TRAVELERS COMPANIES, INC.TRV

TRAVELERS COMPANIES, INC. Leases Disclosure

10-KFiled Feb 12, 20262 min read
LEASES
The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease, and a right-of-use asset and lease liability is recognized as part of other assets and other liabilities, respectively, in the consolidated balance sheet.
Most leases include an option to extend or renew the lease term. The exercise of the renewal option is at the Company’s discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if the Company is reasonably certain of exercising those options. The Company, in determining the present value of lease payments, utilizes either the rate implicit in the lease, if that rate is readily determinable, or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.
Lease expense is included in general and administrative expenses in the consolidated statement of income. Additional information regarding the Company’s real estate operating leases is as follows:
(for the year ended December 31, in millions)202520242023
Lease cost
Operating leases$64 $73 $76 
Short-term leases (1)
2 3 3 
Lease expense66 76 79 
Less: sublease income (2)
— — — 
Net lease cost$66 $76 $79 
Other information on operating leases
Cash payments to settle a lease liability reported in cash flows
$74 $79 $87 
Right-of-use assets obtained in exchange for new lease liabilities$30 $95 $37 
Weighted average discount rate4.06 %3.82 %
Weighted average remaining lease term5.4 years5.7 years
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(1) Leases with a term of twelve months or less are not recorded on the consolidated balance sheet.
(2) Sublease income consists of rent from third parties of office space and is recognized as part of other revenues in the consolidated statement of income.
The following table presents the contractual maturities of the Company’s lease liabilities.
(in millions)Real Estate Lease Liability
2026$69 
202758 
202851 
202939 
203019 
Thereafter59 
Total undiscounted lease payments295 
Less: present value adjustment50 
Operating lease liability$245 

Historical Timeline

Fiscal YearFiled
2025Feb 12, 2026Showing above
2024Feb 13, 2025
2023Feb 15, 2024
2022Feb 16, 2023
2021Feb 17, 2022
2020Feb 11, 2021
2019Feb 13, 2020
2018Feb 14, 2019
2017Feb 15, 2018
2016Feb 16, 2017
2015Feb 11, 2016

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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