Consolidating Financial Statements (Unaudited)

9 Months Ended

Sep. 30, 2015

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. (excluding its subsidiaries, TRV) has fully and unconditionally guaranteed certain debt obligations of Travelers Property Casualty Corp. (TPC), which totaled $700 million at September 30, 2015.

Prior to the merger of TPC and The St. Paul Companies, Inc. 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, TRV 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.

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended September 30, 2015

(in millions)	TPC		Other Subsidiaries		TRV			Eliminations			Consolidated
Revenues
Premiums	$	4,110	$	1,922	$	—		$	—		$	6,032
Net investment income	400		213		1			—			614
Fee income	112		—		—			—			112
Net realized investment gains (1)	5		10		—			—			15
Other revenues	15		6		—			—			21
Total revenues	4,642		2,151		1			—			6,794
Claims and expenses
Claims and claim adjustment expenses	2,264		1,118		—			—			3,382
Amortization of deferred acquisition costs	663		324		—			—			987
General and administrative expenses	711		309		4			—			1,024
Interest expense	12		—		82			—			94
Total claims and expenses	3,650		1,751		86			—			5,487
Income (loss) before income taxes	992		400		(85		)	—			1,307
Income tax expense (benefit)	293		113		(27		)	—			379
Net income of subsidiaries	—		—		986			(986		)	—
Net income	$	699	$	287	$	928		$	(986	)	$	928

(1) Total other-than-temporary impairment (OTTI) for the three months ended September 30, 2015, 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			TRV		Eliminations		Consolidated
Total OTTI losses	$	(5	)	$	(9	)	$	—	$	—	$	(14	)
OTTI losses recognized in net realized investment gains	$	(5	)	$	(9	)	$	—	$	—	$	(14	)
OTTI gains (losses) recognized in OCI	$	—		$	—		$	—	$	—	$	—

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended September 30, 2014

(in millions)	TPC			Other Subsidiaries		TRV			Eliminations			Consolidated
Revenues
Premiums	$	4,064		$	1,919	$	—		$	—		$	5,983
Net investment income	479			239		1			—			719
Fee income	110			—		—			—			110
Net realized investment gains (losses)(1)	(2		)	41		1			—			40
Other revenues	28			6		—			—			34
Total revenues	4,679			2,205		2			—			6,886
Claims and expenses
Claims and claim adjustment expenses	2,359			1,161		—			—			3,520
Amortization of deferred acquisition costs	642			342		—			—			984
General and administrative expenses	716			311		4			—			1,031
Interest expense	12			—		81			—			93
Total claims and expenses	3,729			1,814		85			—			5,628
Income (loss) before income taxes	950			391		(83		)	—			1,258
Income tax expense (benefit)	263			106		(30		)	—			339
Net income of subsidiaries	—			—		972			(972		)	—
Net income	$	687		$	285	$	919		$	(972	)	$	919

(1) Total other-than-temporary impairments (OTTI) for the three months ended September 30, 2014, 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			TRV		Eliminations		Consolidated
Total OTTI losses	$	(8	)	$	—		$	—	$	—	$	(8	)
OTTI losses recognized in net realized investment gains (losses)	$	(9	)	$	(1	)	$	—	$	—	$	(10	)
OTTI gains recognized in OCI	$	1		$	1		$	—	$	—	$	2

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the nine months ended September 30, 2015

(in millions)	TPC		Other Subsidiaries		TRV			Eliminations			Consolidated
Revenues
Premiums	$	12,150	$	5,701	$	—		$	—		$	17,851
Net investment income	1,235		599		4			—			1,838
Fee income	334		—		—			—			334
Net realized investment gains (1)	24		10		1			—			35
Other revenues	55		13		—			—			68
Total revenues	13,798		6,323		5			—			20,126
Claims and expenses
Claims and claim adjustment expenses	6,982		3,378		—			—			10,360
Amortization of deferred acquisition costs	1,956		957		—			—			2,913
General and administrative expenses	2,123		909		12			—			3,044
Interest expense	36		—		242			—			278
Total claims and expenses	11,097		5,244		254			—			16,595
Income (loss) before income taxes	2,701		1,079		(249		)	—			3,531
Income tax expense (benefit)	742		292		(76		)	—			958
Net income of subsidiaries	—		—		2,746			(2,746		)	—
Net income	$	1,959	$	787	$	2,573		$	(2,746	)	$	2,573

(1) Total other-than-temporary impairment (OTTI) for the nine months ended September 30, 2015, 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			TRV		Eliminations		Consolidated
Total OTTI losses	$	(13	)	$	(13	)	$	—	$	—	$	(26	)
OTTI losses recognized in net realized investment gains	$	(11	)	$	(12	)	$	—	$	—	$	(23	)
OTTI losses recognized in OCI	$	(2	)	$	(1	)	$	—	$	—	$	(3	)

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the nine months ended September 30, 2014

(in millions)	TPC		Other Subsidiaries		TRV			Eliminations			Consolidated
Revenues
Premiums	$	12,028	$	5,706	$	—		$	—		$	17,734
Net investment income	1,451		695		4			—			2,150
Fee income	328		1		—			—			329
Net realized investment gains (1)	4		50		3			—			57
Other revenues	93		16		—			—			109
Total revenues	13,904		6,468		7			—			20,379
Claims and expenses
Claims and claim adjustment expenses	7,149		3,512		—			—			10,661
Amortization of deferred acquisition costs	1,927		972		—			—			2,899
General and administrative expenses	2,026		876		11			—			2,913
Interest expense	36		—		241			—			277
Total claims and expenses	11,138		5,360		252			—			16,750
Income (loss) before income taxes	2,766		1,108		(245		)	—			3,629
Income tax expense (benefit)	770		291		(86		)	—			975
Net income of subsidiaries	—		—		2,813			(2,813		)	—
Net income	$	1,996	$	817	$	2,654		$	(2,813	)	$	2,654

(1) Total other-than-temporary impairments (OTTI) for the nine months ended September 30, 2014, 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			TRV		Eliminations		Consolidated
Total OTTI losses	$	(11	)	$	(5	)	$	—	$	—	$	(16	)
OTTI losses recognized in net realized investment gains	$	(14	)	$	(6	)	$	—	$	—	$	(20	)
OTTI gains recognized in OCI	$	3		$	1		$	—	$	—	$	4

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended September 30, 2015

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Net income	$	699		$	287		$	928		$	(986	)	$	928
Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	93			(17		)	(9		)	—			67
Having credit losses recognized in the consolidated statement of income	(2		)	(1		)	—			—			(3		)
Net changes in benefit plan assets and obligations	1			1			22			—			24
Net changes in unrealized foreign currency translation	(148		)	(79		)	—			—			(227		)
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(56		)	(96		)	13			—			(139		)
Income tax expense (benefit)	8			(14		)	4			—			(2		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(64		)	(82		)	9			—			(137		)
Other comprehensive loss of subsidiaries	—			—			(146		)	146			—
Other comprehensive loss	(64		)	(82		)	(137		)	146			(137		)
Comprehensive income	$	635		$	205		$	791		$	(840	)	$	791

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended September 30, 2014

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Net income	$	687		$	285		$	919		$	(972	)	$	919
Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(118		)	(35		)	(1		)	—			(154		)
Having credit losses recognized in the consolidated statement of income	2			(1		)	—			—			1
Net changes in benefit plan assets and obligations	—			1			14			—			15
Net changes in unrealized foreign currency translation	(120		)	(83		)	—			—			(203		)
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(236		)	(118		)	13			—			(341		)
Income tax expense (benefit)	(62		)	(22		)	5			—			(79		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(174		)	(96		)	8			—			(262		)
Other comprehensive loss of subsidiaries	—			—			(270		)	270			—
Other comprehensive loss	(174		)	(96		)	(262		)	270			(262		)
Comprehensive income	$	513		$	189		$	657		$	(702	)	$	657

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the nine months ended September 30, 2015

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Net income	$	1,959		$	787		$	2,573		$	(2,746	)	$	2,573
Other comprehensive income (loss):
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	(492		)	(329		)	(8		)	—			(829		)
Having credit losses recognized in the consolidated statement of income	(11		)	(2		)	—			—			(13		)
Net changes in benefit plan assets and obligations	2			2			67			—			71
Net changes in unrealized foreign currency translation	(293		)	(114		)	—			—			(407		)
Other comprehensive income (loss) before income taxes and other comprehensive loss of subsidiaries	(794		)	(443		)	59			—			(1,178		)
Income tax expense (benefit)	(224		)	(126		)	20			—			(330		)
Other comprehensive income (loss), net of taxes, before other comprehensive loss of subsidiaries	(570		)	(317		)	39			—			(848		)
Other comprehensive loss of subsidiaries	—			—			(887		)	887			—
Other comprehensive loss	(570		)	(317		)	(848		)	887			(848		)
Comprehensive income	$	1,389		$	470		$	1,725		$	(1,859	)	$	1,725

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the nine months ended September 30, 2014

(in millions)	TPC			Other Subsidiaries			TRV		Eliminations			Consolidated
Net income	$	1,996		$	817		$	2,654	$	(2,813	)	$	2,654
Other comprehensive income:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	632			266			3		—			901
Having credit losses recognized in the consolidated statement of income	11			(7		)	—		—			4
Net changes in benefit plan assets and obligations	—			1			44		—			45
Net changes in unrealized foreign currency translation	(94		)	(55		)	—		—			(149		)
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	549			205			47		—			801
Income tax expense	210			84			17		—			311
Other comprehensive income, net of taxes, before other comprehensive income of subsidiaries	339			121			30		—			490
Other comprehensive income of subsidiaries	—			—			460		(460		)	—
Other comprehensive income	339			121			490		(460		)	490
Comprehensive income	$	2,335		$	938		$	3,144	$	(3,273	)	$	3,144

CONSOLIDATING BALANCE SHEET (Unaudited)

At September 30, 2015

(in millions)	TPC		Other Subsidiaries		TRV			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $59,688)	$	42,426	$	19,199	$	46		$	—		$	61,671
Equity securities, available for sale, at fair value (cost $553)	200		383		136			—			719
Real estate investments	56		955		—			—			1,011
Short-term securities	2,295		877		1,956			—			5,128
Other investments	2,578		951		1			—			3,530
Total investments	47,555		22,365		2,139			—			72,059
Cash	201		141		2			—			344
Investment income accrued	423		186		4			—			613
Premiums receivable	4,433		2,126		—			—			6,559
Reinsurance recoverables	5,846		3,103		—			—			8,949
Ceded unearned premiums	713		76		—			—			789
Deferred acquisition costs	1,702		202		—			—			1,904
Deferred taxes	127		56		58			—			241
Contractholder receivables	3,370		1,020		—			—			4,390
Goodwill	2,577		1,002		—			—			3,579
Other intangible assets	201		79		—			—			280
Investment in subsidiaries	—		—		28,115			(28,115		)	—
Other assets	2,003		385		15			—			2,403
Total assets	$	69,151	$	30,741	$	30,333		$	(28,115	)	$	102,110
Liabilities
Claims and claim adjustment expense reserves	$	32,124	$	16,472	$	—		$	—		$	48,596
Unearned premium reserves	8,576		3,708		—			—			12,284
Contractholder payables	3,370		1,020		—			—			4,390
Payables for reinsurance premiums	264		175		—			—			439
Debt	692		—		6,051			—			6,743
Other liabilities	4,142		1,222		261			—			5,625
Total liabilities	49,168		22,597		6,312			—			78,077
Shareholders’ equity
Common stock (1,750.0 shares authorized; 304.2 shares issued and outstanding)	—		390		22,099			(390		)	22,099
Additional paid-in capital	11,634		6,502		—			(18,136		)	—
Retained earnings	7,857		1,070		29,251			(8,915		)	29,263
Accumulated other comprehensive income	492		182		32			(674		)	32
Treasury stock, at cost (458.8 shares)	—		—		(27,361		)	—			(27,361		)
Total shareholders’ equity	19,983		8,144		24,021			(28,115		)	24,033
Total liabilities and shareholders’ equity	$	69,151	$	30,741	$	30,333		$	(28,115	)	$	102,110

CONSOLIDATING BALANCE SHEET (Unaudited)

At December 31, 2014

(in millions)	TPC		Other Subsidiaries			TRV			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,801)	$	43,401	$	20,043		$	30		$	—		$	63,474
Equity securities, available for sale, at fair value (cost $579)	236		522			141			—			899
Real estate investments	56		882			—			—			938
Short-term securities	2,128		706			1,530			—			4,364
Other investments	2,630		955			1			—			3,586
Total investments	48,451		23,108			1,702			—			73,261
Cash	221		151			2			—			374
Investment income accrued	468		215			2			—			685
Premiums receivable	4,241		2,057			—			—			6,298
Reinsurance recoverables	6,156		3,104			—			—			9,260
Ceded unearned premiums	608		70			—			—			678
Deferred acquisition costs	1,622		213			—			—			1,835
Deferred taxes	23		(40		)	50			—			33
Contractholder receivables	3,306		1,056			—			—			4,362
Goodwill	2,602		1,009			—			—			3,611
Other intangible assets	216		88			—			—			304
Investment in subsidiaries	—		—			28,821			(28,821		)	—
Other assets	1,931		429			17			—			2,377
Total assets	$	69,845	$	31,460		$	30,594		$	(28,821	)	$	103,078
Liabilities
Claims and claim adjustment expense reserves	$	32,999	$	16,851		$	—		$	—		$	49,850
Unearned premium reserves	8,201		3,638			—			—			11,839
Contractholder payables	3,306		1,056			—			—			4,362
Payables for reinsurance premiums	194		142			—			—			336
Debt	692		—			5,657			—			6,349
Other liabilities	4,084		1,308			114			—			5,506
Total liabilities	49,476		22,995			5,771			—			78,242
Shareholders’ equity
Common stock (1,750.0 shares authorized; 322.2 shares issued and outstanding)	—		390			21,843			(390		)	21,843
Additional paid-in capital	11,634		6,502			—			(18,136		)	—
Retained earnings	7,673		1,073			27,238			(8,733		)	27,251
Accumulated other comprehensive income	1,062		500			880			(1,562		)	880
Treasury stock, at cost (437.3 shares)	—		—			(25,138		)	—			(25,138		)
Total shareholders’ equity	20,369		8,465			24,823			(28,821		)	24,836
Total liabilities and shareholders’ equity	$	69,845	$	31,460		$	30,594		$	(28,821	)	$	103,078

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the nine months ended September 30, 2015

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	1,959		$	787		$	2,573		$	(2,746	)	$	2,573
Net adjustments to reconcile net income to net cash provided by operating activities	90			(247		)	76			182			101
Net cash provided by operating activities	2,049			540			2,649			(2,564		)	2,674
Cash flows from investing activities
Proceeds from maturities of fixed maturities	5,929			2,869			7			—			8,805
Proceeds from sales of investments:
Fixed maturities	935			620			—			—			1,555
Equity securities	14			24			—			—			38
Real estate investments	—			15			—			—			15
Other investments	341			164			—			—			505
Purchases of investments:
Fixed maturities	(6,845		)	(3,103		)	(24		)	—			(9,972		)
Equity securities	(3		)	(26		)	(2		)	—			(31		)
Real estate investments	—			(116		)	—			—			(116		)
Other investments	(311		)	(78		)	—			—			(389		)
Net purchases of short-term securities	(172		)	(184		)	(426		)	—			(782		)
Securities transactions in course of settlement	80			23			—			—			103
Other	(262		)	40			—			—			(222		)
Net cash provided by (used in) investing activities	(294		)	248			(445		)	—			(491		)
Cash flows from financing activities
Issuance of debt	—			—			392			—			392
Treasury stock acquired – share repurchase authorization	—			—			(2,150		)	—			(2,150		)
Treasury stock acquired – net employee share-based compensation	—			—			(73		)	—			(73		)
Dividends paid to shareholders	—			—			(557		)	—			(557		)
Issuance of common stock – employee share options	—			—			142			—			142
Excess tax benefits from share-based payment arrangements	—			—			42			—			42
Dividends paid to parent company	(1,774		)	(790		)	—			2,564			—
Net cash used in financing activities	(1,774		)	(790		)	(2,204		)	2,564			(2,204		)
Effect of exchange rate changes on cash	(1		)	(8		)	—			—			(9		)
Net decrease in cash	(20		)	(10		)	—			—			(30		)
Cash at beginning of year	221			151			2			—			374
Cash at end of period	$	201		$	141		$	2		$	—		$	344
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	748		$	286		$	(152	)	$	—		$	882
Interest paid	$	40		$	—		$	177		$	—		$	217

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the nine months ended September 30, 2014

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	1,996		$	817		$	2,654		$	(2,813	)	$	2,654
Net adjustments to reconcile net income to net cash provided by operating activities	391			(73		)	322			(126		)	514
Net cash provided by operating activities	2,387			744			2,976			(2,939		)	3,168
Cash flows from investing activities
Proceeds from maturities of fixed maturities	4,886			3,088			1			—			7,975
Proceeds from sales of investments:
Fixed maturities	511			415			1			—			927
Equity securities	83			41			4			—			128
Real estate investments	1			4			—			—			5
Other investments	317			295			—			—			612
Purchases of investments:
Fixed maturities	(4,888		)	(3,345		)	(4		)	—			(8,237		)
Equity securities	(3		)	(38		)	(6		)	—			(47		)
Real estate investments	(22		)	(19		)	—			—			(41		)
Other investments	(292		)	(114		)	—			—			(406		)
Net purchases of short-term securities	(552		)	(326		)	(285		)	—			(1,163		)
Securities transactions in course of settlement	66			53			—			—			119
Acquisitions, net of cash acquired	(9		)	(3		)	—			—			(12		)
Other	(256		)	(6		)	—			—			(262		)
Net cash provided by (used in) investing activities	(158		)	45			(289		)	—			(402		)
Cash flows from financing activities
Treasury stock acquired – share repurchase authorization	—			—			(2,275		)	—			(2,275		)
Treasury stock acquired – net employee share-based compensation	—			—			(56		)	—			(56		)
Dividends paid to shareholders	—			—			(549		)	—			(549		)
Issuance of common stock – employee share options	—			—			154			—			154
Excess tax benefits from share-based payment arrangements	—			—			38			—			38
Dividends paid to parent company	(2,150		)	(789		)	—			2,939			—
Net cash used in financing activities	(2,150		)	(789		)	(2,688		)	2,939			(2,688		)
Effect of exchange rate changes on cash	—			(5		)	—			—			(5		)
Net increase (decrease) in cash	79			(5		)	(1		)	—			73
Cash at beginning of year	137			154			3			—			294
Cash at end of period	$	216		$	149		$	2		$	—		$	367
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	684		$	215		$	(114	)	$	—		$	785
Interest paid	$	40		$	—		$	177		$	—		$	217