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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues
Premiums	$	10,704	$	9,718	$	31,073	$	27,788
Net investment income	904		769		2,635		2,144
Fee income	121		112		345		324
Net realized investment gains (losses)	55		(65)		25		(94)
Other revenues	120		101		337		275
Total revenues	11,904		10,635		34,415		30,437
Claims and expenses
Claims and claim adjustment expenses	6,996		7,149		21,025		20,335
Amortization of deferred acquisition costs	1,790		1,604		5,166		4,585
General and administrative expenses	1,460		1,312		4,344		3,887
Interest expense	98		98		294		278
Total claims and expenses	10,344		10,163		30,829		29,085
Income before income taxes	1,560		472		3,586		1,352
Income tax expense (benefit)	300		68		669		(13)
Net income	$	1,260	$	404	$	2,917	$	1,365
Net income per share
Basic	$	5.50	$	1.75	$	12.68	$	5.89
Diluted	$	5.42	$	1.74	$	12.51	$	5.83
Weighted average number of common shares outstanding
Basic	227.4		228.8		228.3		230.0
Diluted	230.6		231.1		231.3		232.5

Cash dividends declared per common share	$	1.05	$	1.00	$	3.10	$	2.93

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income	$	1,260	$	404	$	2,917	$	1,365
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	2,370		(2,391)		1,294		(1,986)
Having credit losses recognized in the consolidated statement of income	1		—		4		—
Net changes in benefit plan assets and obligations	(1)		(3)		(4)		(10)
Net changes in unrealized foreign currency translation	120		(118)		24		13
Other comprehensive income (loss) before income taxes	2,490		(2,512)		1,318		(1,983)
Income tax expense (benefit)	513		(509)		280		(416)
Other comprehensive income (loss), net of taxes	1,977		(2,003)		1,038		(1,567)
Comprehensive income (loss)	$	3,237	$	(1,599)	$	3,955	$	(202)

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

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)


	September 30, 2024		December 31, 2023
	(Unaudited)
Assets
Fixed maturities, available for sale, at fair value (amortized cost $86,657 and $81,781; allowance for expected credit losses of $0 and $5)	$	83,985	$	77,807
Equity securities, at fair value (cost $547 and $553)	702		608
Real estate investments	901		959
Short-term securities	5,482		5,137
Other investments	4,380		4,299
Total investments	95,450		88,810
Cash	772		650
Investment income accrued	665		688
Premiums receivable (net of allowance for expected credit losses of $70 and $69)	11,271		10,282
Reinsurance recoverables (net of allowance for estimated uncollectible reinsurance of $120 and $118)	8,075		8,143
Ceded unearned premiums	1,502		1,150
Deferred acquisition costs	3,579		3,306
Deferred taxes	1,336		1,504
Contractholder receivables (net of allowance for expected credit losses of $18 and $20)	3,292		3,249
Goodwill	4,273		3,976
Other intangible assets	368		277
Other assets	4,005		3,943
Total assets	$	134,588	$	125,978
Liabilities
Claims and claim adjustment expense reserves	$	64,746	$	61,627
Unearned premium reserves	22,783		20,872
Contractholder payables	3,310		3,269
Payables for reinsurance premiums	921		518
Debt	8,033		8,031
Other liabilities	7,099		6,740
Total liabilities	106,892		101,057
Shareholders’ equity
Common stock (1,750.0 shares authorized; 227.0 and 228.2 shares issued and outstanding)	25,339		24,906
Retained earnings	47,789		45,591
Accumulated other comprehensive loss	(3,433)		(4,471)
Treasury stock, at cost (563.3 and 559.2 shares)	(41,999)		(41,105)
Total shareholders’ equity	27,696		24,921
Total liabilities and shareholders’ equity	$	134,588	$	125,978

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Common stock
Balance, beginning of period	$	25,245	$	24,776	$	24,906	$	24,565
Employee share-based compensation	31		8		231		102
Compensation amortization under share-based plans and other changes	63		47		202		164
Balance, end of period	25,339		24,831		25,339		24,831
Retained earnings
Balance, beginning of period	46,773		44,026		45,591		43,516


Net income	1,260		404		2,917		1,365
Dividends	(243)		(232)		(720)		(683)
Other	(1)		—		1		—
Balance, end of period	47,789		44,198		47,789		44,198
Accumulated other comprehensive income (loss), net of tax
Balance, beginning of period	(5,410)		(6,009)		(4,471)		(6,445)


Other comprehensive income (loss)	1,977		(2,003)		1,038		(1,567)
Balance, end of period	(3,433)		(8,012)		(3,433)		(8,012)
Treasury stock, at cost
Balance, beginning of period	(41,746)		(40,938)		(41,105)		(40,076)
Treasury stock acquired — share repurchase authorizations	(250)		(100)		(750)		(900)
Net shares acquired related to employee share-based compensation plans	(3)		(1)		(144)		(63)
Balance, end of period	(41,999)		(41,039)		(41,999)		(41,039)
Total shareholders’ equity	$	27,696	$	19,978	$	27,696	$	19,978
Common shares outstanding
Balance, beginning of period	227.9		228.9		228.2		232.1
Treasury stock acquired — share repurchase authorizations	(1.1)		(0.6)		(3.4)		(5.0)
Net shares issued under employee share-based compensation plans	0.2		0.1		2.2		1.3
Balance, end of period	227.0		228.4		227.0		228.4

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)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities
Net income	$	2,917	$	1,365
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment (gains) losses	(25)		94
Depreciation and amortization	552		552
Deferred federal income tax benefit	(102)		(107)
Amortization of deferred acquisition costs	5,166		4,585
Equity in income from other investments	(220)		(144)
Premiums receivable	(987)		(1,422)
Reinsurance recoverables	73		(204)
Deferred acquisition costs	(5,439)		(5,079)
Claims and claim adjustment expense reserves	3,067		3,053
Unearned premium reserves	1,904		2,817
Other	104		97
Net cash provided by operating activities	7,010		5,607
Cash flows from investing activities
Proceeds from maturities of fixed maturities	5,990		4,909
Proceeds from sales of investments:
Fixed maturities	1,475		4,619
Equity securities	93		117
Real estate investments	64		—
Other investments	211		166
Purchases of investments:
Fixed maturities	(12,360)		(13,054)
Equity securities	(80)		(80)
Real estate investments	(34)		(46)
Other investments	(283)		(375)
Net purchases of short-term securities	(342)		(1,018)
Securities transactions in the course of settlement	382		60
Acquisition, net of cash acquired	(382)		—
Other	(305)		(335)
Net cash used in investing activities	(5,571)		(5,037)
Cash flows from financing activities
Treasury stock acquired — share repurchase authorizations	(747)		(894)
Treasury stock acquired — net employee share-based compensation	(112)		(63)
Dividends paid to shareholders	(711)		(676)

Issuance of debt	—		738
Issuance of common stock — employee share options	245		117
Net cash used in financing activities	(1,325)		(778)
Effect of exchange rate changes on cash	8		2
Net increase (decrease) in cash	122		(206)
Cash at beginning of year	650		799
Cash at end of period	$	772	$	593
Supplemental disclosure of cash flow information
Income taxes paid	$	947	$	152
Interest paid	$	255	$	234
Supplemental disclosure of noncash financing activities
Issuance of common stock — net share settlement of employee options	$	32	$	—

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, 2023 (the Company’s 2023 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. To the extent that the Company changes its accounting for, or presentation of, items in the financial statements, the presentation of such amounts in prior periods is changed to conform to the current period presentation, if appropriate, and disclosed, if material.

On January 2, 2024, the Company completed its previously announced acquisition of all issued and outstanding shares of Corvus Insurance Holdings, Inc. (Corvus), a cyber insurance managing general underwriter, for consideration transferred of approximately $427 million. The acquisition provides the Company the opportunity to renew Corvus’s book of business and to leverage Corvus’s capabilities to enhance the return profile of Travelers’ existing cyber portfolio. At the acquisition date, the Company recorded at fair value $478 million of assets acquired and $51 million of liabilities assumed as part of purchase accounting, including $390 million of identifiable intangible assets and goodwill. The assets acquired from Corvus were included in the Company’s Bond & Specialty Insurance segment, effective at the acquisition date. The Company funded this transaction from internal resources. A provisional amount of $19 million was recorded as a deferred tax asset and included on the consolidated balance sheet on January 2, 2024, the date of the acquisition. As the tax return for Corvus for the 2023 fiscal year will not be finalized until the fourth quarter of 2024, a measurement period adjustment is expected to be recorded in the fourth quarter of 2024.

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 2023 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 (loss) and total assets by reportable business segments:


(For the three months ended September 30, in millions)	Business Insurance		Bond & Specialty Insurance		Personal Insurance		Total Reportable Segments
2024
Premiums	$	5,474	$	1,009	$	4,221	$	10,704
Net investment income	642		101		161		904
Fee income	109		—		12		121
Other revenues	89		7		24		120
Total segment revenues (1)	$	6,314	$	1,117	$	4,418	$	11,849
Segment income (1)	$	698	$	222	$	384	$	1,304

2023
Premiums	$	4,956	$	935	$	3,827	$	9,718
Net investment income	551		86		132		769
Fee income	102		—		10		112
Other revenues	71		6		24		101
Total segment revenues (1)	$	5,680	$	1,027	$	3,993	$	10,700
Segment income (loss) (1)	$	468	$	265	$	(193)	$	540

(1)Segment revenues for reportable business segments exclude net realized investment gains (losses) and revenues included in “interest expense and other.” Segment income (loss) for reportable business segments excludes the after-tax impact of net realized investment gains (losses) and income (loss) from “interest expense and other.”


(For the nine months ended September 30, in millions)	Business Insurance		Bond & Specialty Insurance		Personal Insurance		Total Reportable Segments
2024
Premiums	$	15,802	$	2,942	$	12,329	$	31,073
Net investment income	1,883		285		467		2,635
Fee income	315		—		30		345
Other revenues	243		22		72		337
Total segment revenues (1)	$	18,243	$	3,249	$	12,898	$	34,390
Segment income (1)	$	2,118	$	587	$	451	$	3,156

2023
Premiums	$	14,077	$	2,721	$	10,990	$	27,788
Net investment income	1,533		237		374		2,144
Fee income	299		—		25		324
Other revenues	185		18		72		275
Total segment revenues (1)	$	16,094	$	2,976	$	11,461	$	30,531
Segment income (loss) (1)	$	1,626	$	702	$	(648)	$	1,680

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2. SEGMENT INFORMATION, Continued

Business Segment Reconciliations


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2024		2023		2024		2023
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation	$	858	$	876	$	2,602	$	2,584
Commercial automobile	915		816		2,649		2,375
Commercial property	915		828		2,682		2,297
General liability	871		804		2,563		2,312
Commercial multi-peril	1,374		1,211		3,890		3,456
Other	21		21		51		55
Total Domestic	4,954		4,556		14,437		13,079
International	520		400		1,365		998
Total Business Insurance	5,474		4,956		15,802		14,077
Bond & Specialty Insurance:
Domestic:
Fidelity and surety	359		333		1,049		964
General liability	454		414		1,317		1,218
Other	58		57		172		168
Total Domestic	871		804		2,538		2,350
International	138		131		404		371
Total Bond & Specialty Insurance	1,009		935		2,942		2,721
Personal Insurance:
Domestic:
Automobile	1,973		1,772		5,766		5,084
Homeowners and Other	2,083		1,896		6,069		5,434
Total Domestic	4,056		3,668		11,835		10,518
International	165		159		494		472
Total Personal Insurance	4,221		3,827		12,329		10,990
Total earned premiums	10,704		9,718		31,073		27,788
Net investment income	904		769		2,635		2,144
Fee income	121		112		345		324
Other revenues	120		101		337		275
Total segment revenues	11,849		10,700		34,390		30,531

Net realized investment gains (losses)	55		(65)		25		(94)
Total revenues	$	11,904	$	10,635	$	34,415	$	30,437
Income reconciliation, net of tax
Total segment income	$	1,304	$	540	$	3,156	$	1,680
Interest Expense and Other (1)	(86)		(86)		(257)		(241)
Core income	1,218		454		2,899		1,439
Net realized investment gains (losses)	42		(50)		18		(74)

Net income	$	1,260	$	404	$	2,917	$	1,365

(1)The primary component of Interest Expense and Other was after-tax interest expense of $77 million and $78 million for the three months ended September 30, 2024 and 2023, respectively, and $232 million and $220 million for the nine months ended September 30, 2024 and 2023, respectively.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2. SEGMENT INFORMATION, Continued


(in millions)	September 30, 2024		December 31, 2023
Asset reconciliation
Business Insurance	$	99,192	$	93,565
Bond & Specialty Insurance	13,060		11,478
Personal Insurance	21,430		20,072
Total assets by reportable segment	133,682		125,115
Other assets (1)	906		863
Total consolidated assets	$	134,588	$	125,978

(1)The primary components of other assets at both September 30, 2024 and December 31, 2023 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 September 30, 2024, in millions)			Gains		Losses
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	6,048	$	—	$	13	$	136	$	5,925
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation	18,482		—		100		1,159		17,423
Revenue	9,244		—		59		544		8,759
State general obligation	1,125		—		8		54		1,079
Pre-refunded	832		—		4		1		835
Total obligations of U.S. states, municipalities and political subdivisions	29,683		—		171		1,758		28,096
Debt securities issued by foreign governments	949		—		8		15		942
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	11,880		—		253		134		11,999
Corporate and all other bonds	38,097		—		348		1,422		37,023
Total	$	86,657	$	—	$	793	$	3,465	$	83,985

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, 2023, in millions)			Gains		Losses
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	6,591	$	—	$	8	$	231	$	6,368
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation	18,374		—		90		1,265		17,199
Revenue	9,748		—		52		616		9,184
State general obligation	1,209		—		7		59		1,157
Pre-refunded	963		—		5		2		966
Total obligations of U.S. states, municipalities and political subdivisions	30,294		—		154		1,942		28,506
Debt securities issued by foreign governments	1,035		—		2		31		1,006
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	7,874		—		120		176		7,818
Corporate and all other bonds	35,987		5		187		2,060		34,109
Total	$	81,781	$	5	$	471	$	4,440	$	77,807

Pre-refunded bonds of $835 million and $966 million at September 30, 2024 and December 31, 2023, 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 $1.48 billion and $4.62 billion during the nine months ended September 30, 2024 and 2023, respectively. Gross gains of $2 million and $26 million and gross losses of $57 million and $93 million were realized on those sales during the nine months ended September 30, 2024 and 2023, respectively. Included in net realized investment gains (losses) for the nine months ended September 30, 2024 and 2023 were $34 million and $0 million, respectively, of losses resulting from the early redemption of fixed maturities by the issuer prior to the bonds’ maturity date.

Equity Securities

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



(at September 30, 2024, in millions)	Cost		Gross Gains		Gross Losses		Fair Value
Common stock	$	501	$	158	$	7	$	652
Non-redeemable preferred stock	46		4		—		50
Total	$	547	$	162	$	7	$	702


(at December 31, 2023, in millions)	Cost		Gross Gains		Gross Losses		Fair Value
Common stock	$	508	$	93	$	41	$	560
Non-redeemable preferred stock	45		3		—		48
Total	$	553	$	96	$	41	$	608

For the nine months ended September 30, 2024 and 2023, the Company recognized $102 million and $(11) million of net gains (losses) on equity securities still held as of September 30, 2024 and 2023, 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 September 30, 2024 and December 31, 2023, 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 2023 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 2023 Annual Report to determine whether a credit loss impairment exists.


	Less than 12 months				12 months or longer				Total
(at September 30, 2024, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	105	$	—	$	3,052	$	136	$	3,157	$	136
Obligations of U.S. states, municipalities and political subdivisions	1,771		8		15,819		1,750		17,590		1,758
Debt securities issued by foreign governments	13		—		539		15		552		15
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	523		3		1,527		131		2,050		134
Corporate and all other bonds	927		5		23,413		1,417		24,340		1,422
Total	$	3,339	$	16	$	44,350	$	3,449	$	47,689	$	3,465


	Less than 12 months				12 months or longer				Total
(at December 31, 2023, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	1,864	$	7	$	2,985	$	224	$	4,849	$	231
Obligations of U.S. states, municipalities and political subdivisions	3,868		31		14,351		1,911		18,219		1,942
Debt securities issued by foreign governments	30		—		763		31		793		31
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1,215		9		1,433		167		2,648		176
Corporate and all other bonds	1,016		9		26,444		2,051		27,460		2,060
Total	$	7,993	$	56	$	45,976	$	4,384	$	53,969	$	4,440

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 September 30, 2024 and December 31, 2023, 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 September 30, 2024, in millions)	3 months or less		Greater than 3 months, 6 months or less		Greater than 6 months, 12 months or less		Greater than 12 months		Total
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	—	$	—	$	—	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	—		—		48		581		629
Debt securities issued by foreign governments	—		—		—		—		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	—		—		—		—		—
Corporate and all other bonds	—		—		2		3		5
Total	$	—	$	—	$	50	$	584	$	634


	Period For Which Fair Value is Less Than 80% of Amortized Cost
(at December 31, 2023, in millions)	3 months or less		Greater than 3 months, 6 months or less		Greater than 6 months, 12 months or less		Greater than 12 months		Total
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	—	$	—	$	—	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	—		2		31		642		675
Debt securities issued by foreign governments	—		—		—		—		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	—		—		—		—		—
Corporate and all other bonds	1		3		22		25		51
Total	$	1	$	5	$	53	$	667	$	726

Increases in interest rates resulted in the gross unrealized investment losses disclosed in the tables above; however, the net unrealized loss is considered temporary in nature as the decrease in value is not due to credit impairments and there is no impact on expected contractual cash flows from fixed maturities.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

3. INVESTMENTS, Continued

Impairment Charges

The following tables present 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)	September 30, 2024		September 30, 2023

Balance, beginning of period	$	1	$	4
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	—		—
Balance, end of period	$	—	$	4


	Fixed Maturities
	Corporate and All Other Bonds
	At and For the Nine Months Ended
(in millions)	September 30, 2024		September 30, 2023

Balance, beginning of period	$	5		$	3
Additions for expected credit losses on securities where no credit losses were previously recognized	3			—
Additions (reductions) for expected credit losses on securities where credit losses were previously recognized	(1)			1
Reductions due to sales/defaults of credit-impaired securities	(7)			—
Reductions for impairments of securities which the Company intends to sell or more likely than not will be required to sell	—			—
Balance, end of period	$	—		$	4

Total net impairment charges, including credit impairments, reported in net realized investment gains (losses) in the consolidated statement of income were $5 million and $1 million for the three months ended September 30, 2024 and 2023, respectively, and $8 million and $2 million for the nine months ended September 30, 2024 and 2023, respectively. Credit losses related to the fixed maturity portfolio for both the three and nine months ended September 30, 2024 and 2023 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

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.

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 September 30, 2024 and December 31, 2023.

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 $38 million and $37 million for these investments at September 30, 2024 and December 31, 2023, 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 2023 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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4. FAIR VALUE MEASUREMENTS, Continued


(at September 30, 2024, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	5,925	$	5,925	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	28,096		—		28,096		—
Debt securities issued by foreign governments	942		—		942		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	11,999		—		11,999		—
Corporate and all other bonds	37,023		5		36,763		255
Total fixed maturities	83,985		5,930		77,800		255
Equity securities
Common stock	652		645		—		7
Non-redeemable preferred stock	50		16		3		31
Total equity securities	702		661		3		38
Other investments	20		20		—		—
Total	$	84,707	$	6,611	$	77,803	$	293


(at December 31, 2023, in millions)	Total		Level 1		Level 2		Level 3
Invested assets:
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	6,368	$	6,368	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	28,506		—		28,506		—
Debt securities issued by foreign governments	1,006		—		1,006		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	7,818		—		7,818		—
Corporate and all other bonds	34,109		—		33,851		258
Total fixed maturities	77,807		6,368		71,181		258
Equity securities
Common stock	560		553		—		7
Non-redeemable preferred stock	48		16		2		30
Total equity securities	608		569		2		37
Other investments	18		18		—		—
Total	$	78,433	$	6,955	$	71,183	$	295

There was no significant activity in Level 3 of the hierarchy during the nine months ended September 30, 2024.

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.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

4. FAIR VALUE MEASUREMENTS, Continued


(at September 30, 2024, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Short-term securities	$	5,482	$	5,482	$	2,013	$	3,419	$	50
Financial liabilities
Debt	$	7,933	$	7,604	$	—	$	7,604	$	—
Commercial paper	100		100		—		100		—


(at December 31, 2023, in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets
Short-term securities	$	5,137	$	5,137	$	1,171	$	3,912	$	54
Financial liabilities
Debt	$	7,931	$	7,645	$	—	$	7,645	$	—
Commercial paper	100		100		—		100		—

The Company had no material assets or liabilities that were measured at fair value on a non-recurring basis during the nine months ended September 30, 2024 or the year ended December 31, 2023.

5. ALLOWANCE FOR EXPECTED CREDIT LOSSES

Premiums Receivable

The following tables present the balances of premiums receivable, net of the allowance for expected credit losses, at September 30, 2024 and 2023, and the changes in the allowance for expected credit losses for the three and nine months ended September 30, 2024 and 2023.


	At and For the Three Months Ended September 30, 2024				At and For the Three Months Ended September 30, 2023
(in millions)	Premiums Receivable, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses		Premiums Receivable, Net of Allowance for Expected Credit Losses		Allowance for Expected Credit Losses

Balance, beginning of period	$	11,491	$	69	$	10,327	$	72

Current period change for expected credit losses			16				11
Write-offs of uncollectible premiums receivable			15				15
Balance, end of period	$	11,271	$	70	$	10,345	$	68

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

5. ALLOWANCE FOR EXPECTED CREDIT LOSSES, Continued


	At and For the Nine Months Ended September 30, 2024				At and For the Nine Months Ended September 30, 2023
(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	$	10,282	$	69	$	8,922	$	77

Current period change for expected credit losses			41				28
Write-offs of uncollectible premiums receivable			40				37
Balance, end of period	$	11,271	$	70	$	10,345	$	68

Reinsurance Recoverables

The following tables present the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at September 30, 2024 and 2023, and the changes in the allowance for estimated uncollectible reinsurance for the three and nine months ended September 30, 2024 and 2023.


	At and For the Three Months Ended September 30, 2024				At and For the Three Months Ended September 30, 2023
(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	$	8,132	$	117	$	8,121	$	121


Current period change for estimated uncollectible reinsurance			3				—
Write-offs of uncollectible reinsurance recoverables			—				—
Balance, end of period	$	8,075	$	120	$	8,267	$	121


	At and For the Nine Months Ended September 30, 2024				At and For the Nine Months Ended September 30, 2023
(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	$	8,143	$	118	$	8,063	$	132


Current period change for estimated uncollectible reinsurance			2				(11)
Write-offs of uncollectible reinsurance recoverables			—				—
Balance, end of period	$	8,075	$	120	$	8,267	$	121

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

5. ALLOWANCE FOR EXPECTED CREDIT LOSSES, Continued

Of the total reinsurance recoverables at September 30, 2024, $5.85 billion, or 88%, 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 12% of reinsurance recoverables comprised the following: 6% related to captive insurance companies, 1% related to the Company’s participation in voluntary pools and 5% 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 tables present the balances of contractholder receivables, net of the allowance for expected credit losses, at September 30, 2024 and 2023, and the changes in the allowance for expected credit losses for the three and nine months ended September 30, 2024 and 2023.


	At and For the Three Months Ended September 30, 2024				At and For the Three Months Ended September 30, 2023
(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	$	3,274	$	18	$	3,449	$	20

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

Balance, end of period	$	3,292	$	18	$	3,467	$	20


	At and For the Nine Months Ended September 30, 2024				At and For the Nine Months Ended September 30, 2023
(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	$	3,249	$	20	$	3,579	$	17

Current period change for expected credit losses			(2)				3
Write-offs of uncollectible contractholder receivables			—				—

Balance, end of period	$	3,292	$	18	$	3,467	$	20

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)	September 30, 2024		December 31, 2023
Business Insurance	$	2,601	$	2,585
Bond & Specialty Insurance (1)	835		550
Personal Insurance	811		815
Other	26		26
Total	$	4,273	$	3,976

(1)Goodwill at September 30, 2024 included $285 million associated with the acquisition of Corvus in the first quarter of 2024, which is primarily attributable to Corvus’s cyber underwriting and support capabilities and workforce and is not deductible for tax purposes.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

6. GOODWILL AND OTHER INTANGIBLE ASSETS, Continued

Other Intangible Assets

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


(at September 30, 2024, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related (1)	$	190	$	73	$	117
Contract-based (2)	205		196		9
Marketing-related (3)	18		2		16
Total subject to amortization	413		271		142
Not subject to amortization	226		—		226
Total	$	639	$	271	$	368


(at December 31, 2023, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	100	$	59	$	41
Contract-based (2)	204		194		10
Total subject to amortization	304		253		51
Not subject to amortization	226		—		226
Total	$	530	$	253	$	277

(1)Customer-related intangibles of $87 million were recorded in connection with the acquisition of Corvus in the first quarter of 2024. The customer-related intangible assets include Corvus’s broker and policyholder relationships and were valued using the excess earnings method income approach, a valuation technique that provides an estimate of fair value based on the cash flows that the asset can be expected to generate over its remaining useful life. Broker relationships represent the relationships Corvus has with its existing brokers through which new business is placed with policyholders. Policyholder relationships represent the renewal of existing policies. Significant inputs to the fair valuation include estimates of revenue growth, broker retention rates, policyholder attrition rates and weighted average cost of capital.

(2)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.

(3)Marketing-related intangibles of $18 million were recorded in connection with the acquisition of Corvus in the first quarter of 2024. The marketing-related intangible assets include trade names and a non-compete agreement. The trade names were valued using a relief from royalty method, a valuation technique which estimates the fair value of an asset based on the present value of the royalties saved because the company owns the asset. Significant inputs to the fair valuation include estimates of future revenue, appropriate rates of return associated with certain assets and weighted average cost of capital. The fair value of the non-compete agreement is based on an estimate of the income that would be lost if the agreement were not in place and the individual chose to compete. Significant inputs to the fair valuation include estimates of projected cash flows and weighted average cost of capital.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

6. GOODWILL AND OTHER INTANGIBLE ASSETS, Continued

The following table presents a summary of the other intangible assets recorded in connection with the acquisition of Corvus by major asset class as of the acquisition date.


(in millions)	Amount		Weighted Average Amortization Period
Subject to amortization
Customer-related	$	87	14 years
Marketing-related	18		7 years
Total	$	105	13 years

7. INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:


(in millions)	September 30, 2024		December 31, 2023
Property-casualty	$	64,741	$	61,621
Accident and health	5		6
Total	$	64,746	$	61,627

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


	Nine Months Ended September 30,
(in millions)	2024		2023
Claims and claim adjustment expense reserves at beginning of year	$	61,621	$	58,643
Less reinsurance recoverables on unpaid losses	7,817		7,790

Net reserves at beginning of year	53,804		50,853
Estimated claims and claim adjustment expenses for claims arising in the current year	21,276		20,205
Estimated increase (decrease) in claims and claim adjustment expenses for claims arising in prior years	(321)		62
Total increases	20,955		20,267
Claims and claim adjustment expense payments for claims arising in:
Current year	7,255		7,305
Prior years	10,545		10,031
Total payments	17,800		17,336
Unrealized foreign exchange (gain) loss	38		(1)
Net reserves at end of period	56,997		53,783
Plus reinsurance recoverables on unpaid losses	7,744		7,920
Claims and claim adjustment expense reserves at end of period	$	64,741	$	61,703

Gross claims and claim adjustment expense reserves at September 30, 2024 increased by $3.12 billion from December 31, 2023, primarily reflecting the impacts of (i) catastrophe losses in the first nine months of 2024, (ii) higher volumes of insured exposures and (iii) loss cost trends for the current accident year, partially offset by (iv) claim payments made during the first nine months of 2024 and (v) net favorable prior year reserve development.

Reinsurance recoverables on unpaid losses at September 30, 2024 decreased by $73 million from December 31, 2023.

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 nine months ended September 30, 2024 and 2023, estimated claims and claim adjustment expenses incurred included $321 million and $(62) million, respectively, of net favorable (unfavorable) development for claims arising in prior years, including $447 million and $11 million, respectively, of net favorable prior year reserve development, and $33 million and $34 million, respectively, of accretion of discount.

Business Insurance. Net unfavorable prior year reserve development in the third quarter of 2024 totaled $91 million, primarily driven by an addition to asbestos reserves of $242 million, partially offset by better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years. Net unfavorable prior year reserve development in the third quarter of 2023 totaled $263 million, primarily driven by (i) an addition to asbestos reserves of $284 million and higher than expected loss experience in the domestic operations’, (ii) general liability product line (excluding asbestos), including additions to reserves attributable to childhood sexual molestation and environmental claims in the Company’s run-off operations and (iii) commercial automobile product line for recent accident years, partially offset by (iv) better than expected loss experience in the workers’ compensation product line for multiple accident years.

Net unfavorable prior year reserve development in the first nine months of 2024 totaled $57 million, primarily driven by (i) higher than expected loss experience in the domestic operations’ general liability product line (excluding asbestos) for recent accident years, (ii) an addition to asbestos reserves of $242 million and (iii) an addition to reserves related to run-off operations, partially offset by (iv) better than expected loss experience in the workers’ compensation product line for multiple accident years. Net unfavorable prior year reserve development in the first nine months of 2023 totaled $345 million, primarily driven by (i) higher than expected loss experience in the domestic operations’ general liability product line (excluding asbestos) for multiple accident years, including additions to reserves attributable to childhood sexual molestation and environmental claims in the Company’s run-off operations, (ii) an addition to asbestos reserves of $284 million and (iii) higher than expected loss experience in the domestic operations’ commercial automobile product line for recent accident years, partially offset by (iv) better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years. The first nine months of 2024 and 2023 also included an increase to environmental reserves.

Bond & Specialty Insurance. Net favorable prior year reserve development in the third quarter and first nine months of 2024 totaled $36 million and $84 million, respectively, primarily driven by better than expected loss experience in the domestic operations’ fidelity and surety product lines for recent accident years. Net favorable prior year reserve development in the third quarter and first nine months of 2023 totaled $72 million and $249 million, respectively, primarily driven by better than expected loss experience in the domestic operations’ fidelity and surety product lines and in the general liability product line for management liability coverages for recent accident years.

Personal Insurance. Net favorable prior year reserve development in the third quarter and first nine months of 2024 totaled $181 million and $420 million, respectively, primarily driven by better than expected loss experience in the domestic operations in both the homeowners and other and automobile product lines for recent accident years. Net favorable prior year reserve development in the third quarter and first nine months of 2023 totaled $37 million and $107 million, respectively, primarily driven by better than expected loss experience in the domestic operations’ homeowners and other product line for recent accident years.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

8. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the changes in the Company’s accumulated other comprehensive income (loss) (AOCI) for the three and nine months ended September 30, 2024.


	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, June 30, 2024	$	(4,158)	$	182	$	(460)	$	(974)	$	(5,410)
Other comprehensive income (loss) (OCI) before reclassifications, net of tax	1,850		1		(1)		113		1,963
Amounts reclassified from AOCI, net of tax	14		—		—		—		14
Net OCI, current period	1,864		1		(1)		113		1,977
Balance, September 30, 2024	$	(2,294)	$	183	$	(461)	$	(861)	$	(3,433)


	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, 2023	$	(3,309)	$	180	$	(458)	$	(884)	$	(4,471)
Other comprehensive income (loss) (OCI) before reclassifications, net of tax	942		3		—		23		968
Amounts reclassified from AOCI, net of tax	73		—		(3)		—		70
Net OCI, current period	1,015		3		(3)		23		1,038
Balance, September 30, 2024	$	(2,294)	$	183	$	(461)	$	(861)	$	(3,433)

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 September 30,				Nine Months Ended September 30,
(in millions)	2024		2023		2024		2023
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income	$	2,370	$	(2,391)	$	1,294	$	(1,986)
Income tax expense (benefit)	506		(501)		279		(418)
Net of taxes	1,864		(1,890)		1,015		(1,568)
Having credit losses recognized in the consolidated statement of income	1		—		4		—
Income tax expense	—		—		1		—
Net of taxes	1		—		3		—
Net changes in benefit plan assets and obligations	(1)		(3)		(4)		(10)
Income tax expense (benefit)	—		(1)		(1)		(2)
Net of taxes	(1)		(2)		(3)		(8)
Net changes in unrealized foreign currency translation	120		(118)		24		13
Income tax expense (benefit)	7		(7)		1		4
Net of taxes	113		(111)		23		9
Total other comprehensive income (loss)	2,490		(2,512)		1,318		(1,983)
Total income tax expense (benefit)	513		(509)		280		(416)
Total other comprehensive income (loss), net of taxes	$	1,977	$	(2,003)	$	1,038	$	(1,567)

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 September 30,				Nine Months Ended September 30,
(in millions)	2024		2023		2024		2023
Reclassification adjustments related to unrealized gains (losses) on investment securities:
Having no credit losses recognized in the consolidated statement of income (1)	$	17	$	35	$	92	$	68
Income tax benefit (2)	3		7		19		14
Net of taxes	14		28		73		54
Having credit losses recognized in the consolidated statement of income (1)	—		—		—		—
Income tax benefit (2)	—		—		—		—
Net of taxes	—		—		—		—
Reclassification adjustment related to benefit plan assets and obligations:
Claims and claim adjustment expenses (benefit) (3)	—		(2)		(1)		(4)
General and administrative expenses (benefit) (3)	(1)		(2)		(3)		(6)
Total	(1)		(4)		(4)		(10)
Income tax (expense) benefit (2)	(1)		(1)		(1)		(2)
Net of taxes	—		(3)		(3)		(8)
Reclassification adjustment related to foreign currency translation (1)	—		—		—		—
Income tax benefit (2)	—		—		—		—
Net of taxes	—		—		—		—
Total reclassifications	16		31		88		58
Total income tax benefit	2		6		18		12
Total reclassifications, net of taxes	$	14	$	25	$	70	$	46

(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 and nine months ended September 30, 2024, the Company repurchased 1.1 million and 3.4 million common shares, respectively, under its share repurchase authorizations for total cost of $250 million and $750 million, respectively. The average cost per share repurchased was $222.58 and $216.94, respectively. In addition, the Company acquired 14,298 shares and 0.7 million common shares for a total cost of $3 million and $144 million during the three and nine months ended September 30, 2024, respectively, 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 exercise price, as well as the related payroll withholding taxes, with respect to 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 on common share repurchase activity, net of common share issuances, as part of the Inflation Reduction Act of 2022. At September 30, 2024, the Company had $5.29 billion of capacity remaining under its share repurchase authorizations.

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 September 30,				Nine Months Ended September 30,
(in millions, except per share amounts)	2024		2023		2024		2023
Basic and Diluted
Net income, as reported	$	1,260	$	404	$	2,917	$	1,365
Participating share-based awards — allocated income	(10)		(3)		(22)		(10)
Net income available to common shareholders — basic and diluted	$	1,250	$	401	$	2,895	$	1,355
Common Shares
Basic
Weighted average shares outstanding	227.4		228.8		228.3		230.0
Diluted
Weighted average shares outstanding	227.4		228.8		228.3		230.0
Weighted average effects of dilutive securities — stock options and performance shares	3.2		2.3		3.0		2.5
Total	230.6		231.1		231.3		232.5
Net Income per Common Share
Basic	$	5.50	$	1.75	$	12.68	$	5.89
Diluted	$	5.42	$	1.74	$	12.51	$	5.83

11. SHARE-BASED INCENTIVE COMPENSATION

The following information relates to fully vested stock option awards at September 30, 2024:


Stock Options	Number	Weighted Average Exercise Price		Weighted Average Contractual Life Remaining	Aggregate Intrinsic Value ($ in millions)
Vested at end of period (1)	6,639,395	$	148.24	5.6 years	$	570
Exercisable at end of period	4,926,954	$	134.01	4.7 years	$	493

(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 $63 million and $46 million for the three months ended September 30, 2024 and 2023, respectively, and $202 million and $162 million for the nine months ended September 30, 2024 and 2023, respectively. The related tax benefits recognized in the consolidated statement of income were $11 million and $8 million for the three months ended September 30, 2024 and 2023, respectively, and $33 million and $27 million for the nine months ended September 30, 2024 and 2023, respectively.

The total unrecognized compensation cost related to all nonvested share-based incentive compensation awards at September 30, 2024 was $296 million, which is expected to be recognized over a weighted-average period of 1.9 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 September 30, 2024 and 2023.


	Pension Plans				Postretirement Benefit Plans
(for the three months ended September 30, in millions)	2024		2023		2024		2023
Net Periodic Benefit Cost (Benefit):
Service cost	$	29	$	27	$	—	$	—
Non-service cost (benefit):
Interest cost on benefit obligation	43		44		1		2
Expected return on plan assets	(74)		(77)		—		—

Amortization of unrecognized:
Prior service benefit	—		(1)		—		(1)
Net actuarial (gain) loss	2		—		(3)		(3)
Total non-service cost (benefit)	(29)		(34)		(2)		(2)
Net periodic benefit cost (benefit)	$	—	$	(7)	$	(2)	$	(2)

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 September 30, 2024 and 2023.


	Pension Plans				Postretirement Benefit Plans
(for the three months ended September 30, in millions)	2024		2023		2024		2023
Service Cost:
Claims and claim adjustment expenses	$	11	$	11	$	—	$	—
General and administrative expenses	18		16		—		—
Total service cost	29		27		—		—
Non-Service Cost (Benefit):
Claims and claim adjustment expenses	(11)		(14)		—		(1)
General and administrative expenses	(18)		(20)		(2)		(1)
Total non-service cost (benefit)	(29)		(34)		(2)		(2)
Net periodic benefit cost (benefit)	$	—	$	(7)	$	(2)	$	(2)

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS, Continued


	Pension Plans				Postretirement Benefit Plans
(for the nine months ended September 30, in millions)	2024		2023		2024		2023
Net Periodic Benefit Cost (Benefit):
Service cost	$	87	$	81	$	—	$	—
Non-service cost (benefit):
Interest cost on benefit obligation	129		132		3		4
Expected return on plan assets	(223)		(233)		—		—

Amortization of unrecognized:
Prior service benefit	—		(1)		(2)		(3)
Net actuarial (gain) loss	5		—		(7)		(7)
Total non-service cost (benefit)	(89)		(102)		(6)		(6)
Net periodic benefit cost (benefit)	$	(2)	$	(21)	$	(6)	$	(6)

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 nine months ended September 30, 2024 and 2023.


	Pension Plans				Postretirement Benefit Plans
(for the nine months ended September 30, in millions)	2024		2023		2024		2023
Service Cost:
Claims and claim adjustment expenses	$	34	$	33	$	—	$	—
General and administrative expenses	53		48		—		—
Total service cost	87		81		—		—
Non-Service Cost (Benefit):
Claims and claim adjustment expenses	(34)		(41)		(2)		(3)
General and administrative expenses	(55)		(61)		(4)		(3)
Total non-service cost (benefit)	(89)		(102)		(6)		(6)
Net periodic benefit cost (benefit)	$	(2)	$	(21)	$	(6)	$	(6)

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 September 30,						Nine Months Ended September 30,
(in millions)	2024			2023				2024			2023
Lease cost
Operating leases	$	18		$	19			$	56		$	57
Short-term leases (1)	1			1				2			2

Lease expense	19			20				58			59
Less: sublease income (2)	—			—				—			—
Net lease cost	$	19		$	20			$	58		$	59

Other information on operating leases

Cash payments to settle a lease liability reported in cash flows	$	18		$	22			$	60		$	65
Right-of-use assets obtained in exchange for new lease liabilities	$	31		$	12			$	45		$	25
Weighted average discount rate	3.32		%	2.64		%		3.32		%	2.64		%
Weighted average remaining lease term	4.2 years			4.2 years				4.2 years			4.2 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 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 other investments. These commitments totaled $1.51 billion and $2.05 billion at September 30, 2024 and December 31, 2023, 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 September 30, 2024.

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 September 30, 2024, 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 2023 Annual Report.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

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