Travelers Companies TRV · USD

SEGMENT INFORMATIONThe accounting policies used to prepare the segment reporting data for the Company’s three reportable business segments are the same as those described in the Summary of Significant Accounting Policies in note 1.The chief operating decision maker (CODM) is the Company’s Chairman and Chief Executive Officer. The CODM reviews the financial performance of the reportable business segments to assess the efficiency with which capital is employed, the effective management of risk, the achievement of strategic initiatives, and how to allocate resources to reportable business segments based on the segment’s historical and projected financial performance. The significant measures of the reportable business segments’ financial performance include segment revenues, consisting of premiums, net investment income, fee income and other revenues, less segment expenses, consisting of claims and claim adjustment expenses, deferred acquisition costs, and general and administrative expenses.Except as described below for certain legal entities, the Company allocates its invested assets and the related net investment income to its reportable business segments. Pre-tax net investment income is allocated based upon an investable funds concept, which takes into account liabilities (net of non-invested assets) and appropriate capital considerations for each segment. For investable funds, a benchmark investment yield is developed that reflects the estimated duration of the loss reserves’ future cash flows, the interest rate environment at the time the losses were incurred and A+ rated corporate debt instrument yields. For capital, a benchmark investment yield is developed that reflects the average yield on the total investment portfolio. The benchmark investment yields are applied to each segment’s investable funds and capital, respectively, to produce a total notional investment income by segment. The Company’s actual net investment income is allocated to each segment in proportion to the respective segment’s notional investment income to total notional investment income. There are certain legal entities within the Company that are dedicated to specific reportable business segments. The invested assets and related net investment income from these legal entities are reported in the applicable business segment and are not allocated among the other business segments.

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

DEBTDebt outstanding was as follows:(as of December 31, in millions)20252024Short-term:Commercial paper$100 $100 7.75% Senior notes due April 15, 20261200 — Total short-term debt300 100 Long-term:7.75% Senior notes due April 15, 20261— 200 7.625% Junior subordinated debentures due December 15, 2027 (effective interest rate 6.147%)125 125 6.375% Senior notes due March 15, 20331500 500 5.05% Senior notes due July 24, 20351500 — 6.75% Senior notes due June 20, 20361400 400 6.25% Senior notes due June 15, 20371800 800 5.35% Senior notes due November 1, 20401750 750 4.60% Senior notes due August 1, 20431500 500 4.30% Senior notes due August 25, 20451400 400 8.50% Junior subordinated debentures due December 15, 2045 (effective interest rate 6.362%)56 56 3.75% Senior notes due May 15, 20461500 500 8.312% Junior subordinated debentures due July 1, 2046 (effective interest rate 6.362%)73 73 4.00% Senior notes due May 30, 20471700 700 4.05% Senior notes due March 7, 20481500 500 4.10% Senior notes due March 4, 20491500 500 2.55% Senior notes due April 27, 20501500 500 3.05% Senior notes due June 8, 20511750 750 5.45% Senior notes due May 25, 20531750 750 5.70% Senior notes due July 24, 20551750 — Total long-term debt9,054 8,004 Total debt principal9,354 8,104 Unamortized fair value adjustment31 34 Unamortized debt issuance costs(118)(105)Total debt$9,267 $8,033 ________________________________________________________(1)The effective interest rate to maturity does not differ materially from the issued rate.2025 Debt Issuance. On July 24, 2025, the Company issued a total of $1.25 billion of debt in two tranches: •$500 million aggregate principal amount of 5.05% senior notes that will mature on July 24, 2035 (the “2035 notes”), and•$750 million aggregate principal amount of 5.70% senior notes that will mature on July 24, 2055 (the “2055 notes” and together with the 2035 notes, the “senior notes”). The net proceeds of the issuance, after deducting the underwriting discount and expenses payable by the Company, totaled approximately $1.23 billion. Interest on the senior notes is payable semi-annually in arrears on January 24 and July 24.

INCOME TAXESEnactment of the One Big Beautiful Bill Act of 2025On July 4, 2025, the U.S. enacted a budget reconciliation package known as the One Big Beautiful Bill Act of 2025 (OBBBA), which includes both tax and non-tax provisions. The changes resulting from the tax provisions in OBBBA did not have a material impact on the Company’s income tax expense and results of operations, financial position or liquidity. Components of Income Tax ExpenseThe following table presents the components of the Company’s U.S. federal and state, as well as foreign income tax expense (benefit) included in the amounts reported in the Company’s consolidated financial statements.(for the year ended December 31, in millions)202520242023Composition of income tax expense included in the consolidated statement of incomeCurrent expense:Federal$1,171 $1,252 $477 Foreign89 70 20 State17 14 7 Total current tax expense1,277 1,336 504 Deferred expense (benefit):Federal210 (152)(163)Foreign21 (3)39 Total deferred tax expense (benefit)231 (155)(124)Total income tax expense included in the consolidated statement of income1,508 1,181 380 Composition of income tax expense (benefit) included in shareholders’ equityExpense (benefit) relating to changes in the unrealized gain (loss) on investments, unrealized loss on foreign exchange and other items in other comprehensive income (loss)620 (79)520 Total income tax expense included in the consolidated financial statements$2,128 $1,102 $900 Tax Rate ReconciliationThe following is a reconciliation of income tax expense at the U.S. federal statutory income tax rate to the income tax expense reported in the Company’s consolidated statement of income.2025(for the year ended December 31, in millions)AmountPercentageIncome before income taxesFederal$7,372 Foreign424 Total income before income taxes7,796 Effective tax rateFederal statutory tax rate21 %Federal statutory income tax rate1,637 21.0 %Nontaxable or nondeductible itemsNontaxable investment income(129)(1.7)%Other(22)(0.3)%Other adjustments, net22 0.3 %Effective tax rate$1,508 19.3 %(for the year ended December 31, in millions)20242023Income before income taxesU.S.

SHARE-BASED INCENTIVE COMPENSATIONThe Company has a share-based incentive compensation plan, The Travelers Companies, Inc. Amended and Restated 2023 Stock Incentive Plan (the 2023 Incentive Plan), the purposes of which are to align the interests of the Company’s non-employee directors, executive officers and other employees with those of the Company’s shareholders and to attract and retain personnel by providing incentives in the form of share-based awards. The 2023 Incentive Plan permits grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, deferred stock units, performance awards and other share-based or share-denominated awards with respect to the Company’s common stock. The Company has a policy of issuing new shares to settle the exercise of stock option awards under the various settlement alternatives allowed under the 2023 Incentive Plan, and the vesting of other equity awards.In connection with the adoption of the 2023 Incentive Plan, The Travelers Companies, Inc. Amended and Restated 2014 Stock Incentive Plan, as amended (the 2014 Incentive Plan) was terminated, joining several other legacy share-based incentive compensation plans that had been terminated in prior years (together, the legacy plans). Outstanding grants were not affected by the termination of the legacy plans. The 2023 Incentive Plan is currently the only plan pursuant to which future stock-based awards may be granted.The number of shares of the Company’s common stock initially authorized for grant under the 2023 Incentive Plan was 5,789,184 shares. In May 2025, the Company’s shareholders authorized an additional 2.1 million shares of the Company’s common stock for grant under the 2023 Incentive Plan.

LEASESThe Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease, and a right-of-use asset and lease liability is recognized as part of other assets and other liabilities, respectively, in the consolidated balance sheet. Most leases include an option to extend or renew the lease term. The exercise of the renewal option is at the Company’s discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if the Company is reasonably certain of exercising those options. The Company, in determining the present value of lease payments, utilizes either the rate implicit in the lease, if that rate is readily determinable, or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease. Lease expense is included in general and administrative expenses in the consolidated statement of income. Additional information regarding the Company’s real estate operating leases is as follows:(for the year ended December 31, in millions)202520242023Lease costOperating leases$64 $73 $76 Short-term leases (1)2 3 3 Lease expense66 76 79 Less: sublease income (2)— — — Net lease cost$66 $76 $79 Other information on operating leasesCash payments to settle a lease liability reported in cash flows$74 $79 $87 Right-of-use assets obtained in exchange for new lease liabilities$30 $95 $37 Weighted average discount rate4.06 %3.82 %Weighted average remaining lease term5.4 years5.7 years_________________________________________________________(1) Leases with a term of twelve months or less are not recorded on the consolidated balance sheet.(2) Sublease income consists of rent from third parties of office space and is recognized as part of other revenues in the consolidated statement of income.The following table presents the contractual maturities of the Company’s lease liabilities.

Risk management and strategyThe Company has implemented technologies and tools to evaluate its cybersecurity protections and maintain a cyber risk management strategy related to its technology infrastructure that includes monitoring emerging cybersecurity threats and assessing appropriate responsive measures.Risk IdentificationThe Company’s Chief Information Security Officer (“CISO”) and Cybersecurity team are actively engaged within the cybersecurity community in order to monitor emerging trends and developments and share best practices for identifying and mitigating cyber threats. For example, the Company participates in threat intelligence information-sharing networks, such as the Financial Services Information Sharing and Analysis Center (FS-ISAC). The Company also tracks industry and government intelligence sources for information about evolving cyber threats and deploys updates to its systems, as appropriate. The Company’s Cybersecurity team monitors and investigates suspicious events.Risk AssessmentThe Company performs an annual cybersecurity risk and control assessment as part of the Enterprise Risk Management team’s risk assessment processes. The CISO and the Chief Financial Officer of the Company’s Technology and Operations group review and approve the cybersecurity assessment. The Company’s Chief Technology and Operations Officer and the Chief Financial Officer of the Company’s Technology and Operations group review and approve the list of emerging, strategic and transformative risks upon which the Enterprise Risk Management team’s cybersecurity risk and control assessment processes are based. In addition, as part of their regular responsibilities, the Company’s Risk and Security officers within its Technology and Cybersecurity groups assess technology and cybersecurity risks by leveraging the Company’s risk framework related to technology and cybersecurity, which aligns with the Company’s enterprise risk management strategy.On an annual basis, under the direction of the Company’s Chief Risk Officer, the Company’s Technology, Cybersecurity and Business Resiliency groups also participate in the enterprise-wide Own Risk and Solvency Assessment (“ORSA”), which outlines identified risks and describes the controls in place across the Company to address those risks.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIESValuation and Qualifying Accounts(in millions)Balance atbeginningof periodCharged tocosts andexpensesCharged tootheraccountsDeductions (1)Balance atend ofperiod2025Reinsurance recoverables$119 $15 $— $5 $129 Allowance for uncollectible:Premiums receivable from underwriting activities$58 $65 $— $65 $58 Deductibles$28 $(2)$— $— $26 2024Reinsurance recoverables $118 $1 $— $— $119 Allowance for uncollectible:Premiums receivable from underwriting activities$69 $50 $— $61 $58 Deductibles$29 $(1)$— $— $28 2023Reinsurance recoverables$132 $(14)$— $— $118 Allowance for uncollectible:Premiums receivable from underwriting activities$77 $42 $— $50 $69 Deductibles$25 $5 $— $1 $29 ___________________________________________(1) Credited to the related asset account. Includes amounts classified as held for sale. See note 1 of the notes to the consolidated financial statements for more information. Deductions of $5 million and $1 million in reinsurance recoverables and allowance for uncollectible premiums receivable from underwriting activities, respectively, relate to assets held for sale. See the Report of Independent Registered Public Accounting Firm.