UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 17, 2002
Travelers Property Casualty Corp.
(Exact Name of Registrant as Specified in Its Charter)
Connecticut 001-31266 06-1008174
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
One Tower Square, Hartford, Connecticut 06183
(Address of principal executive offices) (Zip Code)
(860) 277-0111
(Registrant's telephone number, including area code)
Travelers Property Casualty Corp.
Current Report on Form 8-K
ITEM 5. OTHER EVENTS.
On July 17, 2002 Travelers Property Casualty Corp. (NYSE: TAP.A) reported that
operating income increased 14% over the prior year quarter to $356.8 million or
$0.36 per share compared to $314.3 million or $0.31 per share for the prior year
quarter (adjusted to reflect the shares issued in the March 2002 initial public
offering). On an unadjusted basis operating income was $0.41 per share in the
prior year quarter.
This increase in operating income was driven by the continuing favorable rate
environment and production levels, lower catastrophe losses and our ongoing
focus on managing expenses. These factors were partly offset by unfavorable
prior year reserve development in the current quarter versus favorable prior
year reserve development in the prior year quarter and by lower net investment
income. The Company's statutory combined ratio was 99.1% compared to 101.6% in
the prior year quarter.
Net income, which also includes realized investment gains and losses, was $332.0
million for the quarter or $0.33 per share compared to $343.4 million or $0.34
per share on an adjusted basis in the prior year quarter ($0.45 per share on an
unadjusted basis). The decrease in net income was primarily attributable to
$24.0 million of after-tax net realized investment losses in the second quarter
of 2002 versus $32.2 million of net realized investment gains in the prior year
quarter.
Net written premiums increased $664.4 million or 27% from the prior year quarter
to $3.096 billion, which included $326.2 million from the Northland and
Associates businesses acquired in the fourth quarter of 2001.
"We are very pleased with our overall business performance in the quarter,
particularly in light of the challenging investment environment," said Robert I.
Lipp, Chairman and Chief Executive Officer. "We continue to see the benefits of
very solid fundamentals in our insurance operations, which allowed us to achieve
a return on equity in excess of 14%. Rate increases remain strong across all
businesses. Independent agents are seeking to place more of their business with
stable, high quality insurers like Travelers, and we remain focused on being a
consistent and financially strong partner to this critically important
distribution channel.
"A significant part of our competitive strength is our continuing emphasis on
expense control and operational discipline. During the quarter, we consolidated
a number of claims offices and eliminated marginally performing distribution
channels within Personal Lines. We also continued the migration of personal
lines customers and small commercial accounts to our various service centers,
further leveraging and expanding our technology and process platform," added Mr.
Lipp.
2
For the six months ended June 30, 2002, operating income increased 3% over the
prior year period to $683.4 million or $0.68 per share on an adjusted basis
($0.76 on an unadjusted basis) compared to $663.1 million or $0.66 per share on
an adjusted basis ($0.86 on an unadjusted basis).
Net income for the six months was $434.1 million compared to $822.0 million for
the prior year period. The current period included a first quarter charge of
$242.6 million, after tax, resulting from a change in accounting principles
attributed to goodwill and $5.1 million of net realized investment losses, after
tax. The prior year period included $157.5 million of net realized investment
gains, after tax.
CONSOLIDATED RESULTS
($ millions) Second Quarter Six Months
-------------------- --------------------
2002 2001 2002 2001
------ ------ ------ ------
Operating income $356.8 $314.3 $683.4 $663.1
Realized investment gains
(losses) (24.0) 32.2 (5.1) 157.5
Restructuring charge (0.8) (1.8) (1.6) (1.8)
Cumulative effect of
accounting changes -- (1.3) (242.6) 3.2
------ ------ ------ ------
Net income $332.0 $343.4 $434.1 $822.0
====== ====== ====== ======
COMMERCIAL LINES FUNDAMENTALS CONTINUE TO IMPROVE
Net written premiums increased $545.9 million to $1.922 billion in the second
quarter of 2002 compared to $1.376 billion in the prior year quarter. The
acquisition of Northland and Associates contributed $299.5 million of the
increase, including approximately $115 million relating to our termination of
certain reinsurance contracts.
- In Commercial Accounts, which serves mid-sized businesses, net written
premiums increased 73% to $912.1 million. Excluding the impact of Northland
and Associates, premiums were up 16% to $612.6 million primarily driven by
renewal price changes averaging 23% and strong growth in new business.
- In Select Accounts, which serves small businesses, net written premiums
increased 8% to $472.9 million primarily due to renewal price changes
averaging 18% and strong retention.
- Higher prices in professional liability and fidelity and surety helped to
increase Bond's net written premiums by 12% to $159.5 million. Reductions
in exposures in certain programs, including assumed reinsurance,
transportation and property, offset increases in Gulf's core specialty
lines, resulting in an overall decrease in Gulf's net written premiums of
5% to $180.2 million.
3
- In National Accounts, which serves large corporations and state-sponsored
workers' compensation residual market pools, net written premiums more than
doubled to $196.8 million due to rate increases, higher new business levels
and the renewal of certain assumed reinsurance contracts previously written
by Gulf. Written fees in National Accounts rose 39% to $117.7 million as
pricing for loss prevention and claims administrative services increased
and more business turned to state residual market pools for workers'
compensation.
Operating income increased $8.0 million over the prior year quarter to $310.5
million driven by rate increases considerably in excess of loss trends, higher
production levels, lower catastrophe losses and our ongoing focus on managing
expenses. These factors were partly offset by unfavorable prior year reserve
development in the current quarter versus favorable prior year reserve
development last year and by lower net investment income. The statutory combined
ratio for the quarter was 98.3% compared to 100.1% in the same period last year.
PERSONAL LINES PREMIUMS RISE ON RATE INCREASES
Net written premiums increased $118.5 million or 11% over the prior year quarter
to $1.174 billion, principally as a result of rate increases in both the
Automobile and the Homeowners and Other lines of business. The Northland
acquisition contributed $26.7 million to this rise.
- Automobile net written premiums increased 9% to $714.6 million. Excluding
the impact of Northland, premiums increased 6% to $692.7 million. Renewal
price changes averaged 9%, and retention levels were consistent with prior
quarters.
- Homeowners and Other net written premiums increased 14% to $459.4 million.
Renewal price changes averaged 16% and retention levels were also
consistent with prior quarters.
- Production through our independent agents, which represented over 80% of
net written premiums, was up 14% to $961.4 million.
- Net written premiums through channels other than independent agents was up
only 2% to $212.6 million, as the favorable impact of renewal price changes
was predominantly offset by a reduction in policies in force due to
underwriting actions taken on marginal businesses.
Operating income increased 41% over the prior year quarter to $70.0 million
principally due to lower catastrophe losses. Operating income also benefited
from price increases that continue to exceed loss trends and our ongoing focus
on managing expenses. These factors were partly offset by unfavorable prior year
reserve development in the current quarter versus favorable prior year reserve
development in the prior year quarter and by lower net investment income. The
statutory combined ratio for the second quarter of 2002 was 100.4% compared to
103.9% in the prior year quarter.
INTEREST EXPENSE AND OTHER DECLINED
The after tax charge of $23.7 million in the quarter for Interest Expense and
Other decreased from $37.9 million in the prior year quarter. The primary
component of this charge was interest expense, which amounted to $25.5 million,
after tax, and $34.3
4
million in the 2001 quarter. The reduction in interest expense is due to lower
average interest-bearing debt levels primarily related to the repayment of debt
obligations to Citigroup in the 2002 first quarter. Strong cash flows enabled us
to pre-pay an additional $150.0 million of debt obligations to Citigroup in this
quarter.
INVESTMENT HIGHLIGHTS
After tax net investment income of $346.4 million decreased $32.6 million from
the prior year quarter. The decrease, which resulted from a reduction in the
after tax investment yield from 5.1% to 4.3%, was partially offset by investment
returns on higher average invested assets. This rise in average invested assets
was due to the Northland and Associates acquisitions and increased cash flow
from operations.
Net realized investment losses for the quarter comprise impairments of $126.7
million for the quarter, including a $68.5 million write down in our WorldCom
bonds, from $83.4 million to $14.9 million, along with $90.7 million of net
realized investment gains.
Invested assets increased $893.4 million in the current quarter to $33.4 billion
as the Company benefited from increased cash flow from operations and higher
carrying values of the fixed income portfolio resulting from lower interest
rates. Unrealized investment gains were $579.0 million at the end of the second
quarter.
Travelers Property Casualty Corp. (NYSE: TAP.A) is a leading provider of a broad
range of insurance products and services for commercial markets and for auto and
homeowners insurance for consumers. The company is a member of Citigroup (NYSE:
C), a diversified, global financial services company. During March 2002,
Travelers Property Casualty completed its initial public offering of 231 million
shares of class A common stock. Citigroup has stated its intention to make a
tax-free distribution to its stockholders of a portion of its ownership interest
in Travelers by year-end 2002, such that following the distribution, Citigroup
would remain a holder of approximately 9.9% of Travelers equity. The
distribution is subject to various regulatory approvals as well as a private
letter ruling from the Internal Revenue Service and various other conditions.
Statements made in this press release may include forward-looking information
subject to risks, uncertainties and other facts that could materially affect
actual results.
5
SUMMARY OF FINANCIAL INFORMATION TRAVELERS PROPERTY CASUALTY CORP.
(in millions, except per share data)
AS OF AND FOR THE QUARTER AS OF AND FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2002 2001 2002 2001
-------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $ 356.8 $ 314.3 $ 683.4 $ 663.1
Realized investment gains (losses) (24.0) 32.2 (5.1) 157.5
Restructuring charge (.8) (1.8) (1.6) (1.8)
Cumulative effect of changes in accounting principles -- (1.3) (242.6) 3.2
-------------------------------------------------------------------------------------------------------------------------------
Net income 332.0 343.4 434.1 822.0
Goodwill amortization -- 17.9 -- 35.8
-------------------------------------------------------------------------------------------------------------------------------
Net income excluding goodwill amortization $ 332.0 $ 361.3 $ 434.1 $ 857.8
-------------------------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED EARNINGS PER SHARE:
OPERATING INCOME $ 0.36 $ 0.41 $ 0.76 $ 0.86
Realized investment gains (losses) (0.03) 0.04 (0.01) 0.20
Cumulative effect of changes in accounting principles -- -- (0.27) 0.01
-------------------------------------------------------------------------------------------------------------------------------
Net income 0.33 0.45 0.48 1.07
Goodwill amortization -- 0.02 -- 0.05
-------------------------------------------------------------------------------------------------------------------------------
Net income excluding goodwill amortization $ 0.33 $ 0.47 $ 0.48 $ 1.12
-------------------------------------------------------------------------------------------------------------------------------
Dividends declared $ -- $ 318.5 $ 5,252.5(1) $ 368.5
Basic and diluted weighted average number of
common shares outstanding and common
stock equivalents 1,000.0 769.0 897.9 769.0
Common shares outstanding at period end 1,000.0 769.0 1,000.0 769.0
-------------------------------------------------------------------------------------------------------------------------------
ADJUSTED EARNINGS PER SHARE: (2)
OPERATING INCOME $ 0.36 $ 0.31 $ 0.68 $ 0.66
Realized investment gains (losses) (0.03) 0.03 (0.01) 0.16
Cumulative effect of changes in accounting principles -- -- (0.24) --
-------------------------------------------------------------------------------------------------------------------------------
Net income 0.33 0.34 0.43 0.82
Goodwill amortization -- 0.02 -- 0.04
-------------------------------------------------------------------------------------------------------------------------------
Net income excluding goodwill amortization $ 0.33 $ 0.36 $ 0.43 $ 0.86
-------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) BY SEGMENT
Commercial Lines $ 310.5 $ 302.5 $ 588.1 $ 603.2
Personal Lines 70.0 49.7 141.2 146.1
Interest Expense and Other (23.7) (37.9) (45.9) (86.2)
-------------------------------------------------------------------------------------------------------------------------------
$ 356.8 $ 314.3 $ 683.4 $ 663.1
-------------------------------------------------------------------------------------------------------------------------------
REVENUES
Premiums $ 2,756.7 $ 2,290.8 $ 5,341.3 $ 4,522.7
Net investment income 464.8 518.3 952.6 1,047.1
Fee income 108.8 83.9 211.5 161.6
Realized investment gains (losses) (36.0) 49.3 (7.2) 241.6
Other income 25.5 40.7 54.3 68.1
-------------------------------------------------------------------------------------------------------------------------------
$ 3,319.8 $ 2,983.0 $ 6,552.5 $ 6,041.1
-------------------------------------------------------------------------------------------------------------------------------
(1) 1Q02 dividends were primarily paid in the form of notes, which were
partially prepaid from the $4.1 billion of net proceeds from the March 2002
initial public offering and the issuance of $892.5 million of convertible
notes.
(2) Adjusted earnings per share (basic and diluted) have been computed assuming
the additional 231.0 million shares issued in connection with the March
2002 initial public offering were outstanding for all periods presented.
6
SUMMARY OF FINANCIAL INFORMATION TRAVELERS PROPERTY CASUALTY CORP.
(in millions, except percentage data)
FOR THE QUARTER FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2002 2001 2002 2001
----------------------------------------------------------------------------------------------------------------------------
REVENUES BY SEGMENT EXCLUDING REALIZED
INVESTMENT GAINS (LOSSES)
Commercial Lines $2,173.1 $1,836.0 $4,220.5 $3,627.2
Personal Lines 1,182.8 1,098.9 2,338.2 2,175.0
Interest Expense and Other (0.1) (1.2) 1.0 (2.7)
----------------------------------------------------------------------------------------------------------------------------
$3,355.8 $2,933.7 $6,559.7 $5,799.5
----------------------------------------------------------------------------------------------------------------------------
NET WRITTEN PREMIUMS
Commercial Lines $1,921.5 $1,375.6 $3,609.2 $2,820.5
Personal Lines 1,174.0 1,055.5 2,211.4 1,998.3
----------------------------------------------------------------------------------------------------------------------------
$3,095.5 $2,431.1 $5,820.6 $4,818.8
----------------------------------------------------------------------------------------------------------------------------
STATUTORY COMBINED RATIOS:
COMMERCIAL LINES
Loss and loss adjustment expense ratio 73.2% 72.2% 73.6% 71.1%
Other underwriting expense ratio 25.1% 27.9% 26.1% 28.9%
----------------------------------------------------------------------------------------------------------------------------
Combined ratio 98.3% 100.1% 99.7% 100.0%
----------------------------------------------------------------------------------------------------------------------------
PERSONAL LINES
Loss and loss adjustment expense ratio 76.6% 79.4% 76.4% 75.6%
Other underwriting expense ratio 23.8% 24.5% 24.4% 25.3%
----------------------------------------------------------------------------------------------------------------------------
Combined ratio 100.4% 103.9% 100.8% 100.9%
----------------------------------------------------------------------------------------------------------------------------
TOTAL COMPANY
Loss and loss adjustment expense ratio 74.5% 75.2% 74.7% 73.0%
Other underwriting expense ratio 24.6% 26.4% 25.5% 27.4%
----------------------------------------------------------------------------------------------------------------------------
Combined ratio 99.1% 101.6% 100.2% 100.4%
----------------------------------------------------------------------------------------------------------------------------
7
TRAVELERS PROPERTY CASUALTY CORP.
SECOND QUARTER 2002 FINANCIAL SUPPLEMENT [TRAVELERS LOGO]
PAGE NUMBER
-----------
CONSOLIDATED RESULTS
Financial Highlights F-1
After-Tax Operating Income by Source F-2
Earnings Per Share F-3
Statement of Income F-4
Statement of Operating Income F-5
Selected Statistics F-6
Written and Earned Premiums F-7
COMMERCIAL LINES
Statement of Operating Income F-8
Selected Statistics F-9
Net Written Premiums by Market and Product Line F-10
Selected Production Statistics F-11
PERSONAL LINES
Statement of Operating Income F-12
Selected Statistics F-13
Selected Statistics - Auto F-14
Selected Statistics - Homeowners and Other F-15
Selected Production Statistics F-16
SUPPLEMENTAL DETAIL
Interest Expense and Other Statement of Operating Loss F-17
Consolidated Balance Sheet F-18
Investment Portfolio F-19
Investment Portfolio - Fixed Maturities Data F-20
Net Investment Income F-21
Realized and Unrealized Investment Gains (Losses) F-22
Statutory Reserves for Losses and Loss Adjustment Expense F-23
Capitalization F-24
Statement of Cash Flows F-25
TRAVELERS PROPERTY CASUALTY CORP.
FINANCIAL HIGHLIGHTS [TRAVELERS LOGO]
TRAVELERS PROPERTY CASUALTY CORP. IS ONE OF THE LARGEST PROPERTY AND CASUALTY
INSURANCE COMPANIES IN THE UNITED STATES. THE COMPANY IS ENGAGED IN PROVIDING A
WIDE RANGE OF COMMERCIAL AND PERSONAL PROPERTY AND CASUALTY INSURANCE PRODUCTS
AND SERVICES TO BUSINESSES, ASSOCIATIONS AND INDIVIDUALS.
3Q
1Q 2Q 3Q 2001 4Q
2001 2001 2001 ADJUSTED (1) 2001
--------- --------- --------- --------- ---------
Operating income (loss) (millions) (2) $ 348.8 $ 314.3 $ (121.7) $ 367.8 $ 314.3
Net income (loss) (millions) $ 478.6 $ 343.4 $ (59.9) $ 429.6 $ 303.3
Net income (loss) adjusted (millions) (3) $ 496.5 $ 361.3 $ (42.0) $ 447.5 $ 323.9
Earnings per share (basic and diluted):
Operating income (loss) $ 0.45 $ 0.41 $ (0.16) $ 0.48 $ 0.41
Net income (loss) $ 0.62 $ 0.45 $ (0.08) $ 0.56 $ 0.39
Net income (loss) adjusted (3) $ 0.65 $ 0.47 $ (0.05) $ 0.58 $ 0.42
Adjusted earnings per share (4):
Operating income (loss) $ 0.35 $ 0.31 $ (0.12) $ 0.37 $ 0.31
Net income (loss) $ 0.48 $ 0.34 $ (0.06) $ 0.43 $ 0.30
Net income (loss) adjusted (3) $ 0.50 $ 0.36 $ (0.04) $ 0.45 $ 0.32
Total assets, at period end (billions) $ 54.8 $ 53.4 $ 56.4 $ 56.4 $ 57.8
Total equity, at period end (billions) $ 9.9 $ 9.9 $ 10.1 $ 10.1 $ 10.7
Book value per share, at period end $ 12.84 $ 12.89 $ 13.08 $ 13.08 $ 13.90
Book value per share, excluding
FAS 115, at period end $ 12.24 $ 12.48 $ 12.41 $ 12.41 $ 13.58
Return on equity 14.7% 12.7% (4.9)% 14.4% 12.2%
Return on equity, excluding FAS 115 15.4% 13.2% (5.1)% 15.0% 12.7%
Weighted average number of common
shares outstanding and common stock
equivalents (basic and diluted) (millions) 769.0 769.0 769.0 769.0 769.0
Common shares outstanding at
period end (millions) 769.0 769.0 769.0 769.0 769.0
YTD YTD
1Q 2Q 2Q 2Q
2002 2002 2001 2002
--------- --------- --------- ---------
Operating income (loss) (millions) (2) $ 326.6 $ 356.8 $ 663.1 $ 683.4
Net income (loss) (millions) $ 102.1 $ 332.0 $ 822.0 $ 434.1
Net income (loss) adjusted (millions) (3) $ 102.1 $ 332.0 $ 857.8 $ 434.1
Earnings per share (basic and diluted):
Operating income (loss) $ 0.41 $ 0.36 $ 0.86 $ 0.76
Net income (loss) $ 0.13 $ 0.33 $ 1.07 $ 0.48
Net income (loss) adjusted (3) $ 0.13 $ 0.33 $ 1.12 $ 0.48
Adjusted earnings per share (4):
Operating income (loss) $ 0.33 $ 0.36 $ 0.66 $ 0.68
Net income (loss) $ 0.10 $ 0.33 $ 0.82 $ 0.43
Net income (loss) adjusted (3) $ 0.10 $ 0.33 $ 0.86 $ 0.43
Total assets, at period end (billions) $ 57.9 $ 59.4 $ 53.4 $ 59.4
Total equity, at period end (billions) $ 9.6 $ 10.3 $ 9.9 $ 10.3
Book value per share, at period end $ 9.63 $ 10.26 $ 12.89 $ 10.26
Book value per share, excluding
FAS 115, at period end $ 9.56 $ 9.89 $ 12.48 $ 9.89
Return on equity 12.9% 14.3% 13.7% 13.6%
Return on equity, excluding FAS 115 13.1% 14.7% 14.3% 13.9%
Weighted average number of common
shares outstanding and common stock
equivalents (basic and diluted) (millions) 794.7 1,000.0 769.0 897.9
Common shares outstanding at
period end (millions) 1,000.0 1,000.0 769.0 1,000.0
This report has been restated to reflect the corporate reorganization of
Travelers Property Casualty Corp. (TPC, formerly known as The Travelers
Insurance Group Inc.).
(1) The 3Q01 operating loss and net loss include a charge of $489.5 million
related to the terrorist attack on September 11, 2001. This also impacted
ROE for the quarter. The 3Q01 adjusted excludes the effect of this event.
Assets, equity and book value have not been adjusted.
(2) Operating income excludes realized investment gains (losses), restructuring
charges and the cumulative effect of changes in accounting principles, and
is reflected net of tax.
(3) The 2001 quarters are adjusted to exclude goodwill amortization. Goodwill
is not amortized due to the adoption of Statement of Financial Accounting
Standards No. 142 "Goodwill and Other Intangible Assets" effective January
1, 2002.
(4) Adjusted earnings per share have been computed assuming the 231.0 million
shares issued from the March 2002 initial public offering were issued and
outstanding for all periods presented.
F-1
TRAVELERS PROPERTY CASUALTY CORP.
AFTER-TAX OPERATING INCOME BY SOURCE [TRAVELERS LOGO]
(in millions)
3Q
1Q 2Q 3Q 2001 4Q
2001 2001 2001 ADJUSTED (1) 2001
-------- -------- -------- -------- --------
PROPERTY CASUALTY OPERATIONS
Underwriting:
Commercial Lines $ (11.2) $ (18.2) $ (417.8) $ 30.1 $ (19.7)
Personal Lines 3.3 (35.7) (45.8) (4.2) (22.8)
-------- -------- -------- -------- --------
Total GAAP underwriting gain (loss) (7.9) (53.9) (463.6) 25.9 (42.5)
-------- -------- -------- -------- --------
Other income 18.0 26.6 13.4 13.4 16.1
Net investment income 387.0 379.5 353.0 353.0 367.5
-------- -------- -------- -------- --------
Operating income (loss) from Property Casualty
Operations 397.1 352.2 (97.2) 392.3 341.1
Operating loss from Interest Expense and Other (48.3) (37.9) (24.5) (24.5) (26.8)
-------- -------- -------- -------- --------
Total operating income (loss) $ 348.8 $ 314.3 $ (121.7) $ 367.8 $ 314.3
======== ======== ======== ======== ========
Dividends declared (2) $ 50.0 $ 318.5 $ 157.5 $ 157.5 $ --
Effective tax rate on property casualty net
investment income 27.1% 27.0% 26.2% 26.2% 26.2%
YTD YTD
1Q 2Q 2Q 2Q
2002 2002 2001 2002
-------- -------- -------- --------
PROPERTY CASUALTY OPERATIONS
Underwriting:
Commercial Lines $ (12.9) $ 29.1 $ (29.4) $ 16.2
Personal Lines (17.4) (11.6) (32.4) (29.0)
-------- -------- -------- --------
Total GAAP underwriting gain (loss) (30.3) 17.5 (61.8) (12.8)
-------- -------- -------- --------
Other income 18.7 16.5 44.6 35.2
Net investment income 360.4 346.5 766.5 706.9
-------- -------- -------- --------
Operating income (loss) from Property Casualty
Operations 348.8 380.5 749.3 729.3
Operating loss from Interest Expense and Other (22.2) (23.7) (86.2) (45.9)
-------- -------- -------- --------
Total operating income (loss) $ 326.6 $ 356.8 $ 663.1 $ 683.4
======== ======== ======== ========
Dividends declared (2) $5,252.5 $ -- $ 368.5 $5,252.5
Effective tax rate on property casualty net
investment income 26.0% 25.5% 27.0% 25.7%
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on September
11, 2001.
(2) 1Q02 dividends were primarily paid in the form of notes which were
substantially prepaid from the $4.1 billion of net proceeds from the March
2002 initial public offering and the issuance of $892.5 million of
convertible notes.
F-2
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
EARNINGS PER SHARE
(in millions)
3Q
1Q 2Q 3Q 2001 4Q
2001 2001 2001 ADJUSTED (1) 2001
----- ----- ----- ----- -----
EARNINGS PER SHARE (BASIC AND DILUTED)
Operating income (loss) $0.45 $0.41 $(0.16) $0.48 $0.41
Realized investment gains (losses) 0.16 0.04 0.08 0.08 (0.02)
Cumulative effect of changes in accounting principles 0.01 -- -- -- --
----- ----- ----- ----- -----
Net income (loss) 0.62 0.45 (0.08) 0.56 0.39
Goodwill amortization 0.03 0.02 0.03 0.02 0.03
----- ----- ----- ----- -----
Net income (loss) adjusted for goodwill amortization $0.65 $0.47 $(0.05) $0.58 $0.42
===== ===== ===== ===== =====
ADJUSTED EARNINGS PER SHARE (2)
Operating income (loss) $0.35 $0.31 $(0.12) $0.37 $0.31
Realized investment gains (losses) 0.13 0.03 0.06 0.06 (0.01)
Cumulative effect of changes in accounting principles -- -- -- -- --
----- ----- ----- ----- -----
Net income (loss) 0.48 0.34 (0.06) 0.43 0.30
Goodwill amortization 0.02 0.02 0.02 0.02 0.02
----- ----- ----- ----- -----
Net income (loss) adjusted for goodwill amortization $0.50 $0.36 $(0.04) $0.45 $0.32
===== ===== ===== ===== =====
YTD YTD
1Q 2Q 2Q 2Q
2002 2002 2001 2002
----- ----- ----- -----
EARNINGS PER SHARE (BASIC AND DILUTED)
Operating income (loss) $0.41 $0.36 $0.86 $0.76
Realized investment gains (losses) 0.02 (0.03) 0.20 (0.01)
Cumulative effect of changes in accounting principles (0.30) -- 0.01 (0.27)
----- ----- ----- -----
Net income (loss) 0.13 0.33 1.07 0.48
Goodwill amortization -- -- 0.05 --
----- ----- ----- -----
Net income (loss) adjusted for goodwill amortization $0.13 $0.33 $1.12 $0.48
===== ===== ===== =====
ADJUSTED EARNINGS PER SHARE (2)
Operating income (loss) $0.33 $0.36 $0.66 $0.68
Realized investment gains (losses) 0.01 (0.03) 0.16 (0.01)
Cumulative effect of changes in accounting principles (0.24) -- -- (0.24)
----- ----- ----- -----
Net income (loss) 0.10 0.33 0.82 0.43
Goodwill amortization -- -- 0.04 --
----- ----- ----- -----
Net income (loss) adjusted for goodwill amortization $0.10 $0.33 $0.86 $0.43
===== ===== ===== =====
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
(2) Adjusted earnings per share have been computed assuming the 231.0
million shares issued from the March 2002 initial public offering were
issued and outstanding for all periods presented.
F-3
TRAVELERS PROPERTY CASUALTY CORP.
CONSOLIDATED STATEMENT OF INCOME [TRAVELERS LOGO]
(in millions)
1Q 2Q 3Q
2001 2001 2001
------ ------ ------
REVENUES
Premiums $2,231.9 $2,290.8 $2,314.2
Net investment income 528.8 518.3 488.1
Fee income 77.7 83.9 93.2
Realized investment gains (losses) 192.3 49.3 96.3
Other revenues 27.4 40.7 20.7
-------- -------- --------
Total revenues 3,058.1 2,983.0 3,012.5
-------- -------- --------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 1,624.8 1,757.4 2,428.5
Amortization of deferred acquisition costs 348.5 373.9 380.8
Interest expense 65.7 52.7 46.4
General and administrative expenses 350.9 329.3 309.4
-------- -------- --------
Total claims and expenses 2,389.9 2,513.3 3,165.1
-------- -------- --------
Income (loss) before federal income taxes and cumulative
effect of changes in accounting principles 668.2 469.7 (152.6)
Federal income taxes (benefit) 194.1 125.0 (92.7)
-------- -------- --------
Income (loss) before cumulative effect of changes in accounting principles 474.1 344.7 (59.9)
Cumulative effect of changes in accounting for:
Derivative instruments and hedging activities, net of tax 4.5 -- --
Securitized financial assets, net of tax -- (1.3) --
Goodwill and other intangible assets, net of tax -- -- --
-------- -------- --------
Net income (loss) $ 478.6 $ 343.4 $ (59.9)
======== ======== ========
Other statistics:
Effective tax rate on net investment income 27.1% 26.9% 26.4%
Net investment income (after-tax) $ 385.7 $ 379.0 $ 359.2
Catastrophe losses, net of reinsurance (pre-tax) $ 12.6 $ 84.0 $ 753.0
Asbestos and environmental losses (pre-tax) $ 49.0 $ 50.0 $ 49.0
3Q
2001 4Q 1Q
ADJUSTED (1) 2001 2002
------ ------ ------
REVENUES
Premiums $2,363.2 $2,574.0 $2,584.6
Net investment income 488.1 498.8 487.8
Fee income 93.2 92.6 102.7
Realized investment gains (losses) 96.3 (15.4) 28.8
Other revenues 20.7 26.9 28.8
-------- -------- --------
Total revenues 3,061.5 3,176.9 3,232.7
-------- -------- --------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 1,724.5 1,954.0 1,986.1
Amortization of deferred acquisition costs 380.8 435.5 426.4
Interest expense 46.4 40.1 35.8
General and administrative expenses 309.4 343.6 330.1
-------- -------- --------
Total claims and expenses 2,461.1 2,773.2 2,778.4
-------- -------- --------
Income (loss) before federal income taxes and cumulative
effect of changes in accounting principles 600.4 403.7 454.3
Federal income taxes (benefit) 170.8 100.4 109.6
-------- -------- --------
Income (loss) before cumulative effect of changes in accounting principles 429.6 303.3 344.7
Cumulative effect of changes in accounting for:
Derivative instruments and hedging activities, net of tax -- -- --
Securitized financial assets, net of tax -- -- --
Goodwill and other intangible assets, net of tax -- -- (242.6)
-------- -------- --------
Net income (loss) $ 429.6 $ 303.3 $ 102.1
======== ======== ========
Other statistics:
Effective tax rate on net investment income 26.4% 26.2% 26.0%
Net investment income (after-tax) $ 359.2 $ 368.0 $ 361.1
Catastrophe losses, net of reinsurance (pre-tax) $ -- $ 6.7 $ 16.0
Asbestos and environmental losses (pre-tax) $ 49.0 $ 87.0 $ 64.0
YTD YTD
2Q 2Q 2Q
2002 2001 2002
------ ------ ------
REVENUES
Premiums $2,756.7 $4,522.7 $5,341.3
Net investment income 464.8 1,047.1 952.6
Fee income 108.8 161.6 211.5
Realized investment gains (losses) (36.0) 241.6 (7.2)
Other revenues 25.5 68.1 54.3
-------- -------- --------
Total revenues 3,319.8 6,041.1 6,552.5
-------- -------- --------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 2,094.3 3,382.2 4,080.4
Amortization of deferred acquisition costs 446.1 722.4 872.5
Interest expense 39.8 118.4 75.6
General and administrative expenses 304.4 680.2 634.5
-------- -------- --------
Total claims and expenses 2,884.6 4,903.2 5,663.0
-------- -------- --------
Income (loss) before federal income taxes and cumulative
effect of changes in accounting principles 435.2 1,137.9 889.5
Federal income taxes (benefit) 103.2 319.1 212.8
-------- -------- --------
Income (loss) before cumulative effect of changes in accounting principles 332.0 818.8 676.7
Cumulative effect of changes in accounting for:
Derivative instruments and hedging activities, net of tax -- 4.5 --
Securitized financial assets, net of tax -- (1.3) --
Goodwill and other intangible assets, net of tax -- -- (242.6)
-------- -------- --------
Net income (loss) $ 332.0 $ 822.0 $ 434.1
======== ======== ========
Other statistics:
Effective tax rate on net investment income 25.5% 27.0% 25.7%
Net investment income (after-tax) $ 346.4 $ 764.7 $ 707.5
Catastrophe losses, net of reinsurance (pre-tax) $ 22.0 $ 96.6 $ 38.0
Asbestos and environmental losses (pre-tax) $ 65.0 $ 99.0 $ 129.0
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
F-4
TRAVELERS PROPERTY CASUALTY CORP.
CONSOLIDATED STATEMENT OF OPERATING INCOME [TRAVELERS LOGO]
(in millions)
1Q 2Q 3Q
2001 2001 2001
------ ------ ------
REVENUES
Premiums $2,231.9 $2,290.8 $2,314.2
Net investment income 528.8 518.3 488.1
Fee income 77.7 83.9 93.2
Other revenues 27.4 40.7 20.7
------- ------- -------
Total revenues 2,865.8 2,933.7 2,916.2
------- ------- -------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 1,624.8 1,757.4 2,428.5
Amortization of deferred acquisition costs 348.5 373.9 380.8
Interest expense 65.7 52.7 46.4
General and administrative expenses 350.9 326.6 308.2
------- ------- -------
Total claims and expenses 2,389.9 2,510.6 3,163.9
------- ------- -------
Operating income (loss) before federal income taxes 475.9 423.1 (247.7)
Federal income taxes (benefit) 127.1 108.8 (126.0)
------- ------- -------
Operating income (loss) $348.8 $314.3 $(121.7)
======= ======= =======
3Q
2001 4Q 1Q
ADJUSTED (1) 2001 2002
------ ------ ------
REVENUES
Premiums $2,363.2 $2,574.0 $2,584.6
Net investment income 488.1 498.8 487.8
Fee income 93.2 92.6 102.7
Other revenues 20.7 26.9 28.8
------- ------- -------
Total revenues 2,965.2 3,192.3 3,203.9
------- ------- -------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 1,724.5 1,954.0 1,986.1
Amortization of deferred acquisition costs 380.8 435.5 426.4
Interest expense 46.4 40.1 35.8
General and administrative expenses 308.2 342.4 328.9
------- ------- -------
Total claims and expenses 2,459.9 2,772.0 2,777.2
------- ------- -------
Operating income (loss) before federal income taxes 505.3 420.3 426.7
Federal income taxes (benefit) 137.5 106.0 100.1
------- ------- -------
Operating income (loss) $367.8 $314.3 $326.6
====== ======= =======
YTD YTD
2Q 2Q 2Q
2002 2001 2002
------ ------ ------
REVENUES
Premiums $2,756.7 $4,522.7 $5,341.3
Net investment income 464.8 1,047.1 952.6
Fee income 108.8 161.6 211.5
Other revenues 25.5 68.1 54.3
------- ------- -------
Total revenues 3,355.8 5,799.5 6,559.7
------- ------- -------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 2,094.3 3,382.2 4,080.4
Amortization of deferred acquisition costs 446.1 722.4 872.5
Interest expense 39.8 118.4 75.6
General and administrative expenses 303.2 677.5 632.1
------- ------- -------
Total claims and expenses 2,883.4 4,900.5 5,660.6
------- ------- -------
Operating income (loss) before federal income taxes 472.4 899.0 899.1
Federal income taxes (benefit) 115.6 235.9 215.7
------- ------- -------
Operating income (loss) $356.8 $663.1 $683.4
======= ======= =======
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
F-5
TRAVELERS PROPERTY CASUALTY CORP.
PROPERTY CASUALTY OPERATIONS - SELECTED STATISTICS [TRAVELERS LOGO]
(in millions)
1Q 2Q 3Q
2001 2001 2001
--------- --------- ---------
STATUTORY UNDERWRITING
Net written premiums $ 2,387.7 $ 2,431.1 $ 2,433.4
Net earned premiums $ 2,231.9 $ 2,290.8 $ 2,314.2
Losses and loss adjustment expenses 1,578.2 1,723.5 2,380.3
Other underwriting expenses 678.3 642.0 669.7
--------- --------- ---------
Statutory underwriting gain (loss) (24.6) (74.7) (735.8)
Policyholder dividends 8.9 3.3 7.3
--------- --------- ---------
Statutory underwriting gain (loss) after policyholder dividends $ (33.5) $ (78.0) $ (743.1)
========= ========= =========
STATUTORY COMBINED RATIO (2)
Loss and loss adjustment expense ratio 70.7% 75.2% 102.9%
Other underwriting expense ratio 28.4% 26.4% 27.5%
--------- --------- ---------
Combined ratio 99.1% 101.6% 130.4%
========= ========= =========
IMPACT ON STATUTORY COMBINED RATIO
Catastrophe losses 0.6% 3.7% 32.5%
Prior-year reserve development (0.7)% (1.2)% (0.4)%
GAAP COMBINED RATIO (2,3)
Loss and loss adjustment expense ratio 70.6% 75.0% 102.7%
Other underwriting expense ratio 27.5% 26.8% 26.4%
--------- --------- ---------
Combined ratio 98.1% 101.8% 129.1%
========= ========= =========
OTHER STATUTORY STATISTICS
Reserves for losses and loss adjustment expenses $19,272.4 $19,189.6 $19,772.1
Increase (decrease) in reserves* $ (155.7) $ (82.8) $ 582.5
Statutory surplus $ 7,436.5 $ 7,554.0 $ 7,465.4
Net written premiums/surplus (4) 1.24:1 1.25:1 1.27:1
3Q
2001 4Q 1Q
ADJUSTED (1) 2001 2002
--------- --------- ---------
STATUTORY UNDERWRITING
Net written premiums $ 2,482.4 $ 2,593.3 $ 2,725.1
Net earned premiums $ 2,363.2 $ 2,574.0 $ 2,584.6
Losses and loss adjustment expenses 1,676.3 1,911.0 1,935.5
Other underwriting expenses 669.7 696.0 722.2
--------- --------- ---------
Statutory underwriting gain (loss) 17.2 (33.0) (73.1)
Policyholder dividends 7.3 8.8 7.4
--------- --------- ---------
Statutory underwriting gain (loss) after policyholder dividends $ 9.9 $ (41.8) $ (80.5)
========= ========= =========
STATUTORY COMBINED RATIO (2)
Loss and loss adjustment expense ratio 70.9% 74.2% 74.9%
Other underwriting expense ratio 27.0% 26.8% 26.5%
--------- --------- ---------
Combined ratio 97.9% 101.0% 101.4%
========= ========= =========
IMPACT ON STATUTORY COMBINED RATIO
Catastrophe losses -- 0.3% 0.6%
Prior-year reserve development (0.4)% 1.5% 3.9%
GAAP COMBINED RATIO (2,3)
Loss and loss adjustment expense ratio 70.7% 73.8% 74.6%
Other underwriting expense ratio 25.9% 28.1% 25.9%
--------- --------- ---------
Combined ratio 96.6% 101.9% 100.5%
========= ========= =========
OTHER STATUTORY STATISTICS
Reserves for losses and loss adjustment expenses $19,772.1 $20,214.5 $20,193.0
Increase (decrease) in reserves* $ 582.5 $ 442.4 $ (21.5)
Statutory surplus $ 7,465.4 $ 7,687.3 $ 7,692.9
Net written premiums/surplus (4) 1.27:1 1.36:1 1.37:1
YTD YTD
2Q 2Q 2Q
2002 2001 2002
--------- --------- ---------
STATUTORY UNDERWRITING
Net written premiums $ 3,095.5 $ 4,818.8 $ 5,820.6
Net earned premiums $ 2,756.7 $ 4,522.7 $ 5,341.3
Losses and loss adjustment expenses 2,053.9 3,301.7 3,989.4
Other underwriting expenses 760.9 1,320.3 1,483.1
--------- --------- ---------
Statutory underwriting gain (loss) (58.1) (99.3) (131.2)
Policyholder dividends (1.7) 12.2 5.7
--------- --------- ---------
Statutory underwriting gain (loss) after policyholder dividends $ (56.4) $ (111.5) $ (136.9)
========= ========= =========
STATUTORY COMBINED RATIO (2)
Loss and loss adjustment expense ratio 74.5% 73.0% 74.7%
Other underwriting expense ratio 24.6% 27.4% 25.5%
--------- --------- ---------
Combined ratio 99.1% 100.4% 100.2%
========= ========= =========
IMPACT ON STATUTORY COMBINED RATIO
Catastrophe losses 0.8% 2.1% 0.7%
Prior-year reserve development 3.4% (1.0)% 3.7%
GAAP COMBINED RATIO (2,3)
Loss and loss adjustment expense ratio 74.1% 72.8% 74.3%
Other underwriting expense ratio 22.5% 27.1% 24.1%
--------- --------- ---------
Combined ratio 96.6% 99.9% 98.4%
========= ========= =========
OTHER STATUTORY STATISTICS
Reserves for losses and loss adjustment expenses $20,306.8 $19,189.6 $20,306.8
Increase (decrease) in reserves* $ 113.8 $ (238.5) $ 92.3
Statutory surplus $ 7,645.2 $ 7,554.0 $ 7,645.2
Net written premiums/surplus (4) 1.44:1 1.25:1 1.44:1
* Payments on environmental and cumulative injury claims incurred in
prior years are reflected as a decrease in reserves. Such payments do
not have any impact on reported GAAP earnings.
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001. Other statutory statistics have not been adjusted.
(2) Before policyholder dividends.
(3) For purposes of computing GAAP combined ratios, fee income is allocated as
a reduction of losses and loss adjustment expenses and other underwriting
expenses. Fee income allocated as a reduction of losses and loss
adjustment expenses and other underwriting expenses was $40.5 million and
$37.2 million in 1Q01, $36.6 million and $47.3 million in 2Q01, $45.6
million and $47.6 million in 3Q01, $45.3 million and $47.3 million in
4Q01, $51.6 million and $51.1 million in 1Q02 and $52.0 million and $56.8
million in 2Q02, respectively.
(4) Based on 12 month rolling net written premiums.
F-6
TRAVELERS PROPERTY CASUALTY CORP.
PROPERTY CASUALTY OPERATIONS - WRITTEN AND EARNED PREMIUMS [TRAVELERS LOGO]
(in millions)
1Q 2Q 3Q
2001 2001 2001
-------- -------- --------
WRITTEN PREMIUMS
Direct $2,666.2 $2,631.1 $2,782.0
Assumed 177.6 185.1 172.9
Ceded (456.1) (385.1) (521.5)
-------- -------- --------
Net $2,387.7 $2,431.1 $2,433.4
======== ======== ========
EARNED PREMIUMS
Direct $2,460.1 $2,534.7 $2,606.8
Assumed 213.7 186.9 183.3
Ceded (441.9) (430.8) (475.9)
-------- -------- --------
Net $2,231.9 $2,290.8 $2,314.2
======== ======== ========
3Q
2001 4Q 1Q
ADJUSTED (1) 2001 2002
-------- -------- --------
WRITTEN PREMIUMS
Direct $2,782.0 $2,916.0 $3,176.2
Assumed 172.9 137.5 124.5
Ceded (472.5) (460.2) (575.6)
-------- -------- --------
Net $2,482.4 $2,593.3 $2,725.1
======== ======== ========
EARNED PREMIUMS
Direct $2,606.8 $2,858.5 $2,920.8
Assumed 183.3 193.2 150.1
Ceded (426.9) (477.7) (486.3)
-------- -------- --------
Net $2,363.2 $2,574.0 $2,584.6
======== ======== ========
YTD YTD
2Q 2Q 2Q
2002 2001 2002
-------- -------- --------
WRITTEN PREMIUMS
Direct $3,315.6 $5,297.3 $6,491.8
Assumed 189.6 362.7 314.1
Ceded (409.7) (841.2) (985.3)
-------- -------- --------
Net $3,095.5 $4,818.8 $5,820.6
======== ======== ========
EARNED PREMIUMS
Direct $3,078.5 $4,994.8 $5,999.3
Assumed 183.3 400.6 333.4
Ceded (505.1) (872.7) (991.4)
-------- -------- --------
Net $2,756.7 $4,522.7 $5,341.3
======== ======== ========
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
F-7
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
COMMERCIAL LINES STATEMENT OF OPERATING INCOME
(in millions)
1Q 2Q 3Q
2001 2001 2001
------ ------ ------
REVENUES
Premiums $1,288.5 $1,312.5 $1,310.8
Net investment income 416.7 416.9 382.1
Fee income 77.7 83.9 93.2
Other revenues 8.3 22.7 3.3
------ ------ ------
Total revenues 1,791.2 1,836.0 1,789.4
------ ------ ------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 948.2 980.8 1,627.1
Amortization of deferred acquisition costs 188.3 208.3 209.6
Interest expense -- -- --
General and administrative expenses 245.5 234.4 208.7
------ ------ ------
Total claims and expenses 1,382.0 1,423.5 2,045.4
------ ------ ------
Operating income (loss) before federal income taxes 409.2 412.5 (256.0)
Federal income taxes (benefit) 108.5 110.0 (124.0)
------ ------ ------
Operating income (loss) $300.7 $302.5 $(132.0)
====== ====== ======
3Q
2001 4Q 1Q
ADJUSTED (1) 2001 2002
-------- -------- --------
REVENUES
Premiums $1,355.8 $1,535.2 $1,554.6
Net investment income 382.1 400.6 382.4
Fee income 93.2 92.6 102.7
Other revenues 3.3 7.1 7.7
------ ------ ------
Total revenues 1,834.4 2,035.5 2,047.4
------ ------ ------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 983.1 1,155.6 1,200.2
Amortization of deferred acquisition costs 209.6 258.7 251.3
Interest expense -- -- 0.6
General and administrative expenses 208.7 243.6 233.3
------ ------ ------
Total claims and expenses 1,401.4 1,657.9 1,685.4
------ ------ ------
Operating income (loss) before federal income taxes 433.0 377.6 362.0
Federal income taxes (benefit) 117.1 96.6 84.4
------ ------ ------
Operating income (loss) $315.9 $281.0 $277.6
====== ====== ======
YTD YTD
2Q 2Q 2Q
2002 2001 2002
------ ------ ------
REVENUES
Premiums $1,688.4 $2,601.0 $3,243.0
Net investment income 369.7 833.6 752.1
Fee income 108.8 161.6 211.5
Other revenues 6.2 31.0 13.9
------ ------ ------
Total revenues 2,173.1 3,627.2 4,220.5
------ ------ ------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 1,276.2 1,929.0 2,476.4
Amortization of deferred acquisition costs 265.8 396.6 517.1
Interest expense 0.6 -- 1.2
General and administrative expenses 218.4 479.9 451.7
------ ------ ------
Total claims and expenses 1,761.0 2,805.5 3,446.4
------ ------ ------
Operating income (loss) before federal income taxes 412.1 821.7 774.1
Federal income taxes (benefit) 101.6 218.5 186.0
------ ------ ------
Operating income (loss) $310.5 $603.2 $588.1
====== ====== ======
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
F-8
TRAVELERS PROPERTY CASUALTY CORP.
COMMERCIAL LINES - SELECTED STATISTICS [TRAVELERS LOGO]
(in millions)
1Q 2Q 3Q
2001 2001 2001
-------- -------- --------
GAAP OPERATING INCOME (LOSS) $ 300.7 $ 302.5 $ (132.0)
======== ======== ========
STATUTORY UNDERWRITING
Net written premiums $1,444.9 $1,375.6 $1,358.0
Net earned premiums $1,288.5 $1,312.5 $1,310.8
Losses and loss adjustment expenses 901.5 947.0 1,578.9
Other underwriting expenses 430.3 383.7 396.2
-------- -------- --------
Statutory underwriting gain (loss) (43.3) (18.2) (664.3)
Policyholder dividends 8.9 3.3 7.3
-------- -------- --------
Statutory underwriting gain (loss) after policyholder dividends $ (52.2) $ (21.5) $ (671.6)
======== ======== ========
STATUTORY COMBINED RATIO (2)
Loss and loss adjustment expense ratio 70.0% 72.2% 120.5%
Other underwriting expense ratio 29.8% 27.9% 29.2%
-------- -------- --------
Combined ratio 99.8% 100.1% 149.7%
======== ======== ========
IMPACT ON STATUTORY COMBINED RATIO
Catastrophe losses 1.0% 1.4% 52.6%
Prior-year reserve development (0.8)% (1.0)% (0.4)%
GAAP COMBINED RATIO (2,3)
Loss and loss adjustment expense ratio 69.8% 71.7% 120.1%
Other underwriting expense ratio 27.4% 28.7% 27.3%
-------- -------- --------
Combined ratio 97.2% 100.4% 147.4%
======== ======== ========
OTHER STATISTICS
Effective tax rate on net investment income 26.5% 26.7% 25.8%
Net investment income (after-tax) $ 306.1 $ 305.7 $ 283.7
Catastrophe losses, net of reinsurance (pre-tax) $ 12.6 $ 19.0 $ 689.0
Asbestos and environmental losses (pre-tax) $ 49.0 $ 50.0 $ 49.0
Goodwill amortization $ 12.0 $ 12.0 $ 12.0
3Q
2001 4Q 1Q
ADJUSTED (1) 2001 2002
-------- -------- --------
GAAP OPERATING INCOME (LOSS) $ 315.9 $ 281.0 $ 277.6
======== ======== ========
STATUTORY UNDERWRITING
Net written premiums $1,403.0 $1,559.1 $1,687.7
Net earned premiums $1,355.8 $1,535.2 $1,554.6
Losses and loss adjustment expenses 934.9 1,112.6 1,149.8
Other underwriting expenses 396.2 434.6 460.6
-------- -------- --------
Statutory underwriting gain (loss) 24.7 (12.0) (55.8)
Policyholder dividends 7.3 8.8 7.4
-------- -------- --------
Statutory underwriting gain (loss) after policyholder dividends $ 17.4 $ (20.8) $ (63.2)
======== ======== ========
STATUTORY COMBINED RATIO (2)
Loss and loss adjustment expense ratio 69.0% 72.5% 74.0%
Other underwriting expense ratio 28.2% 27.9% 27.3%
-------- -------- --------
Combined ratio 97.2% 100.4% 101.3%
======== ======== ========
IMPACT ON STATUTORY COMBINED RATIO
Catastrophe losses -- 0.2% --
Prior-year reserve development (0.4)% 2.9% 6.2%
GAAP COMBINED RATIO (2,3)
Loss and loss adjustment expense ratio 68.6% 71.7% 73.4%
Other underwriting expense ratio 26.4% 29.2% 25.7%
-------- -------- --------
Combined ratio 95.0% 100.9% 99.1%
======== ======== ========
OTHER STATISTICS
Effective tax rate on net investment income 25.8% 25.8% 25.4%
Net investment income (after-tax) $ 283.7 $ 297.3 $ 285.4
Catastrophe losses, net of reinsurance (pre-tax) $ -- $ 3.2 $ --
Asbestos and environmental losses (pre-tax) $ 49.0 $ 87.0 $ 64.0
Goodwill amortization $ 12.0 $ 14.3 $ --
YTD YTD
2Q 2Q 2Q
2002 2001 2002
-------- -------- --------
GAAP OPERATING INCOME (LOSS) $ 310.5 $ 603.2 $ 588.1
======== ======== ========
STATUTORY UNDERWRITING
Net written premiums $1,921.5 $2,820.5 $3,609.2
Net earned premiums $1,688.4 $2,601.0 $3,243.0
Losses and loss adjustment expenses 1,235.5 1,848.5 2,385.3
Other underwriting expenses 482.0 814.0 942.6
-------- -------- --------
Statutory underwriting gain (loss) (29.1) (61.5) (84.9)
Policyholder dividends (1.7) 12.2 5.7
-------- -------- --------
Statutory underwriting gain (loss) after policyholder dividends $ (27.4) $ (73.7) $ (90.6)
======== ======== ========
STATUTORY COMBINED RATIO (2)
Loss and loss adjustment expense ratio 73.2% 71.1% 73.6%
Other underwriting expense ratio 25.1% 28.9% 26.1%
-------- -------- --------
Combined ratio 98.3% 100.0% 99.7%
======== ======== ========
IMPACT ON STATUTORY COMBINED RATIO
Catastrophe losses -- 1.2% --
Prior-year reserve development 5.4% (0.9)% 5.8%
GAAP COMBINED RATIO (2,3)
Loss and loss adjustment expense ratio 72.6% 70.7% 73.0%
Other underwriting expense ratio 22.2% 28.1% 23.9%
-------- -------- --------
Combined ratio 94.8% 98.8% 96.9%
======== ======== ========
OTHER STATISTICS
Effective tax rate on net investment income 24.9% 26.6% 25.2%
Net investment income (after-tax) $ 277.5 $ 611.8 $ 562.9
Catastrophe losses, net of reinsurance (pre-tax) $ -- $ 31.6 $ --
Asbestos and environmental losses (pre-tax) $ 65.0 $ 99.0 $ 129.0
Goodwill amortization $ -- $ 24.0 $ --
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
(2) Before policyholder dividends.
(3) For purposes of computing GAAP combined ratios, fee income is allocated
as a reduction of losses and loss adjustment expenses and other
underwriting expenses. Fee income allocated as a reduction of losses
and loss adjustment expenses and other underwriting expenses was $40.5
million and $37.2 million in 1Q01, $36.6 million and $47.3 million in
2Q01, $45.6 million and $47.6 million in 3Q01, $45.3 million and $47.3
million in 4Q01, $51.6 million and $51.1 million in 1Q02 and $52.0
million and $56.8 million in 2Q02, respectively.
F-9
TRAVELERS PROPERTY CASUALTY CORP.
COMMERCIAL LINES - NET WRITTEN PREMIUMS BY MARKET [TRAVELERS LOGO]
AND PRODUCT LINE
(in millions)
1Q 2Q 3Q
2001 2001 2001
-------- -------- --------
NET WRITTEN PREMIUMS BY MARKET
National Accounts $126.2 $ 77.0 $115.8
Commercial Accounts 546.9 527.1 528.8
Select Accounts 429.4 439.6 411.7
Bond 167.6 142.4 147.8
Gulf 174.8 189.5 153.9
-------- -------- --------
Total net written premiums $1,444.9 $1,375.6 $1,358.0
======== ======== ========
NET WRITTEN PREMIUMS BY PRODUCT LINE
Commercial multi-peril $450.4 $421.2 $411.1
Workers' compensation 308.5 228.7 251.9
Commercial automobile 206.0 203.0 223.3
Property 195.8 241.5 180.1
Fidelity and surety 120.4 133.0 134.5
General liability 163.8 148.2 157.1
-------- -------- --------
Total net written premiums $1,444.9 $1,375.6 $1,358.0
======== ======== ========
3Q
2001 4Q 1Q
ADJUSTED (1) 2001 2002
-------- -------- --------
NET WRITTEN PREMIUMS BY MARKET
National Accounts $120.8 $ 99.9 $ 96.8
Commercial Accounts 561.8 804.3 859.3
Select Accounts 415.7 432.5 455.0
Bond 147.8 132.4 131.6
Gulf 156.9 90.0 145.0
-------- -------- --------
Total net written premiums $1,403.0 $1,559.1 $1,687.7
======== ======== ========
NET WRITTEN PREMIUMS BY PRODUCT LINE
Commercial multi-peril $415.1 $475.2 $514.6
Workers' compensation 256.9 241.5 272.6
Commercial automobile 223.3 282.0 308.6
Property 216.1 215.7 241.1
Fidelity and surety 134.5 118.7 117.4
General liability 157.1 226.0 233.4
-------- -------- --------
Total net written premiums $1,403.0 $1,559.1 $1,687.7
======== ======== ========
YTD YTD
2Q 2Q 2Q
2002 2001 2002
-------- -------- --------
NET WRITTEN PREMIUMS BY MARKET
National Accounts $196.8 $203.2 $293.6
Commercial Accounts 912.1 1,074.0 1,771.4
Select Accounts 472.9 869.0 927.9
Bond 159.5 310.0 291.1
Gulf 180.2 364.3 325.2
-------- -------- --------
Total net written premiums $1,921.5 $2,820.5 $3,609.2
======== ======== ========
NET WRITTEN PREMIUMS BY PRODUCT LINE
Commercial multi-peril $527.4 $871.6 $1,042.0
Workers' compensation 254.7 537.2 527.3
Commercial automobile 422.4 409.0 731.0
Property 319.5 437.3 560.6
Fidelity and surety 136.3 253.4 253.7
General liability 261.2 312.0 494.6
-------- -------- --------
Total net written premiums $1,921.5 $2,820.5 $3,609.2
======== ======== ========
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
F-10
TRAVELERS PROPERTY CASUALTY CORP.
COMMERCIAL LINES - SELECTED PRODUCTION STATISTICS [TRAVELERS LOGO]
(in millions)
1Q 2Q 3Q
2001 2001 2001
------ ------ ------
NATIONAL ACCOUNTS
Net written premiums $126.2 $ 77.0 $115.8
Claim volume under
administration $766.4 $478.7 $414.0
Written fees $106.7 $ 84.4 $ 73.1
COMMERCIAL ACCOUNTS
Net written premiums
excluding acquisitions (2) $546.9 $527.1 $528.8
New business premiums (2) $102.3 $106.3 $115.4
Retention (2,3) 71% 70% 71%
Renewal price change (2,4) 23% 14% 19%
Net written premiums
from acquisitions (5) $ -- $ -- $ --
SELECT ACCOUNTS
Net written premiums $429.4 $439.6 $411.7
New business premiums $ 76.0 $ 71.0 $ 65.8
Retention (3) 80% 79% 81%
Renewal price change (4) 15% 15% 14%
BOND
Gross written premiums $155.9 $164.7 $168.1
Net written premiums $167.6 $142.4 $147.8
GULF
Gross written premiums $351.8 $360.1 $325.7
Net written premiums $174.8 $189.5 $153.9
3Q
2001 4Q 1Q
ADJUSTED (1) 2001 2002
------ ------ ------
NATIONAL ACCOUNTS
Net written premiums $120.8 $ 99.9 $ 96.8
Claim volume under
administration $414.0 $593.2 $871.3
Written fees $ 73.1 $ 96.8 $138.3
COMMERCIAL ACCOUNTS
Net written premiums
excluding acquisitions (2) $561.8 $636.9 $675.8
New business premiums (2) $115.4 $183.0 $187.3
Retention (2,3) 71% 72% 75%
Renewal price change (2,4) 19% 20% 24%
Net written premiums
from acquisitions (5) $ -- $167.4 $183.5
SELECT ACCOUNTS
Net written premiums $415.7 $432.5 $455.0
New business premiums $ 65.8 $ 63.0 $ 66.8
Retention (3) 81% 81% 79%
Renewal price change (4) 14% 14% 17%
BOND
Gross written premiums $168.1 $157.1 $178.1
Net written premiums $147.8 $132.4 $131.6
GULF
Gross written premiums $325.7 $248.9 $309.3
Net written premiums $156.9 $ 90.0 $145.0
YTD YTD
2Q 2Q 2Q
2002 2001 2002
------ ------ ------
NATIONAL ACCOUNTS
Net written premiums $196.8 $203.2 $293.6
Claim volume under
administration $595.3 $1,245.1 $1,466.6
Written fees $117.7 $191.1 $256.0
COMMERCIAL ACCOUNTS
Net written premiums
excluding acquisitions (2) $612.6 $1,074.0 $1,288.4
New business premiums (2) $171.1 $208.6 $358.4
Retention (2,3) 74% 70% 74%
Renewal price change (2,4) 23% 18% 23%
Net written premiums
from acquisitions (5) $299.5 $ -- $483.0
SELECT ACCOUNTS
Net written premiums $472.9 $869.0 $927.9
New business premiums $ 71.4 $147.0 $138.2
Retention (3) 80% 80% 79%
Renewal price change (4) 18% 15% 17%
BOND
Gross written premiums $183.5 $320.6 $361.6
Net written premiums $159.5 $310.0 $291.1
GULF
Gross written premiums $338.7 $711.9 $648.0
Net written premiums $180.2 $364.3 $325.2
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
(2) Excludes Northland and Associates acquired in the fourth quarter of
2001.
(3) Retention represents the estimated percentage of premium available for
renewal which renewed in the current period.
(4) Renewal price change represents the estimated average change in premium
on policies that renew, including rate and exposure changes, vs. the
average premium on those same policies for their prior term.
(5) Represents Northland and Associates acquired in the fourth quarter of
2001.
F-11
TRAVELERS PROPERTY CASUALTY CORP.
PERSONAL LINES STATEMENT OF OPERATING INCOME [TRAVELERS LOGO]
(in millions)
1Q 2Q 3Q
2001 2001 2001
------ ------ ------
REVENUES
Premiums $943.4 $978.3 $1,003.4
Net investment income 114.2 102.7 95.9
Other revenues 18.5 17.9 17.4
------ ------ ------
Total revenues 1,076.1 1,098.9 1,116.7
------ ------ ------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 676.6 776.6 801.4
Amortization of deferred acquisition costs 160.2 165.6 171.2
General and administrative expenses 98.8 88.5 98.7
------ ------ ------
Total claims and expenses 935.6 1,030.7 1,071.3
------ ------ ------
Operating income before federal income taxes 140.5 68.2 45.4
Federal income taxes 44.1 18.5 10.6
------ ------ ------
Operating income $ 96.4 $ 49.7 $ 34.8
====== ====== ======
3Q
2001 4Q 1Q
ADJUSTED (1) 2001 2002
------ ------ ------
REVENUES
Premiums $1,007.4 $1,038.8 $1,030.0
Net investment income 95.9 97.4 104.3
Other revenues 17.4 19.5 21.1
------ ------ ------
Total revenues 1,120.7 1,155.7 1,155.4
------ ------ ------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 741.4 798.4 785.9
Amortization of deferred acquisition costs 171.2 176.8 175.1
General and administrative expenses 98.7 96.9 95.7
------ ------ ------
Total claims and expenses 1,011.3 1,072.1 1,056.7
------ ------ ------
Operating income before federal income taxes 109.4 83.6 98.7
Federal income taxes 33.0 23.5 27.5
------ ------ ------
Operating income $ 76.4 $ 60.1 $ 71.2
====== ====== ======
YTD YTD
2Q 2Q 2Q
2002 2001 2002
------ ------ ------
REVENUES
Premiums $1,068.3 $1,921.7 $2,098.3
Net investment income 95.3 216.9 199.6
Other revenues 19.2 36.4 40.3
------ ------ ------
Total revenues 1,182.8 2,175.0 2,338.2
------ ------ ------
CLAIMS AND EXPENSES
Claims and claim adjustment expenses 818.1 1,453.2 1,604.0
Amortization of deferred acquisition costs 180.3 325.8 355.4
General and administrative expenses 87.5 187.3 183.2
------ ------ ------
Total claims and expenses 1,085.9 1,966.3 2,142.6
------ ------ ------
Operating income before federal income taxes 96.9 208.7 195.6
Federal income taxes 26.9 62.6 54.4
------ ------ ------
Operating income $ 70.0 $146.1 $141.2
====== ====== ======
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
F-12
TRAVELERS PROPERTY CASUALTY CORP.
PERSONAL LINES - SELECTED STATISTICS [TRAVELERS LOGO]
(in millions)
1Q 2Q 3Q
2001 2001 2001
------ ------ ------
GAAP OPERATING INCOME $ 96.4 $ 49.7 $ 34.8
====== ====== ======
STATUTORY UNDERWRITING
NET WRITTEN PREMIUMS BY PRODUCT LINE
Auto $621.7 $653.7 $663.0
Homeowners and other 321.1 401.8 412.4
------ ------ ------
Total net written premiums $942.8 $1,055.5 $1,075.4
====== ====== ======
NET WRITTEN PREMIUMS BY DISTRIBUTION CHANNEL
Independent agents $756.2 $847.0 $868.1
Additional distribution 159.1 174.5 179.7
Other 27.5 34.0 27.6
------ ------ ------
Total net written premiums $942.8 $1,055.5 $1,075.4
====== ====== ======
Net earned premiums $943.4 $978.3 $1,003.4
Losses and loss adjustment expenses 676.7 776.5 801.4
Other underwriting expenses 248.0 258.3 273.5
------ ------ ------
Statutory underwriting gain (loss) $ 18.7 $(56.5) $(71.5)
====== ====== ======
STATUTORY COMBINED RATIO
Loss and loss adjustment expense ratio 71.7% 79.4% 79.9%
Other underwriting expense ratio 26.3% 24.5% 25.4%
------ ------ ------
Combined ratio 98.0% 103.9% 105.3%
====== ====== ======
IMPACT ON STATUTORY COMBINED RATIO
Catastrophe losses -- 6.6% 6.4%
Prior-year reserve development (0.6)% (1.4)% (0.5)%
GAAP COMBINED RATIO
Loss and loss adjustment expense ratio 71.7% 79.4% 79.9%
Other underwriting expense ratio 27.5% 24.3% 25.2%
------ ------ ------
Combined ratio 99.2% 103.7% 105.1%
====== ====== ======
OTHER STATISTICS
Effective tax rate on net investment income 29.2% 28.1% 27.7%
Net investment income (after-tax) $ 80.9 $ 73.8 $ 69.3
Catastrophe losses, net of reinsurance (pre-tax) $ -- $ 65.0 $ 64.0
Goodwill amortization $ 4.5 $ 4.5 $ 4.5
3Q
2001 4Q 1Q
ADJUSTED (1) 2001 2002
------ ------ ------
GAAP OPERATING INCOME $ 76.4 $ 60.1 $ 71.2
====== ====== ======
STATUTORY UNDERWRITING
NET WRITTEN PREMIUMS BY PRODUCT LINE
Auto $663.0 $652.3 $687.1
Homeowners and other 416.4 381.9 350.3
------ ------ ------
Total net written premiums $1,079.4 $1,034.2 $1,037.4
====== ====== ======
NET WRITTEN PREMIUMS BY DISTRIBUTION CHANNEL
Independent agents $871.4 $836.6 $850.7
Additional distribution 180.4 173.8 165.0
Other 27.6 23.8 21.7
------ ------ ------
Total net written premiums $1,079.4 $1,034.2 $1,037.4
====== ====== ======
Net earned premiums $1,007.4 $1,038.8 $1,030.0
Losses and loss adjustment expenses 741.4 798.4 785.7
Other underwriting expenses 273.5 261.4 261.6
------ ------ ------
Statutory underwriting gain (loss) $ (7.5) $(21.0) $(17.3)
====== ====== ======
STATUTORY COMBINED RATIO
Loss and loss adjustment expense ratio 73.6% 76.9% 76.3%
Other underwriting expense ratio 25.3% 25.3% 25.2%
------ ------ ------
Combined ratio 98.9% 102.2% 101.5%
====== ====== ======
IMPACT ON STATUTORY COMBINED RATIO
Catastrophe losses -- 0.3% 1.6%
Prior-year reserve development (0.5)% (0.6)% 0.5%
GAAP COMBINED RATIO
Loss and loss adjustment expense ratio 73.6% 76.9% 76.3%
Other underwriting expense ratio 25.1% 26.6% 26.2%
------ ------ ------
Combined ratio 98.7% 103.5% 102.5%
====== ====== ======
OTHER STATISTICS
Effective tax rate on net investment income 27.7% 27.9% 28.2%
Net investment income (after-tax) $ 69.3 $ 70.2 $ 75.0
Catastrophe losses, net of reinsurance (pre-tax) $ -- $ 3.5 $ 16.0
Goodwill amortization $ 4.5 $ 5.0 $ --
YTD YTD
2Q 2Q 2Q
2002 2001 2002
------ ------ ------
GAAP OPERATING INCOME $ 70.0 $ 146.1 $ 141.2
======== ======== ========
STATUTORY UNDERWRITING
NET WRITTEN PREMIUMS BY PRODUCT LINE
Auto $ 714.6 $1,275.4 $1,401.7
Homeowners and other 459.4 722.9 809.7
-------- -------- --------
Total net written premiums $1,174.0 $1,998.3 $2,211.4
======== ======== ========
NET WRITTEN PREMIUMS BY DISTRIBUTION CHANNEL
Independent agents $961.4 $1,603.2 $1,812.1
Additional distribution 186.2 333.6 351.2
Other 26.4 61.5 48.1
-------- -------- --------
Total net written premiums $1,174.0 $1,998.3 $2,211.4
====== ====== ======
Net earned premiums $1,068.3 $1,921.7 $2,098.3
Losses and loss adjustment expenses 818.4 1,453.2 1,604.1
Other underwriting expenses 278.9 506.3 540.5
-------- -------- --------
Statutory underwriting gain (loss) $ (29.0) $ (37.8) $ (46.3)
======== ======== ========
STATUTORY COMBINED RATIO
Loss and loss adjustment expense ratio 76.6% 75.6% 76.4%
Other underwriting expense ratio 23.8% 25.3% 24.4%
-------- -------- --------
Combined ratio 100.4% 100.9% 100.8%
======== ======== ========
IMPACT ON STATUTORY COMBINED RATIO
Catastrophe losses 2.1% 3.4% 1.8%
Prior-year reserve development 0.4% (1.0)% 0.4%
GAAP COMBINED RATIO
Loss and loss adjustment expense ratio 76.6% 75.6% 76.4%
Other underwriting expense ratio 22.9% 25.8% 24.5%
-------- -------- --------
Combined ratio 99.5% 101.4% 100.9%
======== ======== ========
OTHER STATISTICS
Effective tax rate on net investment income 27.6% 28.7% 27.9%
Net investment income (after-tax) $ 69.0 $ 154.7 $ 144.0
Catastrophe losses, net of reinsurance (pre-tax) $ 22.0 $ 65.0 $ 38.0
Goodwill amortization $ -- $ 9.0 $ --
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
F-13
TRAVELERS PROPERTY CASUALTY CORP.
PERSONAL LINES - SELECTED STATISTICS - AUTO [TRAVELERS LOGO]
(in millions)
3Q
1Q 2Q 3Q 2001 4Q
2001 2001 2001 ADJUSTED (1) 2001
--------- -------- -------- -------- --------
STATUTORY UNDERWRITING
NET WRITTEN PREMIUMS BY DISTRIBUTION CHANNEL
Independent agents $ 515.8 $ 544.3 $ 558.5 $ 558.5 $ 551.2
Additional distribution 80.2 77.1 78.2 78.2 78.4
Other 25.7 32.3 26.3 26.3 22.7
--------- -------- -------- -------- --------
Total net written premiums $ 621.7 $ 653.7 $ 663.0 $ 663.0 $ 652.3
========= ======== ======== ======== ========
Net earned premiums $ 588.2 $ 613.7 $ 632.4 $ 632.4 $ 656.3
Losses and loss adjustment expenses 462.6 498.7 516.5 508.0 532.7
Other underwriting expenses 151.4 150.7 155.3 155.3 152.4
--------- -------- -------- -------- --------
Statutory underwriting loss $ (25.8) $ (35.7) $ (39.4) $ (30.9) $ (28.8)
========= ======== ======== ======== ========
STATUTORY COMBINED RATIO
Loss and loss adjustment expense ratio 78.6% 81.3% 81.7% 80.3% 81.2%
Other underwriting expense ratio 24.4% 23.1% 23.4% 23.4% 23.4%
--------- -------- -------- -------- --------
Combined ratio 103.0% 104.4% 105.1% 103.7% 104.6%
========= ======== ======== ======== ========
Catastrophe losses, net of reinsurance (pre-tax) $ -- $ 13.5 $ 8.5 $ -- $ (0.9)
YTD YTD
1Q 2Q 2Q 2Q
2002 2002 2001 2002
-------- -------- ---------- ----------
STATUTORY UNDERWRITING
NET WRITTEN PREMIUMS BY DISTRIBUTION CHANNEL
Independent agents $ 587.1 $ 610.0 $ 1,060.1 $ 1,197.1
Additional distribution 79.5 79.4 157.3 158.9
Other 20.5 25.2 58.0 45.7
-------- -------- ---------- ----------
Total net written premiums $ 687.1 $ 714.6 $ 1,275.4 $ 1,401.7
======== ======== ========== ==========
Net earned premiums $ 650.8 $ 674.6 $ 1,201.9 $ 1,325.4
Losses and loss adjustment expenses 530.9 546.1 961.3 1,077.0
Other underwriting expenses 159.8 161.5 302.1 321.3
-------- -------- ---------- ----------
Statutory underwriting loss $ (39.9) $ (33.0) $ (61.5) $ (72.9)
======== ======== ========== ==========
STATUTORY COMBINED RATIO
Loss and loss adjustment expense ratio 81.6% 81.0% 80.0% 81.3%
Other underwriting expense ratio 23.3% 22.6% 23.7% 22.9%
-------- -------- ---------- ----------
Combined ratio 104.9% 103.6% 103.7% 104.2%
======== ======== ========== ==========
Catastrophe losses, net of reinsurance (pre-tax) $ -- $ -- $ 13.5 $ --
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
F-14
TRAVELERS PROPERTY CASUALTY CORP.
PERSONAL LINES - SELECTED STATISTICS - HOMEOWNERS AND OTHER
(in millions) [TRAVELERS LOGO]
3Q
1Q 2Q 3Q 2001
2001 2001 2001 ADJUSTED (1)
-------- -------- -------- --------
STATUTORY UNDERWRITING
NET WRITTEN PREMIUMS BY DISTRIBUTION CHANNEL
Independent agents $ 240.4 $ 302.7 $ 309.6 $ 312.9
Additional distribution 78.9 97.4 101.5 102.2
Other 1.8 1.7 1.3 1.3
-------- -------- -------- --------
Total net written premiums $ 321.1 $ 401.8 $ 412.4 $ 416.4
======== ======== ======== ========
Net earned premiums $ 355.2 $ 364.6 $ 371.0 $ 375.0
Losses and loss adjustment expenses 214.1 277.8 284.9 233.4
Other underwriting expenses 96.6 107.6 118.2 118.2
-------- -------- -------- --------
Statutory underwriting gain (loss) $ 44.5 $ (20.8) $ (32.1) $ 23.4
======== ======== ======== ========
STATUTORY COMBINED RATIO
Loss and loss adjustment expense ratio 60.3% 76.2% 76.8% 62.2%
Other underwriting expense ratio 30.1% 26.8% 28.7% 28.4%
-------- -------- -------- --------
Combined ratio 90.4% 103.0% 105.5% 90.6%
======== ======== ======== ========
Catastrophe losses, net of reinsurance (pre-tax) $ -- $ 51.5 $ 55.5 $ --
YTD YTD
4Q 1Q 2Q 2Q 2Q
2001 2002 2002 2001 2002
-------- -------- -------- -------- --------
STATUTORY UNDERWRITING
NET WRITTEN PREMIUMS BY DISTRIBUTION CHANNEL
Independent agents $ 285.4 $ 263.6 $ 351.4 $ 543.1 $ 615.0
Additional distribution 95.4 85.5 106.8 176.3 192.3
Other 1.1 1.2 1.2 3.5 2.4
-------- -------- -------- -------- --------
Total net written premiums $ 381.9 $ 350.3 $ 459.4 $ 722.9 $ 809.7
======== ======== ======== ======== ========
Net earned premiums $ 382.5 $ 379.2 $ 393.7 $ 719.8 $ 772.9
Losses and loss adjustment expenses 265.7 254.8 272.3 491.9 527.1
Other underwriting expenses 109.0 101.8 117.4 204.2 219.2
-------- -------- -------- -------- --------
Statutory underwriting gain (loss) $ 7.8 $ 22.6 $ 4.0 $ 23.7 $ 26.6
======== ======== ======== ======== ========
STATUTORY COMBINED RATIO
Loss and loss adjustment expense ratio 69.5% 67.2% 69.2% 68.3% 68.2%
Other underwriting expense ratio 28.5% 29.1% 25.6% 28.2% 27.1%
-------- -------- -------- -------- --------
Combined ratio 98.0% 96.3% 94.8% 96.5% 95.3%
======== ======== ======== ======== ========
Catastrophe losses, net of reinsurance (pre-tax) $ 4.4 $ 16.0 $ 22.0 $ 51.5 $ 38.0
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
F-15
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
PERSONAL LINES - SELECTED PRODUCTION STATISTICS
(in millions)
3Q YTD YTD
1Q 2Q 3Q 2001 4Q 1Q 2Q 2Q 2Q
2001 2001 2001 ADJUSTED (1) 2001 2002 2002 2001 2002
AUTO
Net written premiums
excluding acquisitions (2) $621.7 $653.7 $663.0 $663.0 $628.6 $652.3 $692.7 $1,275.4 $1,345.0
Policies in force (PIF) (in thousands) (2) 1,861 1,876 1,880 1,880 1,874 1,873 1,886 1,876 1,886
New business PIF (in thousands) (2) 107 118 113 113 100 100 107 225 207
Retention* (2,3) 79% 79% 79% 79% 79% 80% 80% 79% 80%
Renewal price change* (2,4) 7% 7% 7% 7% 6% 7% 9% 7% 8%
Net written premiums
from acquisitions (5) $ -- $ -- $ -- $ -- $ 23.7 $34.8 $ 21.9 $ -- $ 56.7
HOMEOWNERS AND OTHER
Net written premiums
excluding acquisitions (2) $321.1 $401.8 $412.4 $416.4 $380.3 $347.8 $454.6 $ 722.9 $ 802.4
Policies in force (PIF) (in thousands) (2) 3,521 3,517 3,503 3,503 3,481 3,459 3,453 3,517 3,453
New business PIF (in thousands) (2) 121 136 144 144 124 112 138 257 250
Retention (2,3) 79% 80% 80% 80% 80% 80% 79% 80% 79%
Renewal price change (2,4) 10% 10% 10% 10% 10% 12% 16% 10% 14%
Net written premiums
from acquisitions (5) $ -- $ -- $ -- $ -- $ 1.6 $ 2.5 $ 4.8 $ -- $ 7.3
* Represents standard voluntary automobile business, which represents
approximately 95% and 92% of total auto policies in force for YTD 2Q 2001 and
2002, respectively.
(1) 3Q01 adjusted data excludes the effect of the terrorist attack on
September 11, 2001.
(2) Excludes Northland and Associates acquired in the fourth quarter of 2001.
(3) Retention represents the estimated percentage of policies from the prior
year period renewed in the current period.
(4) Renewal price change represents the estimated average change in premium on
policies that renew, including rate and exposure changes, vs. the average
premium on those same policies for their prior term.
(5) Represents Northland acquired in the fourth quarter of 2001.
F-16
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
INTEREST EXPENSE AND OTHER STATEMENT OF OPERATING LOSS
(in millions)
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 2Q 2Q
2001 2001 2001 2001 2002 2002 2001 2002
REVENUES
Net investment income $ (2.1) $ (1.3) $ 10.1 $ 0.8 $ 1.1 $ (0.2) $ (3.4) $ 0.9
Other revenues 0.6 0.1 -- 0.3 -- 0.1 0.7 0.1
------- ------- ------ ------- ------- ------- ------- -------
Total revenues (1.5) (1.2) 10.1 1.1 1.1 (0.1) (2.7) 1.0
------- ------- ------ ------- ------- ------- ------- -------
CLAIMS AND EXPENSES
Interest expense 65.7 52.7 46.4 40.1 35.2 39.2 118.4 74.4
General and administrative expenses 6.6 3.7 0.8 1.9 (0.1) (2.7) 10.3 (2.8)
------- ------- ------ ------- ------- ------- ------- -------
Total claims and expenses 72.3 56.4 47.2 42.0 35.1 36.5 128.7 71.6
------- ------- ------ ------- ------- ------- ------- -------
Operating loss before federal income benefit (73.8) (57.6) (37.1) (40.9) (34.0) (36.6) (131.4) (70.6)
Federal income tax benefit (25.5) (19.7) (12.6) (14.1) (11.8) (12.9) (45.2) (24.7)
------- ------- ------ ------- ------- ------- ------- -------
Operating loss $ (48.3) $ (37.9) $ (24.5) $ (26.8) $ (22.2) $ (23.7) $ (86.2) $ (45.9)
======= ======= ======= ======= ======= ======= ======= =======
OTHER STATISTICS
Goodwill amortization $ 1.4 $ 1.4 $ 1.4 $ 1.3 $ -- $ -- $ 2.8 $ --
F-17
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
CONSOLIDATED BALANCE SHEET
(in millions)
JUNE 30, DECEMBER 31,
2002 2001
----------- ----------
ASSETS
Fixed maturities, available for sale at fair value (including
$745.4 and $975.7 subject to securities lending
agreements) (amortized cost $26,200.8 and $25,460.5) $ 26,778.3 $ 25,850.7
Equity securities, at fair value (cost $991.8 and $1,078.7) 993.3 1,082.3
Mortgage loans 262.1 274.4
Real estate held for sale 39.1 38.3
Short-term securities 2,964.1 2,798.3
Trading securities, at fair value 337.8 628.1
Other investments 1,994.7 1,946.5
----------- ----------
Total investments 33,369.4 32,618.6
----------- ----------
Cash 227.7 236.9
Investment income accrued 348.0 359.5
Premium balances receivable 3,866.0 3,657.0
Reinsurance recoverables 10,991.0 11,047.3
Deferred acquisition costs 848.6 768.1
Deferred federal income taxes 1,097.4 1,182.4
Contractholder receivables 2,170.5 2,197.8
Goodwill 2,411.5 2,576.5
Other assets 4,055.5 3,133.7
- ----------- ----------
TOTAL ASSETS $ 59,385.6 $ 57,777.8
=========== ==========
JUNE 30, DECEMBER 31,
2002 2001
---------- ----------
LIABILITIES
Claims and claim adjustment expense reserves $30,735.2 $ 30,736.6
Unearned premium reserves 6,142.9 5,666.9
Contractholder payables 2,170.5 2,197.8
Notes payable to affiliates 1,500.0 1,697.7
Long-term debt 379.8 379.8
Convertible junior subordinated notes payable 867.4 -
Other liabilities 6,425.7 5,512.7
---------- ----------
TOTAL LIABILITIES 48,221.5 46,191.5
---------- ----------
TIGHI - obligated mandatorily redeemable securities
of subsidiary trusts holding solely junior
subordinated debt securities of TIGHI 900.0 900.0
SHAREHOLDERS' EQUITY
Common Stock:
Class A, $.01 par value, 1,500 million shares
authorized, 500 million issued and outstanding 5.0 2.7
Class B, $.01 par value, 1,500 million shares
authorized, 500 million issued and outstanding 5.0 5.0
Additional paid-in capital 8,538.4 4,433.0
Retained earnings 1,343.3 6,004.2
Accumulated other changes in equity from
nonowner sources 372.4 241.4
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 10,264.1 10,686.3
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $59,385.6 $ 57,777.8
========== ==========
F-18
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
INVESTMENT PORTFOLIO
(at carrying value, in millions)
AT AT
JUNE 30, PRE-TAX BOOK DECEMBER 31, PRE-TAX BOOK
2002 YIELD 2001 YIELD
INVESTMENT PORTFOLIO
Taxable fixed maturities (including redeemable preferred stock) $ 15,265.9 7.03% $ 14,911.0 7.27 %
Tax-exempt fixed maturities 11,512.4 5.06 10,939.7 5.13
Non-redeemable preferred stocks 907.6 6.82 1,000.9 6.86
Common stocks 85.7 N/A 81.4 N/A
Mortgage loans 262.1 10.32 274.4 10.29
Real estate held for sale 39.1 1.57 38.3 10.24
Short-term securities 2,964.1 1.96 2,798.3 2.23
Trading securities 337.8 N/A 628.1 N/A
Other investments (1) 1,994.7 N/A 1,946.5 N/A
--------- ------------ ----------- ----------
TOTAL INVESTMENTS $ 33,369.4 5.83% $ 32,618.6 6.05 %
=========== ============ =========== ==========
Net unrealized gain on investment securities,
net of tax, included in shareholders' equity $ 376.8 $ 256.2
=========== ===========
(1) Primarily includes securities partnership interests held for long-term
appreciation. Other investments that generate only intermittent income are
also included in this category and yields fluctuate accordingly.
F-19
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
INVESTMENT PORTFOLIO - FIXED MATURITIES DATA
(at carrying value, in millions)
AT AT
JUNE 30, DECEMBER 31,
2002 2001
--------------- ---------------
Fixed maturities
Mortgage-backed securities - principally obligations of U.S. Government agencies $ 6,528.1 $ 5,608.8
U.S. Treasury securities and obligations of U.S. Government corporations and agencies 1,328.6 1,383.1
Corporates (including redeemable preferreds) 6,825.0 7,231.1
Obligations of states and political subdivisions 11,568.0 11,009.7
Debt securities issued by foreign governments 528.6 618.0
Trading securities 23.1 507.9
--------------- ---------------
Total fixed maturities $ 26,801.4 $ 26,358.6
=============== ===============
FIXED MATURITIES
QUALITY CHARACTERISTICS*
(as of June 30, 2002)
AMOUNT % OF TOTAL
--------------- ---------------
Quality Ratings
Aaa $ 14,503.8 54.2 %
Aa 4,430.5 16.5
A 2,674.3 10.0
Baa 3,504.4 13.1
--------------- ---------------
Total investment grade 25,113.0 93.8
--------------- ---------------
Ba 1,045.7 3.9
B 437.0 1.6
Caa and lower 182.6 0.7
--------------- ---------------
Total below investment grade 1,665.3 6.2
--------------- ---------------
Total fixed maturities, excluding trading securities $ 26,778.3 100.0 %
=============== ===============
Trading securities $ 23.1
===============
Average weighted quality AA3,AA-
---------------
Average duration of fixed maturities and short-term securities 5.9 years
---------------
Average duration of fixed maturities (excluding short-term securities) 6.5 years
---------------
* Rated using external rating agencies, or by Travelers Property Casualty
Corp.'s internal analysts when a public rating does not exist. Below
investment grade assets refer to securities rated "Ba1" or below.
F-20
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
NET INVESTMENT INCOME
(in millions)
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 2Q 2Q
2001 2001 2001 2001 2002 2002 2001 2002
--------- --------- --------- --------- --------- --------- --------- ---------
GROSS INVESTMENT INCOME
Fixed maturities $ 428.6 $ 436.1 $ 410.5 $ 425.1 $ 422.0 $ 405.0 $ 864.7 $ 827.0
Mortgage loans 7.1 7.2 7.1 6.9 6.9 6.9 14.3 13.8
Other, including trading 106.2 84.9 82.3 78.2 67.7 67.4 191.1 135.1
--------- --------- --------- --------- --------- --------- --------- ---------
541.9 528.2 499.9 510.2 496.6 479.3 1,070.1 975.9
Investment expenses 13.1 9.9 11.8 11.4 8.8 14.5 23.0 23.3
--------- --------- --------- --------- --------- --------- --------- ---------
Net investment income, pre-tax 528.8 518.3 488.1 498.8 487.8 464.8 1,047.1 952.6
Federal income taxes 143.1 139.3 128.9 130.8 126.7 118.4 282.4 245.1
--------- --------- --------- --------- --------- --------- --------- ---------
Net investment income, after-tax $ 385.7 $ 379.0 $ 359.2 $ 368.0 $ 361.1 $ 346.4 $ 764.7 $ 707.5
========= ========= ========= ========= ========= ========= ========= =========
Effective tax rate 27.1% 26.9% 26.4% 26.2% 26.0% 25.5% 27.0% 25.7%
Average invested assets $31,121.4 $30,949.4 $30,868.0 $31,972.2 $32,547.3 $32,922.9 $30,884.3 $32,821.3
Average yield pre-tax 7.1% 7.0% 6.5% 6.5% 6.2% 5.8% 7.2% 6.0%
Average yield after-tax 5.2% 5.1% 4.8% 4.8% 4.6% 4.3% 5.2% 4.4%
F-21
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
REALIZED AND UNREALIZED INVESTMENT GAINS (LOSSES)
(in millions)
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 2Q 2Q
2001 2001 2001 2001 2002 2002 2001 2002
------- ------- ------- ------- ------- ------- ------- -------
REALIZED INVESTMENT GAINS (LOSSES)
Fixed maturities $ 209.0 $ 7.2 $ 113.2 $ 1.6 $ 31.2 $ (21.3) $ 216.2 $ 9.9
Equity securities (12.9) 28.5 (12.1) (11.6) (1.3) (6.6) 15.6 (7.9)
Other (3.8) 13.6 (4.8) (5.4) (1.1) (8.1) 9.8 (9.2)
------- ------- ------- ------- ------- ------- ------- -------
Realized investment gains (losses) $ 192.3 $ 49.3 $ 96.3 $ (15.4) $ 28.8 $ (36.0) $ 241.6 $ (7.2)
======= ======= ======= ======= ======= ======= ======= =======
Gross gains on sale $ 262.0 $ 125.7 $ 143.7 $ 141.9 $ 126.9 $ 144.9 $ 387.7 $ 271.8
Gross losses on sale (46.2) (73.3) (28.6) (56.5) (35.9) (54.2) (119.5) (90.1)
Impairments (23.5) (3.1) (18.8) (100.8) (62.2) (126.7) (26.6) (188.9)
------- ------- ------- ------- ------- ------- ------- -------
Realized investment gains (losses) $ 192.3 $ 49.3 $ 96.3 $ (15.4) $ 28.8 $ (36.0) $ 241.6 $ (7.2)
======= ======= ======= ======= ======= ======= ======= =======
UNREALIZED INVESTMENT GAINS (LOSSES)
Fixed maturities $ 97.1 $(239.3) $ 293.4 $(430.2) $(246.1) $ 433.8 (142.2) $ 187.7
Equity securities 15.7 7.7 4.7 18.9 (15.2) 13.1 23.4 (2.1)
------- ------- ------- ------- ------- ------- ------- -------
112.8 (231.6) 298.1 (411.3) (261.3) 446.9 (118.8) 185.6
Related taxes 39.4 (81.0) 104.4 (143.9) (91.4) 156.4 (41.6) 65.0
------- ------- ------- ------- ------- ------- ------- -------
Change in unrealized gains (losses) on
investment securities 73.4 (150.6) 193.7 (267.4) (169.9) 290.5 (77.2) 120.6
Balance, beginning of period 407.1 480.5 329.9 523.6 256.2 86.3 407.1 256.2
------- ------- ------- ------- ------- ------- ------- -------
Balance, end of period $ 480.5 $ 329.9 $ 523.6 $ 256.2 $ 86.3 $ 376.8 $ 329.9 $ 376.8
======= ======= ======= ======= ======= ======= ======= =======
F-22
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
STATUTORY RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSE
(in millions)
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 2Q 2Q
2001 2001 2001 2001 2002 2002 2001 2002
--------- --------- --------- --------- --------- --------- --------- ---------
COMMERCIAL LINES
Beginning of period $16,859.2 $16,738.1 $16,615.2 $17,135.2 $17,488.6 $17,409.5 $16,859.2 $17,488.6
Acquisitions -- -- -- 595.8 -- -- -- --
Incurred* 901.5 947.0 1,578.9 1,112.6 1,149.8 1,235.5 1,848.5 2,385.3
Paids (1,022.6) (1,069.9) (1,058.9) (1,355.0) (1,228.9) (1,218.7) (2,092.5) (2,447.6)
--------- --------- --------- --------- --------- --------- --------- ---------
End of period $16,738.1 $16,615.2 $17,135.2 $17,488.6 $17,409.5 $17,426.3 $16,615.2 $17,426.3
========= ========= ========= ========= ========= ========= ========= =========
PERSONAL LINES
Beginning of period $ 2,568.9 $ 2,534.3 $ 2,574.4 $ 2,636.9 $ 2,725.9 $ 2,783.5 $ 2,568.9 $ 2,725.9
Acquisitions -- -- -- 26.9 -- -- -- --
Incurred* 676.7 776.5 801.4 798.4 785.7 818.4 1,453.2 1,604.1
Paids (711.3) (736.4) (738.9) (736.3) (728.1) (721.4) (1,447.7) (1,449.5)
--------- --------- --------- --------- --------- --------- --------- ---------
End of period $ 2,534.3 $ 2,574.4 $ 2,636.9 $ 2,725.9 $ 2,783.5 $ 2,880.5 $ 2,574.4 $ 2,880.5
========= ========= ========= ========= ========= ========= ========= =========
TOTAL
Beginning of period $19,428.1 $19,272.4 $19,189.6 $19,772.1 $20,214.5 $20,193.0 $19,428.1 $20,214.5
Acquisitions -- -- -- 622.7 -- -- -- --
Incurred* 1,578.2 1,723.5 2,380.3 1,911.0 1,935.5 2,053.9 3,301.7 3,989.4
Paids (1,733.9) (1,806.3) (1,797.8) (2,091.3) (1,957.0) (1,940.1) (3,540.2) (3,897.1)
--------- --------- --------- --------- --------- --------- --------- ---------
End of period $19,272.4 $19,189.6 $19,772.1 $20,214.5 $20,193.0 $20,306.8 $19,189.6 $20,306.8
========= ========= ========= ========= ========= ========= ========= =========
* Includes prior-year reserve
development:
Commercial Lines:
Asbestos, environmental and
cumulative injury other
than asbestos $ 39.0 $ 45.0 $ 45.0 $ 61.0 $ 64.0 $ 63.0 $ 84.0 $ 127.0
Other (49.0) (58.0) (50.0) (16.0) 32.0 28.0 (107.0) 60.0
--------- --------- --------- --------- --------- --------- --------- ---------
Total Commercial Lines (10.0) (13.0) (5.0) 45.0 96.0 91.0 (23.0) 187.0
Personal Lines (6.0) (14.0) (5.0) (6.0) 5.0 4.0 (20.0) 9.0
--------- --------- --------- --------- --------- --------- --------- ---------
Total $ (16.0) $ (27.0) $ (10.0) $ 39.0 $ 101.0 $ 95.0 $ (43.0) $ 196.0
========= ========= ========= ========= ========= ========= ========= =========
F-23
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
CAPITALIZATION
(in millions)
AT AT
JUNE 30, DECEMBER 31,
2002 2001
--------- -----------
DEBT
NOTES PAYABLE TO AFFILIATES:
3.60% Line of credit with Citicorp, due 11/7/2003 $ 500.0 $ 500.0
Floating Rate Note Payable to Citicorp, fully prepaid by 3/27/02 -- 1,197.7
Non-interest bearing Note Payable to Citigroup, due 12/31/02 1,000.0 --
--------- ---------
1,500.0 1,697.7
--------- ---------
CONVERTIBLE NOTES:
4.5% Convertible Junior Subordinated Notes due April 15, 2032 892.5 --
Debt issuance costs (25.1) --
--------- ---------
867.4 --
--------- ---------
LONG-TERM DEBT:
6.75% Notes due 11/15/2006 150.0 150.0
7.81% Notes due 9/16/2011 30.0 30.0
7.75% Notes due 4/15/2026 200.0 200.0
--------- ---------
380.0 380.0
Debt issuance costs (0.2) (0.2)
--------- ---------
379.8 379.8
--------- ---------
Total debt $ 2,747.2 $ 2,077.5
========= =========
TRUST SECURITIES:
8.08% trust securities due April 30, 2036 $ 800.0 $ 800.0
8.00% trust securities due May 15, 2036 100.0 100.0
--------- ---------
$ 900.0 $ 900.0
========= =========
COMMON EQUITY $10,264.1 $10,686.3
========= =========
TOTAL CAPITAL AND DEBT $13,911.3 $13,663.8
========= =========
DEBT TO CAPITAL (1) 16.6% 15.2%
DEBT AND PREFERRED SECURITIES TO CAPITAL (1) 23.1% 21.8%
(1) Assumes 50% equity credit for convertible notes
F-24
TRAVELERS PROPERTY CASUALTY CORP. [TRAVELERS LOGO]
STATEMENT OF CASH FLOWS
(in millions)
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 2Q 2Q
2001 2001 2001 2001 2002 2002 2001 2002
-------- -------- -------- -------- -------- -------- -------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ 272.0 $ (21.3) $ 347.3 $ 621.1 $ 254.7 $ 854.2 $ 250.7 $ 1,108.9
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investments
Fixed maturities 379.7 559.4 464.8 677.5 614.7 578.4 939.1 1,193.1
Mortgage loans 4.8 4.4 4.3 2.3 2.1 11.0 9.2 13.1
Proceeds from sales of investments
Fixed maturities 4,986.2 2,985.7 3,324.2 3,170.6 3,126.4 3,442.5 7,971.9 6,568.9
Equity securities 86.8 200.3 82.6 85.6 48.6 74.8 287.1 123.4
Purchase of investments
Fixed maturities (5,860.9) (3,195.0) (3,077.1) (3,856.1) (3,410.7) (5,346.9) (9,055.9) (8,757.6)
Equity securities (179.2) 79.8 (85.6) 117.6 (87.6) (40.7) (99.4) (128.3)
Mortgage loans -- -- (3.0) (1.1) -- -- -- --
Real estate held for sale (0.5) (4.0) (0.7) (1.0) -- (4.7) (4.5) (4.7)
Short-term securities, (purchases)
sales, net 347.4 326.1 (1,133.0) 353.4 (295.0) 128.8 673.5 (166.2)
Other investments, net (183.3) (40.1) (57.3) (389.9) 357.0 315.9 (223.4) 672.9
Securities transactions in course
of settlement 435.7 (591.3) 141.1 72.8 (131.9) 169.2 (155.6) 37.3
Business acquisitions -- -- -- (329.5) -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Net cash provided by (used in)
investing activities 16.7 325.3 (339.7) (97.8) 223.6 (671.7) 342.0 (448.1)
======== ======== ======== ======== ======== ======== ======== ========
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of convertible notes, net -- -- -- -- 867.0 -- -- 867.0
Issuance of note payable to affiliate -- -- -- 500.0 -- -- -- --
Issuance of short-term debt -- 211.8 -- (211.8) -- -- 211.8 --
Payment of long-term debt -- (500.0) -- -- -- (150.0) (500.0) (150.0)
Payment of note payables to affiliates (401.0) (139.0) -- (500.0) (5,149.0) -- (540.0) (5,149.0)
Issuance of long-term debt to affiliate -- 275.0 -- -- -- -- 275.0 --
Payment of long-term debt to affiliate -- -- -- (275.0) -- -- -- --
Initial public offering -- -- -- -- 4,090.0 -- -- 4,090.0
Receipts from former affiliates 157.5 158.5 157.0 2.0 157.5 0.5 316.0 158.0
Dividend to parent (50.0) (318.5) (157.5) -- (157.5) -- (368.5) (157.5)
Purchase of real estate from an affiliate -- -- -- -- (68.5) -- -- (68.5)
Transfer of employee benefit obligations
to affiliates -- -- -- -- (172.0) -- -- (172.0)
Transfer of lease obligations to affiliate -- -- -- -- (88.0) -- -- (88.0)
Return of capital from former subsidiaries -- -- -- 8.0 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Net cash used in financing activities (293.5) (312.2) (0.5) (476.8) (520.5) (149.5) (605.7) (670.0)
======== ======== ======== ======== ======== ======== ======== ========
Net increase (decrease) in cash (4.8) (8.2) 7.1 46.5 (42.2) 33.0 (13.0) (9.2)
Cash at beginning of period 196.3 191.5 183.3 190.4 236.9 194.7 196.3 236.9
-------- -------- -------- -------- -------- -------- -------- --------
Cash at end of period $ 191.5 $ 183.3 $ 190.4 $ 236.9 $ 194.7 $ 227.7 $ 183.3 $ 227.7
======== ======== ======== ======== ======== ======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Income taxes (received) paid $ 21.0 $ 369.1 $ (34.8) $ (29.7) $ (21.0) $ 125.5 $ 390.1 $ 104.5
Interest paid $ 36.0 $ 22.5 $ 21.3 $ 49.9 $ 35.1 $ 39.0 $ 58.5 $ 74.1
F-25
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 18, 2002 Travelers Property Casualty Corp.
By: /s/ Daniel W. Jackson
--------------------------------
Name: Daniel W. Jackson
Title: Assistant Secretary