Travelers(TRV) - 2024 Q4 - Annual Report

Insurance Industry Overview - The property and casualty insurance industry in the U.S. has approximately 1,100 groups, with the top 150 accounting for about 94% of total net written premiums in 2023[10]. Premiums and Growth - The Company's total direct written premiums for the year ended December 31, 2024, reached $22,078 million, a 8.1$20,430 million in 2023[22]. - Domestic premiums accounted for 91.2% of total business insurance, with the Middle Market segment generating $12,023 million, representing a 8.8$11,045 million in 2023[22]. - The Company’s total international premiums were $1,935 million, accounting for 8.8$4.109 billion, an increase from $3.842 billion in 2023[51]. - Personal Insurance's total net written premiums for 2024 reached$17.169 billion, a 7.8% increase from $15.929 billion in 2023[64]. Geographic Distribution - The Company’s geographic distribution shows California at 10.5$6.7 million per insured, per occurrence, and for property exposures to a maximum of 20.0 million per occurrence[35]. - Bond & Specialty Insurance limits net retentions to 25.0 million per policy for management liability coverages and up to $160.0 million probable maximum loss per principal for surety[56]. - The Corporate Catastrophe Excess-of-Loss Reinsurance Treaty provides for recovery of 80$4.0 billion, with a maximum recovery of $3.7 billion[90]. - The Company has a reinsurance agreement with Long Point Re IV providing coverage of up to$575 million for certain losses from tropical cyclones and earthquakes[93]. - The Personal Insurance Hurricane Catastrophe Excess-of-Loss Reinsurance Treaty offers up to $500 million coverage for homeowners' property losses from hurricanes, subject to a$2.0 billion retention[101]. - The Northeast Property Catastrophe Excess-of-Loss Reinsurance Treaty provides up to $1.0 billion of coverage for losses from a single occurrence, subject to a$2.75 billion retention[102]. - The Business Insurance Earthquake Catastrophe Excess-of-Loss Reinsurance Treaty provides up to $775 million of coverage, subject to a$350 million retention, for earthquake-related losses[103]. - The Canadian Property Catastrophe Excess-of-Loss Reinsurance Treaty covers 50% of losses in excess of C$100 million up to C$200 million, and 100% of losses in excess of C$200 million[105]. Claims and Reserves - As of December 31, 2024, contractholder payables on unpaid losses within the deductible layer of large deductible policies were approximately$3.19 billion, with associated receivables of approximately $3.17 billion[30]. - Premiums receivable from holders of retrospectively rated policies totaled approximately$46 million at December 31, 2024[30]. - As of December 31, 2024, claims and claim adjustment expense reserves (net of reinsurance) were 93 million higher than those reported in the Company's annual financial reports for 2023[111]. - The Company regularly reviews reserve estimates, which involve a high degree of judgment and are influenced by variables such as claims handling procedures and inflation[109]. Financial Strength and Ratings - The Company’s claims-paying ratings from major agencies include A++ from A.M. Best and AA from S&P, indicating strong financial strength[124]. - A downgrade in claims-paying ratings could negatively impact the Company's business volumes and competitive position[120]. - The Company’s debt ratings include A from S&P and A2 from Moody's, with a stable outlook from all major rating agencies[128]. - The Company's U.S. insurance subsidiaries exceeded the Risk-Based Capital (RBC) requirements, indicating strong financial health as of December 31, 2024 and 2023[148]. Employee and Human Capital Management - As of December 31, 2024, the Company had approximately 34,000 employees, with 90% located in the United States[183]. - The average employee tenure is over 11 years, and the voluntary turnover rate over the past three years was approximately 9%[184]. - The Company's minimum hourly wage in the United States is 18, with a median annual total compensation of approximately $117,500 for all employees and$128,000 for full-time U.S. employees[200]. - The Company offers a 401(k) Savings Plan with a dollar-for-dollar match up to 5% of eligible pay, with a maximum annual Company match of $7,500[203]. - The Company has established 10 Diversity Networks to foster a diverse and inclusive work environment[193]. - The Company conducts a comprehensive annual talent review, including succession planning for future leadership positions[197]. - The Company provides various learning and development opportunities, including career mentorship and development programs[191]. - The Company maintains an Ethics Helpline available 24/7 for employees to report issues confidentially[186]. - The Board of Directors actively oversees the Company's human capital management strategy, including diversity and inclusion efforts[205]. - The Company offers comprehensive health and wellness benefits, including medical, dental, vision, and mental health support[203]. Regulatory Environment - The Company's domestic insurance subsidiaries are licensed to operate in all U.S. states and territories, subject to varying degrees of regulation[132]. - The Connecticut insurance holding company laws require state approval for dividends exceeding 10% of statutory capital and surplus or the subsidiary's net income for the previous year[137]. - The Federal Insurance Office (FIO) has limited authority but can recommend expanded federal roles in insurance regulation[153]. - The Company is not designated as a systemically important financial institution (SIFI) and is not currently subject to Federal Reserve regulation[153]. - The NAIC's Insurance Regulatory Information System (IRIS) identified one IRIS ratio outside the normal range for The Travelers Indemnity Company due to investments in non-fixed maturity securities[145]. - The Company is required to participate in various involuntary assigned risk pools, which may impact its financial performance[143]. - The NAIC has adopted changes to its Model Holding Company Act to require certain insurance groups to file a Group Capital Calculation starting in 2023[136]. - The Company's compliance with investment regulations was confirmed as of December 31, 2024 and 2023[152]. - The Company's foreign insurance subsidiaries had capital significantly above their respective regulatory requirements as of December 31, 2024[160]. - The Covered Agreements with the EU and the U.K. aim to promote cooperation between U.S. insurance regulators and their counterparts, eliminating collateral requirements for reinsurers meeting capital and solvency standards[165]. Risk Management Framework - The Company is subject to the Enterprise Risk Management (ERM) framework, which includes annual self-assessments of current and future risks, including solvency positions[175]. - The Company utilizes proprietary and third-party modeling processes to evaluate capital adequacy and manage exposure to catastrophic events[178]. - The Risk Committee of the Board of Directors meets at least four times a year to discuss ERM activities and oversees the implementation of the Company's ERM program[179]. - The IAIS has developed a framework for the supervision of internationally active insurance groups, which could subject the Company to increased supervision if designated as an IAIG[162]. - The Company’s insurance subsidiaries in the U.K. and the Republic of Ireland are subject to change of control restrictions requiring approval from respective regulatory bodies[170]. - The Company’s operations in the Republic of Ireland are regulated by the Central Bank of Ireland and are also subject to EU regulations, including Solvency II[159]. - The Company’s insurance intermediaries are regulated by various state, provincial, and international regulatory bodies focused on market conduct[172]. - The Company’s ERM efforts are designed to foster a risk-based culture that focuses on value creation and preservation, although material financial loss remains a possibility[181].