Consolidating Financial Statements (Unaudited)

3 Months Ended

Mar. 31, 2017

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 March 31, 2017.

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 March 31, 2017

(in millions)	TPC			Other Subsidiaries		TRV			Eliminations			Consolidated
Revenues
Premiums	$	4,228		$	1,955	$	—		$	—		$	6,183
Net investment income	412			194		4			—			610
Fee income	113			—		—			—			113
Net realized investment gains (losses) (1)	(4		)	9		—			—			5
Other revenues	24			9		—			(2		)	31
Total revenues	4,773			2,167		4			(2		)	6,942
Claims and expenses
Claims and claim adjustment expenses	2,752			1,342		—			—			4,094
Amortization of deferred acquisition costs	668			335		—			—			1,003
General and administrative expenses	703			292		3			(2		)	996
Interest expense	12			—		77			—			89
Total claims and expenses	4,135			1,969		80			(2		)	6,182
Income (loss) before income taxes	638			198		(76		)	—			760
Income tax expense (benefit)	130			54		(41		)	—			143
Net income of subsidiaries	—			—		652			(652		)	—
Net income	$	508		$	144	$	617		$	(652	)	$	617

(1) Total other-than-temporary impairment (OTTI) for the three months ended March 31, 2017, 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	$	—		$	(1	)	$	—	$	—	$	(1	)
OTTI losses recognized in net realized investment gains (losses)	$	(1	)	$	(1	)	$	—	$	—	$	(2	)
OTTI gains recognized in OCI	$	1		$	—		$	—	$	—	$	1

CONSOLIDATING STATEMENT OF INCOME (Unaudited)

For the three months ended March 31, 2016

(in millions)	TPC			Other Subsidiaries		TRV			Eliminations			Consolidated
Revenues
Premiums	$	4,085		$	1,896	$	—		$	—		$	5,981
Net investment income	376			166		2			—			544
Fee income	117			—		—			—			117
Net realized investment gains (losses) (1)	(16		)	7		—			—			(9		)
Other revenues	48			16		—			(11		)	53
Total revenues	4,610			2,085		2			(11		)	6,686
Claims and expenses
Claims and claim adjustment expenses	2,520			1,192		—			—			3,712
Amortization of deferred acquisition costs	650			321		—			—			971
General and administrative expenses	704			298		4			(11		)	995
Interest expense	12			—		79			—			91
Total claims and expenses	3,886			1,811		83			(11		)	5,769
Income (loss) before income taxes	724			274		(81		)	—			917
Income tax expense (benefit)	199			69		(42		)	—			226
Net income of subsidiaries	—			—		730			(730		)	—
Net income	$	525		$	205	$	691		$	(730	)	$	691

(1) Total other-than-temporary impairment (OTTI) for the three months ended March 31, 2016, 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	$	(14	)	$	(14	)	$	—	$	—	$	(28	)
OTTI losses recognized in net realized investment gains (losses)	$	(9	)	$	(9	)	$	—	$	—	$	(18	)
OTTI losses recognized in OCI	$	(5	)	$	(5	)	$	—	$	—	$	(10	)

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended March 31, 2017

(in millions)	TPC		Other Subsidiaries			TRV		Eliminations			Consolidated
Net income	$	508	$	144		$	617	$	(652	)	$	617
Other comprehensive income:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	93		44			7		—			144
Having credit losses recognized in the consolidated statement of income	1		(1		)	—		—			—
Net changes in benefit plan assets and obligations	—		—			17		—			17
Net changes in unrealized foreign currency translation	25		16			—		—			41
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	119		59			24		—			202
Income tax expense	37		16			9		—			62
Other comprehensive income, net of taxes, before other comprehensive income of subsidiaries	82		43			15		—			140
Other comprehensive income of subsidiaries	—		—			125		(125		)	—
Other comprehensive income	82		43			140		(125		)	140
Comprehensive income	$	590	$	187		$	757	$	(777	)	$	757

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

For the three months ended March 31, 2016

(in millions)	TPC		Other Subsidiaries		TRV		Eliminations			Consolidated
Net income	$	525	$	205	$	691	$	(730	)	$	691
Other comprehensive income:
Changes in net unrealized gains on investment securities:
Having no credit losses recognized in the consolidated statement of income	485		228		1		—			714
Having credit losses recognized in the consolidated statement of income	2		3		—		—			5
Net changes in benefit plan assets and obligations	—		1		15		—			16
Net changes in unrealized foreign currency translation	94		9		—		—			103
Other comprehensive income before income taxes and other comprehensive income of subsidiaries	581		241		16		—			838
Income tax expense	181		79		7		—			267
Other comprehensive income, net of taxes, before other comprehensive income of subsidiaries	400		162		9		—			571
Other comprehensive income of subsidiaries	—		—		562		(562		)	—
Other comprehensive income	400		162		571		(562		)	571
Comprehensive income	$	925	$	367	$	1,262	$	(1,292	)	$	1,262

CONSOLIDATING BALANCE SHEET (Unaudited)

At March 31, 2017

(in millions)	TPC		Other Subsidiaries			TRV			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $60,269)	$	42,549	$	18,669		$	50		$	—		$	61,268
Equity securities, available for sale, at fair value (cost $512)	173		416			162			—			751
Real estate investments	55		871			—			—			926
Short-term securities	2,202		559			2,056			—			4,817
Other investments	2,605		889			1			—			3,495
Total investments	47,584		21,404			2,269			—			71,257
Cash	91		156			2			—			249
Investment income accrued	402		169			4			—			575
Premiums receivable	4,730		2,282			—			—			7,012
Reinsurance recoverables	5,628		2,571			—			—			8,199
Ceded unearned premiums	668		77			—			—			745
Deferred acquisition costs	1,794		193			—			—			1,987
Deferred taxes	38		201			22			—			261
Contractholder receivables	3,715		953			—			—			4,668
Goodwill	2,582		1,002			—			—			3,584
Other intangible assets	202		64			—			—			266
Investment in subsidiaries	—		—			27,118			(27,118		)	—
Other assets	2,094		311			38			—			2,443
Total assets	$	69,528	$	29,383		$	29,453		$	(27,118	)	$	101,246
Liabilities
Claims and claim adjustment expense reserves	$	32,421	$	15,899		$	—		$	—		$	48,320
Unearned premium reserves	8,918		3,896			—			—			12,814
Contractholder payables	3,715		953			—			—			4,668
Payables for reinsurance premiums	259		170			—			—			429
Debt	693		—			5,745			—			6,438
Other liabilities	3,870		989			106			—			4,965
Total liabilities	49,876		21,907			5,851			—			77,634
Shareholders’ equity
Common stock (1,750.0 shares authorized; 279.4 shares issued and outstanding)	—		390			22,724			(390		)	22,724
Additional paid-in capital	11,634		6,499			—			(18,133		)	—
Retained earnings	7,908		678			32,613			(8,576		)	32,623
Accumulated other comprehensive income (loss)	110		(91		)	(615		)	(19		)	(615		)
Treasury stock, at cost (491.9 shares)	—		—			(31,120		)	—			(31,120		)
Total shareholders’ equity	19,652		7,476			23,602			(27,118		)	23,612
Total liabilities and shareholders’ equity	$	69,528	$	29,383		$	29,453		$	(27,118	)	$	101,246

CONSOLIDATING BALANCE SHEET (Unaudited)

At December 31, 2016

(in millions)	TPC		Other Subsidiaries			TRV			Eliminations			Consolidated
Assets
Fixed maturities, available for sale, at fair value (amortized cost $59,650)	$	42,014	$	18,452		$	49		$	—		$	60,515
Equity securities, available for sale, at fair value (cost $504)	169		408			155			—			732
Real estate investments	56		872			—			—			928
Short-term securities	2,447		791			1,627			—			4,865
Other investments	2,569		878			1			—			3,448
Total investments	47,255		21,401			1,832			—			70,488
Cash	141		164			2			—			307
Investment income accrued	441		183			6			—			630
Premiums receivable	4,545		2,177			—			—			6,722
Reinsurance recoverables	5,664		2,623			—			—			8,287
Ceded unearned premiums	536		53			—			—			589
Deferred acquisition costs	1,741		182			—			—			1,923
Deferred taxes	216		224			25			—			465
Contractholder receivables	3,656		953			—			—			4,609
Goodwill	2,578		1,002			—			—			3,580
Other intangible assets	202		66			—			—			268
Investment in subsidiaries	—		—			27,137			(27,137		)	—
Other assets	1,973		370			34			—			2,377
Total assets	$	68,948	$	29,398		$	29,036		$	(27,137	)	$	100,245
Liabilities
Claims and claim adjustment expense reserves	$	32,168	$	15,781		$	—		$	—		$	47,949
Unearned premium reserves	8,575		3,754			—			—			12,329
Contractholder payables	3,656		953			—			—			4,609
Payables for reinsurance premiums	156		117			—			—			273
Debt	693		—			5,744			—			6,437
Other liabilities	4,106		1,239			82			—			5,427
Total liabilities	49,354		21,844			5,826			—			77,024
Shareholders’ equity
Common stock (1,750.0 shares authorized; 279.6 shares issued and outstanding)	—		390			22,614			(390		)	22,614
Additional paid-in capital	11,634		6,499			—			(18,133		)	—
Retained earnings	7,933		797			32,185			(8,719		)	32,196
Accumulated other comprehensive income (loss)	27		(132		)	(755		)	105			(755		)
Treasury stock, at cost (489.5 shares)	—		—			(30,834		)	—			(30,834		)
Total shareholders’ equity	19,594		7,554			23,210			(27,137		)	23,221
Total liabilities and shareholders’ equity	$	68,948	$	29,398		$	29,036		$	(27,137	)	$	100,245

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the three months ended March 31, 2017

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	508		$	144		$	617		$	(652	)	$	617
Net adjustments to reconcile net income to net cash provided by (used in) operating activities	112			(16		)	205			(143		)	158
Net cash provided by operating activities	620			128			822			(795		)	775
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,638			580			—			—			2,218
Proceeds from sales of investments:
Fixed maturities	88			100			—			—			188
Equity securities	2			19			—			—			21
Real estate investments	—			11			—			—			11
Other investments	144			51			—			—			195
Purchases of investments:
Fixed maturities	(2,191		)	(864		)	(1		)	—			(3,056		)
Equity securities	(1		)	(20		)	(1		)	—			(22		)
Real estate investments	—			(16		)	—			—			(16		)
Other investments	(96		)	(28		)	—			—			(124		)
Net sales (purchases) of short-term securities	245			233			(429		)	—			49
Securities transactions in course of settlement	102			53			2			—			157
Other	(70		)	7			—			—			(63		)
Net cash provided by (used in) investing activities	(139		)	126			(429		)	—			(442		)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorization	—			—			(225		)	—			(225		)
Treasury stock acquired — net employee share-based compensation	—			—			(61		)	—			(61		)
Dividends paid to shareholders	—			—			(190		)	—			(190		)
Issuance of common stock — employee share options	—			—			83			—			83
Dividends paid to parent company	(532		)	(263		)	—			795			—
Net cash used in financing activities	(532		)	(263		)	(393		)	795			(393		)
Effect of exchange rate changes on cash	1			1			—			—			2
Net decrease in cash	(50		)	(8		)	—			—			(58		)
Cash at beginning of year	141			164			2			—			307
Cash at end of period	$	91		$	156		$	2		$	—		$	249
Supplemental disclosure of cash flow information
Income taxes paid	$	1		$	1		$	—		$	—		$	2
Interest paid	$	16		$	—		$	27		$	—		$	43

CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

For the three months ended March 31, 2016

(in millions)	TPC			Other Subsidiaries			TRV			Eliminations			Consolidated
Cash flows from operating activities
Net income	$	525		$	205		$	691		$	(730	)	$	691
Net adjustments to reconcile net income to net cash provided by (used in) operating activities	151			(55		)	115			(52		)	159
Net cash provided by operating activities	676			150			806			(782		)	850
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,239			507			2			—			1,748
Proceeds from sales of investments:
Fixed maturities	237			183			1			—			421
Equity securities	4			10			—			—			14
Real estate investments	—			69			—			—			69
Other investments	122			64			—			—			186
Purchases of investments:
Fixed maturities	(1,534		)	(1,162		)	(4		)	—			(2,700		)
Equity securities	(1		)	(10		)	(1		)	—			(12		)
Real estate investments	—			(7		)	—			—			(7		)
Other investments	(123		)	(39		)	—			—			(162		)
Net sales (purchases) of short-term securities	(152		)	317			(80		)	—			85
Securities transactions in course of settlement	159			131			1			—			291
Other	(78		)	(1		)	—			—			(79		)
Net cash provided by (used in) investing activities	(127		)	62			(81		)	—			(146		)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorization	—			—			(550		)	—			(550		)
Treasury stock acquired — net employee share-based compensation	—			—			(59		)	—			(59		)
Dividends paid to shareholders	—			—			(180		)	—			(180		)
Issuance of common stock — employee share options	—			—			64			—			64
Dividends paid to parent company	(565		)	(217		)	—			782			—
Net cash used in financing activities	(565		)	(217		)	(725		)	782			(725		)
Effect of exchange rate changes on cash	2			—			—			—			2
Net decrease in cash	(14		)	(5		)	—			—			(19		)
Cash at beginning of year	225			153			2			—			380
Cash at end of period	$	211		$	148		$	2		$	—		$	361
Supplemental disclosure of cash flow information
Income taxes paid (received)	$	51		$	17		$	(5	)	$	—		$	63
Interest paid	$	16		$	—		$	26		$	—		$	42