8-KRegulation FD

TRAVELERS COMPANIES, INC. 8-K Report, Regulation FD Disclosure (Sep 9, 2005)

Filed September 9, 2005For Securities:TRV

Summary

This 8-K filing by The St. Paul Travelers Companies, Inc., dated September 9, 2005, provides crucial details about the company's property and physical damage reinsurance program in the wake of Hurricane Katrina. The disclosure aims to address investor inquiries regarding the company's exposure to catastrophic events. The company outlined specific limits on its loss exposure per individual insured property, generally capped at $15 million through its commercial and specialty property treaties, with further reductions possible via facultative reinsurance. More significantly, it detailed its corporate-wide General Catastrophe Reinsurance Treaty, which is designed to mitigate losses from single, large-scale occurrences. This treaty covers a substantial portion of losses between $750 million and $2 billion, indicating a robust risk management strategy for major events.

Key Highlights

  • 1The St. Paul Travelers Companies, Inc. is providing enhanced disclosure on its property and physical damage reinsurance following Hurricane Katrina.
  • 2The company's commercial and specialty property treaties generally limit loss exposure to $15 million per individual insured property.
  • 3Additional reinsurance, including facultative, further reduces loss exposure on certain risks below the $15 million threshold.
  • 4A corporate-wide General Catastrophe Reinsurance Treaty is in place to mitigate losses from single catastrophic occurrences.
  • 5The Catastrophe Reinsurance Treaty covers 62% of losses between $750 million and $1 billion and 72% between $1 billion and $2 billion from a single event.
  • 6The treaty includes a reinstatement clause offering coverage for an additional occurrence with further consideration.
  • 7Key exclusions from the catastrophe treaty include nuclear, chemical, biochemical, and all terrorism losses as defined by TRIA 2002, as well as certain UK and non-U.S. located coverages.

Frequently Asked Questions

The main purpose of this 8-K filing is to provide The St. Paul Travelers Companies, Inc. with additional details about its property and physical damage reinsurance program in response to investor inquiries following Hurricane Katrina. It aims to clarify the company's risk exposure and mitigation strategies for major catastrophic events.

The company utilizes property and other physical damage treaties that generally limit its Commercial and Specialty loss exposure to $15 million per individual insured property, subject to treaty limitations and aggregate limits. For certain risks, facultative and other treaty reinsurance further reduce this exposure.

The General Catastrophe Reinsurance Treaty is designed to mitigate losses from a single occurrence. It covers a significant percentage of total losses between $750 million and $1 billion (62%) and between $1 billion and $2 billion (72%). It also includes a reinstatement clause for potential additional occurrences.

The treaty excludes losses related to nuclear, chemical, and biochemical events, as well as all terrorism losses defined by the Terrorism Risk Insurance Act of 2002. It also excludes insurance coverages underwritten in the United Kingdom, Republic of Ireland, and non-U.S. located coverages underwritten by its Lloyd's operations.