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Travelers Reports Second Quarter 2008 Net Income of $942 million, or $1.54 per Diluted Share

Book Value per Share of $43.56, an Increase of 14% from the Prior Year Quarter, and Return on Equity of 14.4%

Company Release - 7/23/2008 6:00 AM ET

SAINT PAUL, Minn.--(BUSINESS WIRE)--

The Travelers Companies, Inc. ("Travelers,") (NYSE: TRV) today reported net income of $942 million, or $1.57 per basic share and $1.54 per diluted share, for the quarter ended June 30, 2008, compared to $1.254 billion, or $1.90 per basic share and $1.86 per diluted share, for the quarter ended June 30, 2007. Operating income in the current quarter was $918 million, or $1.53 per basic share and $1.50 per diluted share, compared to $1.167 billion, or $1.77 per basic share and $1.73 per diluted share, in the prior year quarter.

"We experienced another quarter of solid underwriting performance, as evidenced by our 89% combined ratio," stated Jay Fishman, Chairman and Chief Executive Officer, "which included 9.8 points of net favorable prior year reserve development and 6.6 points of catastrophe losses. Our diversified, high quality investment portfolio continued to deliver impressive results, although at a lower level than in the prior year quarter. In addition, impairments continued to be negligible. While the marketplace remains competitive, it is consistent with the expectations we had coming into the year. The continuation of historically high retention rates in each of our business segments, particularly given the marketplace, is an indication that our competitive advantages make a difference. Our year over year 14% growth in book value per share, after giving effect to $4.1 billion of share repurchases and dividends, along with our operating return on equity in excess of 14%, demonstrate our ability to write business profitability and actively manage our capital.

"Looking forward, we will remain attentive to changes in general economic conditions, particularly to a potential increase in inflation trends. We have been acting prudently in our pricing and risk selection and will continue to do so. We are fortunate to have a highly experienced underwriting organization which has previously navigated challenging economic times. In addition, our balance sheet and liquidity continue to be extremely strong, as demonstrated by the recent upgrade by Moody's of both our debt and insurance financial strength ratings," concluded Mr. Fishman.


    Current Quarter Highlights

    --  Return on equity and operating return on equity of 14.4
        percent and 14.3 percent, respectively.

    --  Net written premiums of $5.629 billion, a 1 percent decline
        from the prior year quarter.

    --  Strong underwriting results in all segments, despite the high
        frequency and severity of weather events, with GAAP combined
        ratios in Business Insurance of 87.1 percent; Financial,
        Professional & International Insurance of 80.4 percent; and
        Personal Insurance of 97.3 percent. Consolidated GAAP combined
        ratio of 89.3 percent.

    --  Net favorable prior year reserve development of $340 million
        after-tax ($526 million pre-tax) in the current quarter,
        compared to $83 million after-tax ($125 million pre-tax) in
        the prior year quarter.

    --  Catastrophe losses of $231 million after-tax ($356 million
        pre-tax) in the current quarter, compared to $26 million
        after-tax ($40 million pre-tax) in the prior year quarter.

    --  Net investment income of $624 million after-tax ($778 million
        pre-tax) in the current quarter, compared to $758 million
        after-tax ($990 million pre-tax) in the prior year quarter.
        Net investment income declined primarily due to smaller gains
        in the non-fixed income portfolio and lower short-term
        interest rates.

    --  Book value per share of $43.56, a 1 percent increase from
        March 31, 2008 and a 14 percent increase from June 30, 2007,
        after repurchasing 15.3 million common shares for a total cost
        of $750 million in the current quarter and 66.8 million common
        shares for a total cost of $3.350 billion during the preceding
        twelve months under the company's share repurchase
        authorization.

    --  Adjusted book value per share (excluding FAS 115) of $43.45, a
        3 percent increase from March 31, 2008 and a 12 percent
        increase from June 30, 2007, after share repurchases.

                       Consolidated Highlights


----------------------------------------------------------------------
              Three Months Ended June 30,   Six Months Ended June 30,
              ---------------------------  ---------------------------
($ in
 millions,
 except for
 per share
 amounts, and
 after-tax
 except for
 premiums)      2008     2007   Change       2008     2007   Change
              --------- ------- ------     -------- -------- ------

Gross written
 premiums       $6,061  $6,262     (3)%    $11,994  $12,333     (3)%

Net written
 premiums        5,629   5,714     (1)      10,817   10,858      -

Net earned
 premiums        5,357   5,327      1       10,697   10,622      1

Underwriting
 gain              338     449    (25)         739      790     (6)

Net
 investment
 income            624     758    (18)       1,274    1,495    (15)

Operating
 income            918   1,167    (21)       1,926    2,245    (14)

   per
    diluted
    share       $ 1.50  $ 1.73    (13)     $  3.11  $  3.27     (5)

Net income         942   1,254    (25)       1,909    2,340    (18)

   per
    diluted
    share       $ 1.54  $ 1.86    (17)     $  3.08  $  3.41    (10)

Book value
 per share      $43.56  $38.36     14      $ 43.56  $ 38.36     14

Adjusted book
 value per
 share          $43.45  $38.76     12      $ 43.45  $ 38.76     12

GAAP combined
 ratio            89.3%   87.8%   1.5 pts     88.5%    88.5%     - pts

Operating
 return on
 equity           14.3%   18.6%  (4.3)pts     14.9%    18.0%  (3.1)pts

Return on
 equity           14.4%   19.9%  (5.5)pts     14.5%    18.6%  (4.1)pts

See Glossary of Financial Measures for definitions and the statistical
 supplement for additional financial data
----------------------------------------------------------------------

               Second Quarter 2008 Consolidated Results

Net and operating income in the current quarter of $942 million and
 $918 million, respectively, were driven by an after-tax underwriting
 gain of $338 million and after-tax net investment income of $624
 million. The current and prior year quarters included the following:

----------------------------------------------------------------------

($ in millions)                       Three Months Ended June 30,
                                  ------------------------------------
                                    2008      2007     2008     2007
                                  --------- --------- ------- --------
                                        Pre-tax          After-tax
                                  ------------------- ----------------

Underwriting gain                 $ 535     $ 617     $ 338   $   449
GAAP combined ratio                89.3 %    87.8 %

  Underwriting gain includes:
    Net favorable prior year
     reserve development            526       125       340        83
      Impact on GAAP combined
       ratio                       (9.8)pts  (2.4)pts

    Catastrophes, net of
     reinsurance                   (356)      (40)     (231)      (26)
      Impact on GAAP combined
       ratio                        6.6 pts   0.8 pts

    Timing impact for the
     transition to fixed, value-
     based agent compensation
     program                          -        59         -        38
      Impact on GAAP combined
       ratio                          - pts  (1.1)pts

    Resolution of prior year tax
     matters                          -        34         -        34

Net investment income               778       990       624       758
Average yield                       4.2%      5.4%      3.4%      4.2%

Other, including interest expense   (62)      (94)      (44)      (40)
  Other also includes:
    Loss on the redemption of
     securities                       -       (39)        -       (25)
    Resolution of prior year tax
     matters                          -        24         -        24

Net realized investment gains        36       128        24        87
----------------------------------------------------------------------

The current quarter underwriting gain reflects a GAAP combined ratio of 92.5 percent, excluding net favorable prior year reserve development and catastrophe losses as compared to 90.5 percent in the prior year quarter which also excludes the timing impact for the transition to the fixed, value-based agent compensation program. This increase of 2.0 points primarily resulted from the previously anticipated pricing and loss cost trends as well as a small number of large property losses that exceeded expectations.

Net favorable prior year reserve development in the current quarter was driven by better than expected loss experience in each segment, particularly in Business Insurance, while catastrophe losses in the current quarter were primarily due to severe weather events in various regions of the United States. The prior year quarter included a benefit from the timing impact for the transition to the fixed, value-based agent compensation program adopted in the first quarter 2007, which lowered reported expenses from what otherwise would have been reported. The prior year quarter also included benefits for the favorable resolution of various federal tax matters and a charge to net and operating income resulting from the redemption of convertible junior subordinated notes.

The investment portfolio continued to perform well, despite the disruption in the financial markets. Net investment income in the current quarter declined primarily due to smaller gains in the non-fixed income portfolio and significantly lower short-term interest rates. Average invested assets in the current quarter of $74.2 billion increased 1 percent from the prior year quarter after giving effect to $4.1 billion of share repurchases and dividends during the preceding twelve months, due to continued strong operating cash flows.

Net realized investment gains in the current quarter were lower as compared to the prior year quarter primarily due to the bundled sale of a substantial portion of the company's venture capital portfolio that resulted in a $52 million after-tax ($81 million pre-tax) realized gain in the prior year quarter. Both quarters included negligible amounts of impairment losses, with $18 million after-tax ($28 million pre-tax) in the current quarter as compared to $6 million after-tax ($9 million pre-tax) in the prior year quarter.

Net written premiums of $5.629 billion in the current quarter declined by 1 percent from the prior year quarter. Overall, retention rates continued to be strong and renewal price changes were generally consistent with recent quarters, while new business volumes increased from the prior year quarter driven by growth in International and Personal Insurance. This increase was partially offset by a decline in new business volumes in Business Insurance due to competitive market conditions. Submissions and quote ratios within Business Insurance were up significantly, while close ratios were lower as the company maintained its underwriting discipline.

                          Capital Management

During the second quarter 2008, the company repurchased 15.3 million of its common shares under its share repurchase authorization for a total cost of $750 million. Since the initial share repurchase authorization granted by the Board in the second quarter of 2006, the company has repurchased 114.9 million shares for a total cost of $5.8 billion.

The company remains very well capitalized, with all of its financial strength indicators at or better than target levels. At the end of the second quarter 2008, shareholders' equity was $25.9 billion, an increase of 2 percent from the end of the prior year quarter, and statutory surplus was $22.3 billion, also an increase of 2 percent from the end of the prior year quarter. At the end of the second quarter 2008, the company's debt-to-capital ratio (excluding FAS 115) was 19.7 percent, as compared to its 20.0 percent target level, and holding company liquidity of $2.2 billion was twice its target level. The current quarter included the successful issuance of a $500 million public debt offering of 5.80%, 10-year senior notes, replacing $400 million of senior notes that matured in March 2008.


                Year-to-Date 2008 Consolidated Results

Net and operating income for the six-month period ended June 30, 2008
 of $1.909 billion and $1.926 billion, respectively, were driven by an
 after-tax underwriting gain of $739 million and after-tax net
 investment income of $1.274 billion. The current and prior year
 periods included the following:

----------------------------------------------------------------------

($ in millions)                       Six Months Ended June 30,
                                --------------------------------------
                                   2008       2007      2008    2007
                                ---------- ---------- -------- -------
                                       Pre-tax           After-tax
                                --------------------- ----------------

Underwriting gain               $1,165     $1,151     $  739   $  790
GAAP combined ratio               88.5 %     88.5 %

  Underwriting gain includes:
    Net favorable prior year
     reserve development           926        187        601      123
      Impact on GAAP combined
       ratio                      (8.6)pts   (1.8)pts

    Catastrophes, net of
     reinsurance                  (451)       (85)      (293)     (55)
      Impact on GAAP combined
       ratio                       4.2 pts    0.8 pts

    Timing impact for the
     transition to fixed,
     value-based agent
     compensation program            -        131          -       85
      Impact on GAAP combined
       ratio                         - pts   (1.2)pts

    Resolution of prior year
     tax matters                     -         34          -       34

Net investment income            1,593      1,950      1,274    1,495
Average yield                      4.3%       5.3%       3.4%     4.1%

Other, including interest
 expense                          (131)      (142)       (87)     (40)
  Other also includes:
    Loss on the redemption of
     securities                      -        (39)         -      (25)
    Resolution of prior year
     tax matters                     -         52          -       52

Net realized investment gains
 (losses)                          (26)       142        (17)      95
----------------------------------------------------------------------

The current period underwriting gain reflects a GAAP combined ratio of 92.9 percent, excluding net favorable prior year reserve development and catastrophe losses as compared to 90.7 percent in the prior year period which also excludes the timing impact for the transition to the fixed, value-based agent compensation program. This increase of 2.2 points primarily resulted from the previously anticipated pricing and loss cost trends as well as a small number of large property losses that exceeded expectations.

Net favorable prior year reserve development in the current period was driven by better than expected loss experience in each segment, particularly in Business Insurance, while catastrophe losses in the current period were primarily due to severe weather events in various regions of the United States.

Net investment income declined primarily due to smaller gains in the non-fixed income portfolio and lower short-term interest rates.

The current period had net realized investment losses compared to net realized investment gains in the prior year period. Both periods included negligible amounts of impairment losses, with $43 million after-tax ($66 million pre-tax) in the current period as compared to $12 million after-tax ($18 million pre-tax) in the prior year period.

Net written premiums of $10.817 billion in the current year period were generally consistent with the prior year period.

For the first six months of 2008, operating return on equity was 14.9 percent, compared to 18.0 percent in the prior year period.


             Business Insurance Segment Financial Results

For the second quarter 2008, the Business Insurance segment reported
 operating income of $658 million, driven by an after-tax underwriting
 gain of $217 million and after-tax net investment income of $436
 million. The current and prior year quarters included the following:

----------------------------------------------------------------------

                                       Three Months Ended June 30,
                                   -----------------------------------
($ in millions)                       2008      2007     2008    2007
                                   ---------- --------- ------- ------
                                         Pre-tax          After-tax
                                   -------------------- --------------

Underwriting gain                  $  347     $ 328     $ 217   $  249
GAAP combined ratio                  87.1 %    88.1 %

  Underwriting gain includes:
    Net favorable prior year
     reserve development              357        60       229       39
      Impact on GAAP combined
       ratio                        (12.8)pts  (2.1)pts

    Catastrophes, net of
     reinsurance                     (185)        -      (120)       -
      Impact on GAAP combined
       ratio                          6.6 pts     - pts

    Timing impact for the
     transition to fixed, value-
     based agent compensation
     program                            -        29         -       19
      Impact on GAAP combined
       ratio                            - pts  (1.0)pts

    Resolution of prior year tax
     matters                            -        34         -       34

Net investment income                 540       717       436      550

Other                                   7        10         5        6
----------------------------------------------------------------------

The current quarter underwriting gain reflects a GAAP combined ratio of 93.3 percent, excluding net favorable prior year reserve development and catastrophe losses as compared to 91.2 percent in the prior year quarter which also excludes the timing impact for the transition to the fixed, value-based agent compensation program. This increase of 2.1 points was primarily due to previously anticipated pricing and loss cost trends as well as a small number of large property losses that exceeded expectations.

Net favorable prior year reserve development in the quarter was primarily driven by better than expected loss experience for accident years 2004 through 2007, primarily in the commercial multi-peril, general liability, property and commercial automobile product lines, partially offset by a strengthening of workers' compensation reserves for accident years 2004 and prior. The net favorable prior year reserve development also included an increase of $85 million pre-tax ($55 million after-tax) to environmental reserves. Catastrophe losses in the current quarter were primarily due to tornadoes, hail storms and floods in various regions of the United States.

Business Insurance net written premiums of $2.805 billion declined 4 percent from the prior year quarter. Retention rates continued to be strong and renewal price changes were slightly negative which is generally consistent with recent quarters. Submission flow and quote ratios for new business were up significantly from the prior year quarter primarily due to the marketing of additional products to existing customers, the continued successful rollout of TravelersExpress(SM) in Select Accounts and new IndustryEdge(SM) products in Commercial Accounts. However, new business volumes declined from the prior year quarter due to lower close ratios as the company responds with discipline to competitive market conditions.

Select Accounts net written premiums declined 1 percent from the prior year quarter. Retention rates remained strong, and renewal price changes remained slightly positive, generally consistent with recent quarters. New business volume declined from the prior year quarter primarily due to the competitive environment for larger businesses served by Select Accounts, which more than offset the growth of TravelersExpress(SM) which focuses on smaller businesses.

Commercial Accounts net written premiums declined 5 percent from the prior year quarter. Retention rates continued to be strong, renewal price changes were slightly negative, and consistent with recent quarters, while new business volumes declined from the prior year quarter due to the impact of competitive market conditions.

National Accounts net written premiums declined 16 percent from the prior year quarter primarily due to competitive market conditions for large account new business as the company maintains its disciplined underwriting. In addition, premiums were reduced due to favorable loss experience on retrospectively rated Workers' Compensation policies. Industry-Focused Underwriting net written premiums increased 1 percent from the prior year quarter primarily due to strong retention and new business volumes in Oil & Gas and Agribusiness, more than offsetting a decline in Construction premiums due to the impact of slowing economic conditions. Target Risk Underwriting net written premiums declined 6 percent from the prior year quarter largely due to lower business volumes in National Property and Inland Marine. Specialized Distribution net written premiums declined 6 percent from the prior year quarter primarily due to lower retention rates as well as lower new business volumes in Northland's trucking industry products.


 Financial, Professional & International Insurance Segment Financial
                                Results

For the second quarter 2008, the Financial, Professional &
 International Insurance segment reported operating income of $204
 million, driven by an after-tax underwriting gain of $107 million and
 after-tax net investment income of $92 million. The current and prior
 year quarters included the following:

----------------------------------------------------------------------

($ in millions)                       Three Months Ended June 30,
                                 -------------------------------------
                                    2008      2007     2008     2007
                                 ---------- --------- ------- --------
                                       Pre-tax           After-tax
                                 -------------------- ----------------

Underwriting gain                $  164     $  74     $ 107   $     53
GAAP combined ratio                80.4 %    91.0 %

  Underwriting gain includes:
    Net favorable prior year
     reserve development            132        15        87         12
      Impact on GAAP combined
       ratio                      (15.5)pts  (1.7)pts

    Catastrophes, net of
     reinsurance                     (6)        -        (4)         -
      Impact on GAAP combined
       ratio                        0.6 pts     - pts

    Timing impact for the
     transition to fixed, value-
     based agent compensation
     program                          -         5         -          3
      Impact on GAAP combined
       ratio                          - pts  (0.6)pts

Net investment income               120       125        92         95

Other                                 8         6         5          4
----------------------------------------------------------------------

The current quarter underwriting gain reflects a GAAP combined ratio of 95.3 percent, excluding net favorable prior year reserve development and catastrophe losses, as compared to 93.3 percent in the prior year quarter which also excludes the timing impact for the transition to the fixed, value-based agent compensation program. This increase of 2.0 points was primarily due to a small number of large property losses that exceeded expectations.

The net favorable prior year reserve development in the current quarter was primarily driven by better than expected loss experience in the fidelity and surety product line within Bond & Financial Products and across various lines of business within International.

Financial, Professional & International Insurance net written premiums of $985 million were generally consistent with the prior year quarter, but increased 1 percent when adjusted for the March 2007 sale of Afianzadora Insurgentes, the company's Mexican surety operation.

Bond & Financial Products net written premiums declined 6 percent from the prior year quarter, or 5 percent when adjusted for the sale of Afianzadora Insurgentes, driven primarily by the impact of competitive market conditions and the company's continued disciplined underwriting. For Bond & Financial Products, retention rates continued to be strong, renewal price changes were slightly negative and generally consistent with recent quarters, while new business volumes declined from the prior year quarter. These metrics exclude the surety line of business because these products are sold on a non-recurring, project-specific basis.

International net written premiums increased 12 percent from the prior year quarter primarily driven by new business volumes at the company's operations at Lloyd's and in the United Kingdom, as well as the favorable impact of foreign currency exchange rates. Retention rates were lower than recent quarters due to the intentional non-renewal of certain property business in Canada as well as more competitive markets at the company's operations at Lloyd's. Renewal price changes were negative, but improved from recent quarters. New business volumes increased significantly from the prior year quarter due to recently added underwriting units at the company's operations at Lloyd's.


             Personal Insurance Segment Financial Results

For the second quarter 2008, the Personal Insurance segment reported
 operating income of $122 million, driven by an after-tax underwriting
 gain of $14 million and after-tax net investment income of $96
 million. The current and prior year quarters included the following:

----------------------------------------------------------------------

($ in millions)                       Three Months Ended June 30,
                                 -------------------------------------
                                   2008      2007      2008     2007
                                 --------- --------- -------- --------
                                       Pre-tax           After-tax
                                 ------------------- -----------------

Underwriting gain                $  24     $ 215     $   14   $   147
GAAP combined ratio               97.3 %    85.9 %

  Underwriting gain includes:
    Net favorable prior year
     reserve development            37        50         24        32
      Impact on GAAP combined
       ratio                      (2.2)pts  (3.0)pts

    Catastrophes, net of
     reinsurance                  (165)      (40)      (107)      (26)
      Impact on GAAP combined
       ratio                       9.6 pts   2.4 pts

    Timing impact for the
     transition to fixed, value-
     based agent compensation
     program                         -        25          -        16
      Impact on GAAP combined
       ratio                         - pts  (1.5)pts

Net investment income              118       148         96       113

Other                               19        21         12        16
----------------------------------------------------------------------

The current quarter underwriting gain reflects a GAAP combined ratio of 89.9 percent, excluding net favorable prior year reserve development and catastrophe losses as compared to 88.0 percent in the prior year quarter which also excludes the timing impact for the transition to the fixed, value-based agent compensation program. This increase of 1.9 points was primarily due to higher non-catastrophe weather-related losses compared to the prior year quarter.

Net favorable prior year reserve development in the current quarter was driven by better than expected loss experience for both Automobile and Homeowners and Other product lines, due in part to favorable results from claims initiatives previously instituted. Catastrophe losses in the current quarter were due to tornadoes, wind and hail storms in various regions of the United States.

Personal Insurance net written premiums of $1.839 billion increased 2 percent from the prior year quarter. This result was primarily due to continued strong retention rates, positive renewal price changes and higher new business volume.

Automobile net written premiums increased 2 percent from the prior year quarter. Policies in force increased 3 percent from the prior year quarter. Retention rates were strong and renewal price changes were positive, both generally consistent with recent quarters. New business volume increased from the prior year quarter due to the continued success of QuantumAuto(SM), the company's multivariate pricing product, which is now offered in 39 states and the District of Columbia.

Homeowners and Other net written premiums increased 3 percent and policies in force increased 3 percent from the prior year quarter. Retention rates were strong and renewal price changes were positive, both generally consistent with recent quarters. New business volume increased from the prior year quarter as new business growth in non-coastal areas was partially offset by ongoing coastal risk management initiatives.

                         2008 Annual Guidance

Travelers continues to expect its full year 2008 operating income per diluted share will be in a range of $5.55 to $5.85, unchanged from the previously announced guidance range. This range equates to an operating return on equity of approximately 13 percent to 14 percent. This guidance includes the reported results for the first half of 2008 and estimates for the remainder of the year based on a number of assumptions, including:

    --  Catastrophe losses of $785 million pre-tax and $510 million
        after-tax, or $0.84 per diluted share, for the full year which
        incorporates actual experience of the first half of 2008 and
        the original estimates for the remainder of the year;

    --  No additional prior year reserve development, favorable or
        unfavorable;

    --  No significant change in average invested assets (excluding
        FAS 115), after taking into account dividends and
        approximately $2.7 billion of share repurchases for the full
        year; and

    --  Weighted average diluted shares of approximately 610 million,
        including the impact of assumed share repurchases and normal
        growth in shares outstanding from employee equity awards.

    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 Web site at www.travelers.com. The management of Travelers will discuss the contents of this release and other relevant topics via Web cast at 9 a.m. Eastern (8 a.m. Central) on Wednesday, July 23, 2008. Prior to the Web cast, a slide presentation pertaining to the quarterly earnings will be available on the company's Web site. Following the live event, an audio playback of the Web cast and the slide presentation will be available on the company's Web site.

To view the slides or to listen to the Web cast or the playback, visit the "Web casts & Presentations" section of the Travelers investor relations Web site at http://investor.travelers.com/.

About Travelers

Travelers is a leading provider of property casualty insurance. For more information, visit www.travelers.com.

Glossary of Financial 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 statement of income or required to be disclosed in the notes to financial statements, and in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure. In the opinion of the company's management, a discussion of these measures provides investors 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.

Operating income (loss) is net income (loss) excluding the after-tax impact of net realized investment gains (losses). Operating income (loss) per share is operating income (loss) on a per share basis.

Return on equity is the ratio of net income to average equity. Operating return on equity is the ratio of operating income to average equity excluding net unrealized investment gains and losses, net of tax.

In the opinion of the company's management, operating income, operating income per share and operating return on equity are meaningful indicators of underwriting and operating results. These measures exclude net realized investment gains or losses, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends. Internally, the company's management uses operating income, operating income per share and operating return on equity to evaluate performance against historical results and establish financial targets on a consolidated basis.

Underwriting gain (loss) is net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses.

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 for investors to understand the variability in periodic earnings.

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. Loss reserve development may be related to one or more prior years or the current year. In the opinion of the company's management, discussion of loss reserve development is useful to investors 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, and changes in claims and claim adjustment expense reserve levels from period to period.

GAAP combined ratio is the sum of the loss and loss adjustment expense ratio (loss and LAE ratio), the underwriting expense ratio and, where applicable, the ratio of dividends to policyholders to net earned premiums. 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, billing and policy fees to net earned premiums. A GAAP combined ratio under 100 percent generally indicates an underwriting profit. A GAAP combined ratio over 100 percent generally indicates an underwriting loss. The GAAP combined ratio is an operating statistic that includes GAAP measures in the numerator and the denominator.

Gross written premiums reflect the direct and assumed contractually determined amounts charged to the policyholders for the effective period of the contract based on the terms and conditions of the insurance contract. Gross written premiums are a measure of overall business volume. Net written premiums reflect gross written premiums less premiums ceded to reinsurers.

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 (i.e., excluding FAS 115), 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.

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 Accounts; 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 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 businesses, 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, Ireland and Canada, 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 virtually all types of property and casualty insurance covering personal risks. The primary coverages in this segment are personal automobile and homeowners insurance sold to individuals.

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. Specifically, earnings guidance, statements about our share repurchase plans, statements about the potential impact of the recent disruption in the investment markets and other economic conditions on our investment portfolio and underwriting results are forward looking, and we may make forward-looking statements about our results of operations (including, among others, premium volume, net and operating income, investment income, return on equity, expected current returns and combined ratio), and financial condition (including, among others, invested assets and liquidity); the sufficiency of our asbestos and other reserves (including, among others, asbestos claim payment patterns); the cost and availability of reinsurance coverage; catastrophe losses; investment performance; investment, economic and underwriting market conditions; and strategic initiatives. Such statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond our 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 our results of operations, our financial position and/or liquidity and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance; if actual claims exceed our loss reserves, or if changes in the estimated level of loss reserves are necessary, our financial results could be materially and adversely affected; our business could be harmed because of our potential exposure to asbestos and environmental claims and related litigation; we are 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 our business are uncertain; we may not be able to collect all amounts due to us from reinsurers, and reinsurance coverage may not be available to us in the future at commercially reasonable rates or at all; the intense competition that we face could harm our ability to maintain or increase our profitability and premium volume; we are exposed to credit risk in certain of our business operations and in our investment portfolio; the insurance industry and we are the subject of a number of investigations by state and federal authorities in the United States, and we cannot predict the outcome of these investigations or their impact on our business or financial results; our businesses are heavily regulated, and changes in regulation may reduce our profitability and limit our growth; a downgrade in our claims-paying and financial strength ratings could adversely impact our business volumes, adversely impact our ability to access the capital markets and increase our borrowing costs; our investment portfolio may suffer reduced returns or losses; deteriorating economic conditions in the United States and abroad could adversely impact our ability to grow our business, and inflation could result in an increase in loss costs which could negatively impact our profitability; the inability of our insurance subsidiaries to pay dividends to our holding company in sufficient amounts would harm our ability to meet our obligations and to pay future shareholder dividends; disruptions to our relationships with our independent agents and brokers could adversely affect us; we are subject to a number of risks associated with our business outside the United States; we could be adversely affected if our controls to ensure compliance with guidelines, policies and legal and regulatory standards are not effective; our business success and profitability depend, in part, on effective information technology systems and on continuing to develop and implement improvements in technology; certain significant multiyear projects are currently in process but may not be successful; and if we experience difficulties with technology, data security and/or outsourcing relationships, our ability to conduct our business could be negatively impacted.

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 caption "Risk Factors" in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission.


----------------------------------------------------------------------

                                        Three Months     Six Months
                                            Ended           Ended
                                          June 30,        June 30,
                                       --------------- ---------------
($ in millions, except per share
 amounts, and after-tax)                2008    2007    2008    2007
----------------------------------------------------------------------

Operating income                       $  918  $1,167  $1,926  $2,245
Net realized investment gains (losses)     24      87     (17)     95
----------------------------------------------------------------------
Net income                             $  942  $1,254  $1,909  $2,340
----------------------------------------------------------------------

Basic earnings per share
Operating income                       $ 1.53  $ 1.77  $ 3.17  $ 3.38
Net realized investment gains (losses)   0.04    0.13   (0.03)   0.14
----------------------------------------------------------------------
Net income                             $ 1.57  $ 1.90  $ 3.14  $ 3.52
----------------------------------------------------------------------

Diluted earnings per share
Operating income                       $ 1.50  $ 1.73  $ 3.11  $ 3.27
Net realized investment gains (losses)   0.04    0.13   (0.03)   0.14
----------------------------------------------------------------------
Net income                             $ 1.54  $ 1.86  $ 3.08  $ 3.41
----------------------------------------------------------------------

Weighted average number of common
 shares outstanding (basic)             598.7   658.6   607.4   664.2
Weighted average number of common
 shares outstanding and common stock
 equivalents (diluted)                  610.8   676.0   619.5   688.6
Common shares outstanding at period
 end                                    592.8   657.0   592.8   657.0

Common stock dividends declared        $  180  $  192  $  358  $  366
----------------------------------------------------------------------

Operating income by segment
Business Insurance                     $  658  $  805  $1,341  $1,483
Financial, Professional &
 International Insurance                  204     152     412     308
Personal Insurance                        122     276     303     542
----------------------------------------------------------------------
   Total segment operating income         984   1,233   2,056   2,333
Interest Expense and Other                (66)    (66)   (130)    (88)
----------------------------------------------------------------------
                                       $  918  $1,167  $1,926  $2,245
----------------------------------------------------------------------

Operating return on equity               14.3%   18.6%   14.9%   18.0%
Return on equity                         14.4%   19.9%   14.5%   18.6%
----------------------------------------------------------------------

See Glossary of Financial Measures and the statistical supplement for
 additional financial data.


----------------------------------------------------------------------

                                Three Months Ended  Six Months Ended
                                     June 30,           June 30,
                                ------------------ -------------------
($ in millions, pre-tax)          2008      2007     2008      2007
----------------------------------------------------------------------
Revenues
Premiums                        $  5,357  $ 5,327  $10,697   $10,622
Net investment income                778      990    1,593     1,950
Fee income                            90      127      195       247
Net realized investment gains
 (losses)                             36      128      (26)      142
Other revenues                        34        1       68        39
----------------------------------------------------------------------
                                $  6,295  $ 6,573  $12,527   $13,000
----------------------------------------------------------------------
Revenues
Business Insurance              $  3,418  $ 3,656  $ 6,888   $ 7,237
Financial, Professional &
 International Insurance             980      975    1,954     1,945
Personal Insurance                 1,861    1,850    3,709     3,707
----------------------------------------------------------------------
   Total segment revenues          6,259    6,481   12,551    12,889
Interest Expense and Other             -      (36)       2       (31)
----------------------------------------------------------------------
                                   6,259    6,445   12,553    12,858
Net realized investment gains
 (losses)                             36      128      (26)      142
----------------------------------------------------------------------
                                $  6,295  $ 6,573  $12,527   $13,000
----------------------------------------------------------------------
Gross written premiums
Business Insurance              $  3,087  $ 3,321  $ 6,395   $ 6,708
Financial, Professional &
 International Insurance           1,065    1,063    2,011     2,038
Personal Insurance                 1,909    1,878    3,588     3,587
----------------------------------------------------------------------
                                $  6,061  $ 6,262  $11,994   $12,333
----------------------------------------------------------------------
Net written premiums
Business Insurance              $  2,805  $ 2,935  $ 5,716   $ 5,815
Financial, Professional &
 International Insurance             985      984    1,629     1,584
Personal Insurance                 1,839    1,795    3,472     3,459
----------------------------------------------------------------------
                                $  5,629  $ 5,714  $10,817   $10,858
----------------------------------------------------------------------
GAAP combined ratios: (1)

Business Insurance (2)
Loss and loss adjustment
 expense ratio                      54.7%    57.6 %   54.5 %    59.3 %
Underwriting expense ratio          32.4     30.5     32.4      30.4
----------------------------------------------------------------------
Combined ratio                      87.1%    88.1 %   86.9 %    89.7 %
----------------------------------------------------------------------

Financial, Professional &
 International Insurance (2)
Loss and loss adjustment
 expense ratio                      43.7%    54.7 %   44.7 %    53.8 %
Underwriting expense ratio          36.7     36.3     36.2      36.4
----------------------------------------------------------------------
Combined ratio                      80.4%    91.0 %   80.9 %    90.2 %
----------------------------------------------------------------------

Personal Insurance
Loss and loss adjustment
 expense ratio                      67.3%    57.6 %   65.1 %    58.3 %
Underwriting expense ratio          30.0     28.3     29.7      27.4
----------------------------------------------------------------------
Combined ratio                      97.3%    85.9 %   94.8 %    85.7 %
----------------------------------------------------------------------

Total Company (2)
Loss and loss adjustment
 expense ratio                      57.0%    57.1 %   56.3 %    58.1 %
Underwriting expense ratio          32.3     30.7     32.2      30.4
----------------------------------------------------------------------
Combined ratio                      89.3%    87.8 %   88.5 %    88.5 %
----------------------------------------------------------------------

(1) For purposes of computing GAAP ratios, billing and policy fees
 (which are a component of other revenues) are allocated as a
 reduction of other underwriting expenses. In addition, fee income is
 allocated as a reduction of losses and loss adjustment expense and
 other underwriting expenses.

(2) Before policyholder dividends.

See Glossary of Financial Measures and the statistical supplement for
 additional financial data.


----------------------------------------------------------------------
                                        Three Months     Six Months
                                             Ended          Ended
                                           June 30,       June 30,
                                        -------------- ---------------
($ in millions; after-tax except as
 noted)                                  2008   2007    2008    2007
----------------------------------------------------------------------
Reconciliation of underwriting gain to
 net income

Pre-tax underwriting gain               $ 535  $  617  $1,165  $1,151
Tax expense on underwriting results      (197)   (168)   (426)   (361)
----------------------------------------------------------------------
Underwriting gain                         338     449     739     790
Net investment income                     624     758   1,274   1,495
Other, including interest expense         (44)    (40)    (87)    (40)
----------------------------------------------------------------------
Consolidated operating income             918   1,167   1,926   2,245
Net realized investment gains (losses)     24      87     (17)     95
----------------------------------------------------------------------
Net income                              $ 942  $1,254  $1,909  $2,340
----------------------------------------------------------------------


                                                    As of
                                       -------------------------------
                                       June 30,  December 31, June 30,
($ in millions; except per share data)   2008       2007        2007
----------------------------------------------------------------------
Reconciliation of tangible and
 adjusted common shareholders' equity
 to common shareholders' equity

Tangible common shareholders' equity   $ 21,738 $      21,811 $21,338
Goodwill and other intangibles, net of
 tax                                      4,019         4,073   4,128
----------------------------------------------------------------------
Adjusted common shareholders' equity     25,757        25,884  25,466
Net unrealized investment gains
 (losses), net of tax                        63           620    (263)
----------------------------------------------------------------------
Common shareholders' equity            $ 25,820 $      26,504 $25,203
----------------------------------------------------------------------

Common shares outstanding                 592.8         627.8   657.0
----------------------------------------------------------------------

Tangible book value per share          $  36.67 $       34.74 $ 32.48
Adjusted book value per share             43.45         41.23   38.76
Book value per share                   $  43.56 $       42.22 $ 38.36
----------------------------------------------------------------------

See Glossary of Financial Measures and the statistical supplement for
 additional financial data.

Source: The Travelers Companies, Inc.

Contact: The Travelers Companies, Inc. Media: Shane Boyd, 651-310-3846 Jennifer Wislocki, 860-277-7458 or Institutional Investors: Gabriella Nawi, 917-778-6844 Michael Connelly, 860-277-1507 Andrew Hersom, 860-277-0902 or Individual Investors: Marc Parr, 860-277-0779