8-K - TRV - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 8-K

______________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 20, 2021

_______________________________________________

The Travelers Companies, Inc.

(Exact name of registrant as specified in its charter)

_______________________________________________

Minnesota	001-10898	41-0518860
(State or other jurisdiction of<br>incorporation)	(Commission File Number)	(I.R.S. Employer<br>Identification No.)

485 Lexington Avenue

New York, New York 10017

(Address of principal executive offices) (Zip Code)

(917) 778-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

_________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, without par value	TRV	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02. Results of Operations and Financial Condition.

On July 20, 2021, The Travelers Companies, Inc. (the “Company”) issued a press release announcing the results of the Company’s operations for the quarter ended June 30, 2021, and the availability of the Company’s second quarter financial supplement on the Company’s web site. The press release and the financial supplement are furnished as Exhibits 99.1 and 99.2 to this Report and are hereby incorporated by reference in this Item 2.02.

As provided in General Instruction B.2 of Form 8-K, the information and exhibits contained in this Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press Release, dated July 20, 2021, reporting results of operations (This exhibit is furnished and not filed.)
99.2	Second Quarter 2021 Financial Supplement of The Travelers Companies, Inc. (This exhibit is furnished and not filed.)
101.1	Pursuant to Rule 406 of Regulation S-T, the cover page to this Current Report on Form 8-K is formatted in Inline XBRL.
104.1	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101.1.)

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.
Date:	July 20, 2021	By:	/s/ CHRISTINE K. KALLA
			Name: Christine K. Kalla
			Executive Vice President and General Counsel

Document

Exhibit 99.1

The Travelers Companies, Inc.

485 Lexington Avenue

New York, NY 10017-2630

www.travelers.com

NYSE: TRV

Travelers Reports Strong Underwriting and Investment Results

Second Quarter 2021 Net Income per Diluted Share of $3.66 and Return on Equity of 13.0%

Second Quarter 2021 Core Income per Diluted Share of $3.45 and Core Return on Equity of 13.7%

•Strong second quarter net income of $934 million and core income of $879 million.

•Consolidated combined ratio of 95.3% and underlying combined ratio of 91.4%.

•Net investment income of $818 million pre-tax compared to $268 million pre-tax in the prior year quarter.

•Net written premiums of $8.135 billion, up 11% compared to the prior year quarter (8% adjusting for the personal automobile premium refunds in the prior year quarter); growth in all three segments.

•Total capital returned to shareholders of $625 million, including $401 million of share repurchases.

•Book value per share of $116.86, up 10% from June 30, 2020; adjusted book value per share of $103.88, up 13% from June 30, 2020.

•Board of Directors declares regular quarterly cash dividend of $0.88 per share.

New York, July 20, 2021 — The Travelers Companies, Inc. today reported net income of $934 million, or $3.66 per diluted share, for the quarter ended June 30, 2021, compared to a net loss of $40 million, or $0.16 per diluted share, in the prior year quarter. Core income in the current quarter was $879 million, or $3.45 per diluted share, compared to a core loss of $50 million, or $0.20 per diluted share, in the prior year quarter. The improvement was due to higher net investment income, lower catastrophe losses, higher net favorable prior year reserve development and a higher underlying underwriting gain (i.e., excluding net prior year reserve development and catastrophe losses). Net realized investment gains in the current quarter were $61 million pre-tax ($47 million after-tax), compared to $13 million pre-tax ($10 million after-tax) in the prior year quarter. Per diluted share amounts benefited from the impact of share repurchases.

Consolidated Highlights

( in millions, except for per share amounts, and after-tax, except for premiums and revenues)	Three Months Ended June 30,												Six Months Ended June 30,
				2020				Change				2021				2020				Change
Net written premiums	$	8,135			$	7,346			11	%			$	15,640			$	14,692			6	%
Total revenues	$	8,687			$	7,401			17				$	17,000			$	15,309			11
Net income (loss)	$	934			$	(40)			NM				$	1,667			$	560			198
per diluted share	$	3.66			$	(0.16)			NM				$	6.53			$	2.19			198
Core income (loss)	$	879			$	(50)			NM				$	1,578			$	626			152
per diluted share	$	3.45			$	(0.20)			NM				$	6.18			$	2.44			153
Diluted weighted average shares outstanding	253.1				251.6				1				253.6				254.7				—
Combined ratio	95.3		%		103.7		%		(8.4)		pts		95.9		%		99.5		%		(3.6)		pts
Underlying combined ratio	91.4		%		91.4		%		—		pts		90.5		%		91.3		%		(0.8)		pts
Return on equity	13.0		%		(0.6)		%		13.6		pts		11.6		%		4.3		%		7.3		pts
Core return on equity	13.7		%		(0.8)		%		14.5		pts		12.4		%		5.3		%		7.1		pts

All values are in US Dollars.

	As of						Change From
	June 30,<br>2021		December 31,<br>2020		June 30,<br>2020		December 31,<br>2020		June 30,<br>2020
Book value per share	$	116.86	$	115.68	$	106.42	1	%	10	%
Adjusted book value per share	103.88		99.54		92.01		4	%	13	%

See Glossary of Financial Measures for definitions and the statistical supplement for additional financial data. NM = Not meaningful.

“We are very pleased to report excellent underwriting and investment results, generating second quarter core income of $879 million, or $3.45 per diluted share, and core return on equity of 13.7%,” said Alan Schnitzer, Chairman and Chief Executive Officer. “Higher underlying underwriting income and net favorable prior year reserve development, as well as a lower level of catastrophe losses, all contributed to higher core income compared to the prior year quarter. Underlying underwriting income benefited from record net earned premiums and a strong underlying combined ratio of 91.4%. Our high-quality investment portfolio generated net investment income of $682 million after-tax, reflecting very strong returns in our non-fixed income portfolio. These results, together with our strong balance sheet, enabled us to return $625 million of excess capital to shareholders this quarter, including $401 million of share repurchases.

“For the quarter, net written premiums grew 11%, or 8% adjusting for the auto premium refunds in the prior year quarter, with each of our three segments contributing. In Business Insurance, net written premiums grew by 5%, with renewal premium change of 9.5% near an all-time high, driven by continued strong renewal rate change and higher insured exposures reflecting higher levels of U.S. economic activity. At the same time, retention was higher reflecting stability in the pricing environment and we grew new business by 9%. In Bond & Specialty Insurance, net written premiums increased by 16%, driven by record renewal premium change of 12.7% in our management liability business, while retention remained strong. In Personal Insurance, net written premiums increased by 16%, or 8% adjusting for the auto premium refunds in the prior year quarter. Policies in force in both Auto and Homeowners are at record levels driven by continued strong retention and growth in new business.

“Our excellent top and bottom line results this quarter and for the first half of the year demonstrate the continued successful execution of our strategy to grow the top line at attractive returns, as well as the effectiveness of our well-defined and consistent investment philosophy. Our focused innovation agenda has been an important contributor to the growth and profitability we have achieved, and we will continue to relentlessly pursue our priorities of extending our lead in risk expertise, providing great experiences to our customers, distribution partners and employees, and improving productivity and efficiency. With the momentum we have and the best talent in the industry, we are well positioned to continue to create meaningful shareholder value over time.”

Consolidated Results

	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2021				2020				Change				2021				2020				Change
Underwriting gain (loss):	$	324			$	(280)			$	604			$	541			$	8			$	533
Underwriting gain (loss) includes:
Net favorable prior year reserve development	182				2				180				499				29				470
Catastrophes, net of reinsurance	(475)				(854)				379				(1,310)				(1,187)				(123)
Net investment income	818				268				550				1,519				879				640
Other income (expense), including interest expense	(72)				(86)				14				(143)				(167)				24
Core income (loss) before income taxes	1,070				(98)				1,168				1,917				720				1,197
Income tax expense (benefit)	191				(48)				239				339				94				245
Core income (loss)	879				(50)				929				1,578				626				952
Net realized investment gains (losses) after income taxes	47				10				37				81				(66)				147
Impact of changes in tax laws and/or tax rates (1)	8				—				8				8				—				8
Net income (loss)	$	934			$	(40)			$	974			$	1,667			$	560			$	1,107
Combined ratio	95.3		%		103.7		%		(8.4)			pts	95.9		%		99.5		%		(3.6)			pts
Impact on combined ratio
Net favorable prior year reserve development	(2.4)			pts	—			pts	(2.4)			pts	(3.3)			pts	(0.2)			pts	(3.1)			pts
Catastrophes, net of reinsurance	6.3			pts	12.3			pts	(6.0)			pts	8.7			pts	8.4			pts	0.3			pts
Underlying combined ratio	91.4		%		91.4		%		—			pts	90.5		%		91.3		%		(0.8)			pts
Net written premiums
Business Insurance	$	3,980			$	3,777			5		%		$	8,105			$	7,967			2		%
Bond & Specialty Insurance	854				734				16				1,577				1,397				13
Personal Insurance	3,301				2,835				16				5,958				5,328				12
Total	$	8,135			$	7,346			11		%		$	15,640			$	14,692			6		%

(1) Impact is recognized in the accounting period in which the change is enacted

Second Quarter 2021 Results

(All comparisons vs. second quarter 2020, unless noted otherwise)

The Company reported net income of $934 million, compared to a net loss of $40 million in the prior year quarter. Core income of $879 million improved from a core loss of $50 million in the prior year quarter due to higher net investment income, lower catastrophe losses, higher net favorable prior year reserve development and a higher underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes. Net realized investment gains were $61 million pre-tax ($47 million after-tax) compared to $13 million pre-tax ($10 million after-tax) in the prior year quarter.

Combined ratio:

•The combined ratio of 95.3% improved 8.4 points due to lower catastrophe losses (6.0 points) and higher net favorable prior year reserve development (2.4 points).

•The underlying combined ratio of 91.4% was comparable to the prior year quarter. See below for further details by segment.

•Net favorable prior year reserve development occurred in all segments. See below for further details by segment. Catastrophe losses primarily resulted from severe wind and hail storms in several regions of the United States.

Net investment income of $818 million pre-tax ($682 million after-tax) increased from $268 million pre-tax ($251 million after-tax) in the prior year quarter. Income from the non-fixed income investment portfolio was $335 million

pre-tax ($265 million after-tax) compared to a loss of $234 million pre-tax ($180 million after-tax) in the prior year quarter. The improvement in income from the non-fixed income investment portfolio was primarily due to positive private equity partnership returns in the current quarter compared to negative private equity partnership returns in the prior year quarter. The loss in the non-fixed income investment portfolio in the prior year quarter was related to the disruption in global financial markets during the first quarter of 2020 associated with COVID-19. Non-fixed income returns are generally reported on a one-quarter lagged basis and directionally follow the broader equity markets. Income from the fixed income investment portfolio decreased from the prior year quarter, primarily due to lower interest rates, partially offset by a higher average level of fixed maturity investments.

Net written premiums of $8.135 billion increased 11%. Adjusting for the premium refunds provided to personal automobile customers in response to COVID-19 and related economic conditions in the prior year quarter, net written premiums increased 8%. See below for further details by segment.

Year-to-Date 2021 Results

(All comparisons vs. year-to-date 2020, unless noted otherwise)

Net income of $1.667 billion increased $1.107 billion due to higher core income and net realized investment gains in the current period compared to net realized investment losses in the prior year period. Core income of $1.578 billion increased by $952 million due to higher net investment income, higher net favorable prior year reserve development and a higher underlying underwriting gain, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. Net realized investment gains were $105 million pre-tax ($81 million after-tax) compared to net realized investment losses of $85 million pre-tax ($66 million after-tax) in the prior year period.

Combined ratio:

•The combined ratio of 95.9% improved 3.6 points due to higher net favorable prior year reserve development (3.1 points) and a lower underlying combined ratio (0.8 points), partially offset by higher catastrophe losses (0.3 points).

•The underlying combined ratio of 90.5% improved 0.8 points. See below for further details by segment.

•Net favorable prior year reserve development occurred in all segments. See below for further details by segment. Catastrophe losses included the second quarter events described above, as well as winter storms and wind storms in several regions of the United States in the first quarter of 2021.

Net investment income of $1.519 billion pre-tax ($1.272 billion after-tax) increased from $879 million pre-tax ($770 million after-tax) in the prior year period. Income from the non-fixed income investment portfolio was $553 million pre-tax ($439 million after-tax) compared to a loss of $146 million pre-tax ($109 million after-tax) in the prior year period. The improvement in income from the non-fixed income investment portfolio was primarily due to positive private equity partnership returns in the current period compared to negative private equity partnership returns in the prior year period. The loss in the non-fixed income investment portfolio in the prior year period was related to the disruption in global financial markets during the first quarter of 2020 associated with COVID-19. Income from the fixed income investment portfolio decreased from the prior year period, primarily due to lower interest rates, partially offset by a higher average level of fixed maturity investments.

Net written premiums of $15.640 billion increased 6%. Adjusting for the premium refunds provided to personal automobile customers in response to COVID-19 and related economic conditions primarily in the second quarter of 2020, net written premiums increased 5%. See below for further details by segment.

Shareholders’ Equity

Shareholders’ equity of $29.156 billion was comparable to year-end 2020, as lower net unrealized investment gains resulting from higher interest rates, common share repurchases and dividends to shareholders were largely offset by net income of $934 million. Net unrealized investment gains included in shareholders’ equity were $4.112 billion pre-tax ($3.239 billion after-tax) compared to $5.175 billion pre-tax ($4.074 billion after-tax) at year-end 2020. Book value per share of $116.86 increased 10% from June 30, 2020 and increased 1% from year-end 2020. Adjusted book value per share of $103.88, which excludes net unrealized investment gains, increased 13% from June 30, 2020 and increased 4% from year-end 2020.

The Company repurchased 2.6 million shares during the second quarter at an average price of $157.18 per share for a total of $401 million. At the end of the quarter, statutory capital and surplus was $22.797 billion, and the ratio of debt-to-capital was 20.0%. The ratio of debt-to-capital excluding after-tax net unrealized investment gains included in shareholders’ equity was 22.0%, within the Company’s target range of 15% to 25%.

The Board of Directors declared a regular quarterly dividend of $0.88 per share. The dividend is payable on September 30, 2021, to shareholders of record at the close of business on September 10, 2021.

Business Insurance Segment Financial Results

	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2021				2020				Change				2021				2020				Change
Underwriting income (loss):	$	173			$	(273)			$	446			$	29			$	(372)			$	401
Underwriting income (loss) includes:
Net favorable prior year reserve development	73				—				73				207				5				202
Catastrophes, net of reinsurance	(149)				(377)				228				(655)				(572)				(83)
Net investment income	615				180				435				1,138				633				505
Other income (expense)	(8)				(6)				(2)				(15)				(22)				7
Segment income (loss) before income taxes	780				(99)				879				1,152				239				913
Income tax expense (benefit)	137				(41)				178				192				8				184
Segment income (loss)	$	643			$	(58)			$	701			$	960			$	231			$	729
Combined ratio	95.3		%		107.1		%		(11.8)			pts	99.3		%		104.6		%		(5.3)			pts
Impact on combined ratio
Net favorable prior year reserve development	(1.9)			pts	—			pts	(1.9)			pts	(2.7)			pts	—			pts	(2.7)			pts
Catastrophes, net of reinsurance	3.9			pts	10.1			pts	(6.2)			pts	8.5			pts	7.5			pts	1.0			pts
Underlying combined ratio	93.3		%		97.0		%		(3.7)			pts	93.5		%		97.1		%		(3.6)			pts
Net written premiums by market
Domestic
Select Accounts	$	726			$	734			(1)		%		$	1,455			$	1,533			(5)		%
Middle Market	2,087				1,960				6				4,471				4,368				2
National Accounts	213				215				(1)				503				516				(3)
National Property and Other	647				585				11				1,092				1,013				8
Total Domestic	3,673				3,494				5				7,521				7,430				1
International	307				283				8				584				537				9
Total	$	3,980			$	3,777			5		%		$	8,105			$	7,967			2		%

Second Quarter 2021 Results

(All comparisons vs. second quarter 2020, unless noted otherwise)

Segment income for Business Insurance was $643 million after-tax, compared with a segment loss of $58 million after-tax in the prior year quarter. The improvement was due to higher net investment income, lower catastrophe losses, a higher underlying underwriting gain and net favorable prior year reserve development compared with no net prior year reserve development in the prior year quarter. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

•The combined ratio of 95.3% improved 11.8 points due to lower catastrophe losses (6.2 points), a lower underlying combined ratio (3.7 points) and net favorable prior year reserve development compared with no net prior year reserve development in the prior year quarter (1.9 points).

•The underlying combined ratio of 93.3% improved by 3.7 points, primarily reflecting earned pricing that exceeded loss cost trends, as well as lower non-catastrophe weather-related losses and a favorable comparison to a modest net charge related to COVID-19 and related economic conditions in the prior year quarter.

Net written premiums of $3.980 billion increased 5%, reflecting strong renewal premium change and retention, as well as higher new business levels.

Year-to-Date 2021 Results

(All comparisons vs. year-to-date 2020, unless noted otherwise)

Segment income for Business Insurance was $960 million after-tax, an increase of $729 million. Segment income increased due to higher net investment income, a higher underlying underwriting gain and higher net favorable prior year reserve development, partially offset by higher catastrophe losses.

Combined ratio:

•The combined ratio of 99.3% improved 5.3 points due to a lower underlying combined ratio (3.6 points) and higher net favorable prior year reserve development (2.7 points), partially offset by higher catastrophe losses (1.0 points).

•The underlying combined ratio of 93.5% improved 3.6 points, primarily reflecting earned pricing that exceeded loss cost trends, as well as a favorable comparison to a net charge related to COVID-19 and related economic conditions in the prior year period.

•Net favorable prior year reserve development was primarily driven by better than expected loss experience in domestic operations in the workers' compensation product line for multiple accident years and in the commercial property and commercial automobile product lines for recent accident years, partially offset by an increase in claims handling expense reserves related to run-off operations and an increase to environmental reserves.

Net written premiums of $8.105 billion increased 2%. The benefits of continued strong retention and higher renewal rate change were partially offset by lower net written premiums in the workers' compensation product line due to the impact of COVID-19 and related economic conditions on payrolls.

Bond & Specialty Insurance Segment Financial Results

	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2021				2020				Change				2021				2020				Change
Underwriting gain:	$	165			$	40			$	125			$	272			$	132			$	140
Underwriting gain includes:
Net favorable (unfavorable) prior year reserve development	44				(33)				77				59				(33)				92
Catastrophes, net of reinsurance	(3)				(7)				4				(27)				(8)				(19)
Net investment income	64				42				22				123				97				26
Other income	6				4				2				9				8				1
Segment income before income taxes	235				86				149				404				237				167
Income tax expense	48				14				34				80				43				37
Segment income	$	187			$	72			$	115			$	324			$	194			$	130
Combined ratio	78.1		%		93.8		%		(15.7)			pts	81.6		%		89.9		%		(8.3)			pts
Impact on combined ratio
Net favorable (unfavorable) prior year reserve development	(5.7)			pts	4.7			pts	(10.4)			pts	(3.9)			pts	2.4			pts	(6.3)			pts
Catastrophes, net of reinsurance	0.4			pts	1.0			pts	(0.6)			pts	1.7			pts	0.6			pts	1.1			pts
Underlying combined ratio	83.4		%		88.1		%		(4.7)			pts	83.8		%		86.9		%		(3.1)			pts
Net written premiums
Domestic
Management Liability	$	497			$	438			13		%		$	941			$	839			12		%
Surety	232				220				5				432				435				(1)
Total Domestic	729				658				11				1,373				1,274				8
International	125				76				64				204				123				66
Total	$	854			$	734			16		%		$	1,577			$	1,397			13		%

Second Quarter 2021 Results

(All comparisons vs. second quarter 2020, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $187 million after-tax, an increase of $115 million. Segment income increased due to net favorable prior year reserve development in the current quarter compared to net unfavorable prior year reserve development in the prior year quarter, a higher underlying underwriting gain and higher net investment income. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

•The combined ratio of 78.1% improved 15.7 points due to net favorable prior year reserve development in the current quarter compared to net unfavorable prior year reserve development in the prior year quarter (10.4 points), a lower underlying combined ratio (4.7 points) and lower catastrophe losses (0.6 points).

•The underlying combined ratio of 83.4% improved 4.7 points, primarily reflecting earned pricing that exceeded loss cost trends and a lower expense ratio primarily resulting from higher premium volumes.

•Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment's domestic operations in the fidelity and surety product lines for recent accident years.

Net written premiums of $854 million increased 16%, reflecting strong retention and renewal premium change in management liability.

Year-to-Date 2021 Results

(All comparisons vs. year-to-date 2020, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $324 million after-tax, an increase of $130 million. Segment income increased due to net favorable prior year reserve development in the current year compared to net unfavorable prior year reserve development in the prior year period, a higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

•The combined ratio of 81.6% improved 8.3 points due to net favorable prior year reserve development in the current year compared to net unfavorable prior year reserve development in the prior year period (6.3 points) and a lower underlying combined ratio (3.1 points), partially offset by higher catastrophe losses (1.1 points).

•The underlying combined ratio of 83.8% improved 3.1 points, primarily reflecting earned pricing that exceeded loss cost trends and a lower expense ratio primarily resulting from higher premium volumes.

Net written premiums of $1.577 billion increased 13%, driven by the same factors described above for the second quarter of 2021.

Personal Insurance Segment Financial Results

	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2021				2020				Change				2021				2020				Change
Underwriting gain (loss):	$	(14)			$	(47)			$	33			$	240			$	248			$	(8)
Underwriting gain (loss) includes:
Net favorable prior year reserve development	65				35				30				233				57				176
Catastrophes, net of reinsurance	(323)				(470)				147				(628)				(607)				(21)
Net investment income	139				46				93				258				149				109
Other income	21				10				11				42				32				10
Segment income before income taxes	146				9				137				540				429				111
Income tax expense (benefit)	25				(1)				26				105				83				22
Segment income	$	121			$	10			$	111			$	435			$	346			$	89
Combined ratio	99.7		%		101.3		%		(1.6)			pts	95.1		%		94.5		%		0.6			pts
Impact on combined ratio
Net favorable prior year reserve development	(2.2)			pts	(1.3)			pts	(0.9)			pts	(4.0)			pts	(1.1)			pts	(2.9)			pts
Catastrophes, net of reinsurance	10.9			pts	18.6			pts	(7.7)			pts	10.8			pts	11.6			pts	(0.8)			pts
Underlying combined ratio	91.0		%		84.0		%		7.0			pts	88.3		%		84.0		%		4.3			pts
Net written premiums
Domestic
Automobile	$	1,467			$	1,204			22		%		$	2,842			$	2,537			12		%
Homeowners and Other	1,634				1,458				12				2,778				2,475				12
Total Domestic	3,101				2,662				16				5,620				5,012				12
International	200				173				16				338				316				7
Total	$	3,301			$	2,835			16		%		$	5,958			$	5,328			12		%

Second Quarter 2021 Results

(All comparisons vs. second quarter 2020, unless noted otherwise)

Segment income for Personal Insurance was $121 million after-tax, an increase of $111 million. Segment income increased due to lower catastrophe losses, higher net investment income and higher net favorable prior year reserve development, partially offset by a lower underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

•The combined ratio of 99.7% improved 1.6 points due to lower catastrophe losses (7.7 points) and higher net favorable prior year reserve development (0.9 points), partially offset by a higher underlying combined ratio (7.0 points).

•The underlying combined ratio of 91.0% increased 7.0 points, primarily driven by higher losses in the homeowners and other product line as well as higher losses in the automobile product line due to a comparison to a low level of loss activity (net of premium refunds) in the prior year quarter as a result of the pandemic.

•Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment's domestic operations in both the automobile and homeowners and other product lines for recent accident years.

Net written premiums of $3.301 billion increased 16%. Adjusting for the premium refunds provided to personal automobile customers in the prior year quarter, net written premiums increased 8%. Domestic Automobile net written premiums increased 22%. Adjusting for the premium refunds, Domestic Automobile net written premiums increased 4%, driven by strong retention and higher levels of new business. Domestic Homeowners and Other net

written premiums increased 12%, driven by strong retention, renewal premium change of 8.2% and higher levels of new business.

Year-to-Date 2021 Results

(All comparisons vs. year-to-date 2020, unless noted otherwise)

Segment income for Personal Insurance was $435 million after-tax, an increase of $89 million. Segment income increased due to higher net favorable prior year reserve development and higher net investment income, partially offset by a lower underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

•The combined ratio of 95.1% increased 0.6 points due to a higher underlying combined ratio (4.3 points), partially offset by higher net favorable prior year reserve development (2.9 points) and a smaller impact from catastrophe losses (0.8 points).

•The underlying combined ratio of 88.3% increased 4.3 points, primarily driven by higher losses in the homeowners and other product line.

Net written premiums of $5.958 billion increased 12%. Adjusting for the premium refunds provided to personal automobile customers primarily in the second quarter of 2020, net written premiums increased 8%. Domestic Automobile net written premiums increased 12%. Adjusting for the premium refunds, Domestic Automobile net written premiums increased 4% driven by strong retention and higher levels of new business. Domestic Homeowners and Other net written premiums increased 12%, driven by strong retention, renewal premium change of 7.9% and higher levels of new business.

Financial Supplement and Conference Call

The information in this press release should be read in conjunction with the financial supplement that is available on our website at www.travelers.com. Travelers management will discuss the contents of this release and other relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on Tuesday, July 20, 2021. Investors can access the call via webcast at http://investor.travelers.com or by dialing 1.844.895.1976 within the United States and 1.647.689.5389 outside the United States. Prior to the webcast, a slide presentation pertaining to the quarterly earnings will be available on the Company’s website.

Following the live event, replays will be available via webcast for one year at http://investor.travelers.com and by telephone for 30 days by dialing 1.800.585.8367 within the United States or 1.416.621.4642 outside the United States. All callers should use conference ID 5555606.

About Travelers

The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has approximately 30,000 employees and generated revenues of approximately $32 billion in 2020. For more information, visit www.travelers.com.

Travelers 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 our website at http://investor.travelers.com, our Facebook page at https://www.facebook.com/travelers and our Twitter account (@Travelers) at https://twitter.com/travelers. In addition, you may automatically receive email alerts and other information about Travelers when you enroll your email address by visiting the Email Notifications section at http://investor.travelers.com.

Travelers is organized into the following reportable business segments:

Personal Insurance - Personal Insurance writes a broad range of property and casualty insurance covering individuals’ personal risks, primarily in the United States, as well as in Canada. The primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.

* * * * *

Forward-Looking Statements

This press release 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,” “views,” “estimates” and similar expressions are used to identify these forward-looking statements. These statements include, among other things, the Company’s statements about:

•the Company’s outlook, the impact of trends on its business and its future results of operations and financial condition;

•the impact of COVID-19 and related economic conditions;

•the impact of legislative or regulatory actions or court decisions taken in response to COVID-19 or otherwise;

•share repurchase plans;

•future pension plan contributions;

•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, including inflation;

•strategic and operational initiatives to improve profitability and competitiveness;

•the Company’s competitive advantages;

•new product offerings;

•the impact of new or potential trade regulations imposed by the United States or other nations; and

•the impact of developments in the tort environment.

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:

Insurance-Related Risks

•high levels of catastrophe losses;

•actual claims may exceed the Company’s claims and claim adjustment expense reserves, or the estimated level of claims and claim adjustment expense reserves may increase, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments;

•the Company’s potential exposure to asbestos and environmental claims and related litigation;

•the Company is exposed to, and may face adverse developments involving, mass tort claims; and

•the effects of emerging claim and coverage issues on the Company’s business are uncertain, and court decisions or legislative changes that take place after the Company issues its policies can result in an unexpected increase in the number of claims.

Financial, Economic and Credit Risks

•a period of financial market disruption or an economic downturn;

•the Company’s investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses;

•the Company is exposed to credit risk related to reinsurance and structured settlements, and reinsurance coverage may not be available to the Company;

•the Company is exposed to credit risk in certain of its insurance operations and with respect to certain guarantee or indemnification arrangements that it has with third parties;

•a downgrade in the Company’s claims-paying and financial strength ratings; and

•the Company’s insurance subsidiaries may be unable to pay dividends to the Company’s holding company in sufficient amounts.

Business and Operational Risks

•the impact of COVID-19 and related risks, including with respect to revenues, claims and claim adjustment expenses, general and administrative expenses, investments, inflation, adverse legislative and/or regulatory action, operational disruptions and heightened cyber security risks and foreign currency exchange rate changes;

•the intense competition that the Company faces, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which it operates;

•disruptions to the Company’s relationships with its independent agents and brokers or the Company’s inability to manage effectively a changing distribution landscape;

•the Company’s efforts to develop new products, expand in targeted markets, improve business processes and workflows or make acquisitions may not be successful and may create enhanced risks;

•the Company's pricing and capital models may provide materially different indications than actual results;

•loss of or significant restrictions on the use of particular types of underwriting criteria, such as credit scoring, or other data or methodologies, in the pricing and underwriting of the Company’s products; and

•the Company is subject to additional risks associated with its business outside the United States.

Technology and Intellectual Property Risks

•as a result of cyber attacks or otherwise, the Company may experience difficulties with technology, data and network security or outsourcing relationships;

•the Company’s dependence on effective information technology systems and on continuing to develop and implement improvements in technology; and

•the Company may be unable to protect and enforce its own intellectual property or may be subject to claims for infringing the intellectual property of others.

Regulatory and Compliance Risks

•changes in regulation, including higher tax rates; and

•the Company's compliance controls may not be effective.

In addition, the Company’s share 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, changes in levels of written premiums, 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, including the ongoing level of uncertainty related to COVID-19.

Our forward-looking statements speak only as of the date of this press release or as of the date they are made, and we undertake no obligation to update forward-looking statements. For a more detailed discussion of these factors, see the information under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” and “Forward Looking Statements” in the quarterly report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on July 20, 2021, and in our most recent annual report on Form 10-K filed with the SEC on February 11, 2021, in each case as updated by our periodic filings with the SEC.

*****

GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

The following measures are used by the Company’s management to evaluate financial performance against historical results, to establish performance targets on a consolidated basis and for other reasons as discussed below. In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure. Reconciliations of these measures to the most comparable GAAP measures also follow.

In the opinion of the Company’s management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the Company’s periodic results of operations and how management evaluates the Company’s financial performance.

Some of these measures exclude net realized investment gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, included in shareholders’ equity, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends.

Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Company’s management.

RECONCILIATION OF NET INCOME TO CORE INCOME AND CERTAIN OTHER NON-GAAP MEASURES

Core income (loss) is consolidated net income (loss) excluding the after-tax impact of net realized investment gains (losses), discontinued operations, the effect of a change in tax laws and tax rates at enactment, and cumulative effect of changes in accounting principles when applicable. Segment income (loss) is determined in the same manner as core income (loss) on a segment basis. Management uses segment income (loss) to analyze each segment’s performance and as a tool in making business decisions. Financial statement users also consider core income (loss) when analyzing the results and trends of insurance companies. Core income (loss) per share is core income (loss) on a per common share basis.

Reconciliation of Net Income (Loss) to Core Income (Loss) less Preferred Dividends

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions, after-tax)	2021		2020		2021		2020
Net income (loss)	$	934	$	(40)	$	1,667	$	560
Less: Net realized investment (gains) losses	(47)		(10)		(81)		66
Impact of changes in tax laws and/or tax rates (1)	(8)		—		(8)		—
Core income (loss)	$	879	$	(50)	$	1,578	$	626

(1) Impact is recognized in the accounting period in which the change is enacted

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions, pre-tax)	2021		2020		2021		2020
Net income (loss)	$	1,131	$	(85)	$	2,022	$	635
Less: Net realized investment (gains) losses	(61)		(13)		(105)		85
Core income (loss)	$	1,070	$	(98)	$	1,917	$	720
	Twelve Months Ended December 31,
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
($ in millions, after-tax)	2020	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009	2008	2007	2006	2005
Net income	$2,697	$2,622	$2,523	$2,056	$3,014	$3,439	$3,692	$3,673	$2,473	$1,426	$3,216	$3,622	$2,924	$4,601	$4,208	$1,622
Less: Loss from discontinued operations	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	(439)
Income from continuing operations	2,697	2,622	2,523	2,056	3,014	3,439	3,692	3,673	2,473	1,426	3,216	3,622	2,924	4,601	4,208	2,061
Adjustments:
Net realized investment (gains) losses	(11)	(85)	(93)	(142)	(47)	(2)	(51)	(106)	(32)	(36)	(173)	(22)	271	(101)	(8)	(35)
Impact of changes in tax laws and/or tax rates (1) (2)	—	—	—	129	—	—	—	—	—	—	—	—	—	—	—	—
Core income	2,686	2,537	2,430	2,043	2,967	3,437	3,641	3,567	2,441	1,390	3,043	3,600	3,195	4,500	4,200	2,026
Less: Preferred dividends	—	—	—	—	—	—	—	—	—	1	3	3	4	4	5	6
Core income, less preferred dividends	$2,686	$2,537	$2,430	$2,043	$2,967	$3,437	$3,641	$3,567	$2,441	$1,389	$3,040	$3,597	$3,191	$4,496	$4,195	$2,020

(1) Impact is recognized in the accounting period in which the change is enacted

(2) Tax Cuts and Jobs Act of 2017 (TCJA)

Reconciliation of Net Income (Loss) per Share to Core Income (Loss) per Share on a Basic and Diluted Basis

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Basic income (loss) per share
Net income (loss)	$	3.70	$	(0.16)	$	6.58	$	2.19
Adjustments:
Net realized investment (gains) losses, after-tax	(0.19)		(0.04)		(0.32)		0.26
Impact of changes in tax laws and/or tax rates (1)	(0.03)		—		(0.03)		—
Core income (loss)	$	3.48	$	(0.20)	$	6.23	$	2.45
Diluted income (loss) per share
Net income (loss)	$	3.66	$	(0.16)	$	6.53	$	2.19
Adjustments:
Net realized investment (gains) losses, after-tax	(0.18)		(0.04)		(0.32)		0.25
Impact of changes in tax laws and/or tax rates (1)	(0.03)		—		(0.03)		—
Core income (loss)	$	3.45	$	(0.20)	$	6.18	$	2.44

(1) Impact is recognized in the accounting period in which the change is enacted

Reconciliation of Segment Income (Loss) to Total Core Income (Loss)

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions, after-tax)	2021		2020		2021		2020
Business Insurance	$	643	$	(58)	$	960	$	231
Bond & Specialty Insurance	187		72		324		194
Personal Insurance	121		10		435		346
Total segment income	951		24		1,719		771
Interest Expense and Other	(72)		(74)		(141)		(145)
Total core income (loss)	$	879	$	(50)	$	1,578	$	626

RECONCILIATION OF SHAREHOLDERS’ EQUITY TO ADJUSTED SHAREHOLDERS’ EQUITY AND CALCULATION OF RETURN ON EQUITY AND CORE RETURN ON EQUITY

Adjusted shareholders’ equity is shareholders’ equity excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity, net realized investment gains (losses), net of tax, for the period presented, the effect of a change in tax laws and tax rates at enactment (excluding the portion related to net unrealized investment gains (losses)), preferred stock and discontinued operations.

Reconciliation of Shareholders’ Equity to Adjusted Shareholders’ Equity

	As of June 30,
($ in millions)	2021		2020
Shareholders’ equity	$	29,156	$	26,943
Adjustments:
Net unrealized investment gains, net of tax, included in shareholders’ equity	(3,239)		(3,646)
Net realized investment (gains) losses, net of tax	(81)		66
Impact of changes in tax laws and/or tax rates (1)	(8)		—
Adjusted shareholders’ equity	$	25,828	$	23,363

(1) Impact is recognized in the accounting period in which the change is enacted

	As of December 31,
($ in millions)	2020	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009	2008	2007	2006	2005
Shareholders’ equity	$29,201	$25,943	$22,894	$23,731	$23,221	$23,598	$24,836	$24,796	$25,405	$24,477	$25,475	$27,415	$25,319	$26,616	$25,135	$22,303
Adjustments:
Net unrealized investment (gains) losses, net of tax, included in shareholders’ equity	(4,074)	(2,246)	113	(1,112)	(730)	(1,289)	(1,966)	(1,322)	(3,103)	(2,871)	(1,859)	(1,856)	146	(620)	(453)	(327)
Net realized investment (gains) losses, net of tax	(11)	(85)	(93)	(142)	(47)	(2)	(51)	(106)	(32)	(36)	(173)	(22)	271	(101)	(8)	(35)
Impact of changes in tax laws and/or tax rates (1) (2)	—	—	—	287	—	—	—	—	—	—	—	—	—	—	—	—
Preferred stock	—	—	—	—	—	—	—	—	—	—	(68)	(79)	(89)	(112)	(129)	(153)
Loss from discontinued operations	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	439
Adjusted shareholders’ equity	$25,116	$23,612	$22,914	$22,764	$22,444	$22,307	$22,819	$23,368	$22,270	$21,570	$23,375	$25,458	$25,647	$25,783	$24,545	$22,227

(1) Impact is recognized in the accounting period in which the change is enacted

(2) Tax Cuts and Jobs Act of 2017 (TCJA)

Return on equity is the ratio of annualized net income (loss) less preferred dividends to average shareholders’ equity for the periods presented. Core return on equity is the ratio of annualized core income (loss) less preferred dividends to adjusted average shareholders’ equity for the periods presented. In the opinion of the Company’s management, these are important indicators of how well management creates value for its shareholders through its operating activities and its capital management.

Average shareholders’ equity is (a) the sum of total shareholders’ equity excluding preferred stock at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two. Adjusted average shareholders’ equity is (a) the sum of total adjusted shareholders’ equity at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two.

Calculation of Return on Equity and Core Return on Equity

	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions, after-tax)	2021			2020			2021			2020
Annualized net income (loss)	$	3,736		$	(157)		$	3,335		$	1,120
Average shareholders’ equity	28,712			26,074			28,723			25,824
Return on equity	13.0		%	(0.6)		%	11.6		%	4.3		%
Annualized core income (loss)	$	3,514		$	(197)		$	3,155		$	1,253
Adjusted average shareholders’ equity	25,656			23,353			25,464			23,474
Core return on equity	13.7		%	(0.8)		%	12.4		%	5.3		%

Average annual core return on equity over a period is the ratio of: (a) the sum of core income (loss) less preferred dividends for the periods presented to (b) the sum of: (1) the sum of the adjusted average shareholders’ equity for all full years in the period presented and (2) for partial years in the period presented, the number of quarters in that partial year divided by four, multiplied by the adjusted average shareholders’ equity of the partial year.

	Twelve Months Ended December 31,
($ in millions)	2020	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009	2008	2007	2006	2005
Core income, less preferred dividends	$2,686	$2,537	$2,430	$2,043	$2,967	$3,437	$3,641	$3,567	$2,441	$1,389	$3,040	$3,597	$3,191	$4,496	$4,195	$2,020
Adjusted average shareholders’ equity	23,790	23,335	22,814	22,743	22,386	22,681	23,447	23,004	22,158	22,806	24,285	25,777	25,668	25,350	23,381	21,118
Core return on equity	11.3%	10.9%	10.7%	9.0%	13.3%	15.2%	15.5%	15.5%	11.0%	6.1%	12.5%	14.0%	12.4%	17.7%	17.9%	9.6%

RECONCILIATION OF PRE-TAX UNDERWRITING GAIN EXCLUDING CERTAIN ITEMS TO NET INCOME

Underwriting gain (loss) is net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses. In the opinion of the Company’s management, it is important to measure the profitability of each segment excluding the results of investing activities, which are managed separately from the insurance business. This measure is used to assess each segment’s business performance and as a tool in making business decisions. Pre-tax underwriting gain, excluding the impact of catastrophes and net favorable (unfavorable) prior year loss reserve development, is the underwriting gain adjusted to exclude claims and claim adjustment expenses, reinstatement premiums and assessments related to catastrophes and loss reserve development related to time periods prior to the current year. In the opinion of the Company’s management, this measure is meaningful to users of the financial statements to understand the Company’s periodic earnings and the variability of earnings caused by the unpredictable nature (i.e., the timing and amount) of catastrophes and loss reserve development. This measure is also referred to as underlying underwriting margin or underlying underwriting gain.

The Company’s threshold for disclosing catastrophes is primarily determined at the reportable segment level. If a threshold for one segment or a combination thereof is exceeded and the other segments have losses from the same event, losses from the event are identified as catastrophe losses in the segment results and for the consolidated results of the Company. Additionally, an aggregate threshold is applied for international business across all reportable segments. The threshold for 2021 ranges from $20 million to $30 million of losses before reinsurance and taxes.

Net favorable (unfavorable) prior year loss reserve development is the increase or decrease in incurred claims and claim adjustment expenses as a result of the re-estimation of claims and claim adjustment expense reserves at successive valuation dates for a given group of claims, which may be related to one or more prior years. In the opinion of the Company’s management, a discussion of loss reserve development is meaningful to users of the financial statements as it allows them to assess the impact between prior and current year development on incurred claims and claim adjustment expenses, net and core income (loss), and changes in claims and claim adjustment expense reserve levels from period to period.

Components of Net Income (Loss)

	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions, after-tax except as noted)	2021		2020		2021		2020
Pre-tax underwriting gain excluding the impact of catastrophes and net prior year loss reserve development	$	617	$	572	$	1,352	$	1,166
Pre-tax impact of catastrophes	(475)		(854)		(1,310)		(1,187)
Pre-tax impact of net favorable prior year loss reserve development	182		2		499		29
Pre-tax underwriting gain (loss)	324		(280)		541		8
Income tax expense (benefit) on underwriting results	71		(48)		122		20
Underwriting gain (loss)	253		(232)		419		(12)
Net investment income	682		251		1,272		770
Other income (expense), including interest expense	(56)		(69)		(113)		(132)
Core income (loss)	879		(50)		1,578		626
Net realized investment gains (losses)	47		10		81		(66)
Impact of changes in tax laws and/or tax rates (1)	8		—		8		—
Net income (loss)	$	934	$	(40)	$	1,667	$	560

(1) Impact is recognized in the accounting period in which the change is enacted

COMBINED RATIO AND ADJUSTMENTS FOR UNDERLYING COMBINED RATIO

Combined ratio: For Statutory Accounting Practices (SAP), the combined ratio is the sum of the SAP loss and LAE ratio and the SAP underwriting expense ratio as defined in the statutory financial statements required by insurance regulators. The combined ratio, as used in this earnings release, is the equivalent of, and is calculated in the same manner as, the SAP combined ratio except that the SAP underwriting expense ratio is based on net written premiums and the underwriting expense ratio as used in this earnings release is based on net earned premiums.

For SAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses less certain administrative services fee income to net earned premiums as defined in the statutory financial statements required by insurance regulators. The loss and LAE ratio as used in this earnings release is calculated in the same manner as the SAP ratio.

For SAP, the underwriting expense ratio is the ratio of underwriting expenses incurred (including commissions paid), less certain administrative services fee income and billing and policy fees and other, to net written premiums as defined in the statutory financial statements required by insurance regulators. The underwriting expense ratio as used in this earnings release, is the ratio of underwriting expenses (including the amortization of deferred acquisition costs), less certain administrative services fee income, billing and policy fees and other, to net earned premiums.

The combined ratio, loss and LAE ratio, and underwriting expense ratio are used as indicators of the Company’s underwriting discipline, efficiency in acquiring and servicing its business and overall underwriting profitability. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.

Underlying combined ratio represents the combined ratio excluding the impact of net prior year reserve development and catastrophes. The underlying combined ratio is an indicator of the Company’s underwriting discipline and underwriting profitability for the current accident year.

Other companies’ method of computing similarly titled measures may not be comparable to the Company’s method of computing these ratios.

Calculation of the Combined Ratio

	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions, pre-tax)	2021			2020			2021			2020
Loss and loss adjustment expense ratio
Claims and claim adjustment expenses	$	5,045		$	5,107		$	10,015		$	9,896
Less:
Policyholder dividends	10			8			21			20
Allocated fee income	39			44			77			85
Loss ratio numerator	$	4,996		$	5,055		$	9,917		$	9,791
Underwriting expense ratio
Amortization of deferred acquisition costs	$	1,254		$	1,173		$	2,461		$	2,351
General and administrative expenses (G&A)	1,174			1,121			2,337			2,258
Less:
Non-insurance G&A	77			52			147			107
Allocated fee income	65			70			128			137
Billing and policy fees and other	27			17			54			45
Expense ratio numerator	$	2,259		$	2,155		$	4,469		$	4,320
Earned premium	$	7,616		$	6,955		$	15,002		$	14,184
Combined ratio (1)
Loss and loss adjustment expense ratio	65.6		%	72.7		%	66.1		%	69.0		%
Underwriting expense ratio	29.7		%	31.0		%	29.8		%	30.5		%
Combined ratio	95.3		%	103.7		%	95.9		%	99.5		%

(1) For purposes of computing ratios, billing and policy fees and other (which are a component of other revenues) are allocated as a reduction of underwriting expenses. In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses. These allocations are to conform the calculation of the combined ratio with statutory accounting. Additionally, general and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio.

RECONCILIATION OF BOOK VALUE PER SHARE AND SHAREHOLDERS’ EQUITY TO CERTAIN NON-GAAP MEASURES

Book value per share is total common shareholders’ equity divided by the number of common shares outstanding. Adjusted book value per share is total common shareholders’ equity excluding net unrealized investment gains and losses, net of tax, included in shareholders’ equity, divided by the number of common shares outstanding. In the opinion of the Company’s management, adjusted book value per share is useful in an analysis of a property casualty company’s book value per share as it removes the effect of changing prices on invested assets (i.e., net unrealized investment gains (losses), net of tax), which do not have an equivalent impact on unpaid claims and claim adjustment expense reserves. Tangible book value per share is adjusted book value per share excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding. In the opinion of the Company’s management, tangible book value per share is useful in an analysis of a property casualty company’s book value on a nominal basis as it removes certain effects of purchase accounting (i.e., goodwill and other intangible assets), in addition to the effect of changing prices on invested assets.

Reconciliation of Shareholders’ Equity to Tangible Shareholders’ Equity, Excluding Net Unrealized Investment Gains, Net of Tax

	As of
($ in millions, except per share amounts)	June 30,<br>2021		December 31,<br>2020		June 30,<br>2020
Shareholders’ equity	$	29,156	$	29,201	$	26,943
Less: Net unrealized investment gains, net of tax, included in shareholders’ equity	3,239		4,074		3,646
Shareholders’ equity, excluding net unrealized investment gains, net of tax, included in shareholders’ equity	25,917		25,127		23,297
Less:
Goodwill	4,020		3,976		3,925
Other intangible assets	314		317		319
Impact of deferred tax on other intangible assets	(63)		(59)		(49)
Tangible shareholders’ equity	$	21,646	$	20,893	$	19,102
Common shares outstanding	249.5		252.4		253.2
Book value per share	$	116.86	$	115.68	$	106.42
Adjusted book value per share	103.88		99.54		92.01
Tangible book value per share	86.76		82.77		75.45

RECONCILIATION OF TOTAL CAPITALIZATION TO TOTAL CAPITALIZATION EXCLUDING NET UNREALIZED INVESTMENT GAINS, NET OF TAX

Total capitalization is the sum of total shareholders’ equity and debt. Debt-to-capital ratio excluding net unrealized gain on investments, net of tax, included in shareholders’ equity, is the ratio of debt to total capitalization excluding the after-tax impact of net unrealized investment gains and losses included in shareholders’ equity. In the opinion of the Company’s management, the debt-to-capital ratio is useful in an analysis of the Company’s financial leverage.

	As of
($ in millions)	June 30,<br>2021			December 31,<br>2020
Debt	$	7,290		$	6,550
Shareholders’ equity	29,156			29,201
Total capitalization	36,446			35,751
Less: Net unrealized investment gains, net of tax, included in shareholders’ equity	3,239			4,074
Total capitalization excluding net unrealized gain on investments, net of tax, included in shareholders’ equity	$	33,207		$	31,677
Debt-to-capital ratio	20.0		%	18.3		%
Debt-to-capital ratio excluding net unrealized investment gains, net of tax, included in shareholders’ equity	22.0		%	20.7		%

OTHER DEFINITIONS

Gross written premiums reflect the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the insurance contract. Net written premiums reflect gross written premiums less premiums ceded to reinsurers.

For Business Insurance and Bond & Specialty Insurance, retention is the amount of premium available for renewal that was retained, excluding rate and exposure changes. For Personal Insurance, retention is the ratio of the expected number of renewal policies that will be retained throughout the annual policy period to the number of available renewal base policies. For all of the segments, renewal rate change represents the estimated change in average premium on policies that renew, excluding exposure changes. Exposure is the measure of risk used in the pricing of an insurance product. The change in exposure is the amount of change in premium on policies that renew attributable to the change in portfolio risk. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. New business is the amount of written premium related to new policyholders and additional products sold to existing policyholders. These are operating

statistics, which are in part dependent on the use of estimates and are therefore subject to change. For Business Insurance, retention, renewal premium change and new business exclude National Accounts. For Bond & Specialty Insurance, retention, renewal premium change and new business exclude surety and other products that are generally sold on a non-recurring, project specific basis. For each of the segments, production statistics referred to herein are domestic only unless otherwise indicated.

Statutory capital and surplus represents the excess of an insurance company’s admitted assets over its liabilities, including loss reserves, as determined in accordance with statutory accounting practices.

Holding company liquidity is the total funds available at the holding company level to fund general corporate purposes, primarily the payment of shareholder dividends and debt service. These funds consist of total cash, short-term invested assets and other readily marketable securities held by the holding company.

For a glossary of other financial terms used in this press release, we refer you to the Company’s most recent annual report on Form 10-K filed with the SEC on February 11, 2021, and subsequent periodic filings with the SEC.

Contacts

Media:	Institutional Investors:
Patrick Linehan	Abbe Goldstein
917.778.6267	917.778.6825

Document

The Travelers Companies, Inc.

Financial Supplement - Second Quarter 2021

	Page Number
Consolidated Results
Financial Highlights	1
Reconciliation to Net Income (Loss) and Earnings Per Share	2
Statement of Income (Loss)	3
Net Income (Loss) by Major Component and Combined Ratio	4
Core Income (Loss)	5
Selected Statistics - Property and Casualty Operations	6
Written and Earned Premiums - Property and Casualty Operations	7
Business Insurance
Segment Income (Loss)	8
Segment Income (Loss) by Major Component and Combined Ratio	9
Selected Statistics	10
Net Written Premiums	11
Bond & Specialty Insurance
Segment Income	12
Segment Income by Major Component and Combined Ratio	13
Selected Statistics	14
Net Written Premiums	15
Personal Insurance
Segment Income	16
Segment Income by Major Component and Combined Ratio	17
Selected Statistics	18
Net Written Premiums	19
Selected Statistics - Automobile	20
Selected Statistics - Homeowners and Other	21
Supplemental Detail
Interest Expense and Other	22
Consolidated Balance Sheet	23
Investment Portfolio	24
Investment Portfolio - Fixed Maturities Data	25
Investment Income	26
Net Realized and Unrealized Investment Gains (Losses) included in Shareholders’ Equity	27
Reinsurance Recoverables	28
Net Reserves for Losses and Loss Adjustment Expense	29
Asbestos Reserves	30
Capitalization	31
Statutory Capital and Surplus to GAAP Shareholders’ Equity Reconciliation	32
Statement of Cash Flows	33
Statement of Cash Flows (continued)	34
Glossary of Financial Measures and Description of Reportable Business Segments	35-36

The information included in the Financial Supplement is unaudited. This document should be read in conjunction with the Company’s Form 10-Q which will be filed with the Securities and Exchange Commission.

Index

The Travelers Companies, Inc.

Financial Highlights

($ and shares in millions, except for per share data)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Net income (loss)	$	600		$	(40)		$	827		$	1,310		$	733		$	934		$	560		$	1,667
Net income (loss) per share:
Basic	$	2.34		$	(0.16)		$	3.24		$	5.13		$	2.89		$	3.70		$	2.19		$	6.58
Diluted	$	2.33		$	(0.16)		$	3.23		$	5.10		$	2.87		$	3.66		$	2.19		$	6.53
Core income (loss)	$	676		$	(50)		$	798		$	1,262		$	699		$	879		$	626		$	1,578
Core income (loss) per share:
Basic	$	2.64		$	(0.20)		$	3.13		$	4.94		$	2.75		$	3.48		$	2.45		$	6.23
Diluted	$	2.62		$	(0.20)		$	3.12		$	4.91		$	2.73		$	3.45		$	2.44		$	6.18
Return on equity	9.4		%	(0.6)		%	12.1		%	18.4		%	10.2		%	13.0		%	4.3		%	11.6		%
Core return on equity	11.5		%	(0.8)		%	13.5		%	20.5		%	11.1		%	13.7		%	5.3		%	12.4		%
Total assets, at period end	$	109,436		$	113,337		$	116,384		$	116,764		$	117,032		$	119,759		$	113,337		$	119,759
Total equity, at period end	$	25,204		$	26,943		$	27,849		$	29,201		$	28,269		$	29,156		$	26,943		$	29,156
Book value per share, at period end	$	99.69		$	106.42		$	109.94		$	115.68		$	112.42		$	116.86		$	106.42		$	116.86
Less: Net unrealized investment gains, net of tax	7.06			14.41			15.05			16.14			11.21			12.98			14.41			12.98
Adjusted book value per share, at period end	$	92.63		$	92.01		$	94.89		$	99.54		$	101.21		$	103.88		$	92.01		$	103.88
Weighted average number of common shares outstanding (basic)	254.4			251.6			253.3			253.4			252.1			250.7			253.6			251.4
Weighted average number of common shares outstanding and common stock equivalents (diluted)	255.9			251.6			254.3			254.8			254.1			253.1			254.7			253.6
Common shares outstanding at period end	252.8			253.2			253.3			252.4			251.5			249.5			253.2			249.5
Common stock dividends declared	$	210		$	218		$	218		$	218		$	216		$	224		$	428		$	440
Common stock repurchased:
Under Board of Directors authorization
Shares	3.5			—			—			1.4			2.4			2.6			3.5			5.0
Cost	$	425		$	—		$	—		$	200		$	356		$	400		$	425		$	756
Other
Shares	0.3			—			—			—			0.3			—			0.3			0.3
Cost	$	46		$	—		$	—		$	1		$	41		$	1		$	46		$	42

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Reconciliation to Net Income (Loss) and Earnings per Share

($ and shares in millions, except earnings per share)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Net income (loss)
Net income (loss)	$	600	$	(40)	$	827	$	1,310	$	733	$	934	$	560	$	1,667
Adjustments:
Net realized investment (gains) losses, after-tax	76		(10)		(29)		(48)		(34)		(47)		66		(81)
Impact of changes in tax laws and/or tax rates (1)	—		—		—		—		—		(8)		—		(8)
Core income (loss)	$	676	$	(50)	$	798	$	1,262	$	699	$	879	$	626	$	1,578
Basic earnings per share
Net income (loss)	$	2.34	$	(0.16)	$	3.24	$	5.13	$	2.89	$	3.70	$	2.19	$	6.58
Adjustments:
Net realized investment (gains) losses, after-tax	0.30		(0.04)		(0.11)		(0.19)		(0.14)		(0.19)		0.26		(0.32)
Impact of changes in tax laws and/or tax rates (1)	—		—		—		—		—		(0.03)		—		(0.03)
Core income (loss)	$	2.64	$	(0.20)	$	3.13	$	4.94	$	2.75	$	3.48	$	2.45	$	6.23
Diluted earnings per share
Net income (loss)	$	2.33	$	(0.16)	$	3.23	$	5.10	$	2.87	$	3.66	$	2.19	$	6.53
Adjustments:
Net realized investment (gains) losses, after-tax	0.29		(0.04)		(0.11)		(0.19)		(0.14)		(0.18)		0.25		(0.32)
Impact of changes in tax laws and/or tax rates (1)	—		—		—		—		—		(0.03)		—		(0.03)
Core income (loss)	$	2.62	$	(0.20)	$	3.12	$	4.91	$	2.73	$	3.45	$	2.44	$	6.18

Adjustments to net income (loss) and weighted average shares for net income (loss) EPS calculations: (2)

Basic and Diluted	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Net income (loss), as reported	$	600	$	(40)	$	827	$	1,310	$	733	$	934	$	560	$	1,667
Participating share-based awards - allocated income	(5)		(1)		(6)		(10)		(5)		(7)		(3)		(12)
Net income (loss) available to common shareholders - basic and diluted	$	595	$	(41)	$	821	$	1,300	$	728	$	927	$	557	$	1,655
Common Shares
Basic
Weighted average shares outstanding	254.4		251.6		253.3		253.4		252.1		250.7		253.6		251.4
Diluted
Weighted average shares outstanding	254.4		251.6		253.3		253.4		252.1		250.7		253.6		251.4
Weighted average effects of dilutive securities - stock options and performance shares	1.5		—		1.0		1.4		2.0		2.4		1.1		2.2
Diluted weighted average shares outstanding	255.9		251.6		254.3		254.8		254.1		253.1		254.7		253.6

(1) Impact is recognized in the accounting period in which the change is enacted.

(2) Adjustments to net income and weighted average shares for net income EPS calculations can generally be used for the core income EPS calculations.

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Statement of Income (Loss) - Consolidated

($ in millions)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Revenues
Premiums	$	7,229		$	6,955		$	7,380		$	7,480		$	7,386		$	7,616		$	14,184		$	15,002
Net investment income	611			268			671			677			701			818			879			1,519
Fee income	108			114			101			106			101			104			222			205
Net realized investment gains (losses)	(98)			13			37			50			44			61			(85)			105
Other revenues	58			51			86			84			81			88			109			169
Total revenues	7,908			7,401			8,275			8,397			8,313			8,687			15,309			17,000
Claims and expenses
Claims and claim adjustment expenses	4,789			5,107			4,886			4,341			4,970			5,045			9,896			10,015
Amortization of deferred acquisition costs	1,178			1,173			1,207			1,215			1,207			1,254			2,351			2,461
General and administrative expenses	1,137			1,121			1,109			1,142			1,163			1,174			2,258			2,337
Interest expense	84			85			87			83			82			83			169			165
Total claims and expenses	7,188			7,486			7,289			6,781			7,422			7,556			14,674			14,978
Income (loss) before income taxes	720			(85)			986			1,616			891			1,131			635			2,022
Income tax expense (benefit)	120			(45)			159			306			158			197			75			355
Net income (loss)	$	600		$	(40)		$	827		$	1,310		$	733		$	934		$	560		$	1,667
Other statistics
Effective tax rate on net investment income	15.1		%	6.2		%	15.6		%	15.4		%	15.9		%	16.7		%	12.4		%	16.3		%
Net investment income (after-tax)	$	519		$	251		$	566		$	572		$	590		$	682		$	770		$	1,272
Catastrophes, net of reinsurance:
Pre-tax	$	333		$	854		$	397		$	29		$	835		$	475		$	1,187		$	1,310
After-tax	$	263		$	673		$	314		$	24		$	659		$	376		$	936		$	1,035
Prior year reserve development - favorable:
Pre-tax	$	27		$	2		$	142		$	180		$	317		$	182		$	29		$	499
After-tax	$	21		$	1		$	113		$	141		$	249		$	144		$	22		$	393

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Net Income (Loss) by Major Component and Combined Ratio - Consolidated

($ in millions, net of tax)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Underwriting gain (loss)	$	220		$	(232)		$	281		$	741		$	166		$	253		$	(12)		$	419
Net investment income	519			251			566			572			590			682			770			1,272
Other income (expense), including interest expense	(63)			(69)			(49)			(51)			(57)			(56)			(132)			(113)
Core income (loss)	676			(50)			798			1,262			699			879			626			1,578
Net realized investment gains (losses)	(76)			10			29			48			34			47			(66)			81
Impact of changes in tax laws and/or tax rates (1)	—			—			—			—			—			8			—			8
Net income (loss)	$	600		$	(40)		$	827		$	1,310		$	733		$	934		$	560		$	1,667
Combined ratio (2) (3)
Loss and loss adjustment expense ratio	65.5		%	72.7		%	65.6		%	57.3		%	66.7		%	65.6		%	69.0		%	66.1		%
Underwriting expense ratio	30.0		%	31.0		%	29.3		%	29.4		%	29.9		%	29.7		%	30.5		%	29.8		%
Combined ratio	95.5		%	103.7		%	94.9		%	86.7		%	96.6		%	95.3		%	99.5		%	95.9		%
Impact on combined ratio:
Net favorable prior year reserve development	(0.4)		%	—		%	(1.9)		%	(2.4)		%	(4.2)		%	(2.4)		%	(0.2)		%	(3.3)		%
Catastrophes, net of reinsurance	4.6		%	12.3		%	5.3		%	0.4		%	11.3		%	6.3		%	8.4		%	8.7		%
Underlying combined ratio	91.3		%	91.4		%	91.5		%	88.7		%	89.5		%	91.4		%	91.3		%	90.5		%

(1) Impact is recognized in the accounting period in which the change is enacted.

(2) Before policyholder dividends.

(3) Billing and policy fees and other, which are a component of other revenues, are allocated as a reduction of underwriting expenses. In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses. These allocations are to conform the calculation of the combined ratio with statutory accounting. Additionally, general and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio. See following:

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Billing and policy fees and other	$	28	$	17	$	24	$	28	$	27	$	27	$	45	$	54
Fee income:
Loss and loss adjustment expenses	$	41	$	44	$	35	$	41	$	38	$	39	$	85	$	77
Underwriting expenses	67		70		66		65		63		65		137		128
Total fee income	$	108	$	114	$	101	$	106	$	101	$	104	$	222	$	205
Non-insurance general and administrative expenses	$	55	$	52	$	60	$	67	$	70	$	77	$	107	$	147

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Core Income (Loss) - Consolidated

($ in millions)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Revenues
Premiums	$	7,229		$	6,955		$	7,380		$	7,480		$	7,386		$	7,616		$	14,184		$	15,002
Net investment income	611			268			671			677			701			818			879			1,519
Fee income	108			114			101			106			101			104			222			205
Other revenues	58			51			86			84			81			88			109			169
Total revenues	8,006			7,388			8,238			8,347			8,269			8,626			15,394			16,895
Claims and expenses
Claims and claim adjustment expenses	4,789			5,107			4,886			4,341			4,970			5,045			9,896			10,015
Amortization of deferred acquisition costs	1,178			1,173			1,207			1,215			1,207			1,254			2,351			2,461
General and administrative expenses	1,137			1,121			1,109			1,142			1,163			1,174			2,258			2,337
Interest expense	84			85			87			83			82			83			169			165
Total claims and expenses	7,188			7,486			7,289			6,781			7,422			7,556			14,674			14,978
Core income (loss) before income taxes	818			(98)			949			1,566			847			1,070			720			1,917
Income tax expense (benefit)	142			(48)			151			304			148			191			94			339
Core income (loss)	$	676		$	(50)		$	798		$	1,262		$	699		$	879		$	626		$	1,578
Other statistics
Effective tax rate on net investment income	15.1		%	6.2		%	15.6		%	15.4		%	15.9		%	16.7		%	12.4		%	16.3		%
Net investment income (after-tax)	$	519		$	251		$	566		$	572		$	590		$	682		$	770		$	1,272
Catastrophes, net of reinsurance:
Pre-tax	$	333		$	854		$	397		$	29		$	835		$	475		$	1,187		$	1,310
After-tax	$	263		$	673		$	314		$	24		$	659		$	376		$	936		$	1,035
Prior year reserve development - favorable:
Pre-tax	$	27		$	2		$	142		$	180		$	317		$	182		$	29		$	499
After-tax	$	21		$	1		$	113		$	141		$	249		$	144		$	22		$	393

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Selected Statistics - Property and Casualty Operations

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Statutory underwriting
Gross written premiums	$	8,152	$	7,751	$	8,243	$	7,617	$	8,407	$	8,597	$	15,903	$	17,004
Net written premiums	$	7,346	$	7,346	$	7,771	$	7,269	$	7,505	$	8,135	$	14,692	$	15,640
Net earned premiums	$	7,229	$	6,955	$	7,380	$	7,480	$	7,386	$	7,616	$	14,184	$	15,002
Losses and loss adjustment expenses	4,733		5,053		4,830		4,291		4,920		5,003		9,786		9,923
Underwriting expenses	2,193		2,212		2,214		2,153		2,276		2,361		4,405		4,637
Statutory underwriting gain (loss)	303		(310)		336		1,036		190		252		(7)		442
Policyholder dividends	12		8		11		10		11		10		20		21
Statutory underwriting gain (loss) after policyholder dividends	$	291	$	(318)	$	325	$	1,026	$	179	$	242	$	(27)	$	421
Other statutory statistics
Reserves for losses and loss adjustment expenses	$	43,913	$	45,112	$	46,181	$	46,247	$	47,153	$	47,893	$	45,112	$	47,893
Increase in reserves	$	170	$	1,199	$	1,069	$	66	$	906	$	740	$	1,369	$	1,646
Statutory capital and surplus	$	20,808	$	20,607	$	21,230	$	22,180	$	22,403	$	22,797	$	20,607	$	22,797
Net written premiums/surplus (1)	1.41:1		1.42:1		1.39:1		1.34:1		1.33:1		1.35:1		1.42:1		1.35:1

(1) Based on 12 months of rolling net written premiums.

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Written and Earned Premiums - Property and Casualty Operations

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Written premiums
Gross	$	8,152	$	7,751	$	8,243	$	7,617	$	8,407	$	8,597	$	15,903	$	17,004
Ceded	(806)		(405)		(472)		(348)		(902)		(462)		(1,211)		(1,364)
Net	$	7,346	$	7,346	$	7,771	$	7,269	$	7,505	$	8,135	$	14,692	$	15,640
Earned premiums
Gross	$	7,683	$	7,446	$	7,898	$	7,961	$	7,895	$	8,164	$	15,129	$	16,059
Ceded	(454)		(491)		(518)		(481)		(509)		(548)		(945)		(1,057)
Net	$	7,229	$	6,955	$	7,380	$	7,480	$	7,386	$	7,616	$	14,184	$	15,002

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income (Loss) - Business Insurance

($ in millions)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Revenues
Premiums	$	3,864		$	3,735		$	3,841		$	3,854		$	3,799		$	3,880		$	7,599		$	7,679
Net investment income	453			180			498			502			523			615			633			1,138
Fee income	102			108			95			100			95			97			210			192
Other revenues	31			36			58			51			53			57			67			110
Total revenues	4,450			4,059			4,492			4,507			4,470			4,649			8,509			9,119
Claims and expenses
Claims and claim adjustment expenses	2,791			2,880			2,804			2,329			2,788			2,539			5,671			5,327
Amortization of deferred acquisition costs	636			622			633			627			627			642			1,258			1,269
General and administrative expenses	685			656			651			672			683			688			1,341			1,371
Total claims and expenses	4,112			4,158			4,088			3,628			4,098			3,869			8,270			7,967
Segment income (loss) before income taxes	338			(99)			404			879			372			780			239			1,152
Income tax expense (benefit)	49			(41)			39			166			55			137			8			192
Segment income (loss)	$	289		$	(58)		$	365		$	713		$	317		$	643		$	231		$	960
Other statistics
Effective tax rate on net investment income	15.0		%	6.3		%	15.6		%	15.4		%	15.8		%	16.7		%	12.5		%	16.3		%
Net investment income (after-tax)	$	385		$	169		$	421		$	423		$	441		$	511		$	554		$	952
Catastrophes, net of reinsurance:
Pre-tax	$	195		$	377		$	97		$	(24)		$	506		$	149		$	572		$	655
After-tax	$	154		$	298		$	76		$	(19)		$	399		$	119		$	452		$	518
Prior year reserve development - favorable (unfavorable):
Pre-tax	$	5		$	—		$	(220)		$	124		$	134		$	73		$	5		$	207
After-tax	$	3		$	—		$	(173)		$	97		$	105		$	58		$	3		$	163

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income (Loss) by Major Component and Combined Ratio - Business Insurance

($ in millions, net of tax)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Underwriting gain (loss)	$	(84)		$	(221)		$	(59)		$	292		$	(116)		$	137		$	(305)		$	21
Net investment income	385			169			421			423			441			511			554			952
Other income (expense)	(12)			(6)			3			(2)			(8)			(5)			(18)			(13)
Segment income (loss)	$	289		$	(58)		$	365		$	713		$	317		$	643		$	231		$	960
Combined ratio (1) (2)
Loss and loss adjustment expense ratio	70.9		%	75.8		%	71.8		%	59.2		%	72.2		%	64.3		%	73.3		%	68.2		%
Underwriting expense ratio	31.3		%	31.3		%	30.5		%	30.6		%	31.3		%	31.0		%	31.3		%	31.1		%
Combined ratio	102.2		%	107.1		%	102.3		%	89.8		%	103.5		%	95.3		%	104.6		%	99.3		%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development	(0.1)		%	—		%	5.8		%	(3.2)		%	(3.5)		%	(1.9)		%	—		%	(2.7)		%
Catastrophes, net of reinsurance	5.0		%	10.1		%	2.5		%	(0.6)		%	13.3		%	3.9		%	7.5		%	8.5		%
Underlying combined ratio	97.3		%	97.0		%	94.0		%	93.6		%	93.7		%	93.3		%	97.1		%	93.5		%

(1) Before policyholder dividends.

(2) Billing and policy fees and other, which are a component of other revenues, are allocated as a reduction of underwriting expenses. In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses. These allocations are to conform the calculation of the combined ratio with statutory accounting. Additionally, general and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio. See following:

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Billing and policy fees and other	$	4	$	3	$	4	$	5	$	4	$	3	$	7	$	7
Fee income:
Loss and loss adjustment expenses	$	41	$	44	$	35	$	41	$	38	$	39	$	85	$	77
Underwriting expenses	61		64		60		59		57		58		125		115
Total fee income	$	102	$	108	$	95	$	100	$	95	$	97	$	210	$	192
Non-insurance general and administrative expenses	$	47	$	42	$	52	$	56	$	60	$	65	$	89	$	125

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Selected Statistics - Business Insurance

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Statutory underwriting
Gross written premiums	$	4,794	$	4,127	$	4,230	$	3,909	$	4,776	$	4,356	$	8,921	$	9,132
Net written premiums	$	4,190	$	3,777	$	3,833	$	3,631	$	4,125	$	3,980	$	7,967	$	8,105
Net earned premiums	$	3,864	$	3,735	$	3,841	$	3,854	$	3,799	$	3,880	$	7,599	$	7,679
Losses and loss adjustment expenses	2,737		2,828		2,750		2,282		2,741		2,500		5,565		5,241
Underwriting expenses	1,247		1,167		1,145		1,132		1,251		1,226		2,414		2,477
Statutory underwriting gain (loss)	(120)		(260)		(54)		440		(193)		154		(380)		(39)
Policyholder dividends	10		6		9		7		8		6		16		14
Statutory underwriting gain (loss) after policyholder dividends	$	(130)	$	(266)	$	(63)	$	433	$	(201)	$	148	$	(396)	$	(53)

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Net Written Premiums - Business Insurance

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Net written premiums by market
Domestic
Select Accounts	$	799	$	734	$	658	$	630	$	729	$	726	$	1,533	$	1,455
Middle Market	2,408		1,960		2,131		2,012		2,384		2,087		4,368		4,471
National Accounts	301		215		239		241		290		213		516		503
National Property and Other	428		585		602		471		445		647		1,013		1,092
Total Domestic	3,936		3,494		3,630		3,354		3,848		3,673		7,430		7,521
International	254		283		203		277		277		307		537		584
Total	$	4,190	$	3,777	$	3,833	$	3,631	$	4,125	$	3,980	$	7,967	$	8,105
Net written premiums by product line
Domestic
Workers’ compensation	$	1,096	$	780	$	774	$	699	$	948	$	754	$	1,876	$	1,702
Commercial automobile	755		667		689		679		762		715		1,422		1,477
Commercial property	433		620		603		507		466		678		1,053		1,144
General liability	683		531		630		603		714		615		1,214		1,329
Commercial multi-peril	956		892		899		861		940		908		1,848		1,848
Other	13		4		35		5		18		3		17		21
Total Domestic	3,936		3,494		3,630		3,354		3,848		3,673		7,430		7,521
International	254		283		203		277		277		307		537		584
Total	$	4,190	$	3,777	$	3,833	$	3,631	$	4,125	$	3,980	$	7,967	$	8,105

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income - Bond & Specialty Insurance

($ in millions)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Revenues
Premiums	$	667		$	693		$	723		$	740		$	743		$	776		$	1,360		$	1,519
Net investment income	55			42			58			58			59			64			97			123
Other revenues	5			5			7			10			5			7			10			12
Total revenues	727			740			788			808			807			847			1,467			1,654
Claims and expenses
Claims and claim adjustment expenses	327			403			392			342			374			335			730			709
Amortization of deferred acquisition costs	124			128			133			134			134			142			252			276
General and administrative expenses	125			123			124			128			130			135			248			265
Total claims and expenses	576			654			649			604			638			612			1,230			1,250
Segment income before income taxes	151			86			139			204			169			235			237			404
Income tax expense	29			14			24			40			32			48			43			80
Segment income	$	122		$	72		$	115		$	164		$	137		$	187		$	194		$	324
Other statistics
Effective tax rate on net investment income	14.7		%	3.0		%	14.8		%	14.4		%	15.0		%	15.7		%	9.7		%	15.4		%
Net investment income (after-tax)	$	47		$	41		$	49		$	50		$	50		$	55		$	88		$	105
Catastrophes, net of reinsurance:
Pre-tax	$	1		$	7		$	2		$	1		$	24		$	3		$	8		$	27
After-tax	$	1		$	5		$	2		$	1		$	19		$	2		$	6		$	21
Prior year reserve development - favorable (unfavorable):
Pre-tax	$	—		$	(33)		$	—		$	32		$	15		$	44		$	(33)		$	59
After-tax	$	—		$	(26)		$	—		$	25		$	12		$	35		$	(26)		$	47

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income by Major Component and Combined Ratio - Bond & Specialty Insurance

($ in millions, net of tax)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Underwriting gain	$	72		$	29		$	61		$	107		$	84		$	128		$	101		$	212
Net investment income	47			41			49			50			50			55			88			105
Other income	3			2			5			7			3			4			5			7
Segment income	$	122		$	72		$	115		$	164		$	137		$	187		$	194		$	324
Combined ratio (1)
Loss and loss adjustment expense ratio	48.8		%	57.8		%	54.0		%	45.7		%	49.9		%	42.6		%	53.4		%	46.2		%
Underwriting expense ratio	37.1		%	36.0		%	35.3		%	35.2		%	35.3		%	35.5		%	36.5		%	35.4		%
Combined ratio	85.9		%	93.8		%	89.3		%	80.9		%	85.2		%	78.1		%	89.9		%	81.6		%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development	—		%	4.7		%	—		%	(4.2)		%	(2.1)		%	(5.7)		%	2.4		%	(3.9)		%
Catastrophes, net of reinsurance	0.2		%	1.0		%	0.3		%	0.1		%	3.1		%	0.4		%	0.6		%	1.7		%
Underlying combined ratio	85.7		%	88.1		%	89.0		%	85.0		%	84.2		%	83.4		%	86.9		%	83.8		%

(1) General and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio. See following:

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Non-insurance general and administrative expenses	$	1	$	1	$	2	$	2	$	2	$	1	$	2	$	3

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Selected Statistics - Bond & Specialty Insurance

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Statutory underwriting
Gross written premiums	$	750	$	770	$	803	$	861	$	834	$	919	$	1,520	$	1,753
Net written premiums	$	663	$	734	$	754	$	800	$	723	$	854	$	1,397	$	1,577
Net earned premiums	$	667	$	693	$	723	$	740	$	743	$	776	$	1,360	$	1,519
Losses and loss adjustment expenses	325		401		390		339		371		331		726		702
Underwriting expenses	254		253		261		261		270		287		507		557
Statutory underwriting gain	88		39		72		140		102		158		127		260
Policyholder dividends	2		2		2		3		3		4		4		7
Statutory underwriting gain after policyholder dividends	$	86	$	37	$	70	$	137	$	99	$	154	$	123	$	253

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Net Written Premiums - Bond & Specialty Insurance

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Net written premiums by market
Domestic
Management Liability	$	401	$	438	$	467	$	463	$	444	$	497	$	839	$	941
Surety	215		220		208		202		200		232		435		432
Total Domestic	616		658		675		665		644		729		1,274		1,373
International	47		76		79		135		79		125		123		204
Total	$	663	$	734	$	754	$	800	$	723	$	854	$	1,397	$	1,577
Net written premiums by product line
Domestic
Fidelity & surety	$	272	$	274	$	268	$	258	$	256	$	287	$	546	$	543
General liability	289		326		339		357		340		389		615		729
Other	55		58		68		50		48		53		113		101
Total Domestic	616		658		675		665		644		729		1,274		1,373
International	47		76		79		135		79		125		123		204
Total	$	663	$	734	$	754	$	800	$	723	$	854	$	1,397	$	1,577

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income - Personal Insurance

($ in millions)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Revenues
Premiums	$	2,698		$	2,527		$	2,816		$	2,886		$	2,844		$	2,960		$	5,225		$	5,804
Net investment income	103			46			115			117			119			139			149			258
Fee income	6			6			6			6			6			7			12			13
Other revenues	22			10			21			23			23			24			32			47
Total revenues	2,829			2,589			2,958			3,032			2,992			3,130			5,418			6,122
Claims and expenses
Claims and claim adjustment expenses	1,671			1,824			1,690			1,670			1,808			2,171			3,495			3,979
Amortization of deferred acquisition costs	418			423			441			454			446			470			841			916
General and administrative expenses	320			333			328			333			344			343			653			687
Total claims and expenses	2,409			2,580			2,459			2,457			2,598			2,984			4,989			5,582
Segment income before income taxes	420			9			499			575			394			146			429			540
Income tax expense (benefit)	84			(1)			107			118			80			25			83			105
Segment income	$	336		$	10		$	392		$	457		$	314		$	121		$	346		$	435
Other statistics
Effective tax rate on net investment income	15.8		%	9.1		%	16.2		%	16.0		%	16.4		%	17.1		%	13.7		%	16.8		%
Net investment income (after-tax)	$	87		$	41		$	96		$	99		$	99		$	116		$	128		$	215
Catastrophes, net of reinsurance:
Pre-tax	$	137		$	470		$	298		$	52		$	305		$	323		$	607		$	628
After-tax	$	108		$	370		$	236		$	42		$	241		$	255		$	478		$	496
Prior year reserve development - favorable:
Pre-tax	$	22		$	35		$	362		$	24		$	168		$	65		$	57		$	233
After-tax	$	18		$	27		$	286		$	19		$	132		$	51		$	45		$	183

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Segment Income by Major Component and Combined Ratio - Personal Insurance

($ in millions, net of tax)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Underwriting gain (loss)	$	232		$	(40)		$	279		$	342		$	198		$	(12)		$	192		$	186
Net investment income	87			41			96			99			99			116			128			215
Other income	17			9			17			16			17			17			26			34
Segment income	$	336		$	10		$	392		$	457		$	314		$	121		$	346		$	435
Combined ratio (1)
Loss and loss adjustment expense ratio	61.9		%	72.2		%	60.0		%	57.9		%	63.6		%	73.3		%	66.9		%	68.6		%
Underwriting expense ratio	26.3		%	29.1		%	26.4		%	26.2		%	26.7		%	26.4		%	27.6		%	26.5		%
Combined ratio	88.2		%	101.3		%	86.4		%	84.1		%	90.3		%	99.7		%	94.5		%	95.1		%
Impact on combined ratio:
Net favorable prior year reserve development	(0.8)		%	(1.3)		%	(12.8)		%	(0.8)		%	(5.9)		%	(2.2)		%	(1.1)		%	(4.0)		%
Catastrophes, net of reinsurance	5.0		%	18.6		%	10.5		%	1.8		%	10.8		%	10.9		%	11.6		%	10.8		%
Underlying combined ratio	84.0		%	84.0		%	88.7		%	83.1		%	85.4		%	91.0		%	84.0		%	88.3		%

(1) Billing and policy fees and other, which are a component of other revenues, and fee income are allocated as a reduction of underwriting expenses to conform the calculation of the combined ratio with statutory accounting. Additionally, general and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio. See following:

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Billing and policy fees and other	$	24	$	14	$	20	$	23	$	23	$	24	$	38	$	47
Fee income	$	6	$	6	$	6	$	6	$	6	$	7	$	12	$	13
Non-insurance general and administrative expenses	$	—	$	—	$	—	$	—	$	2	$	3	$	—	$	5

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Selected Statistics - Personal Insurance

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Statutory underwriting
Gross written premiums	$	2,608	$	2,854	$	3,210	$	2,847	$	2,797	$	3,322	$	5,462	$	6,119
Net written premiums	$	2,493	$	2,835	$	3,184	$	2,838	$	2,657	$	3,301	$	5,328	$	5,958
Net earned premiums	$	2,698	$	2,527	$	2,816	$	2,886	$	2,844	$	2,960	$	5,225	$	5,804
Losses and loss adjustment expenses	1,671		1,824		1,690		1,670		1,808		2,172		3,495		3,980
Underwriting expenses	692		792		808		760		755		848		1,484		1,603
Statutory underwriting gain (loss)	$	335	$	(89)	$	318	$	456	$	281	$	(60)	$	246	$	221
Policies in force (in thousands)
Automobile	2,970		2,993		3,015		3,029		3,056		3,098		2,993		3,098
Homeowners and Other	5,534		5,679		5,790		5,858		5,944		6,076		5,679		6,076

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Net Written Premiums - Personal Insurance

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Net written premiums by product line
Domestic
Automobile	$	1,333	$	1,204	$	1,484	$	1,348	$	1,375	$	1,467	$	2,537	$	2,842
Homeowners and Other	1,017		1,458		1,524		1,330		1,144		1,634		2,475		2,778
Total Domestic	2,350		2,662		3,008		2,678		2,519		3,101		5,012		5,620
International	143		173		176		160		138		200		316		338
Total	$	2,493	$	2,835	$	3,184	$	2,838	$	2,657	$	3,301	$	5,328	$	5,958

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Selected Statistics - Personal Insurance - Automobile

($ in millions)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Statutory underwriting
Gross written premiums	$	1,447		$	1,322		$	1,609		$	1,460		$	1,481		$	1,604		$	2,769		$	3,085
Net written premiums	$	1,433		$	1,316		$	1,602		$	1,453		$	1,466		$	1,597		$	2,749		$	3,063
Net earned premiums	$	1,467		$	1,254		$	1,499		$	1,500		$	1,478		$	1,525		$	2,721		$	3,003
Losses and loss adjustment expenses	982			738			841			923			845			1,026			1,720			1,871
Underwriting expenses	354			374			381			369			370			389			728			759
Statutory underwriting gain	$	131		$	142		$	277		$	208		$	263		$	110		$	273		$	373
Other statistics
Combined ratio (1):
Loss and loss adjustment expense ratio	66.9		%	58.9		%	56.0		%	61.5		%	57.2		%	67.2		%	63.3		%	62.3		%
Underwriting expense ratio	24.3		%	28.9		%	24.3		%	24.5		%	24.6		%	24.4		%	26.4		%	24.5		%
Combined ratio	91.2		%	87.8		%	80.3		%	86.0		%	81.8		%	91.6		%	89.7		%	86.8		%
Impact on combined ratio:
Net favorable prior year reserve development	(0.2)		%	(1.2)		%	(1.4)		%	(1.4)		%	(5.2)		%	(2.1)		%	(0.6)		%	(3.7)		%
Catastrophes, net of reinsurance	0.5		%	2.9		%	0.2		%	—		%	0.4		%	1.7		%	1.6		%	1.1		%
Underlying combined ratio	90.9		%	86.1		%	81.5		%	87.4		%	86.6		%	92.0		%	88.7		%	89.4		%
Catastrophe losses, net of reinsurance:
Pre-tax	$	8		$	35		$	3		$	—		$	6		$	26		$	43		$	32
After-tax	$	6		$	27		$	3		$	—		$	5		$	21		$	33		$	26
Prior year reserve development - favorable:
Pre-tax	$	3		$	15		$	21		$	20		$	78		$	33		$	18		$	111
After-tax	$	2		$	12		$	17		$	16		$	61		$	26		$	14		$	87
Policies in force (in thousands)	2,970			2,993			3,015			3,029			3,056			3,098
Change from prior year quarter	(0.4)		%	0.4		%	1.2		%	1.9		%	2.9		%	3.5		%
Change from prior quarter	(0.1)		%	0.8		%	0.7		%	0.5		%	0.9		%	1.4		%

(1) Billing and policy fees and other, which are a component of other revenues, and fee income are allocated as a reduction of underwriting expenses.

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Billing and policy fees and other	$	15	$	9	$	12	$	13	$	14	$	14	$	24	$	28
Fee income	$	3	$	4	$	4	$	3	$	3	$	4	$	7	$	7

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Selected Statistics - Personal Insurance - Homeowners and Other

($ in millions)	1Q2020			2Q2020			3Q2020			4Q2020			1Q2021			2Q2021			YTD 2Q2020			YTD 2Q2021
Statutory underwriting
Gross written premiums	$	1,161		$	1,532		$	1,601		$	1,387		$	1,316		$	1,718		$	2,693		$	3,034
Net written premiums	$	1,060		$	1,519		$	1,582		$	1,385		$	1,191		$	1,704		$	2,579		$	2,895
Net earned premiums	$	1,231		$	1,273		$	1,317		$	1,386		$	1,366		$	1,435		$	2,504		$	2,801
Losses and loss adjustment expenses	689			1,086			849			747			963			1,146			1,775			2,109
Underwriting expenses	338			418			427			391			385			459			756			844
Statutory underwriting gain (loss)	$	204		$	(231)		$	41		$	248		$	18		$	(170)		$	(27)		$	(152)
Other statistics
Combined ratio (1):
Loss and loss adjustment expense ratio	56.0		%	85.3		%	64.5		%	53.9		%	70.5		%	79.8		%	70.8		%	75.3		%
Underwriting expense ratio	28.6		%	29.3		%	28.7		%	28.1		%	28.9		%	28.5		%	29.0		%	28.7		%
Combined ratio	84.6		%	114.6		%	93.2		%	82.0		%	99.4		%	108.3		%	99.8		%	104.0		%
Impact on combined ratio:
Net favorable prior year reserve development	(1.6)		%	(1.5)		%	(25.9)		%	(0.3)		%	(6.6)		%	(2.2)		%	(1.6)		%	(4.4)		%
Catastrophes, net of reinsurance	10.5		%	34.1		%	22.3		%	3.8		%	21.9		%	20.6		%	22.5		%	21.3		%
Underlying combined ratio	75.7		%	82.0		%	96.8		%	78.5		%	84.1		%	89.9		%	78.9		%	87.1		%
Catastrophe losses, net of reinsurance:
Pre-tax	$	129		$	435		$	295		$	52		$	299		$	297		$	564		$	596
After-tax	$	102		$	343		$	233		$	42		$	236		$	234		$	445		$	470
Prior year reserve development - favorable:
Pre-tax	$	19		$	20		$	341		$	4		$	90		$	32		$	39		$	122
After-tax	$	16		$	15		$	269		$	3		$	71		$	25		$	31		$	96
Policies in force (in thousands)	5,534			5,679			5,790			5,858			5,944			6,076
Change from prior year quarter	7.2		%	7.9		%	8.0		%	7.6		%	7.4		%	7.0		%
Change from prior quarter	1.7		%	2.6		%	2.0		%	1.2		%	1.5		%	2.2		%

(1) Billing and policy fees and other, which are a component of other revenues, and fee income are allocated as a reduction of underwriting expenses.

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Billing and policy fees and other	$	9	$	5	$	8	$	10	$	9	$	10	$	14	$	19
Fee income	$	3	$	2	$	2	$	3	$	3	$	3	$	5	$	6

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Interest Expense and Other

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Revenues
Other revenues	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Claims and expenses
Interest expense	84		85		87		83		82		83		169		165
General and administrative expenses	7		9		6		9		6		8		16		14
Total claims and expenses	91		94		93		92		88		91		185		179
Loss before income tax benefit	(91)		(94)		(93)		(92)		(88)		(91)		(185)		(179)
Income tax benefit	(20)		(20)		(19)		(20)		(19)		(19)		(40)		(38)
Loss	$	(71)	$	(74)	$	(74)	$	(72)	$	(69)	$	(72)	$	(145)	$	(141)

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Consolidated Balance Sheet

($ in millions)	June 30,<br>2021		December 31,<br>2020
Assets
Fixed maturities, available for sale, at fair value (amortized cost $71,465 and $68,830; allowance for expected credit losses of $2 and $2)	$	75,576	$	74,003
Equity securities, at fair value (cost $394 and $387)	513		453
Real estate investments	1,015		1,026
Short-term securities	5,703		5,511
Other investments	3,738		3,430
Total investments	86,545		84,423
Cash	689		721
Investment income accrued	608		603
Premiums receivable (net of allowance for expected credit losses of $105 and $105)	8,555		7,829
Reinsurance recoverables (net of allowance for estimated uncollectible reinsurance of $135 and $146)	8,209		8,350
Ceded unearned premiums	1,080		772
Deferred acquisition costs	2,501		2,358
Contractholder receivables (net of allowance for expected credit losses of $19 and $19)	4,016		4,242
Goodwill	4,020		3,976
Other intangible assets	314		317
Other assets	3,222		3,173
Total assets	$	119,759	$	116,764
Liabilities
Claims and claim adjustment expense reserves	$	55,906	$	54,521
Unearned premium reserves	16,210		15,222
Contractholder payables	4,035		4,261
Payables for reinsurance premiums	638		356
Deferred taxes	415		558
Debt	7,290		6,550
Other liabilities	6,109		6,095
Total liabilities	90,603		87,563
Shareholders’ equity
Common stock (1,750.0 shares authorized; 249.5 and 252.4 shares issued and outstanding)	24,002		23,743
Retained earnings	39,998		38,771
Accumulated other comprehensive income	1,769		2,502
Treasury stock, at cost (532.6 and 527.3 shares)	(36,613)		(35,815)
Total shareholders’ equity	29,156		29,201
Total liabilities and shareholders’ equity	$	119,759	$	116,764

The Travelers Companies, Inc.

Investment Portfolio

(at carrying value, $ in millions)	June 30,<br>2021		Pre-tax Book<br>Yield (1)		December 31,<br>2020		Pre-tax Book<br>Yield (1)
Investment portfolio
Taxable fixed maturities (including redeemable preferred stock)	$	42,989	2.70	%	$	40,230	2.90	%
Tax-exempt fixed maturities	32,587		2.87	%	33,773		2.83	%
Total fixed maturities	75,576		2.77	%	74,003		2.87	%
Non-redeemable preferred stocks	46		5.02	%	43		5.03	%
Public common stocks	467				410
Total equity securities	513				453
Real estate investments	1,015				1,026
Short-term securities	5,703		0.10	%	5,511		0.18	%
Private equities	2,545				2,301
Hedge funds	229				197
Real estate partnerships	735				701
Other investments	229				231
Total other investments	3,738				3,430
Total investments	$	86,545			$	84,423
Net unrealized investment gains, net of tax, included in shareholders’ equity	$	3,239			$	4,074

(1) Yields are provided for those investments with an embedded book yield.

The Travelers Companies, Inc.

Investment Portfolio - Fixed Maturities Data

(at carrying value, $ in millions)	June 30,<br>2021		December 31,<br>2020
Fixed maturities
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	3,590	$	2,149
Obligations of states and political subdivisions:
Pre-refunded	3,687		3,544
All other	31,985		32,816
Total	35,672		36,360
Debt securities issued by foreign governments	1,036		1,054
Mortgage-backed securities - principally obligations of U.S. Government agencies	1,820		2,361
Corporates (including redeemable preferreds)	33,458		32,079
Total fixed maturities	$	75,576	$	74,003

Fixed Maturities

Quality Characteristics (1)

	June 30, 2021				December 31, 2020
	Amount		% of Total		Amount		% of Total
Quality Ratings
Aaa	$	32,350	42.8	%	$	31,653	42.8	%
Aa	17,851		23.6		18,327		24.8
A	13,759		18.2		12,944		17.5
Baa	10,400		13.8		9,738		13.1
Total investment grade	74,360		98.4		72,662		98.2
Ba	824		1.1		870		1.2
B	298		0.4		366		0.5
Caa and lower	94		0.1		105		0.1
Total below investment grade	1,216		1.6		1,341		1.8
Total fixed maturities	$	75,576	100.0	%	$	74,003	100.0	%
Average weighted quality	Aa2, AA				Aa2, AA
Weighted average duration of fixed maturities and short-term securities, net of securities lending activities and net receivables and payables on investment sales and purchases	4.0				3.8

(1) Rated using external rating agencies or by Travelers when a public rating does not exist. Below investment grade assets refer to securities rated “Ba” or below.

The Travelers Companies, Inc.

Investment Income

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Gross investment income
Fixed maturities
Short-term securities	22		13		6		3		3		1		35		4
Other	88		(234)		173		182		218		335		(146)		553
	621		277		681		685		712		829		898		1,541
Investment expenses	10		9		10		8		11		11		19		22
Net investment income, pre-tax	611		268		671		677		701		818		879		1,519
Income taxes	92		17		105		105		111		136		109		247
Net investment income, after-tax
Effective tax rate	15.1	%	6.2	%	15.6	%	15.4	%	15.9	%	16.7	%	12.4	%	16.3	%
Average invested assets (1)	76,191		76,635		78,722		80,373		81,209		82,594		76,508		81,954
Average yield pre-tax (1)	3.2	%	1.4	%	3.4	%	3.4	%	3.5	%	4.0	%	2.3	%	3.7	%
Average yield after-tax	2.7	%	1.3	%	2.9	%	2.8	%	2.9	%	3.3	%	2.0	%	3.1	%

All values are in US Dollars.

(1) Excludes net unrealized investment gains (losses), and is adjusted for cash, receivables for investment sales, payables on investment purchases and accrued investment income.

The Travelers Companies, Inc.

Net Realized and Unrealized Investment Gains (Losses) included in Shareholders' Equity

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Net realized investment gains (losses)
Fixed maturities	$	(2)	$	10	$	23	$	21	$	14	$	24	$	8	$	38
Equity securities	(88)		43		16		37		26		32		(45)		58
Other (1)	(8)		(40)		(2)		(8)		4		5		(48)		9
Realized investment gains (losses) before tax	(98)		13		37		50		44		61		(85)		105
Related taxes	(22)		3		8		2		10		14		(19)		24
Net realized investment gains (losses)	$	(76)	$	10	$	29	$	48	$	34	$	47	$	(66)	$	81
Gross investment gains (1)	$	31	$	69	$	41	$	64	$	50	$	72	$	100	$	122
Gross investment losses before impairments (1)	(113)		(10)		(8)		(17)		(6)		(11)		(123)		(17)
Net investment gains (losses) before impairments	(82)		59		33		47		44		61		(23)		105
Net credit impairment (charges) recoveries	(16)		(46)		4		3		—		—		(62)		—
Net realized investment gains (losses) before tax	(98)		13		37		50		44		61		(85)		105
Related taxes	(22)		3		8		2		10		14		(19)		24
Net realized investment gains (losses)	$	(76)	$	10	$	29	$	48	$	34	$	47	$	(66)	$	81
($ in millions)	March 31,<br>2020		June 30,<br>2020		September 30,<br>2020		December 31,<br>2020		March 31,<br>2021		June 30,<br>2021
Net unrealized investment gains, net of tax, included in shareholders’ equity, by asset type
Fixed maturities	$	2,271	$	4,632	$	4,842	$	5,175	$	3,577	$	4,113
Equity securities & other	2		2		2		—		2		(1)
Unrealized investment gains before tax	2,273		4,634		4,844		5,175		3,579		4,112
Related taxes	488		988		1,032		1,101		762		873
Balance, end of period	$	1,785	$	3,646	$	3,812	$	4,074	$	2,817	$	3,239
(1) Includes the following gross investment gains and gross investment losses related to U.S. Treasury futures, which are settled daily:
Gross investment Treasury future gains	$	5	$	—	$	—	$	—	$	—	$	—	$	5	$	—
Gross investment Treasury future losses	$	12	$	—	$	—	$	—	$	—	$	—	$	12	$	—

The Company entered into these arrangements as part of its strategy to manage the duration of its fixed maturity portfolio. In a changing interest rate environment, the change in the value of the futures contracts can be expected to partially offset changes in the value of the fixed maturity portfolio.

The Travelers Companies, Inc.

Reinsurance Recoverables

($ in millions)	June 30, 2021		December 31, 2020
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses (1)	$	3,702	$	3,731
Gross structured settlements (2)	2,885		2,964
Mandatory pools and associations (3)	1,757		1,801
Gross reinsurance recoverables (4)	8,344		8,496
Allowance for estimated uncollectible reinsurance (5)	(135)		(146)
Net reinsurance recoverables	$	8,209	$	8,350

(1) The Company’s top five reinsurer groups, including retroactive reinsurance, included in gross reinsurance recoverables is as follows:

Reinsurer	A.M. Best Rating of Group's Predominant Reinsurer	June 30, 2021
Swiss Re Group	A+ second highest of 16 ratings	$	538
Berkshire Hathaway	A++ highest of 16 ratings	301
Munich Re Group	A+ second highest of 16 ratings	282
Alleghany Group	A+ second highest of 16 ratings	201
Axa Group	A+ second highest of 16 ratings	188

The gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses represent the current and estimated future amounts due from reinsurers on known and incurred but not reported claims. The ceded reserves are estimated in a manner consistent with the underlying direct and assumed reserves. Although this total comprises recoverables due from nearly one thousand different reinsurance entities, about half is attributable to 10 reinsurer groups.

(2) Included in reinsurance recoverables are certain amounts related to structured settlements, which comprise annuities purchased from various life insurance companies to settle certain personal physical injury claims, of which workers’ compensation claims comprise a significant portion. In cases where the Company did not receive a release from the claimant, the amounts due from the life insurance company related to the structured settlement are included in both the claims and claim adjustment expense reserves and reinsurance recoverables in the Company’s consolidated balance sheet, as the Company retains the liability to pay the claimant in the event that the life insurance company fails to make the required annuity payments. The Company would be required to make such payments, to the extent the purchased annuities are not covered by state guaranty associations.

The Company’s top five groups included in gross structured settlements is as follows:

Group	A.M. Best Rating of Group's Predominant Insurer	June 30, 2021
Fidelity & Guaranty Life Group	A- fourth highest of 16 ratings	$	738
Genworth Financial Group	B seventh highest of 16 ratings	310
John Hancock Group	A+ second highest of 16 ratings	270
Brighthouse Financial, Inc.	A third highest of 16 ratings	227
Symetra Financial Corporation	A third highest of 16 ratings	226

(3) The mandatory pools and associations represent various involuntary assigned risk pools that the Company is required to participate in. These pools principally involve workers’ compensation and automobile insurance, which provide various insurance coverages to insureds that otherwise are unable to purchase coverage in the open market. The costs of these mandatory pools in most states are usually charged back to the participating members in proportion to voluntary writings of related business in that state. In the event that a member of the pool becomes insolvent, the remaining members assume an additional pro rata share of the pool’s liabilities.

(4) Of the total reinsurance recoverables at June 30, 2021, after deducting mandatory pools and associations and before allowances for estimated uncollectible reinsurance, $5.72 billion, or 87%, were rated by A.M. Best Company. The Company utilizes updated A.M. Best credit ratings on a quarterly basis when determining the allowance. Of the total rated by A.M. Best Company, 94% were rated A- or better. The remaining 13% of reinsurance recoverables were comprised of the following: 6% related to captive insurance companies, 1% related to the Company’s participation in voluntary pools and 6% were balances from other companies not rated by A.M. Best Company. Certain of the Company's reinsurance recoverables are collateralized by letters of credit, funds held or trust agreements.

(5) The Company reports its reinsurance recoverables net of an allowance for estimated uncollectible reinsurance. The allowance is based upon the Company’s ongoing review of amounts outstanding, length of collection periods, changes in reinsurer credit standing, disputes, applicable coverage defenses and other relevant factors. For structured settlements, the allowance is also based upon the Company’s ongoing review of life insurers’ creditworthiness and estimated amounts of coverage that would be available from state guaranty funds if a life insurer defaults. A probability-of-default methodology which reflects current and forecasted economic conditions is used to estimate the amount of uncollectible reinsurance due to credit-related factors and the estimate is reported in an allowance for estimated uncollectible reinsurance. The allowance also includes estimated uncollectible amounts related to dispute risk with reinsurers. The Company adopted updated guidance for the accounting for credit losses for financial instruments for the quarter ending March 31, 2020 which resulted in the recognition of an allowance for expected credit losses on structured settlements of $53 million, pre-tax, with an offsetting after-tax cumulative effect adjustment to retained earnings as of January 1, 2020.

The Travelers Companies, Inc.

Net Reserves for Losses and Loss Adjustment Expense

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Statutory Reserves for Losses and Loss Adjustment Expenses
Business Insurance
Beginning of period	$	35,142	$	35,415	$	36,210	$	36,946	$	36,999	$	37,694	$	35,142	$	36,999
Incurred	2,737		2,828		2,750		2,282		2,741		2,500		5,565		5,241
Paid	(2,364)		(2,067)		(2,054)		(2,296)		(2,056)		(2,196)		(4,431)		(4,252)
Foreign exchange and other	(100)		34		40		67		10		12		(66)		22
End of period	$	35,415	$	36,210	$	36,946	$	36,999	$	37,694	$	38,010	$	36,210	$	38,010
Bond & Specialty Insurance
Beginning of period	$	3,094	$	3,085	$	3,276	$	3,447	$	3,571	$	3,691	$	3,094	$	3,571
Incurred	325		401		390		339		371		331		726		702
Paid	(300)		(216)		(237)		(243)		(256)		(254)		(516)		(510)
Foreign exchange and other	(34)		6		18		28		5		2		(28)		7
End of period	$	3,085	$	3,276	$	3,447	$	3,571	$	3,691	$	3,770	$	3,276	$	3,770
Personal Insurance
Beginning of period	$	5,507	$	5,413	$	5,626	$	5,788	$	5,677	$	5,768	$	5,507	$	5,677
Incurred	1,671		1,824		1,690		1,670		1,808		2,172		3,495		3,980
Paid	(1,693)		(1,644)		(1,546)		(1,816)		(1,730)		(1,837)		(3,337)		(3,567)
Foreign exchange and other	(72)		33		18		35		13		10		(39)		23
End of period	$	5,413	$	5,626	$	5,788	$	5,677	$	5,768	$	6,113	$	5,626	$	6,113
Total
Beginning of period	$	43,743	$	43,913	$	45,112	$	46,181	$	46,247	$	47,153	$	43,743	$	46,247
Incurred	4,733		5,053		4,830		4,291		4,920		5,003		9,786		9,923
Paid	(4,357)		(3,927)		(3,837)		(4,355)		(4,042)		(4,287)		(8,284)		(8,329)
Foreign exchange and other	(206)		73		76		130		28		24		(133)		52
End of period	$	43,913	$	45,112	$	46,181	$	46,247	$	47,153	$	47,893	$	45,112	$	47,893
Prior Year Reserve Development: Unfavorable (Favorable)
Business Insurance
Asbestos	$	—	$	—	$	295	$	—	$	—	$	—	$	—	$	—
All other	(5)		—		(75)		(124)		(134)		(73)		(5)		(207)
Total Business Insurance (1)	(5)		—		220		(124)		(134)		(73)		(5)		(207)
Bond & Specialty Insurance	—		33		—		(32)		(15)		(44)		33		(59)
Personal Insurance	(22)		(35)		(362)		(24)		(168)		(65)		(57)		(233)
Total	$	(27)	$	(2)	$	(142)	$	(180)	$	(317)	$	(182)	$	(29)	$	(499)

(1) Excludes accretion of discount.

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Asbestos Reserves

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Asbestos reserves
Beginning reserves:
Gross	$	1,601	$	1,530	$	1,470	$	1,772	$	1,668	$	1,616	$	1,601	$	1,668
Ceded	(322)		(316)		(301)		(365)		(330)		(327)		(322)		(330)
Net	1,279		1,214		1,169		1,407		1,338		1,289		1,279		1,338
Incurred losses and loss expenses:
Gross	—		—		362		—		—		—		—		—
Ceded	—		—		(67)		—		—		—		—		—
Paid loss and loss expenses:
Gross	69		60		61		105		52		51		129		103
Ceded	(6)		(15)		(2)		(35)		(3)		(12)		(21)		(15)
Foreign exchange and other:
Gross	(2)		—		1		1		—		—		(2)		—
Ceded	—		—		1		—		—		—		—		—
Ending reserves:
Gross	1,530		1,470		1,772		1,668		1,616		1,565		1,470		1,565
Ceded	(316)		(301)		(365)		(330)		(327)		(315)		(301)		(315)
Net	$	1,214	$	1,169	$	1,407	$	1,338	$	1,289	$	1,250	$	1,169	$	1,250

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Capitalization

($ in millions)	June 30,<br>2021			December 31,<br>2020
Debt
Short-term debt
Commercial paper	$	100		$	100
Total short-term debt	100			100
Long-term debt
7.75% Senior notes due April 15, 2026	200			200
7.625% Junior subordinated debentures due December 15, 2027	125			125
6.375% Senior notes due March 15, 2033 (1)	500			500
6.75% Senior notes due June 20, 2036 (1)	400			400
6.25% Senior notes due June 15, 2037 (1)	800			800
5.35% Senior notes due November 1, 2040 (1)	750			750
4.60% Senior notes due August 1, 2043 (1)	500			500
4.30% Senior notes due August 25, 2045 (1)	400			400
8.50% Junior subordinated debentures due December 15, 2045	56			56
3.75% Senior notes due May 15, 2046 (1)	500			500
8.312% Junior subordinated debentures due July 1, 2046	73			73
4.00% Senior notes due May 30, 2047 (1)	700			700
4.05% Senior notes due March 7, 2048 (1)	500			500
4.10% Senior notes due March 4, 2049 (1)	500			500
2.55% Senior notes due April 27, 2050 (1)	500			500
3.05% Senior notes due June 8, 2051 (1)	750			—
Total long-term debt	7,254			6,504
Unamortized fair value adjustment	40			41
Unamortized debt issuance costs	(104)			(95)
	7,190			6,450
Total debt	7,290			6,550
Common equity (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)	25,917			25,127
Total capital (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)	$	33,207		$	31,677
Total debt to capital (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)	22.0		%	20.7		%

(1) Redeemable anytime with “make-whole” premium.

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Statutory Capital and Surplus to GAAP Shareholders' Equity Reconciliation

($ in millions)	June 30,<br>2021 (1)		December 31,<br>2020
Statutory capital and surplus	$	22,797	$	22,180
GAAP adjustments
Goodwill and intangible assets	3,565		3,568
Investments	4,308		5,337
Noninsurance companies	(3,694)		(3,730)
Deferred acquisition costs	2,501		2,358
Deferred federal income tax	(1,428)		(1,585)
Current federal income tax	(44)		(42)
Reinsurance recoverables	55		55
Furniture, equipment & software	805		841
Agents balances	150		168
Other	141		51
Total GAAP adjustments	6,359		7,021
GAAP shareholders’ equity	$	29,156	$	29,201

(1) Estimated and Preliminary

See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.

The Travelers Companies, Inc.

Statement of Cash Flows

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Cash flows from operating activities
Net income (loss)	$	600	$	(40)	$	827	$	1,310	$	733	$	934	$	560	$	1,667
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net realized investment (gains) losses	98		(13)		(37)		(50)		(44)		(61)		85		(105)
Depreciation and amortization	203		188		186		212		235		215		391		450
Deferred federal income tax expense (benefit)	6		(77)		4		38		56		1		(71)		57
Amortization of deferred acquisition costs	1,178		1,173		1,207		1,215		1,207		1,254		2,351		2,461
Equity in (income) loss from other investments	(67)		253		(154)		(162)		(200)		(313)		186		(513)
Premiums receivable	(326)		(245)		247		418		(333)		(385)		(571)		(718)
Reinsurance recoverables	(15)		75		(210)		(12)		12		142		60		154
Deferred acquisition costs	(1,215)		(1,238)		(1,241)		(1,160)		(1,258)		(1,343)		(2,453)		(2,601)
Claims and claim adjustment expense reserves	388		1,067		1,218		(51)		777		536		1,455		1,313
Unearned premium reserves	414		229		317		(368)		509		459		643		968
Other	(636)		292		(38)		511		(504)		410		(344)		(94)
Net cash provided by operating activities	628		1,664		2,326		1,901		1,190		1,849		2,292		3,039
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,461		1,610		2,170		2,146		2,064		2,283		3,071		4,347
Proceeds from sales of investments:
Fixed maturities	388		832		774		1,063		1,238		1,244		1,220		2,482
Equity securities	33		21		22		35		25		20		54		45
Other investments	64		75		45		97		79		116		139		195
Purchases of investments:
Fixed maturities	(2,630)		(2,160)		(5,161)		(4,122)		(4,754)		(4,708)		(4,790)		(9,462)
Equity securities	(35)		(24)		(21)		(32)		(19)		(22)		(59)		(41)
Real estate investments	(16)		(8)		(9)		(80)		(5)		(9)		(24)		(14)
Other investments	(103)		(125)		(93)		(166)		(97)		(124)		(228)		(221)
Net sales (purchases) of short-term securities	906		(2,053)		(240)		821		524		(718)		(1,147)		(194)
Securities transactions in course of settlement	85		9		428		(569)		269		(40)		94		229
Acquisition, net of cash acquired	—		—		—		—		(38)		—		—		(38)
Other	(69)		(75)		(78)		(108)		(60)		(53)		(144)		(113)
Net cash provided by (used in) investing activities	84		(1,898)		(2,163)		(915)		(774)		(2,011)		(1,814)		(2,785)

The Travelers Companies, Inc.

Statement of Cash Flows (Continued)

($ in millions)	1Q2020		2Q2020		3Q2020		4Q2020		1Q2021		2Q2021		YTD 2Q2020		YTD 2Q2021
Cash flows from financing activities
Treasury stock acquired - share repurchase authorization	(425)		—		—		(200)		(356)		(400)		(425)		(756)
Treasury stock acquired - net employee share-based compensation	(46)		—		—		(1)		(41)		(1)		(46)		(42)
Dividends paid to shareholders	(210)		(216)		(217)		(218)		(214)		(222)		(426)		(436)
Payment of debt	—		—		—		(500)		—		—		—		—
Issuance of debt	—		490		—		—		—		739		490		739
Issuance of common stock - employee share options	31		34		7		55		134		72		65		206
Net cash provided by (used in) financing activities	(650)		308		(210)		(864)		(477)		188		(342)		(289)
Effect of exchange rate changes on cash	(12)		5		7		16		3		—		(7)		3
Net increase (decrease) in cash	50		79		(40)		138		(58)		26		129		(32)
Cash at beginning of period	494		544		623		583		721		663		494		721
Cash at end of period	$	544	$	623	$	583	$	721	$	663	$	689	$	623	$	689
Income taxes paid	$	15	$	2	$	396	$	165	$	58	$	284	$	17	$	342
Interest paid	$	60	$	106	$	60	$	113	$	59	$	104	$	166	$	163

The Travelers Companies, Inc.

Glossary of Financial Measures and Description of Reportable Business Segments

The following measures are used by the Company’s management to evaluate financial performance against historical results, to establish performance targets on a consolidated basis, and for other reasons as discussed below. In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure.

Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Company’s management.

Average shareholders’ equity is (a) the sum of total shareholders’ equity at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two. Adjusted shareholders’ equity is shareholders’ equity excluding net realized investment gains (losses), net of tax, net unrealized investment gains (losses), net of tax, included in shareholders’ equity for the periods presented and the effect of a change in tax laws and tax rates at enactment (excluding the portion related to net unrealized investment gains (losses)). Adjusted average shareholders’ equity is (a) the sum of total adjusted shareholders’ equity at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two.

Reconciliation of Shareholders’ Equity to Adjusted Shareholders’ Equity

	As of
($ in millions)	March 31, 2020		June 30, 2020		September 30, 2020		December 31, 2020		March 31, 2021		June 30, 2021
Shareholders’ equity	$	25,204	$	26,943	$	27,849	$	29,201	$	28,269	$	29,156
Adjustments:
Net unrealized investment gains, net of tax, included in shareholders’ equity	(1,785)		(3,646)		(3,812)		(4,074)		(2,817)		(3,239)
Net realized investment (gains) losses, net of tax	76		66		37		(11)		(34)		(81)
Impact of changes in tax laws and/or tax rates (1)	—		—		—		—		—		(8)
Adjusted shareholders’ equity	$	23,495	$	23,363	$	24,074	$	25,116	$	25,418	$	25,828
(1) Impact is recognized in the accounting period in which the change is enacted

Return on equity is the ratio of annualized net income (loss) to average shareholders’ equity for the periods presented. Core return on equity is the ratio of annualized core income (loss) to adjusted average shareholders’ equity for the periods presented. In the opinion of the Company’s management, these are important indicators of how well management creates value for its shareholders through its operating activities and its capital management.

A catastrophe is a severe loss designated a catastrophe by internationally recognized organizations that track and report on insured losses resulting from catastrophic events, such as Property Claim Services (PCS) for events in the United States and Canada. Catastrophes can be caused by various natural events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions and other naturally-occurring events, such as solar flares. Catastrophes can also be man-made, such as terrorist attacks and other intentionally destructive acts including those involving nuclear, biological, chemical and radiological events, cyber events, explosions and destruction of infrastructure. Each catastrophe has unique characteristics and catastrophes are not predictable as to timing or amount. Their effects are included in net and core income and claims and claim adjustment expense reserves upon occurrence. A catastrophe may result in the payment of reinsurance reinstatement premiums and assessments from various pools. The Company’s threshold for disclosing catastrophes is primarily determined at the reportable segment level. If a threshold for one segment or a combination thereof is exceeded and the other segments have losses from the same event, losses from the event are identified as catastrophe losses in the segment results and for the consolidated results of the Company. Additionally, an aggregate threshold is applied for international business across all reportable segments. The threshold for 2021 ranges from $20 million to $30 million of losses before reinsurance and taxes.

The Travelers Companies, Inc.

Glossary of Financial Measures and Description of Reportable Business Segments

users of the financial statements as it allows them to assess the impact between prior and current year development on incurred claims and claim adjustment expenses, net and core income (loss), and changes in claims and claim adjustment expense reserve levels from period to period.

Combined ratio For Statutory Accounting Practices (SAP), the combined ratio is the sum of the SAP loss and LAE ratio and the SAP underwriting expense ratio as defined in the statutory financial statements required by insurance regulators. The combined ratio, as used in this financial supplement, is the equivalent of, and is calculated in the same manner as, the SAP combined ratio except that the SAP underwriting expense ratio is based on net written premiums and the underwriting expense ratio as used in this financial supplement is based on net earned premiums. For SAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses less certain administrative services fee income to net earned premiums as defined in the statutory financial statements required by insurance regulators. The loss and LAE ratio as used in this financial supplement is calculated in the same manner as the SAP ratio. For SAP, the underwriting expense ratio is the ratio of underwriting expenses incurred (including commissions paid), less certain administrative services fee income and billing and policy fees and other, to net written premiums as defined in the statutory financial statements required by insurance regulators. The underwriting expense ratio as used in this financial supplement, is the ratio of underwriting expenses (including the amortization of deferred acquisition costs), less certain administrative services fee income and billing and policy fees, to net earned premiums. Underlying combined ratio is the combined ratio adjusted to exclude the impact of prior year reserve development and catastrophes, net of reinsurance.

Other companies’ method of computing similarly titled measures may not be comparable to the Company’s method of computing these ratios.

Total capital is the sum of total shareholders’ equity and debt. Debt-to-capital ratio excluding net unrealized gain (loss) on investments, net of tax, included in shareholders’ equity is the ratio of debt to total capital excluding net unrealized investment gains and losses, net of tax, included in shareholders’ equity. In the opinion of the Company’s management, the debt to capital ratio is useful in an analysis of the Company’s financial leverage.

Travelers has organized its businesses into the following reportable business segments:

Business Insurance - Business Insurance offers a broad array of property and casualty insurance and insurance-related services to its customers, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world as a corporate member of Lloyd’s. Business Insurance is organized as follows: Select Accounts; Middle Market including Commercial Accounts, Construction, Technology, Public Sector Services, Oil & Gas, Excess Casualty, Inland Marine, Ocean Marine, and Boiler & Machinery; National Accounts; National Property and Other including National Property, Northland Transportation, Northfield, National Programs, and Agribusiness; and International including Global Services. Business Insurance also includes Simply Business, a leading provider of small business insurance policies primarily in the United Kingdom that was acquired in August 2017, as well as Business Insurance Other, which primarily comprises the Company’s asbestos and environmental liabilities, and the assumed reinsurance and certain other runoff operations.

Bond & Specialty Insurance - Bond & Specialty Insurance provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers in the United States and certain specialty insurance products in Canada, the United Kingdom, the Republic of Ireland and Brazil (through a joint venture as described below), utilizing various degrees of financially-based underwriting approaches. The range of coverages includes performance, payment and commercial surety and fidelity bonds for construction and general commercial enterprises; management liability coverages including directors’ and officers’ liability, employee dishonesty, employment practices liability, fiduciary liability and cyber risk for public corporations, private companies, not-for-profit organizations and financial institutions; professional liability coverage for a variety of professionals including, among others, lawyers and design professionals; and in the United States only, property, workers’ compensation, auto and general liability for financial institutions.

Bond & Specialty Insurance surety business in Brazil and Colombia is conducted through Junto Holding Brasil S.A. (Junto) and Junto Holding Latam S.A. in Brazil. The Company owns 49.5% of both Junto, a market leader in surety coverages in Brazil, and Junto Holding Latam S.A., a Colombian start-up surety provider. These joint venture investments are accounted for using the equity method and are included in “other investments” on the consolidated balance sheet.