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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________________________________
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to__________
________________________________________________
Commission file number 001-10898
________________________________________________
The Travelers Companies, Inc.
(Exact name of registrant as specified in its charter)
_________________________________________________________________
Minnesota 41-0518860
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
______________________________________________________________________________
485 Lexington Avenue
New York, NY 10017
(Address of principal executive offices) (Zip code)
 (917) 778-6000
(Registrant’s telephone number, including area code)
______________________________________________________________________________
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
Securities registered pursuant to Section 12(g) of the Act:            None
Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act). Yes x No ¨ 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No x 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Act:
Large accelerated filer
 x
 Accelerated filer ¨
Non-accelerated filer
 ¨
 Smaller reporting company ☐
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. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
As of June 30, 2023, the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates was $39,615,360,010.
As of February 12, 2024, 229,125,844 shares of the registrant’s common stock (without par value) were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement relating to the 2024 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.


The Travelers Companies, Inc.
Annual Report on Form 10-K
For Fiscal Year Ended December 31, 2023

TABLE OF CONTENTS
Item Number Page

2

PART I
Item 1.  BUSINESS
The Travelers Companies, Inc. (together with its consolidated subsidiaries, the Company) is a holding company principally engaged, through its subsidiaries, in providing a wide range of commercial and personal property and casualty insurance products and services to businesses, government units, associations and individuals. The Company is incorporated as a general business corporation under the laws of the State of Minnesota and is one of the oldest insurance organizations in the United States, dating back to 1853. The principal executive offices of the Company are located at 485 Lexington Avenue, New York, New York 10017, and its telephone number is (917) 778-6000. The Company also maintains executive offices in Hartford, Connecticut, and St. Paul, Minnesota. The term “TRV” in this document refers to The Travelers Companies, Inc., the parent holding company excluding subsidiaries.

PROPERTY AND CASUALTY INSURANCE OPERATIONS
The property and casualty insurance industry is highly competitive in the areas of price, service, product offerings, agent and broker relationships and other methods of distribution. Distribution methods include the use of local and national independent agents and brokers, agency aggregators and carrier-based agencies, as well as direct to consumer, affinity and other partner platforms. According to A.M. Best, there are approximately 1,100 property and casualty groups in the United States, comprising approximately 2,600 property and casualty companies. Of those groups, the top 150 accounted for approximately 94% of the consolidated industry’s total net written premiums in 2022. The Company competes with both foreign and domestic insurers. In addition, some property and casualty insurers writing commercial lines of business, including the Company, offer products for alternative forms of risk protection in addition to traditional insurance products. These products include large deductible programs and various forms of self-insurance, some of which utilize captive insurance companies and risk retention groups. The Company’s competitive position in the marketplace is based on many factors, including the following:
•ability to profitably price business, retain existing customers and obtain new business;
•premiums charged, contract terms and conditions, products and services offered (including the ability to design customized programs);
•agent, broker and policyholder relationships;
•ability to keep pace relative to competitors with changes in technology and information systems, including artificial intelligence;
•ability to use data and analytics to make decisions;
•speed of claims payment;
•ability to provide a positive customer experience;
•ability to provide products and services in a cost effective manner;
•ability to provide new products and services to meet changing customer needs;
•ability to adapt to changes in business models, technology, customer preferences or regulation impacting the markets in which the Company operates;
•perceived overall financial strength and corresponding ratings assigned by independent rating agencies;
•ability to recruit and retain qualified employees;
•geographic scope of business; and
•local presence.

In addition, the marketplace is affected by the available capacity of the insurance industry, as measured by statutory capital and surplus, and the availability of reinsurance from both traditional sources, such as reinsurance companies and capital markets (through catastrophe bonds), and non-traditional sources, such as hedge funds and pension plans. Industry capacity as measured by statutory capital and surplus expands and contracts primarily in conjunction with profit levels generated by the industry, less amounts returned to shareholders through dividends and share repurchases. Capital raised by debt and equity offerings may also increase statutory capital and surplus.
Pricing and Underwriting
Pricing of the Company’s property and casualty insurance products is generally developed based upon an estimation of expected losses, the expenses associated with producing, issuing and servicing business and managing claims, the time value of money related to the expected loss and expense cash flows, and a reasonable profit margin that considers the capital needed to support the Company’s business. The Company has a disciplined approach to underwriting and risk management that emphasizes product returns and profitable growth over time rather than premium volume or market share. The Company’s insurance subsidiaries are subject to state laws and regulations regarding rate and policy form approvals. The applicable state laws and regulations establish standards in certain lines of business to ensure that rates are not excessive, inadequate, unfairly discriminatory, or used to engage in unfair price competition.
3

The Company’s ability to increase rates and the relative timing of the process are dependent upon each respective state’s requirements, as well as the competitive market environment.
Geographic Distribution
The following table shows the geographic distribution of the Company’s consolidated direct written premiums for the year ended December 31, 2023:
Location % of
Total
Domestic:  
California 10.4  %
Texas (1)
 9.1 
New York 8.4 
Florida 4.2 
Pennsylvania 4.1 
Illinois 3.8 
Georgia 3.8 
New Jersey 3.7 
Massachusetts 3.1 
All other domestic (2)
 44.1 
Total Domestic 94.7 
   
International:  
Canada 3.0 
All other international 2.3 
Total International 5.3 
Consolidated total 100.0  %
___________________________________________
(1)The percentage for Texas includes business written by the Company through a fronting agreement with another insurer.    
(2)No other single state accounted for 3.0% or more of the Company’s consolidated direct written premiums written in 2023.
Catastrophe Exposure
The Company’s property and casualty insurance operations expose it to claims arising out of catastrophes. The Company uses various analyses and methods, including proprietary and third-party modeling processes, to monitor and analyze underwriting risks of business in natural catastrophe-prone areas and target risk areas for conventional terrorist attacks (defined as attacks other than nuclear, biological, chemical or radiological events). The Company relies, in part, upon these analyses to make underwriting decisions designed to manage its exposure on catastrophe-exposed business. For example, as a result of these analyses, the Company has at various times limited the writing of new property and homeowners business in some markets and has selectively taken underwriting actions on new and existing business. These underwriting actions on new and existing business include tightening underwriting standards, selective price increases and changes to policy terms specific to hurricane-, tornado-, wind-, wildfire- and hail-prone areas. See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Catastrophe Modeling” and “—Changing Climate Conditions.” The Company also utilizes reinsurance to manage its aggregate exposures to catastrophes. See “—Reinsurance.”

BUSINESS INSURANCE
Business Insurance offers a broad array of property and casualty insurance products and 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, including as a corporate member of Lloyd’s.  Business Insurance is organized as follows:
Domestic
•Select Accounts provides small businesses with property and casualty insurance products and services, including commercial multi-peril, workers’ compensation, commercial automobile, general liability and commercial property.
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•Middle Market provides mid-sized businesses with property and casualty insurance products and services, including workers’ compensation, general liability, commercial multi-peril, commercial automobile and commercial property, as well as risk management, claims handling and other services. Middle Market generally provides these products to mid-sized businesses through Commercial Accounts, as well as to targeted industries through Construction, Technology & Life Sciences, Public Sector Services and Oil & Gas, and additionally, provides mono-line umbrella and excess coverage insurance through Excess Casualty. Middle Market also provides insurance for goods in transit and movable objects, as well as builders’ risk insurance, through Inland Marine; insurance for the marine transportation industry and related services, as well as other businesses involved in international trade, through Ocean Marine; and comprehensive breakdown for equipment, including property and business interruption, through Boiler & Machinery.
•National Accounts provides large companies with casualty insurance products and services, including workers’ compensation, commercial automobile and general liability, generally utilizing loss-sensitive products, on both a bundled and unbundled basis, as well as risk management, claims administration and other insurance-related services. National Accounts also includes the Company’s commercial residual market business, which primarily offers workers’ compensation claims, policy management and other administrative services related to the involuntary market. National Accounts also offers insurance-related services, such as claims administration, risk management, loss control and risk management information services through Constitution State Services LLC, a wholly-owned subsidiary of the Company.
•National Property and Other provides traditional and customized commercial property insurance programs to large and mid-sized customers through National Property. National Property and Other also provides insurance coverage for the commercial trucking industry through Northland Transportation and serves small- to medium-sized agricultural businesses, including farms, ranches and other agricultural-related operations through Agribusiness. National Property and Other also includes commercial property and general liability policies for small, difficult to place commercial business primarily on an excess and surplus lines basis through Northfield, and also offers tailored property and casualty insurance programs on an admitted basis for customers with common risk characteristics or coverage requirements through National Programs.
International
•International, through its operations in Canada, the United Kingdom and the Republic of Ireland, provides property and casualty insurance and risk management services to several customer groups, including, among others, those in the technology, manufacturing and public services industry sectors. International also provides insurance for both the foreign exposures of United States organizations and the United States exposures of foreign organizations through Global Services. At its Lloyd’s syndicate (Syndicate 5000), for which the Company provides 100% of the capital, International underwrites five principal businesses — marine, energy, property, aviation and special risks.
Business Insurance also includes Simply Business, a leading provider of small business insurance policies primarily in the United Kingdom, and Business Insurance Other, which primarily comprises the Company’s asbestos and environmental liabilities, and the assumed reinsurance and certain other runoff operations.
Selected Market and Product Information
The following table sets forth Business Insurance’s net written premiums by market and product line for the periods indicated. For a description of the markets and product lines referred to in the table, see “—Principal Markets and Methods of Distribution” and “—Product Lines,” respectively.
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(for the year ended December 31, in millions) 2023 2022 2021 % of Total 2023
By market:        
Domestic:        
Select Accounts $ 3,477  $ 3,099  $ 2,833  17.0  %
Middle Market 11,045  9,923  8,933  54.1 
National Accounts 1,135  1,085  987  5.6 
National Property and Other 3,008  2,467  2,265  14.7 
Total Domestic 18,665  16,574  15,018  91.4 
International 1,765  1,061  1,074  8.6 
Total Business Insurance by market $ 20,430  $ 17,635  $ 16,092  100.0  %
By product line:        
Domestic:        
Workers’ compensation $ 3,492  $ 3,397  $ 3,175  17.1  %
Commercial automobile 3,346  3,061  2,898  16.4 
Commercial property 3,494  2,771  2,408  17.1 
General liability 3,264  2,962  2,699  16.0 
Commercial multi-peril 5,000  4,304  3,768  24.5 
Other 69  79  70  0.3 
Total Domestic 18,665  16,574  15,018  91.4 
International 1,765  1,061  1,074  8.6 
Total Business Insurance by product line $ 20,430  $ 17,635  $ 16,092  100.0  %
Principal Markets and Methods of Distribution
Business Insurance markets and distributes products through thousands of independent agencies and brokers. Agencies and brokers are serviced by 87 field offices and supported by customer service centers where the Company performs services for agents for a fee and centralized business centers where the Company processes new and renewal business that meet certain underwriting criteria.
Business Insurance builds relationships with well-established, independent insurance agencies and brokers. In selecting new independent agencies and brokers to distribute its products, Business Insurance considers, among other factors, each agency’s or broker’s financial strength, staff experience and strategic fit with the Company’s operating and marketing plans. Once an agency or broker is appointed, Business Insurance regularly monitors its performance. The majority of products offered in the United States are distributed through independent agents and brokers, many of whom also sell the Company’s Personal Insurance and Bond & Specialty Insurance products. Business Insurance continues to make significant investments to enable real-time interface capabilities with its independent agencies and brokers.
Domestic
•Select Accounts markets and distributes products and services to small businesses, generally with fewer than 50 employees, through a large network of independent agents and brokers. Products offered by Select Accounts are guaranteed-cost policies, including packaged products covering property and liability exposures.  Each small business risk is independently evaluated via an automated underwriting platform which in turn enables agents to quote, bind and issue a substantial amount of new small business risks in an efficient manner. Risks with more complex characteristics are underwritten with the assistance of Company personnel.
•Middle Market markets and distributes products and services primarily to mid-sized businesses with 50 to 1,000 employees through a large network of independent agents and brokers. The Company offers a full line of products to its Middle Market customers with an emphasis on guaranteed-cost programs. Each account is underwritten based on the unique risk characteristics, loss history and coverage needs of the account. The ability to underwrite at this detailed level allows Middle Market to have a broad risk appetite and a diversified customer base. Within Middle Market, products and services are tailored to certain targeted industry segments of significant size and complexity that require unique underwriting, claims handling services, risk management or other insurance-related products and services.
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•National Accounts markets and distributes products and services to large companies through a large network of national and regional brokers. Products offered by National Accounts are primarily casualty programs that utilize loss-sensitive products, such as large deductible, and to a lesser extent, retrospectively rated insurance and self-insured retention plans. National Accounts also offers insurance-related services, such as claims administration, risk management, loss control and risk management information services through Constitution State Services LLC, a wholly-owned subsidiary of the Company. The commercial residual market business of National Accounts services approximately 35% of the total workers’ compensation assigned risk market, making the Company one of the largest servicing carriers in the industry.
•National Property and Other markets and distributes products and services to a wide customer base, providing traditional and customized insurance programs to a broad range of customer sizes through a large network of agents and brokers. National Property and Other also provides insurance coverage to the excess and surplus lines market, which is characterized by the absence of regulation related to rate and form, and allows for more pricing and coverage flexibility to write certain classes of business. In working with agents or program managers on a brokerage basis, National Property and Other underwrites the business internally and sets the premium level. In working with agents or program managers with delegated underwriting authority, the agents produce and underwrite business subject to pricing and underwriting guidelines that have been specifically designed for each facility or program.
International markets and distributes products and services principally through brokers in each of the countries in which it operates. International also writes business at Lloyd’s, where its products are distributed through Lloyd’s wholesale and retail brokers. By virtue of Lloyd’s worldwide licenses, Business Insurance has access to international markets across the world.
Effective January 1, 2024, the Company renewed a quota share reinsurance agreement with subsidiaries of Fidelis Insurance Holdings Limited (Fidelis) pursuant to which the Company assumes 20% of the gross written premiums of Fidelis during 2024, subject to a loss ratio cap.  The Company’s portion of premiums from Fidelis is reported as part of the International results of Business Insurance. The Company also has a minority investment in Fidelis.
Pricing and Underwriting
Business Insurance utilizes underwriting, claims, engineering, actuarial and product development disciplines for particular industries, together with extensive amounts of proprietary data gathered and analyzed over many years, as well as third-party data, to facilitate its risk selection process and develop pricing parameters. Business Insurance utilizes both proprietary forms and standard industry forms for the insurance policies it issues.
A portion of business in this segment, particularly in National Accounts and Construction, is written with large deductible insurance policies. Under workers’ compensation insurance contracts with large deductible features, the Company is obligated to pay the claimant the full amount of the claim. The Company is subsequently reimbursed by the contractholder for the deductible amount and, as a result, is subject to credit risk until such reimbursement is made. At December 31, 2023, contractholder payables on unpaid losses within the deductible layer of large deductible policies were approximately $3.27 billion, and the associated receivables (net of allowance for expected credit losses) were approximately $3.25 billion. Business Insurance also utilizes retrospectively rated policies for a portion of its business, primarily for workers’ compensation coverage.  Although the retrospectively rated feature of the policy substantially reduces insurance risk for the Company, it introduces additional credit risk to the Company. Premiums receivable from holders of retrospectively rated policies totaled approximately $48 million at December 31, 2023.  Significant collateral, primarily letters of credit and, to a lesser extent, cash collateral, trusts or surety bonds, is generally obtained for large deductible plans and/or retrospectively rated policies that provide for deferred collection of deductible recoveries and/or ultimate premiums. The amount of collateral requested is based upon the creditworthiness of the customer and the nature of the insured risks.  Business Insurance regularly monitors the credit exposure on individual accounts and the adequacy of collateral.   For additional information concerning credit risk in certain of the Company’s businesses, see “Item 1A—Risk Factors—We are exposed to credit risk in certain of our insurance operations and with respect to certain guarantee or indemnification arrangements that we have with third parties.”
Product Lines
Business Insurance provides the following types of coverages:
Domestic
•Workers’ Compensation. Provides coverage for employers for specified benefits payable under state or federal law for workplace injuries to employees. There are typically four types of benefits payable under workers’ compensation policies: medical benefits, disability benefits, death benefits and vocational rehabilitation benefits. The Company emphasizes managed care cost containment strategies, which involve employers, employees and care providers in a collaborative effort that focuses on the injured employee’s early return to work and cost-effective quality care.
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•Commercial Automobile. Provides coverage for businesses against losses incurred from personal bodily injury, bodily injury to third parties, property damage to an insured’s vehicle and property damage to other vehicles and other property resulting from the ownership, maintenance or use of automobiles and trucks in a business.
•Commercial Property. Provides coverage for loss of or damage to buildings, inventory and equipment resulting from a variety of events, including, among others, hurricanes and other windstorms, tornadoes, earthquakes, hail, wildfires, severe winter weather, floods, volcanic eruptions, tsunamis, theft, vandalism, fires, explosions, terrorism and financial loss due to business interruption resulting from covered property damage. Commercial property also includes specialized equipment insurance, which provides coverage for loss or damage resulting from the mechanical breakdown of boilers and machinery, and ocean and inland marine insurance, which provides coverage for goods in transit and unique, one-of-a-kind exposures.
•General Liability. Provides coverages for businesses against third-party claims arising from accidents occurring on their premises or arising out of their operations, including as a result of injuries sustained from products sold. Coverages may also include directors’ and officers’ liability arising in their official capacities, employment practices liability insurance, fiduciary liability for trustees and sponsors of pension, health and welfare, and other employee benefit plans, errors and omissions insurance for employees, agents, professionals and others arising from acts or failures to act under specified circumstances, cyber liability, as well as umbrella and excess insurance.
•Commercial Multi-Peril.  Provides a combination of the property and liability coverages described in the foregoing product line descriptions.
The Company offers the above coverages through the following types of products and services:
•guaranteed-cost insurance products, where the premiums charged are not adjusted for actual loss experience during the covered period;
•loss-sensitive insurance products, including large deductible and retrospectively rated policies, where fees or premiums are adjusted based on actual loss experience of the insured during the policy period; and
•service programs, which are generally sold to the Company’s National Accounts customers, where the Company receives fees rather than premiums for providing insurance-related services, such as claims administration, risk management, loss control and risk management information services.
The Company also participates in state assigned risk pools as a servicing carrier and pool participant.
International
•Provides coverage for employers’ liability (similar to workers’ compensation coverage in the United States), public and product liability (the equivalent of general liability), professional indemnity (similar to professional liability coverage), commercial property, commercial automobile, marine, aviation, onshore and offshore energy, construction, terrorism, personal accident and kidnap & ransom. Marine provides coverage for ship hulls, cargoes carried, private yachts, marine-related liability, ports and terminals, and fine art. Aviation provides coverage for worldwide aviation risks, including physical damage and liabilities for airline, aerospace, general aviation, aviation war and space risks. Personal accident provides financial protection in the event of death or disablement due to accidental bodily injury, while kidnap & ransom provides financial protection against kidnap, hijack, illegal detention and extortion. While the covered hazards may be similar to those in the U.S. market, the different legal environments can make the product risks and coverage terms very different from those the Company faces in the United States.
Net Retention Policy Per Risk
The following discussion reflects the Company’s retention policy with respect to Business Insurance as of January 1, 2024. For third-party liability, Business Insurance generally limits its net retention, through the use of reinsurance, to a maximum of $21.2 million per insured, per occurrence, subject further to a significant aggregate annual deductible. For property exposures, Business Insurance generally limits its net retention, through the use of reinsurance, to a maximum amount per risk of $20.0 million per occurrence. Business Insurance generally retains its workers’ compensation exposures. Reinsurance treaties often have aggregate limits or caps which may result in larger net per-risk retentions if the aggregate limits or caps are reached. Business Insurance utilizes facultative reinsurance to provide additional limits capacity or to reduce retentions on an individual risk basis.
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Business Insurance may also retain amounts greater than those described herein based upon the individual characteristics of the risk.
Geographic Distribution
The following table shows the geographic distribution of Business Insurance’s direct written premiums for the year ended December 31, 2023:
Location % of Total
Domestic:  
California 13.1  %
New York 8.6 
Texas 7.6 
Illinois 4.4 
Florida 4.0 
Pennsylvania 3.8 
New Jersey 3.8 
Georgia 3.0 
All other domestic (1)
 47.0 
Total Domestic 95.3 
International:
Canada 2.0 
All other international 2.7 
Total International 4.7 
Total Business Insurance 100.0  %
___________________________________________
(1)No other single state accounted for 3.0% or more of Business Insurance’s direct written premiums in 2023.
Competition
The insurance industry is represented in the commercial marketplace by many insurance companies of varying size as well as other entities offering risk alternatives, such as self-insured retentions or captive programs. Market competition operates within the insurance regulatory framework to set the price charged for insurance products and the levels of coverage and service provided. A company’s success in the competitive commercial insurance landscape is largely measured by its ability to profitably provide insurance and services, including claims handling and risk management, at prices and terms that retain existing customers and attract new customers, as well as its financial strength. See “Item 1A—Risk Factors—The intense competition that we face, including with respect to attracting and retaining employees, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and our profitability.”
Domestic
Competitors typically write Select Accounts business through independent agents and brokers and, to a lesser extent, as direct writers, including through affinity and other partner platforms. Both national (including international companies doing business in the U.S.) and regional property and casualty insurance companies compete in the Select Accounts market which generally comprises lower-hazard, “Main Street” business customers. Risks are underwritten and priced using standard industry practices and a combination of proprietary and standard industry product offerings. Competition in this market is focused on ease and speed of doing business and price.
Competitors typically write Middle Market business through independent agents and brokers. Several of Middle Market’s operations require unique combinations of industry knowledge, customized coverage, specialized risk control and loss handling services, along with partnerships with agents and brokers that also focus on these markets. Competitors in this market are primarily national property and casualty insurance companies (including international companies doing business in the U.S.) that write most classes of business using traditional products and pricing, and regional insurance companies. Companies compete based on product offerings, service levels, price, claim and loss prevention services and ease and speed of doing business.
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Efficiency through automation and response time to agent, broker and customer needs is one key to success in this market.
In the National Accounts market, competition is based on price, product offerings, claim and loss prevention services, managed care cost containment, risk management information systems and collateral requirements. National Accounts primarily competes with national property and casualty insurance companies (including international companies doing business in the U.S.), as well as with other underwriters of property and casualty insurance in the alternative risk transfer market, such as self-insurance plans, captives managed by others, third-party administrators and a variety of other risk-financing vehicles and mechanisms. The residual market division competes for state contracts to provide claims and policy management services.
National Property and Other competes in focused target markets. Each of these markets is different and requires unique combinations of industry knowledge, customized coverage, specialized risk management and claims handling services, along with partnerships with agents and brokers that also focus on these markets. Some of these businesses compete with national carriers (including international companies doing business in the U.S.) with similarly dedicated underwriting and marketing groups, whereas others compete with smaller regional companies. Specialized agents and brokers, including wholesale agents and program managers, supplement this focused target market approach. National Property and Other’s competitive strategy typically is based on the application of focused industry knowledge to insurance and risk needs.
International
International competes with numerous international and domestic insurers in Canada, the United Kingdom and the Republic of Ireland. Companies compete on the basis of price, product offerings, distribution partnerships, the level of claim and risk management services provided and the ease and speed of doing business. The Company has developed expertise in various markets in these countries similar to those served in the United States and provides both property and casualty coverage for these markets.
At Lloyd’s, International competes with other syndicates operating in the Lloyd’s market as well as international and domestic insurers in the various markets where the Lloyd’s operation writes business worldwide, with an emphasis on short-tail insurance lines. Competition is based on price, product and service.

BOND & SPECIALTY INSURANCE
Bond & Specialty Insurance offers surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers, primarily in the United States, and certain surety and specialty insurance products in Canada, the United Kingdom, the Republic of Ireland and Brazil (through a joint venture, as described below), in each case utilizing various degrees of financially-based underwriting approaches.  The range of coverages includes performance, payment and commercial surety bonds for construction and general commercial enterprises; management liability coverages including directors’ and officers’ liability, employment practices liability, fidelity 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; in the United States only, property, workers’ compensation, auto and general liability for financial institutions; and transactional liability coverages to public and private companies.
Bond & Specialty Insurance’s 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., which owns a majority interest in JMalucelli Travelers Seguros S.A., a Colombian surety provider. These joint venture investments are accounted for using the equity method and are included in “other investments” on the consolidated balance sheet.
On November 3, 2023, the Company announced an agreement to acquire Corvus Insurance Holdings, Inc. (Corvus), a cyber insurance managing general underwriter. On January 2, 2024, the Company completed its acquisition of all issued and outstanding shares of Corvus.
Selected Product Information
The following table sets forth Bond & Specialty Insurance’s net written premiums by product line for the periods indicated. For a description of the product lines referred to in the table, see “—Product Lines.” In addition, see “—Principal Markets and Methods of Distribution” for a discussion of distribution channels for Bond & Specialty Insurance’s product lines.
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(for the year ended December 31, in millions) 2023 2022 2021 % of Total 2023
Domestic:        
Fidelity and surety $ 1,387  $ 1,329  $ 1,123  36.1  %
General liability 1,686  1,639  1,530  43.9 
Other 230  225  218  6.0 
Total Domestic 3,303  3,193  2,871  86.0 
International 539  539  505  14.0 
Total Bond & Specialty Insurance $ 3,842  $ 3,732  $ 3,376  100.0  %
Principal Markets and Methods of Distribution
Bond & Specialty Insurance markets and distributes the vast majority of its products in the United States through many of the same independent agencies and brokers that distribute Business Insurance’s products in the United States. Bond & Specialty Insurance builds relationships with well-established, independent insurance agencies and brokers. In selecting new independent agencies and brokers to distribute its products, Bond & Specialty Insurance considers, among other factors, each agency’s or broker’s profitability, financial stability, staff experience and strategic fit with its operating and marketing plans. Once an agency or broker is appointed, its ongoing performance is regularly monitored. Bond & Specialty Insurance continues to make investments to enable real-time interface capabilities with its independent agencies and brokers. Bond & Specialty Insurance also writes certain products through managing general agents and managing general underwriters.
Pricing and Underwriting
Bond & Specialty Insurance utilizes underwriting, claims, engineering, actuarial and product development disciplines for specific accounts and industries, together with extensive amounts of proprietary data gathered and analyzed over many years, as well as third-party data, to facilitate its risk selection process and develop pricing parameters. Bond & Specialty Insurance utilizes both proprietary forms and standard industry forms for the insurance policies and bonds it issues.
Product Lines
Bond & Specialty Insurance writes the following types of coverages:
Domestic
•Fidelity and Surety. Provides fidelity insurance coverage, which protects an insured for loss due to embezzlement or misappropriation of funds by an employee, and surety, which is a three-party agreement whereby the surety company agrees to pay a third party or to complete an obligation in response to the default, acts or omissions of a bonded party. Surety bonds are generally provided for construction performance; legal matters, such as appeals; trustees in bankruptcy and probate; and other performance obligations.
•General Liability. Provides coverage for specialized liability exposures as described above in more detail in the “Business Insurance” section of this report, as well as transactional liability coverages.
•Other. Coverages include Commercial Property, Workers’ Compensation, Commercial Automobile and Commercial Multi-Peril, which are described above in more detail in the “Business Insurance” section of this report.
International
•Fidelity and Surety and certain General Liability products are provided internationally to various customer groups.
Net Retention Policy Per Risk
The following discussion reflects the Company’s retention policy with respect to Bond & Specialty Insurance as of January 1, 2024. For management liability coverages, including but not limited to directors’ and officers’ liability, professional liability, employment practices liability, fidelity liability, fiduciary liability and cyber risk liability, Bond & Specialty Insurance generally limits net retentions to $25.0 million per policy. For surety, where limits are often significant, Bond & Specialty Insurance generally retains up to $132.5 million probable maximum loss (PML) per principal, after reinsurance, but may retain higher amounts based on the type of obligation, credit quality and other credit risk factors. Reinsurance treaties often have aggregate limits or caps which may result in larger net per risk retentions if the aggregate limits or caps are reached. Bond & Specialty Insurance utilizes facultative reinsurance to provide additional limits capacity or to reduce retentions on an individual risk basis.
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Bond & Specialty Insurance may also retain amounts greater than those described herein based upon the individual characteristics of the risk.
Geographic Distribution
The following table shows the geographic distribution of Bond & Specialty Insurance’s direct written premiums for the year ended December 31, 2023:
Location % of
Total
Domestic:  
California 10.2  %
Texas 6.6 
New York 5.7 
Florida 4.8 
Illinois 3.6 
Pennsylvania 3.4 
All other domestic (1)
 52.2 
Total Domestic 86.5 
   
International:  
United Kingdom 6.4 
Canada 4.3 
All other international 2.8 
Total International 13.5 
Total Bond & Specialty Insurance 100.0  %
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(1)No other single state accounted for 3.0% or more of Bond & Specialty Insurance’s direct written premiums in 2023.
Competition
The competitive landscape in which Bond & Specialty Insurance operates is affected by many of the same factors described above for Business Insurance. Competitors in this market are primarily national property and casualty insurance companies (including international companies doing business in the U.S.) that write most classes of business and, to a lesser extent, regional insurance companies and companies that have developed niche programs for specific industry segments.
Domestic
Bond & Specialty Insurance underwrites and markets its products to all sizes of businesses and other organizations, as well as individuals. The Company believes that its reputation for timely and consistent decision making and financial stability, a nationwide network of local underwriting, claims and industry experts and strong producer and customer relationships, as well as its ability to offer its customers a full range of products and services, provides Bond & Specialty Insurance an advantage over many of its competitors and enables it to compete effectively in a complex, dynamic marketplace. The Company believes that the ability of Bond & Specialty Insurance to cross-sell its products to customers of Business Insurance and Personal Insurance also provides the Company with a competitive advantage. See “Item 1A—Risk Factors—The intense competition that we face, including with respect to attracting and retaining employees, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and our profitability.”

International
International competes with numerous international and domestic insurers in Canada, the United Kingdom, the Republic of Ireland, and in Brazil and Colombia through joint ventures. Companies compete on the basis of price, product offerings, the level of claim and risk management services provided, the ease and speed of doing business and stability of the insurer. The Company has developed expertise in various markets in these countries similar to those served in the United States and provides certain specialty coverages for these markets.
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PERSONAL INSURANCE
Personal Insurance offers a broad range of property and casualty insurance products and services covering individuals’ personal risks, primarily in the United States, as well as in Canada. Personal Insurance’s primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.
Selected Product and Distribution Channel Information
The following table sets forth net written premiums for Personal Insurance’s business by product line for the periods indicated.  For a description of the product lines referred to in the following table, see “—Product Lines.” In addition, see “—Principal Markets and Methods of Distribution” for a discussion of distribution channels for Personal Insurance’s product lines.
(for the year ended December 31, in millions) 2023 2022 2021 % of Total 2023
Domestic:
        
Automobile
 $ 7,330  $ 6,482  $ 5,827  46.0  %
Homeowners and Other
 7,949  6,916  5,980  49.9 
Total Domestic 15,279  13,398  11,807  95.9 
International
 650  649  684  4.1 
Total Personal Insurance $ 15,929  $ 14,047  $ 12,491  100.0  %
Principal Markets and Methods of Distribution
Domestic 
Personal Insurance products are marketed and distributed primarily through thousands of independent agents and brokers located throughout the United States, supported by personnel in eight sales regions. In addition, sales and service are provided to customers through five contact centers. Principal markets for Personal Insurance products are spread throughout the contiguous United States.
In selecting new independent agencies to distribute its products, Personal Insurance considers many factors, including financial stability, staff experience, customer facing online and digital capabilities and operating and marketing plans. Once an agency is appointed, Personal Insurance regularly monitors its performance.
Agents can access the Company’s agency service portal for a number of resources, including customer service, marketing and claims management. In addition, agencies can choose to shift the ongoing service responsibility for Personal Insurance’s customers to the Company’s Customer Care Program, where the Company provides, on behalf of an agency, a comprehensive array of customer service needs, including billing inquiries, coverage discussions and account changes. Approximately two thousand agents take advantage of this service alternative, for which they generally pay a fee.
Personal Insurance also markets and distributes its products directly to consumers, largely through digital marketing, and additional channels, including corporations that make the Company’s product offerings available to their employees primarily through payroll deductions, consumer associations and affinity groups. Personal Insurance handles the sales and service for these programs either through a sponsoring independent agent, through the Company’s contact center locations or through its wholly owned independent agency. Personal Insurance also markets and distributes its products on other distribution platforms, including carrier partnerships. Since 1995, the Company has had a distribution agreement with the agency affiliate of GEICO to underwrite a portion of their homeowners business.
International
In Canada, the Company markets and distributes its personal insurance products principally through hundreds of brokers located throughout the country.
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Pricing and Underwriting
Personal Insurance has developed a product management methodology that integrates the disciplines of underwriting, claims, actuarial and product development. This approach is designed to maintain high-quality underwriting discipline and pricing segmentation. Proprietary and third-party data accumulated over many years is analyzed, and Personal Insurance uses a variety of risk differentiation models to facilitate its pricing segmentation and underwriting. The Company’s product management area establishes underwriting guidelines integrated with its filed pricing and rating plans, which enable Personal Insurance to effectively execute its risk selection and pricing processes.
Domestic
Pricing for personal automobile insurance is driven in large part by changes in the frequency of claims and changes in severity, including inflation in the cost of automobile replacements and repairs (including parts and labor), medical care and resolution of liability claims. Pricing in the homeowners business is driven in large part by changes in the frequency of claims and changes in severity, including inflation in the cost of materials, labor and household possessions. In addition to the normal risks associated with any multiple peril coverage, the profitability and pricing of both homeowners and automobile insurance are affected by the incidence of catastrophes and other weather-related events, as well as other unusual circumstances, such as the impact of supply chain disruptions, labor shortages and inflation. Insurers writing personal lines property and casualty policies may be unable to change prices until some time after the costs associated with coverage have changed, primarily because of state insurance rate regulation. The pace at which an insurer can change rates in response to changing costs depends, in part, on whether the applicable state law requires prior approval of rate changes or notification to the regulator either before or after a rate change is imposed. In states with prior approval laws, rates must be approved by the regulator before being used by the insurer. In states having “file-and-use” laws, the insurer must file rate changes with the regulator, but does not need to wait for approval before using the new rates. A “use-and-file” law requires an insurer to file rates within a period of time after the insurer begins using the new rate. Approximately one-half of the states require prior approval of most rate changes. In addition, changes to methods of marketing and underwriting in some jurisdictions are subject to state-imposed restrictions, which can make it more difficult for an insurer to significantly manage catastrophe exposures.
The Company’s ability or willingness to change prices, modify underwriting terms or shift exposure to, or from, certain geographies may be limited due to a number of factors, including public policy, the competitive environment, the evolving political and legislative environment and/or changes in the general economic climate. The Company also may choose to write business it might not otherwise write in some states for strategic purposes, such as improving access to other commercial or personal underwriting opportunities. In choosing to write business in some states, the Company also considers the costs and benefits of those states’ residual markets and guaranty funds, as well as other property and casualty business the Company writes in those states.
International
Pricing and underwriting for personal automobile and homeowners insurance in Canada is driven in large part by the same factors as in the United States. For personal automobile insurance, all provinces in Canada require prior approval before rates are implemented.
Product Lines
Domestic
The primary coverages in Personal Insurance are personal automobile and homeowners and other insurance sold to individuals.  Personal Insurance had approximately 9.1 million active policies (i.e., policies-in-force) in the United States at December 31, 2023.
Personal Insurance writes the following types of coverages:
•Automobile provides coverage for liability to others for both bodily injury and property damage, uninsured motorist protection, and for physical damage to an insured’s own vehicle from collision, fire, flood, hail and theft.  In addition, many states require policies to provide first-party personal injury protection, frequently referred to as no-fault coverage.
•Homeowners and Other provides protection against losses to dwellings and contents from a variety of perils (excluding flooding) as well as coverage for personal liability. The Company writes homeowners insurance for dwellings, condominiums and tenants, and rental properties.  The Company also writes coverage for boats and yachts, valuable personal items such as jewelry, umbrella liability, and weddings and special events.
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International
•International provides automobile and homeowners and other coverages in Canada (similar to coverages in the United States).  Personal Insurance had approximately 450,000 active policies in Canada at December 31, 2023.
Net Retention Policy Per Risk
The following discussion reflects the Company’s retention policy with respect to Personal Insurance as of January 1, 2024. Personal Insurance generally retains its primary personal auto exposures in their entirety. For personal property insurance, there is an $8.0 million maximum retention per risk, net of reinsurance. Personal Insurance uses facultative reinsurance to provide additional limits capacity or to reduce retentions on an individual risk basis. Personal Insurance issues umbrella policies up to a maximum limit of $10.0 million per risk. Personal Insurance may also retain amounts greater than those described herein based upon the individual characteristics of the risk.
Geographic Distribution
The following table shows the geographic distribution of Personal Insurance’s direct written premiums for the year ended December 31, 2023:
Location % of Total
Domestic:  
Texas (1)
 11.7  %
New York 8.7 
California 6.9 
Georgia 5.2 
Pennsylvania 4.6 
Florida 4.2 
New Jersey 4.1 
Virginia 3.7 
Maryland 3.5 
Colorado 3.4 
Massachusetts 3.3 
Illinois 3.0 
All other domestic (2)
 33.7 
Total Domestic 96.0 
 
International:  
Canada 4.0 
Total International 4.0 
     Total Personal Insurance 100.0  %
___________________________________________
(1)The percentage for Texas includes business written by the Company through a fronting agreement with another insurer.
(2)No other single state accounted for 3.0% or more of Personal Insurance’s direct written premiums in 2023.
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Competition
Domestic
Although national companies (including international companies doing business in the U.S.) write the majority of this business, Personal Insurance also faces competition from many regional and local companies. Competitors write business in both traditional and alternative distribution platforms through independent agents and as direct writers, either through the use of exclusive agents, salaried employees or direct marketing strategies. Personal Insurance primarily competes based on breadth of product offerings, price, service (including claims handling), partner and customer experience, stability of the insurer and name recognition. In the independent agent channel, Personal Insurance competes for business within each independent agency since these agencies also offer policies from competing companies. Most independent personal insurance agents utilize price comparison rating technology, sometimes referred to as “comparative raters,” as a cost-efficient means of obtaining quotes from multiple companies. Because the use of this technology facilitates the process of generating multiple quotes, the technology has increased price comparison on new and renewal business.
International
Personal Insurance competes with numerous international and domestic insurers in Canada. Companies compete based on similar factors to those described above for domestic operations. The Company has developed expertise in various markets in Canada similar to those served in the United States and provides both automobile and homeowners and other coverages for this market.
See “Item 1A—Risk Factors—The intense competition that we face, including with respect to attracting and retaining employees, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and our profitability.”

CLAIMS MANAGEMENT
The Company’s claim functions are managed through its Claims Services organization, with locations in the United States and in the other countries where it does business. With approximately 12,500 employees, Claims Services employs a group of professionals with diverse skills, including claim adjusters, appraisers, attorneys, investigators, engineers, accountants, nurses, data and analytics professionals, system specialists and training, management and support personnel. Approved external service providers, such as investigators, attorneys and, when necessary, independent adjusters and appraisers, are available for use as appropriate.
United States field claim management teams located in 16 claim centers and 55 satellite and specialty-only offices in 42 states are organized to maintain focus on the specific claim characteristics unique to the businesses within the Company’s business segments. Claim teams with specialized skills, required licenses, resources and workflows are matched to the unique exposures of those businesses, with local claims management dedicated to achieving optimal results within each segment, including acting as a third-party administrator for large customers who self-insure and retain the Company to handle their claims process on a fee-for-service basis. The Company’s home office operations provide additional support in the form of workflow design, quality management, information technology, advanced management information and data analysis, training, financial reporting and controls, and human resources strategy. This structure permits the Company to maintain the economies of scale of a large, established company while retaining the agility to respond promptly to the needs of customers, brokers, agents and underwriters. Claims management for International, while generally provided locally by staff in the respective international locations due to local knowledge of applicable laws and regulations, is also managed by the Company’s Claims Services organization in the United States to leverage that knowledge base and to share best practices.
An integral part of the Company’s strategy to benefit customers and shareholders is its continuing industry leadership in the fight against insurance fraud through its Investigative Services unit. The Company has a nationwide staff of experts who investigate a wide array of insurance fraud schemes using in-house forensic resources and other technological tools. This staff also has specialized expertise in fire scene examinations, medical provider fraud schemes, law firm fraud schemes and data mining. The Company also dedicates investigative resources to ensure that violations of law are reported to and prosecuted by law enforcement agencies.
Claims Services uses technology, management information and data analysis to assist the Company in reviewing its claim practices and results in order to evaluate and improve its claims management performance. The Company’s claims-management strategy is focused on segmentation of claims and appropriate technical specialization to drive effective claim resolution. The Company regularly monitors its investment in claim resources to maintain an effective focus on claim outcomes and a disciplined approach to continual improvement. The Company operates a state-of-the-art claims-training facility which offers hands-on experiential learning to help ensure that its claim professionals are properly trained.
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In recent years, the Company has invested significant additional resources in many of its claims handling operations, including digital, analytics, artificial intelligence and automation capabilities. The Company regularly monitors the effect of these investments to ensure a consistent optimization among outcomes, cost and service.
Claims Services’ catastrophe response strategy is to respond to a significant catastrophic event using its own personnel, enabling it to minimize reliance on independent adjusters and appraisers. The Company has developed a large, dedicated Catastrophe Response Team and has also trained a large Enterprise Response Team of existing employees. The latter team can be deployed on short notice in the event of a catastrophe that generates claim volume exceeding the capacity of the dedicated Catastrophe Response Team. In recent years, these internal resources were successfully deployed to respond to a significant level of catastrophe claims.

REINSURANCE
The Company reinsures a portion of the risks it underwrites in order to manage its exposure to losses and to protect its capital. The Company cedes to reinsurers a portion of these risks and pays premiums based upon the risk and exposure of the policies subject to such reinsurance. The Company utilizes a variety of reinsurance agreements to manage its exposure to large property and casualty losses, including facultative as well as catastrophe and individual risk treaties. Ceded reinsurance involves credit risk, except with regard to mandatory pools and associations, and is predominantly subject to aggregate loss limits. Although the reinsurer is liable to the Company to the extent of the reinsurance ceded, the Company remains liable as the direct insurer on all risks reinsured. Reinsurance recoverables are reported after reductions for known insolvencies and after allowances for uncollectible amounts. The Company also holds collateral, including trust agreements, escrow funds and letters of credit, under certain reinsurance agreements. The Company monitors the financial condition of reinsurers on a regular basis and reviews its reinsurance arrangements periodically. Reinsurers are selected based on their financial condition, business practices, the price of their product offerings and the value of collateral provided. After reinsurance is purchased, the Company has limited ability to manage the credit risk of a reinsurer. In addition, in a number of jurisdictions, particularly the European Union and the United Kingdom and a small number of U.S. states, a reinsurer is permitted to transfer a reinsurance arrangement to another reinsurer, which may be less creditworthy, without a counterparty’s consent, provided that the transfer has been approved by the applicable regulatory and/or court authority.
For additional information regarding reinsurance, see note 6 of the notes to the consolidated financial statements and “Item 1A—Risk Factors—We may not be able to collect all amounts due to us from reinsurers, reinsurance coverage may not be available to us in the future at commercially reasonable rates or at all and we are exposed to credit risk related to our structured settlements.” For a description of reinsurance-related litigation, see note 17 of the notes to the consolidated financial statements.
Catastrophe Reinsurance
Catastrophes include hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions, solar flares and other naturally-occurring events. Catastrophes can also result from terrorist attacks and other intentionally destructive acts including those involving cyber events, nuclear, biological, chemical and radiological events, civil unrest, explosions and destruction of infrastructure. The incidence and severity of catastrophes are inherently unpredictable. The extent of losses from a catastrophe is a function of both the total amount of insured exposure affected by the event and the severity of the event. Most catastrophes are restricted to small geographic areas; however, hurricanes, earthquakes, wildfires, cyber attacks and other events may produce significant damage or loss in larger areas, especially those areas that are heavily populated. For additional information regarding catastrophes, see “Item 1A—Risk Factors—High levels of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone areas and changing climate conditions, could materially and adversely affect our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance.” The Company generally seeks to manage its exposure to catastrophes through individual risk selection and the purchase of catastrophe reinsurance. In addition to the Company’s catastrophe reinsurance coverages, the Company is also party to other reinsurance treaties that can provide additional coverage for losses arising from catastrophes, as described in the “Net Retention Policy Per Risk” sections of the respective segment discussions above. The Company conducts reviews of its risk and catastrophe coverages on a regular basis and makes changes as it deems appropriate. The following discussion summarizes the Company’s catastrophe reinsurance coverage at January 1, 2024.
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Corporate Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty covers the accumulation of certain property losses arising from one or multiple occurrences for the period January 1, 2024 through and including December 31, 2024. The treaty provides for recovery of 20% of each qualifying loss in excess of a $3.5 billion retention up to $4.0 billion, 80% of losses in excess of $4.0 billion up to $5.0 billion, 95% of losses in excess of $5.0 billion up to $7.5 billion and 50% of losses in excess of $7.5 billion up to $8.0 billion. Therefore, the maximum recovery under the treaty would be $3.5 billion, or 78%, of the total $4.5 billion limit. Qualifying losses for each occurrence are after a $100 million deductible.  The treaty covers all of the Company’s exposures in North America and all waters contiguous thereto. The treaty only provides coverage for terrorism events in limited circumstances and excludes entirely losses arising from nuclear, biological, chemical or radiological attacks. The treaty only provides coverage for cyber events and civil unrest in limited circumstances and excludes losses arising from communicable disease. The Company’s underlying insurance coverages generally exclude coverage for communicable disease.
Catastrophe Bonds. The Company has catastrophe protection through an indemnity reinsurance agreement with Long Point Re IV Ltd. (Long Point Re IV), an independent Bermuda company registered as a special purpose insurer under the Bermuda Insurance Act of 1978 and related regulations. The reinsurance agreement meets the requirements to be accounted for as reinsurance in accordance with the guidance for reinsurance contracts. In connection with the reinsurance agreement, Long Point Re IV issued notes (generally referred to as “catastrophe bonds”) to investors in amounts equal to the full coverage provided under the reinsurance agreement as described below. The proceeds of the issuance were deposited in a reinsurance trust account. The businesses covered by this reinsurance agreement are subsets of the Company’s overall insurance portfolio, comprising specified property coverages spread across the following geographic locations: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and Vermont.
The reinsurance agreement provides coverage of up to $575 million to the Company through May 24, 2026 for certain losses from tropical cyclones, earthquakes, severe thunderstorms or winter storms in the locations listed above. The attachment point and maximum limit under this agreement are reset annually to adjust the expected loss of the layer within a predetermined range. For events up to and including May 24, 2024, this treaty provides up to $575 million of coverage, subject to a $2.48 billion retention. The coverage under the reinsurance agreement is limited to specified property coverage written in Personal Insurance; Select Accounts, Middle Market (excluding Excess Casualty and Boiler & Machinery) and National Property and Other in Business Insurance; and Other in Bond & Specialty Insurance.
Under the terms of the reinsurance agreement, the Company is obligated to pay annual reinsurance premiums to Long Point Re IV for the reinsurance coverage. Amounts payable to the Company under the reinsurance agreement with respect to any covered event cannot exceed the Company’s actual losses from such event. The principal amount of the catastrophe bonds will be reduced by any amounts paid to the Company under the reinsurance agreement.
As with any reinsurance agreement, there is credit risk associated with collecting amounts due from reinsurers. With regard to Long Point Re IV, the credit risk is mitigated by a reinsurance trust account that has been funded by Long Point Re IV with money market funds that invest solely in direct government obligations and obligations backed by the U.S. government with maturities of no more than 13 months. The money market funds must have a principal stability rating of at least AAAm by Standard & Poor’s or AAAmmf by Fitch Ratings on the issuance date of the bonds and thereafter must be rated by Standard & Poor’s or Fitch Ratings, as applicable. Other permissible investments include money market funds which invest in repurchase and reverse repurchase agreements collateralized by direct government obligations and obligations of any agency backed by the U.S. government with terms of no more than 397 calendar days, and cash.
At the time the agreement was entered into with Long Point Re IV, the Company evaluated the applicability of the accounting guidance that addresses variable interest entities or VIEs. Under this guidance, an entity that is formed for business purposes is considered a VIE if: (a) the equity investors lack the direct or indirect ability through voting rights or similar rights to make decisions about an entity’s activities that have a significant effect on the entity’s operations or (b) the equity investors do not provide sufficient financial resources for the entity to support its activities. Additionally, a company that absorbs a majority of the expected losses from a VIE’s activities or is entitled to receive a majority of the entity’s expected residual returns, or both, is considered to be the primary beneficiary of the VIE and is required to consolidate the VIE in the company’s financial statements.
As a result of the evaluation of the reinsurance agreement with Long Point Re IV, the Company concluded that it was a VIE because the conditions described in items (a) and (b) above were present. However, while Long Point Re IV was determined to be a VIE, the Company concluded that it did not have a variable interest in the entity, as the variability in its results, caused by the reinsurance agreement, is expected to be absorbed entirely by the investors in the catastrophe bonds issued by Long Point Re IV and residual amounts earned by it, if any, are expected to be absorbed by the equity investors (the Company has neither an equity nor a residual interest in Long Point Re IV).
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Accordingly, the Company is not the primary beneficiary of Long Point Re IV and does not consolidate that entity in the Company’s consolidated financial statements. Additionally, because the Company has no intention to pursue any transaction that would result in it acquiring interest in and becoming the primary beneficiary of Long Point Re IV, the consolidation of that entity in the Company’s consolidated financial statements in future periods is unlikely.
The Company has not incurred any losses that have resulted or are expected to result in a recovery under the Long Point Re IV agreement since its inception.
Personal Insurance Hurricane Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty provides up to $500 million part of $1.00 billion of coverage for a single event, subject to a $1.75 billion retention (i.e., for every dollar of loss between $1.75 billion and $2.75 billion, this treaty provides 50 cents of coverage), for homeowners property losses arising from a hurricane or tropical storm for the period from July 1, 2023 through and including June 30, 2024. The treaty covers the United States coastal states from Texas to Maine, excluding Florida.
Northeast Property Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty provides up to $850 million of coverage, subject to a $2.50 billion retention, for losses arising from a single occurrence and allows for one reinstatement. Coverage is provided on an all perils basis, including but not limited to hurricanes, tornadoes, hail storms, earthquakes, winter storms and/or freeze losses (coverage is included for terrorism events in limited circumstances). Coverage for cyber events applies only in limited circumstances, and coverage for communicable disease and nuclear, biological and radiological terrorism attacks is excluded from this treaty. The treaty covers territory from Virginia to Maine for the period from July 1, 2023 through and including June 30, 2024. Losses from a covered event anywhere in North America and waters contiguous thereto may be used to satisfy the retention. Recoveries under the catastrophe bonds (if any) would be first applied to reduce losses subject to this treaty.
Middle Market Earthquake Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty provides up to $270 million part of $300 million of coverage, subject to a $125 million retention (i.e., for every dollar of loss between $125 million and $425 million, this treaty provides 90 cents of coverage), for losses arising from an earthquake, including other ensuing causes of loss such as fire following and sprinkler leakage, incurred under policies written by Technology & Life Sciences, Public Sector Services and Commercial Accounts in Business Insurance for the period from July 1, 2023 through and including June 30, 2024. The treaty covers the United States and Canada, their territories, possessions and waters contiguous thereto.
Personal Insurance Earthquake Catastrophe Excess-of-Loss Reinsurance Treaty. This treaty provides up to $160 million part of $200 million of coverage, subject to a $170 million retention, for losses occurring from an earthquake, including fire following and sprinkler leakage, incurred by Personal Insurance from January 1, 2024 through and including December 31, 2024. The treaty covers the United States, its territories, possessions and waters contiguous thereto.
Canadian Property Catastrophe Excess-of-Loss Reinsurance Treaty.  This treaty provides coverage for 50% of losses in excess of C$100 million (US$76 million at December 31, 2023) up to C$200 million (US$151 million at December 31, 2023) and for 100% of losses in excess of C$200 million (US$151 million at December 31, 2023) up to C$500 million (US$378 million at December 31, 2023), in each case with respect to the accumulation of net property losses arising out of one occurrence on business written by the Company’s Canadian businesses for the period from July 1, 2023 through and including June 30, 2024. The treaty covers all property written by the Company’s Canadian businesses, including, but not limited to, habitational property, commercial property, inland marine, ocean marine and auto physical damages exposures. Coverage for cyber events applies only in limited circumstances, and coverage for communicable disease and nuclear, biological and radiological terrorism attacks is excluded from this treaty.
Other International Reinsurance Treaties. For other business underwritten in Canada, as well as for business written in the United Kingdom and the Republic of Ireland and in the Company’s operations at Lloyd’s, separate reinsurance protections are purchased locally that have lower net retentions more commensurate with the size of the respective local balance sheet.
Terrorism Risk Insurance Program. The Terrorism Risk Insurance Program is a Federal program administered by the Department of the Treasury authorized through December 31, 2027 that provides for a system of shared public and private compensation for certain insured losses resulting from certified acts of terrorism. For a further description of the program, including the Company’s estimated deductible under the program in 2024, see note 6 of the notes to the consolidated financial statements and “Item 1A—Risk Factors—High levels of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone areas and changing climate conditions, could materially and adversely affect our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance.”
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CLAIMS AND CLAIM ADJUSTMENT EXPENSE RESERVES
Claims and claim adjustment expense reserves represent management’s estimate of the ultimate liability for unpaid losses and loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported as of the balance sheet date.
The Company refines its reserve estimates as part of its regular ongoing process that includes reviews of key assumptions, underlying variables and historical loss experience. The Company reflects adjustments to reserves in the results of operations in the periods in which the estimates are changed. In establishing reserves, the Company takes into account estimated recoveries for reinsurance, salvage and subrogation. The reserves are reviewed regularly by qualified actuaries employed by the Company. For additional information on the process of estimating reserves and a discussion of underlying variables and risk factors, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.”
The process of estimating loss reserves involves a high degree of judgment and is subject to a number of variables. These variables (discussed by product line in the “Critical Accounting Estimates” section of “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations”) are affected by both internal and external events, such as changes in claims handling procedures, inflation, judicial trends, the tort environment and the legislative landscape, among others. The impact of many of these items on ultimate costs for claims and claim adjustment expenses is difficult to estimate. Reserve estimation difficulties also differ significantly by product line due to differences in the underlying insurance contract (e.g., claims-made versus occurrence), claim complexity, the volume of claims, the potential severity of individual claims, the determination of the occurrence date for a claim, and reporting lags (the time between the occurrence of the insured event and when it is actually reported to the insurer). Informed judgment is applied throughout the process.
The Company derives estimates for unreported claims and development with respect to reported claims principally from actuarial analyses of historical patterns of loss development by accident year for each business unit, product line and type of exposure. Similarly, the Company derives estimates of unpaid loss adjustment expenses principally from actuarial analyses of historical development patterns and the relationship of loss adjustment expenses to losses for each product line and type of exposure. For a description of the Company’s reserving methods for asbestos and environmental claims, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Asbestos Claims and Litigation,” and “—Environmental Claims and Litigation.”
Certain of the Company’s claims and claim adjustment expense reserves are discounted to present value.  See note 8 of the notes to the consolidated financial statements for further discussion.
Reserves on Statutory Accounting Basis
At December 31, 2023, 2022 and 2021, claims and claim adjustment expense reserves (net of reinsurance) prepared in accordance with U.S. generally accepted accounting principles (GAAP reserves) were $87 million higher, $91 million higher and $99 million higher, respectively, than those reported in the Company’s respective annual financial reports filed with insurance regulators, which are prepared in accordance with statutory accounting practices (statutory reserves).
The differences between the amount of reserves reported for GAAP and statutory reporting are primarily due to the differences in accounting for: (i) fee reimbursements associated with large deductible business, (ii) the impact of updated guidance for credit losses applicable to structured settlements and (iii) the accounting for reinsurance.
For large deductible business, the Company pays the deductible portion of a casualty insurance claim and then seeks reimbursement from the insured, plus a fee. The associated reserves for claim adjustment expenses are reported gross of the expected fee income (i.e., the reserves are not net of the expected fees) for GAAP reporting. For statutory reporting, the associated reserves are reported net of the expected fee income.
For GAAP reporting, amounts payable under structured settlements for which the Company did not receive a release of its obligation from the claimant are reported in loss reserves and reinsurance recoverables, net of an allowance for estimated uncollectible amounts. For statutory reporting, structured settlements for which the Company has not obtained a release are disclosed as a contingent liability and not recorded as part of loss reserves.
Reserves for claims and claim adjustment expenses are reported gross of reinsurance recoverables (i.e., without reduction for amounts recoverable for reinsurance) for GAAP reporting. For statutory reporting, the reserves are reported net of reinsurance recoverables. Additionally, reinsurance balances resulting from reinsurance placed to cover losses on insured events occurring prior to the inception of a reinsurance contract (retroactive reinsurance) are included in reinsurance recoverables for GAAP reporting.
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Statutory accounting practices require retroactive reinsurance balances to be recorded in other liabilities as contra-liabilities rather than in loss reserves.
Asbestos and Environmental Claims
Asbestos and environmental claims are segregated from other claims and are handled separately within the Company’s Strategic Resolution Group, a separate unit staffed by dedicated legal, claim, finance and engineering professionals which also has responsibility for enterprise-wide major case activity. For additional information on asbestos and environmental claims, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Asbestos Claims and Litigation” and “—Environmental Claims and Litigation.”

INTERCOMPANY REINSURANCE POOLING ARRANGEMENTS
Most of the Company’s domestic insurance subsidiaries participate in an intercompany property and casualty reinsurance pooling arrangement. Under such arrangements, the participating subsidiaries share substantially all insurance business they write by reinsuring their combined premiums, losses and expenses to each participating subsidiary in accordance with the quota share participation rate provided in the intercompany agreement. Pooling arrangements allow the participating companies to rely on the capacity of the entire pool’s statutory capital and surplus rather than just on each participating subsidiary’s own statutory capital and surplus.

RATINGS
Ratings are an important factor in assessing the Company’s competitive position in the insurance industry. The Company receives ratings from the following major rating agencies: A.M. Best Company (A.M. Best), Fitch Ratings (Fitch), Moody’s Investors Service (Moody’s) and S&P Global Ratings (S&P). Rating agencies typically issue two types of ratings for insurance companies: claims-paying (or financial strength) ratings, which reflect the rating agency’s assessment of an insurer’s ability to meet its financial obligations to policyholders, and debt ratings, which reflect the rating agency’s assessment of a company’s prospects for repaying its debts and are considered by lenders in connection with the setting of interest rates and terms for a company’s short- and long-term borrowings. Agency ratings are not a recommendation to buy, sell or hold any security, and they may be revised or withdrawn at any time by the rating agency. Each agency’s rating should be evaluated independently of any other agency’s rating. The system and the number of rating categories can vary widely from rating agency to rating agency. Customers usually focus on claims-paying ratings, while creditors focus on debt ratings. Investors use both to evaluate a company’s overall financial strength. The ratings issued on the Company or its subsidiaries by any of these agencies are announced publicly and are available on the Company’s website and from the agencies.
A downgrade in one or more of the Company’s claims-paying ratings could negatively impact the Company’s business volumes and competitive position because demand for certain of its products may be reduced, particularly because some customers require that the Company maintain minimum ratings to enter into, maintain or renew business with it. 
Additionally, a downgrade in one or more of the Company’s debt ratings could adversely impact the Company’s ability to access the capital markets and other sources of funds, including in the syndicated bank loan market, and/or result in higher financing costs.  For example, downgrades in the Company’s debt ratings could result in higher interest expense under the Company’s revolving credit agreement (under which the cost of borrowing could range from the Secured Overnight Financing Rate (SOFR) plus 85 basis points (including a credit spread adjustment) to SOFR plus 147.5 basis points (including a credit spread adjustment), depending on the Company’s debt ratings), the Company’s commercial paper program, or in the event that the Company were to access the capital markets by issuing debt or similar types of securities.  See note 9 of the notes to the consolidated financial statements for a discussion of the Company’s revolving credit agreement and commercial paper program. The Company considers the level of increased cash funding requirements in the event of a ratings downgrade as part of the evaluation of the Company’s liquidity requirements.  The Company currently believes that a one- to two-notch downgrade in its debt ratings would not result in a material increase in interest expense under its existing credit agreement and commercial paper programs. In addition, the Company considers the impact of a ratings downgrade as part of the evaluation of its common share repurchases.
S&P updated its capital adequacy model in 2023. The updated model is not expected to have a material impact on the Company. As part of its capital management strategy, the Company will continue to make its own assessment of the appropriate level of capital to support the Company’s business operations. For a discussion of the risks to the Company’s claims-paying and financial strength ratings, see the risk factor entitled “A downgrade in our claims-paying and financial strength ratings could adversely impact our business volumes, adversely impact our ability to access the capital markets and increase our borrowing costs” included in “Part I—Item 1A—Risk Factors.”
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Claims — Paying Ratings
The following table summarizes the current claims-paying (or financial strength) ratings for each of the Company’s rated entities as of February 15, 2024, including the position of each rating in the applicable agency’s rating scale.
    A.M. Best   Moody’s   S&P   Fitch
Travelers Reinsurance Pool (a)(b)   A++
(1st of 16)
   Aa2
(3rd of 21)
   AA
(3rd of 21)
  
AA (3rd of 21)
Travelers C&S Co. of America   A++
(1st of 16)
   Aa2
(3rd of 21)
   AA
(3rd of 21)
  
AA (3rd of 21)
First Floridian Auto and Home Ins. Co.
   A-
(4th of 16)
   —   —  
AA (3rd of 21)
Travelers Insurance Company of Canada
   A++
(1st of 16)
   —   AA-
(4th of 21)
   —
The Dominion of Canada General Insurance Company
   A
(3rd of 16)
   —   —   —
Travelers Insurance Company Limited
   A++
(1st of 16)
   —   AA
(3rd of 21)
   —
Travelers Insurance Designated Activity Company
 A++
(1st of 16)
 — AA-
(4th of 21)
 —
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(a)The Travelers Reinsurance Pool consists of:  The Travelers Indemnity Company, The Charter Oak Fire Insurance Company, The Phoenix Insurance Company, The Travelers Indemnity Company of Connecticut, The Travelers Indemnity Company of America, Travelers Property Casualty Company of America, Travelers Commercial Casualty Company, TravCo Insurance Company, The Travelers Home and Marine Insurance Company, Travelers Casualty and Surety Company, Northland Insurance Company, Northland Casualty Company, The Standard Fire Insurance Company, The Automobile Insurance Company of Hartford, Connecticut, Travelers Casualty Insurance Company of America, Farmington Casualty Company, Travelers Commercial Insurance Company, Travelers Casualty Company of Connecticut, Travelers Property Casualty Insurance Company, Travelers Personal Security Insurance Company, Travelers Personal Insurance Company, St. Paul Fire and Marine Insurance Company, The Travelers Casualty Company, St. Paul Protective Insurance Company, Travelers Constitution State Insurance Company, St. Paul Guardian Insurance Company, St. Paul Mercury Insurance Company, Fidelity and Guaranty Insurance Underwriters, Inc., TravCo Personal Insurance Company and United States Fidelity and Guaranty Company. In addition, the following entities are also members of the Travelers Reinsurance Pool but have a 0% share of the pool: Northfield Insurance Company, American Equity Specialty Insurance Company, Travelers Excess and Surplus Lines Company, St. Paul Surplus Lines Insurance Company and Travelers Specialty Insurance Company. 
(b)The following affiliated companies are 100% reinsured by one of the pool participants noted in (a) above: Fidelity and Guaranty Insurance Company, Gulf Underwriters Insurance Company, American Equity Insurance Company, Select Insurance Company, The Travelers Lloyds Insurance Company and Travelers Lloyds of Texas Insurance Company.
Debt Ratings
The following table summarizes the current debt, trust preferred securities and commercial paper ratings of the Company and its subsidiaries as of February 15, 2024.  The table also presents the position of each rating in the applicable agency’s rating scale.
  A.M. Best   Moody’s   S&P   Fitch
               
Senior debt
a+ (5th of 22)
   A2
(6th of 21)
   A
(6th of 22)
   A
(6th of 22)
Junior subordinated debentures
a- (7th of 22)
   A3
(7th of 21)
   BBB+
(8th of 22)
   BBB+
(8th of 22)
Commercial paper
AMB-1+ (1st of 5)
   P-1
(1st of 4)
   A-1
(2nd of 10)
   F1
(2nd of 8)
Rating Agency Actions
The following rating agency actions were taken with respect to the Company from February 16, 2023, the date on which the Company filed its Annual Report on Form 10-K for the year ended December 31, 2022, through February 15, 2024:
•On July 20, 2023, A.M. Best affirmed all ratings of the Company. The outlook for all ratings is stable.
•On December 15, 2023, Fitch affirmed all ratings of the Company. The outlook for all ratings is stable.
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INVESTMENT OPERATIONS
The majority of funds available for investment are deployed in a widely diversified portfolio of high quality, liquid, taxable U.S. government, tax-exempt and taxable U.S. municipal and taxable corporate and U.S. agency mortgage-backed bonds. The Company regularly monitors the effective duration of its fixed maturity investments, and the Company’s investment purchases and sales are executed with the objective of having adequate funds available to satisfy its insurance and debt obligations. Generally, the expected principal and interest payments produced by the Company’s fixed maturity portfolio adequately fund the estimated runoff of the Company’s insurance reserves. The Company manages the investment duration relative to its liability duration. In 2023, the estimated effective duration of the Company’s portfolio of fixed maturity and short-term security investments decreased, primarily driven by the impact of lower interest rates, as well as the composition of the investment portfolio. In 2023, the estimated effective duration of the Company’s net insurance liabilities decreased, primarily reflecting the impact of the mix of net insurance liabilities, partially offset by lower interest rates. At December 31, 2023, the estimated effective duration of the Company’s portfolio of fixed maturity and short-term security investments was greater than the estimated effective duration of the Company’s net insurance liabilities. The substantial amount by which the fair value of the fixed maturity portfolio exceeds the value of the net insurance liabilities, as well as the positive cash flow from newly sold policies and the large amount of high-quality liquid bonds, contributes to the Company’s ability to fund claim payments without having to sell illiquid assets or access its credit facilities.
The Company also invests much smaller amounts in equity securities, real estate, private equity limited partnerships, hedge funds, and real estate partnerships and joint ventures. These investment classes have the potential for higher returns but also involve varying degrees of risk, including less stable rates of return and less liquidity.
See note 3 of the notes to the consolidated financial statements for additional information regarding the Company’s investment portfolio.

REGULATION
U.S. State and Federal Regulation
The Company’s domestic insurance subsidiaries are collectively licensed to transact insurance business in all U.S. states, the District of Columbia, Guam, Puerto Rico, the U.S. Virgin Islands and the Northern Mariana Islands and are subject to regulation in both the various states and jurisdictions in which the subsidiaries are legally domiciled and in which the subsidiaries transact business. The extent of regulation varies, but generally derives from statutes that delegate regulatory, supervisory, and administrative authority to a department of insurance or finance in each state and jurisdiction. The regulation, supervision, and administration relate, among other things, to standards of solvency that must be met and maintained, the nature of and limitations on investments, premium rates, restrictions on the type and size of risks that may be insured under a single policy, reserves and provisions for unearned premiums, losses and other obligations, deposits of securities for the benefit of policyholders, the licensing of insurers and their agents, approval of policy forms and the regulation of market conduct, including the use of credit and other information in underwriting as well as other underwriting and claims practices. State insurance departments also conduct periodic examinations of the financial condition and market conduct of insurance companies and require the filing of financial and other reports on a quarterly and annual basis.
State insurance regulation continues to evolve in response to the changing economic and business environment as well as efforts by regulators internationally to develop a consistent approach to regulation. While the U.S. federal government has not historically regulated the insurance business, the Federal Insurance Office (or FIO) was established within the U.S. Treasury Department with limited authority as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. FIO has been active in the efforts to develop international regulatory standards for the insurance industry. In response to these international efforts, the state insurance regulators, through the National Association of Insurance Commissioners (NAIC), along with the Federal Reserve and the FIO, are working to consider and develop changes to the U.S. regulatory framework, including the development of regulatory tools to evaluate risks and the availability of capital on a groupwide basis in addition to the current requirements imposed on a legal-entity basis.
These changes are evidenced by the incorporation of supervisory colleges into the U.S. regulatory framework. A supervisory college is a forum of the regulators having jurisdictional authority over a holding company’s various insurance subsidiaries, including foreign insurance subsidiaries, convened to meet with the insurer’s executive management to evaluate the insurer’s business strategies, approach to enterprise risk management and corporate governance from both a groupwide and legal-entity perspective.
While insurance in the United States is regulated on a legal-entity basis, the NAIC has adopted changes to its Model Holding Company Act that some states, including the State of Connecticut, have enacted to allow the insurance commissioner to be designated as the groupwide supervisor (i.e., lead regulator) for the insurance holding company system based upon certain criteria, including the jurisdiction of domicile of the insurance subsidiaries holding the majority of the insurance group’s premiums, assets, or liabilities.
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Based upon these criteria, the State of Connecticut Insurance Department is designated as the Company’s lead regulator and coordinates supervisory colleges for the Company. Additionally, the NAIC adopted changes to its Model Holding Company Act to require certain insurance groups to file a Group Capital Calculation to allow the groupwide supervisor (lead state) to evaluate the risks and available capital on a groupwide basis in addition to the risk-based capital requirements currently imposed on a legal-entity basis. The State of Connecticut amended its holding company act to incorporate the changes made to the NAIC Model Holding Company Act and required insurers, including the Company, to file a Group Capital Calculation beginning in 2023. These changes could result in an increase in the amount of capital the Company’s insurance subsidiaries are required to have and could subject the Company to increased regulation.
Insurance Regulation Concerning Dividends from Insurance Subsidiaries. The Company’s principal domestic insurance subsidiaries are domiciled in the State of Connecticut. The Connecticut insurance holding company laws require notice to, and approval by, the state insurance commissioner for the declaration or payment of any dividend from an insurance subsidiary that, together with other distributions made within the preceding twelve months, exceeds the greater of 10% of the insurance subsidiary’s statutory capital and surplus as of the preceding December 31st, or the insurance subsidiary’s net income for the twelve-month period ending the preceding December 31st, in each case determined in accordance with the statutory accounting practices prescribed or permitted by the State of Connecticut Insurance Department. This declaration or payment is further limited by the amount of adjusted unassigned surplus held by the insurance subsidiaries, as determined in accordance with statutory accounting practices.
The insurance holding company laws of states in which the Company’s other domestic insurance subsidiaries are domiciled generally contain similar, although in some instances somewhat more restrictive, limitations on the payment of dividends. These insurance subsidiaries, as well as the insurance subsidiaries domiciled in Connecticut, may also be subject to similar dividends limitations imposed by states in which those subsidiaries are considered commercially domiciled as a result of the amount of business written in those states.
Rate and Rule Approvals. TRV’s domestic insurance subsidiaries are subject to each state’s laws and regulations regarding rate and rule approvals. The applicable laws and regulations generally establish standards to ensure that rates are not excessive, inadequate, unfairly discriminatory or used to engage in unfair price competition. An insurer’s ability to adjust rates and the relative timing of the process are dependent upon each state’s requirements. Many states have enacted variations of competitive ratemaking laws, which allow insurers to set certain premium rates for certain classes of insurance without having to obtain the prior approval of the state insurance department.
Requirements for Exiting Geographic Markets and/or Canceling or Nonrenewing Policies. Many states have laws and regulations which may impact the timing and/or the ability of an insurer to either discontinue or substantially reduce its writings in that state. These laws and regulations typically require prior notice and in some instances insurance department approval prior to discontinuing a line of business or withdrawing from that state. In addition, all states impose limitations on cancellations or non-renewals of certain policies, including in particular, limitations on the reasons for cancellations and on the timing of non-renewals.
Regulatory and Legislative Responses to Catastrophes. States from time to time have passed legislation, and regulators have taken action, that have the effect of limiting the ability of insurers to manage catastrophe risk, such as legislation restricting insurers from reducing exposures or withdrawing from catastrophe-prone areas or mandating that insurers participate in residual markets involving catastrophe-prone areas. Participation in residual market mechanisms has resulted in, and may in the future result in, significant losses or assessments to insurers, including the Company, and, in certain states, those losses or assessments may not be commensurate with the Company’s direct catastrophe exposure in those states. If the Company’s competitors leave states that have residual market mechanisms, the remaining insurers, including the Company, may be subject to significant increases in losses or assessments following a catastrophe. In addition, following catastrophes, there have been, and may in the future be, legislative and administrative initiatives and court decisions that seek to expand insurance coverage for catastrophe claims beyond the original intent of the policies, seek to prevent the application of deductibles included in the policies, or seek to limit the exercise of certain rights available to insurers under the policies. Also, the Company’s ability to adjust policy language or terms, including deductible levels, or to increase pricing to the extent necessary to offset rising claim costs related to catastrophes requires approval of insurance regulatory authorities in certain states. The Company’s ability or its willingness to manage its catastrophe exposure by raising prices, modifying policy terms, or reducing exposure to certain geographies may be limited due to considerations of public policy, an evolving political environment, and/or changes in general economic conditions. Furthermore, the reduction or elimination of the National Flood Insurance Program could result in an increase in the Company’s exposure to flood risk if insurers become required to cover flood risk under certain types of policies.
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Assessments for Guaranty Funds and Second-Injury Funds and Other Mandatory Assigned Risk and Reinsurance Arrangements. As a condition of their authority to transact insurance in virtually all states, property and casualty insurers, including the Company’s domestic insurance subsidiaries, are required to be a member of each state’s guaranty association and to bear a portion of the losses covered by the guaranty association (subject to a statutory maximum covered loss amount which varies by state) suffered by claimants of insurers that become insolvent. Additionally, many states also have laws that establish second-injury funds to provide compensation to injured employees for the aggravation of a prior injury or disability.
The Company’s domestic insurance subsidiaries are also required to participate in various involuntary assigned risk pools, principally involving workers’ compensation, automobile insurance, property damage due to wind (windpools) in states prone to property damage from hurricanes and Fair Access to Insurance Requirements (FAIR) plans, as well as automobile assigned risk plans the results of which are not pooled with other carriers, which provide various insurance coverages to individuals or other entities that otherwise are unable to purchase that coverage in the voluntary market.
Other assessments include charges mandated by statute or regulatory authority that are related directly or indirectly to underwriting activities. Examples of such mechanisms include, but are not limited to, the Florida Hurricane Catastrophe Fund, Florida Citizens Property Insurance Corporation, National Workers’ Compensation Reinsurance Pool, various workers’ compensation related funds (e.g., the Florida Special Disability Trust), North Carolina Beach Plan, Louisiana Citizens Property Insurance Corporation, and the Texas Windstorm Insurance Association. Amounts payable or paid as a result of arrangements that are in substance reinsurance, including certain involuntary pools where insurers are required to assume premiums and losses from those pools, are accounted for as reinsurance (e.g., the National Workers’ Compensation Reinsurance Pool, North Carolina Beach Plan). Amounts related to assessments from arrangements that are not reinsurance are reported as part of “General and Administrative Expenses,” such as the Florida Special Disability Trust. For additional information concerning assessments for guaranty funds and second-injury funds as well as other mandatory assigned risk and reinsurance agreements including state-funding mechanisms, see “Item 1A—Risk Factors.”
Insurance Regulatory Information System (IRIS). The NAIC developed the IRIS to help state regulators identify companies that may require regulatory attention. Financial examiners review annual financial statements and the results of key financial ratios based on year-end data with the goal of identifying insurers that appear to require immediate regulatory attention. Each ratio has an established “usual range” of results. A ratio result falling outside the usual range, however, is not necessarily considered adverse; rather, unusual values are used as part of the regulatory early monitoring system. Furthermore, in some years, it may not be unusual for financially sound companies to have several ratios with results outside the usual ranges. Generally, an insurance company may become subject to regulatory scrutiny or, depending on the company’s financial condition, regulatory action if certain of its key IRIS ratios fall outside the usual ranges and the insurer’s financial condition is trending downward.
Based on preliminary 2023 IRIS ratios calculated by the Company for its lead domestic insurance subsidiaries, in both 2023 and 2022, The Travelers Indemnity Company had results outside the normal range for one IRIS ratio due to the size of its investments in certain non-fixed maturity securities, while Travelers Casualty and Surety Company had results outside the normal range for one IRIS ratio due to the amount of dividends received from its subsidiaries.
Management does not anticipate regulatory action as a result of the 2023 IRIS ratio results for the lead insurance subsidiaries or their insurance subsidiaries. In all instances in prior years, regulators have been satisfied upon follow-up that no regulatory action was required.
Risk-Based Capital (RBC) Requirements. The NAIC has an RBC requirement which sets forth minimum capital standards for most U.S.-based property and casualty insurance companies that is intended to raise the level of protection for policyholder obligations. The Company’s U.S. insurance subsidiaries are subject to these NAIC RBC requirements based on laws that have been adopted by individual states. These requirements subject insurers having policyholders’ surplus less than that required by the RBC calculation to varying degrees of regulatory action, depending on the level of capital inadequacy. Each of the Company’s U.S. insurance subsidiaries had policyholders’ surplus at December 31, 2023 and 2022 significantly above the level at which any RBC regulatory action would occur.
While there is currently no group regulatory capital requirement in place for insurers in the United States, state insurance regulators, including the State of Connecticut Insurance Department, use the NAIC Group Capital Calculation (GCC) to provide additional analytical information on a combined basis to the lead state in assessing group risks and capital adequacy to complement the holding company analysis performed by the lead state. The GCC utilizes an aggregation of the available capital/financial resources and the required regulatory capital of a group’s subsidiaries, using the NAIC RBC requirements to identify available and required capital for the group’s U.S. insurance subsidiaries and the local jurisdictional capital requirements for insurance subsidiaries outside of the U.S. The GCC differs from the RBC in that it does not produce a ratio that is subject to a minimum value or result in an identified action level. Instead, the GCC is used in conjunction with other regulatory tools to assist in the lead regulator’s group-wide supervision and evaluation of the adequacy of a group’s capital position.
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The amount of policyholders’ surplus held by the Company’s U.S. insurance subsidiaries at December 31, 2023, exceeded the level at which the subsidiaries would be subject to RBC regulatory action (company action level) on a legal entity basis and the level that would indicate the need for additional analysis when evaluated on a combined basis at that date.
The RBC formulas have not been designed to differentiate among adequately capitalized companies that operate with levels of capital above the RBC requirement. Therefore, it is inappropriate and ineffective to use the formulas to rate or to rank these companies.
Investment Regulation. Insurance company investments must comply with applicable laws and regulations which prescribe the kind, quality, and concentration of investments. In general, these laws and regulations permit investments in federal, state and municipal obligations, corporate bonds, preferred and common equity securities, mortgage loans, real estate, and certain other investments, subject to specified limits and certain other qualifications, depending on the type of investment. At December 31, 2023 and 2022, the Company was in compliance with these laws and regulations.
Federal Regulation. As mentioned above, the Dodd-Frank Act established a Federal Insurance Office (FIO) within the U.S. Department of the Treasury. The FIO has limited regulatory authority and is empowered to gather data and information regarding the insurance industry and insurers, but it has in the past recommended an expanded federal role in some circumstances. The Dodd-Frank Act also gives the Federal Reserve supervisory authority over a number of non-bank financial services holding companies, including holding companies with insurance company subsidiaries, if they are designated by a two-thirds vote of a Financial Stability Oversight Council (the FSOC) as “systemically important financial institutions” (SIFI) or own a bank or thrift. The Company, based upon the FSOC’s rules and interpretive guidance, has not been designated as a SIFI and is not subject to regulation by the Federal Reserve. Nonetheless, it is possible that FSOC may change its rules, interpretations, or application thereof in the future and conclude that the Company is a SIFI. If the Company were designated as a SIFI, the Federal Reserve’s supervisory authority could include the ability to impose heightened financial regulation and could impact requirements regarding the Company’s capital, liquidity and leverage as well as its business and investment conduct. The Dodd-Frank Act also authorizes assessments to pay for the resolution of SIFIs that have become insolvent. The Company (as a financial company with more than $50 billion in assets) could be assessed, and although any such assessment is required to be risk weighted (i.e., riskier firms pay more), such costs could be material and are not currently estimable. As a result of the foregoing, the Dodd-Frank Act, including any changes thereto or additional related regulations, or other additional federal regulation that is adopted in the future, could impose additional burdens on the Company, including impacting the ways in which the Company conducts its business, increasing compliance costs and duplicating state regulation, and could result in a competitive disadvantage, particularly relative to other competitors that may not be subject to the same level of regulation.
International Regulation
The Company’s insurance subsidiaries based in Canada, and the Canadian branch of one of the Company’s U.S. insurance subsidiaries, are regulated for solvency and risk management purposes by the Office of the Superintendent of Financial Institutions (OSFI) under the provisions of the Insurance Companies Act (Canada). These Canadian subsidiaries and the Canadian branch are also subject to Canadian provincial and territorial insurance legislation and regulation, primarily governing market conduct, including pricing, underwriting, coverage, and claim conduct, in varying degrees by province/territory and by product line.
The Company’s insurance subsidiaries based in the United Kingdom (U.K.) are regulated by two regulatory bodies, The Prudential Regulation Authority (PRA) and The Financial Conduct Authority (FCA). As it relates to insurance companies, the PRA’s primary objective is to promote the safety and soundness of insurers for the protection of policyholders, while the FCA is focused on protecting consumers, enhancing market integrity and promoting competition in the interests of consumers. One of the Company’s U.K. insurance subsidiaries is also authorized in the U.S. as a surplus lines insurer subject to U.S. state regulation applicable to such insurers.
The Company’s managing agency (Travelers Syndicate Management Limited) (TSML) of its Lloyd’s syndicate (Syndicate 5000 at Lloyd’s) is also regulated by the PRA and the FCA, which have delegated certain regulatory responsibilities to the Council of Lloyd’s. Travelers Syndicate 5000 is able to write, or reinsure, business in respect of over 200 countries and territories throughout the world by virtue of Lloyd’s international licenses. In each such jurisdiction, the policies written by TSML, as part of Lloyd’s, are subject to the laws and insurance regulations of that jurisdiction.
Travelers is conducting its insurance operations in the Republic of Ireland and across the EU through an insurance subsidiary that is incorporated in the Republic of Ireland and authorized and regulated by the Central Bank of Ireland.
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Certain operations are conducted in the U.K. through a U.K. branch of the Irish subsidiary, which is supervised by the PRA and FCA as well as the Central Bank of Ireland. Since January 1, 2019, the Company has used a Lloyd’s insurance subsidiary in Brussels, Belgium (Lloyd’s Brussels) to cover its Lloyd’s customers’ risks in the EU. Lloyd’s Brussels is regulated by the National Bank of Belgium.
During 2023, the Company’s operations in the Republic of Ireland were also subject to regulation by the European Union (EU). Generally, EU requirements are adopted by the EU and then implemented by enabling legislation in the member countries. Significant areas of oversight and influence from the EU include capital and solvency requirements (Solvency II), competition law and antitrust regulation, intermediary and distribution regulation, gender discrimination, and data security and privacy. Under Solvency II, it is possible that the U.S. parent of a European Union subsidiary could be subject to certain Solvency II requirements if the regulator determines that the subsidiary’s capital position is dependent on the parent company and the U.S. Parent is not already subject to regulations deemed “equivalent” to Solvency II. Currently, as a result of the Covered Agreements described below, the state regulatory system governing U.S. insurers is deemed “equivalent” for purposes of Solvency II.
The applicability of the EU requirements to the Company’s business in the U.K. will change as a result of the U.K.’s exit from the EU. The PRA is currently consulting on proposed changes to Solvency II and its goal is to establish a new regulatory framework for insurers in the U.K., to be referred to as Solvency UK.
Each of the Company’s foreign insurance subsidiaries had capital significantly above their respective regulatory requirements at December 31, 2023.
Regulators in countries where the Company has operations are working with the International Association of Insurance Supervisors (IAIS) (and with the NAIC, the Federal Reserve and FIO in the U.S.) to consider changes to insurance company supervision, including group supervision and group capital requirements.
The IAIS has developed a methodology for identifying “global systemically important insurers” (G-SIIs) and high-level policy measures that will apply to the G-SIIs. The methodology and measures were endorsed by the Financial Stability Board (FSB) which was created by the Group of Twenty (or G-20); however, identification of G-SIIs was suspended at the beginning of 2020. In December 2022, the FSB, in consultation with the IAIS, decided to discontinue the annual identification of G-SIIs. Going forward the FSB will utilize a newly developed framework to inform its considerations of systemic risk in the insurance sector. The Company has not previously been designated as a G-SII by the FSB; however, it is possible that the designation of G-SIIs could be reinstituted, the methodologies or framework could be amended or interpreted differently in the future and the Company could be named as a G-SII.
The IAIS completed its Common Framework for the Supervision of Internationally Active Insurance Groups (known as ComFrame). ComFrame is intended to apply heightened regulatory requirements similar to those being developed for G-SIIs to internationally active insurance groups (or “IAIGs”), including group supervision, group capital requirements, and resolution planning, i.e., a written plan developed by a financial group detailing how it would be wound down in the event of an insolvency. While the Company would not be considered an IAIG under the current criteria in ComFrame, it is possible that the criteria could be changed. If the Company is designated as an IAIG or the NAIC and individual states adopt ComFrame or similar provisions for large insurers, the Company could be subject to increased supervision and higher capital standards.
Covered Agreements
The U.S. Department of the Treasury and the Office of the U.S. Trade Representative have signed covered agreements (the Covered Agreements) regarding prudential (solvency) insurance and reinsurance measures with both the EU and the U.K. The Covered Agreements include three areas of prudential insurance supervision: reinsurance contracts, group supervision, and the exchange of information between U.S. and U.K. regulators and between U.S. and EU regulators on insurers and reinsurers that operate in the U.S., U.K., and EU markets. The Covered Agreement with the EU went into effect in April 2018, while the Covered Agreement with the U.K. took full effect upon the U.K.’s exit from the EU on January 31, 2020. The Covered Agreements are intended to promote cooperation between U.S. insurance regulators and EU and U.K. insurance regulators and to limit the ability of the EU and the U.K. to apply solvency and group capital requirements to the worldwide operations of any U.S. insurer operating in the EU or the U.K. It is possible that individual members of the EU could differ in how they adopt or apply the terms of the Covered Agreement, resulting in greater regulation and higher capital standards as well as inconsistent regulatory requirements among the jurisdictions in which the Company does business. While it is not yet known how or if these actions will impact the Company, such regulation could result in increased costs of compliance, increased disclosure, and less flexibility in capital management, and could adversely impact the Company’s results of operations and limit its growth.
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The Covered Agreements eliminate the collateral and local presence requirements for EU and U.K. reinsurers operating in the U.S., and for U.S. reinsurers operating in the EU and U.K., as a condition for credit for reinsurance in regulatory reporting and capital requirements. The prospective elimination of the collateral requirements is conditioned on the reinsurer meeting capital and solvency standards and maintaining a record of prompt payments to ceding insurers. While the collateral requirement is removed for reinsurers meeting these standards, insurers and reinsurers are not prohibited from negotiating and putting into place collateral as part of reinsurance agreements. The Covered Agreements include a five-year transition period to full compliance in the impacted jurisdictions.
Insurance Holding Company Statutes
As a holding company, TRV is not regulated as an insurance company. However, since TRV owns capital stock in insurance subsidiaries, it is subject to state insurance holding company statutes, as well as certain other laws, of each of its insurance subsidiaries’ states of domicile. All holding company statutes, as well as other laws, require disclosure and, in some instances, prior approval of certain transactions between an insurance company and an affiliate. The holding company statutes and other laws also require, among other things, prior approval for acquiring control of a domestic insurer and the payment of extraordinary dividends or distributions.
Insurance Regulations Concerning Change of Control. Many state insurance regulatory laws contain provisions that require advance approval by state agencies of any change in control of an insurance company that is domiciled, or, in some cases, having substantial business in a state such that the insurance company is deemed to be commercially domiciled in that state.
The laws of many states also contain provisions requiring pre-notification to state agencies prior to any change in control of a non-domestic insurance company admitted to transact business in that state. While these pre-notification statutes do not authorize the state agency to disapprove the change of control, they do authorize issuance of cease-and-desist orders with respect to the non-domestic insurer if it is determined that some conditions, such as undue market concentration, would result from the acquisition.
Any transactions that would constitute a change in control of any of TRV’s insurance subsidiaries would generally require prior approval by the insurance departments of the states in which the insurance subsidiaries are domiciled or commercially domiciled. Pre-acquisition notification may also be required in those states that have adopted pre-acquisition notification provisions and in which such insurance subsidiaries are admitted to transact business.
As described above, one of TRV’s insurance subsidiaries and its operations at Lloyd’s are domiciled in the U.K. and one of its insurance subsidiaries is domiciled in the Republic of Ireland. Insurers in the U.K. and the Republic of Ireland are subject to change of control restrictions, including approval of the PRA and FCA and of the Central Bank of Ireland, respectively. TRV’s insurance subsidiaries domiciled in, or authorized to conduct insurance business in, Canada are also subject to regulatory change of control restrictions, including approval of OSFI. TRV’s Brazilian joint venture is subject to regulatory change of control and other share transfer restrictions, including approval of the Superintendência de Seguros Privados (SUSEP).
These requirements may deter, delay or prevent transactions affecting the control of or the ownership of common stock, including transactions that could be advantageous to TRV’s shareholders.
Insurance Intermediaries
The Company has domestic and international subsidiaries which act as insurance intermediaries, i.e., agents, brokers, and managing general underwriters. These entities are regulated by state, provincial, and international regulatory and self-regulatory bodies focused on market conduct and other matters.
Regulatory Developments
The state insurance regulatory framework has been under continuing scrutiny, and some state legislatures have considered or enacted laws that may alter or increase state authority to regulate insurance companies and insurance holding companies. Further, the NAIC and state insurance regulators continually re-examine existing laws and regulations, specifically focusing on modifications to holding company statutes, regulations, interpretations of existing laws, and the development of new laws and regulations.
As part of these changes, insurance holding company regulations were amended to require insurers who are part of a holding company system to file an enterprise risk report to provide the lead insurance regulator with a summary of the company’s Enterprise Risk Management (ERM) framework, including the material risks within the insurance holding company system that could pose risk to the insurance entities within the holding company system. Insurers having premium volume above certain thresholds, including the Company, are also required to perform at least annually a self-assessment of their current and future risks, including their likely future solvency position (known as an own risk and solvency assessment, or ORSA) and file a confidential report with the insurer’s lead insurance regulator.
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The requirement for an insurer to conduct an ORSA is intended to foster an effective level of ERM for all insurers within a holding company system, and to provide a group-wide perspective on risks and capital as a supplement to the legal entity view. ORSA is now included in the International Association of Insurance Supervisors (IAIS) standards and is in various stages of implementation in the United States, the U.K., Europe, Canada, and other jurisdictions. It is possible that, as a result of ORSA and the manner in which it may be used by insurance regulators, the Company’s states of domicile or other regulatory bodies may require changes in its ERM process (e.g., prescribe the use of specific models or the application of certain assumptions or scenarios in the Company’s models) that have the effect of limiting the Company’s ability to write certain risks, limit its risk appetite, or reduce its capital management flexibility. See “Item 1—Business—Enterprise Risk Management” for further discussion of the Company’s ERM.

For additional information concerning regulations applicable to the Company, including cyber regulations, see “Item 1A—Risk Factors—Our businesses are heavily regulated by the states and countries in which we conduct business, including licensing, market conduct and financial supervision, and changes in regulation, including changes in tax regulation, may reduce our profitability and limit our growth” and “Item 1A—Risk Factors—If we experience difficulties with technology, data and network security (including as a result of cyber attacks), outsourcing relationships or cloud-based technology, our ability to conduct our business could be negatively impacted.”


ENTERPRISE RISK MANAGEMENT
The Company’s Enterprise Risk Management (ERM) activities involve both the identification and assessment of a broad range of risks and the execution of coordinated strategies to effectively manage these risks. Since certain risks can be correlated with other risks, an event or a series of events can impact multiple areas of the Company simultaneously and have a material effect on the Company’s results of operations, financial position and/or liquidity. This requires an entity-wide view of risk and an understanding of the potential impact on all aspects of the Company’s operations. It also requires the Company to manage its risk-taking to be within its risk appetite in a prudent and balanced effort to create and preserve value for all of the Company’s stakeholders. ERM also includes an evaluation of the Company’s risk capital needs, which takes into account regulatory requirements and credit rating considerations, in addition to economic and other factors. ERM at the Company is an integral part of its business operations. All risk owners across all functions, all corporate leaders and the Board of Directors are engaged in ERM. ERM involves risk-based analytics, as well as reporting and feedback throughout the enterprise in support of the Company’s long-term financial strategies and objectives.
The Company uses various analyses and methods, including proprietary and third-party modeling processes, to make underwriting and reinsurance decisions designed to manage its exposure to catastrophic events. In addition to catastrophe modeling and analysis, the Company also models and analyzes its exposure to other extreme events. The Company also utilizes proprietary and third-party modeling processes to evaluate capital adequacy. These analytical techniques are an integral component of the Company’s ERM process and further support the Company’s long-term financial strategies and objectives.
In addition to the day-to-day ERM activities within the Company’s operations, key internal risk management functions include, among others, the Management and Operating Committees (comprised of the Company’s Chief Executive Officer and the other most senior members of management); the Enterprise, Segment and Function (including Catastrophe, Cyber, etc.) Risk Committees of management; the Executive Crisis Management Team; the Committee on Climate, Energy and the Environment; and the Credit Committee. A senior executive team comprised of the Chief Risk Officer and the Enterprise Chief Underwriting Officer oversees the ERM process.  The mission of this team is to facilitate risk assessment and to collaborate in implementing effective risk management strategies throughout the Company. Another strategic ERM objective of this team includes working across the Company to enhance effective and realistic risk modeling capabilities as part of the Company’s overall effort to understand and manage its portfolio of risks to be within its risk appetite. Board oversight of ERM is provided by the Risk Committee of the Board of Directors, which reviews the strategies, processes and controls pertaining to the Company’s insurance operations and oversees the implementation, execution and performance of the Company’s ERM program. The Risk Committee of the Board of Directors meets with senior management at least four times a year to discuss ERM activities and provides a report to the full Board of Directors after each such meeting.
The Company’s ERM efforts build upon the foundation of an effective internal control environment. ERM expands the internal control objectives of effective and efficient operations, reliable financial reporting and compliance with applicable laws and regulations, to foster, lead and support an integrated, risk-based culture within the Company that focuses on value creation and preservation. However, the Company can provide only reasonable, not absolute, assurance that these objectives will be met. Further, the design of any risk management or control system must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. As a result, the possibility of material financial loss remains in spite of the Company’s significant and comprehensive ERM efforts.
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An investor should carefully consider the risks and all of the other information set forth in this annual report, including the discussions included in “Item 1A—Risk Factors,” “Item 7A—Quantitative and Qualitative Disclosures About Market Risk,” and “Item 8—Financial Statements and Supplementary Data.”

OTHER INFORMATION
Seasonality
A discussion of the extent to which the Company’s business may be seasonal can be found under “Outlook” within “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and is incorporated by reference into this Item 1.
Human Capital Management 
At December 31, 2023, the Company had approximately 33,300 employees, 99% of whom are full-time employees. Over 90% of the Company’s employees are located in the United States. The following table shows the geographic distribution of the Company’s employees as of December 31, 2023:
Location % of Total
Domestic:  
Connecticut 22.1  %
New York 6.8 
Minnesota 6.7 
Texas 6.6 
California 5.2 
Florida 4.1 
Massachusetts 3.5 
Georgia 3.4 
Illinois 3.0 
All other domestic (1)
 28.7 
Total Domestic 90.1 
International:
Canada 5.3 
United Kingdom 4.4 
All other international 0.2 
Total International 9.9 
Consolidated total 100.0  %
___________________________________________
(1)No other single state accounted for 3.0% or more of the Company’s employees as of December 31, 2023.
The average employee tenure at the Company is 12 years, and over 20 years for the Company’s approximately 700 most senior leaders. The Company’s average global voluntary turnover rate over the past three years was approximately 10%. The Company believes that these employee tenure and voluntary turnover rates are due, in part, to the resources and support the Company provides to employees throughout their careers, as discussed below.
Maintaining an Ethical Culture
The Company’s culture of honesty, integrity and accountability is critical to its long-term success. To support this culture, the Company promotes ethics and compliance awareness across its operations. On an annual basis, all employees of the Company’s wholly owned subsidiaries are required to complete the Company’s ethics training and certify that they have reviewed, understand and agree to comply with the Company’s Code of Business Conduct and Ethics and other applicable Company policies.
The Company provides employees with multiple channels to raise concerns, including the Human Resources, Employee Relations and Compliance functions, as well as the Travelers Ethics Helpline. The Company’s independently administered Ethics Helpline is available to employees and others 24 hours a day, seven days a week to report issues or seek guidance confidentially and anonymously.
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Trained professionals investigate each concern and, where appropriate, escalate it internally. In addition, the Company maintains a formal Whistleblowing and Non-Retaliation Policy that prohibits retaliation against, or discipline of, an employee who raises concerns in good faith.
Employee Engagement
The Company strives to deliver an employee experience that engages its workforce and strengthens the organization. The Company maintains an Employee Experience function that is responsible for, among other things, an employee experience program that is designed to help drive superior business performance. This function helps the Company create and enhance programs designed to improve employee engagement, reduce attrition and support the retention, growth and satisfaction of the Company’s employees.
The Company uses various methods to evaluate the employee experience and the success of its employee engagement efforts, as well as to inform the strategies the Company uses to enhance those efforts. In addition, the Company’s Chief Human Resources Officer meets regularly with the Chief Executive Officer and other senior leaders to discuss employee engagement strategies and the Company’s progress.
Based on the Company’s employee tenure and voluntary turnover rates, as discussed above, as well as other means the Company uses to evaluate the employee experience and the success of its engagement efforts, the Company believes that its engagement efforts are effective.
Learning and Development
The Company offers various learning and development opportunities to provide its employees with the skills and capabilities they need to be successful. The Company’s enterprise-wide leadership framework outlines the skills and behaviors expected of our leaders. It supports the sustainability of the culture established at Travelers and serves as the underpinning for our leadership training. The Company also offers additional foundational workshops centered on leadership: Coaching for Performance Excellence and Leading World Class Teams.
In addition, the Company offers career mentorship and development programs for both entry-level and experienced professionals. For example, the Company’s Development Programs provide employees with an opportunity to progress through a steady career path in a specific discipline such as Actuarial, Business Insights & Analytics, Data Science, Finance, Human Resources, Engineering (Technology), Operations, Underwriting, Investments or Product Management. Participants complete assignments and rotations designed to help them build upon their strategic thinking skills and business acumen, provide the foundational knowledge and technical skills necessary for success and include on-the-job training, classroom instruction, self-study materials and independent work in an assigned business area. These programs have been a part of the Company’s talent strategy for many years.
Diversity and Inclusion
The Company believes that its diversity and inclusion efforts are important to its success. The Chief Diversity Officer leads the Company’s diversity and inclusion efforts. The Company also has a Diversity Council that is chaired by the Chairman and Chief Executive Officer and is composed of the most senior members of the Company’s leadership team.
The Company also has 10 Diversity Networks – voluntary groups led by employees, dedicated to fostering a diverse and inclusive work environment. The networks, which are open to all employees, help foster the retention, development and success of the Company’s employees through networking, mentorship and community volunteer opportunities. In addition, these groups are a resource for the Company’s business leaders, providing them with important insights and perspectives. More than 13,000 employees – nearly 40% of the Company’s employee population – are members of one or more of the Company’s Diversity Networks.
The Company also continues to enhance its diverse talent pipeline. The Company has established deliberate recruiting, retention and development practices that are tailored to deepen diverse talent pools and broaden advancement opportunities. These practices include matching upcoming leaders with mentors within the organization and offering workshops to advance their careers within the Company. The Company also uses various talent acquisition strategies, including sourcing strategies and initiatives and partnerships with college diversity groups and other organizations, to help create a pipeline of diverse candidates.
The Company has made significant progress over the past decade in increasing its diverse talent. In each of the last 10 years, the Company has increased the percentage of people of color (as defined by the U.S. Equal Employment Opportunity Commission’s EEO-1 race and ethnicity categories for the U.S.) in its U.S. workforce.
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As of December 31, 2023, women and people of color represented approximately 54% and 27% of its U.S. workforce, respectively. The Company continues to make progress in promoting women and people of color. In each of the last 10 years, the Company has increased the percentage of women and people of color in U.S. management-level positions.
Performance and Succession
The Company’s performance management strategy is designed to develop the Company’s talent and equip employees with the skills and resources necessary to ensure the Company’s continued success. To that end, managers assist with setting and monitoring goals, planning, development and discussing opportunities for improvement throughout the year.
The Company also conducts a comprehensive annual talent review, which includes succession planning, to identify and prepare talented employees for future leadership positions. Each line of business identifies talented employees and succession candidates for targeted development and advancement opportunities. This talent review process culminates with the Chief Executive Officer and those reporting directly to him meeting to review succession plans for key positions. In addition, the Chief Executive Officer regularly meets with the Nominating and Governance Committee of the Board of Directors and the full Board of Directors to discuss succession-related matters.
Compensation and Benefits
The Company’s compensation and benefits programs are designed to attract, motivate and retain high performing employees and to help employees be healthy and productive in all aspects of their lives.
Paying employees equitably is the foundation of the Company’s performance-based culture. The Company has comprehensive processes and controls in place and reviews its compensation practices annually with independent, outside experts, in each case to help ensure equitable pay across the Company. Based in part on these measures, the Company believes that it pays its employees equitably, regardless of gender, race or any other protected classification.
The Company’s minimum hourly wage in the United States is $18. As calculated and reported in the Company’s most recent Proxy Statement filed in April 2023, excluding the Company’s Chairman and Chief Executive Officer, (i) the median of the annual total compensation of all the Company’s employees was nearly $110,000, and (ii) the median of the annual total compensation of the Company’s full-time U.S. employees who worked for the Company for the entire year, who comprised over 90% of its U.S. workforce, was more than $115,000.
The Company takes a holistic approach with respect to the physical, mental and financial well-being of its employees. The Company offers comprehensive, flexible benefit options for its employees. In the United States, these include, among others:
Health and Wellness
•Medical, dental, vision and prescription drug coverage;
•Health savings and flexible spending accounts;
•The myWellness platform, a mobile-friendly, easy-to-use application, which allows employees to track activity levels, improve sleep, take self-guided courses and much more;
•Round-the-clock access to the Company’s employee assistance program, which provides employees access to professional counseling services, life coaching and support resources;
•Included Health, a free service for employees and dependents enrolled in the Company’s medical plan that matches members to top-ranked doctors, provides expert second opinions and assists in navigating the health care system; and
•Caregiving Support from Wellthy, a benefit that helps employees navigate the challenges of caring for children, aging family members or loved ones who are chronically ill.
Savings and Retirement
•A 401(k) Savings Plan, through which the Company matches employee contributions dollar-for-dollar up to 5% of eligible pay, with a maximum annual Company match of $7,500;
•The Paying It Forward Savings Program, through which the Company supports employees with student loans by making an annual contribution in the employee’s 401(k) account equal to the annual student loan payments. The combined maximum of the 401(k) match and the Paying It Forward savings contribution is 5% of eligible pay, up to a maximum of $7,500;
•A Pension Plan that provides annual pay credits from 2% to 6% of eligible pay based on age and years of service, plus quarterly interest credits;
•Financial education program, free one on one guidance sessions, on-demand financial webinars and workshops; and
•Investment advisory service that provides day-to-day management of employees 401(k) account.
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Other
•Life insurance;
•Short- and long-term disability coverages;
•Paid time-off, starting at 20 days per year, up to a maximum of 30 days per year based on years of service, plus the ability to purchase up to six additional days per year;
•Eight company holidays plus two floating holidays;
•Paid parental and adoption leave;
•Childcare discounts;
•A Legal Services Plan;
•An Educational Assistance Program;
•A corporate discount program; and
•Paid time off for volunteering.
Board Oversight of Human Capital Management
The Company’s Board of Directors takes an active role in overseeing the Company’s human capital management strategy, including its diversity and inclusion efforts. The Chief Human Resources Officer and other senior executives present to the Board regularly on human capital management matters, including the progress the Company has made over time. Additionally, pursuant to its charter, the Nominating and Governance Committee of the Board meets regularly with senior management, including the Chief Executive Officer and the Chief Human Resources Officer, to review and discuss the Company’s strategies to encourage diversity and inclusion within the Company. Pursuant to its charter, the Compensation Committee of the Board, which is advised by an independent compensation consultant, reviews and approves the Company’s general compensation philosophy and objectives. In addition, the Compensation Committee meets with senior management on a regular basis to discuss the Company’s practices designed to help ensure equitable pay across the organization.
Taxation
For a discussion of tax matters affecting the Company and its operations, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and note 13 of the notes to the consolidated financial statements.
Intellectual Property
The Company relies on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish and protect its intellectual property.  With respect to trademarks specifically, the Company has registrations in many countries, including the United States, for its material trademarks, including the “Travelers” name and the Company’s iconic umbrella logo. The Company has the right to retain its material trademark rights in perpetuity, so long as it satisfies the use and registration requirements of all applicable countries.  The Company regards its trademarks as highly valuable assets in marketing its products and services and vigorously seeks to protect its trademarks against infringement. See “Item 1A—Risk Factors—Intellectual property is important to our business, and we may be unable to protect and enforce our own intellectual property or we may be subject to claims for infringing the intellectual property of others.”
Company Website, Social Media and Availability of SEC Filings
The Company’s internet website is travelers.com. Information on the Company’s website is not incorporated by reference herein and is not a part of this Form 10-K. The Company makes available free of charge on its website or provides a link on its website to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC. To access these filings, go to the Company’s website and under the “Investors” heading, click on “Financial Information” then “SEC Filings.”
The Company may use its website and/or social media outlets, such as Facebook and X, as distribution channels of material company information.  Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s website at investor.travelers.com, its Facebook page at facebook.com/travelers and its X account (@Travelers) at twitter.com/travelers. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting “Email Notifications” under the “Investor Toolkit” section at investor.travelers.com.

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Glossary of Selected Insurance Terms
Accident year The annual calendar accounting period in which loss events occurred, regardless of when the losses are actually reported, booked or paid.
Adjusted unassigned surplus Unassigned surplus as of the most recent statutory annual report reduced by twenty-five percent of that year’s unrealized appreciation in value or revaluation of assets or unrealized profits on investments, as defined in that report.
Admitted insurer A company licensed to transact insurance business within a state.
Agent A licensed individual who sells and services insurance policies, receiving a commission from the insurer for selling the business and a fee for servicing it. An independent agent represents multiple insurance companies and searches the market for the best product for its client.
Annuity A contract that pays a periodic benefit over the remaining life of a person (the annuitant), the lives of two or more persons or for a specified period of time.
Assigned risk pools Reinsurance pools which cover risks for those unable to purchase insurance in the voluntary market. Possible reasons for this inability include the risk being too great or the profit being too small under the required insurance rate structure. The costs of the risks associated with these pools are charged back to insurance carriers in proportion to their direct writings.
Assumed reinsurance Insurance risks acquired from a ceding company.
Book value per share Total common shareholders’ equity divided by the number of common shares outstanding.
Broker One who negotiates contracts of insurance or reinsurance on behalf of an insured party, receiving a commission from the insurer or reinsurer for placement and other services rendered.
Capacity The percentage of statutory capital and surplus, or the dollar amount of exposure, that an insurer or reinsurer is willing or able to place at risk. Capacity may apply to a single risk, a program, a line of business or an entire book of business. Capacity may be constrained by legal restrictions, corporate restrictions or indirect restrictions.
Captive A closely-held insurance company whose primary purpose is to provide insurance coverage to the company’s owners or their affiliates.
Case reserves Claim department estimates of anticipated future payments to be made on each specific individual reported claim.
Casualty insurance Insurance which is primarily concerned with the losses caused by injuries to third persons, i.e., not the insured, and the legal liability imposed on the insured resulting therefrom. It includes, but is not limited to, employers’ liability, workers’ compensation, public liability, automobile liability, personal liability and aviation liability insurance. It excludes certain types of losses that by law or custom are considered as being exclusively within the scope of other types of insurance, such as fire or marine.
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Catastrophe
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 include hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions, solar flares and other naturally-occurring events. 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, civil unrest, 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. For 2023, the threshold ranged from approximately $20 million to $30 million of losses before reinsurance and taxes.
Catastrophe loss Loss and directly identified loss adjustment expenses from catastrophes, as well as related reinsurance reinstatement premiums and assessments from various pools.
Catastrophe reinsurance A form of excess-of-loss reinsurance which, subject to a specified limit, indemnifies the ceding company for the amount of loss in excess of a specified retention with respect to an accumulation of losses and related reinsurance reinstatement premiums resulting from a catastrophic event. The actual reinsurance document is called a “catastrophe cover.” These reinsurance contracts are typically designed to cover property insurance losses but can be written to cover casualty insurance losses such as from workers’ compensation policies.
Cede; ceding company When an insurer reinsures its liability with another insurer or a “cession,” it “cedes” business and is referred to as the “ceding company.”
Ceded reinsurance Insurance risks transferred to another company as reinsurance. See “Reinsurance.”
Claim Request by an insured for indemnification by an insurance company for loss incurred from an insured peril.
Claim adjustment expenses See “Loss adjustment expenses (LAE).”
Claims and claim adjustment expenses
 See “Loss” and “Loss adjustment expenses (LAE).”
Claims and claim adjustment expense reserves
 See “Loss reserves.”
Cohort A group of items or individuals that share a particular statistical or demographic characteristic. For example, all claims for a given product in a given market for a given accident year would represent a cohort of claims.
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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 report 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 premium and the underwriting expense ratio as used in this report is based on net earned premiums.
The combined ratio is an indicator 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.
Other companies’ method of computing a similarly titled measure may not be comparable to the Company’s method of computing this ratio.
Commercial multi-peril policies Refers to policies which cover both property and third-party liability exposures.
Commutation agreement An agreement between a reinsurer and a ceding company whereby the reinsurer pays an agreed-upon amount in exchange for a complete discharge of all obligations, including future obligations, between the parties for reinsurance losses incurred.
Core income (loss) 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 date, and cumulative effect of changes in accounting principles when applicable. Financial statement users consider core income when analyzing the results and trends of insurance companies.
Debt-to-total capital ratio The ratio of debt to total capitalization.
Debt-to-total capital ratio excluding net unrealized gain (loss) on investments
 The ratio of debt to total capitalization excluding the after-tax impact of net unrealized investment gains and losses included in shareholders’ equity.
Deductible The amount of loss that an insured retains.
Deferred acquisition costs (DAC) Incremental direct costs of acquired and renewal insurance contracts, consisting of commissions (other than contingent commissions) and premium-related taxes that are deferred and amortized to achieve a matching of revenues and expenses when reported in financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP).
Deficiency With regard to reserves for a given liability, a deficiency exists when it is estimated or determined that the reserves are insufficient to pay the ultimate settlement value of the related liabilities. Where the deficiency is the result of an estimate, the estimated amount of deficiency (or even the finding of whether or not a deficiency exists) may change as new information becomes available.
Demand surge Significant short-term increases in building material and labor costs due to a sharp increase in demand for those materials and services, commonly as a result of a large catastrophe resulting in significant widespread property damage.
Direct written premiums The amounts charged by an insurer to insureds in exchange for coverages provided in accordance with the terms of an insurance contract. The amounts exclude the impact of all reinsurance premiums, either assumed or ceded.
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Earned premiums or premiums earned
 That portion of property casualty premiums written that applies to the expired portion of the policy term. Earned premiums are recognized as revenues under both SAP and GAAP.
 Excess and surplus lines insurance
 Insurance for risks not covered by standard insurance due to the unique nature of the risk. Risks could be placed in excess and surplus lines markets due to any number of characteristics, such as loss experience, unique or unusual exposures, or insufficient experience in business.  Excess and surplus lines are less regulated by the states, allowing greater flexibility to design specific insurance coverage and negotiate pricing based on the risks to be secured.
Excess liability Additional casualty coverage above a layer of insurance exposures.
Excess-of-loss reinsurance Reinsurance that indemnifies the reinsured against all or a specified portion of losses over a specified dollar amount or “retention.”
Exposure 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.
Facultative reinsurance The reinsurance of all or a portion of the insurance provided by a single policy. Each policy reinsured is separately negotiated.
Fair Access to Insurance Requirements (FAIR) Plan
 A residual market mechanism which provides property insurance to those unable to obtain such insurance through the regular (voluntary) market. FAIR plans are set up on a state-by-state basis to cover only those risks in that state. For more information, see “residual market (involuntary business).”
Fidelity and surety programs Fidelity insurance coverage protects an insured for loss due to embezzlement or misappropriation of funds by an employee. Surety is a three-party agreement in which the insurer agrees to pay a third party or make complete an obligation in response to the default, acts or omissions of an insured.
Gross written premiums The direct and assumed contractually determined amounts charged to the policyholders for the effective period of the contract based on the terms and conditions of the insurance contract.
Ground-up analysis A method to estimate ultimate claim costs for a given cohort of claims such as an accident year/product line component. It involves analyzing the exposure and claim activity at an individual insured level and then through the use of deterministic or stochastic scenarios and/or simulations, estimating the ultimate losses for those insureds. The total losses for the cohort are then the sum of the losses for each individual insured.
In practice, the method is sometimes simplified by performing the individual insured analysis only for the larger insureds, with the costs for the smaller insureds estimated via sampling approaches (extrapolated to the rest of the smaller insured population) or aggregate approaches (using assumptions consistent with the ground-up larger insured analysis).
Guaranteed-cost products An insurance policy where the premiums charged will not be adjusted for actual loss experience during the covered period.
Guaranty fund A state-regulated mechanism that is financed by assessing insurers doing business in those states. Should insolvencies occur, these funds are available to meet some or all of the insolvent insurer’s obligations to policyholders.
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Holding company liquidity Total cash, short-term invested assets and other readily marketable securities held by the holding company.
Incurred but not reported (IBNR) reserves
 Reserves for estimated losses and LAE that have been incurred but not yet reported to the insurer. This includes amounts for unreported claims, development on known cases and re-opened claims.
Inland marine A broad type of insurance generally covering articles that may be transported from one place to another, as well as bridges, tunnels and other instrumentalities of transportation. It includes goods in transit, generally other than transoceanic, and may include policies for movable objects such as personal effects, personal property, jewelry, furs, fine art and others.
Insurance Regulatory Information System (IRIS) ratios
 Financial ratios calculated by the NAIC to assist state insurance departments in monitoring the financial condition of insurance companies.
Large deductible policy An insurance policy where the customer assumes at least $25,000 or more of each loss. Typically, the insurer is responsible for paying the entire loss under those policies and then seeks reimbursement from the insured for the deductible amount.
Lloyd’s An insurance marketplace based in London, England, where brokers, representing clients with insurable risks, deal with Lloyd’s underwriters, who represent investors. The investors are grouped together into syndicates that provide capital to insure the risks.
Loss An occurrence that is the basis for submission and/or payment of a claim. Losses may be covered, limited or excluded from coverage, depending on the terms of the policy.
Loss adjustment expenses (LAE) The expenses of settling claims, including legal and other fees and the portion of general expenses allocated to claim settlement costs.
Loss and LAE ratio 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 report is calculated in the same manner as the SAP ratio.
The loss and LAE ratio is an indicator of the Company’s underwriting discipline and underwriting profitability.
Other companies’ method of computing a similarly titled measure may not be comparable to the Company’s method of computing this ratio.
Loss reserves Liabilities established by insurers and reinsurers to reflect the estimated cost of claims incurred that the insurer or reinsurer will ultimately be required to pay in respect of insurance or reinsurance it has written. Reserves are established for losses and for LAE, and consist of case reserves and IBNR reserves. As the term is used in this document, “loss reserves” is meant to include reserves for both losses and LAE.
Loss reserve development 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. Loss reserve development may be related to prior year or current year development.
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Losses incurred The total losses sustained by an insurance company under a policy or policies, whether paid or unpaid. Incurred losses include a provision for IBNR.
National Association of Insurance Commissioners (NAIC)
 An organization of the insurance commissioners or directors of all 50 states, the District of Columbia and the five U.S. territories organized to promote consistency of regulatory practice and statutory accounting standards throughout the United States.
Net written premiums Direct written premiums plus assumed reinsurance premiums less premiums ceded to reinsurers.
New business volume The amount of written premiums related to new policyholders and additional products sold to existing policyholders.
Pool An organization of insurers or reinsurers through which particular types of risks are underwritten with premiums, losses and expenses being shared in agreed-upon percentages.
Premiums The amount charged during the year on policies and contracts issued, renewed or reinsured by an insurance company.
Probable maximum loss (PML) The maximum amount of loss that the Company would be expected to incur on a policy if a loss were to occur, giving effect to collateral, reinsurance and other factors.
Property insurance Insurance that provides coverage to a person or business with an insurable interest in tangible property for that person’s or business’s property loss, damage or loss of use.
Quota share reinsurance Reinsurance wherein the insurer cedes an agreed-upon fixed percentage of liabilities, premiums and losses for each policy covered on a pro rata basis.
Rates Amounts charged per unit of insurance.
Redundancy With regard to reserves for a given liability, a redundancy exists when it is estimated or determined that the reserves are greater than what will be needed to pay the ultimate settlement value of the related liabilities. Where the redundancy is the result of an estimate, the estimated amount of redundancy (or even the finding of whether or not a redundancy exists) may change as new information becomes available.
Reinstatement premiums Additional premiums payable to reinsurers to restore coverage limits that have been exhausted as a result of reinsured losses under certain excess-of-loss reinsurance treaties.
Reinsurance The practice whereby one insurer, called the reinsurer, in consideration of a premium paid to that insurer, agrees to indemnify another insurer, called the ceding company, for part or all of the liability of the ceding company under one or more policies or contracts of insurance which it has issued.
Reinsurance agreement A contract specifying the terms of a reinsurance transaction.
Renewal premium change The estimated change in average premium on policies that renew, including rate and exposure changes. Such statistics are subject to change based on a number of factors, including changes in estimates.
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Renewal rate change The estimated change in average premium on policies that renew, excluding exposure changes. Such statistics are subject to change based on a number of factors, including changes in estimates.
Residual market (involuntary business)
 Insurance market which provides coverage for risks for those unable to purchase insurance in the voluntary market. Possible reasons for this inability include the risks being too great or the profit potential too small under the required insurance rate structure. Residual markets are frequently created by state legislation either because of lack of available coverage such as: property coverage in a windstorm prone area or protection of the accident victim as in the case of workers’ compensation. The costs of the residual market are usually charged back to the direct insurance carriers in proportion to the carriers’ voluntary market shares for the type of coverage involved.
Retention The amount of exposure a policyholder company retains on any one risk or group of risks. The term may apply to an insurance policy, where the policyholder is an individual, family or business, or a reinsurance policy, where the policyholder is an insurance company.
Retention rate The percentage of prior period premiums (excluding renewal premium changes), accounts or policies available for renewal in the current period that were renewed. Such statistics are subject to change based on a number of factors, including changes in estimates.
Retrospective premiums Premiums related to retrospectively rated policies.
Retrospective rating A plan or method which permits adjustment of the final premium or commission on the basis of actual loss experience, subject to certain minimum and maximum limits.
Return on equity The ratio of net income (loss) less preferred dividends to average shareholders’ equity.
Risk-based capital (RBC) A measure adopted by the NAIC and enacted by states for determining the minimum statutory policyholders’ surplus requirements of insurers. Insurers having total adjusted capital less than that required by the RBC calculation will be subject to varying degrees of regulatory action depending on the level of capital inadequacy.
Risk retention group An alternative form of insurance in which members of a similar profession or business band together to self insure their risks.
Runoff business An operation which has been determined to be nonstrategic; includes non-renewals of in-force policies and a cessation of writing new business, where allowed by law.
Salvage The amount of money an insurer recovers through the sale of property transferred to the insurer as a result of a loss payment.
Second-injury fund The employer of an injured, impaired worker is responsible only for the workers’ compensation benefit for the most recent injury; the second-injury fund would cover the cost of any additional benefits for aggravation of a prior condition. The cost is shared by the insurance industry and self-insureds, funded through assessments to insurance companies and self-insureds based on either premiums or losses.
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Segment income (loss) 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 segment income when analyzing the results and trends of insurance companies.
Self-insured retentions That portion of the risk retained by an insured for its own account.
Servicing carrier An insurance company that provides, for a fee, various services including policy issuance, claims adjusting and customer service for insureds in a reinsurance pool.
Statutory accounting practices (SAP)
 The practices and procedures prescribed or permitted by domiciliary state insurance regulatory authorities in the United States for recording transactions and preparing financial statements. SAP generally reflect a modified going concern basis of accounting.
Statutory capital and surplus The excess of an insurance company’s admitted assets over its liabilities, including loss reserves, as determined in accordance with SAP. Admitted assets are assets of an insurer prescribed or permitted by a state to be recognized on the statutory balance sheet. Statutory capital and surplus is also referred to as “statutory surplus” or “policyholders’ surplus.”
Statutory net income As determined under SAP, total revenues less total expenses and income taxes.
Structured settlement Periodic payments to an injured person or survivor for a determined number of years or for life, typically in settlement of a claim under a liability policy, usually funded through the purchase of an annuity.
Subrogation A principle of law incorporated in insurance policies, which enables an insurance company, after paying a claim under a policy, to recover the amount of the loss from another person or entity who is legally liable for it.
Tenure impact As new business volume increases and accounts for a greater percentage of earned premiums, the loss and LAE ratio generally worsens initially, as the loss and LAE ratio for new business is generally higher than the ratio for business that has been retained for longer periods. As poorer performing business leaves and pricing segmentation improves on renewal of the business that is retained, the loss and LAE ratio is expected to improve in future years.
Third-party liability A liability owed to a claimant (third party) who is not one of the two parties to the insurance contract. Insured liability claims are referred to as third-party claims.
Total capitalization The sum of total shareholders’ equity and debt.
Treaty reinsurance The reinsurance of a specified type or category of risks defined in a reinsurance agreement (a “treaty”) between a primary insurer or other reinsured and a reinsurer. Typically, in treaty reinsurance, the primary insurer or reinsured is obligated to offer and the reinsurer is obligated to accept a specified portion of all that type or category of risks originally written by the primary insurer or reinsured.
Umbrella coverage A form of insurance protection against losses in excess of amounts covered by other liability insurance policies or amounts not covered by the usual liability policies.
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Unassigned surplus The undistributed and unappropriated amount of statutory capital and surplus.
Underlying combined ratio The underlying combined ratio is the sum of the underlying loss and LAE ratio and the underlying underwriting expense ratio. The underlying combined ratio is an indicator of the Company’s underwriting discipline and underwriting profitability for the current accident year.
Underlying loss and LAE ratio The underlying loss and LAE ratio is the loss and LAE ratio, adjusted to exclude the impact of catastrophes and prior year reserve development. The underlying loss and LAE ratio is an indicator of the Company’s underwriting discipline and underwriting profitability for the current accident year.
Underlying underwriting expense ratio
 The underlying underwriting expense ratio is the underwriting expense ratio adjusted to exclude the impact of catastrophes.
Underlying underwriting margin Net earned premiums and fee income less claims and claim adjustment expenses (excluding catastrophe losses and prior year reserve development) and insurance-related expenses. 
Underwriter An employee of an insurance company who examines, accepts or rejects risks and classifies accepted risks in order to charge an appropriate premium for each accepted risk. The underwriter is expected to select business that will produce an average risk of loss no greater than that anticipated for the class of business.
Underwriting The insurer’s or reinsurer’s process of reviewing applications for insurance coverage, and the decision as to whether to accept all or part of the coverage and determination of the applicable premiums; also refers to the acceptance of that coverage.
Underwriting expense 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, to net written premiums as defined in the statutory financial statements required by insurance regulators. The underwriting expense ratio as used in this report 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 underwriting expense ratio is an indicator of the Company’s efficiency in acquiring and servicing its business.
Other companies’ method of computing a similarly titled measure may not be comparable to the Company’s method of computing this ratio.
Underwriting gain or loss Net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses.
Unearned premium The portion of premiums written that is allocable to the unexpired portion of the policy term.
Voluntary market The market in which a person seeking insurance obtains coverage without the assistance of residual market mechanisms.
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Wholesale broker An independent or exclusive agent that represents both admitted and non-admitted insurers in market areas, which include standard, non-standard, specialty and excess and surplus lines of insurance. The wholesaler does not deal directly with the insurance consumer. The wholesaler deals with the retail agent or broker.
Workers’ compensation A system (established under state and federal laws) under which employers provide insurance for benefit payments to their employees for work-related injuries, deaths and diseases, regardless of fault.

Item 1A. RISK FACTORS
You should carefully consider the following risks and all of the other information set forth in this report, including without limitation our consolidated financial statements and the notes thereto and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.” The following risk factors have been organized by category for ease of use; however, many of the risks may have impacts in more than one category.
Insurance-Related Risks
High levels of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone areas and changing climate conditions, could materially and adversely affect our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance. Our property and casualty insurance operations expose us to claims arising out of catastrophes in each of the geographies where we write business and to varying peak catastrophe perils in different countries and regions. 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, solar flares and other naturally-occurring events. Catastrophes can also be man-made, such as terrorist attacks and other intentionally destructive acts including those involving cyber events, nuclear, biological, chemical and radiological events, civil unrest, explosions and destruction of infrastructure.
The incidence and severity of catastrophes are inherently unpredictable, and it is possible that both the frequency and severity of natural and man-made catastrophic events could increase. Severe weather events over the last two decades have underscored the unpredictability of climate trends. For example, the frequency and/or severity of hurricane, tornado, hail and wildfire events in the United States have been more volatile during this time period. The insurance industry has experienced increased catastrophe losses due to a number of potential factors, including, in addition to weather/climate variability, aging infrastructure, more people living in, and moving to, high-risk areas, population growth in areas with weaker enforcement of building codes, urban expansion, an increase in the number of amenities included in, and the average size of, a home and higher inflation, including as a result of post-event demand surge. We believe that changing climate conditions have also likely added to the frequency and severity of natural disasters and created additional uncertainty as to future trends and exposures. Climate studies by government agencies, academic institutions, catastrophe modeling organizations and other groups indicate that an increase in the frequency and/or intensity of hurricanes, heavy precipitation events and associated river, urban and flash flooding, sea level rise, droughts, heat waves and wildfires has occurred, and can be expected into the future. See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Catastrophe Modeling” and “—Changing Climate Conditions.”
All of the catastrophe modeling tools that we use or rely on to evaluate our catastrophe exposures are based on significant assumptions and judgments and are subject to error and mis-estimation. As a result, our estimated exposures could be materially different than our actual results. See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Catastrophe Modeling” and “—Changing Climate Conditions.” In addition, for newer and rapidly evolving products, such as cyber insurance, the lack of historical loss experience increases the level of uncertainty related to the product, and as a result, the inherent potential for unexpected material economic loss.
The extent of losses from a catastrophe is a function of the total amount of insured exposure affected by the event, the severity of the event and the coverage provided. For example, the specific location impacted by tornadoes is inherently random and unpredictable, and the specific location impacted by a tornado may or may not be highly populated and may or may not have a high concentration of our insured exposures. Similarly, the potential for losses from a cyber event can be magnified to the extent that the event impacts geographies, platforms, systems or vulnerabilities shared by a large number of policyholders, such as cloud-based software platforms. In addition, increases in the value and geographic concentration of insured property, the number of policyholders exposed to certain events and the effects of inflation could increase the severity of claims resulting from a catastrophe.
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For example, in recent periods, the effects of inflation, including as a result of post-event demand surge, have increased catastrophe losses, and this could continue in the future. Disruptions to electrical power supplies have also increased losses arising from natural events, a dynamic which may become more frequent as dependency on electricity increases and/or if the reliability of the electric grid decreases.
States have from time to time passed legislation, and regulators have taken action, that have the effect of limiting the ability of insurers to manage catastrophe risk, such as by restricting insurers from reducing exposures or withdrawing from catastrophe-prone areas or mandating that insurers participate in residual markets. Residual markets have resulted in, and may in the future result in, significant losses or assessments to insurers, including us. In addition, legislative, regulatory and legal actions have sought to expand insurance coverage for catastrophe claims beyond the original intent of the policies, prevent the application of deductibles or limit other rights of insurers. We may not be able to adjust terms or adequately raise prices to offset the costs of catastrophes. See “Item 1—Business—U.S. State and Federal Regulation—Regulatory and Legislative Responses to Catastrophes.”
The estimation of claims and claim adjustment expense reserves related to catastrophe losses can be affected by, among other things, the nature of the information available at the time of estimation, coverage issues, and legal, regulatory and economic uncertainties. The estimates related to catastrophe losses are adjusted in subsequent periods as actual claims emerge and additional information becomes available, and these adjustments could be material.
Exposure to catastrophe losses could adversely affect our financial strength and claims-paying ratings and could impair our ability to raise capital on acceptable terms or at all. Also, as a result of our exposure to catastrophe losses, rating agencies may further increase capital requirements, which may require us to raise capital to maintain our ratings. A ratings downgrade could hurt our ability to compete effectively or attract new business. In addition, catastrophic events could cause us to exhaust our available reinsurance limits and could adversely impact the cost and availability of reinsurance on a going-forward basis. Such events can also impact the credit of our reinsurers. For a discussion of our catastrophe reinsurance coverage, see “Item 1—Business—Reinsurance—Catastrophe Reinsurance.” Catastrophic events could also adversely impact the credit of the issuers of securities held in our investment portfolio, such as states or municipalities.
In addition, coverage in our reinsurance program for terrorism is limited. Although the Terrorism Risk Insurance Program provides benefits in the event of certain acts of terrorism, those benefits are subject to a deductible and other limitations, and the program is scheduled to expire on December 31, 2027. Under current provisions of this program, once our losses exceed 20% of our eligible direct commercial earned premiums for the preceding calendar year, the federal government will reimburse us for 80% of our losses attributable to certain acts of terrorism which exceed this deductible up to a total industry program cap of $100 billion. Our estimated deductible under the program is $3.48 billion for 2024. For a further description of the Terrorism Risk Insurance Program, see note 6 of the notes to the consolidated financial statements.
Because of the risks set forth above, catastrophes could materially and adversely affect our results of operations, financial position and/or liquidity. Further, we may not have sufficient resources to respond to claims arising from a high frequency of high-severity natural catastrophes and/or of man-made catastrophic events involving conventional means or claims arising out of one or more man-made catastrophic events involving “unconventional” means, such as nuclear, biological, chemical or radiological events.
If actual claims exceed our claims and claim adjustment expense reserves, or if changes in the estimated level of claims and claim adjustment expense reserves are necessary, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments in which the Company operates, our financial results could be materially and adversely affected. Claims and claim adjustment expense reserves (“loss reserves”) represent management estimates of what the ultimate settlement and administration of claims will cost, generally utilizing actuarial expertise and projection techniques, at a given accounting date. The process of estimating loss reserves involves a high degree of judgment and is subject to a number of variables and significant uncertainty. These variables can be affected by both internal and external events, such as: changes in claims handling procedures, including automation; adverse changes in loss cost trends, including inflationary pressures, technology or other changes that may impact medical, auto and home repair costs (e.g., more costly technology in vehicles, labor shortages, supply chain disruptions, higher costs of used vehicles and parts, and increased demand and decreased supply for raw materials, all of which results in increased severity of claims); economic conditions, including general and wage inflation; legal trends, including adverse changes in the tort environment that have continued to persist at elevated levels for a number of years (e.g., increased and more aggressive attorney involvement in insurance claims, increased litigation, expanded theories of liability, higher jury awards, lawsuit abuse and third-party litigation finance, among others); labor shortages, which can result in companies hiring less experienced workers; higher interest rates, which can result in higher post-judgment interest costs; and legislative changes, among others. The impact of many of these items on ultimate costs for loss reserves could be material and is difficult to estimate. For example, the ongoing backlog of cases in the courts has resulted in claims being unresolved for longer periods of time, which the Company believes has contributed, and will continue to contribute, to increased loss costs.
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Loss reserve estimation difficulties also differ significantly by product line due to differences in claim complexity, the volume of claims, the potential severity of individual claims, the determination of occurrence date for a claim and lags in reporting of events to insurers, among other factors.
Inflation in recent periods has significantly increased our loss costs in our personal and commercial businesses. Inflation higher than at the levels that the Company anticipates could continue to negatively impact our loss costs in future periods. The impact of inflation on loss costs could be more pronounced for those lines of business that are considered “long tail,” such as general liability and workers’ compensation, as they require a relatively long period of time to finalize and settle claims for a given accident year or require payouts over a long period of time. In addition, a significant portion of claims costs, including those in “long tail” lines of business, consists of medical costs. As a result, an increase in medical inflation could materially and adversely impact our loss costs and our claims and claim adjustment expense reserves. Recent changes in the inflationary environment have impacted medical labor and materials costs, the potential persistency of which could result in future loss costs which are higher than our current expectations. In addition to the impact of inflation on reserves, on a going forward basis, we may not be able to offset the impact of inflation on our loss costs with sufficient price increases. The estimation of loss reserves may also be more difficult during extreme events, such as a pandemic, or during volatile or uncertain economic conditions, due to unexpected changes in behavior of claimants and policyholders, including an increase in fraudulent reporting of exposures and/or losses, reduced maintenance of insured properties, increased frequency of small claims or delays in the reporting or adjudication of claims.
We refine our loss reserve estimates as part of a regular, ongoing process as historical loss experience develops, additional claims are reported and settled, and the legal, regulatory and economic environment evolves. Business judgment is applied throughout the process, including the application of various individual experiences and expertise to multiple sets of data and analyses. Different experts may apply different assumptions and judgments when faced with material uncertainty, based on their individual backgrounds, professional experiences and areas of focus. As a result, these experts may at times produce estimates materially different from each other. This risk may be exacerbated in the context of an extreme event or an acquisition. Experts providing input to the various estimates and underlying assumptions include actuaries, underwriters, claim personnel and lawyers, as well as other members of management. Therefore, management often considers varying individual viewpoints as part of its estimation of loss reserves.
Due to the inherent uncertainty underlying loss reserve estimates, the final resolution of the estimated liability for claims and claim adjustment expenses will likely be higher or lower than the related loss reserves at the reporting date. In addition, our estimate of claims and claim adjustment expenses is likely to change. These additional liabilities or increases in estimates, or a range of either, could vary significantly from period to period and could materially and adversely affect our results of operations and/or our financial position. For a discussion of loss reserves by product line, including examples of common factors that can affect reserves, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates—Claims and Claim Adjustment Expense Reserves.”
Our business could be harmed because of our potential exposure to asbestos and environmental claims and related litigation. We continue to receive a significant number of asbestos claims. Factors underlying these claim filings include continued intensive advertising by lawyers seeking asbestos claimants and the continued focus by plaintiffs on defendants, such as manufacturers of talcum powder, who were not traditionally primary targets of asbestos litigation. We also continue to be involved in coverage litigation concerning a number of policyholders, some of whom have filed for bankruptcy, who in some instances have asserted that all or a portion of their asbestos-related claims are not subject to aggregate limits on coverage and/or that each individual bodily injury claim should be treated as a separate occurrence under the policy. To the extent both issues are resolved in a policyholder’s favor and our other defenses are not successful, our coverage obligations under the policies at issue would be materially increased and bounded only by the applicable per-occurrence limits and the number of asbestos bodily injury claims against the policyholders. Although we have seen a moderation in the overall risk associated with these lawsuits, it remains difficult to predict the ultimate cost of these claims. Further, in addition to claims against policyholders, proceedings have been launched directly against insurers, including us, by individuals challenging insurers’ conduct with respect to the handling of past asbestos claims and by individuals seeking damages arising from alleged asbestos-related bodily injuries. It is possible that the filing of other direct actions against insurers, including us, could be made in the future.
We also continue to receive claims from policyholders who allege that they are liable for injury or damage arising out of their alleged disposition of toxic substances. Liability for investigation and cleanup of environmental contamination and for some related losses under federal laws, such as the Comprehensive Environmental Response, Compensation and Liability Act, and under similar state laws, may be imposed on certain parties even if they did not cause the release or threatened release of hazardous substances and may be joint and several with other responsible parties.
The Company has been, and continues to be, involved in litigation involving insurance coverage issues pertaining to asbestos and environmental claims. The Company believes that some court decisions have interpreted the insurance coverage to be broader than the original intent of the insurers and policyholders.
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These decisions continue to be inconsistent and vary from jurisdiction to jurisdiction. Uncertainties surrounding the final resolution of these asbestos and environmental claims continue, and it is difficult to estimate our ultimate liability for such claims and related litigation. As a result, these reserves are subject to revision as new information becomes available and as claims develop. It is also not possible to predict changes in the legal, regulatory and legislative environment and their impact on the future development of asbestos and environmental claims. This environment could be affected by changes in applicable legislation and future court and regulatory decisions and interpretations, including the outcome of legal challenges to legislative and/or judicial reforms establishing medical criteria for the pursuit of asbestos claims. It is also difficult to predict the ultimate outcome of complex coverage disputes until settlement negotiations near completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is particularly the case with policyholders in bankruptcy where negotiations often involve a large number of claimants and other parties and require court approval to be effective.
It is possible that the outcome of the continued uncertainties regarding these claims could result in liability in future periods that differs from current reserves by an amount that could materially and adversely affect our results of operations. See the “Asbestos Claims and Litigation,” “Environmental Claims and Litigation” and “Uncertainty Regarding Adequacy of Asbestos and Environmental Reserves” sections of “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Also see “Item 3—Legal Proceedings.”
We are exposed to, and may face adverse developments involving, mass tort claims such as those relating to exposure to potentially harmful products or substances. We face potential exposure to mass tort claims, including claims related to exposure to potentially harmful products or substances, such as perfluoroalkyl and polyfluoroalkyl substances (PFAS), talc, opioids and lead. Establishing loss reserves for mass tort claims is subject to significant uncertainties because of many factors, including adverse changes to the tort environment that have continued to persist at elevated levels for a number of years (e.g., increased and more aggressive attorney involvement in insurance claims, increased litigation, expanded theories of liability, higher jury awards, lawsuit abuse and third-party litigation finance, among others); evolving judicial interpretations, including application of various theories of joint and several liabilities; disputes concerning medical causation with respect to certain diseases; geographical concentration of the lawsuits asserting the claims; and the potential for a large rise in the total number of claims without underlying epidemiological developments suggesting an increase in disease rates. Because of the uncertainties set forth above, additional liabilities may arise for amounts significantly in excess of the current loss reserves. In addition, our estimate of loss reserves may change. These additional liabilities or increases in estimates, or a range of either, could vary significantly from period to period and could materially and adversely affect our results of operations and/or our financial position.
The effects of emerging claim and coverage issues on our business are uncertain, and court decisions or legislative changes that take place after we issue our policies can result in an unexpected increase in the number of claims and have a material adverse impact on our results of operations and/or our financial position. As industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claim and coverage are likely to emerge. These issues may adversely affect our business, including by extending coverage beyond our underwriting intent, by increasing the number, size or types of claims or by mandating changes to our underwriting practices. Examples of such claims and coverage issues include, but are not limited to:
•judicial expansion of policy coverage and the impact of new or expanded theories of liability;
•plaintiffs targeting insurers in purported class action litigation relating to claims handling and other practices;
•claims relating to construction defects, which often present complex coverage and damage valuation questions;
•claims related to data and network security breaches, information system failures or cyber events, including cases where coverage was not intended to be provided;
•the assertion of “public nuisance” or similar theories of liability, pursuant to which plaintiffs, including governmental entities, seek to recover monies spent to respond to harm caused to members of the public, abate hazards to public health and safety and/or recover expenditures purportedly attributable to a “public nuisance,” such as litigation against manufacturers or distributors of lead paint, opioids, perfluoroalkyl and polyfluoroalkyl substances (PFAS) and other allegedly harmful products, and entities that caused or contributed to harm to the environment;
•claims related to liability, business interruption or workers’ compensation arising out of infectious disease or pandemic;
•claims related to vaccine mandates;
•claims relating to abuse by an employee or a volunteer of an insured;
•claims that link health issues to particular causes (for example, cumulative traumatic head injury from sports or other causes), resulting in liability or workers’ compensation claims;
•claims alleging that one or more of our underwriting criteria have a disparate impact on persons belonging to a protected class in violation of the law, including the Fair Housing Act;
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•claims arising out of modern techniques and practices used in connection with the extraction of natural resources, such as hydraulic fracturing or wastewater injection;
•claims arising out of the use of personal property in commercial transactions, such as ride or home sharing;
•claims against fiduciaries of retirement plans, including allegations regarding excessive fees;
•claims under laws protecting biometric data;
•claims relating to unanticipated consequences of current or new technologies or business models or processes, including as a result of related behavioral changes;
•claims relating to changing climate conditions, including claims alleging that our policyholders cause or contribute to changing climate conditions; and
•bankruptcies of policyholders, which can lead to inflated numbers and values of claims.
In some instances, emerging issues may not become apparent for some time after we have issued the affected insurance policies. As a result, the full extent of liability under our insurance policies may not be known for many years after the policies are issued.
In addition, the passage of new legislation designed to expand the right to sue, to remove limitations on recovery, to deem by statute the existence of a covered occurrence, to extend or eliminate the statutes of limitations or otherwise to repeal or weaken tort reforms could have a material and adverse effect on our results of operations and/or our financial position. For example, over the past few years, a number of states have enacted legislation allowing victims of sexual molestation to file or proceed with claims that otherwise would have been time-barred and additional states are considering similar legislative changes.
The effects of these and other unforeseen emerging claim and coverage issues are extremely hard to predict and could harm our business and materially and adversely affect our results of operations and/or our financial position.
Financial, Economic and Credit Risks
During or following a period of financial market disruption or an economic downturn, our business could be materially and adversely affected. If financial markets experience significant disruption or if economic conditions deteriorate, such as in a period of recession or stagflation, our results of operations, financial position and/or liquidity likely would be adversely impacted. For example, financial market disruptions and economic downturns in the past have resulted in, among other things, reduced business volume, heightened credit risk, reduced valuations for certain of our investments and heightened vulnerability for smaller vendors with whom we do business. Future actions or inactions of the United States government related to the “debt-ceiling” could increase the actual or perceived risk that the United States may not ultimately pay its obligations when due. This could result in downgrades to the credit rating of the United States and potential disruption to financial markets, including capital markets.
Several of the risk factors discussed above and below identify risks that could result from, or be exacerbated by, financial market disruption, an economic slowdown or economic uncertainty. These include risks discussed above related to our estimates of claims and claim adjustment expense reserves and emerging claim and coverage issues, and those discussed below related to our investment portfolio, the competitive environment, reinsurance arrangements, other credit exposures, regulatory developments and the impact of rating agency actions. See also “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations,” particularly the “Outlook” section, for additional information about these risks and the potential impact on our business.
Our investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses. Investment returns are an important part of our overall profitability. Fixed maturity and short-term investments comprised approximately 93% of the carrying value of our investment portfolio as of December 31, 2023. Changes in interest rates affect the carrying value of our fixed maturity investments and returns on our fixed maturity and short-term investments. A decline in interest rates reduces the returns available on short-term investments and new fixed maturity investments (including those purchased to re-invest maturities from the existing portfolio), thereby negatively impacting our net investment income on a going-forward basis, while rising interest rates reduce the market value of existing fixed maturity investments, thereby negatively impacting our book value. See also “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook.” The value of our fixed maturity and short-term investments is also subject to the risk that certain investments may default or become impaired due to a deterioration in the financial condition of one or more issuers of the securities held in our portfolio, or due to a deterioration in the financial condition of an insurer that guarantees an issuer’s payments of such investments. Such defaults and impairments could reduce our net investment income and result in realized investment losses. During an economic downturn, fixed maturity and short-term investments could be subject to a higher risk of default, and our non-fixed income investments could be negatively impacted as well.
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A significant portion of our fixed maturity investment portfolio is invested in obligations of states, municipalities and political subdivisions. This municipal bond portfolio could be subject to default or impairment. In particular:
•Many state and local governments have from time to time operated under deficits or projected deficits, particularly during and after a financial market disruption or economic downturn. The severity and duration of these deficits could have an adverse impact on the collectability and valuation of our municipal bond portfolio. These deficits may also be exacerbated by the impact of unfunded pension plan obligations and other postretirement obligations or by declining municipal tax bases and revenues in times of financial stress.
•Some municipal bond issuers may be unwilling to increase tax rates, or to reduce spending, to fund interest or principal payments on their municipal bonds, or may be unable to access the municipal bond market to fund such payments. The risk of widespread defaults may increase if some issuers voluntarily choose to default, instead of implementing difficult fiscal measures, and the actual or perceived consequences are less severe than expected.
•The risk of widespread defaults may also increase if there are changes in legislation that permit states, municipalities and political subdivisions to file for bankruptcy protection where they were not permitted before. In addition, the collectability and valuation of municipal bonds may be adversely affected if there are judicial interpretations in a bankruptcy or other proceeding that lessen the value of structural protections. For example, debtors may challenge the effectiveness of structural protections thought to be provided by municipal securities backed by a dedicated source of revenue. The collectability and valuation may also be adversely affected if there are judicial interpretations in a bankruptcy or other proceeding that question the payment priority of municipal bonds.
Our portfolio has benefited from tax exemptions (such as those related to interest from municipal bonds) and certain other tax laws, including, but not limited to, those governing dividends-received deductions and tax credits. Changes in these laws could adversely impact the value of our investment portfolio.
Our investment portfolio includes: residential mortgage-backed securities; collateralized mortgage obligations; pass-through securities and asset-backed securities collateralized by sub-prime mortgages; commercial mortgage-backed securities; and wholly-owned real estate and real estate partnerships, all of which could be adversely impacted by declines in real estate valuations, including as a result of changes in the use of commercial office and retail space since the COVID-19 pandemic.
We also invest a portion of our assets in equity securities, private equity limited partnerships, hedge funds and real estate partnerships, as well as strategic investments in private and/or public companies. From time to time, we may also invest in other types of non-fixed maturity investments, including investments with exposure to commodity price risk. All of these asset classes are subject to greater volatility in their investment returns than fixed maturity investments. General economic and market conditions, changes in applicable tax laws and many other factors beyond our control can adversely affect the value of our non-fixed maturity investments and the realization of net investment income, and/or result in realized investment losses. As a result of these factors, we may realize reduced returns on these investments, incur losses on sales of these investments and be required to write down the value of these investments, which could reduce our net investment income and result in realized investment losses. From time to time, the Company enters into short positions in U.S. Treasury futures contracts to manage the duration of its fixed maturity portfolio, which can result in realized investment losses.
Our investment portfolio is also subject to increased valuation uncertainties when investment markets are illiquid. The valuation of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the carrying amount) of the portion of the investment portfolio that is carried at fair value as reflected in our financial statements is not reflective of prices at which actual transactions could occur.
We have in the past, and may in the future, depending on changes in circumstances, such as economic and market conditions and relative asset valuations, make changes to the mix of investments in our investment portfolio as part of our ongoing efforts to seek appropriate risk-adjusted returns. These changes may impact the duration, volatility and risk of our investment portfolio.
Because of the risks set forth above, the value of our investment portfolio could decrease, we could experience reduced net investment income and we could experience realized and/or unrealized investment losses, which could materially and adversely affect our results of operations, financial position and/or liquidity.
We may not be able to collect all amounts due to us from reinsurers, reinsurance coverage may not be available to us in the future at commercially reasonable rates or at all and we are exposed to credit risk related to our structured settlements. Although the reinsurer is liable to us to the extent of the reinsurance, we remain liable as the direct insurer on all risks reinsured. As a result, reinsurance arrangements do not eliminate our obligation to pay claims. Accordingly, we are subject to credit risk with respect to our ability to recover amounts due from reinsurers.
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In the past, certain reinsurers have ceased writing business and entered into runoff. Some of our reinsurance claims may be disputed by the reinsurers, and we may ultimately receive partial or no payment. This is a particular risk in the case of claims that relate to insurance policies written many years ago, including those relating to asbestos and environmental claims. In addition, in a number of jurisdictions a reinsurer is permitted to transfer a reinsurance arrangement to another reinsurer, which may be less creditworthy, without a counterparty’s consent. Also, the reinsurance that we purchase may not cover all of the risks covered by the policies that we issue.
Included in reinsurance recoverables are amounts related to certain structured settlements. Structured settlements are 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 we did not receive a release from the claimant, the structured settlement is included in reinsurance recoverables and the related claim cost is included in the liability for loss reserves, as we retain the contingent liability to the claimant. Some of the life insurance companies from which we have purchased annuities have been downgraded to below investment grade credit ratings subsequent to the time of the purchase. If it is expected that the life insurance company is not able to pay, we would recognize an impairment of the related reinsurance recoverable if, and to the extent, the purchased annuities are not covered by state guaranty associations. In the event that the life insurance company fails to make the required annuity payments, we would be required to make such payments. For a discussion of the top five providers of our reinsurance and structured settlements, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reinsurance Recoverables.”
The availability of reinsurance capacity, as well as its cost and terms, can be impacted, and in recent periods have been impacted, by general economic conditions and conditions in the reinsurance market, such as the occurrence of significant reinsured events or unexpected adverse trends. The availability, cost and terms of reinsurance could affect our business volume and profitability. In addition, the Covered Agreements between the U.S. and each of the EU and U.K. eliminate the requirement for European and U.K. reinsurers operating in the U.S. to provide collateral, which could make it more difficult for U.S. companies, including us, to obtain collateral from European and U.K. reinsurers.
Because of the risks set forth above, we may not be able to collect all amounts due to us from reinsurers, and reinsurance coverage may not be available to us in the future at commercially reasonable rates or terms, or at all, and/or life insurance companies may fail to make required annuity payments, and thus our results of operations could be materially and adversely affected.
We are exposed to credit risk in certain of our insurance operations and with respect to certain guarantee or indemnification arrangements that we have with third parties. We are exposed to credit risk in several areas of our business operations, including credit risk relating to policyholders, independent agents and brokers. To a significant degree, the extent of the credit risk that we face is a function of the health of the economy; accordingly, we face an increased credit risk in an economic downturn.
We are exposed to credit risk in our surety insurance operations, where we guarantee to a third party that our customer will satisfy certain performance obligations (e.g., a construction contract) or certain financial obligations, including exposure to large customers who may have obligations to multiple third parties. If our customer defaults, we may suffer losses and not be reimbursed by that customer, even though we are entitled to indemnification from such customer. In addition, it is customary practice for multiple insurers to participate as co-sureties on large surety bonds. Under these arrangements, the co-surety obligations are typically joint and several, in which case we are also exposed to credit risk with respect to our co-sureties.
In addition, a portion of our business is written with large deductible insurance policies. Under casualty insurance contracts with deductible features, we are obligated to pay the claimant the full amount of the settled claim. We are subsequently reimbursed by the contractholder for the deductible amount, and, as a result, we are exposed to credit risk to the policyholder. Moreover, certain policyholders purchase retrospectively rated policies (i.e., where premiums are adjusted after the policy period based on the actual loss experience of the policyholder during the policy period). Retrospectively rated policies expose us to additional credit risk to the extent that the adjusted premium is greater than the original premium.
Our efforts to mitigate the credit risk that we have to our insureds may not be successful. For example, we may not be able to obtain collateral and any collateral obtained may subsequently have little or no value.
In accordance with industry practice, when policyholders purchase insurance policies from us through independent agents and brokers, the premiums relating to those policies are often paid to the agents and brokers for payment to us. In most jurisdictions, the premiums will be deemed to have been paid to us whether or not they are actually received by us. Consequently, we assume a degree of credit risk associated with amounts due from independent agents and brokers.
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We are also exposed to credit risk related to certain guarantee or indemnification arrangements that we have with third parties. See note 17 of the notes to the consolidated financial statements. Our exposure to the above credit risks could materially and adversely affect our results of operations.
A downgrade in our claims-paying and financial strength ratings could adversely impact our business volumes, adversely impact our ability to access the capital markets and increase our borrowing costs. Claims-paying and financial strength ratings are important to an insurer’s competitive position. A downgrade in one or more of our ratings could negatively impact our business volumes or make it more difficult or costly for us to access the capital markets or borrow money. If significant losses, including, but not limited to, those resulting from one or more major catastrophes, or significant reserve additions or significant investment losses were to cause our capital position to deteriorate significantly, or if one or more rating agencies substantially increase their capital requirements, we may need to raise equity capital in the future (which we may not be able to do at a reasonable cost or at all, especially at a time of financial market disruption) in order to maintain our ratings or limit the extent of a downgrade. A continued trend of more frequent and severe catastrophes or a prolonged financial market disruption or economic downturn may lead rating agencies to substantially increase their capital requirements. See also “Item 1—Business—Ratings.”
The inability of our insurance subsidiaries to pay dividends to our holding company in sufficient amounts would harm our ability to meet our obligations, pay future shareholder dividends and/or make future share repurchases. Our holding company relies on dividends from our U.S. insurance subsidiaries to meet our obligations for payment of interest and principal on outstanding debt, to pay dividends to shareholders, to make contributions to our qualified domestic pension plan, to pay other corporate expenses and to make share repurchases. The ability of our insurance subsidiaries to pay dividends to our holding company in the future will depend on their statutory capital and surplus, earnings and regulatory restrictions.
We are subject to state insurance regulation as an insurance holding company system. Our U.S. insurance subsidiaries are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid to their parent without prior approval of insurance regulatory authorities. In a time of prolonged economic downturn or otherwise, insurance regulators may choose to further restrict the ability of insurance subsidiaries to make payments to their parent companies. The ability of our insurance subsidiaries to pay dividends to our holding company is also restricted by regulations that set standards of solvency that must be met and maintained.
The inability of our insurance subsidiaries to pay dividends to our holding company in an amount sufficient to meet our debt service obligations and other cash requirements could harm our ability to meet our obligations, to pay future shareholder dividends and to make share repurchases.
Business and Operational Risks
The intense competition that we face, including with respect to attracting and retaining employees, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and our profitability. The property and casualty insurance industry is highly competitive, and we believe that it will remain highly competitive for the foreseeable future. We compete with both domestic and foreign insurers, including start-ups, which may offer products at prices and on terms that are not consistent with our economic standards in an effort to maintain or increase their business. The competitive environment in which we operate could also be impacted by current general economic conditions, which could reduce the volume of business available to us as well as to our competitors. Pension and hedge funds and other entities with substantial available capital, more flexible legal structures and/or potentially lower return objectives have increasingly sought to participate in the property and casualty insurance and reinsurance businesses. Well-capitalized new entrants to the property and casualty insurance and reinsurance industries and existing competitors that receive substantial infusions of capital may conduct business in ways that adversely impact our business volumes and profitability. In addition, the competitive environment could be impacted by changes in customer preferences, including customer demand for direct distribution channels and/or greater choice, not only in personal lines, but also in commercial lines (where direct writers may become a more significant source of competition in the future, particularly in the small commercial market). Similarly, comparative rating technology has impacted competition in personal lines and is now being used to access comparative rates for small commercial business as well, and that trend is likely to continue and may accelerate. In recent years, there have been new entrants into the small commercial business, and this trend may continue. Customer behavior could also evolve in the future towards buying insurance in point-of-sale or other non-traditional distribution channels where we may not have a meaningful presence or which are designed to sell products that we currently do not provide. Consolidation within the insurance industry also could impact our business volumes and/or the rates or terms of our products.
Other technological changes also present competitive risks. For example, our competitive position could be impacted if we are unable to deploy, in a cost effective and competitive manner, technology such as artificial intelligence and machine learning that collects and analyzes a wide variety of data points (so-called “big data” analysis) to make underwriting or other decisions, or if our competitors collect and use data which we do not have the ability to access or use or deploy artificial intelligence to create efficiencies in ways that we do not.
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In addition, innovations, such as telematics and other usage-based methods of determining premiums, can impact product design and pricing and are becoming an increasingly important competitive factor.
Competitive dynamics may impact the success of efforts to improve our underwriting margins on our insurance products. These efforts could include seeking improved rates or improved terms and conditions, and could also include other initiatives, such as reducing operating expenses and acquisition costs. These efforts may not be successful and/or may result in lower business volumes. In addition, if our underwriting is not effective, further efforts to increase rates could also lead to “adverse selection”, whereby accounts retained have higher losses, and are less profitable, than accounts lost. For more detail, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook.”
Similar to other industries, the insurance industry is undergoing rapid and significant technological and other change. Traditional insurance industry participants, technology companies, “InsurTech” start-up companies, some of which are supported by traditional insurance industry participants, and others are focused on using technology and innovation to simplify and improve the customer experience, increase efficiencies, redesign products, alter business or distribution models and effect other potentially disruptive changes in the insurance industry. If we do not anticipate, keep pace with and adapt to technological and other changes impacting the insurance industry, it will harm our ability to compete, decrease the value of our products to customers, and materially and adversely affect our business. Furthermore, innovation, technological change and changing customer preferences in the markets in which we operate also pose risks to our business. For example, technologies such as driverless vehicles, assisted-driving or accident prevention technologies, technologies that facilitate ride, car or home sharing, smart homes or automation could reduce the number of vehicles in use and/or the demand for, or profitability of, certain of our products, create coverage issues or impact the frequency or severity of losses, and we may not be able to respond effectively. While there is substantial uncertainty as to the timing of any impact, in the case of driverless vehicles in particular, new legal frameworks or business practices could be adopted that reduce the size of the auto insurance market. If competition or technological or other changes to the markets in which we operate limit our ability to retain existing business or write new business at adequate rates or on appropriate terms, our results of operations could be materially and adversely affected. See “Competition” sections of the discussion on business segments in “Item 1—Business.”
Technological change can impact us in other ways as well. For example, rapid changes in the sophistication and use of certain types of cyber-attacks, such as ransomware and social engineering attacks, on our insureds have increased the frequency and severity of losses under our policies. The risk of cyber-attacks could be exacerbated by geopolitical tensions, including hostile actions taken by nation-states and terrorist organizations. In addition, new technology, such as artificial intelligence, could create unforeseen exposures or coverage issues under the policies we write and aggravate claims fraud and cybercrime.
There is significant competition from within the property and casualty insurance industry and from businesses outside the industry for qualified employees, especially those in key positions and those possessing highly specialized knowledge in areas such as underwriting, data and analytics, technology, claims and artificial intelligence. This competition has increased in recent periods and, with the increase in remote work, is taking place on a broader geographic scale. In addition, the competition for talent and the difficulty in attracting and retaining employees has also increased due to the retirement of members of the “baby boomer” generation. This dynamic has also impacted our agents, brokers, regulators, vendors and other business partners. If we and our business partners are not able to successfully attract, train, retain and motivate our respective employees, our business, financial results and reputation could be materially and adversely affected.
Disruptions to our relationships with our independent agents and brokers or our inability to manage effectively a changing distribution landscape could adversely affect us. We market our insurance products primarily through independent agents and brokers. An important part of our business is written through less than a dozen such intermediaries, including the agency affiliate of GEICO, with whom we have had a distribution arrangement for homeowners’ business since 1995. Further, there has been a trend of increased consolidation by agents and brokers, which could impact our relationships with, and fees paid to, some agents and brokers, and/or otherwise negatively impact the pricing or distribution of our products. Agents and brokers may increasingly compete with us to the extent that markets increasingly provide them with direct access to providers of capital seeking exposure to insurance risk or if they become affiliated with carriers that compete with us. In all of the foregoing situations, loss of all or a substantial portion of the business provided through such agents and brokers could materially and adversely affect our future business volume and results of operations.
Our efforts or the efforts of agents and brokers with respect to new products or markets, alternate distribution channels, changes to commission terms as well as changes in the way agents and brokers utilize data and technology, including in ways that may be in direct competition with us, could adversely impact our business relationship with independent agents and brokers who currently market our products, resulting in a lower volume and/or profitability of business generated from these sources.
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In certain markets, brokers increasingly have been packaging portfolios of risks together and offering them to fewer carriers. In these and other situations, agents and brokers have an increased influence over policy language and compensation structure which, if we participate on that basis, could adversely impact our ability to profitably manage underwriting risk. It could also lead to commoditization of products, which could increase the focus on price and cost management and decrease our ability to differentiate our products in the marketplace with customers based on other factors.
Customers in the past have brought claims against us for the actions of our agents. Even with proper controls in place, actual or alleged errors or inaccuracies by our agents could result in our involvement in disputes, litigation or regulatory actions.
Our efforts to develop new products or services, expand in targeted markets, improve business processes and workflows or make acquisitions may not be successful and may create enhanced risks. From time to time, to protect and grow market share and/or improve our productivity and efficiency, we invest in strategic initiatives and pursue acquisitions. These efforts may require us to make substantial expenditures and not be successful, and even if successful, they may create additional risks:
•Changes to our business processes or workflow, including the use of new technologies, may give rise to execution risk;
•Models underlying automated underwriting and pricing decisions may not be effective;
•Demand for new products or expansion into new markets may not meet our expectations;
•New products or services and expansion into new markets may change our risk exposures, and the data and models we use to manage such exposures may not be as effective as those we use in existing markets or with existing products;
•Acquisitions may not be successfully integrated, resulting in substantial disruption, costs or delays and adversely affecting our ability to compete, may not result in the benefits anticipated by us, and may also result in unforeseen liabilities or impact our credit ratings; and
•The conversion of policyholders to a new product could negatively impact retention and profit margins.
These efforts may require us to make substantial expenditures, which may negatively impact results in the near term, and if not successful, could materially and adversely affect our results of operations.
We may be adversely affected if our pricing and capital models provide materially different indications than actual results. Our profitability substantially depends on the extent to which our actual claims experience is consistent with the assumptions we use in pricing our policies. We utilize proprietary and third-party models to help us price business in a manner that is intended to be consistent, over time, with actual results and return objectives. We incorporate our historical loss experience, external industry and other data, and economic indices into our modeling processes, and we use various methods, including predictive modeling, forecasting and sophisticated simulation modeling techniques, to analyze loss trends and the risks associated with our assets and liabilities. We also use these modeling processes, analyses and methods in making underwriting, pricing and reinsurance decisions as part of managing our exposure to catastrophes and other extreme adverse events. These modeling processes incorporate numerous assumptions and forecasts about the future level and variability of the frequency and severity of losses, inflation, interest rates and capital requirements, among others, that are difficult to make and may differ materially from actual results. In addition, as the number of third-party models increases, it becomes more difficult to validate, manage and integrate such models as they evolve over time, and the risk associated with assimilating the output from such models into our decisions increases.
If we fail to appropriately price the risks we insure or fail to change our pricing models to appropriately reflect our experience, or if our claims experience is more frequent or severe than our underlying risk assumptions, for example due to inflation, changing climate conditions, legislative or regulatory changes, changes in behavior such as distracted or faster driving or a more aggressive tort environment, our profit margins may be negatively affected. If we underestimate the frequency and/or severity of extreme adverse events occurring, our financial condition may be adversely affected. If we overestimate the risks we are exposed to, we may overprice our products, and new business growth and retention of our existing business may be adversely affected. See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Catastrophe Modeling.”
We are subject to additional risks associated with our business outside the United States. We conduct business outside the United States primarily in Canada, the United Kingdom and the Republic of Ireland. In addition, we conduct business in Brazil and Colombia through joint ventures, and throughout other parts of the world, including as a corporate member of Lloyd’s and through our quota share agreement with Fidelis. We may also explore opportunities in other countries. In conducting business outside of the United States, we are subject to a number of risks, particularly in emerging economies. These risks include restrictions such as price controls, capital controls, currency exchange limits, ownership limits and other restrictive or anti-competitive governmental actions or requirements, which could have an adverse effect on our business and our reputation. A portion of our premiums from outside of the United States is generated in Canada, a substantial portion of which consists of automobile premiums from the province of Ontario, which is a highly regulated market that can result in rate inadequacy. Our business activities outside the United States may also subject us to currency risk and, in some markets, it may be difficult to effectively hedge that risk, or we may choose not to hedge that risk.
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In addition, in some markets, we invest as part of a joint venture with a local counterparty. Because our governance rights may be limited, we may not have control over the ability of the joint venture to make certain decisions and/or mitigate risks it faces, and significant disagreements with a joint venture counterparty may adversely impact our investment and/or reputation. Our business activities outside the United States could subject us to increased volatility in earnings resulting from the need to recognize and subsequently revise a valuation allowance associated with income taxes if we became unable to fully utilize any deferred tax assets, including loss carry-forwards from those foreign operations. Also, political instability and geopolitical tensions have at times resulted, and may in the future result, in inflation, reduced growth, supply chain and financial market disruption or an economic downturn in such regions. For certain businesses, we give third parties binding authority to write business on our behalf, and in the case of Fidelis, we assume a percentage of its business under a reinsurance agreement, which exposes us to additional risks, including with respect to certain products, risks and geographies we do not normally cover.
Our business activities outside the United States also subject us to additional domestic and foreign laws and regulations, including the Foreign Corrupt Practices Act and similar laws in other countries that prohibit the making of improper payments to foreign officials. Although we have policies and controls in place that are designed to ensure compliance with these laws, if those controls are ineffective and/or an employee or intermediary fails to comply with applicable laws and regulations, we could suffer civil and criminal penalties and our business and our reputation could be adversely affected. Some countries, particularly emerging economies, have laws and regulations that lack clarity and, even with local expertise and effective controls, it can be difficult to determine the exact requirements of, and potential liability under, the local laws. In some jurisdictions, including Brazil, parties to a joint venture may, in some circumstances, have liability for some obligations of the venture, and that liability may extend beyond the capital invested. Failure to comply with local laws in a particular market may result in substantial liability and could have a significant and negative effect not only on our business in that market but also on our reputation generally.
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 our products could reduce our future profitability. Our underwriting profitability depends in large part on our ability to competitively price our products at a level that will adequately compensate us for the risks assumed. As a result, risk selection and pricing through the application of actuarially sound and segmented underwriting criteria is critical. However, laws or regulations, or judicial or administrative findings, could significantly curtail the use of particular types of underwriting criteria. For example, we may use credit scoring as a factor in pricing decisions where allowed by state law. Some consumer groups and/or regulators have alleged that the use of credit scoring violates the law by discriminating against persons belonging to a protected class and are calling for the prohibition or restrictions on the use of credit scoring in underwriting and pricing. A variety of other underwriting criteria and other data or methodologies used in personal and commercial insurance have been and continue to be criticized by regulators, government agencies, consumer groups or individuals on similar or other grounds, such as the impact of external data sources, artificial intelligence, algorithms and predictive models on protected classes of customers, and a number of states have begun rulemaking efforts in response or are considering doing so. Resulting legislative or regulatory actions or litigation could result in negative publicity and/or generate adverse rules or findings, such as curtailing the use of important underwriting criteria, or other data or methodologies, which could materially and adversely affect our results of operations.
Future pandemics (including new variants of COVID-19), could materially affect our results of operations, financial position and/or liquidity. COVID-19 presented, and any future pandemics (including new variants of COVID-19) could present, the following risks, among others: inflation; supply chain disruption; labor shortages; backlogs in the court system (which increase the time and costs to resolve claims); legal and regulatory demands for rate refunds; behavioral changes can result in the increased frequency and severity of claims, such as driving at faster speeds; medical conditions such as “long-COVID” and other claims in our workers compensation line; litigation seeking business interruption coverage; reduced earned premiums; higher claim and claim adjustment expenses in certain lines of business; adverse legislative or regulatory actions; operational disruptions; increased general and administrative expenses; financial market disruption; and an economic downturn. These risks could materially and adversely impact our results of operations, financial position and/or liquidity. For a further discussion of risks that can impact us as a result of financial market disruption or an economic downturn, see “During or following a period of financial market disruption or an economic downturn, our business could be materially and adversely affected” above and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook.”
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Technology and Intellectual Property Risks
Our business success and profitability depend, in part, on effective information technology systems and on continuing to develop and implement improvements in technology, particularly as our business processes become more digital. We depend in large part on our technology systems for conducting business and processing claims, as well as for providing the data and analytics we utilize to manage our business. As a result, our business success is dependent on maintaining the effectiveness of existing technology systems and on continuing to develop and enhance technology systems that support our business processes and strategic initiatives in an efficient manner, particularly as our business processes become more digital and seek to incorporate artificial intelligence, and certain of our products, such as cyber insurance, are more technology-based. Some system development projects are long-term in nature, may negatively impact our expense ratios as we invest in the projects and may cost more than we expect to complete. In addition, system development projects may not deliver the benefits or perform as expected, or may be replaced or become obsolete more quickly than expected, which could result in operational difficulties, additional costs or accelerated recognition of expenses. Attracting and retaining technology personnel has also become significantly more challenging in recent periods. If we do not effectively and efficiently manage and upgrade our technology portfolio, or if the costs of doing so are higher than we expect, our ability to provide competitive services to, and conduct business with, new and existing customers in a cost effective manner and our ability to implement our strategic initiatives could be adversely impacted.
If we experience difficulties with technology, data and network security (including as a result of cyber attacks), outsourcing relationships or cloud-based technology, our ability to conduct our business could be negatively impacted. A shut-down of, or inability to access, one or more of our facilities (including our primary data processing facility); a power outage; or a failure of one or more of our systems could significantly impair our ability to perform necessary business functions on a timely basis. In the event of a computer virus or natural or other disaster, our systems could be inaccessible for an extended period of time, including as a result of hostile actions taken by nation-states or terrorist organizations. In addition, because our systems increasingly interface with and depend on third-party systems, including cloud-based, we could experience service denials or failures of controls if demand for our service exceeds capacity or a third-party system fails or experiences an interruption. Business interruptions and failures of controls could also result if our internal systems do not interface with each other as intended or if changes to such systems or our other business processes, such as new payment technologies, are not effectively implemented. Business continuity can also be disrupted by an event, such as a pandemic, that renders large numbers of a workforce unable to work as needed, particularly at critical locations. If our business continuity plans do not sufficiently address a business interruption, system failure or service denial, this could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. In addition, should internet disruptions occur, or frustration with our business platforms or distribution initiatives develop among our independent agents and brokers, any resulting loss of business could materially and adversely affect our future business volume and results of operations.
Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. Computer viruses, hackers and employee or vendor misconduct, and other external hazards (such as social engineering attacks), could expose our data systems to security breaches, cyber-attacks or other disruptions. Increased use of data supplied by third parties in our business increases our exposure to this risk. While we attempt to develop secure transmission capabilities with third-party vendors and others with whom we do business, we may not be successful and, in addition, these third parties may not have appropriate controls in place to protect the confidentiality of the information.
Like other global companies, our computer systems are regularly subject to and will continue to be the target of computer viruses, malware or other malicious codes (including ransomware), unauthorized access, cyber-attacks or other computer-related penetrations. The Company, like other property and casualty insurers, may be under greater threat from cybercriminals seeking sensitive personal or other insurance-related information. The risk of cyber attacks could be exacerbated by geopolitical tensions, including hostile actions taken by nation-states or terrorist organizations.
While we have experienced cyber-attacks, to date, we are not aware that we have experienced a material cyber-security breach. The sophistication of these threats continues to increase, and the preventative actions we take to reduce the risk of cyber incidents and protect our systems and information may be insufficient. In addition, new technology that could result in greater operational efficiency, including artificial intelligence, may further expose our computer systems to the risk of cyber-attacks. Also, our increased use of open source software, cloud technology and software as a service can make it more difficult to identify and remedy such situations due to the disparate location of code utilized in our operations.
We have outsourced certain technology and business process functions to third parties and may increasingly do so in the future. If we do not effectively develop, implement and monitor our vendor relationships, if third party providers do not perform as anticipated or experience financial difficulties, if we experience technological or other problems with a transition, or if vendor relationships relevant to our business process functions are terminated, we may not realize expected productivity improvements or cost efficiencies and may experience operational difficulties, increased costs and a loss of business.
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Our outsourcing of certain technology and business process functions to third parties may expose us to increased risk related to data and cyber security, service disruptions or the effectiveness of our control system. These risks could increase as additional functions move to the cloud and as dependencies and interconnections with the third parties with whom we do business increase.
The increased risks identified above could expose us to data loss or manipulation, disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs and costs to improve the security and resiliency of our computer systems. The compromise of personal, confidential or proprietary information could also subject us to significant legal liability or regulatory action under evolving cyber-security, data protection and privacy laws and regulations enacted by the U.S. federal and state governments, Canada, the European Union or other jurisdictions or by various regulatory organizations or exchanges. As a result, our ability to conduct our business and our results of operations might be materially and adversely affected.
Intellectual property is important to our business, and we may be unable to protect and enforce our own intellectual property or we may be subject to claims for infringing the intellectual property of others. Our success depends in part upon our ability to protect our proprietary trademarks, technology and other intellectual property. See “Item 1—Business—Other Information—Intellectual Property.” We may not, however, be able to protect our intellectual property from unauthorized use and disclosure by others. Further, the intellectual property laws may not prevent our competitors from independently developing trademarks, products and services that are similar to ours. We may incur significant costs in our efforts to protect and enforce our intellectual property, including the initiation of expensive and protracted litigation, and we may not prevail. Any inability to enforce our intellectual property rights could have a material adverse effect on our business and our ability to compete.
We may be subject to claims by third parties from time to time that our products, services and technologies infringe on their intellectual property rights. In recent years, certain entities have acquired patents in order to allege claims of infringement against companies, including in some cases, us. Any intellectual property infringement claims brought against us could cause us to spend significant time and money to defend ourselves, regardless of the merits of the claims. If we are found to infringe any third-party intellectual property rights, it could result in reputational harm, payment of significant monetary damages or fees and/or substantial time and expense to redesign our products, services or technologies to avoid the infringement. In addition, we use third-party software in some of our products, services and technologies. If any of our software vendors or licensors are faced with infringement claims, we may lose our ability to use such software until the dispute is resolved. If we cannot successfully redesign an infringing product, service or technology (or procure a substitute version), this could have a material adverse effect on our business and ability to compete.
Regulatory and Compliance Risks
Our businesses are heavily regulated by the states and countries in which we conduct business, including licensing, market conduct and financial supervision, and changes in regulation, including changes in tax regulation, may reduce our profitability and limit our growth. These regulatory systems are generally designed to protect the interests of policyholders, and not necessarily the interests of insurers, their shareholders and other investors. For example, to protect policyholders whose insurance company becomes financially insolvent, guaranty funds have been established in all 50 states to pay the covered claims of policyholders in the event of an insolvency of an insurer, subject to applicable state limits. The funding of guaranty funds is provided through assessments levied against remaining insurers in the marketplace. As a result, the insolvency of one or more insurance companies or an increase in amounts paid by guaranty funds could result in additional assessments levied against us.
These regulatory systems also address authorization for lines of business, statutory capital and surplus requirements, limitations on the types and amounts of certain investments, underwriting limitations, transactions with affiliates, dividend limitations, changes in control, premium rates and a variety of other financial and non-financial components of an insurer’s business including, recently, cyber-security. In addition, many jurisdictions restrict the timing and/or the ability of an insurer to discontinue writing a line of business or to cancel or non-renew certain policies. Insurance regulators may also increase the statutory capital and surplus requirements for our insurance subsidiaries or, as has happened recently in certain states, reject or delay rate increases or other changes to terms and conditions due to the economic environment or other factors and/or expand FAIR plans or similar residual market mechanisms. The adverse impacts of these types of actions have caused some insurance companies to withdraw from certain states, resulting in market dislocations for those insurance companies that remain. These market dislocations make it harder for the remaining companies to maintain their market presence and manage their exposures and profitability. In addition, state tax laws that specifically impact the insurance industry, such as premium taxes, or more general tax laws, such as U.S. federal corporate taxes, could be enacted or changed and could have a material adverse impact on us. Other legislative actions could impact our business as well. For example, changes to state law regarding workers’ compensation insurance could impact the demand for our products, and the legalization of cannabis in certain states has, according to some studies, resulted in more automobile accidents.
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In addition, the potential repeal of the McCarran-Ferguson Act (which exempts insurance from most federal regulation) or a change to the federal health care system that eliminates or reduces the need for the medical coverage component of workers’ compensation insurance, could also significantly harm the insurance industry, including us. State, federal and international regulators are also increasingly focused on imposing new reporting and other requirements, which in some cases can be conflicting, on a multitude of topics. Changes in applicable legislation and regulations and future court and regulatory decisions may be more restrictive and may result in lower revenues, higher costs of compliance and higher risk of non-compliance and, as a result, could materially and adversely affect our results of operations. See also “Item 1 – Business – Regulation.”
We could be adversely affected if our controls designed to ensure compliance with guidelines, policies and legal and regulatory standards are not effective. Our business is highly dependent on our ability to engage on a real-time basis in a large number of insurance underwriting, claim processing, treasury and investment activities, many of which are highly complex and constantly evolving, including from a systems perspective. These activities, particularly when new technologies such as artificial intelligence are incorporated, often require internal governance, guidelines and policies, and are subject to legal and regulatory standards. A control system, no matter how well designed and operated, can provide only reasonable assurance that the control system’s objectives will be met. If our controls, or the controls of our joint ventures or recently acquired businesses, are not effective (including with respect to the prevention or identification of misconduct by employees or others with whom we do business), it could lead to financial loss, unanticipated risk exposure (including underwriting, credit and investment risk), errors in financial reporting, litigation, regulatory proceedings or damage to our reputation.

Item 1B.    UNRESOLVED STAFF COMMENTS
NONE.

Item 1C.    CYBERSECURITY
Risk management and strategy
The Company has implemented technologies and tools to evaluate its cybersecurity protections and maintain a cyber risk management strategy related to its technology infrastructure that includes monitoring emerging cybersecurity threats and assessing appropriate responsive measures.
Risk Identification
The Company’s Chief Information Security Officer (“CISO”) and Cybersecurity team are actively engaged within the cybersecurity community in order to monitor emerging trends and developments and share best practices for identifying and mitigating cyber threats. For example, the Company participates in threat intelligence information-sharing networks, such as the Financial Services Information Sharing and Analysis Center (FS-ISAC). The Company also tracks industry and government intelligence sources for information about evolving cyber threats and deploys updates to its systems, as appropriate. The Company’s Cybersecurity team monitors and investigates suspicious events.
Risk Assessment
The Company performs an annual cybersecurity risk and control assessment as part of the Enterprise Risk Management team’s risk assessment processes. The CISO and the Company’s Chief Technology and Operations Officer review and approve the cybersecurity assessment. In addition, as part of their regular responsibilities, the Company’s Governance, Risk and Compliance officers within its Technology and Cybersecurity groups assess technology and cybersecurity risks by leveraging the Company’s risk framework related to technology and cybersecurity, which aligns with the Company’s enterprise risk management strategy.
On an annual basis, under the direction of the Company’s Chief Risk Officer, the Company’s Technology, Cybersecurity and Business Resiliency groups also participate in the enterprise-wide Own Risk and Solvency Assessment (“ORSA”), which outlines identified risks and describes the controls in place across the Company to address those risks. The ORSA is reviewed with the Company’s lead regulator, the State of Connecticut Department of Insurance, which in turn performs periodic financial examinations, including a technology control assessment.
In addition, the Company regularly self-assesses against its internal policies, using its internal risk assessment process and a variety of frameworks, such as the New York Department of Financial Services Cybersecurity Requirements for Financial Services Companies, the Insurance Data Security Model Law as adopted and modified by various states and the Payment Card Industry Data Security Standard.
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As the workforce, the work environment and the threat landscape continue to evolve, the Company seeks to evaluate related risks and implement appropriate controls.
Risk Management
The Company maintains cybersecurity policies and standards which align with the International Organization for Standardization (ISO) 27001 standard and the National Institute of Standards and Technology (NIST) Cybersecurity Framework. The Company’s cybersecurity policies and standards have been developed in collaboration with groups across the enterprise, such as Legal, Compliance and each of its business segments. The Company’s policies include, for example, Information and System Use policies for employee and non-employee system users. These policies reinforce the data privacy and protection sections of the Company’s Code of Business Conduct and Ethics.
The Company uses technologies and tools, as appropriate, to enhance cybersecurity, such as multifactor authentication, encryption, firewalls, intrusion detection and prevention systems, endpoint detection and response, vulnerability scanning, penetration testing, patch management and identity and access management systems. These systems are designed, implemented and maintained with the goal of identifying, assessing and managing cybersecurity risks. In addition to its internal cybersecurity team, the Company uses internal and external auditors and, as appropriate, third-party consultants, service providers and assessors to review and test its processes.
To help manage risk from potential cybersecurity threats, as part of the annual Code of Business Conduct and Ethics training, all Company employees receive data protection and privacy training, which focuses on the need to appropriately protect and secure confidential Company information. Additionally, the Company provides annual security awareness training that covers a broad range of security topics. The Company also provides regular targeted training on topics such as phishing and secure application development, among others. In addition to online training, employees are provided with cybersecurity related information through a number of different methods, including event-triggered awareness campaigns, recognition programs, security presentations, intranet articles, videos, system-generated communications, email publications and various simulation exercises.
The Company has a Security Incident Response Framework in place. The framework is a set of coordinated procedures and tasks that the Company’s Incident Response team, under the direction of the CISO, executes with the goal of ensuring timely and effective resolution of cybersecurity incidents. To maintain the robustness of the framework, from time-to-time the Company conducts cybersecurity tabletop testing exercises.
As part of the Company’s supplier risk management program, using a risk-based approach, the Cybersecurity team conducts formal risk assessments with respect to certain of the Company’s third-party service providers. The assessment process addresses aspects of the service providers’ data security controls and policies. The team also conducts reassessments of its third-party risk assessments, the frequency of which is determined based on a risk assessment and rating process. Where appropriate, the Company seeks to incorporate contractual language with third-party service providers that includes clear terms involving the collection, use, sharing and retention of user data, as well as compliance with appropriate security terms.
To date, the Company does not believe that any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected the Company, including its business strategy, results of operations, or financial condition. As discussed more fully under “Item 1A—Risk Factors”, the sophistication of cyber threats continues to increase, and the preventative actions the Company takes to reduce the risk of cyber incidents and protect its systems and information may be insufficient. No matter how well designed or implemented the Company’s cybersecurity controls are, it will not be able to anticipate all security breaches, and it may not be able to implement effective preventive measures against cybersecurity breaches in a timely manner. See “Item 1A—Risk Factors—If we experience difficulties with technology, data and network security (including as a result of cyber attacks), outsourcing relationships or cloud-based technology, our ability to conduct our business could be negatively impacted.”
Governance
The Risk Committee of the Board, consistent with its charter, reviews and discusses with management the strategies, processes and controls pertaining to the management of the Company’s information technology operations, including cyber risks and cybersecurity. The CISO typically provides quarterly updates regarding cybersecurity and cyber risk to executive management and the Risk Committee of the Company’s Board of Directors.
The CISO leads the Company’s cybersecurity department. The CISO reports to the Chief Technology and Operations Officer and is a member of the Enterprise Risk team and the Company’s Disclosure Committee. The CISO has over 20 years of cybersecurity and information security risk compliance and threat analysis experience. Prior to joining the Company in 2023, the CISO served as Chief Security Officer for a national telecommunications service provider.
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Under the direction of the CISO, the Company’s Cybersecurity department analyzes cybersecurity and resiliency risks to the Company’s business, considers industry trends and implements controls, as appropriate, to mitigate these risks. This analysis drives the Company’s long- and short-term strategies, which are executed through a collaborative effort within Technology, Cybersecurity and Business Resiliency and are communicated to the Risk Committee of the Board of Directors on a regular basis.

Item 2.    PROPERTIES
The Company leases its principal executive offices in New York, New York, as well as approximately 160 field and claim offices throughout the United States under leases or subleases with third parties. The Company also leases offices outside the United States, including in Canada, the United Kingdom and the Republic of Ireland. The Company owns six buildings in Hartford, Connecticut. The Company also owns buildings located in other areas of Connecticut; Norcross, Georgia; St. Paul, Minnesota; and Omaha, Nebraska.
In the opinion of the Company’s management, the Company’s properties are adequate and suitable for its business as presently conducted and are adequately maintained.

Item 3.    LEGAL PROCEEDINGS
The information required with respect to this item can be found under “Contingencies” in note 17 of the notes to the consolidated financial statements in this annual report and is incorporated by reference into this Item 3.

Item 4.    MINE SAFETY DISCLOSURES
NONE.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Information about the Company’s executive officers is incorporated by reference from Part III—Item 10 of this annual report.

PART II

Item 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock is traded on the New York Stock Exchange under the symbol “TRV.” The number of holders of record of the Company’s common stock was 31,097 as of February 12, 2024. This is not the actual number of beneficial owners of the Company’s common stock as some shares are held in “street name” by brokers and others on behalf of individual owners.
For information regarding dividends paid to shareholders in 2023 and 2022 and the declaration and payment of future dividends, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities—Dividends.”

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SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph shows a five-year comparison of the cumulative total return to shareholders for the Company’s common stock and the common stock of companies included in the S&P 500 Index and the S&P 500 Property & Casualty Insurance Index, which the Company believes is the most appropriate comparative index.
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As of December 31,
2018 2019 2020 2021 2022 2023
The Travelers Companies, Inc. $ 100.00  $ 117.01  $ 123.27  $ 140.50  $ 171.99  $ 178.75 
S&P 500 Index 100.00  131.47  155.65  200.29  163.98  207.04 
S&P 500 Property & Casualty Insurance Index 100.00  125.87  133.84  157.27  186.95  207.04 
________________________________________
(1)The cumulative total return to shareholders is a concept used to compare the performance of a company’s stock over time. Cumulative total return to shareholders is calculated as the net stock price change for the specified time period plus the cumulative amount of dividends (assuming dividend reinvestment on the respective dividend payment dates) divided by the stock price at the beginning of the time period.
(2)Assumes $100 invested in common shares of The Travelers Companies, Inc. on December 31, 2018.
(3)Companies in the S&P 500 Property & Casualty Insurance Index as of December 31, 2023 were the following: The Travelers Companies, Inc., Chubb Limited, Cincinnati Financial Corporation, The Progressive Corporation, The Allstate Corporation, Loews Corporation (CNA), W.R. Berkley Corporation, Arch Capital Group Limited and The Hartford Financial Services Group, Inc. Returns of each of the companies included in this index have been weighted according to their respective market capitalizations.
A long-term perspective is particularly important in the property and casualty insurance industry, where the periodic occurrences of significant catastrophes have historically produced results that can vary significantly year-to-year. Accordingly, the Company manages with a long-term perspective. From January 1, 2007, the year prior to the financial crisis, through December 31, 2023, the Company’s cumulative return to shareholders was 437% as compared to 372% for the S&P 500 Index and 336% for the S&P 500 Property & Casualty Insurance Index.
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ISSUER PURCHASES OF EQUITY SECURITIES
The table below sets forth information regarding repurchases by the Company of its common stock during the periods indicated.
Period Beginning Period Ending Total number
of shares
purchased
Average
price paid
per share (1)
 Total number of
shares purchased
as part of
publicly announced
plans or programs		 Approximate
dollar value of
shares that may
yet be purchased
under the
plans or programs
(in millions)
Oct. 1, 2023 Oct. 31, 2023 3,502  $ 143.00  —  $ 6,105 
Nov. 1, 2023 Nov. 30, 2023 1,404  $ 52.02  —  $ 6,105 
Dec. 1, 2023 Dec. 31, 2023 351,997  $ 185.72  351,448  $ 6,040 
      Total 356,903  $ 184.78  351,448  $ 6,040 
___________________________________________
(1)The average price paid per share includes the impact of the 1% federal excise tax imposed on share repurchase activity, net of any shares issued, as part of the Inflation Reduction Act of 2022. During months when the value of shares issued exceeds the fair value of any shares repurchased, the reduction of the excise tax results in a reduction of the overall cost of shares repurchased.
The Company’s Board of Directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise. The most recent authorization was approved by the Board of Directors on April 19, 2023 and added $5.0 billion of repurchase capacity to the $1.60 billion capacity remaining at that date. The authorizations do not have a stated expiration date. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels appropriate for the Company’s business operations, 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, changes in tax laws (including the Inflation Reduction Act) and other factors. The cost of treasury stock acquired pursuant to common share repurchases includes the 1% excise tax imposed on common share repurchase activity, net of common share issuances, as part of the Inflation Reduction Act of 2022.
The Company acquired 5,455 shares for a total cost of approximately $907,000 during the three months ended December 31, 2023 that were not part of the publicly announced share repurchase authorization. These shares consisted of shares retained to cover payroll withholding taxes in connection with the vesting of restricted stock unit awards and performance share awards, and shares used by employees to cover the price of certain stock options that were exercised.
For additional information regarding the Company’s share repurchases, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
Information relating to compensation plans under which the Company’s equity securities are authorized for issuance is set forth in “Part III—Item 12” of this Report.
Item 6.    RESERVED

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Item 7.         MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of the Company’s financial condition and results of operations for the years ended December 31, 2023 and 2022, including year-to-year comparisons between 2023 and 2022. Year-to-year comparisons between 2022 and 2021 have been omitted from this Form 10-K, but may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

FINANCIAL HIGHLIGHTS
2023 Consolidated Results of Operations
•Net income of $2.99 billion, or $12.93 per share basic and $12.79 per share diluted
•Net earned premiums of $37.76 billion
•Catastrophe losses of $2.99 billion ($2.36 billion after-tax)
•Net favorable prior year reserve development of $143 million ($113 million after-tax)
•Combined ratio of 97.0%
•Net investment income of $2.92 billion ($2.44 billion after-tax)
•Net realized investment losses of $105 million ($81 million after-tax)
•Operating cash flows of $7.71 billion
2023 Consolidated Financial Condition
•Total investments of $88.81 billion; fixed maturities and short-term securities comprised 93% of total investments
•Total assets of $125.98 billion
•Total debt of $8.03 billion, resulting in a debt-to-total capital ratio of 24.4% (22.3% excluding net unrealized investment losses, net of tax, included in shareholders’ equity)
•Total capital returned to shareholders of $1.94 billion, comprising $1.03 billion of share repurchases and $915 million of dividends
•Shareholders’ equity of $24.92 billion
•Net unrealized investment losses of $3.97 billion ($3.13 billion after-tax)
•Book value per common share of $109.19
•Holding company liquidity of $1.54 billion

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CONSOLIDATED OVERVIEW
Consolidated Results of Operations
(for the year ended December 31, in millions except ratio and per share amounts) 2023 2022 2021
Revenues      
Premiums $ 37,761  $ 33,763  $ 30,855 
Net investment income 2,922  2,562  3,033 
Fee income 433  412  402 
Net realized investment gains (losses) (105) (204) 171 
Other revenues 353  351  355 
Total revenues 41,364  36,884  34,816 
Claims and expenses      
Claims and claim adjustment expenses 26,215  22,854  20,298 
Amortization of deferred acquisition costs 6,226  5,515  5,043 
General and administrative expenses 5,176  4,810  4,677 
Interest expense 376  351  340 
Total claims and expenses 37,993  33,530  30,358 
Income before income taxes 3,371  3,354  4,458 
Income tax expense 380  512  796 
Net income $ 2,991  $ 2,842  $ 3,662 
Net income per share      
Basic $ 12.93  $ 11.91  $ 14.63 
Diluted $ 12.79  $ 11.77  $ 14.49 
Combined ratio      
Loss and loss adjustment expense ratio 68.9  % 67.1  % 65.1  %
Underwriting expense ratio 28.1  28.5  29.4 
Combined ratio 97.0  % 95.6  % 94.5  %
The following discussions of the Company’s net income and segment income (loss) are presented on an after-tax basis.  Discussions of the components of net income and segment income (loss) are presented on a pre-tax basis, unless otherwise noted.  Discussions of net income per common share are presented on a diluted basis.
Overview
Diluted net income per share of $12.79 in 2023 increased by 9% over diluted net income per share of $11.77 in 2022. Net income of $2.99 billion in 2023 increased by 5% over net income of $2.84 billion in 2022. The increase in diluted net income per share reflected the impact of share repurchases in recent periods. The increase in income before income taxes primarily reflected the pre-tax impacts of (i) higher underwriting margins excluding catastrophe losses and prior year reserve development (“underlying underwriting margins”), (ii) higher net investment income and (iii) lower net realized investment losses, partially offset by (iv) higher catastrophe losses and (v) lower net favorable prior year reserve development. Catastrophe losses in 2023 and 2022 were $2.99 billion and $1.88 billion, respectively. Net favorable prior year reserve development in 2023 and 2022 was $143 million and $649 million, respectively. The higher underlying underwriting margins in 2023 were driven by Personal Insurance and Business Insurance, partially offset by Bond & Specialty Insurance. Income tax expense in 2023 was lower than in 2022, primarily reflecting a one-time tax benefit of $211 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item, partially offset by a $47 million reduction in income tax expense in the first quarter of 2022 as a result of the resolution of prior year tax matters and the impact of the increase in income before income taxes.
The Company has insurance operations in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world as a corporate member of Lloyd’s, as well as in Brazil and Colombia through joint ventures. Because these operations are conducted in local currencies other than the U.S. dollar, the Company is subject to changes in foreign currency exchange rates. For the years ended December 31, 2023 and 2022, changes in foreign currency exchange rates impacted reported line items in the statement of income by insignificant amounts.
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The impact of these changes was not material to the Company’s net income or segment income (loss) for the periods reported.
Revenues
Earned Premiums
Earned premiums in 2023 were $37.76 billion, $4.00 billion or 12% higher than in 2022. In Business Insurance, earned premiums in 2023 increased by 12% over 2022. In Bond & Specialty Insurance, earned premiums in 2023 increased by 7% over 2022. In Personal Insurance, earned premiums in 2023 increased by 13% over 2022. Factors contributing to the change in earned premiums in each segment in 2023 as compared with 2022 are discussed in more detail in the segment discussions that follow.
Net Investment Income
The following table sets forth information regarding the Company’s investments.
(for the year ended December 31, in millions) 2023 2022 2021
Average investments(1)
 $ 90,941  $ 87,191  $ 83,574 
Pre-tax net investment income 2,922  2,562  3,033 
After-tax net investment income 2,436  $ 2,170  2,541 
Average pre-tax yield(2)
 3.2  % 2.9  % 3.6  %
Average after-tax yield(2)
 2.7  % 2.5  % 3.0  %
___________________________________________
(1)Excludes net unrealized investment gains and losses and reflects cash, receivables for investment sales, payables on investment purchases and accrued investment income.
(2)Excludes net realized and net unrealized investment gains and losses.
Net investment income in 2023 was $2.92 billion, $360 million or 14% higher than in 2022. Net investment income from fixed maturity investments in 2023 was $2.47 billion, $359 million higher than in 2022. The increase primarily resulted from higher long-term average yields and a higher average level of fixed maturity investments. Net investment income from short-term securities in 2023 was $241 million, $168 million higher than in 2022. The increase primarily resulted from higher short-term average yields. The Company’s remaining investment portfolios had net investment income of $253 million in 2023, $166 million lower than in 2022, primarily reflecting lower real estate and private equity partnership returns. Included in other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity method of accounting and typically report their financial statement information to the Company one month to three months following the end of the reporting period. Accordingly, net investment income from these other investments is generally reflected in the Company’s financial statements on a quarter lag basis.
Fee Income
Fee income in 2023 was $433 million, $21 million higher than in 2022. The National Accounts market in Business Insurance is the primary source of the Company’s fee-based business and is discussed in the Business Insurance segment discussion that follows. 
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Net Realized Investment Gains (Losses)
The following table sets forth information regarding the Company’s net pre-tax realized investment gains (losses).
(for the year ended December 31, in millions) 2023 2022 2021
Impairment gains (losses):
   Fixed maturities $ (3) $ (26) $ (2)
Real estate investments (9) (12) — 
Net realized investment gains (losses) on equity securities still held 16  (61) 78 
Other net realized investment gains (losses), including from sales (109) (105) 95 
Total $ (105) $ (204) $ 171 
Net realized investment gains on equity securities still held of $16 million in 2023 were driven by the impact of changes in fair value attributable to favorable equity markets, partially offset by a net unfavorable change in fair value on an individual security held in the Company’s portfolio. Net realized investment losses on equity securities still held of $61 million in 2022 were driven by the impact of changes in fair value attributable to unfavorable equity markets.
Other net realized investment losses in 2023 included $93 million of net realized investment losses related to fixed maturity investments, $7 million of net realized investment losses related to equity securities sold and $9 million of net realized investment losses related to other investments. Other net realized investment losses in 2022 included $72 million of net realized investment losses related to fixed maturity investments, $8 million of net realized investment losses related to equity securities sold and $25 million of net realized investment losses related to other investments.
Other Revenues
Other revenues in 2023 were $353 million, $2 million higher than 2022. Other revenues include revenues from Simply Business, installment premium charges and other policyholder service charges.
Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in 2023 were $26.22 billion, $3.36 billion or 15% higher than 2022, primarily reflecting the impacts of (i) higher business volumes, (ii) higher catastrophe losses, (iii) lower net favorable prior year reserve development, (iv) higher losses in the automobile product line in Personal Insurance, (v) losses from a small number of surety accounts in Bond & Specialty Insurance and (vi) loss activity related to the disruption in the banking sector in Bond & Specialty Insurance, partially offset by (vii) a lower level of property losses in Business Insurance and (viii) lower losses in the homeowners and other product line in Personal Insurance. Catastrophes in 2023 primarily resulted from numerous severe wind and hail storms in multiple states. Catastrophes in 2022 primarily resulted from a significant winter storm that impacted most of the U.S. and parts of Canada and Hurricanes Ian and Fiona, as well as severe wind and hail storms in several regions of the United States.
Factors contributing to net favorable prior year reserve development during the years ended December 31, 2023, 2022 and 2021 are discussed in more detail in note 8 of the notes to the consolidated financial statements.
Significant Catastrophe Losses
The Company defines a “catastrophe” as an event:
•that is 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; and
•for which the Company’s estimates of its ultimate losses before reinsurance and taxes exceed a pre-established dollar threshold.
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.
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The threshold for 2023 ranged from approximately $20 million to $30 million of losses before reinsurance and taxes.
The following table presents the amount of losses recorded by the Company for significant catastrophes that occurred in 2023, 2022 and 2021, the amount of net unfavorable (favorable) prior year reserve development recognized in 2023 and 2022 for catastrophes that occurred in 2022 and 2021, and the estimate of ultimate losses for those catastrophes at December 31, 2023, 2022 and 2021. For purposes of the table, a significant catastrophe is an event for which the Company estimates its ultimate losses will be $100 million or more after reinsurance and before taxes.
  Losses Incurred / Unfavorable (Favorable)
Prior Year Reserve Development for the  Year Ended December 31,		 Estimated Ultimate Losses at
December 31,
(in millions, pre-tax and net of reinsurance)(1)
 2023 2022 2021 2023 2022 2021
2021
PCS Serial Number:
15 — Winter storm (14) (13) 228  201  215  228 
17 — Winter storm (39) (25) 508  444  483  508 
29 — Severe wind storms (2) (12) 105  91  93  105 
60 — Hurricane Ida 26  (81) 417  362  336  417 
76 — Tornado outbreak (8) (18) 131  105  113  131 
2022
PCS Serial Number:
33 — Severe wind and hail storms 1  137  n/a 138  137  n/a
35 — Severe wind and hail storms —  184  n/a 184  184  n/a
43 — Severe wind and hail storms (6) 122  n/a 116  122  n/a
61 — Hurricane Ian (76) 227  n/a 151  227  n/a
73 — Winter storm 158  512  n/a 670  512  n/a
2023
PCS Serial Number:
25 — Severe wind and hail storms 153  n/a n/a 153  n/a n/a
32 — Severe wind and hail storms 140  n/a n/a 140  n/a n/a
33 — Severe wind and hail storms 199  n/a n/a 199  n/a n/a
35 — Severe wind and hail storms 140  n/a n/a 140  n/a n/a
38 — Severe wind and hail storms 110  n/a n/a 110  n/a n/a
42 — Severe wind and hail storms 133  n/a n/a 133  n/a n/a
48 — Severe wind and hail storms 150  n/a n/a 150  n/a n/a
49 — Severe wind and hail storms 133  n/a n/a 133  n/a n/a
51 — Severe wind and hail storms 265  n/a n/a 265  n/a n/a
63 — Severe wind and hail storms 125  n/a n/a 125  n/a n/a
75 — Severe wind and hail storms 190  n/a n/a 190  n/a n/a
___________________________________________
n/a: not applicable.
(1) Amounts are reported pre-tax and net of recoveries under all applicable reinsurance treaties, except for the Company’s 2022 and 2021 Underlying Property Aggregate Catastrophe Excess-of-Loss Treaties. Those treaties covered the accumulation of certain property losses arising from one or multiple occurrences (both catastrophe and non-catastrophe events) for the period January 1, 2022 through and including December 31, 2022 and the period January 1, 2021 through and including December 31, 2021. As a result, the benefit from the 2022 and 2021 treaties are not included in the table as the allocation of the treaties’ benefit to each identified catastrophe changes each time there are additional events or changes in estimated losses from any covered event.
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Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in 2023 was $6.23 billion, $711 million or 13% higher than in 2022. The increase in 2023 was generally consistent with the increase in earned premiums. Amortization of deferred acquisition costs is discussed in more detail in the segment discussions that follow.
General and Administrative Expenses
General and administrative expenses in 2023 were $5.18 billion, $366 million or 8% higher than in 2022, primarily reflecting the impact of costs associated with higher business volumes. General and administrative expenses are discussed in more detail in the segment discussions that follow.
Interest Expense
Interest expense in 2023 and 2022 was $376 million and $351 million, respectively.
Income Tax Expense
Income tax expense in 2023 was $380 million, $132 million or 26% lower than in 2022, primarily reflecting the one-time tax benefit of $211 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item, partially offset by the $47 million reduction in income tax expense in the first quarter of 2022 as a result of the resolution of prior year tax matters and the impact of the $17 million increase in income before income taxes in 2023.
The Company’s effective tax rate was 11% and 15% in 2023 and 2022, respectively. The effective tax rate in 2023 was reduced by the impact of the one-time tax benefit discussed above, and the effective tax rate in 2022 was reduced by the impact of the resolution of prior year tax matters discussed above. The effective tax rates in both years reflected the impact of tax-exempt investment income on the calculation of the Company’s income tax provision.
Combined Ratio
The combined ratio of 97.0% in 2023 was 1.4 points higher than the combined ratio of 95.6% in 2022. The loss and loss adjustment expense ratio of 68.9% in 2023 was 1.8 points higher than the loss and loss adjustment expense ratio of 67.1% in 2022. The underwriting expense ratio of 28.1% in 2023 was 0.4 points lower than the underwriting expense ratio of 28.5% in 2022.
Catastrophe losses in 2023 and 2022 accounted for 7.9 points and 5.5 points, respectively, of the combined ratio. Net favorable prior year reserve development in 2023 and 2022 provided 0.4 points and 1.9 points of benefit, respectively, to the combined ratio. The combined ratio excluding prior year reserve development and catastrophe losses (“underlying combined ratio”) in 2023 was 2.5 points lower than the 2022 ratio on the same basis, primarily reflecting the impacts of (i) the benefit of earned pricing, (ii) a lower level of property losses in Business Insurance and (iii) lower losses in the homeowners and other product line in Personal Insurance, partially offset by (iv) losses from a small number of surety accounts in Bond & Specialty Insurance, (v) loss activity related to the disruption in the banking sector in Bond & Specialty Insurance and (vi) higher losses in the automobile product line in Personal Insurance.
The combined ratio continues to be impacted by the tort environment, including more aggressive attorney involvement in insurance claims.

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Written Premiums
Consolidated gross and net written premiums were as follows:
  Gross Written Premiums
(for the year ended December 31, in millions) 2023 2022 2021
Business Insurance $ 22,569  $ 19,521  $ 17,829 
Bond & Specialty Insurance 4,187  4,082  3,725 
Personal Insurance 16,216  14,273  12,690 
Total $ 42,972  $ 37,876  $ 34,244 
  Net Written Premiums
(for the year ended December 31, in millions) 2023 2022 2021
Business Insurance $ 20,430  $ 17,635  $ 16,092 
Bond & Specialty Insurance 3,842  3,732  3,376 
Personal Insurance 15,929  14,047  12,491 
Total $ 40,201  $ 35,414  $ 31,959 
Gross and net written premiums in 2023 both increased by 13% over 2022. Factors contributing to the changes in gross and net written premiums in each segment are discussed in more detail in the segment discussions that follow.

RESULTS OF OPERATIONS BY SEGMENT
Business Insurance
Results of Business Insurance were as follows:
(for the year ended December 31, in millions) 2023 2022 2021
Revenues      
Earned premiums $ 19,144  $ 17,095  $ 15,734 
Net investment income 2,085  1,864  2,265 
Fee income 400  382  375 
Other revenues 232  248  235 
Total revenues 21,861  19,589  18,609 
Total claims and expenses 18,910  16,522  15,725 
Segment income before income taxes 2,951  3,067  2,884 
Income tax expense 368  536  499 
Segment income $ 2,583  $ 2,531  $ 2,385 
Loss and loss adjustment expense ratio 65.3  % 62.8  % 65.0  %
Underwriting expense ratio 29.4  29.7  30.7 
Combined ratio 94.7  % 92.5  % 95.7  %
Overview
Segment income in 2023 was $2.58 billion, $52 million or 2% higher than segment income of $2.53 billion in 2022. The decrease in segment income before income taxes primarily reflected the pre-tax impacts of (i) net unfavorable prior year reserve development compared to net favorable prior year reserve development in 2022 and (ii) higher catastrophe losses, partially offset by (iii) higher underlying underwriting margins and (iv) higher net investment income. Net unfavorable prior year reserve development in 2023 was $289 million. Net favorable prior year reserve development in 2022 was $381 million. Catastrophe losses in 2023 and 2022 were $838 million and $654 million, respectively. The higher underlying underwriting margins primarily reflected the impacts of (i) higher business volumes, (ii) the benefit of earned pricing and (iii) a lower level of property losses, partially offset by (iv) higher general and administrative expenses. Income tax expense in 2023 was lower than in 2022, primarily reflecting a one-time tax benefit of $171 million in the first quarter of 2023 and the impact of the decrease in segment income before income taxes.
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Revenues
Earned Premiums
Earned premiums in 2023 were $19.14 billion, $2.05 billion or 12% higher than in 2022, primarily reflecting the increase in net written premiums over the preceding twelve months.
Net Investment Income
Net investment income in 2023 was $2.09 billion, $221 million or 12% higher than in 2022. Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the increase in the Company’s consolidated net investment income in 2023 compared with 2022. In addition, refer to note 2 of the notes to the consolidated financial statements for a discussion of the Company’s net investment income allocation methodology.
Fee Income
National Accounts is the primary source of fee income due to revenue from its large deductible policies and service businesses, which include risk management, claims administration, loss control and risk management information services provided to third parties, as well as policy issuance and claims management services to workers’ compensation residual market pools. Fee income in 2023 was $400 million, $18 million or 5% higher than in 2022, primarily reflecting higher claim volume under administration associated with large deductible policies and the service business, partially offset by lower serviced premium volume from the workers’ compensation residual market pool.
Other Revenues
Other revenues in 2023 were $232 million, $16 million or 6% lower than in 2022, primarily reflecting the receipt of a surplus distribution from a state workers’ compensation fund in 2022. Other revenues also included revenues from Simply Business, installment premium charges and other policyholder service charges.
Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in 2023 were $12.70 billion, $1.79 billion or 16% higher than in 2022, primarily reflecting the impacts of (i) net unfavorable prior year reserve development compared to net favorable prior year reserve development in 2022, (ii) higher business volumes, (iii) loss cost trends and (iv) higher catastrophe losses, partially offset by (v) a lower level of property losses.
Factors contributing to net prior year reserve development during the years ended December 31, 2023, 2022 and 2021 are discussed in more detail in note 8 of the notes to the consolidated financial statements.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in 2023 was $3.17 billion, $385 million or 14% higher than in 2022, generally consistent with the increase in earned premiums.
General and Administrative Expenses
General and administrative expenses in 2023 were $3.04 billion, $214 million or 8% higher than in 2022. The increase in 2023 was primarily in support of business growth.
Income Tax Expense
Income tax expense in 2023 was $368 million, $168 million or 31% lower than in 2022, primarily reflecting the one-time tax benefit of $171 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item and the impact of the $116 million decrease in segment income before income taxes in 2023, partially offset by a $3 million reduction in income tax expense in the first quarter of 2022 as a result of the resolution of prior year tax matters.
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Combined Ratio
The combined ratio of 94.7% in 2023 was 2.2 points higher than the combined ratio of 92.5% in 2022. The loss and loss adjustment expense ratio of 65.3% in 2023 was 2.5 points higher than the loss and loss adjustment expense ratio of 62.8% in 2022. The underwriting expense ratio of 29.4% in 2023 was 0.3 points lower than the underwriting expense ratio of 29.7% in 2022.
Catastrophe losses in 2023 and 2022 accounted for 4.3 points and 3.8 points, respectively, of the combined ratio. Net unfavorable prior year reserve development in 2023 accounted for 1.5 points of the combined ratio. Net favorable prior year reserve development in 2022 provided 2.2 points of benefit to the combined ratio. The underlying combined ratio in 2023 was 2.0 points lower than the 2022 ratio on the same basis, primarily reflecting the impacts of (i) the benefit of earned pricing and (ii) a lower level of property losses.
Written Premiums
Business Insurance’s gross and net written premiums by market were as follows:
  Gross Written Premiums
(for the year ended December 31, in millions) 2023 2022 2021
Domestic:      
Select Accounts $ 3,502  $ 3,126  $ 2,860 
Middle Market 11,800  10,532  9,487 
National Accounts 1,665  1,642  1,517 
National Property and Other 3,630  2,942  2,701 
Total Domestic 20,597  18,242  16,565 
International 1,972  1,279  1,264 
Total Business Insurance $ 22,569  $ 19,521  $ 17,829 
  Net Written Premiums
(for the year ended December 31, in millions) 2023 2022 2021
Domestic:      
Select Accounts $ 3,477  $ 3,099  $ 2,833 
Middle Market 11,045  9,923  8,933 
National Accounts 1,135  1,085  987 
National Property and Other 3,008  2,467  2,265 
Total Domestic 18,665  16,574  15,018 
International 1,765  1,061  1,074 
Total Business Insurance $ 20,430  $ 17,635  $ 16,092 
Gross and net written premiums in 2023 both increased by 16% over 2022.
Select Accounts. Net written premiums of $3.48 billion in 2023 increased by 12% over 2022. Retention rates remained strong in 2023 and increased over 2022. Renewal premium changes in 2023 remained positive and were slightly higher than in 2022. New business premiums in 2023 increased over 2022.
Middle Market. Net written premiums of $11.05 billion in 2023 increased by 11% over 2022. Retention rates remained strong in 2023 and increased slightly over 2022. Renewal premium changes in 2023 remained positive and were higher than in 2022. New business premiums in 2023 increased over 2022.
National Accounts. Net written premiums of $1.14 billion in 2023 increased by 5% over 2022. Retention rates remained strong in 2023 and increased over 2022. Renewal premium changes in 2023 remained positive but were lower than in 2022. New business premiums in 2023 increased over 2022.
National Property and Other. Net written premiums of $3.01 billion in 2023 increased by 22% over 2022. Retention rates remained strong in 2023 and increased over 2022. Renewal premium changes in 2023 remained positive and were higher than in 2022. New business premiums in 2023 increased over 2022.
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International. Net written premiums of $1.77 billion in 2023 increased by 66% over 2022, and included the impact of the Company’s quota share reinsurance agreement with subsidiaries of Fidelis Insurance Holding Limited (Fidelis) effective January 1, 2023.

Bond & Specialty Insurance
Results of Bond & Specialty Insurance were as follows:
(for the year ended December 31, in millions) 2023 2022 2021
Revenues      
Earned premiums $ 3,655  $ 3,418  $ 3,138 
Net investment income 328  258  247 
Other revenues 25  20  23 
Total revenues 4,008  3,696  3,408 
Total claims and expenses 2,839  2,593  2,575 
Segment income before income taxes 1,169  1,103  833 
Income tax expense 227  195  165 
Segment income $ 942  $ 908  $ 668 
Loss and loss adjustment expense ratio 40.1  % 39.9  % 46.6  %
Underwriting expense ratio 36.8  35.4  34.9 
Combined ratio 76.9  % 75.3  % 81.5  %
Overview
Segment income in 2023 was $942 million, $34 million or 4% higher than segment income of $908 million in 2022. The increase in segment income before income taxes primarily reflected the pre-tax impacts of (i) higher net investment income and (ii) higher net favorable prior year reserve development, partially offset by (iii) lower underlying underwriting margins. Net favorable prior year reserve development in 2023 and 2022 was $285 million and $222 million, respectively. Catastrophe losses in 2023 and 2022 were $37 million and $25 million, respectively. The lower underlying underwriting margins primarily reflected the impacts of (i) higher general and administrative expenses, (ii) losses from a small number of surety accounts and (iii) loss activity related to the disruption in the banking sector, partially offset by (iv) higher business volumes. Income tax expense in 2023 was higher than in 2022, primarily reflecting a $24 million reduction in income tax expense in the first quarter of 2022 as a result of the resolution of prior year tax matters and the impact of the increase in segment income before income taxes, partially offset by a one-time tax benefit of $9 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.
Revenues
Earned Premiums
Earned premiums in 2023 were $3.66 billion, $237 million or 7% higher than in 2022, primarily reflecting an increase in net written premiums in prior periods, including the impact of longer duration surety bonds and multi-year management liability policies.
Net Investment Income
Net investment income in 2023 was $328 million, $70 million or 27% higher than in 2022. Included in Bond & Specialty Insurance are certain legal entities whose invested assets and related net investment income are reported exclusively in this segment and not allocated among all business segments. Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the increase in the Company’s consolidated net investment income in 2023 as compared with 2022. In addition, refer to note 2 of the notes to the consolidated financial statements for a discussion of the Company’s net investment income allocation methodology.
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Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in 2023 were $1.49 billion, $107 million or 8% higher than in 2022, primarily reflecting the impacts of (i) higher business volumes, (ii) losses from a small number of surety accounts and (iii) loss activity related to the disruption in the banking sector, partially offset by (iv) higher net favorable prior year reserve development.
Factors contributing to net prior year reserve development during the years ended December 31, 2023, 2022 and 2021 are discussed in more detail in note 8 of the notes to the consolidated financial statements.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in 2023 was $673 million, $48 million or 8% higher than in 2022, generally consistent with the increase in earned premiums.
General and Administrative Expenses
General and administrative expenses in 2023 were $681 million, $91 million or 15% higher than in 2022. The increase primarily reflected higher employee and technology related expenses.
Income Tax Expense
Income tax expense in 2023 was $227 million, $32 million or 16% higher than in 2022, primarily reflecting the $24 million reduction in income tax expense in the first quarter of 2022 as a result of the resolution of prior year tax matters and the impact of the $66 million increase in segment income before income taxes in 2023, partially offset by the one-time tax benefit of $9 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.
Combined Ratio
The combined ratio of 76.9% in 2023 was 1.6 points higher than the combined ratio of 75.3% in 2022. The loss and loss adjustment expense ratio of 40.1% in 2023 was 0.2 points higher than the loss and loss adjustment expense ratio of 39.9% in 2022. The underwriting expense ratio of 36.8% in 2023 was 1.4 points higher than the underwriting expense ratio of 35.4% in 2022.
Net favorable prior year reserve development in 2023 and 2022 provided 7.8 points and 6.5 points of benefit, respectively, to the combined ratio.  Catastrophe losses in 2023 and 2022 accounted for 1.0 points and 0.7 points, respectively, of the combined ratio. The underlying combined ratio in 2023 was 2.6 points higher than the 2022 ratio on the same basis, primarily reflecting the impact of (i) a higher expense ratio, (ii) losses from a small number of surety accounts and (iii) loss activity related to the disruption in the banking sector.
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Written Premiums
Bond & Specialty Insurance’s gross and net written premiums were as follows:
  Gross Written Premiums
(for the year ended December 31, in millions) 2023 2022 2021
Domestic:      
Management Liability $ 2,391  $ 2,361  $ 2,243 
Surety 1,219  1,153  952 
Total Domestic 3,610  3,514  3,195 
International 577  568  530 
Total Bond & Specialty Insurance $ 4,187  $ 4,082  $ 3,725 
  Net Written Premiums
(for the year ended December 31, in millions) 2023 2022 2021
Domestic:      
Management Liability $ 2,156  $ 2,112  $ 1,983 
Surety 1,147  1,081  888 
Total Domestic 3,303  3,193  2,871 
International 539  539  505 
Total Bond & Specialty Insurance $ 3,842  $ 3,732  $ 3,376 
Gross written premiums and net written premiums in 2023 both increased by 3% over 2022.
Domestic. Net written premiums of $3.30 billion in 2023 increased by 3% over 2022. Excluding the surety line of business, for which the following are not relevant measures, retention rates remained strong in 2023 and increased over 2022. Renewal premium changes in 2023 remained positive but were lower than in 2022. New business premiums in 2023 increased over 2022.
International. Net written premiums of $539 million in 2023 were comparable with 2022.

Personal Insurance
Results of Personal Insurance were as follows:
(for the year ended December 31, in millions) 2023 2022 2021
Revenues      
Earned premiums $ 14,962  $ 13,250  $ 11,983 
Net investment income 509  440  521 
Fee income 33  30  27 
Other revenues 96  83  97 
Total revenues 15,600  13,803  12,628 
Total claims and expenses 15,831  14,033  11,689 
Segment income (loss) before income taxes (231) (230) 939 
Income tax expense (benefit) (103) (90) 179 
Segment income (loss) $ (128) $ (140) $ 760 
Loss and loss adjustment expense ratio 80.4  % 79.8  % 70.3  %
Underwriting expense ratio 24.4  25.1  26.2 
Combined ratio 104.8  % 104.9  % 96.5  %
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Overview
Segment loss in 2023 was $128 million, compared with a segment loss of $140 million in 2022. The slight increase in segment loss before income taxes was driven by the pre-tax impacts of (i) higher catastrophe losses, largely offset by (ii) higher underlying underwriting margins, (iii) higher net favorable prior year reserve development and (iv) higher net investment income. Catastrophe losses in 2023 and 2022 were $2.12 billion and $1.20 billion, respectively. Net favorable prior year reserve development in 2023 and 2022 was $147 million and $46 million, respectively. The higher underlying underwriting margins primarily reflected the impacts of (i) the benefit of earned pricing in both the automobile and homeowners and other product lines, (ii) a lower level of losses in the homeowners and other product line and (iii) higher business volumes, partially offset by (iv) higher losses in the automobile product line. The income tax benefit in 2023 was higher than in 2022, primarily reflecting a one-time tax benefit of $31 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item, partially offset by a $20 million reduction in income tax expense in the first quarter of 2022 as a result of the resolution of prior year tax matters.
Revenues
Earned Premiums
Earned premiums in 2023 were $14.96 billion, $1.71 billion or 13% higher than in 2022, primarily reflecting the increase in net written premiums over the preceding twelve months.
Net Investment Income
Net investment income in 2023 was $509 million, $69 million or 16% higher than in 2022. Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the increase in the Company’s consolidated net investment income in 2023 as compared with 2022. In addition, refer to note 2 of the notes to the consolidated financial statements for a discussion of the Company’s net investment income allocation methodology.
Other Revenues
Other revenues in all years presented primarily consisted of installment premium charges.
Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in 2023 were $12.03 billion, $1.47 billion or 14% higher than in 2022, primarily reflecting the impacts of (i) higher catastrophe losses, (ii) higher business volumes and (iii) higher losses in the automobile and product line, partially offset by (iv) lower losses in the homeowners and other product line and (v) higher net favorable prior year reserve development.
Factors contributing to net favorable prior year reserve development during the years ended December 31, 2023 and 2021 are discussed in more detail in note 8 of the notes to the consolidated financial statements. Net favorable prior year reserve development was not significant for the year ended December 31, 2022.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in 2023 was $2.38 billion, $278 million or 13% higher than in 2022, generally consistent with the increase in earned premiums.
General and Administrative Expenses
General and administrative expenses in 2023 were $1.42 billion, $55 million or 4% higher than in 2022. The increase primarily reflected higher employee and technology related expenses.
Income Tax Benefit
The income tax benefit in 2023 was $103 million, $13 million or 14% higher than in 2022, primarily reflecting the impact of the one-time tax benefit of $31 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item, partially offset by the $20 million reduction in income tax expense in the first quarter of 2022 as a result of the resolution of prior year tax matters.
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Combined Ratio
The combined ratio of 104.8% in 2023 was 0.1 points lower than the combined ratio of 104.9% in 2022. The loss and loss adjustment expense ratio of 80.4% in 2023 was 0.6 points higher than the loss and loss adjustment expense ratio of 79.8% in 2022. The underwriting expense ratio of 24.4% in 2023 was 0.7 points lower than the underwriting expense ratio of 25.1% in 2022.
Catastrophe losses accounted for 14.1 points and 9.0 points of the combined ratio in 2023 and 2022, respectively. Net favorable prior year reserve development in 2023 and 2022 provided 1.0 points and 0.3 points of benefit, respectively, to the combined ratio. The underlying combined ratio in 2023 was 4.5 points lower than the 2022 ratio on the same basis, primarily reflecting the impacts of (i) the benefit of earned pricing in both the automobile and homeowners and other product lines, (ii) lower losses in the homeowners and other product line and (iii) a lower expense ratio, partially offset by (iv) higher losses in the automobile product line.
Written Premiums
Personal Insurance’s gross and net written premiums were as follows:
  Gross Written Premiums
(for the year ended December 31, in millions) 2023 2022 2021
Domestic:      
Automobile $ 7,352  $ 6,507  $ 5,852 
Homeowners and Other 8,190  7,099  6,137 
Total Domestic 15,542  13,606  11,989 
International 674  667  701 
Total Personal Insurance $ 16,216  $ 14,273  $ 12,690 
  Net Written Premiums
(for the year ended December 31, in millions) 2023 2022 2021
Domestic:      
Automobile $ 7,330  $ 6,482  $ 5,827 
Homeowners and Other 7,949  6,916  5,980 
Total Domestic 15,279  13,398  11,807 
International 650  649  684 
Total Personal Insurance $ 15,929  $ 14,047  $ 12,491 
Gross and net written premiums in 2023 increased by 14% and 13%, respectively, over 2022.
Domestic
Automobile net written premiums of $7.33 billion in 2023 increased by 13% over 2022. Retention rates remained strong in 2023 but decreased from 2022. Renewal premium changes in 2023 remained positive and were higher than in 2022. New business premiums in 2023 decreased from 2022.
Homeowners and Other net written premiums of $7.95 billion in 2023 increased by 15% over 2022. Retention rates remained strong in 2023 but decreased slightly from 2022. Renewal premium changes in 2023 remained positive and were higher than in 2022.  New business premiums in 2023 decreased from 2022.
For its Domestic business, Personal Insurance had approximately 9.1 million and 9.2 million active policies at December 31, 2023 and 2022, respectively.
International
International net written premiums of $650 million in 2023 were comparable with 2022.
For its International business, Personal Insurance had approximately 450,000 and 449,000 active policies at December 31, 2023 and 2022, respectively.

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Interest Expense and Other
(for the year ended December 31, in millions) 2023 2022 2021
Income (loss) $ (325) $ (301) $ (291)
The income (loss) for Interest Expense and Other in 2023 and 2022 was $(325) million and $(301) million, respectively. Pre-tax interest expense in 2023 and 2022 was $376 million and $351 million, respectively. After-tax interest expense in 2023 and 2022 was $297 million and $277 million, respectively.

ASBESTOS CLAIMS AND LITIGATION
The Company believes that the property and casualty insurance industry has suffered from court decisions and other trends that have expanded insurance coverage for asbestos claims far beyond the original intent of insurers and policyholders. The Company has received and continues to receive a significant number of asbestos claims. Factors underlying these claim filings include continued intensive advertising by lawyers seeking asbestos claimants and the focus by plaintiffs on defendants, such as manufacturers of talcum powder, who were not traditionally primary targets of asbestos litigation. The focus on these defendants is primarily the result of the number of traditional asbestos defendants who have sought bankruptcy protection in previous years.  The bankruptcy of many traditional defendants has also caused increased settlement demands against those policyholders who are not in bankruptcy but remain in the tort system. Currently, in many jurisdictions, those who allege very serious injury and who can present credible medical evidence of their injuries are receiving priority trial settings in the courts, while those who have not shown any credible disease manifestation are having their hearing dates delayed or placed on an inactive docket. Prioritizing claims involving credible evidence of injuries, along with the focus on defendants who were not traditionally primary targets of asbestos litigation, contributes to the claims and claim adjustment expense payment patterns experienced by the Company. The Company’s asbestos-related claims and claim adjustment expense experience also has been impacted by the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or through the insolvency of other participating insurers.
The Company continues to be involved in disputes, including litigation, with a number of policyholders, some of whom are in bankruptcy, over coverage for asbestos-related claims. Many coverage disputes with policyholders are only resolved through settlement agreements. Because many policyholders make exaggerated demands, it is difficult to predict the outcome of settlement negotiations. Settlements involving bankrupt policyholders may include extensive releases which are favorable to the Company, but which could result in settlements for larger amounts than originally anticipated. Although the Company has seen a reduction in the overall risk associated with these disputes, it remains difficult to predict the ultimate cost of these claims. As in the past, the Company will continue to pursue settlement opportunities.
In addition to claims against policyholders, proceedings have been launched directly against insurers, including the Company, by individuals challenging insurers’ conduct with respect to the handling of past asbestos claims and by individuals seeking damages arising from alleged asbestos-related bodily injuries.   It is possible that other direct actions against insurers, including the Company, could be filed in the future.  It is difficult to predict the outcome of these proceedings, including whether the plaintiffs would be able to sustain these actions against insurers based on novel legal theories of liability. The Company believes it has meritorious defenses to any such claims and has received favorable rulings in certain jurisdictions.
Because each policyholder presents different liability and coverage issues, the Company generally reviews the exposure presented by each policyholder with open claims at least annually.  Among the factors the Company may consider in the course of this review are: available insurance coverage, including the role of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an analysis of the policyholder’s potential liability; the jurisdictions involved; past and anticipated future claim activity and loss development on pending claims; past settlement values of similar claims; allocated claim adjustment expense; the potential role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and applicable coverage defenses or determinations, if any, including the determination as to whether or not an asbestos claim is a products/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim.
The Company’s net asbestos reserves at December 31, 2023 and 2022 were $1.38 billion and $1.31 billion, respectively, and include case reserves, IBNR reserves and reserves for the costs of defending asbestos-related coverage litigation. IBNR reserves include amounts for new claims and adverse development on existing policyholders, as well as reserves for claims from policyholders reporting asbestos claims for the first time and for policyholders for which there is, or may be, litigation. Asbestos reserves also include amounts related to certain policyholders with whom the Company has entered into permanent settlement agreements, which are based on the expected payout for each policyholder under the applicable agreement.
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Additionally, a portion of the asbestos reserves relates to assumed reinsurance contracts primarily consisting of reinsurance of excess coverage, including various pool participations.
The Company conducts an annual review of domestic policyholders with open asbestos claims. Policyholders are identified for this review based upon, among other factors: a combination of past payments and current case reserves in excess of a specified threshold (currently $100,000), perceived level of exposure, number of reported claims, products/completed operations and potential “non-product” exposures, size of policyholder and geographic distribution of products or services sold by the policyholder.
In the third quarter of 2023, the Company completed its annual in-depth asbestos claim review, including a review of policyholders with open claims and litigation cases for potential product and “non-product” liability. The number of policyholders with open asbestos claims was relatively flat compared to 2022, while net asbestos payments were slightly lower than 2022. Payments on behalf of these policyholders continue to be influenced by an increase in severity for certain policyholders and a high level of litigation activity in a limited number of jurisdictions where individuals alleging serious asbestos-related injury, primarily mesothelioma, continue to target defendants who were not traditionally primary targets of asbestos litigation.
The Company’s quarterly asbestos reserve reviews include an analysis of exposure and claim payment patterns by policyholder, as well as recent settlements, policyholder bankruptcies, judicial rulings and legislative actions.  The Company also analyzes developing payment patterns among policyholders and the assumed reinsurance component of reserves, as well as projected reinsurance billings and recoveries. In addition, the Company reviews its historical gross and net loss and expense paid experience, year-by-year, to assess any emerging trends, fluctuations, or characteristics suggested by the aggregate paid activity. Conventional actuarial methods are not utilized to establish asbestos reserves, and the Company’s evaluations have not resulted in a reliable method to determine a meaningful average asbestos defense or indemnity payment.
The completion of these reviews and analyses in 2023, 2022 and 2021 resulted in $284 million, $212 million and $225 million increases, respectively, to the Company’s net asbestos reserves. In each year, the reserve increases were primarily driven by increases in the Company’s estimate of projected settlement and defense costs related to a broad number of policyholders. The increase in the estimate of projected settlement and defense costs primarily resulted from payment trends that continue to be higher than previously anticipated due to the continued high level of mesothelioma claim filings and the impact of the current litigation environment surrounding those claims discussed above. The 2023 charge also included an additional increase to strengthen the Company’s carried reserve position relative to the range of reasonable estimates. Over the past decade, the property and casualty insurance industry, including the Company, has experienced net unfavorable prior year reserve development with regard to asbestos reserves, but the Company believes that over that period there has been a reduction in the volatility associated with the Company’s overall asbestos exposure as the overall asbestos environment has evolved from one dominated by exposure to significant litigation risks, particularly coverage disputes relating to policyholders in bankruptcy who were asserting that their claims were not subject to the aggregate limits contained in their policies, to an environment primarily driven by a frequency of litigation related to individuals with mesothelioma. The Company’s overall view of the current underlying asbestos environment is essentially unchanged from recent periods, and there remains a high degree of uncertainty with respect to future exposure to asbestos claims.
Net asbestos paid loss and loss expenses in 2023, 2022 and 2021 were $212 million, $245 million and $221 million, respectively. Approximately 1%, 2% and 9% of total net paid losses in 2023, 2022 and 2021, respectively, related to policyholders with whom the Company entered into settlement agreements that limit those policyholders’ ability to present future claims to the Company.
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The following table displays activity for asbestos losses and loss expenses and reserves:
(at and for the year ended December 31, in millions) 2023 2022 2021
Beginning reserves:      
Gross $ 1,674  $ 1,687  $ 1,668 
Ceded (369) (346) (330)
Net 1,305  1,341  1,338 
Incurred losses and loss expenses:  
Gross 374  287  287 
Ceded (90) (75) (62)
Net 284  212  225 
Paid loss and loss expenses:  
Gross 281  298  267 
Ceded (69) (53) (46)
Net 212  245  221 
Foreign exchange and other:  
Gross 1  (2) (1)
Ceded —  (1) — 
Net 1  (3) (1)
Ending reserves:  
Gross 1,768  1,674  1,687 
Ceded (390) (369) (346)
Net $ 1,378  $ 1,305  $ 1,341 

ENVIRONMENTAL CLAIMS AND LITIGATION
The Company has received and continues to receive claims from policyholders who allege that they are liable for injury or damage arising out of the alleged storage, emissions or disposal of toxic substances, frequently under policies issued prior to the mid-1980s. These claims are mainly brought pursuant to various state or federal statutes that require a liable party to undertake or pay for environmental remediation. For example, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) enables private parties as well as federal and state governments to take action with respect to releases and threatened releases of hazardous substances. This federal statute permits the recovery of response costs from some liable parties and may require liable parties to undertake their own remedial action. Liability under these statutes may be joint and several with other responsible parties. The Company has also been, and continues to be, involved in litigation involving insurance coverage issues pertaining to environmental claims. The Company believes that some court decisions pertaining to environmental claims have interpreted the insurance coverage to be broader than the original intent of the insurers and policyholders. For more information regarding environmental claims and litigation, see note 8 of the notes to the consolidated financial statements.
In 2023, 2022 and 2021, the Company increased its net environmental reserves by $93 million, $132 million and $89 million, respectively. Net environmental paid loss and loss expenses in 2023, 2022 and 2021 were $82 million, $82 million and $75 million, respectively. Net environmental reserves were $382 million, $371 million and $321 million at December 31, 2023, 2022 and 2021, respectively.

UNCERTAINTY REGARDING ADEQUACY OF ASBESTOS AND ENVIRONMENTAL RESERVES
As a result of the processes and procedures discussed above, management believes that the reserves carried for asbestos and environmental claims are appropriately established based upon known facts, current law and management’s judgment. However, the uncertainties surrounding the final resolution of these claims continue, and it is difficult to determine the ultimate exposure for asbestos and environmental claims and related litigation. As a result, these reserves are subject to revision as new information becomes available and as claims develop. The continuing uncertainties include, without limitation:
•the risks and lack of predictability inherent in complex litigation;
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•a further increase in the cost to resolve, and/or the number of, asbestos and environmental claims beyond that which is anticipated;
•the emergence of a greater number of asbestos claims than anticipated as a result of extended life expectancies resulting from medical advances and lifestyle improvements;
•the role of any umbrella or excess policies we have issued;
•the resolution or adjudication of disputes concerning coverage for asbestos and environmental claims in a manner inconsistent with our previous assessment of these disputes;
•the number and outcome of direct actions against us;
•future developments pertaining to our ability to recover reinsurance for asbestos and environmental claims;
•any impact on asbestos defendants we insure due to the bankruptcy of other asbestos defendants;
•the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or through the insolvency of other participating insurers; and
•uncertainties arising from the insolvency or bankruptcy of policyholders.
Changes in the legal, regulatory and legislative environment may impact the future resolution of asbestos and environmental claims and result in adverse loss reserve development.  The emergence of a greater number of asbestos or environmental claims beyond that which is anticipated may result in adverse loss reserve development. Changes in applicable legislation and future court and regulatory decisions and interpretations, including the outcome of legal challenges to legislative and/or judicial reforms establishing medical criteria for the pursuit of asbestos claims, could affect the settlement of asbestos and environmental claims.  It is also difficult to predict the ultimate outcome of complex coverage disputes until settlement negotiations near completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is particularly the case with policyholders in bankruptcy where negotiations often involve a large number of claimants and other parties and require court approval to be effective. As part of its continuing analysis of asbestos and environmental reserves, the Company continues to study the implications of these and other developments.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the Company’s current reserves.  In addition, the Company’s estimate of claims and claim adjustment expenses may change.  These additional liabilities or increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company’s operating results in future periods.

INVESTMENT PORTFOLIO
The Company’s invested assets at December 31, 2023 were $88.81 billion, of which 93% was invested in fixed maturity and short-term investments, 1% in equity securities, 1% in real estate investments and 5% in other investments.  Because the primary purpose of the investment portfolio is to fund future claims payments, the Company employs a thoughtful investment philosophy that focuses on appropriate risk-adjusted returns. A significant majority of funds available for investment are deployed in a widely diversified portfolio of high quality, liquid, taxable U.S. government, tax-exempt and taxable U.S. municipal and taxable corporate and U.S. agency mortgage-backed bonds.
The carrying value of the Company’s fixed maturity portfolio at December 31, 2023 was $77.81 billion.  The Company closely monitors the duration of its fixed maturity investments, and investment purchases and sales are executed with the objective of having adequate funds available to satisfy the Company’s insurance and debt obligations.  The weighted average credit quality of the Company’s fixed maturity portfolio, both including and excluding U.S. Treasury securities, was “Aa2” at both December 31, 2023 and 2022.  Below investment grade securities represented 1.3% of the total fixed maturity investment portfolio at both December 31, 2023 and 2022.  The weighted average effective duration of fixed maturities and short-term securities was 4.1 (4.4 excluding short-term securities) at December 31, 2023 and 4.6 (4.8 excluding short-term securities) at December 31, 2022.
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The carrying values of investments in fixed maturities classified as available for sale at December 31, 2023 and 2022 were as follows:
  2023 2022
(at December 31, in millions) Carrying Value Weighted Average Credit
Quality (1)		 Carrying Value Weighted Average Credit
Quality (1)
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 $ 6,368  Aaa/Aa1 $ 5,438  Aaa/Aa1
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation 17,199  Aaa/Aa1 17,823  Aaa/Aa1
Revenue 9,184  Aaa/Aa1 10,198  Aaa/Aa1
State general obligation 1,157  Aaa/Aa1 1,019  Aaa/Aa1
Pre-refunded 966  Aaa/Aa1 2,339  Aaa/Aa1
Total obligations of U.S. states, municipalities and political subdivisions 28,506  31,379 
Debt securities issued by foreign governments 1,006  Aaa/Aa1 994  Aaa/Aa1
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 7,818  Aaa/Aa1 1,991  Aaa/Aa1
Corporate and all other bonds:    
Financial:    
Bank 4,658  A1 4,505  A1
Insurance 2,084  Aa2 1,628  Aa3
Finance/leasing 63  Ba2 47  Ba2
Brokerage and asset management 139  A1 136  A1
Total financial 6,944    6,316 
Industrial 19,037  A3 17,237  A3
Public utility 4,338  A2 4,064  A2
Canadian municipal securities 1,604  Aa1 1,523  Aa1
Sovereign corporate securities (2)
 584  Aaa 559  Aaa
Commercial mortgage-backed securities and project loans (3)
 1,038  Aaa 1,136  Aaa
Asset-backed and other 564  Aa1 523  Aa1
Total corporate and all other bonds 34,109  31,358 
Total fixed maturities $ 77,807  Aa2 $ 71,160  Aa2
___________________________________________
(1)Rated using external rating agencies or by the Company when a public rating does not exist.
(2)Sovereign corporate securities include corporate securities that are backed by a government and include sovereign banks and securities issued under the Federal Ship Financing Programs.
(3)Included in commercial mortgage-backed securities and project loans at December 31, 2023 and 2022 were $116 million and $131 million of securities guaranteed by the U.S. government, respectively.
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The following table sets forth the Company’s fixed maturity investment portfolio rated using external ratings agencies or by the Company when a public rating does not exist:
(at December 31, 2023, in millions)
 Carrying
Value		 Percent of Total
Carrying Value
Quality Rating:    
Aaa $ 36,612  47.0  %
Aa 15,797  20.3 
A 14,715  18.9 
Baa 9,701  12.5 
Total investment grade 76,825  98.7 
Below investment grade 982  1.3 
Total fixed maturities $ 77,807  100.0  %
Obligations of U.S. States, Municipalities and Political Subdivisions
The Company’s fixed maturity investment portfolio at December 31, 2023 and 2022 included $28.51 billion and $31.38 billion, respectively, of securities which are obligations of U.S. states, municipalities and political subdivisions (collectively referred to as the municipal bond portfolio).  The municipal bond portfolio is diversified across the United States, the District of Columbia and Puerto Rico and includes general obligation and revenue bonds issued by states, cities, counties, school districts and similar issuers.  Included in the municipal bond portfolio at December 31, 2023 and 2022 were $966 million and $2.34 billion, respectively, of pre-refunded bonds, which are bonds for which U.S. states or municipalities have established irrevocable trusts, almost exclusively comprised of U.S. Treasury securities and obligations of U.S. government and government agencies and authorities. These trusts were created to fund the payment of principal and interest due under the bonds. The irrevocable trusts are verified as to their sufficiency by an independent verification agent of the underwriter, issuer or trustee. All of the Company’s holdings of securities issued by Puerto Rico and related entities have either been pre-refunded and therefore are defeased by U.S. Treasury securities or have FHA guarantees subject to federal appropriation.
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The following table shows the geographic distribution of the $27.54 billion of municipal bonds at December 31, 2023 that were not pre-refunded:
(at December 31, 2023, in millions)
 State General
Obligation		 Local General
Obligation		 Revenue Total Carrying
Value		 Weighted Average
Credit
Quality(1)
State:          
Texas $ 71  $ 2,903  $ 1,256  $ 4,230  Aaa
California —  1,899  341  2,240  Aaa/Aa1
Virginia 43  957  795  1,795  Aaa/Aa1
North Carolina 176  743  412  1,331  Aaa
Washington 104  936  281  1,321  Aaa/Aa1
Minnesota 158  926  159  1,243  Aaa/Aa1
Wisconsin 162  858  84  1,104  Aa1
Colorado —  664  336  1,000  Aaa/Aa1
Maryland 30  817  123  970  Aaa/Aa1
Massachusetts —  197  721  918  Aaa/Aa1
Tennessee 5  849  64  918  Aa1
Florida 51  154  545  750  Aa1
Georgia 154  519  55  728  Aaa
All others (2)
 203  4,777  4,012  8,992  Aaa/Aa1
Total $ 1,157  $ 17,199  $ 9,184  $ 27,540  Aaa/Aa1
___________________________________________
(1)Rated using external rating agencies or by the Company when a public rating does not exist.  Ratings shown are the higher of the rating of the underlying issuer or the insurer in the case of securities enhanced by third-party insurance for the payment of principal and interest in the event of issuer default.
(2)No other single state accounted for 2.5% or more of the total non-pre-refunded municipal bonds.
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The following table displays the funding sources for the $9.18 billion of municipal bonds identified as revenue bonds in the foregoing table at December 31, 2023:
(at December 31, 2023, in millions)
 Carrying
Value		 Weighted Average
Credit
Quality(1)
Source:    
Water $ 2,686  Aaa/Aa1
Higher education 2,377  Aaa/Aa1
Sewer 964  Aaa/Aa1
Power utilities 500  Aa1
Special tax 475  Aaa/Aa1
Transit 244  Aaa/Aa1
Highway tolls 224  Aa2
Fuel sales 199  Aa1
Health care 176  Aa2
Housing 70  Aaa
Lease 31  Aaa/Aa1
Natural gas 7  Aa2
Lottery 3  Aa1
Industrial 2  A2
Other revenue sources 1,226  Aaa/Aa1
Total $ 9,184  Aaa/Aa1
___________________________________________
(1)Rated using external rating agencies or by the Company when a public rating does not exist. Ratings shown are the higher of the rating of the underlying issuer or the insurer in the case of securities enhanced by third-party insurance for the payment of principal and interest in the event of issuer default.
The Company bases its investment decision on the underlying credit characteristics of the municipal security.  The weighted average credit rating of the municipal bond portfolio was “Aaa/Aa1” at December 31, 2023.
Debt Securities Issued by Foreign Governments
The following table shows the geographic distribution of the Company’s long-term fixed maturity investments in debt securities issued by foreign governments at December 31, 2023:
(at December 31, 2023, in millions)
 Carrying
Value		 Weighted Average Credit
Quality (1)
Foreign Government:    
Canada $ 797  Aaa/Aa1
United Kingdom 185  Aa3
All others (2,3)
 24  Aa1
Total $ 1,006  Aaa/Aa1
___________________________________________
(1)Rated using external rating agencies or by the Company when a public rating does not exist.
(2)The Company does not have direct exposure to sovereign debt issued by the Republic of Ireland, Italy, Greece, Portugal or Spain.
(3)    No other country accounted for 2.5% or more of total debt securities issued by foreign governments.
The following table shows the Company’s Eurozone exposure at December 31, 2023 to all debt securities issued by foreign governments, financial companies, sovereign corporations (including sovereign banks) whose securities are backed by the respective country’s government and all other corporate securities (comprised of industrial corporations and utility companies) which could be affected if economic conditions deteriorated due to a prolonged recession:
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      Corporate Securities
  Debt Securities Issued
by Foreign Governments		 Financial Sovereign Corporates All Other
(at December 31, 2023, in millions)
 Carrying
Value		 Weighted Average
Credit
Quality (1)		 Carrying
Value		 Weighted Average
Credit
Quality (1)		 Carrying
Value		 Weighted Average
Credit
Quality (1)		 Carrying
Value		 Weighted Average
Credit
Quality (1)
Eurozone Periphery                
Spain $ —  —  $ 51  Aa3 $ —  —  $ 3  Baa3
Ireland —  —  —  —  —  —  158  Baa2
Italy —  —  —  —  —  —  —  — 
Greece —  —  —  —  —  —  —  — 
Portugal —  —  —  —  —  —  —  — 
Subtotal —    51    —    161   
Eurozone Non-Periphery                
Germany 16  Aaa —  —  477  Aaa/Aa1 592  A3
France 149  Aa1 —  —  —  —  321  A2
Netherlands —  —  131  A1 104  Aaa 219  A2
Finland —  —  55  Aa3 —  —  —  — 
Belgium —  —  —  —  —  —  121  Baa1
Austria —  —  —  —  14  Aa2 —  — 
Subtotal 165    186    595    1,253 
Total $ 165    $ 237    $ 595    $ 1,414   
___________________________________________
(1)Rated using external rating agencies or by the Company when a public rating does not exist.  The table includes $544 million of short-term securities which have the highest ratings issued by external rating agencies for short-term issuances.  For purposes of this table, the short-term securities, which are rated “A-1+” and/or “P-1,” are included as “Aaa” rated securities.
In addition to fixed maturities noted in the foregoing table, the Company has exposure totaling $289 million to private equity limited partnerships and real estate partnerships (both of which are included in other investments in the Company’s consolidated balance sheet) whose primary investing focus is across Europe.  The Company has unfunded commitments totaling $190 million to these partnerships.
Mortgage-Backed Securities, Collateralized Mortgage Obligations and Pass-Through Securities
The Company’s fixed maturity investment portfolio at December 31, 2023 and 2022 included $7.82 billion and $1.99 billion, respectively, of residential mortgage-backed securities, including pass-through-securities and collateralized mortgage obligations (CMOs), all of which are subject to prepayment risk (either shortening or lengthening of duration). While prepayment risk for securities and its effect on income cannot be fully controlled, particularly when interest rates move dramatically, the Company’s investment strategy generally favors securities that reduce this risk within expected interest rate ranges.  The Company makes investments in residential CMOs that are either guaranteed by GNMA, FNMA or FHLMC, or if not guaranteed, are senior or super-senior positions within their respective securitizations.  Both guaranteed and non-guaranteed residential CMOs allocate the distribution of payments from the underlying mortgages among different classes of bondholders.  In addition, non-guaranteed residential CMOs provide structures that allocate the impact of credit losses to different classes of bondholders.  Senior and super-senior CMOs are protected, to varying degrees, from credit losses as those losses are initially allocated to subordinated bondholders.  The Company’s investment strategy is to purchase CMO tranches that are expected to offer the most favorable return given the Company’s assessment of associated risks.  The Company does not purchase residual interests in CMOs. For more information regarding the Company’s investments in residential mortgage-backed securities, see note 3 of the notes to the consolidated financial statements.
Commercial Mortgage-Backed Securities and Project Loans
At December 31, 2023 and 2022, the Company held commercial mortgage-backed securities (including FHA project loans) of $1.04 billion and $1.14 billion, respectively.  For more information regarding the Company’s investments in commercial mortgage-backed securities, see note 3 of the notes to the consolidated financial statements.
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Equity Securities, Real Estate and Short-Term Investments
See note 1 of the notes to the consolidated financial statements for further information about these invested asset classes.
Other Investments
The Company also invests in private equity, hedge fund and real estate partnerships, and joint ventures.  These asset classes have historically provided a higher return than investments in fixed maturities but are subject to more volatility.  The Company also enters into certain derivative financial instruments from time to time that are reported as part of other investments. At December 31, 2023 and 2022, the carrying value of the Company’s other investments was $4.30 billion and $4.07 billion, respectively. The Company has unfunded commitments to private equity limited partnerships, real estate partnerships and others in which it invests.  These commitments totaled $2.05 billion and $1.80 billion at December 31, 2023 and 2022, respectively. It is the opinion of the Company’s management that the Company has adequate liquidity to meet these commitments.
Securities Lending
The Company has, from time to time, engaged in securities lending activities from which it generates net investment income by lending certain of its investments to other institutions for short periods of time.  At December 31, 2023 and 2022, the Company had $421 million and $445 million, respectively, of securities on loan, respectively, as part of a tri-party lending agreement. The average monthly balance of securities on loan during 2023 and 2022 was $400 million and $347 million, respectively.  Borrowers of these securities provide collateral equal to at least 102% of the market value of the loaned securities plus accrued interest.  The Company did not incur any investment losses in its securities lending program for the years ended December 31, 2023 and 2022.
Lloyd’s Trust Deposits
The Company meets its capital requirements to support its underwriting at Lloyd’s using a combination of the share capital and retained earnings of the Company’s subsidiaries participating in Lloyd’s, trust deposits and uncollateralized letters of credit. Securities with a fair value of approximately $31 million and $28 million held by a wholly-owned subsidiary at December 31, 2023 and 2022, respectively, and $85 million and $58 million held by TRV at December 31, 2023 and 2022, respectively, were pledged into Lloyd’s trust accounts to provide a portion of the Lloyd’s capital requirements. For more information regarding the Company’s utilization of uncollateralized letters of credit, see “Liquidity and Capital Resources” herein.
Net Unrealized Investment Gains (Losses)
The net unrealized investment gains (losses) that were included in shareholders’ equity were as follows:
(at December 31, in millions) 2023 2022 2021
Fixed maturities $ (3,969) $ (6,217) $ 3,062 
Other (1) (3) (2)
Unrealized investment gains (losses) before tax (3,970) (6,220) 3,060 
Tax expense (benefit) (841) (1,322) 645 
Net unrealized investment gains (losses) included in shareholders’ equity at end of year $ (3,129) $ (4,898) $ 2,415 
Net unrealized investment losses included in shareholders’ equity were $3.13 billion at December 31, 2023 compared with $4.90 billion at December 31, 2022. At December 31, 2023, the Company had $726 million fixed maturity investments reported at fair value for which fair value was less than 80% of amortized cost. At December 31, 2022, the Company had $2.18 billion fixed maturity investments reported at fair value for which fair value was less than 80% of amortized cost. These year-over-year changes were driven by changes in interest rates. Since the Company generally holds its high-quality fixed maturity investments to maturity, these net unrealized losses are considered temporary in nature and are not expected to result in significant realized losses. In addition, given the temporary nature of net unrealized losses combined with the Company’s strong operating cash flows, which include income received on investments and the proceeds received upon maturity of the investments, the net unrealized investment loss is not expected to meaningfully impact the Company’s assessment of capital adequacy or liquidity. Equity securities, which include common and non-redeemable preferred stocks, are reported at fair value with changes in fair value recognized in net income.
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For fixed maturity investments where fair value is less than the carrying value and the Company did not reach a decision to impair, the Company continues to have the intent and ability to hold such investments to a projected recovery in value, which may not be until maturity.
At both December 31, 2023 and 2022, below investment grade securities comprised 1.3% of the fair value of the Company’s fixed maturity investment portfolio. Included in below investment grade securities at December 31, 2023 were securities in an unrealized loss position that, in the aggregate, had an amortized cost of $695 million and a fair value of $643 million, resulting in a net pre-tax unrealized investment loss of $52 million. These securities in an unrealized loss position represented less than 1% of both the amortized cost and fair value of the fixed maturity portfolio at December 31, 2023 and accounted for 1.2% of the total gross pre-tax unrealized investment loss in the fixed maturity portfolio at December 31, 2023.
Impairment Charges
Impairment charges included in net realized investment gains (losses) in the consolidated statement of income were $12 million, $38 million and $2 million for the years ended December 31, 2023, 2022 and 2021, respectively. See note 3 of the notes to the consolidated financial statements for further information.
Purchases and Sales of Investment Securities
Purchases and sales of investments are based on cash requirements, the characteristics of the insurance liabilities and current market conditions. The Company identifies investments to be sold to achieve its primary investment goals of assuring the Company’s ability to meet policyholder obligations as well as to optimize investment returns, given these obligations.
During the year ended December 31, 2023, the Company incurred pre-tax realized losses of $119 million on the sale of fixed maturity investments having a fair value of $2.23 billion.

CATASTROPHE MODELING
The Company uses various analyses and methods, including proprietary and third-party modeling processes, to make underwriting and reinsurance decisions designed to manage its exposure to catastrophic events. There are no industry-standard methodologies or assumptions for projecting catastrophe exposure. Accordingly, catastrophe estimates provided by different insurers may not be comparable.
The Company actively monitors and evaluates changes in third-party models and, when necessary, calibrates the catastrophe risk model estimates delivered via its own proprietary modeling processes.  The Company considers historical loss experience, recent events, underwriting practices, market share analyses, external scientific analysis and various other factors, including non-modeled losses, to refine its proprietary view of catastrophe risk. These proprietary models are updated regularly as new information and techniques emerge.
Based on the proprietary and third-party models utilized by the Company, the tables below set forth, as of December 31, 2023, the probabilities that estimated losses, comprising claims and allocated claim adjustment expenses (but excluding unallocated claim adjustment expenses), from a single event occurring in a one-year timeframe will equal or exceed the indicated loss amounts (expressed in dollars, net of tax, and as a percentage of the Company’s common equity).  For example, on the basis described below the tables, the Company estimates that there is a one percent chance that the Company’s loss from a single U.S. and Canadian hurricane in a one-year timeframe would equal or exceed $2.1 billion, or 8% of the Company’s common equity at December 31, 2023.
  Dollars (in billions)
Likelihood of Exceedance (1) Single U.S. and
Canadian
Hurricane		 Single U.S. and
Canadian
Earthquake
2.0% (1-in-50) $ 1.8  $ 0.7 
1.0% (1-in-100) $ 2.1  $ 1.1 
0.4% (1-in-250) $ 2.7  $ 2.1 
0.1% (1-in-1,000) $ 6.9  $ 3.1 
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  Percentage of Common Equity (2)
Likelihood of Exceedance Single U.S. and
Canadian
Hurricane		 Single U.S. and
Canadian
Earthquake
2.0% (1-in-50) 6  % 2  %
1.0% (1-in-100) 8  % 4  %
0.4% (1-in-250) 10  % 7  %
0.1% (1-in-1,000) 25  % 11  %
___________________________________________
(1)    An event that has, for example, a 2% likelihood of exceedance is sometimes described as a “1-in-50 year event.” As noted above, however, the probabilities in the table represent the likelihood of losses from a single event equaling or exceeding the indicated threshold loss amount in a one-year timeframe, not over a multi-year timeframe. Also, because the probabilities relate to a single event, the probabilities do not address the likelihood of more than one event occurring in a particular period, and, therefore, the amounts do not address potential aggregate catastrophe losses occurring in a one-year timeframe.
(2)    The percentage of common equity is calculated by dividing (a) indicated loss amounts in dollars by (b) total common equity excluding net unrealized investment gains and losses, net of taxes, included in shareholders’ equity. Net unrealized investment gains and losses can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends. Accordingly, the Company’s management uses the percentage of common equity calculated on this basis as a metric to evaluate the potential impact of a single hurricane or single earthquake on the Company’s financial position for purposes of making underwriting and reinsurance decisions.
The loss amounts included in the tables above are based on the Company’s in-force portfolio of direct exposures and do not include assumed business. Additionally, the amounts are as of December 31, 2023, reflect the reinsurance program in place at January 1, 2024, are net of reinsurance, after-tax, and exclude unallocated claim adjustment expenses, which historically have been less than 10% of loss estimates. For further information regarding the Company’s reinsurance, see “Item 1—Business—Reinsurance.” The amounts for hurricanes reflect U.S. and Canadian exposures and include property exposures, property residual market exposures and an adjustment for certain non-property exposures. The hurricane loss amounts are based on the Company’s catastrophe risk model estimates and include losses from the hurricane hazards of wind and storm surge. The amounts for earthquakes reflect U.S. and Canadian property and workers’ compensation exposures. These loss amounts include the effects of exposure growth, inflation and modeling updates based on recent trends and scientific analysis. The Company does not believe that the inclusion of hurricane or earthquake losses arising from other geographical areas or other exposures would materially change the estimated loss amounts.
Catastrophe modeling relies upon inputs based on experience, science, engineering and history.  These inputs reflect a significant amount of judgment and are subject to changes which may result in volatility in the modeled output. Catastrophe modeling output may also fail to account for risks that are outside the range of normal probability or are otherwise unforeseeable. Catastrophe modeling assumptions include, among others, the portion of purchased reinsurance that is collectible after a catastrophic event, which may prove to be materially incorrect. Consequently, catastrophe modeling estimates are subject to significant uncertainty. In the tables above, the uncertainty associated with the estimated threshold loss amounts increases significantly as the likelihood of exceedance decreases.  In other words, in the case of a relatively more remote event (e.g., 1-in-1,000), the estimated threshold loss amount is relatively less reliable. Actual losses from an event could materially exceed the indicated threshold loss amount. In addition, more than one such event could occur in any period.
Moreover, the Company is exposed to the risk of material losses from other than property and workers’ compensation coverages arising out of hurricanes and earthquakes, and it is exposed to catastrophe losses from perils other than hurricanes and earthquakes, such as tornadoes and other windstorms, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions, solar flares and other naturally-occurring events, as well as acts of terrorism and cyber events.
In addition, compared to models for hurricanes, models for earthquakes are less reliable due to there being a more limited number of significant historical events to analyze, while models for tornadoes, hail storms, wildfires and winter storms are newer and may be less reliable due to the highly random geographic nature and size of these events. Accordingly, these models may be less accurate in predicting risks and estimating losses. Further, changes in climate conditions could cause our underlying modeling data to be less predictive, thus limiting our ability to effectively evaluate and manage catastrophe risk. As compared to natural catastrophes, modeling for man-made catastrophes, such as terrorism and cyber events, is even more difficult and less reliable, and for some events (both natural and man-made), models are either in early stages of development and, therefore, not widely adopted, or are not available.
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For more information about the Company’s exposure to catastrophe losses, see “Item 1A—Risk Factors—High levels of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone areas and changing climate conditions, could materially and adversely affect our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance” and “Item 1A—Risk Factors—We may be adversely affected if our pricing and capital models provide materially different indications than actual results.”

CHANGING CLIMATE CONDITIONS
Severe weather events over the last two decades underscore the unpredictability of climate trends. For example, the frequency and/or severity of hurricane, tornado, hail and wildfire events in the United States have been more volatile during this time period. The insurance industry has experienced increased catastrophe losses due to a number of potential causal factors, including, in addition to weather/climate variability, aging infrastructure, more people living in, and moving to, high-risk areas, population growth in areas with weaker enforcement of building codes, urban expansion, an increase in the number of amenities included in, and average size of, a home and increased inflation, including as a result of post-event demand surge. We believe that changing climate conditions have also likely added to the frequency and severity of natural disasters and created additional uncertainty as to future trends and exposures. Climate studies by government agencies, academic institutions, catastrophe modeling organizations and other groups indicate that an increase in frequency and/or intensity of hurricanes, heavy precipitation events and associated river, urban and flash flooding, sea level rise, droughts, heat waves and wildfires has occurred, and can be expected into the future. Understanding the potential impacts of changing climate conditions is important to the Company’s business. Changing climate conditions are expected to evolve over decades. Importantly, because most of its policies renew annually, the Company is able to respond to these changes over time through adjustments to its underwriting strategy, product pricing and related policy terms and conditions, as appropriate. As an example, in recent years the Company has focused on enhancing the strategic management of its catastrophe exposure, adding experts in data science, meteorology, including climate and flood science, wind and structural engineering and geophysics, among others, to its catastrophe management organization. The Company has also established dedicated teams for each catastrophe peril, with the goal of developing industry-leading scientific and underwriting expertise. This expertise has been incorporated into the Company’s product development, risk selection, pricing, capital allocation and claim response.
The Company discusses how changing climate conditions may present other issues for its business under “Item 1A—Risk Factors.” and “Outlook.” For example, among other things:
•Increasingly unpredictable and severe weather conditions could result in increased frequency and severity of claims under policies issued by the Company. See “Item 1A—Risk Factors—High levels of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone areas and changing climate conditions, could materially and adversely affect our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance” and “—Outlook—Underwriting Gain/Loss.” Moreover, the Company’s catastrophe models may be less reliable due to the increased unpredictability in frequency and severity of severe weather events, emerging trends in climate conditions and regulatory responses to catastrophe events not being appropriately reflected in the models, in addition to the other factors mentioned above. Accordingly, the Company may be subject to increased losses from catastrophes and other weather-related events.
•Changing climate conditions could also impact the creditworthiness of issuers of securities in which the Company invests. For example, water supply adequacy could impact the creditworthiness of bond issuers with significant assets or business activities in the Southwestern United States; more frequent and/or severe hurricanes could impact the creditworthiness of issuers with significant assets or business activities in the Southeastern United States, among other areas; and increased regulation adopted in response to potential changes in climate conditions could impact the creditworthiness of issuers affected by such regulations. In addition, as issuers of securities in which the Company invests become increasingly focused on mitigating the potential environmental impact of their operations, the costs associated with such initiatives could affect the business models and realized returns of such issuers. See “Item 1A—Risk Factors—Our investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses.”
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•Increased regulation adopted in response to potential changes in climate conditions may impact the Company and its customers, including state insurance regulations that could impact the Company’s ability to manage property exposures in areas vulnerable to significant climate driven losses. For example, state laws have been passed that restrict a carrier’s ability to cancel or non-renew certain policies within or adjacent to declared state of emergency zip codes and mandate discounts for risk mitigation practices that may not be effective. If the Company is unable to implement risk-based pricing, modify policy terms or reduce exposures to the extent necessary to address rising losses related to catastrophes and smaller scale weather events (should those increased losses occur), its business may be adversely affected. See “Item 1—Business—Regulation—U.S. State and Federal Regulation—Regulatory and Legislative Responses to Catastrophes.” In addition, climate change regulation could increase the Company’s customers’ costs of doing business. For example, insureds faced with carbon management regulatory requirements may have less available capital for investment in loss prevention and safety features which may, over time, increase loss exposures. Increased regulation may also result in reduced economic activity, which would decrease the amount of insurable assets and businesses, and increased claim costs, to the extent such regulations require that damaged homes or businesses be rebuilt according to more expensive specifications.
•The full range of potential liability exposures related to changing climate conditions continues to evolve. For example, from time to time third parties sue our policyholders alleging that they caused or contributed to changing climate conditions. Through the Company’s Enterprise Casualty Emerging Risk Committee and its Committee on Climate, Energy and the Environment, the Company works with its business units and corporate groups, as appropriate, to identify and try to assess climate change-related liability issues, which are continually evolving and often hard to fully evaluate. The Company regularly reviews emerging issues, including changing climate conditions, to consider potential changes to its modeling and the use of such modeling, as well as to help determine the need for new underwriting strategies, coverage modifications or new products. See “Item 1A—Risk Factors—The effects of emerging claim and coverage issues on our business are uncertain, and court decisions or legislative changes that take place after we issue our policies can result in an unexpected increase in the number of claims and have a material adverse impact on our results of operations and/or our financial position.”

REINSURANCE RECOVERABLES
The Company reinsures a portion of the risks it underwrites in order to control its exposure to losses.  For additional discussion regarding the Company’s reinsurance coverage, see “Part I—Item 1—Business—Reinsurance.”
The following table summarizes the composition of the Company’s reinsurance recoverables:
(at December 31, in millions) 2023 2022
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses $ 3,895  $ 3,792 
Gross structured settlements 2,707  2,802 
Mandatory pools and associations 1,659  1,601 
Gross reinsurance recoverables 8,261  8,195 
Allowance for estimated uncollectible reinsurance (118) (132)
Net reinsurance recoverables $ 8,143  $ 8,063 
Net reinsurance recoverables at December 31, 2023 increased by $80 million over December 31, 2022, primarily reflecting the impacts of catastrophe losses in 2023, partially offset by cash collections in 2023.
The following table presents the Company’s top five reinsurer groups by reinsurance recoverable at December 31, 2023 (in millions).  Also included is the A.M. Best rating of the Company’s predominant reinsurer from each such reinsurer group at February 15, 2024:
Reinsurer Group Reinsurance
Recoverable		 A.M. Best Rating of Group’s Predominant
Reinsurer
Swiss Re Group $ 634  A+ second highest of 16 ratings
Berkshire Hathaway 472  A++ highest of 16 ratings
Munich Re Group 349  A+ second highest of 16 ratings
Axa Group 162  A+ second highest of 16 ratings
Hannover Group 126  A+ second highest of 16 ratings
At December 31, 2023, the Company held $987 million of collateral in the form of letters of credit, funds and trust agreements held to fully or partially collateralize certain reinsurance recoverables.
Included in net reinsurance recoverables are amounts related to structured settlements, which are annuities purchased from various life insurance companies to settle certain personal physical injury claims, of which workers’ compensation claims comprise a significant portion.
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In cases where the Company did not receive a release from the claimant, the amount due from the life insurance company related to the structured settlement is included in the Company’s consolidated balance sheet as a reinsurance recoverable and the related claim cost is included in the liability for claims and claim adjustment expense reserves, as the Company retains the contingent liability to the claimant. If it is expected that the life insurance company is not able to pay, the Company would recognize an impairment of the related reinsurance recoverable if, and to the extent, the purchased annuities are not covered by state guaranty associations. In the event that the life insurance company fails to make the required annuity payments, the Company would be required to make such payments. The following table presents the Company’s top five groups by structured settlements at December 31, 2023 (in millions). Also included is the A.M. Best rating of the Company’s predominant insurer from each such insurer group at February 15, 2024:
Group Structured
Settlements		 A.M. Best Rating of Group’s Predominant
Insurer
Fidelity & Guaranty Life Group $ 677  A third highest of 16 ratings
Genworth Financial Group 325  B- eighth highest of 16 ratings
John Hancock Group 229  A+ second highest of 16 ratings
Symetra Financial Corporation 209  A third highest of 16 ratings
Brighthouse Financial, Inc. 190  A third highest of 16 ratings
The Company considers the ratings and related outlook assigned to reinsurance companies and life insurance companies by various independent ratings agencies in assessing the adequacy of its allowance for uncollectible amounts.

OUTLOOK
The following discussion provides outlook information for certain key drivers of the Company’s results of operations and capital position.
Premiums.  The Company’s earned premiums are a function of net written premium volume.  Net written premiums comprise both renewal business and new business and are recognized as earned premium over the term of the underlying policies. When business renews, the amount of net written premiums associated with that business may increase or decrease (renewal premium change) as a result of increases or decreases in rate and/or insured exposures, which the Company considers as a measure of units of exposure (such as the number and value of vehicles or properties insured).  Net written premiums from both renewal and new business, and therefore earned premiums, are impacted by competitive market conditions as well as general economic conditions, which, particularly in the case of Business Insurance, affect audit premium adjustments, policy endorsements and mid-term cancellations.  Net written premiums may also be impacted by the structure of reinsurance programs and related costs, as well as changes in foreign currency exchange rates.
Overall, the Company expects that retention levels (the amount of expiring premium that renews, before the impact of renewal premium changes) will remain strong by historical standards during 2024.
Property and casualty insurance market conditions are expected to remain competitive during 2024 for new business. In each of the Company’s business segments, new business generally has less of an impact on underwriting profitability than renewal business, given the volume of new business relative to renewal business.  However, in periods of meaningful increases in new business, despite its positive impact on underwriting gains over time, the impact of higher new business levels may negatively impact the combined ratio for a period of time. In periods of meaningful decreases in new business, despite its negative impact on underwriting gains over time, the impact of lower new business levels may positively impact the combined ratio for a period of time.
Effective January 1, 2024, the Company renewed a quota share reinsurance agreement with subsidiaries of Fidelis Insurance Holdings Limited (Fidelis) pursuant to which the Company assumes 20% of the gross written premiums of Fidelis during 2024, subject to a loss ratio cap.  The Company’s portion of premiums from Fidelis is reported as part of the International results of Business Insurance. The Company also has a minority investment in Fidelis.
Underwriting Gain/Loss. The Company’s underwriting gain/loss can be significantly impacted by catastrophe losses and net favorable or unfavorable prior year reserve development, as well as underlying underwriting margins. Underlying underwriting margins can be impacted by a number of factors, including variability in non-catastrophe weather, large loss and other loss activity; changes in current period loss estimates resulting from prior period loss development; changes in loss cost trends; changes in business mix; changes in reinsurance coverages and/or costs; premium adjustments; and variability in expenses and assessments.
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Catastrophe losses and non-catastrophe weather-related losses are inherently unpredictable from period to period. The Company’s results of operations could be adversely impacted if significant catastrophe and non-catastrophe weather-related losses were to occur.
On average for the ten-year period ended December 31, 2023, the Company experienced approximately 40% of its annual catastrophe losses during the second quarter, primarily arising out of severe wind and hail storms, including tornadoes. Hurricanes, wildfires and winter storms tend to happen at other times of the year and can also have a material impact on the Company’s results of operations. Catastrophe losses incurred in a particular quarter in any given year may differ materially from historical experience. In addition, most of the Company’s reinsurance programs renew on January 1 or July 1 of each year, and, therefore, any changes to the availability, cost or coverage terms of such programs will be effective after such dates.
Over much of the past decade, the Company’s results have included significant amounts of net favorable prior year reserve development driven by better than expected loss experience. However, given the inherent uncertainty in estimating claims and claim adjustment expense reserves, loss experience could develop such that the Company recognizes in future periods higher or lower levels of favorable prior year reserve development, no favorable prior year reserve development or unfavorable prior year reserve development. In addition, the ongoing review of prior year claims and claim adjustment expense reserves, or other changes in current period circumstances, may result in the Company revising current year loss estimates upward or downward in future periods of the current year.
It is possible that changes in economic conditions, the supply chain, the labor market and geopolitical tensions, as well as steps taken by federal, state and/or local governments and the Federal Reserve could lead to higher or lower inflation than the Company anticipated, which could in turn lead to an increase or decrease in the Company’s loss costs and the need to strengthen or reduce claims and claim adjustment expense reserves. These impacts of inflation on loss costs and claims and claim adjustment expense reserves could be more pronounced for those lines of business that require a relatively longer period of time to finalize and settle claims for a given accident year and, accordingly, are relatively more inflation sensitive. Labor shortages and higher costs of vehicles, parts and raw materials are adversely impacting severity in our personal and commercial businesses and may continue to do so in future quarters. For a further discussion, see “Part I—Item 1A—Risk Factors—If actual claims exceed our claims and claim adjustment expense reserves, or if changes in the estimated level of claims and claim adjustment expense reserves are necessary, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments in which the Company operates, our financial results could be materially and adversely affected.”
The Company’s results of operations may be impacted by a number of other factors, including an economic slowdown, a recession, financial market volatility, a shutdown of the U.S. government, disruption in the banking sector, supply chain disruptions, monetary and fiscal policy measures, heightened geopolitical tensions, fluctuations in interest rates and foreign currency exchange rates, the political and regulatory environment, changes to the U.S. Federal budget and potential changes in tax laws.
Investment Portfolio. The Company expects to continue to focus its investment strategy on maintaining a high-quality investment portfolio and a relatively short average effective duration. The weighted average effective duration of fixed maturities and short-term securities was 4.1 (4.4 excluding short-term securities) at December 31, 2023. From time to time, the Company enters into short positions in U.S. Treasury futures contracts to manage the duration of its fixed maturity portfolio.  At December 31, 2023, the Company had no open U.S. Treasury futures contracts. The Company regularly evaluates its investment alternatives and mix. Currently, the majority of the Company’s investments are comprised of a widely diversified portfolio of high-quality, liquid, taxable U.S. government, tax-exempt and taxable U.S. municipal, taxable corporate and U.S. agency mortgage-backed bonds.
The Company also invests much smaller amounts in equity securities, real estate and private equity, hedge fund and real estate partnerships, and joint ventures.  These investment classes have the potential for higher returns but also the potential for greater volatility and higher degrees of risk, including less stable rates of return and less liquidity.
Approximately 33% of the fixed maturity portfolio is expected to mature over the next three years (including the early redemption of bonds, assuming interest rates (including credit spreads) do not rise significantly by applicable call dates). As a result, the overall yield on and composition of its portfolio could be meaningfully impacted by the types of investments available for reinvestment with the proceeds of maturing bonds.
Net investment income is a material contributor to the Company’s results of operations. Based on the Company’s current expectations for the impact of expected higher reinvestment yields on the Company’s fixed income investments and slightly higher levels of fixed income investments, the Company expects that after-tax net investment income from that portfolio will be approximately $630 million in the first quarter of 2024, increasing to an estimated $675 million by the fourth quarter of 2024. This expectation could be impacted by the direction of interest rates and disruptions in global financial markets.
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Included in other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity method of accounting and typically report their financial statement information to the Company one month to three months following the end of the reporting period. Accordingly, net investment income or loss from these other investments is generally reflected in the Company’s financial statements on a quarter lag basis. The Company’s net investment income in future periods from its non-fixed income investment portfolio will be impacted, positively or negatively, by the performance of global financial markets.
The Company had net pre-tax realized investment losses of $105 million in 2023. Changes in global financial markets could result in net realized investment gains or losses in the Company’s investment portfolio.
The Company had a net pre-tax unrealized investment loss of $3.97 billion ($3.13 billion after-tax) in its fixed maturity investment portfolio at December 31, 2023, compared to $6.22 billion ($4.90 billion after-tax) at December 31, 2022. The net unrealized investment loss is primarily due to the impact of movements in interest rates. The decrease in the net unrealized investment loss in 2023 was due to a change in interest rates. While the Company does not attempt to predict future interest rate movements, a rising interest rate environment reduces the market value of fixed maturity investments and, therefore, reduces shareholders’ equity, and a declining interest rate environment has the opposite effects. The net unrealized loss discussed above is considered temporary in nature as it is not due to credit impairments, there is no impact on expected contractual cash flows from fixed maturities, and the Company generally holds its fixed maturity investments to maturity. In addition, given the temporary nature of net unrealized losses combined with the Company’s strong operating cash flows (which include income received on investments and the proceeds received upon maturity of the investments), the net unrealized investment loss is not expected to meaningfully impact the Company’s assessment of capital adequacy or liquidity. Equity securities, which include common and non-redeemable preferred stocks, are reported at fair value with changes in fair value recognized in net income.
Additionally, disruptions in global financial markets could also impact the market value of the Company’s investment portfolio. The Company’s investment portfolio has benefited from certain tax exemptions (primarily those related to interest from municipal bonds) and certain other tax laws, including, but not limited to, those governing dividends-received deductions and tax credits (such as foreign tax credits). Changes in these laws could adversely impact the value of the Company’s investment portfolio. See “Our businesses are heavily regulated by the states and countries in which we conduct business, including licensing, market conduct and financial supervision, and changes in regulation, including changes in tax regulation, may reduce our profitability and limit our growth” included in “Part I—Item 1A—Risk Factors.”
For further discussion of the Company’s investment portfolio, see “Investment Portfolio.” For a discussion of the risks to the Company’s business during or following a financial market disruption and risks to the Company’s investment portfolio, see the risk factors entitled “During or following a period of financial market disruption or an economic downturn, our business could be materially and adversely affected” and “Our investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses” included in “Part I—Item 1A—Risk Factors.” For a discussion of the risks to the Company’s investments from foreign currency exchange rate fluctuations, see the risk factor entitled “We are subject to additional risks associated with our business outside the United States” included in “Part I—Item 1A—Risk Factors” and see “Part II—Item 7A—Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Exchange Rate Risk.”
Capital Position. The Company believes it has a strong capital position and, as part of its ongoing efforts to create shareholder value, expects to continue to return capital not needed to support its business operations to its shareholders, subject to the considerations described below.  The Company expects that, generally over time, the combination of dividends to common shareholders and common share repurchases will likely not exceed net income.  The Company also expects that to the extent that it continues to grow premium volumes, the level of capital to support the Company’s financial strength ratings will also increase, and accordingly, the amount of capital returned to shareholders relative to earnings would be somewhat less than it otherwise would have been absent the growth in premium volumes. The timing and actual number of shares to be repurchased in the future will depend on a variety of additional factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels appropriate for the Company’s business operations, 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, changes in tax laws (including the Inflation Reduction Act) and other factors. For information regarding the Company’s common share repurchases in 2023, see “Liquidity and Capital Resources” herein.
As a result of the Company’s business outside of the United States, primarily in Canada, the United Kingdom (including Lloyd’s), the Republic of Ireland and in Brazil through a joint venture, the Company’s capital is also subject to the effects of changes in foreign currency exchange rates. Strengthening of the U.S. dollar in comparison to other currencies could result in a reduction in shareholders’ equity, while a weakening of the U.S. dollar in comparison to other currencies could result in an increase in shareholders’ equity.
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For additional discussion of the Company’s foreign exchange market risk exposure, see “Part II—Item 7A—Quantitative and Qualitative Disclosures About Market Risk.”
Many of the statements in this “Outlook” section and in “Liquidity and Capital Resources” are forward-looking statements, which are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control.  Actual results could differ materially from those expressed or implied by such forward-looking statements.  Further, such forward-looking statements speak only as of the date of this report and the Company undertakes no obligation to update them.  See “—Forward Looking Statements.” For a discussion of potential risks and uncertainties that could impact the Company’s results of operations or financial position, see “Part I—Item 1A—Risk Factors” and “Critical Accounting Estimates.”

LIQUIDITY AND CAPITAL RESOURCES
Liquidity is a measure of a company’s ability to generate sufficient cash flows to meet the cash requirements of its business operations and to satisfy general corporate purposes when needed.
Operating Company Liquidity. The liquidity requirements of the Company’s insurance subsidiaries are met primarily by funds generated from premiums, fees, income received on investments and investment maturities. Cash provided from these sources is used primarily for claims and claim adjustment expense payments and operating expenses. The insurance subsidiaries’ liquidity requirements can be impacted by, among other factors, the timing and amount of catastrophe claims, which are inherently unpredictable, as well as the timing and amount of reinsurance recoveries, which may be affected by reinsurer solvency and reinsurance coverage disputes. Additionally, the variability of asbestos-related claim payments, as well as the volatility of potential judgments and settlements arising out of litigation, may also result in increased liquidity requirements. While an environment of higher interest rates during 2022 and 2023 resulted in significant net unrealized investment losses, the net unrealized loss is considered temporary in nature as it is not due to credit impairments, there is no impact on expected contractual cash flows from fixed maturities, and the Company generally holds its high-quality fixed maturity investments to maturity. In addition, given the temporary nature of net unrealized losses combined with the Company’s strong operating cash flows (which include income received on investments and the proceeds received upon maturity of the investments), the net unrealized investment loss is not expected to meaningfully impact the Company’s assessment of capital adequacy or liquidity. It is the opinion of the Company’s management that the insurance subsidiaries’ future liquidity needs will be adequately met from all of the sources described above. Subject to the restrictions imposed by states in which the Company’s insurance subsidiaries are domiciled, the Company’s principal insurance subsidiaries pay dividends to their respective parent companies, which, in turn, pay dividends to the corporate holding (parent) company (TRV). For further information regarding restrictions on dividends paid by the Company’s insurance subsidiaries, see “Part I—Item 1—Business—Regulation.”
Holding Company Liquidity.  TRV’s liquidity requirements primarily include shareholder dividends, debt servicing, common share repurchases and, from time to time, contributions to its qualified domestic pension plan.  At December 31, 2023, TRV held total cash and short-term invested assets in the United States aggregating $1.54 billion and having a weighted average maturity of 24 days. TRV has established a holding company liquidity target equal to its estimated annual pre-tax interest expense and common shareholder dividends (currently approximately $1.30 billion). TRV’s holding company liquidity of $1.54 billion at December 31, 2023 exceeded this target, and it is the opinion of the Company’s management that these assets are sufficient to meet TRV’s current liquidity requirements.
TRV is not dependent on dividends or other forms of repatriation from its foreign operations to support its liquidity needs. The undistributed earnings of the Company’s foreign operations are intended to be permanently reinvested in those operations, and such earnings were not material to the Company’s financial position or liquidity at December 31, 2023.
TRV has a shelf registration statement filed with the Securities and Exchange Commission that expires on June 8, 2025 which permits it to issue securities from time to time. TRV also has a $1.0 billion line of credit facility with a syndicate of financial institutions that expires on June 15, 2027. At December 31, 2023, the Company had $100 million of commercial paper outstanding. TRV is not reliant on its commercial paper program to meet its operating cash flow needs. The Company has no senior notes or junior subordinated debentures maturing until April 2026, at which time $200 million of senior notes will mature.
The Company utilized uncollateralized letters of credit issued by major banks with an aggregate limit of $260 million to provide a portion of the capital needed to support its obligations at Lloyd’s at December 31, 2023. If uncollateralized letters of credit are not available at a reasonable price or at all in the future, the Company can collateralize these letters of credit or may have to seek alternative means of supporting its obligations at Lloyd’s, which could include utilizing holding company funds on hand.
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Operating Activities
Net cash provided by operating activities were $7.71 billion and $6.47 billion in 2023 and 2022, respectively.  The increase in cash flows in 2023 primarily reflected the impacts of higher levels of cash received for premiums and lower levels of payments for income taxes, partially offset by higher levels of payments for claims and claim adjustment expenses, commissions and general and administrative expenses. The increase in cash paid for claims and claim adjustment expenses in 2023 was impacted by business growth and higher loss costs. Additionally, cash used for claims and claim adjustment expenses continue to be impacted by reduced judicial system and claims settlement activity related to a backlog in the court system. The increase in cash received for premiums in 2023 compared to the prior year was impacted by business growth including the impact of positive renewal premium changes.
Investing Activities
Net cash used in investing activities was $6.82 billion and $3.73 billion in 2023 and 2022, respectively.  The Company’s consolidated total investments at December 31, 2023 increased by $8.36 billion, or 10% over December 31, 2022, primarily reflecting the impacts of (i) net cash flows provided by operating activities and (ii) lower net unrealized investment losses on investments due to the impact of a change in interest rates during 2023, partially offset by (iii) net cash used in financing activities.
The Company’s investment portfolio is managed to support its insurance operations; accordingly, the portfolio is positioned to meet obligations to policyholders. As such, the primary goals of the Company’s asset-liability management process are to satisfy the insurance liabilities and maintain sufficient liquidity to cover fluctuations in projected liability cash flows. Generally, the expected principal and interest payments produced by the Company’s fixed maturity portfolio adequately fund the estimated runoff of the Company’s insurance reserves. Although this is not an exact cash flow match in each period, the substantial amount by which the market value of the fixed maturity portfolio exceeds the value of the net insurance liabilities, as well as the positive cash flow from newly sold policies and the large amount of high quality liquid bonds, contributes to the Company’s ability to fund claim payments without having to sell illiquid assets or access credit facilities.
Financing Activities
Net cash used in financing activities were $1.05 billion and $2.67 billion in 2023 and 2022, respectively.  The totals in both 2023 and 2022 reflected common share repurchases and dividends paid to shareholders, partially offset by the net proceeds from employee stock option exercises. The total in 2023 also included net proceeds from the issuance of debt. Common share repurchases in 2023 and 2022 were $1.02 billion and $2.06 billion, respectively.
Debt Transactions.
2023. On May 25, 2023, the Company issued $750 million aggregate principal amount of 5.45% senior notes that will mature on May 25, 2053. The net proceeds of the issuance, after the deduction of the underwriting discount and expenses payable by the Company, totaled approximately $738 million. Interest on the senior notes is payable semi-annually in arrears on May 25 and November 25. Prior to November 25, 2052, the senior notes may be redeemed, in whole or in part, at the Company’s option, at any time or from time to time, at a redemption price equal to the greater of (a) 100% of the principal amount of any senior notes to be redeemed or (b) the sum of the present values of the remaining scheduled payments of principal and interest to but excluding November 25, 2052 on any senior notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the then current Treasury rate (as defined in the senior notes), plus 25 basis points. On or after November 25, 2052, the senior notes may be redeemed, in whole or in part, at the Company’s option, at any time or from time to time, at a redemption price equal to 100% of the principal amount of any senior notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
Dividends.  Dividends paid to shareholders were $908 million and $875 million in 2023 and 2022, respectively.  The declaration and payment of future dividends to holders of the Company’s common stock will be at the discretion of the Company’s Board of Directors and will depend upon many factors, including the Company’s financial position, earnings, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints and other factors as the Board of Directors deems relevant. Dividends will be paid by the Company only if declared by its Board of Directors out of funds legally available, subject to any other restrictions that may be applicable to the Company. On January 19, 2024, the Company announced that its Board of Directors declared a regular quarterly dividend of $1.00 per share, payable March 29, 2024 to shareholders of record on March 8, 2024.
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Share Repurchases.  The Company’s Board of Directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise.  The authorizations do not have a stated expiration date. The Company expects that, generally over time, the combination of dividends to common shareholders and common share repurchases will likely not exceed net income. The Company also expects that to the extent that it continues to grow premium volumes, the amount of capital returned to shareholders relative to earnings would be somewhat less than it otherwise would have been absent the growth in premium volumes. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels appropriate for the Company’s business operations, 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, changes in tax laws (including the Inflation Reduction Act) and other factors. During 2023, the Company repurchased 5.4 million shares under its share repurchase authorizations, for a total of $965 million. The average cost per share repurchased was $179.95. Common share repurchases of $965 million in 2023 were lower than the total of $2.00 billion in 2022 due to elevated catastrophe losses in 2023 and to increase capital to support business growth. On April 19, 2023, the Board of Directors approved a share repurchase authorization that added $5.0 billion of repurchase capacity to the $1.60 billion of capacity remaining at that date. At December 31, 2023, the Company had $6.04 billion of capacity remaining under its share repurchase authorizations. The cost of treasury stock acquired pursuant to common share repurchases includes the 1% excise tax imposed as part of the Inflation Reduction Act of 2022.
From the inception of the first authorization on May 2, 2006 through December 31, 2023, the Company has repurchased a cumulative total of 543.9 million shares for a total of $39.96 billion, or an average of $73.48 per share.
In 2023 and 2022, the Company acquired 0.3 million and 0.4 million shares of common stock, respectively, from employees as treasury stock primarily to cover payroll withholding taxes in connection with the vesting of restricted stock unit awards and performance share awards, and shares used by employees to cover the price of certain stock options that were exercised.
Capital Resources
Capital resources reflect the overall financial strength of the Company and its ability to borrow funds at competitive rates and raise new capital to meet its needs.  The following table summarizes the components of the Company’s capital structure at December 31, 2023 and 2022:
(at December 31, in millions) 2023 2022
Debt:    
Short-term $ 100  $ 100 
Long-term 8,004  7,254 
Net unamortized fair value adjustments and debt issuance costs (73) (62)
Total debt 8,031  7,292 
Shareholders’ equity:    
Common stock and retained earnings, less treasury stock 29,392  28,005 
Accumulated other comprehensive loss (4,471) (6,445)
Total shareholders’ equity 24,921  21,560 
Total capitalization $ 32,952  $ 28,852 
Total capitalization at December 31, 2023 was $32.95 billion, $4.10 billion higher than at December 31, 2022, primarily reflecting the impacts of (i) net income of $2.99 billion, (ii) other comprehensive income of $1.97 billion, primarily reflecting a decrease in net unrealized losses on investments due to a change in interest rates during 2023 and (iii) proceeds from the exercise of employee share options of $141 million, partially offset by (iv) common share repurchases totaling $965 million under the Company’s share repurchase authorizations and (v) shareholder dividends of $915 million.
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The following table provides a reconciliation of total capitalization presented in the foregoing table to total capitalization excluding net unrealized losses on investments, net of taxes, included in shareholders’ equity:
(at December 31, dollars in millions) 2023 2022
Total capitalization $ 32,952  $ 28,852 
Less: net unrealized losses on investments, net of taxes, included in shareholders’ equity (3,129) (4,898)
Total capitalization excluding net unrealized losses on investments, net of taxes, included in shareholders’ equity $ 36,081  $ 33,750 
Debt-to-total capital ratio 24.4  % 25.3  %
Debt-to-total capital ratio excluding net unrealized losses on investments, net of taxes, included in shareholders’ equity 22.3  % 21.6  %
The debt-to-total capital ratio excluding net unrealized gains (losses) on investments, net of taxes, included in shareholders’ equity, is calculated by dividing (a) debt by (b) total capitalization excluding net unrealized gains and losses on investments, net of taxes, included in shareholders’ equity. Net unrealized gains and losses on investments can be significantly impacted by both interest rate movements and other economic factors. Accordingly, in the opinion of the Company’s management, the debt-to-total capital ratio calculated on this basis provides another useful metric for investors to understand the Company’s financial leverage position. The Company’s ratio of debt-to-total capital excluding after-tax net unrealized investment losses included in shareholders’ equity of 22.3% at December 31, 2023 was within the Company’s target range of 15% to 25%.
Credit Agreement. The Company is a party to a five-year, $1.0 billion revolving credit agreement with a syndicate of financial institutions that expires on June 15, 2027.  Terms of the credit agreement are discussed in more detail in note 9 of the notes to the consolidated financial statements.
Shelf Registration.  The Company has filed a universal shelf registration statement with the Securities and Exchange Commission that expires on June 8, 2025 for the potential offering and sale of securities.  The Company may offer these securities from time to time at prices and on other terms to be determined at the time of offering.
Share Repurchase Authorizations.  At December 31, 2023, the Company had $6.04 billion of capacity remaining under its share repurchase authorizations approved by the Board of Directors.
Cash Requirements from Contractual and Other Obligations
The following table summarizes, as of December 31, 2023, the Company’s future payments under material contractual obligations and estimated claims and claim-related payments.  The table includes only liabilities at December 31, 2023 that are expected to be settled in cash.
The table below includes the amount and estimated future timing of claims and claim-related payments. The amounts do not represent the exact liability, but instead represent estimates, generally utilizing actuarial projection techniques, at a given accounting date. These estimates include expectations of what the ultimate settlement and administration of claims will cost based on the Company’s assessment of facts and circumstances known, review of historical settlement patterns, estimates of trends in claims severity, frequency, legal theories of liability and other factors. Variables in the reserve estimation process can be affected by both internal and external events, such as changes in claims handling procedures, economic inflation or deflation, legal trends and legislative changes. Many of these items are not directly quantifiable, particularly on a prospective basis. Additionally, there may be significant reporting lags between the occurrence of the policyholder event and the time it is actually reported to the insurer. The future cash flows related to the items contained in the table below required estimation of both amount (including severity considerations) and timing. Amount and timing are frequently estimated separately. An estimation of both amount and timing of future cash flows related to claims and claim-related payments has unavoidable estimation uncertainty.
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The material cash requirements from contractual and other obligations at December 31, 2023 were as follows:
Payments Due by Period (in millions) Total Less than
1 Year		 1-3
Years		 3-5
Years		 After 5
Years
Debt          
Senior notes $ 7,750  $ —  $ 200  $ —  $ 7,550 
Junior subordinated debentures 254  —  —  125  129 
Total debt principal 8,004  —  200  125  7,679 
Interest 7,429  389  770  738  5,532 
Total long-term debt obligations (1)
 15,433  389  970  863  13,211 
Real estate and other operating leases (2)
 303  88  123  70  22 
Information systems-related commitments (3)
 946  450  416  80  — 
Unfunded investment commitments (4)
 2,052  761  498  555  238 
Estimated claims and claim-related payments
          
Claims and claim adjustment expenses (5)
 60,060  14,285  14,864  7,627  23,284 
Claims from large deductible policies (6)
 —  —  —  —  — 
Total estimated claims and claim-related payments
 60,060  14,285  14,864  7,627  23,284 
Total $ 78,794  $ 15,973  $ 16,871  $ 9,195  $ 36,755 
________________________________________
(1)See note 9 of the notes to the consolidated financial statements for a further discussion of outstanding indebtedness. Because the amounts reported in the foregoing table include principal and interest, the total long-term debt obligations will not agree with the amounts reported in note 9.
(2)Represents agreements entered into in the ordinary course of business to lease office space, equipment and furniture. 
(3)Includes agreements with vendors to purchase system software (including software as a service), software maintenance services and technology-related costs.
(4)Represents estimated timing for fulfilling unfunded commitments for private equity limited partnerships, real estate partnerships and other investments.
(5)The amounts in “Claims and claim adjustment expenses” in the table above represent the estimated timing of future payments for both reported and unreported claims incurred and related claim adjustment expenses, gross of reinsurance recoverables, excluding structured settlements expected to be paid by annuity companies.
The Company has entered into reinsurance agreements to manage its exposure to losses and protect its capital as described in note 6 of the notes to the consolidated financial statements.
In order to qualify for reinsurance accounting, a reinsurance agreement must indemnify the insurer from insurance risk, i.e., the agreement must transfer amount and timing risk. Since the timing and amount of cash inflows from such reinsurance agreements are directly related to the underlying payment of claims and claim adjustment expenses by the insurer, reinsurance recoverables are recognized in a manner consistent with the liabilities (the estimated liability for claims and claim adjustment expenses) relating to the underlying reinsured contracts.  The presence of any feature that can delay timely reimbursement of claims by a reinsurer results in the reinsurance contract being accounted for as a deposit rather than reinsurance. The assumptions used in estimating the amount and timing of the reinsurance recoverables are consistent with those used in estimating the amount and timing of the related liabilities.
The estimated future cash inflows from the Company’s reinsurance contracts that qualify for reinsurance accounting are as follows:
(in millions) Total Less than 1
Year		 1-3
Years		 3-5
Years		 After 5
Years
Reinsurance recoverables $ 5,208  $ 933  $ 1,010  $ 637  $ 2,628 
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The Company manages its business and evaluates its liabilities for claims and claim adjustment expenses on a net of reinsurance basis.  The estimated cash flows on a net of reinsurance basis are as follows:
(in millions) Total Less than 1
Year		 1-3
Years		 3-5
Years		 After 5
Years
Claims and claim adjustment expenses, net
 $ 54,852  $ 13,352  $ 13,854  $ 6,990  $ 20,656 
For business underwritten by non-U.S. operations, future cash flows related to reported and unreported claims incurred and related claim adjustment expenses were translated at the spot rate on December 31, 2023.
The amounts reported in the table above and in the table of reinsurance recoverables above are presented on a nominal basis and have not been adjusted to reflect the time value of money. Accordingly, the amounts above will differ from the Company’s balance sheet to the extent that the liability for claims and claim adjustment expenses and the related reinsurance recoverables have been discounted in the balance sheet. See note 1 of the notes to the consolidated financial statements.
(6)    Workers’ compensation large deductible policies provide third-party coverage in which the Company typically is responsible for paying the entire loss under such policies and then seeks reimbursement from the insured for the deductible amount. “Claims from large deductible policies” represent the estimated future payment for claims and claim related expenses below the deductible amount, net of the estimated recovery of the deductible. The liability and the related deductible receivable for unpaid claims are presented in the consolidated balance sheet as “contractholder payables” and “contractholder receivables,” respectively. Most deductibles for such policies are paid directly from the policyholder’s escrow, which is periodically replenished by the policyholder. The payment of the loss amounts above the deductible are reported within “Claims and claim adjustment expenses” in the above table. Because the timing of the collection of the deductible (contractholder receivables) occurs shortly after the payment of the deductible to a claimant (contractholder payables), these cash flows offset each other in the table.
The estimated timing of the payment of the contractholder payables and the collection of contractholder receivables (net of allowance for expected credit losses) for workers’ compensation policies is presented below:
(in millions) Total Less than 1
Year		 1-3
Years		 3-5
Years		 After 5
Years
Contractholder payables/receivables $ 3,249  $ 1,024  $ 961  $ 411  $ 853 
The above table does not include an analysis of liabilities reported for structured settlements for which the Company has purchased annuities and remains contingently liable in the event of default by the company issuing the annuity. The Company is not reasonably likely to incur material future payment obligations under such agreements. In addition, the Company is not currently subject to any minimum funding requirements for its qualified pension plan. Accordingly, future contributions are not included in the foregoing table.
The Company believes that the combination of operating company liquidity, holding company liquidity, its investment portfolio and its capital resources are sufficient to meet its contractual obligations.
Dividend Availability
The Company’s principal insurance subsidiaries are domiciled in the State of Connecticut. The insurance holding company laws of Connecticut applicable to the Company’s subsidiaries requires notice to, and approval by, the state insurance commissioner for the declaration or payment of any dividend that, together with other distributions made within the preceding twelve months, exceeds the greater of 10% of the insurer’s statutory capital and surplus as of the preceding December 31, or the insurer’s net income for the twelve-month period ending the preceding December 31, in each case determined in accordance with statutory accounting practices and by state regulation. This declaration or payment is further limited by adjusted unassigned surplus, as determined in accordance with statutory accounting practices. The insurance holding company laws of other states in which the Company’s subsidiaries are domiciled generally contain similar, although in some instances somewhat more restrictive, limitations on the payment of dividends. A maximum of $2.73 billion is available by the end of 2024 for such dividends to ultimately be paid to the holding company, TRV, without prior approval of the Connecticut Insurance Department. The Company may choose to accelerate the timing within 2024 and/or increase the amount of dividends from its insurance subsidiaries in 2024, which could result in certain dividends being subject to approval by the Connecticut Insurance Department prior to payment.
In addition to the regulatory restrictions on the amount of dividends that can be paid by the Company’s U.S. insurance subsidiaries, the maximum amount of dividends that may be paid to the Company’s shareholders is also limited, to a lesser degree, by certain covenants contained in its line of credit agreement with a syndicate of financial institutions that require the Company to maintain a minimum consolidated net worth as described in note 9 of the notes to the consolidated financial statements.
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TRV is not dependent on dividends or other forms of repatriation from its foreign operations to support its liquidity needs. The undistributed earnings of the Company’s foreign operations are intended to be permanently reinvested in those operations, and such earnings were not material to the Company’s financial position or liquidity at December 31, 2023.
The U.S. insurance subsidiaries paid dividends of $1.17 billion and $2.90 billion during 2023 and 2022, respectively.
Pension and Other Postretirement Benefit Plans
The Company sponsors a qualified non-contributory defined benefit pension plan (the qualified domestic pension plan), which covers substantially all U.S. domestic employees and provides benefits primarily under a cash balance formula. In addition, the Company sponsors a nonqualified defined benefit pension plan which covers certain highly-compensated employees, pension plans for employees of its foreign subsidiaries, and a postretirement health and life insurance benefit plan for employees satisfying certain age and service requirements and for certain retirees.
The qualified domestic pension plan is subject to regulations under the Employee Retirement Income Security Act of 1974 as amended (ERISA), which requires plans to meet minimum standards of funding and requires such plans to subscribe to plan termination insurance through the Pension Benefit Guaranty Corporation (PBGC). The Company does not have a minimum funding requirement for the qualified domestic pension plan for 2024 and does not anticipate having a minimum funding requirement in 2025. The Company has significant discretion in making contributions above those necessary to satisfy the minimum funding requirements. In 2023, 2022 and 2021, there was no minimum funding requirement for the qualified domestic pension plan.  In 2023, 2022 and 2021, the Company made no voluntary contributions to the qualified domestic pension plan. The qualified domestic pension plan had a funded status of 120% and 116% at December 31, 2023 and 2022, respectively. Based on its funded status at December 31, 2023, the Company does not currently anticipate making a voluntary contribution to the qualified domestic pension plan in 2024. In determining future contributions, the Company will consider the performance of the plan’s investment portfolio, the effects of interest rates on the projected benefit obligation of the plan and the Company’s other capital requirements.
The qualified domestic pension plan assets are managed to maximize long-term total return while maintaining an appropriate level of risk. The Company’s overall investment strategy is to achieve a mix of approximately 85% to 90% of investments for long-term growth and 10% to 15% for near-term benefit payments with a diversification of asset types, fund strategies and fund managers. The current target allocations for plan assets are 55% to 65% equity securities and 20% to 40% fixed income securities, with the remainder allocated to short-term securities. For 2024, the Company plans to apply an expected long-term rate of return on plan assets of 7.00%, comparable with 2023. The expected rate of return reflects the Company’s current expectations with regard to long-term returns in the capital markets, taking into account the pension plan’s asset allocation targets, the historical performance and current valuation of U.S. and international equities, and the level of long term interest rate and inflation expectations.
For further discussion of the pension and other postretirement benefit plans, see note 15 of the notes to the consolidated financial statements.
Risk-Based Capital
The NAIC has an RBC requirement for most property and casualty insurance companies, which determines minimum capital requirements and is intended to raise the level of protection for policyholder obligations. The Company’s U.S. insurance subsidiaries are subject to these NAIC RBC requirements based on laws that have been adopted by individual states. These requirements subject insurers having policyholders’ surplus less than that required by the RBC calculation to varying degrees of regulatory action, depending on the level of capital inadequacy. Each of the Company’s U.S. insurance subsidiaries had policyholders’ surplus at December 31, 2023 significantly above the level at which any RBC regulatory action would occur.  Regulators in the jurisdictions in which the Company’s foreign insurance subsidiaries are located require insurance companies to maintain certain levels of capital depending on, among other things, the type and amount of insurance policies written.  Each of the Company’s foreign insurance subsidiaries had capital significantly above their respective regulatory requirements at December 31, 2023.
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Off-Balance Sheet Arrangements
The Company has entered into certain contingent obligations for guarantees related to selling businesses to third parties, certain investments, certain insurance policy obligations of former insurance subsidiaries and various other indemnifications. See note 17 of the notes to the consolidated financial statements. The Company does not believe it is reasonably likely that these arrangements will have a material current or future effect on the Company’s financial position, changes in financial position, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources.

CRITICAL ACCOUNTING ESTIMATES
The Company considers its most significant accounting estimates to be those applied to claims and claim adjustment expense reserves and related reinsurance recoverables, and impairments of investments, goodwill and other intangible assets.
Claims and Claim Adjustment Expense Reserves
Gross claims and claim adjustment expense reserves by product line were as follows:
  December 31, 2023 December 31, 2022
(in millions) Case IBNR Total Case IBNR Total
General liability $ 5,658  $ 10,214  $ 15,872  $ 5,465  $ 9,220  $ 14,685 
Commercial property 1,447  281  1,728  1,200  439  1,639 
Commercial multi-peril 2,869  2,905  5,774  2,624  2,759  5,383 
Commercial automobile 2,661  2,773  5,434  2,625  2,388  5,013 
Workers’ compensation 10,004  9,203  19,207  10,034  9,458  19,492 
Fidelity and surety 265  466  731  166  496  662 
Personal automobile 2,245  2,460  4,705  2,139  2,133  4,272 
Personal homeowners and other 1,217  2,004  3,221  1,095  1,913  3,008 
International and other 2,620  2,329  4,949  2,420  2,069  4,489 
Property-casualty 28,986  32,635  61,621  27,768  30,875  58,643 
Accident and health 6  —  6  6  —  6 
Claims and claim adjustment expense reserves
 $ 28,992  $ 32,635  $ 61,627  $ 27,774  $ 30,875  $ 58,649 
The $2.98 billion increase in gross claims and claim adjustment expense reserves since December 31, 2022 primarily reflected the impacts of (i) catastrophe losses in 2023, (ii) higher volumes of insured exposures and (iii) loss cost trends for the current accident year, partially offset by (iv) claim payments made during 2023 and (v) net favorable prior year reserve development.
Asbestos and environmental reserves are included in the General liability, Commercial multi-peril and International and other lines in the foregoing summary table. Asbestos and environmental reserves are discussed separately; see “Asbestos Claims and Litigation,” “Environmental Claims and Litigation” and “Uncertainty Regarding Adequacy of Asbestos and Environmental Reserves” herein.
Claims and claim adjustment expense reserves represent management’s estimate of the ultimate liability for unpaid losses and loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported (IBNR) as of the balance sheet date. Claims and claim adjustment expense reserves do not represent an exact calculation of liability, but instead represent management estimates, primarily utilizing actuarial expertise and projection methods. These estimates are expectations of what the ultimate settlement and administration of claims will cost upon final resolution in the future, based on the Company’s assessment of facts and circumstances then known, review of historical settlement patterns, estimates of trends in claims severity and frequency, expected interpretations of legal theories of liability and other factors. In establishing gross claims and claim adjustment expense reserves, the Company also considers salvage and subrogation. Estimated recoveries from reinsurance are included in “Reinsurance Recoverables” as an asset on the Company’s consolidated balance sheet. The claims and claim adjustment expense reserves are reviewed regularly by qualified actuaries employed by the Company.
The process of estimating claims and claim adjustment expense reserves involves a high degree of judgment and is subject to a number of variables. These variables can be affected by both internal and external events, such as changes in claims handling procedures, changes in individuals involved in the reserve estimation process, economic inflation, changes in the tort environment, legal trends and legislative changes, among others. The impact of many of these items on ultimate costs for claims and claim adjustment expenses is difficult to estimate.
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Estimation difficulties also differ significantly by product line due to differences in claim complexity, the volume of claims, the potential severity of individual claims, the determination of occurrence date for a claim and reporting lags (the time between the occurrence of the policyholder event and when it is actually reported to the insurer). Informed judgment is applied throughout the process, including the application of various individual experiences and expertise to multiple sets of data and analyses. The Company refines its estimates in a regular ongoing process as historical loss experience develops and additional claims are reported and settled. The Company rigorously attempts to consider all significant facts and circumstances known at the time claims and claim adjustment expense reserves are established. Due to the inherent uncertainty underlying these estimates including, but not limited to, the future settlement environment, final resolution of the estimated liability for claims and claim adjustment expenses may be higher or lower than the related claims and claim adjustment expense reserves at the reporting date. Therefore, actual paid losses, as claims are settled in the future, may be materially different than the amount currently recorded-favorable or unfavorable. Because establishment of claims and claim adjustment expense reserves is an inherently uncertain process involving estimates and the application of judgment, currently established claims and claim adjustment expense reserves may change. The Company reflects adjustments to the reserves in the results of operations in the period the estimates are changed.
There are also additional risks which impact the estimation of ultimate costs for catastrophes. For example, the estimation of reserves related to hurricanes, tornadoes, wildfires and other catastrophic events can be affected by the inability of the Company and its insureds to access portions of the impacted areas, the complexity of factors contributing to the losses, the legal and regulatory uncertainties, including the interpretation of policy terms and conditions, and the nature of the information available to establish the reserves. Complex factors include, but are not limited to: determining whether damage was caused by flooding versus wind; evaluating general liability and pollution exposures; estimating additional living expenses; estimating the impact of demand surge, infrastructure disruption, fraud, the effect of mold damage and business interruption costs; and reinsurance collectibility. The timing of a catastrophe, such as at or near the end of a reporting period, can also affect the information available to the Company in estimating reserves for that reporting period. The estimates related to catastrophes are adjusted as actual claims emerge.
A portion of the Company’s gross claims and claim adjustment expense reserves (totaling $2.18 billion at December 31, 2023) are for asbestos and environmental claims and related litigation. While the ongoing review of asbestos and environmental claims and associated liabilities considers the inconsistencies of court decisions as to coverage, plaintiffs’ expanded theories of liability and the risks inherent in complex litigation and other uncertainties, in the opinion of the Company’s management, it is possible that the outcome of the continued uncertainties regarding these claims could result in liability in future periods that differs from current insurance reserves by an amount that could be material to the Company’s future operating results. See the preceding discussion of “Asbestos Claims and Litigation” and “Environmental Claims and Litigation.”
General Discussion
The process for estimating the liabilities for claims and claim adjustment expenses begins with the collection and analysis of claim data. Data on individual reported claims, both current and historical, including paid amounts and individual claim adjuster estimates, are grouped by common characteristics (components) and evaluated by actuaries in their analyses of ultimate claim liabilities. Such data is occasionally supplemented with external data as available and when appropriate. The process of analyzing reserves for a component is undertaken on a regular basis, generally quarterly, in light of continually updated information.
Multiple estimation methods are available for the analysis of ultimate claim liabilities. Each estimation method has its own set of assumption variables and its own advantages and disadvantages, with no single estimation method being better than the others in all situations and no one set of assumption variables being meaningful for all product line components. The relative strengths and weaknesses of the particular estimation methods when applied to a particular group of claims can also change over time. Therefore, the actual choice of estimation method(s) can change with each evaluation. The estimation method(s) chosen are those that are believed to produce the most reliable indication at that particular evaluation date for the claim liabilities being evaluated.
In most cases, multiple estimation methods will be valid for the particular facts and circumstances of the claim liabilities being evaluated. This will result in a range of reasonable estimates for any particular claim liability. The Company uses such range analyses to back test whether previously established estimates for reserves by reporting segments are reasonable, given available information. Reported values found to be closer to the endpoints of a range of reasonable estimates are subject to further detailed reviews. These reviews may substantiate the validity of management’s recorded estimate or lead to a change in the reported estimate.
The exact boundary points of these ranges are more qualitative than quantitative in nature, as no clear line of demarcation exists to determine when the set of underlying assumptions for an estimation method switches from being reasonable to unreasonable.
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As a result, the Company does not believe that the endpoints of these ranges are or would be comparable across companies. In addition, potential interactions among the different estimation assumptions for different product lines make the aggregation of individual ranges a highly judgmental and inexact process.
Property-casualty insurance policies are either written on a “claims-made” or on an “occurrence” basis. Claims-made policies generally cover, subject to requirements in individual policies, claims reported during the policy period. Policies that are written on an occurrence basis require that the insured demonstrate that a loss occurred in the policy period, even if the insured reports the loss many years later.
Most general liability policies are written on an occurrence basis. These policies are subject to substantial loss development over time as facts and circumstances change in the years following the policy issuance. The occurrence form, which accounts for much of the reserve development in asbestos and environmental exposures, is also used to provide coverage for construction general liability, including construction defect. Occurrence-based forms of insurance for general liability exposures require substantial projection of loss trends, which can be influenced by a number of factors, including future inflation, judicial interpretations and societal litigation trends (e.g., size of jury awards and propensity of individuals to pursue litigation), among others.
A basic premise in most actuarial analyses is that past patterns demonstrated in the data will repeat themselves in the future, absent a material change in the associated risk factors discussed below. To the extent a material change affecting the ultimate claim liability is known, such change is estimated to the extent possible through an analysis of internal company data and, if available and when appropriate, external data. Such a measurement is specific to the facts and circumstances of the particular claim portfolio and the known change being evaluated. Significant structural changes to the available data, product mix or organization can materially impact the reserve estimation process. In addition, the introduction of new products creates a unique risk as historical company data would typically not be available.
Informed judgment is applied throughout the reserving process. This includes the application of various individual experiences and expertise to multiple sets of data and analyses. In addition to actuaries, experts involved with the reserving process also include underwriting and claims personnel and lawyers, as well as other company management. Therefore, management may have to consider varying individual viewpoints as part of its estimation of claims and claim adjustment expense reserves. It is also likely that during periods of significant change, such as a merger, consistent application of informed judgment becomes even more complicated and difficult.
The variables discussed above in this general discussion have different impacts on reserve estimation uncertainty for a given product line, depending on the length of the claim tail, the reporting lag, the impact of individual claims and the complexity of the claim process for a given product line.
Product lines are generally classifiable as either long tail or short tail, based on the average length of time between the event triggering claims under a policy and the final resolution of those claims. Short tail claims are reported and settled quickly, resulting in less estimation variability. The longer the time to final claim resolution, the greater the exposure to estimation risks and hence the greater the estimation uncertainty.
A major component of the claim tail is the reporting lag. The reporting lag, which is the time between the event triggering a claim and the reporting of the claim to the insurer, makes estimating IBNR inherently more uncertain. In addition, the greater the reporting lag, the greater the proportion of IBNR to the total claim liability for the product line. Writing new products with material reporting lags can result in adding several years’ worth of IBNR claim exposure before the reporting lag exposure becomes clearly observable, thereby increasing the risk associated with estimating the liabilities for claims and claim adjustment expenses for such products. The most extreme example of claim liabilities with long reporting lags are asbestos claims.
For some lines, the impact of large individual claims can be material to the analysis. These lines are generally referred to as being “low frequency/high severity,” while lines without this “large claim” sensitivity are referred to as “high frequency/low severity.” Estimates of claim liabilities for low frequency/high severity lines can be sensitive to the impact of a small number of potentially large claims. As a result, the role of judgment is much greater for these reserve estimates. In contrast, for high frequency/low severity lines the impact of individual claims is relatively minor and the range of reasonable reserve estimates is likely narrower and more stable.
Claim complexity can also greatly affect the estimation process by impacting the number of assumptions needed to produce the estimate, the potential stability of the underlying data and claim process, and the ability to gain an understanding of the data. Product lines with greater claim complexity, such as for certain surety and construction exposures, have inherently greater estimation uncertainty.
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Actuaries have to exercise a considerable degree of judgment in the evaluation of all these factors in their analysis of reserves. The human element in the application of actuarial judgment is unavoidable when faced with material uncertainty. Different actuaries may choose different assumptions when faced with such uncertainty, based on their individual backgrounds, professional experiences and areas of focus. Hence, the estimates selected by the various actuaries may differ materially from each other.
Lastly, significant structural changes to the available data, product mix or organization can also materially impact the reserve estimation process. Events such as mergers increase the inherent uncertainty of reserve estimates for a period of time, until stable trends re-establish themselves within the new organization.
Risk Factors
The major causes of material uncertainty (“risk factors”) generally will vary for each product line, as well as for each separately analyzed component of the product line. In a few cases, such risk factors are explicit assumptions of the estimation method, but in most cases, they are implicit. For example, a method may explicitly assume that a certain percentage of claims will close each year, but will implicitly assume that the legal interpretation of existing contract language will remain unchanged. Actual results will likely vary from expectations for each of these assumptions, causing actual paid losses, as claims are settled in the future, to be different in amount than the reserves being estimated currently.
Some risk factors will affect more than one product line. Examples include changes in claim department practices, changes in the tort environment, changes in settlement patterns, regulatory and legislative actions, court actions, timeliness of claim reporting, state mix of claimants, medical utilization and degree of claimant fraud. The extent of the impact of a risk factor will also vary by components within a product line. Individual risk factors are also subject to interactions with other risk factors within product line components.
The effect of a particular risk factor on estimates of claim liabilities cannot be isolated in most cases. For example, estimates of potential claim settlements may be impacted by the risk associated with potential court rulings, but the final settlement agreement typically does not delineate how much of the settled amount is due to this and other factors.
The evaluation of data is also subject to distortion from extreme events or structural shifts, sometimes in unanticipated ways. For example, the timing of claims payments in one geographic region may be impacted if claim adjusters are temporarily reassigned from that region to help settle catastrophe claims in another region.
While some changes in the claim environment are sudden in nature (such as a new court ruling affecting the interpretation of all contracts in that jurisdiction), others are more evolutionary. Evolutionary changes can occur when multiple factors affect final claim values, with the uncertainty surrounding each factor being resolved separately, in stepwise fashion. The final impact is not known until all steps have occurred.
Sudden changes generally cause a one-time shift in claim liability estimates, although there may be some lag in reliable quantification of their impact. Evolutionary changes generally cause a series of shifts in claim liability estimates, as each component of the evolutionary change becomes evident and estimable.
Actuarial Methods for Analyzing and Estimating Claims and Claim Adjustment Expense Reserves
The principal estimation and analysis methods utilized by the Company’s actuaries to evaluate management’s existing estimates for prior accident periods are the paid loss development method, the case incurred development method, the Bornhuetter-Ferguson (BF) method, and average value analysis combined with the reported claim development method. The BF method is usually utilized for more recent accident periods, with a transition to other methods as the underlying claim data becomes more voluminous and therefore more credible. These estimation and analysis methods are typically referred to as conventional actuarial methods. (See note 8 of the notes to the consolidated financial statements for an explanation of these methods).
While the Company utilizes these conventional actuarial methods to estimate the claims liability for its various businesses, Company actuaries evaluating a particular component for a product line may select from the full range of methods developed within the casualty actuarial profession. The Company’s actuaries are also regularly monitoring developments within the profession for advances in existing techniques or the creation of new techniques that might improve current and future estimates.
Some components of a product line may be susceptible to infrequent large claims or not be subject to conventional methods. In such cases, the Company’s actuarial analysis will isolate such components for review. The reserves excluding such large claims are generally analyzed using the conventional methods described above. The reserves associated with large claims are then analyzed utilizing various methods, such as:
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•Estimating the number of large claims and their average values based on historical trends from prior accident periods, adjusted for the current environment and supplemented with actual data for the accident year analyzed to the extent available.
•Utilizing individual claim adjuster estimates of the large claims, combined with continual monitoring of the aggregate accuracy of such claim adjuster estimates. (This monitoring may lead to supplemental adjustments to the aggregate of such claim estimates).
•Utilizing historic longer-term average ratios of large claims to small claims, and applying such ratios to the estimated ultimate small claims from conventional analysis.
•Ground-up analysis of the underlying exposure (typically used for asbestos and environmental).
The results of such methodologies are subjected to various reasonability and diagnostic tests, including implied incurred-loss-to-earned-premium ratios, non-zero claim severity trends and paid-to-incurred loss ratios. An actual versus expected analysis is also performed comparing actual loss development to expected development embedded within management’s estimate. Additional analyses may be performed based on the results of these diagnostics, including the investigation of other actuarial methods.
The methods described above are generally utilized to evaluate management’s estimate for prior accident periods. For the initial estimate of the current accident year, however, the available claim data is typically insufficient to produce a reliable indication. As a result, the initial estimate for an accident year is generally based on an exposure-based method using either the loss ratio projection method or the expected loss method. The loss ratio projection method, which is typically used for guaranteed-cost business, develops an initial estimate for an accident year by multiplying earned premiums for the accident year by a projected loss ratio. The projected loss ratio is determined by analyzing prior period experience, and adjusting for loss cost trends, rate level differences, mix of business changes and other known or observed factors influencing the current accident year relative to prior accident years. The exact number of prior accident years utilized varies by product line component, based on the stability and consistency of the individual accident year estimates. The expected loss method, which is typically used for loss sensitive business, develops an initial estimate of ultimate claims and claim adjustment expenses for an accident year by analyzing exposures by account.
Management’s Estimates
At least once per quarter, members of Company management meet with the Company’s actuaries to review the latest claims and claim adjustment expense reserve analyses. Based on these analyses, management determines whether its ultimate claim liability estimates should be changed from the prior period. In doing so, it must evaluate whether the new data provided represents credible actionable information or an anomaly that will have no effect on estimated ultimate claim liability. For example, as described above, payments may have decreased in one geographic region due to fewer claim adjusters being available to process claims. The resulting claim payment patterns would be analyzed to determine whether or not the change in payment pattern represents a change in ultimate claim liability.
This type of assessment requires considerable judgment. It is frequently not possible to determine whether a change in the data is an anomaly until sometime after the event. Even if a change is determined to be permanent, it is not always possible to reliably determine the extent of the change until sometime later. The overall detailed analyses supporting such an effort can take several months to perform as the underlying causes of the trends observed need to be evaluated, which may require the gathering or assembling of data not previously available. It may also include interviews with experts involved with the underlying processes. As a result, there can be a time lag between the emergence of a change and a determination that the change should be reflected in the Company’s estimated claim liabilities. The final estimate selected by management in a reporting period is based on these various detailed analyses of past data, adjusted to reflect any new actionable information.
The Audit Committee of the Board of Directors reviews the process by which the Company establishes reserves for the purpose of the Company’s financial statements.
Discussion of Product Lines
The following section details reserving considerations and common risk factors by product line. There are many additional risk factors that may impact ultimate claim costs. Each risk factor presented will have a different impact on required reserves. Also, risk factors can have offsetting or compounding effects on required reserves. For example, in workers’ compensation, the use of expensive medical procedures that result in medical cost inflation may enable workers to return to work faster, thereby lowering indemnity costs. Thus, in almost all cases, it is impossible to discretely measure the effect of a single risk factor and construct a meaningful sensitivity expectation.
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In order to provide information on reasonably possible reserving changes by product line, the historical changes in year-end claims and claim adjustment expense reserves over a one-year period are provided for the U.S. product lines. This information is provided for both the Company and the industry for the nine most recent years, and is based on the most recent publicly available data for the reported line(s) that most closely match the individual product line being discussed. These changes were calculated, net of reinsurance, from statutory annual statement data found in Schedule P of those statements, and represent the reported reserve development on the beginning-of-the-year claim liabilities divided by the beginning claim liabilities, all accident years combined, excluding non-defense related claim adjustment expense. Data presented for the Company includes history for the entire Travelers group (U.S. companies only), as required by the statutory reporting instructions promulgated by state regulatory authorities for Schedule P. Comparable data for non-U.S. companies is not available.
General Liability
General liability is generally considered a long tail line, as it takes a relatively long period of time to finalize and settle claims from a given accident year. The speed of claim reporting and claim settlement is a function of the characteristics of claims, including specific coverage provided, the jurisdiction and specific policy provisions such as self-insured retentions, among others. There are numerous components underlying the general liability product line. Some of these have relatively moderate payment patterns (with most of the claims for a given accident year closed within five to seven years), while others can have extreme lags in both reporting and payment of claims (e.g., a reporting lag of a decade or more for “construction defect” claims).
While the majority of general liability coverages are written on an “occurrence” basis, certain general liability coverages (such as those covering management and professional liability, including cyber coverages) are typically insured on a “claims-made” basis.
General liability reserves are generally analyzed as two components: primary and excess/umbrella, with the primary component generally analyzed separately for bodily injury and property damage. Bodily injury liability payments reimburse the claimant for damages pertaining to physical injury as a result of the policyholder’s legal obligation arising from non-intentional acts such as negligence, subject to the insurance policy provisions. In some cases the damages can include future wage loss (which is a function of future earnings power and wage inflation) and future medical treatment costs. Property damage liability payments result from damages to the claimant’s private property arising from the policyholder’s legal obligation for non-intentional acts. In most cases, property damage losses are a function of costs as of the loss date, or soon thereafter.
In addition, sizable or unique exposures are reviewed separately. These exposures include asbestos, environmental, other mass torts, construction defect and large unique accounts that would otherwise distort the analysis. These unique categories often require a very high degree of judgment and require reserve analyses that do not rely on conventional actuarial methods.
Defense costs are also a part of the insured costs covered by liability policies and can be significant, sometimes greater than the cost of the actual paid claims. For some products this risk is mitigated by policy language such that the insured portion of defense costs is included in the policy limit available to pay the claim. Such “defense within the limits” policies are most common for “claims-made” products. When defense costs are outside of the policy limits, the full amount of the policy limit is available to pay claims and the amounts paid for defense costs have no contractual limit.  
This line is typically the largest source of reserve estimate uncertainty in the United States (excluding assumed reinsurance contracts covering the same risk). Major contributors to this reserve estimate uncertainty include the reporting lag (i.e., the length of time between the event triggering coverage and the actual reporting of the claim), the number of parties involved in the underlying tort action, whether the “event” triggering coverage is confined to only one time period or is spread over multiple time periods, the potential dollars involved (in the individual claim actions), whether such claims were reasonably foreseeable and intended to be covered at the time the contracts were written (i.e., coverage dispute potential), and the potential for mass claim actions. Claims with longer reporting lags result in greater estimation uncertainty. This is especially true for alleged claims with a latency feature, particularly where courts have ruled that coverage is spread over multiple policy years, hence involving multiple defendants (and their insurers and reinsurers) and multiple policies (thereby increasing the potential dollars involved and the underlying settlement complexity). Claims with long latencies also increase the potential recognition lag (i.e., the lag between writing a type of policy in a certain market and the recognition that such policies have potential mass tort and/or latent claim exposure).
The amount of reserve estimate uncertainty also varies significantly by component for the general liability product line. The components in this product line with the longest latency, longest reporting lags, largest potential dollars involved and greatest claim settlement complexity are asbestos and environmental. Components that include latency, reporting lag and/or complexity issues, but to a materially lesser extent than asbestos and environmental, include construction defect and other mass tort actions. Many components of general liability are not subject to material latency or claim complexity risks and hence have materially less uncertainty than the previously mentioned components.
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In general, components with shorter reporting lags, fewer parties involved in settlement negotiations, only one policy potentially triggered per claim, fewer potential settlement dollars, reasonably foreseeable (and stable) potential hazards/claims and no mass tort potential result in much less reserve estimate uncertainty than components without those characteristics.
In addition to the conventional actuarial methods mentioned in the general discussion section, the company utilizes various report year development methods for the construction defect components of this product line. The Construction Defect report year development analysis is supplemented with projected claim counts and average values for IBNR claim counts. For components with greater lags in claim reporting, such as excess and umbrella components of this product line, the Company relies more heavily on the BF method than on the paid and case incurred development methods.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required general liability reserves (beyond those included in the general discussion section) include:
General liability risk factors
•Changes in claim handling philosophies
•Changes in policy provisions or court interpretation of such provisions
•New or expanded theories of liability
•Trends in jury awards
•Changes in the propensity to sue, in general with specificity to particular issues
•Changes in the propensity to litigate rather than settle a claim
•Increases in attorney involvement in, or impact on, claims
•Changes in statutes of limitations
•Changes in the underlying court system
•Distortions from losses resulting from large single accounts or single issues
•Changes in tort law
•Shifts in lawsuit mix between federal and state courts
•Changes in claim adjuster processes or reporting which may cause distortions in the data being analyzed
•The impact of inflation on loss costs
•Changes in settlement patterns
General liability book of business risk factors
•Changes in policy provisions (e.g., deductibles, policy limits, endorsements)
•Changes in underwriting standards
•Product mix (e.g., size of account, industries insured, jurisdiction mix)
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk factors could have on reserves for general liability (excluding asbestos and environmental), a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.5% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line, excluding estimated asbestos and environmental amounts, over the last nine years has varied from -4% to 6% (averaging 0%) for the Company, and from -2% to 3% (averaging 0%) for the industry overall.  The Company’s year-to-year changes are driven by, and are based on, observed events during the year.  The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line.  General liability reserves (excluding asbestos and environmental) represent approximately 23% of the Company’s total claims and claim adjustment expense reserves.
The Company’s change in reserve estimate for this product line related to the last nine accident years, which excludes the impacts of increases in asbestos and environmental reserves, the extension of the statute of limitations for childhood sexual molestation claims and increases in reserves in the Company’s runoff operations, was 4% for 2023, 2% for 2022 and 1% for 2021. The 2023 change primarily reflected higher than expected loss experience in Business Insurance for accident years 2017 through 2020. The 2022 change primarily reflected higher than expected loss experience in Business Insurance for accident years 2017 through 2019. The 2021 change primarily reflected higher than expected loss experience in Bond & Specialty Insurance for accident years 2012 and 2017 through 2019 and in Business Insurance for accident years 2018 through 2020.
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Commercial Property
Commercial property is generally considered a short tail line with a simpler and faster claim reporting and adjustment process than liability coverages, and less uncertainty in the reserve setting process (except for more complex business interruption claims). It is generally viewed as a moderate frequency, low to moderate severity line, except for catastrophes and coverage related to large properties. The claim reporting and settlement process for property coverage claim reserves is generally restricted to the insured and the insurer. Overall, the claim liabilities for this line create a low estimation risk, except possibly for catastrophes and business interruption claims.
Commercial property reserves are typically analyzed in two components, one for catastrophic or other large single events, and another for all other events. Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required property reserves (beyond those included in the general discussion section) include:
Commercial property risk factors
•Physical concentration of policyholders
•Availability and cost of local contractors
•Inflation and materials shortages
•For the more severe catastrophic events, “demand surge” inflation, which refers to significant short-term increases in building material and labor costs due to a sharp increase in demand for those materials and services
•Local building codes
•Amount of time to return property to full usage (for business interruption claims)
•Frequency of claim re-openings on claims previously closed
•Court interpretation of policy provisions (such as occurrence definition, wind versus flooding or communicable disease exclusions)
•Lags in reporting claims (e.g., winter damage to summer homes, hidden damage after an earthquake, hail damage to roofs and/or equipment on roofs)
•Court or legislative changes to the statute of limitations
•Weather/climate variability
Commercial property book of business risk factors
•Policy provisions mix (e.g., deductibles, policy limits, endorsements)
•Changes in underwriting standards
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk factors could have on reserves for property, a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.1% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -21% to 2% (averaging -9%) for the Company, and from -10% to -2% (averaging -6%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Commercial property reserves represent approximately 3% of the Company’s total claims and claim adjustment expense reserves.
Since commercial property is considered a short tail coverage, the one year change for commercial property can be more volatile than that for the longer tail product lines. This is due to the fact that the majority of the reserve for commercial property relates to the most recent accident year, which is subject to the most uncertainty for all product lines. This recent accident year uncertainty is relevant to commercial property because weather-related events that occur in the second half of the year may not be completely resolved until the following year. Reserve estimates associated with catastrophes may take even longer to resolve. The reserve estimates for this product line are also potentially subject to material changes due to uncertainty in measuring ultimate losses for significant catastrophes such as hurricanes, tornadoes, hail storms and wildfires.
The Company’s change in reserve estimate for this product line was 2% for 2023, -8% for 2022 and -10% for 2021. The 2023 change primarily reflected higher than expected loss experience related to both catastrophe and non-catastrophe losses for accident year 2022. The 2022 change primarily reflected better than expected loss experience related to both catastrophe and non-catastrophe losses for accident years 2020 and 2021. The 2021 change primarily reflected better than expected loss experience related to both catastrophe and non-catastrophe losses for accident year 2020.
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Commercial Multi-Peril
Commercial multi-peril provides a combination of property and liability coverage typically for small businesses and, therefore, includes both short and long tail coverages. For property coverage, it generally takes a relatively short period of time to close claims, while for the other coverages, generally for the liability coverages, it takes a longer period of time to close claims.
The reserving risk for this line is dominated by the liability coverage portion of this product, except occasionally in the event of catastrophic or other large single loss events. The reserving risk for this line differs from that of the general liability product line and the property product line due to the nature of the customer. Commercial multi-peril is generally sold to small- to mid-sized accounts, while the customer profile for general liability and commercial property includes larger customers.
See “Commercial property risk factors” and “General liability risk factors,” discussed above, with regard to reserving risk for commercial multi-peril.
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk factors could have on reserves for commercial multi-peril (excluding asbestos and environmental), a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.3% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line, excluding estimated asbestos and environmental amounts, over the last nine years has varied from -5% to 4% (averaging 0%) for the Company, and from -3% to 1% (averaging 0%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Commercial multi-peril reserves (excluding asbestos and environmental reserves) represent approximately 9% of the Company’s total claims and claim adjustment expense reserves.
As discussed above, this line combines general liability and commercial property coverages and it has been impacted in the past by many of the same events as those two lines.
The Company’s change in reserve estimate for this product line related to the last nine accident years, which excludes the impacts of increases in asbestos and environmental reserves and increases in reserves in the Company’s runoff operations, was 0% for 2023, -2% for 2022 and 0% for 2021. In 2023, higher than expected loss experience for liability coverages for accident year 2022 was mostly offset by better than expected loss experience for liability coverages for accident years 2017 and 2020. The 2022 change primarily reflected better than expected loss experience for property coverages for accident year 2021. In 2021, higher than expected loss experience for liability coverages for accident years 2017 and 2018 was largely offset by better than expected loss experience for liability coverages for accident years 2012 through 2016.
Commercial Automobile
The commercial automobile product line is a mix of property and liability coverages and, therefore, includes both short and long tail coverages. The payments that are made quickly typically pertain to auto physical damage (property) claims and property damage (liability) claims. The payments that take longer to finalize and are more difficult to estimate relate to bodily injury claims. In general, claim reporting lags are generally short, claim complexity is not a major issue, and the line is viewed as high frequency, low to moderate severity. Overall, the claim liabilities for this line create a moderate estimation risk. Recently, the Company has seen more of an increase in the rate of attorney involvement than it had anticipated and a lengthening of the claim development pattern. As a consequence, the Company has experienced a higher level of bodily injury severity than it had anticipated.
Commercial automobile reserves are typically analyzed in four components: bodily injury liability; property damage liability; collision claims; and comprehensive claims. These last two components have minimum reserve risk and fast payouts and, accordingly, separate risk factors are not presented.
The Company utilizes the conventional actuarial methods mentioned in the general discussion above in estimating claim liabilities for this line. This is supplemented with detailed custom analyses where needed.
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Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required commercial automobile reserves (beyond those included in the general discussion section) include:
Bodily injury and property damage liability risk factors
•Trends in jury awards
•Changes in the underlying court system
•Changes in case law
•Litigation trends
•Increases in attorney involvement in, or impact on, claims
•Frequency of claims with payment capped by policy limits
•Change in average severity of accidents, or proportion of severe accidents, including the impact of inflation
•Changes in auto safety technology
•Subrogation opportunities
•Changes in claim handling philosophies
•Frequency of visits to health providers
•Number of medical procedures given during visits to health providers
•Types of health providers used
•Types of medical treatments received
•Changes in cost of medical treatments
•Degree of patient responsiveness to treatment
Commercial automobile book of business risk factors
•Changes in policy provisions (e.g., deductibles, policy limits, endorsements, etc.)
•Changes in mix of insured vehicles (e.g., long haul trucks versus local and smaller vehicles, fleet risks versus non-fleets)
•Changes in underwriting standards
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk factors could have on reserves for commercial automobile, a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.3% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -2% to 11% (averaging 3%) for the Company, and from 2% to 7% (averaging 5%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Commercial automobile reserves represent approximately 9% of the Company’s total claims and claim adjustment expense reserves.
The Company’s change in reserve estimate for this product line was 4% for 2023, 0% for 2022 and -2% for 2021. The 2023 change primarily reflected higher than expected loss experience for liability coverages for accident years 2021 and 2022. In 2022, higher than expected loss experience for liability coverages for accident years 2017 through 2019 and 2021 was largely offset by better than expected loss experience for physical damage coverages for accident year 2021 and for liability coverages for accident year 2020. The 2021 change primarily reflected better than expected loss experience for liability and physical damage coverages for accident year 2020.
Workers’ Compensation
Workers’ compensation is generally considered a long tail coverage, as it takes a relatively long period of time to finalize claims from a given accident year. While certain payments such as initial medical treatment or temporary wage replacement for the injured worker are made quickly, some other payments are made over the course of several years, such as awards for permanent partial injuries. In addition, some payments can run as long as the injured worker’s life, such as permanent disability benefits and on-going medical care. Despite the possibility of long payment tails, the reporting lags are generally short, payment obligations are generally not complex, and most of the liability can be considered high frequency with moderate severity. The largest reserve risk generally comes from the low frequency, high severity claims providing lifetime coverage for medical expense arising from a worker’s injury, as such claims are subject to greater inflation risk. Overall, the claim liabilities for this line create a somewhat greater than moderate estimation risk.
Workers’ compensation reserves are typically analyzed in three components: indemnity losses, medical losses and claim adjustment expenses.
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Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required workers’ compensation reserves (beyond those included in the general discussion section) include:
Indemnity risk factors
•Time required to recover from the injury
•Degree of available transitional jobs
•Degree of legal involvement
•Changes in the interpretations and processes of the administrative bodies that oversee workers’ compensation claims
•Future wage inflation for states that index benefits
•Changes in the administrative policies of second injury funds
Medical risk factors
•Changes in the cost of medical treatments (including prescription drugs) and underlying fee schedules (“inflation”)
•Availability of medical providers and medical wage impacts
•Frequency of visits to health providers
•Number of medical procedures given during visits to health providers
•Types of health providers used
•Type of medical treatments received
•Use of preferred provider networks and other medical cost containment practices
•Availability of new medical processes and equipment
•Changes in the use of pharmaceutical drugs, including drugs for pain management
•Degree of patient responsiveness to treatment
General workers’ compensation risk factors
•Frequency of reopening claims previously closed
•Mortality trends of injured workers with lifetime benefits and medical treatment
•Changes in statutory benefits, including due to presumption laws
•The impact, if any, of potential future changes to government health insurance legislation
Workers’ compensation book of business risk factors
•Product mix
•Injury type mix
•Changes in underwriting standards
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk factors could have on reserves for workers’ compensation, a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.1% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -5% to -1% (averaging -3%) for the Company, and from -5% to -1% (averaging -3%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Workers’ compensation reserves represent approximately 31% of the Company’s total claims and claim adjustment expense reserves.
The Company’s change in reserve estimate for this product line was -5% for 2023, -4% for 2022 and -3% for 2021. The 2023 change primarily reflected better than expected loss experience for accident years 2021 and prior. The 2022 change primarily reflected better than expected loss experience for accident years 2021 and prior. The 2021 change primarily reflected better than expected loss experience for accident years 2020 and prior.
Fidelity and Surety
Fidelity is generally considered a short tail coverage. It takes a relatively short period of time to finalize and settle most fidelity claims. The volatility of fidelity reserves is generally related to the type of business of the insured, the size and complexity of the insured’s business operations, amount of policy limit and attachment point of coverage. The uncertainty surrounding reserves for small, commercial insureds is typically less than the uncertainty for large commercial or financial institutions. The high frequency, low severity nature of small commercial fidelity losses provides for stability in loss estimates, whereas the low frequency, high severity nature of losses for large insureds results in a wider range of ultimate loss outcomes. Actuarial techniques that rely on a stable pattern of loss development are generally not applicable to low frequency, high severity claims.
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Surety has certain components that are generally considered short tail coverages with short reporting lags, although large individual construction and commercial surety contracts can result in a long settlement tail, based on the length and complexity of the construction project(s) or commercial transaction being bonded. The frequency of losses in surety generally has a lagging correlation with economic cycles as the primary cause of surety loss is the inability of an insured to fulfill its contractual obligations. The Company actively seeks to mitigate this exposure to loss through disciplined risk selection, adherence to underwriting standards and ongoing monitoring of contractor progress in significant construction projects. The volatility of surety losses is generally related to the type of business performed by the bonded party, the type of bonded obligation, the amount of limit exposed to loss and the amount of assets available to the surety company to mitigate losses, such as unbilled contract funds, collateral, first and third party indemnity, and other security positions of a bonded party’s assets. Certain classes of surety claims are very high severity, low frequency in nature. These can include large construction contractors involved with one or multiple large, complex projects as well as certain large commercial surety exposures. Other claim factors affecting reserve variability of surety include litigation related to amounts owed by the bonded party and due to the surety company (e.g., salvage and subrogation efforts), the results of financial restructuring of a bonded party and the availability and cost of replacement contractors, labor and materials.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required fidelity and surety reserves (beyond those included in the general discussion section) include:
Fidelity risk factors
•Type of business of insured
•Policy limit and attachment points
•Third-party claims
•Coverage litigation
•Complexity of claims
•Growth in insureds’ operations
Surety risk factors
•Economic trends, including the general level of construction activity
•Concentration of reserves in a relatively few large claims
•Type of business bonded
•Type of obligation bonded
•Cumulative limits of liability for the bonded party
•Assets available to mitigate loss
•Defective workmanship/latent defects
•Financial strategy of the bonded party
•Changes in statutory obligations
•Geographic spread of business
Fidelity and Surety book of business risk factors
•Changes in policy provisions (e.g., deductibles, limits, endorsements)
•Changes in underwriting standards
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk factors could have on reserves for fidelity and surety, a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.5% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -36% to -10% (averaging -21%) for the Company, and from -21% to 0% (averaging -14%) for the industry overall.  The Company’s year-to-year changes are driven by, and are based on, observed events during the year.  The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line.  Fidelity and surety reserves represent approximately 1% of the Company’s total claims and claim adjustment expense reserves.
In general, developments on single large claims (both adverse and favorable) are a primary source of changes in reserve estimates for this product line.
The Company’s change in reserve estimate for this product line was -26% for 2023, -30% for 2022 and -27% for 2021. The 2023 change primarily reflected better than expected loss experience in the fidelity and surety product line for accident years 2021 and 2022. The 2022 change primarily reflected better than expected loss experience in the fidelity and surety product line for accident years 2015 through 2019 and 2021. The 2021 change primarily reflected better than expected loss experience in the fidelity and surety product line for accident years 2015 through 2017 and 2020.
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Personal Automobile
Personal automobile includes both short and long tail coverages. The payments that are made quickly typically pertain to auto physical damage (property) claims and property damage (liability) claims. The payments that take longer to finalize and are more difficult to estimate relate to bodily injury claims. Reporting lags are relatively short and the claim settlement process for personal automobile liability generally is the least complex of the liability products. It is generally viewed as a high frequency, low to moderate severity product line. Overall, the claim liabilities for this line create a moderate estimation risk.
Personal automobile reserves are typically analyzed in five components: bodily injury liability, property damage liability, no-fault losses, collision claims and comprehensive claims. These last two components have minimum reserve risk and fast payouts and, accordingly, separate factors are not presented.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required personal automobile reserves (beyond those included in the general reserve discussion section) include:
Bodily injury, property damage liability and no-fault risk factors
•Trends in jury awards
•Changes in the underlying court system and its philosophy
•Changes in case law
•Litigation trends
•Increases in attorney involvement in, or impact on, claims
•Frequency of claims with payment capped by policy limits
•Change in frequency trends, including the impact of changes in driving behavior and customer coverage elections
•Change in average severity of accidents, or proportion of severe accidents, including the impact of inflation, changes in driving behavior and the involvement of pedestrians
•Changes in auto technology, including safety features
•Subrogation opportunities
•Frequency of visits to health providers
•Number of medical procedures given during visits to health providers
•Types of health providers used
•Types of medical treatments received
•Changes in cost of medical treatments
•Effectiveness of no-fault laws
•Degree of patient responsiveness to treatment
•Changes in claim handling philosophies
Personal automobile book of business risk factors
•Changes in policy provisions (e.g., deductibles, policy limits, endorsements, etc.)
•Changes in underwriting standards
•Changes in the use of permissible data for rating and underwriting
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk factors could have on reserves for personal automobile, a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.1% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -4% to 3% (averaging -1%) for the Company, and from -2% to 4% (averaging 0%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Personal automobile reserves represent approximately 8% of the Company’s total claims and claim adjustment expense reserves.
The Company’s change in reserve estimate for this product line was 0% for 2023, 0% for 2022 and -4% for 2021. In 2023, better than expected loss experience for physical damage coverages for accident years 2021 and 2022 was largely offset by higher than expected loss experience for liability coverages for accident years 2020 and 2021. In 2022, higher than expected loss experience for liability coverages for accident year 2021 was largely offset by better than expected loss experience for physical damage coverages for accident year 2021 and for liability coverages for accident years 2018 through 2020. The 2021 change primarily reflected better than expected loss experience for liability and physical damage coverages for accident years 2017 through 2020.
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Personal Homeowners and Other
Homeowners is generally considered a short tail coverage. Most payments are related to the property portion of the policy, where the claim reporting and settlement process is generally restricted to the insured and the insurer. Claims on property coverage are typically reported soon after the actual damage occurs, although delays of several months are not unusual. The resulting settlement process is typically fairly short term, although exceptions do exist.
The liability portion of the homeowners policy generates claims which take longer to pay due to the involvement of litigation and negotiation, but with generally small reporting lags. Personal Insurance Other products include personal umbrella policies, among others. See “general liability reserving risk factors,” discussed above, for reserving risk factors related to umbrella coverages.
Overall, the line is generally high frequency, low to moderate severity (except for catastrophes), with simple to moderate claim complexity.
Homeowners reserves are typically analyzed in two components: non-catastrophe related losses and catastrophe losses.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required homeowners reserves (beyond those included in the general discussion section) include:
Homeowners and Other risk factors
•Weather/climate variability
•Inflation and materials costs and shortages
•For the more severe catastrophic events, “demand surge” inflation, which refers to significant short-term increases in building material and labor costs due to a sharp increase in demand for those materials and services
•Amount of time to return property to residential use
•Lags in reporting claims (e.g., winter damage to summer homes, hidden damage after an earthquake, hail damage to roofs and/or equipment on roofs)
•Availability and cost of local contractors
•Quality of construction of insured homes
•Local building codes
•Litigation trends
•Trends in jury awards
•Court interpretation of policy provisions (such as occurrence definition, or wind versus flooding)
•Court or legislative changes to the statute of limitations
•Salvage and subrogation opportunities
Homeowners and Other book of business risk factors
•Policy provisions mix (e.g., deductibles, policy limits, endorsements, etc.)
•Degree of concentration of policyholders
•Changes in underwriting standards
•Changes in the use of permissible data for rating and underwriting
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk factors could have on reserves for personal homeowners and other, a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.1% increase (decrease) in claims and claim adjustment expense reserves.
Historically, the one-year change in the reserve estimate for this product line (excluding Personal Insurance Other, which for statutory reporting purposes is included with other lines of business) over the last nine years has varied from -28% to 3% (averaging -7%) for the Company, and from -5% to 2% (averaging -1%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Personal homeowners and other reserves represent approximately 5% of the Company’s total claims and claim adjustment expense reserves.
This line combines both liability and property coverages; however, the majority of the reserves relate to property. While property is considered a short tail coverage, the one year change for property can be more volatile than that for the longer tail product lines. This is due to the fact that the majority of the reserve for property relates to the most recent accident year, which is subject to the most uncertainty for all product lines. This recent accident year uncertainty is relevant to property because weather-related events in the second half of the year may not be completely resolved until the following year.
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Reserve estimates associated with catastrophes, including wildfires in recent years, may take even longer to resolve.
The Company’s change in reserve estimate for this product line (excluding Personal Insurance Other) was -9% for 2023, -2% for 2022 and -9% for 2021. The 2023 change primarily reflected better than expected loss experience for catastrophe and non-catastrophe losses for accident years 2017 through 2022. The 2022 change primarily reflected better than expected loss experience for catastrophe and non-catastrophe losses for accident years 2018 through 2020. The 2021 change primarily reflected better than expected loss experience for catastrophe and non-catastrophe losses for accident years 2016 through 2018 and 2020.
International and Other
International and other includes products written by the Company’s international operations, as well as all other products not explicitly discussed above. The principal component of “other” claim reserves is assumed reinsurance written on an excess-of-loss basis, which may include reinsurance of non-U.S. exposures, and is runoff business.
International and other claim liabilities result from a mix of coverages, currencies and jurisdictions/countries. The common characteristic is the need to customize the analysis to the individual component, and the inability to rely on data characterizations and reporting requirements in the U.S. statutory reporting framework.
Due to changes in the business mix for this product line over time, incurred claim liabilities for more recent years are generally shorter-tailed (due to both the products and the jurisdictions involved, e.g., Canada, the Republic of Ireland and the United Kingdom), compared to the older liabilities from runoff operations that are extremely long tail (e.g., U.S. excess liabilities reinsured through the London market, and several underwriting pools in runoff). The speed of claim reporting and claim settlement is a function of the specific coverage provided, the jurisdiction, the distribution system (e.g., underwriting pool versus direct) and the proximity of the insurance sale to the insured hazard (e.g., insured and insurer located in different countries). In particular, liabilities arising from the underwriting pools in runoff may result in significant reporting lags, settlement lags and claim complexity, due to the need to coordinate with other pool members or co-insurers through a broker or lead-insurer for claim settlement purposes.
International reserves are generally analyzed by country and general coverage category (e.g., General Liability in Canada, Commercial Property in the United Kingdom, etc.). The business is also generally split by direct versus assumed reinsurance for a given coverage. Where the underlying insured hazard is outside the United States, the underlying coverages are generally similar to those described under the Homeowners, Personal Automobile, Commercial Automobile, General Liability, Commercial Property and Surety discussions above, taking into account differences in the legal environment and differences in terms and conditions. However, statutory coverage differences exist amongst various jurisdictions. For example, in some jurisdictions there are no aggregate policy limits on certain liability coverages.
Other reserves, primarily assumed reinsurance in runoff, are generally analyzed by program/pool, treaty type, and general coverage category (e.g., General Liability — excess of loss reinsurance). Excess exposure requires the insured to “prove” not only claims under the policy, but also the prior payment of claims reaching up to the excess policy’s attachment point.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required International and other reserves (beyond those included in the general discussion section, and in the Personal Automobile, Homeowners, General Liability, Commercial Property, Commercial Automobile and Surety discussions above) include:
International and other risk factors
•Changes in claim handling procedures, including those of the primary carriers
•Changes in policy provisions or court interpretation of such provision
•Economic trends
•New theories of liability
•Trends in jury awards
•Changes in the propensity to sue
•Changes in statutes of limitations
•Changes in the underlying court system
•Distortions from losses resulting from large single accounts or single issues
•Changes in tort law
•Changes in claim adjuster office structure (causing distortions in the data)
•Changes in foreign currency exchange rates International and other book of business risk factors
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•Changes in policy provisions (e.g., deductibles, policy limits, endorsements, “claims-made” language)
•Changes in underwriting standards
•Product mix (e.g., size of account, industries insured, jurisdiction mix)
Unanticipated changes in risk factors can affect reserves. As an indicator of the causal effect that a change in one or more risk factors could have on reserves for International and other (excluding asbestos and environmental), a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.3% increase (decrease) in claims and claim adjustment expense reserves. International and other reserves (excluding asbestos and environmental) represent approximately 8% of the Company’s total claims and claim adjustment expense reserves.
International and other represents a combination of different product lines, some of which are in runoff. Comparative historical information is not available for international product lines as insurers domiciled outside of the United States do not file U.S. statutory reports. Comparative historical information on runoff business is not indicative of reasonably possible one-year changes in the reserve estimate for this mix of runoff business. Accordingly, the Company has not included comparative analyses for International and other.
Reinsurance Recoverables
Amounts recoverable from reinsurers are estimated in a manner consistent with the associated claim liability. The Company evaluates and monitors the financial condition of its reinsurers under voluntary reinsurance arrangements to minimize its exposure to significant losses from reinsurer insolvencies. In addition, in the ordinary course of business, the Company becomes involved in coverage disputes with its reinsurers. Some of these disputes could result in lawsuits and arbitrations brought by or against the reinsurers to determine the Company’s rights and obligations under the various reinsurance agreements. The Company employs dedicated specialists and comprehensive strategies to manage reinsurance collections and disputes.
The Company has entered into a reinsurance contract in connection with catastrophe bonds issued by Long Point Re IV. This contract meets the requirements to be accounted for as reinsurance in accordance with guidance for accounting for reinsurance contracts. The catastrophe bonds are described in more detail in “Item 1-Business-Catastrophe Reinsurance.”
Recoverables attributable to structured settlements relate primarily to personal injury claims, of which workers’ compensation claims comprise a significant portion, for which the Company has purchased annuities and remains contingently liable in the event of a default by the companies issuing the annuities. Recoverables attributable to mandatory pools and associations relate primarily to workers’ compensation service business. These recoverables are supported by the participating insurance companies’ obligation to pay a pro rata share based on each company’s voluntary market share of written premium in each state in which it is a pool participant. In the event a member of a mandatory pool or association defaults on its share of the pool’s or association’s obligations, the other members’ share of such obligation increases proportionally.
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. Amounts deemed to be uncollectible, including amounts due from known insolvent reinsurers, are written off against the allowance. Changes in the allowance, as well as any subsequent collections of amounts previously written off, are reported as part of claims and claim adjustment expenses. The Company evaluates and monitors the financial condition of its reinsurers under voluntary reinsurance arrangements to minimize its exposure to significant losses from reinsurer insolvencies.
Impairments
Investment Impairments
See note 1 of the notes to the consolidated financial statements for a discussion of investment impairments.
Due to the subjective nature of the Company’s analysis and estimates of future cash flows, along with the judgment that must be applied in the analysis, it is possible that the Company could reach a different conclusion whether or not to impair a security if it had access to additional information about the issuer.
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Additionally, it is possible that the issuer’s actual ability to meet contractual obligations may be different than what the Company determined during its analysis, which may lead to a different impairment conclusion in future periods.
Goodwill and Other Intangible Assets Impairments
The Company performs a review, on at least an annual basis, of goodwill held by the reporting units which are the Company’s three operating and reportable segments: Business Insurance; Bond & Specialty Insurance; and Personal Insurance. The Company uses a discounted cash flow model to estimate the fair value of its reporting units that incorporates multiple inputs into discounted cash flow calculations, including assumptions that market participants may make in valuing the reporting unit. The discounted cash flow model is an income approach to valuation that is based on a detailed cash flow analysis for deriving a current fair value of reporting units and is representative of the Company’s reporting units’ current and expected future financial performance. The assumptions used include earnings projections, including projected growth, projected levels of economic capital needed to support the business, and the weighted average cost of capital used for purposes of discounting the projected cash flows. Changes in the estimates of projected earnings, business growth, economic capital, and the weighted average cost of capital will directly impact the estimated fair value of the reporting units and, depending on the directional change of inputs, may increase the risk of impairment of goodwill. Once the Company estimates the fair value of its reporting units, those estimates are compared to their carrying values. If the carrying values of the reporting units were to exceed their fair value, the amount of the impairment would be calculated, and goodwill adjusted accordingly.
Other indefinite-lived intangible assets held by the Company are also reviewed for impairment on at least an annual basis. The Company uses various methods for estimating the fair value of the intangible assets and relies on inputs such as replacement cost, projected earnings, including projected growth of earnings, and market royalty rates applied to the projected earnings.
See note 1 of the notes to the consolidated financial statements for a discussion of impairments of goodwill and other intangible assets.

OTHER UNCERTAINTIES
For a discussion of other risks and uncertainties that could impact the Company’s results of operations or financial position, see note 17 of the notes to the consolidated financial statements and “Item 1A—Risk Factors.”

FORWARD-LOOKING STATEMENTS
This report contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as “may,” “will,” “should,” “likely,” “probably,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “views,” “ensures,” “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, such as the impact of elevated industrywide loss costs in Personal Insurance, and its future results of operations and financial condition (including, among other things, anticipated premium volume, premium rates, renewal premium changes, underwriting margins and underlying underwriting margins, net and core income, investment income and performance, loss costs, return on equity, core return on equity and expected current returns, and combined ratios and underlying combined ratios);
•the impact of legislative or regulatory actions or court decisions;
•share repurchase plans;
•future pension plan contributions;
•the sufficiency of the Company’s reserves, including asbestos;
•the impact of emerging claims issues as well as other insurance and non-insurance litigation;
•the cost and availability of reinsurance coverage;
•catastrophe losses and modeling, including statements about probabilities or likelihood of exceedance;
•the impact of investment (including changes in interest rates), economic (including inflation, changes in tax laws, changes in commodity prices and fluctuations in foreign currency exchange rates) and underwriting market conditions;
•the Company’s approach to managing its investment portfolio;
•the impact of changing climate conditions;
•strategic and operational initiatives to improve profitability and competitiveness;
•the Company’s competitive advantages and innovation agenda, including executing on that agenda with respect to artificial intelligence;
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•the Company’s cybersecurity policies and practices;
•new product offerings;
•the impact of developments in the tort environment, such as increased attorney involvement in insurance claims;
•the impact of developments in the geopolitical environment;
•the impact of a U.S. government shutdown; and
•the impact of the Company’s acquisition of Corvus Insurance Holdings, Inc.
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.
For a discussion of some of the factors that could cause actual results to differ, see “Item 1A—Risk Factors” and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The Company’s forward-looking statements speak only as of the date of this report or as of the date they are made, and the Company undertakes no obligation to update its forward-looking statements.

Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates (inclusive of credit spreads), foreign currency exchange rates and other relevant market rate or price changes. Market risk is directly influenced by the volatility and liquidity in the markets in which the related underlying assets are traded. The following is a discussion of the Company’s primary market risk exposures and how those exposures are managed as of December 31, 2023. The Company’s market risk sensitive instruments, including derivatives, are primarily entered into for purposes other than trading.
The carrying value of the Company’s investment portfolio at December 31, 2023 and 2022 was $88.81 billion and $80.45 billion, respectively, of which 87% and 89%, respectively, was invested in fixed maturity securities. At December 31, 2023 and 2022, approximately 7.2% and 7.0%, respectively, of the Company’s invested assets were denominated in foreign currencies. The Company’s exposure to equity price risk is not significant. The Company has no direct commodity risk and is not a party to any credit default swaps.
The primary market risks to the investment portfolio are interest rate risk and credit risk associated with investments in fixed maturity securities. The portfolio duration is primarily managed through cash market transactions and treasury futures transactions.  For additional information regarding the Company’s investments, see notes 3 and 4 of the notes to the consolidated financial statements as well as the “Investment Portfolio” and “Outlook” sections of “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The primary market risk for all of the Company’s debt is interest rate risk at the time of refinancing. The Company monitors the interest rate environment and evaluates refinancing opportunities as maturity dates approach. For additional information regarding the Company’s debt, see note 9 of the notes to the consolidated financial statements as well as the “Liquidity and Capital Resources” section of “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The Company’s foreign exchange market risk exposure is concentrated in the Company’s invested assets, insurance reserves and shareholders’ equity denominated in foreign currencies. Cash flows from the Company’s foreign operations are the primary source of funds for the purchase of investments denominated in foreign currencies. The Company purchases these investments primarily to fund insurance reserves and other liabilities denominated in the same currency, effectively reducing its foreign currency exchange rate exposure. Invested assets denominated in the Canadian dollar comprised approximately 4.1% and 4.2% of the total invested assets at December 31, 2023 and 2022, respectively. Invested assets denominated in the British Pound Sterling comprised approximately 2.4% and 2.2% of total invested assets at December 31, 2023 and 2022, respectively. Invested assets denominated in other currencies at December 31, 2023 and 2022 were not material.
There were no other significant changes in the Company’s primary market risk exposures or in how those exposures were managed for the year ended December 31, 2023 compared to the year ended December 31, 2022. The Company does not currently anticipate significant changes in its primary market risk exposures or in how those exposures are managed in future reporting periods based upon what is known or expected to be in effect in future reporting periods.

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SENSITIVITY ANALYSIS
Sensitivity analysis is defined as the measurement of potential loss in future earnings, fair values or cash flows of market sensitive instruments resulting from one or more selected hypothetical changes in interest rates and other market rates or prices over a selected period of time. In the Company’s sensitivity analysis model, a hypothetical change in market rates is selected that is expected to reflect reasonably possible near-term changes in those rates. “Near-term” means a period of time going forward up to one year from the date of the consolidated financial statements. Actual results may differ from the hypothetical change in market rates assumed in this disclosure, especially since this sensitivity analysis does not reflect the results of any actions that would be taken by the Company to mitigate such hypothetical losses in fair value.
Interest Rate Risk
In this sensitivity analysis model, the Company uses fair values to measure its potential loss. The sensitivity analysis model includes the following financial instruments entered into for purposes other than trading: fixed maturities, non-redeemable preferred stocks, mortgage loans, short-term securities and debt and derivative financial instruments. The primary market risk to the Company’s market sensitive instruments is interest rate risk (inclusive of credit spreads). The sensitivity analysis model uses various basis point changes in interest rates to measure the hypothetical change in fair value of financial instruments included in the model.
For invested assets with primary exposure to interest rate risk, estimates of portfolio duration and convexity are used to model the loss of fair value that would be expected to result from a parallel increase in interest rates. Durations on invested assets are adjusted for call, put and interest rate reset features. Durations on tax-exempt securities are adjusted for the fact that the yields on such securities do not normally move in lockstep with changes in the U.S. Treasury curve. Fixed maturity portfolio durations are calculated on a market value-weighted basis, including accrued interest, using holdings as of December 31, 2023 and 2022.
For debt, the change in fair value is determined by calculating hypothetical December 31, 2023 and 2022 ending prices based on yields adjusted to reflect a 100 basis point change, comparing such hypothetical ending prices to actual ending prices, and multiplying the difference by the par or securities outstanding.
The sensitivity analysis model used by the Company produces a loss in fair value of market sensitive instruments of approximately $2.58 billion and $2.68 billion based on a 100 basis point increase in interest rates at December 31, 2023 and 2022, respectively.
The loss estimates do not take into account the impact of possible interventions that the Company might reasonably undertake in order to mitigate or avoid losses that would result from emerging interest rate trends. In addition, the loss value only reflects the impact of an interest rate increase on the fair value of the Company’s financial instruments.
Foreign Currency Exchange Rate Risk
The Company uses fair values of investment securities to measure its potential loss from foreign denominated investments. A hypothetical 10% reduction in value of foreign denominated investments is used to estimate the impact on the market value of the foreign denominated holdings. The Company’s analysis indicates that a hypothetical 10% reduction in the value of foreign denominated investments would be expected to produce a loss in fair value of approximately $638 million and $563 million at December 31, 2023 and 2022, respectively.
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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Page
Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY, Auditor Firm ID: 185)
Consolidated Financial Statements:
Schedules:
Schedule II - Condensed Financial Information of Registrant (Parent Company Only)
Schedule III - Supplementary Insurance Information
Schedule V - Valuation and Qualifying Accounts
Schedule VI - Supplementary Information Concerning Property-Casualty Insurance Operations

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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
The Travelers Companies, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of The Travelers Companies, Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2023, and the related notes and financial statement schedules as listed in the accompanying index to consolidated financial statements and schedules (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 15, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of the estimate of claims and claim adjustment expense reserves

As discussed in Notes 1 and 8 to the consolidated financial statements, the claims and claim adjustment expense reserves represent the Company’s estimate of the ultimate liability for unpaid losses and loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported as of the balance sheet date. The Company’s claims and claim adjustment expense reserves balance at December 31, 2023 was $61.6 billion.

We identified the evaluation of the estimate of claims and claim adjustment expense reserves as a critical audit matter. The process of evaluating the estimate of claims and claim adjustment expense reserves involves significant auditor judgment due to the inherent uncertainty in the ultimate amounts and timing of claim payments, which may be affected by a number of internal and external considerations, such as:
•changes in claims handling procedures
•economic inflation and changes in the tort environment
•legislative changes, among others.
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Evaluating the impact of these considerations on the ultimate costs of claims and claim adjustment expenses requires specialized skills and knowledge.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s reserving process for claims and claim adjustment expense reserves. This included controls related to the actuarial analyses and the determination of the Company’s estimate of the claims and claim adjustment expense reserves. We involved actuarial professionals with specialized skills and knowledge who assisted in:
•assessing the assumptions and methodologies underlying the Company’s claims and claim adjustment expense reserve estimate
•evaluating the Company’s estimates by performing independent analyses of claims and claim adjustment expense reserves for certain lines of business
•assessing the Company’s internally prepared actuarial analyses in comparison to the Company’s internal experience and related industry trends for selected other lines of business
•developing an overall range of reserve estimates and assessing the position of the Company’s recorded reserve relative to the range.
/s/ KPMG LLP
KPMG LLP
We have served as the Company’s auditor since 1994.
New York, New York
February 15, 2024

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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share amounts)
For the year ended December 31, 2023 2022 2021
Revenues
Premiums $ 37,761  $ 33,763  $ 30,855 
Net investment income 2,922  2,562  3,033 
Fee income 433  412  402 
Net realized investment gains (losses) (105) (204) 171 
Other revenues 353  351  355 
Total revenues 41,364  36,884  34,816 
Claims and expenses
Claims and claim adjustment expenses 26,215  22,854  20,298 
Amortization of deferred acquisition costs 6,226  5,515  5,043 
General and administrative expenses 5,176  4,810  4,677 
Interest expense 376  351  340 
Total claims and expenses 37,993  33,530  30,358 
Income before income taxes 3,371  3,354  4,458 
Income tax expense 380  512  796 
Net income $ 2,991  $ 2,842  $ 3,662 
Net income per share
Basic $ 12.93  $ 11.91  $ 14.63 
Diluted $ 12.79  $ 11.77  $ 14.49 
Weighted average number of common shares outstanding
Basic 229.7  237.0  248.5 
Diluted 232.2  239.7  250.8 






















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

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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(in millions)
For the year ended December 31, 2023 2022 2021
Net income $ 2,991  $ 2,842  $ 3,662 
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income
 2,249  (9,276) (2,115)
Having credit losses recognized in the consolidated statement of income 1  (4) — 
Net changes in benefit plan assets and obligations 106  (87) 455 
Net changes in unrealized foreign currency translation 138  (273) (11)
Other comprehensive income (loss) before income taxes 2,494  (9,640) (1,671)
Income tax expense (benefit) 520  (2,002) (362)
Other comprehensive income (loss), net of taxes 1,974  (7,638) (1,309)
Comprehensive income (loss) $ 4,965  $ (4,796) $ 2,353 





































The accompanying notes are an integral part of the consolidated financial statements.
122

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
At December 31, 2023 2022
Assets
Fixed maturities, available for sale, at fair value (amortized cost $81,781 and $77,380; allowance for expected credit losses of $5 and $3)
 $ 77,807  $ 71,160 
Equity securities, at fair value (cost $553 and $747)
 608  807 
Real estate investments 959  952 
Short-term securities 5,137  3,470 
Other investments 4,299  4,065 
Total investments 88,810  80,454 
Cash 650  799 
Investment income accrued 688  650 
Premiums receivable (net of allowance for expected credit losses
 of $69 and $77)
 10,282  8,922 
Reinsurance recoverables (net of allowance for estimated uncollectible
 reinsurance of $118 and $132)
 8,143  8,063 
Ceded unearned premiums 1,150  1,024 
Deferred acquisition costs 3,306  2,836 
Deferred taxes 1,504  1,877 
Contractholder receivables (net of allowance for expected credit losses
 of $20 and $17)
 3,249  3,579 
Goodwill 3,976  3,952 
Other intangible assets 277  287 
Other assets 3,943  3,274 
Total assets $ 125,978  $ 115,717 
Liabilities
Claims and claim adjustment expense reserves $ 61,627  $ 58,649 
Unearned premium reserves 20,872  18,240 
Contractholder payables 3,269  3,596 
Payables for reinsurance premiums 518  419 
Debt 8,031  7,292 
Other liabilities 6,740  5,961 
Total liabilities 101,057  94,157 
Shareholders’ equity
Common stock (1,750.0 shares authorized; 228.2 and 232.1 shares
 issued and outstanding)
 24,906  24,565 
Retained earnings 45,591  43,516 
Accumulated other comprehensive loss (4,471) (6,445)
Treasury stock, at cost (559.2 and 553.5 shares)
 (41,105) (40,076)
Total shareholders’ equity 24,921  21,560 
Total liabilities and shareholders’ equity $ 125,978  $ 115,717 






The accompanying notes are an integral part of the consolidated financial statements.
123

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(in millions)
For the year ended December 31, 2023 2022 2021
Common stock
Balance, beginning of year $ 24,565  $ 24,154  $ 23,743 
Employee share-based compensation 125  227  247 
Compensation amortization under share-based plans and other changes 216  184  164 
Balance, end of year 24,906  24,565  24,154 
Retained earnings
Balance, beginning of year 43,516  41,555  38,771 
Net income 2,991  2,842  3,662 
Dividends (915) (880) (876)
Other (1) (1) (2)
Balance, end of year 45,591  43,516  41,555 
Accumulated other comprehensive income (loss), net of tax
Balance, beginning of year (6,445) 1,193  2,502 
Other comprehensive income (loss) 1,974  (7,638) (1,309)
Balance, end of year (4,471) (6,445) 1,193 
Treasury stock, at cost
Balance, beginning of year (40,076) (38,015) (35,815)
Treasury stock acquired — share repurchase authorizations (965) (2,000) (2,156)
Net shares acquired related to employee share-based compensation plans (64) (61) (44)
Balance, end of year (41,105) (40,076) (38,015)
Total shareholders’ equity $ 24,921  $ 21,560  $ 28,887 
Common shares outstanding
Balance, beginning of year 232.1  241.2  252.4 
Treasury stock acquired — share repurchase authorizations (5.4) (11.6) (13.9)
Net shares issued under employee share-based compensation plans 1.5  2.5  2.7 
Balance, end of year 228.2  232.1  241.2 





The accompanying notes are an integral part of the consolidated financial statements.
124

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
For the year ended December 31, 2023 2022 2021
Cash flows from operating activities
Net income $ 2,991  $ 2,842  $ 3,662 
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment (gains) losses 105  204  (171)
Depreciation and amortization 722  826  870 
Deferred federal income tax expense (benefit) (163) (186) 62 
Amortization of deferred acquisition costs 6,226  5,515  5,043 
Equity in income from other investments (157) (336) (993)
Premiums receivable (1,341) (877) (258)
Reinsurance recoverables (63) 344  (101)
Deferred acquisition costs (6,689) (5,824) (5,227)
Claims and claim adjustment expense reserves 2,843  2,050  2,388 
Unearned premium reserves 2,590  1,862  1,249 
Other 647  45  750 
Net cash provided by operating activities 7,711  6,465  7,274 
Cash flows from investing activities
Proceeds from maturities of fixed maturities 6,371  6,837  8,852 
Proceeds from sales of investments:
Fixed maturities 4,981  5,657  3,165 
Equity securities 138  138  102 
Real estate investments —  10  31 
Other investments 255  302  427 
Purchases of investments:
Fixed maturities (15,690) (15,908) (18,153)
Equity securities (105) (136) (407)
Real estate investments (67) (41) (28)
Other investments (495) (574) (520)
Net sales (purchases) of short-term securities (1,664) 355  1,671 
Securities transactions in the course of settlement (83) 21  (19)
Acquisitions, net of cash acquired —  (4) (38)
Other (462) (385) (279)
Net cash used in investing activities (6,821) (3,728) (5,196)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorizations (958) (2,000) (2,156)
Treasury stock acquired — net employee share-based compensation (64) (61) (44)
Dividends paid to shareholders (908) (875) (869)
Issuance of debt 738  —  739 
Issuance of common stock — employee share options 141  267  293 
Net cash used in financing activities (1,051) (2,669) (2,037)
Effect of exchange rate changes on cash 12  (30) (1)
Net increase (decrease) in cash (149) 38  40 
Cash at beginning of year 799  761  721 
Cash at end of year $ 650  $ 799  $ 761 
Supplemental disclosure of cash flow information
Income taxes paid $ 201  $ 817  $ 707 
Interest paid $ 370  $ 349  $ 337 


The accompanying notes are an integral part of the consolidated financial statements.
125

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of The Travelers Companies, Inc. (together with its subsidiaries, the Company).  The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and claims and expenses during the reporting period.  Actual results could differ from those estimates.  All material intercompany transactions and balances have been eliminated. To the extent that the Company changes its accounting for or presentation of items in the financial statements, the presentation of such amounts in prior periods is changed to conform to the current period presentation, if appropriate, and a disclosure is provided, if material.
On November 3, 2023, the Company announced an agreement to acquire Corvus Insurance Holdings, Inc. (Corvus), a cyber insurance managing general underwriter. On January 2, 2024, the Company completed its acquisition of all issued and outstanding shares of Corvus for consideration transferred of approximately $426 million. The Company funded this transaction from internal resources.

Accounting Policies
Investments
Fixed Maturities
Fixed maturities include bonds, notes and redeemable preferred stocks. Fixed maturities, including instruments subject to securities lending agreements, are classified as available for sale and reported at fair value, with unrealized investment gains and losses, net of income taxes, charged or credited directly to other comprehensive income.
Equity Securities
Equity securities, which include public and non-public common and non-redeemable preferred stocks, are reported at fair value with changes in fair value recognized in net realized investment gains (losses).
Real Estate Investments
The Company’s real estate investments include warehouses, office buildings and other commercial land and properties that are directly owned. Real estate is recorded on the purchase date at the purchase price, which generally represents fair value, and is supported by internal analysis or external appraisals that use discounted cash flow analyses and other acceptable valuation techniques.  Real estate held for investment purposes is subsequently carried at cost less accumulated depreciation.
Buildings are depreciated on a straight-line basis over the shorter of the expected useful life of the building or 39 years.  Real estate held for sale is carried at lower of cost or fair value, less estimated costs to sell.
Short-term Securities
Short-term securities have an original maturity of less than one year and are carried at amortized cost, which approximates fair value.
Other Investments
Investments in Private Equity Limited Partnerships, Hedge Funds and Real Estate Partnerships
The Company uses the equity method of accounting for investments in private equity limited partnerships, hedge funds and real estate partnerships. The partnerships and the hedge funds generally report investments on their balance sheet at fair value. The financial statements prepared by the investee are received by the Company on a lag basis, with the lag period generally dependent upon the type of underlying investments. The private equity and real estate partnerships provide financial information quarterly which is generally available to investors, including the Company, within three months following the date of the reporting period.
126

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1.                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The hedge funds provide financial information monthly, which is generally available to investors within one month following the date of the reporting period. The Company regularly requests financial information from the partnerships prior to the receipt of the partnerships’ financial statements and records any material information obtained from these requests in its consolidated financial statements.
Other
Derivatives are also included in other investments. The Company’s derivative financial instruments are carried at fair value, with the changes in fair value reflected in the consolidated statement of income in net realized investment gains (losses).  For a further discussion of the derivatives used by the Company, see note 3.
Net Investment Income
Investment income from fixed maturities is recognized based on the constant effective yield method which includes an adjustment for estimated principal pre-payments, if any. The effective yield used to determine amortization for fixed maturities subject to prepayment risk (e.g., asset-backed, loan-backed and structured securities) is recalculated and adjusted periodically based upon actual historical and/or projected future cash flows, which are obtained from a widely-accepted securities data provider.  The adjustments to the yield for highly rated prepayable fixed maturities are accounted for using the retrospective method.  The adjustments to the yield for non-highly rated prepayable fixed maturities are accounted for using the prospective method.  Dividends on equity securities (including those with transfer restrictions) are recognized in income when declared.  Rental income on real estate is recognized on a straight-line basis over the lease term.  See the section titled: Real Estate in note 3 for further discussion.  Investments in private equity limited partnerships, hedge funds, real estate partnerships and joint ventures are accounted for using the equity method of accounting, whereby the Company’s share of the investee’s earnings or losses in the fund is reported in net investment income.
Accrual of income is suspended on non-securitized fixed maturities that are in default, or on which it is likely that future payments will not be made as scheduled.  Interest income on investments in default is recognized only when payments are received.  Investments included in the consolidated balance sheet that were not income-producing for the preceding 12 months were not material.
Net Realized Investment Gains and Losses
Net realized investment gains and losses include net realized gains (losses) from the sale of investments, credit impairment losses on investment assets, changes in the fair value of equity securities, foreign currency transaction gains and losses and changes in the fair value of derivative financial instruments. Net realized investment gains (losses) on the sale of investments are included as a component of pre-tax revenues based upon specific identification of the investments sold on the trade date.
Investment Impairments
The Company conducts a periodic review to identify and evaluate invested assets that may have credit impairments.
Credit Impairments Related to Fixed Maturity Investments
Some of the factors considered in assessing impairment of fixed maturity investments due to credit-related factors include: (1) the extent to which the fair value has been less than amortized cost; (2) the financial condition, near-term and long-term prospects for the issuer, including the relevant industry conditions and trends, and implications of rating agency actions and offering prices; (3) the likelihood of the recoverability of principal and interest; and (4) whether it is more likely than not that the Company will be required to sell the investment prior to an anticipated recovery in value.
For fixed maturity investments that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment from the amount related to all other factors and reports the credit loss component in net realized investment gains (losses).  The impairment related to all other factors (non-credit factors) is reported in other comprehensive income. The allowance is adjusted for any additional credit losses and subsequent recoveries. Upon recognizing a credit loss, the cost basis is not adjusted.
127

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1.                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
For fixed maturity investments where the Company records a credit loss, a determination is made as to the cause of the impairment and whether the Company expects a recovery in the value.  For fixed maturity investments where the Company expects a recovery in value, the constant effective yield method is utilized, and the investment is amortized to par.
For fixed maturity investments the Company intends to sell or for which it is more likely than not that the Company will be required to sell before an anticipated recovery in value, the full amount of the impairment is included in net realized investment gains (losses). The new cost basis of the investment is the previous amortized cost basis less the impairment recognized in net realized investment gains (losses).  The new cost basis is not adjusted for any subsequent recoveries in fair value.
The Company reports investment income accrued separately from fixed maturity investments, available for sale, and has elected not to measure an allowance for credit losses for investment income accrued. Investment income accrued is written off through net realized investment gains (losses) at the time the issuer of the bond defaults or is expected to default on payments.
Uncollectible available-for-sale debt securities are written-off when the Company determines that no additional payments of principal or interest will be received.
Determination of Credit Loss — Fixed Maturities
The Company determines the credit loss component of fixed maturity investments by utilizing discounted cash flow modeling to determine the present value of the security and comparing the present value with the amortized cost of the security.  If the amortized cost is greater than the present value of the expected cash flows, the difference is considered a credit loss and recognized as an impairment loss in net realized investment gains (losses).
For non-structured fixed maturities (U.S. Treasury securities, obligations of U.S. government and government agencies and authorities, obligations of states, municipalities and political subdivisions, debt securities issued by foreign governments and certain corporate debt), the estimate of expected cash flows is determined by projecting a recovery value and a recovery time frame and assessing whether further principal and interest will be received.  The determination of recovery value incorporates an issuer valuation assumption utilizing one or a combination of valuation methods as deemed appropriate by the Company.  The Company determines the undiscounted recovery value by allocating the estimated value of the issuer to the Company’s assessment of the priority of claims.  The present value of the cash flows is determined by applying the effective yield of the security at the date of acquisition (or the most recent implied rate used to accrete the security if the implied rate has changed as a result of a previous impairment) and an estimated recovery time frame.  Generally, that time frame for securities for which the issuer is in bankruptcy is 12 months.  For securities for which the issuer is financially troubled but not in bankruptcy, that time frame is generally 24 months.  Included in the present value calculation are expected principal and interest payments; however, for securities for which the issuer is classified as bankrupt or in default, the present value calculation assumes no interest payments and a single recovery amount.
In estimating the recovery value, significant judgment is involved in the development of assumptions relating to a myriad of factors related to the issuer including, but not limited to, revenue, margin and earnings projections, the likely market or liquidation values of assets, potential additional debt to be incurred pre- or post-bankruptcy/restructuring, the ability to shift existing or new debt to different priority layers, the amount of restructuring/bankruptcy expenses, the size and priority of unfunded pension obligations, litigation or other contingent claims, the treatment of intercompany claims and the likely outcome with respect to inter-creditor conflicts.
For structured fixed maturity securities (primarily residential and commercial mortgage-backed securities and asset-backed securities), the Company estimates the present value of the security by projecting future cash flows of the assets underlying the securitization, allocating the flows to the various tranches based on the structure of the securitization and determining the present value of the cash flows using the effective yield of the security at the date of acquisition (or the most recent implied rate used to accrete the security if the implied rate has changed as a result of a previous impairment or changes in expected cash flows).  The Company incorporates levels of delinquencies, defaults and severities as well as credit attributes of the remaining assets in the securitization, along with other economic data, to arrive at its estimate of the parameters applied to the assets underlying the securitization. 
128

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1.                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Real Estate Investments
On at least an annual basis, the Company obtains independent appraisals for substantially all of its real estate investments. In addition, the carrying value of all real estate investments is reviewed for impairment on a quarterly basis or when events or changes in circumstances indicate that the carrying amount may not be recoverable.  The review for impairment considers the valuation from the independent appraisal, when applicable, and incorporates an estimate of the undiscounted cash flows expected to result from the use and eventual disposition of the real estate property. An impairment loss is recognized if the expected future undiscounted cash flows are less than the carrying value of the real estate property.  The impairment loss is the amount by which the carrying amount exceeds fair value.
Other Investments
The Company reviews its investments in private equity limited partnerships, hedge funds and real estate partnerships for impairment no less frequently than quarterly and monitors the performance throughout the year through discussions with the managers/general partners.  If the Company becomes aware of an impairment of a partnership’s investments at the balance sheet date prior to receiving the partnership’s financial statements, it will recognize an impairment by recording a reduction in the carrying value of the partnership with a corresponding charge to net investment income.
Changes in Intent to Sell Temporarily Impaired Assets
The Company may, from time to time, sell invested assets subsequent to the balance sheet date that it did not intend to sell at the balance sheet date.  Conversely, the Company may not sell invested assets that it asserted that it intended to sell at the balance sheet date.  Such changes in intent are due to events occurring subsequent to the balance sheet date.  The types of events that may result in a change in intent include, but are not limited to, significant changes in the economic facts and circumstances related to the invested asset (e.g., a downgrade or upgrade from a rating agency), significant unforeseen changes in liquidity needs, or changes in tax laws or the regulatory environment.
Securities Lending
The Company has, from time to time, engaged in securities lending activities from which it generates net investment income by lending certain of its investments to other institutions for short periods of time. Borrowers of these securities provide collateral equal to at least 102% of the market value of the loaned securities plus accrued interest. This collateral is held by a third-party custodian, and the Company has the right to access the collateral only in the event that the institution borrowing the Company’s securities is in default under the lending agreement (i.e., the Company is not permitted to re-pledge or sell any such collateral). Therefore, the Company does not recognize the receipt of the collateral held by the third-party custodian or the obligation to return the collateral. The loaned securities remain a recorded asset of the Company.  The Company accepts only cash as collateral for securities on loan and restricts the manner in which that cash is invested.
Reinsurance Recoverables
Amounts recoverable from reinsurers are estimated in a manner consistent with the associated claim liability. Included in reinsurance recoverables are amounts related to certain structured settlements. The Company reports its reinsurance recoverables net of an allowance for amounts that are estimated to be uncollectible. 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.  Amounts deemed to be uncollectible, including amounts due from known insolvent reinsurers, are written off against the allowance. Changes in the allowance, as well as any subsequent collections of amounts previously written off, are reported as part of claims and claim adjustment expenses.  The Company evaluates and monitors the financial condition of its reinsurers under voluntary reinsurance arrangements to minimize its exposure to significant losses from reinsurer insolvencies.
129

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1.                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferred Acquisition Costs
Incremental direct costs of acquired, new and renewal insurance contracts, consisting of commissions (other than contingent commissions) and premium-related taxes, are capitalized and charged to expense pro rata over the contract periods in which the related premiums are earned.  Deferred acquisition costs are reviewed to determine if they are recoverable from future income and, if not, are charged to expense. Future investment income attributable to related premiums is taken into account in measuring the recoverability of the carrying value of this asset. All other acquisition expenses are charged to operations as incurred.
Contractholder Receivables and Payables
Under certain workers’ compensation insurance contracts with deductible features, the Company is obligated to pay the claimant for the full amount of the claim. The Company is subsequently reimbursed by the policyholder for the deductible amount. These amounts are included on a gross basis in the consolidated balance sheet in both contractholder payables and contractholder receivables. Contractholder receivables are reported net of an allowance for expected credit losses. The allowance is based upon the Company’s ongoing review of amounts outstanding, changes in policyholder credit standing, and other relevant factors.  A probability-of-default methodology, which reflects current and forecasted economic conditions, is used to estimate the allowance for expected credit losses.
Goodwill and Other Intangible Assets
The Company performs a review, on at least an annual basis, of goodwill held by the reporting units which are the Company’s three operating and reportable segments: Business Insurance; Bond & Specialty Insurance; and Personal Insurance.  The Company estimates the fair value of its reporting units and compares it to their carrying value, including goodwill.  If the carrying values of the reporting units were to exceed their fair value, the amount of the impairment would be calculated and goodwill adjusted accordingly.
The Company uses a discounted cash flow model to estimate the fair value of its reporting units.  The discounted cash flow model is an income approach to valuation that is based on a detailed cash flow analysis for deriving a current fair value of reporting units and is representative of the Company’s reporting units’ current and expected future financial performance.  The discount rate assumptions reflect the Company’s assessment of the risks inherent in the projected future cash flows and the Company’s weighted-average cost of capital, and are compared against available market data for reasonableness.
Other indefinite-lived intangible assets held by the Company are also reviewed for impairment on at least an annual basis.  The classification of the asset as indefinite-lived is reassessed and an impairment is recognized if the carrying amount of the asset exceeds its fair value.
Intangible assets that are deemed to have a finite useful life are amortized over their useful lives.  The carrying amount of intangible assets with a finite useful life is regularly reviewed for indicators of impairment in value.  Impairment is recognized only if the carrying amount of the intangible asset is not recoverable from its undiscounted cash flows and is measured as the difference between the carrying amount and the fair value of the asset.
As a result of the reviews performed for the years ended December 31, 2023, 2022 and 2021, the Company determined that the estimated fair value substantially exceeded the respective carrying value of its reporting units for those years and that goodwill was not impaired.  The Company also determined during its reviews for each year that its other indefinite-lived intangible assets and finite-lived intangible assets were not impaired.
Internal-Use Software
In the ordinary course of business, the Company develops and purchases software as well as enters into arrangements to utilize software as a service under cloud computing arrangements. These software costs and any costs related to the implementation and set-up of the cloud computing arrangements are capitalized and reported within other assets in the consolidated balance sheet.
130

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1.                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Claims and Claim Adjustment Expense Reserves
Claims and claim adjustment expense reserves represent management’s estimate of the ultimate liability for unpaid losses and loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported (IBNR) as of the balance sheet date. The reserves are adjusted regularly based upon experience. Included in the claims and claim adjustment expense reserves in the consolidated balance sheet are reserves for long-term disability and annuity claim payments, primarily arising from workers’ compensation insurance and workers’ compensation excess insurance policies, that are discounted to the present value of estimated future payments.
The Company performs a continuing review of its claims and claim adjustment expense reserves, including its reserving techniques and the impact of reinsurance. The reserves are also reviewed regularly by qualified actuaries employed by the Company.  Since the reserves are based on estimates, the ultimate liability may be more or less than such reserves. The effects of changes in such estimated reserves are included in the results of operations in the period in which the estimates are changed. Such changes in estimates could occur in a future period and may be material to the Company’s results of operations and financial position in such period.
Other Liabilities
Included in other liabilities in the consolidated balance sheet is the Company’s estimate of its liability for guaranty fund and other insurance-related assessments. The liability for expected state guaranty fund and other premium-based assessments is recognized as the Company writes or becomes obligated to write or renew the premiums on which the assessments are expected to be based.  The liability for loss-based assessments is recognized as the related losses are incurred. At December 31, 2023 and 2022, the Company had a liability of $183 million and $177 million, respectively, for guaranty fund and other insurance-related assessments and related recoverables of $26 million and $17 million, respectively. The liability for such assessments and the related recoverables are not discounted for the time value of money. The loss-based assessments are expected to be paid over a period ranging from one year to the life expectancy of certain workers’ compensation claimants and the recoveries are expected to occur over the same period of time.
Also included in other liabilities is an accrual for policyholder dividends. Certain insurance contracts, primarily workers’ compensation, are participating whereby dividends are paid to policyholders in accordance with contract provisions. Net written premiums for participating dividend policies were approximately 1% of total net written premiums for each of the years ended December 31, 2023, 2022 and 2021.  Policyholder dividends are accrued against earnings using best available estimates of amounts to be paid.  The liability accrued for policyholder dividends totaled $77 million and $69 million at December 31, 2023 and 2022, respectively.
Treasury Stock
The cost of common stock repurchased by the Company is reported as treasury stock and represents authorized and unissued shares of the Company under the Minnesota Business Corporation Act.
Statutory Accounting Practices
The Company’s U.S. insurance subsidiaries, domiciled principally in the State of Connecticut, are required to prepare statutory financial statements in accordance with the accounting practices prescribed or permitted by the insurance departments of the states of domicile. Prescribed statutory accounting practices are those practices that are incorporated directly or by reference in state laws, regulations, and general administrative rules applicable to all insurance enterprises domiciled in a particular state. The State of Connecticut requires insurers domiciled in Connecticut to prepare their statutory financial statements in accordance with National Association of Insurance Commissioners’ (NAIC) statutory accounting practices.
Permitted statutory accounting practices are those practices that differ either from state-prescribed statutory accounting practices or NAIC statutory accounting practices.
The Company does not apply any statutory accounting practices that would be considered a prescribed or permitted statutory accounting practice that differs from NAIC statutory accounting practices.
131

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1.                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Company’s non-U.S. insurance subsidiaries file financial statements prepared in accordance with the regulatory reporting requirements of their respective local jurisdiction.
Premiums and Unearned Premium Reserves
Premiums are recognized as revenues over the period of the contract in proportion to the amount of insurance protection provided, which is generally pro rata over the policy period. Unearned premium reserves represent the unexpired portion of policy premiums. Accrued retrospective premiums are included in premium balances receivable. Premium balances receivable are reported net of an allowance for expected credit losses. The allowance is based upon the Company’s ongoing review of amounts outstanding, historical loss data, including delinquencies and write-offs, current and forecasted economic conditions and other relevant factors. Credit risk is partially mitigated by the Company’s ability to cancel the policy if the policyholder does not pay the premium.
Ceded premiums are charged to income over the applicable term of the various reinsurance contracts with third party reinsurers. Prepaid reinsurance premiums represent the unexpired portion of premiums ceded to reinsurers and are reported as ceded unearned premiums, an asset on the consolidated balance sheet.
Fee Income
Fee income includes revenues from risk and claims management services provided to the Company’s insureds and third-party non-insureds, as well as policy issuance and claims management services to workers’ compensation residual market pools. Fee income is earned over the policy period for the services provided to the Company’s insureds, and either over the contract period or as the Company completes its service obligations for the services provided to third-party non-insureds.
Other Revenues
Other revenues include revenues from premium installment charges, which are recognized as collected, gains and losses on dispositions of assets and redemption of debt, and other miscellaneous revenues, including gains recognized as a result of settlements of reinsurance disputes and claim-related legal matters.
Other revenues also include revenues from noninsurance subsidiaries (other than fee income) for insurance-related services and on-line insurance brokerage services and is recognized as the service is provided to the customer.
Income Taxes
The Company recognizes deferred income tax assets and liabilities for the expected future tax effects attributable to temporary differences between the financial statement and tax return bases of assets and liabilities, based on enacted tax rates and other provisions of the tax law. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized in income in the period in which such change is enacted. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that all or some portion of the deferred tax assets will not be realized.
Foreign Currency
The Company assigns functional currencies to its foreign operations, which are generally the currencies of the local operating environment. Foreign currency amounts are remeasured to the functional currency, and the resulting foreign exchange gains or losses are reported in net realized investment gains (losses). Functional currency amounts are then translated into U.S. dollars. The foreign currency remeasurement and translation are calculated using current exchange rates for items reported in the balance sheet and average exchange rates for items recorded in earnings.  The change in unrealized foreign currency translation gain or loss during the year, net of tax, is a component of other comprehensive income.
Foreign currency gains and losses related to the changes in fair value of available-for-sale fixed maturities are reported in other comprehensive income. All other foreign currency transaction gains and losses are reported in earnings.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1.                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Share-Based Compensation
The Company has an employee stock incentive compensation plan that permits grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, deferred stock, stock units, performance awards and other share-based or share-denominated awards with respect to the Company’s common stock.
Compensation cost is measured based on the grant-date fair value of an award, utilizing the assumptions discussed in note 14.  Compensation cost is recognized for financial reporting purposes over the period in which the employee is required to provide service in exchange for the award (generally the vesting period).  In connection with certain share-based awards, participants are entitled to receive dividends during the vesting period, either in cash or dividend equivalent shares, commensurate with the dividends paid to common shareholders.  Dividends and dividend equivalent shares on awards that are expected to vest are recorded in retained earnings.  Dividends paid on awards that are not expected to vest as part of the Company’s forfeiture estimate are recorded as compensation expense.
Nature of Operations
Business Insurance
Business Insurance offers a broad array of property and casualty insurance products and 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, including as a corporate member of Lloyd’s.  Business Insurance is organized as follows:
Domestic
•Select Accounts provides small businesses with property and casualty insurance products and services, including commercial multi-peril, workers’ compensation, commercial automobile, general liability and commercial property.
•Middle Market provides mid-sized businesses with property and casualty insurance products and services, including workers’ compensation, general liability, commercial multi-peril, commercial automobile and commercial property, as well as risk management, claims handling and other services. Middle Market generally provides these products to mid-sized businesses through Commercial Accounts, as well as to targeted industries through Construction, Technology & Life Sciences, Public Sector Services and Oil & Gas, and additionally, provides mono-line umbrella and excess coverage insurance through Excess Casualty. Middle Market also provides insurance for goods in transit and movable objects, as well as builders’ risk insurance, through Inland Marine; insurance for the marine transportation industry and related services, as well as other businesses involved in international trade, through Ocean Marine; and comprehensive breakdown for equipment, including property and business interruption, through Boiler & Machinery.
•National Accounts provides large companies with casualty insurance products and services, including workers’ compensation, commercial automobile and general liability, generally utilizing loss-sensitive products, on both a bundled and unbundled basis, as well as risk management, claims administration and other insurance-related services. National Accounts also includes the Company’s commercial residual market business, which primarily offers workers’ compensation claims, policy management and other administrative services related to the involuntary market. National Accounts also offers insurance-related services, such as claims administration, risk management, loss control and risk management information services through Constitution State Services LLC, a wholly-owned subsidiary of the Company.
•National Property and Other provides traditional and customized commercial property insurance programs to large and mid-sized customers through National Property. National Property and Other also provides insurance coverage for the commercial trucking industry through Northland Transportation and serves small- to medium-sized agricultural businesses, including farms, ranches and other agricultural-related operations through Agribusiness. National Property and Other also includes commercial property and general liability policies for small, difficult to place commercial business primarily on an excess and surplus lines basis through Northfield, and also offers tailored property and casualty insurance programs on an admitted basis for customers with common risk characteristics or coverage requirements through National Programs.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1.                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
International
•International, through its operations in Canada, the United Kingdom and the Republic of Ireland, provides property and casualty insurance and risk management services to several customer groups, including, among others, those in the technology, manufacturing and public services industry sectors. International also provides insurance for both the foreign exposures of United States organizations and the United States exposures of foreign organizations through Global Services. At its Lloyd’s syndicate (Syndicate 5000), for which the Company provides 100% of the capital, International underwrites five principal businesses — marine, energy, property, aviation and special risks.
Business Insurance also includes Simply Business, a leading provider of small business insurance policies primarily in the United Kingdom, and 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 offers surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers, primarily in the United States, and certain surety and specialty insurance products in Canada, the United Kingdom, the Republic of Ireland and Brazil (through a joint venture, as described below), in each case utilizing various degrees of financially-based underwriting approaches.  The range of coverages includes performance, payment and commercial surety bonds for construction and general commercial enterprises; management liability coverages including directors’ and officers’ liability, employment practices liability, fidelity 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; in the United States only, property, workers’ compensation, auto and general liability for financial institutions; and transactional liability coverages to public and private companies.
Bond & Specialty Insurance’s 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., which owns a majority interest in JMalucelli Travelers Seguros S.A., a Colombian surety provider. These joint venture investments are accounted for using the equity method and are included in “other investments” on the consolidated balance sheet.
Personal Insurance
Personal Insurance offers a broad range of property and casualty insurance products and services covering individuals’ personal risks, primarily in the United States, as well as in Canada. Personal Insurance’s primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.
Automobile policies provide coverage for liability to others for both bodily injury and property damage, uninsured motorist protection, and for physical damage to an insured’s own vehicle from collision, fire, flood, hail and theft.  In addition, many states require policies to provide first-party personal injury protection, frequently referred to as no-fault coverage.
Homeowners and Other policies provide protection against losses to dwellings and contents from a variety of perils (excluding flooding) as well as coverage for personal liability. The Company writes homeowners insurance for dwellings, condominiums and tenants, and rental properties.  The Company also writes coverage for boats and yachts, valuable personal items such as jewelry, umbrella liability, and weddings and special events.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.                                      SEGMENT INFORMATION
The accounting policies used to prepare the segment reporting data for the Company’s three reportable business segments are the same as those described in the Summary of Significant Accounting Policies in note 1.
Except as described below for certain legal entities, the Company allocates its invested assets and the related net investment income to its reportable business segments.  Pre-tax net investment income is allocated based upon an investable funds concept, which takes into account liabilities (net of non-invested assets) and appropriate capital considerations for each segment. For investable funds, a benchmark investment yield is developed that reflects the estimated duration of the loss reserves’ future cash flows, the interest rate environment at the time the losses were incurred and A+ rated corporate debt instrument yields.  For capital, a benchmark investment yield is developed that reflects the average yield on the total investment portfolio.  The benchmark investment yields are applied to each segment’s investable funds and capital, respectively, to produce a total notional investment income by segment.  The Company’s actual net investment income is allocated to each segment in proportion to the respective segment’s notional investment income to total notional investment income.  There are certain legal entities within the Company that are dedicated to specific reportable business segments.  The invested assets and related net investment income from these legal entities are reported in the applicable business segment and are not allocated among the other business segments.
The cost of the Company’s catastrophe treaty program is included in the Company’s ceded premiums and is allocated among reportable business segments based on an estimate of actual market reinsurance pricing using expected losses calculated by the Company’s catastrophe model, adjusted for any experience adjustments.
The following tables summarize the components of the Company’s revenues, income (loss), net written premiums and total assets by reportable business segments.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.                                      SEGMENT INFORMATION (Continued)
(for the year ended December 31, in millions) Business
Insurance		 Bond &
Specialty
Insurance		 Personal
Insurance		 Total
Reportable
Segments
2023
Premiums $ 19,144  $ 3,655  $ 14,962  $ 37,761 
Net investment income 2,085  328  509  2,922 
Fee income 400  —  33  433 
Other revenues 232  25  96  353 
Total segment revenues (1)
 $ 21,861  $ 4,008  $ 15,600  $ 41,469 
Amortization and depreciation $ 3,640  $ 744  $ 2,558  $ 6,942 
Income tax expense (benefit) 368  227  (103) 492 
Segment income (loss) (1)
 2,583  942  (128) 3,397 
2022
Premiums $ 17,095  $ 3,418  $ 13,250  $ 33,763 
Net investment income 1,864  258  440  2,562 
Fee income 382  —  30  412 
Other revenues 248  20  83  351 
Total segment revenues (1)
 $ 19,589  $ 3,696  $ 13,803  $ 37,088 
Amortization and depreciation $ 3,344  $ 697  $ 2,293  $ 6,334 
Income tax expense (benefit) 536  195  (90) 641 
Segment income (loss) (1)
 2,531  908  (140) 3,299 
2021
Premiums $ 15,734  $ 3,138  $ 11,983  $ 30,855 
Net investment income 2,265  247  521  3,033 
Fee income 375  —  27  402 
Other revenues 235  23  97  355 
Total segment revenues (1)
 $ 18,609  $ 3,408  $ 12,628  $ 34,645 
Amortization and depreciation $ 3,180  $ 643  $ 2,084  $ 5,907 
Income tax expense 499  165  179  843 
Segment income (1)
 2,385  668  760  3,813 
_________________________________________
(1)Segment revenues for reportable business segments exclude net realized investment gains (losses) and revenues included in “interest expense and other.” Segment income (loss) for reportable business segments excludes the after-tax impact of net realized investment gains (losses) and income (loss) from “interest expense and other.”
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.                                      SEGMENT INFORMATION (Continued)
Net written premiums by market were as follows:
(for the year ended December 31, in millions) 2023 2022 2021
Business Insurance:
Domestic:
Select Accounts $ 3,477  $ 3,099  $ 2,833 
Middle Market 11,045  9,923  8,933 
National Accounts 1,135  1,085  987 
National Property and Other 3,008  2,467  2,265 
Total Domestic 18,665  16,574  15,018 
International 1,765  1,061  1,074 
Total Business Insurance 20,430  17,635  16,092 
Bond & Specialty Insurance:
Domestic:
Management Liability 2,156  2,112  1,983 
Surety 1,147  1,081  888 
Total Domestic 3,303  3,193  2,871 
International 539  539  505 
Total Bond & Specialty Insurance 3,842  3,732  3,376 
Personal Insurance:
Domestic:
Automobile 7,330  6,482  5,827 
Homeowners and Other 7,949  6,916  5,980 
Total Domestic 15,279  13,398  11,807 
International 650  649  684 
Total Personal Insurance 15,929  14,047  12,491 
Total consolidated net written premiums $ 40,201  $ 35,414  $ 31,959 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.                                      SEGMENT INFORMATION (Continued)
Business Segment Reconciliations
(for the year ended December 31, in millions) 2023 2022 2021
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation $ 3,467  $ 3,425  $ 3,227 
Commercial automobile 3,215  2,976  2,855 
Commercial property 3,154  2,611  2,275 
General liability 3,146  2,875  2,576 
Commercial multi-peril 4,686  4,109  3,667 
Other 76  76  65 
Total Domestic 17,744  16,072  14,665 
International 1,400  1,023  1,069 
Total Business Insurance 19,144  17,095  15,734 
Bond & Specialty Insurance:
Domestic:
Fidelity and surety 1,290  1,173  1,091 
General liability 1,639  1,556  1,415 
Other 225  222  220 
Total Domestic 3,154  2,951  2,726 
International 501  467  412 
Total Bond & Specialty Insurance 3,655  3,418  3,138 
Personal Insurance:
Domestic
Automobile 6,923  6,170  5,687 
Homeowners and Other 7,404  6,426  5,608 
Total Domestic 14,327  12,596  11,295 
International 635  654  688 
Total Personal Insurance 14,962  13,250  11,983 
Total earned premiums 37,761  33,763  30,855 
Net investment income 2,922  2,562  3,033 
Fee income 433  412  402 
Other revenues 353  351  355 
Total segment revenues 41,469  37,088  34,645 
Net realized investment gains (losses) (105) (204) 171 
Total revenues $ 41,364  $ 36,884  $ 34,816 
Income reconciliation, net of tax
Total segment income $ 3,397  $ 3,299  $ 3,813 
Interest Expense and Other (1)
 (325) (301) (291)
Core income 3,072  2,998  3,522 
Net realized investment gains (losses) (81) (156) 132 
Impact of changes in tax laws and/or tax rates (2)
 —  —  8 
Net income $ 2,991  $ 2,842  $ 3,662 
______________________________________
(1)    The primary component of Interest Expense and Other was after-tax interest expense of $297 million, $277 million and $269 million in 2023, 2022 and 2021, respectively.
(2)    Impact is recognized in the accounting period in which the change is enacted.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.                                      SEGMENT INFORMATION (Continued)
(at December 31, in millions) 2023 2022
Asset reconciliation:
Business Insurance $ 93,565  $ 86,522 
Bond & Specialty Insurance 11,478  10,119 
Personal Insurance 20,072  18,275 
Total assets for reportable segments 125,115  114,916 
Other assets (1)
 863  801 
Total consolidated assets $ 125,978  $ 115,717 
___________________________________________
(1)    The primary components of other assets at both December 31, 2023 and 2022, were the over-funded benefit plan assets related to the Company’s qualified domestic pension plan and other intangible assets.
Enterprise-Wide Disclosures
The Company does not have revenue from transactions with a single customer amounting to 10 percent or more of its revenues.
The following table presents revenues of the Company’s operations based on location:
(for the year ended December 31, in millions) 2023 2022 2021
U.S. $ 39,086  $ 34,822  $ 32,596 
Non-U.S.:
Canada 1,281  1,300  1,351 
Other Non-U.S. 997  762  869 
Total Non-U.S. 2,278  2,062  2,220 
Total revenues $ 41,364  $ 36,884  $ 34,816 


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.                                      INVESTMENTS
Fixed Maturities
The amortized cost and fair value of investments in fixed maturities classified as available for sale were as follows:
Amortized Allowance for Expected Credit Losses Gross Unrealized Fair
(at December 31, 2023, in millions) Cost Gains Losses Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 $ 6,591  $ —  $ 8  $ 231  $ 6,368 
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation 18,374  —  90  1,265  17,199 
Revenue 9,748  —  52  616  9,184 
State general obligation 1,209  —  7  59  1,157 
Pre-refunded 963  —  5  2  966 
Total obligations of U.S. states, municipalities and political subdivisions 30,294  —  154  1,942  28,506 
Debt securities issued by foreign governments 1,035  —  2  31  1,006 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 7,874  —  120  176  7,818 
Corporate and all other bonds 35,987  5  187  2,060  34,109 
Total $ 81,781  $ 5  $ 471  $ 4,440  $ 77,807 
Amortized Allowance for Expected Credit Losses Gross Unrealized Fair
(at December 31, 2022, in millions) Cost Gains Losses Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 $ 5,798  $ —  $ 3  $ 363  $ 5,438 
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation 19,615  —  33  1,825  17,823 
Revenue 11,076  —  29  907  10,198 
State general obligation 1,104  —  3  88  1,019 
Pre-refunded 2,323  —  17  1  2,339 
Total obligations of U.S. states, municipalities and political subdivisions 34,118  —  82  2,821  31,379 
Debt securities issued by foreign governments 1,049  —  —  55  994 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 2,178  —  13  200  1,991 
Corporate and all other bonds 34,237  3  37  2,913  31,358 
Total $ 77,380  $ 3  $ 135  $ 6,352  $ 71,160 
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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.                                      INVESTMENTS (Continued)
The amortized cost and fair value of fixed maturities by contractual maturity follow. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
(at December 31, 2023, in millions) Amortized
Cost		 Fair
Value
Due in one year or less $ 5,004  $ 4,965 
Due after 1 year through 5 years 25,328  24,592 
Due after 5 years through 10 years 21,407  19,740 
Due after 10 years 22,168  20,692 
73,907  69,989 
Mortgage-backed securities, collateralized mortgage obligations
 and pass-through securities
 7,874  7,818 
Total $ 81,781  $ 77,807 
Pre-refunded bonds of $966 million and $2.34 billion at December 31, 2023 and 2022, respectively, were bonds for which U.S. states or municipalities have established irrevocable trusts that are almost exclusively comprised of U.S. Treasury securities and obligations of U.S. government and government agencies and authorities. These trusts were created to fund the payment of principal and interest due under the bonds.
The Company’s fixed maturity investment portfolio at December 31, 2023 and 2022 included $7.82 billion and $1.99 billion, respectively, of residential mortgage-backed securities, which include pass-through securities and collateralized mortgage obligations (CMOs).  Included in the totals at December 31, 2023 and 2022 were $6.23 billion and $922 million, respectively, of GNMA, FNMA, FHLMC (excluding FHA project loans) and Canadian government guaranteed residential mortgage-backed pass-through securities classified as available for sale.  Also included in those totals were residential CMOs classified as available for sale with a fair value of $1.59 billion and $1.07 billion at December 31, 2023 and 2022, respectively. Approximately 33% and 40% of the Company’s CMO holdings at December 31, 2023 and 2022, respectively, were guaranteed by or fully collateralized by securities issued by GNMA, FNMA or FHLMC.  The weighted average credit rating of the $1.07 billion and $647 million of non-guaranteed CMO holdings at December 31, 2023 and 2022, respectively, was “Aaa" and "Aaa/Aa1”, respectively. The weighted average credit rating of all of the above securities was “Aaa/Aa1” at both December 31, 2023 and 2022.
At December 31, 2023 and 2022, the Company held commercial mortgage-backed securities (CMBS, including FHA project loans) of $1.04 billion and $1.14 billion, respectively, which are included in “Corporate and all other bonds” in the tables above.  At December 31, 2023 and 2022, approximately $116 million and $131 million of these securities, respectively, or the loans backing such securities, contained guarantees by the U.S. government or a government-sponsored enterprise.  The weighted average credit rating of the $922 million and $1.01 billion of non-guaranteed securities at December 31, 2023 and 2022, respectively, was “Aaa” at both dates.  The CMBS portfolio is supported by loans that are diversified across economic sectors and geographical areas. The weighted average credit rating of the CMBS portfolio was “Aaa” at both December 31, 2023 and 2022.
At December 31, 2023 and 2022, the Company had $421 million and $445 million, respectively, of securities on loan as part of a tri-party lending agreement.
Proceeds from the sales of fixed maturities classified as available for sale were $4.98 billion, $5.66 billion and $3.17 billion in 2023, 2022 and 2021, respectively. Gross gains of $26 million, $27 million and $74 million and gross losses of $119 million, $99 million and $5 million were realized on those sales in 2023, 2022 and 2021, respectively.
At December 31, 2023 and 2022, the Company’s insurance subsidiaries had $4.04 billion and $3.94 billion, respectively, of securities on deposit at financial institutions in certain states pursuant to the respective states’ insurance regulatory requirements. Funds deposited with third parties to be used as collateral to secure various liabilities on behalf of insureds, cedants and other creditors had a fair value of $54 million and $53 million at December 31, 2023 and 2022, respectively. In addition, the Company utilizes Lloyd’s trust deposits, whereby owned securities with a fair value of approximately $31 million and $28 million held by a wholly-owned subsidiary at December 31, 2023 and 2022, respectively, and $85 million and $58 million held by TRV at December 31, 2023 and 2022, respectively, were pledged into Lloyd’s trust accounts to provide a portion of the capital needed to support the Company’s obligations at Lloyd’s.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.                                      INVESTMENTS (Continued)
Equity Securities
The cost and fair value of investments in equity securities were as follows:
(at December 31, 2023, in millions) Cost Gross Gains Gross Losses Fair Value
Common stock $ 508  $ 93  $ 41  $ 560 
Non-redeemable preferred stock 45  3  —  48 
Total $ 553  $ 96  $ 41  $ 608 
(at December 31, 2022, in millions) Cost Gross Gains Gross Losses Fair Value
Common stock $ 706  $ 89  $ 32  $ 763 
Non-redeemable preferred stock 41  3  —  44 
Total $ 747  $ 92  $ 32  $ 807 
The Company recognized $16 million and $(61) million of net gains (losses) on equity securities still held as of December 31, 2023 and 2022, respectively.
Real Estate
The Company’s real estate investments include warehouses, office buildings and other commercial land and properties that are directly owned.  The Company negotiates commercial leases with individual tenants through unrelated, licensed real estate brokers. Negotiated terms and conditions include, among others, rental rates, length of lease period and improvements to the premises to be provided by the landlord.
Proceeds from the sales of real estate investments were $0 million in 2023, $10 million in 2022 and $31 million in 2021. Gains of $4 million and $8 million were realized on those sales in 2022 and 2021, respectively. Net realized investment gains (losses) in 2023 and 2022 included $9 million and $12 million, respectively, of impairment charges related to real estate. Accumulated depreciation on real estate held for investment purposes was $556 million and $519 million at December 31, 2023 and 2022, respectively.
Future minimum rental income on operating leases relating to the Company’s real estate properties is expected to be $138 million, $114 million, $87 million, $67 million and $48 million for 2024, 2025, 2026, 2027 and 2028, respectively, and $69 million for 2029 and thereafter.
Short-term Securities
The Company’s short-term securities consist of Aaa-rated registered money market funds, U.S. Treasury securities, high-quality commercial paper (primarily A1/P1) and high-quality corporate securities purchased within a year to their maturity with a combined average of 25 days to maturity at December 31, 2023.  The amortized cost of these securities, which totaled $5.14 billion and $3.47 billion at December 31, 2023 and 2022, respectively, approximated their fair value.
Other Investments
Included in other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity method of accounting and typically report their financial statement information to the Company one month to three months following the end of the reporting period. Accordingly, net investment income from these other investments is generally reflected in the Company’s financial statements on a quarter lag basis.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.                                      INVESTMENTS (Continued)
Variable Interest Entities
Entities which do not have sufficient equity at risk to allow the entity to finance its activities without additional financial support or in which the equity investors, as a group, do not have the characteristic of a controlling financial interest are referred to as variable interest entities (VIE). A VIE is consolidated by the variable interest holder that is determined to have the controlling financial interest (primary beneficiary) as a result of having both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE.  The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis.
The Company is a passive investor in limited partner equity interests issued by third party VIEs. These include certain of the Company’s investments in private equity limited partnerships, hedge funds and real estate partnerships where the Company is not related to the general partner. These investments are generally accounted for under the equity method and reported in the Company’s consolidated balance sheet as other investments unless the Company is deemed the primary beneficiary. These equity interests generally cannot be redeemed. Distributions from these investments are received by the Company as a result of liquidation of the underlying investments of the funds and/or as income distribution. The Company’s maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company’s consolidated balance sheet and any unfunded commitment. The Company considers an investment in a VIE in which it has a 20% or greater equity interest as a significant VIE. Neither the Company’s carrying amounts nor the unfunded commitments related to these significant VIE’s are material individually or in the aggregate.
Unrealized Investment Losses
The following tables summarize, for all fixed maturities classified as available for sale in an unrealized loss position at December 31, 2023 and 2022, the aggregate fair value and gross unrealized loss by the length of time those securities have been continuously in an unrealized loss position.  The fair value amounts reported in the tables are estimates that are prepared using the process described in note 4.  The Company also relies upon estimates of several factors in its review and evaluation of individual investments, using the process described in note 1, in determining whether a credit loss impairment exists.
Less than 12 months 12 months or longer Total
(at December 31, 2023, in millions) Fair
Value		 Gross
Unrealized
Losses		 Fair
Value		 Gross
Unrealized
Losses		 Fair
Value		 Gross
Unrealized
Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 $ 1,864  $ 7  $ 2,985  $ 224  $ 4,849  $ 231 
Obligations of U.S. states, municipalities and political subdivisions 3,868  31  14,351  1,911  18,219  1,942 
Debt securities issued by foreign governments
 30  —  763  31  793  31 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 1,215  9  1,433  167  2,648  176 
Corporate and all other bonds 1,016  9  26,444  2,051  27,460  2,060 
Total $ 7,993  $ 56  $ 45,976  $ 4,384  $ 53,969  $ 4,440 
143

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.                                      INVESTMENTS (Continued)
Less than 12 months 12 months or longer Total
(at December 31, 2022, in millions) Fair
Value		 Gross
Unrealized
Losses		 Fair
Value		 Gross
Unrealized
Losses		 Fair
Value		 Gross
Unrealized
Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 $ 2,835  $ 100  $ 1,679  $ 263  $ 4,514  $ 363 
Obligations of U.S. states, municipalities and political subdivisions 19,251  1,975  3,134  846  22,385  2,821 
Debt securities issued by foreign governments
 604  22  367  33  971  55 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 1,414  128  316  72  1,730  200 
Corporate and all other bonds 24,080  1,635  6,096  1,278  30,176  2,913 
Total $ 48,184  $ 3,860  $ 11,592  $ 2,492  $ 59,776  $ 6,352 
The following tables summarize, for all fixed maturities reported at fair value for which fair value was less than 80% of amortized cost at December 31, 2023 and December 31, 2022, the gross unrealized investment loss by length of time those securities have continuously been in an unrealized loss position of greater than 20% of amortized cost:
  Period For Which Fair Value is Less Than 80% of Amortized Cost
(at December 31, 2023, in millions) 3 months or less Greater than 3 months, 6 months or less Greater than 6 months, 12 months or less Greater than 12 months Total
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 $ —  $ —  $ —  $ —  $ — 
Obligations of U.S. states, municipalities and political subdivisions —  2  31  642  675 
Debt securities issued by foreign governments
 —  —  —  —  — 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 —  —  —  —  — 
Corporate and all other bonds 1  3  22  25  51 
Total $ 1  $ 5  $ 53  $ 667  $ 726 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.                                      INVESTMENTS (Continued)
  Period For Which Fair Value is Less Than 80% of Amortized Cost
(at December 31, 2022, in millions) 3 months or less Greater than 3 months, 6 months or less Greater than 6 months, 12 months or less Greater than 12 months Total
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 $ —  $ —  $ —  $ —  $ — 
Obligations of U.S. states, municipalities and political subdivisions 81  776  643  —  1,500 
Debt securities issued by foreign governments
 1  —  —  —  1 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 4  48  —  —  52 
Corporate and all other bonds 89  526  8  —  623 
Total $ 175  $ 1,350  $ 651  $ —  $ 2,176 
Increases in interest rates resulted in the gross unrealized investment losses disclosed in the tables above; however, the net unrealized loss is considered temporary in nature as the decrease in value is not due to credit impairments and there is no impact on expected contractual cash flows from fixed maturities.
Impairment Charges
Credit impairment charges included in net realized investment gains (losses) in the consolidated statement of income were as follows:
(for the year ended December 31, in millions) 2023 2022 2021
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 $ —  $ 12  $ — 
Obligations of U.S. states, municipalities and political subdivisions 1  14  — 
Debt securities issued by foreign governments —  —  — 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 —  —  — 
Corporate and all other bonds 2  —  2 
Total fixed maturities $ 3  $ 26  $ 2 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.                                      INVESTMENTS (Continued)
The following table presents changes in the allowance for expected credit losses on fixed maturities classified as available for sale for the category of Corporate and All Other Bonds (no other categories of fixed maturities currently have an allowance for expected credit losses):
Fixed Maturities
Corporate and All Other Bonds
(in millions) At and For the Twelve Months Ended December 31, 2023 At and For the Twelve Months Ended December 31, 2022
Balance, beginning of period $ 3  $ 3 
Additions for expected credit losses on securities where no credit losses were previously recognized
 1  — 
Additions for expected credit losses on securities where credit losses were previously recognized 1  1 
 Reductions due to sales/defaults of credit-impaired securities —  (1)
Reductions for impairments of securities which the Company intends to sell or more likely than not will be required to sell —  — 
Balance, end of period $ 5  $ 3 
Total net impairment charges, including credit impairments, reported in net realized investment gains (losses) in the consolidated statement of income, were $12 million, $38 million and $2 million for the years ended December 31, 2023, 2022 and 2021, respectively. Net realized investment gains (losses) in 2023 and 2022 included $9 million and $12 million, respectively, of realized losses related to real estate. Credit losses related to the fixed maturity portfolio for 2023 and 2022 represented less than 1% of the fixed maturity portfolio on a pre-tax basis and less than 1% of shareholders’ equity on an after-tax basis at both December 31, 2023 and 2022.
Concentrations and Credit Quality
Concentrations of credit risk arise from exposure to counterparties that are engaged in similar activities and have similar economic characteristics that could cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.  The Company seeks to mitigate credit risk by actively monitoring the creditworthiness of counterparties, obtaining collateral as deemed appropriate and applying controls that include credit approvals, limits of credit exposure and other monitoring procedures.
At December 31, 2023 and 2022, other than U.S. Treasury securities and obligations of U.S. government and government agencies and authorities, the Company was not exposed to any concentration of credit risk of a single issuer greater than 5% of the Company’s shareholders’ equity.
Included in fixed maturities are below investment grade securities totaling $982 million and $930 million at December 31, 2023 and 2022, respectively. The Company defines its below investment grade securities as those securities rated below investment grade by external rating agencies, or the equivalent by the Company when a public rating does not exist.  Such securities include below investment grade bonds that are publicly traded and certain other privately issued bonds that are classified as below investment grade loans.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.                                      INVESTMENTS (Continued)
Net Investment Income
(for the year ended December 31, in millions) 2023 2022 2021
Gross investment income
Fixed maturities $ 2,472  $ 2,113  $ 1,989 
Equity securities 18  17  19 
Short-term securities 241  73  7 
Real estate investments 64  66  59 
Other investments 171  336  999 
Gross investment income 2,966  2,605  3,073 
Investment expenses 44  43  40 
Net investment income $ 2,922  $ 2,562  $ 3,033 
Changes in net unrealized gains (losses) on investment securities that are included as a separate component of other comprehensive income (loss) were as follows:
(at and for the year ended December 31, in millions) 2023 2022 2021
Changes in net unrealized investment gains (losses)
Fixed maturities $ 2,248  $ (9,279) $ (2,113)
Other investments 2  (1) (2)
Change in net pre-tax unrealized gains (losses) on investment securities 2,250  (9,280) (2,115)
Related tax expense (benefit) 481  (1,967) (456)
Change in net unrealized gains (losses) on investment securities 1,769  (7,313) (1,659)
Balance, beginning of year (4,898) 2,415  4,074 
Balance, end of year $ (3,129) $ (4,898) $ 2,415 
Derivative Financial Instruments
From time to time, the Company enters into certain derivative financial instruments that are reported on the balance sheet at fair value. The change in fair value of these investments is reported in net realized investment gains and losses.

4.                                      FAIR VALUE MEASUREMENTS
The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance.  The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available.  The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable.  In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions.  The level in the fair value hierarchy within which the fair value measurement is reported is based on the lowest level input that is significant to the measurement in its entirety.  The three levels of the hierarchy are as follows:
•Level 1 - Unadjusted quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access.
•Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4.                                      FAIR VALUE MEASUREMENTS (Continued)
•Level 3 - Valuations based on models where significant inputs are not observable.  The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.
Valuation of Investments Reported at Fair Value in Financial Statements
The fair value of a financial instrument is the estimated amount at which the instrument could be exchanged in an orderly transaction between knowledgeable, unrelated, willing parties, i.e., not in a forced transaction.  The estimated fair value of a financial instrument may differ from the amount that could be realized if the security was sold in an immediate sale, e.g., a forced transaction.  Additionally, the valuation of investments is more subjective when markets are less liquid due to the lack of market based inputs, which may increase the potential that the estimated fair value of an investment is not reflective of the price at which an actual transaction would occur.
For investments that have quoted market prices in active markets, the Company uses the unadjusted quoted market prices as fair value and includes these prices in the amounts disclosed in Level 1 of the hierarchy.  The Company receives the quoted market prices from third party, nationally recognized pricing services.  When quoted market prices are unavailable, the Company utilizes these pricing services to determine an estimate of fair value.  The fair value estimates provided from these pricing services are included in the amount disclosed in Level 2 of the hierarchy.  If quoted market prices and an estimate from a pricing service are unavailable, the Company produces an estimate of fair value based on internally developed valuation techniques, which, depending on the level of observable market inputs, will render the fair value estimate as Level 2 or Level 3.  The Company bases all of its estimates of fair value for assets on the bid price as it represents what a third-party market participant would be willing to pay in an arm’s length transaction.
Fixed Maturities
The Company utilized a pricing service to estimate fair value measurements for approximately 99% of its fixed maturities at both December 31, 2023 and 2022.  The pricing service utilizes market quotations for fixed maturity securities that have quoted prices in active markets.  Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements for these securities using its proprietary pricing applications, which include available relevant market information, benchmark curves, benchmarking of like securities, sector groupings and matrix pricing.  Additionally, the pricing service uses an Option Adjusted Spread model to develop prepayment and interest rate scenarios.
The pricing service evaluates each asset class based on relevant market information, relevant credit information, perceived market movements and sector news.  The market inputs utilized in the pricing evaluation, listed in the approximate order of priority, include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events.  The extent of the use of each market input depends on the asset class and the market conditions.  Depending on the security, the priority of the use of inputs may change or some market inputs may not be relevant.  For some securities, additional inputs may be necessary.
The pricing service utilized by the Company has indicated that it will only produce an estimate of fair value if there is objectively verifiable information to produce a valuation. If the pricing service discontinues pricing an investment, the Company would be required to produce an estimate of fair value using some of the same methodologies as the pricing service but would have to make assumptions for any market-based inputs that were unavailable due to market conditions. The Company reviews the estimates of fair value provided by the pricing service and compares the estimates to the Company’s knowledge of the market to determine if the estimates obtained are representative of the prices in the market. In addition, the Company has periodic discussions with the pricing service to discuss and understand any changes in process and their responsiveness to changes occurring in the markets. The Company also monitors all monthly price changes and further evaluates any securities whose value changed more than 10% from the prior month. The Company has implemented various other processes including randomly selecting purchased or sold securities and comparing execution prices to the estimates from the pricing service as well as reviewing securities whose valuation did not change from their previous valuation (stale price review). The Company also uses a second  independent pricing service to further test the primary pricing service’s valuation of the Company’s fixed maturity portfolio. These processes have not highlighted any significant issues with the fair value estimates received from the primary pricing service.
The fair value estimates of most fixed maturity investments are based on observable market information rather than market quotes. Accordingly, the estimates of fair value for such fixed maturities, other than U.S. Treasury securities, provided by the pricing service are included in the amount disclosed in Level 2 of the hierarchy.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4.                                      FAIR VALUE MEASUREMENTS (Continued)
The estimated fair value of U.S. Treasury securities is included in the amount disclosed in Level 1 as the estimates are based on unadjusted market prices.
The Company also holds certain fixed maturity investments which are not priced by the pricing service and, accordingly, estimates the fair value of such fixed maturities using an internal matrix that is based on market information regarding interest rates, credit spreads and liquidity. The underlying source data for calculating the matrix of credit spreads relative to the U.S. Treasury curve are observable market-based indices that relate to corporate and high-yield fixed maturity investments. The Company includes the fair value estimates of these corporate bonds in Level 2, since all significant inputs are market observable.
While the vast majority of the Company’s fixed maturities are included in Level 2, the Company holds a number of corporate bonds which are not valued by the pricing service and estimates the fair value of these bonds using either another internal pricing matrix, a present value income approach, or a broker quote (collectively, the other methodologies). The other methodologies include some unobservable inputs that are significant to the valuation.  Due to the limited amount of observable market information available in the estimation of fair value, the Company includes the fair value estimates for bonds that are valued using the other methodologies in Level 3. 
Equity Securities — Common Stock and Non-Redeemable Preferred Stock
For public common stock and non-redeemable preferred stocks, the Company receives prices from pricing services that are based on observable market transactions and includes these estimates in the amount disclosed in Level 1.  When current market quotes in active markets are unavailable for certain non-redeemable preferred stocks held by the Company, the Company receives an estimate of fair value from the pricing services.  The services utilize similar methodologies to price the non-redeemable preferred stocks as they do for the fixed maturities. The Company includes the fair value estimate for these non-redeemable preferred stocks in the amount disclosed in Level 2.
For certain investments in non-public common and preferred equity securities, the fair value estimate is determined either internally or by an external fund manager based on the impact of recent observable transactions related to the investment, recent filings, operating results, balance sheet stability, growth and other business and market sector fundamentals. Due to the significant unobservable inputs in these valuations, the Company included the fair value estimate of $37 million and $371 million for these investments at December 31, 2023 and 2022, respectively, in the amounts disclosed in Level 3.
Other Investments
The Company holds investments in various publicly-traded securities which are reported in other investments.  These investments include mutual funds and other small holdings.  The $18 million and $15 million fair value of these investments at December 31, 2023 and 2022, respectively, was disclosed in Level 1.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4.                                      FAIR VALUE MEASUREMENTS (Continued)
Fair Value Hierarchy
The following tables present the level within the fair value hierarchy at which the Company’s financial assets and financial liabilities are measured on a recurring basis.
(at December 31, 2023, in millions) Total Level 1 Level 2 Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 $ 6,368  $ 6,368  $ —  $ — 
Obligations of U.S. states, municipalities and political subdivisions 28,506  —  28,506  — 
Debt securities issued by foreign governments 1,006  —  1,006  — 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 7,818  —  7,818  — 
Corporate and all other bonds 34,109  —  33,851  258 
Total fixed maturities 77,807  6,368  71,181  258 
Equity securities
Common stock 560  553  —  7 
Non-redeemable preferred stock 48  16  2  30 
Total equity securities 608  569  2  37 
Other investments 18  18  —  — 
Total $ 78,433  $ 6,955  $ 71,183  $ 295 
(at December 31, 2022, in millions) Total Level 1 Level 2 Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 $ 5,438  $ 5,438  $ —  $ — 
Obligations of U.S. states, municipalities and political subdivisions 31,379  —  31,379  — 
Debt securities issued by foreign governments 994  —  994  — 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 1,991  —  1,991  — 
Corporate and all other bonds 31,358  —  31,055  303 
Total fixed maturities 71,160  5,438  65,419  303 
Equity securities
Common stock 763  418  —  345 
Non-redeemable preferred stock 44  15  3  26 
Total equity securities 807  433  3  371 
Other investments 16  15  —  1 
Total $ 71,983  $ 5,886  $ 65,422  $ 675 
Other liabilities $ 2  $ —  $ —  $ 2 
Transfers out of Level 3 during the year ended December 31, 2023 included $182 million of privately held common stock that the Company exchanged during the first quarter of 2023 for shares in an investment that is reported using the equity method of accounting (and as a result is excluded from the December 31, 2023 table above), and $151 million of common stock in a company that had been privately held but became publicly traded during the second quarter of 2023, valued using an unadjusted quoted market price and now disclosed in Level 1.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4.                                      FAIR VALUE MEASUREMENTS (Continued)
There was no other significant activity in Level 3 of the hierarchy during the year ended December 31, 2023.
The following tables present the changes in the Level 3 fair value category for the years ended December 31, 2023 and 2022.
(in millions) Fixed
Maturities		 Equity Securities Other
Investments		 Total
Balance at December 31, 2022 $ 303  $ 371  $ 1  $ 675 
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (losses) (1)
 (1) (5) —  (6)
Reported in other comprehensive income (loss) 6  —  —  6 
Purchases, sales and settlements/maturities:
Purchases 25  4  —  29 
Sales —  —  (1) (1)
Settlements/maturities (26) —  —  (26)
Gross transfers into Level 3 —  —  —  — 
Gross transfers out of Level 3 (49) (333) —  (382)
Balance at December 31, 2023 $ 258  $ 37  $ —  $ 295 
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date
 $ —  $ —  $ —  $ — 
___________________________________________
(1)Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.
(in millions) Fixed
Maturities		 Equity Securities Other
Investments		 Total
Balance at December 31, 2021 $ 248  $ 343  $ 5  $ 596 
Total realized and unrealized investment gains (losses):
Reported in net realized investment gains (losses) (1)
 1  33  2  36 
Reported in other comprehensive income (loss) (13) —  —  (13)
Purchases, sales and settlements/maturities:
Purchases 226  7  —  233 
Sales —  —  (1) (1)
Settlements/maturities (55) —  (2) (57)
Gross transfers into Level 3 —  3  —  3 
Gross transfers out of Level 3 (104) (15) (3) (122)
Balance at December 31, 2022 $ 303  $ 371  $ 1  $ 675 
Amount of total realized investment gains (losses) for the period included in the consolidated statement of income attributable to changes in the fair value of assets still held at the reporting date
 $ —  $ 33  $ 1  $ 34 
___________________________________________
(1)Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4.                                      FAIR VALUE MEASUREMENTS (Continued)
Financial Instruments Disclosed, But Not Carried, At Fair Value
The following tables present the carrying value and fair value of the Company’s financial assets and financial liabilities disclosed, but not carried, at fair value, and the level within the fair value hierarchy at which such assets and liabilities are categorized.
(at December 31, 2023, in millions) Carrying
Value		 Fair
Value		 Level 1 Level 2 Level 3
Financial assets:
Short-term securities $ 5,137  $ 5,137  $ 1,171  $ 3,912  $ 54 
Financial liabilities:
Debt $ 7,931  $ 7,645  $ —  $ 7,645  $ — 
Commercial paper 100  100  —  100  — 
(at December 31, 2022, in millions) Carrying
Value		 Fair
Value		 Level 1 Level 2 Level 3
Financial assets:
Short-term securities $ 3,470  $ 3,470  $ 871  $ 2,546  $ 53 
Financial liabilities:
Debt $ 7,192  $ 6,509  $ —  $ 6,509  $ — 
Commercial paper 100  100  —  100  — 
The Company had no material assets or liabilities that were measured at fair value on a non-recurring basis during the years ended December 31, 2023 and 2022.


5.                                      ALLOWANCE FOR EXPECTED CREDIT LOSSES
Premiums Receivable
The following table presents the balances of premiums receivable, net of the allowance for expected credit losses, at December 31, 2023 and 2022, and the changes in the allowance for expected credit losses for the twelve months ended December 31, 2023 and 2022.
At and For the Twelve Months Ended December 31, 2023 At and For the Twelve Months Ended December 31, 2022
(in millions) Premiums Receivable, Net of Allowance for Expected Credit Losses Allowance for Expected Credit Losses Premiums Receivable, Net of Allowance for Expected Credit Losses Allowance for Expected Credit Losses
 
Balance, beginning of period $ 8,922  $ 77  $ 8,085  $ 107 
Current period change for expected credit losses 42  54 
Write-offs of uncollectible premiums receivable 50  84 
Balance, end of period $ 10,282  $ 69  $ 8,922  $ 77 
Reinsurance Recoverables
The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at December 31, 2023 and 2022, and the changes in the allowance for estimated uncollectible reinsurance for the twelve months ended December 31, 2023 and 2022.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5.                                      ALLOWANCE FOR EXPECTED CREDIT LOSSES (Continued)
At and For the Twelve Months Ended December 31, 2023 At and For the Twelve Months Ended December 31, 2022
(in millions) Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance Allowance for Estimated Uncollectible Reinsurance Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance Allowance for Estimated Uncollectible Reinsurance
 
Balance, beginning of period $ 8,063  $ 132  $ 8,452  $ 141 
Current period change for estimated uncollectible reinsurance (14) (9)
Write-offs of uncollectible reinsurance recoverables —  — 
Balance, end of period $ 8,143  $ 118  $ 8,063  $ 132 
Of the total reinsurance recoverables at December 31, 2023, $5.74 billion, or 87%, were rated by A.M. Best Company, after deducting mandatory pools and associations and before allowances for estimated uncollectible reinsurance.  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.
Contractholder Receivables
The following table presents the balances of contractholder receivables, net of the allowance for expected credit losses, at December 31, 2023 and 2022, and the changes in the allowance for expected credit losses for the twelve months ended December 31, 2023 and 2022.
At and For the Twelve Months Ended December 31, 2023 At and For the Twelve Months Ended December 31, 2022
(in millions) Contractholder Receivables, Net of Allowance for Expected Credit Losses Allowance for Expected Credit Losses Contractholder Receivables, Net of Allowance for Expected Credit Losses Allowance for Expected Credit Losses
 
Balance, beginning of period $ 3,579  $ 17  $ 3,890  $ 21 
Current period change for expected credit losses 3  (3)
Write-offs of uncollectible contractholder receivables —  1 
Balance, end of period $ 3,249  $ 20  $ 3,579  $ 17 


6.                                      REINSURANCE
The Company’s consolidated financial statements reflect the effects of assumed and ceded reinsurance transactions. Assumed reinsurance refers to the acceptance of certain insurance risks that other insurance companies have underwritten. Ceded reinsurance involves transferring certain insurance risks (along with the related written and earned premiums) the Company has underwritten to other insurance companies who agree to share these risks. The primary purpose of ceded reinsurance is to protect the Company, at a cost, from losses in excess of the amount it is prepared to accept and to protect the Company’s capital. Reinsurance is placed on both a quota-share and excess-of-loss basis.  Ceded reinsurance arrangements do not discharge the Company as the primary insurer, except for instances where the primary policy or policies have been novated, such as in certain structured settlement agreements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6.                                      REINSURANCE (Continued)
The Company utilizes a corporate catastrophe excess-of-loss reinsurance treaty with unaffiliated reinsurers to manage its exposure to losses resulting from catastrophes and to protect its capital.  In addition to the coverage provided under this treaty, the Company also utilizes a reinsurance agreement entered into in connection with catastrophe bonds issued by Long Point Re IV to protect against certain weather-related and earthquake losses in the Northeastern United States and a Northeast property catastrophe excess-of-loss reinsurance treaty to protect against losses resulting from weather-related and earthquake catastrophes in the Northeastern United States. The Company also utilizes excess-of-loss treaties to protect against earthquake losses up to a certain threshold in Business Insurance (for certain markets) and for Personal Insurance, and several reinsurance treaties specific to its international operations.
The Company monitors the financial condition of its reinsurers under voluntary reinsurance arrangements to evaluate the collectability of amounts due from reinsurers and as a basis for determining the reinsurers with which the Company conducts ongoing business.  In addition, in the ordinary course of business, the Company may become involved in coverage disputes with its reinsurers.  Some of these disputes could result in lawsuits and arbitrations brought by or against the reinsurers to determine the Company’s rights and obligations under the various reinsurance agreements. The Company employs dedicated specialists and strategies to manage reinsurance collections and disputes.
Included in reinsurance recoverables are amounts related to involuntary reinsurance arrangements.  The Company is required to participate in various involuntary reinsurance arrangements through assumed reinsurance, principally with regard to residual market mechanisms in workers’ compensation and automobile insurance, as well as homeowners’ insurance in certain coastal areas. In addition, the Company provides services for several of these involuntary arrangements (mandatory pools and associations) under which it writes such residual market business directly, then cedes 100% of this business to the mandatory pool.  Such participations and servicing arrangements are arranged to mitigate credit risk to the Company, as any ceded balances are jointly backed by all the pool members.
Also included in reinsurance recoverables are amounts related to certain structured settlements.  Structured settlements are 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 structured settlement is included in reinsurance recoverables and the related claim cost is included in the liability for claims and claim adjustment expense reserves, as the Company retains the contingent liability to the claimant.  If it is expected that the life insurance company is not able to pay, the Company would recognize an impairment of the related reinsurance recoverable if, and to the extent, the purchased annuities are not covered by state guaranty associations.  In the event that the life insurance company fails to make the required annuity payments, the Company would be required to make such payments.
The following is a summary of reinsurance financial data reflected in the consolidated statement of income:
(for the year ended December 31, in millions) 2023 2022 2021
Written premiums
Direct $ 40,983  $ 36,648  $ 33,180 
Assumed 1,989  1,228  1,064 
Ceded (2,771) (2,462) (2,285)
Total net written premiums $ 40,201  $ 35,414  $ 31,959 
Earned premiums
Direct $ 38,796  $ 34,948  $ 31,977 
Assumed 1,614  1,145  1,032 
Ceded (2,649) (2,330) (2,154)
Total net earned premiums $ 37,761  $ 33,763  $ 30,855 
Percentage of assumed earned premiums to net earned premiums 4.3  % 3.4  % 3.3  %
Ceded claims and claim adjustment expenses incurred $ 1,462  $ 1,187  $ 1,184 
Ceded premiums include the premiums paid for coverage provided by the Company’s catastrophe bonds.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6.                                      REINSURANCE (Continued)
Reinsurance recoverables include amounts recoverable on both paid and unpaid claims and claim adjustment expenses and were as follows:
(at December 31, in millions) 2023 2022
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses $ 3,895  $ 3,792 
Gross structured settlements 2,707  2,802 
Mandatory pools and associations 1,659  1,601 
     Gross reinsurance recoverables 8,261  8,195 
Allowance for estimated uncollectible reinsurance (118) (132)
    Net reinsurance recoverables $ 8,143  $ 8,063 
Terrorism Risk Insurance Program
The Terrorism Risk Insurance Program is a Federal program administered by the Department of the Treasury authorized through December 31, 2027 that provides for a system of shared public and private compensation for certain insured losses resulting from certified acts of terrorism.
In order for a loss to be covered under the program (subject losses), the loss must meet certain aggregate industry loss minimums and must be the result of an event that is certified as an act of terrorism by the U.S. Secretary of the Treasury, in consultation with the Secretary of Homeland Security and the Attorney General of the United States.  The annual aggregate industry loss minimum under the program is $200 million.  The program excludes from participation the following types of insurance: Federal crop insurance, private mortgage insurance, financial guaranty insurance, medical malpractice insurance, health or life insurance, flood insurance, reinsurance, commercial automobile, professional liability (other than directors’ and officers’), surety, burglary and theft, and farm-owners multi-peril.  In the case of a war declared by Congress, only workers’ compensation losses are covered by the program. All commercial property and casualty insurers licensed in the United States are generally required to participate in the program. Under the program, a participating insurer, in exchange for making terrorism insurance available, is entitled to be reimbursed by the Federal Government for 80% of subject losses, after an insurer deductible, subject to an annual cap. 
The deductible for any calendar year is equal to 20% of the insurer’s direct earned premiums for covered lines for the preceding calendar year.  The Company’s estimated deductible under the program is $3.48 billion for 2024.  The annual cap limits the amount of aggregate subject losses for all participating insurers to $100 billion.  Once subject losses have reached the $100 billion aggregate during a program year, participating insurers will not be liable under the program for additional covered terrorism losses for that program year.  There have been no terrorism-related losses that have triggered program coverage since the program was established.  Given that the law establishing the program remains untested, there is substantial uncertainty as to how it will be applied if an act of terrorism is certified under the program.  In addition, application of the program to a specific event will depend upon whether the government has designated such event as a covered event. It is also possible that future legislative action could change or eliminate the program.  Further, given the unpredictable frequency and severity of terrorism losses, as well as the limited terrorism coverage in the Company’s own reinsurance program, future losses from acts of terrorism, particularly involving nuclear, biological, chemical or radiological events, could be material to the Company’s operating results, financial position and/or liquidity in future periods. In addition, the Company may not have sufficient resources to respond to claims arising from a high frequency of high severity natural catastrophes and/or of man-made catastrophic events involving conventional means.  While the Company seeks to manage its exposure to man-made catastrophic events involving conventional means, the Company may not have sufficient resources to respond to claims arising out of one or more man-made catastrophic events involving nuclear, biological, chemical or radiological means.


7.                                      GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The following table presents the carrying amount of the Company’s goodwill by segment.  Each reportable segment includes goodwill associated with the Company’s international business which is subject to the impact of changes in foreign currency exchange rates.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7.                                      GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)
(at December 31, in millions) 2023 2022
Business Insurance $ 2,585  $ 2,565 
Bond & Specialty Insurance 550  550 
Personal Insurance 815  811 
Other 26  26 
Total $ 3,976  $ 3,952 
Other Intangible Assets
The following tables present a summary of the Company’s other intangible assets by major asset class:
(at December 31, 2023, in millions) Gross
Carrying
Amount		 Accumulated
Amortization		 Net
Subject to amortization
Customer-related $ 100  $ 59  $ 41 
Contract-based (1)
 204  194  10 
Total subject to amortization 304  253  51 
Not subject to amortization 226  —  226 
Total $ 530  $ 253  $ 277 
(at December 31, 2022, in millions) Gross
Carrying
Amount		 Accumulated
Amortization		 Net
Subject to amortization
Customer-related $ 96  $ 48  $ 48 
Contract-based (1)
 204  191  13 
Total subject to amortization 300  239  61 
Not subject to amortization 226  —  226 
Total $ 526  $ 239  $ 287 
___________________________________________
(1)Contract-based intangible assets subject to amortization are comprised of fair value adjustments on claims and claim adjustment expense reserves, reinsurance recoverables and other contract-related intangible assets.  Fair value adjustments recorded in connection with insurance acquisitions were based on management’s estimate of nominal claims and claim adjustment expense reserves and reinsurance recoverables.  The method used calculated a risk adjustment to a risk-free discounted reserve that would, if reserves ran off as expected, produce results that yielded the assumed cost-of-capital on the capital supporting the loss reserves.  The fair value adjustments are reported as other intangible assets on the consolidated balance sheet, and the amounts measured in accordance with the acquirer’s accounting policies for insurance contracts have been reported as part of the claims and claim adjustment expense reserves and reinsurance recoverables.  The intangible assets are being recognized into income over the expected payment pattern.  Because the time value of money and the risk adjustment (cost of capital) components of the intangible assets run off at different rates, the amount recognized in income may be a net benefit in some periods and a net expense in other periods.
Amortization expense of intangible assets was $12 million, $13 million and $14 million for the years ended December 31, 2023, 2022 and 2021, respectively. Amortization expense for all intangible assets subject to amortization is estimated to be $12 million in 2024, $11 million in 2025, $11 million in 2026, $8 million in 2027 and $2 million in 2028. Amortization expense for intangible assets arising from insurance contracts acquired in a business combination is estimated to be $2 million in 2024, $2 million in 2025, $1 million in 2026, $1 million in 2027 and $1 million in 2028.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES
Claims and claim adjustment expense reserves were as follows:
(at December 31, in millions) 2023 2022
Property-casualty $ 61,621  $ 58,643 
Accident and health 6  6 
Total $ 61,627  $ 58,649 
The following table presents a reconciliation of beginning and ending property casualty reserve balances for claims and claim adjustment expenses:
(at and for the year ended December 31, in millions) 2023 2022 2021
Claims and claim adjustment expense reserves at beginning of year $ 58,643  $ 56,897  $ 54,510 
Less reinsurance recoverables on unpaid losses 7,790  8,209  8,153 
Net reserves at beginning of year 50,853  48,688  46,357 
Estimated claims and claim adjustment expenses for claims arising in the current year
 26,159  23,308  20,698 
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years (38) (537) (484)
Total increases 26,121  22,771  20,214 
Claims and claim adjustment expense payments for claims arising in:
Current year 10,852  9,406  8,401 
Prior years 12,424  10,945  9,470 
Total payments 23,276  20,351  17,871 
Unrealized foreign exchange loss (gain) 106  (255) (12)
Net reserves at end of year 53,804  50,853  48,688 
Plus reinsurance recoverables on unpaid losses 7,817  7,790  8,209 
Claims and claim adjustment expense reserves at end of year $ 61,621  $ 58,643  $ 56,897 
Gross claims and claim adjustment expense reserves at December 31, 2023 increased by $2.98 billion over December 31, 2022, primarily reflecting the impacts of (i) catastrophe losses in 2023, (ii) higher volumes of insured exposures and (iii) loss cost trends for the current accident year, partially offset by (iv) claim payments made during 2023 and (v) net favorable prior year reserve development. Gross claims and claim adjustment expense reserves at December 31, 2022 increased by $1.75 billion over December 31, 2021, primarily reflecting the impacts of (i) higher volumes of insured exposures, (ii) loss cost trends for the current accident year and (iii) catastrophe losses in 2022, partially offset by (iv) claim payments made during 2022 and (v) net favorable prior year reserve development.
Reinsurance recoverables on unpaid losses at December 31, 2023 increased by $27 million over December 31, 2022, primarily reflecting the impact of catastrophe losses in 2023 and a higher level of recoverables from mandatory pools and associations, partially offset by cash collections and a decrease in structured settlements. Reinsurance recoverables on unpaid losses at December 31, 2022 decreased by $419 million from December 31, 2021, primarily reflecting cash collections and decreases in mandatory pools and associations and structured settlements.
Included in the claims and claim adjustment expense reserves are reserves for long-term disability and annuity claim payments, primarily arising from workers’ compensation insurance and workers’ compensation excess insurance policies, that are discounted to the present value of the estimated future payments.  The discount rates used were a range of 3.5% to 5.0% at both December 31, 2023 and 2022.  Total reserves net of the discount were $2.68 billion and $2.72 billion, and the related amount of discount was $1.10 billion and $1.12 billion, at December 31, 2023 and 2022, respectively.  Accretion of the discount is reported as part of “claims and claim adjustment expenses” in the consolidated statement of income and was $45 million, $46 million and $48 million for the years ended December 31, 2023, 2022 and 2021.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Prior Year Reserve Development
The following disclosures regarding reserve development are on a “net of reinsurance” basis.
2023
In 2023, estimated claims and claim adjustment expenses incurred included $38 million of net favorable development for claims arising in prior years, including $143 million of net favorable prior year reserve development and $45 million of accretion of discount that impacted the Company’s results of operations.
Business Insurance. Net unfavorable prior year reserve development in 2023 totaled $289 million, primarily driven by (i) higher than expected loss experience in the domestic operations’ general liability product line (excluding asbestos) for multiple accident years, including additions to reserves attributable to childhood sexual molestation and environmental claims in the Company’s run-off operations, (ii) an addition to asbestos reserves of $284 million and (iii) higher than expected loss experience in the domestic operations’ commercial automobile product line for recent accident years, partially offset by (iv) better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years.
Bond & Specialty Insurance. Net favorable prior year reserve development in 2023 totaled $285 million, primarily driven by better than expected loss experience in the domestic operations’ fidelity and surety product lines and in the general liability product line for management liability coverages for recent accident years.
Personal Insurance. Net favorable prior year reserve development in 2023 totaled $147 million, primarily driven by better than expected loss experience in the domestic operations’ homeowners and other product line for recent accident years.
2022
In 2022, estimated claims and claim adjustment expenses incurred included $537 million of net favorable development for claims arising in prior years, including $649 million of net favorable prior year reserve development and $46 million of accretion of discount that impacted the Company’s results of operations.
Business Insurance.  Net favorable prior year reserve development in 2022 totaled $381 million, primarily driven by the following:
•Workers’ compensation - better than expected loss experience in domestic operations for multiple accident years;
•Commercial property - better than expected loss experience in domestic operations for recent accident years; and
•Commercial multi-peril (excluding asbestos and environmental) - better than expected loss experience in domestic operations for recent accident years;
Partially offset by:
•Asbestos reserves - an addition of $212 million, primarily in the domestic operations’ general liability product line;
•General liability (excluding asbestos and environmental) - higher than expected loss experience in domestic operations for excess coverages for multiple accident years, as well as an increase to general liability reserves in the Company’s run-off operations; and
•Environmental reserves - an addition primarily in the domestic operations’ general liability product line.
Bond & Specialty Insurance.  Net favorable prior year reserve development in 2022 totaled $222 million, primarily driven by better than expected loss experience in the domestic operations’ fidelity and surety product lines for recent accident years.
Personal Insurance.  Net favorable prior year reserve development in 2022 totaled $46 million.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
2021
In 2021, estimated claims and claim adjustment expenses incurred included $484 million of net favorable development for claims arising in prior years, including $538 million of net favorable prior year reserve development and $48 million of accretion of discount that impacted the Company’s results of operations.
Business Insurance. Net favorable prior year reserve development in 2021 totaled $173 million, primarily driven by the following:
•Workers’ compensation - better than expected loss experience in domestic operations for multiple accident years;
•Commercial property - better than expected loss experience in domestic operations for recent accident years;
•International - better than expected loss experience for recent accident years; and
•Commercial automobile - better than expected loss experience in domestic operations for recent accident years;
Partially offset by:
•Asbestos reserves - an addition of $225 million, primarily in the domestic operations’ general liability product line;
•Other reserves - an addition related to run-off operations; and
•Environmental reserves - an addition primarily in the domestic operations’ general liability product line.
Bond & Specialty Insurance.  Net favorable prior year reserve development in 2021 totaled $105 million, primarily driven by better than expected loss experience in the domestic operations’ fidelity and surety product lines for multiple accident years, partially offset by higher than expected loss experience in the general liability product line for management liability coverages for multiple accident years.
Personal Insurance.  Net favorable prior year reserve development in 2021 totaled $260 million, primarily driven by better than expected loss experience in domestic operations’ in both the homeowners and other and automobile product lines for recent accident years.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Claims Development
The following is a summary of claims and claim adjustment expense reserves, including certain components, for the Company’s major product lines by reporting segment at December 31, 2023.
(at December 31, 2023, in millions) Net Undiscounted
Claims and Claim
Adjustment Expense
Reserves		 Discount
(Net of
Reinsurance)		 Subtotal:
Net Claims and Claim Adjustment
Expense Reserves		 Reinsurance
Recoverables on
Unpaid Losses (4)		 Claims and Claim
Adjustment
Expense
Reserves
Business Insurance
General liability $ 10,251  $ (132) $ 10,119  $ 1,052  $ 11,171 
Commercial property 1,160  —  1,160  464  1,624 
Commercial multi-peril 5,205  —  5,205  207  5,412 
Commercial automobile 4,263  —  4,263  299  4,562 
Workers’ compensation (1)
 16,104  (912) 15,192  614  15,806 
Bond & Specialty Insurance
General liability 2,432  —  2,432  276  2,708 
Fidelity and surety 611  —  611  24  635 
Personal Insurance
Automobile 4,095  —  4,095  345  4,440 
Homeowners (excluding Other) 2,439  —  2,439  64  2,503 
International - Canada 765  —  765  18  783 
Subtotal — claims and allocated claim adjustment expenses for the products presented in the development tables below
 47,325  (1,044) 46,281  3,363  49,644 
Other insurance contracts (2)
 4,753  (4) 4,749  1,814  6,563 
Unallocated loss adjustment expense reserves
 2,689  —  2,689  14  2,703 
Structured settlements (3)
 —  —  —  2,663  2,663 
Other 85  —  85  (37) 48 
Total property-casualty 54,852  (1,048) 53,804  7,817  61,621 
Accident and health —  —  —  6  6 
Total $ 54,852  $ (1,048) $ 53,804  $ 7,823  $ 61,627 
___________________________________________
(1)Net discount amount includes discount of $48 million on reinsurance recoverables for long-term disability and annuity claim payments.
(2)Primarily includes residual market, international (other than operations in Canada within the Personal Insurance segment) and runoff assumed reinsurance business.
(3)Includes structured settlements in cases where the Company did not receive a release from the claimant.
(4)Total reinsurance recoverables (on paid and unpaid losses) at December 31, 2023 were $8.14 billion.
The claim development tables that follow present, by accident year, incurred and cumulative paid claims and allocated claim adjustment expense on a historical basis.  This claim development information is presented on an undiscounted, net of reinsurance basis for ten years, or the number of years for which claims incurred typically remain outstanding if less than ten years. The claim development tables also provide the historical average annual percentage payout of incurred claims by age, net of reinsurance, as supplementary information (identified as unaudited in the tables below). The historical average annual percentage payout for incurred claims is subject to variability due to the impact of both large claim activity and subrogation recoveries, among other items.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Business Insurance
General Liability
(dollars in millions)
For the Years Ended December 31,
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Unaudited
Accident Year IBNR Reserves Dec 31, 2023 Cumulative Number of Reported Claims
2014 $ 976  $ 989  $ 983  $ 948  $ 956  $ 1,013  $ 988  $ 979  $ 971  $ 968  $ 70  22,665 
2015 998  956  923  967  1,057  1,087  1,072  1,082  1,110  94  21,845 
2016 1,075  1,058  1,087  1,187  1,204  1,179  1,185  1,183  116  20,755 
2017 1,133  1,143  1,196  1,234  1,226  1,243  1,288  151  19,578 
2018 1,253  1,312  1,344  1,395  1,477  1,530  195  19,870 
2019 1,447  1,486  1,498  1,567  1,706  362  19,232 
2020 1,467  1,493  1,470  1,577  496  16,317 
2021 1,591  1,589  1,628  780  14,682 
2022 1,696  1,736  1,079  16,311 
2023 1,998  1,789  11,949 
Total $ 14,724 
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year Unaudited
2014 $ 37  $ 163  $ 321  $ 515  $ 640  $ 750  $ 805  $ 832  $ 849  $ 868 
2015 36  137  336  558  740  828  875  927  975 
2016 35  191  421  649  758  858  951  991 
2017 40  180  378  552  724  914  1,029  Liability for Claims
2018 42  202  441  709  939  1,146  And Allocated Claim
2019 51  233  482  816  1,074  Adjustment Expenses,
2020 61  244  458  770  Net of Reinsurance
2021 67  231  493 
2022 81  302  2014 - Before
2023 54  2023 2014
Total $ 7,702  $ 7,022  $ 3,229 
Total net liability $ 10,251 
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Unaudited
Years 1 2 3 4 5 6 7 8 9 10
3.4  % 11.3  % 16.1  % 18.5  % 13.7  % 11.2  % 6.7  % 3.6  % 3.1  % 2.0  %
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Commercial Property
(dollars in millions)
For the Years Ended December 31,
2019 2020 2021 2022 2023
Incurred Claims and Allocated Claims Adjustment Expenses, Net of Reinsurance
Unaudited
Accident Year IBNR Reserves December 31, 2023 Cumulative Number of Reported Claims
2019 $ 1,069  $ 1,034  $ 1,031  $ 1,039  $ 1,031  $ 2  25,453 
2020 1,107  1,025  1,005  993  32  25,692 
2021 1,236  1,190  1,190  (11) 25,743 
2022 1,309  1,369  (15) 28,594 
2023 1,268  160  25,396 
Total $ 5,851 
Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance
Unaudited
Liability for Claims
Accident Year And Allocated Claim
2019 $ 610  $ 957  $ 1,001  $ 1,012  $ 1,013  Adjustment Expenses,
2020 580  857  907  932  Net of Reinsurance
2021 645  1,068  1,141 
2022 624  1,113  2019 - Before
2023 614  2023 2019
Total $ 4,813  $ 1,038  $ 122 
Total net liability $ 1,160 
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
  Unaudited
Years 1 2 3 4 5
  53.2  % 33.2  % 5.2  % 1.8  % —  %
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Commercial Multi-Peril
(dollars in millions)
For the Years Ended December 31,
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Unaudited
Accident Year IBNR Reserves December 31, 2023 Cumulative Number of Reported Claims
2014 $ 1,663  $ 1,627  $ 1,625  $ 1,617  $ 1,626  $ 1,627  $ 1,627  $ 1,622  $ 1,619  $ 1,619  $ 18  78,565 
2015 1,568  1,625  1,593  1,597  1,606  1,593  1,584  1,571  1,563  18  72,444 
2016 1,662  1,623  1,598  1,590  1,601  1,587  1,579  1,578  29  69,551 
2017 1,872  1,928  1,956  1,919  1,935  1,943  1,930  61  72,592 
2018 1,976  2,114  2,092  2,112  2,121  2,127  76  79,965 
2019 2,017  2,087  2,089  2,103  2,103  114  68,272 
2020 2,142  2,141  2,126  2,111  310  70,349 
2021 2,164  2,097  2,097  357  57,321 
2022 2,502  2,533  550  52,447 
2023 2,781  1,080  44,311 
Total $ 20,442 
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year Unaudited
2014 $ 628  $ 956  $ 1,154  $ 1,328  $ 1,448  $ 1,512  $ 1,544  $ 1,560  $ 1,577  $ 1,589 
2015 595  970  1,144  1,310  1,409  1,452  1,489  1,512  1,523 
2016 585  950  1,133  1,278  1,373  1,437  1,477  1,510 
2017 716  1,199  1,388  1,531  1,674  1,763  1,815  Liability for Claims
2018 792  1,302  1,500  1,669  1,815  1,917  And Allocated Claim
2019 707  1,187  1,423  1,628  1,801  Adjustment Expenses,
2020 791  1,180  1,373  1,547  Net of Reinsurance
2021 744  1,206  1,437 
2022 817  1,476  2014 - Before
2023 935  2023 2014
Total $ 15,550  $ 4,892  $ 313 
Total net liability $ 5,205 
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Unaudited
Years 1 2 3 4 5 6 7 8 9 10
36.1  % 22.9  % 10.7  % 9.1  % 7.0  % 4.0  % 2.4  % 1.6  % 0.8  % 0.8  %
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Commercial Automobile
(dollars in millions)
For the Years Ended December 31,
2019 2020 2021 2022 2023
Incurred Claims and Allocated Claims Adjustment
Expenses, Net of Reinsurance
Unaudited
Accident Year IBNR Reserves December 31, 2023 Cumulative Number of Reported Claims
2019 $ 1,835  $ 1,951  $ 1,976  $ 1,992  $ 2,041  $ 90  207,380 
2020 1,788  1,677  1,621  1,558  180  143,035 
2021 1,741  1,757  1,786  323  148,739 
2022 1,939  2,040  636  158,945 
2023 2,245  1,238  149,934 
Total $ 9,670 
Cumulative Paid Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance
Unaudited
Liability for Claims
Accident Year And Allocated Claim
2019 $ 539  $ 934  $ 1,269  $ 1,577  $ 1,794  Adjustment Expenses,
2020 437  696  958  1,192  Net of Reinsurance
2021 453  800  1,135 
2022 540  966  2019 - Before
2023 589  2023 2019
Total $ 5,676  $ 3,994  $ 269 
Total net liability $ 4,263 
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
Unaudited
Years 1 2 3 4 5
26.5  % 19.1  % 17.3  % 15.1  % 10.6  %
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Workers’ Compensation
(dollars in millions)
For the Years Ended December 31,
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Unaudited
Accident Year IBNR Reserves December 31, 2023 Cumulative Number of Reported Claims
2014 $ 2,554  $ 2,553  $ 2,547  $ 2,476  $ 2,430  $ 2,393  $ 2,352  $ 2,336  $ 2,277  $ 2,234  $ 300  131,666 
2015 2,644  2,585  2,505  2,441  2,372  2,279  2,220  2,155  2,097  349  131,239 
2016 2,768  2,690  2,569  2,473  2,372  2,300  2,235  2,151  315  132,006 
2017 2,779  2,681  2,584  2,483  2,439  2,342  2,243  403  129,555 
2018 2,744  2,687  2,599  2,503  2,416  2,318  478  126,699 
2019 2,680  2,714  2,699  2,632  2,521  566  120,548 
2020 2,559  2,530  2,433  2,271  670  96,891 
2021 2,356  2,349  2,294  721  95,329 
2022 2,293  2,294  966  102,371 
2023 2,373  1,386  88,578 
Total $ 22,796 
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year Unaudited
2014 $ 455  $ 944  $ 1,224  $ 1,399  $ 1,505  $ 1,581  $ 1,634  $ 1,672  $ 1,703  $ 1,728 
2015 430  893  1,154  1,310  1,411  1,470  1,520  1,547  1,574 
2016 421  873  1,118  1,272  1,367  1,433  1,486  1,522 
2017 433  890  1,154  1,314  1,418  1,490  1,544  Liability for Claims
2018 440  919  1,169  1,330  1,440  1,516  And Allocated Claim
2019 466  951  1,229  1,402  1,518  Adjustment Expenses,
2020 389  794  1,017  1,164  Net of Reinsurance
2021 427  848  1,076 
2022 388  830  2014 - Before
2023 444  2023 2014
Total $ 12,916  $ 9,880  $ 6,224 
Total net liability $ 16,104 
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Unaudited
Years 1 2 3 4 5 6 7 8 9 10
18.9  % 20.1  % 11.2  % 7.1  % 4.7  % 3.1  % 2.4  % 1.6  % 1.3  % 1.1  %
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Bond & Specialty Insurance
General Liability
(dollars in millions)
For the Years Ended December 31,
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Unaudited
Accident Year IBNR Reserves December 31, 2023 Cumulative Number of Reported Claims
2014 $ 549  $ 571  $ 563  $ 518  $ 473  $ 452  $ 450  $ 449  $ 451  $ 453  $ 15  4,383 
2015 528  524  486  437  395  414  413  414  407  15  4,233 
2016 512  511  504  520  514  510  511  509  18  4,412 
2017 534  517  526  493  524  554  565  46  4,616 
2018 530  548  585  595  605  612  62  4,883 
2019 588  653  665  670  662  79  5,466 
2020 772  753  741  698  145  5,446 
2021 812  756  683  256  5,568 
2022 803  763  402  4,819 
2023 862  605  4,199 
Total $ 6,214 
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year Unaudited
2014 $ 38  $ 150  $ 239  $ 312  $ 367  $ 407  $ 418  $ 426  $ 431  $ 434 
2015 38  141  234  310  338  348  381  383  387 
2016 30  141  233  313  378  446  463  472 
2017 38  155  262  340  404  450  488  Liability for Claims
2018 49  182  290  383  458  504  And Allocated Claim
2019 51  189  323  410  513  Adjustment Expenses,
2020 52  210  333  447  Net of Reinsurance
2021 78  210  316 
2022 69  212  2014 - Before
2023 90  2023 2014
Total $ 3,863  $ 2,351  $ 81 
Total net liability $ 2,432 
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Unaudited
Years 1 2 3 4 5 6 7 8 9 10
8.4  % 21.7  % 18.8  % 15.6  % 11.8  % 8.1  % 5.1  % 1.4  % 1.0  % 0.6  %
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Fidelity and Surety
   
(dollars in millions)
For the Years Ended December 31,    
2019 2020 2021 2022 2023 IBNR Reserves December 31, 2023 Cumulative Number of Reported Claims
Incurred Claims and Allocated Claims Adjustment
Expenses, Net of Reinsurance
Accident Year Unaudited  
2019 $ 203  $ 193  $ 200  $ 185  $ 175  $ 8  896 
2020   274  203  219  222  71  805 
2021     284  172  93  33  602 
2022       310  261  147  715 
2023         353  175  682 
        Total $ 1,104     
  Cumulative Paid Claims and Allocated Claim    
Adjustment Expenses, Net of Reinsurance    
Accident Year Unaudited   Liability for Claims
            And Allocated Claim
2019 $ 49  $ 121  $ 147  $ 154  $ 162  Adjustment Expenses,
2020   50  79  110  125  Net of Reinsurance
2021     25  50  57     
2022       36  82  2019 - Before
2023         96  2023 2019
        Total $ 522  $ 582  $ 29 
          Total net liability $ 611 
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
  Unaudited
Years 1 2 3 4 5
  23.7  % 24.7  % 12.0  % 5.5  % 4.3  %

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Personal Insurance
Automobile
(dollars in millions)
  For the Years Ended December 31,    
  2019 2020 2021 2022 2023 IBNR Reserves December 31, 2023 Cumulative Number of Reported Claims
  Incurred Claims and Allocated Claims Adjustment
Expenses, Net of Reinsurance
Accident Year Unaudited  
2019 $ 3,362  $ 3,361  $ 3,333  $ 3,339  $ 3,343  $ 29  1,033,672 
2020   2,829  2,764  2,729  2,717  73  810,855 
2021     3,716  3,770  3,751  192  1,000,225 
2022       4,755  4,784  511  1,128,273 
2023         5,206  1,535  1,009,660 
        Total $ 19,801     
  Cumulative Paid Claims and Allocated Claim    
Adjustment Expenses, Net of Reinsurance    
Accident Year Unaudited   Liability for Claims
            And Allocated Claim
2019 $ 1,933  $ 2,650  $ 2,958  $ 3,159  $ 3,259  Adjustment Expenses,
2020   1,571  2,126  2,411  2,561  Net of Reinsurance
2021     2,062  2,981  3,350     
2022       2,683  3,855  2019 - Before
2023         2,888  2023 2019
        Total $ 15,913  $ 3,888  $ 207 
          Total net liability $ 4,095 
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
  Unaudited
Years 1 2 3 4 5
  56.4  % 22.7  % 9.9  % 5.8  % 3.0  %
168

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Homeowners (excluding Other)
(dollars in millions)
  For the Years Ended December 31,    
  2019 2020 2021 2022 2023 IBNR Reserves December 31, 2023 Cumulative Number of Reported Claims
  Incurred Claims and Allocated Claims Adjustment
Expenses, Net of Reinsurance
Accident Year Unaudited  
2019 $ 2,297  $ 2,344  $ 2,343  $ 2,341  $ 2,334  $ —  181,521 
2020   3,019  2,967  2,909  2,869  26  221,208 
2021     3,463  3,486  3,444  52  233,584 
2022       4,277  4,184  167  233,740 
2023         5,171  1,367  233,201 
        Total $ 18,002     
  Cumulative Paid Claims and Allocated Claim    
Adjustment Expenses, Net of Reinsurance    
Accident Year Unaudited   Liability for Claims
            And Allocated Claim
2019 $ 1,613  $ 2,179  $ 2,269  $ 2,300  $ 2,316  Adjustment Expenses,
2020   2,019  2,673  2,755  2,802  Net of Reinsurance
2021     2,334  3,235  3,344     
2022       2,537  3,828  2019 - Before
2023         3,369  2023 2019
        Total $ 15,659  $ 2,343  $ 96 
          Total net liability $ 2,439 
Average Annual Percentage Payout of Incurred
Claims by Age, Net of Reinsurance
  Unaudited
Years 1 2 3 4 5
  66.6  % 26.0  % 3.3  % 1.5  % 0.7  %
169

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
International - Canada
(dollars in millions)
  For the Years Ended December 31, IBNR Reserves December 31, 2023 Cumulative
  2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Number of
Accident Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Reported
Year Unaudited   Claims
2014 $ 420  $ 436  $ 436  $ 425  $ 418  $ 415  $ 414  $ 411  $ 420  $ 421  $ (3) 52,032 
2015   353  353  353  349  351  350  345  345  346  1  44,955 
2016     354  401  401  411  411  409  411  412  (3) 45,502 
2017       339  374  395  395  395  398  401  2  46,521 
2018         431  453  454  459  462  465  3  50,328 
2019           436  431  452  454  456  6  47,916 
2020             340  327  314  308  24  30,036 
2021               342  329  321  41  28,042 
2022                 379  388  59  32,872 
2023                   446  106  30,774 
                  Total $ 3,964     
Accident Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance    
Year Unaudited      
2014 $ 186  $ 260  $ 296  $ 324  $ 355  $ 376  $ 393  $ 407  $ 411  $ 416     
2015   158  221  249  277  301  315  329  336  339     
2016     207  278  303  337  360  377  390  396     
2017       178  252  291  314  340  361  375  Liability for Claims
2018         215  299  333  372  403  420  And Allocated Claim
2019           212  283  319  357  387  Adjustment Expenses,
2020             141  190  214  233  Net of Reinsurance
2021               126  185  214     
2022                 165  239  2014 - Before
2023                   200  2023 2014
                  Total $ 3,219  $ 745  $ 20 
                    Total net liability $ 765 
  Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
  Unaudited
Years 1 2 3 4 5 6 7 8 9 10
  45.0  % 17.6  % 8.0  % 7.4  % 6.7  % 4.5  % 3.6  % 2.3  % 0.8  % 1.2  %
The incurred and paid amounts have been translated from the local currency to U.S. dollars using the December 31, 2023 spot rate for all years presented in the table above in order to isolate changes in foreign exchange rates from loss development.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Methodology for Estimating Incurred But Not Reported (IBNR) Reserves
Claims and claim adjustment expense reserves represent management’s estimate of the ultimate liability for unpaid losses and loss adjustment expenses for claims that have been reported and claims that have been incurred but not yet reported (IBNR) as of the balance sheet date.  Claims and claim adjustment expense reserves do not represent an exact calculation of the liability, but instead represent management estimates, primarily utilizing actuarial expertise and projection methods that develop estimates for the ultimate cost of claims and claim adjustment expenses.  Because the establishment of claims and claim adjustment expense reserves is an inherently uncertain process involving estimates and judgment, currently estimated claims and claim adjustment expense reserves may change.  The Company reflects changes to the reserves in the results of operations in the period the estimates are changed.
Cumulative amounts paid and case reserves held as of the balance sheet date are subtracted from the estimate of the ultimate cost of claims and claim adjustment expenses to derive incurred but not reported (IBNR) reserves.  Accordingly, IBNR reserves include the cost of unreported claims, development on known claims and re-opened claims.  This approach to estimating IBNR reserves has been in place for many years, with no material changes in methodology in the past year.
Detailed claim data is typically insufficient to produce a reliable indication of the initial estimate for ultimate claims and claim adjustment expenses for an accident year.  As a result, the initial estimate for an accident year is generally based on an exposure-based method using either the loss ratio projection or the expected loss method.  The loss ratio projection method, which is typically used for guaranteed-cost business, develops an initial estimate of ultimate claims and claim adjustment expenses for an accident year by multiplying earned premium for the accident year by a projected loss ratio.  The projected loss ratio is determined by analyzing prior period experience, and adjusting for loss cost trends, rate level differences, mix of business changes and other known or observed factors influencing the accident year relative to prior accident years.  The expected loss method, which is typically used for loss sensitive business, develops an initial estimate of ultimate claims and claim adjustment expenses for an accident year by analyzing exposures by account.
For prior accident years, the following estimation and analysis methods are principally used by the Company’s actuaries to estimate the ultimate cost of claims and claim adjustment expenses.  These estimation and analysis methods are typically referred to as conventional actuarial methods.
•The paid loss development method assumes that the future change (positive or negative) in cumulative paid losses for a given cohort of claims will occur in a stable, predictable pattern from year-to-year, consistent with the pattern observed in past cohorts.
•The case incurred development method is the same as the paid loss development method but is based on cumulative case-incurred losses rather than paid losses.
•The Bornhuetter-Ferguson method uses an initial estimate of ultimate losses for a given product line reserve component, typically expressed as a ratio to earned premium.  The method assumes that the ratio of additional claim activity to earned premium for that component is relatively stable and predictable over time and that actual claim activity to date is not a credible predictor of further activity for that component.  The method is used most often for more recent accident years where claim data is sparse and/or volatile, with a transition to other methods as the underlying claim data becomes more voluminous and therefore more credible.
•The average value analysis combined with the reported claim development method assumes that average claim values are stable and predictable over time for a particular cohort of claims.  It is typically limited to analysis at more granular levels, such as coverage or hazard/peril, where a more homogeneous subset of claims produce a more stable and fairly predictable average value.  The reported claim development method is the same as the paid loss development method but uses changes in cumulative claim counts to produce estimates of ultimate claim counts rather than ultimate dollars.  The resulting estimate of ultimate claim counts by cohort is multiplied by an average value per claim from an average value analysis to obtain estimated ultimate claims and claim adjustment expenses.
While these are the principal methods utilized, the Company’s actuaries have available to them the full range of actuarial methods developed by the casualty actuarial profession. The Company’s actuaries are also regularly monitoring developments within the profession for advances in existing techniques or the creation of new techniques that might improve current and future estimates. Most actuarial methods assume that past patterns demonstrated in the data will repeat themselves in the future.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
For certain reserve components where this assumption may not hold, such as asbestos and environmental reserves, conventional actuarial methods are not utilized by the Company.
Methodology for Determining Cumulative Number of Reported Claims
A claim file is created when the Company is notified of an actual demand for payment, notified of an event that may lead to a demand for payment or when it is determined that a demand for payment could possibly lead to a future demand for payment on another coverage on the same policy or on another policy.  Claim files are generally created for a policy at the claimant by coverage level, depending on the particular facts and circumstances of the underlying event.
For Business Insurance and for Personal Insurance, claim file information is summarized such that the Company generally recognizes one count for each policy claim event by internal regulatory line of business, regardless of the number of claimants or coverages involved.  The claims counts are then accumulated and reported by product line.  While the methodology is generally consistent within each segment for the product lines displayed, there are some minor differences between and within segments.  For Bond & Specialty Insurance, the Company generally recognizes one count per coverage per policy claim event and one count per bond per surety claim event.
For purposes of the claims development tables above, claims reported for direct business are counted even if they eventually close with no loss payment, except in the case of (i) deductible business, where the claim is not counted until the case incurred claim estimate is above the deductible and (ii) International-Canada reported claim counts where claims closed with no loss payment are not counted.  Note that claims with zero claim dollars may still generate some level of claim adjustment expenses.  Claim counts for assumed business are included only to the extent such counts are available. The Company generally does not receive claim count information for which the underlying claim activity is handled by others, including pools and associations.  The Company does not generate claim counts for ceded business. The methods used to summarize claim counts have not changed significantly over the time periods reported in the tables above.
The Company cautions against using the summarized claim count information provided in this disclosure in attempting to project ultimate loss payouts by product line. The Company generally finds claim count data to be useful only on a more granular basis than the aggregated basis disclosed in the claim development tables above, as the risks, average values and other dynamics of the claim process can vary materially by the cause of loss and coverage within product line.  For example, in Personal Automobile, the introduction of roadside assistance coverage resulted in a significant increase in claim counts with a low average claim cost.  For this reason the Company varies its approach to, and in many cases the level of aggregation for, counting claims for internal analysis purposes depending on the particular granular analysis performed.
Asbestos and Environmental Reserves
At December 31, 2023 and 2022, the Company’s claims and claim adjustment expense reserves included $1.76 billion and $1.68 billion, respectively, for asbestos and environmental-related claims, net of reinsurance.
It is difficult to estimate the reserves for asbestos and environmental-related claims due to the vagaries of court coverage decisions, plaintiffs’ expanded theories of liability, the risks inherent in complex litigation and other uncertainties, including, without limitation, those which are set forth below.
Asbestos Reserves. Because each policyholder presents different liability and coverage issues, the Company generally reviews the exposure presented by each policyholder with open claims at least annually.  Among the factors the Company may consider in the course of this review are: available insurance coverage, including the role of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an analysis of the policyholder’s potential liability; the jurisdictions involved; past and anticipated future claim activity and loss development on pending claims; past settlement values of similar claims; allocated claim adjustment expense; the potential role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and applicable coverage defenses or determinations, if any, including the determination as to whether or not an asbestos claim is a products/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim.
In the third quarter of 2023, the Company completed its annual in-depth asbestos claim review, including a review of policyholders with open claims and litigation cases for potential product and “non-product” liability. The number of policyholders with open asbestos claims was relatively flat compared to 2022, while net asbestos payments were slightly lower than 2022.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
Payments on behalf of these policyholders continue to be influenced by an increase in severity for certain policyholders and a high level of litigation activity in a limited number of jurisdictions where individuals alleging serious asbestos-related injury, primarily mesothelioma, continue to target defendants who were not traditionally primary targets of asbestos litigation.
The Company’s quarterly asbestos reserve reviews include an analysis of exposure and claim payment patterns by policyholder, as well as recent settlements, policyholder bankruptcies, judicial rulings and legislative actions.  The Company also analyzes developing payment patterns among policyholders and the assumed reinsurance component of reserves, as well as projected reinsurance billings and recoveries. In addition, the Company reviews its historical gross and net loss and expense paid experience, year-by-year, to assess any emerging trends, fluctuations, or characteristics suggested by the aggregate paid activity. Conventional actuarial methods are not utilized to establish asbestos reserves, and the Company’s evaluations have not resulted in a reliable method to determine a meaningful average asbestos defense or indemnity payment.
The completion of these reviews and analyses in 2023, 2022 and 2021 resulted in $284 million, $212 million and $225 million increases, respectively, to the Company’s net asbestos reserves. In each year, the reserve increases were primarily driven by increases in the Company’s estimate of projected settlement and defense costs related to a broad number of policyholders. The increase in the estimate of projected settlement and defense costs primarily resulted from payment trends that continue to be higher than previously anticipated due to the continued high level of mesothelioma claim filings and the impact of the current litigation environment surrounding those claims discussed above. The 2023 charge also included an additional increase to strengthen the Company’s carried reserve position relative to the range of reasonable estimates. Over the past decade, the property and casualty insurance industry, including the Company, has experienced net unfavorable prior year reserve development with regard to asbestos reserves, but the Company believes that over that period there has been a reduction in the volatility associated with the Company’s overall asbestos exposure as the overall asbestos environment has evolved from one dominated by exposure to significant litigation risks, particularly coverage disputes relating to policyholders in bankruptcy who were asserting that their claims were not subject to the aggregate limits contained in their policies, to an environment primarily driven by a frequency of litigation related to individuals with mesothelioma. The Company’s overall view of the current underlying asbestos environment is essentially unchanged from recent periods, and there remains a high degree of uncertainty with respect to future exposure to asbestos claims.
Net asbestos paid loss and loss expenses in 2023, 2022 and 2021 were $212 million, $245 million and $221 million, respectively. Approximately 1%, 2% and 9% of total net paid losses in 2023, 2022 and 2021, respectively, related to policyholders with whom the Company entered into settlement agreements that limit those policyholders’ ability to present future claims to the Company.
Environmental Reserves. In establishing environmental reserves, the Company evaluates the exposure presented by each policyholder and the anticipated cost of resolution, if any. These claims are mainly brought pursuant to various state or federal statutes that require a liable party to undertake or pay for environmental remediation. Liability under these statutes may be joint and several with other responsible parties. In the course of its analysis, the Company generally considers the probable liability, available coverage and relevant judicial interpretations. In addition, the Company considers the many variables presented, such as: the nature of the alleged activities of the policyholder at each site; the number of sites; the total number of potentially responsible parties at each site; the nature of the alleged environmental harm and the corresponding remedy at each site; the nature of government enforcement activities at each site; the ownership and general use of each site; the overall nature of the insurance relationship between the Company and the policyholder, including the role of any umbrella or excess insurance the Company has issued to the policyholder; the involvement of other insurers; the potential for other available coverage, including the number of years of coverage; the role, if any, of non-environmental claims or potential non-environmental claims in any resolution process; and the applicable law in each jurisdiction. The evaluation of the exposure presented by a policyholder can change as information concerning that policyholder and the many variables presented is developed. Conventional actuarial methods are not used to estimate these reserves.
Over the past several years, the Company has experienced generally favorable trends in the number of new policyholders tendering environmental claims for the first time and in the number of pending declaratory judgment actions relating to environmental matters. These policyholders continue to present smaller exposures, are involved in fewer hazardous waste sites and are lower tier defendants than policyholders presenting such claims in the past. Further, in many instances, clean-up costs have been reduced because regulatory agencies are willing to accept risk-based site analyses and more efficient clean-up technologies. However, the degree to which those favorable trends have continued has been less than anticipated.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.                                      INSURANCE CLAIM RESERVES (Continued)
In addition, reserve development on existing environmental claims as well as the costs associated with coverage litigation on environmental matters has been greater than anticipated, driven by claims and legal developments in a limited number of jurisdictions. As a result of these factors, in 2023, 2022 and 2021, the Company increased its net environmental reserves by $93 million, $132 million and $89 million, respectively.
Asbestos and Environmental Reserves. As a result of the processes and procedures discussed above, management believes that the reserves carried for asbestos and environmental claims are appropriately established based upon known facts, current law and management’s judgment. However, the uncertainties surrounding the final resolution of these claims continue, and it is difficult to determine the ultimate exposure for asbestos and environmental claims and related litigation. As a result, these reserves are subject to revision as new information becomes available and as claims develop. Changes in the legal, regulatory and legislative environment may impact the future resolution of asbestos and environmental claims and result in adverse loss reserve development.  The emergence of a greater number of asbestos or environmental claims beyond that which is anticipated may result in adverse loss reserve development. Changes in applicable legislation and future court and regulatory decisions and interpretations, including the outcome of legal challenges to legislative and/or judicial reforms establishing medical criteria for the pursuit of asbestos claims, could affect the settlement of asbestos and environmental claims.  It is also difficult to predict the ultimate outcome of complex coverage disputes until settlement negotiations near completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is particularly the case with policyholders in bankruptcy where negotiations often involve a large number of claimants and other parties and require court approval to be effective. As part of its continuing analysis of asbestos and environmental reserves, the Company continues to study the implications of these and other developments.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the Company’s current reserves.  In addition, the Company’s estimate of claims and claim adjustment expenses may change.  These additional liabilities or increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company’s operating results in future periods.
Catastrophe Exposure
The Company has geographic exposure to catastrophe losses, which include hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions, solar flares and other naturally-occurring events.  Catastrophes can also result from terrorist attacks and other intentionally destructive acts including those involving cyber events, nuclear, biological, chemical and radiological events, civil unrest, explosions and destruction of infrastructure.  The incidence and severity of catastrophes are inherently unpredictable. The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Most catastrophes are restricted to small geographic areas; however, hurricanes, earthquakes, wildfires and cyber attacks may produce significant damage in larger areas, especially those that are heavily populated. The Company generally seeks to mitigate its exposure to catastrophes through individual risk selection and the purchase of catastrophe reinsurance.
There are also risks which impact the estimation of ultimate costs for catastrophes.  For example, the estimation of reserves related to hurricanes can be affected by the inability of the Company and its insureds to access portions of the impacted areas, the complexity of factors contributing to the losses, the legal and regulatory uncertainties and the nature of the information available to establish the reserves.  Complex factors include, but are not limited to: determining whether damage was caused by flooding versus wind; evaluating general liability and pollution exposures; estimating additional living expenses; the impact of demand surge; the potential impact of changing climate conditions, including higher frequency and severity of weather-related events; infrastructure disruption; fraud; the effect of mold damage and business income interruption costs; and reinsurance collectibility.  The timing of a catastrophe’s occurrence, such as at or near the end of a reporting period, can also affect the information available to the Company in estimating reserves for that reporting period.  The estimates related to catastrophes are adjusted as actual claims emerge.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9.                                      DEBT
Debt outstanding was as follows:
(at December 31, in millions) 2023 2022
Short-term:
Commercial paper $ 100  $ 100 
Total short-term debt 100  100 
Long-term:
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
 500  500 
6.75% Senior notes due June 20, 2036
 400  400 
6.25% Senior notes due June 15, 2037
 800  800 
5.35% Senior notes due November 1, 2040
 750  750 
4.60% Senior notes due August 1, 2043
 500  500 
4.30% Senior notes due August 25, 2045
 400  400 
8.50% Junior subordinated debentures due December 15, 2045
 56  56 
3.75% Senior notes due May 15, 2046
 500  500 
8.312% Junior subordinated debentures due July 1, 2046
 73  73 
4.00% Senior notes due May 30, 2047
 700  700 
4.05% Senior notes due March 7, 2048
 500  500 
4.10% Senior notes due March 4, 2049
 500  500 
2.55% Senior notes due April 27, 2050
 500  500 
3.05% Senior notes due June 8, 2051
 750  750 
5.45% Senior notes due May 25, 2053
 750  — 
Total long-term debt 8,004  7,254 
Total debt principal 8,104  7,354 
Unamortized fair value adjustment 35  38 
Unamortized debt issuance costs (108) (100)
Total debt $ 8,031  $ 7,292 
2023 Debt Issuance. On May 25, 2023, the Company issued $750 million aggregate principal amount of 5.45% senior notes that will mature on May 25, 2053. The net proceeds of the issuance, after the deduction of the underwriting discount and expenses payable by the Company, totaled approximately $738 million. Interest on the senior notes is payable semi-annually in arrears on May 25 and November 25. Prior to November 25, 2052, the senior notes may be redeemed, in whole or in part, at the Company’s option, at any time or from time to time, at a redemption price equal to the greater of (a) 100% of the principal amount of any senior notes to be redeemed or (b) the sum of the present values of the remaining scheduled payments of principal and interest to but excluding November 25, 2052 on any senior notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the then current Treasury rate (as defined in the senior notes), plus 25 basis points. On or after November 25, 2052, the senior notes may be redeemed, in whole or in part, at the Company’s option, at any time or from time to time, at a redemption price equal to 100% of the principal amount of any senior notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
2021 Debt Issuance. On June 8, 2021, the Company issued $750 million aggregate principal amount of 3.05% senior notes that will mature on June 8, 2051. The net proceeds of the issuance, after the deduction of the underwriting discount and expenses payable by the Company, totaled approximately $739 million. Interest on the senior notes is payable semi-annually in arrears on June 8 and December 8.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9.                                      DEBT (Continued)
Prior to December 8, 2050, the senior notes may be redeemed, in whole or in part, at the Company’s option, at any time or from time to time, at a redemption price equal to the greater of (a) 100% of the principal amount of any senior notes to be redeemed or (b) the sum of the present values of the remaining scheduled payments of principal and interest to but excluding December 8, 2050 on any senior notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the then current Treasury rate (as defined in the senior notes), plus 15 basis points. On or after December 8, 2050, the senior notes may be redeemed, in whole or in part, at the Company’s option, at any time or from time to time, at a redemption price equal to 100% of the principal amount of any senior notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
Description of Debt
Commercial Paper—The Company maintains an $800 million commercial paper program. Interest rates on commercial paper issued in 2023 ranged from 4.29% to 5.34%, and in 2022 ranged from 0.10% to 4.29%.
Senior Notes—The Company’s various senior debt issues are unsecured obligations that rank equally with one another.  Interest payments are made semi-annually.  The Company generally may redeem some or all of the notes prior to maturity in accordance with terms unique to each debt instrument.
The Travelers Companies, Inc. fully and unconditionally guarantees the payment of all principal, premiums, if any, and interest on certain debt obligations of its subsidiaries Travelers Property Casualty Corp. (TPC) and Travelers Insurance Group Holdings Inc. (TIGHI). The guarantees pertain to the $200 million 7.75% notes due 2026 and the $500 million 6.375% notes due 2033.
Junior Subordinated Debentures—The Company’s three junior subordinated debenture instruments are all similar in nature to each other.  Three separate business trusts issued preferred securities to investors and used the proceeds to purchase the Company’s junior subordinated debentures.  Interest on each of the instruments is paid semi-annually.
The Company’s consolidated balance sheet includes the debt instruments acquired in a business acquisition, which were recorded at fair value as of the acquisition date. The resulting fair value adjustment is being amortized over the remaining life of the respective debt instruments using the effective-interest method. The amortization of the fair value adjustment reduced interest expense by $3 million and $1 million for the years ended December 31, 2023 and 2022, respectively.
The following table presents merger-related unamortized fair value adjustments and the related effective interest rate:
Unamortized Fair Value
Purchase Adjustment at December 31,		 Effective Interest Rate to Maturity
(in millions) Issue Rate Maturity Date 2023 2022
Junior subordinated debentures 7.625  % Dec. 2027 $ 6  $ 7  6.147  %
8.500  % Dec. 2045 13  14  6.362  %
8.312  % Jul. 2046 16  17  6.362  %
Total $ 35  $ 38 
Maturities—Other than commercial paper, the amount of debt obligations that become due in each of the next five years is as follows: 2024, $0; 2025, $0; 2026, $200 million; 2027, $125 million; and 2028, $0.
Credit Agreement
On June 15, 2022, the Company entered into to a five-year, $1.0 billion revolving credit agreement with a syndicate of financial institutions, replacing its five-year, $1.0 billion credit agreement that was due to expire on June 4, 2023. Pursuant to the credit agreement covenants, the Company must maintain a minimum consolidated net worth, defined as shareholders’ equity determined in accordance with GAAP (excluding accumulated other comprehensive income (loss)) plus (a) trust preferred securities (not to exceed 15% of total capital) and (b) mandatorily convertible securities (combined with trust preferred securities, not to exceed 25% of total capital), less goodwill and other intangible assets. That threshold is fixed during the term of the credit agreement at an amount equal to $13.9 billion (57.5% of the Company’s net worth at March 31, 2022). In addition, the credit agreement contains other customary restrictive covenants as well as certain customary events of default, including with respect to a change in control, which would occur upon the acquisition of 35% or more of the Company’s voting stock or certain changes in the composition of the Company’s Board of Directors.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9.                                      DEBT (Continued)
At December 31, 2023, the Company was in compliance with these covenants. Generally, the cost of borrowing under this agreement will range from the Secured Overnight Financing Rate (SOFR) plus 85 basis points (including a credit spread adjustment) to SOFR plus 147.5 basis points (including a credit spread adjustment), depending on the Company’s credit ratings. At December 31, 2023, that cost would have been SOFR plus 110 basis points (including a credit spread adjustment), had there been any amounts outstanding under the credit agreement.
The Company has uncollateralized letters of credit with an aggregate limit of $305 million at December 31, 2023, including $260 million that provides a portion of the capital needed to support the Company’s obligations at Lloyd’s.
Shelf Registration
The Company has a shelf registration statement filed with the Securities and Exchange Commission that expires on June 8, 2025 which permits it to issue securities from time to time at prices and on other terms to be determined at the time of offering.


10.                                      SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY
Authorized Shares
The number of authorized shares of the Company is 1.755 billion, consisting of five million shares of preferred stock, 1.745 billion shares of voting common stock and five million undesignated shares.  The Company’s Articles of Incorporation authorize the Board of Directors to establish, from the undesignated shares, one or more classes and series of shares, and to further designate the type of shares and terms thereof.
Preferred Stock
The Company’s Articles of Incorporation provide authority to issue up to five million shares of preferred stock.
Common Stock
The Company is governed by the Minnesota Business Corporation Act. All authorized shares of voting common stock have no par value.  Shares of common stock reacquired are considered authorized and unissued shares.
Treasury Stock
The Company’s Board of Directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise.  The authorizations do not have a stated expiration date.  The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels appropriate for the Company’s business operations, 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, changes in tax laws (including the Inflation Reduction Act) and other factors.  In April 2023, the Board of Directors approved a share repurchase authorization that added an additional $5.0 billion of repurchase capacity. During 2023, the Company repurchased 5.4 million shares under its share repurchase authorizations, for a total of $965 million. The average cost per share repurchased was $179.95. At December 31, 2023, the Company had $6.04 billion of capacity remaining under its share repurchase authorizations. The cost of treasury stock acquired pursuant to common share repurchases includes the 1% excise tax imposed on common share repurchase activity, net of common share issuances, as part of the Inflation Reduction Act of 2022.
The Company’s Amended and Restated 2004 Stock Incentive Plan, the Amended and Restated 2014 Stock Incentive Plan and the 2023 Stock Incentive Plan provide settlement alternatives to employees in which the Company retains shares to cover payroll withholding taxes in connection with the vesting of restricted stock unit awards and performance share awards, and shares used by employees to cover the price of certain stock options that were exercised.  During the years ended December 31, 2023 and 2022, the Company acquired $64 million and $61 million, respectively, of its common stock under these plans.
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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10.                                      SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY (Continued)
Common shares acquired are reported as treasury stock in the consolidated balance sheet.
Dividend Availability
The Company’s U.S. insurance subsidiaries, domiciled principally in the State of Connecticut, are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid by each insurance subsidiary to its respective parent company without prior approval of insurance regulatory authorities. A maximum of $2.73 billion is available by the end of 2024 for such dividends to ultimately be paid to the holding company, TRV, without prior approval of the Connecticut Insurance Department.  The Company may choose to accelerate the timing within 2024 and/or increase the amount of dividends from its insurance subsidiaries in 2024, which could result in certain dividends being subject to approval by the Connecticut Insurance Department prior to payment.
Each of the Company’s U.S. insurance subsidiaries had policyholders’ surplus at December 31, 2023 significantly above the level at which any regulatory action would occur. Regulators in the jurisdictions in which the Company’s foreign insurance subsidiaries are located require insurance companies to maintain certain levels of capital depending on, among other things, the type and amount of insurance policies written. Each of the Company’s foreign insurance subsidiaries also had capital significantly above their respective regulatory requirements at December 31, 2023.
In addition to the regulatory restrictions on the amount of dividends that can be paid by the Company’s U.S. insurance subsidiaries, the maximum amount of dividends that may be paid to the Company’s shareholders is also limited, to a lesser degree, by certain covenants contained in its line of credit agreement with a syndicate of financial institutions that require the Company to maintain a minimum consolidated net worth as described in note 9.
TRV is not dependent on dividends or other forms of repatriation from its foreign operations to support its liquidity needs.  The undistributed earnings of the Company’s foreign operations are intended to be permanently reinvested in those operations, and such earnings were not material to the Company’s financial position or liquidity at December 31, 2023.
The U.S. insurance subsidiaries paid dividends of $1.17 billion, $2.90 billion and $2.18 billion during 2023, 2022 and 2021, respectively.
For the years ended December 31, 2023, 2022 and 2021, TRV declared cash dividends per common share of $3.93, $3.67 and $3.49, respectively, and paid cash dividends of $908 million, $875 million and $869 million, respectively.
Statutory Net Income and Statutory Capital and Surplus
Statutory net income of the Company’s domestic and international insurance subsidiaries was $2.85 billion, $2.62 billion and $3.41 billion for the years ended December 31, 2023, 2022 and 2021, respectively. Statutory capital and surplus of the Company’s domestic and international insurance subsidiaries was $25.11 billion and $23.68 billion at December 31, 2023 and 2022, respectively.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11.                                     OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table presents the changes in the Company’s accumulated other comprehensive income (loss) (AOCI) for the years ended December 31, 2023, 2022 and 2021.
Changes in Net Unrealized Gains (Losses) on
Investment Securities
(in millions) Having No Credit
Losses Recognized in
the Consolidated
Statement of Income		 Having Credit Losses
Recognized in the
Consolidated
Statement of Income		 Net Benefit Plan Assets and
Obligations
Recognized in
Shareholders’ Equity		 Net Unrealized
Foreign Currency
Translation		 Total Accumulated
Other
Comprehensive
Income (Loss)
Balance, December 31, 2020 $ 3,892  $ 182  $ (832) $ (740) $ 2,502 
Other comprehensive income (loss) (OCI) before reclassifications, net of tax
 (1,606) —  278  (9) (1,337)
Amounts reclassified from AOCI, net of tax
 (53) —  81  —  28 
Net OCI, current period (1,659) —  359  (9) (1,309)
Balance, December 31, 2021 2,233  182  (473) (749) 1,193 
OCI before reclassifications, net of tax
 (7,387) (3) (102) (256) (7,748)
Amounts reclassified from AOCI, net of tax
 77  —  33  —  110 
Net OCI, current period (7,310) (3) (69) (256) (7,638)
Balance, December 31, 2022 (5,077) 179  (542) (1,005) (6,445)
OCI before reclassifications, net of tax
 1,692  1  94  121  1,908 
Amounts reclassified from AOCI, net of tax
 76  —  (10) —  66 
Net OCI, current period 1,768  1  84  121  1,974 
Balance, December 31, 2023 $ (3,309) $ 180  $ (458) $ (884) $ (4,471)
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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11.  OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Continued)
The following table presents the pre-tax components of the Company’s other comprehensive income (loss) and the related income tax expense (benefit).
(for the year ended December 31, in millions) 2023 2022 2021
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income
 $ 2,249  $ (9,276) $ (2,115)
Income tax expense (benefit) 481  (1,966) (456)
Net of taxes 1,768  (7,310) (1,659)
Having credit losses recognized in the consolidated statement of income 1  (4) — 
Income tax benefit —  (1) — 
Net of taxes 1  (3) — 
Net changes in benefit plan assets and obligations 106  (87) 455 
Income tax expense (benefit) 22  (18) 96 
Net of taxes 84  (69) 359 
Net changes in unrealized foreign currency translation 138  (273) (11)
Income tax expense (benefit) 17  (17) (2)
Net of taxes 121  (256) (9)
Total other comprehensive income (loss) 2,494  (9,640) (1,671)
Income tax expense (benefit) 520  (2,002) (362)
Total other comprehensive income (loss), net of taxes $ 1,974  $ (7,638) $ (1,309)
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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11.  OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Continued)
The following table presents the pre-tax and related income tax (expense) benefit components of the amounts reclassified from the Company’s AOCI to the Company’s consolidated statement of income.
(for the year ended December 31, in millions) 2023 2022 2021
Reclassification adjustments related to unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)
 $ 96  $ 98  $ (67)
Income tax (expense) benefit (2)
 20  21  (14)
Net of taxes 76  77  (53)
Having credit losses recognized in the consolidated statement of income (1)
 —  —  — 
Income tax benefit (2)
 —  —  — 
Net of taxes —  —  — 
Reclassification adjustment related to benefit plan assets and obligations:
Claims and claim adjustment expenses (benefit) (3)
 (5) 17  41 
General and administrative expenses (benefit) (3)
 (8) 24  61 
Total
 (13) 41  102 
Income tax (expense) benefit (2)
 (3) 8  21 
Net of taxes (10) 33  81 
Reclassification adjustment related to foreign currency translation (1)
 —  —  — 
Income tax benefit (2)
 —  —  — 
Net of taxes —  —  — 
Total reclassifications 83  139  35 
Total income tax benefit 17  29  7 
Total reclassifications, net of taxes $ 66  $ 110  $ 28 
___________________________________________
(1)(Increases) decreases net realized investment gains (losses) on the consolidated statement of income.
(2)(Increases) decreases income tax expense on the consolidated statement of income.
(3)Increases (decreases) expenses on the consolidated statement of income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12.                                      EARNINGS PER SHARE
Basic earnings per share was computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share reflected the effect of potentially dilutive securities and excludes the effect of any anti-dilutive shares.
Potentially dilutive securities include restricted stock units, deferred stock units, stock options and performance share awards related to the employee share-based incentive compensation programs. The restricted stock units and deferred stock units contain non-forfeitable rights to dividends and are included as participating securities in the calculation of basic and diluted earnings per share using the two-class method. Stock option and performance share awards are included in the calculation of diluted earnings per share using the treasury stock method.
The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations:
(for the year ended December 31, in millions, except per share amounts) 2023 2022 2021
Basic and Diluted
Net income, as reported $ 2,991  $ 2,842  $ 3,662 
Participating share-based awards — allocated income (22) (20) (27)
Net income available to common shareholders — basic and diluted $ 2,969  $ 2,822  $ 3,635 
Common Shares
Basic
Weighted average shares outstanding 229.7  237.0  248.5 
Diluted
Weighted average shares outstanding 229.7  237.0  248.5 
Weighted average effects of dilutive securities:
Stock options and performance shares 2.5  2.7  2.3 
Total 232.2  239.7  250.8 
Net income Per Common Share 0
Basic $ 12.93  $ 11.91  $ 14.63 
Diluted $ 12.79  $ 11.77  $ 14.49 


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13.                                      INCOME TAXES
Components of Income Tax Expense
The following table presents the components of income tax expense (benefit) included in the amounts reported in the Company’s consolidated financial statements:
(for the year ended December 31, in millions) 2023 2022 2021
Composition of income tax expense included in the consolidated statement of income
Current expense:
Federal $ 477  $ 636  $ 659 
Foreign 20  97  67 
State 7  8  6 
Total current tax expense 504  741  732 
Deferred expense (benefit):
Federal (163) (186) 62 
Foreign 39  (43) 2 
Total deferred tax expense (benefit) (124) (229) 64 
Total income tax expense included in the consolidated
 statement of income
 380  512  796 
Composition of income tax expense (benefit) included
 in shareholders’ equity
Expense (benefit) relating to changes in the unrealized gain (loss) on investments, unrealized loss on foreign exchange and other items in other comprehensive income (loss)
 520  (2,002) (362)
Total income tax expense (benefit) included in the
 consolidated financial statements
 $ 900  $ (1,490) $ 434 
The following is a reconciliation of income tax expense at the U.S. federal statutory income tax rate to the income tax expense reported in the Company’s consolidated statement of income:
(for the year ended December 31, in millions) 2023 2022 2021
Income before income taxes
U.S. $ 3,122  $ 3,101  $ 4,107 
Foreign 249  253  351 
Total income before income taxes 3,371  3,354  4,458 
Effective tax rate
Statutory tax rate 21  % 21  % 21  %
Expected federal income tax expense 708  704  936 
Tax effect of:
Nontaxable investment income (132) (149) (147)
Audit reserve (205) (40) 1 
Other, net 9  (3) 6 
Total income tax expense $ 380  $ 512  $ 796 
Effective tax rate 11  % 15  % 18  %
The Company recognized a one-time tax benefit of $211 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item impacted by the repeal of Internal Revenue Code Section 847, which related to the discounting of property-casualty loss reserves.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13.                                      INCOME TAXES (Continued)
This amount is included in the Audit reserve line in the table above.
The Company paid income taxes of $201 million, $817 million and $707 million during the years ended December 31, 2023, 2022 and 2021, respectively.  The current income tax payable of $285 million at December 31, 2023 was included in other liabilities in the consolidated balance sheet. The current income tax receivable of $32 million at December 31, 2022, was included in other assets in the consolidated balance sheet.
Deferred Tax Asset
The net deferred tax asset comprises the tax effects of temporary differences related to the following assets and liabilities:
(at December 31, in millions) 2023 2022
Deferred tax assets
Investments $ 532  $ 999 
Claims and claim adjustment expense reserves 665  660 
Unearned premium reserves 772  673 
Internally developed software 204  65 
Other 258  293 
Total gross deferred tax assets 2,431  2,690 
Less: valuation allowance 35  27 
Adjusted gross deferred tax assets 2,396  2,663 
Deferred tax liabilities
Claims and claim adjustment expense reserve discounting (transition rule) 39  58 
Deferred acquisition costs 627  539 
Intangibles 70  65 
Depreciation 125  105 
Other 31  19 
Total gross deferred tax liabilities 892  786 
Net deferred tax asset $ 1,504  $ 1,877 
If the Company determines that any of its deferred tax assets will not result in future tax benefits, a valuation allowance must be established for the portion of these assets that are not expected to be realized.  The net change in the valuation allowance for deferred tax assets was an increase of $8 million in 2023, primarily driven by a $7 million increase in the Company’s Canadian subsidiary and an increase of $1 million in the Company’s Republic of Ireland subsidiary.  Based upon a review of the Company’s anticipated future taxable income, and also including all other available evidence, both positive and negative, the Company’s management concluded that it is more likely than not that the net deferred tax assets will be realized.
U.S. income taxes have not been recognized on any undistributed earnings that are intended to be permanently reinvested. Any potential U.S. income tax on these amounts is immaterial.
The Organization for Economic Cooperation and Development (OECD) has developed guidance known as base erosion and profit shifting as part of its initiative to address corporate tax planning strategies used by some multinationals to shift profits from higher-tax jurisdictions to lower-tax jurisdictions or no-tax locations. This guidance generally imposes rules with a global minimum tax of 15%, which is expected to be effective in 2024 for several of the jurisdictions in which the Company operates. The Company does not expect to be subject to any global minimum taxes imposed by these rules in 2024.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13.                                      INCOME TAXES (Continued)
Net Operating Losses
For tax return purposes, as of December 31, 2023, the Company had net operating loss (NOL) carryforwards in the United States, Canada, the Republic of Ireland and the United Kingdom.  The amount and timing of realizing the benefits of NOL carryforwards depend on future taxable income and limitations imposed by tax laws.  Only the benefits of the United Kingdom NOL carryforwards have been recognized in the consolidated financial statements and are included in net deferred tax assets.  The NOL amounts by jurisdiction and year of expiration are as follows:
(in millions) Amount Year of 
expiration
United States $ 2  2035 - 2036
Canada $ 74  2035 - 2043
Republic of Ireland $ 123  None
United Kingdom $ 248  None
Uncertain Tax Positions
The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2023 and 2022:
(in millions) 2023 2022
Balance at January 1 $ 9  $ 48 
Additions for tax positions of prior years 3  3 
Reductions for tax positions of prior years —  (44)
Additions based on tax positions related to current year 3  2 
Expiration of statute of limitations (1) — 
Balance at December 31 $ 14  $ 9 
Included in the balances at December 31, 2023 and 2022 were $12 million and $8 million, respectively, of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.  Also included in the balances at those dates were $2 million and $1 million, respectively, of tax positions for which the ultimate deductibility is certain, but for which there is uncertainty about the timing of deductibility.  The timing of such deductibility could affect the annual effective tax rate depending on the year of deduction and tax rate at the time.
The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in income taxes.  During the years ended December 31, 2023, 2022 and 2021, the Company recognized approximately $3 million, $(13) million and $3 million in interest, respectively.  The Company had approximately $6 million and $3 million accrued for the payment of interest at December 31, 2023 and 2022, respectively.
The IRS has completed examination of the Company’s U.S. income tax returns for all years through 2018. The statute of limitations for federal income tax purposes has closed for all tax years prior to 2020. The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next twelve months.
Enactment of the Inflation Reduction Act of 2022
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (IRA) which, among other changes, created a new corporate alternative minimum tax (CAMT) based on adjusted financial statement income and imposes a 1% excise tax on the cost of treasury stock acquired pursuant to common share repurchases. The effective date of these provisions was January 1, 2023. The IRA did not have any impact on the Company’s financial statements upon enactment. While the Company is an applicable corporation subject to the CAMT beginning in 2023 based on its reported GAAP earnings for the past three years, the Company expects any current or future year CAMT incurred to be treated as a taxable temporary difference and have no direct impact on total income tax expense, subject to any additional guidance or regulations that may be issued.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14.                                      SHARE-BASED INCENTIVE COMPENSATION
The Company has a share-based incentive compensation plan, The Travelers Companies, Inc. 2023 Stock Incentive Plan (the 2023 Incentive Plan), the purposes of which are to align the interests of the Company’s non-employee directors, executive officers and other employees with those of the Company’s shareholders and to attract and retain personnel by providing incentives in the form of share-based awards.  The 2023 Incentive Plan permits grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, deferred stock units, performance awards and other share-based or share-denominated awards with respect to the Company’s common stock. The Company has a policy of issuing new shares to settle the exercise of stock option awards and the vesting of other equity awards.
In connection with the adoption of the 2023 Incentive Plan, The Travelers Companies, Inc. Amended and Restated 2014 Stock Incentive Plan, as amended (the 2014 Incentive Plan) was terminated, joining several other legacy share-based incentive compensation plans that had been terminated in prior years (together, the legacy plans). Outstanding grants were not affected by the termination of the legacy plans.  The 2023 Incentive Plan is currently the only plan pursuant to which future stock-based awards may be granted.
The number of shares of the Company’s common stock initially authorized for grant under the 2023 Incentive Plan was 5,789,184 shares.  The following are not counted towards the combined 5,789,184 shares available and will be available for future grants under the 2023 Incentive Plan: (i) shares of common stock subject to awards that expire unexercised, that are forfeited, terminated or canceled, that are settled in cash or other forms of property, or otherwise do not result in the issuance of shares of common stock, in whole or in part; (ii) shares that are used to pay the exercise price of stock options and shares used to pay withholding taxes on awards generally; and (iii) shares purchased by the Company on the open market using cash option exercise proceeds; provided, however, that the increase in the number of shares of common stock available for grant pursuant to such market purchases shall not be greater than the number that could be repurchased at fair market value on the date of exercise of the stock option giving rise to such option proceeds.  In addition, the 5,789,184 shares authorized by shareholders for issuance under the 2023 Incentive Plan will be increased by any shares subject to awards under the 2014 Incentive Plan that were outstanding as of May 24, 2023 and subsequently expire, are forfeited, canceled, settled in cash or otherwise terminate without the issuance of shares.
The Company also has a compensation program for non-employee directors (the Director Compensation Program). Under the Director Compensation Program, non-employee directors’ compensation consists of an annual retainer, a deferred stock award, committee chair fees and a lead director fee.  Each non-employee director may choose to receive all or a portion of his or her annual retainer, committee chair fee and lead director fee, as applicable, in the form of cash or deferred stock units which vest upon grant.  The annual deferred stock awards vest in full one day prior to the date of the Company’s annual meeting of shareholders occurring in the year following the year of the grant date, subject to continued service. The annual deferred stock awards, including dividend equivalents, accumulate until distribution either in a lump sum or, if the director so elects, in annual installments, in each case beginning at least six months following termination of service as a director. The deferred stock units issued under the Director Compensation Program are awarded under the 2023 Incentive Plan.
Stock Option Awards
Stock option awards granted to eligible officers and key employees have a ten-year term.  All stock options are granted with an exercise price equal to the closing price of the Company’s common stock on the date of grant. The stock options granted generally vest upon meeting certain years of service criteria. Except as the Compensation Committee of the Board of Directors may allow in the future, stock options cannot be sold or transferred by the participant. Stock options outstanding under the 2023 Incentive Plan and the 2014 Incentive Plan generally vest three years after grant date (cliff vest).
The fair value of each option award is estimated on the date of grant by application of a variation of the Black-Scholes option pricing model using the assumptions noted in the following table. The expected term of newly granted stock options is the time to vest plus half the remaining time to expiration. This considers the vesting restrictions and represents an even pattern of exercise behavior over the remaining term. The expected volatility assumption is based on the historical volatility of the Company’s common stock for the same period as the estimated option term generally using the volatility of the week prior to the stock option grant.  The expected dividend is based upon the Company’s current quarter dividend annualized and assumed to be constant over the expected option term. The risk-free interest rate for each option is the interpolated market yield of a U.S.
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THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14.                                      SHARE-BASED INCENTIVE COMPENSATION (Continued)
Treasury bill with a term comparable to the expected option term for the same week used for measuring volatility.  The following table provides information about options granted:
(for the year ended December 31,) 2023 2022 2021
Assumptions used in estimating fair value of options on grant date
Expected term of stock options 6 years 6 years 6 years
Expected volatility of Company’s stock
25.63% - 25.99%
 24.81  %
24.22% - 24.53%
Weighted average volatility 25.63  % 24.81  % 24.22  %
Expected annual dividend per share $3.72 $3.52
$3.40 - $3.52
Risk-free rate
3.63% - 3.89%
 1.83  %
0.59% - 1.08%
Additional information
Weighted average grant-date fair value of
 options granted (per share)
 $ 47.77  $ 35.70  $ 23.32 
Total intrinsic value of options exercised
 during the year (in millions)
 $ 58  $ 110  $ 94 
A summary of stock option activity under the 2023 Incentive Plan and the legacy plans as of and for the year ended December 31, 2023 is as follows:
Stock Options Number Weighted
Average
Exercise
Price		 Weighted
Average
Contractual
Life
Remaining		 Aggregate
Intrinsic
Value
($ in millions)
Outstanding, beginning of year 8,558,864  $ 134.92 
Original grants 875,760  189.00 
Exercised (944,913) 121.73 
Forfeited or expired (66,729) 160.27 
Outstanding, end of year 8,422,982  $ 141.82  5.8 years $ 410 
Vested at end of year (1)
 7,312,505  $ 138.44  5.5 years $ 381 
Exercisable at end of year 5,181,130  $ 128.55  4.5 years $ 321 
___________________________________________
(1)Represents awards for which the requisite service has been rendered, including those that are retirement eligible.
On February 6, 2024, the Company, under the 2023 Incentive Plan, granted 770,664 stock option awards with an exercise price of $213.01 per share. The fair value attributable to the stock option awards on the date of grant was $56.45 per share.
Restricted Stock Units, Deferred Stock Units and Performance Share Award Programs
The Company issues restricted stock unit awards to eligible officers and key employees under the Equity Awards program established pursuant to the 2023 Incentive Plan.  A restricted stock unit represents the right to receive a share of common stock. These restricted stock unit awards are granted at market price, generally vest three years from the date of grant, do not have voting rights and the underlying shares of common stock are not issued until the vesting criteria is satisfied.  In addition, members of the Company’s Board of Directors can be issued deferred stock units from (i) an annual award; (ii) deferred compensation (in lieu of cash retainer, committee chair fees and lead director fees); and (iii) dividend equivalents earned on outstanding deferred compensation.
The Company also has a Performance Share Awards program established pursuant to the Amended and Restated 2004 Stock Incentive Plan, as amended, which continued pursuant to the 2014 Incentive Plan and which continues pursuant to the 2023 Incentive Plan. Under the program, the Company may issue performance share awards to certain employees of the Company who hold positions of Vice President (or its equivalent) or above. The performance share awards provide the recipient the right to earn shares of the Company’s common stock based upon the Company’s attainment of certain performance goals and the recipient meeting certain years of service criteria.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14.                                      SHARE-BASED INCENTIVE COMPENSATION (Continued)
The performance goals for performance share awards are based on the Company’s adjusted return on equity over a three-year performance period. Vesting of performance shares is contingent upon the Company attaining the relevant performance period minimum threshold return on equity and the recipient meeting certain years of service criteria, generally three years for full vesting. If the performance period return on equity is below the minimum threshold, none of the performance shares will vest. If performance meets or exceeds the minimum performance threshold, a range of performance shares will vest (50% to 200% for awards granted in 2022, 2023 and 2024), depending on the actual return on equity attained.
The fair value of restricted stock units, deferred stock units and performance shares is measured at the market price of the Company stock at date of grant.  Under terms of the 2023 Incentive Plan, holders of deferred stock units and performance shares may receive dividend equivalents.
The total fair value of shares that vested during the years ended December 31, 2023, 2022 and 2021 was $164 million, $159 million and $124 million, respectively.
A summary of restricted stock units, deferred stock units and performance share activity under the 2023 Incentive Plan and the legacy plans as of and for the year ended December 31, 2023 is as follows:
Restricted and Deferred Stock
Units		 Performance Shares
Other Equity Instruments Number Weighted
Average
Grant-Date
Fair Value		 Number Weighted Average
Grant-Date Fair
Value
Nonvested, beginning of year 1,034,422  $ 149.53  1,062,924  $ 154.49 
Granted 523,442  187.61  306,220  189.01 
Vested (491,023) (1) 150.34  (604,560) (2) 139.94 
Forfeited (41,146) 164.41  (17,101) 164.50 
Performance-based adjustment —  —  257,316  (3) 182.88 
Nonvested, end of year 1,025,695  $ 167.98  1,004,799  $ 180.87 
___________________________________________
(1)Represents awards for which the requisite service has been rendered.
(2)Reflects the number of performance shares attributable to the performance goals attained over the completed performance period (three years) and for which service conditions have been met.
(3)Represents the current year change in estimated performance shares to reflect the attainment of performance goals for the awards that were granted in each of the years 2021 through 2023.
In addition to the nonvested shares presented in the above table, there are related nonvested dividend equivalent shares.  The number of nonvested dividend equivalent shares related to deferred stock units was 269 at the beginning of the year and 260 at the end of the year and the number of nonvested dividend equivalent shares related to performance shares was 36,719 at the beginning of the year and 33,757 at the end of the year. The dividend equivalent shares are subject to the same vesting terms as the deferred stock units and performance shares.
On February 6, 2024, the Company, under the 2023 Incentive Plan, granted 745,834 common stock awards in the form of restricted stock units, deferred stock units and performance share awards to participating officers, non-employee directors and other key employees. The restricted stock units and deferred stock units totaled 462,913 shares and the performance share awards totaled 282,921 shares. The fair value per share attributable to the common stock awards on the date of grant was $213.01.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14.                                      SHARE-BASED INCENTIVE COMPENSATION (Continued)
Share-Based Compensation Cost Recognition
The amount of compensation cost for awards subject to a service condition is based on the number of shares expected to be issued and is recognized over the time period for which service is to be provided (requisite service period), generally the vesting period.  Awards granted to retiree-eligible employees or to employees who become retiree-eligible before an award’s vesting date are considered to have met the requisite service condition if the vesting terms are accelerated upon retirement. The compensation cost for awards subject to a performance condition is based upon the probable outcome of the performance condition, which on the grant date reflects an estimate of attaining 100% of the performance shares granted.  The compensation cost reflects an estimated annual forfeiture rate from 1.5% to 3.5% over the requisite service period of the awards. That estimate is revised if subsequent information indicates that the actual number of instruments expected to vest is likely to differ from previous estimates.  Compensation costs for awards are recognized on a straight-line basis over the requisite service period.  For awards that have graded vesting terms, the compensation cost is recognized on a straight-line basis over the requisite service period for each separate vesting portion of the award as if the award was, in substance, multiple awards. The total compensation cost for all share-based incentive compensation awards recognized in earnings for the years ended December 31, 2023, 2022 and 2021 was $214 million, $183 million and $162 million, respectively. Included in these amounts are compensation cost adjustments of $39 million, $23 million and $12 million, for the years ended December 31, 2023, 2022 and 2021, respectively, that reflected the cost associated with the updated estimate of performance shares due to attaining certain performance levels from the date of the initial grant of the performance awards.  The related tax benefits recognized in earnings were $36 million, $31 million and $28 million for the years ended December 31, 2023, 2022 and 2021, respectively.
At December 31, 2023, there was $200 million of total unrecognized compensation cost related to all nonvested share-based incentive compensation awards. This includes stock options, restricted and deferred stock units and performance shares granted under the 2023 Incentive Plan. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.7 years.  Cash received from the exercise of employee stock options under share-based compensation plans totaled $141 million, $267 million and $293 million in 2023, 2022 and 2021, respectively. The tax benefit for tax deductions from employee stock options exercised during 2023, 2022 and 2021 totaled $11 million, $22 million and $19 million, respectively.


15.                                      PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS
The Company sponsors a qualified non-contributory defined benefit pension plan (the qualified domestic pension plan), which covers substantially all U.S. domestic employees and provides benefits under a cash balance formula, except that certain limited groups of legacy participants are covered by a prior traditional final average pay formula.  In addition, the Company sponsors a nonqualified defined benefit pension plan which covers certain highly-compensated employees, pension plans for employees of its foreign subsidiaries, and a postretirement health and life insurance benefit plan for employees satisfying certain age and service requirements and for certain retirees.
Obligations and Funded Status
The following tables summarize the funded status, obligations and amounts recognized in the consolidated balance sheet for the Company’s benefit plans. The Company uses a December 31 measurement date for its pension and postretirement benefit plans.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15.                                      PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
(at and for the year ended December 31,  in millions) Qualified Domestic
Pension Plan		 Nonqualified and Foreign
Pension Plans		 Total
2023 2022 2023 2022 2023 2022
Change in projected benefit obligation:
Benefit obligation at beginning of year
 $ 3,400  $ 4,212  $ 180  $ 259  $ 3,580  $ 4,471 
Benefits earned 104  137  4  8  108  145 
Interest cost on benefit obligation 167  95  9  6  176  101 
Actuarial (gain) loss 123  (781) 1  (64) 124  (845)
Benefits paid (340) (263) (13) (14) (353) (277)
Settlement —  —  —  (3) —  (3)
Foreign currency exchange rate change
 —  —  3  (12) 3  (12)
Benefit obligation at end of year $ 3,454  $ 3,400  $ 184  $ 180  $ 3,638  $ 3,580 
Change in plan assets:
Fair value of plan assets at beginning of year
 $ 3,938  $ 4,902  $ 95  $ 134  $ 4,033  $ 5,036 
Actual return on plan assets 551  (701) (2) (22) 549  (723)
Company contributions —  —  13  13  13  13 
Benefits paid (340) (263) (13) (14) (353) (277)
Settlement —  —  —  (3) —  (3)
Foreign currency exchange rate change
 —  —  4  (13) 4  (13)
Fair value of plan assets at end
 of year
 4,149  3,938  97  95  4,246  4,033 
Funded status of plan at end
 of year
 $ 695  $ 538  $ (87) $ (85) $ 608  $ 453 
Amounts recognized in the consolidated balance sheet consist of:
Accrued over-funded benefit plan assets
 $ 695  $ 538  $ 27  $ 23  $ 722  $ 561 
Accrued under-funded benefit plan liabilities
 —  —  (114) (108) (114) (108)
Total $ 695  $ 538  $ (87) $ (85) $ 608  $ 453 
Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss $ 663  $ 785  $ 13  $ 5  $ 676  $ 790 
Prior service cost (benefit) —  (1) 1  1  1  — 
Total $ 663  $ 784  $ 14  $ 6  $ 677  $ 790 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15.                                      PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
Postretirement
Benefit Plans
(at and for the year ended December 31, in millions) 2023 2022
Change in accumulated benefit obligation:
Benefit obligation at beginning of year $ 99  $ 149 
Benefits earned —  — 
Interest cost on benefit obligation 5  3 
Actuarial gain (6) (45)
Benefits paid (6) (7)
Foreign currency exchange rate change —  (1)
Benefit obligation at end of year $ 92  $ 99 
Change in plan assets:
Fair value of plan assets at beginning of year $ 8  $ 9 
Actual return on plan assets —  — 
Company contributions 5  6 
Benefits paid (6) (7)
Fair value of plan assets at end of year 7  8 
Funded status of plan at end of year $ (85) $ (91)
Amounts recognized in the consolidated balance sheet consist of:
Accrued under-funded benefit plan liability $ (85) $ (91)
Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial gain $ (91) $ (94)
Prior service benefit (8) (11)
Total $ (99) $ (105)
The total accumulated benefit obligation for the Company’s defined benefit pension plans was $3.47 billion and $3.44 billion at December 31, 2023 and 2022, respectively. The qualified domestic pension plan accounted for $3.30 billion and $3.27 billion of the total accumulated benefit obligation at December 31, 2023 and 2022, respectively, whereas the nonqualified and foreign plans accounted for $176 million and $170 million of the total accumulated benefit obligation at December 31, 2023 and 2022, respectively.
For pension plans with a projected benefit obligation in excess of plan assets, the aggregate projected benefit obligation was $114 million and $108 million at December 31, 2023 and 2022, respectively, and the aggregate plan assets were $0 million at both December 31, 2023 and 2022. For pension plans with an accumulated benefit obligation in excess of plan assets, the aggregate accumulated benefit obligation was $106 million and $99 million at December 31, 2023 and 2022, respectively, and the aggregate plan assets were $0 million at both December 31, 2023 and 2022.  For postretirement benefit plans with an accumulated benefit obligation in excess of plan assets, the aggregate accumulated benefit obligation was $92 million and $99 million at December 31, 2023 and 2022, respectively, and the aggregate plan assets were $7 million and $8 million at December 31, 2023 and 2022, respectively.
The $123 million actuarial loss experienced in 2023 for the qualified domestic pension plan was largely driven by the decrease in the assumed discount rate from the prior year that was used to determine the projected benefit obligation at December 31, 2023. The $781 million actuarial gain experienced in 2022 for the qualified domestic pension plan was largely driven by the increase in the assumed discount rate from the prior year that was used to determine the projected benefit obligation at December 31, 2022.
The Company has discretion regarding whether to provide additional funding and when to provide such funding to its qualified domestic pension plan. In 2023, 2022 and 2021, there were no required or voluntary contributions to the qualified domestic pension plan. There is no required contribution to the qualified domestic pension plan during 2024, and the Company has not determined whether additional funding will be made during 2024.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15.                                      PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
With respect to the Company’s foreign pension plans, there are no significant required contributions in 2024.
The following table summarizes the components of net periodic benefit cost (benefit) and other amounts recognized in other comprehensive income (loss) related to the benefit plans.
Pension Plans Postretirement Benefit
Plans
(for the year ended December 31, in millions) 2023 2022 2021 2023 2022 2021
Net Periodic Benefit Cost (Benefit):
Service cost $ 108  $ 145  $ 141  $ —  $ —  $ — 
Non-service cost (benefit):
Interest cost on benefit obligation 176  101  83  5  3  3 
Expected return on plan assets (311) (296) (274) —  —  — 
Amortization of unrecognized:
Prior service benefit (1) (1) (1) (3) (3) (4)
Net actuarial (gain) loss —  49  109  (9) (4) (2)
Total non-service cost (benefit) (136) (147) (83) (7) (4) (3)
Net periodic benefit cost (benefit) (28) (2) 58  (7) (4) (3)
Other Changes in Benefit Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):
Prior service benefit —  —  —  —  —  — 
Net actuarial (gain) loss (114) 174  (338) (6) (45) (16)
Foreign currency exchange rate change —  (2) —  —  1  — 
Amortization of prior service benefit 1  1  1  3  3  4 
Amortization of net actuarial gain (loss) —  (49) (109) 9  4  2 
Total other changes recognized in other comprehensive income (loss) (113) 124  (446) 6  (37) (10)
Total other changes recognized in net periodic benefit cost (benefit) and other comprehensive income (loss) $ (141) $ 122  $ (388) $ (1) $ (41) $ (13)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15.                                      PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
The following table indicates the line items in which the respective service cost and non-service cost (benefit) are presented in the consolidated statement of income for the years ended December 31, 2023, 2022 and 2021.
  Pension Plans Postretirement Benefit
Plans
(for the year ended December 31, in millions) 2023 2022 2021 2023 2022 2021
Service Cost:
Net investment income $ —  $ 1  $ 1  $ —  $ —  $ — 
Claims and claim adjustment expenses 44  58  57  —  —  — 
General and administrative expenses 64  86  83  —  —  — 
Total service cost 108  145  141  —  —  — 
Non-Service Cost (Benefit):
Net investment income (1) (1) —  —  —  — 
Claims and claim adjustment expenses (54) (59) (34) (3) (2) (1)
General and administrative expenses (81) (87) (49) (4) (2) (2)
Total non-service cost (benefit) (136) (147) (83) (7) (4) (3)
Net periodic benefit cost (benefit) $ (28) $ (2) $ 58  $ (7) $ (4) $ (3)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15.                                      PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
Assumptions
The following table summarizes assumptions used with regard to the Company’s qualified and nonqualified domestic pension plans and the domestic postretirement benefit plans.
(at and for the year ended December 31,) 2023 2022
Assumptions used to determine benefit obligations
Discount rate:
Qualified domestic pension plan 5.02  % 5.19  %
Nonqualified domestic pension plan 4.94  % 5.13  %
Domestic postretirement benefit plan 4.88  % 5.08  %
Cash balance interest crediting rate 4.01  % 4.01  %
Future compensation increase rate 4.00  % 4.00  %
Assumptions used to determine net periodic benefit cost
Discount rate:
Qualified domestic pension plan:
Service cost 5.27  % 3.18  %
Interest cost 5.18  % 2.34  %
Nonqualified domestic pension plan:
Service cost 5.16  % 2.92  %
Interest cost 5.11  % 2.23  %
Domestic postretirement benefit plan:
Interest cost 5.03  % 2.08  %
Expected long-term rate of return on assets:
Pension plan 7.00  % 6.50  %
Postretirement benefit plan 4.00  % 4.00  %
Assumed health care cost trend rates (1)
Following year (2.78) % 9.50  %
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) 4.50  % 4.50  %
Year that the rate reaches the ultimate trend rate 2033 2032
___________________________________________
(1)The 2024 assumed health care cost trend rate of (2.78)% reflects known negotiated medical premium rate changes to the Company's baseline health care cost trend rate of 8.00%. After 2024, assumed health care cost trend rates are expected to increase in the subsequent year and then are expected to decrease in a linear pattern until the rate reaches the ultimate trend rate of 4.50% in 2033.
The discount rate assumption used to determine the benefit obligation is based on a yield-curve approach. Under this approach, individual spot rates from the yield curve of a hypothetical portfolio of high quality fixed maturity corporate bonds (rated Aa) available at the year-end valuation date, for which the timing and amount of cash outflows correspond with the timing and amount of the estimated benefit payouts of the Company’s benefit plan, are applied to expected future benefits payments in measuring the projected benefit obligation. The discount rate assumption used to determine benefit obligations disclosed above represents the weighted average of the individual spot rates.
The discount rate assumption used to determine the net periodic benefit cost is the single weighted average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the year.
In choosing the expected long-term rate of return on plan assets, the Company selected the rate that reflected the Company’s current expectations with regard to long-term returns in the capital markets, taking into account the pension plan’s asset allocation targets, the historical performance and current valuation of U.S. and international equities, and the level of long term interest rate and inflation expectations.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15.                                      PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
The assumptions made for the Company’s foreign pension and foreign postretirement benefit plans are not materially different from those of the Company’s qualified domestic pension plan and the domestic postretirement benefit plan.
Plan Assets
The qualified domestic pension plan assets are invested for the exclusive benefit of the plan participants and beneficiaries and are intended, over time, to satisfy the benefit obligations under the plan. Risk tolerance is established through consideration of plan liabilities, plan funded status and corporate financial position. The asset mix guidelines have been established and are reviewed quarterly. These guidelines are intended to serve as tools to facilitate the investment of plan assets to maximize long-term total return and the ongoing oversight of the plan’s investment performance.  Investment risk is measured and monitored on an ongoing basis through daily and monthly investment portfolio reviews, annual liability measurements and periodic asset/liability studies.
The Company’s overall investment strategy for the qualified domestic pension plan is to achieve a mix of approximately 85% to 90% of investments for long-term growth and 10% to 15% for near-term benefit payments with a diversification of asset types, fund strategies and fund managers.  The current target allocations for plan assets are 55% to 65% equity securities and 20% to 40% fixed income securities, with the remainder allocated to short-term securities.  Equity securities primarily include investments in large, medium and small-cap companies primarily located in the United States.  Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities, U.S. Treasury securities and debt securities issued by foreign governments.
Assets of the Company’s foreign pension plans are not significant.
Fair Value Measurement — Pension Plans and Other Postretirement Benefit Assets
For a discussion of the methods employed by the Company to measure the fair value of invested assets, see note 4.  The following discussion of fair value measurements applies exclusively to the Company’s pension plans and other postretirement benefit assets.
Fair value estimates for equity and bond mutual funds held by the pension plans reflect prices received from an external pricing service that are based on observable market transactions.  These estimates are primarily included in Level 1.
Short-term securities are carried at fair value which approximates cost plus accrued interest or amortized discount.  The fair value or market value of these is periodically compared to this amortized cost and is based on significant observable inputs as determined by an external pricing service.  Accordingly, the estimates of fair value for such short-term securities, other than U.S. Treasury securities and money market mutual funds, provided by an external pricing service are included in the amount disclosed in Level 2 of the hierarchy.  The estimated fair value of U.S. Treasury securities and money market mutual funds is included in the amount disclosed in Level 1 as the estimates are based on unadjusted market prices.
Fair Value Hierarchy — Pension Plans
The following tables present the level within the fair value hierarchy at which the financial assets of the Company’s pension plans are measured on a recurring basis.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15.                                      PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
(at December 31, 2023, in millions) Total Level 1 Level 2 Level 3
Invested assets:
Fixed maturities
Obligations of U.S. states, municipalities and political subdivisions $ 105  $ —  $ 105  $ — 
Debt securities issued by foreign governments 32  —  32  — 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 8  —  8  — 
Corporate and all other bonds 776  —  776  — 
Total fixed maturities 921  —  921  — 
Mutual funds
Equity mutual funds 1,207  1,201  6  — 
Bond mutual funds 658  655  3  — 
Total mutual funds 1,865  1,856  9  — 
Equity securities 1,302  1,302  —  — 
Other investments 1  —  —  1 
Cash and short-term securities
U.S. Treasury securities —  —  —  — 
Other 157  114  43  — 
Total cash and short-term securities 157  114  43  — 
Total $ 4,246  $ 3,272  $ 973  $ 1 
(at December 31, 2022, in millions) Total Level 1 Level 2 Level 3
Invested assets:
Fixed maturities
Obligations of U.S. states, municipalities and political subdivisions $ 80  $ —  $ 80  $ — 
Debt securities issued by foreign governments 25  —  25  — 
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 4  —  4  — 
Corporate and all other bonds 713  —  713  — 
Total fixed maturities 822  —  822  — 
Mutual funds
Equity mutual funds 1,157  1,151  6  — 
Bond mutual funds 754  751  3  — 
Total mutual funds 1,911  1,902  9  — 
Equity securities 1,116  1,116  —  — 
Other investments 1  —  —  1 
Cash and short-term securities
U.S. Treasury securities —  —  —  — 
Other 183  131  52  — 
Total cash and short-term securities 183  131  52  — 
Total $ 4,033  $ 3,149  $ 883  $ 1 
196

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15.                                      PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
Other Postretirement Benefit Plans
The Company’s overall investment strategy is to achieve a mix of approximately 35% to 65% of investments for long-term growth and 35% to 65% for near-term insurance payments with a wide diversification of asset types, fund strategies and fund managers.  The current target allocations for plan assets are 25% to 75% fixed income securities, with the remainder allocated to short-term securities.  Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities and U.S. Treasuries.
Fair Value — Other Postretirement Benefit Plans
The Company’s other postretirement benefit plans had financial assets of $7 million and $8 million at December 31, 2023 and 2022, respectively, which are measured at fair value on a recurring basis.  The assets are primarily corporate bonds, which are categorized as level 2 in the fair value hierarchy.
Estimated Future Benefit Payments
The following table presents the estimated benefits expected to be paid by the Company’s pension and postretirement benefit plans for the next ten years (reflecting estimated future employee service).
Benefits Expected to be Paid
(in millions) Pension Plans Postretirement Benefit Plans
2024 $ 285  $ 8 
2025 283  8 
2026 288  8 
2027 290  8 
2028 291  8 
2029 through 2033 1,424  38 
Savings Plan
Substantially all U.S. domestic Company employees are eligible to participate in The Travelers 401(k) Savings Plan (the Savings Plan). Eligible employees can contribute to the Savings Plan, and the Company makes a matching contribution into the employee’s Savings Plan account, subject to limitations described below. In addition, when an eligible U.S. employee makes a payment toward their student loans, the Company makes a contribution of that amount into the employee’s Savings Plan account, subject to limitations described below. The total annual amount of the Company’s matching contributions, student loan repayment contributions or a combination of both is the lesser of 5% of eligible pay or $7,500, which becomes 100% vested after three years of service. All Company contributions to the Savings Plan are made in cash and invested according to the employee’s current investment elections and can be reinvested into other investment options in accordance with the terms of the Savings Plan. The Company’s non-U.S. employees and certain domestic employees participate in separate savings plans.  The total expense related to all of the savings plans was $154 million, $139 million and $133 million for the years ended December 31, 2023, 2022 and 2021, respectively.
All common shares held by the Savings Plan are considered outstanding for basic and diluted EPS computations and dividends paid on all shares are charged to retained earnings.


16.                                      LEASES
The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease, and a right-of-use asset and lease liability is recognized as part of other assets and other liabilities, respectively, in the consolidated balance sheet.
Most leases include an option to extend or renew the lease term. The exercise of the renewal option is at the Company’s discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if the
197

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16.                                      LEASES (Continued)
Company is reasonably certain of exercising those options. The Company, in determining the present value of lease payments, utilizes either the rate implicit in the lease, if that rate is readily determinable, or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.
Lease expense is included in general and administrative expenses in the consolidated statement of income. Additional information regarding the Company’s real estate operating leases is as follows:
(for the year ended December 31, in millions) 2023 2022 2021
Lease cost
Operating leases $ 76  $ 81  $ 89 
Short-term leases (1)
 3  2  1 
Lease expense 79  83  90 
Less: sublease income (2)
 —  —  — 
Net lease cost $ 79  $ 83  $ 90 
Other information on operating leases
Cash payments to settle a lease liability reported in cash flows
 $ 87  $ 93  $ 104 
Right-of-use assets obtained in exchange for new lease liabilities $ 37  $ 30  $ 59 
Weighted average discount rate 2.79  % 2.39  %
Weighted average remaining lease term 4.1 years 4.4 years
_________________________________________________________
(1) Leases with a term of twelve months or less are not recorded on the consolidated balance sheet.
(2) Sublease income consists of rent from third parties of office space and is recognized as part of other revenues in the consolidated statement of income.
The following table presents the contractual maturities of the Company’s lease liabilities:
(in millions) Real Estate Lease Liability
2024 $ 81 
2025 58 
2026 51 
2027 36 
2028 19 
Thereafter 15 
Total undiscounted lease payments 260 
Less: present value adjustment 17 
Operating lease liability $ 243 


17.                                      CONTINGENCIES, COMMITMENTS AND GUARANTEES
Contingencies
The major pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party or to which any of the Company’s properties is subject are described below.
198

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17.                                      CONTINGENCIES, COMMITMENTS AND GUARANTEES (Continued)
Asbestos and Environmental Claims and Litigation
In the ordinary course of its insurance business, the Company has received and continues to receive claims for insurance arising under policies issued by the Company asserting alleged injuries and damages from asbestos- and environmental-related exposures that are the subject of related coverage litigation. The Company is defending asbestos- and environmental-related litigation vigorously and believes that it has meritorious defenses; however, the outcomes of these disputes are uncertain.  In this regard, the Company employs dedicated specialists and comprehensive resolution strategies to manage asbestos and environmental loss exposure, including settling litigation under appropriate circumstances.  Currently, it is not possible to predict legal outcomes and their impact on future loss development for claims and litigation relating to asbestos and environmental claims. Any such development could be affected by future court decisions and interpretations, as well as future changes, if any, in applicable legislation. Because of these uncertainties, additional liabilities may arise for amounts in excess of the Company’s current insurance reserves. In addition, the Company’s estimate of ultimate claims and claim adjustment expenses may change. These additional liabilities or changes in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company’s results of operations in future periods.
Other Proceedings Not Arising Under Insurance Contracts or Reinsurance Agreements
The Company is involved in other lawsuits, including lawsuits alleging extra-contractual damages relating to insurance contracts or reinsurance agreements, that do not arise under insurance contracts or reinsurance agreements.  The legal costs associated with such lawsuits are expensed in the period in which the costs are incurred.  Based upon currently available information, the Company does not believe it is reasonably possible that any such lawsuit or related lawsuits would be material to the Company’s results of operations or would have a material adverse effect on the Company’s financial position or liquidity.
Other Commitments and Guarantees
Commitments
Investment Commitments — The Company has unfunded commitments to private equity limited partnerships, real estate partnerships and other investments. These commitments totaled $2.05 billion and $1.80 billion at December 31, 2023 and 2022, respectively.
Guarantees
In the ordinary course of selling businesses to third parties, the Company has agreed to indemnify purchasers for losses arising out of breaches of representations and warranties, obligations arising from certain liabilities and any breach or failure to perform certain covenants with respect to the businesses being sold. Such indemnification provisions generally are applicable from the closing date to the expiration of the relevant statutes of limitations, although, in some cases, there may be agreed upon term limitations or no term limitations.  Certain of these contingent obligations are subject to deductibles which have to be incurred by the obligee before the Company is obligated to make payments.  The maximum amount of the Company’s contingent obligation for indemnifications related to the sale of businesses that are quantifiable was $351 million at December 31, 2023.
The Company also has contingent obligations for guarantees related to certain investments, certain insurance policy obligations of former insurance subsidiaries and various other indemnifications.  The Company also provides standard indemnifications that it utilizes with service providers in the normal course of business.  The indemnification clauses are often standard contractual terms.  The maximum amount of the Company’s obligation related to the guarantee of certain insurance policy obligations of a former insurance subsidiary was $480 million at December 31, 2023, all of which is indemnified by a third party.
Certain of the guarantees and indemnifications described above have no stated or notional amounts or limitation to the maximum potential future payments, and, accordingly, the Company is unable to provide an estimate of the maximum potential payments for such arrangements.


199

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18.                                      NONCASH INVESTING AND FINANCING ACTIVITIES
There were no material noncash financing or investing activities during the years ended December 31, 2023, 2022 and 2021.


200

Item 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.


Item 9A.  CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31, 2023.  Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2023, the design and operation of the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
In addition, there was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
The Company regularly seeks to identify, develop and implement improvements to its technology systems and business processes, some of which may affect its internal control over financial reporting. These changes may include such activities as implementing new, more efficient systems, updating existing systems or platforms, automating manual processes or utilizing technology developed by third parties. These systems changes are often phased in over multiple periods in order to limit the implementation risk in any one period, and as each change is implemented the Company monitors its effectiveness as part of its internal control over financial reporting.


201

Management’s Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of the consolidated financial statements of the Company in accordance with U.S. generally accepted accounting principles. The Company’s accounting policies and internal controls over financial reporting, established and maintained by management, are under the general oversight of the Company’s Audit Committee.
The Company’s internal control over financial reporting includes those policies and procedures that:
•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and
•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the Company’s internal control over financial reporting as of December 31, 2023. The standard measures adopted by management in making its evaluation are the measures in the Internal Control ‑ Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission.
Based upon its assessment, management has concluded that the Company’s internal control over financial reporting was effective at December 31, 2023, and that there were no material weaknesses in the Company’s internal control over financial reporting as of that date.
KPMG LLP, an independent registered public accounting firm, which has audited and reported on the consolidated financial statements contained in this Form 10-K, has issued its report on the effectiveness of the Company’s internal control over financial reporting which follows this report.


202

Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
The Travelers Companies, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited The Travelers Companies, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedules as listed in the index to consolidated financial statements and schedules (collectively, the consolidated financial statements), and our report dated February 15, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
KPMG LLP
New York, New York
February 15, 2024
203

Item 9B.    OTHER INFORMATION
During the three months ended December 31, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).


Item 9C.    DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.


PART III

Item 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers of the Company
Set forth below is information concerning the Company’s executive officers as of February 15, 2024.
Name Age Office
Alan D. Schnitzer 58  Chairman of the Board of Directors and Chief Executive Officer
William H. Heyman 75  Vice Chairman and Chairman of the Investment Policy Committee
Avrohom J. Kess 55  Vice Chairman and Chief Legal Officer
Daniel S. Frey 59  Executive Vice President and Chief Financial Officer
Andy F. Bessette 70  Executive Vice President and Chief Administrative Officer
Michael F. Klein 56  Executive Vice President and President, Personal Insurance
Jeffrey P. Klenk 54  Executive Vice President and President, Bond & Specialty Insurance
Diane Kurtzman 54  Executive Vice President and Chief Human Resources Officer
Mojgan M. Lefebvre 58  Executive Vice President and Chief Technology & Operations Officer
Maria Olivo 59  Executive Vice President, Strategic Development and President, International
David D. Rowland 58  Executive Vice President and Co-Chief Investment Officer
Gregory C. Toczydlowski 57  Executive Vice President and President, Business Insurance
Daniel T.H. Yin 58  Executive Vice President and Co-Chief Investment Officer
Alan D. Schnitzer, 58, has been Chairman of the Board of Directors since August 2017 and Chief Executive Officer and Director since December 2015. He previously served as Vice Chairman and Chief Executive Officer, Business and International Insurance from July 2014.  Mr. Schnitzer was Vice Chairman - Financial, Professional & International Insurance and Field Management; Chief Legal Officer from May 2012 until July 2014 and Vice Chairman and Chief Legal Officer and Executive Vice President - Financial, Professional and International Insurance from May 2008 until May 2012. He was Vice Chairman and Chief Legal Officer from April 2007 until May 2008. Prior to joining the Company, he was a partner at the law firm of Simpson Thacher & Bartlett LLP.
William H. Heyman, 75, has been Vice Chairman and Chairman of the Investment Policy Committee since August 2019. Prior to that, Mr. Heyman was Vice Chairman and Chief Investment Officer since May 2005. He previously served as Executive Vice President and Chief Investment Officer from May 2002. Mr. Heyman held various positions with Citigroup from 1995 until 2002, including the position of chairman of Citigroup Investments from 2000 until 2002. Prior to joining Citigroup in 1995, Mr. Heyman was, successively: a managing director of Salomon Brothers; Director of the Division of Market Regulation of the U.S. Securities and Exchange Commission; and a managing director of Smith Barney.
Avrohom J. Kess, 55, has been Vice Chairman and Chief Legal Officer since December 2016. Prior to that, Mr. Kess was a partner, member of the Corporate Department and Head of the Public Company Advisory Practice at the law firm of Simpson Thacher & Bartlett LLP, which he joined in 1995.
Daniel S. Frey, 59, has been Executive Vice President and Chief Financial Officer since September 2018. Mr. Frey has held various financial management roles since joining a predecessor to the Company in 2003, including Senior Vice President and Chief Financial Officer, Personal Insurance from September 2014, Senior Vice President Finance, Business Insurance from August 2010 and Senior Vice President and Chief Financial Officer, Claim Services from June 2006.
204

Prior to that, Mr. Frey held the position of Chief Financial Officer at Spalding Sports Worldwide from 1999 to 2003 and held various financial management positions at Duracell International, Inc. from 1994 to 1999. Mr. Frey began his career at Deloitte in 1986.
Andy F. Bessette, 70, has been Executive Vice President and Chief Administrative Officer since January 2002. Mr. Bessette previously held various management positions with predecessors of the Company since 1980, including Vice President, Corporate Real Estate and Services at Travelers Property Casualty Corp.
Michael F. Klein, 56, has been Executive Vice President and President, Personal Insurance since July 2015, and was also Head of Enterprise Business Intelligence & Analytics from May 2016 to May 2018. He previously served as Executive Vice President and Co-President, Business Insurance from July 2014, Executive Vice President, Middle Market from November 2012, President of Middle Market from March 2010, President of Commercial Accounts from September 2007, and Senior Vice President, Industry and Product Group from June 2006. Prior to that, Mr. Klein held various positions with the Company since 1990.
Jeffrey P. Klenk, 54, has been Executive Vice President and President, Bond & Specialty Insurance since September 2021. Mr. Klenk joined the Company in 1999 and previously since 2016, he served as Executive Vice President, Management Liability, Bond & Specialty Insurance.
Diane Kurtzman, 54, has been Executive Vice President and Chief Human Resources Officer since August 2020. She was previously Senior Vice President, Human Resources from July 2018 and Vice President, Human Resources, International & Corporate from July 2014. Prior to that, Ms. Kurtzman held various positions with the Company or its predecessors since 1991.
Mojgan M. Lefebvre, 58, has been Executive Vice President and Chief Technology & Operations Officer since May 2019. Prior to that, Ms. Lefebvre was Executive Vice President and Chief Information Officer, Enterprise Operations and eBusiness since joining the Company in September 2018. Ms. Lefebvre previously held various information technology roles at Liberty Mutual, where she was most recently Senior Vice President and Chief Information Officer for the Global Risk Solutions business, from 2010 to 2018, at bioMerieux from 2007 to 2010 and at TeleTech Holdings from 2004 to 2007.
Maria Olivo, 59, has been Executive Vice President, Strategic Development and President, International since October 2018. Prior to that, she was Executive Vice President, Strategic Development and Corporate Treasurer since July 2010. She previously served as Executive Vice President and Treasurer from June 2009 and Executive Vice President, Market Development from October 2007.  Prior to that Ms. Olivo held various positions with the Company or its predecessors since 2002, including leading Corporate Development, Investor Relations and Corporate Communications.  Ms. Olivo was deputy head of Strategic Investments at Swiss Re Capital Partners from April 2000 until June 2002.  Prior to joining Swiss Re Capital Partners, she was a director in Salomon Smith Barney’s Investment Bank.
David D. Rowland, 58, has been Executive Vice President and Co-Chief Investment Officer since August 2019. He previously served as Executive Vice President and Deputy Chief Investment Officer since October 2017 and prior to that he was Executive Vice President, Fixed Income. Mr. Rowland joined the Company in 1996 from Piper Jaffray Companies, where he was Vice President in the fixed income group.
Gregory C. Toczydlowski, 57, has been Executive Vice President and President, Business Insurance since June 2016. He previously served as Executive Vice President and President, Small Commercial and Business Insurance Technology and Operations from July 2015 and Executive Vice President and President, Personal Insurance from July 2009. Prior to that, Mr. Toczydlowski held various positions with the Company or its predecessors since 1990, including Chief Operating Officer of Personal Insurance and Chief Financial Officer for the independent agency distribution channel within Personal Insurance.
Daniel T.H. Yin, 58, has been Executive Vice President and Co-Chief Investment Officer since August 2019. He previously served as Executive Vice President and Deputy Chief Investment Officer since October 2017 and prior to that he was Executive Vice President, Alternative Investments. Mr. Yin joined the Company in 2002 from ACE Asset Management, the investment arm of what is now Chubb, Ltd., where he was responsible for implementing investment strategies across a global portfolio.
205

Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics (Code of Ethics) that applies to all employees, including executive officers, and to directors. The Code of Ethics is available on the Corporate Governance page of the Company’s website at travelers.com. If the Company ever were to amend or waive any provision of its Code of Ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or any person performing similar functions, the Company intends to satisfy its disclosure obligations, if any, with respect to any such waiver or amendment by posting such information on its website set forth above rather than by filing a Current Report on Form 8-K.
Other
The following sections of the Company’s definitive Proxy Statement relating to its 2024 Annual Meeting of Shareholders, which will be filed with the SEC no later than 120 days after the end of the Company’s fiscal year on December 31, 2023 (the Proxy Statement), are incorporated herein by reference: “Nominees for Election of Directors,” “Governance of Your Company - Specific Considerations Regarding the 2024 Nominees,” “Governance of Your Company - Committees of the Board and Meetings - Audit Committee,” “Share Ownership Information - Delinquent Section 16(a) Reports” and “Other Information - Shareholder Proposals for 2025 Annual Meeting” to the extent applicable.


Item 11.    EXECUTIVE COMPENSATION
The following sections of the Proxy Statement are incorporated herein by reference: “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Summary Compensation Table,” “Grants of Plan-Based Awards in 2023,” “Narrative Supplement to Summary Compensation Table and Grants of Plan-Based Awards in 2023,” “Option Exercises and Stock Vested in 2023,” “Outstanding Equity Awards at December 31, 2023,” “Post-Employment Compensation,” “Potential Payments to Named Executive Officers Upon Termination of Employment or Change in Control,” “Non-Employee Director Compensation,” “Governance of Your Company - Risk Management and Compensation” and “CEO Pay Ratio.”


Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The “Share Ownership Information - 5% Owners” and “Share Ownership Information - Directors and Executive Officers” sections of the Proxy Statement are incorporated herein by reference.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2023 regarding the Company’s equity compensation plans. The only plan pursuant to which the Company may currently make additional equity grants is The Travelers Companies, Inc. 2023 Stock Incentive Plan (the 2023 Incentive Plan).
Plan Category Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights
(a)		   Weighted average
exercise price of
outstanding options,
warrants and rights
(b)		   Number of securities
remaining available for future issuance under equity compensation
plans (excluding
securities reflected in
column (a))
(c)		  
Equity compensation plans approved by security holders (1)
 11,323,410  (2) $ 141.41   per share (3) 5,830,724  (4)
___________________________________________
(1)In addition to the 2023 Incentive Plan, also included are The Travelers Companies, Inc. Amended and Restated 2014 Stock Incentive Plan, as amended (the 2014 Incentive Plan), which was replaced by the 2023 Incentive Plan and The Travelers Companies, Inc. Amended and Restated 2004 Stock Incentive Plan, as amended (the 2004 Incentive Plan), which was replaced by the 2014 Incentive Plan, and certain plans for employees in the United Kingdom and the Republic of Ireland and The Travelers Deferred Compensation Plan for Non-Employee Directors. Shares delivered under these plans are issued pursuant to the 2004 Incentive Plan, the 2014 Incentive Plan and the 2023 Incentive Plan.
(2)Total includes (i) 8,528,345 stock options, (ii) 1,005,618 performance shares and dividend equivalents accrued thereon (assuming issuance of 100% of performance shares granted), (iii) 1,499,818 restricted stock units, (iv) 271,144 director deferred stock awards and dividend equivalents accrued thereon and (v) 18,485 common stock units credited to the deferred compensation accounts of certain non-employee directors in lieu of cash compensation, at the election of such directors.
206

(3)The weighted average exercise prices for the 2004 Incentive Plan, the 2014 Incentive Plan and the 2023 Incentive Plan relate only to stock options. The calculation of the weighted average exercise price does not include outstanding equity awards that are received or exercised for no consideration and also does not include common stock units credited to the deferred compensation accounts of certain non-employee directors at fair market value in lieu of cash compensation at the election of such directors.
(4)These shares are available for grant as of December 31, 2023 under the 2023 Incentive Plan pursuant to which the Compensation Committee of the Board of Directors may make various stock-based awards including nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, deferred stock units, performance awards and other stock-based or stock-denominated awards with respect to the Company’s common stock. This includes 5,789,184 shares initially authorized for issuance under the 2023 Incentive Plan and shares subject to awards under the 2014 Incentive Plan that expired, were cancelled, forfeited, settled in cash or otherwise terminated without the issuance of shares.


Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The “Governance of Your Company—Transactions with Related Persons,” “Nominees for Election of Directors” and “Governance of Your Company—Director Independence and Independence Determinations” sections of the Proxy Statement are incorporated herein by reference.


Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES
The “Audit and Non-Audit Fees” section of the Proxy Statement is incorporated herein by reference.


PART IV

Item 15.                           EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Documents filed as a part of the report:
(1)     Financial Statements and Schedules. See Index to Consolidated Financial Statements and Schedules on page 118 hereof.
(2)    Exhibits:
Exhibit
Number		 Description of Exhibit
3.1 
3.2 
4.1 
10.1 
10.2*
10.3*
10.4*
10.5*
207

10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
208

10.26*
10.27*
10.28*
10.29*
10.30†*
10.31†*
10.32*
10.33*
10.34*
10.35†*
10.36†*
21.1†
23.1†
24.1†
31.1†
31.2†
32.1†
32.2†
97.1†*
101.1†
The following information from The Travelers Companies, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023 formatted in Inline XBRL: (i) Consolidated Statement of Income for the years ended December 31, 2023, 2022 and 2021; (ii) Consolidated Statement of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021; (iii) Consolidated Balance Sheet at December 31, 2023 and 2022; (iv) Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2023, 2022 and 2021; (v) Consolidated Statement of Cash Flows for the years ended December 31, 2023, 2022 and 2021; (vi) Notes to Consolidated Financial Statements; (vii) Financial Statement Schedules; and (viii) the cover page.
104.1  Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101.1).
_________________________________________
†     Filed herewith.
*    Management contract or compensatory plan in which directors and/or executive officers are eligible to participate.
The total amount of securities authorized pursuant to any instrument defining rights of holders of long-term debt of the Company does not exceed 10% of the total assets of the Company and its consolidated subsidiaries. Therefore, the Company is not filing any instruments evidencing long-term debt. However, the Company will furnish copies of any such instrument to the Securities and Exchange Commission upon request.
209

Copies of any of the exhibits referred to above will be furnished to security holders who make written request therefor to The Travelers Companies, Inc., 385 Washington Street, Saint Paul, MN, 55102, Attention: Corporate Secretary.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs at the date they were made or at any other time.


Item 16.    FORM 10-K SUMMARY
None.


210

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, The Travelers Companies, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE TRAVELERS COMPANIES, INC.
(Registrant)
Date: February 15, 2024 By /s/ CHRISTINE K. KALLA
Christine K. Kalla
Executive Vice President and General Counsel
(Authorized Signatory)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of The Travelers Companies, Inc. and in the capacities and on the dates indicated.
Date
By /s/ ALAN D. SCHNITZER
Director, Chairman and Chief Executive Officer (Principal Executive Officer)
 February 15, 2024
Alan D. Schnitzer
By /s/ DANIEL S. FREY
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
 February 15, 2024
Daniel S. Frey
By /s/ PAUL E. MUNSON
Senior Vice President and Corporate Controller (Principal Accounting Officer)
 February 15, 2024
Paul E. Munson
By * Director February 15, 2024
Alan L. Beller
By * Director February 15, 2024
Janet M. Dolan
By * Director February 15, 2024
Russell G. Golden
By * Director February 15, 2024
Patricia L. Higgins
By * Director February 15, 2024
William J. Kane
By * Director February 15, 2024
Thomas B. Leonardi
By * Director February 15, 2024
Clarence Otis Jr.
By * Director February 15, 2024
Elizabeth E. Robinson
By * Director February 15, 2024
Philip T. Ruegger III
By * Director February 15, 2024
Rafael Santana
By * Director February 15, 2024
Todd C. Schermerhorn
By * Director February 15, 2024
Laurie J. Thomsen
By * Director February 15, 2024
Bridget van Kralingen
/s/ CHRISTINE K. KALLA February 15, 2024
Christine K. Kalla,
Attorney-in-fact
211

FINANCIAL STATEMENT SCHEDULES
SCHEDULE II

THE TRAVELERS COMPANIES, INC.
(Parent Company Only)

CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(in millions)

CONDENSED STATEMENT OF INCOME
For the year ended December 31, 2023 2022 2021
Revenues
Net investment income $ 92  $ 30  $ 13 
Net realized investment gains (losses) 37  (51) 28 
Total revenues 129  (21) 41 
Expenses
Interest 328  303  292 
Other (18) 13  13 
Total expenses 310  316  305 
Loss before income taxes and net income of subsidiaries (181) (337) (264)
Income tax benefit (58) (99) (59)
Loss before net income of subsidiaries (123) (238) (205)
Net income of subsidiaries 3,114  3,080  3,867 
Net income $ 2,991  $ 2,842  $ 3,662 

The condensed financial statements should be read in conjunction with the notes to the condensed financial information of the registrant, as well as the consolidated financial statements and notes thereto.

See the Report of Independent Registered Public Accounting Firm.

212

SCHEDULE II

THE TRAVELERS COMPANIES, INC.
(Parent Company Only)

CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(in millions)

CONDENSED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the year ended December 31, 2023 2022 2021
Net income $ 2,991  $ 2,842  $ 3,662 
Other comprehensive income (loss)—parent company:
Changes in net unrealized gains (losses) on investment securities having no credit losses recognized in the condensed statement of income 3  (12) (4)
Net changes in benefit plan assets and obligations 111  (105) 444 
Other comprehensive income (loss) before income taxes and other comprehensive income (loss) of subsidiaries 114  (117) 440 
Income tax expense (benefit) 30  (38) 87 
Other comprehensive income (loss), net of taxes, before other comprehensive income (loss) of subsidiaries 84  (79) 353 
Other comprehensive income (loss) of subsidiaries 1,890  (7,559) (1,662)
Other comprehensive income (loss) 1,974  (7,638) (1,309)
Comprehensive income (loss) $ 4,965  $ (4,796) $ 2,353 

The condensed financial statements should be read in conjunction with the notes to the condensed financial information of the registrant, as well as the consolidated financial statements and notes thereto.

See the Report of Independent Registered Public Accounting Firm.

213

SCHEDULE II

THE TRAVELERS COMPANIES, INC.
(Parent Company Only)

CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(in millions)

CONDENSED BALANCE SHEET
At December 31, 2023 2022
Assets
Fixed maturities $ 182  $ 112 
Equity securities 241  234 
Short-term securities 1,494  1,406 
Investment in subsidiaries 29,946  26,098 
Other assets 549  748 
Total assets $ 32,412  $ 28,598 
Liabilities
Debt $ 7,336  $ 6,597 
Other liabilities 146  433 
Total liabilities 7,482  7,030 
Shareholders’ equity
Common stock (1,750.0 shares authorized; 228.2 and 232.1 shares issued and outstanding)
 24,906  24,565 
Retained earnings 45,600  43,524 
Accumulated other comprehensive loss (4,471) (6,445)
Treasury stock, at cost (559.2 and 553.5 shares)
 (41,105) (40,076)
Total shareholders’ equity 24,930  21,568 
Total liabilities and shareholders’ equity $ 32,412  $ 28,598 

The condensed financial statements should be read in conjunction with the notes to the condensed financial information of the registrant, as well as the consolidated financial statements and notes thereto.

See the Report of Independent Registered Public Accounting Firm.

214

SCHEDULE II

THE TRAVELERS COMPANIES, INC.
(Parent Company Only)

CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(in millions)

CONDENSED STATEMENT OF CASH FLOWS
For the year ended December 31, 2023 2022 2021
Cash flows from operating activities
Net income $ 2,991  $ 2,842  $ 3,662 
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income of subsidiaries (3,114) (3,080) (3,867)
Dividends received from consolidated subsidiaries 1,125  2,860  2,149 
Capital received from subsidiaries 18  —  — 
Deferred federal income tax expense 17  14  7 
Change in income taxes payable (2) (13) — 
Other 142  7  (69)
Net cash provided by operating activities 1,177  2,630  1,882 
Cash flows from investing activities
Net sales (purchases) of short-term securities (88) 73  167 
Other investments, net (37) (35) (11)
Net cash provided by (used in) investing activities (125) 38  156 
Cash flows from financing activities
Treasury stock acquired—share repurchase authorizations (958) (2,000) (2,156)
Treasury stock acquired—net employee share-based compensation (64) (61) (44)
Dividends paid to shareholders (908) (875) (869)
Issuance of debt 738  —  739 
Issuance of common stock—employee share options 141  267  293 
Net cash used in financing activities (1,051) (2,669) (2,037)
Net increase (decrease) in cash 1  (1) 1 
Cash at beginning of year —  1  — 
Cash at end of year $ 1  $ —  $ 1 
Supplemental disclosure of cash flow information
Cash received during the year for taxes $ 73  $ 100  $ 66 
Cash paid during the year for interest $ 322  $ 301  $ 289 

The condensed financial statements should be read in conjunction with the notes to the condensed financial information of the registrant, as well as the consolidated financial statements and notes thereto.

See the Report of Independent Registered Public Accounting Firm.

215

SCHEDULE II

THE TRAVELERS COMPANIES, INC.
(Parent Company Only)

NOTES TO THE CONDENSED FINANCIAL INFORMATION OF REGISTRANT
1.    GUARANTEES
The Travelers Companies, Inc. (TRV) fully and unconditionally guarantees the payment of all principal, premiums, if any, and interest on certain debt obligations of its subsidiaries TPC and TIGHI.  The guarantees pertain to the $200 million 7.75% notes due 2026 and the $500 million 6.375% notes due 2033.
TRV also has contingent obligations for guarantees in connection with the selling of businesses to third parties; certain insurance, reinsurance and banking facility obligations of certain subsidiaries and various indemnifications including indemnifications that it utilizes with service providers in the normal course of business.  The guarantees and indemnification clauses are often standard contractual terms and include indemnifications for breaches of representations and warranties and in some cases obligations arising from certain liabilities. The terms of these provisions vary in duration and nature. 
Certain of the guarantees and indemnifications described above have no stated or notional amounts or limitation to the maximum potential future payments. Accordingly, TRV is unable to provide an estimate of the maximum potential payments for such arrangements; the likelihood for any payment under these guarantees is remote.

216

SCHEDULE III
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
Supplementary Insurance Information
2021-2023
(in millions)
Segment Deferred
Acquisition
Costs		 Claims and
Claim
Adjustment
Expense
Reserves		 Unearned
Premiums		 Earned
Premiums		 Net
Investment
Income (1)		 Claims and
Claim
Adjustment
Expenses		 Amortization
of Deferred
Acquisition
Costs		 Other
Operating
Expenses (2)		 Net
Written
Premiums
2023
Business Insurance $ 1,580  $ 47,739  $ 10,068  $ 19,144  $ 2,085  $ 12,696  $ 3,173  $ 3,041  $ 20,430 
Bond & Specialty Insurance 477  4,945  2,861  3,655  328  1,485  673  681  3,842 
Personal Insurance 1,249  8,937  7,943  14,962  509  12,034  2,380  1,417  15,929 
Total—Reportable Segments 3,306  61,621  20,872  37,761  2,922  26,215  6,226  5,139  40,201 
Other —  6  —  —  —  —  —  413  — 
Consolidated $ 3,306  $ 61,627  $ 20,872  $ 37,761  $ 2,922  $ 26,215  $ 6,226  $ 5,552  $ 40,201 
2022
Business Insurance $ 1,315  $ 45,909  $ 8,619  $ 17,095  $ 1,864  $ 10,907  $ 2,788  $ 2,827  $ 17,635 
Bond & Specialty Insurance 430  4,482  2,679  3,418  258  1,378  625  590  3,732 
Personal Insurance 1,091  8,252  6,942  13,250  440  10,569  2,102  1,362  14,047 
Total—Reportable Segments 2,836  58,643  18,240  33,763  2,562  22,854  5,515  4,779  35,414 
Other —  6  —  —  —  —  —  382  — 
Consolidated $ 2,836  $ 58,649  $ 18,240  $ 33,763  $ 2,562  $ 22,854  $ 5,515  $ 5,161  $ 35,414 
2021
Business Insurance $ 1,206  $ 45,358  $ 7,953  $ 15,734  $ 2,265  $ 10,398  $ 2,581  $ 2,746  $ 16,092 
Bond & Specialty Insurance 375  4,247  2,360  3,138  247  1,473  570  532  3,376 
Personal Insurance 961  7,292  6,156  11,983  521  8,427  1,892  1,370  12,491 
Total—Reportable Segments 2,542  56,897  16,469  30,855  3,033  20,298  5,043  4,648  31,959 
Other —  10  —  —  —  —  —  369  — 
Consolidated $ 2,542  $ 56,907  $ 16,469  $ 30,855  $ 3,033  $ 20,298  $ 5,043  $ 5,017  $ 31,959 
___________________________________________
(1)    See note 2 of the notes to the consolidated financial statements for discussion of the method used to allocate net investment income and invested assets to the identified segments.
(2)    Expense allocations are determined in accordance with prescribed statutory accounting practices. These practices make a reasonable allocation of all expenses to those product lines with which they are associated.
See the Report of Independent Registered Public Accounting Firm.

217

SCHEDULE V
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
(in millions)
Balance at
beginning
of period		 Charged to
costs and
expenses		 Charged to
other
accounts		 Deductions (1) Balance at
end of
period
2023
Reinsurance recoverables $ 132  $ (14) $ —  $ —  $ 118 
Allowance for uncollectible:
Premiums receivable from underwriting activities
 $ 77  $ 42  $ —  $ 50  $ 69 
Deductibles $ 25  $ 5  $ —  $ 1  $ 29 
2022
Reinsurance recoverables $ 141  $ (9) $ —  $ —  $ 132 
Allowance for uncollectible:
Premiums receivable from underwriting activities
 $ 107  $ 56  $ (2) $ 84  $ 77 
Deductibles $ 29  $ (3) $ —  $ 1  $ 25 
2021
Reinsurance recoverables $ 146  $ (5) $ —  $ —  $ 141 
Allowance for uncollectible:
Premiums receivable from underwriting activities
 $ 105  $ 65  $ —  $ 63  $ 107 
Deductibles $ 27  $ 2  $ —  $ —  $ 29 
___________________________________________
(1)    Credited to the related asset account.




See the Report of Independent Registered Public Accounting Firm.

218

SCHEDULE VI
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
Supplementary Information Concerning Property-Casualty Insurance Operations (1)
2021-2023
(in millions)
Claims and Claim
Adjustment
Expenses Incurred
Related to:		 Amortization of Deferred Acquisition Costs Paid Claims and Claim Adjustment Expenses
Affiliation with Registrant(2) Deferred Acquisition Costs Claims and Claim Adjustment Expense Reserves Discount from Reserves for Unpaid Claims(3) Unearned Premiums Earned Premiums Net Investment Income Current Year Prior Year Net Written Premiums
2023 $ 3,306  $ 61,621  $ 1,096  $ 20,872  $ 37,761  $ 2,922  $ 26,159  $ (38) $ 6,226  $ 23,276  $ 40,201 
2022 $ 2,836  $ 58,643  $ 1,124  $ 18,240  $ 33,763  $ 2,562  $ 23,308  $ (537) $ 5,515  $ 20,351  $ 35,414 
2021 $ 2,542  $ 56,897  $ 1,146  $ 16,469  $ 30,855  $ 3,033  $ 20,698  $ (484) $ 5,043  $ 17,871  $ 31,959 
___________________________________________
(1)    Excludes accident and health insurance business.
(2)    Consolidated property-casualty insurance operations.
(3)    For a discussion of types of reserves discounted and discount rates used, see note 8 of the notes to the consolidated financial statements.

See the Report of Independent Registered Public Accounting Firm.

219
EX-10.30 2 a1030trv2024mcmoptionagree.htm EX-10.30 Document

Exhibit 10.30

TRAVELERS STOCK OPTION GRANT NOTIFICATION AND AGREEMENT

(This award must be accepted within 90 days after the Grant Date shown below or it will be forfeited. Refer below to Section 16.)

Participant: “NAME” Grant Date: “GRANT DATE”
Number of Shares: “GRANTED” Grant Price: $ “GRANT PRICE”
Expiration Date: “EXPIRATION DATE” Vesting Date: 3 years from Grant Date

1. Grant of Option. This option is granted pursuant to The Travelers Companies, Inc. 2023 Stock Incentive Plan, as it may be amended from time to time (the "Plan"), by The Travelers Companies, Inc. (the "Company") to you (the “Participant”) as an employee of the Company or an affiliate of the Company (together, the "Travelers Group"). The Company hereby grants to the Participant as of the Grant Date a non-qualified stock option (the "Option") to purchase the number of shares set forth above of the Company's common stock, no par value ("Common Stock"), at an option price per share (the "Grant Price") set forth above, pursuant to the Plan, as it may be amended from time to time, and subject to the terms, conditions, and restrictions set forth herein, including, without limitation, the conditions set forth in Section 5.

2. Terms and Conditions. The terms, conditions, and restrictions applicable to the Option are specified in the Plan and this grant notification and agreement, including Exhibits A and B (the "Award Agreement"). The terms, conditions and restrictions in the Plan include, but are not limited to, provisions relating to amendment, vesting, cancellation, and exercise, all of which are hereby incorporated by reference into this Award Agreement to the extent not otherwise set forth herein.

By accepting the Option, the Participant acknowledges receipt of the prospectus dated May 24, 2023 and any applicable prospectus supplements thereto (together, the “Prospectus”) and that he or she has read and understands the Prospectus.

The Participant understands that the Option and all other incentive awards are entirely discretionary and that no right to receive an award exists absent a prior written agreement with the Company to the contrary. The Participant also understands that the value that may be realized, if any, from the Option is contingent, and depends on the future market price of the Common Stock, among other factors. The Participant further confirms his or her understanding that the Option is intended to promote employee retention and stock ownership and to align participants' interests with those of shareholders. Additionally, the Participant understands that the Option is subject to vesting conditions and will be cancelled if the vesting or other conditions are not satisfied. Thus, the Participant understands that (a) any monetary value assigned to the Option in any communication regarding the Option is contingent, hypothetical, or for illustrative purposes only, and does not express or imply any promise or intent by the Company to deliver, directly or indirectly, any certain or determinable cash value to the Participant; (b) receipt of the Option or any incentive award in the past is neither an indication nor a guarantee that an incentive award of any type or amount will be made in the future, and that absent a written agreement to the contrary, the Company is free to change its practices and policies regarding incentive awards at any time; and (c) vesting may be subject to confirmation and final determination by the Company's Board of Directors or its Compensation Committee (the "Committee") that the vesting conditions have been satisfied.

The Participant shall have no rights as a stockholder of the Company with respect to any shares covered by the Option unless and until the Option vests, is properly exercised and shares of Common Stock are issued.

3. Vesting. The Option shall vest in full and become exercisable on the Vesting Date set forth above, provided the Participant remains continuously employed within the Travelers Group. The Option shall in all events expire on the tenth (10th) anniversary of the Grant Date set forth above. If the Participant has a termination of, or leave from active employment prior to exercise or expiration of the Option, the Participant's rights are determined under the Option Rules of Exhibit A.

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4. Exercise of Option. The Option may be exercised in whole or in part by the Participant after the Vesting Date (or the date provided pursuant to Exhibit A) upon notice to the Company together with provision for payment of the Grant Price and applicable withholding taxes. Such notice shall be given in the manner prescribed by the Company and shall specify the date and method of exercise and the number of shares being exercised. The Participant acknowledges that the laws of the country in which the Participant is working at the time of grant or exercise of the Option (including any rules or regulations governing securities, foreign exchange, tax, or labor matters) or Company accounting or other policies dictated by such country's political or regulatory climate, may restrict or prohibit any one or more of the stock option exercise methods described in the Prospectus, that such restrictions may apply differently if the Participant is a resident or expatriate employee, and that such restrictions are subject to change at any time. The Committee may suspend the right to exercise the Option during any period for which (a) there is no registration statement under the Securities Act of 1933, as amended, in effect with respect to the shares of Common Stock issuable upon exercise of the Option, or (b) the Committee determines, in its sole discretion, that such suspension would be necessary or advisable in order to comply with the requirements of (i) any applicable federal securities law or rule or regulation thereunder; (ii) any rule of the New York Stock Exchange or other self-regulatory organization; or (iii) any other federal or state law or regulation (an "Option Exercise Suspension"). To the extent the vested and exercisable portion of the Option remains unexercised as of the close of business on the date the Option expires (the Expiration Date or such earlier date that is the last date on which the Option may be exercised under the Option Rules of Exhibit A if the Participant’s employment with the Travelers Group has ended), that portion of the Option will be exercised without any action by the Participant in accordance with Section 7.5 of the Plan if the Fair Market Value of a share of Common Stock on that date is at least $0.01 greater than the Grant Price, the exercise will result in Participant receiving at least one incremental share, and no Option Exercise Suspension is then in effect.

5. Grant Conditioned on Principles of Employment Agreement.

By entering into this Award Agreement, the Participant shall be deemed to have confirmed his or her agreement to be bound by the Company’s Principles of Employment Agreement in effect on the date immediately preceding the Grant Date (the “POE Agreement”), as published on the Company’s intranet site or previously distributed in hard copy to the Participant. Furthermore, by accepting the Option, the Participant agrees that the POE Agreement shall supersede and replace the form of Principles of Employment Agreement contained or referenced in any Prior Equity Award (as defined below) made by the Company to the Participant, and, accordingly, such Prior Equity Award shall become subject to the terms and conditions of the POE Agreement.

6. Acceptance of Exhibits A and B. The Participant agrees to be bound by the terms of the Option Rules set forth in Exhibits A and B ("Option Rules").

7. Acceptance of and Agreement to Non-Solicitation and Confidentiality Conditions. In consideration for the award of Options under this Award Agreement, the Participant agrees that the Option is conditioned upon Participant’s compliance with the following non-solicitation and confidentiality conditions (the "Non-Solicitation Conditions" and the “Confidentiality Conditions,” respectively), subject to the state- and country-specific modifications to this Section 7, depending on the Participant’s Employment Jurisdiction (as defined below), as contained in Exhibit B attached hereto and incorporated herein by reference:

(a)The Company and the Participant understand, intend and agree that the Non-Solicitation Conditions of this Section 7 are intended to protect the Travelers Group and other participants in the Plan against the Participant soliciting its employees and/or its customers during the twelve (12) month period (the "Restricted Period") following the date of the Participant's termination of employment with the Travelers Group (whether voluntary or involuntary) as reflected on the Travelers Group’s books and records (the "Termination Date"), while recognizing that after the Termination Date the Participant is still permitted to compete with the Travelers Group subject to the restrictions set forth below. Nothing in this Section 7 is intended to limit any of the Travelers Group’s rights or claims as to any future employer of the Participant.

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(b)Non-Solicitation of Employees. The Participant acknowledges that the Travelers Group sustains its operations and the goodwill of its clients, customers, policyholders, producers, agents, and brokers (its “Customers”) through its employees. The Travelers Group has made significant investment in its employees and their ability to establish and maintain relationships with each other and with the Company Customers in order to further its operations and cultivate goodwill. The Participant acknowledges that the loss of the Travelers Group’s employees could adversely affect its operations and jeopardize the goodwill that has been established through these employees, and that the Travelers Group therefore has a legitimate interest in preventing the solicitation of its employees by the Participant after the Termination Date. During the Restricted Period, the Participant will not, directly or indirectly, seek to recruit or solicit, attempt to influence or assist in the recruitment or solicitation, or participate in or promote the solicitation of, a Covered Employee to terminate their employment with the Travelers Group or to take employment in any other position outside the Travelers Group. The term “Covered Employee” means any person (i) who was or is employed by the Travelers Group at any time during the last three months of the Participant's employment or during the Restricted Period and (ii) with whom the Participant worked, who the Participant supervised, or about whom the Participant acquired Confidential Information during the two-year period immediately preceding the Termination Date (the “Look Back Period”). Without limiting the foregoing restriction, the Participant shall not, on behalf of himself or herself or any other person, hire, employ, or engage any Covered Employee and shall not engage in the aforesaid conduct during the Restricted Period through a third party for the purpose of colluding to avoid the restrictions in this Section 7. Without limiting the generality of the restrictions under this Section 7, by way of example, the restrictions under this Section 7 shall prohibit the Participant from (i) interviewing a Covered Employee for a position outside of the Travelers Group, (ii) communicating in any manner with a Covered Employee in connection with a current or future employment opportunity outside of the Travelers Group, (iii) identifying Covered Employees to potentially be solicited or hired in a position outside of the Travelers Group, (iv) providing information or feedback regarding Covered Employees seeking employment with another employer, and/or (v) otherwise directly or indirectly assisting or participating in the solicitation or hiring of a Covered Employee. However, the Non-Solicitation Conditions do not preclude the Participant from directing a third party (including but not limited to employees of his/her subsequent employer or a search firm) to broadly solicit, recruit, and hire individuals, some of whom may be employees of the Travelers Group, provided that the Participant does not direct such third party specifically to target employees of the Travelers Group generally or specific individual employees of the Travelers Group. This provision shall be referred to as the “Employee Non-Solicitation Conditions.”

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(c)Non-Solicitation of Customers. The Participant acknowledges that by virtue of his or her employment with the Travelers Group, he or she may have developed relationships with and/or had access to Confidential Information (as defined below) about the Company Customers and is, therefore, capable of significantly and adversely impacting existing relationships that the Travelers Group has with them. The Participant further acknowledges that the Travelers Group has invested in its and the Participant’s relationship with the Company Customers and the goodwill that has been developed with them on the Travelers Group’s behalf and, therefore, the Travelers Group has a legitimate interest in protecting these relationships against solicitation and/or interference by the Participant for a reasonable period of time after the Participant’s employment with the Travelers Group ends. If, after the Termination Date, the Participant accepts a position as an employee, consultant, or contractor with a “Competitor” (as defined below), then, during the Restricted Period, the Participant will not, directly or indirectly, solicit, participate in soliciting, encourage, or attempt to influence, or otherwise knowingly engage in any conduct that is intended to cause, or could reasonably be expected to cause, any Company Customer of the Travelers Group to discontinue, curtail, or reduce its business with the Travelers Group and/or move existing or future business of the Travelers Group elsewhere. “Company Customer” means any current, prospective or former client, customer or policyholder of the Travelers Group during the five year period immediately preceding the Termination Date (the “Extended Look Back Period”) (i) on which the Participant, or anyone reporting directly to him or her, worked or was actively engaged in soliciting or servicing, (ii) about which the Participant gained access to Confidential Information (as defined below) during the Participant’s employment with the Travelers Group, or (iii) for which the Participant received commissions or other beneficial credit or compensation from the Travelers Group for business conducted with such current or prospective customer or policyholder. In addition to the foregoing restriction, the Participant agrees not to be personally involved in the negotiation of, competition for, solicitation of, or execution of any individual book roll over(s) or other book of business transfer arrangements involving the transfer of business away from the Travelers Group, at any time during the twenty-four month period following the Termination Date (the “Enhanced Restricted Period”). The Participant may, at any time after the Termination Date, broadly direct a third party (including but not limited to employees of his/her subsequent employer) to negotiate, compete for, solicit, and execute such book roll over(s) or other book of business transfer arrangements, provided that (i) the Participant is not personally involved in such activities and (ii) the Participant does not direct such third party specifically to target business of the Travelers Group. As used herein, “Competitor” shall include any person (including the Participant), business enterprise, or organization, including, without limitation, agents, brokers and producers, that engages in, owns, or controls a significant interest in any entity that engages in the sale of products and/or performance of services of the type sold or performed by the Travelers Group and/or provides advice relating to such products and services. This provision shall be referred to as the “Customer Non-Solicitation Condition.” For purposes of this Agreement, the Customer Non-Solicitation Condition and the Employee Non-Solicitation Condition shall be referred to collectively as the “Non-Solicitation Conditions.”
(d)Solicitation. It will be presumed that “to solicit” or “soliciting” and their derivations mean to interact with another person or entity with the purpose or foreseeable result being to cause, motivate, or induce the person or entity to engage in some responsive action (such as starting, modifying, or ending a business relationship), irrespective of who first initiated contact. It shall not include general advertising (such as “help wanted” ads) that are not targeted at the Travelers Group’s employees or Customers. The Non-Solicitation Conditions are understood to be reasonably and logically limited by geography to those locations where the subjects (Covered Employees and Company Customers) are located and available for solicitation and no further geographic limitation is necessary to make these restrictions reasonable. However, if a different form of geographic limitation is necessary to make one of these restrictions enforceable, then the applicable restriction(s) shall be considered limited to the Employment Jurisdiction and any additional counties, states, or countries where the Travelers Group does business in which the Participant had material involvement or about which the Participant was provided Confidential Information. Nothing in the Non-Solicitation Conditions prohibit solicitation activity that is a Protected Disclosure under Section 7 of the National Labor Relations Act (the “NLRA”) (as described below).
(e)Subject to the non-competition obligations in the Option Rules that apply to Participants meeting the "Retirement Rule," at any time after the Termination Date, the Participant may otherwise compete with the Travelers Group, including, but not limited to, competing on an account by account or deal by deal basis, to the extent that he or she does not violate the provisions of subsection (c) above or any other contractual, statutory, or common law obligations to the Travelers Group.
(f)Notwithstanding anything herein to the contrary, if the Participant breaches any of the Non-Solicitation Conditions of this Section 7, then the Restricted Period (or the Enhanced Restricted Period, if applicable) will be extended until the date that is 12 months (or 24 months , in the case of a breach under Section 7(c) with respect to the restrictions applicable during the Enhanced Restricted Period) after the date of the Participant’s last breach of such Non-Solicitation Conditions, provided, however, that the period of the Participant’s required compliance shall not be indefinite and shall be equal to the maximum time allowed for the Non-Solicitation Conditions under controlling law, and if this extension would make the restriction unenforceable under controlling law, then it will not be applied to the Participant.

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(g)The Participant agrees not to, either during or after his or her employment, use, publish, make available, or otherwise disclose, except for benefit of the Travelers Group in the course of such employment, confidential information (“Confidential Information”) developed by, for, or at the expense of the Travelers Group, or assigned or entrusted to the Travelers Group, unless such information is generally known outside of the Travelers Group. In addition, the Participant will keep at all times, subject to the Travelers Group’s control, and will deliver to or leave with the Travelers Group all written and other materials in any form or medium (including, but not limited to, print, tape, digital, computerized and electronic data, parts, tools, or equipment) containing such Confidential Information upon termination of the Participant’s employment or upon the Company’s request. The Participant also agrees to cooperate to remedy any unauthorized use of such Confidential Information and not to violate any Travelers Group policy regarding same. If, and only if, the controlling state or local law applicable to the Participant requires a time limit to be placed on restrictions concerning the post-employment use of Confidential Information for the restriction to be enforceable, then this restriction on the Participant’s use of Confidential Information that is not a trade secret will expire three (3) years after the Termination Date. This time limit will not apply to (a) Confidential Information that qualifies as a trade secret, or (b) third party Confidential Information. Trade secrets will remain protected for as long as they qualify as trade secrets under applicable law. Items of third-party Confidential Information will remain protected for as long as allowed under the law and/or separate agreements that make them confidential.
(h)“Confidential Information” means any item of information or data, or compilation of information or data, in any form (tangible or intangible) that relates to the Travelers Group’s business, services, products, or customers that the Participant acquires or to which the Participant gains access or that the Participant is enabled to create in the course of the Participant’s employment, and is presumed to include, but is not limited to, non-public information such as: internal information about the Travelers Group’s business, such as financial, sales, marketing, claim, technical and business information, including profit and loss statements, business/marketing strategy and “Trade Secrets” (as defined below); client, customer, policyholder, insured person, claimant, vendor, consultant and agent information, including personal information such as social security numbers and medical information; legal advice obtained; product and system information; and any compilation of this information or employee information obtained as part of the Participant’s responsibilities at the Travelers Group. As used herein, “Trade Secrets” shall include information relating to the Travelers Group and its affiliates that is protectable as a trade secret under applicable law, including, without limitation, and without regard to form: technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, business and strategic plans, product plans, source code, software, unpublished patent applications, customer proposals or pricing information or a list of actual or potential customers or suppliers which is not commonly known by or available to the public and which information derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. The Participant agrees that all records, reports, notes, compilations, or other recorded matter, and copies or reproductions thereof, relating to the Travelers Group’s operations, activities, Confidential Information, or business, made or received by the Participant during the Participant’s employment with any member(s) of the Travelers Group are, and shall be, the property of the Travelers Group exclusively, and the Participant will keep the same at all times subject to the Travelers Group’s control and will deliver or leave with the Travelers Group the same at the termination of the Participant’s employment. Confidential Information does not include information lawfully acquired by non-management employees about wages, hours, or other terms and conditions of employment when used for purposes protected by Section 7 of the National Labor Relations Act, such as joining or forming a union, engaging in collective bargaining, or engaging in other concerted activity for mutual aid or protection of non-management employees.

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(i)Protected Disclosures. If the Participant is not a supervisor (as defined by the NLRA) or member of the Company’s management, then nothing in this Agreement prohibits Participant from engaging in conduct that is protected under Section 7 of the NLRA. Nothing herein should be construed as prohibiting the Participant from sharing information concerning the Participant’s own wages (or the wages of another employee, if voluntarily disclosed by that employee) or other terms and conditions of employment, or for purposes of otherwise pursuing the Participant’s legal rights. The Travelers Group will not terminate, discipline or otherwise discriminate or retaliate against any employee because they make such a disclosure. The Travelers Group, does however, prohibit employees who have access to, or who were entrusted in confidence by the Company with, other employees’ wage information as part of their job functions from sharing such information gathered during the course of their employment, unless such disclosure is in furtherance of or in response to their job duties, an investigation, action or hearing, or the employee otherwise has a legal obligation to furnish the information. For example, an employee who has access to the salaries of other employees due to his or her job responsibilities (such as payroll or benefits administration) generally may not disclose the salary of those co-workers. This Agreement also does not permit an employee to disclose (without the prior written consent of the Travelers Group) Confidential Information or permit an employee to disclose wage information of other employees to a competitor. Additionally, nothing herein is intended to prohibit or restrict the Participant from (i) filing a complaint with, making disclosures to, communicating with or participating in proceedings brought before a court or tribunal in the applicable jurisdiction or in an investigation or proceeding conducted by any governmental agency (including the United States Equal Employment Opportunity Commission and the Securities and Exchange Commission), (ii) pursuing the Participant’s legal rights related to the Participant’s employment with the Travelers Group, or (iii) engaging in activities protected by applicable laws or regulations, including filing a complaint or participating in an investigation being conducted by a government agency. The Participant acknowledges under the federal Defend Trade Secrets Act that employees will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (i) in confidence to a Federal, State or local government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is under seal. Notwithstanding, the Travelers Group does not authorize the waiver of, or disclosure of information covered by, the attorney-client privilege or attorney work product doctrine or any other privilege belonging to the Travelers Group. This Protected Disclosures provision shall not be construed to protect, invite, permit, or limit liability for illegal activity such as breaking and entering, illegal computer access (hacking) or theft or destruction of the Travelers Group’s property.
(j)If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 7 is unreasonable, invalid, or unenforceable in any respect, the parties agree that (i) the court making the determination of invalidity or unenforceability shall have the power to modify or reform the restriction to make it reasonable and enforceable by applicable law, including by reducing the scope, duration, or geographic area of the term or provision, deleting specific words or phrases, or replacing any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision to the greatest extent permitted by applicable law, (ii) the parties shall request that the court exercise that power, and (iii) this Award Agreement shall be enforceable as so modified after the expiration of the time within which the judgment or decision may be appealed.
(k)During the Restricted Period or any extension thereof (as provided for in Section 7(f)), the Participant shall notify any subsequent employer of his or her obligations under this Award Agreement prior to commencing employment. During the Restricted Period or any extension thereof, the Participant will provide the Company and his or her prior manager at the Travelers Group fourteen (14) days’ advance written notice prior to becoming associated with and/or employed by any person or entity or engaging in any business of any type or form, with such notice including the identity of the prospective employer or business, the specific division (if applicable) for which the Participant will be performing services and the title or position to be assumed by the Participant. The Participant must provide a copy of such notice to the Company’s Employee Services Unit by email, facsimile or regular mail as follows:
Email: 4-ESU@travelers.com

Fax: 1.866.871.4378 (U.S. and Canada)
001.866.871.4378 (Europe)


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Mail: The Travelers Companies, Inc.
Employee Services Unit
385 Washington Street
Mail Code: 9275-SB02L
St. Paul, MN USA 55102

(l) As consideration for and by accepting the Option, the Participant agrees that the Non-Solicitation Conditions and Confidentiality Conditions of this Section 7 shall supersede any non-solicitation and confidentiality covenants contained or incorporated in any prior equity award made by the Company to the Participant under the Plan or The Travelers Companies, Inc. Amended and Restated 2014 Stock Incentive Plan ("Prior Equity Awards"); accordingly, the vesting and forfeiture provisions of such Prior Equity Awards shall become subject to the terms and conditions of the Non-Solicitation Conditions and Confidentiality Conditions of this Section 7, provided that if application of the state- and country-specific modifications contained in Exhibit B for the Participant’s Employment Jurisdiction would result in the non-solicitation and confidentiality covenants contained or incorporated in any Prior Equity Awards being less restrictive (including, without limitation, as to activities restrained, length, geographic scope, or with regard to the definitions of Company Customer or Covered Employee), invalid, inapplicable, or unenforceable, then the Non-Solicitation Conditions and Confidentiality Conditions of this Section 7 shall not supersede the non-solicitation and confidentiality covenants contained and incorporated in any Prior Equity Award and such covenants in such Prior Equity Award shall remain in full force and effect after the Participant’s execution of this Agreement. Notwithstanding anything set forth herein to the contrary, these Non-Solicitation Conditions and Confidentiality Conditions shall be in addition to, and shall not supersede, any non-solicitation, non-competition, confidentiality, intellectual property or other restrictive covenants contained or incorporated in (i) any Non-Competition Agreement between any member(s) of the Travelers Group and the Participant arising out of the Participant's service as a Management Committee member or otherwise, (ii) any employment agreement or other agreement between any member(s) of the Travelers Group and the Participant (other than such Prior Equity Awards), or (iii) any other Travelers Group plan or policy that covers the Participant (other than such Prior Equity Awards). Notwithstanding the foregoing, any portion of the Non-Solicitation Conditions that the Travelers Group would be prohibited from enforcing against the Participant under applicable state or local law governing the Participant’s primary place of employment shall be deemed not to apply to the Participant.

8. Forfeiture of Option Awards.

(a)Participant’s Agreement. The Participant expressly acknowledges that the terms of Section 7 and this Section 8 are material to this Agreement and reasonable and necessary to protect the legitimate interests of the Travelers Group, including without limitation, the Travelers Group’s Confidential Information, trade secrets, customer and supplier relationships, goodwill and loyalty, and that any violation of these Non-Solicitation Conditions or Confidentiality Conditions by the Participant would cause substantial and irreparable harm to the Travelers Group and other Participants in the Plan. The Participant further acknowledges and agrees that:
(i)The receipt of the Option constitutes good, valuable, and independent consideration for the Participant's acceptance of and compliance with the provisions of the Award Agreement, including the forfeiture and repayment provision of subsection 8(b) below and the Non-Solicitation Conditions and Confidentiality Conditions of Section 7 above, and the amendment of Prior Equity Award provisions of subsection 7(l), 8(f) and Section 18, below.
(ii)The Participant’s rights with respect to the Option are conditioned on his or her compliance with the POE Agreement at all times after acceptance of the POE Agreement in accordance with Sections 5 and 16 hereunder.
(iii)The scope, duration and activity restrictions and limitations described in this Agreement are reasonable and necessary to protect the legitimate business interests of the Travelers Group. The Participant acknowledges that all restrictions and limitations relating to the Restricted Period will apply regardless of the reason the Participant’s employment ends. The Participant further agrees that any alleged claims the Participant may have against the Travelers Group do not excuse the Participant’s obligations under this Award Agreement.

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(b)Forfeiture and Repayment Provisions. The Participant agrees that, prior to the Termination Date and during the Restricted Period (or the Enhanced Restricted Period, as applicable), if the Participant breaches the Non-Solicitation Conditions, the Confidentiality Conditions and/or the POE Agreement, in addition to all rights and remedies available to the Travelers Group at law and in equity (including without limitation those set forth in the Option Rules for involuntary termination), the Participant will immediately forfeit any portion of the Option under this Award Agreement that has not otherwise been previously forfeited under the Award Rules in Exhibit A and that has not yet been paid, exercised, settled, or vested. The Company may also require repayment from the Participant of any and all compensatory value that the Participant received during the twelve (12) months immediately preceding the Termination Date and through the end of the Restricted Period (or the Enhanced Restricted Period, as applicable) from this Option or any Prior Equity Awards (including without limitation the gross amount of any Common Stock distribution or cash payment made to the Participant upon the vesting, distribution, exercise, or settlement of any such awards and/or any consideration in excess of such gross amounts received by the Participant upon the sale or transfer of the Common Stock acquired through vesting, distribution, exercise, or settlement of any such awards). The Participant will promptly pay the full amount due upon demand by the Company, in the form of cash or shares of Common Stock at current Fair Market Value.
(c)No Limitation on the Travelers Group’s Rights or Remedies. The Participant acknowledges and agrees that the forfeiture and repayment remedies under subsection 8(b) are non-exclusive remedies and shall not limit or modify the Travelers Group's other rights and remedies to obtain other monetary, equitable, or injunctive relief as a result of breach of, or in order to enforce, the terms and conditions of this Agreement or with respect to any other covenants or agreements between the Travelers Group and the Participant or the Participant's obligations under applicable law.
(d)Option Rules. The Option Rules provide a right to payment, subject to certain conditions, following the Participant's Termination Date if the Participant meets the Retirement Rule which, among other conditions, may require that the Participant not engage in any activities that compete with the business operations of the Travelers Group through the settlement or exercise date of the Option (such non-compete condition may extend beyond the Restricted Period). The remedies for a violation of such non-compete conditions are specified in the Option Rules and are in addition to any remedies of the Travelers Group under this Section 8.
(e)Severability. The agreements and covenants contained in Section 7 and/or this Section 8 of the Award Agreement shall be considered separate and severable. If any court of competent jurisdiction determines that any of the terms and conditions of Section 7 or this Section 8 are invalid or unenforceable, the remainder of the terms and conditions of this Award Agreement shall not thereby be affected and shall be given full effect, without regard to the invalid portions, and shall be interpreted as if such invalid portions were not contained herein. If any court determines that any of the terms and conditions are unenforceable because of the duration of such terms and conditions or the area covered thereby, such court shall have the power to reduce the duration or area of such terms and conditions and, in their reduced form, the terms and conditions shall then be enforceable and shall be enforced.
(f)Awards Subject to Recoupment. Except to the extent prohibited by law, this Option and any outstanding Prior Equity Award may be forfeited, and the compensatory value received under such awards (including without limitation the gross amount of any Common Stock distribution or cash payment made to the Participant upon the vesting, distribution, exercise or settlement of such awards, or consideration in excess of such gross amounts received by the Participant upon the sale or transfer of the Common Stock acquired through vesting, distribution, exercise or settlement of such awards) may be subject to recoupment by the Company, in accordance with the Company’s executive compensation recoupment policy and other policies in effect from time to time with respect to forfeiture and recoupment of bonus payments, retention awards, cash or stock-based incentive compensation or awards, or similar forms of compensation, and the terms of any such policy, while it is in effect, are incorporated herein by reference. As consideration for and by accepting the Award Agreement, the Participant agrees that all the remedy and recoupment provisions of this Section 8 shall apply to any Prior Equity Award made by the Company to the Participant, shall be in addition to and shall not supersede any other remedies contained or referenced in any such Prior Equity Award, and, accordingly, such Prior Equity Award shall become subject to both those other remedies and the terms and conditions of this Section 8.

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(g)Survival of Provisions. The agreements, covenants, obligations, and provisions contained in Section 7 and this Section 8 shall survive the Participant’s Termination Date and the expiration of this Award Agreement, and shall be fully enforceable thereafter.

9. Consent to Electronic Delivery. In lieu of receiving documents in paper format, the Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company desires or may be required to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other agreements, forms and communications) in connection with this and any other prior or future incentive award or program made or offered by the Company or its predecessors or successors. Electronic delivery of a document to the Participant may be via a Company e-mail system or by reference to a location on a Company intranet site to which the Participant has access.

10. Administration. The Company’s Compensation Committee or its designee administers the Plan and this Award Agreement and has the authority to interpret any ambiguous or inconsistent terms in its sole discretion. The Participant's rights under this Award Agreement are expressly subject to the terms and conditions of the Plan and to any guidelines the Compensation Committee or its designee adopts from time to time. The interpretation and construction by the Compensation Committee or its designee of the Plan and this Award Agreement, and such rules and regulations as the Compensation Committee or its designee may adopt for purposes of administering the Plan and this Award Agreement, will be final and binding upon the Participant.

11. Entire Agreement/Amendment/Survival/Assignment. The terms, conditions and restrictions set forth in the Plan and this Award Agreement constitute the entire understanding between the parties hereto regarding the Option and supersede all previous written, oral, or implied understandings between the parties hereto about the subject matter hereof, except as otherwise provided in Section 7(l) above regarding the Non-Solicitation Conditions and the Confidentiality Conditions and/or in the Retirement Rule set forth in Exhibit A. This Award Agreement may be amended by a subsequent writing (including e-mail or electronic form) agreed to between the Travelers Group and the Participant. Section headings herein are for convenience only and have no effect on the interpretation of this Award Agreement. The provisions of the Award Agreement that apply to a time period or require performance or enforcement after the Termination Date, including the Non-Solicitation Conditions, the Confidentiality Conditions, and the Retirement Rule, shall survive and remain in full force and effect after the Termination Date of a Participant and the termination of this Award Agreement, specifically including the post-employment restrictions contained in Sections 7 and 8 of this Award Agreement. The Company may assign this Award Agreement and its rights and obligations hereunder to any current or future member of the Travelers Group in its sole discretion and without further consent of the Participant.

12. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group for a fixed duration of time. The employment relationship is "at will," which affords the Participant or the Travelers Group the right to terminate the relationship at any time for any reason or no reason not otherwise prohibited by applicable law. The Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant's employment with the Travelers Group. The Option granted hereunder will not form part of the Participant’s regular employment compensation and will not be considered in calculating any statutory benefits or severance pay due to the Participant.


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13. No Limitation on the Company's Rights. The Participant agrees that nothing in this Award Agreement shall in any way affect the Company's right or power to make adjustments, reclassifications or changes in its capital or business structure or to merge, consolidate, reincorporate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

14. Transfer Restrictions. The Participant may not sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or dispose of the Option or his or her right under the Option to receive shares of Common Stock, except as otherwise provided in the Prospectus.

15. Conflict. In the event of a conflict between the Plan and the Award Agreement the Plan terms shall govern.

16. Acceptance and Agreement by the Participant; Forfeiture upon Failure to Accept. By accepting this Option, the Participant agrees to be bound by the terms, conditions, and restrictions set forth in the Plan, this Award Agreement, and the Travelers Group’s policies, as in effect from time to time, relating to the Plan. The Participant's rights under the Option will lapse ninety (90) days from the Grant Date, and the Option will be forfeited on such date if the Participant does not accept the Award Agreement by such date. For the avoidance of doubt, the Participant's failure to accept the Award Agreement shall not affect his or her continuing obligations under any other agreement between any member(s) of the Travelers Group and the Participant. Additionally, the Participant acknowledges and agrees that the Participant’s acceptance of this Option is voluntary and not a condition of employment, and the Participant may decline to accept this Option without adverse consequences to the Participant’s continued employment relationship with the Travelers Group. Participant is advised to consult with an attorney before entering into this Award Agreement.

17. Waiver; Cumulative Rights. The Company’s failure or delay to require performance by the Participant of any provision of this Award Agreement will not affect its right to require performance of such provision unless and until the Company has waived such performance in writing. Each right under this Award Agreement is cumulative and may be exercised in part or in whole from time to time.

18. Governing Law. The Award Agreement shall be legally binding and shall be executed and construed and its provisions enforced and administered in accordance with the laws of the Participant’s Employment Jurisdiction. For purposes of this Award Agreement, the “Employment Jurisdiction” means the state or, if outside of the United States, the country where the Participant primarily resides and works for the Company Group as of the Termination Date, and if the Participant’s state or country of residence is different from the state or country in which the Participant is primarily employed to work for the Company Group, then the Participant’s Employment Jurisdiction will be the state or country of the Participant’s assigned Travelers’ office location as reflected in the Company’s human resources information systems as of the Termination Date. If the Participant spends more than half the Participant’s work time working for the Company in the District of Columbia (“DC”), or is based in DC and the Participant does not spend the majority of the Participant’s work time working in another jurisdiction, then DC will be the Participant’s Employment Jurisdiction. If the Participant’s Employment Jurisdiction is listed in Exhibit B to this Award Agreement, the provisions of this Award Agreement are herein modified as indicated in Exhibit B for that state or country, but only while that applicable state or country remains the Participant’s Employment Jurisdiction. For purposes of this Award Agreement, the Participant shall have only one Employment Jurisdiction at any given time.

19. Forum for Disputes. The jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), this Agreement will be exclusively in the courts in the Employment Jurisdiction, including, for states within the United States, the Federal Courts located therein (should Federal jurisdiction exist). The parties consent to and submit to the personal jurisdiction and venue of courts of the Employment Jurisdiction and irrevocably waive any claim or argument that the courts in the Employment Jurisdiction are an inconvenient forum (whether based on convenience, cost, location of witnesses or evidence, or otherwise). Unless otherwise required by applicable law, the Participant agrees to accept service of any court filings and process by delivery to his or her most current home address on record with the Travelers Group via first class mail or other nationally (in the case of the United States) or internationally (in the case of non-US countries) recognized overnight delivery provider, or by any third party regularly engaged in the service of process.

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As consideration for and by accepting the Option, the Participant agrees that the Governing Law and Forum for Disputes provision of Section 18 and this Section 19 shall supersede any governing law, forum or similar provisions contained or referenced in any Prior Equity Award made by the Company to the Participant, and, accordingly, such Prior Equity Award shall become subject to the terms and conditions of the Governing Law and Forum for Disputes provisions of Section 18 and this Section 19.

20. Personal Data. The Participant understands that the Company and other members of the Travelers Group hold certain personal information about the Participant, which may include, without limitation, information such as his or her name, home address, telephone number, gender, date of birth, salary, nationality, job title, social insurance number or other such tax identity number and details of all awards or other entitlement to shares of common stock awarded, cancelled, exercised, vested, unvested or outstanding in his or her favor (“Personal Data”).

The Participant understands that in order for the Company to process the Participant’s Option and maintain a record of Options under the Plan, the Company shall collect, use, transfer and disclose Personal Data within the Travelers Group electronically or otherwise, as necessary for the implementation and administration of the Plan including, in the case of a social insurance number, for income reporting purposes as required by law. The Participant further understands that the Company may transfer Personal Data, electronically or otherwise, to third parties, including but not limited to such third parties as outside tax, accounting, technical and legal consultants when such third parties are assisting the Company or other members of the Travelers Group in the implementation and administration of the Plan. The Participant understands that such recipients may be located within the jurisdiction of residence of the Participant, or within the United States or elsewhere and are subject to the legal requirements in those jurisdictions applicable to those organizations, for example, lawful requirements to disclose personal information such as the Personal Data to government authorities in those countries. The Participant understands that the employees of the Travelers Group and third parties performing work related to the implementation and administration of the Plan shall have access to the Personal Data as is necessary to fulfill their duties related to the implementation and administration of the Plan. By accepting the Option, the Participant consents, to the fullest extent permitted by law, to the collection, use, transfer and disclosure, electronically or otherwise, of his or her Personal Data by or to such entities for such purposes and the Participant accepts that this may involve the transfer of Personal Data to a country which may not have the same level of data protection law as the country in which this Award Agreement is executed. The Participant confirms that if the Participant has provided or, in the future, will provide Personal Data concerning third parties including beneficiaries, the Participant has the consent of such third party to provide their Personal Data to the Travelers Group for the same purposes.

The Participant understands that he or she may, at any time, request to review the Personal Data and require any necessary amendments to it by contacting the Company in writing. Additionally, the Participant may always elect to forgo participation in the Plan or any other award program.


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EXHIBIT A

OPTION RULES TO TRAVELERS' STOCK OPTION GRANT NOTIFICATION AND AGREEMENT

When you leave the Travelers Group

References to "you" or "your" are to the Participant. "Termination Date" is defined in Section 7(a) of the Award Agreement and means the date of the termination of your employment with the Travelers Group (whether voluntary or involuntary) as reflected on the books and records of the Travelers Group.

If you terminate your employment or if there is a break in your employment, your Option may be cancelled before the end of the vesting period and the vesting and exercisability of your Option may be affected.

The provisions in the chart below apply to Options granted under the Plan. Depending upon your employment jurisdiction upon the Grant Date, special rules may apply for vesting, payment, exercise and exercisability of your Option in cases of termination of employment if you satisfy certain age and years of service requirements ("Retirement Rule"), as set forth in "Retirement Rule" below. Participants based in countries outside the United States on the Grant Date or in California immediately prior to the Termination Date should refer to Exhibit B for special rules that apply. For the avoidance of doubt, the applicable vesting terms for your Option pursuant to Exhibits A and B shall be based on your employment jurisdiction on the Grant Date.

If any Option exercisability period set forth in the chart below or under "Retirement Rule" below would otherwise expire during an Option Exercise Suspension, the Option shall remain exercisable for a period of 30 days after the Option Exercise Suspension (as defined in Section 4 of the Award Agreement) is lifted by the Company (but no later than the original option expiration date, which is the tenth (10th) anniversary of the Grant Date).

If You: Here's What Happens to Your Options:
Terminate employment or your employment is terminated by the Travelers Group for any reason other than due to death or disability (but you do not meet the Retirement Rule and you do not qualify for accelerated vesting following a Change of Control, as described below) Vesting stops and unvested options are cancelled effective on the Termination Date. You may exercise your vested options for up to 90 days after the Termination Date but no later than the original option expiration date; provided, however, that if your employment is terminated for cause or gross misconduct (as determined by the Company in its sole discretion) or you voluntarily terminated your employment where grounds for involuntary termination for gross misconduct or for cause existed (as determined by the Company in its sole discretion at the time of or following your termination of employment) you may not exercise vested options at any time after the Termination Date.
Become disabled (as defined under the Travelers Group's applicable long-term disability plan or policy covering disabilities in your employment jurisdiction) Options continue to vest on schedule through an approved disability leave. Upon the earlier of the (i) Termination Date or (ii) the first anniversary of the commencement of your approved disability leave, your unvested options will vest, and you may exercise your options for up to one year from such date, but no later than the original option expiration date.

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Take an approved personal leave of absence approved by the Travelers Group under its Personal Leave Policy, if applicable For the first three months of an approved personal leave, vesting continues. If the approved leave exceeds three months, vesting is suspended until you return to work with the Travelers Group and remain actively employed for 30 calendar days, after which time vesting will be restored retroactively. Vested options may be exercised during approved leave, but no later than the original option expiration date. If you terminate employment for any reason during the first year of an approved leave, the termination of employment provisions will apply. If the leave exceeds one year, all options will be cancelled immediately.
Are on an approved family leave, medical leave, dependent care leave, military leave, or other statutory leave of absence or notice leave (including, without limitation, “garden leave” but not including any period corresponding to pay in lieu of notice (by statute or common law), severance pay or other monies on account of the cessation of your employment)
 Options will continue to vest on schedule, and you may exercise vested options during the leave but no later than the original option expiration date.
Die while employed or following employment while your option is still outstanding
 Options fully vest upon death. Your estate may exercise options for up to one year from the date of death but no later than the original option expiration date.
Are involuntarily terminated without “Cause” (as defined below) or terminate employment for “Good Reason” (as defined below), in each case, within 24 months following a Change of Control (as defined in the Plan), and including, without limitation, if such involuntary termination without “Cause” or termination for “Good Reason” within 24 months following a Change of Control occurs after the onset of a disability or other approved leave or after meeting the Retirement Rule (any such termination, a “COC Termination”) Unvested options fully vest on the Termination Date. You may exercise your vested options for up to 90 days after the Termination Date (or up to one year after the Termination Date if you are disabled on the Termination Date, or as described below if you meet the Retirement Rule) but in any case no later than the original option expiration date.

The terms “Cause” and “Good Reason”, as used above, shall only be applicable with respect to a termination of employment that occurs within 24 months following a Change of Control and shall have the following meanings:

“Cause” shall mean your conviction of any felony (or equivalent crime committed outside the United States), your willful misconduct in connection with the performance of your duties with the Company, or your taking illegal action in your business or personal life that harms the reputation or damages the good name of the Company.

“Good Reason” shall mean (i) a material reduction in your base salary or bonus opportunity (except for year over year reductions in payout due to performance), (ii) a material diminution in your title, duties, or responsibilities (other than solely by reason of the Company ceasing to be a publicly traded company), or (iii) an involuntary relocation of more than 30 miles of your principal place of business.

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Notwithstanding the foregoing, no event shall constitute Good Reason unless and until you have notified the Company in writing describing the event which constitutes Good Reason and then only if the Company shall fail to cure such event within thirty (30) days following its receipt of such written notice; provided, further, that “Good Reason” shall cease to exist for an event on the 90th day following the later of its occurrence or your knowledge thereof, unless you have given the Company written notice thereof prior to such date.

Retirement Rule

If, as of your Termination Date (including, without limitation, a Termination Date that occurs after the onset of a disability or other approved leave), you are at least (i) age 62 with one or more full years of service or (ii) age 55 with 10 or more full years of service, then you meet the "Retirement Rule." If you meet the Retirement Rule pursuant to clause (ii) of the preceding sentence (but not pursuant to clause (i) of the preceding sentence), that will constitute an “Early Retirement” for purposes of this Agreement.

The Retirement Rule will not apply to your Option or any Prior Equity Award if you were involuntarily terminated for gross misconduct or for cause (as determined by the Company in its sole discretion at the time of or following your termination of employment) or you voluntarily terminated your employment where grounds for involuntary termination for gross misconduct or for cause existed (as determined by the Company in its sole discretion at the time of or following your termination of employment); provided, however, that if such termination occurs within 24 months following a Change of Control, the Retirement Rule will only not apply to your Option or any Prior Equity Award if you are involuntarily terminated for “Cause” (as defined above) or if you voluntarily terminate employment where grounds for “Cause” (as defined above) existed. If you retire and do not meet the Retirement Rule, you will be considered to have resigned.
If You:
Meet the Retirement Rule (subject to Exhibit B if applicable)
Unvested options fully vest on the Termination Date. Vested options may be exercised for up to five years from the Termination Date in the case of an Early Retirement, but no later than the original option expiration date, and may be exercised until the original option expiration date in the case of a termination meeting the Retirement Rule that is not an Early Retirement; provided, in each case, that you do not engage in any activities that compete with the business operations of the Travelers Group (as determined by the Company in its sole discretion), including, but not limited to, working for another insurance company engaged in the property casualty insurance business as either an employee or independent contractor. You are not subject to this non-compete provision if you are terminated involuntarily or if you are employed in any state or country where applicable law prohibits such non-compete provisions, as identified in the state and country-specific modifications set forth in Exhibit B of the Award Agreement, but you remain subject to Sections 7 and 8 of the Award Agreement, and the POE Agreement.

When you exercise any options subject to the Retirement Rule, your exercise will represent and constitute your certification to the Company that you have not engaged in any activities that compete with the business operations of the Travelers Group since your Termination Date. You may be required to provide the Company with other evidence of your compliance with the Retirement Rule as the Company may require. Subject to the state- and country-specific modifications set forth in Exhibit B of the Award Agreement, in the event that you are determined to have engaged in competitive activities while receiving the benefit of continued vesting pursuant to the Retirement Rule (other than following an involuntary termination), any outstanding portion of the Option will be immediately forfeited and any portion of the Option previously paid to you will be subject to recoupment by the Company in accordance with Section 8(f) of the Award Agreement.


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EXHIBIT B

Special Rules Applicable to Participants Based in Certain Jurisdictions

Terms and Conditions

This Exhibit B includes additional and/or alternative terms and conditions that govern the Option granted to the Participant under The Travelers Companies, Inc. 2023 Stock Incentive Plan (the “Plan”) if the Participant’s Employment Jurisdiction is one of the jurisdictions listed below on the Grant Date or on the Termination Date. Capitalized terms used but not defined in this Exhibit B are defined in the Plan and/or Award Agreement and have the meanings set forth therein. To the extent that this Exhibit B is applicable to the Participant (based on the Participant’s Employment Jurisdiction on the Grant Date or on the Termination Date), the provisions set forth in this Exhibit B will apply to the Participant and will supersede the corresponding provisions set forth in the Award Agreement with respect to the Participant.

Notifications

This Exhibit B also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant's participation in the Plan. The information is based on the securities, exchange control, and other laws in effect in the respective jurisdictions as of July 2023. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant should not rely on such information noted in this Exhibit B as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date by the time the Participant’s Option hereunder is exercised.

In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation, and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s Employment Jurisdiction may apply to the Participant's situation.


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Low Wage Worker Protections. The parties acknowledge that some states prohibit or place limitations on the use of covenants not to compete or noncompete covenants with an employee considered to be a low wage worker based on the employee’s rate of compensation or overtime exemption status under the Fair Labor Standards Act (a “Low Wage Worker Protection” law, or “LWWP law”). It is the parties’ intent not to create any restriction that would violate any controlling state LWWP law. Where the controlling state’s law includes an LWWP law, it is the parties’ intent that this Agreement’s obligations be construed so as to fit within any applicable exclusion for duty of loyalty obligations, non-solicitation covenants, confidential information protection covenants, and intellectual property assignment agreements recognized under the LWWP law at issue, and that it not create a prohibited covenant not to compete.

Alabama:
If Alabama is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) Section 7(b) is rewritten as follows: “While employed and for a period of twelve (12) months from the date of the termination of the Participant’s employment, the Participant will not participate in soliciting any Covered Employee of the Travelers Group who is in a Sensitive Position to leave the employment of the Travelers Group on behalf of (or for the benefit of) a Competitor nor will the Participant knowingly assist a Competitor in efforts to hire a Covered Employee away from the Travelers Group or encouraging the Covered Employee to terminate their employment the Travelers Group. An employee in a “Sensitive Position” refers to an employee of the Travelers Group who is uniquely essential to the management, organization, or service of the business; and (b) “Company Customer” means a current customer of the Travelers Group with which the Participant had material business-related contact or dealings or access to Confidential Information about during the Look Back Period.

California:
If California is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 7(b) and 7(c) and the non-competition restrictions in the Retirement Rule shall not apply after the Participant’s employment with the Travelers Group ends. However, any conduct relating to the solicitation of the Company Customers or Covered Employees that involves the misappropriation of the Travelers Group’s trade secret information (as defined by applicable law), such as its protected customer information, will remain prohibited conduct at all times.

Section 19 shall be modified to add that no provision in Section 19 shall require the Participant to litigate any dispute outside the State of California.

Nothing in the Agreement shall be construed to prohibit the Participant from disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that the Participant has reason to believe is unlawful.

Colorado:
If Colorado is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) Non-Competition and Non-Solicitation Restrictions. If the Participant does not earn an amount of annualized cash compensation equivalent to or greater than the threshold amount for highly compensated workers, $101,250 (or the earnings threshold in effect as adjusted annually after August 10, 2022, by the Colorado Division of Labor Standards and Statistics in the Department of Labor and Employment)(“Non-Competition Earnings Threshold”), then the non-competition restrictions contained in the Retirement Rule shall not apply after the Participant’s employment with the Travelers Group ends. If the Participant does not earn an amount of annualized cash compensation equivalent to or greater than sixty-percent of the threshold amount for highly compensated workers, $60,750 (or the earnings threshold in effect as adjusted annually after August 10, 2022, by the Colorado Division of Labor Standards and Statistics in the Department of Labor and Employment)(“Customer Non-Solicitation Earnings Threshold”), then the Customer Non-Solicitation Condition in Section 7(c) shall not apply after the Participant’s employment with the Travelers Group ends.

The definition of “Company Customer” in Section 7(c) shall be modified to cover only those customers or other key relationships with respect to which the Participant would have been provided trade secret information during the Look Back Period.

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The Participant stipulates that the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 7(b) and 7(c) are reasonable and necessary for the protection of trade secrets within the meaning § 8-2-113(2)(b) (the “Colorado Noncompete Act”).

(b) Notice. the Participant acknowledges that they received notice of the restriction on competing contained in the Retirement Rule and its terms before the Participant accepted an offer of employment, or, if a current employee at the time the Participant enters into this Agreement, at least fourteen (14) days before the earlier of the effective date of the Agreement or the effective date of any additional compensation or change in the terms or conditions of employment that provides consideration for such covenant not to compete. The Confidential Information restrictions in this Agreement do not prohibit a worker’s disclosure of information that arises from the worker’s general training, knowledge, skill, or experience, whether gained on the job or otherwise, information that is readily ascertainable to the public, or information that a worker otherwise has a right to disclose as legally protected conduct. Nothing in this Agreement or the Travelers Group’s policy limits or prevents a worker from disclosing information about workplace health and safety practices or hazards.

District of Columbia:
If the Participant performs a majority of their work in the District of Columbia or is based in the District of Columbia and does not perform the majority of their work in any other jurisdiction, then the Agreement will be modified as follows:

(a) the noncompetition provision contained in the Retirement Rule will not be enforceable against the Participant after their employment with the Travelers Group ends unless the Participant earns (or is anticipated to earn) from the Travelers Group at least $150,000 in compensation in a consecutive 12-month period, increased in proportion to the annual average increase, if any, in the Consumer Price Index for All Urban Consumers in the Washington Metropolitan Statistical Area published by the Bureau of Labor Statistics of the United States Department of Labor for the previous calendar year (“Earnings Threshold”);

(b) nothing in this Agreement or any the Travelers Group’s policy restricts the Participant from having additional employment or contract work in addition to their employment with the Travelers Group so long as the employment or work would not result in the employee’s disclosure or use of Confidential Information or create a conflict of interest. The Participant shall notify the Travelers Group’s Human Resources Department prior to accepting any such additional employment or contract work so the Travelers Group may determine whether such employment violates or would likely violate this subparagraph (b) of the D.C. appendix;

(c) subject to the limitation in subparagraph (a) of the D.C. appendix, the definition of “Restricted Period” shall include the term of employee’s employment with the Travelers Group and the 365 days following the termination of that employment, regardless of the reason;

(d) the Participant acknowledges they received a copy of the Agreement, including the Exhibit B, at least 14 calendar days before the Participant began working for the Travelers Group, if a new hire, or, at least 14 days before the Participant was required to sign the Agreement, if already employed by the Travelers Group at the time the Participant is asked to sign the Agreement. If the Participant’s compensation meets the Earnings Threshold, the Participant further acknowledges that they received the following notice: “The District’s Ban on Non-Compete Agreements Amendment Act of 2020 limits the use of non-compete agreements. It allows employers to request non-compete agreements from highly compensated employees, as that term is defined in the Ban on Non-Compete Agreements Amendment Act of 2020, under certain conditions. The Travelers Group has determined that you are a highly compensated employee. For more information about the Ban on Non-Compete Agreements Amendment Act of 2020, contact the District of Columbia Department of Employment Services (DOES).”

Georgia:
If Georgia is deemed to be the Employment Jurisdiction: the definition of Confidential Information will be understood to exclude information voluntarily disclosed to the public by the Travelers Group (excluding

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unauthorized disclosures by the Participant or others), information that is the result of independent development by others, and information that is otherwise available in the public domain through lawful means. Nothing in this Agreement, including the definition of Confidential Information, limits or alters the definition of what constitutes a trade secret under any federal or state law designed to protect trade secrets. The Employee Non-Solicitation Condition will be limited to the Restricted Territory.

Hawaii:
If Hawaii is deemed to be the Employment Jurisdiction, then the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 7(b) and 7(c), and the covenant not to compete contained in the Retirement Rule, shall not apply after the Participant’s employment with the Travelers Group ends. However, any conduct relating to the solicitation of Company Customers or Covered Employees that involves the misappropriation of the Travelers Group’s trade secret information (as defined by applicable law), such as its protected customer information, will remain prohibited conduct at all times.

Illinois:
If the Participant resides in Illinois at the time this Agreement is entered into, then the Participant agrees that the award of the Option provided for in the Award Agreement constitutes sufficient consideration for this Agreement, to supplement and not replace or eliminate the value and sufficiency of the remaining consideration provided for by this Award Agreement. The Participant stipulates that this is adequate consideration to make the provisions of this Agreement immediately binding upon him or her.

In addition, if Illinois is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) the non-competition restrictions in the Retirement Rule shall not apply to employees earning less than $75,000.00 per year (“Non-Compete Earnings Threshold”) (with the Non-Compete Earnings Threshold increasing by $5,000 every five years from January 1, 2027 through January 1, 2037) after the Participant’s employment with the Travelers Group ends;

(b) the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition contained in Sections 7(b) and 7(c) shall not apply to employees earning less than $45,000.00 per year (“Non-Solicitation Earnings Threshold”) (with the Non-Solicitation Earnings Threshold increasing by $2,500 every five years from January 1, 2027 through January 1, 2037) after the Participant’s employment with the Travelers Group ends;

(c) if, at the time the Participant signs the Agreement, the Participant’s earnings do not meet the Non-Compete Earnings Threshold and/or the Non-Solicitation Earnings Threshold, then the covenant not to compete contained in the Retirement Rule will automatically become enforceable against the Participant if and when the Participant begins earning an amount equal to or greater than the Non-Compete Earnings Threshold, and the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 7(b) and 7(c) will automatically become enforceable against the Participant if and when the Participant begins earning an amount equal to or greater than the Non-Solicitation Earnings Threshold;

(d) the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition contained in Sections 7(b) and 7(c) and the covenant not to compete contained in the Retirement Rule shall not apply to employees furloughed or terminated due to business circumstances or governmental orders related to COVID-19 or similar situations unless the Participant continues to be paid his or her base salary in the enforcement period; and

(e) the Participant acknowledges that he or she has been advised in writing to seek attorney consultation and was provided at least 14 calendar days to review this Agreement before signing.

Indiana:
If Indiana is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Employee Non-Solicitation Conditions in Section 7(b) shall be modified to further limit the restriction on If the Participant resides in Massachusetts at the time this Agreement is entered into, then the Participant stipulates that the Option award provided for in the Award Agreement is adequate consideration to make the provisions of this Agreement immediately binding upon him or her.

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solicitation of Covered Employees to those who have access to or possess any Confidential Information that would give a competitor an unfair advantage.

Louisiana:
If Louisiana is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the “Restricted Territory” defined in Section 7 of the Agreement is understood to cover the following parishes, counties, and county equivalents: in Louisiana, the parishes of Acadia, Allen, Ascension, Assumption, Avoyelles, Beauregard, Bienville, Bossier, Caddo, Calcasieu, Caldwell, Cameron, Catahoula, Claiborne, Concordia, Desoto, East Baton Rouge, East Carroll, East Feliciana, Evangeline, Franklin, Grant, Iberia, Iberville, Jackson, Jefferson Davis. Jefferson, Lafayette, Lafourche, LaSalle, Lincoln, Livingston, Madison, Morehouse, Natchitoches, Orleans, Ouachita, Plaquemines, Pointe Coupee, Rapides, Red River, Richland, Sabine, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Landry, St. Martin, St. Mary, St. Tammany, Tangipahoa, Tensas, Terrebonne, Union, Vermillion, Vernon, Washington, Webster, West Baton Rouge, West Carroll, West Feliciana, Winn; and, for any additional states assigned to me as part of my Territory, the names of the counties (and equivalents) for such state(s) found in Geographic Areas Reference Manual published by the United States Census Bureau, also identified on the Census Bureau’s map published at stco2003.pdf (census.gov), and at https://en.wikipedia.org/wiki/List_of_counties_by_U.S._state_and_territory which lists of county and county equivalent names by state are incorporated herein by reference as if set forth in full.; and (b) the restrictions in Section 7 shall be limited to the foregoing parishes and counties.

Maine:
If Maine is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the Participant acknowledges that if the Participant is being initially hired by the Travelers Group that the Participant was notified a non-compete agreement would be required prior to their receiving a formal offer of employment from the Travelers Group and the Participant received a copy of this Agreement prior to receiving a formal offer of employment from the Travelers Group and was given at least three business days to consider the Agreement before signing; (b) the covenant not to compete contained in the Retirement Rule will not take effect until one year of employment or a period of six months from the date the agreement is signed, whichever is later; and (c) the covenant not to compete contained in the Retirement Rule shall not apply if the Participant earns at or below 400% of the federal poverty level.

Maryland:
If Maryland is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the covenant not to compete contained in the Retirement Rule shall not apply if the Participant earns equal to or less than $15/hour or $31,200 annually.

Massachusetts:
In addition, if Massachusetts is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) the covenant not to compete contained in the Retirement Rule will not apply if the Participant’s employment is terminated without cause or if the Participant is terminated as part of a reduction in force. The Participant further understands that for the limited purposes of the application of the covenant not to compete in the Retirement Rule of the Agreement, “cause” to terminate the Participant’s employment exists if the Participant has (i) been convicted of or entered a plea of guilty or nolo contendere to, or admission to facts sufficient for a finding of guilt for, any crime constituting a felony or any misdemeanor involving fraud, dishonesty and/or moral turpitude, (ii) violated a material term of this Agreement or the Travelers Group’s policies, (iii) engaged in insubordination, or failed or refused to perform assigned duties of my position despite reasonable opportunity to perform, (iv) failed to exercise reasonable care and diligence in the exercise of the Participant’s duties for the Travelers Group (other than due to physical or mental illness), (v) engaged in conduct or omissions that the Participant knew, or should have known (with the exercise of reasonable care), would cause, or be likely to cause, harm to the Travelers Group or its reputation in the business community, or (vi) engaged in any other act that is accepted as cause for termination under the common law;

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(b) the period of the covenant not to compete contained in the Retirement Rule shall be limited to a period of one year following the cessation of employment by the Travelers Group (as well as while employed by the Travelers Group) (the “Non-Compete Restricted Period”); however, if the Participant breaches the covenant not to compete contained in the Retirement Rule of this Agreement, and also breaches the Participant’s fiduciary duty to the Travelers Group and/or has unlawfully taken, physically or electronically, any company records, then the Non-Compete Restricted Period shall be extended to a period of two (2) years from the cessation of employment;

(c) the Participant acknowledges that if the Participant is being initially hired by the Travelers Group that the Participant received a copy of this Agreement with their first formal offer of employment from the Travelers Group or at least ten (10) business days before commencement of the Participant’s employment by the Travelers Group, whichever came first; and if the Participant was already employed by the Travelers Group at the time of signing this Agreement, that the Participant was provided a copy hereof at least ten (10) business days before the effective date of this Agreement;

(d) the extension of the Restricted Period or the Enhanced Restricted Period contained in Section 7(f) shall only apply to any breach of Sections 7(b) and 7(c) (i.e., the tolling language shall not apply to the Retirement Rule);

(e) the covenant not to compete contained in the Retirement Rule shall not apply to the Participant post-employment if the Participant is: classified as non-exempt under the FLSA; 18 years or younger; or an undergraduate or graduate student in an internship or other short-term employment relationship while enrolled in college or graduate school; and

(f) Section 19 shall be modified to add that any legal action arising from this Agreement shall be exclusively finally resolved by a state or federal court located in the county where the Participant resides or the business litigation session of the superior court in Suffolk County, Massachusetts, and the parties to this Agreement hereby consent to personal jurisdiction therein.

Minnesota:
If the Participant’s Employment Jurisdiction is Minnesota, then the following shall apply to this Award Agreement:

Notwithstanding anything set forth in this Agreement to the contrary, if Minnesota law is deemed to apply to this Agreement, then (i) the covenant not to compete in the Retirement Rule will not apply to the Participant, unless Minnesota Statutes § 181.988 has been repealed or otherwise has no legal effect or application to the Retirement Rule as of the date the Participant’s employment with the Travelers Group terminates; and (ii) with respect to claims arising under Minnesota Statutes § 181.988 (referencing “Covenants Not To Compete”), nothing in this Agreement will require the Participant to adjudicate outside of Minnesota any claim arising in Minnesota or deprive the Participant of the substantive protection of Minnesota law with respect to a controversy arising in Minnesota.

Missouri:
If Missouri is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Employee Non-Non-Solicitation Conditions in Section 7(b) will be modified to exclude from the definition of Covered Employee any employee who provides only secretarial or clerical services.

Nebraska:
If Nebraska is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the list of Company Customers that are subject to the restriction in Section 7(c) is modified so that it means any persons or entities with which the Participant did business and had personal business-related contact during the Look Back Period; and (B) the covenant not to compete in the Retirement Rule does not apply after the Participant’s employment with the Travelers Group ends.


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Nevada:
If Nevada is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) the covenant not to compete restriction in the Retirement Rule shall not apply if the Participant is paid solely on an hourly wage basis, exclusive of any tips or gratuities (that is, if the Participant is paid on an hourly wage basis and does not receive bonuses, profit sharing, or commissions in addition to his or her hourly wages);

(b) the covenant not to compete in the Retirement Rule will not become effective until the Participant has either been employed by the Travelers Group for sixty (60) days or received $5,000 in wages from the Travelers Group;

(c) if the Participant’s employment with the Travelers Group is terminated as a result of a reduction in force, reorganization or similar restructuring of the Travelers Group, the covenant not to compete in the Retirement Rule will only be enforceable during the period in which the Travelers Group is paying the Participant’s salary, benefits, or equivalent compensation, including without limitation, severance pay, if it elects to make such a payment; and

(d) Section 7 does not preclude the Participant from providing services to any former client, customer, or key relationship of the Travelers Group if: (1) the Participant did not solicit the former customer, client, or key relationship; (2) the customer, client, or key relationship voluntarily chose to leave and seek services from the Participant; and (3) the Participant is otherwise complying with the limitations in this Agreement as to time, geographical area, and scope of activity to be restrained.

New Hampshire:
If New Hampshire is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the covenant not to compete in the Retirement Rule does not apply if the Participant earns an hourly rate less than or equal to 200 percent of the federal minimum wage; and (b) the Participant acknowledges that the Participant was given a copy of this Agreement prior to a change in job classification or the offer of employment.

New York:
If New York is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the customers subject to the restriction on solicitation contained in the Customer Non-Solicitation Condition in Section 7(c) shall be modified so that it excludes from its definition of “Company Customer” those clients who became a customer of the Travelers Group as a result of the Participant’s independent contact and business development efforts with the customer prior to and independent from his/her employment with the Travelers Group.

North Carolina:
If North Carolina is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Look Back Period shall be calculated looking back one year from the date the employment ends or two years from the date of enforcement and not from the date employment ends, whichever provides the Travelers Group the greatest protection and is enforceable under applicable law.

North Dakota:
If North Dakota is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Customer Non-Solicitation Condition in Section 7(c) and the covenant not to compete in the Retirement Rule shall not apply after the Participant’s employment with the Travelers Group ends. The Participant’s Employee Non-Solicitation Conditions continue to apply as stated. Further, any conduct relating to the solicitation of Company Customers or Covered Employees that involves the misappropriation of the Travelers Group’s trade secret information (as defined by applicable law), such as its protected customer information, will remain prohibited conduct at all times.

Oklahoma:
If Oklahoma is deemed to be the Employment Jurisdiction, then the following applies to the Participant: The Customer Non-Solicitation Condition in Section 7(c) and the covenant not to compete contained in the Retirement Rule shall be limited in their application so that they permit the Participant to engage in the same business as that conducted by the Travelers Group or in a similar business as long as the Participant does not directly solicit the sale of goods, services, or a combination of goods and services from established customers of the Travelers Group.

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Established customers are those persons and entities who have an ongoing business relationship or prospective business relationship with the Travelers Group and who did business with the Travelers Group (or made an agreement to do business with the Travelers Group) in the Look Back Period.

Oregon:
If Oregon is deemed to be the Employment Jurisdiction, then the following applies to the Participant: unless the Travelers Group chooses to compensate the Participant as allowed under the Oregon Noncompete Act (Or. Rev. Stat. §653 et seq.), the restrictions in the Retirement Rule shall only apply to the Participant, and the definition of “Company Customers” subject to the Customer Non-Solicitation Condition in Section 7(c) will only be deemed to include prospective customers, if the Participant: (a) is engaged in administrative, executive or professional work and performs predominantly intellectual, managerial, or creative tasks, exercises discretion and independent judgment and earns a salary and is paid on a salary basis; (b) the Travelers Group has a "protectable interest" (meaning, access to trade secrets or competitively sensitive confidential business or professional information that otherwise would not qualify as a trade secret, including product development plans, product launch plans, marketing strategy or sales plans); and (c) the total amount of the Participant's annual gross salary and commissions, calculated on an annual basis, at the time of the Participant's Termination Date, exceeds $100,533 (as of January 1, 2022 and adjusted annually for inflation pursuant to the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor immediately preceding the calendar year of the Participant’s termination).

Rhode Island:
If Rhode Island is deemed to be the Employment Jurisdiction, then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant post-employment if the Participant is: classified as non-exempt under the FLSA; an undergraduate or graduate student in an internship or short-term employment relationship; 18 years of age or younger; or a low wage employee (defined as earning less than 250% of the federal poverty level).

Virginia:
If Virginia law controls, the parties agree that the covenant not to compete in the Retirement Rule and the Customer Non-solicit Condition are reasonably limited in nature and do not prohibit employment with a competing business in a non-competitive position. If the Participant resides in Virginia on the Termination Date and their average weekly earnings calculated as provided for under Code of Virginia §40.1-28.7:7 (the “Virginia Act”), are less than the average weekly wage of the Commonwealth as determined pursuant to subsection B of §65.2-500 or the Participant otherwise qualifies as a “low-wage employee” under the Virginia Act then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant and nothing in the Customer Non-Solicitation Condition in Section 7(c) shall restrict the Participant from providing a service to a customer, client, or key relationship of the Travelers Group if the Participant does not initiate contact with or solicit the customer, client, or key relationship. The Participant shall not be considered a “low-wage employee” if the Participant’s earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to the employee by the Travelers Group.

Washington State:
If the Participant resides in Washington at the time this Agreement is entered into and is an existing employee, then the Participant agrees that the RSUs provided for in this Award Agreement is the mutually agreed upon, fair and reasonable consideration for the covenant not to compete contained in the Retirement Rule and the Non-Solicitation Conditions in Section 7. This consideration shall supplement and not replace or eliminate the value and sufficiency of any additional consideration provided for in the Agreement. The Participant stipulates that the above-referenced consideration is sufficient to make this Agreement fully binding and enforceable, and agrees not to assert otherwise. If the Participant is an existing employee, the Participant acknowledges that the Participant was given ten (10) business days to consider this Agreement before accepting it.

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In addition, if Washington law controls, then for so long as Washington law controls, the Agreement will be modified and applied as follows:
(a) the covenant not to compete contained in the Retirement Rule, the Employee Non-Solicitation Conditions in Section 7(b), and the Customer Non-Solicitation Condition in Section 7(c) (the “Excluded Covenants”), and the definition of “solicit” in Section 7(d) shall only apply post-employment if the Participant’s annualized earnings from the Travelers Group exceed $107,302 per year (adjusted annually in accordance with Section 5 of Washington HP 1450);
(b) if, at the time the Participant signs the Agreement, the Participant’s earnings do not meet the Earnings Threshold described above Washington appendix (a), then the Excluded Covenants will automatically become enforceable against the Participant if and when the Participant begins earning at least $107,302 annually (adjusted for inflation) in Box 1 W-2 annual compensation;
(c) for purposes of the application of the Excluded Covenants, the Participant understands that the Excluded Covenants will not be enforced against the Participant if the Participant is laid off unless the Travelers Group pays the Participant during the Restricted Period an amount equal to the Participant’s base salary at the time of termination, less any compensation earned by the Participant during the Restricted Period. For purposes of this section, “layoff” means termination of the Participant’s employment by the Travelers Group for reasons of the Travelers Group’s insolvency, or other purely economic factors, and specifically excludes termination of the Participant’s employment for any other reason, either with or without cause;
(d) Section 19 shall be modified to add that no provision in Section 8 shall require the Participant to litigate any dispute outside the State of Washington;
(e) the Participant further acknowledges that if the Participant is a new employee, the Participant has had advance notice of the terms of this Agreement, including the Exhibit B, prior to accepting the Travelers Group’s offer of employment and
(f) In addition to the other forms of Protected Conduct, nothing in the Agreement prohibits disclosure or discussion of conduct the Participant reasonably believes to be illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is recognized as against a clear mandate of public policy, or the disclosure of the existence of a settlement involving any such event or conduct.

Wisconsin:
If Wisconsin is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) Section 7(f) shall not apply; and (b) Section 7(b) is rewritten as follows: “While employed and for a period of twelve (12) months from the date of the termination of the Participant’s employment, the Participant will not participate in soliciting any Covered Employee of the Travelers Group that is in a Sensitive Position to leave the employment of the Travelers Group on behalf of (or for the benefit of) a Competitor nor will the Participant knowingly assist a Competitor in efforts to hire a Covered Employee away from the Travelers Group or encouraging the Covered Employee to terminate their employment with the Travelers Group. An employee in a “Sensitive Position” refers to an employee of the Travelers Group who is in a management, supervisory, sales, research and development, or similar role where the employee is provided Confidential Information or is involved in business dealings with the Travelers Group’s clients.”










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Canada

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations thereunder) will not apply to the Participant.

•Section 12 of the Award Agreement shall be revised to read as follows:

12. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group. Nothing contained herein shall be deemed to give the Participant the right to be retained in the service of the Travelers Group or to interfere with the right of the Travelers Group to terminate the employment of the Participant at any time. For greater certainty, in such a case of employment termination, the Participant shall not be entitled or eligible to receive or be awarded any payment, compensation or damages (at common law or otherwise) in relation to the forfeiture or loss of any Award or other amount for which the Participant was previously eligible to receive under the Plan.

•For purposes of Section 7(a) and Exhibit A to the Award Agreement, “Termination Date” shall mean the date of the Participant’s termination of employment with the Travelers Group (whether voluntary or involuntary) as reflected on the Travelers Group’s books and records, regardless of whether such termination is lawful and without regard to any pay in lieu of notice, severance pay, benefits continuation or similar termination-related compensation or benefits whether pursuant to the common law or otherwise except as expressly required by applicable employment standards legislation.

•If the province of Ontario is deemed to be the Employment Jurisdiction, then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant post-employment.

•The non-solicitation restrictions in respect of Covered Employees and Company Customers will be limited to solicitation that is for a purpose that is competitive with the business of the Travelers Group.




























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Germany

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations) will not apply to the Participant.

•Section 7(b) of the Award Agreement shall be revised to read as follows:

(b) Non-Solicitation of Employees. The Participant acknowledges that the Travelers Group sustains its operations and the goodwill of its clients, customers, policyholders, producers, agents, and brokers (its “Customers”) through its employees. The Travelers Group has made significant investment in its employees and their ability to establish and maintain relationships with each other and with the Company Customers in order to further its operations and cultivate goodwill. The Participant acknowledges that the loss of the Travelers Group’s employees could adversely affect its operations and jeopardize the goodwill that has been established through these employees, and that the Travelers Group therefore has a legitimate interest in preventing the solicitation of its employees by the Participant after the Termination Date. During the Restricted Period, the Participant will not, directly or indirectly, seek to recruit or solicit, attempt to influence or assist in the recruitment or solicitation, or participate in or promote the solicitation of, a Covered Employee to terminate their employment with the Travelers Group to take employment in any position within or for the benefit of Participant’s own business outside the Travelers Group. The term “Covered Employee” means any person (i) who was or is employed by the Travelers Group at any time during the last three months of the Participant's employment or during the Restricted Period and (ii) with whom the Participant worked, who the Participant supervised, or about whom the Participant acquired Confidential Information during the two-year period immediately preceding the Termination Date (the “Look Back Period”). Without limiting the generality of the restrictions under this Section, by way of example, the restrictions under this Section shall prohibit the Participant from (i) interviewing a Covered Employee for a position outside of the Travelers Group, (ii) communicating in any manner with a Covered Employee in connection with a current or future employment opportunity outside of the Travelers Group, (iii) identifying Covered Employees to potentially be solicited or hired in a position outside of the Travelers Group, (iv) providing information or feedback regarding Covered Employees seeking employment with another employer, and/or (v) otherwise directly or indirectly assisting or participating in the solicitation or hiring of a Covered Employee. However, the Non-Solicitation Conditions do not preclude the Participant from directing a third party (including but not limited to employees of his/her subsequent employer or a search firm) to broadly solicit, recruit, and hire individuals, some of whom may be employees of the Travelers Group, provided that the Participant does not direct such third party specifically to target employees of the Travelers Group generally or specific individual employees of the Travelers Group. This provision shall be referred to as the “Employee Non-Solicitation Conditions.”

•Section 7(c) of the Award Agreement shall be deleted in its entirety.

•Section 12 of the Award Agreement shall be revised to read as follows:

12. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment or guarantees employment with any member of the Travelers Group for any time. Each member of the Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of or terminate the Participant's employment with the Travelers Group, subject to applicable law and the terms of the Participant's employment contract.






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Republic of Ireland

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations thereunder) will not apply to the Participant.

•Section 12 of the Award Agreement shall be revised to read as follows:

12. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group for a definite period of time. The Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant's employment with the Travelers Group, subject to applicable Irish law and the terms of the Participant's employment contract.

•Further to the provisions as set out in Section 20 of the Award Agreement, the Travelers Group agrees that it will comply with the provisions of the Data Protection Act 2018 together with the EU General Data Protection Regulation (collectively, the “Irish DPA Act”). The Participant acknowledges that the Company has made available to the Participant a copy of the Europe Employee Privacy Policy related to the EU General Data Protection Regulation (the “Privacy Policy”) and the Participant understands that a copy of such policy and further information related thereto can be obtained by contacting the Travelers Europe Data Protection Officer at DPOEurope@travelers.com. With this information, the Participant confirms that the Participant consents to the Company, the Travelers Group and any other third parties as described in Section 19 for the purposes of this Award Agreement processing and transferring their personal data (as defined in the Irish DPA Act) outside of the European Economic Area, subject to and in accordance with the terms and requirements of the Privacy Policy and the Irish DPA Act.

•The provisions in Exhibit A related to the Retirement Rule shall be inapplicable to the Participant. Accordingly, upon the Participant’s termination of employment for any reason other than due to death, Disability or a COC Termination as set forth in the Award Agreement (regardless of whether the Participant meets the Retirement Rule), vesting of the Option will cease and all outstanding unvested restricted stock units will be cancelled effective on the Termination Date.

•The provisions in Exhibit A related to disability shall be inapplicable to the Participant for so long as the Participant remains employed by the Travelers Group. Accordingly, a disabled Participant who remains employed by the Travelers Group shall be treated as a continuing employee in all respects for purposes of vesting and other rights with respect to the Option.





















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United Kingdom

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations) will not apply to the Participant.

•The Restricted Period, as defined in Section 7(a) of the Award Agreement, will include any period during which the Participant is placed on “garden leave.”

•The restrictions under Section 7(b) of the Award Agreement related to non-solicitation of Covered Employees shall only apply with respect to employees with whom the Participant had material dealings during the 12 months preceding the date of the Participant’s termination of employment with the Travelers Group, and such restrictions shall not apply with respect to any secretarial or administrative assistant employees of the Travelers Group.

•The “Enhanced Restricted Period” defined under Section 7(c) of the Award Agreement shall be limited to 12 months following the Termination Date (i.e., the same duration as the normal Restricted Period). Additionally, under Section 7(c) of the Award Agreement:
(i)the restrictions relating to recruiting or solicitation of, interference with, attempting to influence or otherwise affecting any Company Customer shall be limited to such Company Customers with which the Participant had material dealings within the 12 months preceding the Termination Date; and
(ii)the references to “business” (aside from references to “book of business”) shall be limited to business activities with which the Participant was materially involved during the 12 months preceding the Termination Date.

•Section 12 of the Award Agreement shall be replaced with the following:

12. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment or guarantees employment with any member of the Travelers Group for a fixed duration of time. Each member of the Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant's employment with the Travelers Group, subject to applicable law and the terms of the Participant's employment contract. Upon termination of the Participant’s employment (for whatever reason) the Participant will have no rights as a result of this Award Agreement or any alleged breach of this Award Agreement or otherwise to any compensation under or in respect of any shares, share options, restricted stock units, long-term incentive plans or any other profit sharing scheme in which the Participant may participate or have received grants or allocations on or before the date on which the Participant’s employment terminates. Any rights which the Participant may have under such schemes will be exclusively governed by the rules of such schemes from time to time.

•Further to the provisions as set out in Section 20 of the Award Agreement, the Travelers Group agrees that it will comply with the provisions of the Data Protection Act 2018 (the “Act”), and the EU General Data Protection Regulation (2016/679) (the “GDPR”) and the retained version of the GDPR applicable in the UK (the “UK GDPR”). The Participant acknowledges that the Company has made available to the Participant a copy of the Europe Employee Privacy Policy related to the GDPR and UK GDPR (the “Privacy Policy”) and the Participant understands that a copy of such policy and further information related thereto can be obtained by contacting the Travelers Europe Data Protection Officer at DPOEurope@travelers.com. With this information, the Participant confirms that the Participant consents to the Company, the Travelers Group and any other third parties as described in Section 19 for the purposes of this Award Agreement processing and transferring their personal data (as defined in the Act) outside of the UK or the European Economic Area, subject to and in accordance with the terms and requirements of the Privacy Policy, the GDPR, the UK GDPR and the Act.


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•The provisions in Exhibit A related to the Retirement Rule shall be inapplicable to the Participant. Accordingly, upon the Participant’s termination of employment for any reason other than due to death, Disability or a COC Termination as set forth in the Award Agreement (regardless of whether the Participant meets the Retirement Rule), vesting of the Option will cease and all outstanding unvested restricted stock units will be cancelled effective on the Termination Date.

•The provisions in Exhibit A related to disability shall be inapplicable to the Participant for so long as the Participant remains employed by the Travelers Group. Accordingly, a disabled Participant who remains employed by the Travelers Group shall be treated as a continuing employee in all respects for purposes of vesting and other rights with respect to the Option.


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EX-10.31 3 a1031trv2024restrictedstoc.htm EX-10.31 Document

Exhibit 10.31

TRAVELERS
RESTRICTED STOCK UNIT AWARD NOTIFICATION AND AGREEMENT

(This award must be accepted within 90 days after the Grant Date shown below or it will be forfeited. Refer below to Section 16.)

Participant: “NAME” Grant Date: “GRANT DATE”
Number of Award Shares: “GRANTED” Vesting Date: 3 years from Grant Date

1.    Grant of Restricted Stock Units. This restricted stock unit award (“Award”) is granted pursuant to The Travelers Companies, Inc. 2023 Stock Incentive Plan, as it may be amended from time to time (the “Plan”), by The Travelers Companies, Inc. (the “Company”) to you (the “Participant”) as an employee of the Company or an affiliate of the Company (together, the “Travelers Group”). The Company hereby grants to the Participant as of the Grant Date an award (“Award”) consisting of a right to receive the number of shares set forth above (“Award Shares”) of the Company's common stock, no par value (“Common Stock”), upon the Vesting Date or such earlier date as set forth herein, pursuant to the Plan, as it may be amended from time to time, and subject to the terms, conditions, and restrictions set forth herein, including, without limitation, the conditions set forth in Section 5.

2.    Terms and Conditions. The terms, conditions, and restrictions applicable to the Award are specified in the Plan and this grant notification and agreement, including Exhibits A and B, as amended (the “Award Agreement”). The terms, conditions and restrictions in the Plan include, but are not limited to, provisions relating to amendment, vesting, cancellation, and settlement, all of which are hereby incorporated by reference into this Award Agreement to the extent not otherwise set forth herein.

    By accepting the Award, the Participant acknowledges receipt of the prospectus dated May 24, 2023 and any applicable prospectus supplement thereto (together, the “Prospectus”) and that he or she has read and understands the Prospectus.

The Participant understands that the Award and all other incentive awards are entirely discretionary and that no right to receive an award exists absent a prior written agreement with the Company to the contrary. The Participant also understands that the value that may be realized, if any, from the Award is contingent, and depends on the future market price of the Common Stock, among other factors. The Participant further confirms his or her understanding that the Award is intended to promote employee retention and stock ownership and to align participants' interests with those of shareholders. Additionally, the Participant understands that the Award is subject to vesting conditions and will be cancelled if the vesting conditions are not satisfied. Thus, the Participant understands that (a) any monetary value assigned to the Award in any communication regarding the Award is contingent, hypothetical, or for illustrative purposes only, and does not express or imply any promise or intent by the Company to deliver, directly or indirectly, any certain or determinable cash value to the Participant; (b) receipt of the Award or any incentive award in the past is neither an indication nor a guarantee that an incentive award of any type or amount will be made in the future, and that absent a written agreement to the contrary, the Company is free to change its practices and policies regarding incentive awards at any time; and (c) vesting may be subject to confirmation and final determination by the Company's Board of Directors or its Compensation Committee (the “Committee”) that the vesting conditions have been satisfied.

The Participant shall have no rights as a stockholder of the Company with respect to any shares covered by the Award unless and until the Award is vested and settled in shares of Common Stock; provided, however, that if the Company pays cash dividends on its shares while the Award is outstanding, the Participant shall be entitled to receive corresponding dividend equivalent cash payments based on the number of shares underlying the Award at the time when such regular cash dividends are paid.

3.    Vesting. The Award shall vest in full on the Vesting Date set forth above provided the Participant remains continuously employed within the Travelers Group through such Vesting Date. If the Participant has a termination of, or leave from active employment prior to the Vesting Date, the Participant's rights are determined under the Award Rules of Exhibit A.

4. Settlement of Award. The Company shall deliver to the Participant a number of shares of Common Stock equal to the number of vested Award Shares on the Vesting Date (or the date provided pursuant to Exhibit A, if applicable) or as soon as administratively practicable thereafter. The number of shares of Common Stock delivered to the Participant shall be reduced by a number of shares of Common Stock having a Fair Market Value on the date of delivery equal to the tax withholding obligation (including any applicable employment taxes due in connection with the vesting of the Award on or prior to the settlement date), unless the Plan administrator is notified in advance of the Award settlement (or the Award vesting, if applicable) and the Participant elects another method for tax withholding.
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5.    Grant Conditioned on Principles of Employment Agreement. By entering into this Award Agreement, the Participant shall be deemed to have confirmed his or her agreement to be bound by the Company’s Principles of Employment Agreement in effect on the date immediately preceding the Grant Date (the “POE Agreement”), as published on the Company’s intranet site or previously distributed in hard copy to the Participant. Furthermore, by accepting the Award, the Participant agrees that the POE Agreement shall supersede and replace the form of Principles of Employment Agreement contained or referenced in any Prior Equity Award (as defined below) made by the Company to the Participant, and, accordingly, such Prior Equity Award shall become subject to the terms and conditions of the POE Agreement.

6.    Acceptance of Exhibits A and B. The Participant agrees to be bound by the terms of the Award Rules set forth in Exhibits A and B (“Award Rules”).

7.    Acceptance of and Agreement to Non-Solicitation and Confidentiality Conditions. In consideration for the award of Restricted Stock Units under this Award Agreement, the Participant agrees that the Award is conditioned upon Participant’s compliance with the following non-solicitation and confidentiality conditions (the “Non-Solicitation Conditions” and the “Confidentiality Conditions,” respectively), subject to the state- and country-specific modifications to this Section 7, depending on the Participant’s Employment Jurisdiction (as defined below), as contained in Exhibit B attached hereto and incorporated herein by reference:

(a)     The Company and the Participant understand, intend and agree that the Non-Solicitation Conditions of this Section 7 are intended to protect the Travelers Group and other participants in the Plan against the Participant soliciting its employees and/or its customers during the twelve (12) month period (the “Restricted Period”) following the date of the Participant’s termination of employment with the Travelers Group (whether voluntary or involuntary) as reflected on the Travelers Group’s books and records (the “Termination Date”), while recognizing that after the Termination Date the Participant is still permitted to compete with the Travelers Group subject to the restrictions set forth below. Nothing in this Section 7 is intended to limit any of the Travelers Group’s rights or claims as to any future employer of the Participant.

(b) Non-Solicitation of Employees. The Participant acknowledges that the Travelers Group sustains its operations and the goodwill of its clients, customers, policyholders, producers, agents, and brokers (its “Customers”) through its employees. The Travelers Group has made significant investment in its employees and their ability to establish and maintain relationships with each other and with the Company Customers in order to further its operations and cultivate goodwill. The Participant acknowledges that the loss of the Travelers Group’s employees could adversely affect its operations and jeopardize the goodwill that has been established through these employees, and that the Travelers Group therefore has a legitimate interest in preventing the solicitation of its employees by the Participant after the Termination Date. During the Restricted Period, the Participant will not, directly or indirectly, seek to recruit or solicit, attempt to influence or assist in the recruitment or solicitation, or participate in or promote the solicitation of, a Covered Employee to terminate their employment with the Travelers Group or to take employment in any other position outside the Travelers Group. The term “Covered Employee” means any person (i) who was or is employed by the Travelers Group at any time during the last three months of the Participant's employment or during the Restricted Period and (ii) with whom the Participant worked, who the Participant supervised, or about whom the Participant acquired Confidential Information during the two-year period immediately preceding the Termination Date (the “Look Back Period”). Without limiting the foregoing restriction, the Participant shall not, on behalf of himself or herself or any other person, hire, employ, or engage any Covered Employee and shall not engage in the aforesaid conduct during the Restricted Period through a third party for the purpose of colluding to avoid the restrictions in this Section 7. Without limiting the generality of the restrictions under this Section 7, by way of example, the restrictions under this Section 7 shall prohibit the Participant from (i) interviewing a Covered Employee for a position outside of the Travelers Group, (ii) communicating in any manner with a Covered Employee in connection with a current or future employment opportunity outside of the Travelers Group, (iii) identifying Covered Employees to potentially be solicited or hired in a position outside of the Travelers Group, (iv) providing information or feedback regarding Covered Employees seeking employment with another employer, and/or (v) otherwise directly or indirectly assisting or participating in the solicitation or hiring of a Covered Employee. However, the Non-Solicitation Conditions do not preclude the Participant from directing a third party (including but not limited to employees of his/her subsequent employer or a search firm) to broadly solicit, recruit, and hire individuals, some of whom may be employees of the Travelers Group, provided that the Participant does not direct such third party specifically to target employees of the Travelers Group generally or specific individual employees of the Travelers Group. This provision shall be referred to as the “Employee Non-Solicitation Conditions.”
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(c)     Non-Solicitation of Customers. The Participant acknowledges that by virtue of his or her employment with the Travelers Group, he or she may have developed relationships with and/or had access to Confidential Information (as defined below) about the Company Customers and is, therefore, capable of significantly and adversely impacting existing relationships that the Travelers Group has with them. The Participant further acknowledges that the Travelers Group has invested in its and the Participant’s relationship with the Company Customers and the goodwill that has been developed with them on the Travelers Group’s behalf and, therefore, the Travelers Group has a legitimate interest in protecting these relationships against solicitation and/or interference by the Participant for a reasonable period of time after the Participant’s employment with the Travelers Group ends. If, after the Termination Date, the Participant accepts a position as an employee, consultant, or contractor with a “Competitor” (as defined below), then, during the Restricted Period, the Participant will not, directly or indirectly, solicit, participate in soliciting, encourage, or attempt to influence, or otherwise knowingly engage in any conduct that is intended to cause, or could reasonably be expected to cause, any Company Customer of the Travelers Group to discontinue, curtail, or reduce its business with the Travelers Group and/or move existing or future business of the Travelers Group elsewhere. “Company Customer” means any current, prospective or former client, customer or policyholder of the Travelers Group during the five year period immediately preceding the Termination Date (the “Extended Look Back Period”) (i) on which the Participant, or anyone reporting directly to him or her, worked or was actively engaged in soliciting or servicing, (ii) about which the Participant gained access to Confidential Information (as defined below) during the Participant’s employment with the Travelers Group, or (iii) for which the Participant received commissions or other beneficial credit or compensation from the Travelers Group for business conducted with such current or prospective customer or policyholder. In addition to the foregoing restriction, the Participant agrees not to be personally involved in the negotiation of, competition for, solicitation of, or execution of any individual book roll over(s) or other book of business transfer arrangements involving the transfer of business away from the Travelers Group, at any time during the twenty-four month period following the Termination Date (the “Enhanced Restricted Period”). The Participant may, at any time after the Termination Date, broadly direct a third party (including but not limited to employees of his/her subsequent employer) to negotiate, compete for, solicit, and execute such book roll over(s) or other book of business transfer arrangements, provided that (i) the Participant is not personally involved in such activities and (ii) the Participant does not direct such third party specifically to target business of the Travelers Group. As used herein, “Competitor” shall include any person (including the Participant), business enterprise, or organization, including, without limitation, agents, brokers and producers, that engages in, owns, or controls a significant interest in any entity that engages in the sale of products and/or performance of services of the type sold or performed by the Travelers Group and/or provides advice relating to such products and services. This provision shall be referred to as the “Customer Non-Solicitation Condition.” For purposes of this Agreement, the Customer Non-Solicitation Condition and the Employee Non-Solicitation Condition shall be referred to collectively as the “Non-Solicitation Conditions.”

(d)     Solicitation. It will be presumed that “to solicit” or “soliciting” and their derivations mean to interact with another person or entity with the purpose or foreseeable result being to cause, motivate, or induce the person or entity to engage in some responsive action (such as starting, modifying, or ending a business relationship), irrespective of who first initiated contact. It shall not include general advertising (such as “help wanted” ads) that are not targeted at the Travelers Group’s employees or Customers. The Non-Solicitation Conditions are understood to be reasonably and logically limited by geography to those locations where the subjects (Covered Employees and Company Customers) are located and available for solicitation and no further geographic limitation is necessary to make these restrictions reasonable. However, if a different form of geographic limitation is necessary to make one of these restrictions enforceable, then the applicable restriction(s) shall be considered limited to the Employment Jurisdiction and any additional counties, states, or countries where the Travelers Group does business in which the Participant had material involvement or about which the Participant was provided Confidential Information. Nothing in the Non-Solicitation Conditions prohibit solicitation activity that is a Protected Disclosure under Section 7 of the National Labor Relations Act (the “NLRA”) (as described below).

(e)    Subject to the non-competition obligations in the Award Rules that apply to Participants meeting the “Retirement Rule,” at any time after the Termination Date, the Participant may otherwise compete with the Travelers Group, including, but not limited to, competing on an account by account or deal by deal basis, to the extent that he or she does not violate the provisions of
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subsection (c) above or any other contractual, statutory, or common law obligations to the Travelers Group.

(f)     Notwithstanding anything herein to the contrary, if the Participant breaches any of the Non-Solicitation Conditions of this Section 7, then the Restricted Period (or the Enhanced Restricted Period, if applicable) will be extended until the date that is 12 months (or 24 months, in the case of a breach under Section 7(c) with respect to the restrictions applicable during the Enhanced Restricted Period) after the date of the Participant’s last breach of such Non-Solicitation Conditions, provided, however, that the period of the Participant’s required compliance shall not be indefinite and shall be equal to the maximum time allowed for the Non-Solicitation Conditions under controlling law, and if this extension would make the restriction unenforceable under controlling law, then it will not be applied to the Participant.

(g)     The Participant agrees not to, either during or after his or her employment, use, publish, make available, or otherwise disclose, except for benefit of the Travelers Group in the course of such employment, confidential information (“Confidential Information”) developed by, for, or at the expense of the Travelers Group, or assigned or entrusted to the Travelers Group, unless such information is generally known outside of the Travelers Group. In addition, the Participant will keep at all times, subject to the Travelers Group’s control, and will deliver to or leave with the Travelers Group all written and other materials in any form or medium (including, but not limited to, print, tape, digital, computerized and electronic data, parts, tools, or equipment) containing such Confidential Information upon termination of the Participant’s employment or upon the Company’s request. The Participant also agrees to cooperate to remedy any unauthorized use of such Confidential Information and not to violate any Travelers Group policy regarding same. If, and only if, the controlling state or local law applicable to the Participant requires a time limit to be placed on restrictions concerning the post-employment use of Confidential Information for the restriction to be enforceable, then this restriction on the Participant’s use of Confidential Information that is not a trade secret will expire three (3) years after the Termination Date. This time limit will not apply to (a) Confidential Information that qualifies as a trade secret, or (b) third party Confidential Information. Trade secrets will remain protected for as long as they qualify as trade secrets under applicable law. Items of third-party Confidential Information will remain protected for as long as allowed under the law and/or separate agreements that make them confidential.

(h)    “Confidential Information” means any item of information or data, or compilation of information or data, in any form (tangible or intangible) that relates to the Travelers Group’s business, services, products, or customers that the Participant acquires or to which the Participant gains access or that the Participant is enabled to create in the course of the Participant’s employment, and is presumed to include, but is not limited to, non-public information such as: internal information about the Travelers Group’s business, such as financial, sales, marketing, claim, technical and business information, including profit and loss statements, business/marketing strategy and “Trade Secrets” (as defined below); client, customer, policyholder, insured person, claimant, vendor, consultant and agent information, including personal information such as social security numbers and medical information; legal advice obtained; product and system information; and any compilation of this information or employee information obtained as part of the Participant’s responsibilities at the Travelers Group. As used herein, “Trade Secrets” shall include information relating to the Travelers Group and its affiliates that is protectable as a trade secret under applicable law, including, without limitation, and without regard to form: technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, business and strategic plans, product plans, source code, software, unpublished patent applications, customer proposals or pricing information or a list of actual or potential customers or suppliers which is not commonly known by or available to the public and which information derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. The Participant agrees that all records, reports, notes, compilations, or other recorded matter, and copies or reproductions thereof, relating to the Travelers Group’s operations, activities, Confidential Information, or business, made or received by the Participant during the Participant’s employment with any member(s) of the Travelers Group are, and shall be, the property of the Travelers Group exclusively, and the Participant will keep the same at all times subject to the Travelers Group’s control and will deliver or leave with the Travelers Group the same at the termination of the Participant’s employment. Confidential Information does not include information lawfully acquired by non-management employees about wages, hours, or other terms and conditions of employment when used for purposes protected by Section 7 of the National Labor Relations Act, such as joining or forming a union, engaging in collective bargaining, or engaging in other concerted activity for mutual aid or protection of non-management employees.

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(i)     Protected Disclosures. If the Participant is not a supervisor (as defined by the NLRA) or member of the Company’s management, then nothing in this Agreement prohibits Participant from engaging in conduct that is protected under Section 7 of the NLRA. Nothing herein should be construed as prohibiting the Participant from sharing information concerning the Participant’s own wages (or the wages of another employee, if voluntarily disclosed by that employee) or other terms and conditions of employment, or for purposes of otherwise pursuing the Participant’s legal rights. The Travelers Group will not terminate, discipline or otherwise discriminate or retaliate against any employee because they make such a disclosure. The Travelers Group, does however, prohibit employees who have access to, or who were entrusted in confidence by the Company with, other employees’ wage information as part of their job functions from sharing such information gathered during the course of their employment, unless such disclosure is in furtherance of or in response to their job duties, an investigation, action or hearing, or the employee otherwise has a legal obligation to furnish the information. For example, an employee who has access to the salaries of other employees due to his or her job responsibilities (such as payroll or benefits administration) generally may not disclose the salary of those co-workers. This Agreement also does not permit an employee to disclose (without the prior written consent of the Travelers Group) Confidential Information or permit an employee to disclose wage information of other employees to a competitor. Additionally, nothing herein is intended to prohibit or restrict the Participant from (i) filing a complaint with, making disclosures to, communicating with or participating in proceedings brought before a court or tribunal in the applicable jurisdiction or in an investigation or proceeding conducted by any governmental agency (including the United States Equal Employment Opportunity Commission and the Securities and Exchange Commission), (ii) pursuing the Participant’s legal rights related to the Participant’s employment with the Travelers Group, or (iii) engaging in activities protected by applicable laws or regulations, including filing a complaint or participating in an investigation being conducted by a government agency. The Participant acknowledges under the federal Defend Trade Secrets Act that employees will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (i) in confidence to a Federal, State or local government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is under seal. Notwithstanding, the Travelers Group does not authorize the waiver of, or disclosure of information covered by, the attorney-client privilege or attorney work product doctrine or any other privilege belonging to the Travelers Group. This Protected Disclosures provision shall not be construed to protect, invite, permit, or limit liability for illegal activity such as breaking and entering, illegal computer access (hacking) or theft or destruction of the Travelers Group’s property.

(j)    If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 7 is unreasonable, invalid, or unenforceable in any respect, the parties agree that (i) the court making the determination of invalidity or unenforceability shall have the power to modify or reform the restriction to make it reasonable and enforceable by applicable law, including by reducing the scope, duration, or geographic area of the term or provision, deleting specific words or phrases, or replacing any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision to the greatest extent permitted by applicable law, (ii) the parties shall request that the court exercise that power, and (iii) this Award Agreement shall be enforceable as so modified after the expiration of the time within which the judgment or decision may be appealed.

(k)     During the Restricted Period or any extension thereof (as provided for in Section 7(f)), the Participant shall notify any subsequent employer of his or her obligations under this Award Agreement prior to commencing employment. During the Restricted Period or any extension thereof, the Participant will provide the Company and his or her prior manager at the Travelers Group fourteen (14) days’ advance written notice prior to becoming associated with and/or employed by any person or entity or engaging in any business of any type or form, with such notice including the identity of the prospective employer or business, the specific division (if applicable) for which the Participant will be performing services and the title or position to be assumed by the Participant. The Participant must provide a copy of such notice to the Company’s Employee Services Unit by email, facsimile or regular mail as follows:

Email:    4-ESU@travelers.com

Fax:    1.866.871.4378 (U.S. and Canada)
    001.866.871.4378 (Europe)

Mail:    The Travelers Companies, Inc.
Employee Services Unit
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385 Washington Street
Mail Code: 9275-SB02L
St. Paul, MN USA 55102

(l)    As consideration for and by accepting the Award, the Participant agrees that the Non-Solicitation Conditions and Confidentiality Conditions of this Section 7 shall supersede any non-solicitation and confidentiality covenants contained or incorporated in any prior equity award made by the Company to the Participant under the Plan or The Travelers Companies, Inc. Amended and Restated 2014 Stock Incentive Plan (“Prior Equity Awards”); accordingly, the vesting and forfeiture provisions of such Prior Equity Awards shall become subject to the terms and conditions of the Non-Solicitation Conditions and Confidentiality Conditions of this Section 7, provided that if application of the state- and country-specific modifications contained in Exhibit B for the Participant’s Employment Jurisdiction would result in the non-solicitation and confidentiality covenants contained or incorporated in any Prior Equity Awards being less restrictive (including, without limitation, as to activities restrained, length, geographic scope, or with regard to the definitions of Company Customer or Covered Employee), invalid, inapplicable, or unenforceable, then the Non-Solicitation Conditions and Confidentiality Conditions of this Section 7 shall not supersede the non-solicitation and confidentiality covenants contained and incorporated in any Prior Equity Award and such covenants in such Prior Equity Award shall remain in full force and effect after the Participant’s execution of this Agreement. Notwithstanding anything set forth herein to the contrary, these Non-Solicitation Conditions and Confidentiality Conditions shall be in addition to, and shall not supersede, any non-solicitation, non-competition, confidentiality, intellectual property or other restrictive covenants contained or incorporated in (i) any Non-Competition Agreement between any member(s) of the Travelers Group and the Participant arising out of the Participant's service as a Management Committee member or otherwise, (ii) any employment agreement or other agreement between any member(s) of the Travelers Group and the Participant (other than such Prior Equity Awards), or (iii) any other Travelers Group plan or policy that covers the Participant (other than such Prior Equity Awards). Notwithstanding the foregoing, any portion of the Non-Solicitation Conditions that the Travelers Group would be prohibited from enforcing against the Participant under applicable state or local law governing the Participant’s primary place of employment shall be deemed not to apply to the Participant.

8.    Forfeiture of Restricted Stock Unit Award.

(a)     Participant’s Agreement. The Participant expressly acknowledges that the terms of Section 7 and this Section 8 are material to this Agreement and reasonable and necessary to protect the legitimate interests of the Travelers Group, including without limitation, the Travelers Group’s Confidential Information, trade secrets, customer and supplier relationships, goodwill and loyalty, and that any violation of these Non-Solicitation Conditions or Confidentiality Conditions by the Participant would cause substantial and irreparable harm to the Travelers Group and other Participants in the Plan. The Participant further acknowledges and agrees that:

(i)     The receipt of the Award constitutes good, valuable, and independent consideration for the Participant's acceptance of and compliance with the provisions of the Award Agreement, including the forfeiture and repayment provision of subsection 8(b) below and the Non-Solicitation Conditions and Confidentiality Conditions of Section 7 above, and the amendment of Prior Equity Award provisions of subsection 7(l), 8(f) and Section 18, below.

(ii)     The Participant’s rights with respect to the Award are conditioned on his or her compliance with the POE Agreement at all times after acceptance of the POE Agreement in accordance with Sections 5 and 16 hereunder.

(iii)     The scope, duration and activity restrictions and limitations described in this Agreement are reasonable and necessary to protect the legitimate business interests of the Travelers Group. The Participant acknowledges that all restrictions and limitations relating to the Restricted Period will apply regardless of the reason the Participant’s employment ends. The Participant further agrees that any alleged claims the Participant may have against the Travelers Group do not excuse the Participant’s obligations under this Award Agreement.

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(b) Forfeiture and Repayment Provisions. The Participant agrees that, prior to the Termination Date and during the Restricted Period (or the Enhanced Restricted Period, as applicable), if the Participant breaches the Non-Solicitation Conditions, the Confidentiality Conditions and/or the POE Agreement, in addition to all rights and remedies available to the Travelers Group at law and in equity (including without limitation those set forth in the Award Rules for involuntary termination), the Participant will immediately forfeit any portion of the Award made under this Award Agreement that has not otherwise been previously forfeited under the Award Rules in Exhibit A and that has not yet been paid, settled, or vested. The Company may also require repayment from the Participant of any and all compensatory value that the Participant received during the twelve (12) months immediately preceding the Termination Date and through the end of the Restricted Period (or the Enhanced Restricted Period, as applicable) from this Award or any Prior Equity Awards (including without limitation the gross amount of any Common Stock distribution or cash payment made to the Participant upon the vesting, distribution, or settlement of any such awards, and/or any consideration in excess of such gross amounts received by the Participant upon the sale or transfer of the Common Stock acquired through vesting, distribution, or settlement of any such awards). The Participant will promptly pay the full amount due upon demand by the Company, in the form of cash or shares of Common Stock at current Fair Market Value.

(c)     No Limitation on the Travelers Group’s Rights or Remedies. The Participant acknowledges and agrees that the forfeiture and repayment remedies under subsection 8(b) are non-exclusive remedies and shall not limit or modify the Travelers Group's other rights and remedies to obtain other monetary, equitable, or injunctive relief as a result of breach of, or in order to enforce, the terms and conditions of this Agreement or with respect to any other covenants or agreements between the Travelers Group and the Participant or the Participant's obligations under applicable law.

(d)     Award Rules. The Award Rules provide a right to payment, subject to certain conditions, following the Participant's Termination Date if the Participant meets the Retirement Rule which, among other conditions, may require that the Participant not engage in any activities that compete with the business operations of the Travelers Group through the Vesting Date (such non-compete condition may extend beyond the Restricted Period). The remedies for a violation of such non-compete conditions are specified in the Award Rules and are in addition to any remedies of the Travelers Group under this Section 8.

(e)     Severability. The agreements and covenants contained in Section 7 and/or this Section 8 of the Award Agreement shall be considered separate and severable. If any court of competent jurisdiction determines that any of the terms and conditions of Section 7 or this Section 8 are invalid or unenforceable, the remainder of the terms and conditions of this Agreement shall not thereby be affected and shall be given full effect, without regard to the invalid portions, and shall be interpreted as if such invalid portions were not contained herein. If any court determines that any of the terms and conditions are unenforceable because of the duration of such terms and conditions or the area covered thereby, such court shall have the power to reduce the duration or area of such terms and conditions and, in their reduced form, the terms and conditions shall then be enforceable and shall be enforced.

(f)     Awards Subject to Recoupment. Except to the extent prohibited by law, this Award and any outstanding Prior Equity Award may be forfeited, and the compensatory value received under such awards (including without limitation the gross amount of any Common Stock distribution or cash payment made to the Participant upon the vesting, distribution, or settlement of such awards, or consideration in excess of such gross amounts received by the Participant upon the sale or transfer of the Common Stock acquired through vesting, distribution, or settlement of the awards) may be subject to recoupment by the Company, in accordance with the Company’s executive compensation recoupment policy and other policies in effect from time to time with respect to forfeiture and recoupment of bonus payments, retention awards, cash or stock-based incentive compensation or awards, or similar forms of compensation, and the terms of any such policy, while it is in effect, are incorporated herein by reference. As consideration for and by accepting the Award Agreement, the Participant agrees that all the remedy and recoupment provisions of this Section 8 shall apply to any Prior Equity Award made by the Company to the Participant, shall be in addition to and shall not supersede any other remedies contained or referenced in any such Prior Equity Award, and, accordingly, such Prior Equity Award shall become subject to both those other remedies and the terms and conditions of this Section 8.

(g)     Survival of Provisions. The agreements, covenants, obligations, and provisions contained in Section 7 and this Section 8 shall survive the Participant’s Termination Date and the expiration of this Award Agreement, and shall be fully enforceable thereafter.

9. Consent to Electronic Delivery. In lieu of receiving documents in paper format, the Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company desires or may be required to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other agreements, forms and communications) in connection with this and any other prior or future incentive award or program made or offered by the Company or its predecessors or successors. Electronic delivery of a document to the Participant may be via a Company e-mail system or by reference to a location on a Company intranet site to which the Participant has access.
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10.    Administration. The Company’s Compensation Committee or its designee administers the Plan and this Award Agreement and has the authority to interpret any ambiguous or inconsistent terms in its sole discretion. The Participant's rights under this Award Agreement are expressly subject to the terms and conditions of the Plan and to any guidelines the Compensation Committee or its designee adopts from time to time. The interpretation and construction by the Compensation Committee or its designee of the Plan and this Award Agreement, and such rules and regulations as the Compensation Committee or its designee may adopt for purposes of administering the Plan and this Award Agreement, will be final and binding upon the Participant.

11.    Entire Agreement/Amendment/Survival/Assignment. The terms, conditions, and restrictions set forth in the Plan and this Award Agreement constitute the entire understanding between the parties hereto regarding the Award and supersede all previous written, oral, or implied understandings between the parties hereto about the subject matter hereof, except as otherwise provided in Section 7(l) above regarding the Non-Solicitation Conditions and the Confidentiality Conditions and/or in the Retirement Rule set forth in Exhibit A. This Award Agreement may be amended by a subsequent writing (including e-mail or electronic form) agreed to between the Travelers Group and the Participant. Section headings herein are for convenience only and have no effect on the interpretation of this Award Agreement. The provisions of the Award Agreement that apply to a time period or require performance or enforcement after the Termination Date, including the Non-Solicitation Conditions, the Confidentiality Conditions, and the Retirement Rule, shall survive and remain in full force and effect after the Termination Date of a Participant and the termination of this Agreement, specifically including the post-employment restrictions contained in Sections 7 and 8 of this Award Agreement. The Company may assign this Award Agreement and its rights and obligations hereunder to any current or future member of the Travelers Group in its sole discretion and without further consent of the Participant.

12.    No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group for a fixed duration of time. The employment relationship is “at will,” which affords the Participant or the Travelers Group the right to terminate the relationship at any time for any reason or no reason not otherwise prohibited by applicable law. The Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant's employment with the Travelers Group. The Award granted hereunder will not form part of the Participant’s regular employment compensation and will not be considered in calculating any statutory benefits or severance pay due to the Participant.

13.    No Limitation on the Company's Rights. The Participant agrees that nothing in this Award Agreement shall in any way affect the Company's right or power to make adjustments, reclassifications or changes in its capital or business structure or to merge, consolidate, reincorporate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

14.     Transfer Restrictions. The Participant may not sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or dispose of the Award or his or her right hereunder to receive any Award Shares, except as otherwise provided in the Prospectus.

15.     Conflict. In the event of a conflict between the Plan and the Award Agreement the Plan terms shall govern.

16.     Acceptance and Agreement by the Participant; Forfeiture upon Failure to Accept. By accepting this Award, the Participant agrees to be bound by the terms, conditions, and restrictions set forth in the Plan, this Award Agreement, and the Travelers Group’s policies, as in effect from time to time, relating to the Plan. The Participant's rights under the Award will lapse ninety (90) days from the Grant Date, and the Award will be forfeited on such date if the Participant does not accept the Award Agreement by such date. For the avoidance of doubt, the Participant's failure to accept the Award Agreement shall not affect his or her continuing obligations under any other agreement between any member(s) of the Travelers Group and the Participant. Additionally, the Participant acknowledges and agrees that the Participant’s acceptance of this Award is voluntary and not a condition of employment, and the Participant may decline to accept this Award without adverse consequences to the Participant’s continued employment relationship with the Travelers Group. Participant is advised to consult with an attorney before entering into this Award Agreement.

17.     Waiver; Cumulative Rights. The Company’s failure or delay to require performance by the Participant of any provision of this Award Agreement will not affect its right to require performance of such provision unless and until the Company has waived such performance in writing. Each right under this Award Agreement is cumulative and may be exercised in part or in whole from time to time.
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18.     Governing Law. The Award Agreement shall be legally binding and shall be executed and construed and its provisions enforced and administered in accordance with the laws of the Participant’s Employment Jurisdiction. For purposes of this Award Agreement, the “Employment Jurisdiction” means the state or, if outside of the United States, the country where the Participant primarily resides and works for the Company Group as of the Termination Date, and if the Participant’s state or country of residence is different from the state or country in which the Participant is primarily employed to work for the Company Group, then the Participant’s Employment Jurisdiction will be the state or country of the Participant’s assigned Travelers’ office location as reflected in the Company’s human resources information systems as of the Termination Date. If the Participant spends more than half the Participant’s work time working for the Company in the District of Columbia (“DC”), or is based in DC and the Participant does not spend the majority of the Participant’s work time working in another jurisdiction, then DC will be the Participant’s Employment Jurisdiction. If the Participant’s Employment Jurisdiction is listed in Exhibit B to this Award Agreement, the provisions of this Award Agreement are herein modified as indicated in Exhibit B for that state or country, but only while that applicable state or country remains the Participant’s Employment Jurisdiction. For purposes of this Award Agreement, the Participant shall have only one Employment Jurisdiction at any given time.

19.    Forum for Disputes. The jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), this Agreement will be exclusively in the courts in the Employment Jurisdiction, including, for states within the United States, the Federal Courts located therein (should Federal jurisdiction exist). The parties consent to and submit to the personal jurisdiction and venue of courts of the Employment Jurisdiction and irrevocably waive any claim or argument that the courts in the Employment Jurisdiction are an inconvenient forum (whether based on convenience, cost, location of witnesses or evidence, or otherwise). Unless otherwise required by applicable law, the Participant agrees to accept service of any court filings and process by delivery to his or her most current home address on record with the Travelers Group via first class mail or other nationally (in the case of the United States) or internationally (in the case of non-US countries) recognized overnight delivery provider, or by any third party regularly engaged in the service of process. As consideration for and by accepting the Award, the Participant agrees that the Governing Law and Forum for Disputes provision of Section 18 and this Section 19 shall supersede any governing law, forum, or similar provisions contained or referenced in any Prior Equity Award made by the Company to the Participant, and, accordingly, such Prior Equity Award shall become subject to the terms and conditions of the Governing Law and Forum for Disputes provisions of Section 18 and this Section 19.

20.     Personal Data. The Participant understands that the Company and other members of the Travelers Group hold certain personal information about the Participant, which may include, without limitation, information such as his or her name, home address, telephone number, gender, date of birth, salary, nationality, job title, social insurance number or other such tax identity number and details of all Awards or other entitlement to shares of common stock awarded, cancelled, exercised, vested, unvested or outstanding in his or her favor (“Personal Data”).

The Participant understands that in order for the Company to process the Participant’s Award and maintain a record of Award Shares under the Plan, the Company shall collect, use, transfer and disclose Personal Data within the Travelers Group electronically or otherwise, as necessary for the implementation and administration of the Plan including, in the case of a social insurance number, for income reporting purposes as required by law. The Participant further understands that the Company may transfer Personal Data, electronically or otherwise, to third parties, including but not limited to such third parties as outside tax, accounting, technical and legal consultants when such third parties are assisting the Company or other members of the Travelers Group in the implementation and administration of the Plan. The Participant understands that such recipients may be located within the jurisdiction of residence of the Participant, or within the United States or elsewhere and are subject to the legal requirements in those jurisdictions applicable to those organizations, for example, lawful requirements to disclose personal information such as the Personal Data to government authorities in those countries. The Participant understands that the employees of the Travelers Group and third parties performing work related to the implementation and administration of the Plan shall have access to the Personal Data as is necessary to fulfill their duties related to the implementation and administration of the Plan. By accepting the Award, the Participant consents, to the fullest extent permitted by law, to the collection, use, transfer and disclosure, electronically or otherwise, of his or her Personal Data by or to such entities for such purposes and the Participant accepts that this may involve the transfer of Personal Data to a country which may not have the same level of data protection law as the country in which this Award Agreement is executed. The Participant confirms that if the Participant has provided or, in the future, will provide Personal Data concerning third parties including beneficiaries, the Participant has the consent of such third party to provide their Personal Data to the Travelers Group for the same purposes.

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The Participant understands that he or she may, at any time, request to review the Personal Data and require any necessary amendments to it by contacting the Company in writing. Additionally, the Participant may always elect to forgo participation in the Plan or any other award program.

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EXHIBIT A

AWARD RULES
TO TRAVELERS' RESTRICTED STOCK UNIT AWARD NOTIFICATION AND AGREEMENT

When you leave the Travelers Group

References to “you” or “your” are to the Participant. “Termination Date” is defined in Section 7(a) of the Award Agreement and means the date of the termination of your employment with the Travelers Group (whether voluntary or involuntary) as reflected on the books and records of the Travelers Group.

If you terminate your employment or if there is a break in your employment, your Award may be cancelled before the Vesting Date and the vesting and settlement of your Award may be affected.

The provisions in the chart below apply to Awards granted under the Plan. Depending upon your employment jurisdiction upon the Grant Date, special rules may apply for vesting, payment, exercise and settlement of your Award in cases of termination of employment if you satisfy certain age and years of service requirements (“Retirement Rule”), as set forth in “Retirement Rule” below. Participants based in countries outside the United States on the Grant Date or in California immediately prior to the Termination Date should refer to Exhibit B for special rules that apply. For the avoidance of doubt, the applicable vesting terms for your Award pursuant to Exhibits A and B shall be based on your employment jurisdiction on the Grant Date.

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If You: Here's What Happens to Your Award:
Terminate employment or your employment is terminated by the Travelers Group for any reason other than due to death or disability (but you do not meet the Retirement Rule and you do not qualify for continued vesting following a Change of Control, as described below)
Vesting stops and all outstanding unvested restricted stock unit Awards are cancelled effective on the Termination Date.
Become disabled (as defined under the Travelers Group’s applicable long-term disability plan or policy covering disabilities in your employment jurisdiction) The restricted stock unit Award Shares will continue to vest without regard to your employment status and the shares will be issued and distributed to you upon the Vesting Date for the Award.
Take an approved personal leave of absence approved by the Travelers Group under its Personal Leave Policy, if applicable
 The vesting of outstanding restricted stock unit Awards will continue during the first three months of an approved personal leave of absence. Once the approved leave of absence exceeds three months, vesting is suspended until you return to work with the Travelers Group and remain actively employed for 30 calendar days, after which time vesting will be restored retroactively. If you terminate employment during the leave for any reason, the termination of employment provisions will apply. If leave exceeds one year, all restricted stock unit Awards will be cancelled.
Are on an approved family leave, medical leave, dependent care leave, military leave, or other statutory leave of absence or notice leave (including, without limitation, “garden leave”, but not including any period corresponding to pay in lieu of notice (by statute or common law), severance pay or other monies on account of the cessation of your employment)
 Outstanding unvested restricted stock unit Awards will continue to vest while you are on such leave.
Die while you are employed or following employment while your Award is outstanding
Outstanding unvested restricted stock unit Awards will vest immediately and the shares will be issued and distributed to your estate as soon as practical thereafter.
Are involuntarily terminated without “Cause” (as defined below) or terminate employment for “Good Reason” (as defined below), in each case, within 24 months following a Change of Control (as defined in the Plan), and including, without limitation, if such involuntary termination without “Cause” or termination for “Good Reason” within 24 months following a Change of Control occurs after the onset of a disability or other approved leave or after meeting the Retirement Rule (any such termination, a “COC Termination”) The restricted stock unit Award Shares will continue to vest and the shares will be issued and distributed to you upon the Vesting Date for the Award.

The terms “Cause” and “Good Reason”, as used above, shall only be applicable with respect to a termination of employment that occurs within 24 months following a Change of Control and shall have the following meanings:

“Cause” shall mean your conviction of any felony (or equivalent crime committed outside the United States), your willful misconduct in connection with the performance of your duties with the Company, or your taking illegal action in your business or personal life that harms the reputation or damages the good name of the Company.

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“Good Reason” shall mean: (i) a material reduction in your base salary or (ii) an involuntary relocation of more than 30 miles of your principal place of business. Notwithstanding the foregoing, no event shall constitute Good Reason unless and until you have notified the Company in writing describing the event which constitutes Good Reason and then only if the Company shall fail to cure such event within thirty (30) days following its receipt of such written notice; provided, further, that “Good Reason” shall cease to exist for an event on the 90th day following the later of its occurrence or your knowledge thereof, unless you have given the Company written notice thereof prior to such date.

Retirement Rule

If, as of your Termination Date (including, without limitation, a Termination Date that occurs after the onset of a disability or other approved leave), you are at least (i) age 62 with one or more full years of service or (ii) age 55 with 10 or more full years of service, then you meet the "Retirement Rule."

The Retirement Rule will not apply to your Award or any Prior Equity Award if you were involuntarily terminated for gross misconduct or for cause (as determined by the Company in its sole discretion at the time of or following your termination of employment) or you voluntarily terminated your employment where grounds for involuntary termination for gross misconduct or for cause existed (as determined by the Company in its sole discretion at the time of or following your termination of employment); provided, however, that if such termination occurs within 24 months following a Change of Control, the Retirement Rule will only not apply to your Award or any Prior Equity Award if you are involuntarily terminated for “Cause” (as defined above) or if you voluntarily terminate employment where grounds for “Cause” (as defined above) existed. If you retire and do not meet the Retirement Rule, you will be considered to have resigned.

If You:
Meet the Retirement Rule (subject to Exhibit B, if applicable)
Your restricted stock unit Award Shares will continue to vest and the shares will be issued and distributed to you upon the Vesting Date for the Award, provided that, during the period prior to the Vesting Date, you do not engage in any activities that compete with the business operations of the Travelers Group (as determined by the Company in its sole discretion), including, but not limited to, working for another insurance company engaged in the property casualty insurance business as either an employee or independent contractor. You are not subject to this non-compete provision if you are terminated involuntarily or if you are employed in any state or country where applicable law prohibits such non-compete provisions, as identified in the state and country-specific modifications set forth in Exhibit B of the Award Agreement, but you remain subject to Sections 7 and 8 of the Award Agreement, and the POE Agreement.

When called for under the above rules, you will be required to certify to the Company that you have not engaged in any activities that compete with the business operations of the Travelers Group since your Termination Date. You may be required to provide the Company with other evidence of your compliance with the Retirement Rule as the Company may require. Subject to the state- and country-specific modifications set forth in Exhibit B of the Award Agreement, in the event that you are determined to have engaged in competitive activities while receiving the benefit of continued vesting pursuant to the Retirement Rule (other than following an involuntary termination), any outstanding portion of the Award will be immediately forfeited and any portion of the Award previously paid to you will be subject to recoupment by the Company in accordance with Section 8(f) of the Award Agreement.

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EXHIBIT B

Special Rules Applicable to Participants Based in Certain Jurisdictions

Terms and Conditions

This Exhibit B includes additional and/or alternative terms and conditions that govern the Award granted to the Participant under The Travelers Companies, Inc. 2023 Stock Incentive Plan (the “Plan”) if the Participant’s Employment Jurisdiction is one of the jurisdictions listed below on the Grant Date or on the Termination Date. Capitalized terms used but not defined in this Exhibit B are defined in the Plan and/or Award Agreement and have the meanings set forth therein. To the extent that this Exhibit B is applicable to the Participant (based on the Participant’s Employment Jurisdiction on the Grant Date or on the Termination Date), the provisions set forth in this Exhibit B will apply to the Participant and will supersede the corresponding provisions set forth in the Award Agreement with respect to the Participant.

Notifications

This Exhibit B also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant's participation in the Plan. The information is based on the securities, exchange control, and other laws in effect in the respective jurisdictions as of July 2023. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant should not rely on such information noted in this Exhibit B as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date by the time the Participant’s Award hereunder is settled.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation, and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s Employment Jurisdiction may apply to the Participant's situation.



* * *


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Low Wage Worker Protections. The parties acknowledge that some states prohibit or place limitations on the use of covenants not to compete or noncompete covenants with an employee considered to be a low wage worker based on the employee’s rate of compensation or overtime exemption status under the Fair Labor Standards Act (a “Low Wage Worker Protection” law, or “LWWP law”). It is the parties’ intent not to create any restriction that would violate any controlling state LWWP law. Where the controlling state’s law includes an LWWP law, it is the parties’ intent that this Agreement’s obligations be construed so as to fit within any applicable exclusion for duty of loyalty obligations, non-solicitation covenants, confidential information protection covenants, and intellectual property assignment agreements recognized under the LWWP law at issue, and that it not create a prohibited covenant not to compete.

Alabama:
If Alabama is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) Section 7(b) is rewritten as follows: “While employed and for a period of twelve (12) months from the date of the termination of the Participant’s employment, the Participant will not participate in soliciting any Covered Employee of the Travelers Group who is in a Sensitive Position to leave the employment of the Travelers Group on behalf of (or for the benefit of) a Competitor nor will the Participant knowingly assist a Competitor in efforts to hire a Covered Employee away from the Travelers Group or encouraging the Covered Employee to terminate their employment the Travelers Group. An employee in a “Sensitive Position” refers to an employee of the Travelers Group who is uniquely essential to the management, organization, or service of the business; and (b) “Company Customer” means a current customer of the Travelers Group with which the Participant had material business-related contact or dealings or access to Confidential Information about during the Look Back Period.

California:
If California is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 7(b) and 7(c) and the non-competition restrictions in the Retirement Rule shall not apply after the Participant’s employment with the Travelers Group ends. However, any conduct relating to the solicitation of the Company Customers or Covered Employees that involves the misappropriation of the Travelers Group’s trade secret information (as defined by applicable law), such as its protected customer information, will remain prohibited conduct at all times.
Section 19 shall be modified to add that no provision in Section 19 shall require the Participant to litigate any dispute outside the State of California.

Nothing in the Agreement shall be construed to prohibit the Participant from disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that the Participant has reason to believe is unlawful.

Colorado:
If Colorado is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) Non-Competition and Non-Solicitation Restrictions. If the Participant does not earn an amount of annualized cash compensation equivalent to or greater than the threshold amount for highly compensated workers, $101,250 (or the earnings threshold in effect as adjusted annually after August 10, 2022, by the Colorado Division of Labor Standards and Statistics in the Department of Labor and Employment)(“Non-Competition Earnings Threshold”), then the non-competition restrictions contained in the Retirement Rule shall not apply after the Participant’s employment with the Travelers Group ends. If the Participant does not earn an amount of annualized cash compensation equivalent to or greater than sixty-percent of the threshold amount for highly compensated workers, $60,750 (or the earnings threshold in effect as adjusted annually after August 10, 2022, by the Colorado Division of Labor Standards and Statistics in the Department of Labor and Employment)(“Customer Non-Solicitation Earnings Threshold”), then the Customer Non-Solicitation Condition in Section 7(c) shall not apply after the Participant’s employment with the Travelers Group ends.

The definition of “Company Customer” in Section 7(c) shall be modified to cover only those customers or other key relationships with respect to which the Participant would have been provided trade secret information during the Look Back Period. The Participant stipulates that the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 7(b) and 7(c) are reasonable and necessary for the protection of trade secrets within the meaning § 8-2-113(2)(b) (the “Colorado Noncompete Act”).

(b) Notice. the Participant acknowledges that they received notice of the restriction on competing contained in the Retirement Rule and its terms before the Participant accepted an offer of employment, or, if a current employee at the time the Participant enters into this Agreement, at least fourteen (14) days before the earlier of the effective date of the Agreement or the effective date of any additional compensation or change in the terms or conditions of employment that provides consideration for such
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covenant not to compete. The Confidential Information restrictions in this Agreement do not prohibit a worker’s disclosure of information that arises from the worker’s general training, knowledge, skill, or experience, whether gained on the job or otherwise, information that is readily ascertainable to the public, or information that a worker otherwise has a right to disclose as legally protected conduct. Nothing in this Agreement or the Travelers Group’s policy limits or prevents a worker from disclosing information about workplace health and safety practices or hazards.

District of Columbia:
If the Participant performs a majority of their work in the District of Columbia or is based in the District of Columbia and does not perform the majority of their work in any other jurisdiction, then the Agreement will be modified as follows:

(a) the noncompetition provision contained in the Retirement Rule will not be enforceable against the Participant after their employment with the Travelers Group ends unless the Participant earns (or is anticipated to earn) from the Travelers Group at least $150,000 in compensation in a consecutive 12-month period, increased in proportion to the annual average increase, if any, in the Consumer Price Index for All Urban Consumers in the Washington Metropolitan Statistical Area published by the Bureau of Labor Statistics of the United States Department of Labor for the previous calendar year (“Earnings Threshold”);

(b) nothing in this Agreement or any the Travelers Group’s policy restricts the Participant from having additional employment or contract work in addition to their employment with the Travelers Group so long as the employment or work would not result in the employee’s disclosure or use of Confidential Information or create a conflict of interest. The Participant shall notify the Travelers Group’s Human Resources Department prior to accepting any such additional employment or contract work so the Travelers Group may determine whether such employment violates or would likely violate this subparagraph (b) of the D.C. appendix;

(c) subject to the limitation in subparagraph (a) of the D.C. appendix, the definition of “Restricted Period” shall include the term of employee’s employment with the Travelers Group and the 365 days following the termination of that employment, regardless of the reason;

(d) the Participant acknowledges they received a copy of the Agreement, including the Exhibit B, at least 14 calendar days before the Participant began working for the Travelers Group, if a new hire, or, at least 14 days before the Participant was required to sign the Agreement, if already employed by the Travelers Group at the time the Participant is asked to sign the Agreement. If the Participant’s compensation meets the Earnings Threshold, the Participant further acknowledges that they received the following notice: “The District’s Ban on Non-Compete Agreements Amendment Act of 2020 limits the use of non-compete agreements. It allows employers to request non-compete agreements from highly compensated employees, as that term is defined in the Ban on Non-Compete Agreements Amendment Act of 2020, under certain conditions. The Travelers Group has determined that you are a highly compensated employee. For more information about the Ban on Non-Compete Agreements Amendment Act of 2020, contact the District of Columbia Department of Employment Services (DOES).”

Georgia:
If Georgia is deemed to be the Employment Jurisdiction: the definition of Confidential Information will be understood to exclude information voluntarily disclosed to the public by the Travelers Group (excluding unauthorized disclosures by the Participant or others), information that is the result of independent development by others, and information that is otherwise available in the public domain through lawful means. Nothing in this Agreement, including the definition of Confidential Information, limits or alters the definition of what constitutes a trade secret under any federal or state law designed to protect trade secrets. The Employee Non-Solicitation Condition will be limited to the Restricted Territory.

Hawaii:
If Hawaii is deemed to be the Employment Jurisdiction, then the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 7(b) and 7(c), and the covenant not to compete contained in the Retirement Rule, shall not apply after the Participant’s employment with the Travelers Group ends. However, any conduct relating to the solicitation of Company Customers or Covered Employees that involves the misappropriation of the Travelers Group’s trade secret information (as defined by applicable law), such as its protected customer information, will remain prohibited conduct at all times.

Illinois:
If the Participant resides in Illinois at the time this Agreement is entered into, then the Participant agrees that the award of the RSUs provided for in the Award Agreement constitutes sufficient consideration for this Agreement, to supplement and not replace or eliminate the value and sufficiency of the remaining consideration provided for by this Award Agreement.
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The Participant stipulates that this is adequate consideration to make the provisions of this Agreement immediately binding upon him or her.

In addition, if Illinois is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) the non-competition restrictions in the Retirement Rule shall not apply to employees earning less than $75,000.00 per year (“Non-Compete Earnings Threshold”) (with the Non-Compete Earnings Threshold increasing by $5,000 every five years from January 1, 2027 through January 1, 2037) after the Participant’s employment with the Travelers Group ends;

(b) the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition contained in Sections 7(b) and 7(c) shall not apply to employees earning less than $45,000.00 per year (“Non-Solicitation Earnings Threshold”) (with the Non-Solicitation Earnings Threshold increasing by $2,500 every five years from January 1, 2027 through January 1, 2037) after the Participant’s employment with the Travelers Group ends;

(c) if, at the time the Participant signs the Agreement, the Participant’s earnings do not meet the Non-Compete Earnings Threshold and/or the Non-Solicitation Earnings Threshold, then the covenant not to compete contained in the Retirement Rule will automatically become enforceable against the Participant if and when the Participant begins earning an amount equal to or greater than the Non-Compete Earnings Threshold, and the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 7(b) and 7(c) will automatically become enforceable against the Participant if and when the Participant begins earning an amount equal to or greater than the Non-Solicitation Earnings Threshold;

(d) the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition contained in Sections 7(b) and 7(c) and the covenant not to compete contained in the Retirement Rule shall not apply to employees furloughed or terminated due to business circumstances or governmental orders related to COVID-19 or similar situations unless the Participant continues to be paid his or her base salary in the enforcement period; and

(e) the Participant acknowledges that he or she has been advised in writing to seek attorney consultation and was provided at least 14 calendar days to review this Agreement before signing.

Indiana:
If Indiana is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Employee Non-Solicitation Conditions in Section 7(b) shall be modified to further limit the restriction on solicitation of Covered Employees to those who have access to or possess any Confidential Information that would give a competitor an unfair advantage.

Louisiana:
If Louisiana is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the “Restricted Territory” defined in Section 7 of the Agreement is understood to cover the following parishes, counties, and county equivalents: in Louisiana, the parishes of Acadia, Allen, Ascension, Assumption, Avoyelles, Beauregard, Bienville, Bossier, Caddo, Calcasieu, Caldwell, Cameron, Catahoula, Claiborne, Concordia, Desoto, East Baton Rouge, East Carroll, East Feliciana, Evangeline, Franklin, Grant, Iberia, Iberville, Jackson, Jefferson Davis. Jefferson, Lafayette, Lafourche, LaSalle, Lincoln, Livingston, Madison, Morehouse, Natchitoches, Orleans, Ouachita, Plaquemines, Pointe Coupee, Rapides, Red River, Richland, Sabine, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Landry, St. Martin, St. Mary, St. Tammany, Tangipahoa, Tensas, Terrebonne, Union, Vermillion, Vernon, Washington, Webster, West Baton Rouge, West Carroll, West Feliciana, Winn; and, for any additional states assigned to me as part of my Territory, the names of the counties (and equivalents) for such state(s) found in Geographic Areas Reference Manual published by the United States Census Bureau, also identified on the Census Bureau’s map published at stco2003.pdf (census.gov), and at https://en.wikipedia.org/wiki/List_of_counties_by_U.S._state_and_territory which lists of county and county equivalent names by state are incorporated herein by reference as if set forth in full.; and (b) the restrictions in Section 7 shall be limited to the foregoing parishes and counties.

Maine:
If Maine is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the Participant acknowledges that if the Participant is being initially hired by the Travelers Group that the Participant was notified a non-compete agreement would be required prior to their receiving a formal offer of employment from the Travelers Group and the Participant received a copy of this Agreement prior to receiving a formal offer of employment from the Travelers Group and was given at least three business days to consider the Agreement before signing; (b) the covenant not to compete contained in the Retirement Rule will not take effect until one year of employment or a period of six months from the date the agreement is signed, whichever is later; and (c) the covenant not to compete contained in the Retirement Rule shall not apply if the Participant earns at or below 400% of the federal poverty level.
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Maryland:
If Maryland is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the covenant not to compete contained in the Retirement Rule shall not apply if the Participant earns equal to or less than $15/hour or $31,200 annually.

Massachusetts:
If the Participant resides in Massachusetts at the time this Agreement is entered into, then the Participant stipulates that the RSU award provided for in the Award Agreement is adequate consideration to make the provisions of this Agreement immediately binding upon him or her. In addition, if Massachusetts is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) the covenant not to compete contained in the Retirement Rule will not apply if the Participant’s employment is terminated without cause or if the Participant is terminated as part of a reduction in force. The Participant further understands that for the limited purposes of the application of the covenant not to compete in the Retirement Rule of the Agreement, “cause” to terminate the Participant’s employment exists if the Participant has (i) been convicted of or entered a plea of guilty or nolo contendere to, or admission to facts sufficient for a finding of guilt for, any crime constituting a felony or any misdemeanor involving fraud, dishonesty and/or moral turpitude, (ii) violated a material term of this Agreement or the Travelers Group’s policies, (iii) engaged in insubordination, or failed or refused to perform assigned duties of my position despite reasonable opportunity to perform, (iv) failed to exercise reasonable care and diligence in the exercise of the Participant’s duties for the Travelers Group (other than due to physical or mental illness), (v) engaged in conduct or omissions that the Participant knew, or should have known (with the exercise of reasonable care), would cause, or be likely to cause, harm to the Travelers Group or its reputation in the business community, or (vi) engaged in any other act that is accepted as cause for termination under the common law;

(b) the period of the covenant not to compete contained in the Retirement Rule shall be limited to a period of one year following the cessation of employment by the Travelers Group (as well as while employed by the Travelers Group) (the “Non-Compete Restricted Period”); however, if the Participant breaches the covenant not to compete contained in the Retirement Rule of this Agreement, and also breaches the Participant’s fiduciary duty to the Travelers Group and/or has unlawfully taken, physically or electronically, any company records, then the Non-Compete Restricted Period shall be extended to a period of two (2) years from the cessation of employment;

(c) the Participant acknowledges that if the Participant is being initially hired by the Travelers Group that the Participant received a copy of this Agreement with their first formal offer of employment from the Travelers Group or at least ten (10) business days before commencement of the Participant’s employment by the Travelers Group, whichever came first; and if the Participant was already employed by the Travelers Group at the time of signing this Agreement, that the Participant was provided a copy hereof at least ten (10) business days before the effective date of this Agreement;

(d) the extension of the Restricted Period or the Enhanced Restricted Period contained in Section 7(f) shall only apply to any breach of Sections 7(b) and 7(c) (i.e., the tolling language shall not apply to the Retirement Rule);

(e) the covenant not to compete contained in the Retirement Rule shall not apply to the Participant post-employment if the Participant is: classified as non-exempt under the FLSA; 18 years or younger; or an undergraduate or graduate student in an internship or other short-term employment relationship while enrolled in college or graduate school; and

(f) Section 19 shall be modified to add that any legal action arising from this Agreement shall be exclusively finally resolved by a state or federal court located in the county where the Participant resides or the business litigation session of the superior court in Suffolk County, Massachusetts, and the parties to this Agreement hereby consent to personal jurisdiction therein.

Minnesota:
If the Participant’s Employment Jurisdiction is Minnesota, then the following shall apply to this Award Agreement:

Notwithstanding anything set forth in this Agreement to the contrary, if Minnesota law is deemed to apply to this Agreement, then (i) the covenant not to compete in the Retirement Rule will not apply to the Participant, unless Minnesota Statutes § 181.988 has been repealed or otherwise has no legal effect or application to the Retirement Rule as of the date the Participant’s employment with the Travelers Group terminates; and (ii) with respect to claims arising under Minnesota Statutes § 181.988 (referencing “Covenants Not To Compete”), nothing in this Agreement will require the Participant to adjudicate outside of Minnesota any claim arising in Minnesota or deprive the Participant of the substantive protection of Minnesota law with respect to a controversy arising in Minnesota.
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Missouri:
If Missouri is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Employee Non-Non-Solicitation Conditions in Section 7(b) will be modified to exclude from the definition of Covered Employee any employee who provides only secretarial or clerical services.

Nebraska:
If Nebraska is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the list of Company Customers that are subject to the restriction in Section 7(c) is modified so that it means any persons or entities with which the Participant did business and had personal business-related contact during the Look Back Period; and (B) the covenant not to compete in the Retirement Rule does not apply after the Participant’s employment with the Travelers Group ends.

Nevada:
If Nevada is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) the covenant not to compete restriction in the Retirement Rule shall not apply if the Participant is paid solely on an hourly wage basis, exclusive of any tips or gratuities (that is, if the Participant is paid on an hourly wage basis and does not receive bonuses, profit sharing, or commissions in addition to his or her hourly wages);

(b) the covenant not to compete in the Retirement Rule will not become effective until the Participant has either been employed by the Travelers Group for sixty (60) days or received $5,000 in wages from the Travelers Group;

(c) if the Participant’s employment with the Travelers Group is terminated as a result of a reduction in force, reorganization or similar restructuring of the Travelers Group, the covenant not to compete in the Retirement Rule will only be enforceable during the period in which the Travelers Group is paying the Participant’s salary, benefits, or equivalent compensation, including without limitation, severance pay, if it elects to make such a payment; and

(d) Section 7 does not preclude the Participant from providing services to any former client, customer, or key relationship of the Travelers Group if: (1) the Participant did not solicit the former customer, client, or key relationship; (2) the customer, client, or key relationship voluntarily chose to leave and seek services from the Participant; and (3) the Participant is otherwise complying with the limitations in this Agreement as to time, geographical area, and scope of activity to be restrained.

New Hampshire:
If New Hampshire is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the covenant not to compete in the Retirement Rule does not apply if the Participant earns an hourly rate less than or equal to 200 percent of the federal minimum wage; and (b) the Participant acknowledges that the Participant was given a copy of this Agreement prior to a change in job classification or the offer of employment.

New York:
If New York is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the customers subject to the restriction on solicitation contained in the Customer Non-Solicitation Condition in Section 7(c) shall be modified so that it excludes from its definition of “Company Customer” those clients who became a customer of the Travelers Group as a result of the Participant’s independent contact and business development efforts with the customer prior to and independent from his/her employment with the Travelers Group.

North Carolina:
If North Carolina is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Look Back Period shall be calculated looking back one year from the date the employment ends or two years from the date of enforcement and not from the date employment ends, whichever provides the Travelers Group the greatest protection and is enforceable under applicable law.

North Dakota:
If North Dakota is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Customer Non-Solicitation Condition in Section 7(c) and the covenant not to compete in the Retirement Rule shall not apply after the Participant’s employment with the Travelers Group ends. The Participant’s Employee Non-Solicitation Conditions continue to apply as stated. Further, any conduct relating to the solicitation of Company Customers or Covered Employees that involves the misappropriation of the Travelers Group’s trade secret information (as defined by applicable law), such as its protected customer information, will remain prohibited conduct at all times.
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Oklahoma:
If Oklahoma is deemed to be the Employment Jurisdiction, then the following applies to the Participant: The Customer Non-Solicitation Condition in Section 7(c) and the covenant not to compete contained in the Retirement Rule shall be limited in their application so that they permit the Participant to engage in the same business as that conducted by the Travelers Group or in a similar business as long as the Participant does not directly solicit the sale of goods, services, or a combination of goods and services from established customers of the Travelers Group. Established customers are those persons and entities who have an ongoing business relationship or prospective business relationship with the Travelers Group and who did business with the Travelers Group (or made an agreement to do business with the Travelers Group) in the Look Back Period.

Oregon:
If Oregon is deemed to be the Employment Jurisdiction, then the following applies to the Participant: unless the Travelers Group chooses to compensate the Participant as allowed under the Oregon Noncompete Act (Or. Rev. Stat. §653 et seq.), the restrictions in the Retirement Rule shall only apply to the Participant, and the definition of “Company Customers” subject to the Customer Non-Solicitation Condition in Section 7(c) will only be deemed to include prospective customers, if the Participant: (a) is engaged in administrative, executive or professional work and performs predominantly intellectual, managerial, or creative tasks, exercises discretion and independent judgment and earns a salary and is paid on a salary basis; (b) the Travelers Group has a "protectable interest" (meaning, access to trade secrets or competitively sensitive confidential business or professional information that otherwise would not qualify as a trade secret, including product development plans, product launch plans, marketing strategy or sales plans); and (c) the total amount of the Participant's annual gross salary and commissions, calculated on an annual basis, at the time of the Participant's Termination Date, exceeds $100,533 (as of January 1, 2022 and adjusted annually for inflation pursuant to the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor immediately preceding the calendar year of the Participant’s termination).

Rhode Island:
If Rhode Island is deemed to be the Employment Jurisdiction, then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant post-employment if the Participant is: classified as non-exempt under the FLSA; an undergraduate or graduate student in an internship or short-term employment relationship; 18 years of age or younger; or a low wage employee (defined as earning less than 250% of the federal poverty level).

Virginia:
If Virginia law controls, the parties agree that the covenant not to compete in the Retirement Rule and the Customer Non-solicit Condition are reasonably limited in nature and do not prohibit employment with a competing business in a non-competitive position. If the Participant resides in Virginia on the Termination Date and their average weekly earnings calculated as provided for under Code of Virginia §40.1-28.7:7 (the “Virginia Act”), are less than the average weekly wage of the Commonwealth as determined pursuant to subsection B of §65.2-500 or the Participant otherwise qualifies as a “low-wage employee” under the Virginia Act then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant and nothing in the Customer Non-Solicitation Condition in Section 7(c) shall restrict the Participant from providing a service to a customer, client, or key relationship of the Travelers Group if the Participant does not initiate contact with or solicit the customer, client, or key relationship. The Participant shall not be considered a “low-wage employee” if the Participant’s earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to the employee by the Travelers Group.

Washington State:
If the Participant resides in Washington at the time this Agreement is entered into and is an existing employee, then the Participant agrees that the RSUs provided for in this Award Agreement is the mutually agreed upon, fair and reasonable consideration for the covenant not to compete contained in the Retirement Rule and the Non-Solicitation Conditions in Section 7. This consideration shall supplement and not replace or eliminate the value and sufficiency of any additional consideration provided for in the Agreement. The Participant stipulates that the above-referenced consideration is sufficient to make this Agreement fully binding and enforceable, and agrees not to assert otherwise. If the Participant is an existing employee, the Participant acknowledges that the Participant was given ten (10) business days to consider this Agreement before accepting it.
In addition, if Washington law controls, then for so long as Washington law controls, the Agreement will be modified and applied as follows:
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(a) the covenant not to compete contained in the Retirement Rule, the Employee Non-Solicitation Conditions in Section 7(b), and the Customer Non-Solicitation Condition in Section 7(c) (the “Excluded Covenants”), and the definition of “solicit” in Section 7(d) shall only apply post-employment if the Participant’s annualized earnings from the Travelers Group exceed $107,302 per year (adjusted annually in accordance with Section 5 of Washington HP 1450);
(b) if, at the time the Participant signs the Agreement, the Participant’s earnings do not meet the Earnings Threshold described above Washington appendix (a), then the Excluded Covenants will automatically become enforceable against the Participant if and when the Participant begins earning at least $107,302 annually (adjusted for inflation) in Box 1 W-2 annual compensation;
(c) for purposes of the application of the Excluded Covenants, the Participant understands that the Excluded Covenants will not be enforced against the Participant if the Participant is laid off unless the Travelers Group pays the Participant during the Restricted Period an amount equal to the Participant’s base salary at the time of termination, less any compensation earned by the Participant during the Restricted Period. For purposes of this section, “layoff” means termination of the Participant’s employment by the Travelers Group for reasons of the Travelers Group’s insolvency, or other purely economic factors, and specifically excludes termination of the Participant’s employment for any other reason, either with or without cause;
(d) Section 19 shall be modified to add that no provision in Section 8 shall require the Participant to litigate any dispute outside the State of Washington;
(e) the Participant further acknowledges that if the Participant is a new employee, the Participant has had advance notice of the terms of this Agreement, including the Exhibit B, prior to accepting the Travelers Group’s offer of employment and
(f) In addition to the other forms of Protected Conduct, nothing in the Agreement prohibits disclosure or discussion of conduct the Participant reasonably believes to be illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is recognized as against a clear mandate of public policy, or the disclosure of the existence of a settlement involving any such event or conduct.

Wisconsin:
If Wisconsin is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) Section 7(f) shall not apply; and (b) Section 7(b) is rewritten as follows: “While employed and for a period of twelve (12) months from the date of the termination of the Participant’s employment, the Participant will not participate in soliciting any Covered Employee of the Travelers Group that is in a Sensitive Position to leave the employment of the Travelers Group on behalf of (or for the benefit of) a Competitor nor will the Participant knowingly assist a Competitor in efforts to hire a Covered Employee away from the Travelers Group or encouraging the Covered Employee to terminate their employment with the Travelers Group. An employee in a “Sensitive Position” refers to an employee of the Travelers Group who is in a management, supervisory, sales, research and development, or similar role where the employee is provided Confidential Information or is involved in business dealings with the Travelers Group’s clients.”








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Canada

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations thereunder) will not apply to the Participant.

•Section 12 of the Award Agreement shall be revised to read as follows:

12. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group. Nothing contained herein shall be deemed to give the Participant the right to be retained in the service of the Travelers Group or to interfere with the right of the Travelers Group to terminate the employment of the Participant at any time. For greater certainty, in such a case of employment termination, the Participant shall not be entitled or eligible to receive or be awarded any payment, compensation or damages (at common law or otherwise) in relation to the forfeiture or loss of any Award or other amount for which the Participant was previously eligible to receive under the Plan.

•For purposes of Section 7(a) and Exhibit A to the Award Agreement, “Termination Date” shall mean the date of the Participant’s termination of employment with the Travelers Group (whether voluntary or involuntary) as reflected on the Travelers Group’s books and records, regardless of whether such termination is lawful and without regard to any pay in lieu of notice, severance pay, benefits continuation or similar termination-related compensation or benefits whether pursuant to the common law or otherwise except as expressly required by applicable employment standards legislation.

•If the province of Ontario is deemed to be the Employment Jurisdiction, then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant post-employment.

•The non-solicitation restrictions in respect of Covered Employees and Company Customers will be limited to solicitation that is for a purpose that is competitive with the business of the Travelers Group.




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Germany

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations) will not apply to the Participant.

•Section 7(b) of the Award Agreement shall be revised to read as follows:

(b)    Non-Solicitation of Employees. The Participant acknowledges that the Travelers Group sustains its operations and the goodwill of its clients, customers, policyholders, producers, agents, and brokers (its “Customers”) through its employees. The Travelers Group has made significant investment in its employees and their ability to establish and maintain relationships with each other and with the Company Customers in order to further its operations and cultivate goodwill. The Participant acknowledges that the loss of the Travelers Group’s employees could adversely affect its operations and jeopardize the goodwill that has been established through these employees, and that the Travelers Group therefore has a legitimate interest in preventing the solicitation of its employees by the Participant after the Termination Date. During the Restricted Period, the Participant will not, directly or indirectly, seek to recruit or solicit, attempt to influence or assist in the recruitment or solicitation, or participate in or promote the solicitation of, a Covered Employee to terminate their employment with the Travelers Group to take employment in any position within or for the benefit of Participant’s own business outside the Travelers Group. The term “Covered Employee” means any person (i) who was or is employed by the Travelers Group at any time during the last three months of the Participant's employment or during the Restricted Period and (ii) with whom the Participant worked, who the Participant supervised, or about whom the Participant acquired Confidential Information during the two-year period immediately preceding the Termination Date (the “Look Back Period”). Without limiting the generality of the restrictions under this Section, by way of example, the restrictions under this Section shall prohibit the Participant from (i) interviewing a Covered Employee for a position outside of the Travelers Group, (ii) communicating in any manner with a Covered Employee in connection with a current or future employment opportunity outside of the Travelers Group, (iii) identifying Covered Employees to potentially be solicited or hired in a position outside of the Travelers Group, (iv) providing information or feedback regarding Covered Employees seeking employment with another employer, and/or (v) otherwise directly or indirectly assisting or participating in the solicitation or hiring of a Covered Employee. However, the Non-Solicitation Conditions do not preclude the Participant from directing a third party (including but not limited to employees of his/her subsequent employer or a search firm) to broadly solicit, recruit, and hire individuals, some of whom may be employees of the Travelers Group, provided that the Participant does not direct such third party specifically to target employees of the Travelers Group generally or specific individual employees of the Travelers Group. This provision shall be referred to as the “Employee Non-Solicitation Conditions.”

•Section 7(c) of the Award Agreement shall be deleted in its entirety.

•Section 12 of the Award Agreement shall be revised to read as follows:

12.    No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment or guarantees employment with any member of the Travelers Group for any time. Each member of the Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of or terminate the Participant's employment with the Travelers Group, subject to applicable law and the terms of the Participant's employment contract.



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Republic of Ireland

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations thereunder) will not apply to the Participant.

•Section 12 of the Award Agreement shall be revised to read as follows:

12.    No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group for a definite period of time. The Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant's employment with the Travelers Group, subject to applicable Irish law and the terms of the Participant's employment contract.

•Further to the provisions as set out in Section 20 of the Award Agreement, the Travelers Group agrees that it will comply with the provisions of the Data Protection Act 2018 together with the EU General Data Protection Regulation (collectively, the “Irish DPA Act”). The Participant acknowledges that the Company has made available to the Participant a copy of the Europe Employee Privacy Policy related to the EU General Data Protection Regulation (the “Privacy Policy”) and the Participant understands that a copy of such policy and further information related thereto can be obtained by contacting the Travelers Europe Data Protection Officer at DPOEurope@travelers.com. With this information, the Participant confirms that the Participant consents to the Company, the Travelers Group and any other third parties as described in Section 19 for the purposes of this Award Agreement processing and transferring their personal data (as defined in the Irish DPA Act) outside of the European Economic Area, subject to and in accordance with the terms and requirements of the Privacy Policy and the Irish DPA Act.

•The provisions in Exhibit A related to the Retirement Rule shall be inapplicable to the Participant. Accordingly, upon the Participant’s termination of employment for any reason other than due to death, Disability or a COC Termination as set forth in the Award Agreement (regardless of whether the Participant meets the Retirement Rule), vesting of the Award will cease and all outstanding unvested restricted stock units will be cancelled effective on the Termination Date.

•The provisions in Exhibit A related to disability shall be inapplicable to the Participant for so long as the Participant remains employed by the Travelers Group. Accordingly, a disabled Participant who remains employed by the Travelers Group shall be treated as a continuing employee in all respects for purposes of vesting and other rights with respect to the Award.


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United Kingdom

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations) will not apply to the Participant.
•The Restricted Period, as defined in Section 7(a) of the Award Agreement, will include any period during which the Participant is placed on “garden leave.”

•The restrictions under Section 7(b) of the Award Agreement related to non-solicitation of Covered Employees shall only apply with respect to employees with whom the Participant had material dealings during the 12 months preceding the date of the Participant’s termination of employment with the Travelers Group, and such restrictions shall not apply with respect to any secretarial or administrative assistant employees of the Travelers Group.

•The “Enhanced Restricted Period” defined under Section 7(c) of the Award Agreement shall be limited to 12 months following the Termination Date (i.e., the same duration as the normal Restricted Period). Additionally, under Section 7(c) of the Award Agreement:

(i)the restrictions relating to recruiting or solicitation of, interference with, attempting to influence or otherwise affecting any Company Customer shall be limited to such Company Customers with which the Participant had material dealings within the 12 months preceding the Termination Date; and

(ii)the references to “business” (aside from references to “book of business”) shall be limited to business activities with which the Participant was materially involved during the 12 months preceding the Termination Date.

•Section 12 of the Award Agreement shall be replaced with the following:

12. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment or guarantees employment with any member of the Travelers Group for a fixed duration of time. Each member of the Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant's employment with the Travelers Group, subject to applicable law and the terms of the Participant's employment contract. Upon termination of the Participant’s employment (for whatever reason) the Participant will have no rights as a result of this Award Agreement or any alleged breach of this Award Agreement or otherwise to any compensation under or in respect of any shares, share options, restricted stock units, long-term incentive plans or any other profit sharing scheme in which the Participant may participate or have received grants or allocations on or before the date on which the Participant’s employment terminates. Any rights which the Participant may have under such schemes will be exclusively governed by the rules of such schemes from time to time.


•Further to the provisions as set out in Section 20 of the Award Agreement, the Travelers Group agrees that it will comply with the provisions of the Data Protection Act 2018 (the “Act”), and the EU General Data Protection Regulation (2016/679) (the “GDPR”) and the retained version of the GDPR applicable in the UK (the “UK GDPR”). The Participant acknowledges that the Company has made available to the Participant a copy of the Europe Employee Privacy Policy related to the GDPR and UK GDPR (the “Privacy Policy”) and the Participant understands that a copy of such policy and further information related thereto can be obtained by contacting the Travelers Europe Data Protection Officer at DPOEurope@travelers.com. With this information, the Participant confirms that the Participant consents to the Company, the Travelers Group and any other third parties as described in Section 19 for the purposes of this Award Agreement processing and transferring their personal data (as defined in the Act) outside of the UK or the European Economic Area, subject to and in accordance with the terms and requirements of the Privacy Policy, the GDPR, the UK GDPR and the Act.

•The provisions in Exhibit A related to the Retirement Rule shall be inapplicable to the Participant. Accordingly, upon the Participant’s termination of employment for any reason other than due to death, Disability or a COC Termination as set forth in the Award Agreement (regardless of whether the Participant meets the Retirement Rule), vesting of the Award will cease and all outstanding unvested restricted stock units will be cancelled effective on the Termination Date.

•The provisions in Exhibit A related to disability shall be inapplicable to the Participant for so long as the Participant remains employed by the Travelers Group. Accordingly, a disabled Participant
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who remains employed by the Travelers Group shall be treated as a continuing employee in all respects for purposes of vesting and other rights with respect to the Award.
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EX-10.35 4 a1035trv2024mcmperfsharesa.htm EX-10.35 Document

Exhibit 10.35

TRAVELERS
PERFORMANCE SHARES AWARD NOTIFICATION AND AGREEMENT

(This award must be accepted within 90 days after the Grant Date shown below or it will be forfeited. Refer below to Section 18.)

Participant:
 “NAME” Grant Date: “GRANT DATE”
Number of Performance Shares: “GRANTED”
Performance Period: XXXXX XX, 20XX to XXXXX XX, 20XX

1.     Grant of Performance Shares. This performance shares award is granted pursuant to The Travelers Companies, Inc. 2023 Stock Incentive Plan, as it may be amended from time to time (the "Plan"), by The Travelers Companies, Inc. (the "Company") to you (the “Participant”) as an employee of the Company or an affiliate of the Company (together, the "Travelers Group"). The Company hereby grants to the Participant as of the Grant Date an award ("Award") for the initial number of performance shares set forth above pursuant to the Plan, as it may be amended from time to time, and subject to the terms, conditions, and restrictions set forth herein, including, without limitation, the conditions set forth in Section 7.

2.     Terms and Conditions. The terms, conditions, and restrictions applicable to the Award are specified the Plan and this grant notification and agreement, including Exhibits A, B and C (the "Award Agreement"). The terms, conditions and restrictions in the Plan include, but are not limited to, provisions relating to amendment, vesting, cancellation and settlement, all of which are hereby incorporated by reference into this Award Agreement to the extent not otherwise set forth herein.

    By accepting this Award, the Participant acknowledges receipt of the prospectus dated May 24, 2023 and any applicable prospectus supplement thereto (together, the “Prospectus”) and that he or she has read and understands the Prospectus.

The Participant understands that the Award and all other incentive awards are entirely discretionary and that no right to receive an award exists absent a prior written agreement with the Company to the contrary. The Participant also understands that the value that may be realized, if any, from the Award is contingent, and depends on the future financial performance of the Company, among other factors. The Participant further confirms his or her understanding that the Award is intended to promote employee retention and stock ownership and to align participants’ interests with those of shareholders. Additionally, the Participant understands that the Award is subject to performance conditions and will be cancelled if the performance or other conditions are not satisfied. Thus, the Participant understands that (a) any monetary value assigned to the Award in any communication regarding the Award is contingent, hypothetical, or for illustrative purposes only, and does not express or imply any promise or intent by the Company to deliver, directly or indirectly, any certain or determinable cash value to the Participant; (b) receipt of the Award or any incentive award in the past is neither an indication nor a guarantee that an incentive award of any type or amount will be made in the future, and that absent a written agreement to the contrary, the Company is free to change its practices and policies regarding incentive awards at any time; and (c) performance may be subject to confirmation and final determination by the Company's Board of Directors or its Compensation Committee (the "Committee") that the performance conditions have been satisfied.

The Participant shall have no rights as a stockholder of the Company with respect to any shares covered by the Award unless and until the Award is vested and settled in shares of Common Stock.

3.     Performance Period. For purposes of the Award, the Performance Period shall be defined as the three-year period commencing XXXXX XX, 20XX and ending XXXXX XX, 20XX.

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4.     Vesting. The Award shall vest in full on the last day of the Performance Period, provided the Participant remains continuously employed within the Travelers Group through such date. If the Participant has a termination of, or leave from active employment prior to the last day of the Performance Period, the Participant's rights are determined under the Award Rules of Exhibit A.

5.     Settlement of Award. The number of performance shares vested (which shall include any additional performance shares credited to the Participant's account pursuant to Section 6) shall be calculated based on the Performance Shares Vesting Grid set forth in Exhibit B. The Company shall deliver to the Participant, subject to any certification of satisfaction of the performance goal as required by the Plan a number of shares of Common Stock equal to the number of vested performance shares on January 1 of the year following the end of the Performance Period or as soon as administratively practicable thereafter (but no later than March 15 of the year following the end of the Performance Period, or the date provided pursuant to Exhibit A, if applicable). The number of shares of Common Stock delivered to the Participant shall be reduced by a number of shares of Common Stock having a Fair Market Value on the date of delivery equal to the tax withholding obligation.

6.     Dividend Equivalents. The Participant shall be entitled to receive additional performance shares with respect to any cash dividends declared by the Company. The number of additional performance shares shall be determined by multiplying the number of performance shares credited to the Participant's account (which shall include the number of performance shares set forth above, plus any performance shares credited in connection with dividend payments under this Section 6), times the dollar amount of the cash dividend per share of Common Stock, and then dividing by the Fair Market Value of the Common Stock as of the dividend payment date. The Participant's right to any performance shares credited to the Participant's account in connection with dividends shall vest in the same manner described in Section 4. As described in Section 5, such additional performance shares shall be included in the total number of performance shares credited to the Participant's account for purposes of applying the Performance Shares Vesting Grid.

7.     Grant Conditioned on Principles of Employment Agreement.

By entering into this Award Agreement, the Participant shall be deemed to have confirmed his or her agreement to be bound by the Company’s Principles of Employment Agreement in effect on the date immediately preceding the Grant Date (the “POE Agreement”), as published on the Company’s intranet site or previously distributed in hard copy to the Participant. Furthermore, by accepting the Award, the Participant agrees that the POE Agreement shall supersede and replace the form of Principles of Employment Agreement contained or referenced in any Prior Equity Award (as defined below) made by the Company to the Participant, and, accordingly, such Prior Equity Award shall become subject to the terms and conditions of the POE Agreement.

8.     Acceptance of Exhibits A, B and C. The Participant agrees to be bound by the terms of the Award Rules set forth in Exhibits A, B and C ("Award Rules").

9.     Acceptance of and Agreement to Non-Solicitation and Confidentiality Conditions. In consideration for the Award of performance shares under this Award Agreement, the Participant agrees that the Award is conditioned upon Participant’s compliance with the following non-solicitation and confidentiality conditions (the "Non-Solicitation Conditions" and the “Confidentiality Conditions,” respectively), subject to the state- and country-specific modifications to this Section 7, depending on the Participant’s Employment Jurisdiction (as defined below), as contained in Exhibit C attached hereto and incorporated herein by reference:

(a) The Company and the Participant understand, intend and agree that the Non-Solicitation Conditions of this Section 9 are intended to protect the Travelers Group and other participants in the Plan against the Participant soliciting its employees and/or its customers during the twelve (12) month period (the "Restricted Period") following the date of the Participant’s termination of employment with the Travelers Group (whether voluntary or involuntary) as reflected on the Travelers Group’s books and records (the “Termination Date”), while recognizing that after the Termination Date the Participant is still permitted to compete with the Travelers Group subject to the restrictions set forth below.
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Nothing in this Section 9 is intended to limit any of the Travelers Group’s rights or claims as to any future employer of the Participant.

(b)     Non-Solicitation of Employees. The Participant acknowledges that the Travelers Group sustains its operations and the goodwill of its clients, customers, policyholders, producers, agents, and brokers (its “Customers”) through its employees. The Travelers Group has made significant investment in its employees and their ability to establish and maintain relationships with each other and with the Company Customers in order to further its operations and cultivate goodwill. The Participant acknowledges that the loss of the Travelers Group’s employees could adversely affect its operations and jeopardize the goodwill that has been established through these employees, and that the Travelers Group therefore has a legitimate interest in preventing the solicitation of its employees by the Participant after the Termination Date. During the Restricted Period, the Participant will not, directly or indirectly, seek to recruit or solicit, attempt to influence or assist in the recruitment or solicitation, or participate in or promote the solicitation of, a Covered Employee to terminate their employment with the Travelers Group or to take employment in any other position outside the Travelers Group. The term “Covered Employee” means any person (i) who was or is employed by the Travelers Group at any time during the last three months of the Participant's employment or during the Restricted Period and (ii) with whom the Participant worked, who the Participant supervised, or about whom the Participant acquired Confidential Information during the two-year period immediately preceding the Termination Date (the “Look Back Period”). Without limiting the foregoing restriction, the Participant shall not, on behalf of himself or herself or any other person, hire, employ, or engage any Covered Employee and shall not engage in the aforesaid conduct during the Restricted Period through a third party for the purpose of colluding to avoid the restrictions in this Section 9. Without limiting the generality of the restrictions under this Section 9, by way of example, the restrictions under this Section 9 shall prohibit the Participant from (i) interviewing a Covered Employee for a position outside of the Travelers Group, (ii) communicating in any manner with a Covered Employee in connection with a current or future employment opportunity outside of the Travelers Group, (iii) identifying Covered Employees to potentially be solicited or hired in a position outside of the Travelers Group, (iv) providing information or feedback regarding Covered Employees seeking employment with another employer, and/or (v) otherwise directly or indirectly assisting or participating in the solicitation or hiring of a Covered Employee. However, the Non-Solicitation Conditions do not preclude the Participant from directing a third party (including but not limited to employees of his/her subsequent employer or a search firm) to broadly solicit, recruit, and hire individuals, some of whom may be employees of the Travelers Group, provided that the Participant does not direct such third party specifically to target employees of the Travelers Group generally or specific individual employees of the Travelers Group. This provision shall be referred to as the “Employee Non-Solicitation Conditions.”

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(c) Non-Solicitation of Customers. The Participant acknowledges that by virtue of his or her employment with the Travelers Group, he or she may have developed relationships with and/or had access to Confidential Information (as defined below) about the Company Customers and is, therefore, capable of significantly and adversely impacting existing relationships that the Travelers Group has with them. The Participant further acknowledges that the Travelers Group has invested in its and the Participant’s relationship with the Company Customers and the goodwill that has been developed with them on the Travelers Group’s behalf and, therefore, the Travelers Group has a legitimate interest in protecting these relationships against solicitation and/or interference by the Participant for a reasonable period of time after the Participant’s employment with the Travelers Group ends. If, after the Termination Date, the Participant accepts a position as an employee, consultant, or contractor with a “Competitor” (as defined below), then, during the Restricted Period, the Participant will not, directly or indirectly, solicit, participate in soliciting, encourage, or attempt to influence, or otherwise knowingly engage in any conduct that is intended to cause, or could reasonably be expected to cause, any Company Customer of the Travelers Group to discontinue, curtail , or reduce its business with the Travelers Group and/or move existing or future business of the Travelers Group elsewhere. “Company Customer” means any current, prospective or former client, customer or policyholder of the Travelers Group during the five year period immediately preceding the Termination Date (the “Extended Look Back Period”) (i) on which the Participant, or anyone reporting directly to him or her, worked or was actively engaged in soliciting or servicing, (ii) about which the Participant gained access to Confidential Information (as defined below) during the Participant’s employment with the Travelers Group, or (iii) for which the Participant received commissions or other beneficial credit or compensation from the Travelers Group for business conducted with such current or prospective customer or policyholder. In addition to the foregoing restriction, the Participant agrees not to be personally involved in the negotiation of, competition for, solicitation of, or execution of any individual book roll over(s) or other book of business transfer arrangements involving the transfer of business away from the Travelers Group, at any time during the twenty-four month period following the Termination Date (the “Enhanced Restricted Period”). The Participant may, at any time after the Termination Date, broadly direct a third party (including but not limited to employees of his/her subsequent employer) to negotiate, compete for, solicit, and execute such book roll over(s) or other book of business transfer arrangements, provided that (i) the Participant is not personally involved in such activities and (ii) the Participant does not direct such third party specifically to target business of the Travelers Group. As used herein, “Competitor” shall include any person (including the Participant), business enterprise, or organization, including, without limitation, agents, brokers and producers, that engages in, owns, or controls a significant interest in any entity that engages in, the sale of products and/or performance of services of the type sold or performed by the Travelers Group and/or provides advice relating to such products and services. This provision shall be referred to as the “Customer Non-Solicitation Condition.” For purposes of this Agreement, the Customer Non-Solicitation Condition and the Employee Non-Solicitation Condition shall be referred to collectively as the “Non-Solicitation Conditions.”

(d)     Solicitation. It will be presumed that “to solicit” or “soliciting” and their derivations mean to interact with another person or entity with the purpose or foreseeable result being to cause, motivate, or induce the person or entity to engage in some responsive action (such as starting, modifying, or ending a business relationship), irrespective of who first initiated contact. It shall not include general advertising (such as “help wanted” ads) that are not targeted at the Travelers Group’s employees or Customers. The Non-Solicitation Conditions are understood to be reasonably and logically limited by geography to those locations where the subjects (Covered Employees and Company Customers) are located and available for solicitation and no further geographic limitation is necessary to make these restrictions reasonable. However, if a different form of geographic limitation is necessary to make one of these restrictions enforceable, then the applicable restriction(s) shall be considered limited to the Employment Jurisdiction and any additional counties, states, or countries where the Travelers Group does business in which the Participant had material involvement or about which the Participant was provided Confidential Information. Nothing in the Non-Solicitation Conditions prohibit solicitation activity that is a Protected Disclosure under Section 7 of the National Labor Relations Act (the “NLRA”) (as described below).

(e)     Subject to the non-competition obligations in the Award Rules that apply to Participants meeting the “Retirement Rule,” at any time after the Termination Date, the Participant may otherwise compete with the Travelers Group, including, but not limited to, competing on an account by account or deal by deal basis, to the extent that he or she does not violate the provisions of subsection (c) above or any other contractual, statutory, or common law obligations to the Travelers Group.

(f)     Notwithstanding anything herein to the contrary, if the Participant breaches any of the Non-Solicitation Conditions of this Section 9, then the Restricted Period (or the Enhanced Restricted Period, if applicable) will be extended until the date that is 12 months (or 24 months, in the case of a breach under Section 9(c) with respect to the restrictions applicable during the Enhanced Restricted Period) after the date of the Participant’s last breach of such Non-Solicitation Conditions, provided, however, that the period of the Participant’s required compliance shall not be indefinite and shall be equal to the maximum time allowed for the Non-Solicitation Conditions under controlling law, and if this extension would make the restriction unenforceable under controlling law, then it will not be applied to the Participant.
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(g)     The Participant agrees not to, either during or after his or her employment, use, publish, make available, or otherwise disclose, except for benefit of the Travelers Group in the course of such employment, confidential information (“Confidential Information”) developed by, for, or at the expense of the Travelers Group, or assigned or entrusted to the Travelers Group, unless such information is generally known outside of the Travelers Group. In addition, the Participant will keep at all times, subject to the Travelers Group’s control, and will deliver to or leave with the Travelers Group all written and other materials in any form or medium (including, but not limited to, print, tape, digital, computerized and electronic data, parts, tools, or equipment) containing such Confidential Information upon termination of the Participant’s employment or upon the Company’s request. The Participant also agrees to cooperate to remedy any unauthorized use of such Confidential Information and not to violate any Travelers Group policy regarding same. If, and only if, the controlling state or local law applicable to the Participant requires a time limit to be placed on restrictions concerning the post-employment use of Confidential Information for the restriction to be enforceable, then this restriction on the Participant’s use of Confidential Information that is not a trade secret will expire three (3) years after the Termination Date. This time limit will not apply to (a) Confidential Information that qualifies as a trade secret, or (b) third party Confidential Information. Trade secrets will remain protected for as long as they qualify as trade secrets under applicable law. Items of third-party Confidential Information will remain protected for as long as allowed under the law and/or separate agreements that make them confidential.

(h)     “Confidential Information” means any item of information or data, or compilation of information or data, in any form (tangible or intangible) that relates to the Travelers Group’s business, services, products, or customers that the Participant acquires or to which the Participant gains access or that the Participant is enabled to create in the course of the Participant’s employment, and is presumed to include, but is not limited to, non-public information such as: internal information about the Travelers Group’s business, such as financial, sales, marketing, claim, technical and business information, including profit and loss statements, business/marketing strategy and “Trade Secrets” (as defined below); client, customer, policyholder, insured person, claimant, vendor, consultant and agent information, including personal information such as social security numbers and medical information; legal advice obtained; product and system information; and any compilation of this information or employee information obtained as part of the Participant’s responsibilities at the Travelers Group. As used herein, “Trade Secrets” shall include information relating to the Travelers Group and its affiliates that is protectable as a trade secret under applicable law, including, without limitation, and without regard to form: technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, business and strategic plans, product plans, source code, software, unpublished patent applications, customer proposals or pricing information or a list of actual or potential customers or suppliers which is not commonly known by or available to the public and which information derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. The Participant agrees that all records, reports, notes, compilations, or other recorded matter, and copies or reproductions thereof, relating to the Travelers Group’s operations, activities, Confidential Information, or business, made or received by the Participant during the Participant’s employment with any member(s) of the Travelers Group are, and shall be, the property of the Travelers Group exclusively, and the Participant will keep the same at all times subject to the Travelers Group’s control and will deliver or leave with the Travelers Group the same at the termination of the Participant’s employment. Confidential Information does not include information lawfully acquired by non-management employees about wages, hours, or other terms and conditions of employment when used for purposes protected by Section 7 of the National Labor Relations Act, such as joining or forming a union, engaging in collective bargaining, or engaging in other concerted activity for mutual aid or protection of non-management employees.

(i)     Protected Disclosures. If the Participant is not a supervisor (as defined by the NLRA) or member of the Company’s management, then nothing in this Agreement prohibits Participant from
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engaging in conduct that is protected under Section 7 of the NLRA. Nothing herein should be construed as prohibiting the Participant from sharing information concerning the Participant’s own wages (or the wages of another employee, if voluntarily disclosed by that employee) or other terms and conditions of employment, or for purposes of otherwise pursuing the Participant’s legal rights. The Travelers Group will not terminate, discipline or otherwise discriminate or retaliate against any employee because they make such a disclosure. The Travelers Group, does however, prohibit employees who have access to, or who were entrusted in confidence by the Company with, other employees’ wage information as part of their job functions from sharing such information gathered during the course of their employment, unless such disclosure is in furtherance of or in response to their job duties, an investigation, action or hearing, or the employee otherwise has a legal obligation to furnish the information. For example, an employee who has access to the salaries of other employees due to his or her job responsibilities (such as payroll or benefits administration) generally may not disclose the salary of those co-workers. This Agreement also does not permit an employee to disclose (without the prior written consent of the Travelers Group) Confidential Information or permit an employee to disclose wage information of other employees to a competitor. Additionally, nothing herein is intended to prohibit or restrict the Participant from (i) filing a complaint with, making disclosures to, communicating with or participating in proceedings brought before a court or tribunal in the applicable jurisdiction or in an investigation or proceeding conducted by any governmental agency (including the United States Equal Employment Opportunity Commission and the Securities and Exchange Commission), (ii) pursuing the Participant’s legal rights related to the Participant’s employment with the Travelers Group, or (iii) engaging in activities protected by applicable laws or regulations, including filing a complaint or participating in an investigation being conducted by a government agency. The Participant acknowledges under the federal Defend Trade Secrets Act that employees will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (i) in confidence to a Federal, State or local government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is under seal. Notwithstanding, the Travelers Group does not authorize the waiver of, or disclosure of information covered by, the attorney-client privilege or attorney work product doctrine or any other privilege belonging to the Travelers Group. This Protected Disclosures provision shall not be construed to protect, invite, permit, or limit liability for illegal activity such as breaking and entering, illegal computer access (hacking) or theft or destruction of the Travelers Group’s property.

(j)     If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 9 is unreasonable, invalid, or unenforceable in any respect, the parties agree that (i) the court making the determination of invalidity or unenforceability shall have the power to modify or reform the restriction to make it reasonable and enforceable by applicable law, including by reducing the scope, duration, or geographic area of the term or provision, deleting specific words or phrases, or replacing any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision to the greatest extent permitted by applicable law, (ii) the parties shall request that the court exercise that power, and (iii) this Award Agreement shall be enforceable as so modified after the expiration of the time within which the judgment or decision may be appealed.

(k)     During the Restricted Period or any extension thereof (as provided for in Section 9(f)), the Participant shall notify any subsequent employer of his or her obligations under this Award Agreement prior to commencing employment. During the Restricted Period or any extension thereof, the Participant will provide the Company and his or her prior manager at the Travelers Group fourteen (14) days’ advance written notice prior to becoming associated with and/or employed by any person or entity or engaging in any business of any type or form, with such notice including the identity of the prospective employer or business, the specific division (if applicable) for which the Participant will be performing services and the title or position to be assumed by the Participant. The Participant must provide a copy of such notice to the Company’s Employee Services Unit by email, facsimile or regular mail as follows:
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Email:    4-ESU@travelers.com

Fax:    1.866.871.4378 (U.S. and Canada)
    001.866.871.4378 (Europe)

Mail:    The Travelers Companies, Inc.
    Employee Services Unit
    385 Washington Street
    Mail Code: 9275-SB02L
    St. Paul, MN USA 55102

(l)     As consideration for and by accepting the Award, the Participant agrees that the Non-Solicitation Conditions and Confidentiality Conditions of this Section 9 shall supersede any non-solicitation and confidentiality covenants contained or incorporated in any prior equity award made by the Company to the Participant under the Plan or The Travelers Companies, Inc. Amended and Restated 2014 Stock Incentive Plan ("Prior Equity Awards"); accordingly, the vesting and forfeiture provisions of such Prior Equity Awards shall become subject to the terms and conditions of the Non-Solicitation Conditions and Confidentiality Conditions of this Section 9, provided that if application of the state- and country-specific modifications contained in Exhibit C for the Participant’s Employment Jurisdiction would result in the non-solicitation and confidentiality covenants contained or incorporated in any Prior Equity Awards being less restrictive (including, without limitation, as to activities restrained, length, geographic scope, or with regard to the definitions of Company Customer or Covered Employee), invalid, inapplicable, or unenforceable, then the Non-Solicitation Conditions and Confidentiality Conditions of this Section 7 shall not supersede the non-solicitation and confidentiality covenants contained and incorporated in any Prior Equity Award and such covenants in such Prior Equity Award shall remain in full force and effect after the Participant’s execution of this Agreement. Notwithstanding anything set forth herein to the contrary these Non-Solicitation Conditions and Confidentiality Conditions shall be in addition to, and shall not supersede, any non-solicitation, non-competition, confidentiality, intellectual property or other restrictive covenants contained or incorporated in (i) any Non-Competition Agreement between any member(s) of the Travelers Group and the Participant arising out of the Participant's service as a Management Committee member or otherwise, (ii) any employment agreement or other agreement between any member(s) of the Travelers Group and the Participant (other than such Prior Equity Awards), or (iii) any other Travelers Group plan or policy that covers the Participant (other than such Prior Equity Awards). Notwithstanding the foregoing, any portion of the Non-Solicitation Conditions that the Travelers Group would be prohibited from enforcing against the Participant under applicable state or local law governing the Participant’s primary place of employment shall be deemed not to apply to the Participant.

10.     Forfeiture of Performance Shares Award.

(a)     Participant’s Agreement. The Participant expressly acknowledges that the terms of Section 9 and this Section 10 are material to this Agreement and reasonable and necessary to protect the legitimate interests of the Travelers Group, including without limitation, the Travelers Group’s Confidential Information, trade secrets, customer and supplier relationships, goodwill and loyalty, and that any violation of these Non-Solicitation Conditions or Confidentiality Conditions by the Participant would cause substantial and irreparable harm to the Travelers Group and other Participants in the Plan. The Participant further acknowledges and agrees that:

(i)     The receipt of the Award constitutes good, valuable and independent consideration for the Participant's acceptance of and compliance with the provisions of the Award Agreement, including the forfeiture and repayment provision of subsection 10(b) below and the Non-Solicitation Conditions and Confidentiality Conditions of Section 9 above, and the amendment of Prior Equity Award provisions of subsection 9(l), 10(f) and Section 20, below.

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(ii)     The Participant’s rights with respect to the Award are conditioned on his or her compliance with the POE Agreement at all times after acceptance of the POE Agreement in accordance with Sections 7 and 18 hereunder.

(iii)     The scope, duration and activity restrictions and limitations described in this Agreement are reasonable and necessary to protect the legitimate business interests of the Travelers Group. The Participant acknowledges that all restrictions and limitations relating to the Restricted Period will apply regardless of the reason the Participant’s employment ends. The Participant further agrees that any alleged claims the Participant may have against the Travelers Group do not excuse the Participant’s obligations under this Award Agreement.

(b)     Forfeiture and Repayment Provisions. The Participant agrees that, prior to the Termination Date and during the Restricted Period (or the Enhanced Restricted Period, as applicable), if the Participant breaches the Non-Solicitation Conditions, the Confidentiality Conditions and/or the POE Agreement, in addition to all rights and remedies available to the Travelers Group at law and in equity (including without limitation those set forth in the Award Rules for involuntary termination), the Participant will immediately forfeit any portion of the Award made under this Award Agreement that has not otherwise been previously forfeited under the Award Rules in Exhibit A and that has not yet been paid, settled, or vested. The Company may also require repayment from the Participant of any and all compensatory value that the Participant received during the twelve (12) months immediately preceding the Termination Date and through the end of the Restricted Period (or the Enhanced Restricted Period, as applicable) from this Award or any Prior Equity Awards (including without limitation the gross amount of any Common Stock distribution or cash payment made to the Participant upon the vesting, distribution, or settlement of any such awards, and/or any consideration in excess of such gross amounts received by the Participant upon the sale or transfer of the Common Stock acquired through vesting, distribution, or settlement of any such awards). The Participant will promptly pay the full amount due upon demand by the Company, in the form of cash or shares of Common Stock at current Fair Market Value.

(c)     No Limitation on the Travelers Group’s Rights or Remedies. The Participant acknowledges and agrees that the forfeiture and repayment remedies under subsection 10(b) are non-exclusive remedies and shall not limit or modify the Travelers Group's other rights and remedies to obtain other monetary, equitable or injunctive relief as a result of breach of, or in order to enforce, the terms and conditions of this Agreement or with respect to any other covenants or agreements between the Travelers Group and the Participant or the Participant's obligations under applicable law.

(d)     Award Rules. The Award Rules provide a right to payment, subject to certain conditions, following the Participant's Termination Date if the Participant meets the Retirement Rule which, among other conditions, may require that the Participant not engage in any activities that compete with the business operations of the Travelers Group through the settlement date of the Award (such non-compete condition may extend beyond the Restricted Period). The remedies for a violation of such non-compete conditions are specified in the Award Rules and are in addition to any remedies of the Travelers Group under this Section 10.

(e)     Severability. The agreements and covenants contained in Section 9 and/or this Section 10 of the Award Agreement shall be considered separate and severable. If any court of competent jurisdiction determines that any of the terms and conditions of Section 9 or this Section 10 are invalid or unenforceable, the remainder of the terms and conditions of this Award Agreement shall not thereby be affected and shall be given full effect, without regard to the invalid portions, and shall be interpreted as if such invalid portions were not contained herein. If any court determines that any of the terms and conditions are unenforceable because of the duration of such terms and conditions or the area covered thereby, such court shall have the power to reduce the duration or area of such terms and conditions and, in their reduced form, the terms and conditions shall then be enforceable and shall be enforced.
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(f)     Awards Subject to Recoupment. Except to the extent prohibited by law, this Award and any outstanding Prior Equity Award may be forfeited, and the compensatory value received under such awards (including without limitation the gross amount of any Common Stock distribution or cash payment made to the Participant upon the vesting, distribution, or settlement of such awards, or consideration in excess of such gross amounts received by the Participant upon the sale or transfer of the Common Stock acquired through vesting, distribution, or settlement of the awards) may be subject to recoupment by the Company, in accordance with the Company’s executive compensation recoupment policy and other policies in effect from time to time with respect to forfeiture and recoupment of bonus payments, retention awards, cash or stock-based incentive compensation or awards, or similar forms of compensation, and the terms of any such policy, while it is in effect, are incorporated herein by reference. As consideration for and by accepting the Award Agreement, the Participant agrees that all the remedy and recoupment provisions of this Section 10 shall apply to any Prior Equity Award made by the Company to the Participant, shall be in addition to and shall not supersede any other remedies contained or referenced in any such Prior Equity Award, and, accordingly, such Prior Equity Award shall become subject to both those other remedies and the terms and conditions of this Section 10.

(g)     Survival of Provisions. The agreements, covenants, obligations, and provisions contained in Section 9 and this Section 10 shall survive the Participant’s Termination Date and the expiration of this Award Agreement, and shall be fully enforceable thereafter.

11.     Consent to Electronic Delivery. In lieu of receiving documents in paper format, the Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company desires or may be required to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other agreements, forms and communications) in connection with this and any other prior or future incentive award or program made or offered by the Company or its predecessors or successors. Electronic delivery of a document to the Participant may be via a Company e-mail system or by reference to a location on a Company intranet site to which the Participant has access.

12.     Administration. The Company’s Compensation Committee or its designee administers the Plan and this Award Agreement and has the authority to interpret any ambiguous or inconsistent terms in its sole discretion. The Participant's rights under this Award Agreement are expressly subject to the terms and conditions of the Plan and to any guidelines the Compensation Committee or its designee adopts from time to time. The interpretation and construction by the Compensation Committee or its designee of the Plan and this Award Agreement, and such rules and regulations as the Compensation Committee or its designee may adopt for purposes of administering the Plan and this Award Agreement, will be final and binding upon the Participant.

13.     Entire Agreement/Amendment/Survival/Assignment. The terms, conditions, and restrictions set forth in the Plan and this Award Agreement constitute the entire understanding between the parties hereto regarding the Award and supersede all previous written, oral, or implied understandings between the parties hereto about the subject matter hereof, except as otherwise provided in Section 9(l) above regarding the Non-Solicitation Conditions and the Confidentiality Conditions and/or in the Retirement Rule set forth in Exhibit A. This Award Agreement may be amended by a subsequent writing (including e-mail or electronic form) agreed to between the Travelers Group and the Participant. Section headings herein are for convenience only and have no effect on the interpretation of this Award Agreement. The provisions of the Award Agreement that apply to a time period or require performance or enforcement after the Termination Date, including the Non-Solicitation Conditions, the Confidentiality Conditions, and the Retirement Rule, shall survive and remain in full force and effect after the Termination Date of a Participant and the termination of this Award Agreement, specifically including the post-employment restrictions contained in Sections 9 and 10 of this Award Agreement. The Company may assign this Award Agreement and its rights and obligations hereunder to any current or future member of the Travelers Group in its sole discretion and without further consent of the Participant.

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14.     No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group for a fixed duration of time. The employment relationship is "at will," which affords the Participant or the Travelers Group the right to terminate the relationship at any time for any reason or no reason not otherwise prohibited by applicable law. The Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant's employment with the Travelers Group. The Award granted hereunder will not form part of the Participant’s regular employment compensation and will not be considered in calculating any statutory benefits or severance pay due to the Participant.

15.     No Limitation on the Company's Rights. The Participant agrees that nothing in this Award Agreement shall in any way affect the Company's right or power to make adjustments, reclassifications or changes in its capital or business structure or to merge, consolidate, reincorporate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

16.     Transfer Restrictions. The Participant may not sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or dispose of the Award or his or her right hereunder to receive any performance shares, except as otherwise provided in the Prospectus.

17.     Conflict. In the event of a conflict between the Plan and the Award Agreement the Plan terms shall govern.

18.     Acceptance and Agreement by the Participant; Forfeiture upon Failure to Accept. By accepting this Award, the Participant agrees to be bound by the terms, conditions, and restrictions set forth in the Plan, this Award Agreement, and the Travelers Group’s policies, as in effect from time to time, relating to the Plan. The Participant's rights under the Award will lapse ninety (90) days from the Grant Date and the Award will be forfeited on such date if the Participant does not accept the Award Agreement by such date. For the avoidance of doubt, the Participant's failure to accept the Award Agreement shall not affect his or her continuing obligations under any other agreement between any member(s) of the Travelers Group and the Participant. Additionally, the Participant acknowledges and agrees that the Participant’s acceptance of this Award is voluntary and not a condition of employment, and the Participant may decline to accept this Award without adverse consequences to the Participant’s continued employment relationship with the Travelers Group. Participant is advised to consult with an attorney before entering into this Award Agreement.

19.     Waiver; Cumulative Rights. The Company’s failure or delay to require performance by the Participant of any provision of this Award Agreement will not affect its right to require performance of such provision unless and until the Company has waived such performance in writing. Each right under this Award Agreement is cumulative and may be exercised in part or in whole from time to time.

20.     Governing Law. The Award Agreement shall be legally binding and shall be executed and construed and its provisions enforced and administered in accordance with the laws of the Participant’s Employment Jurisdiction. For purposes of this Award Agreement, the “Employment Jurisdiction” means the state or, if outside of the United States, the country where the Participant primarily resides and works for the Company Group as of the Termination Date, and if the Participant’s state or country of residence is different from the state or country in which the Participant is primarily employed to work for the Company Group, then the Participant’s Employment Jurisdiction will be the state or country of the Participant’s assigned Travelers’ office location as reflected in the Company’s human resources information systems as of the Termination Date. If the Participant spends more than half the Participant’s work time working for the Company in the District of Columbia (“DC”), or is based in DC and the Participant does not spend the majority of the Participant’s work time working in another jurisdiction, then DC will be the Participant’s Employment Jurisdiction. If the Participant’s Employment Jurisdiction is listed in Exhibit C to this Award Agreement, the provisions of this Award Agreement are herein modified as indicated in Exhibit C for that state or country, but only while that applicable state or country remains the Participant’s Employment Jurisdiction. For purposes of this Award Agreement, the Participant shall have only one Employment Jurisdiction at any given time.

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21.     Forum for Disputes. The jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), this Agreement will be exclusively in the courts in the Employment Jurisdiction, including, for states within the United States, the Federal Courts located therein (should Federal jurisdiction exist). The parties consent to and submit to the personal jurisdiction and venue of courts of the Employment Jurisdiction and irrevocably waive any claim or argument that the courts in the Employment Jurisdiction are an inconvenient forum (whether based on convenience, cost, location of witnesses or evidence, or otherwise). Unless otherwise required by applicable law, the Participant agrees to accept service of any court filings and process by delivery to his or her most current home address on record with the Travelers Group via first class mail or other nationally (in the case of the United States) or internationally (in the case of non-US countries) recognized overnight delivery provider, or by any third party regularly engaged in the service of process. As consideration for and by accepting the Award, the Participant agrees that the Governing Law and Forum for Disputes provision of Section 20 and this Section 21 shall supersede any governing law, forum or similar provisions contained or referenced in any Prior Equity Award made by the Company to the Participant, and, accordingly, such Prior Equity Award shall become subject to the terms and conditions of the Governing Law and Forum for Disputes provisions of Section 20 and this Section 21.
22.     Personal Data. The Participant understands that the Company and other members of the Travelers Group hold certain personal information about the Participant, which may include, without limitation, information such as his or her name, home address, telephone number, gender, date of birth, salary, nationality, job title, social insurance number or other such tax identity number and details of all awards or other entitlement to shares of common stock awarded, cancelled, exercised, vested, unvested or outstanding in his or her favor (“Personal Data”).
The Participant understands that in order for the Company to process the Participant’s Award and maintain a record of performance shares under the Plan, the Company shall collect, use, transfer and disclose Personal Data within the Travelers Group electronically or otherwise, as necessary for the implementation and administration of the Plan including, in the case of a social insurance number, for income reporting purposes as required by law. The Participant further understands that the Company may transfer Personal Data, electronically or otherwise, to third parties, including but not limited to such third parties as outside tax, accounting, technical and legal consultants when such third parties are assisting the Company or other members of the Travelers Group in the implementation and administration of the Plan. The Participant understands that such recipients may be located within the jurisdiction of residence of the Participant, or within the United States or elsewhere and are subject to the legal requirements in those jurisdictions applicable to those organizations, for example, lawful requirements to disclose personal information such as the Personal Data to government authorities in those countries. The Participant understands that the employees of the Travelers Group and third parties performing work related to the implementation and administration of the Plan shall have access to the Personal Data as is necessary to fulfill their duties related to the implementation and administration of the Plan. By accepting the Award, the Participant consents, to the fullest extent permitted by law, to the collection, use, transfer and disclosure, electronically or otherwise, of his or her Personal Data by or to such entities for such purposes and the Participant accepts that this may involve the transfer of Personal Data to a country which may not have the same level of data protection law as the country in which this Award Agreement is executed. The Participant confirms that if the Participant has provided or, in the future, will provide Personal Data concerning third parties including beneficiaries, the Participant has the consent of such third party to provide their Personal Data to the Travelers Group for the same purposes.

The Participant understands that he or she may, at any time, request to review the Personal Data and require any necessary amendments to it by contacting the Company in writing. Additionally, the Participant may always elect to forgo participation in the Plan or any other award program.
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EXHIBIT A

AWARD RULES
TO TRAVELERS' PERFORMANCE SHARES AWARD NOTIFICATION AND AGREEMENT

When you leave the Travelers Group

References to "you" or "your" are to the Participant. "Termination Date" is defined in Section 9(a) of the Award Agreement and means the date of the termination of your employment with the Travelers Group (whether voluntary or involuntary) as reflected on the books and records of the Travelers Group.

If you terminate your employment or if there is a break in your employment, your Award may be cancelled before the end of the Performance Period and the vesting and settlement of your Award may be affected.

The provisions in the chart below apply to Awards granted under the Plan. Depending upon your employment jurisdiction upon the Grant Date, special rules may apply for vesting, payment and settlement of your Award in cases of termination of employment if you satisfy certain age and years of service requirements ("Retirement Rule"), as set forth in "Retirement Rule" below. Participants based in countries outside the United States on the Grant Date or in California immediately prior to the Termination Date should refer to Exhibit C for special rules that apply. For the avoidance of doubt, the applicable vesting terms for your Award pursuant to Exhibits A, B and C shall be based on your employment jurisdiction on the Grant Date.

If You: Here's What Happens to Your Award:
Terminate employment or your employment is terminated by the Travelers Group for any reason other than due to death or disability (but you do not meet the Retirement Rule and you do not qualify for continued vesting following a Change of Control, as described below)
Your rights under the Award are cancelled and your right to the performance shares is forfeited.
Become disabled (as defined under the Travelers Group's applicable long-term disability plan or policy covering disabilities in your employment jurisdiction)
You will be entitled to receive the number of shares of Common Stock you would have received, if any, if your employment had not terminated due to disability. Any such shares will be received at the time of settlement of the performance shares after the end of the Performance Period.
Take an approved personal leave of absence approved by the Travelers Group under its Personal Leave Policy, if applicable
 Your rights under the Award continue when you are on such leave of absence for up to three months. Once your approved leave of absence exceeds three months, your rights under the Award are suspended until you return to work with the Travelers Group and remain actively employed for 30 calendar days, after which your rights under the Award will be restored retroactively. If you terminate employment during the leave for any reason, the applicable termination of employment provisions will apply. If your personal leave of absence exceeds one year, your rights under the Award are cancelled and your right to the performance shares is forfeited.
Are on an approved family leave, medical leave, dependent care leave, military leave, or other statutory leave of absence or notice leave (including, without limitation, “garden leave,” but not including any period corresponding to pay in lieu of notice (by statute or common law), severance pay or other monies on account of the cessation of your employment)
 Your rights under the Award continue when you are on such leave of absence.
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Die while employed or following employment while your Award is outstanding (but prior to the end of the Performance Period)
 Your estate will be entitled to receive a number of shares of Common Stock equal to the initial number of performance shares set forth at the beginning of the Award, plus any performance shares credited as dividend equivalents in connection with the dividends paid or payable as of the date of your death. Any such shares will be delivered as soon as administratively possible following your death. No performance shares shall be credited with respect to any cash dividends paid by the Company after the date of the Participant's death but prior to the distribution with respect to performance shares already credited to the Participant's account.
Are involuntarily terminated without “Cause” (as defined below) or terminate employment for “Good Reason” (as defined below), in each case, within 24 months following a Change of Control (as defined in the Plan), and including, without limitation, if such involuntary termination without “Cause” or termination for “Good Reason” within 24 months following a Change of Control occurs after the onset of a disability or other approved leave or after meeting the Retirement Rule (any such termination, a “COC Termination”) You will be entitled to receive the number of shares of Common Stock you would have received, if any, if your employment had not terminated. Any such shares will be received at the time of settlement of the performance shares after the end of the Performance Period.

The terms “Cause” and “Good Reason”, as used above, shall only be applicable with respect to a termination of employment that occurs within 24 months following a Change of Control and shall have the following meanings:

“Cause” shall mean your conviction of any felony (or equivalent crime committed outside the United States), your willful misconduct in connection with the performance of your duties with the Company, or your taking illegal action in your business or personal life that harms the reputation or damages the good name of the Company.

“Good Reason” shall mean (i) a material reduction in your base salary or bonus opportunity (except for year over year reductions in payout due to performance), (ii) a material diminution in your title, duties, or responsibilities (other than solely by reason of the Company ceasing to be a publicly traded company), or (iii) an involuntary relocation of more than 30 miles of your principal place of business. Notwithstanding the foregoing, no event shall constitute Good Reason unless and until you have notified the Company in writing describing the event which constitutes Good Reason and then only if the Company shall fail to cure such event within thirty (30) days following its receipt of such written notice; provided, further, that “Good Reason” shall cease to exist for an event on the 90th day following the later of its occurrence or your knowledge thereof, unless you have given the Company written notice thereof prior to such date.

Retirement Rule

If, as of your Termination Date (including, without limitation, a Termination Date that occurs after the onset of a disability or other approved leave), you are at least (i) age 62 with one or more full years of service or (ii) age 55 with 10 or more full years of service, then you meet the "Retirement Rule."

The Retirement Rule will not apply to your Award or any Prior Equity Award if you were involuntarily terminated for gross misconduct or for cause (as determined by the Company in its sole discretion at the time of or following your termination of employment) or you voluntarily terminated your employment where grounds for involuntary termination for gross misconduct or for cause existed (as determined by the Company in its sole discretion at the time of or following your termination of employment); provided, however, that if such termination occurs within 24 months following a Change of Control, the Retirement Rule will only not apply to your Award or any Prior Equity Award if you are involuntarily terminated for “Cause” (as defined above) or if you voluntarily terminate employment where grounds for “Cause” (as defined above) existed.
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If you retire and do not meet the Retirement Rule, you will be considered to have resigned.

If You:
Meet the Retirement Rule (subject
to Exhibit C, if applicable)
You will be entitled to receive a number of shares of Common Stock equal to the shares you would have received, if any, if your employment had not terminated due to retirement in accordance with the Retirement Rule. Any such shares will be received at the time of settlement of the performance shares after the end of the Performance Period. You will have a right to payment under the Retirement Rule provided that, prior to the time of settlement, you do not engage in any activities that compete with the business operations of the Travelers Group (as determined by the Company in its sole discretion), including, but not limited to, working for another insurance company engaged in the property casualty insurance business as either an employee or independent contractor. You are not subject to this non-compete provision if you are terminated involuntarily or if you are employed in any state or country where applicable law prohibits such non-compete provisions, as identified in the state and country-specific modifications set forth in Exhibit C of the Award Agreement, but you remain subject to Sections 9 and 10 of the Award Agreement, and the POE Agreement.

When called for under the above rules, as a condition to receiving payment, you will be required to certify to the Company that you have not engaged in any activities that compete with the business operations of the Travelers Group since your Termination Date. You may be required to provide the Company with other evidence of your compliance with the Retirement Rule as the Company may require. Subject to the state- and country-specific modifications set forth in Exhibit C of the Award Agreement, in the event that you are determined to have engaged in competitive activities while receiving the benefit of continued vesting pursuant to the Retirement Rule (other than following an involuntary termination), any outstanding portion of the Award will be immediately forfeited and any portion of the Award previously paid to you will be subject to recoupment by the Company in accordance with Section 10(f) of the Award Agreement.


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EXHIBIT B

PERFORMANCE SHARES VESTING GRID
TO TRAVELERS' PERFORMANCE SHARES AWARD NOTIFICATION AND AGREEMENT

Performance Period ROE*
% of Performance Shares Vested
≥16.0% 200%     (Maximum)
13.0 160
12.5 140
11.5 120
11.0 100
9.5 75
8.0 50 (Threshold)
<8.0 0

*     For any Performance Period ROE (as defined below) that is at least 8.0%, but falls between two Performance Period ROE performance levels, the percentage of performance shares vested shall be interpolated (for example, if Performance Period ROE is 13.75%, 170% of the performance shares would be vested).

Definitions:

"Performance Period ROE" is defined as the sum of the Adjusted ROE for each of the three years in the Performance Period, divided by three.

"Adjusted ROE" is defined as Adjusted Core Income divided by Adjusted Shareholders' Equity.

"Adjusted Core Income" for each year in the Performance Period is defined as the Company's net income from continuing operations as reported in the Company's financial statements (including accompanying footnotes and management's discussion and analysis), adjusted as set forth in the immediately following sentence. In calculating Adjusted Core Income, net income from continuing operations shall be adjusted as follows: first (A) remove the after-tax effects of the following items: (i) losses (net of reinsurance) from catastrophes (as designated by the Insurance Service Office's Property Claims Service Group, the Lloyd's Claim Office, Swiss Reinsurance Company's sigma report, or a comparable report or organization generally recognized by the insurance industry, and disclosed by the Company as a catastrophe); asbestos and environmental reserve charges (or releases); net realized investment gains or losses in the fixed maturities and real estate portfolios; and (ii) items that are unusual or infrequently occurring (or both), the cumulative effect of accounting changes and federal income tax rate changes, charges for amortization of goodwill to the extent goodwill is amortized, and exit or disposal costs, each as defined by generally accepted accounting principles in the United States, and each as disclosed in the Company's financial statements (including accompanying footnotes and management's discussion and analysis); (B) reduced, as to the first year in the Performance Period (20XX), by $XXXXX million (which represents the after-tax dollar amount of expected “normal” catastrophe losses in 20XX), as to the second year in the Performance Period (20XX), by $XXXXX million times the ratio of: the Company's 20XX consolidated personal lines homeowners net written premium plus commercial lines property net written premium plus 50% of commercial lines multi peril net written premium divided by the Company's 20XX consolidated personal lines homeowners net written premium plus commercial lines property net written premium plus 50% of commercial lines multi peril net written premium, and as to the third year in the Performance Period (20XX), by $XXXXX million times the ratio of: the Company's 20XX consolidated personal lines homeowners net written premium plus commercial lines property net written premium plus 50% of commercial lines multi peril net written premium divided by the Company's 20XX consolidated personal lines homeowners net written premium plus commercial lines property net written premium plus 50% of commercial lines multi peril net written premium (with the after-tax dollar amount of expected “normal” catastrophe losses referenced in this clause (B) further adjusted to reflect any changes in federal income tax rates); and (C) reduced by an amount intended, as of the date of this award, to approximate historical levels of credit losses (on an after-tax basis) associated with the Company’s fixed income investments, determined by (i) multiplying a fixed factor, expressed as 0.31 basis points, by the amortized cost of the Company’s fixed maturity investment portfolio at the beginning of each quarter during the relevant year in the Performance Period and (ii) adding the after-tax sum of the amounts resulting from (i) for such year in the Performance Period.
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"Adjusted Shareholders' Equity" for each year in the Performance Period is defined as the sum of the Company's total common stockholders' equity as reported in the Company's balance sheet as of the beginning and end of the year (excluding net unrealized appreciation or depreciation of investments and adjusted as set forth in the immediately following sentence), divided by two. In calculating Adjusted Shareholders' Equity, the Company's total common shareholders' equity as of the beginning and end of the year shall be adjusted to remove the cumulative after-tax impact of the following items during the Performance Period: (i) discontinued operations and (ii) the adjustments and reductions made in calculating Adjusted Core Income.


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EXHIBIT C

Special Rules Applicable to Participants Based in Certain Jurisdictions

Terms and Conditions

This Exhibit C includes additional and/or alternative terms and conditions that govern the Award granted to the Participant under The Travelers Companies, Inc. 2023 Stock Incentive Plan (the “Plan”) if the Participant’s Employment Jurisdiction is one of the jurisdictions listed below on the Grant Date or on the Termination Date. Capitalized terms used but not defined in this Exhibit C are defined in the Plan and/or Award Agreement and have the meanings set forth therein. To the extent that this Exhibit C is applicable to the Participant (based on the Participant’s Employment Jurisdiction on the Grant Date or on the Termination Date), the provisions set forth in this Exhibit C will apply to the Participant and will supersede the corresponding provisions set forth in the Award Agreement with respect to the Participant.

Notifications

This Exhibit C also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant's participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective jurisdictions as of July 2023. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant should not rely on such information noted in this Exhibit C as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date by the time the Participant’s Award hereunder is settled.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation, and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s Employment Jurisdiction may apply to the Participant's situation.



* * *


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Low Wage Worker Protections. The parties acknowledge that some states prohibit or place limitations on the use of covenants not to compete or noncompete covenants with an employee considered to be a low wage worker based on the employee’s rate of compensation or overtime exemption status under the Fair Labor Standards Act (a “Low Wage Worker Protection” law, or “LWWP law”). It is the parties’ intent not to create any restriction that would violate any controlling state LWWP law. Where the controlling state’s law includes an LWWP law, it is the parties’ intent that this Agreement’s obligations be construed so as to fit within any applicable exclusion for duty of loyalty obligations, non-solicitation covenants, confidential information protection covenants, and intellectual property assignment agreements recognized under the LWWP law at issue, and that it not create a prohibited covenant not to compete.

Alabama:
If Alabama is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) Section 9(b) is rewritten as follows: “While employed and for a period of twelve (12) months from the date of the termination of the Participant’s employment, the Participant will not participate in soliciting any Covered Employee of the Travelers Group who is in a Sensitive Position to leave the employment of the Travelers Group on behalf of (or for the benefit of) a Competitor nor will the Participant knowingly assist a Competitor in efforts to hire a Covered Employee away from the Travelers Group or encouraging the Covered Employee to terminate their employment the Travelers Group. An employee in a “Sensitive Position” refers to an employee of the Travelers Group who is uniquely essential to the management, organization, or service of the business; and (b) “Company Customer” means a current customer of the Travelers Group with which the Participant had material business-related contact or dealings or access to Confidential Information about during the Look Back Period.

California:
If California is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 7(b) and 7(c) and the non-competition restrictions in the Retirement Rule shall not apply after the Participant’s employment with the Travelers Group ends. However, any conduct relating to the solicitation of the Company Customers or Covered Employees that involves the misappropriation of the Travelers Group’s trade secret information (as defined by applicable law), such as its protected customer information, will remain prohibited conduct at all times.
Section 21 shall be modified to add that no provision in Section 21 shall require the Participant to litigate any dispute outside the State of California.

Nothing in the Agreement shall be construed to prohibit the Participant from disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that the Participant has reason to believe is unlawful.

Colorado:
If Colorado is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) Non-Competition and Non-Solicitation Restrictions. If the Participant does not earn an amount of annualized cash compensation equivalent to or greater than the threshold amount for highly compensated workers, $101,250 (or the earnings threshold in effect as adjusted annually after August 10, 2022, by the Colorado Division of Labor Standards and Statistics in the Department of Labor and Employment)(“Non-Competition Earnings Threshold”), then the non-competition restrictions contained in the Retirement Rule shall not apply after the Participant’s employment with the Travelers Group ends. If the Participant does not earn an amount of annualized cash compensation equivalent to or greater than sixty-percent of the threshold amount for highly compensated workers, $60,750 (or the earnings threshold in effect as adjusted annually after August 10, 2022, by the Colorado Division of Labor Standards and Statistics in the Department of Labor and Employment)(“Customer Non-Solicitation Earnings Threshold”), then the Customer Non-Solicitation Condition in Section 9(c) shall not apply after the Participant’s employment with the Travelers Group ends.

The definition of “Company Customer” in Section 9(c) shall be modified to cover only those customers or other key relationships with respect to which the Participant would have been provided trade secret information during the Look Back Period.
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The Participant stipulates that the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 9(b) and 9(c) are reasonable and necessary for the protection of trade secrets within the meaning § 8-2-113(2)(b) (the “Colorado Noncompete Act”).

(b) Notice. the Participant acknowledges that they received notice of the restriction on competing contained in the Retirement Rule and its terms before the Participant accepted an offer of employment, or, if a current employee at the time the Participant enters into this Agreement, at least fourteen (14) days before the earlier of the effective date of the Agreement or the effective date of any additional compensation or change in the terms or conditions of employment that provides consideration for such covenant not to compete. The Confidential Information restrictions in this Agreement do not prohibit a worker’s disclosure of information that arises from the worker’s general training, knowledge, skill, or experience, whether gained on the job or otherwise, information that is readily ascertainable to the public, or information that a worker otherwise has a right to disclose as legally protected conduct. Nothing in this Agreement or the Travelers Group’s policy limits or prevents a worker from disclosing information about workplace health and safety practices or hazards.

District of Columbia:
If the Participant performs a majority of their work in the District of Columbia or is based in the District of Columbia and does not perform the majority of their work in any other jurisdiction, then the Agreement will be modified as follows:

(a) the noncompetition provision contained in the Retirement Rule will not be enforceable against the Participant after their employment with the Travelers Group ends unless the Participant earns (or is anticipated to earn) from the Travelers Group at least $150,000 in compensation in a consecutive 12-month period, increased in proportion to the annual average increase, if any, in the Consumer Price Index for All Urban Consumers in the Washington Metropolitan Statistical Area published by the Bureau of Labor Statistics of the United States Department of Labor for the previous calendar year (“Earnings Threshold”);

(b) nothing in this Agreement or any the Travelers Group’s policy restricts the Participant from having additional employment or contract work in addition to their employment with the Travelers Group so long as the employment or work would not result in the employee’s disclosure or use of Confidential Information or create a conflict of interest. The Participant shall notify the Travelers Group’s Human Resources Department prior to accepting any such additional employment or contract work so the Travelers Group may determine whether such employment violates or would likely violate this subparagraph (b) of the D.C. appendix;

(c) subject to the limitation in subparagraph (a) of the D.C. appendix, the definition of “Restricted Period” shall include the term of employee’s employment with the Travelers Group and the 365 days following the termination of that employment, regardless of the reason;

(d) the Participant acknowledges they received a copy of the Agreement, including the Exhibit B, at least 14 calendar days before the Participant began working for the Travelers Group, if a new hire, or, at least 14 days before the Participant was required to sign the Agreement, if already employed by the Travelers Group at the time the Participant is asked to sign the Agreement. If the Participant’s compensation meets the Earnings Threshold, the Participant further acknowledges that they received the following notice: “The District’s Ban on Non-Compete Agreements Amendment Act of 2020 limits the use of non-compete agreements. It allows employers to request non-compete agreements from highly compensated employees, as that term is defined in the Ban on Non-Compete Agreements Amendment Act of 2020, under certain conditions. The Travelers Group has determined that you are a highly compensated employee. For more information about the Ban on Non-Compete Agreements Amendment Act of 2020, contact the District of Columbia Department of Employment Services (DOES).”

Georgia:
If Georgia is deemed to be the Employment Jurisdiction: the definition of Confidential Information will be understood to exclude information voluntarily disclosed to the public by the Travelers Group (excluding
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unauthorized disclosures by the Participant or others), information that is the result of independent development by others, and information that is otherwise available in the public domain through lawful means. Nothing in this Agreement, including the definition of Confidential Information, limits or alters the definition of what constitutes a trade secret under any federal or state law designed to protect trade secrets. The Employee Non-Solicitation Condition will be limited to the Restricted Territory.

Hawaii:
If Hawaii is deemed to be the Employment Jurisdiction, then the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 9(b) and 9(c), and the covenant not to compete contained in the Retirement Rule, shall not apply after the Participant’s employment with the Travelers Group ends. However, any conduct relating to the solicitation of Company Customers or Covered Employees that involves the misappropriation of the Travelers Group’s trade secret information (as defined by applicable law), such as its protected customer information, will remain prohibited conduct at all times.

Illinois:
If the Participant resides in Illinois at the time this Agreement is entered into, then the Participant agrees that the award of the performance shares provided for in the Award Agreement constitutes sufficient consideration for this Agreement, to supplement and not replace or eliminate the value and sufficiency of the remaining consideration provided for by this Award Agreement. The Participant stipulates that this is adequate consideration to make the provisions of this Agreement immediately binding upon him or her.

In addition, if Illinois is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) the non-competition restrictions in the Retirement Rule shall not apply to employees earning less than $75,000.00 per year (“Non-Compete Earnings Threshold”) (with the Non-Compete Earnings Threshold increasing by $5,000 every five years from January 1, 2027 through January 1, 2037) after the Participant’s employment with the Travelers Group ends;

(b) the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition contained in Sections 9(b) and 9(c) shall not apply to employees earning less than $45,000.00 per year (“Non-Solicitation Earnings Threshold”) (with the Non-Solicitation Earnings Threshold increasing by $2,500 every five years from January 1, 2027 through January 1, 2037) after the Participant’s employment with the Travelers Group ends;

(c) if, at the time the Participant signs the Agreement, the Participant’s earnings do not meet the Non-Compete Earnings Threshold and/or the Non-Solicitation Earnings Threshold, then the covenant not to compete contained in the Retirement Rule will automatically become enforceable against the Participant if and when the Participant begins earning an amount equal to or greater than the Non-Compete Earnings Threshold, and the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition in Sections 9(b) and 9(c) will automatically become enforceable against the Participant if and when the Participant begins earning an amount equal to or greater than the Non-Solicitation Earnings Threshold;

(d) the Employee Non-Solicitation Conditions and Customer Non-Solicitation Condition contained in Sections 9(b) and 9(c) and the covenant not to compete contained in the Retirement Rule shall not apply to employees furloughed or terminated due to business circumstances or governmental orders related to COVID-19 or similar situations unless the Participant continues to be paid his or her base salary in the enforcement period; and

(e) the Participant acknowledges that he or she has been advised in writing to seek attorney consultation and was provided at least 14 calendar days to review this Agreement before signing.

Indiana:
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solicitation of Covered Employees to those who have access to or possess any Confidential Information that would give a competitor an unfair advantage.

Louisiana:
If Indiana is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Employee Non-Solicitation Conditions in Section 9(b) shall be modified to further limit the restriction on If Louisiana is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the “Restricted Territory” defined in Section 9 of the Agreement is understood to cover the following parishes, counties, and county equivalents: in Louisiana, the parishes of Acadia, Allen, Ascension, Assumption, Avoyelles, Beauregard, Bienville, Bossier, Caddo, Calcasieu, Caldwell, Cameron, Catahoula, Claiborne, Concordia, Desoto, East Baton Rouge, East Carroll, East Feliciana, Evangeline, Franklin, Grant, Iberia, Iberville, Jackson, Jefferson Davis. Jefferson, Lafayette, Lafourche, LaSalle, Lincoln, Livingston, Madison, Morehouse, Natchitoches, Orleans, Ouachita, Plaquemines, Pointe Coupee, Rapides, Red River, Richland, Sabine, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Landry, St. Martin, St. Mary, St. Tammany, Tangipahoa, Tensas, Terrebonne, Union, Vermillion, Vernon, Washington, Webster, West Baton Rouge, West Carroll, West Feliciana, Winn; and, for any additional states assigned to me as part of my Territory, the names of the counties (and equivalents) for such state(s) found in Geographic Areas Reference Manual published by the United States Census Bureau, also identified on the Census Bureau’s map published at stco2003.pdf (census.gov), and at https://en.wikipedia.org/wiki/List_of_counties_by_U.S._state_and_territory which lists of county and county equivalent names by state are incorporated herein by reference as if set forth in full.; and (b) the restrictions in Section 9 shall be limited to the foregoing parishes and counties.

Maine:
If Maine is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the Participant acknowledges that if the Participant is being initially hired by the Travelers Group that the Participant was notified a non-compete agreement would be required prior to their receiving a formal offer of employment from the Travelers Group and the Participant received a copy of this Agreement prior to receiving a formal offer of employment from the Travelers Group and was given at least three business days to consider the Agreement before signing; (b) the covenant not to compete contained in the Retirement Rule will not take effect until one year of employment or a period of six months from the date the agreement is signed, whichever is later; and (c) the covenant not to compete contained in the Retirement Rule shall not apply if the Participant earns at or below 400% of the federal poverty level.

Maryland:
If Maryland is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the covenant not to compete contained in the Retirement Rule shall not apply if the Participant earns equal to or less than $15/hour or $31,200 annually.

Massachusetts:
If the Participant resides in Massachusetts at the time this Agreement is entered into, then the Participant stipulates that the performance shares award provided for in the Award Agreement is adequate consideration to make the provisions of this Agreement immediately binding upon him or her. In addition, if Massachusetts is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) the covenant not to compete contained in the Retirement Rule will not apply if the Participant’s employment is terminated without cause or if the Participant is terminated as part of a reduction in force. The Participant further understands that for the limited purposes of the application of the covenant not to compete in the Retirement Rule of the Agreement, “cause” to terminate the Participant’s employment exists if the Participant has (i) been convicted of or entered a plea of guilty or nolo contendere to, or admission to facts sufficient for a finding of guilt for, any crime constituting a felony or any misdemeanor involving fraud, dishonesty and/or moral turpitude, (ii) violated a material term of this Agreement or the Travelers Group’s policies, (iii) engaged in insubordination, or failed or refused to perform assigned duties of my position despite reasonable opportunity to perform, (iv) failed to exercise reasonable care and diligence in the exercise of the Participant’s duties for the Travelers Group (other than due to physical or mental illness), (v) engaged in conduct or omissions that the Participant knew, or should have known (with the exercise of reasonable care), would cause, or be likely to cause, harm to the Travelers Group or its reputation in the business community, or (vi) engaged in any other act that is accepted as cause for termination under the common law;
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(b) the period of the covenant not to compete contained in the Retirement Rule shall be limited to a period of one year following the cessation of employment by the Travelers Group (as well as while employed by the Travelers Group) (the “Non-Compete Restricted Period”); however, if the Participant breaches the covenant not to compete contained in the Retirement Rule of this Agreement, and also breaches the Participant’s fiduciary duty to the Travelers Group and/or has unlawfully taken, physically or electronically, any company records, then the Non-Compete Restricted Period shall be extended to a period of two (2) years from the cessation of employment;

(c) the Participant acknowledges that if the Participant is being initially hired by the Travelers Group that the Participant received a copy of this Agreement with their first formal offer of employment from the Travelers Group or at least ten (10) business days before commencement of the Participant’s employment by the Travelers Group, whichever came first; and if the Participant was already employed by the Travelers Group at the time of signing this Agreement, that the Participant was provided a copy hereof at least ten (10) business days before the effective date of this Agreement;

(d) the extension of the Restricted Period or the Enhanced Restricted Period contained in Section 9(f) shall only apply to any breach of Sections 9(b) and 9(c) (i.e., the tolling language shall not apply to the Retirement Rule);

(e) the covenant not to compete contained in the Retirement Rule shall not apply to the Participant post-employment if the Participant is: classified as non-exempt under the FLSA; 18 years or younger; or an undergraduate or graduate student in an internship or other short-term employment relationship while enrolled in college or graduate school; and

(f) Section 21 shall be modified to add that any legal action arising from this Agreement shall be exclusively finally resolved by a state or federal court located in the county where the Participant resides or the business litigation session of the superior court in Suffolk County, Massachusetts, and the parties to this Agreement hereby consent to personal jurisdiction therein.

Minnesota:
If the Participant’s Employment Jurisdiction is Minnesota, then the following shall apply to this Award Agreement:

Notwithstanding anything set forth in this Agreement to the contrary, if Minnesota law is deemed to apply to this Agreement, then (i) the covenant not to compete in the Retirement Rule will not apply to the Participant, unless Minnesota Statutes § 181.988 has been repealed or otherwise has no legal effect or application to the Retirement Rule as of the date the Participant’s employment with the Travelers Group terminates; and (ii) with respect to claims arising under Minnesota Statutes § 181.988 (referencing “Covenants Not To Compete”), nothing in this Agreement will require the Participant to adjudicate outside of Minnesota any claim arising in Minnesota or deprive the Participant of the substantive protection of Minnesota law with respect to a controversy arising in Minnesota.

Missouri:
If Missouri is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Employee Non-Non-Solicitation Conditions in Section 9(b) will be modified to exclude from the definition of Covered Employee any employee who provides only secretarial or clerical services.

Nebraska:
If Nebraska is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the list of Company Customers that are subject to the restriction in Section 9(c) is modified so that it means any persons or entities with which the Participant did business and had personal business-related contact during the Look Back Period; and (B) the covenant not to compete in the Retirement Rule does not apply after the Participant’s employment with the Travelers Group ends.

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Nevada:
If Nevada is deemed to be the Employment Jurisdiction, then the following applies to the Participant:

(a) the covenant not to compete restriction in the Retirement Rule shall not apply if the Participant is paid solely on an hourly wage basis, exclusive of any tips or gratuities (that is, if the Participant is paid on an hourly wage basis and does not receive bonuses, profit sharing, or commissions in addition to his or her hourly wages);

(b) the covenant not to compete in the Retirement Rule will not become effective until the Participant has either been employed by the Travelers Group for sixty (60) days or received $5,000 in wages from the Travelers Group;

(c) if the Participant’s employment with the Travelers Group is terminated as a result of a reduction in force, reorganization or similar restructuring of the Travelers Group, the covenant not to compete in the Retirement Rule will only be enforceable during the period in which the Travelers Group is paying the Participant’s salary, benefits, or equivalent compensation, including without limitation, severance pay, if it elects to make such a payment; and

(d) Section 9 does not preclude the Participant from providing services to any former client, customer, or key relationship of the Travelers Group if: (1) the Participant did not solicit the former customer, client, or key relationship; (2) the customer, client, or key relationship voluntarily chose to leave and seek services from the Participant; and (3) the Participant is otherwise complying with the limitations in this Agreement as to time, geographical area, and scope of activity to be restrained.

New Hampshire:
If New Hampshire is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) the covenant not to compete in the Retirement Rule does not apply if the Participant earns an hourly rate less than or equal to 200 percent of the federal minimum wage; and (b) the Participant acknowledges that the Participant was given a copy of this Agreement prior to a change in job classification or the offer of employment.

New York:
If New York is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the customers subject to the restriction on solicitation contained in the Customer Non-Solicitation Condition in Section 9(c) shall be modified so that it excludes from its definition of “Company Customer” those clients who became a customer of the Travelers Group as a result of the Participant’s independent contact and business development efforts with the customer prior to and independent from his/her employment with the Travelers Group.

North Carolina:
If North Carolina is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Look Back Period shall be calculated looking back one year from the date the employment ends or two years from the date of enforcement and not from the date employment ends, whichever provides the Travelers Group the greatest protection and is enforceable under applicable law.

North Dakota:
If North Dakota is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the Customer Non-Solicitation Condition in Section 9(c) and the covenant not to compete in the Retirement Rule shall not apply after the Participant’s employment with the Travelers Group ends. The Participant’s Employee Non-Solicitation Conditions continue to apply as stated. Further, any conduct relating to the solicitation of Company Customers or Covered Employees that involves the misappropriation of the Travelers Group’s trade secret information (as defined by applicable law), such as its protected customer information, will remain prohibited conduct at all times.

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Oklahoma:
If Oklahoma is deemed to be the Employment Jurisdiction, then the following applies to the Participant: The Customer Non-Solicitation Condition in Section 9(c) and the covenant not to compete contained in the Retirement Rule shall be limited in their application so that they permit the Participant to engage in the same business as that conducted by the Travelers Group or in a similar business as long as the Participant does not directly solicit the sale of goods, services, or a combination of goods and services from established customers of the Travelers Group. Established customers are those persons and entities who have an ongoing business relationship or prospective business relationship with the Travelers Group and who did business with the Travelers Group (or made an agreement to do business with the Travelers Group) in the Look Back Period.

Oregon:
If Oregon is deemed to be the Employment Jurisdiction, then the following applies to the Participant: unless the Travelers Group chooses to compensate the Participant as allowed under the Oregon Noncompete Act (Or. Rev. Stat. §653 et seq.), the restrictions in the Retirement Rule shall only apply to the Participant, and the definition of “Company Customers” subject to the Customer Non-Solicitation Condition in Section 9(c) will only be deemed to include prospective customers, if the Participant: (a) is engaged in administrative, executive or professional work and performs predominantly intellectual, managerial, or creative tasks, exercises discretion and independent judgment and earns a salary and is paid on a salary basis; (b) the Travelers Group has a "protectable interest" (meaning, access to trade secrets or competitively sensitive confidential business or professional information that otherwise would not qualify as a trade secret, including product development plans, product launch plans, marketing strategy or sales plans); and (c) the total amount of the Participant's annual gross salary and commissions, calculated on an annual basis, at the time of the Participant's Termination Date, exceeds $100,533 (as of January 1, 2022 and adjusted annually for inflation pursuant to the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor immediately preceding the calendar year of the Participant’s termination).

Rhode Island:
If Rhode Island is deemed to be the Employment Jurisdiction, then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant post-employment if the Participant is: classified as non-exempt under the FLSA; an undergraduate or graduate student in an internship or short-term employment relationship; 18 years of age or younger; or a low wage employee (defined as earning less than 250% of the federal poverty level).

Virginia:
If Virginia law controls, the parties agree that the covenant not to compete in the Retirement Rule and the Customer Non-solicit Condition are reasonably limited in nature and do not prohibit employment with a competing business in a non-competitive position. If the Participant resides in Virginia on the Termination Date and their average weekly earnings calculated as provided for under Code of Virginia §40.1-28.7:7 (the “Virginia Act”), are less than the average weekly wage of the Commonwealth as determined pursuant to subsection B of §65.2-500 or the Participant otherwise qualifies as a “low-wage employee” under the Virginia Act then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant and nothing in the Customer Non-Solicitation Condition in Section 9(c) shall restrict the Participant from providing a service to a customer, client, or key relationship of the Travelers Group if the Participant does not initiate contact with or solicit the customer, client, or key relationship. The Participant shall not be considered a “low-wage employee” if the Participant’s earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to the employee by the Travelers Group.

Washington State:
If the Participant resides in Washington at the time this Agreement is entered into and is an existing employee, then the Participant agrees that the performance shares award provided for in this Award Agreement is the mutually agreed upon, fair and reasonable consideration for the covenant not to compete contained in the Retirement Rule and the Non-Solicitation Conditions in Section 9. This consideration shall supplement and not replace or eliminate the value and sufficiency of any additional consideration provided for in the Agreement.
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The Participant stipulates that the above-referenced consideration is sufficient to make this Agreement fully binding and enforceable, and agrees not to assert otherwise. If the Participant is an existing employee, the Participant acknowledges that the Participant was given ten (10) business days to consider this Agreement before accepting it.
In addition, if Washington law controls, then for so long as Washington law controls, the Agreement will be modified and applied as follows:
(a) the covenant not to compete contained in the Retirement Rule, the Employee Non-Solicitation Conditions in Section 9(b), and the Customer Non-Solicitation Condition in Section 9(c) (the “Excluded Covenants”), and the definition of “solicit” in Section 9(d) shall only apply post-employment if the Participant’s annualized earnings from the Travelers Group exceed $107,302 per year (adjusted annually in accordance with Section 5 of Washington HP 1450);
(b) if, at the time the Participant signs the Agreement, the Participant’s earnings do not meet the Earnings Threshold described above Washington appendix (a), then the Excluded Covenants will automatically become enforceable against the Participant if and when the Participant begins earning at least $107,302 annually (adjusted for inflation) in Box 1 W-2 annual compensation;
(c) for purposes of the application of the Excluded Covenants, the Participant understands that the Excluded Covenants will not be enforced against the Participant if the Participant is laid off unless the Travelers Group pays the Participant during the Restricted Period an amount equal to the Participant’s base salary at the time of termination, less any compensation earned by the Participant during the Restricted Period. For purposes of this section, “layoff” means termination of the Participant’s employment by the Travelers Group for reasons of the Travelers Group’s insolvency, or other purely economic factors, and specifically excludes termination of the Participant’s employment for any other reason, either with or without cause;
(d) Section 21 shall be modified to add that no provision in Section 10 shall require the Participant to litigate any dispute outside the State of Washington;
(e) the Participant further acknowledges that if the Participant is a new employee, the Participant has had advance notice of the terms of this Agreement, including the Exhibit B, prior to accepting the Travelers Group’s offer of employment and
(f) In addition to the other forms of Protected Conduct, nothing in the Agreement prohibits disclosure or discussion of conduct the Participant reasonably believes to be illegal discrimination, illegal harassment, illegal retaliation, a wage and hour violation, or sexual assault, or that is recognized as against a clear mandate of public policy, or the disclosure of the existence of a settlement involving any such event or conduct.

Wisconsin:
If Wisconsin is deemed to be the Employment Jurisdiction, then the following applies to the Participant: (a) Section 9(f) shall not apply; and (b) Section 9(b) is rewritten as follows: “While employed and for a period of twelve (12) months from the date of the termination of the Participant’s employment, the Participant will not participate in soliciting any Covered Employee of the Travelers Group that is in a Sensitive Position to leave the employment of the Travelers Group on behalf of (or for the benefit of) a Competitor nor will the Participant knowingly assist a Competitor in efforts to hire a Covered Employee away from the Travelers Group or encouraging the Covered Employee to terminate their employment with the Travelers Group. An employee in a “Sensitive Position” refers to an employee of the Travelers Group who is in a management, supervisory, sales, research and development, or similar role where the employee is provided Confidential Information or is involved in business dealings with the Travelers Group’s clients.”



-25-
        

Canada

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations thereunder) will not apply to the Participant.

•Section 14 of the Award Agreement shall be revised to read as follows:

14. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group. Nothing contained herein shall be deemed to give the Participant the right to be retained in the service of the Travelers Group or to interfere with the right of the Travelers Group to terminate the employment of the Participant at any time. For greater certainty, in such a case of employment termination, the Participant shall not be entitled or eligible to receive or be awarded any payment, compensation or damages (at common law or otherwise) in relation to the forfeiture or loss of any Award or other amount for which the Participant was previously eligible to receive under the Plan.

•For purposes of Section 9(a) and Exhibit A to the Award Agreement, “Termination Date” shall mean the date of the Participant’s termination of employment with the Travelers Group (whether voluntary or involuntary) as reflected on the Travelers Group’s books and records, regardless of whether such termination is lawful and without regard to any pay in lieu of notice, severance pay, benefits continuation or similar termination-related compensation or benefits whether pursuant to the common law or otherwise except as expressly required by applicable employment standards legislation.

•If the province of Ontario is deemed to be the Employment Jurisdiction, then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant post-employment.

•The non-solicitation restrictions in respect of Covered Employees and Company Customers will be limited to solicitation that is for a purpose that is competitive with the business of the Travelers Group.




-26-
        

Germany

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations) will not apply to the Participant.

•Section 9(b) of the Award Agreement shall be revised to read as follows:

(b)    Non-Solicitation of Employees. The Participant acknowledges that the Travelers Group sustains its operations and the goodwill of its clients, customers, policyholders, producers, agents, and brokers (its “Customers”) through its employees. The Travelers Group has made significant investment in its employees and their ability to establish and maintain relationships with each other and with the Company Customers in order to further its operations and cultivate goodwill. The Participant acknowledges that the loss of the Travelers Group’s employees could adversely affect its operations and jeopardize the goodwill that has been established through these employees, and that the Travelers Group therefore has a legitimate interest in preventing the solicitation of its employees by the Participant after the Termination Date. During the Restricted Period, the Participant will not, directly or indirectly, seek to recruit or solicit, attempt to influence or assist in the recruitment or solicitation, or participate in or promote the solicitation of, a Covered Employee to terminate their employment with the Travelers Group to take employment in any position within or for the benefit of Participant’s own business outside the Travelers Group. The term “Covered Employee” means any person (i) who was or is employed by the Travelers Group at any time during the last three months of the Participant's employment or during the Restricted Period and (ii) with whom the Participant worked, who the Participant supervised, or about whom the Participant acquired Confidential Information during the two-year period immediately preceding the Termination Date (the “Look Back Period”). Without limiting the generality of the restrictions under this Section, by way of example, the restrictions under this Section shall prohibit the Participant from (i) interviewing a Covered Employee for a position outside of the Travelers Group, (ii) communicating in any manner with a Covered Employee in connection with a current or future employment opportunity outside of the Travelers Group, (iii) identifying Covered Employees to potentially be solicited or hired in a position outside of the Travelers Group, (iv) providing information or feedback regarding Covered Employees seeking employment with another employer, and/or (v) otherwise directly or indirectly assisting or participating in the solicitation or hiring of a Covered Employee. However, the Non-Solicitation Conditions do not preclude the Participant from directing a third party (including but not limited to employees of his/her subsequent employer or a search firm) to broadly solicit, recruit, and hire individuals, some of whom may be employees of the Travelers Group, provided that the Participant does not direct such third party specifically to target employees of the Travelers Group generally or specific individual employees of the Travelers Group. This provision shall be referred to as the “Employee Non-Solicitation Conditions.”

•Section 9(c) of the Award Agreement shall be deleted in its entirety.

•Section 14 of the Award Agreement shall be revised to read as follows:

14.    No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment or guarantees employment with any member of the Travelers Group for any time. Each member of the Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of or terminate the Participant's employment with the Travelers Group, subject to applicable law and the terms of the Participant's employment contract.



-27-
        

Republic of Ireland

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations thereunder) will not apply to the Participant.

•Section 14 of the Award Agreement shall be revised to read as follows:

14.    No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group for a definite period of time. The Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant's employment with the Travelers Group, subject to applicable Irish law and the terms of the Participant's employment contract.

•Further to the provisions as set out in Section 22 of the Award Agreement, the Travelers Group agrees that it will comply with the provisions of the Data Protection Act 2018 together with the EU General Data Protection Regulation (collectively, the “Irish DPA Act”). The Participant acknowledges that the Company has made available to the Participant a copy of the Europe Employee Privacy Policy related to the EU General Data Protection Regulation (the “Privacy Policy”) and the Participant understands that a copy of such policy and further information related thereto can be obtained by contacting the Travelers Europe Data Protection Officer at DPOEurope@travelers.com. With this information, the Participant confirms that the Participant consents to the Company, the Travelers Group and any other third parties as described in Section 21 for the purposes of this Award Agreement processing and transferring their personal data (as defined in the Irish DPA Act) outside of the European Economic Area, subject to and in accordance with the terms and requirements of the Privacy Policy and the Irish DPA Act.

•The provisions in Exhibit A related to the Retirement Rule shall be inapplicable to the Participant. Accordingly, upon the Participant’s termination of employment for any reason other than due to death, Disability or a COC Termination as set forth in the Award Agreement (regardless of whether the Participant meets the Retirement Rule), vesting of the Award will cease and all outstanding unvested performance shares will be cancelled effective on the Termination Date.

•The provisions in Exhibit A related to disability shall be inapplicable to the Participant for so long as the Participant remains employed by the Travelers Group. Accordingly, a disabled Participant who remains employed by the Travelers Group shall be treated as a continuing employee in all respects for purposes of vesting and other rights with respect to the Award.


-28-
        

United Kingdom

•References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations) will not apply to the Participant.
•The Restricted Period, as defined in Section 9(a) of the Award Agreement, will include any period during which the Participant is placed on “garden leave.”

•The restrictions under Section 9(b) of the Award Agreement related to non-solicitation of Covered Employees shall only apply with respect to employees with whom the Participant had material dealings during the 12 months preceding the date of the Participant’s termination of employment with the Travelers Group, and such restrictions shall not apply with respect to any secretarial or administrative assistant employees of the Travelers Group.

•The “Enhanced Restricted Period” defined under Section 9(c) of the Award Agreement shall be limited to 12 months following the Termination Date (i.e., the same duration as the normal Restricted Period). Additionally, under Section 9(c) of the Award Agreement:

(1)the restrictions relating to recruiting or solicitation of, interference with, attempting to influence or otherwise affecting any Company Customer shall be limited to such Company Customers with which the Participant had material dealings within the 12 months preceding the Termination Date; and

(2)the references to “business” (aside from references to “book of business”) shall be limited to business activities with which the Participant was materially involved during the 12 months preceding the Termination Date.

•Section 14 of the Award Agreement shall be replaced with the following:

14. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment or guarantees employment with any member of the Travelers Group for a fixed duration of time. Each member of the Travelers Group retains the right to decrease the Participant's compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant's employment with the Travelers Group, subject to applicable law and the terms of the Participant's employment contract. Upon termination of the Participant’s employment (for whatever reason) the Participant will have no rights as a result of this Award Agreement or any alleged breach of this Award Agreement or otherwise to any compensation under or in respect of any shares, share options, restricted stock units, long-term incentive plans or any other profit sharing scheme in which the Participant may participate or have received grants or allocations on or before the date on which the Participant’s employment terminates. Any rights which the Participant may have under such schemes will be exclusively governed by the rules of such schemes from time to time.

•Further to the provisions as set out in Section 22 of the Award Agreement, the Travelers Group agrees that it will comply with the provisions of the Data Protection Act 2018 (the “Act”), and the EU General Data Protection Regulation (2016/679) (the “GDPR”) and the retained version of the GDPR applicable in the UK (the “UK GDPR”). The Participant acknowledges that the Company has made available to the Participant a copy of the Europe Employee Privacy Policy related to the GDPR and UK GDPR (the “Privacy Policy”) and the Participant understands that a copy of such policy and further information related thereto can be obtained by contacting the Travelers Europe Data Protection Officer at DPOEurope@travelers.com. With this information, the Participant confirms that the Participant consents to the Company, the Travelers Group and any other third parties as described in Section 21 for the purposes of this Award Agreement processing and transferring their personal data (as defined in the Act) outside of the UK or the European Economic Area, subject to and in accordance with the terms and requirements of the Privacy Policy, the GDPR, the UK GDPR and the Act.

-29-
        

•The provisions in Exhibit A related to the Retirement Rule shall be inapplicable to the Participant. Accordingly, upon the Participant’s termination of employment for any reason other than due to death, Disability or a COC Termination as set forth in the Award Agreement (regardless of whether the Participant meets the Retirement Rule), vesting of the Award will cease and all outstanding unvested performance shares will be cancelled effective on the Termination Date.

•The provisions in Exhibit A related to disability shall be inapplicable to the Participant for so long as the Participant remains employed by the Travelers Group. Accordingly, a disabled Participant who remains employed by the Travelers Group shall be treated as a continuing employee in all respects for purposes of vesting and other rights with respect to the Award.
-30-
        
EX-10.36 5 a1036trv2024boardofdirecto.htm EX-10.36 Document

Exhibit 10.36


THE TRAVELERS COMPANIES, INC.
NON-EMPLOYEE DIRECTOR
NOTIFICATION AND AGREEMENT OF ANNUAL DEFERRED STOCK AWARD TO
[DIRECTOR NAME]

1.General. This notification (“Notification”) is being provided to you (the “Participant”), as a non-employee director (“Director”) of The Travelers Companies, Inc. (the “Company”), in connection with the Deferred Stock Award set forth below (the “Award”) that has been made pursuant to: (i) the Company’s Board of Directors revised compensation program adopted by the Company’s Board of Directors (the “Board”) as of May 28, 2014, as the same may be amended by the Board from time-to-time; and (ii) The Travelers Companies, Inc. 2023 Stock Incentive Plan (the “2023 Plan”). The Award was made on XXXXX XX, 20XX (the “Grant Date”).

2.Deferred Stock Award. The Company hereby grants to you X,XXX deferred common stock units (each unit being equivalent to one share of the Company’s common stock, no par value (“Common Stock”) and referred to herein as a “Unit”, and collectively as “Units”). The Award is subject to the following vesting, distribution and other requirements:


a.The Units will vest in full one day prior to the date of the annual shareholder meeting occurring in the year following the year of the date of grant (the “vesting date”) so long as you continuously serve on the Board through the vesting date, subject to the termination of service provisions set forth below.

b.After the Units have vested, actual shares of Common Stock will be distributed in exchange for Units either in a lump sum or in annual installments, as you may elect, to be paid or commence six (6) months following your termination of service on the Board, or such later date you may elect, pursuant to The Travelers Companies, Inc. Deferred Compensation Plan For Non-Employee Directors (the “Directors Deferred Plan”), which elections must have been made prior to the beginning of the calendar year of this Award.

c.Upon termination of your service on the Board, other than for death, Unit grants, to the extent not then vested, will be forfeited.

d.Upon death, unvested Units will vest immediately, and shares of Common Stock will be distributed to your estate as soon as practicable thereafter, or, with respect to deferred Units, will be distributed in accordance with the terms of the Directors Deferred Plan.

e.If the Company declares a cash dividend on the Common Stock, dividend equivalents attributable to Units will be automatically granted and deemed reinvested in additional Units as of the last day of the quarter in which the dividend was paid. The number of dividend equivalent Units shall equal the cash dividend equivalent divided by the closing price of the Common Stock on the New York Stock Exchange on the dividend payment date.

3.Miscellaneous.

a.Shares of Common Stock subject to a Unit that has vested may be withheld by the Company if required to satisfy applicable tax withholding obligations of the Company. In such case, shares of Common Stock net of such withholding will be distributed to you, unless you pay the tax withholding in cash. If the Company does not have a tax withholding obligation, then no shares of Common Stock will be withheld, and instead the Company will issue to you a Form 1099-MISC or other applicable tax report for the year in which the shares of Common Stock are delivered to you.

b.Except with respect to dividend equivalents for Units as provided above, the Units do not entitle you to any voting rights or other rights of a shareholder of the Company until shares of Common Stock have been distributed in exchange for Units.

c.In addition to the terms and conditions set forth herein, the Awards are subject to (i) the terms and conditions of the 2023 Plan, and to the extent that a deferral election has been made with respect to Units, the Directors Deferred Plan; and (ii) the prospectus relating to the Awards as the same may be amended, modified and supplemented from time-to-time.



d.This Award (and any prior Award that was made or vested after December 31, 2004) is intended to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), including any regulations or other guidance issued by the United States Treasury Department under Section 409A of the Code, and should be interpreted accordingly. By way of example, but not limitation, if a termination of service on the Board does not result in a separation from service under Section 409A of the Code, distributions to you under this Notification will instead be determined by reference to separation from service as defined under Section 409A of the Code.

e.This Notification constitutes the entire understanding between the parties hereto regarding the Units and supersedes all previous written, oral, or implied understandings between the parties hereto about the subject matter hereof.
4.     Acceptance and Agreement by Director. Upon electronic acceptance of this Award, the Participant agrees to be bound by the terms, conditions, and restrictions set forth in the 2023 Plan, this Notification, and the Company's policies, as in effect from time to time, relating to the 2023 Plan.



THE TRAVELERS COMPANIES, INC.        [NON-EMPLOYEE DIRECTOR NAME]

EX-21.1 6 trv-12312023x10kxex211.htm EX-21.1 Document

Exhibit 21.1
Name of Subsidiaries of The Travelers Companies, Inc. State or
Other
Jurisdiction of
Incorporation
Travelers Property Casualty Corp.  Connecticut
Travelers Insurance Group Holdings Inc.  Delaware
The Standard Fire Insurance Company Connecticut
Standard Fire Properties, LLC Delaware
Standard Fire UK Investments LLC Delaware
The Automobile Insurance Company of Hartford, Connecticut Connecticut
Auto Hartford Investments LLC Delaware
Travelers Personal Security Insurance Company Connecticut
Travelers Property Casualty Insurance Company Connecticut
Travelers Personal Insurance Company Connecticut
Travelers Texas MGA, Inc.  Texas
The Travelers Indemnity Company Connecticut
Arch Street North LLC Delaware
Gulf Underwriters Insurance Company Connecticut
Select Insurance Company Texas
First Floridian Auto and Home Insurance Company Florida
Travelers Distribution Alliance, Inc.  Delaware
Travelers Indemnity U.K. Investments LLC Connecticut
The Charter Oak Fire Insurance Company Connecticut
American Equity Insurance Company Arizona
American Equity Specialty Insurance Company
 Connecticut
Northland Insurance Company Connecticut
Northfield Insurance Company
 Iowa
Northland Casualty Company
 Connecticut
The Phoenix Insurance Company Connecticut
Constitution State Services LLC Delaware
Phoenix UK Investments LLC Delaware
The Travelers Indemnity Company of America Connecticut
The Travelers Indemnity Company of Connecticut Connecticut
Travelers Property Casualty Company of America Connecticut
The Travelers Home and Marine Insurance Company Connecticut
The Travelers Lloyds Insurance Company Texas
Travelers Marine, LLC Delaware
Travelers Marketplace Holdings, LLC Delaware
InsuraMatch, LLC Delaware
TPC U.K. Investments LLC Delaware
TravCo Insurance Company Connecticut
Travelers Commercial Casualty Company Connecticut
TPC Investments, Inc.  Connecticut
1

Name of Subsidiaries of The Travelers Companies, Inc. State or
Other
Jurisdiction of
Incorporation
Travelers (Bermuda) Limited Bermuda
Travelers Casualty and Surety Company Connecticut
8527512 Canada Inc.1
 Canada
The Dominion of Canada General Insurance Company Canada
Farmington Casualty Company Connecticut
Travelers MGA, Inc.  Texas
Simply Business, LLC Massachusetts
Harborway Insurance Agency, LLC Massachusetts
The Family Business Institute LLC Delaware
Travelers Casualty and Surety Company of America Connecticut
Travelers Global, Inc.  Delaware
Travelers Brazil Holding LLC Delaware
Travelers Brazil Acquisition LLC Delaware
Travelers Casualty Insurance Company of America Connecticut
Travelers Casualty Company of Connecticut Connecticut
Travelers Casualty UK Investments LLC Delaware
Travelers Commercial Insurance Company Connecticut
Travelers Excess and Surplus Lines Company Connecticut
Travelers Lloyds of Texas Insurance Company Texas
Travelers Insurance Company of Canada Canada
Travelers Group Captive Insurance Company Connecticut
St. Paul Fire and Marine Insurance Company Connecticut
 Fidelity and Guaranty Insurance Company Iowa
 Fidelity and Guaranty Insurance Underwriters, Inc. Wisconsin
St. Paul Mercury Insurance Company Connecticut
St. Paul Guardian Insurance Company Connecticut
St. Paul Surplus Lines Insurance Company Delaware
The Travelers Casualty Company Connecticut
Travelers Constitution State Insurance Company Connecticut
Northbrook Holdings, Inc.  Delaware
TravCo Personal Insurance Company Connecticut
St. Paul Protective Insurance Company Connecticut
350 Market Street, LLC Delaware
United States Fidelity and Guaranty Company Connecticut
Travelers Specialty Insurance Company Connecticut
SPFM Holdings, LLC Delaware
Camperdown Corporation Delaware
TCI Global Services, Inc.  Delaware
SPC Insurance Agency, Inc.  Minnesota
Travelers Management Limited United Kingdom
Travelers Insurance Company Limited United Kingdom
Travelers Insurance Designated Activity Company Ireland
Travelers London Limited United Kingdom
F&G UK Underwriters Limited United Kingdom
2

Name of Subsidiaries of The Travelers Companies, Inc. State or
Other
Jurisdiction of
Incorporation
Travelers Syndicate Management Limited United Kingdom
Aprilgrange Limited United Kingdom
Travelers Underwriting Agency Limited United Kingdom
Xbridge Limited
 United Kingdom
10762962 Canada Inc.
Canada
   Zensurance Inc. Canada
       Zensurance Brokers Inc.
Canada
ClearCover Underwriting Inc. Canada
_______________________________________________________________________________
18527512 Canada Inc., which wholly owns The Dominion of Canada General Insurance Company, is jointly owned by Travelers Casualty and Surety Company, which holds a 77.52% interest, and St. Paul Fire and Marine Insurance Company, which holds a 22.48% interest.
The names of particular subsidiaries have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute, as of the end of the year covered by this report, a "significant subsidiary" as that term is defined in Rule 1-02(w) of Regulation S-X under the Securities Exchange Act of 1934. In addition to what is listed above, the Company has a 49.5% interest in (i) Junto Holding Brasil S.A., a Brazilian company, which has two direct wholly-owned Brazilian subsidiaries, Junto Seguros S.A. and Junto Resseguros S.A, and one indirect wholly-owned Brazilian subsidiary, Junto Controle de Riscos Ltda and (ii) Junto Holding Latam S.A., a Brazilian company, which owns 51% of JMalucelli Travelers Seguros S.A., a Colombian company.
3
EX-23.1 7 trv-12312023x10kxex231.htm EX-23.1 Document

Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
The Travelers Companies, Inc.:
We consent to the incorporation by reference in the registration statements (SEC File No. 333-272161, No. 333-257361, No. 333-234648, No. 333-232051, No. 333-218874, No. 333-212078, No. 333-196290, No. 333-176002, No. 333-164972, No. 333-157092, No. 333-157091, No. 333-128026, No. 333-120998, No. 333-117726, No. 333-114135 and No. 333-63114) on Form S-8 and the registration statements (SEC File No. 333-232050 and No. 333-265485) on Form S-3 of our reports dated February 15, 2024, with respect to the consolidated financial statements of The Travelers Companies, Inc. and the effectiveness of internal control over financial reporting.


/s/ KPMG LLP
KPMG LLP
New York, New York
February 15, 2024

1

EX-24.1 8 trv-12312023x10kxex241.htm EX-24.1 Document

Exhibit 24.1
POWER OF ATTORNEY
Know all persons by these presents, that I, the undersigned, a director of The Travelers Companies, Inc., a Minnesota corporation (the "Corporation"), do hereby make, nominate and appoint Christine K. Kalla and Wendy C. Skjerven, and each of them, to be my attorney-in-fact, with full power and authority to sign on my behalf a Form 10-K for the year ended December 31, 2023, to be filed by the Corporation with the Securities and Exchange Commission, and any amendments thereto, which shall have the same force and effect as though I had manually signed the Form 10-K or any amendments thereto.
        Date
By   /s/ ALAN L. BELLER   February 7, 2024
Alan L. Beller
By   /s/ JANET M. DOLAN   February 7, 2024
Janet M. Dolan
By /s/ RUSSELL G. GOLDEN February 7, 2024
Russell G. Golden
By   /s/ PATRICIA L. HIGGINS   February 7, 2024
Patricia L. Higgins
By   /s/ WILLIAM J. KANE   February 7, 2024
William J. Kane
By /s/ THOMAS B. LEONARDI February 7, 2024
Thomas B. Leonardi
By   /s/ CLARENCE OTIS JR.   February 7, 2024
Clarence Otis Jr.
By   /s/ ELIZABETH E. ROBINSON   February 7, 2024
Elizabeth E. Robinson
By   /s/ PHILIP T. RUEGGER III   February 7, 2024
Philip T. Ruegger III
By /s/ RAFAEL SANTANA February 7, 2024
Rafael Santana
By   /s/ TODD C. SCHERMERHORN   February 7, 2024
Todd C. Schermerhorn
By /s/ LAURIE J. THOMSEN February 7, 2024
Laurie J. Thomsen
By /s/ BRIDGET VAN KRALINGEN February 7, 2024
Bridget van Kralingen
1
EX-31.1 9 trv-12312023x10kxex311.htm EX-31.1 Document

Exhibit 31.1
CERTIFICATION
I, Alan D. Schnitzer, certify that:
1.    I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2023 of The Travelers Companies,  Inc. (the Company);
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4.    The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)    evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)    disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and
5.    The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's Board of Directors (or persons performing the equivalent functions):
a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
Date: February 15, 2024
   By:   /s/ ALAN D. SCHNITZER
Alan D. Schnitzer
Chairman and Chief Executive Officer

1
EX-31.2 10 trv-12312023x10kxex312.htm EX-31.2 Document

Exhibit 31.2
CERTIFICATION
I, Daniel S. Frey, certify that:
1.    I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2023 of The Travelers Companies,  Inc. (the Company);
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4.    The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)    evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)    disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and
5.    The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's Board of Directors (or persons performing the equivalent functions):
a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
Date: February 15, 2024
   By:   /s/ DANIEL S. FREY
Daniel S. Frey
Executive Vice President and Chief Financial Officer

1
EX-32.1 11 trv-12312023x10kxex321.htm EX-32.1 Document

Exhibit 32.1
THE TRAVELERS COMPANIES, INC.
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, the undersigned officer of The Travelers Companies, Inc. (the "Company") hereby certifies that the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 15, 2024
   By:   /s/ ALAN D. SCHNITZER
Name: Alan D. Schnitzer
Title: Chairman and Chief Executive Officer

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EX-32.2 12 trv-12312023x10kxex322.htm EX-32.2 Document

Exhibit 32.2
THE TRAVELERS COMPANIES, INC.
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, the undersigned officer of The Travelers Companies, Inc. (the "Company") hereby certifies that the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 15, 2024
   By:   /s/ DANIEL S. FREY
Name: Daniel S. Frey
Title: Executive Vice President and Chief Financial Officer

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EX-97.1 13 a971trvpolicyregardingreco.htm EX-97.1 Document

Exhibit 97.1
THE TRAVELERS COMPANIES, INC.
POLICY REGARDING RECOVERY OF EXECUTIVE COMPENSATION BASED ON FINANCIAL REPORTING MEASURES
        The Board of Directors (the “Board”) of The Travelers Companies, Inc. (the “Company”) has adopted this Compensation Recovery Policy (the “Policy”) effective as of December 1, 2023. This Policy provides for the recovery of certain incentive-based compensation in the event of a Financial Restatement (as defined below) of the Company’s financial statements. This Policy is intended to comply with the requirements of Section 10D of the Exchange Act (as defined below) and Section 303A.14 of the New York Stock Exchange Listed Company Manual.
1.Definitions. For purposes of this Policy, the following terms shall have the meanings set forth below.

(a)“Committee” means the Compensation Committee of the Board, or if so designated by the Board, another committee of the Board comprised solely of independent directors.

(b)“Covered Compensation” means any Incentive based Compensation “received” by a Covered Executive during the applicable Recovery Period; provided that:

(i) such compensation was received by such Covered Executive (A) on or after October 2, 2023, (B) on or after he or she commenced service as an Executive Officer, and (C) while the Company had a class of securities publicly listed on a U.S. national securities exchange; and

(ii) such Covered Executive served as an Executive Officer at any time during the performance period applicable to such Incentive based Compensation.

For purposes of this Policy, Incentive based Compensation is deemed “received” by a Covered Executive in the fiscal period during which the Financial Reporting Measure applicable to such Incentive based Compensation (or portion thereof) is attained, even if the payment or grant of such Incentive based Compensation occurs after the end of such period.

(c)“Covered Executive” means any current or former Executive Officer.

(d)“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

(e)“Executive Officer” means, with respect to the Company, (i) its president, (ii) its principal financial officer, (iii) its principal accounting officer (or if there is no such accounting officer, its controller), (iv) any vice-president in charge of a principal business unit, division or function (such as sales, administration or finance), (v) any other officer who performs a policy-making function for the Company (including any officer of the Company’s parent(s) or subsidiaries if they perform policy-making functions for the Company), and (vi) any other person who performs similar policy-making functions for the Company. Policy-making function is not intended to include policy-making functions that are not significant. The determination as to an individual’s status as an Executive Officer shall be made by the Board and such determination shall be final, conclusive and binding on such individual and all other interested persons.

(f)“Financial Reporting Measure” means any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from any such measure.
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Stock price and total shareholder return are also Financial Reporting Measures. A Financial Reporting Measure does not need to be presented within the Company’s financial statements or included in a filing with the U.S. Securities and Exchange Commission.

(g)“Financial Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under U.S. federal securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

    For the avoidance of doubt, for purposes of this Policy, a Financial Restatement shall not be deemed to occur in the event of a restatement of the Company’s financial statements due to an out-of-period adjustment or a retrospective: (1) application of a change in accounting principles, (2) revision to reportable segment information due to a change in the structure of the Company’s internal organization, (3) reclassification due to a discontinued operation, (4) application of a change in reporting entity, such as from a reorganization of entities under common control, or (5) revision for stock splits, reverse stock splits, stock dividends, or other changes in capital structure.

(h)“Incentive based Compensation” means any compensation (including, for the avoidance of doubt, any cash or equity or equity-based compensation, whether deferred or current) that is granted, earned or vested based wholly or in part upon the achievement of a Financial Reporting Measure. For purposes of this Policy, “Incentive based Compensation” shall also be deemed to include any amounts which were determined based on (or were otherwise calculated by reference to) Incentive based Compensation (including, without limitation, any amounts under any long-term disability, life insurance or supplemental retirement plan or any notional account that is based on Incentive based Compensation, as well as any earnings accrued thereon).
(i) “NYSE” means the New York Stock Exchange, or any successor thereof.
(j)“Recovery Period” means the three fiscal years completed immediately preceding the date of any applicable Recovery Trigger Date. Notwithstanding the foregoing, the Recovery Period additionally includes any transition period (that results from a change in the Company’s fiscal year) within or immediately following those three completed fiscal years, provided that a transition period between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year that comprises a period of nine (9) to twelve (12) months would be deemed a completed fiscal year.

(k)“Recovery Trigger Date” means the earlier of (i) the date that the Board (or a committee thereof or the officer(s) of the Company authorized to take such action if Board action is not required) concludes, or reasonably should have concluded, that the Company is required to prepare a Financial Restatement, and (ii) the date on which a court, regulator or other legally authorized body directs the Company to prepare a Financial Restatement.

2.Recovery of Erroneously Awarded Compensation.

(a)In the event of a Financial Restatement, if the amount of any Covered Compensation received by a Covered Executive (the “Awarded Compensation”) exceeds the amount of such Covered Compensation that otherwise would have been received by such Covered Executive if it had been determined based on the information in the Financial Restatement (the “Adjusted Compensation”), the Company shall reasonably promptly recover from such Covered Executive an amount equal to the excess of the Awarded Compensation over the Adjusted Compensation, each calculated on a pre-tax basis (such excess amount, the “Erroneously Awarded Compensation”).
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(b)If (i) the Financial Reporting Measure applicable to the relevant Covered Compensation is stock price or total shareholder return (or any measure derived wholly or in part from either of such measures) and (ii) the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in the Financial Restatement, then the amount of Erroneously Awarded Compensation shall be determined (on a pre-tax basis) based on the Company’s reasonable estimate of the effect of the Financial Restatement on the Company’s stock price or total shareholder return (or the derivative measure thereof) upon which such Covered Compensation was received and (ii) the Company shall maintain documentation of the determination of that reasonable estimate and provide such documentation to the NYSE.
(c)For the avoidance of doubt, the Company’s obligation to recover Erroneously Awarded Compensation is not dependent on (i) if or when the restated financial statements are filed, or (ii) any fault of any Covered Executive for the accounting errors or other actions leading to a Financial Restatement.
(d)Notwithstanding anything to the contrary in Sections 2(a) through (c) hereof, the Company shall not be required to recover any Erroneously Awarded Compensation if both (x) the conditions set forth in either of the following clauses (i), (ii) or (iii) are satisfied and (y) the Compensation Committee (or, in the absence of such committee, a majority of the independent directors serving on the Board) has determined that recovery of the Erroneously Awarded Compensation would be impracticable:

(i)the direct expense paid to a third party to assist in enforcing the recovery of the Erroneously Awarded Compensation under this Policy would exceed the amount of such Erroneously Awarded Compensation to be recovered; provided that, before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation pursuant to this Section 2(d), the Company shall have first made a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to make such recovery, and provide that documentation to the NYSE;

(ii)recovery would violate home country law where that law was adopted prior to November 28, 2022. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of home country law, the Company must obtain an opinion of home country counsel, acceptable to the NYSE, that recovery would result in such a violation, and must provide such opinion to the NYSE; or

(iii)recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of Sections 401(a)(13) or 411(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”).

(e)The Company shall not indemnify any Covered Executive, directly or indirectly, for any losses that such Covered Executive may incur in connection with the recovery of Erroneously Awarded Compensation pursuant to this Policy, including through the payment of insurance premiums or through gross-up payments.

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(f)The Committee shall determine, in its sole discretion, the manner and timing in which any Erroneously Awarded Compensation shall be recovered from a Covered Executive in accordance with applicable law, including, without limitation, by (i) requiring reimbursement of Covered Compensation previously paid in cash, (ii) seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity or equity-based awards, (iii) offsetting the Erroneously Awarded Compensation amount from any compensation otherwise planned or owed by the Company or any of its affiliates to the Covered Executive, (iv) cancelling outstanding vested or unvested equity or equity-based awards, (v) forfeiting deferred compensation, subject to compliance with Section 409A of the Code and the regulations promulgated thereunder and/or (vi) taking any other remedial and recovery action permitted by applicable law. For the avoidance of doubt, except as set forth in Section 2(d), in no event may the Company accept an amount that is less than the amount of Erroneously Awarded Compensation.

3.Administration. This Policy shall be administered by the Committee. All decisions of the Committee shall be final, conclusive and binding upon the Company and the Covered Executives, their beneficiaries, heirs, executors, administrators and any other legal representatives. The Committee shall have full power and authority to: (i) administer and interpret this Policy, (ii) correct any defect, supply any omission, and reconcile any inconsistency in this Policy, and (iii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of this Policy or to comply with applicable law, rules, regulations, administrative interpretations or listing standards.

4.Amendment/Termination. Subject to Section 10D of the Exchange Act and Section 303A.14 of the NYSE Listed Company Manual, this Policy may be amended, modified, supplemented, rescinded, replaced or terminated by the Committee at any time and from time to time in its sole discretion. To the extent that any applicable law, rules, regulations, administrative interpretations or listing standards require recovery of Erroneously Awarded Compensation in circumstances in addition to those specified herein, nothing in this Policy shall be deemed to limit or restrict the right or obligation of the Company to recover Erroneously Awarded Compensation to the fullest extent required by such applicable law, rules, regulations, administrative interpretations or listing standards. Unless otherwise required by applicable law, this Policy shall no longer be effective from and after the date that the Company no longer has a class of securities listed on a United States national securities exchange.

5.Interpretation. Notwithstanding anything to the contrary herein, this Policy is intended to comply with the requirements of Section 10D of the Exchange Act and Section 303A.14 of the NYSE Listed Company Manual (and any applicable rules, regulations, administrative interpretations or listing standards adopted in connection therewith), and the provisions of this Policy shall be interpreted in a manner that satisfies such requirements, and this Policy shall be applied accordingly. If any provision of this Policy would otherwise frustrate or conflict with this intent, the provision shall be interpreted and deemed amended so as to avoid such conflict.

6.Other Compensation Clawback/Recovery Rights. Any right of recovery under this Policy is in addition to, and not in lieu of, (i) any other remedies, rights or requirements with respect to the clawback, recovery or recoupment of any compensation that may be available to the Company pursuant to the terms of any other policy of the Company (or any of its affiliates) that may be in effect from time to time, (ii) any provisions in any employment agreement, offer letter, equity plan, equity award agreement or similar plan or agreement, and (iii) any other legal remedies available to the Company under applicable law; provided, however, that any amounts recouped, recovered or clawed back under any law or other policy that would be recoverable under this Policy shall count toward any required recoupment, recovery or clawback under this Policy and vice versa, in each case without duplication.

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7. Exempt Compensation. Notwithstanding anything to the contrary herein, the Company has no obligation pursuant to this Policy to seek recovery of amounts received by a Covered Executive which are awarded, paid, granted, vested or earned based solely upon the occurrence or non-occurrence of nonfinancial events. Such exempt compensation includes, without limitation, base salaries; bonuses paid solely at the discretion of the Compensation Committee or Board that are not paid from a “bonus pool” that is determined by satisfying a Financial Reporting Measure; bonuses paid solely upon satisfying one or more subjective standards; non-equity incentive plan awards earned solely upon satisfying one or more strategic measures or operational measures; equity awards for which the grant is not contingent upon achieving any Financial Reporting Measure performance goal and vesting is contingent solely upon completion of a specified employment period and/or attaining one or more nonfinancial reporting measures; or any other compensation awarded on the basis of the achievement of metrics that are not Financial Reporting Measures.
8.Miscellaneous.

(a)Any applicable award agreement or other document setting forth the terms and conditions of any compensation covered by this Policy shall be deemed to include the provisions imposed herein and incorporate this Policy by reference and, in the event of any inconsistency, the terms of this Policy will govern.

(b)This Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or other legal representatives.



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