Travelers Companies, INC. (NYSE: TRV) sells property & casualty insurance. The company is divided into three business segments: business insurance; financial, professional and international insurance; and personal insurance, with its business insurance accounting for the majority of its revenue at about 54% of sales.^[1] The company earns its revenue primarily through its sales of insurance premiums or premiums earned- approximately 88% of TRV's revenue is attributed to premiums earned.^[2] In 2008, Travelers earned $24.5 billion in revenue, 5.9% less than 2007 because of increases in claims expenses and lower earnings from its investments.^[3]

Like other insurance companies, Travelers relies on investing its premium revenue to create a pool of assets (known as "claims loss provision" ) which it can use to pay out future claims. However, the company's earnings from its investments dropped 26% in 2008 because of the 2008 Financial Crisis.^[4] In particular, Travelers' investments are vulnerable to fluctuations in interest rates because the value of TRV's numerous bonds decrease as interest rates rise.^[5] Additionally, Travelers is susceptible to the accuracy of its catastrophe models as incorrect estimates may result in inadequate premiums to fund the necessary claims expenses. However, its combined ratio of 85.9% in 2008 beat the 104.7% average combined ratio of the overall property & casualty insurance industry.^[6][7] This means that on average, TRV's competitors paid more in claims expenses than they earned in 2008 while Travelers performed close to the top of the industry.

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