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 September 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.

In connection with the planned acquisition of The Dominion of Canada General Insurance Company from E-L Financial Corporation Limited (E-L Financial), The Travelers Companies, Inc. (TRV) provided an unconditional guarantee to E-L Financial of a TRV subsidiary’s obligation for the full and prompt payment of the purchase price when due and the performance of all agreements, covenants, and obligations under the agreement. 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 September 30, 2013

(in millions)	TPC		Other Subsidiaries			Travelers (2)			Eliminations			Consolidated
Revenues
Premiums	$	3,839	$	1,827		$	—		$	—		$	5,666
Net investment income	438		217			2			—			657
Fee income	106		1			—			—			107
Net realized investment gains (losses) (1)	3		(25		)	—			—			(22		)
Other revenues	38		6			—			—			44
Total revenues	4,424		2,026			2			—			6,452
Claims and expenses
Claims and claim adjustment expenses	2,214		1,083			—			—			3,297
Amortization of deferred acquisition costs	640		313			—			—			953
General and administrative expenses	646		286			2			—			934
Interest expense	12		—			79			—			91
Total claims and expenses	3,512		1,682			81			—			5,275
Income (loss) before income taxes	912		344			(79		)	—			1,177
Income tax expense (benefit)	248		93			(28		)	—			313
Net income of subsidiaries	—		—			915			(915		)	—
Net income	$	664	$	251		$	864		$	(915	)	$	864

(1) Total other-than-temporary impairment (OTTI) for the three months ended September 30, 2013, 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			Other Subsidiaries			Travelers (2)		Eliminations		Consolidated

Total OTTI gains (losses)	$	1		$	(1	)	$	—	$	—	$	—
OTTI losses recognized in net realized investment gains	$	(2	)	$	(1	)	$	—	$	—	$	(3	)
OTTI gains recognized in OCI	$	3		$	—		$	—	$	—	$	3

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended September 30, 2012

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

(1) Total other-than-temporary impairment (OTTI) for the three months ended September 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			Other Subsidiaries			Travelers (2)		Eliminations		Consolidated

Total OTTI gains	$	15		$	2		$	—	$	—	$	17
OTTI losses recognized in net realized investment gains (losses)	$	(2	)	$	(1	)	$	—	$	—	$	(3	)
OTTI gains recognized in OCI	$	17		$	3		$	—	$	—	$	20

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the nine months ended September 30, 2013

(in millions)	TPC		Other Subsidiaries		Travelers (2)			Eliminations			Consolidated
Revenues
Premiums	$	11,384	$	5,402	$	—		$	—		$	16,786
Net investment income	1,350		659		5			—			2,014
Fee income	284		2		—			—			286
Net realized investment gains (1)	120		34		1			—			155
Other revenues	170		43		—			—			213
Total revenues	13,308		6,140		6			—			19,454
Claims and expenses
Claims and claim adjustment expenses	6,684		3,296		—			—			9,980
Amortization of deferred acquisition costs	1,912		939		—			—			2,851
General and administrative expenses	1,915		861		4			—			2,780
Interest expense	41		—		228			—			269
Total claims and expenses	10,552		5,096		232			—			15,880
Income (loss) before income taxes	2,756		1,044		(226		)	—			3,574
Income tax expense (benefit)	700		269		(80		)	—			889
Net income of subsidiaries	—		—		2,831			(2,831		)	—
Net income	$	2,056	$	775	$	2,685		$	(2,831	)	$	2,685

(1) Total other-than-temporary impairment (OTTI) for the nine months ended September 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			Other Subsidiaries			Travelers (2)		Eliminations		Consolidated

Total OTTI gains (losses)	$	(3	)	$	2		$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains	$	(7	)	$	(3	)	$	—	$	—	$	(10	)
OTTI gains recognized in OCI	$	4		$	5		$	—	$	—	$	9

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

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the nine months ended September 30, 2012

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

(1) Total other-than-temporary impairment (OTTI) for the nine months ended September 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			Other Subsidiaries			Travelers (2)		Eliminations		Consolidated

Total OTTI gains	$	15		$	13		$	—	$	—	$	28
OTTI losses recognized in net realized investment gains (losses)	$	(8	)	$	(3	)	$	—	$	—	$	(11	)
OTTI gains recognized in OCI	$	23		$	16		$	—	$	—	$	39

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended September 30, 2013

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated

Net income	$	664		$	251		$	864		$	(915	)	$	864

Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(138		)	(71		)	5			—			(204		)
Having credit losses recognized in the consolidated statement of income	(1		)	(1		)	—			—			(2		)
Net changes in benefit plan assets and obligations	—			(1		)	25			—			24
Net changes in unrealized foreign currency translation	26			86			—			—			112
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(113		)	13			30			—			(70		)
Income tax expense (benefit)	(46		)	(20		)	11			—			(55		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(67		)	33			19			—			(15		)
Other comprehensive loss of subsidiaries	—			—			(34		)	34			—
Other comprehensive income (loss)	(67		)	33			(15		)	34			(15		)
Comprehensive income	$	597		$	284		$	849		$	(881	)	$	849

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended September 30, 2012

(in millions)	TPC		Other Subsidiaries		Travelers (1)		Eliminations			Consolidated

Net income	$	598	$	310	$	864	$	(908	)	$	864

Other comprehensive income:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	338		127		5		—			470
Having credit losses recognized in the consolidated statement of income	28		13		—		—			41
Net changes in benefit plan assets and obligations	1		—		21		—			22
Net changes in unrealized foreign currency translation	13		52		—		—			65
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	380		192		26		—			598
Income tax expense	129		54		9		—			192
Other comprehensive income net of taxes, before other comprehensive income of subsidiaries	251		138		17		—			406
Other comprehensive income of subsidiaries	—		—		389		(389		)	—
Other comprehensive income	251		138		406		(389		)	406
Comprehensive income	$	849	$	448	$	1,270	$	(1,297	)	$	1,270

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the nine months ended September 30, 2013

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated

Net income	$	2,056		$	775		$	2,685		$	(2,831	)	$	2,685

Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(1,735		)	(647		)	12			—			(2,370		)
Having credit losses recognized in the consolidated statement of income	4			(2		)	—			—			2
Net changes in benefit plan assets and obligations	1			2			75			—			78
Net changes in unrealized foreign currency translation	(35		)	(22		)	—			—			(57		)
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(1,765		)	(669		)	87			—			(2,347		)
Income tax expense (benefit)	(616		)	(231		)	31			—			(816		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(1,149		)	(438		)	56			—			(1,531		)
Other comprehensive loss of subsidiaries	—			—			(1,587		)	1,587			—
Other comprehensive loss	(1,149		)	(438		)	(1,531		)	1,587			(1,531		)
Comprehensive income	$	907		$	337		$	1,154		$	(1,244	)	$	1,154

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

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the nine months ended September 30, 2012

(in millions)	TPC			Other Subsidiaries		Travelers (1)		Eliminations			Consolidated

Net income	$	1,610		$	704	$	2,169	$	(2,314	)	$	2,169

Other comprehensive income:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	451			147		11		—			609
Having credit losses recognized in the consolidated statement of income	49			22		—		—			71
Net changes in benefit plan assets and obligations	1			—		63		—			64
Net changes in unrealized foreign currency translation	(20		)	63		—		—			43
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	481			232		74		—			787
Income tax expense	165			65		26		—			256
Other comprehensive income, net of taxes, before other comprehensive income of subsidiaries	316			167		48		—			531
Other comprehensive income of subsidiaries	—			—		483		(483		)	—
Other comprehensive income	316			167		531		(483		)	531
Comprehensive income	$	1,926		$	871	$	2,700	$	(2,797	)	$	2,700

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

CONSOLIDATING BALANCE SHEET (Unaudited)

At September 30, 2013

(in millions)	TPC		Other Subsidiaries		Travelers (1)			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $59,960)	$	42,493	$	19,572	$	37		$	—		$	62,102
Equity securities, available for sale, at fair value (cost $470)	159		428		121			—			708
Real estate investments	32		885		—			—			917
Short-term securities	2,750		833		1,796			—			5,379
Other investments	2,437		987		1			—			3,425
Total investments	47,871		22,705		1,955			—			72,531
Cash	130		163		2			—			295
Investment income accrued	457		210		6			—			673
Premiums receivable	4,107		2,006		—			—			6,113
Reinsurance recoverables	6,153		3,391		—			—			9,544
Ceded unearned premiums	858		157		—			—			1,015
Deferred acquisition costs	1,578		224		—			—			1,802
Deferred taxes	159		55		107			—			321
Contractholder receivables	3,253		1,197		—			—			4,450
Goodwill	2,411		954		—			—			3,365
Other intangible assets	245		102		—			—			347
Investment in subsidiaries	—		—		28,835			(28,835		)	—
Other assets	1,882		327		20			—			2,229
Total assets	$	69,104	$	31,491	$	30,925		$	(28,835	)	$	102,685
Liabilities
Claims and claim adjustment expense reserves	$	32,232	$	16,921	$	—		$	—		$	49,153
Unearned premium reserves	8,136		3,580		—			—			11,716
Contractholder payables	3,253		1,197		—			—			4,450
Payables for reinsurance premiums	219		219		—			—			438
Debt	692		—		5,654			—			6,346
Other liabilities	4,106		1,195		470			—			5,771
Total liabilities	48,638		23,112		6,124			—			77,874
Shareholders’ equity
Common stock (1,750.0 shares authorized; 364.1 shares issued and outstanding)	—		390		21,425			(390		)	21,425
Additional paid-in capital	11,635		6,501		—			(18,136		)	—
Retained earnings	7,873		1,003		23,475			(8,866		)	23,485
Accumulated other comprehensive income	958		485		705			(1,443		)	705
Treasury stock, at cost (390.1 shares)	—		—		(20,804		)	—			(20,804		)
Total shareholders’ equity	20,466		8,379		24,801			(28,835		)	24,811
Total liabilities and shareholders’ equity	$	69,104	$	31,491	$	30,925		$	(28,835	)	$	102,685

(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 nine months ended September 30, 2013

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	2,056		$	775		$	2,685		$	(2,831	)	$	2,685
Net adjustments to reconcile net income to net cash provided by operating activities	(348		)	224			(1,531		)	1,859			204
Net cash provided by operating activities	1,708			999			1,154			(972		)	2,889

Cash flows from investing activities
Proceeds from maturities of fixed maturities	4,096			1,820			1			—			5,917
Proceeds from sales of investments:
Fixed maturities	590			565			5			—			1,160
Equity securities	21			36			—			—			57
Other investments	337			208			—			—			545
Purchases of investments:
Fixed maturities	(4,339		)	(2,146		)	(7		)	—			(6,492		)
Equity securities	(20		)	(29		)	(1		)	—			(50		)
Real estate investments	—			(65		)	—			—			(65		)
Other investments	(222		)	(90		)	—			—			(312		)
Net sales (purchases) of short-term securities	(1,563		)	(492		)	162			—			(1,893		)
Securities transactions in course of settlement	182			98			—			—			280
Other	(250		)	(4		)	—			—			(254		)
Net cash provided by (used in) investing activities	(1,168		)	(99		)	160			—			(1,107		)

Cash flows from financing activities
Payment of debt	(500		)	—			—			—			(500		)
Issuance of debt	—			—			494			—			494
Dividends paid to shareholders	—			—			(549		)	—			(549		)
Issuance of common stock — employee share options	—			—			158			—			158
Treasury stock acquired — share repurchase authorization	—			—			(1,400		)	—			(1,400		)
Treasury stock acquired — net employee share-based compensation	—			—			(60		)	—			(60		)
Excess tax benefits from share-based payment arrangements	—			—			43			—			43
Capital contributions	500			—			—			(500		)	—
Dividends paid to parent company	(587		)	(885		)	—			1,472			—
Net cash used in financing activities	(587		)	(885		)	(1,314		)	972			(1,814		)

Effect of exchange rate changes on cash	—			(3		)	—			—			(3		)
Net increase (decrease) in cash	(47		)	12			—			—			(35		)
Cash at beginning of year	177			151			2			—			330
Cash at end of period	$	130		$	163		$	2		$	—		$	295
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	691		$	236		$	(203	)	$	—		$	724
Interest paid	$	52		$	—		$	154		$	—		$	206

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

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the nine months ended September 30, 2012

(in millions)	TPC			Other Subsidiaries			Travelers (1)			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	1,610		$	704		$	2,169		$	(2,314	)	$	2,169
Net adjustments to reconcile net income to net cash provided by operating activities	552			(136		)	(921		)	1,102			597
Net cash provided by operating activities	2,162			568			1,248			(1,212		)	2,766

Cash flows from investing activities
Proceeds from maturities of fixed maturities	4,123			1,731			1			—			5,855
Proceeds from sales of investments:
Fixed maturities	494			228			2			—			724
Equity securities	18			13			—			—			31
Real estate investments	—			3			—			—			3
Other investments	389			127			—			—			516
Purchases of investments:
Fixed maturities	(5,645		)	(2,023		)	(9		)	—			(7,677		)
Equity securities	(1		)	(37		)	(1		)	—			(39		)
Real estate investments	—			(62		)	—			—			(62		)
Other investments	(187		)	(105		)	—			—			(292		)
Net sales (purchases) of short-term securities	(306		)	(99		)	364			—			(41		)
Securities transactions in course of settlement	46			7			—			—			53
Other	(235		)	6			—			—			(229		)
Net cash provided by (used in) investing activities	(1,304		)	(211		)	357			—			(1,158		)

Cash flows from financing activities
Payment of debt	—			—			(258		)	—			(258		)
Dividends paid to shareholders	—			—			(519		)	—			(519		)
Issuance of common stock — employee share options	—			—			247			—			247
Treasury stock acquired — share repurchase authorization	—			—			(1,056		)	—			(1,056		)
Treasury stock acquired — net employee share-based compensation	—			—			(52		)	—			(52		)
Excess tax benefits from share-based payment arrangements	—			—			32			—			32
Dividends paid to parent company	(854		)	(358		)	—			1,212			—
Net cash used in financing activities	(854		)	(358		)	(1,606		)	1,212			(1,606		)

Effect of exchange rate changes on cash	—			4			—			—			4
Net increase (decrease) in cash	4			3			(1		)	—			6
Cash at beginning of year	114			98			2			—			214
Cash at end of period	$	118		$	101		$	1		$	—		$	220
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	343		$	110		$	(143	)	$	—		$	310
Interest paid	$	65		$	—		$	161		$	—		$	226

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