SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from_____________to______________
Commission file number 001-10898
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Travelers 401(k) Savings Plan
One Tower Square
Hartford, CT 06183
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
The St. Paul Travelers Companies, Inc.
385 Washington Street
St. Paul, MN 55102
TRAVELERS 401(k) SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 2003 and 2002
(With Report of Independent Registered Public Accounting Firm Thereon)
TRAVELERS 401(k) SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 2003 and 2002
INDEX
PAGE
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits as of
December 31, 2003 and 2002 2
Statements of Changes in Net Assets Available for Plan Benefits for the
year ended December 31, 2003 and the period
August 20, 2002 to December 31, 2002 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE*:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
as of December 31, 2003 14
* Schedules required by Form 5500, which are not applicable, have not been
included.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator and Participants of the
Travelers 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Travelers 401(k) Savings Plan (the Plan) as of December 31, 2003
and 2002, and the related statements of changes in net assets available for plan
benefits for the year ended December 31, 2003 and 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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
audits provide 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 Plan as
of December 31, 2003 and 2002, and the changes in net assets available for plan
benefits for the year ended December 31, 2003 and the period August 20, 2002
(inception of Plan) to December 31, 2002, in conformity with U.S. generally
accepted accounting principles.
Our audits were 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) as of December 31, 2003 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 has
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ KPMG LLP
New York, New York
June 25, 2004
TRAVELERS 401(k) SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
As of December 31, 2003 and 2002
2003 2002
-------------- -------------
Assets:
Investments at fair value (note 3) $1,423,631,932 1,073,510,400
-------------- -------------
Receivables:
Employer contributions 21,815,793 17,808,417
Accrued interest and dividends 122,026 310,250
Investments sold but not delivered 1,400,569 1,329,977
-------------- -------------
Total receivables 23,338,388 19,448,644
-------------- -------------
Total assets 1,446,970,320 1,092,959,044
-------------- -------------
Liabilities:
Investments purchased but not received 1,392,990 555,229
Administrative fees payable 748,861 421,716
-------------- -------------
Total liabilities 2,141,852 976,945
-------------- -------------
Net assets available for plan benefits $1,444,828,468 1,091,982,099
============== =============
See accompanying notes to financial statements.
2
TRAVELERS 401(k) SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
For the year ended December 31, 2003 and the period August 20, 2002 to
December 31, 2002
2003 2002
-------------- -------------
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of investments (note 3) $ 253,764,811 4,679,376
Dividends 17,505,861 3,025,093
Interest 16,712,874 5,434,076
-------------- -------------
Total investment income 287,983,546 13,138,545
Contributions:
Employer 21,815,793 17,808,417
Employees 76,335,209 23,856,753
Rollover 10,749,506 958,273
-------------- -------------
Total contributions 108,900,508 42,623,443
-------------- -------------
Total additions 396,884,054 55,761,988
-------------- -------------
Deductions from net assets attributed to:
Benefits paid to participants 42,070,055 8,260,040
Administrative expenses 1,967,630 469,810
-------------- -------------
Total deductions 44,037,685 8,729,850
-------------- -------------
Net Increase 352,846,369 47,032,138
Net assets available for plan benefits at:
Beginning of period 1,091,982,099 --
Transfer in from Citigroup 401(k) Plan -- 1,044,949,961
-------------- -------------
End of period $1,444,828,468 1,091,982,099
============== =============
See accompanying notes to financial statements.
3
TRAVELERS 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2003 and 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.
GENERAL
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 Company
participants on the Effective Date. 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).
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 $12,000
and $11,000 for 2003 and 2002, respectively) as defined in the Plan.
EMPLOYER CONTRIBUTION
The Company makes employer matching contributions to either of 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 that can be provided from the
vested portion of their participant's account.
COMPANY MATCHING CONTRIBUTION FOR 2002 PAID TO PARTICIPANTS IN 2003
For each $1 contributed
If qualifying compensation for the by the participant, the
prior year is: Company will contribute To a maximum of:
---------------------------------- ----------------------- -----------------------------------------------------
$0 - $50,000 $3 The lesser of 3% of eligible pay or $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.
4
TRAVELERS 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2003 and 2002
COMPANY MATCHING CONTRIBUTION FOR 2003 TO BE PAID TO PARTICIPANTS IN 2004
For each $1 contributed
by the participant, the
If annual compensation is: Company will contribute To a maximum of:
------------------------------ ----------------------- -----------------------------------------------------
$0 - $50,000 $3 The lesser of 3% of eligible pay or $1,500 annually.
Greater-than $50,000 - $75,000 $2
Greater-than $75,000 $1
The 2003 employer contribution was a receivable to the Plan as of December
31, 2003. The contribution amount for plan year 2003 was $20,407,643 and
was made on March 30, 2004. This amount was contributed to the Company's
class "B" Common Stock Fund. The Plan allows for the Company to make
discretionary profit sharing contributions to the Plan. There were no such
contributions for 2003.
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 to the Company's
class "B" Common Stock Fund. 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, a predecessor Citigroup 401(k) Plan. The
Aetna Supplemental Company Contribution was established in conjunction
with the April 2, 1996 acquisition by Travelers Insurance Group Holdings
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
2003 Aetna Supplemental Company Contribution was a receivable to the Plan
as of December 31, 2003 and the 2002 Aetna Supplemental Company
Contribution was a receivable to the Plan as of December 31, 2002. The
contribution amount for plan year 2003 was $1,408,150 and was made in
February 2004. The contribution amount for the plan year 2002 was
$1,481,726 and was made in February 2003.
PARTICIPANT ACCOUNTS
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.
5
TRAVELERS 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2003 and 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 "Company Stock
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.
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).
INVESTMENT OPTIONS
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. For the
period from August 20, 2002 to December 31, 2003, the Plan offered the
following twenty-six investment funds:
TRAVELERS PROPERTY CASUALTY CORP. CLASS A STOCK FUND - This fund invests
primarily in shares of the Company's class "A" common stock (TAP.A).
TRAVELERS PROPERTY CASUALTY CORP. CLASS B STOCK FUND - This fund invests
primarily in shares of the Company's class "B" common stock (TAP.B).
CITIGROUP COMMON STOCK FUND - This fund invests primarily in shares of
Citigroup Inc. common stock (C).
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.
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.
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.
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.
6
TRAVELERS 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2003 and 2002
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
7
TRAVELERS 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2003 and 2002
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.
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.
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.
INTERNATIONAL SECURITIES FUND - The 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 respective country.
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.
TEMPLETON DEVELOPING MARKETS TRUST FUND (class "A" Shares) - This fund
invests primarily in equity securities of developing or emerging market
issuers.
VAN KAMPEN EMERGING GROWTH FUND (class "A" shares) - This fund seeks to
achieve its objective by investing in common stocks of emerging-growth
companies.
8
TRAVELERS 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2003 and 2002
VAN KAMPEN COMSTOCK FUND (class "A" Shares) - This fund emphasizes a
"value" style of investing, seeking well-established, undervalued
companies.
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.
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. As of December 31, 2003 and 2002, the
unallocated forfeitures amounted $31,481 and $0, respectively. There were
no forfeitures used to pay administrative expenses or employee
contributions in 2003 or 2002.
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 by a participant 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
Company Stock Funds or the Citigroup Stock Fund other than for a hardship
withdrawal may elect to receive payments in the form of
9
TRAVELERS 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2003 and 2002
common stock or cash at the discretion of the participant. Fractional
shares and withdrawals from other funds are paid in cash.
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.
ADMINISTRATIVE EXPENSES
Substantially all administrative expenses of the Plan are paid by the
participants of the Plan.
(2) SUMMARY OF ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the accrual
method of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles 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 and assumptions.
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 commingled funds are valued at the net asset value per
share as reported by the sponsor of the commingled fund. Mutual funds are
valued at their quoted market price
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. There are no reserves against
contract value for credit risk of the contract issuers or otherwise. The
crediting interest rate is based on a formula agreed upon with the
issuers.
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.
PAYMENT OF BENEFITS
Benefit payments are recorded when paid.
10
TRAVELERS 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2003 and 2002
(3) INVESTMENTS
A summary of the Plan's investments for Plan years ended December 31, 2003
and 2002 are listed below. Investments that represent more than 5% of the
Plan's assets are separately identified.
2003 2002
-------------- -------------
Investments at Fair Value:
Citigroup Common Stock $ 596,744,498 471,543,220
Travelers Property Casualty Corp. (class "A" shares) 35,856,628 30,236,443
Travelers Property Casualty Corp. (class "B" shares) 40,106,389 19,486,903
U.S. government and Agency Obligations 598,907 9,820,984
Corporate and Foreign Bonds -- 4,910,374
INVESCO 500 Index Fund -- 59,917,022
Delaware Bankers Trust Index 500 Fund 95,183,310 --
-------------- -------------
768,489,732 595,914,946
-------------- -------------
Investments at Estimated Fair Value:
Stable Value Fund 309,424,923 265,847,376
Other Mutual and Commingled Funds 279,914,559 163,703,750
-------------- -------------
589,339,482 429,551,126
-------------- -------------
Investments at Contract Value:
Short Term Investment Funds 28,157,620 12,244,389
Guaranteed Investment Contracts 5,356,781 3,849,788
-------------- -------------
33,514,401 16,094,177
-------------- -------------
Participant Loans, at Cost 32,288,317 31,950,151
-------------- -------------
Total Investments $1,423,631,932 1,073,510,400
============== =============
The credit rates for Guaranteed Investment Contracts ranged from 5.0% to
7.10% and from 4.65% to 7.31% during 2003 and the period from August 20,
2002 to December 31, 2002, respectively. The Plan's investments (including
investments bought, sold and held during the year) appreciated in value by
$253,764,811 and $4,679,376 during 2003 and the period from August 20,
2002 to December 31, 2002, respectively.
2003 2002
------------ ----------
Common stock $201,529,862 13,576,358
U.S. Government and Agency Obligations (312,889) 84,774
Corporate and Foreign Bonds 23,755 129,186
Other Mutual and Commingled Funds 52,524,083 (9,110,942)
------------ ----------
Net appreciation in fair value of investments $253,764,811 4,679,376
============ ==========
11
TRAVELERS 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2003 and 2002
(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:
YEAR ENDED DECEMBER 31,
-----------------------------
2003 2002
----------- ----------
Net Assets:
Common Stock $18,393,071 --
Employer Contributions Receivable 20,407,643 16,326,691
----------- ----------
Total $38,800,714 16,326,691
----------- ----------
Changes in Net Assets:
Employer Contributions, net of Forfeitures $20,407,643 16,326,691
Net Appreciation in Fair Value of Investments $ 2,962,708 --
Dividends $ 238,774 --
Benefits Paid $ 1,135,102 --
(5) RISK AND UNCERTAINTIES
The Plan offers a number of investment options including the Company Stock
Funds, the Citigroup Common Stock Fund, and other investment Funds. The
investment funds invest in 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 net assets available for plan benefits.
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 Company Stock Funds and Citigroup Common Stock
Fund, which primarily invest in securities of a single issuer.
(6) RELATED PARTY TRANSACTIONS (PARTIES-IN-INTEREST)
Certain Plan investments are shares of stock issued by Travelers Property
Casualty Corp. Travelers Property Casualty Corp. is the Plan Sponsor of
the Plan. Please see note 9 below.
12
TRAVELERS 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2003 and 2002
Certain Plan investments are shares of commingled trust funds managed by
State Street Bank and Trust Company (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.
(7) TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated March 4, 2004, that the Plan and related trust are designed
in accordance with applicable sections of the Internal Revenue Code (IRC).
The Plan administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the applicable
requirements of the IRC.
(8) PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to amend or discontinue its contributions at any time
and to amend or terminate the Plan subject to the provisions of ERISA. In
the event of plan termination, either full or partial, all amounts
credited to the participants' accounts shall become 100% vested; and
therefore, will not be subject to forfeiture.
(9) SUBSEQUENT EVENTS
MERGER
On November 16, 2003, the Company entered into an agreement and plan of
merger with The St. Paul Companies, Inc. (St. Paul). The merger took place
effective April 1, 2004, and has been treated as a purchase business
combination by the Company of St. Paul under the U.S. Generally Accepted
Accounting Principles. In this merger, the acquired entity (St. Paul)
issued the equity interests, and the business combination met the criteria
of a reverse acquisition. As a result of the merger, each share of the
Company's class "A" and class "B" common stock was exchanged for 0.4334 of
a share of common stock of the St. Paul Travelers Companies, Inc.,
including the shares held in the Plan.
INVESTMENT OPTIONS
During the plan year 2003, the Plan's Investment Committee engaged an
independent investment manager to review the current investment options
offered by the Plan. This independent manager completed its review of the
investment options during the year and made several alternative
suggestions. The Plan's Investment Committee reviewed these options and
effective January 2004 these investment options were implemented.
Approximately $304 million was transferred to the new or existing
investment options in January 2004.
13
SUPPLEMENTAL SCHEDULE
TRAVELERS 401(k) PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2003
NUMBER OF
IDENTITY OF ISSUE RATE MATURITY DATE SHARES/UNITS COST CURRENT VALUE
------------------------------------------------- ----- ------------- ------------ -------------- -------------
CASH AND CASH EQIVALENTS
*State Street Bank 28,157,620 $ 28,157,620 28,157,620
-------------- -------------
COMMON STOCK
Citigroup Inc. 12,293,871 417,991,598 596,744,498
*Travelers Property Casualty Corp. TAP.A 2,136,867 32,235,918 35,856,628
*Travelers Property Casualty Corp. TAP.B 2,363,370 35,755,159 40,106,389
-------------- -------------
485,982,675 672,707,515
-------------- -------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
United States Treas Bill 600,000 598,681 598,907
-------------- -------------
MUTUAL FUNDS AND COMINGLED FUNDS
Conservative Focus Funds
Conservative Focus Fund 78,573 889,482 926,449
*SSGA Daily Eafe SL Series T 12,864 116,107 157,670
*SSGA Daily EMG Markets Series A 5,400 44,134 52,132
*SSGA Passive Bond Market Index 59,873 884,280 924,016
*SSGA Russell 2000 Index SL Fund 2,840 37,558 49,729
*SSGA S& P 500 Flagship Series A 1,928 323,102 384,541
Moderate Focus Funds
Moderate Focus Fund 202,129 2,270,612 2,383,279
*SSGA Daily Eafe SL Series T 100,447 868,403 1,231,178
*SSGA Daily EMG Markets Series A 42,291 342,950 408,273
*SSGA Passive Bond Market Index 155,948 2,281,507 2,406,741
*SSGA Russell 2000 Index SL Fund 22,190 283,891 388,503
*SSGA S& P 500 Flagship Series A 14,958 2,467,259 2,983,119
Aggressive Focus Funds
Aggressive Focus Fund 112,869 1,272,955 1,330,824
*SSGA Daily Eafe SL Series T 161,441 1,390,425 1,978,788
*SSGA Daily EMG Markets Series A 67,771 549,272 654,262
*SSGA Passive Bond Market Index 83,491 1,223,571 1,288,511
*SSGA Russell 2000 Index SL Fund 35,647 455,642 624,103
*SSGA S& P 500 Flagship Series A 24,200 4,006,928 4,826,074
Other Funds
Delaware Bankers Trust Index 500 Fund 9,493,837 81,152,703 95,183,310
Dimensional Invt Group Inc-Emg Mkts Port II 38,577 328,777 410,459
Dimensional Invt Group Inc-DFA Int Value Port. IV 357,685 3,162,704 3,770,004
Smith Barney Money Funds Inc 37,880,742 37,880,742 37,880,742
Smith Barney Govt Securities Fund 1,134,338 11,324,145 11,218,599
Smith Barney Div Strat Inc Fund 678,224 4,421,920 4,625,485
Salomon Brothers Service Funds Inc 1,128,709 8,522,312 9,356,996
Smith Barney Appreciation Fund 1,210,922 14,301,964 16,662,289
Smith Barney Large Cap Growth Fund 930,471 16,433,193 20,777,423
Smith Barney Large Cap Value Fund 560,524 7,220,956 8,278,946
Salomon Brothers Investor Fund 444,580 7,000,492 8,464,796
*SSGA Russell 2000 Index Fund 3,225,433 41,457,435 56,470,877
Smith Barney Aggressive Growth 576,715 39,550,968 51,154,636
Salomon Brothers Cap Fund Inc 214,756 4,626,510 5,888,609
Smith Barney World Funds Inc 238,574 2,620,730 2,984,566
Euro Pacific Growth Fund 384,528 9,335,090 11,616,591
Templeton Developing Markets 421,989 5,475,349 6,325,617
Van Kampen Amern Cap Comstock Fund 28,362 364,339 452,366
Van Kampen Amern Cap Emerging Fund 15,980 507,840 577,366
-------------- -------------
315,396,250 375,097,868
-------------- -------------
STABLE VALUE FUND
Principal Life 5.10% various 7,444,825 7,444,825 7,444,825
Principal Life 4.05% various 2,431,187 2,431,187 2,431,187
Monumental Life 2.68% various 21,687,815 21,687,815 21,687,815
Monumental Life 4.65% various 8,003,735 8,003,735 8,003,735
Trans Financial Life 4.91% various 4,359,389 4,359,389 4,359,389
SEI 3.74% various 37,815,051 37,815,051 37,815,051
Travelers Life & Annuity 4.97% various 31,238,955 31,238,955 31,238,955
Travelers Life & Annuity 4.68% various 74,495,424 74,495,424 74,495,424
Travelers Life & Annuity 4.48% various 93,999,063 93,999,063 93,999,063
Travelers Life & Annuity 6.94% various 10,554,096 10,554,096 10,554,096
Travelers Life & Annuity 7.35% various 10,101,037 10,101,037 10,101,037
*State Street Bank - Stif 0.99% various 7,294,346 7,294,346 7,294,346
-------------- -------------
309,424,923 309,424,923
-------------- -------------
GUARANTEED INVESTMENT CONTRACTS
Travelers GIC - 1999 5.10% 12/31/03 898,678 898,678 898,678
Travelers GIC - 2000 6.70% 1/1/05 1,288,565 1,288,565 1,288,565
Travelers GIC - 2001 7.10% 1/1/06 1,057,651 1,057,651 1,057,651
Travelers GIC - 2002 5.00% 1/1/04 788,784 788,784 788,784
Travelers GIC - 2003 6.94% 6/2/07 1,323,103 1,323,103 1,323,103
-------------- -------------
5,356,781 5,356,781
-------------- -------------
*PARTICIPANT LOANS 5,635 loans to participants with
interest rates of 5.0% to 12.5% 32,288,317 32,288,317
-------------- -------------
TOTAL $1,177,205,248 1,423,631,932
============== =============
* Parties-in-interest as defined by ERISA.
See accompanying report of independent registered public accounting firm.
14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) of the Plan
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 25, 2004
Travelers 401(k) Savings Plan
By: /s/ Diane Bengston
Senior Vice President-Human Resources
Travelers Property Casualty Corp.
Index to Exhibits
Exhibit
Number
------
23.01 Consent of Independent Registered Public Accounting Firm