Travelers Reports Net Income per Diluted Share of $2.30, Up 4% from Prior Year Quarter

  Travelers Reports Net Income per Diluted Share of $2.30, Up 4% from Prior
  Year Quarter

Record Quarterly Operating Income per Diluted Share of $2.35, Up 6% from Prior
                                 Year Quarter

     Return on Equity and Operating Return on Equity of 13.9% and 15.2%,
                                 Respectively

  *Strong net and operating income of $864 million and $883 million,
    respectively, generally consistent with the prior year quarter.
  *Continued improvement in underlying underwriting margins.
  *Written rate gains continued to exceed expected loss cost trends in all
    segments.
  *Total capital returned to shareholders of $985 million in the quarter,
    including $800 million in share repurchases. Year-to-date total capital
    returned to shareholders of $1.952 billion.
  *Board of Directors authorizes an additional $5.0 billion of share
    repurchases.
  *Increase in book value per share of 1% to $68.15 and increase in adjusted
    book value per share of 8% to $63.87 from year-end 2012.

Business Wire

NEW YORK -- October 22, 2013

The Travelers Companies, Inc. today reported net income of $864 million, or
$2.30 per diluted share, for the quarter ended September 30, 2013, compared to
$864 million, or $2.21 per diluted share, in the prior year quarter. Operating
income in the current quarter was $883 million, or $2.35 per diluted share,
compared to $867 million, or $2.22 per diluted share, in the prior year
quarter. The increase in net and operating income per diluted share compared
to the prior year quarter primarily resulted from a higher underlying
underwriting gain (i.e., excluding prior year reserve development and
catastrophe losses) and the impact of share repurchases, partially offset by
lower net investment income and lower net favorable prior year reserve
development.

                                                  
Consolidated Highlights

             Three Months Ended September 30,          Nine Months Ended September 30,
($ in
millions,
except for
per share
amounts,      2013        2012        Change            2013         2012         Change
and
after-tax,
except for
premiums &
revenues)
                                                                                         
Net written  $ 5,713   $ 5,697    -      %     $ 17,134   $ 17,062   -      %
premiums
                                                                                         
Total         $ 6,452     $ 6,512       (1    )         $ 19,454     $ 19,263     1
revenues
                                                                                         
Operating     $ 883       $ 867         2               $ 2,586      $ 2,163      20
income
                                        
per diluted   $ 2.35      $ 2.22        6               $ 6.79       $ 5.48       24
share
                                                                                         
Net income    $ 864       $ 864         -               $ 2,685      $ 2,169      24
                                                                                         
per diluted   $ 2.30      $ 2.21        4               $ 7.05       $ 5.50       28
share
                                                                                         
Diluted
weighted
average         372.9       387.9       (4    )           378.1        391.5      (3   )
shares
outstanding
                                                                                         
GAAP
combined        88.9  %     90.3  %     (1.4  ) pts       90.6   %     94.3   %   (3.7 ) pts
ratio
                                                                                         
Underlying
GAAP            90.0  %     92.1  %     (2.1  ) pts       90.8   %     93.7   %   (2.9 ) pts
combined
ratio
                                                                                         
Operating
return on       15.2  %     15.5  %     (0.3  ) pts       15.1   %     13.1   %   2.0    pts
equity
                                                                                         
Return on     13.9  %   13.6  %   0.3    pts    14.2   %   11.6   %  2.6   pts
equity
                                                                                         
                                                        Change from
              September   December    September         December     September
              30,         31,         30,               31,          30,
              2013        2012        2012              2012         2012
Book value    $ 68.15     $ 67.31     $ 67.81             1        %   1        %
per share
                                                                                         
Adjusted
book value      63.87       59.09       59.13             8            8
per share
                                                                                         
See Glossary of Financial Measures for definitions and the statistical supplement for
additional financial data.
                                                                                         

“We are very pleased to report quarterly operating income per diluted share of
$2.35, a record dating back to Travelers’ initial public offering in 2002 and
operating income of $883 million,” commented Jay Fishman, Chairman and Chief
Executive Officer, “as well as operating return on equity of 15.2%. The
current quarter benefited from earned rate increases exceeding loss cost
trends in each segment, largely the result of the pricing strategy we have
been pursuing since the middle of 2010, low weather-related losses and
meaningful net favorable prior year reserve development. Our strong results
for the first nine months of this year enabled us to return almost $2 billion
in capital to shareholders year-to-date through share repurchases and
dividends, including almost $1 billion in the quarter.

“We continue to be pleased with the execution of our granular pricing
strategies in our commercial lines businesses. Retention and renewal rate
change levels remained strong and consistent with recent quarters, while new
business was up slightly from the prior year quarter. We intend to stay the
course on this strategy as our expectations of more volatile weather patterns
and continued low interest rates have not changed. In Personal Insurance, we
are pleased that profitability continues to improve and our retention levels
remain consistent with recent quarters. We plan on introducing our new auto
insurance product, Quantum 2.0, in approximately fifteen states in the fourth
quarter, and we are optimistic that this new product which incorporates a
meaningfully lower cost structure will enable us to improve new business
volumes at attractive returns.

“We expect that the Dominion acquisition will close in the fourth quarter of
2013, subject to customary closing conditions.We are excited about the
transaction and look forward to welcoming the Dominion employees to Travelers.

“Our results, both currently and over time, demonstrate the successful
execution of our strategy. We remain committed to delivering top-tier earnings
and returning excess capital to shareholders,” concluded Mr. Fishman.

                                                                                           
Consolidated Results

($ in
millions and
pre-tax,
unless noted
otherwise)
                Three Months Ended September 30,                 Nine Months Ended September 30,
                2013            2012            Change           2013             2012             Change
                                                                                                            
Underwriting    $ 595           $ 514           $ 81             $ 1,478          $ 845            $ 633
gain:
Underwriting
gain
includes:
Net favorable
prior year        158             193             (35  )           581              718              (137 )
reserve
development
Catastrophes,
net of            (99   )         (91   )         (8   )           (538   )         (808   )         270
reinsurance
                                                                                                            
Net
investment        657             722             (65  )           2,014            2,200            (186 )
income
                                                                                                            
Other,
including        (53   )        (64   )        11             (73    )        (202   )        129  
interest
expense
Operating
income before     1,199           1,172           27               3,419            2,843            576
income taxes
Income tax       316           305           11             833            680            153  
expense
Operating         883             867             16               2,586            2,163            423
income
Net realized
investment
gains            (19   )        (3    )        (16  )          99             6              93   
(losses)
after income
taxes
Net Income      $ 864          $ 864          $ -             $ 2,685         $ 2,169         $ 516  
                                                                             
                                                                                                            
GAAP combined     88.9    %       90.3    %       (1.4 ) pts       90.6     %       94.3     %       (3.7 ) pts
ratio
                                                                                                            
Impact on
GAAP combined
ratio
Net favorable
prior year        (2.8  ) pts     (3.4  ) pts     0.6    pts       (3.4   ) pts     (4.3   ) pts     0.9    pts
reserve
development
Catastrophes,
net of            1.7     pts     1.6     pts     0.1    pts       3.2      pts     4.9      pts     (1.7 ) pts
reinsurance
                                                                                                            
Underlying
GAAP combined     90.0    %       92.1    %       (2.1 ) pts       90.8     %       93.7     %       (2.9 ) pts
ratio
                                                                             
                                                                                                            
Net written
premiums
Business        $ 3,032         $ 2,962           2      %       $ 9,360          $ 9,088            3      %
Insurance
Financial,
Professional
&                 770             729             6                2,266            2,173            4
International
Insurance
Personal         1,911         2,006          (5   )          5,508          5,801           (5   )
Insurance
Total           $ 5,713        $ 5,697          -      %       $ 17,134        $ 17,062          -      %
                                                                             
                                                                                                            

Third Quarter 2013 Results
(All comparisons vs. third quarter 2012, unless noted otherwise)

Net income of $864 million after-tax was level with the prior year quarter.
Operating income of $883 million after-tax increased $16 million or 2%,
primarily reflecting a higher underlying underwriting gain, partially offset
by lower net investment income and lower net favorable prior year reserve
development. Both the current quarter and prior year quarter benefited from
benign levels of catastrophe losses.

Underwriting results

  *The GAAP combined ratio improved 1.4 points to 88.9% due to higher
    underlying underwriting margins (2.1 points), partially offset by lower
    net favorable prior year reserve development (0.6 points) and slightly
    higher catastrophe losses (0.1 point).
  *Net favorable prior year reserve development occurred in all segments.
    Catastrophe losses primarily resulted from wind and hail storms in several
    regions in the United States, as well as increases in estimated losses
    related to wind and hail storms that occurred in the second quarter.
  *The underlying GAAP combined ratio improved 2.1 points to 90.0%, primarily
    resulting from earned rate increases exceeding loss cost trends in each
    segment, as well as lower non-catastrophe weather-related losses in
    Personal Insurance.

Net investment income of $657 million decreased primarily due to lower
reinvestment rates in the fixed income portfolio and lower real estate
partnership returns in the non-fixed income portfolio.

Net written premiums of $5.713 billion were slightly higher than the prior
year quarter as higher net written premiums in Business Insurance and
Financial, Professional & International Insurance were mostly offset by lower
net written premiums in Personal Insurance.

Year-to-Date 2013 Results
(All comparisons vs. year-to-date 2012, unless noted otherwise)

Net income of $2.685 billion after-tax increased $516 million or 24% due to
higher operating income and higher net realized investment gains after-tax.
Operating income of $2.586 billion increased $423 million, primarily
reflecting improved underwriting results driven by a higher underlying
underwriting gain, lower catastrophe losses, a $63 million benefit resulting
from the resolution of prior year tax matters and a $59 million after-tax ($91
million pre-tax) gain from the settlement of a legal proceeding. These
improvements were partially offset by lower net investment income and lower
net favorable prior year reserve development.

Underwriting results

  *The GAAP combined ratio improved 3.7 points to 90.6% due to higher
    underlying underwriting margins (2.9 points) and lower catastrophe losses
    (1.7 points), partially offset by lower net favorable prior year reserve
    development (0.9 points).
  *Net favorable prior year reserve development occurred in all segments.
    Catastrophe losses primarily resulted from tornado, wind and hail storms
    in several regions of the United States, as well as flooding in Alberta,
    Canada.
  *The underlying GAAP combined ratio improved 2.9 points to 90.8%, primarily
    resulting from earned rate increases exceeding loss cost trends in each
    segment, as well as lower non-catastrophe weather-related losses.

Net investment income of $2.014 billion decreased primarily due to the same
factors discussed above for the third quarter.

Net realized investment gains of $99 million after-tax ($155 million pre-tax)
increased primarily from an $87 million after-tax ($134 million pre-tax) gain
in the second quarter related to a short position in U.S. Treasury futures
contracts. The company closed this position by the end of the second quarter.

Net written premiums of $17.134 billion were slightly higher than the prior
year period reflecting the same factors discussed above for the third quarter.

Shareholders’ Equity

Shareholders’ equity of $24.811 billion was generally consistent with the end
of second quarter 2013, but decreased 2% from the end of 2012. Included in
shareholders’ equity were after-tax net unrealized investment gains of $1.559
billion, compared to $1.692 billion at the end of the second quarter and
$3.103 billion at the end of the prior year. These lower net unrealized
investment gains as compared to the end of the prior year resulted from
increased interest rates. The company repurchased 9.7 million shares during
the quarter and 17.0 million shares year-to-date under its existing share
repurchase authorization at a total cost of $800 million and $1.400 billion,
respectively. Statutory surplus was $21.509 billion, and the ratio of
debt-to-capital (excluding after-tax net unrealized investment gains) was
21.4%, well within its target range of 15% to 25%.

Travelers’ Board of Directors has authorized an additional $5.0 billion of
share repurchases. This amount is in addition to the $759 million that
remained from previous authorizations as of September 30, 2013. This
authorization does not have a stated expiration date. The timing and actual
number of shares to be repurchased will depend on a variety of factors,
including the factors described below in the Forward-Looking Statement
section.

The Board of Directors also declared a quarterly dividend of $0.50 per share.
This dividend is payable December 31, 2013, to shareholders of record as of
the close of business on December 10, 2013.

                                                                                                          
Business Insurance Segment Financial Results
                                                                              
($ in millions
and pre-tax,
unless noted
otherwise)
                   Three Months Ended September 30,                 Nine Months Ended September 30,
                   2013            2012            Change           2013            2012            Change
                                                                                                                   
Underwriting       $ 205           $ 187           $ 18             $ 603           $ 371           $ 232
gain
Underwriting
gain includes:
Net favorable
prior year           36              41              (5   )           204             347             (143 )
reserve
development
Catastrophes,
net of               (61   )         (50   )         (11  )           (244  )         (355  )         111
reinsurance
                                                                                                                   
Net investment       479             524             (45  )           1,468           1,592           (124 )
income
                                                                                                                   
Other               8             9             (1   )          135           31            104  
Operating income
before income        692             720             (28  )           2,206           1,994           212
taxes
Income tax          166           177           (11  )          511           477           34   
expense
Operating income   $ 526          $ 543          $ (17  )         $ 1,695        $ 1,517        $ 178        
                                                                              
                                                                                                                   
GAAP combined        93.0    %       93.3    %       (0.3 ) pts       92.9    %       95.3    %       (2.4 ) pts
ratio
                                                                                                                   
Impact on GAAP
combined ratio
Net favorable
prior year           (1.2  ) pts     (1.4  ) pts     0.2    pts       (2.3  ) pts     (4.0  ) pts     1.7    pts
reserve
development
Catastrophes,
net of               2.0     pts     1.7     pts     0.3    pts       2.7     pts     4.1     pts     (1.4 ) pts
reinsurance
                                                                                                                   
Underlying GAAP      92.2    %       93.0    %       (0.8 ) pts       92.5    %       95.2    %       (2.7 ) pts
combined ratio
                                                                              
                                                                                                                   
Net written
premiums by
market
Select Accounts    $ 654           $ 679             (4   ) %       $ 2,087         $ 2,118           (1   ) %
Commercial           807             805             -                2,447           2,383           3
Accounts
National             236             202             17               755             663             14
Accounts
Industry-Focused     673             671             -                2,025           1,955           4
Underwriting
Target Risk          441             382             15               1,389           1,297           7
Underwriting
Specialized          220             222             (1   )           656             672             (2   )
Distribution
Other               1             1              -               1             -              NM
Total              $ 3,032        $ 2,962          2      %       $ 9,360        $ 9,088          3      %
                                                                                                                   
NM = Not                                                                       
Meaningful
                                                                                                                   

Third Quarter 2013 Results
(All comparisons vs. third quarter 2012, unless noted otherwise)

Operating income of $526 million after-tax decreased $17 million or 3%,
primarily reflecting lower net investment income, higher catastrophe losses
and lower net favorable prior year reserve development, partially offset by a
higher underlying underwriting gain.

Underwriting results

  *The GAAP combined ratio improved 0.3 points to 93.0% due to higher
    underlying underwriting margins (0.8 points), partially offset by higher
    catastrophe losses (0.3 points) and lower net favorable prior year
    development (0.2 points).
  *Net favorable prior year reserve development resulted from better than
    expected loss experience related to the general liability product line for
    accident years 2009 through 2012, as well as the property product line
    related to catastrophe and non-catastrophe losses for accident years 2010
    through 2012. These improvements were partially offset by a $124 million
    after-tax ($190 million pre-tax) increase to asbestos reserves.
  *The asbestos reserve strengthening was primarily driven by increases in
    the company’s estimate for projected settlement and defense costs related
    to a broad number of policyholders, as well as slightly higher projected
    payments on assumed reinsurance accounts. The increase in the estimate of
    projected settlement and defense costs resulted from recent payment trends
    that continue to be moderately higher than previously anticipated due to
    the impact of the current litigation environment. Notwithstanding these
    payment trends, the company’s overall view of the underlying asbestos
    environment is essentially unchanged from recent periods and there remains
    a high degree of uncertainty with respect to future exposure from asbestos
    claims.
  *The underlying GAAP combined ratio improved 0.8 points to 92.2%, primarily
    resulting from earned rate increases exceeding loss cost trends and a
    decrease in the expense ratio, partially offset by higher non-catastrophe
    weather-related losses.

Business Insurance net written premiums of $3.032 billion increased 2%
primarily driven by continued increases in renewal rate change. Retention
rates remained strong and generally consistent with recent quarters. New
business volumes increased modestly from the prior year quarter. Net written
premiums also benefited from positive exposure change at renewal which was
higher than the prior year quarter, as well as positive audit premiums, which
were lower than the prior year quarter.

Year-to-Date 2013 Results
(All comparisons vs. year-to-date 2012, unless noted otherwise)

Operating income of $1.695 billion after-tax increased $178 million or 12%,
primarily reflecting improved underwriting results driven by a higher
underlying underwriting gain, lower catastrophe losses, a $59 million
after-tax ($91 million pre-tax) gain from the settlement of a legal proceeding
and a $43 million benefit resulting from the resolution of prior year tax
matters. These improvements were partially offset by lower net favorable prior
year reserve development and lower net investment income.

Underwriting results

  *The GAAP combined ratio improved 2.4 points to 92.9% due to higher
    underlying underwriting margins (2.7 points), and lower catastrophe losses
    (1.4 points), partially offset by lower net favorable prior year reserve
    development (1.7 points).
  *Net favorable prior year reserve development was primarily driven by the
    same factors discussed above for the third quarter. Also included in net
    favorable prior year reserve development was a $42 million pre-tax ($27
    million after-tax) charge that was precipitated by legislation in New York
    enacted in the first quarter 2013 related to the New York Fund for
    Reopened Cases for workers’ compensation.
  *The underlying GAAP combined ratio improved 2.7 points to 92.5%, primarily
    resulting from earned rate increases exceeding loss cost trends.

Business Insurance net written premiums of $9.360 billion increased 3%
primarily driven by the same factors discussed above for the third quarter.

                                                                                        
Financial, Professional & International Insurance Segment Financial Results
                                                                          
($ in
millions and
pre-tax,
unless noted
otherwise)
                Three Months Ended September 30,                Nine Months Ended September 30,
                2013           2012            Change           2013            2012            Change
                                                                                                         
Underwriting    $ 131          $ 149           $ (18  )         $ 359           $ 388           $ (29  )
gain
Underwriting
gain
includes:
Net favorable
prior year        74             87              (13  )           204             229             (25  )
reserve
development
Catastrophes,
net of            -              (1    )         1                (46   )         (5    )         (41  )
reinsurance
                                                                                                         
Net
investment        88             97              (9   )           271             300             (29  )
income
                                                                                                         
Other            5            8             (3   )          15            21            (6   )
Operating
income before     224            254             (30  )           645             709             (64  )
income taxes
Income tax       64           74            (10  )          168           198           (30  )
expense
Operating       $ 160         $ 180          $ (20  )         $ 477          $ 511          $ (34  )
income
                                                                          
                                                                                                         
GAAP combined     83.2   %       80.2    %       3.0    pts       83.9    %       82.6    %       1.3    pts
ratio
                                                                                                         
Impact on
GAAP combined
ratio
Net favorable
prior year        (9.3 ) pts     (11.3 ) pts     2.0    pts       (9.0  ) pts     (10.0 ) pts     1.0    pts
reserve
development
Catastrophes,
net of            -      pts     0.1     pts     (0.1 ) pts       2.0     pts     0.2     pts     1.8    pts
reinsurance
                                                                                                         
Underlying
GAAP combined     92.5   %       91.4    %       1.1    pts       90.9    %       92.4    %       (1.5 ) pts
ratio
                                                                          
                                                                                                         
Net written
premiums by
market
Bond &
Financial       $ 553          $ 529             5      %       $ 1,479         $ 1,410           5      %
Products
International    217          200            9               787           763            3
Total           $ 770         $ 729            6      %       $ 2,266        $ 2,173          4      %
                                                                          
                                                                                                         

Third Quarter 2013 Results
(All comparisons vs. third quarter 2012, unless noted otherwise)

Operating income of $160 million after-tax decreased $20 million or 11%
primarily reflecting lower underlying underwriting results, which were
impacted by a higher level of large losses as compared to a particularly low
level of large losses in the prior year quarter, lower net favorable prior
year reserve development and lower net investment income.

Underwriting results

  *The GAAP combined ratio increased 3.0 points to 83.2% due to lower net
    favorable prior year reserve development (2.0 points) and lower underlying
    underwriting margins (1.1 points), primarily reflecting a higher level of
    large losses, partially offset by lower catastrophe losses (0.1 point).
  *Net favorable prior year reserve development primarily resulted from
    better than expected loss experience in the surety line of business for
    accident years 2004 through 2010 within Bond & Financial Products, as well
    as in the surety line of business in Canada and the marine line of
    business in the company’s operations at Lloyd’s within International.
  *The underlying GAAP combined ratio increased 1.1 points to 92.5%,
    primarily resulting from a higher level of large losses within
    International and an increase in the expense ratio as a result of business
    mix and timing, largely offset by earned rate increases exceeding loss
    cost trends.

Financial, Professional & International Insurance net written premiums of $770
million increased 6%, primarily reflecting higher volumes in construction
surety and renewal rate increases in management liability within Bond &
Financial Products, as well as higher new business volumes within
International.

Year-to-Date 2013 Results
(All comparisons vs. year-to-date 2012, unless noted otherwise)

Operating income of $477 million after-tax decreased $34 million or 7%,
primarily reflecting lower underwriting results and lower net investment
income. The lower underwriting results were driven by higher catastrophe
losses and lower net favorable prior year reserve development, partially
offset by a higher underlying underwriting gain.

Underwriting results

  *The GAAP combined ratio increased 1.3 points to 83.9% due to higher
    catastrophe losses (1.8 points) and lower net favorable prior year reserve
    development (1.0 point), partially offset by higher underlying
    underwriting margins (1.5 points).
  *Net favorable prior year reserve development was primarily driven by the
    same factors discussed above for the third quarter. Catastrophe losses
    primarily resulted from flooding in Alberta, Canada.
  *The underlying GAAP combined ratio improved 1.5 points to 90.9%, primarily
    resulting from earned rate increases exceeding loss cost trends, partially
    offset by an increase in the expense ratio.

Financial, Professional & International Insurance net written premiums of
$2.266 billion increased 4%, primarily driven by the same factors discussed
above for the third quarter, as well as lower reinsurance costs (resulting
from price decreases and slightly higher retention levels).

                                                                                         
Personal Insurance Segment Financial Results
                                                                           
($ in
millions and
pre-tax,
unless noted
otherwise)
                Three Months Ended September 30,                 Nine Months Ended September 30,
                2013            2012            Change           2013            2012            Change
                                                                                                          
Underwriting    $ 259           $ 178           $ 81             $ 516           $ 86            $ 430
gain
Underwriting
gain
includes:
Net favorable
prior year        48              65              (17  )           173             142             31
reserve
development
Catastrophes,
net of            (38   )         (40   )         2                (248  )         (448  )         200
reinsurance
                                                                                                          
Net
investment        90              101             (11  )           275             308             (33  )
income
                                                                                                          
Other            34            17            17             67            52            15   
Operating
income before     383             296             87               858             446             412
income taxes
Income tax       121           90            31             257           115           142  
expense
Operating       $ 262          $ 206          $ 56            $ 601          $ 331          $ 270  
income
                                                                           
                                                                                                          
GAAP combined     84.7    %       89.7    %       (5.0 ) pts       89.5    %       97.4    %       (7.9 ) pts
ratio
                                                                                                          
Impact on
GAAP combined
ratio
Net favorable
prior year        (2.6  ) pts     (3.4  ) pts     0.8    pts       (3.2  ) pts     (2.5  ) pts     (0.7 ) pts
reserve
development
Catastrophes,
net of            2.0     pts     2.1     pts     (0.1 ) pts       4.5     pts     7.8     pts     (3.3 ) pts
reinsurance
                                                                                                          
Underlying
GAAP combined     85.3    %       91.0    %       (5.7 ) pts       88.2    %       92.1    %       (3.9 ) pts
ratio
                                                                           
                                                                                                          
Net written
premiums
Agency          $ 828           $ 906             (9   ) %       $ 2,493         $ 2,705           (8   ) %
Automobile^1
Agency
Homeowners &      1,039           1,056           (2   )           2,892           2,975           (3   )
Other^1
Direct to        44            44             -               123           121            2
Consumer
Total           $ 1,911        $ 2,006          (5   ) %       $ 5,508        $ 5,801          (5   ) %
                                                                                                          
^1 Represents business sold through agents, brokers and other intermediaries and excludes direct to consumer.
                                                                                                          

Third Quarter 2013 Results
(All comparisons vs. third quarter 2012, unless noted otherwise)

Operating income of $262 million after-tax increased $56 million or 27%,
primarily reflecting improved underwriting results driven by a higher
underlying underwriting gain, partially offset by lower net favorable prior
year reserve development and lower net investment income.

Underwriting results

  *The GAAP combined ratio improved 5.0 points to 84.7% due to higher
    underlying underwriting margins (5.7 points) and slightly lower
    catastrophe losses (0.1 point), partially offset by lower net favorable
    prior year reserve development (0.8 points).

  *Net favorable prior year reserve development primarily resulted from
    better than expected loss experience in Homeowners & Other for catastrophe
    losses incurred in accident year 2012.
  *The underlying GAAP combined ratio improved 5.7 points to 85.3% primarily
    resulting from lower non-catastrophe weather-related losses, as well as
    earned rate increases exceeding loss cost trends in both Automobile and
    Homeowners & Other.

Personal Insurance net written premiums of $1.911 billion decreased 5%,
largely as a result of the company’s pricing strategy, increasing deductibles
and other profitability improvement initiatives. Renewal premium change and
retention rates remained strong, while new business was lower than the prior
year quarter.

Year-to-Date 2013 Results
(All comparisons vs. year-to-date 2012, unless noted otherwise)

Operating income of $601 million after-tax increased $270 million or 82%,
primarily reflecting improved underwriting results driven by higher underlying
underwriting gain, lower catastrophe losses and higher net favorable prior
year reserve development, partially offset by lower net investment income.

Underwriting results

  *The GAAP combined ratio improved 7.9 points to 89.5% due to higher
    underlying underwriting margins (3.9 points), lower catastrophe losses
    (3.3 points) and higher net favorable prior year reserve development (0.7
    points).
  *Net favorable prior year reserve development was primarily driven by the
    same factors discussed above for the third quarter, as well as net
    favorable prior year reserve development in the first six months of 2013
    in Homeowners & Other for accident year 2011 and 2012 for both catastrophe
    and non-catastrophe weather-related losses, as well as non-weather-related
    losses.
  *The underlying GAAP combined ratio improved 3.9 points to 88.2%, primarily
    resulting from earned rate increases exceeding loss cost trends in both
    Automobile and Homeowners & Other, and lower non-catastrophe
    weather-related losses.

Personal Insurance net written premiums of $5.508 billion decreased 5%,
primarily driven by the same factors discussed above for the third quarter.

Financial Supplement and Conference Call
The information in this press release should be read in conjunction with a
financial supplement that is available on our website at www.travelers.com.
Travelers management will discuss the contents of this release and other
relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on Tuesday,
October 22, 2013. Investors can access the call via webcast at
http://investor.travelers.com or by dialing 1-800-698-9012 within the U.S. and
1-303-223-2680 outside the U.S. (use passcode 14788 for both the U.S. and
international calls). Prior to the webcast, a slide presentation pertaining to
the quarterly earnings will be available on the company's website.

Following the live event, an audio playback of the webcast and the slide
presentation will be available at the same website. An audio playback can also
be accessed by phone at 1-800-633-8284 within the U.S. and 1-402-977-9140
outside the U.S. (use reservation 21674246 for both the U.S. and international
calls).

About Travelers
The Travelers Companies, Inc. (NYSE:TRV) is a leading provider of property
casualty insurance for auto, home and business. The company’s diverse business
lines offer its customers a wide range of coverage sold primarily through
independent agents and brokers. A component of the Dow Jones Industrial
Average, Travelers has approximately 30,000 employees and operations in the
United States and selected International markets. For more information, visit
www.travelers.com.

From time to time, Travelers may use its website and/or social media outlets,
such as Facebook and Twitter, as distribution channels of material company
information. Financial and other important information regarding the company
is routinely accessible through and posted on our website at
http://investor.travelers.com, our Facebook page at
https://www.facebook.com/travelers and our Twitter account (@TRV_Insurance) at
https://twitter.com/TRV_Insurance. In addition, you may automatically receive
email alerts and other information about Travelers when you enroll your email
address by visiting the “Email Alert Service” section at
http://investor.travelers.com.

Travelers has organized its businesses into the following reportable business
segments:

Business Insurance: The Business Insurance segment offers a broad array of
property and casualty insurance and insurance-related services to its clients
primarily in the United States. Business Insurance is organized into the
following six groups, which collectively comprise Business Insurance Core
operations: Select Accounts; Commercial Accounts; National Accounts;
Industry-Focused Underwriting including Construction, Technology, Public
Sector Services, Oil & Gas and Agribusiness; Target Risk Underwriting
including National Property, Inland Marine, Ocean Marine, Excess Casualty,
Boiler & Machinery and Global Partner Services; and Specialized Distribution
including Northland and National Programs. Business Insurance also includes
the Special Liability Group (which manages the company’s asbestos and
environmental liabilities) and the assumed reinsurance and certain other
runoff operations, which collectively are referred to as Business Insurance
Other.

Financial, Professional & International Insurance: The Financial, Professional
& International Insurance segment includes surety and financial liability
coverages, which primarily use credit-based underwriting processes, as well as
property and casualty products that are primarily marketed on a domestic basis
in the United Kingdom, Canada and the Republic of Ireland, and on an
international basis through Lloyd’s. The businesses in Financial, Professional
& International Insurance are Bond & Financial Products and International.

Personal Insurance: The Personal Insurance segment writes a broad range of
property and casualty insurance covering individuals’ personal risks. The
primary products of automobile and homeowners insurance are complemented by a
broad suite of related coverages.

Forward-Looking Statement

This press release contains, and management may make, certain “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. All statements, other than statements of historical facts, may be
forward-looking statements. Words such as “may”, “will”, “should”, “likely”,
“anticipates”, “expects”, “intends”, “plans”, “projects”, “believes”,
“estimates” and similar expressions are used to identify these forward-looking
statements. Specifically, statements about the company’s share repurchase
plans, expected margin improvement, future pension plan contributions and the
potential impact of investment markets and other economic conditions on the
company’s investment portfolio and underwriting results, among others, are
forward looking, and the company may also make forward-looking statements
about, among other things:

  *its results of operations and financial condition (including, among other
    things, premium volume, premium rates, net and operating income,
    investment income and performance, loss costs, return on equity, and
    expected current returns and combined ratios);
  *the sufficiency of the company’s asbestos and other reserves;
  *the impact of emerging claims issues as well as other insurance and
    non-insurance litigation;
  *the cost and availability of reinsurance coverage;
  *catastrophe losses;
  *the impact of investment, economic and underwriting market conditions;
  *strategic initiatives, including initiatives, such as in Personal
    Insurance, to improve profitability and competitiveness; and
  *the potential closing date and impact of its merger and acquisition
    transactions, including the acquisition of The Dominion of Canada General
    Insurance Company (The Dominion).

The company cautions investors that such statements are subject to risks and
uncertainties, many of which are difficult to predict and generally beyond the
company’s control, that could cause actual results to differ materially from
those expressed in, or implied or projected by, the forward-looking
information and statements.

Some of the factors that could cause actual results to differ include, but are
not limited to, the following:

  *catastrophe losses could materially and adversely affect the company’s
    results of operations, its financial position and/or liquidity, and could
    adversely impact the company’s ratings, the company’s ability to raise
    capital and the availability and cost of reinsurance;
  *during or following a period of financial market disruption or economic
    downturn (including, among other things, following a government shutdown
    or potential default), the company’s business could be materially and
    adversely affected;
  *if actual claims exceed the company’s claims and claim adjustment expense
    reserves, or if changes in the estimated level of claims and claim
    adjustment expense reserves are necessary, the company’s financial results
    could be materially and adversely affected;
  *the company’s investment portfolio may suffer reduced returns or material
    realized or unrealized losses;
  *the company’s business could be harmed because of its potential exposure
    to asbestos and environmental claims and related litigation;
  *the company is exposed to, and may face adverse developments involving,
    mass tort claims such as those relating to exposure to potentially harmful
    products or substances;
  *the effects of emerging claim and coverage issues on the company’s
    business are uncertain;
  *the intense competition that the company faces could harm its ability to
    maintain or increase its business volumes and profitability;
  *the company may not be able to collect all amounts due to it from
    reinsurers, and reinsurance coverage may not be available to the company
    in the future at commercially reasonable rates or at all;
  *the company is exposed to credit risk in certain of its business
    operations;
  *within the United States, the company’s businesses are heavily regulated
    by the states in which it conducts business, including licensing and
    supervision, and changes in regulation may reduce the company’s
    profitability and limit its growth;
  *changes in federal regulation could impose significant burdens on the
    company and otherwise adversely impact its results;
  *a downgrade in the company’s claims-paying and financial strength ratings
    could adversely impact the company’s business volumes, adversely impact
    the company’s ability to access the capital markets and increase the
    company’s borrowing costs;
  *the inability of the company’s insurance subsidiaries to pay dividends to
    the company’s holding company in sufficient amounts would harm the
    company’s ability to meet its obligations, pay future shareholder
    dividends or make future share repurchases;
  *disruptions to the company’s relationships with its independent agents and
    brokers could adversely affectthe company;
  *the company’s efforts to develop new products, including in Personal
    Insurance, or expand in targeted markets may not be successful and may
    create enhanced risks;
  *changes in U.S. tax laws or in the tax laws of other jurisdictions in
    which the company operates could adversely impact the company;
  *the company may be adversely affected if its pricing and capital models
    provide materially different indications than actual results;
  *the company’s business success and profitability depend, in part, on
    effective information technology systems and on continuing to develop and
    implement improvements in technology;
  *if the company experiences difficulties with technology, data security
    and/or outsourcing relationships, the company’s ability to conduct its
    business could be negatively impacted;
  *the company is subject to a number of risks associated with its business
    outside the United States;
  *new regulations outside of the U.S., including in the European Union,
    could adversely impact the company’s results of operations and limit its
    growth;
  *acquisitions and integration of acquired businesses, including the
    company’s planned acquisition of The Dominion, may result in operating
    difficulties and other unintended consequences;
  *changes to existing accounting standards may adversely impact the
    company’s reported results;
  *the company could be adversely affected if its controls to ensure
    compliance with guidelines, policies and legal and regulatory standards
    are not effective;
  *the company’s businesses may be adversely affected if it is unable to hire
    and retain qualified employees;
  *loss of or significant restriction on the use of credit scoring in the
    pricing and underwriting of Personal Insurance products could reduce the
    company’s future profitability;
  *the company’s repurchase plans depend on a variety of factors, including
    the company’s financial position, earnings, share price, catastrophe
    losses, maintaining capital levels commensurate with the company’s desired
    ratings from independent rating agencies, funding of the company’s
    qualified pension plan, capital requirements of the company’s operating
    subsidiaries, legal requirements, regulatory constraints, other investment
    opportunities (including mergers and acquisitions and related financings),
    market conditions and other factors;
  *the company may not achieve the anticipated benefits of its transactions
    or its strategic initiatives, including in Personal Insurance, or complete
    a transaction that is subject to closing conditions; and
  *conditions in the capital markets may not be suitable for the company to
    incur additional indebtedness and/or to issue preferred or other capital
    stock.

Our forward-looking statements speak only as of the date of this press release
or as of the date they are made, and we undertake no obligation to update
forward-looking statements. For a more detailed discussion of these factors,
see the information under the captions "Risk Factors" and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in
our most recent annual report on Form 10-K and our quarterly report on Form
10-Q filed with the Securities and Exchange Commission (SEC).

  GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF NON-GAAP MEASURES TO
                                GAAP MEASURES

The following measures are used by the company’s management to evaluate
financial performance against historical results and establish targets on a
consolidated basis. In some cases, these measures are considered non-GAAP
financial measures under applicable SEC rules because they are not displayed
as separate line items in the consolidated financial statements or are not
required to be disclosed in the notes to financial statements or, in some
cases, include or exclude certain items not ordinarily included or excluded in
the most comparable GAAP financial measure. Reconciliations of non-GAAP
measures to their most directly comparable GAAP measures also follow.

In the opinion of the company’s management, a discussion of these measures
provides investors, financial analysts, rating agencies and other financial
statement users with a better understanding of the significant factors that
comprise the company’s periodic results of operations and how management
evaluates the company’s financial performance. Internally, the company's
management uses these measures to evaluate performance against historical
results, to establish financial targets on a consolidated basis and for other
reasons, which are discussed below.

Some of these measures exclude net realized investment gains (losses), net of
tax, and/or net unrealized investment gains (losses), net of tax, which can be
significantly impacted by both discretionary and other economic factors and
are not necessarily indicative of operating trends.

Other companies may calculate these measures differently, and, therefore,
their measures may not be comparable to those used by the company’s
management.

RECONCILIATION OF OPERATING INCOME AND CERTAIN OTHER NON-GAAP MEASURES TO NET
INCOME

Operating income is net income excluding the after-tax impact of net realized
investment gains (losses) and discontinued operations. Management uses
operating income to analyze each segment’s performance and as a tool in making
business decisions. Financial statement users also consider operating income
when analyzing the results and trends of insurance companies. Operating
earnings per share is operating income on a per common share basis.

                                                                   
Reconciliation of Operating Income less Preferred Dividends to Net Income


                                     Three Months Ended      Nine Months Ended
                                     September 30,           September 30,
($ in millions, pre-tax)            2013       2012       2013     2012
                                                                         
Operating income                     $ 1,199     $ 1,172     $ 3,419   $ 2,843
Net realized investment gains        (22   )   (2    )   155     12
(losses)
Net income                          $ 1,177   $ 1,170   $ 3,574  $ 2,855
                                                           

                                                           
                                                          
                                        Three Months Ended   Nine Months Ended
                                        September 30,        September 30,
($ in millions, after-tax)             2013      2012     2013     2012
                                                                    
Operating income                        $  883     $ 867     $ 2,586   $ 2,163
Net realized investment gains            (19 )   (3  )   99      6
(losses)
Net income                             $  864   $ 864   $ 2,685  $ 2,169
                                                           

                                                                       
                                                                              
               Twelve Months Ended December 31,
($ in
millions,     2012     2011     2010     2009     2008       2007     2006     2005
after-tax)
                                                                                       
Operating
income, less   $ 2,441   $ 1,389   $ 3,040   $ 3,597   $ 3,191     $ 4,496   $ 4,195   $ 2,020
preferred
dividends
Preferred      -       1       3       3       4        4       5       6     
dividends
Operating        2,441     1,390     3,043     3,600     3,195       4,500     4,200     2,026
income
Net realized
investment     32      36      173     22      (271  )   101     8       35    
gains
(losses)
Income from
continuing       2,473     1,426     3,216     3,622     2,924       4,601     4,208     2,061
operations
Discontinued   -       -       -       -       -        -       -       (439  )
operations
Net income    $ 2,473  $ 1,426  $ 3,216  $ 3,622  $ 2,924   $ 4,601  $ 4,208  $ 1,622 
                                                                     


Reconciliation of Operating Earnings per Share to Net Income per Share on a
Basic and Diluted Basis
                                                              
                                                                
                          Three Months Ended              Nine Months Ended
                          September 30,                   September 30,
                        2013           2012           2013       2012
                                                                      
Basic earnings per
share
Operating income          $  2.38         $  2.24         $  6.86     $  5.53
Net realized
investment gains           (0.05  )      (0.01  )      0.26      0.02
(losses)
Net income               $  2.33       $  2.23       $  7.12    $  5.55
                                                                      
Diluted earnings per
share
Operating income          $  2.35         $  2.22         $  6.79     $  5.48
Net realized
investment gains           (0.05  )      (0.01  )      0.26      0.02
(losses)
Net income               $  2.30       $  2.21       $  7.05    $  5.50
                                                           


Reconciliation of Operating Income by Segment to Total Operating Income
                                                             
                                                                
                                    Three Months Ended   Nine Months Ended
                                    September 30,        September 30,
($ in millions, after-tax)         2013      2012     2013       2012
                                                                     
                                                                     
Business Insurance                  $  526     $ 543     $ 1,695     $ 1,517
Financial, Professional &              160       180       477         511
International Insurance
Personal Insurance                   262    206    601      331   
Total segment operating income         948       929       2,773       2,359
Interest Expense and Other           (65 )   (62 )   (187  )   (196  )
Total operating income             $  883   $ 867   $ 2,586   $ 2,163 
                                                             
                                                                             

RECONCILIATION OF ADJUSTED SHAREHOLDERS’ EQUITY TO SHAREHOLDERS’ EQUITY AND
OPERATING RETURN ON EQUITY TO RETURN ON EQUITY

Average shareholders’ equity is (a) the sum of total shareholders’ equity
excluding preferred stock at the beginning and end of each of the quarters for
the period presented divided by (b) the number of quarters in the period
presented times two. Adjusted shareholders’ equity is shareholders’ equity
excluding net unrealized investment gains (losses), net of tax, net realized
investment gains (losses), net of tax, for the period presented, preferred
stock and discontinued operations. Adjusted average shareholders’ equity is
average shareholders’ equity excluding net unrealized investment gains
(losses), net of tax, for all quarters included in the calculation and, for
each quarterly period included in the calculation, that quarter’s net realized
investment gains (losses), net of tax.

Reconciliation of Adjusted Shareholders’ Equity to Shareholders’ Equity
                                                                                          
                                                                                                  
                           As of September 30, 
($ in                   2013      2012     
millions)
                                                                                                            
Adjusted
shareholders'              $ 23,153   $ 22,584
equity
Net
unrealized
investment                   1,559      3,315
gains, net of
tax
Net realized
investment               99       6      
gains, net of
tax
Shareholders'           $ 24,811  $ 25,905 
equity
                                                                                                            
                As of December 31,
($ in          2012      2011      2010      2009      2008        2007      2006      2005        2004
millions)
                                                                                                            
Adjusted
shareholders'   $ 22,270   $ 21,570   $ 23,375   $ 25,458   $ 25,647     $ 25,783   $ 24,545   $ 22,227     $ 20,087
equity
Net
unrealized
investment        3,103      2,871      1,859      1,856      (146   )     620        453        327          866
gains
(losses), net
of tax
Net realized
investment
gains             32         36         173        22         (271   )     101        8          35           (28    )
(losses), net
of tax
Preferred         -          -          68         79         89           112        129        153          188
stock
Discontinued    -        -        -        -        -         -        -        (439   )   88     
operations
Shareholders'  $ 25,405  $ 24,477  $ 25,475  $ 27,415  $ 25,319   $ 26,616  $ 25,135  $ 22,303   $ 21,201 
equity
                                                                                          

Return on equity is the ratio of annualized net income less preferred
dividends to average shareholders’ equity for the periods presented. Operating
return on equity is the ratio of annualized operating income less preferred
dividends to adjusted average shareholders’ equity for the periods presented.
In the opinion of the company’s management, these are important indicators of
how well management creates value for its shareholders through its operating
activities and its capital management.

Calculation of Operating Return on Equity and Return on Equity
                                                            
                                                               
                             Three Months Ended        Nine Months Ended
                             September 30,             September 30,
($ in millions, after-tax)  2013        2012        2013        2012
                                                                    
Annualized operating         $ 3,534      $ 3,467      $ 3,448      $ 2,884
income
Adjusted average             23,235    22,331    22,886    22,066 
shareholders' equity
Operating return on equity   15.2   %   15.5   %   15.1   %   13.1   %
                                                                    
Annualized net income        $ 3,458      $ 3,458      $ 3,580      $ 2,892
Average shareholders'        24,851    25,477    25,198    25,037 
equity
Return on equity             13.9   %   13.6   %   14.2   %   11.6   %
                                                             
                                                                             

Average annual operating return on equity over a period is the ratio of:
a) the sum of operating income less preferred dividends for the periods
presented to
b) the sum of: 1) the sum of the adjusted average shareholders’ equity for all
full years in the period presented, and 2) for partial years in the period
presented, the number of quarters in that partial year divided by four,
multiplied by the adjusted average shareholders’ equity of the partial year.

Calculation of Average Annual Operating Return on Equity from January 1, 2005 through September 30, 2013
                                                                                                                  
                                                                                                                           
                Nine Months Ended
                September 30,               Twelve Months Ended December 31,
($ in          2013        2012           2012        2011        2010        2009        2008        2007        2006        2005
millions)
                                                                                                                                       
Operating
income, less    $ 2,586      $ 2,163        $ 2,441      $ 1,389      $ 3,040      $ 3,597      $ 3,191      $ 4,496      $ 4,195      $ 2,020
preferred
dividends
Annualized
operating         3,448        2,884
income
Adjusted
average           22,886       22,066         22,158       22,806       24,285       25,777       25,668       25,350       23,381       21,118
shareholders'
equity
Operating
return on       15.1   %   13.1   %    11.0   %   6.1    %   12.5   %   14.0   %   12.4   %   17.7   %   17.9   %   9.6    %
equity
                                                                                                                                       
Average
annual
operating
return on
equity for        13.0   %
the period
Jan. 1, 2005
through Sept.
30, 2013
                                                                                                                  
                                                                                                                                       

RECONCILIATION OF PRE-TAX UNDERWRITING GAIN EXCLUDING CERTAIN ITEMS TO NET
INCOME

Underwriting gain (loss) is net earned premiums and fee income less claims and
claim adjustment expenses and insurance-related expenses. In the opinion of
the company’s management, it is important to measure the profitability of each
segment excluding the results of investing activities, which are managed
separately from the insurance business. This measure is used to assess each
segment’s business performance and as a tool in making business decisions.
Pre-tax underwriting gain, excluding the impact of catastrophes and net
favorable prior year loss reserve development, is the underwriting gain (loss)
adjusted to exclude claims and claim adjustment expenses, reinstatement
premiums and assessments related to catastrophes and loss reserve development
related to time periods prior to the current year. In the opinion of the
company's management, this measure is meaningful to users of the financial
statements to understand the company's periodic earnings and the variability
of earnings caused by the unpredictable nature (i.e., the timing and amount)
of catastrophes and loss reserve development. This measure is also referred to
as underlying underwriting margin or underlying underwriting gain (loss).

A catastrophe is a severe loss, resulting from natural and man-made events,
including risks such as fire, earthquake, windstorm, explosion, terrorism and
other similar events. Each catastrophe has unique characteristics, and
catastrophes are not predictable as to timing or amount. Their effects are
included in net and operating income and claims and claim adjustment expense
reserves upon occurrence. A catastrophe may result in the payment of
reinsurance reinstatement premiums and assessments from various pools. In the
opinion of the company's management, a discussion of the impact of
catastrophes is meaningful to users of the financial statements to understand
the company’s periodic earnings and the variability in periodic earnings
caused by the unpredictable nature of catastrophes.

Net favorable (unfavorable) prior year loss reserve development is the
increase or decrease in incurred claims and claim adjustment expenses as a
result of the re-estimation of claims and claim adjustment expense reserves at
successive valuation dates for a given group of claims, which may be related
to one or more prior years. In the opinion of the company's management, a
discussion of loss reserve development is meaningful to users of the financial
statements as it allows them to assess the impact between prior and current
year development on incurred claims and claim adjustment expenses, net and
operating income (loss), and changes in claims and claim adjustment expense
reserve levels from period to period.

Reconciliation of Pre-tax Underwriting Gain (Excluding the Impact of
Catastrophes and Net Favorable Prior Year Loss Reserve Development) to Net
Income
                                                             
                                                                
                                    Three Months Ended   Nine Months Ended
                                    September 30,        September 30,
($ in millions, after-tax except   2013      2012     2013       2012
as noted)
                                                                     
Pre-tax underwriting gain
excluding the impact of
catastrophes and net favorable      $  536    $ 412     $ 1,435     $ 935
prior year loss reserve
development
Pre-tax impact of catastrophes         (99 )     (91 )     (538  )     (808  )
Pre-tax impact of net favorable
prior year loss reserve              158    193    581      718   
development
Pre-tax underwriting gain              595       514       1,478       845
Income tax expense on                208    187    471      317   
underwriting results
Underwriting gain                      387       327       1,007       528
Net investment income                  531       578       1,624       1,760
Other, including interest expense    (35 )   (38 )   (45   )   (125  )
Operating income                       883       867       2,586       2,163
Net realized investment gains        (19 )   (3  )   99       6     
(losses)
Net income                         $  864   $ 864   $ 2,685   $ 2,169 
                                                             
                                                                             

GAAP COMBINED RATIO AND ADJUSTMENTS FOR UNDERLYING GAAP COMBINED RATIO

GAAP combined ratio is the sum of the loss and loss adjustment expense ratio
(loss and LAE ratio) and the underwriting expense ratio. For GAAP, the loss
and LAE ratio is the ratio of incurred losses and loss adjustment expenses
reduced by an allocation of fee income to net earned premiums. The
underwriting expense ratio is the ratio of underwriting expenses incurred
reduced by an allocation of fee income, and billing and policy fees and other
to net earned premiums. A GAAP combined ratio under 100% generally indicates
an underwriting profit. A GAAP combined ratio over 100% generally indicates an
underwriting loss. The GAAP combined ratio is an operating statistic that
includes GAAP measures in the numerator and the denominator.

Underlying GAAP combined ratio represents the GAAP combined ratio excluding
the impact of net prior year reserve development and catastrophes. In the
opinion of the company’s management, this measure is meaningful to users of
the financial statements to understand the company’s periodic underwriting
profitability and the variability of underwriting profitability caused by the
unpredictable nature of catastrophes and loss reserve development.

Calculation of the GAAP Combined Ratio
                                                            
                                                              
                   Three Months Ended              Nine Months Ended
                   September 30,                   September 30,
($ in millions,   2013           2012           2013            2012
pre-tax)
                                                                    
Loss and loss
adjustment
expense ratio
Claims and
claim              $  3,297        $  3,359        $  9,980         $ 10,509
adjustment
expenses
Less:
Policyholder          7               11              30              34
dividends
Allocated fee       44           40           113          86     
income
Loss ratio        $  3,246      $  3,308      $  9,837       $ 10,389 
numerator
                                                                    
Underwriting
expense ratio
Amortization of
deferred           $  953          $  986          $  2,851         $ 2,933
acquisition
costs
General and
administrative        934             904             2,780           2,681
expenses (G&A)
Less:
G&A included in
Interest              6               5               17              17
Expense and
Other
Allocated fee         63              52              173             147
income
Billing and
policy fees and     25           24           74           76     
other
Expense ratio     $  1,793      $  1,809      $  5,367       $ 5,374  
numerator
                                                            
Earned premium    $  5,666      $  5,666      $  16,786      $ 16,718 
                                                                    
GAAP combined
ratio ^1
Loss and loss
adjustment            57.3   %        58.4   %        58.6    %       62.1   %
expense ratio
Underwriting        31.6   %      31.9   %      32.0    %     32.2   %
expense ratio
Combined ratio      88.9   %      90.3   %      90.6    %     94.3   %
^1 For purposes of computing GAAP ratios, billing and policy fees and other
(which are a component of other revenues) are allocated as a reduction of
underwriting expenses. In addition, fee income is allocated as a reduction of
losses and loss adjustment expenses and underwriting expenses.
                                                               
                                                                    

ADJUSTMENT TO NET WRITTEN PREMIUMS FOR THE IMPACT OF CHANGES IN FOREIGN
EXCHANGE RATES

Adjusting for the impact of changes in foreign exchange rates allowsthe
effect of foreign exchange rate differences to beisolatedin theanalysis of
changes in various financial statement line items that are translated from a
local currency to the company's reporting currency,U.S. dollars.The impact
isdeterminedbyassuming constant foreign exchange rates between periods as
illustrated in the reconciliation below.In the opinion of the company's
management, this is useful in an analysis of the results of the International
market and the Financial, Professional & International (FP&II) segment.

Reconciliation of the Impact of Changes in Foreign Exchange Rates on
International Net Written Premiums to International Net Written Premiums
                                                            
                                                            
              Three Months Ended                 Nine Months Ended
               September 30,                       September 30,
($ in         2013         2012      Change    2013        2012   Change
millions)
                                                                   
Net written
premiums -
holding
foreign        $  220        $  200     10   %     $  795       $ 763   4   %
exchange
rates
constant
Impact of
changes in
foreign         (3   )                        (8   )         
exchange
rates
Net written   $  217      $  200    9    %    $  787     $ 763  3   %
premiums
                                                            
                                                                        

Reconciliation of the Impact of Changes in Foreign Exchange Rates on FP&II Net
Written Premiums to FP&II Net Written Premiums
                                                            
                                                            
                   Three Months Ended           Nine Months Ended
                    September 30,                 September 30,
($ in millions)    2013        2012   Change  2013       2012     Change
                                                                   
Net written
premiums -
holding foreign     $  773       $ 729   6   %    $ 2,274     $ 2,173   5   %
exchange rates
constant
Impact of
changes in           (3   )                 (8    )          
foreign exchange
rates
Net written        $  770     $ 729  6   %   $ 2,266   $ 2,173  4   %
premiums
                                                            
                                                                        

RECONCILIATION OF CERTAIN NON-GAAP MEASURES TO BOOK VALUE PER SHARE AND
SHAREHOLDERS’ EQUITY

Book value per share is total common shareholders’ equity divided by the
number of common shares outstanding. Adjusted book value per share is total
common shareholders’ equity excluding the after-tax impact of net unrealized
investment gains and losses, divided by the number of common shares
outstanding.  In the opinion of the company’s management, adjusted book value
is useful in an analysis of a property casualty company’s book value as it
removes the effect of changing prices on invested assets (i.e., net unrealized
investment gains (losses), net of tax), which do not have an equivalent impact
on unpaid claims and claim adjustment expense reserves. Tangible book value
per share is adjusted book value per share excluding the after-tax value of
goodwill and other intangible assets divided by the number of common shares
outstanding. In the opinion of the company’s management, tangible book value
per share is useful in an analysis of a property casualty company’s book value
on a nominal basis as it removes certain effects of purchase accounting (i.e.,
goodwill and other intangible assets), in addition to the effect of changing
prices on invested assets.

Reconciliation of Tangible and Adjusted Shareholders’ Equity to Shareholders’
Equity
                                                           
                                                             
                                  As of
                                  September 30,   December 31,   September 30,
($ in millions, except per       2013           2012          2012
share amounts)
                                                                 
Tangible shareholders' equity     $  19,589       $  18,604      $  18,879
Goodwill                             3,365           3,365          3,365
Other intangible assets              347             381            393
Less: Impact of deferred tax on    (49     )     (48     )    (47     )
other intangible assets
Adjusted shareholders' equity        23,252          22,302         22,590
Net unrealized investment          1,559        3,103       3,315   
gains, net of tax
Shareholders' equity             $  24,811     $  25,405    $  25,905  
                                                                 
Common shares outstanding          364.1        377.4       382.0   
                                                                 
Tangible book value per share     $  53.81        $  49.29       $  49.42
Adjusted book value per share        63.87           59.09          59.13
Book value per share               68.15        67.31       67.81   
                                                           
                                                                 

RECONCILIATION OF CERTAIN NON-GAAP MEASURES TO TOTAL CAPITALIZATION

Total capitalization is the sum of total shareholders’ equity and debt.
Debt-to-capital ratio excluding net unrealized gain on investments isthe
ratio of debttototal capitalization excluding the after-tax impact of net
unrealized investment gains and losses.In the opinion of the company's
management, the debt to capital ratio is useful in an analysis of the
company's financial leverage.

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large*
Reconciliation of Total Debt and Equity Excluding Net Unrealized Investment
Gain to Total Capitalization
                                                           
                                                             
                                  As of
                                  September 30,   December 31,   September 30,
($ in millions)                  2013           2012          2012
                                                                 
Debt                              $  6,346        $  6,350       $  6,350
Shareholders' equity               24,811       25,405      25,905  
Total capitalization               31,157       31,755      32,255  
Net unrealized investment          1,559        3,103       3,315   
gains, net of tax
Total capitalization excluding
net unrealized gain on           $  29,598     $  28,652    $  28,940  
investments, net of tax
                                                                 
Debt-to-capital ratio                20.4    %       20.0    %      19.7    %
Debt-to-capital ratio excluding
net unrealized investment        
gains, net of tax

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