIR VALUE MEASUREMENTS

The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance.  The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available.  The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable.  In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions.  The level in the fair value hierarchy within which the fair value measurement is reported is based on the lowest level input that is significant to the measurement in its entirety.  The three levels of the hierarchy are as follows:

· Level 1- Unadjusted quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access.

· Level 2- Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.

· Level 3- Valuations based on models where significant inputs are not observable.  The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.

Valuation of Investments Reported at Fair Value in Financial Statements

The fair value of a financial instrument is the estimated amount at which the instrument could be exchanged in an orderly transaction between knowledgeable, unrelated, willing parties, i.e., not in a forced transaction.  The estimated fair value of a financial instrument may differ from the amount that could be realized if the security was sold in an immediate sale, e.g., a forced transaction.  Additionally, the valuation of investments is more subjective when markets are less liquid due to the lack of market based inputs, which may increase the potential that the estimated fair value of an investment is not reflective of the price at which an actual transaction would occur.

For investments that have quoted market prices in active markets, the Company uses the unadjusted quoted market prices as fair value and includes these prices in the amounts disclosed in Level 1 of the hierarchy.  The Company receives the quoted market prices from a third party, nationally recognized pricing service (pricing service).  When quoted market prices are unavailable, the Company utilizes a pricing service to determine an estimate of fair value, which is mainly used for its fixed maturity investments.  The fair value estimates provided from this pricing service are included in the amount disclosed in Level 2 of the hierarchy.  If quoted market prices and an estimate from a pricing service are unavailable, the Company produces an estimate of fair value based on internally developed valuation techniques, which, depending on the level of observable market inputs, will render the fair value estimate as Level 2 or Level 3.  The Company bases all of its estimates of fair value for assets on the bid price as it represents what a third-party market participant would be willing to pay in an arm’s length transaction.

Fixed Maturities

The Company utilized a pricing service to estimate fair value measurements for approximately 98% of its fixed maturities at both June 30, 2013 and December 31, 2012.  The pricing service utilizes market quotations for fixed maturity securities that have quoted prices in active markets.  Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements for these securities using its proprietary pricing applications, which include available relevant market information, benchmark curves, benchmarking of like securities, sector groupings and matrix pricing.  Additionally, the pricing service uses an Option Adjusted Spread model to develop prepayment and interest rate scenarios.

The pricing service evaluates each asset class based on relevant market information, relevant credit information, perceived market movements and sector news.  The market inputs utilized in the pricing evaluation, listed in the approximate order of priority, include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events.  The extent of the use of each market input depends on the asset class and the market conditions.  Depending on the security, the priority of the use of inputs may change or some market inputs may not be relevant.  For some securities, additional inputs may be necessary.

The pricing service utilized by the Company has indicated that it will only produce an estimate of fair value if there is objectively verifiable information to produce a valuation.  If the pricing service discontinues pricing an investment, the Company would be required to produce an estimate of fair value using some of the same methodologies as the pricing service but would have to make assumptions for market-based inputs that are unavailable due to market conditions.

The fair value estimates of most fixed maturity investments are based on observable market information rather than market quotes.  Accordingly, the estimates of fair value for such fixed maturities, other than U.S. Treasury securities, provided by the pricing service are included in the amount disclosed in Level 2 of the hierarchy.  The estimated fair value of U.S. Treasury securities is included in the amount disclosed in Level 1 as the estimates are based on unadjusted market prices.

The Company also holds certain fixed maturity investments which are not priced by the pricing service and, accordingly, estimates the fair value of such fixed maturities using an internal matrix that is based on market information regarding interest rates, credit spreads and liquidity.  The underlying source data for calculating the matrix of credit spreads relative to the U.S. Treasury curve are the BofA Merrill Lynch U.S. Corporate Index and the BofA Merrill Lynch High Yield BB Rated Index.  The Company includes the fair value estimates of these corporate bonds in Level 2, since all significant inputs are market observable.

While the vast majority of the Company’s municipal bonds and corporate bonds are included in Level 2, the Company holds a number of municipal bonds and corporate bonds which are not valued by the pricing service and estimates the fair value of these bonds using an internal pricing matrix with some unobservable inputs that are significant to the valuation.  Due to the limited amount of observable market information, the Company includes the fair value estimates for these particular bonds in Level 3.  The fair value of the fixed maturities for which the Company used an internal pricing matrix was $80 million at June 30, 2013 and $102 million at December 31, 2012. Additionally, the Company holds a small amount of other fixed maturity investments that have characteristics that make them unsuitable for matrix pricing.  For these fixed maturities, the Company obtains a quote from a broker (primarily the market maker).  The fair value of the fixed maturities for which the Company received a broker quote was $145 million and $128 million at June 30, 2013 and December 31, 2012, respectively. Due to the disclaimers on the quotes that indicate that the price is indicative only, the Company includes these fair value estimates in Level 3.

Equities — Public Common and Preferred

For public common and preferred stocks, the Company receives prices from a nationally recognized pricing service that are based on observable market transactions and includes these estimates in the amount disclosed in Level 1.  When current market quotes in active markets are unavailable for certain non-redeemable preferred stocks held by the Company, the Company receives an estimate of fair value from the pricing service that provides fair value estimates for the Company’s fixed maturities. The service utilizes some of the same methodologies to price the non-redeemable preferred stocks as it does for the fixed maturities. The Company includes the fair value estimate for these non-redeemable preferred stocks in the amount disclosed in Level 2.

Other Investments

The Company holds investments in various publicly-traded securities which are reported in other investments.  These investments include securities in the Company’s trading portfolio, mutual funds and other small holdings.  The $17 million and $46 million fair value of these investments at June 30, 2013 and December 31, 2012, respectively, was disclosed in Level 1.  At June 30, 2013 and December 31, 2012, the Company held investments in non-public common and preferred equity securities, with fair value estimates of $33 million and $54 million, respectively, reported in other investments, where the fair value estimate is determined either internally or by an external fund manager based on recent filings, operating results, balance sheet stability, growth and other business and market sector fundamentals.  Due to the significant unobservable inputs in these valuations, the Company includes the total fair value estimate for all of these investments at June 30, 2013 and December 31, 2012 in the amount disclosed in Level 3.

Derivatives

At June 30, 2013 and December 31, 2012, the Company held $19 million and $21 million, respectively, of convertible bonds containing embedded conversion options that are valued separately from the host bond contract in the amount disclosed in Level 2 — fixed maturities.

Fair Value Hierarchy

The following tables present the level within the fair value hierarchy at which the Company’s financial assets and financial liabilities reported at fair value are measured on a recurring basis at June 30, 2013 and December 31, 2012.  An investment transferred between levels during a period is transferred at its fair value as of the beginning of that period.

(at June 30, 2013, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,103	$	2,086	$	17	$	—
Obligations of states, municipalities and political subdivisions	37,068		—		37,042		26
Debt securities issued by foreign governments	2,079		—		2,079		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,595		—		2,590		5
All other corporate bonds	18,966		—		18,772		194
Redeemable preferred stock	32		—		32		—
Total fixed maturities	62,843		2,086		60,532		225
Equity securities
Common stock	577		577		—		—
Non-redeemable preferred stock	124		32		92		—
Total equity securities	701		609		92		—
Other investments	50		17		—		33
Total	$	63,594	$	2,712	$	60,624	$	258

During the six months ended June 30, 2013, the Company had transfers of $32 million of redeemable preferred stock and $54 million of non-redeemable preferred stock from Level 1 to Level 2. The Company also had transfers of $3 million of non-redeemable preferred stock from Level 2 to Level 1.

(at December 31, 2012, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,222	$	2,205	$	17	$	—
Obligations of states, municipalities and political subdivisions	38,681		—		38,653		28
Debt securities issued by foreign governments	2,257		—		2,257		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,997		—		2,992		5
All other corporate bonds	19,203		—		19,006		197
Redeemable preferred stock	33		32		1		—
Total fixed maturities	65,393		2,237		62,926		230
Equity securities
Common stock	510		510		—		—
Non-redeemable preferred stock	135		92		43		—
Total equity securities	645		602		43		—
Other investments	100		46		—		54
Total	$	66,138	$	2,885	$	62,969	$	284

During the year ended December 31, 2012, the Company had transfers of $4 million of non-redeemable preferred stock from Level 1 to Level 2.

The following tables present the changes in the Level 3 fair value category during the three months and six months ended June 30, 2013 and the twelve months ended December 31, 2012.

Three Months Ended June 30, 2013 (in millions)	FixedMaturities			OtherInvestments			Total
Balance at March 31, 2013	$	254		$	49		$	303
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (1)	1			13			14
Reported in increases (decreases) in other comprehensive income	(3		)	(12		)	(15		)
Purchases, sales and settlements/maturities:
Purchases	35			—			35
Sales	(24		)	(17		)	(41		)
Settlements/maturities	(27		)	—			(27		)
Gross transfers into Level 3	13			—			13
Gross transfers out of Level 3	(24		)	—			(24		)
Balance at June 30, 2013	$	225		$	33		$	258
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date	$	—		$	—		$	—

(1) Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.

Six Months Ended June 30, 2013 (in millions)	FixedMaturities			OtherInvestments			Total
Balance at December 31, 2012	$	230		$	54		$	284
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (1)	2			13			15
Reported in increases (decreases) in other comprehensive income	(2		)	(1		)	(3		)
Purchases, sales and settlements/maturities:
Purchases	77			—			77
Sales	(24		)	(33		)	(57		)
Settlements/maturities	(47		)	—			(47		)
Gross transfers into Level 3	13			—			13
Gross transfers out of Level 3	(24		)	—			(24		)
Balance at June 30, 2013	$	225		$	33		$	258
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date	$	—		$	—		$	—

(1)   Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.

Twelve Months Ended December 31, 2012 (in millions)	FixedMaturities			OtherInvestments		Total
Balance at December 31, 2011	$	250		$	44	$	294
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (1)	4			5		9
Reported in increases (decreases) in other comprehensive income	5			2		7
Purchases, sales and settlements/maturities:
Purchases	79			3		82
Sales	—			—		—
Settlements/maturities	(94		)	—		(94		)
Gross transfers into Level 3	10			—		10
Gross transfers out of Level 3	(24		)	—		(24		)
Balance at December 31, 2012	$	230		$	54	$	284
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date	$	—		$	—	$	—

(1)     Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.

Financial Instruments Disclosed, But Not Carried, At Fair Value

The Company uses various financial instruments in the normal course of its business. The Company’s insurance contracts are excluded from fair value of financial instruments accounting guidance and, therefore, are not included in the amounts discussed below.  The following tables present the carrying value and fair value of the Company’s financial assets and financial liabilities disclosed, but not carried, at fair value at June 30, 2013 and December 31, 2012, and the level within the fair value hierarchy at which such assets and liabilities are measured on a recurring basis.

(at June 30, 2013, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Short-term securities	$	3,394	$	3,394	$	1,343	$	1,990	$	61
Financial liabilities:
Debt	$	5,752	$	6,724	$	—	$	6,724	$	—
Commercial paper	$	100	$	100	$	—	$	100	$	—

(at December 31, 2012, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Short-term securities	$	3,483	$	3,483	$	1,448	$	1,957	$	78
Financial liabilities:
Debt	$	6,250	$	7,715	$	—	$	7,715	$	—
Commercial paper	$	100	$	100	$	—	$	100	$	—

The Company utilized a pricing service to estimate fair value for approximately 94% and 95% of short-term securities at June 30, 2013 and December 31, 2012, respectively.  A description of the process and inputs used by the pricing service to estimate fair value is discussed in the “Fixed Maturities” section above.  Estimates of fair value for U.S. Treasury securities and money market funds are based on market quotations received from the pricing service and are disclosed in Level 1 of the hierarchy.  The fair value of other short-term fixed maturity securities is estimated by the pricing service using observable market inputs and is disclosed in Level 2 of the hierarchy.  For short-term securities where an estimate is not obtained from the pricing service, the carrying value approximates fair value and is included in Level 3 of the hierarchy.

The Company utilized a pricing service to estimate fair value for 100% of its debt, including commercial paper, at both June 30, 2013 and December 31, 2012.  The pricing service utilizes market quotations for debt that have quoted prices in active markets.  Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the fair value estimates are based on market observable inputs and disclosed in Level 2 of the hierarchy.

The Company had no material assets or liabilities that were measured at fair value on a non-recurring basis during the six months ended June 30, 2013 or twelve months ended December 31, 2012.

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Consolidated Statement of Changes in Shareholders' Equity (Unaudited) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Common stock
Common stock, balance, beginning of year	$ 21,161	$ 20,732
Common stock, employee share-based compensation	106	149
Common stock, compensation amortization under share-based plans and other changes	100	89
Common stock, balance, end of period	21,367	20,970
Retained earnings
Retained earnings, balance, beginning of year	21,352	19,579
Net income	1,821	1,305
Dividends	(367)	(343)
Retained earnings, balance, end of period	22,806	20,541
Accumulated other comprehensive income, net of tax
Accumulated other comprehensive income, net of tax, balance, beginning of year	2,236	2,005
Other comprehensive income (loss)	(1,516)	125
Accumulated other comprehensive income, net of tax, balance, end of period	720	2,130
Treasury stock (at cost)
Treasury stock (at cost), balance, beginning of year	(19,344)	(17,839)
Treasury stock (at cost), treasury stock acquired - share repurchase authorization	(600)	(700)
Treasury stock (at cost), net shares acquired related to employee share-based compensation plans	(59)	(53)
Treasury stock (at cost), balance, end of period	(20,003)	(18,592)
Total shareholders' equity	$ 24,890	$ 25,049
Common shares outstanding
Common shares outstanding, balance, beginning of year	377.4	392.8
Common shares outstanding, treasury stock acquired - share repurchase authorization	(7.3)	(11.6)
Common shares outstanding, net shares issued under employee share-based compensation plans	3.4	4.8
Common shares outstanding, balance, end of period	373.5	386.0

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Shareholders' Equity (details)	Jun. 30, 2013
Shareholders' Equity disclosure
Number of preferred stock shares the shareholders voted to amend the Company's Articles of Incorporation to provide authority to issue	5,000,000

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Goodwill (details) - Other Intangible Assets (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Other intangible assets by major asset class
Intangible assets subject to amortization, gross carrying amount	$ 646		$ 646		$ 646
Intangible assets subject to amortization, accumulated amortization	504		504		481
Intangible assets subject to amortization, net	142		142		165
Amortization expense for other intangible assets	12	12	23	28
Customer-related [Member]
Other intangible assets by major asset class
Intangible assets subject to amortization, gross carrying amount	455		455		455
Intangible assets subject to amortization, accumulated amortization	398		398		383
Intangible assets subject to amortization, net	57		57		72
Amortization expense for other intangible assets	8	7	15	18
Fair value adjustment on claims and claim adjustment expense reserves and reinsurance recoverables [Member]
Other intangible assets by major asset class
Intangible assets subject to amortization, gross carrying amount	191		191		191
Intangible assets subject to amortization, accumulated amortization	106		106		98
Intangible assets subject to amortization, net	85		85		93
Amortization expense for other intangible assets	$ 4	$ 5	$ 8	$ 10

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Basis of Presentation and Accounting Policies (details) - Acquisitions (The Dominion of Canada General Insurance Company [Member]) In Millions, unless otherwise specified	0 Months Ended
	Jun. 10, 2013 US Dollars [Member] USD ($)	Jun. 10, 2013 Canadian Dollars [Member] CAD
Business acquisitions
Approximate cash purchase price in agreement to acquire all of the issued and outstanding stock of a foreign entity, subject to adjustment upon final closing of transaction	$ 1,100	1,125

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Consolidating Financial Statements (Unaudited) (details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013
Consolidating Financial Statements of The Travelers Companies, Inc. and Subsidiaries (Unaudited) disclosure
Amount of certain debt obligations of TPC that are unconditionally guaranteed by The Travelers Companies, Inc.	$ 700

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Pension Plans, Retirement Benefits and Savings Plans

6 Months Ended

Jun. 30, 2013

Pension Plans, Retirement Benefits and Savings Plans disclosure

Pension Plans, Retirement Benefits and Savings Plans disclosure [Text Block]

11. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS

The following tables summarize the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans recognized in the consolidated statement of income.

	Pension Plans						Postretirement Benefit Plans
(for the three months ended June 30, in millions)	2013			2012			2013			2012
Net Periodic Benefit Cost:
Service cost	$	30		$	29		$	—		$	—
Interest cost on benefit obligation	33			34			2			3
Expected return on plan assets	(52		)	(47		)	—			(1		)
Amortization of unrecognized:
Prior service benefit	—			—			(1		)	—
Net actuarial loss	26			23			—			—
Net benefit expense	$	37		$	39		$	1		$	2

	Pension Plans						Postretirement Benefit Plans
(for the six months ended June 30, in millions)	2013			2012			2013			2012
Net Periodic Benefit Cost:
Service cost	$	59		$	57		$	—		$	—
Interest cost on benefit obligation	66			69			4			6
Expected return on plan assets	(104		)	(94		)	—			(1		)
Amortization of unrecognized:
Prior service benefit	—			—			(1		)	—
Net actuarial loss	53			45			—			—
Net benefit expense	$	74		$	77		$	3		$	5

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Debt

6 Months Ended

Jun. 30, 2013

Debt disclosure

Debt disclosure [Text Block]

7. DEBT

Debt Payment.  On March 15, 2013, the Company’s $500 million, 5.00% senior notes matured and were fully paid.

Credit Agreement.  On June 7, 2013, the Company entered into a five-year, $1.0 billion revolving credit agreement with a syndicate of financial institutions, replacing its three-year $1.0 billion credit agreement that was due to expire on June 10, 2013.  Pursuant to the credit agreement covenants, the Company must maintain a minimum consolidated net worth, defined as shareholders’ equity determined in accordance with GAAP plus (a) trust preferred securities (not to exceed 15% of total capital) and (b) mandatorily convertible securities (combined with trust preferred securities, not to exceed 25%  of total capital) less goodwill and other intangible assets.  That threshold is adjusted downward by an amount equal to 70% of the aggregate amount of common stock repurchased by the Company after March 31, 2013, up to a maximum deduction of $1.75 billion.  The threshold was $15.27 billion at June 30, 2013 and could decline to a minimum of $13.73 billion during the term of the credit agreement, subject to the Company repurchasing an additional $2.20 billion of its common stock.  In addition, the credit agreement contains other customary restrictive covenants as well as certain customary events of default, including with respect to a change in control, which is defined to include the acquisition of 35% or more of the Company’s voting stock and certain changes in the composition of the Company’s board of directors.  At June 30, 2013, the Company was in compliance with these covenants.  Generally, the cost of borrowing under this agreement will range from LIBOR plus 87.5 basis points to LIBOR plus 150 basis points, depending on the Company’s credit ratings.  At June 30, 2013, that cost would have been LIBOR plus 112.5 basis points, had there been any amounts outstanding under the credit agreement.  This credit agreement also supports the Company’s commercial paper program.

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Basis of Presentation and Accounting Policies (policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies disclosure

Accounting Policies, Basis of Presentation [Policy Text Block]

Basis of Presentation

The interim consolidated financial statements include the accounts of The Travelers Companies, Inc. (together with its subsidiaries, the Company). These financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP) and are unaudited. In the opinion of the Company’s management, all adjustments necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. All material intercompany transactions and balances have been eliminated. The accompanying interim consolidated financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s 2012 Annual Report on Form 10-K.

The preparation of the interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates.

Accounting Policies, Adoption of Accounting Standards Updates [Policy Text Block]

Adoption of Accounting Standards Updates

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

In February 2013, the Financial Accounting Standards Board (FASB) issued updated guidance to improve the reporting of reclassifications out of accumulated other comprehensive income. The guidance requires an entity to present, either on the face of the statement of income or in the notes, separately for each component of comprehensive income, the current period reclassifications out of accumulated other comprehensive income by the respective line items of net income affected by the reclassification.

The updated guidance is effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted the updated guidance effective March 31, 2013, and such adoption did not have any effect on the Company’s results of operations, financial position or liquidity.

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Contingencies, Commitments and Guarantees

6 Months Ended

Jun. 30, 2013

Contingencies, Commitments and Guarantees disclosure

Contingencies, Commitments and Guarantees disclosure [Text Block]

12. CONTINGENCIES, COMMITMENTS AND GUARANTEES

Contingencies

The major pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or to which any of the Company’s properties is subject are described below.

Asbestos- and Environmental-Related Proceedings

In the ordinary course of its insurance business, the Company has received and continues to receive claims for insurance arising under policies issued by the Company asserting alleged injuries and damages from asbestos- and environmental-related exposures that are the subject of related coverage litigation, including, among others, the litigation described below.  The Company is defending asbestos- and environmental-related litigation vigorously and believes that it has meritorious defenses; however, the outcomes of these disputes are uncertain.  In this regard, the Company employs dedicated specialists and aggressive resolution strategies to manage asbestos and environmental loss exposure, including settling litigation under appropriate circumstances.

Asbestos Direct Action Litigation — In October 2001 and April 2002, two purported class action suits (Wise v. Travelers and Meninger v. Travelers) were filed against Travelers Property Casualty Corp. (TPC), a wholly-owned subsidiary of the Company, and other insurers (not including The St. Paul Companies, Inc. (SPC), which was acquired by TPC in 2004) in state court in West Virginia.  These and other cases subsequently filed in West Virginia were consolidated into a single proceeding in the Circuit Court of Kanawha County, West Virginia. The plaintiffs allege that the insurer defendants engaged in unfair trade practices in violation of state statutes by inappropriately handling and settling asbestos claims. The plaintiffs seek to reopen large numbers of settled asbestos claims and to impose liability for damages, including punitive damages, directly on insurers.  Similar lawsuits alleging inappropriate handling and settling of asbestos claims were filed in Massachusetts and Hawaii state courts.  These suits are collectively referred to as the Statutory and Hawaii Actions.

In March 2002, the plaintiffs in consolidated asbestos actions pending before a mass tort panel of judges in West Virginia state court amended their complaint to include TPC as a defendant, alleging that TPC and other insurers breached alleged duties to certain users of asbestos products.  The plaintiffs seek damages, including punitive damages. Lawsuits seeking similar relief and raising similar allegations, primarily violations of purported common law duties to third parties, have also been asserted in various state courts against TPC and SPC. The claims asserted in these suits are collectively referred to as the Common Law Claims.

In response to these claims, TPC moved to enjoin the Statutory Actions and the Common Law Claims in the federal bankruptcy court that had presided over the bankruptcy of TPC’s former policyholder Johns-Manville Corporation on the ground that the suits violated injunctions entered in connection with confirmation of the Johns-Manville bankruptcy (the “1986 Orders”).  The bankruptcy court issued a temporary restraining order and referred the parties to mediation.  In November 2003, the parties reached a settlement of the Statutory and Hawaii Actions, which included a lump-sum payment of up to $412 million by TPC, subject to a number of significant contingencies. In May 2004, the parties reached a settlement resolving substantially all pending and similar future Common Law Claims against TPC, which included a payment of up to $90 million by TPC, subject to similar contingencies.  Among the contingencies for each of these settlements was that the bankruptcy court issue an order, which must become a final order, clarifying that all of these claims, and similar future asbestos-related claims against TPC, as well as related contribution claims, are barred by the 1986 Orders.

On August 17, 2004, the bankruptcy court entered an order approving the settlements and clarifying that the 1986 Orders barred the pending Statutory and Hawaii Actions and substantially all Common Law Claims pending against TPC (the “Clarifying Order”). The Clarifying Order also applies to similar direct action claims that may be filed in the future.  Although the District Court substantially affirmed the Clarifying Order, on February 15, 2008, the Second Circuit issued an opinion vacating on jurisdictional grounds the District Court’s approval of the Clarifying Order.

On December 12, 2008, the United States Supreme Court granted TPC’s Petition for Writ of Certiorari and, on June 18, 2009, the Supreme Court reversed the Second Circuit’s February 15, 2008 decision, finding, among other things, that the 1986 Orders are final and therefore may not be collaterally challenged on jurisdictional grounds.  The Supreme Court further ruled that the bankruptcy court had jurisdiction to issue the Clarifying Order.  However, since the Second Circuit had not ruled on certain additional issues, principally related to procedural matters and the adequacy of notice provided to certain parties, the Supreme Court remanded the case to the Second Circuit for further proceedings on those specific issues.

On March 22, 2010, the Second Circuit issued an opinion in which it found that the notice of the 1986 Orders provided to one remaining objector was insufficient to bar contribution claims by that objector against TPC. TPC’s Petition for Rehearing and Rehearing En Banc was denied May 25, 2010 and its Petition for Writ of Certiorari and Petition for a Writ of Mandamus were denied by the United States Supreme Court on November 29, 2010.

The plaintiffs in the Statutory and Hawaii actions and the Common Law Claims actions thereafter filed motions in the bankruptcy court to compel TPC to make payment under the settlement agreements, arguing that all conditions precedent to the settlements had been met.  On December 16, 2010, the bankruptcy court granted the plaintiffs’ motions and ruled that TPC was required to fund the settlements.  The court entered judgment against TPC on January 20, 2011 in accordance with this ruling and ordered TPC to pay the settlement amounts plus prejudgment interest.  The bankruptcy court’s judgment was reversed by the district court on March 1, 2012, the district court having found that the conditions to the settlements had not been met in view of the Second Circuit’s March 22, 2010 ruling permitting the filing of contribution claims against TPC.  The plaintiffs appealed the district court’s March 1, 2012 decision to the Second Circuit Court of Appeals.  Oral argument before the Second Circuit took place on January 10, 2013, and the parties await the court’s decision.

SPC, which is not covered by the Manville bankruptcy court rulings or the settlements described above, from time to time has been named as a defendant in direct action cases in Texas state court asserting common law claims.  All such cases that are still pending and in which SPC has been served are currently on the inactive docket in Texas state court.  If any of those cases becomes active, SPC intends to litigate those cases vigorously.  SPC was previously a defendant in similar direct actions in Ohio state court, which have been dismissed following favorable rulings by Ohio trial and appellate courts.  From time to time, SPC and/or its subsidiaries have been named in similar individual direct actions in other jurisdictions.

Outcome and Impact of Asbestos and Environmental Claims and Litigation.  Currently, it is not possible to predict legal outcomes and their impact on the future development of claims and litigation relating to asbestos and environmental claims. Any such development will be affected by future court decisions and interpretations, as well as changes in applicable legislation. Because of these uncertainties, additional liabilities may arise for amounts in excess of the Company’s current reserves. In addition, the Company’s estimate of ultimate claims and claim adjustment expenses may change. These additional liabilities or increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company’s results of operations in future periods.

Other Proceedings Not Arising Under Insurance Contracts or Reinsurance Agreements

The Company is involved in other lawsuits, including lawsuits alleging extra-contractual damages relating to insurance contracts or reinsurance agreements, that do not arise under insurance contracts or reinsurance agreements.  Based upon currently available information, the Company does not believe it is reasonably possible that any such lawsuit or related lawsuits would be material to the Company’s results of operations or have a material adverse effect on the Company’s financial position or liquidity.

Gain Contingencies

On August 17, 2010, in a reinsurance dispute in New York state court captioned United States Fidelity & Guaranty Company v. American Re-Insurance Company, et al., the trial court granted summary judgment for United States Fidelity and Guaranty Company (USF&G), a subsidiary of the Company, and denied summary judgment for American Re-Insurance Company, a subsidiary of Munich Re (American Re), and three other reinsurers.  By order dated October 22, 2010, the trial court corrected certain clerical errors and made certain clarifications to the August 17, 2010 order.  On October 25, 2010, judgment was entered against American Re and the other three insurers, awarding USF&G $420 million, comprising $251 million ceded under the terms of the disputed reinsurance contract plus interest of 9% amounting to $169 million as of that date.  The judgment, including the award of interest, was appealed by the reinsurers to the New York Supreme Court, Appellate Division, First Department.  On January 24, 2012, the Appellate Division affirmed the judgment.  On January 30, 2012, the reinsurers filed a motion with the Appellate Division seeking permission to appeal its decision to the New York Court of Appeals, and on March 12, 2012, the Appellate Division granted the reinsurers’ motion.  On February 7, 2013, the Court of Appeals issued an opinion that largely affirmed the summary judgment in USF&G’s favor, while modifying in part the summary judgment with respect to two discrete issues and remanding the case to the trial court for determination of those issues.  The Company believes it has a meritorious position on each of these issues and intends to pursue its claim vigorously.  On March 8, 2013, the reinsurers filed motions with the Court of Appeals to reargue one issue that was decided in USF&G’s favor.  On March 18, 2013, USF&G filed its opposition to the reinsurers’ motions to reargue.  On May 2, 2013, the Court of Appeals denied the reinsurers’ motions for re-argument.  At June 30, 2013, the claim totaled $482 million, comprising the $251 million of reinsurance recoverable plus interest amounting to $231 million as of that date.  Interest will continue to accrue at 9% until the claim is paid. The $251 million of reinsurance recoverable owed to USF&G under the terms of the disputed reinsurance contract has been reported as part of reinsurance recoverables in the Company’s consolidated balance sheet.  The interest that would be owed as part of any judgment ultimately entered in favor of USF&G is treated for accounting purposes as a gain contingency in accordance with FASB Topic 450, Contingencies, and accordingly has not been recognized in the Company’s consolidated financial statements.

In an unrelated action, The Travelers Indemnity Company is one of the Settlement Class plaintiffs and a class member in a class action lawsuit captioned Safeco Insurance Company of America, et al. v American International Group, Inc. et al. (U.S. District Court, N.D. Ill.) in which the defendants are alleged to have engaged in the under-reporting of workers’ compensation premium in connection with a workers’ compensation reinsurance pool in which several subsidiaries of the Company participate.  On July 26, 2011, the court granted preliminary approval of a class settlement pursuant to which the defendants agreed to pay $450 million to the class.  On December 21, 2011, the court entered an order granting final approval of the settlement, and on February 28, 2012, the district court issued a written opinion approving the settlement.  On March 27, 2012, three parties who objected to the settlement appealed the court’s orders approving the settlement to the U.S. Court of Appeals for the Seventh Circuit.  On January 11, 2013, all parties, including the three parties who had objected to the settlement, filed a Stipulation of Dismissal indicating that there were no longer any objections to the settlement.  On March 25, 2013, the Seventh Circuit dismissed the appeals.  On April 16, 2013, the Seventh Circuit issued its mandate returning the case to the district court for administration of the settlement.  Prior to receiving payment, the Company accounted for its anticipated allocation from the settlement fund as a gain contingency in accordance with FASB Topic 450, Contingencies.  On June 26, 2013, the Company received payment of approximately $91 million, comprising 98% of its allocation from the settlement fund. The Company anticipates receiving payment of the remaining 2% (approximately $2 million, less any additional fees and expenses to be paid from the settlement fund), prior to December 31, 2013.  The $91 million received by the Company in June 2013 was recorded as a gain and is reported in “Other revenues” in the consolidated statement of income in the Company’s consolidated financial statements.

Other Commitments and Guarantees

Commitments

Investment Commitments — The Company has unfunded commitments to private equity limited partnerships and real estate partnerships in which it invests.  These commitments totaled $1.40 billion and $1.27 billion at June 30, 2013 and December 31, 2012, respectively.

Guarantees

In the ordinary course of selling business entities to third parties, the Company has agreed to indemnify purchasers for losses arising out of breaches of representations and warranties with respect to the business entities being sold, covenants and obligations of the Company and/or its subsidiaries following the closing, and in certain cases obligations arising from undisclosed liabilities, adverse reserve development, imposition of additional taxes due to either a change in the tax law or an adverse interpretation of the tax law, or certain named litigation.  Such indemnification provisions generally survive for periods ranging from seven years following the applicable closing date to the expiration of the relevant statutes of limitations, although, in some cases, there may be other agreed upon term limitations or no term limitations.  Certain of these contingent obligations are subject to deductibles which have to be incurred by the obligee before the Company is obligated to make payments.  The maximum amount of the Company’s contingent obligation for indemnifications related to the sale of business entities that are quantifiable was $471 million at June 30, 2013, of which $8 million was recognized on the balance sheet at that date.

The Company also has contingent obligations for guarantees related to certain investments, third-party loans related to certain investments, certain insurance policy obligations of former insurance subsidiaries, and various other indemnifications.  The Company also provides standard indemnifications to service providers in the normal course of business.  The indemnification clauses are often standard contractual terms.  Certain of these guarantees and indemnifications have no stated or notional amounts or limitation to the maximum potential future payments, and, accordingly, the Company is unable to develop an estimate of the maximum potential payments for such arrangements.  The maximum amount of the Company’s obligation for guarantees of certain investments and third-party loans related to certain investments that are quantifiable was $129 million at June 30, 2013, approximately $63 million of which is indemnified by a third party.  The maximum amount of the Company’s obligation related to the guarantee of certain insurance policy obligations of a former insurance subsidiary was $480 million at June 30, 2013, all of which is indemnified by a third party.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 19, 2013
Entity [Domain]
Registrant name	Travelers Companies, Inc.
Central index key	0000086312
Document type	10-Q
Document period end date	Jun. 30, 2013
Amendment flag	false
Current fiscal year end date	--12-31
Well-known seasoned issuer	Yes
Voluntary filers	No
Current reporting status	Yes
Filer category	Large Accelerated Filer
Common stock shares outstanding		373,469,340
Document fiscal year focus	2013
Document fiscal period focus	Q2

XML

Consolidating Financial Statements (Unaudited)

6 Months Ended

Jun. 30, 2013

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, which totaled $700 million at June 30, 2013.

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). Concurrent with the merger, The Travelers Companies, Inc. fully and unconditionally assumed 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.

On June 10, 2013, in connection with the definitive agreement to acquire all of the issued and outstanding shares of The Dominion of Canada General Insurance Company (The Dominion) from E-L Financial Corporation Limited (E-L Financial), The Travelers Companies, Inc. (TRV) provided customary representations and warranties, as well as an unconditional guarantee to E-L Financial of the full and prompt payment of the purchase price when due and the performance of all agreements, covenants, and obligations under the agreement by TRV’s subsidiary that was formed to complete the purchase.  See Financial, Professional & International Insurance in note 1 to the Company’s consolidated financial statements for further information regarding the transaction.

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended June 30, 2013

(in millions)	TPC		OtherSubsidiaries		Travelers (2)			Eliminations			Consolidated
Revenues
Premiums	$	3,804	$	1,799	$	—		$	—		$	5,603
Net investment income	457		229		1			—			687
Fee income	82		—		—			—			82
Net realized investment gains (1)	124		43		—			—			167
Other revenues	103		32		—			—			135
Total revenues	4,570		2,103		1			—			6,674
Claims and expenses
Claims and claim adjustment expenses	2,339		1,191		—			—			3,530
Amortization of deferred acquisition costs	635		315		—			—			950
General and administrative expenses	639		289		3			—			931
Interest expense	12		—		74			—			86
Total claims and expenses	3,625		1,795		77			—			5,497
Income (loss) before income taxes	945		308		(76		)	—			1,177
Income tax expense (benefit)	203		77		(28		)	—			252
Net income of subsidiaries	—		—		973			(973		)	—
Net income	$	742	$	231	$	925		$	(973	)	$	925

(1) Total other-than-temporary impairment (OTTI) for the three months ended June 30, 2013, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains (losses)	$	(1	)	$	—		$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains	$	(1	)	$	(1	)	$	—	$	—	$	(2	)
OTTI gains recognized in OCI	$	—		$	1		$	—	$	—	$	1

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended June 30, 2012

(in millions)	TPC		OtherSubsidiaries		Travelers (2)			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 (1)	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
Net income of subsidiaries	—		—		539			(539		)	—
Net income	$	394	$	145	$	499		$	(539	)	$	499

(1) Total other-than-temporary impairment (OTTI) for the three months ended June 30, 2012, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains (losses)	$	(1	)	$	12		$	—	$	—	$	11
OTTI losses recognized in net realized investment gains	$	(3	)	$	(1	)	$	—	$	—	$	(4	)
OTTI gains recognized in OCI	$	2		$	13		$	—	$	—	$	15

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the six months ended June 30, 2013

(in millions)	TPC		OtherSubsidiaries		Travelers (2)			Eliminations			Consolidated
Revenues
Premiums	$	7,545	$	3,575	$	—		$	—		$	11,120
Net investment income	912		442		3			—			1,357
Fee income	178		1		—			—			179
Net realized investment gains (1)	117		59		1			—			177
Other revenues	132		37		—			—			169
Total revenues	8,884		4,114		4			—			13,002
Claims and expenses
Claims and claim adjustment expenses	4,470		2,213		—			—			6,683
Amortization of deferred acquisition costs	1,272		626		—			—			1,898
General and administrative expenses	1,269		575		2			—			1,846
Interest expense	29		—		149			—			178
Total claims and expenses	7,040		3,414		151			—			10,605
Income (loss) before income taxes	1,844		700		(147		)	—			2,397
Income tax expense (benefit)	452		176		(52		)	—			576
Net income of subsidiaries	—		—		1,916			(1,916		)	—
Net income	$	1,392	$	524	$	1,821		$	(1,916	)	$	1,821

(1) Total other-than-temporary impairment (OTTI) for the six months ended June 30, 2013, and the amounts comprising total OTTI that were recognized in net realized investment gains and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains (losses)	$	(4	)	$	3		$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains	$	(5	)	$	(2	)	$	—	$	—	$	(7	)
OTTI gains recognized in OCI	$	1		$	5		$	—	$	—	$	6

(2) 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 (2)			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) (1)	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
Net income of subsidiaries	—		—			1,406			(1,406		)	—
Net income	$	1,012	$	394		$	1,305		$	(1,406	)	$	1,305

(1) Total other-than-temporary impairment (OTTI) for the six months ended June 30, 2012, and the amounts comprising total OTTI that were recognized in net realized investment gains (losses) and in other comprehensive income (OCI) were as follows:

(in millions)	TPC			OtherSubsidiaries			Travelers (2)		Eliminations		Consolidated
Total OTTI gains	$	—		$	11		$	—	$	—	$	11
OTTI losses recognized in net realized investment gains (losses)	$	(6	)	$	(2	)	$	—	$	—	$	(8	)
OTTI gains recognized in OCI	$	6		$	13		$	—	$	—	$	19

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For the three months ended June 30, 2013

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Net income	$	742		$	231		$	925		$	(973	)	$	925
Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(1,282		)	(509		)	1			—			(1,790		)
Having credit losses recognized in the consolidated statement of income	(2		)	(3		)	—			—			(5		)
Net changes in benefit plan assets and obligations	—			1			25			—			26
Net changes in unrealized foreign currency translation	(51		)	(22		)	—			—			(73		)
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(1,335		)	(533		)	26			—			(1,842		)
Income tax expense (benefit)	(462		)	(183		)	9			—			(636		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(873		)	(350		)	17			—			(1,206		)
Other comprehensive loss of subsidiaries	—			—			(1,223		)	1,223			—
Other comprehensive loss	(873		)	(350		)	(1,206		)	1,223			(1,206		)
Comprehensive loss	$	(131	)	$	(119	)	$	(281	)	$	250		$	(281	)

(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:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	167			52			(3		)	—			216
Having credit losses recognized in the consolidated statement of income	5			—			—			—			5
Net changes in benefit plan assets and obligations	—			1			21			—			22
Net changes in unrealized foreign currency translation	(54		)	(32		)	—			—			(86		)
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	118			21			18			—			157
Income tax expense	43			16			7			—			66
Other comprehensive income net of taxes, before other comprehensive income of subsidiaries	75			5			11			—			91
Other comprehensive income of subsidiaries	—			—			80			(80		)	—
Other comprehensive income	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 six months ended June 30, 2013

(in millions)	TPC			OtherSubsidiaries			Travelers (1)			Eliminations			Consolidated
Net income	$	1,392		$	524		$	1,821		$	(1,916	)	$	1,821
Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(1,597		)	(576		)	7			—			(2,166		)
Having credit losses recognized in the consolidated statement of income	5			(1		)	—			—			4
Net changes in benefit plan assets and obligations	1			3			50			—			54
Net changes in unrealized foreign currency translation	(61		)	(108		)	—			—			(169		)
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(1,652		)	(682		)	57			—			(2,277		)
Income tax expense (benefit)	(570		)	(211		)	20			—			(761		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(1,082		)	(471		)	37			—			(1,516		)
Other comprehensive loss of subsidiaries	—			—			(1,553		)	1,553			—
Other comprehensive loss	(1,082		)	(471		)	(1,516		)	1,553			(1,516		)
Comprehensive income	$	310		$	53		$	305		$	(363	)	$	305

(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:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	113			20		6		—			139
Having credit losses recognized in the consolidated statement of income	21			9		—		—			30
Net changes in benefit plan assets and obligations	—			—		42		—			42
Net changes in unrealized foreign currency translation	(33		)	11		—		—			(22		)
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	101			40		48		—			189
Income tax expense	36			11		17		—			64
Other comprehensive income, net of taxes, before other comprehensive income of subsidiaries	65			29		31		—			125
Other comprehensive income of subsidiaries	—			—		94		(94		)	—
Other comprehensive income	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 BALANCE SHEET (Unaudited)

At June 30, 2013

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,494)	$	43,198	$	19,607	$	38		$	—		$	62,843
Equity securities, available for sale, at fair value (cost $463)	153		433		115			—			701
Real estate investments	32		889		—			—			921
Short-term securities	1,369		252		1,773			—			3,394
Other investments	2,431		976		1			—			3,408
Total investments	47,183		22,157		1,927			—			71,267
Cash	152		155		1			—			308
Investment income accrued	498		232		4			—			734
Premiums receivable	4,196		2,072		—			—			6,268
Reinsurance recoverables	6,468		3,419		—			—			9,887
Ceded unearned premiums	736		177		—			—			913
Deferred acquisition costs	1,567		235		—			—			1,802
Deferred taxes	100		53		104			—			257
Contractholder receivables	3,231		1,217		—			—			4,448
Goodwill	2,411		954		—			—			3,365
Other intangible assets	253		105		—			—			358
Investment in subsidiaries	—		—		28,358			(28,358		)	—
Other assets	1,983		32		278			—			2,293
Total assets	$	68,778	$	30,808	$	30,672		$	(28,358	)	$	101,900
Liabilities
Claims and claim adjustment expense reserves	$	32,681	$	16,939	$	—		$	—		$	49,620
Unearned premium reserves	7,935		3,622		—			—			11,557
Contractholder payables	3,231		1,217		—			—			4,448
Payables for reinsurance premiums	183		212		—			—			395
Debt	692		—		5,160			—			5,852
Other liabilities	3,817		689		632			—			5,138
Total liabilities	48,539		22,679		5,792			—			77,010
Shareholders’ equity
Common stock (1,750.0 shares authorized; 373.5 shares issued and outstanding)	—		390		21,367			(390		)	21,367
Additional paid-in capital	11,635		6,501		—			(18,136		)	—
Retained earnings	7,580		786		22,796			(8,356		)	22,806
Accumulated other comprehensive income	1,024		452		720			(1,476		)	720
Treasury stock, at cost (380.3 shares)	—		—		(20,003		)	—			(20,003		)
Total shareholders’ equity	20,239		8,129		24,880			(28,358		)	24,890
Total liabilities and shareholders’ equity	$	68,778	$	30,808	$	30,672		$	(28,358	)	$	101,900

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

CONSOLIDATING BALANCE SHEET (Unaudited)

At December 31, 2012

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,829)	$	44,336	$	21,019	$	38		$	—		$	65,393
Equity securities, available for sale, at fair value (cost $462)	153		386		106			—			645
Real estate investments	33		850		—			—			883
Short-term securities	1,187		338		1,958			—			3,483
Other investments	2,443		990		1			—			3,434
Total investments	48,152		23,583		2,103			—			73,838
Cash	177		151		2			—			330
Investment income accrued	507		240		5			—			752
Premiums receivable	3,944		1,928		—			—			5,872
Reinsurance recoverables	7,112		3,600		—			—			10,712
Ceded unearned premiums	698		158		—			—			856
Deferred acquisition costs	1,560		232		—			—			1,792
Contractholder receivables	3,540		1,266		—			—			4,806
Goodwill	2,411		954		—			—			3,365
Other intangible assets	268		113		—			—			381
Investment in subsidiaries	—		—		28,562			(28,562		)	—
Other assets	1,930		286		18			—			2,234
Total assets	$	70,299	$	32,511	$	30,690		$	(28,562	)	$	104,938
Liabilities
Claims and claim adjustment expense reserves	$	33,598	$	17,324	$	—		$	—		$	50,922
Unearned premium reserves	7,751		3,490		—			—			11,241
Contractholder payables	3,540		1,266		—			—			4,806
Payables for reinsurance premiums	151		195		—			—			346
Deferred taxes	316		123		(101		)	—			338
Debt	1,191		—		5,159			—			6,350
Other liabilities	4,107		1,186		237			—			5,530
Total liabilities	50,654		23,584		5,295			—			79,533
Shareholders’ equity
Common stock (1,750.0 shares authorized; 377.4 shares issued and outstanding)	—		390		21,161			(390		)	21,161
Additional paid-in capital	11,135		6,501		—			(17,636		)	—
Retained earnings	6,404		1,113		21,342			(7,507		)	21,352
Accumulated other comprehensive income	2,106		923		2,236			(3,029		)	2,236
Treasury stock, at cost (372.3 shares)	—		—		(19,344		)	—			(19,344		)
Total shareholders’ equity	19,645		8,927		25,395			(28,562		)	25,405
Total liabilities and shareholders’ equity	$	70,299	$	32,511	$	30,690		$	(28,562	)	$	104,938

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

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the six months ended June 30, 2013

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	1,392		$	524		$	1,821		$	(1,916	)	$	1,821
Net adjustments to reconcile net income to net cash provided by operating activities	(807		)	37			(1,148		)	1,349			(569		)
Net cash provided by operating activities	585			561			673			(567		)	1,252
Cash flows from investing activities
Proceeds from maturities of fixed maturities	2,570			1,330			1			—			3,901
Proceeds from sales of investments:
Fixed maturities	300			267			5			—			572
Equity securities	18			32			—			—			50
Other investments	224			157			—			—			381
Purchases of investments:
Fixed maturities	(3,062		)	(1,419		)	(7		)	—			(4,488		)
Equity securities	(15		)	(24		)	(1		)	—			(40		)
Real estate investments	—			(59		)	—			—			(59		)
Other investments	(150		)	(59		)	—			—			(209		)
Net sales (purchases) of short-term securities	(182		)	78			185			—			81
Securities transactions in course of settlement	59			1			—			—			60
Other	(155		)	(2		)	—			—			(157		)
Net cash provided by (used in) investing activities	(393		)	302			183			—			92
Cash flows from financing activities
Payment of debt	(500		)	—			—			—			(500		)
Dividends paid to shareholders	—			—			(366		)	—			(366		)
Issuance of common stock — employee share options	—			—			139			—			139
Treasury stock acquired — share repurchase authorization	—			—			(600		)	—			(600		)
Treasury stock acquired — net employee share-based compensation	—			—			(59		)	—			(59		)
Excess tax benefits from share-based payment arrangements	—			—			29			—			29
Capital contributions	500			—			—			(500		)	—
Dividends paid to parent company	(217		)	(850		)	—			1,067			—
Net cash used in financing activities	(217		)	(850		)	(857		)	567			(1,357		)
Effect of exchange rate changes on cash	—			(9		)	—			—			(9		)
Net increase (decrease) in cash	(25		)	4			(1		)	—			(22		)
Cash at beginning of year	177			151			2			—			330
Cash at end of period	$	152		$	155		$	1		$	—		$	308
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	479		$	178		$	(162	)	$	—		$	495
Interest paid	$	36		$	—		$	148		$	—		$	184

(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 investments	—			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 investments	—			(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 stock acquired — share repurchase authorization	—			—			(707		)	—			(707		)
Treasury stock 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.

XML

Consolidating Financial Statements (details) - Consolidated Statement of Comprehensive Income (Loss) (Unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidating Statement of Comprehensive Income (Loss)
Net income	$ 925	$ 499	$ 1,821	$ 1,305
Changes in net unrealized gains on investment securities having no credit losses recognized in the consolidated statement of income	(1,790)	216	(2,166)	139
Changes in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income	(5)	5	4	30
Net changes in benefit plan assets and obligations	26	22	54	42
Net changes in unrealized foreign currency translation	(73)	(86)	(169)	(22)
Other comprehensive income (loss) before income taxes	(1,842)	157	(2,277)	189
Income tax expense (benefit)	(636)	66	(761)	64
Other comprehensive income (loss), net of taxes, before other comprehensive income (loss) of subsidiaries	(1,206)	91	(1,516)	125
Other comprehensive income (loss), net of taxes	(1,206)	91	(1,516)	125
Comprehensive income (loss)	(281)	590	305	1,430
TPC [Member]
Consolidating Statement of Comprehensive Income (Loss)
Net income	742	394	1,392	1,012
Changes in net unrealized gains on investment securities having no credit losses recognized in the consolidated statement of income	(1,282)	167	(1,597)	113
Changes in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income	(2)	5	5	21
Net changes in benefit plan assets and obligations			1
Net changes in unrealized foreign currency translation	(51)	(54)	(61)	(33)
Other comprehensive income (loss) before income taxes	(1,335)	118	(1,652)	101
Income tax expense (benefit)	(462)	43	(570)	36
Other comprehensive income (loss), net of taxes, before other comprehensive income (loss) of subsidiaries	(873)	75	(1,082)	65
Other comprehensive income (loss), net of taxes	(873)	75	(1,082)	65
Comprehensive income (loss)	(131)	469	310	1,077
Other Subsidiaries [Member]
Consolidating Statement of Comprehensive Income (Loss)
Net income	231	145	524	394
Changes in net unrealized gains on investment securities having no credit losses recognized in the consolidated statement of income	(509)	52	(576)	20
Changes in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income	(3)		(1)	9
Net changes in benefit plan assets and obligations	1	1	3
Net changes in unrealized foreign currency translation	(22)	(32)	(108)	11
Other comprehensive income (loss) before income taxes	(533)	21	(682)	40
Income tax expense (benefit)	(183)	16	(211)	11
Other comprehensive income (loss), net of taxes, before other comprehensive income (loss) of subsidiaries	(350)	5	(471)	29
Other comprehensive income (loss), net of taxes	(350)	5	(471)	29
Comprehensive income (loss)	(119)	150	53	423
Travelers [Member]
Consolidating Statement of Comprehensive Income (Loss)
Net income	925	499	1,821	1,305
Changes in net unrealized gains on investment securities having no credit losses recognized in the consolidated statement of income	1	(3)	7	6
Net changes in benefit plan assets and obligations	25	21	50	42
Other comprehensive income (loss) before income taxes	26	18	57	48
Income tax expense (benefit)	9	7	20	17
Other comprehensive income (loss), net of taxes, before other comprehensive income (loss) of subsidiaries	17	11	37	31
Other comprehensive income (loss) of subsidiaries	(1,223)	80	(1,553)	94
Other comprehensive income (loss), net of taxes	(1,206)	91	(1,516)	125
Comprehensive income (loss)	(281)	590	305	1,430
Eliminations [Member]
Consolidating Statement of Comprehensive Income (Loss)
Net income	(973)	(539)	(1,916)	(1,406)
Other comprehensive income (loss) of subsidiaries	1,223	(80)	1,553	(94)
Other comprehensive income (loss), net of taxes	1,223	(80)	1,553	(94)
Comprehensive income (loss)	$ 250	$ (619)	$ (363)	$ (1,500)

XML

Consolidating Financial Statements (details) - Consolidating Statement of Income (Unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Consolidating Statement of Income (Loss)
Premiums	$ 5,603		$ 5,529		$ 11,120		$ 11,052
Net investment income	687		738		1,357		1,478
Fee income	82		59		179		141
Net realized investment gains (losses)	167	[1]	4	[1]	177	[1]	14	[1]
Other revenues	135		29		169		66
Total revenues	6,674		6,359		13,002		12,751
Claims and claim adjustment expenses	3,530		3,786		6,683		7,150
Amortization of deferred acquisition costs	950		976		1,898		1,947
General and administrative expenses	931		893		1,846		1,777
Interest expense	86		96		178		192
Total claims and expenses	5,497		5,751		10,605		11,066
Income before income taxes	1,177		608		2,397		1,685
Income tax expense (benefit)	252		109		576		380
Net income	925		499		1,821		1,305
Total other-than-temporary impairment gains (losses)	(1)		11		(1)		11
Other-than-temporary impairment losses recognized in net realized investment gains (losses)	(2)		(4)		(7)		(8)
Other-than-temporary impairment gains recognized in other comprehensive income	1		15		6		19
TPC [Member]
Consolidating Statement of Income (Loss)
Premiums	3,804		3,745		7,545		7,488
Net investment income	457		507		912		1,001
Fee income	82		58		178		140
Net realized investment gains (losses)	124		3		117		15
Other revenues	103		22		132		49
Total revenues	4,570		4,335		8,884		8,693
Claims and claim adjustment expenses	2,339		2,549		4,470		4,821
Amortization of deferred acquisition costs	635		647		1,272		1,293
General and administrative expenses	639		608		1,269		1,207
Interest expense	12		18		29		36
Total claims and expenses	3,625		3,822		7,040		7,357
Income before income taxes	945		513		1,844		1,336
Income tax expense (benefit)	203		119		452		324
Net income	742		394		1,392		1,012
Total other-than-temporary impairment gains (losses)	(1)		(1)		(4)
Other-than-temporary impairment losses recognized in net realized investment gains (losses)	(1)		(3)		(5)		(6)
Other-than-temporary impairment gains recognized in other comprehensive income			2		1		6
Other Subsidiaries [Member]
Consolidating Statement of Income (Loss)
Premiums	1,799		1,784		3,575		3,564
Net investment income	229		229		442		473
Fee income			1		1		1
Net realized investment gains (losses)	43		1		59		(1)
Other revenues	32		7		37		17
Total revenues	2,103		2,022		4,114		4,054
Claims and claim adjustment expenses	1,191		1,237		2,213		2,329
Amortization of deferred acquisition costs	315		329		626		654
General and administrative expenses	289		284		575		566
Total claims and expenses	1,795		1,850		3,414		3,549
Income before income taxes	308		172		700		505
Income tax expense (benefit)	77		27		176		111
Net income	231		145		524		394
Total other-than-temporary impairment gains (losses)			12		3		11
Other-than-temporary impairment losses recognized in net realized investment gains (losses)	(1)		(1)		(2)		(2)
Other-than-temporary impairment gains recognized in other comprehensive income	1		13		5		13
Travelers [Member]
Consolidating Statement of Income (Loss)
Net investment income	1		2		3		4
Net realized investment gains (losses)					1
Total revenues	1		2		4		4
General and administrative expenses	3		1		2		4
Interest expense	74		78		149		156
Total claims and expenses	77		79		151		160
Income before income taxes	(76)		(77)		(147)		(156)
Income tax expense (benefit)	(28)		(37)		(52)		(55)
Net income of subsidiaries	973		539		1,916		1,406
Net income	925		499		1,821		1,305
Eliminations [Member]
Consolidating Statement of Income (Loss)
Net income of subsidiaries	(973)		(539)		(1,916)		(1,406)
Net income	$ (973)		$ (539)		$ (1,916)		$ (1,406)

[1] Total other-than-temporary impairment (OTTI) gains (losses) were $(1) million and $11 million for the three months ended June 30, 2013 and 2012, respectively, and $(1) million and $11 million for the six months ended June 30, 2013 and 2012, respectively. Of total OTTI, credit losses of $(2) million and $(4) million for the three months ended June 30, 2013 and 2012, respectively, and $(7) million and $(8) million for the six months ended June 30, 2013 and 2012, respectively, were recognized in net realized investment gains. In addition, unrealized gains from other changes in total OTTI of $1 million and $15 million for the three months ended June 30, 2013 and 2012, respectively, and $6 million and $19 million for the six months ended June 30, 2013 and 2012, respectively, were recognized in other comprehensive income as part of change in net unrealized gains on investment securities having credit losses recognized in the consolidated statement of income.