Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

(in millions, except per share amounts)


	Three Months Ended March 31,
	2022		2021

Revenues
Premiums	$	8,014	$	7,386
Net investment income	637		701
Fee income	103		101
Net realized investment gains (losses)	(23)		44
Other revenues	78		81

Total revenues	8,809		8,313

Claims and expenses
Claims and claim adjustment expenses	5,039		4,970
Amortization of deferred acquisition costs	1,310		1,207
General and administrative expenses	1,191		1,163
Interest expense	87		82
Total claims and expenses	7,627		7,422

Income before income taxes	1,182		891
Income tax expense	164		158
Net income	$	1,018	$	733

Net income per share
Basic	$	4.20	$	2.89
Diluted	$	4.15	$	2.87

Weighted average number of common shares outstanding
Basic	240.9		252.1
Diluted	243.7		254.1

Cash dividends declared per common share	$	0.88	$	0.85

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(in millions)


	Three Months Ended March 31,
	2022		2021

Net income	$	1,018	$	733

Other comprehensive loss
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	(4,829)		(1,596)
Having credit losses recognized in the consolidated statement of income	(1)		—
Net changes in benefit plan assets and obligations	11		25
Net changes in unrealized foreign currency translation	2		26
Other comprehensive loss before income taxes	(4,817)		(1,545)
Income tax benefit	(1,022)		(334)
Other comprehensive loss, net of taxes	(3,795)		(1,211)
Comprehensive loss	$	(2,777)	$	(478)

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)


	March 31, 2022		December 31, 2021
	(Unaudited)
Assets
Fixed maturities, available for sale, at fair value (amortized cost $76,158 and $74,751; allowance for expected credit losses of $4 and $3)	$	74,386	$	77,810
Equity securities, at fair value (cost $761 and $749)	880		893
Real estate investments	975		979
Short-term securities	3,467		3,836
Other investments	3,956		3,857
Total investments	83,664		87,375
Cash	752		761
Investment income accrued	570		615
Premiums receivable (net of allowance for expected credit losses of $89 and $107)	8,593		8,085
Reinsurance recoverables (net of allowance for estimated uncollectible reinsurance of $135 and $141)	8,734		8,452
Ceded unearned premiums	1,266		902
Deferred acquisition costs	2,645		2,542
Deferred taxes	662		—
Contractholder receivables (net of allowance for expected credit losses of $19 and $21)	3,901		3,890
Goodwill	4,001		4,008
Other intangible assets	301		306
Other assets	3,503		3,530
Total assets	$	118,592	$	120,466

Liabilities
Claims and claim adjustment expense reserves	$	57,572	$	56,907
Unearned premium reserves	17,193		16,469
Contractholder payables	3,920		3,911
Payables for reinsurance premiums	694		384
Deferred taxes	—		289
Debt	7,291		7,290
Other liabilities	6,391		6,329
Total liabilities	93,061		91,579

Shareholders’ equity
Common stock (1,750.0 shares authorized; 240.0 and 241.2 shares issued and outstanding)	24,348		24,154
Retained earnings	42,359		41,555
Accumulated other comprehensive income (loss)	(2,602)		1,193
Treasury stock, at cost (544.8 and 541.5 shares)	(38,574)		(38,015)
Total shareholders’ equity	25,531		28,887
Total liabilities and shareholders’ equity	$	118,592	$	120,466

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 (Unaudited)

(in millions)


	Three Months Ended March 31,
	2022		2021

Common stock
Balance, beginning of period	$	24,154	$	23,743
Employee share-based compensation	135		108
Compensation amortization under share-based plans and other changes	59		54
Balance, end of period	24,348		23,905

Retained earnings
Balance, beginning of period	41,555		38,771


Net income	1,018		733
Dividends	(214)		(216)
Other	—		(3)
Balance, end of period	42,359		39,285

Accumulated other comprehensive income (loss), net of tax
Balance, beginning of period	1,193		2,502


Other comprehensive loss	(3,795)		(1,211)
Balance, end of period	(2,602)		1,291

Treasury stock, at cost
Balance, beginning of period	(38,015)		(35,815)
Treasury stock acquired — share repurchase authorizations	(500)		(356)
Net shares acquired related to employee share-based compensation plans	(59)		(41)
Balance, end of period	(38,574)		(36,212)

Total shareholders’ equity	$	25,531	$	28,269

Common shares outstanding
Balance, beginning of period	241.2		252.4
Treasury stock acquired — share repurchase authorizations	(2.9)		(2.4)
Net shares issued under employee share-based compensation plans	1.7		1.5
Balance, end of period	240.0		251.5

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(in millions)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities
Net income	$	1,018	$	733
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment (gains) losses	23		(44)
Depreciation and amortization	234		235
Deferred federal income tax expense	40		56
Amortization of deferred acquisition costs	1,310		1,207
Equity in income from other investments	(118)		(200)
Premiums receivable	(509)		(333)
Reinsurance recoverables	(282)		12
Deferred acquisition costs	(1,413)		(1,258)
Claims and claim adjustment expense reserves	679		777
Unearned premium reserves	727		509
Other	(443)		(504)
Net cash provided by operating activities	1,266		1,190
Cash flows from investing activities
Proceeds from maturities of fixed maturities	1,879		2,064
Proceeds from sales of investments:
Fixed maturities	1,044		1,238
Equity securities	63		25

Other investments	81		79
Purchases of investments:
Fixed maturities	(4,409)		(4,754)
Equity securities	(63)		(19)
Real estate investments	(9)		(5)
Other investments	(135)		(97)
Net sales of short-term securities	367		524
Securities transactions in the course of settlement	613		269
Acquisitions, net of cash acquired	(4)		(38)
Other	(84)		(60)
Net cash used in investing activities	(657)		(774)

Cash flows from financing activities
Treasury stock acquired — share repurchase authorizations	(500)		(356)
Treasury stock acquired — net employee share-based compensation	(59)		(41)
Dividends paid to shareholders	(213)		(214)


Issuance of common stock — employee share options	159		134
Net cash used in financing activities	(613)		(477)
Effect of exchange rate changes on cash	(5)		3
Net decrease in cash	(9)		(58)
Cash at beginning of year	761		721
Cash at end of period	$	752	$	663

Supplemental disclosure of cash flow information
Income taxes paid	$	10	$	58
Interest paid	$	59	$	59

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Basis of Presentation

The interim consolidated financial statements include the accounts of The Travelers Companies, Inc. (together with its subsidiaries, the Company). These financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP) and are unaudited. In the opinion of the Company’s management, all adjustments necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. All material intercompany transactions and balances have been eliminated. The accompanying interim consolidated financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the Company’s 2021 Annual Report).

The preparation of the interim consolidated financial statements in conformity with 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 interim consolidated financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to the 2021 financial statements to conform to the 2022 presentation.

Adoption of Accounting Standards

For information regarding accounting standards that the Company adopted during the periods presented, see note 1 of notes to the consolidated financial statements in the Company’s 2021 Annual Report.

2. SEGMENT INFORMATION

Nature of Operations

The Company’s results are reported in the following three business segments — Business Insurance, Bond & Specialty Insurance and Personal Insurance. These segments reflect the manner in which the Company’s businesses are currently managed and represent an aggregation of products and services based on the type of customer, how the business is marketed and the manner in which risks are underwritten. For more information regarding the Company’s nature of operations, see the “Nature of Operations*”* section of note 1 of notes to the consolidated financial statements in the Company’s 2021 Annual Report.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2. SEGMENT INFORMATION, Continued

The following tables summarize the components of the Company’s revenues, income and total assets by reportable business segments:


(For the three months ended March 31, in millions)	Business Insurance		Bond & Specialty Insurance		Personal Insurance		Total Reportable Segments

2022
Premiums	$	4,071	$	820	$	3,123	$	8,014
Net investment income	468		59		110		637
Fee income	96		—		7		103
Other revenues	53		4		21		78
Total segment revenues (1)	$	4,688	$	883	$	3,261	$	8,832
Segment income (1)	$	669	$	217	$	225	$	1,111

2021
Premiums	$	3,799	$	743	$	2,844	$	7,386
Net investment income	523		59		119		701
Fee income	95		—		6		101
Other revenues	53		5		23		81
Total segment revenues (1)	$	4,470	$	807	$	2,992	$	8,269
Segment income (1)	$	317	$	137	$	314	$	768

(1)Segment revenues for reportable business segments exclude net realized investment gains (losses) and revenues included in "interest expense and other." Segment income for reportable business segments equals net income excluding 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 (Unaudited), Continued

2. SEGMENT INFORMATION, Continued

Business Segment Reconciliations


	Three Months Ended March 31,
(in millions)	2022		2021
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation	$	830	$	811
Commercial automobile	713		695
Commercial property	608		531
General liability	688		607
Commercial multi-peril	967		870
Other	17		14
Total Domestic	3,823		3,528
International	248		271
Total Business Insurance	4,071		3,799
Bond & Specialty Insurance:
Domestic:
Fidelity and surety	274		266
General liability	373		331
Other	55		56
Total Domestic	702		653
International	118		90
Total Bond & Specialty Insurance	820		743
Personal Insurance:
Domestic:
Automobile	1,458		1,370
Homeowners and Other	1,496		1,308
Total Domestic	2,954		2,678
International	169		166
Total Personal Insurance	3,123		2,844
Total earned premiums	8,014		7,386
Net investment income	637		701
Fee income	103		101
Other revenues	78		81
Total segment revenues	8,832		8,269

Net realized investment gains (losses)	(23)		44
Total revenues	$	8,809	$	8,313
Income reconciliation, net of tax
Total segment income	$	1,111	$	768
Interest Expense and Other (1)	(74)		(69)
Core income	1,037		699
Net realized investment gains (losses)	(19)		34

Net income	$	1,018	$	733

(1) The primary component of Interest Expense and Other was after-tax interest expense of $69 million and $65 million for the three months ended March 31, 2022 and 2021, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2. SEGMENT INFORMATION, Continued


(in millions)	March 31, 2022		December 31, 2021
Asset reconciliation
Business Insurance	$	89,036	$	90,353
Bond & Specialty Insurance	10,171		10,146
Personal Insurance	18,527		18,983
Total assets by reportable segment	117,734		119,482
Other assets (1)	858		984
Total consolidated assets	$	118,592	$	120,466

(1)The primary components of other assets at both March 31, 2022 and December 31, 2021 were accrued over-funded benefit plan assets related to the Company’s qualified domestic pension plan and other intangible assets.

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
(at March 31, 2022, in millions)			Gains		Losses
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	3,356	$	—	$	7	$	190	$	3,173
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation	19,345		—		275		821		18,799
Revenue	11,585		—		172		396		11,361
State general obligation	1,180		—		19		46		1,153
Pre-refunded	3,882		—		93		—		3,975
Total obligations of U.S. states, municipalities and political subdivisions	35,992		—		559		1,263		35,288
Debt securities issued by foreign governments	1,073		—		—		32		1,041
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1,791		—		23		54		1,760
Corporate and all other bonds	33,946		4		257		1,075		33,124
Total	$	76,158	$	4	$	846	$	2,614	$	74,386

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3. INVESTMENTS, Continued


	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized				Fair Value
(at December 31, 2021, in millions)			Gains		Losses
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	3,574	$	—	$	20	$	32	$	3,562
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation	18,668		—		1,045		46		19,667
Revenue	11,274		—		693		27		11,940
State general obligation	1,158		—		67		2		1,223
Pre-refunded	3,825		—		207		—		4,032
Total obligations of U.S. states, municipalities and political subdivisions	34,925		—		2,012		75		36,862
Debt securities issued by foreign governments	1,041		—		7		7		1,041
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1,754		—		68		5		1,817
Corporate and all other bonds	33,457		3		1,249		175		34,528
Total	$	74,751	$	3	$	3,356	$	294	$	77,810

Pre-refunded bonds of $3.98 billion and $4.03 billion at March 31, 2022 and December 31, 2021, respectively, were bonds for which U.S. states or municipalities have established irrevocable trusts, almost exclusively comprised of U.S. Treasury securities and obligations of U.S. government and government agencies and authorities. These trusts were created to fund the payment of principal and interest due under the bonds.

Proceeds from sales of fixed maturities classified as available for sale were $1.04 billion and $1.24 billion during the three months ended March 31, 2022 and 2021, respectively. Gross gains of $5 million and $15 million and gross losses of $2 million and $1 million were realized on those sales during the three months ended March 31, 2022 and 2021, respectively.

Equity Securities

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


							Fair
(at March 31, 2022, in millions)	Cost		Gross Gains		Gross Losses		Value
Common stock	$	705	$	118	$	7	$	816
Non-redeemable preferred stock	56		9		1		64
Total	$	761	$	127	$	8	$	880


							Fair
(at December 31, 2021, in millions)	Cost		Gross Gains		Gross Losses		Value
Common stock	$	694	$	137	$	4	$	827
Non-redeemable preferred stock	55		11		—		66
Total	$	749	$	148	$	4	$	893

For the three months ended March 31, 2022 and 2021, the Company recognized $(14) million and $23 million of net gains (losses) on equity securities still held as of March 31, 2022 and 2021, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), 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 at March 31, 2022 and December 31, 2021, 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 herein and in note 4 of notes to the consolidated financial statements in the Company’s 2021 Annual Report. The Company also relies upon estimates of several factors in its review and evaluation of individual investments, using the process described in note 1 of notes to the consolidated financial statements in the Company’s 2021 Annual Report to determine whether a credit loss impairment exists.


	Less than 12 months				12 months or longer				Total
(at March 31, 2022, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,344	$	167	$	228	$	23	$	2,572	$	190
Obligations of U.S. states, municipalities and political subdivisions	10,923		1,100		1,177		163		12,100		1,263
Debt securities issued by foreign governments	633		21		145		11		778		32
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1,336		53		21		1		1,357		54
Corporate and all other bonds	15,170		836		1,964		239		17,134		1,075
Total	$	30,406	$	2,177	$	3,535	$	437	$	33,941	$	2,614


	Less than 12 months				12 months or longer				Total
(at December 31, 2021, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,438	$	32	$	5	$	—	$	2,443	$	32
Obligations of U.S. states, municipalities and political subdivisions	3,873		69		153		6		4,026		75
Debt securities issued by foreign governments	452		7		7		—		459		7
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	426		5		1		—		427		5
Corporate and all other bonds	7,306		153		436		22		7,742		175
Total	$	14,495	$	266	$	602	$	28	$	15,097	$	294

At March 31, 2022, the amount of gross unrealized losses for all fixed maturity investments reported at fair value for which fair value was less than 80% of amortized cost was $142 million due to higher interest rates.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3. INVESTMENTS, Continued

Credit Impairment Charges

The following table presents changes in the allowance for expected credit losses on fixed maturities classified as available for sale for the category of Corporate and All Other Bonds (no other categories of fixed maturities currently have an allowance for expected credit losses):


	Fixed Maturities
	Corporate and All Other Bonds
(in millions)	At and For the Three Months Ended March 31, 2022		At and For the Three Months Ended March 31, 2021

Balance, beginning of period	$	3	$	2
Additions for expected credit losses on securities where no credit losses were previously recognized	—		—
Additions (reductions) for expected credit losses on securities where credit losses were previously recognized	1		—
Reductions due to sales/defaults of credit-impaired securities	—		—
Reductions for impairments of securities which the Company intends to sell or more likely than not will be required to sell (1)	—		—
Balance, end of period	$	4	$	2

(1)Credit impairment charges recognized in net realized investment gains (losses) for both the three months ended March 31, 2022 and 2021 included no credit losses on fixed maturity securities which the Company intends to sell.

Total net credit impairment charges included in net realized investment gains (losses) in the consolidated statement of income were $1 million and $0 million for the three months ended March 31, 2022 and 2021, respectively. Credit losses related to the fixed maturity portfolio for the three months ended March 31, 2022 and 2021 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.

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.

4. FAIR VALUE MEASUREMENTS

The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the fair value accounting guidance hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. The level in the fair value hierarchy within which the fair value measurement is reported is based on the lowest level input that is significant to the measurement in its entirety. The three levels of the hierarchy are as follows:

Level 1 - Unadjusted quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4. FAIR VALUE MEASUREMENTS, Continued

Level 3 - Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.

Valuation of Investments Reported at Fair Value in Financial Statements

The Company utilized a pricing service to estimate fair value measurements for approximately 99% of its fixed maturities at both March 31, 2022 and December 31, 2021.

While the vast majority of the Company’s fixed maturities are included in Level 2, the Company holds a number of municipal bonds and 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.

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 on the investment’s equity, 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 $345 million and $343 million for these investments at March 31, 2022 and December 31, 2021, respectively, in the amounts disclosed in Level 3.

For more information regarding the valuation of the Company’s fixed maturities, equity securities and other investments, see note 4 of notes to the consolidated financial statements in the Company’s 2021 Annual Report.

Other Liabilities

The Company has a put/call option that was entered into in connection with a business acquisition that allows the Company to acquire the remaining shares of the acquired company at a future date. The fair value of the put/call option at both March 31, 2022 and December 31, 2021 was $3 million, and was determined using an internal model and is based on the acquired company's financial performance, adjusted for a risk margin and discounted to present value. The Company includes the fair value estimate of the put/call option in Level 3.

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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4. FAIR VALUE MEASUREMENTS, Continued


(at March 31, 2022, in millions)	Total		Level 1		Level 2		Level 3

Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	3,173	$	3,173	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	35,288		—		35,284		4
Debt securities issued by foreign governments	1,041		—		1,041		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1,760		—		1,712		48
Corporate and all other bonds	33,124		3		32,897		224
Total fixed maturities	74,386		3,176		70,934		276
Equity securities
Common stock	816		497		—		319
Non-redeemable preferred stock	64		18		20		26
Total equity securities	880		515		20		345
Other investments	19		17		—		2
Total	$	75,285	$	3,708	$	70,954	$	623

Other liabilities	$	3	$	—	$	—	$	3


(at December 31, 2021, 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	$	3,562	$	3,562	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	36,862		—		36,858		4
Debt securities issued by foreign governments	1,041		—		1,041		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1,817		—		1,762		55
Corporate and all other bonds	34,528		—		34,339		189
Total fixed maturities	77,810		3,562		74,000		248
Equity securities
Common stock	827		509		—		318
Non-redeemable preferred stock	66		21		20		25
Total equity securities	893		530		20		343
Other investments	23		18		—		5
Total	$	78,726	$	4,110	$	74,020	$	596

Other liabilities	$	3	$	—	$	—	$	3

There was no significant activity in Level 3 of the hierarchy during the three months ended March 31, 2022.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4. FAIR VALUE MEASUREMENTS, Continued

Financial Instruments Disclosed, But Not Carried, At Fair Value

The following tables present the carrying value and fair value of the Company’s financial assets and financial liabilities disclosed, but not carried, at fair value, and the level within the fair value hierarchy at which such assets and liabilities are categorized.


(at March 31, 2022, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Short-term securities	$	3,467	$	3,467	$	376	$	3,030	$	61
Financial liabilities
Debt	$	7,191	$	7,920	$	—	$	7,920	$	—
Commercial paper	100		100		—		100		—


(at December 31, 2021, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Short-term securities	$	3,836	$	3,836	$	1,163	$	2,615	$	58
Financial liabilities
Debt	$	7,190	$	9,085	$	—	$	9,085	$	—
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 three months ended March 31, 2022 or the year ended December 31, 2021.

5. ALLOWANCE FOR EXPECTED CREDIT LOSSES

Premiums Receivable

The following table presents the balances of premiums receivable, net of the allowance for expected credit losses, at March 31, 2022 and 2021, and the changes in the allowance for expected credit losses for the three months ended March 31, 2022 and 2021.


	At and For the Three Months Ended March 31, 2022				At and For the Three Months Ended March 31, 2021
(in millions)	Premiums Receivable, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses		Premiums Receivable, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses

Balance, beginning of period	$	8,085	$	107	$	7,829	$	105

Current period change for expected credit losses			18				16
Write-offs of uncollectible premiums receivable			36				11

Balance, end of period	$	8,593	$	89	$	8,167	$	110

Reinsurance Recoverables

The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at March 31, 2022 and 2021, and the changes in the allowance for estimated uncollectible reinsurance for the three months ended March 31, 2022 and 2021.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

5. ALLOWANCE FOR EXPECTED CREDIT LOSSES, Continued


	At and For the Three Months Ended March 31, 2022				At and For the Three Months Ended March 31, 2021
(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	$	8,452	$	141	$	8,350	$	146


Current period change for estimated uncollectible reinsurance			(6)				(4)
Write-offs of uncollectible reinsurance recoverables			—				—
Balance, end of period	$	8,734	$	135	$	8,345	$	142

Of the total reinsurance recoverables at March 31, 2022, after deducting mandatory pools and associations and before allowances for estimated uncollectible reinsurance, $5.94 billion, or 84%, were rated by A.M. Best Company. The Company utilizes updated A.M. Best credit ratings on a quarterly basis when determining the allowance. Of the total rated by A.M. Best Company, 94% were rated A- or better. The remaining 16% 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 9% were balances from other companies not rated by A.M. Best Company. Certain of the Company's reinsurance recoverables are collateralized by letters of credit, funds held or trust agreements.

Contractholder Receivables

The following table presents the balances of contractholder receivables, net of the allowance for expected credit losses, at March 31, 2022 and 2021, and the changes in the allowance for expected credit losses for the three months ended March 31, 2022 and 2021.


	At and For the Three Months Ended March 31, 2022				At and For the Three Months Ended March 31, 2021
(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	$	3,890	$	21	$	4,242	$	19

Current period change for expected credit losses			(2)				—
Write-offs of uncollectible contractholder receivables			—				—

Balance, end of period	$	3,901	$	19	$	4,271	$	19

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

6. 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.


(in millions)	March 31, 2022		December 31, 2021
Business Insurance	$	2,600	$	2,610
Bond & Specialty Insurance	550		550
Personal Insurance	825		822
Other	26		26
Total	$	4,001	$	4,008

Other Intangible Assets

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


(at March 31, 2022, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	102	$	43	$	59
Contract-based (1)	205		189		16
Total subject to amortization	307		232		75
Not subject to amortization	226		—		226
Total	$	533	$	232	$	301


(at December 31, 2021, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	104	$	41	$	63
Contract-based (1)	205		188		17
Total subject to amortization	309		229		80
Not subject to amortization	226		—		226
Total	$	535	$	229	$	306

(1)Contract-based intangible assets subject to amortization are comprised of fair value adjustments on claims and claim adjustment expense reserves, reinsurance recoverables and other contract-related intangible assets. Fair value adjustments recorded in connection with insurance acquisitions were based on management’s estimate of nominal claims and claim adjustment expense reserves and reinsurance recoverables. The method used calculated a risk adjustment to a risk-free discounted reserve that would, if reserves ran off as expected, produce results that yielded the assumed cost-of-capital on the capital supporting the loss reserves. The fair value adjustments are reported as other intangible assets on the consolidated balance sheet, and the amounts measured in accordance with the acquirer’s accounting policies for insurance contracts have been reported as part of the claims and claim adjustment expense reserves and reinsurance recoverables. The intangible assets are being recognized into income over the expected payment pattern. Because the time value of money and the risk adjustment (cost of capital) components of the intangible assets run off at different rates, the amount recognized in income may be a net benefit in some periods and a net expense in other periods.

Amortization expense of intangible assets was $3 million and $4 million for the three months ended March 31, 2022 and 2021, respectively. Amortization expense for all intangible assets subject to amortization is estimated to be $10 million for the remainder of 2022, $13 million in 2023, $12 million in 2024, $12 million in 2025 and $11 million in 2026. Amortization

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

6. GOODWILL AND OTHER INTANGIBLE ASSETS, Continued

expense for intangible assets arising from insurance contracts acquired in a business combination is estimated to be $2 million for the remainder of 2022, $3 million in 2023, $2 million in 2024, $2 million in 2025 and $1 million in 2026.

7. INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:


(in millions)	March 31, 2022		December 31, 2021
Property-casualty	$	57,563	$	56,897
Accident and health	9		10
Total	$	57,572	$	56,907

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


	Three Months Ended March 31,
(in millions)	2022		2021
Claims and claim adjustment expense reserves at beginning of year	$	56,897	$	54,510
Less reinsurance recoverables on unpaid losses	8,209		8,153

Net reserves at beginning of year	48,688		46,357

Estimated claims and claim adjustment expenses for claims arising in the current year	5,133		5,242
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years	(114)		(294)
Total increases	5,019		4,948

Claims and claim adjustment expense payments for claims arising in:
Current year	1,074		1,059
Prior years	3,498		3,012
Total payments	4,572		4,071
Unrealized foreign exchange (gain) loss	(13)		28
Net reserves at end of period	49,122		47,262
Plus reinsurance recoverables on unpaid losses	8,441		8,068
Claims and claim adjustment expense reserves at end of period	$	57,563	$	55,330

Gross claims and claim adjustment expense reserves at March 31, 2022 increased by $666 million from December 31, 2021, primarily reflecting the impacts of (i) higher volumes of insured exposures, (ii) loss cost trends for the current accident year, (iii) fully reinsured property losses associated with fronting arrangements and (iv) reduced claim settlement activity largely due to continued disruptions in the judicial system related to COVID-19.

Reinsurance recoverables on unpaid losses at March 31, 2022 increased by $232 million from December 31, 2021, primarily reflecting the impact of fully reinsured property losses associated with fronting arrangements, partially offset by cash collections in the first three months of 2022.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

7. INSURANCE CLAIM RESERVES, Continued

Prior Year Reserve Development

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

For the three months ended March 31, 2022 and 2021, estimated claims and claim adjustment expenses incurred included $114 million and $294 million, respectively, of net favorable development for claims arising in prior years, including $153 million and $317 million, respectively, of net favorable prior year reserve development, and $12 million of accretion of discount in each period that impacted the Company's results of operations.

Business Insurance. Net favorable prior year reserve development in the first quarters of 2022 and 2021 totaled $113 million and $134 million, respectively, primarily driven by better than expected loss experience in the domestic operations' workers' compensation product line for multiple accident years. The first quarters of 2022 and 2021 also included an increase to environmental reserves. Included in net favorable prior year reserve development in the first quarter of 2021 was a subrogation benefit of $10 million from Southern California Edison Company related to the 2018 Woolsey wildfire in California.

Bond & Specialty Insurance. Net favorable prior year reserve development in the first quarter of 2022 totaled $35 million, primarily driven by better than expected loss experience in the domestic operations' fidelity and surety product lines for recent accident years, partially offset by higher than expected loss experience in the domestic operations' general liability product line for management liability coverages for multiple accident years. Net favorable prior year reserve development in the first quarter of 2021 totaled $15 million, primarily driven by better than expected loss experience in the domestic fidelity and surety product lines for multiple accident years, partially offset by higher than expected loss experience in the domestic general liability product line for management liability coverages for multiple accident years.

Personal Insurance. Net favorable prior year reserve development in the first quarter of 2022 totaled $5 million. Net favorable prior year reserve development in the first quarter of 2021 totaled $168 million, primarily driven by better than expected loss experience in domestic operations in both the homeowners and other and automobile product lines for recent accident years. Included in net favorable prior year reserve development in the first quarter of 2021 was a subrogation benefit of $62 million from Southern California Edison Company related to the 2018 Woolsey wildfire in California.

8. 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 three months ended March 31, 2022.


	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, 2021	$	2,233	$	182	$	(473)	$	(749)	$	1,193

Other comprehensive income (loss) (OCI) before reclassifications, net of tax	(3,804)		(1)		1		2		(3,802)
Amounts reclassified from AOCI, net of tax	(1)		—		8		—		7
Net OCI, current period	(3,805)		(1)		9		2		(3,795)
Balance, March 31, 2022	$	(1,572)	$	181	$	(464)	$	(747)	$	(2,602)

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

8. 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).


	Three Months Ended March 31,
(in millions)	2022		2021

Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	(4,829)	$	(1,596)
Income tax benefit	(1,024)		(339)
Net of taxes	(3,805)		(1,257)

Having credit losses recognized in the consolidated statement of income	(1)		—
Income tax benefit	—		—
Net of taxes	(1)		—

Net changes in benefit plan assets and obligations	11		25
Income tax expense	2		5
Net of taxes	9		20

Net changes in unrealized foreign currency translation	2		26
Income tax expense	—		—
Net of taxes	2		26

Total other comprehensive loss	(4,817)		(1,545)
Total income tax benefit	(1,022)		(334)
Total other comprehensive loss, net of taxes	$	(3,795)	$	(1,211)

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

8. 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.


	Three Months Ended March 31,
(in millions)	2022		2021

Reclassification adjustments related to unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)	$	(2)	$	(14)
Income tax expense (2)	(1)		(3)
Net of taxes	(1)		(11)

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 (3)	4		10
General and administrative expenses (3)	6		15
Total	10		25
Income tax benefit (2)	2		5
Net of taxes	8		20

Reclassification adjustment related to foreign currency translation (1)	—		—
Income tax benefit (2)	—		—
Net of taxes	—		—

Total reclassifications	8		11
Total income tax benefit	1		2
Total reclassifications, net of taxes	$	7	$	9

(1) (Increases) decreases net realized investment gains (losses) on the consolidated statement of income.

(2) (Increases) decreases income tax expense on the consolidated statement of income.

(3) Increases (decreases) expenses on the consolidated statement of income.

9. COMMON SHARE REPURCHASES

During the three months ended March 31, 2022, the Company repurchased 2.9 million common shares under its share repurchase authorizations for total cost of $500 million. The average cost per share repurchased was $172.10. In addition, the Company acquired 0.4 million shares for a total cost of $59 million during the three months ended March 31, 2022 that were not part of its publicly announced share repurchase authorizations. These shares consisted of shares retained to cover payroll withholding taxes in connection with the vesting of restricted stock unit awards and performance share awards, and shares used by employees to cover the price of certain stock options that were exercised. At March 31, 2022, the Company had $3.51 billion of capacity remaining under its share repurchase authorizations.

10. EARNINGS PER SHARE

The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations for the periods presented:

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

10. EARNINGS PER SHARE, Continued


	Three Months Ended March 31,
(in millions, except per share amounts)	2022		2021

Basic and Diluted
Net income, as reported	$	1,018	$	733
Participating share-based awards — allocated income	(7)		(5)
Net income available to common shareholders — basic and diluted	$	1,011	$	728

Common Shares
Basic
Weighted average shares outstanding	240.9		252.1

Diluted
Weighted average shares outstanding	240.9		252.1
Weighted average effects of dilutive securities — stock options and performance shares	2.8		2.0
Total	243.7		254.1

Net Income per Common Share
Basic	$	4.20	$	2.89
Diluted	$	4.15	$	2.87

11. SHARE-BASED INCENTIVE COMPENSATION

The following information relates to fully vested stock option awards at March 31, 2022:


Stock Options	Number	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining	Aggregate Intrinsic Value ($ in millions)
Vested at end of period (1)	7,437,915	$	130.41	6.5 years	$	389
Exercisable at end of period	4,607,372	$	122.31	5.2 years	$	278

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

The total compensation cost for all share-based incentive compensation awards recognized in earnings was $59 million and $53 million for the three months ended March 31, 2022 and 2021, respectively. The related tax benefits recognized in earnings were $10 million and $9 million for the three months ended March 31, 2022 and 2021, respectively.

The total unrecognized compensation cost related to all nonvested share-based incentive compensation awards at March 31, 2022 was $278 million, which is expected to be recognized over a weighted-average period of 2.2 years.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS

The following table summarizes the components of net periodic benefit cost (benefit) for the Company’s pension and postretirement benefit plans recognized in the consolidated statement of income for the three months ended March 31, 2022 and 2021.


	Pension Plans				Postretirement Benefit Plans
(for the three months ended March 31, in millions)	2022		2021		2022		2021

Net Periodic Benefit Cost (Benefit):
Service cost	$	36	$	35	$	—	$	—

Non-service cost (benefit):
Interest cost on benefit obligation	$	25	$	21	$	1	$	1
Expected return on plan assets	(74)		(69)		—		—

Amortization of unrecognized:
Prior service benefit	—		—		(1)		(1)
Net actuarial (gain) loss	12		27		(1)		(1)
Total non-service cost (benefit)	(37)		(21)		(1)		(1)
Net periodic benefit cost (benefit)	$	(1)	$	14	$	(1)	$	(1)

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 three months ended March 31, 2022 and 2021.


	Pension Plans				Postretirement Benefit Plans
(for the three months ended March 31, in millions)	2022		2021		2022		2021
Service Cost:
Claims and claim adjustment expenses	$	15	$	14	$	—	$	—
General and administrative expenses	21		21		—		—
Total service cost	36		35		—		—

Non-Service Cost (Benefit):
Claims and claim adjustment expenses	(15)		(9)		—		—
General and administrative expenses	(22)		(12)		(1)		(1)
Total non-service cost (benefit)	(37)		(21)		(1)		(1)
Net periodic benefit cost (benefit)	$	(1)	$	14	$	(1)	$	(1)

13. 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

13. LEASES, Continued

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:


	Three Months Ended March 31,
(in millions)	2022			2021

Lease cost
Operating leases	$	21		$	23
Short-term leases (1)	—			—

Lease expense	21			23
Less: sublease income (2)	—			—
Net lease cost	$	21		$	23

Other information on operating leases

Cash payments to settle a lease liability reported in cash flows	$	24		$	26
Right-of-use assets obtained in exchange for new lease liabilities	$	2		$	12
Weighted average discount rate	2.23		%	2.46		%
Weighted average remaining lease term	4.8 years			4.9 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.

14. 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 and Environmental Claims and Litigation

In the ordinary course of its insurance business, the Company has received and continues to receive claims for insurance arising under policies issued by the Company asserting alleged injuries and damages from asbestos- and environmental-related exposures that are the subject of related coverage litigation. The Company is defending asbestos- and environmental-related litigation vigorously and believes that it has meritorious defenses; however, the outcomes of these disputes are uncertain. In this regard, the Company employs dedicated specialists and comprehensive resolution strategies to manage asbestos and environmental loss exposure, including settling litigation under appropriate circumstances. Currently, it is not possible to predict legal outcomes and their impact on future loss development for claims and litigation relating to asbestos and environmental claims. Any such development could be affected by future court decisions and interpretations, as well as future changes, if any, in applicable legislation. Because of these uncertainties, additional liabilities may arise for amounts in excess of the Company’s current insurance reserves. In addition, the Company’s estimate of ultimate claims and claim adjustment expenses may change. These additional liabilities or changes in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company’s results of operations in future periods.

Other Proceedings Not Arising Under Insurance Contracts or Reinsurance Agreements

The Company is involved in other lawsuits, including lawsuits alleging extra-contractual damages relating to insurance contracts or reinsurance agreements, that do not arise under insurance contracts or reinsurance agreements. The legal costs

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

14. CONTINGENCIES, COMMITMENTS AND GUARANTEES, Continued

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 others. These commitments totaled $1.72 billion and $1.70 billion at March 31, 2022 and December 31, 2021, respectively.

Guarantees

The maximum amount of the Company’s contingent obligation for indemnifications related to the sale of businesses that are quantifiable was $351 million at March 31, 2022.

The maximum amount of the Company’s obligation related to the guarantee of certain insurance policy obligations of a former insurance subsidiary was $480 million at March 31, 2022, all of which is indemnified by a third party. For more information regarding Company guarantees, see note 17 of notes to the consolidated financial statements in the Company’s 2021 Annual Report.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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