Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

410K characters. Original on sec.gov · Markdown

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)			117
Consolidated Financial Statements:
Statement of Income for the years ended December 31, 202 5 , 202 4 and 20 23			119
Statement of Comprehensive Income for the years ended December 31, 202 5 , 202 4 and 20 23			120
Balance Sheet as of December 31, 202 5 and 202 4			121
Statement of Changes in Shareholders’ Equity for the years ended December 31, 202 5 , 202 4 and 202 3			122
Statement of Cash Flows for the years ended December 31, 202 5 , 202 4 and 202 3			123
Notes to Consolidated Financial Statements			124
Schedules:
Schedule II - Condensed Financial Information of Registrant (Parent Company Only)			214
Schedule III - Supplementary Insurance Information			219
Schedule V - Valuation and Qualifying Accounts			220
Schedule VI - Supplementary Information Concerning Property-Casualty Insurance Operations			221

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, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2025, 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, 2025, 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 12, 2026 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 claims and claim 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 derives estimates of claims and claim adjustment expense reserves principally utilizing actuarial expertise and various projection methods. The Company’s claims and claim adjustment expense reserves balance at December 31, 2025 was $65.7 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.

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, with involvement of actuarial professionals with specialized skills and knowledge, 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 also involved actuarial professionals, who assisted in:

assessing the methodologies underlying the Company’s claims and claim adjustment expense reserve estimate and comparing to generally accepted actuarial practices
evaluating for certain lines of business, the Company’s estimates by performing independent analyses of claims and claim adjustment expense reserves using Company historical loss experience and industry data
assessing, for selected other lines of business, the Company’s internally prepared actuarial projection methods and key assumptions in comparison to the Company’s internal experience and related industry trends
developing a range of reserve estimates and assessing the position and movement within the range of the Company’s recorded reserves in order to evaluate the Company’s consolidated reserves.


/s/ KPMG LLP
KPMG LLP

We have served as the Company’s auditor since 1994.

New York, New York

February 12, 2026

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(in millions, except per share amounts)


For the year ended December 31,	2025		2024		2023
Revenues
Premiums	$	43,914	$	41,941	$	37,761
Net investment income	3,959		3,590		2,922
Fee income	495		473		433
Net realized investment losses	(48)		(30)		(105)
Other revenues	508		449		353
Total revenues	48,828		46,423		41,364
Claims and expenses
Claims and claim adjustment expenses	27,221		27,059		26,215
Amortization of deferred acquisition costs	7,266		6,973		6,226
General and administrative expenses	6,120		5,819		5,176
Interest expense	425		392		376
Total claims and expenses	41,032		40,243		37,993
Income before income taxes	7,796		6,180		3,371
Income tax expense	1,508		1,181		380
Net income	$	6,288	$	4,999	$	2,991
Net income per share
Basic	$	27.83	$	21.76	$	12.93
Diluted	$	27.43	$	21.47	$	12.79
Weighted average number of common shares outstanding
Basic	224.2		228.0		229.7
Diluted	227.6		231.1		232.2

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in millions)


For the year ended December 31,	2025		2024		2023
Net income	$	6,288	$	4,999	$	2,991
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	2,744		(644)		2,249
Having credit losses recognized in the consolidated statement of income	3		5		1
Net changes in benefit plan assets and obligations	94		296		106
Net changes in unrealized foreign currency translation	246		(232)		138
Other comprehensive income (loss) before income taxes	3,087		(575)		2,494
Income tax expense (benefit)	620		(79)		520
Other comprehensive income (loss), net of taxes	2,467		(496)		1,974
Comprehensive income	$	8,755	$	4,503	$	4,965

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)


As of December 31,	2025		2024
Assets
Fixed maturities, available for sale, at fair value (amortized cost $91,717 and $88,277; allowance for expected credit losses of $3 and $2)	$	89,833	$	83,666
Equity securities, at fair value (cost $457 and $544)	618		687
Real estate investments	900		902
Short-term securities	5,716		4,766
Other investments	4,115		4,202
Total investments	101,182		94,223
Cash (including restricted cash of $132 and $131)	842		699
Investment income accrued	877		752
Premiums receivable (net of allowance for expected credit losses of $58 and $58)	10,992		11,110
Reinsurance recoverables (net of allowance for estimated uncollectible reinsurance of $129 and $119)	7,886		8,000
Ceded unearned premiums	1,283		1,202
Deferred acquisition costs	3,518		3,494
Deferred taxes	887		1,762
Contractholder receivables (net of allowance for expected credit losses of $16 and $18)	3,010		3,171
Goodwill	4,066		4,233
Other intangible assets	336		360
Other assets	4,279		4,183
Assets held for sale	4,550		—
Total assets	$	143,708	$	133,189
Liabilities
Claims and claim adjustment expense reserves	$	65,737	$	64,093
Unearned premium reserves	22,431		22,289
Contractholder payables	3,026		3,189
Payables for reinsurance premiums	529		550

Debt	9,267		8,033
Other liabilities	7,282		7,171
Liabilities held for sale	2,542		—
Total liabilities	110,814		105,325
Shareholders’ equity
Common stock (1,750.0 shares authorized; 217.5 and 226.6 shares issued and outstanding)	25,910		25,452
Retained earnings	54,931		49,630
Accumulated other comprehensive loss	(2,500)		(4,967)
Treasury stock, at cost (575.9 and 564.3 shares)	(45,447)		(42,251)
Total shareholders’ equity	32,894		27,864
Total liabilities and shareholders’ equity	$	143,708	$	133,189

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(in millions)


For the year ended December 31,	2025		2024		2023
Common stock
Balance, beginning of year	$	25,452	$	24,906	$	24,565
Employee share-based compensation	202		286		125
Compensation amortization under share-based plans and other changes	256		260		216
Balance, end of year	25,910		25,452		24,906
Retained earnings
Balance, beginning of year	49,630		45,591		43,516

Net income	6,288		4,999		2,991
Dividends	(987)		(962)		(915)
Other	—		2		(1)
Balance, end of year	54,931		49,630		45,591
Accumulated other comprehensive loss, net of tax
Balance, beginning of year	(4,967)		(4,471)		(6,445)
Other comprehensive income (loss)	2,467		(496)		1,974
Balance, end of year	(2,500)		(4,967)		(4,471)
Treasury stock, at cost
Balance, beginning of year	(42,251)		(41,105)		(40,076)
Treasury stock acquired — share repurchase authorizations	(3,025)		(1,000)		(965)
Net shares acquired related to employee share-based compensation plans	(171)		(146)		(64)
Balance, end of year	(45,447)		(42,251)		(41,105)
Total shareholders’ equity	$	32,894	$	27,864	$	24,921
Common shares outstanding
Balance, beginning of year	226.6		228.2		232.1
Treasury stock acquired — share repurchase authorizations	(10.9)		(4.4)		(5.4)
Net shares issued under employee share-based compensation plans	1.8		2.8		1.5
Balance, end of year	217.5		226.6		228.2

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions)


For the year ended December 31,	2025		2024		2023
Cash flows from operating activities
Net income	$	6,288	$	4,999	$	2,991
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment losses	48		30		105
Depreciation and amortization	680		715		722
Deferred federal income tax expense (benefit)	210		(152)		(163)
Amortization of deferred acquisition costs	7,266		6,973		6,226
Equity in income from other investments	(226)		(294)		(157)
Premiums receivable	(115)		(859)		(1,341)
Reinsurance recoverables	(137)		111		(63)
Deferred acquisition costs	(7,373)		(7,173)		(6,689)
Claims and claim adjustment expense reserves	3,300		2,680		2,843
Unearned premium reserves	584		1,488		2,590
Other	81		556		647
Net cash provided by operating activities	10,606		9,074		7,711
Cash flows from investing activities
Proceeds from maturities of fixed maturities	11,660		8,537		6,371
Proceeds from sales of investments:
Fixed maturities	832		1,634		4,981
Equity securities	160		143		138
Real estate investments	—		64		—
Other investments	321		422		255
Purchases of investments:
Fixed maturities	(18,771)		(17,132)		(15,690)
Equity securities	(126)		(124)		(105)
Real estate investments	(48)		(48)		(67)
Other investments	(346)		(396)		(495)
Net sales (purchases) of short-term securities	(945)		370		(1,664)
Securities transactions in the course of settlement	144		56		(83)
Acquisition, net of cash acquired	—		(382)		—
Other	(533)		(408)		(462)
Net cash used in investing activities	(7,652)		(7,264)		(6,821)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorizations	(3,004)		(1,003)		(958)
Treasury stock acquired — net employee share-based compensation	(127)		(114)		(64)
Dividends paid to shareholders	(979)		(951)		(908)

Issuance of debt	1,233		—		738
Issuance of common stock — employee share options	214		321		141

Net cash used in financing activities	(2,663)		(1,747)		(1,051)
Effect of exchange rate changes on cash and restricted cash	23		(14)		12
Net increase (decrease) in cash and restricted cash	314		49		(149)
Cash and restricted cash at beginning of year	699		650		799
Less amounts classified as held for sale at end of period	171		—		—
Cash and restricted cash at end of year	$	842	$	699	$	650
Supplemental disclosure of cash flow information
Income taxes paid	$	1,274	$	1,310	$	201
Interest paid	$	393	$	390	$	370

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

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 January 2, 2024, the Company completed its previously announced acquisition of all issued and outstanding shares of Corvus Insurance Holdings, Inc. and its subsidiaries (Corvus), a cyber insurance managing general underwriter, for consideration transferred of approximately $427 million. The acquisition provided the Company the opportunity to renew Corvus’s book of business and to leverage Corvus’s capabilities to enhance the return profile of Travelers’ existing cyber portfolio. At the acquisition date, the Company recorded at fair value $478 million of assets acquired and $51 million of liabilities assumed as part of purchase accounting, including $390 million of identifiable intangible assets and goodwill. The assets acquired from Corvus were included in the Company’s Bond & Specialty Insurance segment, effective at the acquisition date. The Company funded this transaction from internal resources. A provisional amount of $19 million was recorded as a deferred tax asset and included on the consolidated balance sheet on January 2, 2024, and was later increased by an insignificant amount when the 2023 tax return for Corvus was finalized.

On May 27, 2025, the Company entered into an agreement to sell its Canadian personal insurance business and the majority of its Canadian commercial insurance business to Definity Financial Corporation for approximately US$2.4 billion. The assets and liabilities of the Canadian personal insurance business and the majority of its Canadian commercial insurance business have been classified as held for sale in the consolidated balance sheet as of December 31, 2025. The Company retained its surety business in Canada. The sale closed on January 2, 2026.

The major classes of assets and liabilities classified as held for sale were as follows:


	December 31, 2025
Assets
Fixed maturities, available for sale, at fair value	$	3,243
Premiums receivable	263
Reinsurance recoverables	285
Goodwill	208
Remaining assets held for sale	551
Total assets held for sale	$	4,550
Liabilities
Claims and claim adjustment expense reserves	$	1,909
Unearned premium reserves	514
Remaining liabilities held for sale	119
Total liabilities held for sale	$	2,542

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounting Standards Not Yet Adopted

In September 2025, the Financial Accounting Standards Board (FASB) issued updated guidance on the accounting for internal use software costs. The updated guidance removes all references to software development project stages so that the guidance is neutral to different software development methods and allows for the application of iterative software development methods such as agile. The updated guidance requires that an entity capitalize software costs when both: 1) management has authorized and committed to the funding of the software project, and 2) it is probable that the project will be completed, and the software will be used to perform its intended function. Additionally, the updated guidance clarifies that internal and external training costs and maintenance costs must be expensed as incurred.

The updated guidance is effective for the quarter ended March 31, 2028, and can be applied on a prospective, modified, or retrospective transition approach. Early adoption is permitted. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position, or liquidity.

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. 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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, impairments of real estate investments, 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.

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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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.

Restricted Cash

Restricted cash represents funds that are legally or contractually restricted as to withdrawal or usage. These restrictions primarily relate to certain wholly-owned subsidiaries of the Company providing brokerage and other insurance-related services.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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, 2025, 2024 and 2023, 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.

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. As of December 31, 2025 and 2024, the Company had a liability of $188 million and $182 million, respectively, for guaranty fund and other insurance-related assessments and related recoverables of $30 million and $29 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, 2025, 2024 and 2023. Policyholder dividends are accrued against earnings using best available estimates of amounts to be paid. The liability accrued for policyholder dividends totaled $80 million and $81 million as of December 31, 2025 and 2024, 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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.

The cost of reinsurance premiums (ceded reinsurance premiums) is generally reflected in income (as a charge to income) in a manner consistent with the recognition of premium on the underlying reinsurance contracts. For catastrophe coverage, the cost of reinsurance premiums is generally recognized ratably over the contract period to the extent coverage remains available. Ceded unearned premiums represent the unexpired portion of premiums ceded to reinsurers and are reported as 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 (loss).

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.

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 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 commercial multi-peril, general liability, commercial automobile, workers’ compensation 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 Energy, 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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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, as well as insurance coverages and programs provided by Northland Transportation, Agribusiness, Northfield and National Programs. Northland Transportation provides insurance coverage for the commercial trucking industry. Agribusiness serves small- to medium-sized agricultural businesses, including farms, ranches and other agricultural-related operations*. Northfield* includes commercial property and general liability policies for small, difficult to place commercial business primarily on an excess and surplus lines basis. National Programs offers tailored property and casualty insurance programs on an admitted basis for customers with common risk characteristics or coverage requirements.

International

International, through its operations in 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, public services and commercial real estate 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 liabilities and other runoff operations, including certain assumed reinsurance arrangements.

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 is conducted through Junto Holding Brasil S.A. (Junto). The Company owns 49.5% of Junto, a market leader in surety coverages in Brazil. This joint venture investment is accounted for using the equity method and is 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. Personal Insurance’s primary products of automobile and homeowners insurance are complemented by a broad suite of related products and 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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

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.

The chief operating decision maker (CODM) is the Company’s Chairman and Chief Executive Officer. The CODM reviews the financial performance of the reportable business segments to assess the efficiency with which capital is employed, the effective management of risk, the achievement of strategic initiatives, and how to allocate resources to reportable business segments based on the segment’s historical and projected financial performance. The significant measures of the reportable business segments’ financial performance include segment revenues, consisting of premiums, net investment income, fee income and other revenues, less segment expenses, consisting of claims and claim adjustment expenses, deferred acquisition costs, and general and administrative expenses.

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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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
2025
Premiums	$	22,412	$	4,107	$	17,395	$	43,914
Net investment income	2,782		445		732		3,959
Fee income	445		—		50		495
Other revenues	379		27		102		508
Total segment revenues (1)	26,018		4,579		18,279		48,876
Claims and claim adjustment expenses	14,154		1,764		11,303		27,221
Amortization of deferred acquisition costs	3,796		778		2,692		7,266
General and administrative expenses	3,482		843		1,746		6,071
Income tax expense	891		244		485		1,620
Segment income (1)	$	3,695	$	950	$	2,053	$	6,698
2024
Premiums	$	21,345	$	3,958	$	16,638	$	41,941
Net investment income	2,560		390		640		3,590
Fee income	430		—		43		473
Other revenues	322		30		97		449
Total segment revenues (1)	24,657		4,378		17,418		46,453
Claims and claim adjustment expenses	13,679		1,774		11,606		27,059
Amortization of deferred acquisition costs	3,588		756		2,629		6,973
General and administrative expenses	3,303		832		1,640		5,775
Income tax expense	781		201		294		1,276
Segment income (1)	$	3,306	$	815	$	1,249	$	5,370
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
Claims and claim adjustment expenses	12,696		1,485		12,034		26,215
Amortization of deferred acquisition costs	3,173		673		2,380		6,226
General and administrative expenses	3,041		681		1,417		5,139
Income tax expense (benefit)	368		227		(103)		492
Segment income (loss) (1)	$	2,583	$	942	$	(128)	$	3,397

(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.”

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SEGMENT INFORMATION (Continued)

Prior year reserve development and catastrophe losses by reportable business segments were as follows:


(for the year ended December 31, in millions)	Business Insurance		Bond & Specialty Insurance		Personal Insurance		Total Reportable Segments
2025
Net favorable prior year reserve development	$	233	$	221	$	582	$	1,036
Catastrophe losses	$	1,073	$	25	$	2,592	$	3,690
2024
Net favorable prior year reserve development	$	90	$	129	$	490	$	709
Catastrophe losses	$	1,032	$	51	$	2,252	$	3,335
2023
Net favorable (unfavorable) prior year reserve development	$	(289)	$	285	$	147	$	143
Catastrophe losses	$	838	$	37	$	2,116	$	2,991

The following table presents the Company’s amortization and depreciation expense by reportable business segment (excluding the amortization of deferred acquisition costs which is disclosed separately in the table above with segment income (loss) by reportable business segment).


(for the year ended December 31, in millions)	2025		2024		2023
Business Insurance	$	409	$	426	$	467
Bond & Specialty Insurance	82		86		71
Personal Insurance	182		197		178
Total	$	673	$	709	$	716

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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)	2025		2024		2023
Business Insurance:
Domestic:
Select Accounts	$	3,830	$	3,727	$	3,477
Middle Market	12,541		12,023		11,045
National Accounts	1,262		1,259		1,135
National Property and Other	3,112		3,134		3,008
Total Domestic	20,745		20,143		18,665
International	1,934		1,935		1,765
Total Business Insurance	22,679		22,078		20,430
Bond & Specialty Insurance:
Domestic:
Management Liability	2,326		2,309		2,156
Surety	1,354		1,294		1,147
Total Domestic	3,680		3,603		3,303
International	582		506		539
Total Bond & Specialty Insurance	4,262		4,109		3,842
Personal Insurance:
Domestic:
Automobile	7,745		7,925		7,330
Homeowners and Other	9,051		8,550		7,949
Total Domestic	16,796		16,475		15,279
International	650		694		650
Total Personal Insurance	17,446		17,169		15,929
Total consolidated net written premiums	$	44,387	$	43,356	$	40,201

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SEGMENT INFORMATION (Continued)

Business Segment Reconciliations


(for the year ended December 31, in millions)	2025		2024		2023
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation	$	3,360	$	3,470	$	3,467
Commercial automobile	3,942		3,590		3,215
Commercial property	3,772		3,616		3,154
General liability	3,566		3,464		3,146
Commercial multi-peril	5,797		5,269		4,686
Other	76		73		76
Total Domestic	20,513		19,482		17,744
International	1,899		1,863		1,400
Total Business Insurance	22,412		21,345		19,144
Bond & Specialty Insurance:
Domestic:
Fidelity and surety	1,492		1,416		1,290
General liability	1,838		1,778		1,639
Other	239		231		225
Total Domestic	3,569		3,425		3,154
International	538		533		501
Total Bond & Specialty Insurance	4,107		3,958		3,655
Personal Insurance:
Domestic:
Automobile	7,902		7,767		6,923
Homeowners and Other	8,824		8,208		7,404
Total Domestic	16,726		15,975		14,327
International	669		663		635
Total Personal Insurance	17,395		16,638		14,962
Total earned premiums	43,914		41,941		37,761
Net investment income	3,959		3,590		2,922
Fee income	495		473		433
Other revenues	508		449		353
Total segment revenues	48,876		46,453		41,469

Net realized investment losses	(48)		(30)		(105)
Total revenues	$	48,828	$	46,423	$	41,364
Income reconciliation, net of tax
Total segment income	$	6,698	$	5,370	$	3,397
Interest Expense and Other (1)	(373)		(345)		(325)
Core income	6,325		5,025		3,072
Net realized investment losses	(37)		(26)		(81)

Net income	$	6,288	$	4,999	$	2,991

(1) The primary component of Interest Expense and Other was after-tax interest expense of $336 million, $310 million and $297 million in 2025, 2024 and 2023, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SEGMENT INFORMATION (Continued)


(as of December 31, in millions)	2025		2024
Asset reconciliation:
Business Insurance	$	106,084	$	98,311
Bond & Specialty Insurance	13,676		12,628
Personal Insurance	22,787		21,138
Total assets for reportable segments	142,547		132,077
Other assets (1)	1,161		1,112
Total consolidated assets	$	143,708	$	133,189

(1) The primary components of other assets as of both December 31, 2025 and 2024, 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)	2025		2024		2023
U.S.	$	46,360	$	43,924	$	39,086
Non-U.S.:
Canada	1,345		1,359		1,281
Other Non-U.S.	1,123		1,140		997
Total Non-U.S.	2,468		2,499		2,278
Total revenues	$	48,828	$	46,423	$	41,364

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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 Cost		Allowance for Expected Credit Losses		Gross Unrealized				Fair Value
(as of December 31, 2025, in millions)			Gains		Losses
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	3,927	$	—	$	11	$	81	$	3,857
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation	21,724		—		161		1,096		20,789
Revenue	9,810		—		58		543		9,325
State general obligation	871		—		6		29		848
Pre-refunded	414		—		4		2		416
Total obligations of U.S. states, municipalities and political subdivisions	32,819		—		229		1,670		31,378
Debt securities issued by foreign governments	313		—		2		3		312
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	13,094		—		268		130		13,232
Corporate and all other bonds	41,564		3		458		965		41,054
Total (1)	$	91,717	$	3	$	968	$	2,849	$	89,833

(1)Excludes fixed maturities classified as held for sale of $3,221 million of amortized cost and $3,243 million of fair value as of December 31, 2025.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVESTMENTS (Continued)


	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized				Fair Value
(as of December 31, 2024, in millions)			Gains		Losses
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	5,735	$	—	$	4	$	169	$	5,570
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation	18,604		—		23		1,604		17,023
Revenue	9,268		—		16		704		8,580
State general obligation	1,081		—		2		73		1,010
Pre-refunded	573		—		2		3		572
Total obligations of U.S. states, municipalities and political subdivisions	29,526		—		43		2,384		27,185
Debt securities issued by foreign governments	917		—		5		13		909
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	12,888		—		53		336		12,605
Corporate and all other bonds	39,211		2		118		1,930		37,397
Total	$	88,277	$	2	$	223	$	4,832	$	83,666

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.


(as of December 31, 2025, in millions)	Amortized Cost		Fair Value
Due in one year or less	$	5,902	$	5,893
Due after 1 year through 5 years	21,141		20,762
Due after 5 years through 10 years	24,897		24,397
Due after 10 years	26,683		25,549
	78,623		76,601
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	13,094		13,232
Total	$	91,717	$	89,833

Pre-refunded bonds of $416 million and $572 million as of December 31, 2025 and 2024, 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 as of December 31, 2025 and 2024 included $13.23 billion and $12.61 billion, respectively, of residential mortgage-backed securities, which include pass-through securities and collateralized mortgage obligations (CMOs). Included in the totals as of December 31, 2025 and 2024 were $10.24 billion and $9.93 billion, 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 $2.99 billion and $2.68 billion as of December 31, 2025 and 2024, respectively. Approximately 45% and 43% of the Company’s CMO holdings as of December 31, 2025 and 2024, respectively, were guaranteed by or fully collateralized by securities issued by GNMA, FNMA or FHLMC. The weighted average credit rating of the $1.64 billion and $1.53 billion of non-guaranteed CMO holdings was “Aaa” as of both December 31, 2025 and

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVESTMENTS (Continued)

The weighted average credit rating of all of the above securities was “Aa1” and “Aaa/Aa1” as of December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, the Company held commercial mortgage-backed securities (CMBS, including FHA project loans) of $1.31 billion and $1.15 billion, respectively, which are included in “Corporate and all other bonds” in the tables above. As of December 31, 2025 and 2024, approximately $557 million and $327 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 $757 million and $825 million of non-guaranteed securities as of December 31, 2025 and 2024, respectively, was “Aaa” as of 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/Aa1” as of both December 31, 2025 and 2024.

As of December 31, 2025 and 2024, the Company had $473 million and $586 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 $832 million, $1.63 billion and $4.98 billion in 2025, 2024 and 2023, respectively. Gross gains of $1 million, $2 million and $26 million and gross losses of $33 million, $62 million and $119 million were realized on those sales in 2025, 2024 and 2023, respectively. Included in net realized investment losses in 2025, 2024 and 2023 were $35 million, $66 million and $0 million, respectively, of losses resulting from the early redemption of fixed maturities by the issuer prior to the bonds’ maturity date.

As of December 31, 2025 and 2024, the Company’s insurance subsidiaries had $4.04 billion and $3.96 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 $51 million and $46 million as of December 31, 2025 and 2024, respectively. In addition, the Company utilizes Lloyd’s trust deposits, whereby owned securities with a fair value of $13 million were held by a wholly-owned subsidiary as of both December 31, 2025 and 2024, and $89 million and $86 million held by TRV as of December 31, 2025 and 2024, 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.

Equity Securities

The cost and fair value of investments in equity securities were as follows:


(as of December 31, 2025, in millions)	Cost		Gross Gains		Gross Losses		Fair Value
Common stock	$	419	$	177	$	12	$	584
Non-redeemable preferred stock	38		1		5		34
Total (1)	$	457	$	178	$	17	$	618

(1)Excludes equity securities classified as held for sale of $69 million of cost and $104 million of fair value as of December 31, 2025.


(as of December 31, 2024, in millions)	Cost		Gross Gains		Gross Losses		Fair Value
Common stock	$	500	$	150	$	11	$	639
Non-redeemable preferred stock	44		4		—		48
Total	$	544	$	154	$	11	$	687

The Company recognized $50 million and $89 million of net gains on equity securities still held as of December 31, 2025 and 2024, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVESTMENTS (Continued)

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 Company.

Proceeds from the sales of real estate investments were $0 million in 2025, $64 million in 2024 and $0 million in 2023. Gains of $17 million were realized on those sales in 2024. Net realized investment losses in 2025, 2024 and 2023 included $0 million, $5 million and $9 million, respectively, of impairment charges related to real estate. Accumulated depreciation on real estate held for investment purposes was $620 million and $581 million at December 31, 2025 and 2024, respectively.

Future minimum rental income on operating leases relating to the Company’s real estate properties is expected to be $124 million, $114 million, $92 million, $63 million and $46 million for 2026, 2027, 2028, 2029 and 2030, respectively, and $69 million for 2031 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 24 days to maturity as of December 31, 2025. The amortized cost of these securities, which totaled $5.72 billion and $4.77 billion as of December 31, 2025 and 2024, 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.

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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVESTMENTS (Continued)

Unrealized Investment Losses

The following tables summarize, for all fixed maturities classified as available for sale in an unrealized loss position as of December 31, 2025 and 2024, 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
(as of December 31, 2025, 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	$	611	$	5	$	1,684	$	76	$	2,295	$	81
Obligations of U.S. states, municipalities and political subdivisions	2,234		28		16,428		1,642		18,662		1,670
Debt securities issued by foreign governments	34		—		75		3		109		3
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	437		2		1,835		128		2,272		130
Corporate and all other bonds	2,351		13		17,428		952		19,779		965
Total	$	5,667	$	48	$	37,450	$	2,801	$	43,117	$	2,849


	Less than 12 months				12 months or longer				Total
(as of December 31, 2024, 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	$	557	$	1	$	2,830	$	168	$	3,387	$	169
Obligations of U.S. states, municipalities and political subdivisions	8,584		160		15,007		2,224		23,591		2,384
Debt securities issued by foreign governments	113		1		454		12		567		13
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	7,359		148		1,419		188		8,778		336
Corporate and all other bonds	7,341		144		21,999		1,786		29,340		1,930
Total	$	23,954	$	454	$	41,709	$	4,378	$	65,663	$	4,832

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVESTMENTS (Continued)

The following tables summarize, for all fixed maturities reported at fair value for which fair value was less than 80% of amortized cost as of December 31, 2025 and 2024, 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
(as of December 31, 2025, 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	18		—		10		550		578
Debt securities issued by foreign governments	—		—		—		—		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	—		—		—		—		—
Corporate and all other bonds	1		—		4		—		5
Total	$	19	$	—	$	14	$	550	$	583


	Period For Which Fair Value is Less Than 80% of Amortized Cost
(as of December 31, 2024, 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	366		—		43		635		1,044
Debt securities issued by foreign governments	—		—		—		—		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	58		—		—		—		58
Corporate and all other bonds	13		—		—		3		16
Total	$	437	$	—	$	43	$	638	$	1,118

Increases in the applicable 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVESTMENTS (Continued)

Impairment Charges

Credit impairment charges included in net realized investment losses in the consolidated statement of income were as follows:


(for the year ended December 31, in millions)	2025		2024		2023
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	—		—		1
Debt securities issued by foreign governments	—		—		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	—		—		—
Corporate and all other bonds	2		5		2
Total fixed maturities	$	2	$	5	$	3

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)	As of and For the Twelve Months Ended December 31, 2025		As of and For the Twelve Months Ended December 31, 2024

Balance, beginning of period	$	2	$	5
Additions for expected credit losses on securities where no credit losses were previously recognized	4		5
Additions (reductions) for expected credit losses on securities where credit losses were previously recognized	—		(1)
Reductions due to sales/defaults of credit-impaired securities	(3)		(7)
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	$	3	$	2

Total net impairment charges, including credit impairments, reported in net realized investment losses in the consolidated statement of income, were $2 million, $10 million and $12 million for the years ended December 31, 2025, 2024 and 2023, respectively. Net realized investment losses in 2025, 2024 and 2023 included $0 million, $5 million and $9 million, respectively, of realized losses related to real estate. Credit losses related to the fixed maturity portfolio for 2025 and 2024 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 as of both December 31, 2025 and 2024.

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.

As of December 31, 2025 and 2024, 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVESTMENTS (Continued)

Included in fixed maturities are below investment grade securities totaling $1.05 billion and $980 million as of December 31, 2025 and 2024, 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.

Net Investment Income


(for the year ended December 31, in millions)	2025		2024		2023
Gross investment income
Fixed maturities	$	3,433	$	2,948	$	2,472
Equity securities	21		21		18
Short-term securities	253		280		241
Real estate investments	59		70		64
Other investments	246		318		171
Gross investment income	4,012		3,637		2,966
Investment expenses	53		47		44
Net investment income	$	3,959	$	3,590	$	2,922

Changes in net unrealized gains (losses) on investment securities that are included as a separate component of other comprehensive income (loss) were as follows:


(as of and for the year ended December 31, in millions)	2025		2024		2023
Changes in net unrealized investment gains (losses)
Fixed maturities	$	2,750	$	(640)	$	2,248

Other investments	(3)		1		2
Change in net pre-tax unrealized gains (losses) on investment securities	2,747		(639)		2,250
Related tax expense (benefit)	585		(128)		481
Change in net unrealized gains (losses) on investment securities	2,162		(511)		1,769


Balance, beginning of year	(3,640)		(3,129)		(4,898)
Balance, end of year	$	(1,478)	$	(3,640)	$	(3,129)

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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. FAIR VALUE MEASUREMENTS (Continued)

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.
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 as of both December 31, 2025 and 2024. 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 TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. FAIR VALUE MEASUREMENTS (Continued)

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. 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 $32 million and $37 million for these investments as of December 31, 2025 and 2024, 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 $9 million and $20 million fair value of these investments as of December 31, 2025 and 2024, respectively, was disclosed in Level 1.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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.


(as of December 31, 2025, 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	$	3,857	$	3,857	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	31,378		—		31,378		—
Debt securities issued by foreign governments	312		—		312		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	13,232		—		13,232		—
Corporate and all other bonds	41,054		25		40,698		331
Total fixed maturities	89,833		3,882		85,620		331
Equity securities
Common stock	584		576		—		8
Non-redeemable preferred stock	34		7		3		24
Total equity securities	618		583		3		32
Other investments	9		9		—		—
Assets held for sale	3,347		104		3,243		—
Total	$	93,807	$	4,578	$	88,866	$	363


(as of December 31, 2024, 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	$	5,570	$	5,570	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	27,185		—		27,185		—
Debt securities issued by foreign governments	909		—		909		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	12,605		—		12,602		3
Corporate and all other bonds	37,397		—		37,151		246
Total fixed maturities	83,666		5,570		77,847		249
Equity securities
Common stock	639		631		—		8
Non-redeemable preferred stock	48		16		3		29
Total equity securities	687		647		3		37
Other investments	20		20		—		—
Total	$	84,373	$	6,237	$	77,850	$	286

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. FAIR VALUE MEASUREMENTS (Continued)

The following tables present the changes in the Level 3 fair value category for the years ended December 31, 2025 and 2024.


(in millions)	Fixed Maturities		Equity Securities		Other Investments		Total
Balance as of December 31, 2024	$	249	$	37	$	—	$	286
Total realized and unrealized investment gains (losses):
Reported in net realized investment losses (1)	—		(6)		—		(6)
Reported in other comprehensive income (loss)	3		—		—		3
Purchases, sales and settlements/maturities:
Purchases	—		1		—		1
Sales	—		—		—		—
Settlements/maturities	(51)		—		—		(51)
Gross transfers into Level 3	135		—		—		135
Gross transfers out of Level 3	(5)		—		—		(5)
Balance as of December 31, 2025	$	331	$	32	$	—	$	363
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	$	—	$	(6)	$	—	$	(6)

(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 as of December 31, 2023	$	258	$	37	$	—	$	295
Total realized and unrealized investment gains (losses):
Reported in net realized investment losses (1)	—		1		—		1
Reported in other comprehensive income (loss)	(1)		—		—		(1)
Purchases, sales and settlements/maturities:
Purchases	85		2		—		87
Sales	—		(3)		—		(3)
Settlements/maturities	(25)		—		—		(25)
Gross transfers into Level 3	—		—		—		—
Gross transfers out of Level 3	(68)		—		—		(68)
Balance as of December 31, 2024	$	249	$	37	$	—	$	286
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	$	—	$	1

(1)Includes impairments on investments held at the end of the period as well as amortization on fixed maturities.

A “Corporate and all other bonds” investment totaling $133 million that had been valued using observable market inputs as of December 31, 2024 and disclosed in Level 2 was valued using a broker quote as of December 31, 2025 and transferred into Level 3 during the twelve months ended December 31, 2025. There was no other significant activity in Level 3 of the hierarchy during the year ended December 31, 2025.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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.


(as of December 31, 2025, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Short-term securities	$	5,716	$	5,716	$	1,398	$	4,267	$	51
Financial liabilities:
Debt	$	9,167	$	8,538	$	—	$	8,538	$	—
Commercial paper	100		100		—		100		—


(as of December 31, 2024, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Short-term securities	$	4,766	$	4,766	$	1,933	$	2,788	$	45
Financial liabilities:
Debt	$	7,933	$	7,095	$	—	$	7,095	$	—
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, 2025 and 2024.

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, as of December 31, 2025 and 2024, and the changes in the allowance for expected credit losses for the twelve months ended December 31, 2025 and 2024.


	As of and For the Twelve Months Ended December 31, 2025				As of and For the Twelve Months Ended December 31, 2024
(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	$	11,110	$	58	$	10,282	$	69

Current period change for expected credit losses			65				50
Write-offs of uncollectible premiums receivable			64				61
Less amounts classified as held for sale			1				—
Balance, end of period	$	10,992	$	58	$	11,110	$	58

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. ALLOWANCE FOR EXPECTED CREDIT LOSSES (Continued)

Reinsurance Recoverables

The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, as of December 31, 2025 and 2024, and the changes in the allowance for estimated uncollectible reinsurance for the twelve months ended December 31, 2025 and 2024.


	As of and For the Twelve Months Ended December 31, 2025				As of and For the Twelve Months Ended December 31, 2024
(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	$	8,000	$	119	$	8,143	$	118


Current period change for estimated uncollectible reinsurance			16				1
Write-offs of uncollectible reinsurance recoverables			—				—
Less amounts classified as held for sale			6				—
Balance, end of period	$	7,886	$	129	$	8,000	$	119

Of the total reinsurance recoverables as of December 31, 2025, $6.09 billion, or 89%, 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, 95% were rated A- or better. The remaining 11% 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 4% 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, as of December 31, 2025 and 2024, and the changes in the allowance for expected credit losses for the twelve months ended December 31, 2025 and 2024.


	As of and For the Twelve Months Ended December 31, 2025				As of and For the Twelve Months Ended December 31, 2024
(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	$	3,171	$	18	$	3,249	$	20

Current period change for expected credit losses			(2)				(2)
Write-offs of uncollectible contractholder receivables			—				—
Balance, end of period	$	3,010	$	16	$	3,171	$	18

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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 TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. REINSURANCE (Continued)

The following is a summary of reinsurance financial data reflected in the consolidated statement of income.


(for the year ended December 31, in millions)	2025			2024			2023
Written premiums
Direct	$	45,594		$	44,377		$	40,983
Assumed	2,136			2,173			1,989
Ceded	(3,343)			(3,194)			(2,771)
Total net written premiums	$	44,387		$	43,356		$	40,201
Earned premiums
Direct	$	45,042		$	42,983		$	38,796
Assumed	2,110			2,095			1,614
Ceded	(3,238)			(3,137)			(2,649)
Total net earned premiums	$	43,914		$	41,941		$	37,761
Percentage of assumed earned premiums to net earned premiums	4.8		%	5.0		%	4.3		%
Ceded claims and claim adjustment expenses incurred	$	1,679		$	1,249		$	1,462

Ceded premiums include the premiums paid for coverage provided by the Company’s catastrophe bonds.

Reinsurance recoverables include amounts recoverable on both paid and unpaid claims and claim adjustment expenses and were as follows:


(as of December 31, in millions)	2025		2024
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses	$	4,352	$	3,962
Gross structured settlements	2,469		2,626
Mandatory pools and associations	1,485		1,531
Gross reinsurance recoverables	8,306		8,119
Allowance for estimated uncollectible reinsurance	(135)		(119)
Less amounts classified as held for sale	285		—
Net reinsurance recoverables	$	7,886	$	8,000

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 $4.01 billion for 2026. The annual cap limits the amount of aggregate subject losses for all participating insurers to $100 billion. Once subject losses have reached the $100

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. REINSURANCE (Continued)

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 cyber, 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.


(as of December 31, in millions)	2025		2024
Business Insurance	$	2,601	$	2,572
Bond & Specialty Insurance	838		834
Personal Insurance	809		801
Other	26		26
Less amounts classified as held for sale	208		—
Total	$	4,066	$	4,233

Other Intangible Assets

The following tables present a summary of the Company’s other intangible assets by major asset class.


(as of December 31, 2025, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	186	$	93	$	93
Contract-based	204		198		6
Marketing-related	18		6		12
Total subject to amortization	408		297		111
Not subject to amortization	226		—		226
Less amounts classified as held for sale	5		4		1
Total	$	629	$	293	$	336

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)


(as of December 31, 2024, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	185	$	74	$	111
Contract-based	204		196		8
Marketing-related	18		3		15
Total subject to amortization	407		273		134
Not subject to amortization	226		—		226
Total	$	633	$	273	$	360

Amortization expense of intangible assets was $20 million, $21 million and $12 million for the years ended December 31, 2025, 2024 and 2023, respectively. Amortization expense for all intangible assets subject to amortization is estimated to be $20 million in 2026, $17 million in 2027, $9 million in 2028, $8 million in 2029 and $8 million in 2030.

8. INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:


(as of December 31, in millions)	2025		2024
Property-casualty	$	67,643	$	64,088
Accident and health	3		5
Less amounts classified as held for sale	1,909		—
Total	$	65,737	$	64,093

The following table presents a reconciliation of beginning and ending property casualty reserve balances for claims and claim adjustment expenses.


(as of and for the year ended December 31, in millions)	2025		2024		2023
Claims and claim adjustment expense reserves at beginning of year	$	64,088	$	61,621	$	58,643
Less reinsurance recoverables on unpaid losses	7,669		7,817		7,790

Net reserves at beginning of year	56,419		53,804		50,853
Estimated claims and claim adjustment expenses for claims arising in the current year	28,051		27,508		26,159
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(939)		(548)		(38)
Total increases	27,112		26,960		26,121
Claims and claim adjustment expense payments for claims arising in:
Current year	10,606		10,924		10,852
Prior years	13,307		13,227		12,424
Total payments	23,913		24,151		23,276

Unrealized foreign exchange (gain) loss	228		(194)		106
Net reserves at end of year	59,846		56,419		53,804
Plus reinsurance recoverables on unpaid losses	7,797		7,669		7,817
Claims and claim adjustment expense reserves at end of year	$	67,643	$	64,088	$	61,621

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

Gross claims and claim adjustment expense reserves as of December 31, 2025 increased by $3.56 billion over December 31, 2024, primarily reflecting the impacts of (i) catastrophe losses in 2025, (ii) higher volumes of insured exposures and (iii) loss cost trends for the current accident year, partially offset by (iv) claim payments made during 2025 and (v) net favorable prior year reserve development. Gross claims and claim adjustment expense reserves as of December 31, 2024 increased by $2.47 billion over December 31, 2023, primarily reflecting the impacts of (i) catastrophe losses in 2024, (ii) higher volumes of insured exposures and (iii) loss cost trends for the current accident year, partially offset by (iv) claim payments made during 2024 and (v) net favorable prior year reserve development.

Reinsurance recoverables on unpaid losses as of December 31, 2025 increased by $128 million over December 31, 2024, primarily reflecting the impact of catastrophe losses, partially offset by a decrease in structured settlements and recoverables from mandatory pools and associations. Reinsurance recoverables on unpaid losses as of December 31, 2024 decreased by $148 million over December 31, 2023, primarily reflecting a decrease in structured settlements and recoverables from mandatory pools and associations, partially offset by the impact of catastrophe losses.

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% as of both December 31, 2025 and 2024. Total reserves net of the discount were $2.61 billion and $2.65 billion, and the related amount of discount was $1.03 billion and $1.07 billion, as of December 31, 2025 and 2024, respectively. Accretion of the discount is reported as part of “claims and claim adjustment expenses” in the consolidated statement of income and was $43 million, $44 million and $45 million for the years ended December 31, 2025, 2024 and 2023.

Prior Year Reserve Development

The following disclosures regarding reserve development are on a “net of reinsurance” basis.

2025

In 2025*,* estimated claims and claim adjustment expenses incurred included $939 million of net favorable development for claims arising in prior years, including $1.04 billion of net favorable prior year reserve development and $43 million of accretion of discount that impacted the Company’s results of operations.

Business Insurance. Net favorable prior year reserve development in 2025 totaled $233 million, primarily driven by better than expected loss experience in the workers’ compensation product line for multiple accident years, partially offset by an addition to reserves related to run-off operations, including an addition to asbestos reserves of $277 million.

Bond & Specialty Insurance. Net favorable prior year reserve development in 2025 totaled $221 million, primarily driven by better than expected loss experience in the fidelity and surety product line for recent accident years.

Personal Insurance. Net favorable prior year reserve development in 2025 totaled $582 million, primarily driven by better than expected loss experience in both the automobile and homeowners and other product lines for recent accident years.

2024

In 2024, estimated claims and claim adjustment expenses incurred included $548 million of net favorable development for claims arising in prior years, including $709 million of net favorable prior year reserve development and $44 million of accretion of discount that impacted the Company’s results of operations.

Business Insurance. Net favorable prior year reserve development in 2024 totaled $90 million, primarily driven by (i) better than expected loss experience in the workers’ compensation product line for multiple accident years, partially offset by (ii) higher than expected loss experience in the general liability product line (excluding asbestos) for recent accident years, (iii) an addition to asbestos reserves of $242 million and (iv) additions to other reserves related to run-off operations.

Bond & Specialty Insurance. Net favorable prior year reserve development in 2024 totaled $129 million, primarily driven by better than expected loss experience in the fidelity and surety product line for multiple accident years.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

Personal Insurance. Net favorable prior year reserve development in 2024 totaled $490 million, primarily driven by better than expected loss experience in the homeowners and other and automobile product lines for recent accident years.

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 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 commercial automobile product line for recent accident years, partially offset by (iv) better than expected loss experience in the 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 fidelity and surety product line 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 homeowners and other product line for recent accident years.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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 as of December 31, 2025.


(as of December 31, 2025, 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	$	12,063	$	(121)	$	11,942	$	1,496	$	13,438
Commercial property	1,299		—		1,299		296		1,595
Commercial multi-peril	6,275		—		6,275		317		6,592
Commercial automobile	5,474		—		5,474		324		5,798
Workers’ compensation (1)	15,560		(870)		14,690		531		15,221
Bond & Specialty Insurance
General liability	2,967		—		2,967		364		3,331
Fidelity and surety	740		—		740		12		752
Personal Insurance
Automobile	4,258		—		4,258		306		4,564
Homeowners (excluding Other)	2,638		—		2,638		13		2,651
International - Canada	847		—		847		13		860
Subtotal — claims and allocated claim adjustment expenses for the products presented in the development tables below	52,121		(991)		51,130		3,672		54,802
Other insurance contracts (2)	5,561		(5)		5,556		1,763		7,319
Unallocated loss adjustment expense reserves	3,061		—		3,061		18		3,079
Structured settlements (3)	—		—		—		2,428		2,428
Other	99		—		99		(84)		15
Total property-casualty	60,842		(996)		59,846		7,797		67,643
Accident and health	—		—		—		3		3
Less amounts classified as held for sale	1,627		—		1,627		282		1,909
Total	$	59,215	$	(996)	$	58,219	$	7,518	$	65,737

(1)Net discount amount includes discount of $31 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) as of December 31, 2025 were $7.89 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

Business Insurance

General Liability


	(dollars in millions)
	For the Years Ended December 31,
	2016		2017		2018		2019		2020		2021		2022		2023		2024		2025
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves Dec 31, 2025		Cumulative Number of Reported Claims
2016	$	1,075	$	1,058	$	1,087	$	1,187	$	1,204	$	1,179	$	1,185	$	1,183	$	1,173	$	1,185	$	85	21,090
2017			1,133		1,143		1,196		1,234		1,226		1,243		1,288		1,306		1,313		98		19,983
2018					1,253		1,312		1,344		1,395		1,477		1,530		1,571		1,604		122		20,194
2019							1,447		1,486		1,498		1,567		1,706		1,698		1,752		181		19,972
2020									1,467		1,493		1,470		1,577		1,568		1,570		226		23,456
2021											1,591		1,589		1,628		1,711		1,711		383		16,269
2022													1,696		1,736		1,916		2,014		620		19,494
2023															1,998		2,060		2,129		1,080		19,166
2024																	2,340		2,315		1,782		17,488
2025																			2,604		2,396		13,197
																	Total		$	18,197

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2016	$	35	$	191	$	421	$	649	$	758	$	858	$	951	$	991	$	1,031	$	1,072
2017			40		180		378		552		724		914		1,029		1,111		1,172
2018					42		202		441		709		939		1,146		1,270		1,367
2019							51		233		482		816		1,074		1,276		1,416		Liability for Claims
2020									61		244		458		770		1,031		1,179		And Allocated Claim
2021											67		231		493		826		1,100		Adjustment Expenses,
2022													81		302		668		1,042		Net of Reinsurance
2023															54		280		597
2024																	55		242		2016 -		Before
2025																			28		2025		2016
																	Total		$	9,215	$	8,982	$	3,081
																			Total net liability				$	12,063


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5		6		7		8		9		10
	2.9	%	10.6	%	15.7	%	18.0	%	14.0	%	11.4	%	8.1	%	5.2	%	4.0	%	3.5	%

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

Commercial Property


	(dollars in millions)
	For the Years Ended December 31,
	2021		2022		2023		2024		2025
	Incurred Claims and Allocated Claims Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year											IBNR Reserves December 31, 2025		Cumulative Number of Reported Claims
2021	$	1,236	$	1,190	$	1,190	$	1,201	$	1,207	$	15	25,814
2022			1,309		1,369		1,372		1,343		(3)		28,976
2023					1,268		1,244		1,219		16		29,443
2024							1,474		1,434		28		28,903
2025									1,417		266		22,297
							Total		$	6,620

	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
	Unaudited
											Liability for Claims
Accident Year											And Allocated Claim
2021	$	645	$	1,068	$	1,141	$	1,169	$	1,176	Adjustment Expenses,
2022			624		1,113		1,247		1,272		Net of Reinsurance
2023					614		1,049		1,125
2024							702		1,193		2021 -		Before
2025									664		2025		2021
							Total		$	5,430	$	1,190	$	109
									Total net liability				$	1,299


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5
	49.2	%	35.3	%	7.4	%	2.1	%	0.5	%

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

Commercial Multi-Peril


	(dollars in millions)
	For the Years Ended December 31,
	2016		2017		2018		2019		2020		2021		2022		2023		2024		2025
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2025		Cumulative Number of Reported Claims
2016	$	1,662	$	1,623	$	1,598	$	1,590	$	1,601	$	1,587	$	1,579	$	1,578	$	1,590	$	1,602	$	24	69,716
2017			1,872		1,928		1,956		1,919		1,935		1,943		1,930		1,928		1,929		37		72,872
2018					1,976		2,114		2,092		2,112		2,121		2,127		2,125		2,136		46		80,732
2019							2,017		2,087		2,089		2,103		2,103		2,110		2,102		49		77,552
2020									2,142		2,141		2,126		2,111		2,061		2,041		144		70,943
2021											2,164		2,097		2,097		2,107		2,084		157		59,084
2022													2,502		2,533		2,569		2,569		280		55,514
2023															2,781		2,811		2,773		474		55,151
2024																	2,946		2,909		875		50,466
2025																			2,996		1,420		37,006
																	Total		$	23,141

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2016	$	585	$	950	$	1,133	$	1,278	$	1,373	$	1,437	$	1,477	$	1,510	$	1,547	$	1,559
2017			716		1,199		1,388		1,531		1,674		1,763		1,815		1,843		1,865
2018					792		1,302		1,500		1,669		1,815		1,917		1,986		2,021
2019							707		1,187		1,423		1,628		1,801		1,916		1,973		Liability for Claims
2020									791		1,180		1,373		1,547		1,687		1,791		And Allocated Claim
2021											744		1,206		1,437		1,616		1,764		Adjustment Expenses,
2022													817		1,476		1,752		1,965		Net of Reinsurance
2023															935		1,603		1,894
2024																	906		1,539		2016 -		Before
2025																			897		2025		2016
																	Total		$	17,268	$	5,873	$	402
																			Total net liability				$	6,275


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5		6		7		8		9		10
	34.5	%	23.0	%	10.4	%	8.5	%	7.1	%	4.8	%	2.8	%	1.7	%	1.7	%	0.7	%

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

Commercial Automobile


	(dollars in millions)
	For the Years Ended December 31,
	2021		2022		2023		2024		2025
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
	Unaudited
Accident Year											IBNR Reserves December 31, 2025		Cumulative Number of Reported Claims
2021	$	1,741	$	1,757	$	1,786	$	1,800	$	1,789	$	92	149,271
2022			1,939		2,040		2,050		2,059		209		160,802
2023					2,245		2,222		2,272		424		168,367
2024							2,544		2,452		925		168,679
2025									2,754		1,735		152,342
							Total		$	11,326

	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
	Unaudited
											Liability for Claims
Accident Year											And Allocated Claim
2021	$	453	$	800	$	1,135	$	1,405	$	1,591	Adjustment Expenses,
2022			540		966		1,324		1,607		Net of Reinsurance
2023					589		1,006		1,394
2024							604		1,021		2021 -		Before
2025									572		2025		2021
							Total		$	6,185	$	5,141	$	333
									Total net liability				$	5,474


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5
	24.6	%	18.9	%	17.7	%	14.4	%	10.4	%

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

Workers’ Compensation


	(dollars in millions)
	For the Years Ended December 31,
	2016		2017		2018		2019		2020		2021		2022		2023		2024		2025
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2025		Cumulative Number of Reported Claims
2016	$	2,768	$	2,690	$	2,569	$	2,473	$	2,372	$	2,300	$	2,235	$	2,151	$	2,111	$	2,092	$	216	132,524
2017			2,779		2,681		2,584		2,483		2,439		2,342		2,243		2,190		2,167		290		130,310
2018					2,744		2,687		2,599		2,503		2,416		2,318		2,245		2,194		313		132,689
2019							2,680		2,714		2,699		2,632		2,521		2,424		2,355		369		129,611
2020									2,559		2,530		2,433		2,271		2,152		2,025		362		102,671
2021											2,356		2,349		2,294		2,237		2,166		419		96,412
2022													2,293		2,294		2,226		2,148		476		103,197
2023															2,373		2,365		2,371		579		98,269
2024																	2,352		2,344		809		95,182
2025																			2,356		1,379		86,579
																	Total		$	22,218

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2016	$	421	$	873	$	1,118	$	1,272	$	1,367	$	1,433	$	1,486	$	1,522	$	1,553	$	1,579
2017			433		890		1,154		1,314		1,418		1,490		1,544		1,585		1,612
2018					440		919		1,169		1,330		1,440		1,516		1,578		1,616
2019							466		951		1,229		1,402		1,518		1,593		1,639		Liability for Claims
2020									389		794		1,017		1,164		1,273		1,342		And Allocated Claim
2021											427		848		1,076		1,234		1,341		Adjustment Expenses,
2022													388		830		1,081		1,242		Net of Reinsurance
2023															444		925		1,188
2024																	443		934		2016 -		Before
2025																			430		2025		2016
																	Total		$	12,923	$	9,295	$	6,265
																			Total net liability				$	15,560


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5		6		7		8		9		10
	19.3	%	20.7	%	11.4	%	7.4	%	4.9	%	3.3	%	2.5	%	1.8	%	1.4	%	1.2	%

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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,
	2016		2017		2018		2019		2020		2021		2022		2023		2024		2025
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Unaudited
Accident Year																					IBNR Reserves December 31, 2025		Cumulative Number of Reported Claims
2016	$	512	$	511	$	504	$	520	$	514	$	510	$	511	$	509	$	512	$	513	$	13	4,421
2017			534		517		526		493		524		554		565		582		574		37		4,626
2018					530		548		585		595		605		612		636		624		19		4,895
2019							588		653		665		670		662		654		646		25		5,517
2020									772		753		741		698		684		673		70		5,528
2021											812		756		683		659		654		86		5,769
2022													803		763		727		689		180		5,206
2023															862		888		884		277		6,060
2024																	1,001		1,073		487		6,499
2025																			1,078		735		5,165
																	Total		$	7,408

	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited
2016	$	30	$	141	$	233	$	313	$	378	$	446	$	463	$	472	$	479	$	480
2017			38		155		262		340		404		450		488		513		530
2018					49		182		290		383		458		504		559		567
2019							51		189		323		410		513		554		582		Liability for Claims
2020									52		210		333		447		525		564		And Allocated Claim
2021											78		210		316		401		461		Adjustment Expenses,
2022													69		212		335		405		Net of Reinsurance
2023															90		274		435
2024																	115		369		2016 -		Before
2025																			116		2025		2016
																	Total		$	4,509	$	2,899	$	68
																			Total net liability				$	2,967


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5		6		7		8		9		10
	8.9	%	21.5	%	18.1	%	14.0	%	12.1	%	8.2	%	5.8	%	2.5	%	2.1	%	0.3	%

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

Fidelity and Surety


	(dollars in millions)
	For the Years Ended December 31,
	2021		2022		2023		2024		2025		IBNR Reserves December 31, 2025		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2021	$	284	$	172	$	93	$	87	$	76	$	18	612
2022			310		261		187		148		21		757
2023					353		374		372		83		986
2024							363		266		164		1,049
2025									356		320		793
							Total		$	1,218

	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited										Liability for Claims
											And Allocated Claim
2021	$	25	$	50	$	57	$	58	$	57	Adjustment Expenses,
2022			36		82		99		118		Net of Reinsurance
2023					96		202		262
2024							39		95		2021 -		Before
2025									31		2025		2021
							Total		$	563	$	655	$	85
									Total net liability				$	740


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5
	21.3	%	28.5	%	12.1	%	7.2	%	(0.8)	%

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

Personal Insurance

Automobile


	(dollars in millions)
	For the Years Ended December 31,
	2021		2022		2023		2024		2025		IBNR Reserves December 31, 2025		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2021	$	3,716	$	3,770	$	3,751	$	3,724	$	3,703	$	29	1,001,126
2022			4,755		4,784		4,729		4,686		80		1,132,092
2023					5,206		5,133		5,032		232		1,112,458
2024							5,179		4,988		586		1,033,917
2025									4,770		1,487		851,578
							Total		$	23,179

	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited										Liability for Claims
											And Allocated Claim
2021	$	2,062	$	2,981	$	3,350	$	3,541	$	3,628	Adjustment Expenses,
2022			2,683		3,855		4,278		4,485		Net of Reinsurance
2023					2,888		4,068		4,531
2024							2,838		3,904		2021 -		Before
2025									2,557		2025		2021
							Total		$	19,105	$	4,074	$	184
									Total net liability				$	4,258


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5
	56.2	%	23.7	%	9.4	%	4.8	%	2.4	%

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

Homeowners (excluding Other)


	(dollars in millions)
	For the Years Ended December 31,
	2021		2022		2023		2024		2025		IBNR Reserves December 31, 2025		Cumulative Number of Reported Claims
	Incurred Claims and Allocated Claims Adjustment
	Expenses, Net of Reinsurance
Accident Year	Unaudited
2021	$	3,463	$	3,486	$	3,444	$	3,423	$	3,397	$	(3)	234,160
2022			4,277		4,184		4,146		4,145		24		236,736
2023					5,171		5,018		4,979		70		271,119
2024							5,021		4,915		219		239,165
2025									5,120		1,157		153,096
							Total		$	22,556

	Cumulative Paid Claims and Allocated Claim
	Adjustment Expenses, Net of Reinsurance
Accident Year	Unaudited										Liability for Claims
											And Allocated Claim
2021	$	2,334	$	3,235	$	3,344	$	3,372	$	3,380	Adjustment Expenses,
2022			2,537		3,828		4,018		4,084		Net of Reinsurance
2023					3,369		4,608		4,814
2024							3,402		4,454		2021 -		Before
2025									3,224		2025		2021
							Total		$	19,956	$	2,600	$	38
									Total net liability				$	2,638


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5
	66.0	%	26.0	%	4.0	%	1.2	%	0.3	%

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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, 2025			Cumulative
	2016		2017		2018		2019		2020		2021		2022		2023		2024			2025				Number of
Accident	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																							Reported
Year	Unaudited																							Claims
2016	$	341	$	386	$	387	$	396	$	396	$	395	$	396	$	397	$	398		$	399	$	1		45,503
2017			327		360		381		381		381		384		386		380			380		(3)			46,520
2018					415		436		438		442		445		448		445			442		(4)			50,331
2019							420		415		435		438		439		444			438		5			47,923
2020									328		315		302		296		294			292		7			30,038
2021											329		317		310		307			300		15			28,063
2022													365		373		377			370		31			33,035
2023															430		455			439		55			32,890
2024																	485			487		96			33,448
2025																				421		131			28,662
																	Total			$	3,968

Accident	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Year	Unaudited
2016	$	200	$	268	$	292	$	325	$	347	$	364	$	376	$	381	$	388		$	391
2017			172		243		280		303		328		348		361		369			374
2018					207		288		321		358		388		405		418			425
2019							204		273		307		344		373		398			410		Liability for Claims
2020									136		183		206		225		245			255		And Allocated Claim
2021											121		178		206		226			248		Adjustment Expenses,
2022													159		231		260			286		Net of Reinsurance
2023															193		275			310
2024																	197			278		2016 -			Before
2025																				173		2025			2016
																	Total			$	3,150	$	818		$	29
																			Total net liability						$	847


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	Unaudited
Years	1		2		3		4		5		6		7		8		9		10
	44.4	%	17.7	%	8.0	%	7.2	%	6.7	%	4.5	%	3.1	%	1.7	%	1.4	%	0.8	%

The incurred and paid amounts have been translated from the local currency to U.S. dollars using the December 31, 2025 spot rate for all years presented in the table above in order to isolate changes in foreign exchange rates from loss development.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

For certain reserve components where this assumption may not hold, such as asbestos 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 Reserves

As of December 31, 2025 and 2024, the Company’s claims and claim adjustment expense reserves included $1.36 billion and $1.34 billion, respectively, for asbestos-related claims, net of reinsurance.

It is difficult to estimate the reserves for asbestos-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.

Because each policyholder presents different liability and coverage issues, the Company generally conducts an in-depth asbestos claim review on an annual basis, including a review of domestic policyholders with open claims and litigation cases for potential product and “non-product” liability. 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.

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, including as a result of the bankruptcy of other defendants; the jurisdictions involved, including any trends, judicial rulings or legislative actions in those jurisdictions; 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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

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 also reviews its asbestos reserves quarterly. These reviews include, as appropriate, 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.

During the third quarter of 2025, the Company completed its annual in-depth asbestos claim review. While the latest available government data continue to reflect a declining trend in deaths caused by mesothelioma, the number of policyholders with open asbestos claims was relatively flat compared to 2024. Net asbestos paid claims and claim adjustment expenses in 2025, 2024 and 2023 were $261 million, $282 million and $212 million, respectively. Payments on behalf of these policyholders continue to be influenced by the factors described above, including 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 sued and/or primary targets of asbestos litigation. The completion of the analyses described above and the annual review in the third quarters of 2025, 2024 and 2023 resulted in $277 million, $242 million and $284 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.

As a result of the processes and procedures discussed above, management believes that the reserves carried for asbestos 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 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 claims and result in adverse loss reserve development. The emergence of a greater number of asbestos 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 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 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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. INSURANCE CLAIM RESERVES (Continued)

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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. DEBT

Debt outstanding was as follows:


(as of December 31, in millions)	2025		2024
Short-term:
Commercial paper	$	100	$	100
7.75% Senior notes due April 15, 20261	200		—
Total short-term debt	300		100
Long-term:
7.75% Senior notes due April 15, 20261	—		200
7.625% Junior subordinated debentures due December 15, 2027 (effective interest rate 6.147%)	125		125
6.375% Senior notes due March 15, 20331	500		500
5.05% Senior notes due July 24, 20351	500		—
6.75% Senior notes due June 20, 20361	400		400
6.25% Senior notes due June 15, 20371	800		800
5.35% Senior notes due November 1, 20401	750		750
4.60% Senior notes due August 1, 20431	500		500
4.30% Senior notes due August 25, 20451	400		400
8.50% Junior subordinated debentures due December 15, 2045 (effective interest rate 6.362%)	56		56
3.75% Senior notes due May 15, 20461	500		500
8.312% Junior subordinated debentures due July 1, 2046 (effective interest rate 6.362%)	73		73
4.00% Senior notes due May 30, 20471	700		700
4.05% Senior notes due March 7, 20481	500		500
4.10% Senior notes due March 4, 20491	500		500
2.55% Senior notes due April 27, 20501	500		500
3.05% Senior notes due June 8, 20511	750		750
5.45% Senior notes due May 25, 20531	750		750
5.70% Senior notes due July 24, 20551	750		—
Total long-term debt	9,054		8,004
Total debt principal	9,354		8,104
Unamortized fair value adjustment	31		34
Unamortized debt issuance costs	(118)		(105)
Total debt	$	9,267	$	8,033

(1)The effective interest rate to maturity does not differ materially from the issued rate.

2025 Debt Issuance. On July 24, 2025, the Company issued a total of $1.25 billion of debt in two tranches:

$500 million aggregate principal amount of 5.05% senior notes that will mature on July 24, 2035 (the “2035 notes”), and
$750 million aggregate principal amount of 5.70% senior notes that will mature on July 24, 2055 (the “2055 notes” and together with the 2035 notes, the “senior notes”).

The net proceeds of the issuance, after deducting the underwriting discount and expenses payable by the Company, totaled approximately $1.23 billion. Interest on the senior notes is payable semi-annually in arrears on January 24 and July 24.

The 2035 notes may be redeemed prior to April 24, 2035, 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 2035 notes to be redeemed or

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. DEBT (Continued)

(b) the sum of the present values of the remaining scheduled payments of principal and interest to but excluding April 24, 2035 on any 2035 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 2035 notes), plus 15 basis points. On or after April 24, 2035, the 2035 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 2035 notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The 2055 notes may be redeemed prior to January 24, 2055, 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 2055 notes to be redeemed or (b) the sum of the present values of the remaining scheduled payments of principal and interest to but excluding January 24, 2055 on any 2055 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 2055 notes), plus 15 basis points. On or after January 24, 2055, the 2055 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 2055 notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

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.

Description of Debt

Commercial Paper—The Company maintains an $800 million commercial paper program. Interest rates on commercial paper issued in 2025 ranged from 3.87% to 4.35%, and in 2024 ranged from 4.59% to 5.36%.

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, 2025 and 2024, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. DEBT (Continued)

The following table presents merger-related unamortized fair value adjustments.


				Unamortized Fair Value Purchase Adjustment at December 31,
(in millions)	Issue Rate		Maturity Date	2025		2024
Junior subordinated debentures	7.625	%	Dec. 2027	$	3	$	5
	8.500	%	Dec. 2045	13		13
	8.312	%	Jul. 2046	15		16
Total				$	31	$	34

Maturities—Other than commercial paper, the amount of debt obligations that become due in each of the next five years is as follows: 2026, $200 million; 2027, $125 million; 2028, $0; 2029, $0; and 2030, $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. 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 as of 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. As of December 31, 2025, 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. As of December 31, 2025, 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 $299 million as of December 31, 2025, 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 4, 2028 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY (Continued)

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 appropriate capital levels for business operations, changes in the levels of written premiums, funding of its qualified pension plan, regulatory capital requirements of the operating insurance subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws and other factors. During 2025, the Company repurchased 10.9 million shares under its share repurchase authorizations, for a total of $3.0 billion. The average cost per share repurchased was $277.17. Included in the cost of the treasury stock acquired pursuant to common share repurchases is the 1% federal excise tax imposed on common share repurchase activity, net of common share issuances, as part of the Inflation Reduction Act of 2022. As of December 31, 2025, the Company had $2.02 billion of capacity remaining under its share repurchase authorizations. On January 21, 2026, the Board of Directors approved a share repurchase authorization that added an additional $5.0 billion of repurchase capacity to the $2.02 billion of capacity remaining at that date, which was previously approved by the Board of Directors on April 19, 2023.

The Company’s Amended and Restated 2014 Stock Incentive Plan and the Amended and Restated 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 exercise price, as well as the related payroll withholding taxes, for stock options that were exercised. During the years ended December 31, 2025 and 2024, the Company acquired $171 million and $146 million, respectively, of its common stock under these plans.

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 $5.92 billion is available by the end of 2026 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 2026 and/or increase the amount of dividends from its insurance subsidiaries in 2026, 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 as of December 31, 2025 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 as of December 31, 2025.

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 as of December 31, 2025.

The U.S. insurance subsidiaries paid dividends of $3.25 billion, $2.00 billion and $1.17 billion during 2025, 2024 and 2023, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY (Continued)

For the years ended December 31, 2025, 2024 and 2023, TRV declared cash dividends per common share of $4.35, $4.15 and $3.93, respectively, and paid cash dividends of $979 million, $951 million and $908 million, respectively.

Statutory Net Income and Statutory Capital and Surplus

Statutory net income of the Company’s domestic and international insurance subsidiaries was $6.76 billion, $4.74 billion and $2.85 billion for the years ended December 31, 2025, 2024 and 2023, respectively. Statutory capital and surplus of the Company’s domestic and international insurance subsidiaries was $31.06 billion and $27.72 billion as of December 31, 2025 and 2024, respectively.

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, 2025, 2024 and 2023.


	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, 2022	$	(5,077)	$	179	$	(542)	$	(1,005)	$	(6,445)
Other comprehensive income (loss) (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)
OCI before reclassifications, net of tax	(619)		4		238		(219)		(596)
Amounts reclassified from AOCI, net of tax	104		—		(4)		—		100
Net OCI, current period	(515)		4		234		(219)		(496)
Balance, December 31, 2024	(3,824)		184		(224)		(1,103)		(4,967)
OCI before reclassifications, net of tax	2,105		2		74		231		2,412
Amounts reclassified from AOCI, net of tax	55		—		—		—		55
Net OCI, current period	2,160		2		74		231		2,467
Balance, December 31, 2025	$	(1,664)	$	186	$	(150)	$	(872)	$	(2,500)

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)	2025		2024		2023
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	2,744	$	(644)	$	2,249
Income tax expense (benefit)	584		(129)		481
Net of taxes	2,160		(515)		1,768
Having credit losses recognized in the consolidated statement of income	3		5		1
Income tax expense	1		1		—
Net of taxes	2		4		1
Net changes in benefit plan assets and obligations	94		296		106
Income tax expense	20		62		22
Net of taxes	74		234		84
Net changes in unrealized foreign currency translation	246		(232)		138
Income tax expense (benefit)	15		(13)		17
Net of taxes	231		(219)		121
Total other comprehensive income (loss)	3,087		(575)		2,494
Income tax expense (benefit)	620		(79)		520
Total other comprehensive income (loss), net of taxes	$	2,467	$	(496)	$	1,974

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)	2025		2024		2023
Reclassification adjustments related to unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)	$	69	$	131	$	96
Income tax benefit (2)	14		27		20
Net of taxes	55		104		76
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)	—		(2)		(5)
General and administrative expenses (benefit) (3)	—		(3)		(8)
Total	—		(5)		(13)
Income tax (expense) benefit (2)	—		(1)		(3)
Net of taxes	—		(4)		(10)
Reclassification adjustment related to foreign currency translation (1)	—		—		—
Income tax benefit (2)	—		—		—
Net of taxes	—		—		—
Total reclassifications	69		126		83
Total income tax benefit	14		26		17
Total reclassifications, net of taxes	$	55	$	100	$	66

(1)(Increases) decreases net realized investment 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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)	2025		2024		2023
Basic and Diluted
Net income, as reported	$	6,288	$	4,999	$	2,991
Participating share-based awards — allocated income	(46)		(38)		(22)
Net income available to common shareholders — basic and diluted	$	6,242	$	4,961	$	2,969
Common Shares
Basic
Weighted average shares outstanding	224.2		228.0		229.7
Diluted
Weighted average shares outstanding	224.2		228.0		229.7
Weighted average effects of dilutive securities:
Stock options and performance shares	3.4		3.1		2.5
Total	227.6		231.1		232.2
Net income Per Common Share
Basic	$	27.83	$	21.76	$	12.93
Diluted	$	27.43	$	21.47	$	12.79

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. INCOME TAXES

Enactment of the One Big Beautiful Bill Act of 2025

On July 4, 2025, the U.S. enacted a budget reconciliation package known as the One Big Beautiful Bill Act of 2025 (OBBBA), which includes both tax and non-tax provisions. The changes resulting from the tax provisions in OBBBA did not have a material impact on the Company’s income tax expense and results of operations, financial position or liquidity.

Components of Income Tax Expense

The following table presents the components of the Company’s U.S. federal and state, as well as foreign income tax expense (benefit) included in the amounts reported in the Company’s consolidated financial statements.


(for the year ended December 31, in millions)	2025		2024		2023
Composition of income tax expense included in the consolidated statement of income
Current expense:
Federal	$	1,171	$	1,252	$	477
Foreign	89		70		20
State	17		14		7
Total current tax expense	1,277		1,336		504
Deferred expense (benefit):
Federal	210		(152)		(163)
Foreign	21		(3)		39
Total deferred tax expense (benefit)	231		(155)		(124)
Total income tax expense included in the consolidated statement of income	1,508		1,181		380
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)	620		(79)		520
Total income tax expense included in the consolidated financial statements	$	2,128	$	1,102	$	900

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. INCOME TAXES (Continued)

Tax Rate Reconciliation

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.


	2025
(for the year ended December 31, in millions)	Amount			Percentage
Income before income taxes
Federal	$	7,372
Foreign	424
Total income before income taxes	7,796
Effective tax rate
Federal statutory tax rate	21		%
Federal statutory income tax rate	1,637			21.0	%
Nontaxable or nondeductible items
Nontaxable investment income	(129)			(1.7)	%
Other	(22)			(0.3)	%
Other adjustments, net	22			0.3	%
Effective tax rate	$	1,508		19.3	%


(for the year ended December 31, in millions)	2024			2023
Income before income taxes
U.S.	$	5,947		$	3,122
Foreign	233			249
Total income before income taxes	6,180			3,371
Effective tax rate
Statutory tax rate	21		%	21		%
Expected federal income tax expense	1,298			708
Tax effect of:
Nontaxable investment income	(122)			(132)
Audit reserve	9			(205)
Other, net	(4)			9
Total income tax expense	$	1,181		$	380
Effective tax rate	19		%	11		%

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. This amount is included in the Audit reserve line in the table above.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. INCOME TAXES (Continued)

Income Taxes Paid


(for the year ended December 31, in millions)	2025
Income taxes paid:
Federal	$	1,159
Foreign:
United Kingdom	65
Other	33
Total foreign	98
State	17
Total income taxes paid	$	1,274

The Company paid income taxes of $1.31 billion and $201 million during the years ended December 31, 2024 and 2023, respectively. The current income tax payable of $309 million and $301 million as of December 31, 2025 and 2024, respectively, was included in other liabilities 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.


(as of December 31, in millions)	2025		2024
Deferred tax assets
Investments	$	61	$	659
Claims and claim adjustment expense reserves	780		708
Unearned premium reserves	854		833
Internally developed software	—		303

Other	247		261
Total gross deferred tax assets	1,942		2,764
Less: valuation allowance	47		38
Adjusted gross deferred tax assets	1,895		2,726
Deferred tax liabilities

Deferred acquisition costs	691		673

Intangibles	90		87
Depreciation	114		118
Internally developed software	8		—
Other	63		86
Total gross deferred tax liabilities	966		964
Less amounts classified as held for sale	42		—
Net deferred tax asset	$	887	$	1,762

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 $9 million in 2025, primarily driven by an increase in the Company’s Canadian subsidiaries. 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 TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. INCOME TAXES (Continued)

Net Operating Losses

For tax return purposes, as of December 31, 2025, 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. Substantially all the United States and United Kingdom NOL carryforwards have been recognized in the consolidated financial statements and included in net deferred tax assets. None of the Republic of Ireland and Canada NOL carryforwards have been recognized in the consolidated financial statements and 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	$	21	2035-2036

Canada	$	125	2035-2045
Republic of Ireland	$	115	None
United Kingdom	$	104	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, 2025 and 2024.


(in millions)	2025		2024
Balance as of January 1	$	17	$	14
Additions for tax positions of prior years	—		1
Reductions for tax positions of prior years	(1)		(1)
Additions based on tax positions related to current year	3		4
Expiration of statute of limitations	(3)		(1)
Balance as of December 31	$	16	$	17

Included in the balances as of December 31, 2025 and 2024 were $15 million and $17 million, respectively, of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate. Also included in the balances as of those dates were $1 million and $0 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, 2025, 2024 and 2023, the Company recognized approximately $1 million, $5 million and $3 million in interest, respectively. The Company had approximately $12 million and $11 million accrued for the payment of interest as of December 31, 2025 and 2024, 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 2022.

14. SHARE-BASED INCENTIVE COMPENSATION

The Company has a share-based incentive compensation plan, The Travelers Companies, Inc. Amended and Restated 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 under the various settlement alternatives allowed under the 2023 Incentive Plan, and the vesting of other equity awards.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SHARE-BASED INCENTIVE COMPENSATION (Continued)

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. In May 2025, the Company’s shareholders authorized an additional 2.1 million shares of the Company’s common stock for grant under the 2023 Incentive Plan. The following are not counted towards the combined 7,889,184 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 7,889,184 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 based on historical exercise behavior and forfeitures by employees adjusted for certain other factors expected to differ from historical trends, if any. 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 U.S. Treasury rates 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:

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SHARE-BASED INCENTIVE COMPENSATION (Continued)


(for the year ended December 31,)	2025			2024			2023
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	26.22		%	25.80		%	25.63% - 25.99%
Weighted average volatility	26.22		%	25.80		%	25.63		%
Expected annual dividend per share	$4.20			$4.00			$3.72
Risk-free rate	4.39		%	3.99		%	3.63% - 3.89%
Additional information
Weighted average grant-date fair value of options granted (per share)	$	68.92		$	56.45		$	47.77
Total intrinsic value of options exercised during the year (in millions)	$	186		$	205		$	58

A summary of stock option activity under the 2023 Incentive Plan and the legacy plans as of and for the year ended December 31, 2025 is as follows:


Stock Option Activity	Number	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining	Aggregate Intrinsic Value ($ in millions)
Outstanding, beginning of year	7,005,747	$	153.89
Original grants	648,808	244.06
Exercised	(1,405,737)	136.09
Forfeited or expired	(54,162)	212.45
Outstanding, end of year	6,194,656	$	166.86	5.5 years	$	763
Vested at end of year (1)	5,557,170	$	161.26	5.2 years	$	716
Exercisable at end of year	4,142,265	$	143.68	4.3 years	$	606

(1)Represents awards for which the requisite service has been rendered, including those that are retirement eligible.

Subsequent to the balance sheet date, on February 3, 2026, the Company granted 572,936 stock option awards under the 2023 Incentive Plan with an exercise price of $288.23 per share. The fair value attributable to the stock option awards on the date of grant was $81.68 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 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 fair value of restricted stock units and deferred stock units was measured at the market price of the Company’s common stock at date of grant.

The Company also has a Performance Share Awards program 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. The performance goals for outstanding performance share awards are based on the Company’s adjusted return on

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SHARE-BASED INCENTIVE COMPENSATION (Continued)

equity over a three-year performance period and for the 2025 grant year include the attainment of certain market-based goals over the performance period.

Performance shares granted in 2023 and 2024 may vest in shares of the Company’s stock contingent upon the Company attaining the relevant performance period return on equity (ROE) minimum threshold 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), depending on the actual return on equity attained. The value of these performance shares was measured at the market price of the Company’s common stock at the date of grant.

Beginning with the 2025 performance share award, the award incorporates a modifier to the performance share payout based on relative total shareholder return. This modifier adjusts final payouts higher or lower by a maximum of 20% percentage points based on the Company’s total shareholder return relative to the total shareholder return for companies included in the S&P 500 Financials Index (Peer Companies), in each case over the applicable performance period. The range of performance shares that may vest under the plan is 0% to an overall maximum payout of 200%. The grant date fair value of the 2025 award, which includes this market-based modifier, was determined using the risk neutral Monte Carlo simulation model and using the assumptions noted in the following table. The expected term of newly granted performance shares is based on the remaining performance period as of the valuation date. The expected volatility assumption for the Company and the Peer Companies is based on each entity’s historical stock price volatility over the last 2.9 years on the date of valuation. The expected dividend yield assumes dividends distributed during the period are reinvested. The risk-free interest rate for each performance share is the interpolated U.S. Treasury rates commensurate with the expected term of the performance share on the date of grant. The following table provides a summary of the assumptions used in estimating the fair value of the 2025 performance awards on grant date:


Assumptions used in estimating fair value of performance awards on grant date	2025
Expected term	2.9 years
Expected volatility	28.16	%
Expected dividend yield	0.00	%
Risk-free interest rate	4.20	%

Under the 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, 2025, 2024 and 2023 was $267 million, $253 million and $164 million, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SHARE-BASED INCENTIVE COMPENSATION (Continued)

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, 2025 is as follows:


	Restricted and Deferred Stock Units				Performance Shares
Restricted Stock and Performance Share Activity	Number		Weighted Average Grant-Date Fair Value		Number		Weighted Average Grant-Date Fair Value
Nonvested, beginning of year	1,100,989		$	192.83	1,155,648		$	200.66
Granted	493,676		247.31		252,956	(1)	251.19
Vested	(451,967)	(2)	196.26		(582,010)	(3)	189.02
Forfeited	(81,137)		210.93		(18,078)		216.75
Performance-based adjustment	—		—		234,724	(4)	229.56
Nonvested, end of year	1,061,561		$	215.33	1,043,240		$	225.63

(1)Represents the number of performance shares at target ROE at date of grant. The weighted average grant date fair value assumes attaining 100% of the performance shares granted.

(2)Represents the number of awards for which the requisite service has been rendered.

(3)Represents 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.

(4)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 2023 through 2025. Because the 2025 award is subject to both a performance and market-based condition modifier, the estimated fair value of the award is updated from the grant date fair value to reflect the estimation of the impact of the award’s market-based modifier.

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 165 at the beginning of the year and 114 at the end of the year and the number of nonvested dividend equivalent shares related to performance shares was 35,112 at the beginning of the year and 26,815 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.

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 and, if applicable, a market-based modifier, 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, 2025, 2024 and 2023 was $256 million, $260 million and $214 million, respectively. Included in these amounts are compensation cost adjustments of $55 million, $68 million and $39 million, for the years ended December 31, 2025, 2024 and 2023, 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 $43 million, $43 million and $36 million for the years ended December 31, 2025, 2024 and 2023, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SHARE-BASED INCENTIVE COMPENSATION (Continued)

As of December 31, 2025, there was $255 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 $214 million, $321 million and $141 million in 2025, 2024 and 2023, respectively. The tax benefit for tax deductions from employee stock options exercised during 2025, 2024 and 2023 totaled $31 million, $39 million and $11 million, respectively.

Awards Made Subsequent to the Balance Sheet Date

On February 3, 2026, the Company granted 607,689 common stock awards in the form of restricted stock units, deferred stock units and performance share awards under the 2023 Incentive Plan to participating officers, non-employee directors and other key employees.

Included in the total common stock awards granted were 382,510 shares of restricted stock units and deferred stock units with a fair value per share attributable to the units of $288.23 and 225,179 performance shares having a fair value at grant date of $300.82.

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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)

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.


(as of and for the year ended December 31, in millions)		Qualified Domestic Pension Plan						Nonqualified and Foreign Pension Plans						Total
	2025			2024			2025			2024			2025			2024
Change in projected benefit obligation:
Benefit obligation as of beginning of year		$	3,245		$	3,454		$	186		$	184		$	3,431		$	3,638
Benefits earned		110			111			4			5			114			116
Interest cost on benefit obligation		167			163			9			9			176			172
Actuarial (gain) loss		127			(159)			4			4			131			(155)
Benefits paid		(234)			(324)			(13)			(14)			(247)			(338)


Foreign currency exchange rate change		—			—			5			(2)			5			(2)
Benefit obligation as of end of year		$	3,415		$	3,245		$	195		$	186		$	3,610		$	3,431
Change in plan assets:
Fair value of plan assets as of beginning of year		$	4,234		$	4,149		$	100		$	97		$	4,334		$	4,246
Actual return on plan assets		501			409			4			8			505			417
Company contributions		—			—			10			12			10			12
Benefits paid		(234)			(324)			(13)			(14)			(247)			(338)

Foreign currency exchange rate change		—			—			7			(3)			7			(3)
Fair value of plan assets as of end of year		4,501			4,234			108			100			4,609			4,334
Funded status of plan as of end of year		$	1,086		$	989		$	(87)		$	(86)		$	999		$	903
Amounts recognized in the consolidated balance sheet consist of:
Accrued over-funded benefit plan assets		$	1,086		$	989		$	38		$	32		$	1,124		$	1,021
Accrued under-funded benefit plan liabilities		—			—			(125)			(118)			(125)			(118)
Total		$	1,086		$	989		$	(87)		$	(86)		$	999		$	903
Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss		$	268		$	381		$	20		$	14		$	288		$	395
Prior service cost (benefit)		—			—			1			1			1			1
Total		$	268		$	381		$	21		$	15		$	289		$	396

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)


	Postretirement Benefit Plans
(as of and for the year ended December 31, in millions)	2025		2024
Change in accumulated benefit obligation:
Benefit obligation as of beginning of year	$	62	$	92
Benefits earned	—		—
Interest cost on benefit obligation	3		4
Actuarial gain	—		(28)
Benefits paid	(2)		(5)
Foreign currency exchange rate change	1		(1)
Benefit obligation as of end of year	$	64	$	62
Change in plan assets:
Fair value of plan assets as of beginning of year	$	6	$	7
Actual return on plan assets	1		—
Company contributions	1		4
Benefits paid	(2)		(5)
Fair value of plan assets as of end of year	6		6
Funded status of plan as of end of year	$	(58)	$	(56)
Amounts recognized in the consolidated balance sheet consist of:
Accrued under-funded benefit plan liability	$	(58)	$	(56)
Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial gain	$	(98)	$	(110)
Prior service benefit	(2)		(4)
Total	$	(100)	$	(114)

The total accumulated benefit obligation for the Company’s defined benefit pension plans was $3.43 billion and $3.27 billion as of December 31, 2025 and 2024, respectively. The qualified domestic pension plan accounted for $3.24 billion and $3.09 billion of the total accumulated benefit obligation as of December 31, 2025 and 2024, respectively, whereas the nonqualified and foreign plans accounted for $189 million and $180 million of the total accumulated benefit obligation as of December 31, 2025 and 2024, respectively.

For pension plans with a projected benefit obligation in excess of plan assets, the aggregate projected benefit obligation was $125 million and $118 million as of December 31, 2025 and 2024, respectively, and the aggregate plan assets were $0 million as of both December 31, 2025 and 2024. For pension plans with an accumulated benefit obligation in excess of plan assets, the aggregate accumulated benefit obligation was $120 million and $112 million as of December 31, 2025 and 2024, respectively, and the aggregate plan assets were $0 million as of both December 31, 2025 and 2024. For postretirement benefit plans with an accumulated benefit obligation in excess of plan assets, the aggregate accumulated benefit obligation was $64 million and $62 million as of December 31, 2025 and 2024, respectively, and the aggregate plan assets were $6 million as of both December 31, 2025 and 2024.

The $127 million actuarial loss experienced in 2025 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 as of December 31, 2025. The $159 million actuarial gain experienced in 2024 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 as of December 31, 2024.

The Company has discretion regarding whether to provide additional funding and when to provide such funding to its qualified domestic pension plan. In 2025, 2024 and 2023, 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 2026, and the Company has not

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)

determined whether additional funding will be made during 2026. With respect to the Company’s foreign pension plans, there are no significant required contributions in 2026.

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)	2025		2024		2023		2025		2024		2023
Net Periodic Benefit Cost (Benefit):
Service cost	$	114	$	116	$	108	$	—	$	—	$	—
Non-service cost (benefit):
Interest cost on benefit obligation	176		172		176		3		4		5
Expected return on plan assets	(281)		(298)		(311)		(1)		—		—

Amortization of unrecognized:
Prior service benefit	—		—		(1)		(2)		(3)		(3)
Net actuarial (gain) loss	14		7		—		(12)		(9)		(9)
Total non-service cost (benefit)	(91)		(119)		(136)		(12)		(8)		(7)
Net periodic benefit cost (benefit)	23		(3)		(28)		(12)		(8)		(7)
Other Changes in Benefit Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):
Prior service benefit	—		—		—		—		—		—
Net actuarial gain	(93)		(274)		(114)		—		(28)		(6)
Foreign currency exchange rate change	—		—		—		—		1		—

Amortization of prior service benefit	—		—		1		2		3		3
Amortization of net actuarial gain (loss)	(14)		(7)		—		12		9		9
Total other changes recognized in other comprehensive income (loss)	(107)		(281)		(113)		14		(15)		6
Total other changes recognized in net periodic benefit cost (benefit) and other comprehensive income (loss)	$	(84)	$	(284)	$	(141)	$	2	$	(23)	$	(1)

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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, 2025, 2024 and 2023.


	Pension Plans						Postretirement Benefit Plans
(for the year ended December 31, in millions)	2025		2024		2023		2025		2024		2023
Service Cost:
Net investment income	$	1	$	1	$	—	$	—	$	—	$	—
Claims and claim adjustment expenses	44		45		44		—		—		—
General and administrative expenses	69		70		64		—		—		—
Total service cost	114		116		108		—		—		—

Non-Service Cost (Benefit):
Net investment income	(1)		(1)		(1)		—		—		—
Claims and claim adjustment expenses	(34)		(45)		(54)		(5)		(3)		(3)
General and administrative expenses	(56)		(73)		(81)		(7)		(5)		(4)
Total non-service cost (benefit)	(91)		(119)		(136)		(12)		(8)		(7)
Net periodic benefit cost (benefit)	$	23	$	(3)	$	(28)	$	(12)	$	(8)	$	(7)

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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.


(as of and for the year ended December 31,)	2025		2024
Assumptions used to determine benefit obligations
Discount rate:
Qualified domestic pension plan	5.53	%	5.69	%
Nonqualified domestic pension plan	5.12	%	5.51	%
Domestic postretirement benefit plan	5.06	%	5.48	%
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	5.81	%	5.10	%
Interest cost	5.36	%	4.91	%
Nonqualified domestic pension plan:
Service cost	5.58	%	4.98	%
Interest cost	5.25	%	4.86	%
Domestic postretirement benefit plan:
Interest cost	5.24	%	4.84	%
Expected long-term rate of return on assets:
Qualified domestic pension plan	7.00	%	7.00	%
Domestic postretirement benefit plan	4.00	%	4.00	%
Assumed health care cost trend rates (1)
Following year	(7.21)	%	(18.04)	%
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	2035		2033

(1)The 2026 assumed health care cost trend rate of (7.21)% reflects known negotiated medical premium rate changes and expected drug reimbursements to the Company’s baseline health care cost trend rate of 9.75%. After 2026, 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 2035. The 2025 assumed health care cost trend rate of (18.04)% reflects known negotiated medical premium rate changes and expected drug reimbursements to the Company’s baseline health care cost trend rate of 10.00%.

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)

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.

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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)

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.


(as of December 31, 2025, 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	$	594	$	594	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	160		—		160		—
Debt securities issued by foreign governments	36		—		36		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	7		—		7		—
Corporate and all other bonds	767		—		767		—
Total fixed maturities	1,564		594		970		—
Mutual funds
Equity mutual funds	1,265		1,259		6		—
Bond mutual funds	94		91		3		—
Total mutual funds	1,359		1,350		9		—
Equity securities	1,533		1,533		—		—
Other investments	1		—		—		1
Cash and short-term securities
U.S. Treasury securities	76		76		—		—

Other	76		76		—		—
Total cash and short-term securities	152		152		—		—
Total	$	4,609	$	3,629	$	979	$	1

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)


(as of December 31, 2024, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
Obligations of U.S. states, municipalities and political subdivisions	$	109	$	—	$	109	$	—
Debt securities issued by foreign governments	34		—		34		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	8		—		8		—
Corporate and all other bonds	751		—		751		—
Total fixed maturities	902		—		902		—
Mutual funds
Equity mutual funds	1,178		1,172		6		—
Bond mutual funds	667		636		31		—
Total mutual funds	1,845		1,808		37		—
Equity securities	1,401		1,401		—		—
Other investments	1		—		—		1
Cash and short-term securities
U.S. Treasury securities	108		108		—		—

Other	77		62		15		—
Total cash and short-term securities	185		170		15		—
Total	$	4,334	$	3,379	$	954	$	1

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 $6 million as of both December 31, 2025 and 2024, 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
2026	$	292	$	5
2027	298		6
2028	303		6
2029	304		6
2030	301		6
2031 through 2035	1,478		27

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)

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 $180 million, $170 million and $154 million for the years ended December 31, 2025, 2024 and 2023, 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 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)	2025			2024			2023

Lease cost
Operating leases	$	64		$	73		$	76
Short-term leases (1)	2			3			3

Lease expense	66			76			79
Less: sublease income (2)	—			—			—
Net lease cost	$	66		$	76		$	79

Other information on operating leases

Cash payments to settle a lease liability reported in cash flows	$	74		$	79		$	87
Right-of-use assets obtained in exchange for new lease liabilities	$	30		$	95		$	37
Weighted average discount rate	4.06		%	3.82		%
Weighted average remaining lease term	5.4 years			5.7 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 TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. LEASES (Continued)

The following table presents the contractual maturities of the Company’s lease liabilities.


(in millions)	Real Estate Lease Liability

2026	$	69
2027	58
2028	51
2029	39
2030	19
Thereafter	59
Total undiscounted lease payments	295
Less: present value adjustment	50
Operating lease liability	$	245

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.

Asbestos 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--related exposures that are the subject of related coverage litigation. The Company is defending asbestos-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 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 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 $1.41 billion and $1.49 billion as of December 31, 2025 and 2024, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. CONTINGENCIES, COMMITMENTS AND GUARANTEES (Continued)

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 $352 million as of December 31, 2025.

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 as of December 31, 2025, 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. The Company does not expect to make any material payments related to these guarantees.

18. NONCASH INVESTING AND FINANCING ACTIVITIES

The Company issued common stock during 2025 and 2024 in connection with its stock compensation plan which resulted in noncash financing transactions totaling $44 million and $32 million, respectively, from the net share settlement of employee stock options. In an unrelated transaction, the Company received a beneficial interest totaling $32 million in a noncash investing activity related to the restructuring of the Massachusetts Property Insurance Underwriting Association, a FAIR Plan, during 2024. There were no other material noncash financing or investing activities during the years ended December 31, 2025, 2024 and 2023.

Previous: Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK · Next: Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE