2015 The T raveler s C ompanies, Inc. 5 V2

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1 ANNUAL REPORT 2015

2 Our 2015 results mark the latest in a decade-long run of industry-leading financial success, and they suggest an outlook for our future that is similarly bright. Alan D. Schnitzer Chief Executive Officer

3 2015 ANNUAL REPORT 1 To our shareholders By nearly every measure, 2015 was another great year for Travelers. Our 2015 results mark the latest in a decade-long run of industry-leading financial success, and they suggest an outlook for our future that is similarly bright. We owe the strength of our position to the collective efforts of more than 30,000 people who execute in the marketplace every day, but also, in no small part, to the man I was humbled to succeed as CEO, Jay Fishman. 14.2% return on equity in 2015 More than a decade ago, Jay and the senior management team laid out a clear, simple and unwavering mission for creating shareholder value: Deliver superior returns on equity by leveraging our competitive advantages. Generate earnings and capital substantially in excess of our growth needs. Thoughtfully right-size capital and grow book value per share over time. Delivering superior returns has been our North Star, and the results are clear. Over the last decade, we produced an industry-leading return on equity, returned over $35 billion of excess capital to our shareholders, grew dividends per share at an average annual rate of 10%, more than doubled our book value per share and delivered a total return of approximately 225% to our shareholders. Travelers hasn t simply succeeded from a financial perspective. It is a place where people love to work, a valued partner for our agents and brokers, a source of peace of mind for our customers and a thought leader for the industry. Since Jay announced that he would be stepping down as CEO due to health reasons, many of us have paid tribute to him in our own ways. No one is more pleased than I am that Jay will continue in a key management role as Executive Chairman of the Board. But as a company, I believe our most fitting tribute to Jay s leadership is to carry forward the success he made possible, and to turn today s summit into tomorrow s base camp results This past year s terrific results are an ideal place from which to begin that climb. In 2015, Travelers posted record net income per diluted share of $10.88, net income of over $3.4 billion and a strong return on equity of 14.2%. We delivered outstanding underwriting results across our business segments, with a consolidated combined ratio of 88.3%, demonstrating our continued focus on underwriting excellence and the value of industry-leading data

4 2 TRAVELERS Over $3.9 billion in capital returned to shareholders in 2015 and analytics, which have been decades in the making and are continually improving. Our high-quality investment portfolio continued to contribute reliably to our results despite stubbornly low interest rates and more challenging capital market conditions. We delivered these financial results by successfully executing our marketplace strategies. In domestic Business Insurance, we achieved a record level of retention and positive renewal rate change, consistent with our objectives given the attractive levels of current product returns. In Bond & Specialty Insurance, we generated a very strong combined ratio of 67.9% for the year. Our sustained strong performance in Bond & Specialty Insurance, a set of credit-sensitive businesses, demonstrates our expert management of risk and reward over time and through difficult business environments. In Personal Insurance, the continued success of Quantum Auto 2.0 drove 8% growth in our Agency Automobile policies-in-force count for the year, with retention up by more than two full points and new business up nearly 40% over the prior year. Success in the Auto product also had a positive impact on our top line Homeowners results. Moreover, our success in Personal Insurance was not limited to the top line, with Agency Auto and Agency Homeowners posting full year combined ratios of 94.7% and 75.8%, respectively. All in all, this excellent execution across our businesses contributed to record consolidated net written premiums of just over $24 billion in Finally, our earnings and significant cash flow enabled us to continue to invest in our businesses while at the same time returning excess capital to our shareholders, increasing book value per share and maintaining our balance sheet strength. During 2015, we returned over $3.9 billion in capital to our shareholders, comprising more than $3.2 billion in share repurchases and $744 million of dividends. We also increased our dividend per share by 10.7%. Consistent and successful financial strategy The results we deliver are due to our deliberate and consistent approach to creating shareholder value. We have been clear for many years that one of our crucial responsibilities is to produce an appropriate return on equity for our shareholders. This has meant developing and executing financial and operational plans consistent with our goal of achieving superior returns, which we defined many years ago as a mid-teens operating return on equity over time. We emphasize that the objective is measured over time because we recognize that interest rates, reserve development and weather, among other factors, impact our results from year to year, and that there are years or longer periods and environments in which a mid-teens return is not attainable and other years in which we expect we will achieve or exceed a

5 2015 ANNUAL REPORT 3 mid-teens return. In that regard, we established the mid-teens goal at a time when the 10-year Treasury was yielding around 5%, and in that environment, a mid-teens return was industry leading. As we ve said before, our ability to achieve a mid-teens return over time going forward will depend on interest rates returning to more normal levels by historical standards. In any event, we will always seek to deliver industry-leading, superior returns over time. Our focus on operating return on equity encompasses multiple performance objectives that are key to creating shareholder value. The measure is a function of both (1) operating income and (2) shareholders equity (excluding unrealized gains and losses on investments). Accordingly, operating return on equity reflects a number of separate areas of financial performance related to both our income statement and balance sheet, including the quality and profitability of our underwriting and investment decisions, the pricing of our policies, the effectiveness of our claims management and the efficacy of our capital and risk management. Our average annual operating return on equity over the last decade is 13.8%, a meaningful spread over the average 10-year Treasury and meaningfully in excess of our average cost of equity, in each case for that period. In addition, as demonstrated by the chart below, our return on equity has meaningfully exceeded the average return on equity for the P&C industry in each of the last 10 years. Return on equity Travelers 20% US P&C Insurers 1 15% 14.2% 10% 7.6% 5% 0% Net income as a percentage of equity on a GAAP basis. Source: Insurance Information Institute; 2015 is an estimate.

6 Financial highlights At and for the year ended December 31. Dollar amounts in millions, except per share amounts Earned Premiums $ 23,874 $ 23,713 $ 22,637 $ 22,357 $ 22,090 Total Revenues $ 26,800 $ 27,162 $ 26,191 $ 25,740 $ 25,446 Operating Income $ 3,437 $ 3,641 $ 3,567 $ 2,441 $ 1,390 Net Income $ 3,439 $ 3,692 $ 3,673 $ 2,473 $ 1,426 Net Income Per Diluted Common Share $ $ $ 9.74 $ 6.30 $ 3.36 Total Investments $ 70,470 $ 73,261 $ 73,160 $ 73,838 $ 72,701 Total Assets $ 100,184 $ 103,078 $ 103,812 $ 104,938 $ 104,575 Shareholders Equity $ 23,598 $ 24,836 $ 24,796 $ 25,405 $ 24,477 Return On Equity 14.2% 14.6% 14.6% 9.8% 5.7% Operating Return On Equity 15.2% 15.5% 15.5% 11.0% 6.1% Book Value Per Share $ $ $ $ $ Dividends Per Share $ 2.38 $ 2.15 $ 1.96 $ 1.79 $ 1.59 The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property and casualty insurance for auto, home and business. The company s diverse business lines offer its customers a wide range of coverage sold primarily through independent agents and brokers. A component of the Dow Jones Industrial Average, Travelers has approximately 30,000 employees and operations in the United States and selected international markets.

7 2015 ANNUAL REPORT 5 Granular and deliberate execution One critical component of our ability to deliver exceptional returns over time is our granular approach to underwriting. In our commercial businesses, that means execution, including the allocation of capital, on an account-by-account or class-by-class basis. In personal lines, that means a very high degree of account segmentation and the allocation of capital generally on a very local geographic basis. With that and our advanced data and analytics, we select the risks we write and price our products deliberately with our targeted return in mind. In addition, as we have said for some time, we are believers that the amplitude of the pricing cycle in our industry does not exist to the same degree as it had in the past. While we re not immune from market conditions, we are also not passive rate takers. For us, this means that we don t let the notion of a pricing cycle deter us from deliberate execution. Overlaying all of this is a culture that understands how to balance the art and science of decision making based on data and analytics. That culture alone is a competitive advantage, and one that we believe is hard to replicate. You can see the success of our granular and deliberate strategy in the chart below, which shows our after-tax underlying underwriting margin, which is our underwriting margin excluding the impact of catastrophes and net favorable prior year reserve development, for each year since Travelers underlying underwriting margin (in millions, after tax) $1,500 $1,000 $500 $ Just as a data point, our after-tax net investment income is about $1 billion lower in 2015 as compared to its recent high in 2007, driven by the low interest rate environment. On the other hand, our after-tax underlying underwriting margin is about $1 billion higher in 2015 than it was at its recent low in With capital increasingly finding its way into that portion of the business that serves the largest and most global accounts, and with interest rates as low as they currently are, our expertise in generating underwriting margins and

8 6 TRAVELERS Our ability to assess, diagnose and execute gives us great confidence in our ability to outperform the competition going forward, regardless of what the future brings." our strong franchises in the small and middle marketplaces with meaningful barriers to entry really matter. Our granular and deliberate execution goes beyond risk selection and pricing. There are other profitability levers in our business, including volume, mix, expenses and reinsurance. We have a long track record of capitalizing on all of the available levers to deliver superior returns and of applying these levers on a strategic and business-by-business basis. This is evident in the way we have executed quite differently in each of our business segments over the past several years. Our ability to assess, diagnose and execute gives us great confidence in our ability to outperform the competition going forward, regardless of what the future brings. Reliable investment results Similar to our underwriting strategy, our investment philosophy is well defined and consistent. Our investment portfolio is managed first and foremost to support our insurance operations and, accordingly, is positioned to meet our obligations to policyholders under a wide range of conditions. We emphasize risk-adjusted returns and credit quality rather than reaching for yield that is not consistent with the underlying risk. Our asset allocation is designed so that even when we experience lower non-fixed income returns, which we know on occasion we will, the predictable stream of investment income from our fixed income portfolio will nonetheless provide a firm and reliable foundation for our overall results. That s exactly what we saw in 2015, and that s our investment philosophy at work it s not an accident. Right-sizing capital and growing book value over time: a balanced approach Our performance has enabled us to return significant amounts of excess capital to our shareholders in the form of dividends and share repurchases while meaningfully growing book value per share. We set our dividend at a level that we believe to be both competitive and sustainable, recognizing that we provide coverage for catastrophic events, and use share repurchases to return additional excess capital to our shareholders. This strategy gives us the flexibility to respond to changing business conditions and permits us to take advantage of business opportunities as they present themselves.

9 2015 ANNUAL REPORT 7 Our capital management strategy has been an important driver of shareholder value creation. Since the initial share repurchase authorization granted by our Board on May 2, 2006, and through the end of 2015, we have returned over $35 billion of capital to our shareholders through share repurchases and dividends, more than 100% of the company s market capitalization on that day. Importantly, over the same period, book value per share grew by a compound annual growth rate of more than 9%. Acquisitions and footprint Since the announcement of my appointment as CEO, I ve been asked many times about my approach to acquisitions. Our approach has not changed. The lens through which we evaluate acquisition opportunities which, as our shareholders should expect, we do all the time is that a transaction should contribute to our mission by improving our long-term return profile, reducing the volatility of our returns or creating shareholder value through some other important strategic benefit, such as a geographic or product position. Our capital management strategy has been an important driver of shareholder value creation. We have a great deal of experience in executing strategic transactions, and we view this as a core competency. The company that we are today has come together through a number of significant transactions over the past two decades. More recently, we have expanded our operations in Canada through the acquisition of Dominion, made a joint venture investment in the leading surety business in Brazil, established a presence in the property and casualty insurance market in Brazil and, through our Brazilian surety joint venture, invested in a start-up surety business in Colombia. While we have an international footprint and the ability to place our customers business all over the world, we are primarily U.S. based. Given that the United States is the largest insurance market in the world, along with the current outlook for economic instability and geopolitical risk in so many regions outside the United States, our current geographic position is very attractive. Nonetheless, over the past five years or so, we have invested in our capability to deliver our competitive advantages outside of the United States, and we are prepared for opportunities as we find them. We ll proceed thoughtfully and deliberately, maintaining our discipline and pursuing only those opportunities that we are confident will meet our objectives. Total shareholder return over time Ultimately, the success of our strategy with all its component parts drives our superior total returns to shareholders over time.

10 8 TRAVELERS Total return to shareholders 1 250% Travelers 200% 150% Dow 30 S&P 500 S&P Financials 100% 50% 0% -50% -100% Represents the change in stock price plus the cumulative amount of dividends, assuming dividend reinvestment. For each year on the chart, total return is calculated with January 1, 2006, as the starting point and December 31 of the relevant year as the ending point. Source: SNL Financial and Bloomberg. In contrast to many other property and casualty companies, our level of shareholder returns over recent years reflects consistent strong performance rather than a recovery from a significant decline during the financial crisis. I couldn t be more confident that maintaining the approach we have followed for more than a decade is the right strategy to continue to build on Travelers outstanding record. It s part of our DNA, we understand it, we ve been executing it and it has been remarkably successful. Creating value in a changing world In an industry like ours, it s essential to look beyond our four walls at the changes taking place across the economy in order to stay competitive. The speed, scale and scope of innovation taking place right now are unprecedented, and it s important to consider how these trends will affect our industry over time. I am quite optimistic about how we will perform in this environment. Innovation is a hallmark of our great company, and we ve never been intimidated by change. We issued the first auto insurance policy and the first travel insurance protection for astronauts. In 1955, we pioneered a homeowners policy that combined fire, theft and liability coverage, which 61 years later is still the industry standard. In 1997, we issued the first insurance policy to protect individuals using personal computers for online banking.

11 2015 ANNUAL REPORT 9 More recently, we have been at the forefront of data and analytics, leading in an area that has come to dominate our entire industry. We ve continued this long-standing focus on innovation from the launch of Quantum Auto 2.0 to our workers compensation business, where we have introduced ConciergeCLAIM Nurse and predictive modeling for chronic pain. These efforts by the most dedicated and creative talent in this industry enable us to stay at the forefront, delivering innovative products and solutions to our customers, giving them more reasons to choose Travelers and to stay with us once they do. We are confident that, moving forward, we will continue to be well positioned to find and capitalize on the opportunities that a changing world will inevitably present. Opening a wider umbrella: philanthropy and advocacy We re proud of our nearly $200 million in philanthropic giving over the past decade. To us, this is about more than writing checks and making grants. Central to Travelers identity is that we have a responsibility to give back to the communities where our employees, customers and agents live and work. It s also about encouraging and fostering real and lasting employee engagement in our philanthropic priority areas: academic and career success, thriving neighborhoods and arts and culture. Central to Travelers identity is that we have a responsibility to give back to the communities where our employees, customers and agents live and work. In 2015 alone, 3,675 members of the Travelers family logged more than 90,000 volunteer hours a 30% increase over From Habitat for Humanity, to our Small Business Risk Education Program, to our mentorship and scholarship programs benefiting students at all levels, we're committed to creating opportunities and then to helping people make the most of them. This is the right thing to do. But it also happens to be the smart thing to do, because a commitment to community strengthens our company in the long run. Whether you act from your head or your heart, you come to the same conclusion. Another illustration of our civic-minded, outward-looking identity is the public policy work we undertake, including through our policy organization, the Travelers Institute. Our industry touches so many others, and our business is often subjected to global trends and national issues ranging from economic growth to regulatory regimes. Some of these we can t influence, and we must simply prepare for them. In other areas, we do have the ability to advise and perhaps even influence policy. In all cases, our policy work is unique, and uniquely important. From small business advocacy, to disaster preparedness and consumer insurance education symposia, to work that engages policymakers and regulators in policy dialogue, we believe that with industry leadership comes responsibility, and we endeavor to advance the thinking that s

12 10 TRAVELERS advancing our industry. We re committed to being a go-to and trusted source of information and insight, and we seek to influence public policy in the interest of the common good. One of the areas in which we have been and will continue to be vocal is regarding threats to the competitiveness of our domestic insurance industry. Specifically, we continue to see the U.S. corporate income tax rate the highest of any industrialized nation as encouraging insurers to shift capital offshore, ultimately harming the U.S. economy. Ensuring that U.S. companies remain competitive should be a priority for Congress. Building the next successful decade As we look forward, it s clear that a decade of thoughtful, diligent management has put us in an excellent position to continue our strong performance in the years ahead. At a moment when many others in the industry are struggling with a variety of challenges, we are in a position to innovate and lead. In the years ahead, in large part by maintaining our effective strategy and continuing to invest in our competitive strengths, we intend to press our advantages. We ll leverage our lead in data and analytics and solidify our leadership in risk selection and pricing. We ll keep innovating across our products and throughout our world-class Claim and Risk Control organizations to keep our agents, brokers and customers on the cutting edge. And we ll maintain our distribution partner advantage to make sure we remain a partner of choice. In the years ahead, in large part by maintaining our effective strategy and continuing to invest in our competitive strengths, we intend to press our advantages. In the months since I succeeded Jay, people have asked me what it s like to follow a legend. I tell them that, fortunately for me, Jay set the stage for Travelers future achievements. He has perpetuated a culture of hard work, collaboration, high standards, mutual support, innovation and constant improvement. In that sense, Jay s legacy is far more than a decade of success in the books. It s also a culture that will enable us to achieve the next decade of success. I m enormously grateful to every person who worked tirelessly to deliver this past year s exceptional results. Travelers success is possible because of the counsel and commitment of our Board of Directors, the dedication and passion of every Travelers employee, the partnership and insights of our agents and brokers and the loyalty of so many of our customers. It is my privilege to work with all of you toward even better years to come. Alan D. Schnitzer Chief Executive Officer

13 2015 ANNUAL REPORT 11 Management Alan D. Schnitzer* + Chief Executive Officer Jay S. Fishman* + Executive Chairman of the Board Scott C. Belden + Senior Vice President, Reinsurance D. Keith Bell Senior Vice President, Accounting Standards Jay S. Benet* + Vice Chairman and Chief Financial Officer Diane D. Bengston + Senior Vice President, Enterprise Human Resources Andy F. Bessette* + Executive Vice President and Chief Administrative Officer Robert C. Brody* + Executive Vice President, Claim Services Lisa M. Caputo* + Executive Vice President, Marketing and Communications James W. Chapman + Senior Vice President, Property and Marine Practice Leader John P. Clifford Jr.* + Executive Vice President, Human Resources Renee H. Davis + Vice President and Chief Corporate Actuary Behram M. Dinshaw + Senior Vice President and Chief Operating Officer, Personal Insurance Fred R. Donner* + Executive Vice President, Enterprise Risk Management and Chief Financial Officer, Business and International Insurance Irwin R. Ettinger* + Vice Chairman Marlyss J. Gage* + Executive Vice President and Enterprise Chief Underwriting Officer Myles P. Gibbons + Senior Vice President and President, Select Accounts Martin J. Henry + Senior Vice President, Risk Control William H. Heyman* + Vice Chairman and Chief Investment Officer Scott F. Higgins + Senior Vice President and President, Middle Market Bruce R. Jones* + Executive Vice President and Chief Risk Officer Christine Kucera Kalla Senior Vice President, Chief Ethics and Compliance Officer and Group General Counsel Patrick J. Kinney* + Executive Vice President, Field Management Michael F. Klein* + Executive Vice President and President, Personal Insurance Jeffrey P. Klenk + Senior Vice President, Management Liability, Bond & Specialty Insurance Thomas M. Kunkel* + Executive Vice President and President, Bond & Specialty Insurance Madelyn J. Lankton* + Executive Vice President and Chief Information Officer Patrick L. Linehan + Vice President, Corporate Communications Brian W. MacLean* + President and Chief Operating Officer William C. Malugen Jr.* + Executive Vice President and President, National Accounts and First Party Gabriella Nawi + Senior Vice President, Investor Relations Maria Olivo* + Executive Vice President, Strategic Development and Corporate Treasurer Brian P. Reilly Senior Vice President and Chief Auditor Ellen M. Rizzo + Senior Vice President, Claim Shared Services and Chief Financial Officer, Claim Services David D. Rowland + Executive Vice President, Fixed Income Investments Douglas K. Russell + Senior Vice President, Corporate Controller Scott W. Rynda Senior Vice President, Corporate Tax Richard D. Schug + Senior Vice President and Actuary, Business and International Insurance Peter Schwartz Senior Vice President and Group General Counsel, Corporate Litigation Wendy C. Skjerven Vice President, Corporate Secretary and Associate Group General Counsel Kevin C. Smith* + Executive Vice President and President, International Doreen Spadorcia* + Vice Chairman, Technology, Claim Services, Operations and Risk Control, and Chief Executive Officer, Personal Insurance and Bond & Specialty Insurance Kenneth F. Spence III* + Executive Vice President and General Counsel Gregory C. Toczydlowski* + Executive Vice President and President, Small Commercial, Business Insurance Technology and Operations Julie A. Trowbridge-Dillman* + Executive Vice President, Operations, Enterprise Business Intelligence and Analytics and ebusiness Glenn E. Westrick Senior Vice President, Government Relations Joan K. Woodward* + Executive Vice President, Public Policy and President, The Travelers Institute Daniel T. H. Yin + Executive Vice President, Alternative Investments * Management Committee Member + Operating Committee Member

14 1 TRAVELERS Board of Directors Board committees Audit Dasburg (Chair) Beller Dolan Higgins Hodgson Kane Ruegger Compensation Shepard (Chair) Duberstein Killingsworth Thomsen Left to right from top left Alan L. Beller Senior Counsel, Cleary Gottlieb Steen & Hamilton LLP Director since 2007 John H. Dasburg* Chairman and CEO, ASTAR USA, LLC Director since 1994 Janet M. Dolan President, Act 3 Enterprises, LLC Retired President and CEO, Tennant Company Director since 2001 Kenneth M. Duberstein Chairman and CEO, The Duberstein Group, Inc. Director since 1998 Jay S. Fishman Executive Chairman of the Board, Travelers Director since 2001 Patricia L. Higgins Retired President and CEO, Switch and Data Facilities, Inc. Director since 2007 Thomas R. Hodgson Retired President and COO, Abbott Laboratories Director since 1997 William J. Kane Retired Audit Partner, Ernst & Young Director since 2012 Cleve L. Killingsworth Jr. Retired President and CEO, Blue Cross Blue Shield of Massachusetts, Inc. Director since 2007 Philip T. Ruegger III Retired Chairman, Simpson Thacher & Bartlett LLP Director since 2014 Alan D. Schnitzer CEO, Travelers Director since 2015 Donald J. Shepard Retired Chairman of the Executive Board and CEO, AEGON N.V. Director since 2009 Laurie J. Thomsen Retired Partner and Co-Founder, Prism Venture Partners Director since 2004 Executive Fishman (Chair) Dasburg Duberstein Hodgson Schnitzer Shepard Thomsen Investment and Capital Markets Thomsen (Chair) Duberstein Killingsworth Shepard Nominating and Governance Duberstein (Chair) Killingsworth Shepard Thomsen Risk Hodgson (Chair) Beller Dasburg Dolan Higgins Kane Ruegger * Lead Independent Director

15 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C 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, 2015 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from Commission file number The Travelers Companies, Inc. (Exact name of registrant as specified in its charter) to Minnesota (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 485 Lexington Avenue, New York, NY (Address of principal executive offices) (Zip Code) (917) (Registrant s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common stock, without par value 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 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 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 No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ( of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Act (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No As of June 30, 2015, the aggregate market value of the registrant s voting and non-voting common equity held by nonaffiliates was $29,961,887,660. As of February 5, 2016, 294,977,349 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 2016 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.

16 The Travelers Companies, Inc. Annual Report on Form 10-K For Fiscal Year Ended December 31, 2015 Item Number TABLE OF CONTENTS Part I 1. Business A. Risk Factors B. Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures Part II 5. Market for Registrant s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management s Discussion and Analysis of Financial Condition and Results of Operations A. Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure A. Controls and Procedures B. Other Information Part III 10. Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services Part IV 15. Exhibits and Financial Statement Schedules Signatures Index to Consolidated Financial Statements and Schedules Exhibit Index Page 2

17 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 The principal executive offices of the Company are located at 485 Lexington Avenue, New York, New York 10017, and its telephone number is (917) 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. For a summary of the Company s revenues, operating income and total assets by reportable business segments, see note 2 of notes to the consolidated financial statements herein. PROPERTY AND CASUALTY INSURANCE OPERATIONS The property and casualty insurance industry is highly competitive in the areas of price, service, product offerings, agent relationships and methods of distribution. Distribution methods include the use of independent agents, exclusive agents, direct marketing and/or salaried employees. According to A.M. Best, there are approximately 1,250 property and casualty groups in the United States, comprising approximately 2,700 property and casualty companies. Of those groups, the top 150 accounted for approximately 92% of the consolidated industry s total net written premiums in The Company competes with both foreign and domestic insurers. In addition, several 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: premiums charged; contract terms and conditions; products and services offered; claim service; agent, broker and client relationships; local presence; geographic scope of business; overall financial strength; ratings assigned by independent rating agencies; experience and qualifications of employees; and technology and information systems. In addition, the marketplace is affected by 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 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 3

18 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 allowance for profit 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 the long-term 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. 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, 2015: Location % of Total Domestic: California % New York Texas Pennsylvania Illinois New Jersey Florida Georgia Massachusetts All other domestic(1) Total domestic International: Canada All other international(1) Total international Consolidated total % (1) No other single state or country accounted for 3.0% or more of the Company s consolidated direct written premiums written in Catastrophe Exposure The wide geographic distribution of the Company s property and casualty insurance operations exposes it to claims arising out of catastrophes. The Company uses various analyses and methods, including proprietary and third-party computer modeling processes, to continually monitor and analyze 4

19 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 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 tightened underwriting standards, selective price increases and changes to deductibles specific to hurricane-, tornado-, wind- 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 AND INTERNATIONAL INSURANCE The Business and International Insurance segment offers a broad array of property and casualty insurance and insurance related services to its clients, primarily in the United States and in Canada, as well as in the United Kingdom, the Republic of Ireland, Brazil and throughout other parts of the world as a corporate member of Lloyd s. Business and International Insurance is organized as follows: Domestic Select Accounts provides small businesses with property and casualty products, including commercial multi-peril, commercial property, general liability, commercial auto and workers compensation insurance. Middle Market provides mid-sized businesses with property and casualty products, including commercial multi-peril, commercial property, general liability, commercial auto and workers compensation insurance, 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, Public Sector Services and Oil & Gas. Middle Market also provides mono-line umbrella and excess coverage insurance through Excess Casualty and insurance coverages for foreign organizations with United States exposures through Global Partner Services. National Accounts provides large companies with casualty products and services, including workers compensation, general liability and automobile liability, generally utilizing loss-sensitive products, on both a bundled and unbundled basis. National Accounts also includes the Company s commercial residual market business, which primarily offers workers compensation products and services to the involuntary market. First Party provides traditional and customized property insurance programs to large and midsized customers through National Property, 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 coverages for equipment, including property and business interruption coverages, through Boiler & Machinery. Specialized Distribution markets and underwrites its products to customers predominantly through brokers, wholesale agents, program managers and specialized retail agents that manage customers unique insurance requirements. Specialized Distribution provides insurance coverage for the commercial transportation industry, as well as commercial liability and commercial property policies for small, difficult to place specialty classes of commercial business primarily on an excess and surplus lines basis, through Northland, and tailored property and casualty programs on an admitted basis for customers with common risk characteristics or coverage 5

20 requirements through National Programs. Specialized Distribution also serves small to mediumsized agricultural businesses, including farms, ranches, wineries and related operations, through Agribusiness. International International, through its operations in Canada, the United Kingdom and the Republic of Ireland, offers property and casualty insurance and risk management services to several customer groups, including, among others, those in the technology, public services, and financial and professional services industry sectors. In addition, International markets personal lines and small commercial insurance business in Canada through The Dominion of Canada General Insurance Company (Dominion), which the Company acquired on November 1, International, through its Lloyd s syndicate (Syndicate 5000), for which the Company provides 100% of the capital, underwrites five principal businesses marine, global property, accident & special risks, power & utilities and aviation. International also includes results from J. Malucelli Participações em Seguros e Resseguros S.A. (JMalucelli) and J. Malucelli Latam S.A. in Brazil. The Company owns 49.5% of both JMalucelli, a market leader in surety coverages in Brazil, and J. Malucelli Latam S.A., which in September 2015 acquired a majority interest in JMalucelli Travelers Seguros S.A., a Colombian start-up surety provider. These joint venture investments are accounted for using the equity method and are included in other investments on the consolidated balance sheet. Also, as a result of a transaction that was completed in October 2015 with Paraná Banco S.A., the Company s joint venture partner in Brazil, the Company acquired 100% of the common stock of Travelers Participações em Seguros Brasil S.A., which comprises JMalucelli s former property and casualty insurance business other than surety. The Company consolidates this investment in its financial statements and includes Paraná Banco S.A. s preferred stock interest in other liabilities. Business and International Insurance also includes the Special Liability Group (which manages the Company s asbestos and environmental liabilities) and the assumed reinsurance and certain other runoff operations, which are collectively referred to as Business and International Insurance Other. Selected Market and Product Information The following table sets forth the Business and International Insurance segment 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. 6

21 % of Total (for the year ended December 31, in millions) By market: Domestic: Select Accounts... $ 2,716 $ 2,707 $ 2, % Middle Market... 6,325 6,108 5, National Accounts... 1,048 1,047 1, First Party... 1,564 1,579 1, Specialized Distribution... 1,111 1,074 1, Total Domestic... 12,764 12,515 12, International... 1,819 2,121 1, Total Business and International Insurance by market. $14,583 $14,636 $13, % By product line: Domestic: Workers compensation... $ 3,915 $ 3,794 $ 3, % Commercial automobile... 1,960 1,892 1, Commercial property... 1,766 1,793 1, General liability... 1,939 1,891 1, Commercial multi-peril... 3,146 3,103 3, Other Total Domestic... 12,764 12,515 12, International... 1,819 2,121 1, Total Business and International Insurance by product line... $14,583 $14,636 $13, % Principal Markets and Methods of Distribution The Business and International Insurance segment distributes its products through approximately 11,300 independent agencies and brokers. Agencies and brokers are serviced by 127 field offices and three customer service centers. Business and International Insurance continues to make significant investments in enhanced technology utilizing internet-based applications to provide real-time interface capabilities with independent agencies and brokers. Business and International Insurance builds relationships with wellestablished, independent insurance agencies and brokers. In selecting new independent agencies and brokers to distribute its products, Business and International Insurance considers, among other attributes, 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 and International Insurance carefully monitors its performance. The majority of products offered in the United States are distributed through a common base of independent agents and brokers, many of whom also sell the Company s Personal Insurance products. Additionally, several operations may underwrite business with agents that specialize in servicing the needs of certain of the industries served by these operations. Select Accounts is a leading provider of commercial property and casualty insurance products to small businesses in the U.S., generally with fewer than 50 employees, and sells these products 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 7

22 small business risks at their desktop in an efficient manner that significantly reduces the time period between quoting a price on a new policy and issuing that policy. Risks with more complex characteristics are underwritten with the assistance of Company personnel. Select Accounts has established a strong marketing relationship with its distribution network and has provided this network with defined underwriting policies, a broad array of products and competitive prices. In addition, the Company has established centralized service centers to help agents perform many service functions, in return for a fee. Middle Market sells a broad range of commercial property and casualty insurance products and services through a large network of independent agents and brokers, primarily targeting midsized businesses in the U.S. with 50 to 1,000 employees. 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, claim, risk management or other insurance-related products and services. National Accounts sells a variety of casualty products and services to large companies in the U.S. through a network of national and regional brokers, primarily utilizing loss-sensitive products in connection with a large deductible or self-insured program and, to a lesser extent, a retrospectively rated or a guaranteed cost insurance policy. National Accounts also provides casualty products and services through retail brokers on an unbundled basis, using third-party administrators for insureds who utilize programs such as collateralized deductibles, captive reinsurers and self-insurance. National Accounts provides insurance-related services, such as risk management services, claims administration, loss control and risk management information services, either in addition to, or in lieu of, pure risk coverage, and generated $253 million of fee income in 2015, excluding commercial residual market business. The commercial residual market business of National Accounts sells claims and policy management services to workers compensation pools throughout the United States, and generated $138 million of fee income in National Accounts services approximately 36% of the total workers compensation assigned risk market, making the Company one of the largest servicing carriers in the industry. Workers compensation accounted for approximately 73% of sales to National Accounts customers during 2015, based on direct written premiums and fees. First Party markets commercial property and casualty insurance products and services through a large network of agents and brokers to a wide customer base in the U.S. having specialized property and casualty coverage requirements. First Party provides traditional and customized property insurance programs to large and mid-sized customers; insurance for goods in transit and movable objects; builders risk insurance; and insurance for the marine transportation industry, providers of related services and other businesses involved in international trade. In addition, First Party provides comprehensive breakdown coverages for equipment, including property and business interruption coverages. Specialized Distribution distributes admitted as well as excess and surplus lines property and casualty products predominantly through selected brokers, wholesale agents, program managers and specialized retail agents, including on a brokerage and delegated authority underwriting basis. These brokers, wholesale agents, program managers and specialized retail agents operate in certain markets in the U.S. that are not typically served by the Company s appointed retail agents, or they maintain certain affinity arrangements in specialized market segments. The wholesale excess and surplus lines market, which is characterized by the absence of rate and form regulation, allows for more flexibility to write certain classes of business. In working with 8