UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
Commission file number: 001-31266
A. Full title of the plan and address of the plan, if different from that
of the issuer named below:
Travelers 401(k) Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
TRAVELERS PROPERTY CASUALTY CORP.
ONE TOWER SQUARE
HARTFORD, CT 06183
TRAVELERS
401(k) SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 2002
(With Independent Auditors' Report Thereon)
TRAVELERS
401(k) SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 2002
INDEX
PAGE
Independent Auditors' Report 1
Financial Statements:
Statement of Net Assets Available for Plan Benefits as of
December 31, 2002 2
Statement of Changes in Net Assets Available for Plan Benefits
for the period August 20, 2002 to December 31, 2002 3
Notes to Financial Statements 4 - 13
SUPPLEMENTAL SCHEDULE: *
Schedule I - Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
- December 31, 2002 14
* Schedules required by Form 5500 which are not applicable have not been
included.
INDEPENDENT AUDITORS' REPORT
To the Plan Administrator and Participants of the
Travelers 401(k) Savings Plan:
We have audited the accompanying statement of net assets available for plan
benefits of the Travelers 401(k) Savings Plan (the Plan) as of December 31,
2002, and the related statement of changes in net assets available for plan
benefits for the period August 20, 2002 (inception of Plan) to December 31,
2002. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Travelers 401(k) Savings Plan as of December 31, 2002, and the changes in net
assets available for plan benefits for the period August 20, 2002 (inception of
Plan) to December 31, 2002, in conformity with accounting principles generally
accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplemental schedule H, Line
4i-Schedule of assets (held at end of year) - December 31, 2002 is presented for
the purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule have been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
New York, New York
June 30, 2003
1
TRAVELERS 401(k) SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
As of December 31, 2002
ASSETS
Investments at fair value (note 3) $ 1,073,510,400
----------------
Receivables:
Employer contributions 17,808,417
Accrued interest and dividends 310,250
Investments sold but not delivered 1,329,977
----------------
Total receivables 19,448,644
----------------
TOTAL ASSETS 1,092,959,044
----------------
LIABILITIES
Investments purchased but not received 555,229
Administrative fees payable 421,716
----------------
TOTAL LIABILITIES 976,945
----------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 1,091,982,099
================
See accompanying notes to financial statements.
2
TRAVELERS 401(k) SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
For the Period August 20, 2002 (inception of Plan) to December 31, 2002
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments (note 3) $ 4,679,376
Dividends 3,025,093
Interest 5,434,076
----------------
13,138,545
Less investment expenses 469,810
----------------
Net investment income 12,668,735
CONTRIBUTIONS:
Employee contribution 23,856,753
Employee rollover contribution 958,273
Employer contribution 17,808,417
----------------
TOTAL CONTRIBUTIONS 42,623,443
----------------
Total additions 55,292,178
----------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 8,260,040
----------------
TOTAL DEDUCTIONS 8,260,040
----------------
NET INCREASE IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 47,032,138
NET ASSETS AVAILABLE FOR PLAN BENEFITS AT:
BEGINNING OF PERIOD -
Transfer in from Citigroup 401(k) Plan 1,044,949,961
----------------
END OF PERIOD $ 1,091,982,099
================
See accompanying notes to financial statements.
3
TRAVELERS
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
(1) PLAN DESCRIPTION
The following brief description of the Travelers 401(k) Savings Plan
(the "Plan") is provided for general information purposes only.
Participants should refer to the plan document for a more complete
description of the Plan's provisions.
Travelers Property Casualty Corp. and participating affiliated
companies (the "Company") was reorganized in connection with its
Initial Public Offering in March 2002. Citigroup, Inc. (together with
its consolidated subsidiaries, - "Citigroup") completed the spin-off of
the Company, as an independent public company in August 2002 (the
"Effective Date"). The Plan received an asset transfer from the
Citigroup 401(k) Plan, and in conjunction therewith, assumed the
liability for benefits previously provided under the Citigroup 401(k)
Plan with respect to participants on the Effective Date in this Plan.
The Company as the Plan Sponsor has the power to appoint a committee to
carry out its administrative duties.
The Plan is a defined contribution section 401(k) plan that covers all
eligible employees of the Company. The Plan is subject to the
provisions of the Employee Income Retirement Security Act of 1974, as
amended (ERISA).
INVESTMENT PROGRAMS - Employee contributions to the Plan are invested
by the Plan's trustee, State Street Bank and Trust Company, as directed
by the participants. The Plan offers participants a choice of funds in
which to invest. As of December 31, 2002, the Plan offered the
following investment funds:
1. TRAVELERS PROPERTY CASUALTY CORP. CLASS A STOCK FUND - This fund
invests primarily in shares of the Company's class "A" common stock
(TAP.A).
2. TRAVELERS PROPERTY CASUALTY CORP. CLASS B STOCK FUND - This fund
invests primarily in shares of the Company's class "B" common stock
(TAP.B).
3. CITIGROUP COMMON STOCK FUND - This fund invests primarily in shares
of Citigroup Inc. common stock (C).
4. STABLE VALUE FUND - This fund invests in: (i) high-quality
insurance, bank or like products, including guaranteed interest
contracts, insurance company separate accounts, and general account
insurance contracts, and (ii) collective investment funds that
invest primarily in high quality, stable value investment contracts
issued by insurance companies and banks and synthetic guaranteed
investment contracts.
5. SMITH BARNEY MONEY FUNDS CASH PORTFOLIO FUND (class "Y" shares) -
This fund invests in U.S. government obligations, high-quality
commercial paper and other short-term obligations, corporate
obligations, and municipal obligations.
6. FIXED-INCOME SECURITIES FUND - This fund is designed to be an
enhanced fixed-income index fund and is expected to offer a return
that is close to the index return.
4
TRAVELERS
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
7. SMITH BARNEY GOVERNMENT SECURITIES FUND (class "Y" shares) - This
fund seeks to achieve its objective through investments, primarily
in debt securities issued or guaranteed by the U.S. government, its
agencies, or its instrumentalities. These include U.S. Treasury and
mortgage-rated securities.
8. SMITH BARNEY DIVERSIFIED STRATEGIC INCOME FUND (class "Y" shares) -
This fund invests primarily in three types of fixed income
securities: U.S. government securities and U.S. government
mortgage-related securities; foreign government securities,
including securities issued by supranational organizations; and U.S.
and foreign corporate debt securities.
9. SALOMON BROTHERS HIGH YIELD BOND FUND (class "O" shares) - This fund
invests primarily in high-yield, fixed-income securities issued by
U.S. and foreign corporations and foreign governments and their
agencies and instrumentalities. The fund will limit its investments
in emerging market governmental issuers to 35% of its assets.
10. CONSERVATIVE FOCUS FUND - This fund invests in a mix of fixed-income
and equity funds. The fund is managed to approximate this target
portfolio mix. The fund is rebalanced monthly or more often when
justified by significant activity or changes in the market values of
the underlying funds.
11. MODERATE FOCUS FUND - This fund invests in a mix of fixed-income and
equity funds and is managed to approximate this target portfolio
mix. The fund is rebalanced monthly or more often when justified by
significant activity or changes in the market values of the
underlying funds.
12. AGGRESSIVE FOCUS FUND - This fund invests in a mix of fixed-income
and equity funds and is managed to approximate this target portfolio
mix. The fund is rebalanced monthly or more often when justified by
significant activity or changes in the market values of the
underlying funds.
13. S&P 500 INDEX FUND - This fund invests in an index fund that
replicates the composition of the S&P 500 Index, and the return for
the fund is expected to be very close to that of the S&P 500. A
relatively small cash balance is maintained for liquidity purposes,
but it is equitized using S&P 500 stock index futures in order to
keep the Fund fully invested.
14. SMITH BARNEY APPRECIATION FUND (class "Y" shares) - This fund
invests primarily in equity securities of U.S. companies. The fund
typically invests in medium- and large-capitalization companies and
may invest in small-capitalization companies. Equity securities
include exchange-traded and over-the-counter common stocks and
preferred stocks, debt securities convertible into equity
securities, and warrants and rights relating to equity securities.
15. SMITH BARNEY LARGE CAP GROWTH FUND (class "Y" shares) - This fund
invests primarily in equity securities of companies with large
market capitalizations. Large-capitalization companies are those
with total market capitalizations of $5 billion or more at the time
of investment. Equity securities include U.S. exchange-traded and
over-the-counter common stocks, debt securities convertible into
equity securities, and warrants and rights relating to equity
securities.
5
TRAVELERS
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
16. SMITH BARNEY LARGE CAP VALUE FUND (class "Y" shares) - This fund
invests primarily in common stocks of U.S. companies having market
capitalizations of at least $5 billion at the time of investment.
17. SALOMON BROTHERS INVESTORS VALUE FUND (class "O" shares) - This fund
invests primarily in common stocks of established U.S. companies.
The fund also may invest in other equity securities. To a lesser
degree, the fund invests in income-producing securities, such as
debt securities.
18. STATE STREET GLOBAL ADVISORS RUSSELL 2000 INDEX SECURITIES LENDING
FUND (Series A) - This fund attempts to invest in all 2,000 stocks
in the Russell 2000 Index in proportion to their weighting in the
Index. The Fund may also hold 2-5% of its value in futures contracts
(an agreement to buy or sell a specific security by a specific date
at an agreed upon price). The strategy of investing in the same
stocks as the Index minimizes the need for trading and therefore
results in lower expenses.
19. SMITH BARNEY AGGRESSIVE GROWTH FUND (class "Y" shares) - This fund
invests primarily in common stocks of companies that the manager
believes are experiencing, or will experience, growth in earnings
that exceeds the average rate of earnings growth of the companies
that comprise the S&P 500 Index. The fund may invest in the
securities of large, well-known companies that offer prospects of
long-term earnings growth. However, because higher earnings growth
rates are often achieved by small- to medium-sized companies, a
significant portion of the fund's assets are invested in the
securities of such companies.
20. SMITH BARNEY INTERNATIONAL ALL CAP GROWTH FUND (class "Y" shares) -
This fund invests primarily in equity securities of foreign
companies. Equity securities include exchange-traded and
over-the-counter common stocks and preferred shares, debt securities
convertible into equity securities, and warrants and rights relating
to equity securities.
21. INTERNATIONAL SECURITIES FUND - This fund invests 90% of its assets
in the DFA International Value Portfolio IV and 10% in the Emerging
Markets Portfolio II. Each portfolio is a separate fund managed by
Dimensional Fund Advisors Inc. (DFA). The DFA International Value
Portfolio IV invests in large non-U.S.-based companies in developed
countries whose stocks DFA deems value stocks, typically because the
shares have higher book value in relations to their market value.
Generally, investments are in companies whose market capitalization
(shares outstanding times market price) exceeds $800 million and
whose book-to-market ratio is in the top 30% of all companies of
each country. DFA generally invests in the same countries as are
found in the Morgan Stanley Europe, Australasia, Far East Index
(EAFE), a widely followed international index for developed
countries. The Emerging Markets Portfolio II invests in stocks of
companies in countries whose economies have the potential for rapid
economic growth. These countries are located in regions such as
Southeast Asia, Latin America, and the Middle East. The portfolio
will invest in companies whose market capitalization ranking by size
is in the top 40th-75th percentile of the total market
capitalization of public companies in the country.
6
TRAVELERS
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
22. EUROPACIFIC GROWTH FUND -This fund's assets may be invested in
common stocks; securities convertible into common stocks, warrants
and rights; debt securities; government securities; nonconvertible
preferred stocks; repurchase agreements; and cash or cash
equivalents. Holdings range from small firms to multinational
corporations located in major world markets as well as in smaller,
developing countries.
23. TEMPLETON DEVELOPING MARKETS TRUST FUND (class "A" Shares) - This
fund invests primarily in equity securities of developing or
emerging market issuers.
24. VAN KAMPEN EMERGING GROWTH FUND (class "A" shares) - This fund seeks
to achieve its objective by investing in common stocks of
emerging-growth companies.
25. VAN KAMPEN COMSTOCK FUND (class "A" Shares) - This fund emphasizes a
"value" style of investing, seeking well-established, undervalued
companies.
26. SALOMON BROTHERS CAPITAL FUND (class "O" Shares) - This fund invests
in securities believed to have above-average price appreciation
potential. The fund may invest in seasoned, established companies
and relatively small new companies as well as new issues. The fund
will not invest more than 25% of its assets in any particular
industry.
EMPLOYEE CONTRIBUTIONS
Eligible employees who elect to participate in the plan may contribute
up to 50% (in increments of 1%) of their eligible compensation as
pre-tax contributions into the Plan (subject to statutory limitations
of $11,000 for 2002) as defined in the Plan.
EMPLOYER CONTRIBUTION
The Company makes employer matching contributions to the Company Common
Stock Funds on behalf of eligible participants as defined in the Plan
document. Allocations are based on participant's qualifying
compensation and eligible pay, as provided in the Plan document. Each
participant is entitled only to the benefits equal to the vested
portion of their participant's account.
Travelers 401(k) Savings Plan Company Match for 2002 to be credited in 2003
--------------------------------------------------------------------------------------------------------------
For each $1 contributed by
the participant, the To a maximum of:
If total eligible compensation is: Company will contribute
--------------------------------------------------------------------------------------------------------------
| The lesser of 3% of eligible pay or |
$0 - $50,000 $3 | $1,500 annually. |
---------------------------------------------------------------------| |
Greater-than $50,000 - $75,000 $2 | |
---------------------------------------------------------------------| |
Greater-than $75,000 - $100,000 $1 | |
--------------------------------------------------------------------------------------------------------------
Greater-than $100,000 No matching contribution made.
--------------------------------------------------------------------------------------------------------------
7
TRAVELERS
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
The 2002 employer contribution was a receivable to the Plan as of
December 31, 2002. The contribution amount for plan year 2002 was
$16,326,691 and was made on March 28, 2003. This amount was contributed
in the Company's class "B" common stock. The Plan allows for the
Company to make discretionary profit sharing contributions to the Plan.
There were no such contributions for 2002.
Aetna Supplemental Company Contribution
The Aetna Supplemental Company Contribution is a supplement to the
Travelers 401(k) Savings Plan. The Aetna Supplemental Company
Contribution was established in conjunction with the April 2, 1996
acquisition by Travelers Insurance Group Holding Inc. of the
outstanding capital stock of Travelers Casualty and Surety Company
(formerly Aetna Casualty and Surety Company) and the Standard Fire
Insurance Company. It provides a fixed annual contribution into the
Plan for eligible employees ("Aetna Participants").
The contribution amount for each Aetna Participant is fixed for each
year the employee remains actively employed with the Company. In the
year an employee terminates employment, retires, becomes disabled or
dies, the contribution will be prorated to reflect the number of full
months worked. The Aetna Participants are fully vested in this
supplemental account. The 2002 Aetna Supplemental Company Contribution
was a receivable to the Plan as of December 31, 2002. The contribution
amount for plan year 2002 was $1,481,726 and was made in February 2003.
VESTING
Participants are fully vested in their contributions to the Plan plus
actual earnings thereon. The Plan provides for participants to be
one-hundred percent (100%) vested in employer contributions after
completion of three years of service.
Amounts forfeited from Participant Accounts during a plan year shall be
applied, at the Company's discretion, to pay the Plan administration
expenses or to reduce the employer contribution amount which would
otherwise be required for any matching contribution or profit-sharing
contributions made under the Plan. There were no forfeitures in 2002.
PLAN TERMINATION
The Company expects to continue the Plan indefinitely, but reserves the
right at any time to terminate the Plan in its entirety. The Company
may also completely discontinue contributions to the Plan. Upon full or
partial termination or complete discontinuance of contributions under
the Plan, all amounts credited to the affected Participants' Accounts
shall become one-hundred percent (100%) vested and shall not thereafter
be subject to forfeiture.
FUND TRANSFERS AND ALLOCATION OF CONTRIBUTIONS
Participants may elect to divide their contributions among the
investment funds in whole increments divisible by 1%. Certain
restrictions apply to transfers in and out of various investment funds.
8
TRAVELERS
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
Company matching contributions made on behalf of a participant (and any
earnings thereon) which are initially invested in either the Company's
class A or class B common stock funds (collectively, the "Travelers
Funds") may not be transferred to other investment funds for a period
of five years unless such Participant attains age 55, at which point
there are no transfer restrictions.
INVESTMENTS
Plan assets are held in a trust fund established under the Plan.
ROLLOVER AND TRANSFER CONTRIBUTIONS
Participants may also elect to contribute amounts as "rollovers"
representing distributions from other qualified defined benefit or
defined contribution plans of a former employer or to make rollover
contributions into the Plan from an individual retirement account (or
similar arrangement).
PARTICIPANT LOANS
Loans transferred to the Plan pursuant to the Citigroup 401(k) Plan
Asset Transfer shall be treated as loans under the Plan, and will
retain all of the material features (e.g. interest rate and repayment
schedule) that such loans had under the Citigroup 401(k) Plan.
Participants may borrow from their accounts a minimum of $1,000 up to a
maximum equal to the lessor of $50,000 or 50% of their account balance.
Each loan bears interest at prime rate plus 1% as published in the Wall
Street Journal on the first business day of the month in which the loan
is made.
Loan repayments by participants who are employed by the Company are
generally made through after-tax payroll deductions.
WITHDRAWALS
Generally, contributions may not be withdrawn while employed by the
Company prior to retirement age. No amounts attributable to matching or
additional employer contributions may be withdrawn while a participant
is employed by the Company prior to age 59 1/2. In the case of
hardships resulting in an "immediate and heavy financial need", a
participant may elect to withdraw all or a portion of his or her
account balance, including earnings in an amount which, as determined
by the Committee to be "necessary to satisfy the financial need". Any
hardship withdrawals under the Citigroup 401(k) Plan within twelve (12)
months prior to the Effective Date of this Plan shall be deemed to be a
hardship withdrawal under this Plan.
Withdrawals to which a participant is entitled are the amounts that can
be provided by the contributions and income thereon (including net
realized and unrealized investment gains and losses) allocated to each
Participant's Account. Any Participant who makes a withdrawal from the
Travelers Funds or the Citigroup Stock Fund other than for a hardship
withdrawal may elect to receive payments in the form of common stock or
cash at the discretion of the participant. Fractional shares and
withdrawals from other funds are paid in cash.
9
TRAVELERS
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
DISTRIBUTIONS
A Participant or beneficiary may receive distributions from his/her
account under the Plan upon any termination of employment, retirement,
death or disability (as defined in the Plan) in the forms of a lump-sum
payment, or, if vested account balance is greater than $5,000, in
installments.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the accrual
basis of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
Plan investments are stated at fair value, except for short-term money
market investments and participant loans, which are valued at cost plus
interest received which approximates fair value. Stocks and bonds
traded on national securities exchanges are valued at their closing
market prices. When no trades are reported, stocks and bonds are valued
at the most recent bid quotation; securities traded in the over-the
counter market are valued at their last sale or bid price.
The shares of the mutual and commingled funds are valued at the net
asset value per share as reported by the sponsor of the mutual and
commingled fund.
U.S. Government and Agency Obligations are valued based upon bid
quotations for identical or similar obligations. Guaranteed investment
contracts which have contract provisions that require withdrawals at
contract value for benefit payments, loans or transfers are carried at
contract value.
Purchases and sales of securities are recorded on a trade date basis.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date.
BENEFITS PAID TO PARTICIPANTS
Benefit payments are recorded when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, changes therein, and disclosures of
contingent assets and liabilities. Actual results could differ from
those estimates.
EXPENSES
Substantially all expenses related to the administration of the Plan
are paid by the participants of the Plan.
10
TRAVELERS
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
MARKET RISK
The Plan offers a number of investment options including the Travelers
Funds and other investment Funds. The investment funds include U.S.
equities, international equities, and fixed income securities.
Investment securities, in general, are exposed to various risks, such
as interest rate, credit, and overall market volatility risk. Due to
the level of risk associated with certain investment securities, it is
reasonable to expect the changes in the values of investment securities
will occur in the near term and that such changes could materially
affect participant account balances and the statement of changes in net
assets available for plan benefits.
CREDIT RISK
The Plan's exposure to a concentration of credit risk is limited by the
diversification of investments across twenty-six participant-direct
fund elections. Additionally the investments within each
participant-direct fund elections are further diversified into varied
financial instruments, with the exceptions of the Travelers Funds and
Citigroup Common Stock Fund, which primarily invest in securities of a
single issuer.
(3) INVESTMENTS
A summary of the Plan's investments as of December 31, 2002 is listed
below. Investments that represent more than 5% of the Plans assets are
separately identified.
2002
----------------
Investments at fair value as determined by quoted market price:
Citigroup Common Stock $ 471,543,220
Travelers Property Casualty Corp. (class "A" shares) 30,236,443
Travelers Property Casualty Corp. (class "B" shares) 19,486,903
U.S. Government and Agency Obligation 9,820,984
Corporate & Foreign Bonds 4,910,374
Stable Value Fund 265,847,376
INVESCO 500 Index Fund 59,917,022
Other Mutual and Commingled Funds 163,703,750
----------------
1,025,466,072
----------------
Investments at contract value:
Short Term Investment Fund 12,244,389
Guaranteed Investment Contracts 3,849,788
Participant Loans 31,950,151
----------------
$ 48,044,328
----------------
Total Investments $ 1,073,510,400
================
11
TRAVELERS
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
The credit rates for Guaranteed Investment Contracts as of December 31,
2002 ranged from 4.65% to 7.31%. During the period from August 20, 2002
to December 31, 2002, the Plan's investments (including investments
bought, sold and held during the year) appreciated in value by
$4,679,376.
Common Stock $ 13,576,358
U.S. Government and Agency Obligation 84,774
Corporate & Foreign Bonds 129,186
Other Mutual and Commingled Funds (9,110,942)
--------------
Net appreciation in fair value of investments $ 4,679,376
==============
(4) NON - PARTICIPANT DIRECTED INVESTMENTS
Employer contributions and Company Matching Contributions made on
behalf of a participant must stay in the Company's common stock fund
for five plan years. After five plan years, the restriction on the
contribution, lapses, and that portion of contributions and its
earnings can be transferred to any of the available investment options.
This five-year restriction also lapses when the participant reaches age
55. Once a participant is vested in his or her company contributions,
the funds are non-forfeitable and will become available for
distribution or withdrawal in accordance with the terms of the Plan.
Information about the net assets and significant components of the
changes in net assets relating to non-participant directed investments
is as follows:
2002
-------------
Net Assets Available for Plan Benefits:
Employer Contribution Receivable $ 16,326,691
Significant Changes in Net Assets:
Employer Contribution $ 16,326,691
(5) TAX STATUS
The Plan has not yet requested a determination letter from the Internal
Revenue Service. The Plan Administrator and the Plan's legal counsel
believe that the Plan as designed qualifies under the applicable
provisions of the Internal Revenue Code and, therefore the related
trust, is exempt from Federal income taxes. In the opinion of the plan
administrator, the Plan and its underlying trust have operated within
the terms of the Plan and should qualified under the applicable
provisions of the Internal Revenue Code. Therefore, no provision for
income tax is included in the Plan's financial statements.
12
TRAVELERS
401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
(6) RELATED PARTY TRANSACTIONS (PARTIES IN INTEREST)
Certain Plan investments are shares on stock issued by Travelers
Property Casualty Corp. Travelers Property Casualty Corp. is the Plan
Sponsor of the Plan.
Certain Plan investments are shares of commingled trust funds managed
by State Street Bank and Trust Company (`State Street"), and common
stock issued by State Street. State Street is the custodian of the
Plan's assets.
CitiStreet, a subsidiary of a joint venture between Citigroup and State
Street provided administration and recordkeeping for the Plan.
13
SUPPLEMENTAL SCHEDULE I
TRAVELERS 401(k) PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
MATURITY NUMBER MARKET VALUE
IDENTITY OF ISSUE RATE DATE OF SHARES COST 12/31/02
---------------------------------------------------------------------------------------------------------------
STATE STREET BANK
State Street Bank & Trust Co 12,244,389 12,244,389 12,244,389
--------------- ---------------
COMMON STOCK
Citigroup Inc. 13,399,921 455,597,297 471,543,220
*Travelers Property Casualty Corp. TAP.A 2,063,921 31,020,172 30,236,443
*Travelers Property Casualty Corp. TAP.B 1,330,164 21,072,739 19,486,903
--------------- ---------------
507,690,208 521,266,566
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
Federal Home Loan Banks 6.250% 8/4/13 100,000 107,341 107,012
Federal Home Loan Mortgage Corp 5.750% 4/15/08 125,000 139,082 140,309
Federal Home Loan Mortgage Corp 6.000% 6/15/11 150,000 167,336 169,891
Federal Home Loan Mortgage Corp 6.250% 7/15/04 400,000 427,344 428,489
Federal Home Loan Mortgage Corp 6.875% 1/15/05 450,000 495,094 495,188
Federal Home Loan Mortgage Corp 5.250% 1/15/06 1,100,000 1,184,988 1,194,989
Federal National Mortgage Association 6.000% 5/15/08 70,000 76,997 79,290
Federal National Mortgage Association 6.375% 6/15/09 100,000 111,948 115,711
Federal National Mortgage Association 7.125% 3/15/07 125,000 143,291 146,239
Federal National Mortgage Association 5.125% 2/13/04 300,000 312,930 312,563
Federal National Mortgage Association 7.000% 6/15/05 500,000 556,735 560,565
Federal National Mortgage Association 7.500% 2/25/29 101,396 108,107 104,624
Federal Natl Mtg Assn Gtd 7.000% 12/25/41 135,082 142,960 144,875
FHLMC 5.500% 12/31/99 300,000 307,313 310,875
FNMA Pool 6.500% 12/1/12 16,398 17,211 17,382
United States Treasury Notes 5.750% 8/15/10 40,000 44,668 45,991
United States Treasury Notes 5.750% 8/15/03 150,000 155,789 154,190
United States Treasury Notes 6.125% 8/15/07 140,000 157,569 160,989
United States Treasury Notes 5.250% 5/15/04 200,000 210,908 210,664
United States Treasury Notes 6.500% 2/15/10 190,000 220,964 227,109
United States Treasury Notes 5.625% 5/15/08 260,000 292,565 294,978
United States Treasury Notes 6.625% 5/14/07 400,000 458,488 466,906
United States Treasury Notes 5.625% 2/15/06 500,000 548,012 553,672
United States Treasury Notes 7.875% 11/15/03 680,000 759,306 759,342
United States Treasury Notes 6.500% 10/15/06 920,000 1,048,368 1,056,706
United States Treasury Notes 5.000% 8/15/11 970,000 1,042,381 1,063,665
United States Treasury Bill 500,000 498,515 498,770
--------------- ---------------
9,736,210 9,820,984
CORPORATE BONDS
Alcoa Inc 5.875% 6/1/06 10,000 10,635 10,979
All State Corporation 7.200% 12/1/09 50,000 57,264 57,986
AOL Time Warner Inc 6.125% 4/15/06 20,000 18,400 20,649
AT&T Wireless Services Inc 7.875% 3/1/11 30,000 28,050 30,150
Atlantic Richfield Co 5.900% 4/15/09 80,000 85,810 89,057
Bank of America 7.125% 9/15/06 60,000 67,183 68,431
Bellsouth Corp 5.000% 10/15/06 15,000 15,224 16,016
Boeing Capital Corporation 6.100% 3/1/11 15,000 15,279 15,554
Boeing Capital Corporation 6.500% 2/15/12 25,000 26,871 26,655
Burlington Northern Santa Fe 7.125% 12/15/10 80,000 89,531 92,304
Capital One Bank 6.875% 2/1/06 35,000 33,250 33,861
Capital One Master Tr 4.900% 3/15/10 50,000 52,186 52,336
Citigroup Inc. 7.375% 4/2/07 50,000 51,648 54,510
Citigroup Inc. 7.250% 10/1/10 60,000 68,059 69,652
Comcast Cable Communications 6.750% 1/1/11 15,000 13,588 15,607
Comcast Cable Communications 6.375% 6/30/06 35,000 33,644 36,620
Comcast Cable Communications Inc 6.875% 6/15/09 60,000 59,815 63,834
Conagra Inc 6.000% 9/15/06 80,000 85,174 87,540
Continental Airlines Pass Thru Tr 7.918% 5/1/10 25,000 22,000 22,210
Cox Communications Inc New 7.750% 11/1/10 30,000 32,860 34,169
Credit Swisse First Boston USA 6.125% 11/15/11 25,000 25,132 26,085
CSX Corp 6.250% 10/15/08 80,000 85,674 88,954
Daimler Chrysler Na Holdings 6.400% 5/15/06 25,000 26,346 26,949
Devon Fing Corp U L C 6.875% 9/30/11 15,000 16,205 16,708
Discover Card Master Tr I 5.300% 11/16/06 70,000 73,266 73,372
EOP Oper LTD Partnership 6.800% 1/15/09 70,000 74,365 75,921
Erac Usa Fin Co 8.000% 1/15/11 50,000 55,880 57,492
FedEx Corp 6.875% 2/16/06 60,000 65,216 66,587
Ford Motor Car Company 7.375% 10/28/09 90,000 88,504 89,178
Ford Motor Car Company 6.875% 2/1/06 100,000 98,194 100,175
14
SUPPLEMENTAL SCHEDULE I
TRAVELERS 401(k) PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
MATURITY NUMBER MARKET VALUE
IDENTITY OF ISSUE RATE DATE OF SHARES COST 12/31/02
---------------------------------------------------------------------------------------------------------------
General Electric Cap Corp 8.850% 4/1/05 50,000 56,919 56,854
General Electric Cap Corp MTN 5.875% 2/15/12 100,000 106,776 106,909
General Mills Inc 5.125% 2/15/07 50,000 51,765 53,122
General Motors Acceptance Corp 6.750% 1/15/06 130,000 131,816 134,631
Goldman Sachs Group Inc. 6.875% 1/15/11 30,000 32,494 33,487
Goldman Sachs Group Inc. 6.650% 5/15/09 90,000 98,762 99,204
Household Financial Corp 6.500% 1/24/06 35,000 34,790 37,272
Household Financial Corp 7.200% 6/15/06 35,000 36,788 37,868
Household Financial Corp 5.750% 1/30/07 120,000 119,240 125,594
International Business Machines 5.375% 2/1/09 60,000 61,459 64,812
International Paper Company 8.125% 6/8/05 15,000 16,674 16,789
Kellogg Company 6.000% 4/1/06 50,000 53,472 54,197
Lehman Brothers Holding 7.000% 2/1/08 25,000 28,014 28,264
Lehman Brothers Holding Inc 8.250% 6/15/07 15,000 17,457 17,631
Lehman Brothers Holding Inc 7.250% 10/15/03 50,000 52,456 52,114
Lockheed Martin Corp 8.200% 12/1/09 50,000 59,382 61,790
Marsh and McLennan Cos Inc 6.625% 6/15/04 70,000 74,204 74,766
MBNA Master CR Card TR II 5.800% 12/15/05 60,000 61,875 61,402
Mellon Financial Co 6.000% 3/1/04 60,000 62,794 62,891
Merill Lynch & Co Inc 6.150% 1/26/06 50,000 54,206 54,095
Morgan J P & Co Inc 6.700% 11/1/07 20,000 21,423 21,967
Morgan J P & Co Inc 5.750% 2/25/04 50,000 51,751 52,157
Morgan Stanley Group Inc 6.100% 4/15/06 50,000 52,641 54,468
National Rural Utilities Coop Fin 7.250% 3/1/12 60,000 64,172 68,815
Nomura Asset Secs Corp 6.280% 3/15/30 47,203 50,531 50,998
Norwest Financial Inc. 5.625% 2/3/09 75,000 77,736 79,545
Pfizer Inc 3.625% 11/1/04 70,000 71,409 72,152
Phillips Pete Co 8.750% 5/25/10 80,000 97,018 100,114
Progress Energy Inc 7.100% 3/1/11 30,000 32,631 33,063
Raytheon Co 6.750% 8/15/07 80,000 86,253 88,709
Safeway Inc 6.500% 3/1/11 20,000 21,484 21,773
SBC Communications Inc 5.750% 5/2/06 50,000 53,805 54,226
Sears Roebuck Accep Corp Mtn 6.560% 11/20/03 50,000 51,834 50,608
Sprint Cap Corp 7.625% 1/30/11 40,000 37,150 38,000
Toyota Motor Car Corp 5.500% 12/15/08 70,000 73,777 76,001
Union Pac Corp 6.500% 4/15/12 50,000 53,967 56,179
Unilever Capital 7.125% 11/1/10 15,000 17,075 17,705
Viacom Inc 7.700% 6/30/10 15,000 16,892 17,821
Wachovia Corp 6.250% 8/4/08 50,000 53,805 55,412
Walmart Stores Inc 6.550% 8/10/04 70,000 75,227 75,241
Wash Mutual Bank FA 6.875% 6/15/11 50,000 54,274 56,064
Wells Fargo & Co new 6.625% 7/15/04 50,000 53,651 53,488
Weyerhaeuser Co 6.750% 3/15/12 50,000 52,591 54,517
Verizon Global Fdg Corp 7.250% 12/1/10 100,000 105,005 113,653
--------------- ---------------
4,012,698 4,115,909
FOREIGN BONDS
Inter American Development Bank 5.750% 2/26/08 60,000 65,684 67,435
United Mexican States 8.375% 1/14/11 100,000 108,140 113,000
British Columbia Prov Cda 5.375% 10/29/08 70,000 74,825 77,063
British Telecommunications PLC 8.125% 12/15/10 30,000 34,224 35,967
Ontario Prov Cda 7.375% 1/27/03 20,000 20,401 20,071
Italy Rep 5.625% 6/15/12 50,000 53,532 54,786
France Telecom Sa 7.200% 3/1/06 15,000 15,805 16,423
AXA Financial Inc. 7.750% 8/1/10 70,000 76,580 79,208
Bayerische Landes Bank 5.875% 12/1/08 70,000 74,808 75,941
National Australia Bank Ltd 8.600% 5/1/10 70,000 84,736 88,277
Royal Kpn Nv 8.000% 10/1/10 25,000 26,671 29,277
Pemex Fin Ltd 7.330% 5/15/12 70,000 66,440 67,913
Deutsche Telekom International 1.000% 6/15/10 60,000 66,644 69,104
--------------- ---------------
768,490 794,465
MUTUAL FUNDS AND COMINGLED FUNDS
Conservative Focus Funds
*SSGA Daily Eafe SL Series A 12,175 115,946 108,402
*SSGA Daily EMG Markets Series A 5,848 36,603 36,323
*SSGA Passive Bond Market Index 48,351 692,643 716,519
*SSGA Russell 2000 Index SL Fund 2,951 36,076 35,344
*SSGA S& P 500 Flagship Series A 1,706 274,811 264,319
--------------- ---------------
Moderate Focus Funds
*SSGA Daily Eafe SL Series A 91,922 884,562 818,476
15
SUPPLEMENTAL SCHEDULE I
TRAVELERS 401(k) PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
MATURITY NUMBER MARKET VALUE
IDENTITY OF ISSUE RATE DATE OF SHARES COST 12/31/02
---------------------------------------------------------------------------------------------------------------
*SSGA Daily EMG Markets Series A 44,023 278,216 273,429
*SSGA Passive Bond Market Index 121,744 1,743,575 1,804,118
*SSGA Russell 2000 Index SL Fund 22,281 275,146 266,859
*SSGA S& P 500 Flagship Series A 12,869 2,093,140 1,993,979
--------------- ---------------
Aggressive Focus Funds
*SSGA Daily Eafe SL Series A 148,726 1,437,650 1,324,259
*SSGA Daily EMG Markets Series A 71,135 451,591 441,822
*SSGA Passive Bond Market Index 65,542 938,920 971,274
*SSGA Russell 2000 Index SL Fund 36,010 445,594 431,287
*SSGA S& P 500 Flagship Series A 20,802 3,399,301 3,222,979
--------------- ---------------
INVESCO 500 Index Fund 7,691,333 63,652,703 59,917,022
Dimensional Invt Group Inc 206,859 1,575,756 1,497,160
*Smith Barney Money Funds Inc 28,643,792 28,643,792 28,643,792
*Smith Barney Govt Securities Fund 1,076,087 10,716,433 10,846,960
*Smith Barney Div Strat Inc Fund 375,056 2,380,752 2,415,360
*Salomon Brothers Service Funds Inc 420,020 2,897,774 3,032,546
*Smith Barney Appreciation Fund 1,007,918 11,789,479 11,238,287
*Smith Barney Large Cap Growth Fund 515,661 8,327,733 7,817,422
*Smith Barney Large Cap Value Fund 346,795 4,397,787 3,995,079
*Salomon Brothers Investor Fund 339,819 5,263,355 4,981,741
*SSGA Russell 2000 Index Fund 2,657,167 32,871,769 31,824,891
*Smith Barney Aggressive Growth 496,624 33,116,389 32,121,658
*Salomon Brothers Cap Fund Inc 103,035 1,984,355 1,965,900
*Smith Barney World Funds Inc 160,152 1,709,829 1,607,930
Euro Pacific Growth Fund 285,616 6,786,912 6,560,596
Templeton Developing Markets 161,699 1,603,135 1,616,991
Van Kampen Amern Cap Comstock Fund 31,140 398,945 384,264
Van Kampen Amern Cap Emerging Fund 15,704 499,397 443,784
--------------- ---------------
231,720,069 223,620,772
STABLE VALUE FUND
American General 5.630% various 713,502 713,502 713,502
Principal Life 5.100% various 8,508,136 8,508,136 8,508,136
Principal Life 4.050% various 3,009,729 3,009,729 3,009,729
John Hancock 7.300% 10/1/2003 598,522 598,522 598,522
Metropolitan Life 7.310% 4/1/2003 189,681 189,681 189,681
Monumental Life 4.910% various 6,366,890 6,366,890 6,366,890
Monumental Life 4.650% various 10,158,176 10,158,176 10,158,176
Travelers Life & Annuity 6.450% various 89,492,128 89,492,128 89,492,128
Travelers Life & Annuity 7.350% various 9,352,934 9,352,934 9,352,934
Travelers Life & Annuity 5.550% various 29,623,676 29,623,676 29,623,676
Travelers Life & Annuity 5.960% various 184,039 184,039 184,039
Travelers Life & Annuity 6.940% various 9,813,093 9,813,093 9,813,093
Travelers Life & Annuity 5.360% various 7,999,520 7,999,520 7,999,520
Travelers Life & Annuity 6.000% various 70,813,591 70,813,591 70,813,591
State Street Bank - Stif 1.346% various 19,023,759 19,023,759 19,023,759
--------------- ---------------
265,847,376 265,847,376
GUARANTEED INVESTMENT CONTRACTS
Travelers Life & Annuity 5.100% 12/31/03 865,540 865,540 865,540
Travelers Life & Annuity 6.940% 1/1/04 1,226,902 1,226,902 1,226,902
Travelers Life & Annuity 7.100% 1/1/06 1,006,134 1,006,134 1,006,134
Travelers Life & Annuity 5.000% 2/6/07 751,212 751,212 751,212
--------------- ---------------
3,849,788 3,849,788
Loan Fund ( 5,491 loans interest ranging from 5.25% to 12.5% ) 31,950,151 31,950,151 31,950,151
=============== ===============
$ 1,067,819,379 $ 1,073,510,400
=============== ===============
* PARTY-IN-INTEREST AS DEFINED BY ERISA.
See accompanying independent auditors' report.
16
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: June 30, 2003
Travelers 401(k) Savings Plan
By: /s/ Diane Bengston
________________________________
Diane Bengston
Senior Vice President-Human Resources
Travelers Property Casualty Corp.
Index to Exhibits
Exhibit
Number
------
23.01 Independent Auditors' Consent
99.1 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
99.2 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002