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,
						2023						2022
Revenues
Premiums						$	8,854					$	8,014
Net investment income						663						637
Fee income						106						103
Net realized investment gains (losses)						6						(23)
Other revenues						75						78
Total revenues						9,704						8,809
Claims and expenses
Claims and claim adjustment expenses						5,959						5,039
Amortization of deferred acquisition costs						1,462						1,310
General and administrative expenses						1,267						1,191
Interest expense						88						87
Total claims and expenses						8,776						7,627
Income before income taxes						928						1,182
Income tax expense (benefit)						(47)						164
Net income						$	975					$	1,018
Net income per share
Basic						$	4.18					$	4.20
Diluted						$	4.13					$	4.15
Weighted average number of common shares outstanding
Basic						231.7						240.9
Diluted						234.4						243.7
Cash dividends declared per common share						$	0.93					$	0.88

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,
						2023						2022
Net income						$	975					$	1,018
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income						1,308						(4,829)
Having credit losses recognized in the consolidated statement of income						—						(1)
Net changes in benefit plan assets and obligations						(3)						11
Net changes in unrealized foreign currency translation						37						2
Other comprehensive income (loss) before income taxes						1,342						(4,817)
Income tax expense (benefit)						283						(1,022)
Other comprehensive income (loss), net of taxes						1,059						(3,795)
Comprehensive income (loss)						$	2,034					$	(2,777)

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, 2023						December 31, 2022
						(Unaudited)
Assets
Fixed maturities, available for sale, at fair value (amortized cost $77,827 and $77,380; allowance for expected credit losses of $4 and $3)						$	72,914					$	71,160
Equity securities, at fair value (cost $592 and $747)						649						807
Real estate investments						953						952
Short-term securities						3,243						3,470
Other investments						4,276						4,065
Total investments						82,035						80,454
Cash						767						799
Investment income accrued						594						650
Premiums receivable (net of allowance for expected credit losses of $77 and $77)						9,483						8,922
Reinsurance recoverables (net of allowance for estimated uncollectible reinsurance of $131 and $132)						8,091						8,063
Ceded unearned premiums						1,360						1,024
Deferred acquisition costs						3,005						2,836
Deferred taxes						1,568						1,877
Contractholder receivables (net of allowance for expected credit losses of $19 and $17)						3,598						3,579
Goodwill						3,959						3,952
Other intangible assets						285						287
Other assets						3,607						3,274
Total assets						$	118,352					$	115,717
Liabilities
Claims and claim adjustment expense reserves						$	59,064					$	58,649
Unearned premium reserves						19,143						18,240
Contractholder payables						3,617						3,596
Payables for reinsurance premiums						761						419
Debt						7,292						7,292
Other liabilities						5,423						5,961
Total liabilities						95,300						94,157
Shareholders’ equity
Common stock (1,750.0 shares authorized; 231.0 and 232.1 shares issued and outstanding)						24,703						24,565
Retained earnings						44,273						43,516
Accumulated other comprehensive loss						(5,386)						(6,445)
Treasury stock, at cost (556.0 and 553.5 shares)						(40,538)						(40,076)
Total shareholders’ equity						23,052						21,560
Total liabilities and shareholders’ equity						$	118,352					$	115,717

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,
						2023						2022
Common stock
Balance, beginning of period						$	24,565					$	24,154
Employee share-based compensation						68						135
Compensation amortization under share-based plans and other changes						70						59
Balance, end of period						24,703						24,348
Retained earnings
Balance, beginning of period						43,516						41,555
Net income						975						1,018
Dividends						(218)						(214)
Balance, end of period						44,273						42,359
Accumulated other comprehensive income (loss), net of tax
Balance, beginning of period						(6,445)						1,193
Other comprehensive income (loss)						1,059						(3,795)
Balance, end of period						(5,386)						(2,602)
Treasury stock, at cost
Balance, beginning of period						(40,076)						(38,015)
Treasury stock acquired — share repurchase authorizations						(400)						(500)
Net shares acquired related to employee share-based compensation plans						(62)						(59)
Balance, end of period						(40,538)						(38,574)
Total shareholders’ equity						$	23,052					$	25,531
Common shares outstanding
Balance, beginning of period						232.1						241.2
Treasury stock acquired — share repurchase authorizations						(2.2)						(2.9)
Net shares issued under employee share-based compensation plans						1.1						1.7
Balance, end of period						231.0						240.0

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,
						2023						2022
Cash flows from operating activities
Net income						$	975					$	1,018
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment (gains) losses						(6)						23
Depreciation and amortization						204						234
Deferred federal income tax expense						32						40
Amortization of deferred acquisition costs						1,462						1,310
Equity in income from other investments						(30)						(118)
Premiums receivable						(557)						(509)
Reinsurance recoverables						(24)						(282)
Deferred acquisition costs						(1,629)						(1,413)
Claims and claim adjustment expense reserves						381						679
Unearned premium reserves						893						727
Other						(689)						(443)
Net cash provided by operating activities						1,012						1,266
Cash flows from investing activities
Proceeds from maturities of fixed maturities						1,538						1,879
Proceeds from sales of investments:
Fixed maturities						2,364						1,044
Equity securities						28						63
Other investments						64						81
Purchases of investments:
Fixed maturities						(4,335)						(4,409)
Equity securities						(34)						(63)
Real estate investments						(14)						(9)
Other investments						(139)						(135)
Net sales of short-term securities						228						367
Securities transactions in the course of settlement						(35)						613
Acquisition, net of cash acquired						—						(4)
Other						(120)						(84)
Net cash used in investing activities						(455)						(657)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorizations						(398)						(500)
Treasury stock acquired — net employee share-based compensation						(62)						(59)
Dividends paid to shareholders						(215)						(213)
Issuance of common stock — employee share options						82						159
Net cash used in financing activities						(593)						(613)
Effect of exchange rate changes on cash						4						(5)
Net decrease in cash						(32)						(9)
Cash at beginning of year						799						761
Cash at end of period						$	767					$	752
Supplemental disclosure of cash flow information
Income taxes paid (received)						$	(16)					$	10
Interest paid						$	60					$	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, 2022 (the Company’s 2022 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.

Adoption of Accounting Standards

For information regarding accounting standards that the Company adopted during the periods presented, see note 1 of the notes to the consolidated financial statements in the Company’s 2022 Annual Report.

Income Taxes

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.

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 the notes to the consolidated financial statements in the Company’s 2022 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
2023
Premiums						$	4,477					$	875					$	3,502					$	8,854
Net investment income						473						73						117						663
Fee income						99						—						7						106
Other revenues						47						5						23						75
Total segment revenues (1)						$	5,096					$	953					$	3,649					$	9,698
Segment income (1)						$	756					$	207					$	83					$	1,046
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

---

(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 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 (Unaudited), Continued

2. SEGMENT INFORMATION, Continued

Business Segment Reconciliations

						Three Months Ended March 31,
(in millions)						2023						2022
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation						$	850					$	830
Commercial automobile						761						713
Commercial property						709						608
General liability						760						688
Commercial multi-peril						1,100						967
Other						18						17
Total Domestic						4,198						3,823
International						279						248
Total Business Insurance						4,477						4,071
Bond & Specialty Insurance:
Domestic:
Fidelity and surety						306						274
General liability						398						373
Other						54						55
Total Domestic						758						702
International						117						118
Total Bond & Specialty Insurance						875						820
Personal Insurance:
Domestic:
Automobile						1,624						1,458
Homeowners and Other						1,724						1,496
Total Domestic						3,348						2,954
International						154						169
Total Personal Insurance						3,502						3,123
Total earned premiums						8,854						8,014
Net investment income						663						637
Fee income						106						103
Other revenues						75						78
Total segment revenues						9,698						8,832
Net realized investment gains (losses)						6						(23)
Total revenues						$	9,704					$	8,809
Income reconciliation, net of tax
Total segment income						$	1,046					$	1,111
Interest Expense and Other (1)						(76)						(74)
Core income						970						1,037
Net realized investment gains (losses)						5						(19)
Net income						$	975					$	1,018

---

(1)The primary component of Interest Expense and Other was after-tax interest expense of $70 million and $69 million for the three months ended March 31, 2023 and 2022, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2. SEGMENT INFORMATION, Continued

(in millions)						March 31, 2023						December 31, 2022
Asset reconciliation
Business Insurance						$	88,468					$	86,522
Bond & Specialty Insurance						10,539						10,119
Personal Insurance						18,514						18,275
Total assets by reportable segment						117,521						114,916
Other assets (1)						831						801
Total consolidated assets						$	118,352					$	115,717

---

(1)The primary components of other assets at both March 31, 2023 and December 31, 2022 were the 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, 2023, in millions)												Gains						Losses
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities						$	6,617					$	—					$	18					$	283					$	6,352
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation						18,866						—						74						1,430						17,510
Revenue						10,321						—						51						709						9,663
State general obligation						1,198						—						5						68						1,135
Pre-refunded						1,710						—						15						—						1,725
Total obligations of U.S. states, municipalities and political subdivisions						32,095						—						145						2,207						30,033
Debt securities issued by foreign governments						1,051						—						—						41						1,010
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities						3,024						—						20						180						2,864
Corporate and all other bonds						35,040						4						71						2,452						32,655
Total						$	77,827					$	4					$	254					$	5,163					$	72,914

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, 2022, in millions)												Gains						Losses
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities						$	5,798					$	—					$	3					$	363					$	5,438
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation						19,615						—						33						1,825						17,823
Revenue						11,076						—						29						907						10,198
State general obligation						1,104						—						3						88						1,019
Pre-refunded						2,323						—						17						1						2,339
Total obligations of U.S. states, municipalities and political subdivisions						34,118						—						82						2,821						31,379
Debt securities issued by foreign governments						1,049						—						—						55						994
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities						2,178						—						13						200						1,991
Corporate and all other bonds						34,237						3						37						2,913						31,358
Total						$	77,380					$	3					$	135					$	6,352					$	71,160

Pre-refunded bonds of $1.73 billion and $2.34 billion at March 31, 2023 and December 31, 2022, respectively, were bonds for which U.S. states or municipalities have established irrevocable trusts that are almost exclusively comprised of U.S. Treasury securities and obligations of U.S. government and government agencies and authorities. These trusts were created to fund the payment of principal and interest due under the bonds.

Proceeds from the sales of fixed maturities classified as available for sale were $2.36 billion and $1.04 billion during the three months ended March 31, 2023 and 2022, respectively. Gross gains of $17 million and $5 million and gross losses of $27 million and $2 million were realized on those sales during the three months ended March 31, 2023 and 2022, respectively.

Equity Securities

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

(at March 31, 2023, in millions)						Cost						Gross Gains						Gross Losses						Fair Value
Common stock						$	549					$	79					$	25					$	603
Non-redeemable preferred stock						43						3						—						46
Total						$	592					$	82					$	25					$	649

(at December 31, 2022, in millions)						Cost						Gross Gains						Gross Losses						Fair Value
Common stock						$	706					$	89					$	32					$	763
Non-redeemable preferred stock						41						3						—						44
Total						$	747					$	92					$	32					$	807

For the three months ended March 31, 2023 and 2022, the Company recognized $17 million and $(14) million of net gains (losses) on equity securities still held as of March 31, 2023 and 2022, 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, 2023 and December 31, 2022, the aggregate fair value and gross unrealized loss by the length of time those securities have been continuously in an unrealized loss position. The fair value amounts reported in the tables are estimates that are prepared using the process described in note 4 herein and in note 4 of the notes to the consolidated financial statements in the Company’s 2022 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 the notes to the consolidated financial statements in the Company’s 2022 Annual Report to determine whether a credit loss impairment exists.

						Less than 12 months												12 months or longer												Total
(at March 31, 2023, in millions)						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities						$	2,056					$	29					$	1,969					$	254					$	4,025					$	283
Obligations of U.S. states, municipalities and political subdivisions						7,701						182						10,534						2,025						18,235						2,207
Debt securities issued by foreign governments						284						3						668						38						952						41
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities						875						27						1,081						153						1,956						180
Corporate and all other bonds						14,709						441						15,098						2,011						29,807						2,452
Total						$	25,625					$	682					$	29,350					$	4,481					$	54,975					$	5,163

						Less than 12 months												12 months or longer												Total
(at December 31, 2022, in millions)						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities						$	2,835					$	100					$	1,679					$	263					$	4,514					$	363
Obligations of U.S. states, municipalities and political subdivisions						19,251						1,975						3,134						846						22,385						2,821
Debt securities issued by foreign governments						604						22						367						33						971						55
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities						1,414						128						316						72						1,730						200
Corporate and all other bonds						24,080						1,635						6,096						1,278						30,176						2,913
Total						$	48,184					$	3,860					$	11,592					$	2,492					$	59,776					$	6,352

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), 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 at March 31, 2023 and December 31, 2022, the gross unrealized investment loss by length of time those securities have continuously been in an unrealized loss position of greater than 20% of amortized cost:

						Period For Which Fair Value is Less Than 80% of Amortized Cost
(at March 31, 2023, in millions)						3 months or less						Greater than 3 months, 6 months or less						Greater than 6 months, 12 months or less						Greater than 12 months						Total
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities						$	—					$	—					$	—					$	—					$	—
Obligations of U.S. states, municipalities and political subdivisions						115						1						617						185						918
Debt securities issued by foreign governments						—						—						—						—						—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities						35						—						—						—						35
Corporate and all other bonds						103						1						84						—						188
Total						$	253					$	2					$	701					$	185					$	1,141

						Period For Which Fair Value is Less Than 80% of Amortized Cost
(at December 31, 2022, in millions)						3 months or less						Greater than 3 months, 6 months or less						Greater than 6 months, 12 months or less						Greater than 12 months						Total
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities						$	—					$	—					$	—					$	—					$	—
Obligations of U.S. states, municipalities and political subdivisions						81						776						643						—						1,500
Debt securities issued by foreign governments						1						—						—						—						1
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities						4						48						—						—						52
Corporate and all other bonds						89						526						8						—						623
Total						$	175					$	1,350					$	651					$	—					$	2,176

Recent increases in interest rates resulted in the gross unrealized investment losses disclosed in the table 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 (Unaudited), Continued

3. INVESTMENTS, Continued

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
						At and For the Three Months Ended
(in millions)						March 31, 2023												March 31, 2022
Balance, beginning of period						$	3											$	3
Additions for expected credit losses on securities where no credit losses were previously recognized						—												—
Additions for expected credit losses on securities where credit losses were previously recognized						1												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						—												—
Balance, end of period						$	4											$	4

Total net impairment charges, including credit impairments, reported in net realized investment gains (losses) in the consolidated statement of income, were $1 million for both the three months ended March 31, 2023 and 2022. Credit losses related to the fixed maturity portfolio for the three months ended March 31, 2023 and 2022 represented less than 1% of the fixed maturity portfolio on a pre-tax basis and less than 1% of shareholders’ equity on an after-tax basis.

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.

• 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4. FAIR VALUE MEASUREMENTS, Continued

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, 2023 and December 31, 2022.

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.

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, 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 $193 million and $371 million for these investments at March 31, 2023 and December 31, 2022, 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 the notes to the consolidated financial statements in the Company’s 2022 Annual Report.

Fair Value Hierarchy

The following tables present the level within the fair value hierarchy at which the Company’s financial assets and financial liabilities are measured on a recurring basis.

(at March 31, 2023, in millions)						Total						Level 1						Level 2						Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities						$	6,352					$	6,352					$	—					$	—
Obligations of U.S. states, municipalities and political subdivisions						30,033						—						30,033						—
Debt securities issued by foreign governments						1,010						—						1,010						—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities						2,864						—						2,864						—
Corporate and all other bonds						32,655						9						32,371						275
Total fixed maturities						72,914						6,361						66,278						275
Equity securities
Common stock						603						438						—						165
Non-redeemable preferred stock						46						15						3						28
Total equity securities						649						453						3						193
Other investments						16						15						—						1
Total						$	73,579					$	6,829					$	66,281					$	469

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4. FAIR VALUE MEASUREMENTS, Continued

(at December 31, 2022, in millions)						Total						Level 1						Level 2						Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities						$	5,438					$	5,438					$	—					$	—
Obligations of U.S. states, municipalities and political subdivisions						31,379						—						31,379						—
Debt securities issued by foreign governments						994						—						994						—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities						1,991						—						1,991						—
Corporate and all other bonds						31,358						—						31,055						303
Total fixed maturities						71,160						5,438						65,419						303
Equity securities
Common stock						763						418						—						345
Non-redeemable preferred stock						44						15						3						26
Total equity securities						807						433						3						371
Other investments						16						15						—						1
Total						$	71,983					$	5,886					$	65,422					$	675
Other liabilities						$	2					$	—					$	—					$	2

There was no significant activity in Level 3 of the hierarchy during the three months ended March 31, 2023.

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, 2023, in millions)						Carrying Value						Fair Value						Level 1						Level 2						Level 3
Financial assets
Short-term securities						$	3,243					$	3,243					$	409					$	2,782					$	52
Financial liabilities
Debt						$	7,192					$	6,787					$	—					$	6,787					$	—
Commercial paper						100						100						—						100						—

(at December 31, 2022, in millions)						Carrying Value						Fair Value						Level 1						Level 2						Level 3
Financial assets
Short-term securities						$	3,470					$	3,470					$	871					$	2,546					$	53
Financial liabilities
Debt						$	7,192					$	6,509					$	—					$	6,509					$	—
Commercial paper						100						100						—						100						—

The Company had no material assets or liabilities that were measured at fair value on a non-recurring basis during the three months ended March 31, 2023 or the year ended December 31, 2022.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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, 2023 and 2022, and the changes in the allowance for expected credit losses for the three months ended March 31, 2023 and 2022.

						At and For the Three Months Ended March 31, 2023												At and For the Three Months Ended March 31, 2022
(in millions)						Premiums Receivable, Net of Allowance for Expected Credit Losses						Allowance for Expected Credit Losses						Premiums Receivable, Net of Allowance for Expected Credit Losses						Allowance for Expected Credit Losses
Balance, beginning of period						$	8,922					$	77					$	8,085					$	107
Current period change for expected credit losses												10												18
Write-offs of uncollectible premiums receivable												10												36
Balance, end of period						$	9,483					$	77					$	8,593					$	89

Reinsurance Recoverables

The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at March 31, 2023 and 2022, and the changes in the allowance for estimated uncollectible reinsurance for the three

months ended March 31, 2023 and 2022.

						At and For the Three Months Ended March 31, 2023												At and For the Three Months Ended March 31, 2022
(in millions)						Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance						Allowance for Estimated Uncollectible Reinsurance						Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance						Allowance for Estimated Uncollectible Reinsurance
Balance, beginning of period						$	8,063					$	132					$	8,452					$	141
Current period change for estimated uncollectible reinsurance												(1)												(6)
Write-offs of uncollectible reinsurance recoverables												—												—
Balance, end of period						$	8,091					$	131					$	8,734					$	135

Of the total reinsurance recoverables at March 31, 2023, $5.69 billion, or 87%, were rated by A.M. Best Company, after deducting mandatory pools and associations and before allowances for estimated uncollectible reinsurance. The Company utilizes updated A.M. Best credit ratings on a quarterly basis when determining the allowance. Of the total rated by A.M. Best Company, 94% were rated A- or better. The remaining 13% of reinsurance recoverables comprised the following: 6% related to captive insurance companies, 1% related to the Company’s participation in voluntary pools and 6% were balances from other companies not rated by A.M. Best Company. Certain of the Company’s reinsurance recoverables are collateralized by letters of credit, funds held or trust agreements.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

5. ALLOWANCE FOR EXPECTED CREDIT LOSSES, Continued

Contractholder Receivables

The following table presents the balances of contractholder receivables, net of the allowance for expected credit losses, at March 31, 2023 and 2022, and the changes in the allowance for expected credit losses for the three months ended March 31, 2023 and 2022.

						At and For the Three Months Ended March 31, 2023												At and For the Three Months Ended March 31, 2022
(in millions)						Contractholder Receivables, Net of Allowance for Expected Credit Losses						Allowance for Expected Credit Losses						Contractholder Receivables, Net of Allowance for Expected Credit Losses						Allowance for Expected Credit Losses
Balance, beginning of period						$	3,579					$	17					$	3,890					$	21
Current period change for expected credit losses												2												(2)
Write-offs of uncollectible contractholder receivables												—												—
Balance, end of period						$	3,598					$	19					$	3,901					$	19

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, 2023						December 31, 2022
Business Insurance						$	2,572					$	2,565
Bond & Specialty Insurance						550						550
Personal Insurance						811						811
Other						26						26
Total						$	3,959					$	3,952

Other Intangible Assets

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

(at March 31, 2023, in millions)						Gross Carrying Amount						Accumulated Amortization						Net
Subject to amortization
Customer-related						$	97					$	50					$	47
Contract-based (1)						204						192						12
Total subject to amortization						301						242						59
Not subject to amortization						226						—						226
Total						$	527					$	242					$	285

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

6. GOODWILL AND OTHER INTANGIBLE ASSETS, Continued

(at December 31, 2022, in millions)						Gross Carrying Amount						Accumulated Amortization						Net
Subject to amortization
Customer-related						$	96					$	48					$	48
Contract-based (1)						204						191						13
Total subject to amortization						300						239						61
Not subject to amortization						226						—						226
Total						$	526					$	239					$	287

---

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

7. INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:

(in millions)						March 31, 2023						December 31, 2022
Property-casualty						$	59,058					$	58,643
Accident and health						6						6
Total						$	59,064					$	58,649

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

7. INSURANCE CLAIM RESERVES, Continued

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)						2023						2022
Claims and claim adjustment expense reserves at beginning of year						$	58,643					$	56,897
Less reinsurance recoverables on unpaid losses						7,790						8,209
Net reserves at beginning of year						50,853						48,688
Estimated claims and claim adjustment expenses for claims arising in the current year						6,025						5,133
Estimated decrease in claims and claim adjustment expenses for claims arising in prior years						(90)						(114)
Total increases						5,935						5,019
Claims and claim adjustment expense payments for claims arising in:
Current year						1,177						1,074
Prior years						4,382						3,498
Total payments						5,559						4,572
Unrealized foreign exchange (gain) loss						28						(13)
Net reserves at end of period						51,257						49,122
Plus reinsurance recoverables on unpaid losses						7,801						8,441
Claims and claim adjustment expense reserves at end of period						$	59,058					$	57,563

Gross claims and claim adjustment expense reserves at March 31, 2023 increased by $415 million from December 31, 2022, primarily reflecting the impacts of (i) higher volumes of insured exposures, (ii) loss cost trends for the current accident year and (iii) catastrophe losses in the first three months of 2023, partially offset by (iv) claim payments made during the first three months of 2023 and (v) net favorable prior year reserve development.

Reinsurance recoverables on unpaid losses at March 31, 2023 increased by $11 million from December 31, 2022.

Prior Year Reserve Development

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

For the three months ended March 31, 2023 and 2022, estimated claims and claim adjustment expenses incurred included $90 million and $114 million, respectively, of net favorable development for claims arising in prior years, including $105 million and $153 million, respectively, of net favorable prior year reserve development, and $11 million and $12 million, respectively, of accretion of discount that impacted the Company’s results of operations.

Business Insurance. Net favorable prior year reserve development in the first quarter of 2023 totaled $19 million, primarily driven by better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years, partially offset by higher than expected loss experience in the general liability product line for excess coverages for multiple accident years. Net favorable prior year reserve development in the first quarter of 2022 totaled $113 million, primarily driven by better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years. The first quarters of 2023 and 2022 also included an increase to environmental reserves.

Bond & Specialty Insurance. Net favorable prior year reserve development in the first quarter of 2023 totaled $58 million, primarily driven by better than expected loss experience in the domestic operations’ fidelity and surety product lines and in the general liability product line for management liability coverages for recent accident years. 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

7. INSURANCE CLAIM RESERVES, Continued

Personal Insurance. Net favorable prior year reserve development in the first quarter of 2023 totaled $28 million, primarily driven by better than expected loss experience in the domestic operations’ homeowners and other product line for recent accident years. Net favorable prior year reserve development in the first quarter of 2022 totaled $5 million.

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, 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						1,021												1						31						1,053
Amounts reclassified from AOCI, net of tax						9						—						(3)						—						6
Net OCI, current period						1,030						—						(2)						31						1,059
Balance, March 31, 2023						$	(4,047)					$	179					$	(544)					$	(974)					$	(5,386)

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)						2023						2022
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income						$	1,308					$	(4,829)
Income tax expense (benefit)						278						(1,024)
Net of taxes						1,030						(3,805)
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						(3)						11
Income tax expense (benefit)						(1)						2
Net of taxes						(2)						9
Net changes in unrealized foreign currency translation						37						2
Income tax expense						6						—
Net of taxes						31						2
Total other comprehensive income (loss)						1,342						(4,817)
Total income tax expense (benefit)						283						(1,022)
Total other comprehensive income (loss), net of taxes						$	1,059					$	(3,795)

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)						2023						2022
Reclassification adjustments related to unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)						$	11					$	(2)
Income tax (expense) benefit (2)						2						(1)
Net of taxes						9						(1)
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)						(1)						4
General and administrative expenses (benefit) (3)						(2)						6
Total						(3)						10
Income tax benefit (2)						—						2
Net of taxes						(3)						8
Reclassification adjustment related to foreign currency translation (1)						—						—
Income tax benefit (2)						—						—
Net of taxes						—						—
Total reclassifications						8						8
Total income tax benefit						2						1
Total reclassifications, net of taxes						$	6					$	7

---

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

(2)(Increases) decreases income tax expense (benefit) 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, 2023, the Company repurchased 2.2 million common shares under its share repurchase authorizations for total cost of $400 million. The average cost per share repurchased was $183.26. In addition, the Company acquired 0.3 million common shares for a total cost of $62 million during the three months ended March 31, 2023 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. Included in the cost of treasury stock acquired pursuant to common share repurchases is the 1% excise tax imposed as part of the Inflation Reduction Act. On April 19, 2023, the Board of Directors approved a share repurchase authorization that added an additional $5.0 billion of repurchase capacity to the $1.60 billion of capacity remaining at March 31, 2023.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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:

						Three Months Ended March 31,
(in millions, except per share amounts)						2023						2022
Basic and Diluted
Net income, as reported						$	975					$	1,018
Participating share-based awards — allocated income						(7)						(7)
Net income available to common shareholders — basic and diluted						$	968					$	1,011
Common Shares
Basic
Weighted average shares outstanding						231.7						240.9
Diluted
Weighted average shares outstanding						231.7						240.9
Weighted average effects of dilutive securities — stock options and performance shares						2.7						2.8
Total						234.4						243.7
Net Income per Common Share
Basic						$	4.18					$	4.20
Diluted						$	4.13					$	4.15

11. SHARE-BASED INCENTIVE COMPENSATION

The following information relates to fully vested stock option awards at March 31, 2023:

Stock Options						Number						Weighted Average Exercise Price						Weighted Average Contractual Life Remaining						Aggregate Intrinsic Value ($ in millions)
Vested at end of period (1)						7,603,711						$	137.41					6.2 years						$	269
Exercisable at end of period						5,519,783						$	127.94					5.3 years						$	240

---

(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 $69 million and $59 million for the three months ended March 31, 2023 and 2022, respectively. The related tax benefits recognized in earnings were $11 million and $10 million for the three months ended March 31, 2023 and 2022, respectively.

The total unrecognized compensation cost related to all nonvested share-based incentive compensation awards at March 31, 2023 was $324 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, 2023 and 2022.

						Pension Plans												Postretirement Benefit Plans
(for the three months ended March 31, in millions)						2023						2022						2023						2022
Net Periodic Benefit Cost (Benefit):
Service cost						$	27					$	36					$	—					$	—
Non-service cost (benefit):
Interest cost on benefit obligation						$	44					$	25					$	1					$	1
Expected return on plan assets						(78)						(74)						—						—
Amortization of unrecognized:
Prior service benefit						—						—						(1)						(1)
Net actuarial (gain) loss						—						12						(2)						(1)
Total non-service cost (benefit)						(34)						(37)						(2)						(1)
Net periodic benefit cost (benefit)						$	(7)					$	(1)					$	(2)					$	(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, 2023 and 2022.

						Pension Plans												Postretirement Benefit Plans
(for the three months ended March 31, in millions)						2023						2022						2023						2022
Service Cost:
Claims and claim adjustment expenses						$	11					$	15					$	—					$	—
General and administrative expenses						16						21						—						—
Total service cost						27						36						—						—
Non-Service Cost (Benefit):
Claims and claim adjustment expenses						(14)						(15)						(1)						—
General and administrative expenses						(20)						(22)						(1)						(1)
Total non-service cost (benefit)						(34)						(37)						(2)						(1)
Net periodic benefit cost (benefit)						$	(7)					$	(1)					$	(2)					$	(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)																								2023						2022
Lease cost
Operating leases																								$	19					$	21
Short-term leases (1)																								1						—
Lease expense																								20						21
Less: sublease income (2)																								—						—
Net lease cost																								$	20					$	21
Other information on operating leases
Cash payments to settle a lease liability reported in cash flows																								$	21					$	24
Right-of-use assets obtained in exchange for new lease liabilities																								$	10					$	2
Weighted average discount rate																								2.44		%				2.23		%
Weighted average remaining lease term																								4.4 years						4.8 years

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(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 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

14. CONTINGENCIES, COMMITMENTS AND GUARANTEES, Continued

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 $1.77 billion and $1.80 billion at March 31, 2023 and December 31, 2022, 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, 2023.

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, 2023, all of which is indemnified by a third party. For more information regarding the Company’s guarantees, see note 17 of the notes to the consolidated financial statements in the Company’s 2022 Annual Report.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES