MetLife Insurance Co USA – ‘10-K’ for 12/31/01

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Annual Report   —   Form 10-K
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 1: 10-K        Annual Report                                         63    299K 

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------

 FORM 10-K

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF  
 THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2001

OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ________

----------

 Commission file number 33-33691

----------

 The Travelers Insurance Company
(exact name of registrant as specified in its charter)

    Connecticut                                             06-0566090
(State or other jurisdiction of                               (I.R.S. Employer  
incorporation or organization)                               Identification No.)

 One Tower Square, Hartford, Connecticut 06183
 (Address of principal executive offices) (Zip Code)

(860) 277-0111
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None                
Securities registered pursuant to Section 12(g) of the Act: None                

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was     
required to file such reports), and (2) has been subject to such filing         
requirements for the past 90 days.                                              

Yes |X| No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405  
of Regulation S-K is not contained herein, and will not be contained, to the    
best of registrant's knowledge, in definitive proxy or information statements   
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.                                                                      

Yes |X| No |_|

At February 28, 2002 there were outstanding 40,000,000 shares of common stock,  
par value $2.50 per share, of the registrant, all of which were owned by        
Travelers Property Casualty Corp. (formerly known as Travelers Insurance Group  
Inc.), an indirect wholly owned subsidiary of Citigroup Inc.                    

 REDUCED DISCLOSURE FORMAT

The registrant meets the conditions set forth in General Instruction I(1)(a) and
(b) of Form 10-K and is therefore filing this Form with the reduced disclosure  
format.                                                                         

DOCUMENTS INCORPORATED BY REFERENCE: NONE                                       

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES

 TABLE OF CONTENTS

                                                        [Enlarge/Download Table]

Form 10-K                                                                                           
Item Number                                       PART I                                        Page
-----------                                                                                     ----
                                                                                                    
     1.  Business.................................................................................2 

         A.   General.............................................................................2 
         B.   Business by Segment                                                                   
                   Travelers Life & Annuity.......................................................2 
                   Primerica Life Insurance.......................................................3 
         C.   Insurance Regulations...............................................................4 

     2.  Properties...............................................................................5 

     3.  Legal Proceedings........................................................................6 

     4.  Submission of Matters to a Vote of Security Holders......................................6 

                                                  PART II                                           

     5.  Market for Registrant's Common Equity and Related Stockholder Matters....................6 

     6.  Selected Financial Data..................................................................7 

     7.  Management's Discussion and Analysis of Financial Condition and Results of Operations....7 

     7A. Quantitative and Qualitative Disclosures About Market Risk..............................12 

     8.  Financial Statements and Supplementary Data.............................................15 

     9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure....54 

                                                  PART III                                          

     10. Directors and Executive Officers of the Registrant......................................54 

     11. Executive Compensation..................................................................54 

     12. Security Ownership of Certain Beneficial Owners and Management..........................54 

     13. Certain Relationships and Related Transactions..........................................54 

                                                  PART IV                                           

     14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................55 
         Exhibit Index...........................................................................56 
         Signatures..............................................................................57 
         Index to Financial Statements and Financial Statement Schedules.........................58 

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K

PART I

Item 1. Business.                                                               

GENERAL                                                                         

At December 31, 2001 and 2000 The Travelers Insurance Company (TIC, together    
with its subsidiaries, the Company), was a wholly owned subsidiary of The       
Travelers Insurance Group Inc. (TIGI), an indirect wholly owned subsidiary of   
Citigroup Inc. (Citigroup). On February 4, 2002, TIGI changed its name to       
Travelers Property Casualty Corp. (TPC). Citigroup is a diversified holding     
company whose businesses provide a broad range of financial services to consumer
and corporate customers around the world. The periodic reports of Citigroup     
provide additional business and financial information concerning that company   
and its consolidated subsidiaries. TIC was incorporated in 1863. With $77.9     
billion of assets and $510.5 billion of life insurance in force at December 31, 
2001, the Company believes that it is one of the largest stock life insurance   
groups in the United States as measured by these criteria.                      

TIGI has filed a registration statement on Form S-1, relating to an offering of 
common stock and other securities with the Securities and Exchange Commission on
February 8, 2002. At the time of such offering, it is expected that TIC will no 
longer be a subsidiary of TPC, but will remain an indirect wholly owned         
subsidiary of Citigroup. See Note 16 of Notes to Consolidated Financial         
Statements.                                                                     

The Company's two reportable business segments are Travelers Life & Annuity and 
Primerica Life Insurance. The primary insurance entities of the Company are TIC 
and its subsidiary The Travelers Life and Annuity Company (TLAC), included in   
the Travelers Life & Annuity segment, and Primerica Life Insurance Company      
(Primerica Life) and its subsidiaries, Primerica Life Insurance Company of      
Canada, CitiLife Financial Limited (CitiLife) and National Benefit Life         
Insurance Company (NBL), included in the Primerica Life Insurance segment. The  
consolidated financial statements include the accounts of the Company on a fully
consolidated basis.                                                             

BUSINESS BY SEGMENT                                                             

Travelers Life & Annuity                                                        

Travelers Life & Annuity (TLA) core offerings include individual annuity,       
individual life, corporate owned life insurance (COLI) and group annuity        
insurance products distributed by TIC and The Travelers Life and Annuity Company
(TLAC). Among the range of individual products offered are fixed and variable   
deferred annuities, payout annuities and term, universal and variable life      
insurance. The COLI product is a variable universal life product distributed    
through independent specialty brokers. The group products include institutional 
pensions, including guaranteed investment contracts, payout annuities, group    
annuities sold to employer-sponsored retirement and savings plans and structured
finance transactions. The majority of the annuity business and a substantial    
portion of the life business written by TLA are accounted for as investment     
contracts, with the result that the deposits collected are reported as          
liabilities and are not included in revenues.                                   

Individual fixed and variable annuities are primarily used for retirement       
funding purposes. Variable annuities permit policyholders to direct retirement  
funds into a number of separate accounts, which offer differing investment      
options. Individual payout annuities offer a guaranteed payment stream over a   
specified period.                                                               

Individual life insurance is used to meet estate, business planning and         
retirement needs and also to provide protection against financial loss due to   
death.                                                                          

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Group annuity products, including fixed and variable rate guaranteed investment 
contracts, which provide a guaranteed return on investment, continue to be a    
popular investment choice for employer-sponsored retirement and savings plans.  
Annuities purchased by employer-sponsored plans fulfill retirement obligations  
to individual employees. Payout annuities are used for providing structured     
settlements of certain indemnity claims and making other payments to            
policyholders over a period of time. Structured finance transactions offer fixed
term and rate investment options with policyholder status to domestic and       
foreign institutional investors. These group annuity products are sold through  
direct sales and various intermediaries.                                        

TIC is licensed to sell and market its individual products in all 50 states, the
District of Columbia, Puerto Rico, Guam, the Bahamas and the U.S. and British   
Virgin Islands.                                                                 

Individual annuity products are distributed through affiliated channels and     
non-affiliated channels. The affiliated channels include CitiStreet Retirement  
Services LLC (CitiStreet), a joint venture between Citigroup and State Street   
Bank; Salomon Smith Barney (SSB); Primerica Financial Services (Primerica); and 
Citibank, N.A. (Citibank). The non-affiliated channels primarily include a      
nationwide network of independent financial professionals and independent wire  
houses and broker-dealers. CitiStreet is a captive sales organization of        
personal retirement planning specialists focused primarily on the qualified     
periodic deferred annuity marketplace. CitiStreet's share of total individual   
annuity production was 26% in 2001. SSB distributes Travelers Life & Annuity's  
individual annuities and individual life products, and accounted for 24% of     
total individual annuity production in 2001. Sales by Primerica and Citibank    
accounted for 15% and 9% respectively, of total individual annuity premiums and 
deposits in 2001. The non-affiliated channels accounted for 26% of individual   
annuity premiums and deposits.                                                  

Individual life products are primarily marketed by the independent financial    
professionals and by SSB, who accounted for 74% and 20%, respectively, of total 
individual life sales for 2001.                                                 

Effective July 1, 2000, the Company sold 90% of its individual long-term care   
insurance business to General Electric Capital Assurance Company in the form of 
an indemnity reinsurance arrangement. See Note 2 of Notes to Consolidated       
Financial Statements.                                                           

The Company operates Tower Square Securities, Inc. (Tower Square Securities),   
which is an introducing broker-dealer offering a full line of brokerage         
services. Tower Square Securities facilitates the sale of individual variable   
life and annuity insurance products by the independent financial professionals  
of the Company.                                                                 

Primerica Life Insurance                                                        

Primerica Life and its subsidiaries, Primerica Life Insurance Company of Canada,
CitiLife and NBL, are the insurance operations of Primerica. Their primary      
product is individual term life insurance marketed through a sales force        
composed of approximately 96,000 Personal Financial Analysts. A great majority  
of the domestic licensed sales force works on a part-time basis. NBL also       
provides statutory disability benefits and insurance, primarily in New York, as 
well as direct response student term life insurance nationwide. CitiLife was    
established in September 2000 to underwrite insurance in Europe. Primerica Life 
and its subsidiaries together are licensed to sell and market term life         
insurance in all 50 states, the District of Columbia, Canada, Puerto Rico, Guam,
the U.S. Virgin Islands, Northern Mariana Islands and Spain.                    

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K

INSURANCE REGULATIONS                                                           

Insurance Regulatory Information System                                         

The National Association of Insurance Commissioners (NAIC) Insurance Regulatory 
Information System ("IRIS") was developed to help state regulators identify     
companies that may require special attention. The IRIS system consists of a     
statistical phase and an analytical phase whereby financial examiners review    
annual statements and financial ratios. The statistical phase consists of 12 key
financial ratios based on year-end data that are generated from the NAIC        
database annually; each ratio has an established "usual range" of results. These
ratios assist state insurance departments in executing their statutory mandate  
to oversee the financial condition of insurance companies.                      

A ratio result falling outside the usual range of IRIS ratios is not considered 
a failing result; rather, unusual values are viewed as part of the regulatory   
early monitoring system. Furthermore, in some years, it may not be unusual for  
financially sound companies to have several ratios with results outside the     
usual ranges. An insurance company may fall out of the usual range for one or   
more ratios because of specific transactions that are in themselves immaterial. 
Generally, an insurance company will become subject to regulatory scrutiny if it
falls outside the usual ranges for four or more of the ratios. Prior to         
codification of statutory accounting principles effective in 2001, 15% of the   
companies included in the IRIS system were expected by the NAIC, in normal      
years, to be outside the usual range on four or more ratios.                    

In 2000, four IRIS ratios for TLAC had fallen outside of the usual range due to 
growth in business volume. For 2000, the regulators have been satisfied upon    
follow-up that there was no solvency problem. In 2001, the same four ratios have
fallen outside of the usual range and management believes that the resolution in
the current year would be the same, however no assurances at this time can be   
given that such resolution will be the same as in prior years. This statement is
a forward-looking statement within the meaning of the Private Securities        
Litigation Reform Act. See "Forward-Looking Statements" on page 12. No          
regulatory action has been taken by any state insurance department or the NAIC  
with respect to IRIS ratios of the primary insurance entities of the Company or 
any of its insurance subsidiaries during the two years ended December 31, 2001. 

Risk-Based Capital (RBC) Requirements                                           

In order to enhance the regulation of insurer solvency, the NAIC adopted a      
formula and model law to implement RBC requirements for most life and annuity   
insurance companies, which are designed to determine minimum capital            
requirements and to raise the level of protection that statutory surplus        
provides for policyholder obligations. For this purpose, an insurer's total     
adjusted capital is measured in relation to its specific asset and liability    
profiles. A company's risk-based capital is calculated by applying factors to   
various asset, premium and reserve items, where the factor is higher for those  
items with greater underlying risk and lower for less risky items.              

The RBC formula for life insurers measures four major areas of risk:            

o     asset risk (i.e., the risk of asset default),                 

   o     insurance risk (i.e., the risk of adverse mortality and morbidity
experience),                                            

o     interest rate risk (i.e., the risk of loss due to changes in  
interest rates) and                                     

o     business risk (i.e., normal business and management risk).    

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Under laws adopted by the states, insurers having less total adjusted capital   
than that required by the RBC calculation will be subject to varying degrees of 
regulatory action, depending upon the level of capital inadequacy.              

The RBC law provides for four levels of regulatory action as defined by the     
NAIC. The extent of regulatory intervention and action increases as the level of
total adjusted capital to RBC falls. The first level, the company action level, 
requires an insurer to submit a plan of corrective actions to the regulator if  
total adjusted capital falls below 200% of the RBC amount. The second level, the
regulatory action level, requires an insurer to submit a plan containing        
corrective actions and requires the relevant insurance commissioner to perform  
an examination or other analysis and issue a corrective order if total adjusted 
capital falls below 150% of the RBC amount. The third level, the authorized     
control level, authorizes the relevant commissioner to take whatever regulatory 
actions are considered necessary to protect the best interest of the            
policyholders and creditors of the insurer which may include the actions        
necessary to cause the insurer to be placed under regulatory control, i.e.,     
rehabilitation or liquidation, if total adjusted capital falls below 100% of the
RBC amount. The fourth level, the mandatory control level, requires the relevant
insurance commissioner to place the insurer under regulatory control if total   
adjusted capital falls below 70% of the RBC amount.                             

The formulas have not been designed to differentiate among adequately           
capitalized companies, which operate with higher levels of capital. Therefore,  
it is inappropriate and ineffective to use the formula to rate or rank          
companies. At December 31, 2001, the Company's principal insurance entities all 
had total adjusted capital in excess of amounts requiring company action or any 
level of regulatory action at any prescribed RBC level.                         

Insurance Regulation Concerning Dividends                                       

TIC is domiciled in the State of Connecticut. The insurance holding company law 
of Connecticut requires notice to, and approval by, the State of Connecticut    
Insurance Department for the declaration or payment of any dividend which,      
together with other distributions made within the preceding twelve months,      
exceeds the greater of (i) 10% of the insurer's surplus or (ii) the insurer's   
net gain from operations for the twelve-month period ending on the preceding    
December 31st, in each case determined in accordance with statutory accounting  
practices. Such declaration or payment is further limited by adjusted unassigned
funds (surplus), as determined in accordance with statutory accounting          
practices. The insurance holding company laws of other states in which the      
Company's insurance subsidiaries are domiciled generally contain similar        
(although in certain instances somewhat more restrictive) limitations on the    
payment of dividends. A maximum of $586 million is available by the end of the  
year 2002 for such dividends without prior approval of the State of Connecticut 
Insurance Department, depending upon the amount and timing of the payments.     

Item 2. Properties.                                                             

The Company's executive offices are located in Hartford, Connecticut. At        
December 31, 2001 the Company owned buildings containing approximately 1.38     
million square feet of office space located in Hartford serving as the home     
office for the Company and Travelers Insurance Group Holdings Inc. (TIGHI), an  
affiliate. TIGHI leases approximately 1.03 million square feet of such office   
space at One Tower Square, Hartford under a ten-year lease that expires on April
1, 2006. Leasehold interests of the Company included approximately 585,000      
square feet of office space in 20 field offices throughout the United States.   
The Company also leases approximately 575,000 square feet of office space in    
Hartford, Connecticut, under a 25-year lease that expires in 2010. The Company  
currently subleases approximately 426,000 square feet to third party tenants.   

As of December 31, 2001 the Company also owned a building in Norcross, Georgia. 
An affiliate's information systems department occupies the entire building,     
which has approximately 147,000 square feet of space. The                       

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ANNUAL REPORT ON FORM 10-K

Company is reimbursed by affiliates for their use of this space on a cost       
allocation method based generally on estimated usage by department.             

Management believes that these facilities are suitable and adequate for the     
Company's current needs. See Note 16 of Notes to Consolidated Financial         
Statements for additional information regarding these facilities.               

The foregoing discussion does not include information on investment properties. 

Item 3. Legal Proceedings.                                                      

This section describes the major pending legal proceedings, other than ordinary 
routine litigation incidental to the business, to which the Company or its      
subsidiaries is a party or to which any of their property is subject.           

In March 1997, a purported class action entitled Patterman v. The Travelers,    
Inc., et al. was commenced in the Superior Court of Richmond County, Georgia,   
alleging, among other things, violations of the Georgia RICO statute and other  
state laws by an affiliate of the Company, Primerica Financial Services, Inc.   
and certain of its affiliates. Plaintiffs seek unspecified compensatory and     
punitive damages and other relief. From February 1998 through April 2000,       
various motions for transfer of the lawsuit were heard and appealed. In April   
2000, the matter was remanded to the Superior Court of Richmond County by the   
Georgia Supreme Court. Also, in April 2000 defendants moved for summary         
judgement on all counts of the complaint. Discovery commenced in May 2000.      
Defendants intend to vigorously contest the litigation.                         

In the ordinary course of business, TIC and its subsidiaries are defendants or  
co-defendants in various other litigation matters incidental to and typical of  
the businesses in which they are engaged. These include civil actions,          
arbitration proceedings and other matters arising in the normal course of       
business out of activities as an insurance company, a broker and dealer in      
securities or otherwise. In the opinion of the Company's management, the        
ultimate resolution of these legal proceedings would not be likely to have a    
material adverse effect on its results of operations, financial condition or    
liquidity. This statement is a forward-looking statement within the meaning of  
the Private Securities Litigation Reform Act. See "Forward-Looking Statements"  
on page 12.                                                                     

Item 4. Submission of Matters to a Vote of Security Holders.                    

Omitted pursuant to General Instruction I(2)(c) of Form 10-K.                   

 PART II

Item 5. Market for Registrant's Common Equity and Related Shareholder Matters.  

The Company has 40,000,000 authorized shares of common stock, all of which are  
issued and outstanding as of December 31, 2001. All shares are held by an       
indirect subsidiary of Citigroup, and there exists no established public trading
market for the common equity of the Company. The Company paid dividends to its  
parent of $472 million in 2001. See Note 8 of Notes to Consolidated Financial   
Statements for certain information regarding dividend restrictions.             

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ANNUAL REPORT ON FORM 10-K

Item 6. Selected Financial Data.                                                

Omitted pursuant to General Instruction I(2)(a) of Form 10-K.                   

Item 7. Management's Discussion and Analysis of Financial Condition and Results 
of Operations.                                                                  

Management's narrative analysis of the results of operations is presented in    
lieu of Management's Discussion and Analysis of Financial Condition and Results 
of Operations, pursuant to General Instruction I(2)(a) of Form 10-K.            

At December 31, 2001 and 2000, The Travelers Insurance Company (TIC, together   
with its subsidiaries, the Company) was a direct subsidiary of The Travelers    
Insurance Group Inc. (TIGI), an indirect wholly owned subsidiary of Citigroup   
Inc. (Citigroup). On February 4, 2002, TIGI changed its name to Travelers       
Property Casualty Corp. (TPC). The Company is composed of two business segments,
Travelers Life & Annuity and Primerica Life Insurance.                          

TPC has filed a registration statement on Form S-1, relating to an offering of  
common stock and other securities, with the Securities and Exchange Commission  
on February 8, 2002. At the time of such offering, it is expected that TIC will 
no longer be a subsidiary of TPC, but will remain an indirect wholly owned      
subsidiary of Citigroup. See Note 16 of Notes to Consolidated Financial         
Statements.                                                                     

Significant Accounting Policies                                                 

The financial statements contain a summary of the Company's significant         
accounting policies, including a discussion of recently-issued accounting       
pronouncements. Certain of these policies are considered to be important to the 
portrayal of the Company's financial condition, since they require management to
make difficult, complex or subjective judgments, some of which may relate to    
matters that are inherently uncertain. These policies include valuation of      
financial instruments where no ready market exists and insurance policy and     
claims reserves. Additional information about these policies can be found in    
Note 1 of Notes to Consolidated Financial Statements.                           

Investments                                                                     

Fixed maturities include bonds, notes and redeemable preferred stocks. Fair     
values of investments in fixed maturities are based on quoted market prices or  
dealer quotes or, if these are not available, discounted expected cash flows    
using market rates commensurate with the credit quality and maturity of the     
investment. Fixed maturities, including instruments subject to securities       
lending agreements (see Note 4 of Notes to Consolidated Financial Statements),  
are classified as "available for sale" and are reported at fair value, with     
unrealized investment gains and losses, net of income taxes, credited or charged
directly to shareholder's equity.                                               

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ANNUAL REPORT ON FORM 10-K

Deferred Acquisition Costs                                                      

Costs of acquiring individual life insurance and annuities, principally         
commissions and certain expenses related to policy issuance, underwriting and   
marketing, all of which vary with and are primarily related to the production of
new business, are deferred. Acquisition costs relating to traditional life      
insurance, including term insurance, are amortized in relation to anticipated   
premiums. Universal life costs are amortized in relation to estimated gross     
profits, and annuity contracts employ a level yield method. For life insurance, 
a 15 to 20-year amortization period is used, and a 7 to 20-year period is       
employed for annuities. Deferred acquisition costs are reviewed periodically for
recoverability to determine if any adjustment is required. Adjustments, if any, 
are charged to income.                                                          

Future Policy Benefits                                                          

Future policy benefits represent liabilities for future insurance policy        
benefits. Benefit reserves for life insurance and annuities have been computed  
based upon mortality, morbidity, persistency and interest assumptions applicable
to these coverages, which range from 2.5% to 8.1%, including adverse deviation. 
These assumptions consider Company experience and industry standards. The       
assumptions vary by plan, age at issue, year of issue and duration. Appropriate 
recognition has been given to experience rating and reinsurance.                

Premiums                                                                        

Premiums are recognized as revenues when due. Reserves are established for the  
portion of premiums that will be earned in future periods and for deferred      
profits on limited-payment policies that are being recognized in income over the
policy term.                                                                    

CONSOLIDATED OVERVIEW                                                           

                                                                [Download Table]

For the years ended December 31,                            2001            2000
      ($ in millions)                                       ----            ----
                                                                                
Revenues                                                  $5,702          $5,254
                                                          ======          ======
Net income (1)                                            $1,272          $1,103
                                                          ======          ======

(1)   Net income includes net realized investment gains of $81 million and a $9 
million charge from the cumulative effects of changes in accounting 
    principles in 2001, and net realized investment losses of $50 million in
2000.                                                               

Operating income, defined as income before net realized gains or losses and     
cumulative effect of changes in accounting principles, increased 4% to $1.20    
billion in 2001 from $1.15 billion in 2000. The operating earnings increase was 
driven by increased revenues from business volume growth, mitigated by the loss 
of revenues related to the long-term care insurance business sold in 2000, and a
reduction in general and administrative expenses due to continued expense       
management and the absence of expenses related to the long-term care insurance  
business.                                                                       

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ANNUAL REPORT ON FORM 10-K

Travelers Life & Annuity                                                        

                                                                [Download Table]

For the years ended December 31,                        2001                2000
($ in millions)                                         ----                ----
                                                                                
Revenues                                              $4,089              $3,822
                                                      ======              ======
Net income (1)                                        $  826              $  758
                                                      ======              ======

(1)   Net income includes net realized investment gains of $33 million and an $8
million charge from the cumulative effects of changes in accounting 
    principles in 2001, and net realized investment losses of $19 million in
2000.                                                               

Travelers Life & Annuity (TLA) core offerings include individual annuity,       
individual life, corporate owned life insurance (COLI) and group annuity        
insurance products distributed by TIC and The Travelers Life and Annuity Company
(TLAC). Among the range of individual products offered are fixed and variable   
deferred annuities, payout annuities and term, universal and variable life      
insurance. The COLI product is a variable universal life product distributed    
through independent specialty brokers. The group products include institutional 
pensions, including guaranteed investment contracts, payout annuities, group    
annuities sold to employer-sponsored retirement and savings plans and structured
finance transactions. The majority of the annuity business and a substantial    
portion of the life business written by TLA are accounted for as investment     
contracts, with the result that the deposits collected are reported as          
liabilities and are not included in revenues.                                   

  The cross-selling of TLA products through CitiStreet Retirement Services
LLC (CitiStreet), Primerica Financial Services, Inc. (Primerica), Citibank and  
Salomon Smith Barney (SSB) distribution channels, along with improved sales     
through a nationwide network of independent financial professionals and outside 
wire houses and broker-dealers, and strong group sales through various          
intermediaries, reflect ongoing efforts to build market share by strengthening  
relationships in key distribution channels.                                     

 Operating income increased 3% to $801 million in 2001, compared to $777
million in 2000. The improvement in earnings during 2001 was largely driven by  
increases in investment income from business volume, particularly Group Annuity,
expense management and the absence of expenses due to the sale of the long-term 
care insurance business in 2000.                                                

Business Volume ($ in millions)                                                 

                                                                [Download Table]

                                                     2001        2000   % change
                                                     ----        ----   --------
                                                                                
Individual Annuity Account Balances               $28,873     $27,981      3.2  

Group Annuity Account Balances                    $20,992     $17,460     20.2  

Direct Periodic Premiums and Deposits             $   652     $   511     27.6  

Individual annuity account balances were $28.9 billion at year-end 2001, up 3%  
from $28.0 billion at year-end 2000, reflecting good in-force policy retention, 
offset by declines in market values of investments. Net premiums and deposits   
decreased 2% in 2001 to $6.1 billion, from $6.2 billion in 2000. This decrease  
in individual annuity net written premiums and deposits was driven by a decline 
in variable annuity sales due to market conditions, but was partially offset by 
significant fixed annuity sales increases over the prior year. Non-affiliated   
sales channels increased 34%, allowing the individual annuity line to increase  
market share despite lower sales.                                               

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K

Group annuity account balances and benefits reserves reached $21.0 billion at   
year-end 2001, up 20% from $17.5 billion at year-end 2000. This volume growth   
reflects strong sales momentum in all products, particularly guaranteed         
investment contracts (GIC) and long-term liability contracts. Net premiums and  
deposits (excluding Citigroup's employee pension plan deposits) were $7.1       
billion in 2001 compared to $5.5 billion in 2000, which reflected particularly  
strong fixed GIC growth through structured finance transactions and long term   
liability growth through the extension of structured settlement broker          
relationships and large case employer pension sales.                            

Direct periodic premiums for individual life insurance of $651.6 million were up
28% from $510.6 million in 2000, driven by independent financial professionals, 
particularly in the high end estate planning markets, and COLI sales. Life      
insurance in force was $75.7 billion at December 31, 2001, up from $68.3 billion
at year-end 2000. This reflects strong agency results and increased             
corporate-owned life insurance sales.                                           

TLA general and administrative expenses decreased 34% to $154 million in 2001   
from $234 million in 2000, resulting from decreases in renewal commissions,     
premium taxes, licenses and fees related to the long-term care insurance        
business sold in 2000, reduced goodwill amortization and strict expense         
management.                                                                     

Effective July 1, 2000, the Company sold 90% of its individual long-term care   
insurance business to General Electric Capital Assurance Company and its        
subsidiary in the form of an indemnity reinsurance arrangements. See Note 2 of  
Notes to Consolidated Financial Statements.                                     

OUTLOOK                                                                         

TLA should benefit from growth in the aging population which is becoming more   
focused on the need to accumulate adequate savings for retirement, to protect   
these savings and to plan for the transfer of wealth to the next generation. TLA
is well positioned to take advantage of the favorable long-term demographic     
trends through its strong financial position, widespread brand name recognition 
and broad array of competitive life, annuity and retirement and estate planning 
products sold through established distribution channels.                        

However, competition in both product pricing and customer service is            
intensifying. While there has been some consolidation within the industry, other
financial services organizations are increasingly involved in the sale and/or   
distribution of insurance products. Financial services reform is likely to have 
many effects on the life insurance industry and the results will take time to   
assess; however, heightened competition is expected. Also, the annuities        
business is interest rate and market sensitive, and swings in interest rates and
equity markets could influence sales and retention of in-force policies. In     
order to strengthen its competitive position, TLA expects to maintain a         
competitive product portfolio, further diversify its distribution channels, and 
retain its financial position through increased sales growth and maintenance of 
an efficient cost structure.                                                    

The statements above are forward-looking statements within the meaning of the   
Private Securities Litigation Reform Act. See "Forward-Looking Statements" on   
page 12.                                                                        

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ANNUAL REPORT ON FORM 10-K

Primerica Life Insurance                                                        

                                                                [Download Table]

For the years ended December 31,                        2001                2000
($ in millions)                                         ----                ----
                                                                                
Revenues                                              $1,613              $1,432
                                                      ======              ======
Net income (1)                                        $  446              $  345
                                                      ======              ======

(1)   Net income includes net realized investment gains of $48 million and a $1 
million charge from the cumulative effect of change in accounting   
   principle in 2001, and net realized investment losses of $31 million in
2000.                                                               

Operating income was $399 million in 2001 compared to $376 million in 2000. The 
6% improvement in 2001 reflects growth in life insurance in force, increased    
investment earnings and disciplined expense management.                         

Earned Premiums, Net of Reinsurance                                 

                                                                [Download Table]

For the years ended December 31,                         2001               2000
($ in millions)                                          ----               ----
                                                                                
Individual term life                                   $1,078             $1,038

Other                                                      67                 68
                                                       ------             ------
                                                       $1,145             $1,106
                                                       ======             ======

The average face value per policy issued was $250,000 in 2001 compared to       
$245,000 in 2000. Total face amount of term life insurance issued was $71.5     
billion in 2001 compared to $67.4 billion in 2000. The number of policies issued
was 244,700 in 2001 compared to 234,700 in 2000. These increases in term life   
production resulted from the increase in licensed life agents and reflects the  
use of the Financial Needs Analysis, the diagnostic tool that enhances the      
ability of the Personal Financial Analysts to address client needs. Life        
insurance in force at year-end 2001 reached $434.8 billion, up from $412.7      
billion at year-end 2000, continuing to reflect strong policy persistency.      

OUTLOOK                                                                         

Over the last few years, programs including sales and product training were     
begun that are designed to maintain high compliance standards, increase the     
number of producing agents and customer contacts and, ultimately, increase      
production levels. Insurance in-force has grown and the number of producing     
agents has also grown. A continuation of these trends could positively influence
future operations. This statement is a forward-looking statement within the     
meaning of the Private Securities Litigation Reform Act. See "Forward-Looking   
Statements" on page 12.                                                         

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K

FUTURE APPLICATION OF ACCOUNTING STANDARDS                                      

See Note 1 of Notes to Consolidated Financial Statements for Future Applications
of Accounting Standards.                                                        

FORWARD-LOOKING STATEMENTS                                                      

Certain of the statements contained herein that are not historical facts are    
forward-looking statements within the meaning of the Private Securities         
Litigation Reform Act. The Company's actual results may differ materially from  
those included in the forward-looking statements. Forward-looking statements are
typically identified by the words "believe," "expect," "anticipate," "intend,"  
"estimate," "may increase," "may fluctuate," and similar expressions, or future 
or conditional verbs such as "will," "should," "would," and "could." These      
forward-looking statements involve risks and uncertainties including, but not   
limited to, regulatory matters, the resolution of legal proceedings and the     
Company's market risk, as well as the discussions of the Company's prospects    
under "Outlook" for each of the businesses.                                     

Item 7A. Quantitative and Qualitative Disclosures About Market Risk             

Market risk is the risk of loss arising from adverse changes in market rates and
prices, such as interest rates, foreign currency exchange rates, and other      
relevant market rate or price changes. Market risk is directly influenced by the
volatility and liquidity in the markets in which the related underlying assets  
are traded. The following is a discussion of the Company's primary market risk  
exposures and how those exposures are currently managed as of December 31, 2001.

Market risk sensitive instruments entered into for purposes other than trading  

The primary market risk to the Company's investment portfolio is interest rate  
risk associated with investments. The Company's exposure to equity price risk   
and foreign exchange risk is not significant. The Company has no direct         
commodity risk.                                                                 

The interest rate risk taken in the investment portfolio is managed relative to 
the duration of the liabilities. The portfolio is differentiated by product     
line, with each product line's portfolio structured to meet its particular      
needs. Potential liquidity needs of the business are also key factors in        
managing the investment portfolio. The portfolio duration relative to the       
liabilities' duration is primarily managed through cash market transactions. For
additional information regarding the Company's investment portfolio see Note 4  
of Notes to Consolidated Financial Statements.                                  

There were no significant changes in the Company's primary market risk exposures
or in how those exposures are managed compared to the year ended December 31,   
2000. The Company does not anticipate significant changes in the Company's      
primary market risk exposures or in how those exposures are managed in future   
reporting periods based upon what is known or expected to be in effect in future
reporting periods. The statements above are forward-looking statements within   
the meaning of the Private Securities Litigation Reform Act. See                
"Forward-Looking Statements" on this page.                                      

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K

Sensitivity Analysis                                                            

Sensitivity analysis is defined as the measurement of potential loss in future  
earnings, fair values or cash flows of market sensitive instruments resulting   
from one or more selected hypothetical changes in interest rates and other      
market rates or prices over a selected time. In the Company's sensitivity       
analysis model, a hypothetical change in market rates is selected that is       
expected to reflect reasonably possible near-term changes in those rates. The   
term "near-term" means a period of time going forward up to one year from the   
date of the financial statements. Actual results may differ from the            
hypothetical change in market rates assumed in this report, especially since    
this sensitivity analysis does not reflect the results of any actions that would
be taken by the Company to mitigate such hypothetical losses in fair value.     

In this sensitivity analysis model, the Company uses fair values to measure its 
potential loss. The sensitivity analysis model includes the following financial 
instruments: fixed maturities, interest-bearing non-redeemable preferred stock, 
mortgage loans, short-term securities, cash, investment income accrued, policy  
loans, contractholder funds, guaranteed separate account assets and liabilities 
and derivative financial instruments. In addition, certain non-financial        
instrument liabilities have been included in the sensitivity analysis model.    
These non-financial instruments include future policy benefits and policy and   
contract claims. The primary market risk to the Company's market sensitive      
instruments is interest rate risk. The sensitivity analysis model uses a 100    
basis point change in interest rates to measure the hypothetical change in fair 
value of financial instruments and the non-financial instruments included in the
model.                                                                          

For invested assets, duration modeling is used to calculate changes in fair     
values. Durations on invested assets are adjusted for call, put and reset       
features. Portfolio durations are calculated on a market value weighted basis,  
including accrued investment income, using trade date holdings as of December   
31, 2001 and 2000. The sensitivity analysis model used by the Company produces a
loss in fair value of interest rate sensitive invested assets of approximately  
$1.7 billion and $1.3 billion based on a 100 basis point increase in interest   
rates as of December 31, 2001 and 2000, respectively.                           

Liability durations are determined consistently with the determination of       
liability fair values. Where fair values are determined by discounting expected 
cash flows, the duration is the percentage change in the fair value for a 100   
basis point change in the discount rate. Where liability fair values are set    
equal to surrender values, option-adjusted duration techniques are used to      
calculate changes in fair values. The sensitivity analysis model used by the    
Company produces a decrease in fair value of interest rate sensitive insurance  
policy and claims reserves of approximately $1.3 billion and $.9 billion based  
on a 100 basis point increase in interest rates as of December 31, 2001 and     
2000, respectively. Based on the sensitivity analysis model used by the Company,
the net loss in fair value of market sensitive instruments, including           
non-financial instrument liabilities, as a result of a 100 basis point increase 
in interest rates as of December 31, 2001 and 2000 is not material.             

Market risk sensitive instruments entered into for trading purposes             

The Company maintains a trading portfolio consisting of carrying values of      
$1,880 million and $1,870 million of convertible bonds and common stocks as of  
December 31, 2001 and 2000, respectively, and $891 million and $1,109 million of
liabilities resulting from common stocks sold not yet purchased (referred to as 
short sales) as of December 31, 2001 and 2000, respectively. The primary market 
risk to the trading portfolio is equity risk. Assets are reported as trading    
securities and liabilities are reported as trading securities sold not yet      
purchased.                                                                      

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ANNUAL REPORT ON FORM 10-K

The common stocks are paired with short sales, reflecting the Company's         
arbitrage strategy where both positions are invested in each of the companies   
involved in a merger. The convertible bonds are also paired with short sales of 
the common stocks of companies issuing the convertible bonds. These positions   
are established and maintained so that general changes in equity markets and    
interest rates should not materially impact the value of the portfolio.         

Tabular presentation                                                            

The table below provides information about the trading portfolio's financial    
instruments that are primarily exposed to equity price risk. This table presents
the fair values of these instruments by trading portfolio type, as designated   
internally by the Company, as of December 31, 2001 and 2000. Fair values are    
based upon quoted market prices.                                                

                                                                [Download Table]

($ in millions)                                Fair value as of   Fair value as of 
                                               December 31, 2001  December 31, 2000
                                               -----------------  -----------------
                                                                                   
Assets                                                                             
    Trading securities                                                             
        Convertible bond arbitrage                   $1,798            $1,474      
        Merger arbitrage                                 80               309      
        Other                                             2                87      
                                                     ------            ------      
                                                     $1,880            $1,870      
                                                     ======            ======      

Liabilities                                                                        
    Trading securities sold not yet purchased                                      
        Convertible bond arbitrage                   $  836            $  845      
        Merger arbitrage                                 51               205      
        Other                                             4                59      
                                                     ------            ------      
                                                     $  891            $1,109      
                                                     ======            ======      

The Company's trading portfolio investments and related liabilities are normally
held for periods less than six months. Therefore, expected future cash flows for
these assets and liabilities are expected to be realized in less than one year. 

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Item 8. Financial Statements and Supplementary Data                             

 Index to Financial Statements

                                                                [Download Table]

                                                                            Page
                                                                            ----
                                                                                
Independent Auditors' Report..................................................16

Consolidated Financial Statements:                                              

     Consolidated Statements of Income for                                      
     the years ended December 31, 2001, 2000 and 1999.........................17

     Consolidated Balance Sheets - December 31, 2001 and 2000.................18

     Consolidated Statements of Changes in Retained Earnings                    
     and Accumulated Other Changes in Equity from Nonowner                      
     Sources for the years ended December 31, 2001, 2000 and 1999.............19

     Consolidated Statements of Cash Flows for                                  
     the years ended December 31, 2001, 2000 and 1999.........................20

     Notes to Consolidated Financial Statements............................21-53

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Independent Auditors' Report

The Board of Directors and Shareholder                                          
The Travelers Insurance Company:                                                

We have audited the accompanying consolidated balance sheets of The Travelers   
Insurance Company and subsidiaries as of December 31, 2001 and 2000, and the    
related statements of income, changes in retained earnings and accumulated other
changes in equity from nonowner sources, and cash flows for each of the years   
in the three-year period ended December 31, 2001. These consolidated financial  
statements are the responsibility of the Company's management. Our              
responsibility is to express an opinion on these consolidated financial         
statements based on our audits.                                                 

We conducted our audits 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 consolidated 
financial statements are free of material misstatement. An audit includes       
examining, on a test basis, evidence supporting the amounts and disclosures in  
the consolidated financial statements. An audit also includes assessing the     
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We     
believe that our audits provide a reasonable basis for our opinion.             

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of The Travelers       
Insurance Company and subsidiaries as of December 31, 2001 and 2000, and the    
results of their operations and their cash flows for each of the years in the   
three-year period ended December 31, 2001, in conformity with accounting        
principles generally accepted in the United States of America.                  

As discussed in Note 1 to the consolidated financial statements, the Company    
changed its method of accounting for derivative instruments and hedging         
activities and for securitized financial assets in 2001.                        

/s/ KPMG LLP                                                                    

Hartford, Connecticut                                                           
January 17, 2002, except as to                                                  
Note 16, which is as of February 27, 2002                           

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF INCOME
 ($ in millions)

                                                        [Enlarge/Download Table]

For the Year Ended December 31,                                                   2001         2000        1999 
                                                                                  ----         ----        ---- 
                                                                                                                
REVENUES                                                                                                        
Premiums                                                                        $ 2,102      $ 1,966      $1,728
Net investment income                                                             2,831        2,730       2,506
Realized investment gains (losses)                                                  125          (77)        113
Fee income                                                                          537          505         432
Other revenues                                                                      107          130          89
----------------------------------------------------------------------------------------------------------------
      Total Revenues                                                              5,702        5,254       4,868
----------------------------------------------------------------------------------------------------------------

BENEFITS AND EXPENSES                                                                                           
Current and future insurance benefits                                             1,862        1,752       1,505
Interest credited to contractholders                                              1,179        1,038         937
Amortization of deferred acquisition costs                                          379          347         315
General and administrative expenses                                                 371          463         519
----------------------------------------------------------------------------------------------------------------
      Total Benefits and Expenses                                                 3,791        3,600       3,276
----------------------------------------------------------------------------------------------------------------

Income from operations before federal income taxes and cumulative                                               
   effects of changes in accounting principles                                    1,911        1,654       1,592
----------------------------------------------------------------------------------------------------------------

Federal income taxes                                                                                            
      Current                                                                       471          462         409
      Deferred                                                                      159           89         136
----------------------------------------------------------------------------------------------------------------
      Total Federal Income Taxes                                                    630          551         545
----------------------------------------------------------------------------------------------------------------
Income before cumulative effects of changes in accounting principles              1,281        1,103       1,047
Cumulative effect of change in accounting for derivative instruments and                                        
   hedging activities, net of tax                                                    (6)          --          --
Cumulative effect of change in accounting for securitized financial assets,                                     
   net of tax                                                                        (3)          --          --
----------------------------------------------------------------------------------------------------------------
Net income                                                                      $ 1,272      $ 1,103      $1,047
================================================================================================================

 See Notes to Consolidated Financial Statements.

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 ($ in millions)

                                                        [Enlarge/Download Table]

At December 31,                                                                           2001        2000 
-----------------------------------------------------------------------------------------------------------
                                                                                                           
ASSETS                                                                                                     
Fixed maturities, available for sale at fair value (including $2,309 and $1,494                            
  subject to securities lending agreements)                                             $32,072     $26,812
Equity securities, at fair value                                                            472         592
Mortgage loans                                                                            1,995       2,187
Real estate held for sale                                                                    55          31
Policy loans                                                                              1,208       1,249
Short-term securities                                                                     3,053       2,136
Trading securities, at fair value                                                         1,880       1,870
Other invested assets                                                                     2,485       2,356
-----------------------------------------------------------------------------------------------------------
      Total Investments                                                                  43,220      37,233
-----------------------------------------------------------------------------------------------------------
Cash                                                                                        146         150
Investment income accrued                                                                   487         442
Premium balances receivable                                                                 137          97
Reinsurance recoverables                                                                  4,163       3,977
Deferred acquisition costs                                                                3,461       2,989
Separate and variable accounts                                                           24,837      24,006
Other assets                                                                              1,415       1,399
-----------------------------------------------------------------------------------------------------------
      Total Assets                                                                      $77,866     $70,293
-----------------------------------------------------------------------------------------------------------
LIABILITIES                                                                                                
Contractholder funds                                                                    $22,810     $19,394
Future policy benefits and claims                                                        14,221      13,300
Separate and variable accounts                                                           24,837      23,994
Deferred federal income taxes                                                               409         284
Trading securities sold not yet purchased, at fair value                                    891       1,109
Other liabilities                                                                         5,513       3,818
-----------------------------------------------------------------------------------------------------------
      Total Liabilities                                                                 $68,681     $61,899
-----------------------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY                                                                                       
Common stock, par value $2.50; 40 million shares authorized, issued and outstanding         100         100
Additional paid-in capital                                                                3,869       3,848
Retained earnings                                                                         5,142       4,342
Accumulated other changes in equity from nonowner sources                                    74         104
-----------------------------------------------------------------------------------------------------------
      Total Shareholder's Equity                                                          9,185       8,394
-----------------------------------------------------------------------------------------------------------
      Total Liabilities and Shareholder's Equity                                        $77,866     $70,293
===========================================================================================================

 See Notes to Consolidated Financial Statements.

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CHANGES IN RETAINED EARNINGS AND
ACCUMULATED OTHER CHANGES IN EQUITY FROM NONOWNER SOURCES 
 ($ in millions)

                                                        [Enlarge/Download Table]

                                                          For the Year Ended December 31,  
-------------------------------------------------------------------------------------------
Statements of Changes in Retained Earnings                  2001         2000         1999 
-------------------------------------------------------------------------------------------
                                                                                           
Balance, beginning of year                               $ 4,342      $ 4,099      $ 3,602 
Net income                                                 1,272        1,103        1,047 
Dividends to parent                                          472          860          550 
-------------------------------------------------------------------------------------------
Balance, end of year                                     $ 5,142      $ 4,342      $ 4,099 
===========================================================================================

-------------------------------------------------------------------------------------------
Statements of Accumulated Other Changes                                                    
In Equity From Nonowner Sources                                                            
-------------------------------------------------------------------------------------------
Balance, beginning of year                               $   104      $  (398)     $   598 
Cumulative effect of accounting for                                                        
  derivative instruments and hedging activities, net                                       
  of tax                                                     (29)           0            0 
Unrealized gains (losses), net of tax                         68          501         (996)
Foreign currency translation, net of tax                      (5)           1            0 
Derivative instrument hedging activity losses, net                                         
  of tax                                                     (64)           0            0 
-------------------------------------------------------------------------------------------
Balance, end of year                                     $    74      $   104      $  (398)
===========================================================================================

-------------------------------------------------------------------------------------------
Summary of Changes in Equity                                                               
From Nonowner Sources                                                                      
-------------------------------------------------------------------------------------------
Net Income                                               $ 1,272      $ 1,103      $ 1,047 
Other changes in equity from nonowner sources                (30)         502         (996)
-------------------------------------------------------------------------------------------
Total changes in equity from nonowner sources            $ 1,242      $ 1,605      $    51 
===========================================================================================

 See Notes to Consolidated Financial Statements.

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Increase (Decrease) in Cash
 ($ in millions)

                                                        [Enlarge/Download Table]

For the Year Ended December 31,                                    2001          2000          1999 
----------------------------------------------------------------------------------------------------
                                                                                                    
Cash Flows from Operating Activities                                                                
      Premiums collected                                       $  2,109      $  1,986      $  1,715 
      Net investment income received                              2,430         2,489         2,365 
      Other revenues received                                       867           865           537 
      Benefits and claims paid                                   (1,176)       (1,193)       (1,094)
      Interest credited to contractholders                       (1,159)       (1,046)         (958)
      Operating expenses paid                                    (1,000)         (970)       (1,013)
      Income taxes paid                                            (472)         (490)         (393)
      Trading account investments purchases, net                    (92)         (143)          (80)
      Other                                                        (227)         (258)         (104)
----------------------------------------------------------------------------------------------------
           Net Cash Provided by Operating Activities              1,280         1,240           975 
----------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities                                                                
      Proceeds from maturities of investments                                                       
           Fixed maturities                                       3,706         4,257         4,103 
           Mortgage loans                                           455           380           662 
      Proceeds from sales of investments                                                            
           Fixed maturities                                      14,110        10,840        12,562 
           Equity securities                                        112           397           100 
           Real estate held for sale                                  6           244           219 
      Purchases of investments                                                                      
           Fixed maturities                                     (22,556)      (17,836)      (18,129)
           Equity securities                                        (50)           (7)         (309)
           Mortgage loans                                          (287)         (264)         (470)
      Policy loans, net                                              41             9           599 
      Short-term securities (purchases) sales, net                 (914)         (810)          316 
      Other investments (purchases), sales, net                     103          (461)         (413)
      Securities transactions in course of settlement, net        1,086           944          (463)
----------------------------------------------------------------------------------------------------
      Net Cash Used in Investing Activities                      (4,188)       (2,307)       (1,223)
----------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities                                                                
      Contractholder fund deposits                                8,308         6,022         5,764 
      Contractholder fund withdrawals                            (4,932)       (4,030)       (4,946)
      Dividends to parent company                                  (472)         (860)         (550)
----------------------------------------------------------------------------------------------------
           Net Cash Provided by Financing Activities              2,904         1,132           268 
----------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                                      (4)           65            20 
Cash at December 31, previous year                                  150            85            65 
----------------------------------------------------------------------------------------------------
Cash at December 31, current year                              $    146      $    150      $     85 
====================================================================================================

 See Notes to Consolidated Financial Statements.

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                

Significant accounting policies used in the preparation of the      
accompanying financial statements follow.                           

Basis of Presentation                                               

At December 31, 2001 and 2000, The Travelers Insurance Company (TIC,
together with its subsidiaries, the Company), was a wholly owned    
subsidiary of The Travelers Insurance Group Inc. (TIGI), an indirect
wholly owned subsidiary of Citigroup Inc. (Citigroup), a diversified
holding company whose businesses provide a broad range of financial 
      services to consumer and corporate customers around the world. On February
      4, 2002, TIGI changed its name to Travelers Property Casualty Corp. (TPC).
     The consolidated financial statements include the accounts of the Company
    and its insurance and non-insurance subsidiaries on a fully consolidated
basis. The primary insurance entities of the Company are TIC and its
  subsidiaries, The Travelers Life and Annuity Company (TLAC), Primerica
    Life Insurance Company (Primerica Life), and its subsidiaries, Primerica
   Life Insurance Company of Canada, CitiLife Financial Limited (CitiLife)
and National Benefit Life Insurance Company (NBL). Significant      
     intercompany transactions and balances have been eliminated. See Note 16.

  The financial statements and accompanying footnotes of the Company are
   prepared in conformity with accounting principles generally accepted in
the United States of America (GAAP). The preparation of financial   
    statements in conformity with GAAP requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
  and disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenues and benefits and
  expenses during the reporting period. Actual results could differ from
those estimates.                                                    

    Certain prior year amounts have been reclassified to conform to the 2001
presentation.                                                       

Accounting Changes                                                  

Accounting for Derivative Instruments and Hedging Activities        

   Effective January 1, 2001, the Company adopted the Financial Accounting
  Standards Board (FASB) Statement of Financial Accounting Standards No.
    133, "Accounting for Derivative Instruments and Hedging Activities" (FAS
133). FAS 133 establishes accounting and reporting standards for    
     derivative instruments, including certain derivative instruments embedded
 in other contracts (collectively referred to as derivatives), and for
    hedging activities. It requires that an entity recognize all derivatives
 as either assets or liabilities in the consolidated balance sheet and
     measure those instruments at fair value. If certain conditions are met, a
    derivative may be specifically designated as (a) a hedge of the exposure
 to changes in the fair value of a recognized asset or liability or an
      unrecognized firm commitment, (b) a hedge of the exposure to variable cash
    flows of a recognized asset or liability or of a forecasted transaction,
    or (c) a hedge of the foreign currency exposure of a net investment in a
     foreign operation, an unrecognized firm commitment, an available-for-sale
   security, or a foreign-currency-denominated forecasted transaction. The
    accounting for changes in the fair value of a derivative (that is, gains
and losses) depends on the intended use of the derivative and the   
resulting designation.                                              

As a result of adopting FAS 133, the Company recorded a charge of $6
   million after tax, reflected as a cumulative catch-up adjustment in the
   consolidated statement of income and a charge of $29 million after tax,
  reflected as a cumulative catch-up adjustment in the accumulated other
changes in equity from nonowner                                     

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

    sources section of shareholder's equity. During the twelve months ending
      December 31, 2001, the Company reclassified from accumulated other changes
     in equity from nonowner sources into net investment income $35 million of
     losses related to derivatives that were designated as cash flow hedges at
transition.                                                         

   Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets                

  In April 2001, the Company adopted the FASB Emerging Issues Task Force
     (EITF) 99-20, "Recognition of Interest Income and Impairment on Purchased
    and Retained Beneficial Interests in Securitized Financial Assets" (EITF
      99-20). EITF 99-20 establishes guidance on the recognition and measurement
   of interest income and impairment on certain investments, e.g., certain
     asset-backed securities. The recognition of impairment resulting from the
    adoption of EITF 99-20 was recorded as a cumulative catch-up adjustment.
   Interest income on beneficial interest falling within the scope of EITF
 99-20 is to be recognized prospectively. As a result of adopting EITF
      99-20, the Company recorded a charge of $3 million after tax, reflected as
     a cumulative catch-up adjustment in the consolidated statement of income.
The implementation of this EITF did not have a significant impact on
results of operations, financial condition or liquidity.            

Accounting for Transfers and Servicing of Financial Assets and      
Extinguishments of Liabilities                                      

In September 2000, the FASB issued Statement of Financial Accounting
   Standards No. 140, "Accounting for Transfers and Servicing of Financial
      Assets and Extinguishments of Liabilities, a replacement of FASB Statement
     No. 125" (FAS 140). Provisions of FAS 140 primarily relating to transfers
  of financial assets and securitizations that differ from provisions of
"Accounting for Transfers and Servicing of Financial Assets and     
 Extinguishments of Liabilities" (FAS 125) are effective for transfers
      taking place after March 31, 2001. Special purpose entities (SPEs) used in
 securitizations that are currently qualifying SPEs under FAS 125 will
  continue to be treated as qualifying SPEs so long as they issue no new
  beneficial interests and accept no new asset transfers after March 31,
     2001, other than transfers committed to prior to that date. Under FAS 140
qualifying SPEs are not consolidated by the transferor. FAS 140 also
 amends the accounting for collateral and requires new disclosures for
   collateral, securitizations, and retained interests in securitizations.
    These provisions are effective for financial statements for fiscal years
      ending after December 15, 2000. The accounting for collateral, as amended,
requires (a) certain assets pledged as collateral to be separately  
    reported in the consolidated balance sheet from assets not so encumbered
 and (b) disclosure of assets pledged as collateral that have not been
      reclassified and separately reported. The adoption of FAS 140 did not have
  a significant effect on the Company's results of operations, financial
condition or liquidity. See Note 4.                                 

Accounting Standards Not Yet Adopted                                

Business Combinations, Goodwill and Other Intangible Assets         

      In July 2001, the FASB issued Statements of Financial Accounting Standards
 No. 141, "Business Combinations" (FAS 141) and No. 142, "Goodwill and
     Other Intangible Assets" (FAS 142). These standards change the accounting
for business combinations by, among other things, prohibiting the   
      prospective use of pooling-of-interests accounting and requiring companies
to stop amortizing goodwill and certain intangible assets with an   
 indefinite useful life created by business combinations accounted for
     using the purchase method of accounting. Instead, goodwill and intangible
 assets deemed to have an indefinite useful life will be subject to an
     annual review for impairment. Other intangible assets that are not deemed
to have an indefinite                                               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

  useful life will continue to be amortized over their useful lives. The
 Company will apply the new rules on accounting for goodwill and other
    intangible assets in the first quarter of 2002 and for purchase business
combinations consummated after June 30, 2001.                       

Upon adoption, the Company will stop amortizing goodwill and        
    indefinite-lived intangible assets. Based on the current levels of these
      assets, this would reduce general and administrative expenses and increase
     net income by approximately $11 million in 2002. In addition, the Company
has performed the transitional impairment tests using the fair value
      approach required by the new standard. Based upon these tests, the Company
   does not anticipate impairing goodwill or other intangible assets as of
January 1, 2002.                                                    

Asset Retirement Obligations                                        

     In June 2001, the FASB issued Statement of Financial Accounting Standards
     No. 143, "Accounting for Asset Retirement Obligations" (FAS 143). FAS 143
changes the measurement of an asset retirement obligation from a    
     cost-accumulation approach to a fair value approach, where the fair value
   (discounted value) of an asset retirement obligation is recognized as a
    liability in the period in which it is incurred and accretion expense is
  recognized using the credit-adjusted risk-free interest rate in effect
when the liability was initially recognized. The associated asset   
  retirement costs are capitalized as part of the carrying amount of the
     long-lived asset and subsequently amortized into expense. The pre-FAS 143
      prescribed practice of reporting a retirement obligation as a contra-asset
     will no longer be allowed. The Company is in the process of assessing the
impact of the new standard that will take effect on January 1, 2003.

Impairment or Disposal of Long-Lived Assets                         

In August 2001, the FASB issued Statement of Financial Accounting   
Standards No. 144, "Accounting for the Impairment or Disposal of    
 Long-Lived Assets" (FAS 144). FAS 144 establishes a single accounting
     model for long-lived assets to be disposed of by sale. A long-lived asset
      classified as held for sale is to be measured at the lower of its carrying
     amount or fair value less cost to sell. Depreciation (amortization) is to
cease. Impairment is recognized only if the carrying amount of a    
    long-lived asset is not recoverable from its undiscounted cash flows and
    is measured as the difference between the carrying amount and fair value
    of the asset. Long-lived assets to be abandoned, exchanged for a similar
   productive asset, or distributed to owners in a spin-off are considered
     held and used until disposed of. Accordingly, discontinued operations are
no longer to be measured on a net realizable value basis, and future
operating losses are no longer recognized before they occur.        

    The Company will adopt FAS 144 effective January 1, 2002. The provisions
     of the new standard are generally to be applied prospectively and are not
 expected to significantly affect the Company's results of operations,
financial condition or liquidity.                                   

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

Accounting Policies                                                 

Investments                                                         

  Fixed maturities include bonds, notes and redeemable preferred stocks.
     Fair values of investments in fixed maturities are based on quoted market
prices or dealer quotes or, if these are not available, discounted  
expected cash flows using market rates commensurate with the credit 
     quality and maturity of the investment. Also included in fixed maturities
    are loan-backed and structured securities, which are amortized using the
    retrospective method. The effective yield used to determine amortization
is calculated based upon actual historical and projected future cash
      flows, which are obtained from a widely accepted securities data provider.
 Fixed maturities, including instruments subject to securities lending
   agreements (see Note 4), are classified as "available for sale" and are
    reported at fair value, with unrealized investment gains and losses, net
  of income taxes, credited or charged directly to shareholder's equity.

Equity securities, which include common and non-redeemable preferred
    stocks, are classified as "available for sale" and carried at fair value
     based primarily on quoted market prices. Changes in fair values of equity
    securities are charged or credited directly to shareholder's equity, net
of income taxes.                                                    

Mortgage loans are carried at amortized cost. A mortgage loan is    
      considered impaired when it is probable that the Company will be unable to
   collect principal and interest amounts due. For mortgage loans that are
  determined to be impaired, a reserve is established for the difference
between the amortized cost and fair market value of the underlying  
 collateral. In estimating fair value, the Company uses interest rates
reflecting the higher returns required in the current real estate   
    financing market. Impaired loans were insignificant at December 31, 2001
and 2000.                                                           

   Real estate held for sale is carried at the lower of cost or fair value
less estimated cost to sell. Fair value of foreclosed properties is 
   established at the time of foreclosure by internal analysis or external
appraisers, using discounted cash flow analyses and other accepted  
   techniques. Thereafter, an allowance for losses on real estate held for
 sale is established if the carrying value of the property exceeds its
current fair value less estimated costs to sell. There was no such  
allowance at December 31, 2001 and 2000.                            

      Policy loans are carried at the amount of the unpaid balances that are not
in excess of the net cash surrender values of the related insurance 
policies. The carrying value of policy loans, which have no defined 
maturities, is considered to be fair value.                         

   Short-term securities, consisting primarily of money market instruments
      and other debt issues purchased with a maturity of less than one year, are
carried at amortized cost, which approximates fair value.           

    Trading securities and related liabilities are normally held for periods
 less than six months. These investments are marked to market with the
 change recognized in net investment income during the current period.

 Other invested assets include partnership investments and real estate
joint ventures accounted for on the equity method of accounting.    
    Undistributed income is reported in net investment income. Also included
   in other invested assets is an investment in Citigroup Preferred Stock.
See Note 13.                                                        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

     Accrual of income is suspended on fixed maturities or mortgage loans that
     are in default, or on which it is likely that future payments will not be
      made as scheduled. Interest income on investments in default is recognized
    only as payment is received. Investments in default at December 31, 2001
and 2000 were insignificant.                                        

Derivative Financial Instruments                                    

  The Company uses derivative financial instruments, including financial
 futures contracts, interest rate swaps, currency swaps, equity swaps,
     options and forward contracts, as a means of hedging exposure to interest
     rate changes, equity price change and foreign currency risk. The Company,
  through Tribeca Investments LLC, a subsidiary that is a broker-dealer,
      holds and issues derivative instruments for trading purposes. (See Note 11
for a more detailed description of the Company's derivative use.)   
   Derivative financial instruments in a gain position are reported in the
consolidated balance sheet in other invested assets while derivative
     financial instruments in a loss position are reported in the consolidated
balance sheet in other liabilities.                                 

     To qualify for hedge accounting, the hedge relationship is designated and
     formally documented at inception detailing the particular risk management
      objective and strategy for the hedge which includes the item and risk that
is being hedged, the derivative that is being used, as well as how  
    effectiveness is being assessed. A derivative has to be highly effective
     in accomplishing the objective of offsetting either changes in fair value
or cash flows for the risk being hedged.                            

      For fair value hedges, in which derivatives hedge the fair value of assets
      and liabilities, changes in the fair value of derivatives are reflected in
 realized investment gains (losses), together with changes in the fair
 value of the related hedged item. The Company's fair value hedges are
primarily of available-for-sale securities.                         

For cash flow hedges, the accounting treatment depends on the       
    effectiveness of the hedge. To the extent that derivatives are effective
  in offsetting the variability of the hedged cash flows, changes in the
    derivatives' fair value will not be included in current earnings but are
     reported in the accumulated other changes in equity from nonowner sources
    in shareholder's equity. These changes in fair value will be included in
earnings of future periods when earnings are also affected by the   
     variability of the hedged cash flows. To the extent these derivatives are
   not effective, changes in their fair values are immediately included in
realized investment gains (losses). The Company's cash flow hedges  
  primarily include hedges of foreign denominated funding agreements and
floating rate available-for-sale securities.                        

      For net investment hedges, in which derivatives hedge the foreign currency
exposure of a net investment in a foreign operation, the accounting 
  treatment will similarly depend on the effectiveness of the hedge. The
      effective portion of the change in fair value of the derivative, including
  any forward premium or discount, is reflected in the accumulated other
   changes in equity from nonowner sources as part of the foreign currency
      translation adjustment in shareholder's equity. The ineffective portion is
reflected in realized investment gains (losses).                    

   Derivatives that are used to hedge instruments that are carried at fair
    value, or do not qualify as hedges under the new rules, are also carried
      at fair value with changes in value reflected in realized investment gains
(losses).                                                           

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

The effectiveness of these hedging relationships is evaluated on a  
retrospective and prospective basis using quantitative measures of  
  correlation. If a hedge relationship is found to be ineffective, it no
      longer qualifies as a hedge and any excess gains or losses attributable to
such ineffectiveness as well as subsequent changes in fair value are
recognized in realized investment gains (losses).                   

 For those hedge relationships that are terminated, hedge designations
     removed, or forecasted transactions that are no longer expected to occur,
    the hedge accounting treatment described in the paragraphs above will no
      longer apply. For fair value hedges, any changes to the hedged item remain
as part of the basis of the asset or liability and are ultimately   
      reflected as an element of the yield. For cash flow hedges, any changes in
 fair value of the end-user derivative remain in the accumulated other
   changes in equity from nonowner sources in shareholder's equity and are
     included in earnings of future periods when earnings are also affected by
  the variability of the hedged cash flow. If the hedged relationship is
discontinued because a forecasted transaction will not occur when   
scheduled, any changes in fair value of the end-user derivative are 
immediately reflected in realized investment gains (losses).        

Financial instruments with embedded derivatives:                    

The Company bifurcates an embedded derivative where a.) the economic
    characteristics and risks of the embedded instrument are not clearly and
 closely related to the economic characteristics and risks of the host
    contract, b.) the entire instrument would not otherwise be remeasured at
fair value and c.) a separate instrument with the same terms of the 
   embedded instrument would meet the definition of a derivative under FAS
133.                                                                

The Company purchases investments that have embedded derivatives,   
 primarily convertible debt securities. These embedded derivatives are
carried at fair value with changes in value reflected in realized   
investment gains (losses). Derivatives embedded in convertible debt 
securities are classified in the consolidated balance sheet as fixed
maturity securities, consistent with the host instruments.          

The Company markets certain insurance contracts that have embedded  
     derivatives, primarily variable annuity contracts with put options. These
embedded derivatives are carried at fair value with changes in value
     reflected in realized investment gains (losses) consistent with the hedge
instrument. Derivatives embedded in variable annuity contracts are  
classified in the consolidated balance sheet as future policyholder 
benefits and claims.                                                

     Prior to the adoption of FAS 133 on January 1, 2001, end-user derivatives
  designated as qualifying hedges were accounted for consistent with the
      risk management strategy as follows. Derivatives used for hedging purposes
    were generally accounted for using hedge accounting. Changes in value of
      the derivatives which were expected to substantially offset the changes in
 value of the hedged items qualified for hedge accounting. Hedges were
monitored to ensure that there was a high correlation between the   
     derivative instrument and the hedged investment. Derivatives that did not
     qualify for hedge accounting were marked to market with changes in market
     value reflected in the consolidated statement of income as realized gains
(losses).                                                           

      Payments to be received or made under interest rate swaps were accrued and
recognized in net investment income. Swaps hedging investments were 
carried at fair value with unrealized gains (losses), net of taxes, 
      charged directly to shareholder's equity. Interest rate and currency swaps
    hedging liabilities were treated as off-balance sheet instruments. Gains
      and losses arising from financial future contracts were used to adjust the
    basis of hedged investments and were recognized in net investment income
 over the life of the investment. Gains and losses arising from equity
index options were marked to market with changes in market value    

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

      reflected in realized investment gains (losses). Forward contracts hedging
    investments were marked to market based on changes in the spot rate with
   changes in market value reflected in realized investment gains (losses)
and any forward premium or discount was recognized in net investment
income over the life of the contract. Gains and losses from forward 
contracts hedging foreign operations were carried at fair value with
      unrealized gains (losses), net of taxes, charged directly to shareholder's
equity.                                                             

Investment Gains and Losses                                         

Realized investment gains and losses are included as a component of 
  pre-tax revenues based upon specific identification of the investments
  sold on the trade date. Other-than-temporary declines in fair value of
  investments are included in realized investment gains and losses. Also
     included are gains and losses arising from the remeasurement of the local
 currency value of foreign investments to U.S. dollars, the functional
currency of the Company. The foreign exchange effects of Canadian   
operations are included in unrealized gains and losses.             

Deferred Acquisition Costs                                          

   Costs of acquiring individual life insurance and annuities, principally
     commissions and certain expenses related to policy issuance, underwriting
  and marketing, all of which vary with and are primarily related to the
   production of new business, are deferred. Acquisition costs relating to
  traditional life insurance, including term insurance, are amortized in
   relation to anticipated premiums. Universal life costs are amortized in
     relation to estimated gross profits, and annuity contracts employ a level
    yield method. For life insurance, a 15 to 20-year amortization period is
used, and a 7 to 20-year period is employed for annuities. Deferred 
acquisition costs are reviewed periodically for recoverability to   
     determine if any adjustment is required. Adjustments, if any, are charged
to income.                                                          

Value of Insurance in Force                                         

     The value of insurance in force is an asset that was recorded at the time
   of acquisition of the Company by Citigroup's predecessor. It represents
 the actuarially determined present value of anticipated profits to be
    realized from life insurance, annuities and health contracts at the date
  of acquisition using the same assumptions that were used for computing
      related liabilities where appropriate. The value of insurance in force was
    the actuarially determined present value of the projected future profits
  discounted at interest rates ranging from 14% to 18%. Traditional life
insurance and guaranteed renewable health policies are amortized in 
     relation to anticipated premiums; universal life is amortized in relation
     to estimated gross profits; and annuity contracts are amortized employing
    a level yield method. The value of insurance in force, which is included
     in other assets, is reviewed periodically for recoverability to determine
      if any adjustment is required. Adjustments, if any, are charged to income.
      The carrying value at December 31, 2001 and 2000 was $144 million and $170
million, respectively.                                              

Separate and Variable Accounts                                      

Separate and variable accounts primarily represent funds for which  
     investment income and investment gains and losses accrue directly to, and
investment risk is borne by, the contractholders. Each account has  
  specific investment objectives. The assets of each account are legally
segregated and are not subject to claims that arise out of any other
business of the Company. The assets of these accounts are carried at
market value.                                                       

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

  Certain other separate accounts provide guaranteed levels of return or
     benefits and the assets of these accounts are primarily carried at market
      value. Amounts assessed to the contractholders for management services are
included in revenues. Deposits, net investment income and realized  
      investment gains and losses for these accounts are excluded from revenues,
    and related liability increases are excluded from benefits and expenses.

Goodwill and Intangible Assets                                      

     Goodwill and intangible assets are included in other assets. Prior to the
 adoption of FASB Statements of Financial Accounting Standards No. 141
"Business Combinations" (FAS 141) and No. 142 "Goodwill and Other   
intangible Assets" (FAS 142), which will be applied to goodwill and 
intangible assets in the first quarter of 2002, goodwill is being   
     amortized on a straight-line basis principally over a 40-year period. The
  carrying amount of $336 million and $334 million of goodwill and other
intangible assets at December 31, 2001 and 2000, respectively, is   
     regularly reviewed for indication of impairment in value that in the view
 of management would be other than temporary. If it is determined that
goodwill and other intangible assets are unlikely to be recovered,  
impairment is recognized on a discounted cash flow basis.           

  Upon adoption of FAS 141 and FAS 142, the Company will stop amortizing
  goodwill and intangible assets deemed to have an infinite useful life.
     Instead, these assets will be subject to an annual review for impairment.
    Other intangible assets that are not deemed to have an indefinite useful
   life will continue to be amortized over their useful lives. See Note 1,
    Summary of Significant Accounting Policies, Accounting Standards Not Yet
Adopted.                                                            

Contractholder Funds                                                

  Contractholder funds represent receipts from the issuance of universal
life, corporate owned life insurance, pension investment and certain
     deferred annuity contracts. Contractholder fund balances are increased by
     such receipts and credited interest and reduced by withdrawals, mortality
charges and administrative expenses charged to the contractholders. 
     Interest rates credited to contractholder funds range from 1.9% to 14.0%.

Future Policy Benefits                                              

    Future policy benefits represent liabilities for future insurance policy
 benefits. Benefit reserves for life insurance and annuities have been
computed based upon mortality, morbidity, persistency and interest  
     assumptions applicable to these coverages, which range from 2.5% to 8.1%,
      including adverse deviation. These assumptions consider Company experience
    and industry standards. The assumptions vary by plan, age at issue, year
of issue and duration. Appropriate recognition has been given to    
experience rating and reinsurance.                                  

Guaranty Fund and Other Insurance-Related Assessments               

    Included in Other Liabilities is the Company's estimate of its liability
     for guaranty fund and other insurance-related assessments. State guaranty
     fund assessments are based upon the Company's share of premium written or
 received in one or more years prior to an insolvency occurring in the
industry. Once an insolvency has occurred, the Company recognizes a 
    liability for such assessments if it is probable that an assessment will
    be imposed and the amount of the assessment can be reasonably estimated.
At December 31, 2001 and 2000,                                      

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

the Company had a liability of $22.3 million and $22.5 million,     
 respectively, for guaranty fund assessments and a related premium tax
  offset recoverable of $4.3 million and $3.4 million, respectively. The
     assessments are expected to be paid over a period of 3 to 5 years and the
     premium tax offsets are expected to be realized over a period of 10 to 15
years.                                                              

Permitted Statutory Accounting Practices                            

      The Company's insurance subsidiaries, domiciled principally in Connecticut
   and Massachusetts, prepare statutory financial statements in accordance
  with the accounting practices prescribed or permitted by the insurance
  departments of the states of domicile. Prescribed statutory accounting
practices are those practices that are incorporated directly or by  
  reference in state laws, regulations, and general administrative rules
    applicable to all insurance enterprises domiciled in a particular state.
     Permitted statutory accounting practices include practices not prescribed
     by the domiciliary state, but allowed by the domiciliary state regulatory
    authority. The impact of any permitted accounting practices on statutory
surplus of the Company is not material.                             

Premiums                                                            

      Premiums are recognized as revenues when due. Reserves are established for
 the portion of premiums that will be earned in future periods and for
     deferred profits on limited-payment policies that are being recognized in
income over the policy term.                                        

Fee Income                                                          

Fee income includes mortality, administrative and equity protection 
    charges, as well as universal life and variable annuity separate account
management fees.                                                    

Other Revenues                                                      

    Other revenues include surrender, penalties and other charges related to
annuity and universal life contracts. Also included are revenues of 
non-insurance subsidiaries and amortization of deferred income.     

Current and Future Insurance Benefits                               

     Current and future insurance benefits represent charges for mortality and
      morbidity related to fixed annuities, universal life, term life and health
insurance benefits.                                                 

Interest Credited to Contractholders                                

Interest credited to contractholders represents amounts earned by   
  universal life, corporate owned life insurance, pension investment and
      certain deferred annuity contracts in accordance with contract provisions.

Federal Income Taxes                                                

  The provision for federal income taxes is comprised of two components,
   current income taxes and deferred income taxes. Deferred federal income
taxes arise from changes during the year in cumulative temporary    
differences between the tax basis and book basis of assets and      
liabilities.                                                        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

Stock-Based Compensation                                            

 The Company accounts for the stock-based compensation plans using the
   accounting method prescribed by Accounting Principles Board Opinion No.
     25, "Accounting for Stock Issued to Employees" (APB 25), and has included
in the Notes to Consolidated Financial Statements the pro forma     
   disclosures required by Statement of Financial Accounting Standards No.
      123, "Accounting for Stock-Based Compensation" (FAS 123). See Note 13. The
   Company accounts for its stock-based non-employee compensation plans at
fair value.                                                         

2.    BUSINESS DISPOSITION                                                      

    Effective July 1, 2000, the Company sold 90% of its individual long-term
     care insurance business to General Electric Capital Assurance Company and
 its subsidiary in the form of indemnity reinsurance arrangements. The
     proceeds were $410 million, resulting in a deferred gain of approximately
      $150 million after-tax. The deferred gain will be amortized in relation to
    anticipated premiums. After-tax amortization amounted to $21 million and
$5 million in 2001 and 2000, respectively. Earned premiums were $25 
million, $138 million and $230 million in 2001, 2000 and 1999,      
respectively.                                                       

3.    OPERATING SEGMENTS                                                        

The Company has two reportable business segments that are separately
    managed due to differences in products, services, marketing strategy and
resource management. The business of each segment is maintained and 
reported through separate legal entities within the Company. The    
      management groups of each segment report separately to the common ultimate
parent, Citigroup Inc.                                              

     Travelers Life & Annuity (TLA) core offerings include individual annuity,
    individual life, corporate owned life insurance (COLI) and group annuity
insurance products distributed by TIC and TLAC principally under the
    Travelers name. Among the range of individual products offered are fixed
     and variable deferred annuities, payout annuities and term, universal and
  variable life insurance. The COLI product is a variable universal life
product distributed through independent specialty brokers. The group
    products include institutional pensions, including guaranteed investment
contracts (GICs), payout annuities, group annuities sold to         
  employer-sponsored retirement and savings plans and structured finance
transactions. The majority of the annuity business and a substantial
portion of the life business written by TLA are accounted for as    
 investment contracts, with the result that the deposits collected are
reported as liabilities and are not included in revenues.           

    The Primerica Life Insurance business segment consolidates primarily the
   business of Primerica Life, Primerica Life Insurance Company of Canada,
  CitiLife and NBL. The Primerica Life Insurance business segment offers
      individual life products, primarily term insurance, to customers through a
      nationwide sales force of approximately 96,000 full and part-time licensed
Personal Financial Analysts.                                        

      The accounting policies of the segments are the same as those described in
    the summary of significant accounting policies (see Note 1), except that
   management also includes receipts on long-duration contracts (universal
  life-type and investment contracts) as deposits along with premiums in
 measuring business volume. The amount of investments in equity method
investees and total expenditures for additions to long-             

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

lived assets other than financial instruments, long-term customer   
  relationships of a financial institution, mortgage and other servicing
rights, and deferred tax assets, were not material.                 

                                                        [Enlarge/Download Table]

Business Segment Information:                                                                   
------------------------------------------------------------------------------------------------
At and for the year                                                                             
Ended December 31, 2001                              Travelers Life   Primerica Life            
($ in millions)                                         & Annuity        Insurance        Total 
------------------------------------------------------------------------------------------------
                                                                                                
Business Volume:                                                                                
      Premiums                                           $   957           $1,145        $ 2,102
      Deposits                                            13,067               --         13,067
                                                         -------           ------        -------
Total business volume                                    $14,024           $1,145        $15,169
Net investment income                                      2,530              301          2,831
Interest credited to contractholders                       1,179               --          1,179
Amortization of deferred acquisition costs                   171              208            379
Total expenditures for deferred acquisition costs            553              298            851
Federal income taxes (FIT) on Operating Income               377              209            586
Operating Income (excludes realized gains or                                                    
       losses and the related FIT)                       $   801           $  399        $ 1,200
Segment Assets                                           $69,836           $8,030        $77,866
------------------------------------------------------------------------------------------------


------------------------------------------------------------------------------------------------
At and for the year                                                                             
Ended December 31, 2000                              Travelers Life   Primerica Life            
($ in millions)                                         & Annuity        Insurance        Total 
------------------------------------------------------------------------------------------------
                                                                                                
Business Volume:                                                                                
      Premiums                                           $   860           $1,106        $ 1,966
      Deposits                                            11,536               --         11,536
                                                         -------           ------        -------
Total business volume                                    $12,396           $1,106        $13,502
Net investment income                                      2,450              280          2,730
Interest credited to contractholders                       1,038               --          1,038
Amortization of deferred acquisition costs                   166              181            347
Total expenditures for deferred acquisition costs            520              272            792
Federal income taxes (FIT) on Operating Income               381              197            578
Operating Income (excludes realized gains or                                                    
      losses and the related FIT)                        $   777           $  376        $ 1,153
Segment Assets                                           $62,771           $7,522        $70,293
------------------------------------------------------------------------------------------------

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

                                                        [Enlarge/Download Table]

---------------------------------------------------------------------------------------------------
At and for the year                                                                                
Ended December 31, 1999                                Travelers Life   Primerica Life             
($ in millions)                                           & Annuity       Insurance          Total 
---------------------------------------------------------------------------------------------------
                                                                                                   
Business Volume:                                                                                   
      Premiums                                             $   656          $1,072          $ 1,728
      Deposits                                              10,639              --           10,639
                                                           -------          ------          -------
Total business volume                                      $11,295          $1,072          $12,367
Net investment income                                        2,249             257            2,506
Interest credited to contractholders                           937              --              937
Amortization of deferred acquisition costs                     127             188              315
Total expenditures for deferred acquisition costs              430             256              686
Federal income taxes (FIT) on Operating Income                 319             186              505
Operating Income (excludes realized gains or                                                       
      losses and the related FIT)                          $   619          $  355          $   974
Segment Assets                                             $56,615          $6,916          $63,531
---------------------------------------------------------------------------------------------------

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

                                                        [Enlarge/Download Table]

-----------------------------------------------------------------------------------------------
Business Segment Reconciliation:                                                               
($ in millions)                                         At and for the years ended December 31,
-----------------------------------------------------------------------------------------------

Business Volume and Revenues                                 2001          2000          1999  
-----------------------------------------------------------------------------------------------
                                                                                               
Total business volume                                    $ 15,169      $ 13,502      $ 12,367  
Other revenues, including fee income                          644           635           521  
Elimination of deposits                                   (13,067)      (11,536)      (10,639) 
                                                         --------------------------------------
Revenue from external sources                               2,746         2,601         2,249  
Net investment income                                       2,831         2,730         2,506  
Realized investment gains (losses)                            125           (77)          113  
===============================================================================================
       Total revenues                                    $  5,702      $  5,254      $  4,868  
===============================================================================================

Operating Income                                                                               
-----------------------------------------------------------------------------------------------
Total operating income of business segments              $  1,200      $  1,153      $    974  
Realized investment gains (losses), net of tax                 81           (50)           73  
Cumulative effect of change in accounting for                                                  
  derivative instruments and hedging activities, net                                           
  of tax                                                       (6)           --            --  
Cumulative effect of change in accounting for                                                  
  securitized financial assets, net of tax                     (3)           --            --  
-----------------------------------------------------------------------------------------------
       Income from continuing operations                 $  1,272      $  1,103      $  1,047  
===============================================================================================

Assets                                                                                         
-----------------------------------------------------------------------------------------------
Total assets of business segments                        $ 77,866      $ 70,293      $ 63,531  
===============================================================================================

Business Volume and Revenues                                                                   
-----------------------------------------------------------------------------------------------
Individual Annuities                                     $  7,166      $  7,101      $  5,816  
Group Annuities                                             8,383         6,563         6,572  
Individual Life and Health Insurance                        2,854         2,445         2,424  
Other (a)                                                     366           681           695  
Elimination of deposits                                   (13,067)      (11,536)      (10,639) 
-----------------------------------------------------------------------------------------------
       Total revenue                                     $  5,702      $  5,254      $  4,868  
===============================================================================================

(a)   Other represents revenue attributable to unallocated capital and run-off  
businesses.                                                         

The Company's revenue was derived almost entirely from U.S. domestic business.  
Revenue attributable to foreign countries was insignificant.                    

The Company had no transactions with a single customer representing 10% or more 
of its revenue.                                                                 

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

4.    INVESTMENTS                                                               

Fixed Maturities                                                    

     The amortized cost and fair value of investments in fixed maturities were
as follows:                                                         

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------------------------------
                                                                         Gross         Gross                 
December 31, 2001                                       Amortized      Unrealized    Unrealized         Fair 
($ in millions)                                            Cost          Gains         Losses          Value 
-------------------------------------------------------------------------------------------------------------
                                                                                                             
Available For Sale:                                                                                          
      Mortgage-backed securities - CMOs and                                                                  
      pass-through securities                            $ 6,654          $116          $ 57          $ 6,713
      U.S. Treasury securities and obligations                                                               
      of U.S. Government and government                                                                      
      agencies and authorities                             1,677             8            63            1,622
      Obligations of states, municipalities and                                                              
      political subdivisions                                 108             4             1              111
      Debt securities issued by foreign                                                                      
      governments                                            810            46             5              851
      All other corporate bonds                           17,904           482           260           18,126
      Other debt securities                                4,406           154            86            4,474
      Redeemable preferred stock                             171            12             8              175
-------------------------------------------------------------------------------------------------------------
           Total Available For Sale                      $31,730          $822          $480          $32,072
-------------------------------------------------------------------------------------------------------------


-------------------------------------------------------------------------------------------------------------
                                                                         Gross         Gross                 
December 31, 2000                                       Amortized      Unrealized    Unrealized         Fair 
($ in millions)                                            Cost          Gains         Losses          Value 
-------------------------------------------------------------------------------------------------------------
                                                                                                             
Available For Sale:                                                                                          
      Mortgage-backed securities - CMOs and                                                                  
      pass-through securities                            $ 5,492          $169          $ 34          $ 5,627
      U.S. Treasury securities and obligations                                                               
      of U.S. Government and government                                                                      
      agencies and authorities                             1,141            71             5            1,207
      Obligations of states, municipalities and                                                              
      political subdivisions                                 168            14             1              181
      Debt securities issued by foreign                                                                      
      governments                                            761            18            14              765
      All other corporate bonds                           14,575           269           253           14,591
      Other debt securities                                4,217            87            59            4,245
      Redeemable preferred stock                             201            14            19              196
-------------------------------------------------------------------------------------------------------------
           Total Available For Sale                      $26,555          $642          $385          $26,812
-------------------------------------------------------------------------------------------------------------

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

    Proceeds from sales of fixed maturities classified as available for sale
 were $14.1 billion, $10.8 billion and $12.6 billion in 2001, 2000 and
  1999, respectively. Gross gains of $633 million, $213 million and $200
      million and gross losses of $426 million, $432 million and $223 million in
2001, 2000 and 1999, respectively, were realized on those sales.    

     Fair values of investments in fixed maturities are based on quoted market
prices or dealer quotes or, if these are not available, discounted  
expected cash flows using market rates commensurate with the credit 
     quality and maturity of the investment. The fair value of investments for
     which a quoted market price or dealer quote are not available amounted to
      $4.6 billion and $4.8 billion at December 31, 2001 and 2000, respectively.

 The amortized cost and fair value of fixed maturities at December 31,
  2001, by contractual maturity, are shown below. Actual maturities will
      differ from contractual maturities because borrowers may have the right to
    call or prepay obligations with or without call or prepayment penalties.

                                                                [Download Table]

--------------------------------------------------------------------------------
                                                       Amortized                
($ in millions)                                          Cost         Fair Value
--------------------------------------------------------------------------------
                                                                                
Maturity:                                                                       
      Due in one year or less                           $ 1,843        $ 1,868  
      Due after 1 year through 5 years                    9,206          9,401  
      Due after 5 years through 10 years                  7,578          7,649  
      Due after 10 years                                  6,449          6,441  
--------------------------------------------------------------------------------
                                                         25,076         25,359  
--------------------------------------------------------------------------------
      Mortgage-backed securities                          6,654          6,713  
--------------------------------------------------------------------------------
           Total Maturity                               $31,730        $32,072  
--------------------------------------------------------------------------------

The Company makes investments in collateralized mortgage obligations
      (CMOs). CMOs typically have high credit quality, offer good liquidity, and
      provide a significant advantage in yield and total return compared to U.S.
     Treasury securities. The Company's investment strategy is to purchase CMO
   tranches which are protected against prepayment risk, including planned
amortization class and last cash flow tranches. Prepayment protected
      tranches are preferred because they provide stable cash flows in a variety
     of interest rate scenarios. The Company does invest in other types of CMO
tranches if a careful assessment indicates a favorable risk/return  
tradeoff. The Company does not purchase residual interests in CMOs. 

At December 31, 2001 and 2000, the Company held CMOs classified as  
  available for sale with a fair value of $4.5 billion and $4.4 billion,
   respectively. Approximately 38% and 49%, respectively, of the Company's
      CMO holdings are fully collateralized by GNMA, FNMA or FHLMC securities at
      December 31, 2001 and 2000. In addition, the Company held $2.1 billion and
$1.1 billion of GNMA, FNMA or FHLMC mortgage-backed pass-through    
securities at December 31, 2001 and 2000, respectively. All of these
securities are rated AAA.                                           

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

     The Company engages in securities lending whereby certain securities from
     its portfolio are loaned to other institutions for short periods of time.
      The Company generally receives cash collateral from the borrower, equal to
     at least the market value of the loaned securities plus accrued interest,
     and reinvests it in short-term securities. The loaned securities remain a
   recorded asset of the Company, however, the Company records a liability
 for the amount of the collateral held, representing its obligation to
      return the collateral related to these loaned securities, and reports that
     liability as part of other liabilities in the consolidated balance sheet.
      At December 31, 2001 and 2000, the Company held collateral of $2.4 billion
and $1.5 billion, respectively.                                     

Equity Securities                                                   

The cost and fair values of investments in equity securities were as
follows:                                                            

                                                        [Enlarge/Download Table]

---------------------------------------------------------------------------------------------------

Equity Securities:                                    Gross Unrealized   Gross Unrealized     Fair 
($ in millions)                                Cost         Gains              Losses         Value
---------------------------------------------------------------------------------------------------
                                                                                                   
December 31, 2001                                                                                  
      Common stocks                            $ 96          $11                 $ 6          $101 
      Non-redeemable preferred stocks           375            8                  12           371 
---------------------------------------------------------------------------------------------------
           Total Equity Securities             $471          $19                 $18          $472 
---------------------------------------------------------------------------------------------------
December 31, 2000                                                                                  
      Common stocks                            $139          $11                 $25          $125 
      Non-redeemable preferred stocks           492            7                  32           467 
---------------------------------------------------------------------------------------------------
           Total Equity Securities             $631          $18                 $57          $592 
---------------------------------------------------------------------------------------------------

    Proceeds from sales of equity securities were $112 million, $397 million
     and $100 million in 2001, 2000 and 1999, respectively. Gross gains of $10
   million, $107 million and $15 million and gross losses of $109 million,
 $16 million and $8 million in 2001, 2000 and 1999, respectively, were
realized on those sales.                                            

Mortgage Loans and Real Estate                                      

      At December 31, 2001 and 2000, the Company's mortgage loan and real estate
portfolios consisted of the following:                              

                                                                [Download Table]

--------------------------------------------------------------------------------
($ in millions)                                               2001          2000
--------------------------------------------------------------------------------
                                                                                
Current Mortgage Loans                                      $1,976        $2,144
Underperforming Mortgage Loans                                  19            43
--------------------------------------------------------------------------------
      Total Mortgage Loans                                   1,995         2,187
--------------------------------------------------------------------------------
Real Estate - Foreclosed                                        42            18
Real Estate - Investment                                        13            13
--------------------------------------------------------------------------------
      Total Real Estate                                         55            31
--------------------------------------------------------------------------------
      Total Mortgage Loans and Real Estate                  $2,050        $2,218
================================================================================

Underperforming mortgage loans include delinquent mortgage loans over 90 days   
past due, loans in the process of foreclosure and loans modified at interest    
rates below market.                                                             

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

     Aggregate annual maturities on mortgage loans at December 31, 2001 are as
follows:                                                            

                                                                [Download Table]

--------------------------------------------------------------------------------
Year Ending December 31,                                                        
($ in millions)                                                                 
--------------------------------------------------------------------------------
                                                                                
2002                                                                      $  139
2003                                                                         174
2004                                                                         133
2005                                                                         132
2006                                                                         206
Thereafter                                                                 1,211
--------------------------------------------------------------------------------
Total                                                                     $1,995
================================================================================

Trading Securities                                                  

      Trading securities of the Company are held in Tribeca Investments LLC. See
Note 11.                                                            

   The Company's trading portfolio investments and related liabilities are
      normally held for periods less than six months. Therefore, expected future
      cash flows for these assets and liabilities are expected to be realized in
less than one year.                                                 

Other invested assets                                               

Other invested assets are composed of the following:                

                                                                [Download Table]

--------------------------------------------------------------------------------
($ in millions)                                              2001           2000
--------------------------------------------------------------------------------
                                                                                
Investment in Citigroup preferred stock                    $  987         $  987
Partnership investments                                       949            807
Real estate joint ventures                                    520            535
Other                                                          29             27
--------------------------------------------------------------------------------
Total                                                      $2,485         $2,356
--------------------------------------------------------------------------------

Concentrations                                                      

     At December 31, 2001 and 2000, the Company had an investment in Citigroup
Preferred Stock of $987 million. See Note 13.                       

The Company maintains a short-term investment pool for its insurance
affiliates in which the Company also participates. See Note 13.     

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

     The Company had concentrations of investments, primarily fixed maturities
at fair value, in the following industries:                         

                                                                [Download Table]

--------------------------------------------------------------------------------
($ in millions)                                          2001               2000
--------------------------------------------------------------------------------
                                                                                
Electric Utilities                                     $3,883             $2,244
Banking                                                 1,944              2,078
Finance                                                 1,633              1,836
--------------------------------------------------------------------------------

The Company held investments in foreign banks in the amount of $954 
   million and $1,082 million at December 31, 2001 and 2000, respectively,
which are included in the table above. Below investment grade assets
     included in the categories of the preceding table totaled $401 million in
2001 and $214 million in 2000.                                      

   Included in fixed maturities are below investment grade assets totaling
      $2.3 billion and $2.0 billion at December 31, 2001 and 2000, respectively.
     The Company defines its below investment grade assets as those securities
      rated Ba1 (or its equivalent) or below by external rating agencies, or the
     equivalent by internal analysts when a public rating does not exist. Such
   assets include publicly traded below investment grade bonds and certain
other privately issued bonds and notes that are classified as below 
investment grade.                                                   

                                                                [Download Table]


Included in mortgage loans were the following group concentrations:
-------------------------------------------------------------------
                                              2001             2000
-------------------------------------------------------------------
                                                                   
STATE                                                              
-----                                                              
California                                    $788             $734
New York                                       203              208
PROPERTY TYPE                                                      
------------                                                       
Agricultural                                $1,131           $1,006
Office                                         471              661
-------------------------------------------------------------------


    The Company monitors creditworthiness of counterparties to all financial
      instruments by using controls that include credit approvals, credit limits
  and other monitoring procedures. Collateral for fixed maturities often
    includes pledges of assets, including stock and other assets, guarantees
    and letters of credit. The Company's underwriting standards with respect
  to new mortgage loans generally require loan to value ratios of 75% or
less at the time of mortgage origination.                           

Non-Income Producing Investments                                    

Investments included in the consolidated balance sheets that were   
non-income producing for the preceding 12 months were insignificant.

Restructured Investments                                            

     The Company had mortgage loans and debt securities that were restructured
    at below market terms at December 31, 2001 and 2000. The balances of the
      restructured investments were insignificant. The new terms typically defer
  a portion of contract interest payments to varying future periods. The
     accrual of interest is suspended on all restructured assets, and interest
    income is reported only as payment is received. Gross interest income on
    restructured assets that would have been recorded in accordance with the
     original terms of such loans was insignificant in 2001 and 2000. Interest
      on these assets, included in net investment income, was also insignificant
in 2001 and 2000.                                                   

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

Net Investment Income                                               

                                                                [Download Table]

--------------------------------------------------------------------------------
For The Year Ended December 31,                     2001        2000        1999
($ in millions)                                                                 
--------------------------------------------------------------------------------
                                                                                
Gross Investment Income                                                         
      Fixed maturities                            $2,328      $2,061      $1,806
      Mortgage loans                                 210         223         235
      Trading                                        131         208         141
      Joint ventures and partnerships                 71         150         141
      Other, including policy loans                  218         237         287
--------------------------------------------------------------------------------
Total gross investment income                      2,958       2,879       2,610
--------------------------------------------------------------------------------
Investment expenses                                  127         149         104
--------------------------------------------------------------------------------
Net investment income                             $2,831      $2,730      $2,506
--------------------------------------------------------------------------------

Realized and Unrealized Investment Gains (Losses)                   

   Net realized investment gains (losses) for the periods were as follows:

                                                                [Download Table]

--------------------------------------------------------------------------------
For The Year Ended December 31,                        2001      2000      1999 
($ in millions)                                                                 
--------------------------------------------------------------------------------
                                                                                
Realized Investment Gains (Losses)                                              
      Fixed maturities                                $ 207     $(219)    $ (23)
      Equity securities                                 (99)       91         7 
      Mortgage loans                                      5        27        29 
      Real estate held for sale                           3        25       108 
      Other                                               9        (1)       (8)
--------------------------------------------------------------------------------
          Total realized investment gains (losses)    $ 125     $ (77)    $ 113 
--------------------------------------------------------------------------------

    Changes in net unrealized investment gains (losses) that are reported in
      accumulated other changes in equity from nonowner sources were as follows:

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------
For The Year Ended December 31,                           2001      2000        1999 
($ in millions)                                                                      
-------------------------------------------------------------------------------------
                                                                                     
Unrealized Investment Gains (Losses)                                                 
      Fixed maturities                                   $  85     $ 891     $(1,554)
      Equity securities                                     40      (132)         49 
      Other                                                (20)       13         (30)
-------------------------------------------------------------------------------------
           Total unrealized investment gains (losses)      105       772      (1,535)
-------------------------------------------------------------------------------------
      Related taxes                                         37       271        (539)
-------------------------------------------------------------------------------------
      Change in unrealized investment gains (losses)        68       501        (996)
      Balance beginning of year                            103      (398)        598 
-------------------------------------------------------------------------------------
           Balance end of year                           $ 171     $ 103     $  (398)
-------------------------------------------------------------------------------------

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

5.    REINSURANCE                                                               

    The Company uses reinsurance in order to limit losses, minimize exposure
to large risks, provide additional capacity for future growth and to
     effect business-sharing arrangements. Reinsurance is accomplished through
     various plans of reinsurance, primarily yearly renewable term coinsurance
 and modified coinsurance. The Company remains primarily liable as the
direct insurer on all risks reinsured.                              

  Since 1997 universal life business has been reinsured under an 80%/20%
     quota share reinsurance program and term life business has been reinsured
      under a 90%/10% quota share reinsurance program. Maximum retention of $2.5
    million is generally reached on policies in excess of $12.5 million. For
other plans of insurance, it is the policy of the Company to obtain 
     reinsurance for amounts above certain retention limits on individual life
 policies, which limits vary with age and underwriting classification.
      Generally, the maximum retention on an ordinary life risk is $2.5 million.
Total in-force business ceded under reinsurance contracts is $285.7 
billion and $252.5 billion at December 31, 2001 and 2000.           

   Effective July 1, 2000 the Company sold 90% of its individual long-term
     care insurance business to General Electric Capital Assurance Company and
     its subsidiary in the form of indemnity reinsurance arrangements. Written
premiums ceded per these arrangements were $233.3 million and $123.4
 million in 2001 and 2000, respectively and earned premiums ceded were
$240.1 million and $117.3 million in 2001 and 2000, respectively.   

  The Company writes workers' compensation business through its Accident
  Department. This business is ceded 100% to an affiliate, The Travelers
Indemnity Company.                                                  

     A summary of reinsurance financial data reflected within the consolidated
statements of income and balance sheets is presented below ($ in    
millions):                                                          

                                                                [Download Table]

                                              For the years ending December 31, 
Written Premiums                               2001          2000          1999 
--------------------------------------------------------------------------------
                                                                                
Direct                                      $ 2,848       $ 2,634       $ 2,274 
Assumed from:                                                                   
      Non-affiliated companies                    1            --            -- 
Ceded to:                                                                       
      Affiliated companies                     (146)         (195)         (206)
      Non-affiliated companies                 (591)         (465)         (322)
--------------------------------------------------------------------------------
Total Net Written Premiums                  $ 2,112       $ 1,974       $ 1,746 
================================================================================

Earned Premiums                                2001          2000          1999 
--------------------------------------------------------------------------------
Direct                                      $ 2,879       $ 2,644       $ 2,248 
Assumed from:                                                                   
      Non-affiliated companies                    1            --            -- 
Ceded to:                                                                       
      Affiliated companies                     (180)         (216)         (193)
      Non-affiliated companies                 (598)         (462)         (327)
================================================================================
Total Net Earned Premiums                   $ 2,102       $ 1,966       $ 1,728 
================================================================================

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

  Reinsurance recoverables at December 31, 2001 and 2000 include amounts
      recoverable on unpaid and paid losses and were as follows ($ in millions):

                                                                [Download Table]

Reinsurance Recoverables                                      2001          2000
--------------------------------------------------------------------------------
                                                                                
Life and Accident and Health Business:                                          
      Non-affiliated companies                              $2,282        $2,024
Property-Casualty Business:                                                     
      Affiliated companies                                   1,881         1,953
--------------------------------------------------------------------------------
Total Reinsurance Recoverables                              $4,163        $3,977
================================================================================

 Reinsurance recoverables include $1,060 million and $820 million from
     General Electric Capital Assurance Company, and also include $500 million
      and $539 million, from The Metropolitan Life Insurance Company at December
31, 2001 and 2000, respectively.                                    

6.    DEPOSIT FUNDS AND RESERVES                                                

  At December 31, 2001 and 2000, the Company had $34.1 billion and $29.7
    billion of life and annuity deposit funds and reserves, respectively. Of
that total, $19.1 billion and $16.4 billion is not subject to       
 discretionary withdrawal based on contract terms. The remaining $15.0
billion and $13.3 billion is for life and annuity products that are 
      subject to discretionary withdrawal by the contractholder. Included in the
    amounts that are subject to discretionary withdrawal is $4.2 billion and
$2.9 billion of liabilities that are surrenderable with market value
      adjustments. Also included are an additional $5.0 billion and $4.9 billion
     of life insurance and individual annuity liabilities which are subject to
   discretionary withdrawals, and have an average surrender charge of 4.7%
    and 4.5%, respectively. In the payout phase, these funds are credited at
     significantly reduced interest rates. The remaining $5.8 billion and $5.5
    billion of liabilities are surrenderable without charge. More than 10.2%
    and 10.5% of these relate to individual life products for 2001 and 2000,
respectively. These risks would have to be underwritten again if    
transferred to another carrier, which is considered a significant   
deterrent against withdrawal by long-term policyholders. Insurance  
    liabilities that are surrendered or withdrawn are reduced by outstanding
policy loans and related accrued interest prior to payout.          

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

7.    FEDERAL INCOME TAXES                                                      

Effective Tax Rate                                                  

                                                                [Download Table]

($ in millions)                                                                 
--------------------------------------------------------------------------------
For the year ended December 31,                 2001         2000         1999  
--------------------------------------------------------------------------------
                                                                                
Income Before Federal Income Taxes           $ 1,911      $ 1,654      $ 1,592  
Statutory Tax Rate                                35%          35%          35% 
--------------------------------------------------------------------------------
Expected Federal Income Taxes                    669          579          557  
Tax Effect of:                                                                  
      Non-taxable investment income              (20)         (19)         (19) 
      Other, net                                 (19)          (9)           7  
--------------------------------------------------------------------------------
Federal Income Taxes                         $   630      $   551      $   545  
================================================================================
Effective Tax Rate                                33%          33%          34% 
--------------------------------------------------------------------------------

Composition of Federal Income Taxes                                 

                                                                [Download Table]
                                                                                
Current:                                                                        
      United States                          $ 424          $ 429          $ 377
      Foreign                                   47             33             32
--------------------------------------------------------------------------------
      Total                                    471            462            409
--------------------------------------------------------------------------------
Deferred:                                                                       
      United States                            166             96            143
      Foreign                                  (7)            (7)            (7)
--------------------------------------------------------------------------------
      Total                                    159             89            136
--------------------------------------------------------------------------------
Federal Income Taxes                         $ 630          $ 551          $ 545
================================================================================

  Additional tax benefits attributable to employee stock plans allocated
   directly to shareholder's equity for the years ended December 31, 2001,
      2000 and 1999 were $21 million, $24 million and $17 million, respectively.

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

The net deferred tax liabilities at December 31, 2001 and 2000 were 
comprised of the tax effects of temporary differences related to the
following assets and liabilities:                                   

                                                        [Enlarge/Download Table]

---------------------------------------------------------------------------------------
($ in millions)                                                       2001        2000 
---------------------------------------------------------------------------------------
                                                                                       
Deferred Tax Assets:                                                                   
      Benefit, reinsurance and other reserves                       $  539     $   667 
      Operating lease reserves                                          62          66 
      Employee benefits                                                104         102 
      Other                                                            158         139 
---------------------------------------------------------------------------------------
           Total                                                       863         974 
---------------------------------------------------------------------------------------
Deferred Tax Liabilities:                                                              
      Deferred acquisition costs and value of insurance in force      (968)       (843)
      Investments, net                                                (215)       (308)
      Other                                                            (89)       (107)
---------------------------------------------------------------------------------------
           Total                                                    (1,272)     (1,258)
---------------------------------------------------------------------------------------
Net Deferred Tax Liability                                          $ (409)    $  (284)
---------------------------------------------------------------------------------------

The Company and its life insurance subsidiaries file a consolidated 
 federal income tax return. Federal income taxes are allocated to each
    member of the consolidated group on a separate return basis adjusted for
credits and other amounts required by the consolidation process. Any
      resulting liability will be paid currently to the Company. Any credits for
      losses will be paid by the Company to the extent that such credits are for
   tax benefits that have been utilized in the consolidated federal income
tax return.                                                         

At December 31, 2001, the Company had no ordinary or capital loss   
carryforwards.                                                      

   The policyholders' surplus account, which arose under prior tax law, is
generally that portion of the gain from operations that has not been
     subjected to tax, plus certain deductions. The balance of this account is
 approximately $932 million. Income taxes are not provided for on this
      amount because under current U.S. tax rules such taxes will become payable
   only to the extent such amounts are distributed as a dividend or exceed
limits prescribed by federal law. Distributions are not currently   
  contemplated from this account. At current rates the maximum amount of
such tax would be approximately $326 million.                       

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

8.    SHAREHOLDER'S EQUITY                                                      

Shareholder's Equity and Dividend Availability                      

The Company's statutory net income, which includes the statutory net
    income of all insurance subsidiaries, was $330 million, $981 million and
$890 million for the years ended December 31, 2001, 2000 and 1999,  
respectively. The Company's statutory capital and surplus was $5.09 
  billion and $5.16 billion at December 31, 2001 and 2000, respectively.

      Effective January 1, 2001, the Company began preparing its statutory basis
financial statements in accordance with the National Association of 
 Insurance Commissioners' Accounting Practices and Procedures Manual -
      version effective January 1, 2001, subject to any deviations prescribed or
    permitted by its domicilary insurance commissioners (see Note 1, Summary
of Significant Accounting Policies, Permitted Statutory Accounting  
      Practices). The impact of this change on statutory capital and surplus was
  not significant. The impact of this change on statutory net income was
   $119 million, related to recording equity method investment earnings as
unrealized gains versus net investment income.                      

    The Company is currently subject to various regulatory restrictions that
    limit the maximum amount of dividends available to be paid to its parent
    without prior approval of insurance regulatory authorities. A maximum of
    $586 million is available by the end of the year 2002 for such dividends
    without prior approval of the State of Connecticut Insurance Department,
  depending upon the amount and timing of the payments. The Company paid
      dividends of $472 million, $860 million and $550 million in 2001, 2000 and
1999, respectively.                                                 

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

8. SHAREHOLDER'S EQUITY (continued)                                             

Accumulated Other Changes in Equity from Nonowner Sources, Net of Tax           

Changes in each component of Accumulated Other Changes in Equity from Nonowner  
Sources were as follows:                                                        

                                                        [Enlarge/Download Table]

                                                      Net Unrealized                                                Accumulated     
                                                      Gain (Loss) On      Foreign Currency    Derivative            Other Changes in
                                                      Investment          Translation         Instruments And       Equity from     
($ in millions)                                       Securities          Adjustments         Hedging Activities    Nonowner Sources
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
Balance, January 1, 1999                                  $ 607                $ (9)                  $ --                $ 598     
Unrealized losses on investment securities,                                                                                         
   net of tax of $(576)                                    (923)                 --                     --                 (923)    
Less:  reclassification adjustment for gains                                                                                        
   included in net income, net of tax of $40                (73)                 --                     --                  (73)    
------------------------------------------------------------------------------------------------------------------------------------
Period change                                              (996)                 --                     --                 (996)    
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                                 (389)                 (9)                    --                 (398)    
Unrealized gains on investment securities,                                                                                          
   net of tax of $297                                       451                  --                     --                  451     
Less:  reclassification adjustment for losses                                                                                       
   included in net income, net of tax of $(27)               50                  --                     --                   50     
Foreign currency translation adjustment, net                                                                                        
   of tax of $1                                              --                   1                     --                    1     
------------------------------------------------------------------------------------------------------------------------------------
Period change                                               501                   1                     --                  502     
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                                  112                  (8)                    --                  104     
Cumulative effect of change in accounting                                                                                           
   for derivative instruments and hedging                                                                                           
   activities, net of tax of $(16)                           --                  --                    (29)                 (29)    
Unrealized gain on investment securities,                                                                                           
   net of tax of $80                                        149                  --                     --                  149     
Less:  reclassification adjustment for gains                                                                                        
   included in net income, net of tax of $44                (81)                 --                     --                  (81)    
Foreign currency translation adjustment, net                                                                                        
   of tax of $(3)                                            --                  (5)                    --                   (5)    
Derivative instrument hedging activity                                                                                              
   losses, net of tax of $(35)                               --                  --                    (64)                 (64)    
------------------------------------------------------------------------------------------------------------------------------------
Period change                                                68                  (5)                   (93)                 (30)    
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001                                $ 180               $ (13)                  $(93)               $  74     
------------------------------------------------------------------------------------------------------------------------------------

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

9.    BENEFIT PLANS                                                             

Pension and Other Postretirement Benefits                           

    The Company participates in a qualified, noncontributory defined benefit
  pension plan sponsored by Citigroup. In addition, the Company provides
     certain other postretirement benefits to retired employees through a plan
   sponsored by TPC. (See Note 16). The Company's share of net expense for
the qualified pension and other postretirement benefit plans was not
significant for 2001, 2000 and 1999.                                

401(k) Savings Plan                                                 

    Substantially all of the Company's employees are eligible to participate
      in a 401(k) savings plan sponsored by Citigroup. The Company's expenses in
      connection with the 401(k) savings plan were not significant in 2001, 2000
and 1999. See Note 13.                                              

10.   LEASES                                                                    

   Most leasing functions for TPC and its subsidiaries are administered by
    the property casualty affiliates of the Company. Rent expense related to
   all leases is shared by the companies on a cost allocation method based
generally on estimated usage by department. Net rent expense was $26
million, $26 million, and $30 million in 2001, 2000 and 1999,       
respectively.                                                       

                                                                [Download Table]

--------------------------------------------------------------------------------
Year Ending December 31,                                       Minimum Operating
($ in millions)                                                 Rental Payments 
--------------------------------------------------------------------------------
                                                                                
2002                                                                  $ 46      
2003                                                                    47      
2004                                                                    44      
2005                                                                    41      
2006                                                                    43      
Thereafter                                                             220      
--------------------------------------------------------------------------------
Total Rental Payments                                                 $441      
================================================================================

     Future sublease rental income of approximately $91 million will partially
     offset these commitments. Also, the Company will be reimbursed for 50% of
  the rental expense for a particular lease totaling $167 million, by an
 affiliate. Minimum future capital lease payments are not significant.

     The Company is reimbursed for use of furniture and equipment through cost
sharing agreements by its affiliates.                               

See Note 16 for additional information about lease arrangements.    

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

11.   DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS  

Derivative Financial Instruments                                    

  The Company uses derivative financial instruments, including financial
 futures contracts, interest rate swaps, currency swaps, equity swaps,
     options and forward contracts, as a means of hedging exposure to interest
      rate changes, equity price changes and foreign currency risk. The Company,
  through Tribeca Investments LLC, a subsidiary that is a broker-dealer,
holds and issues derivative instruments for trading purposes.       

      The Company uses exchange traded financial futures contracts to manage its
     exposure to changes in interest rates that arise from the sale of certain
    insurance and investment products, or the need to reinvest proceeds from
    the sale or maturity of investments. To hedge against adverse changes in
   interest rates, the Company enters long or short positions in financial
      futures contracts, which offset asset price changes resulting from changes
      in market interest rates until an investment is purchased, or a product is
     sold. Futures contracts are commitments to buy or sell at a future date a
   financial instrument, commodity, or currency at a contracted price, and
may be settled in cash or through delivery.                         

      The Company uses equity option contracts to manage its exposure to changes
 in equity market prices that arise from the sale of certain insurance
   products. To hedge against adverse changes in the equity market prices,
   the Company enters long positions in equity option contracts with major
     financial institutions. These contracts allow the Company, for a fee, the
 right to receive a payment if the Standard and Poor's 500 Index falls
below agreed upon strike prices.                                    

Currency option contracts are used on an ongoing basis to hedge the 
  Company's exposure to foreign currency exchange rates that result from
the Company's direct foreign currency investments. To hedge against 
     adverse changes in exchange rates, the Company enters contracts that give
     it the right, but not the obligation, to sell the foreign currency within
  a limited time at a contracted price that may also be settled in cash,
based on differentials in the foreign exchange rate. These contracts
cannot be settled prior to maturity.                                

The Company enters into interest rate swaps in connection with other
    financial instruments to provide greater risk diversification and better
match assets and liabilities. Under interest rate swaps, the Company
agrees with other parties to exchange, at specified intervals, the  
difference between fixed rate and floating rate interest amounts    
    calculated by reference to an agreed upon notional principal amount. The
   Company also enters into basis swaps in which both legs of the swap are
      floating with each other based on a different index. Generally, no cash is
      exchanged at the outset of the contract and no principal payments are made
     by either party. A single net payment is usually made by one counterparty
at each due date.                                                   

     The Company enters into currency swaps in connection with other financial
instruments to provide greater risk diversification and better match
      assets purchased in U.S. Dollars with a corresponding liability originated
      in a foreign currency. Under currency swaps, the Company agrees with other
  parties to exchange, at specified intervals, foreign currency for U.S.
    Dollars based upon interest amounts calculated by reference to an agreed
      upon notional principal amount. Generally, there is an exchange of foreign
currency for U.S. Dollars at the outset of the contract based upon  
      prevailing foreign exchange rates. Swap agreements are not exchange traded
so they are subject to the risk of default by the counterparty.     

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

 Forward contracts are used on an ongoing basis to hedge the Company's
exposure to foreign currency exchange rates that result from the net
     investment in the Company's Canadian Operations as well as direct foreign
     currency investments. To hedge against adverse changes in exchange rates,
   the Company enters into contracts to exchange foreign currency for U.S.
Dollars with major financial institutions. These contracts cannot be
     settled prior to maturity. At the maturity date the Company must purchase
the foreign currency necessary to settle the contracts.             

The Company monitors the creditworthiness of counterparties to these
financial instruments by using criteria of acceptable risk that are 
consistent with on-balance sheet financial instruments. The controls
    include credit approvals, credit limits and other monitoring procedures.

The following table summarizes certain information related to the   
Company's hedging activities for the year ended December 31, 2001:  

                                                                [Download Table]

                                                                    Year Ended  
(in millions)                                                       December 31,
                                                                    2001        
--------------------------------------------------------------------------------
                                                                                
Hedge ineffectiveness recognized                                                
  related to fair value hedges                                      $ (4.1)     
Hedge ineffectiveness recognized                                                
  related to cash flow hedges                                         (6.2)     
Cash flow transaction amount                                                    
 expected to be reclassified from                                               
 accumulated other changes in                                                   
 equity from nonowner sources into                                              
 pretax earnings within twelve                                                  
 months from 12/31/01                                               (110.0)     
Net gain recorded in accumulated                                                
 other changes in equity from                                                   
 nonowner sources related to net                                       0.8      
 investment hedges                                                              
--------------------------------------------------------------------------------

During the year ended December 31, 2001 there were no discontinued  
forecasted transactions.                                            

In 2000, these derivative financial instruments were treated as     
off-balance sheet instruments. Financial instruments with           
      off-balance sheet risk involve, to varying degrees, elements of credit and
    market risk in excess of the amount recognized in the balance sheet. The
   contract or notional amounts of these instruments reflect the extent of
      involvement the Company has in a particular class of financial instrument.
    However, the maximum loss of cash flow associated with these instruments
    can be less than these amounts. For interest rate swaps, currency swaps,
      equity swaps, options and forward contracts, credit risk is limited to the
     amount that it would cost the Company to replace the contracts. Financial
    futures contracts and purchased listed option contracts have very little
credit risk since organized exchanges are the counterparties.       

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

Financial Instruments with Off-Balance Sheet Risk                   

   In the normal course of business, the Company issues fixed and variable
rate loan commitments and has unfunded commitments to non-affiliated
    partnerships. The off-balance sheet risk of fixed and variable rate loan
      commitments was not significant at December 31, 2001 and 2000. The Company
  had unfunded commitments of $525.1 million and $491.2 million to these
partnerships at December 31, 2001 and 2000, respectively.           

Fair Value of Certain Financial Instruments                         

      The Company uses various financial instruments in the normal course of its
business. Certain insurance contracts are excluded by Statement of  
   Financial Accounting Standards No. 107, "Disclosure about Fair Value of
 Financial Instruments," and therefore are not included in the amounts
discussed.                                                          

At December 31, 2001 and 2000, investments in fixed maturities had a
carrying value and a fair value of $32.1 billion and $26.8 billion, 
respectively. See Notes 1 and 4.                                    

     At December 31, 2001, mortgage loans had a carrying value of $2.0 billion
      and a fair value of $2.1 billion and at year-end 2000 had a carrying value
of $2.2 billion and a fair value of $2.2 billion. In estimating fair
     value, the Company used interest rates reflecting the current real estate
financing market.                                                   

    Included in other invested assets are 987 shares of Citigroup Cumulative
     Preferred Stock Series YY carried at cost of $987 million at December 31,
      2001 and 2000. This series YY preferred stock pays cumulative dividends at
      5.321%, has a liquidation value of $1 million per share, and has perpetual
      duration, is not subject to a sinking fund or mandatory redemption but may
    be optionally redeemed by Citigroup at any time on or after December 22,
      2018. Dividends totaling $52.5 million were received during 2001, 2000 and
      1999, respectively. There is no established market for this investment and
    it is not practicable to estimate the fair value of the preferred stock.

    At December 31, 2001, contractholder funds with defined maturities had a
      carrying value of $9.5 billion and a fair value of $10.0 billion, compared
      with a carrying value and a fair value of $6.8 billion and $6.7 billion at
 December 31, 2000. The fair value of these contracts is determined by
     discounting expected cash flows at an interest rate commensurate with the
Company's credit risk and the expected timing of cash flows.        
   Contractholder funds without defined maturities had a carrying value of
 $10.6 billion and a fair value of $10.3 billion at December 31, 2001,
    compared with a carrying value of $10.1 billion and a fair value of $9.9
 billion at December 31, 2000. These contracts generally are valued at
surrender value.                                                    

The carrying values of $495 million and $588 million of financial   
    instruments classified as other assets approximated their fair values at
 December 31, 2001 and 2000, respectively. The carrying values of $1.5
 billion and $2.4 billion of financial instruments classified as other
    liabilities also approximated their fair values at December 31, 2001 and
2000, respectively. Fair value is determined using various methods, 
     including discounted cash flows, as appropriate for the various financial
instruments.                                                        

The assets of separate accounts providing a guaranteed return had a 
 carrying value and a fair value of $507 million at December 31, 2001,
compared with a carrying value and a fair value of $376 million at  
December 31, 2000. The liabilities of separate accounts providing a 
      guaranteed return had a carrying value and a fair value of $507 million at
      December 31, 2001, compared with a carrying value and a fair value of $376
million at December 31, 2000.                                       

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

  The carrying values of cash, trading securities and trading securities
    sold not yet purchased are carried at fair value. The carrying values of
  short-term securities and investment income accrued approximated their
fair values.                                                        

    The carrying value of policy loans, which have no defined maturities, is
considered to be fair value.                                        

12.   COMMITMENTS AND CONTINGENCIES                                             

Financial Instruments with Off-Balance Sheet Risk                   

  See Note 11 for a discussion of financial instruments with off-balance
sheet risk.                                                         

Litigation                                                          

In March 1997, a purported class action entitled Patterman v. The   
   Travelers, Inc., et al. was commenced in the Superior Court of Richmond
    County, Georgia, alleging, among other things, violations of the Georgia
RICO statute and other state laws by an affiliate of the Company,   
Primerica Financial Services, Inc. and certain of its affiliates.   
   Plaintiffs seek unspecified compensatory and punitive damages and other
relief. From February 1998 through April 2000, various motions for  
      transfer of the lawsuit were heard and appealed. In April 2000, the matter
was remanded to the Superior Court of Richmond County by the Georgia
     Supreme Court. Also, in April 2000 defendants moved for summary judgement
on all counts of the complaint. Discovery commenced in May 2000.    
Defendants intend to vigorously contest the litigation.             

     TIC and its subsidiaries are defendants or co-defendants in various other
    litigation matters in the normal course of business. These include civil
    actions, arbitration proceedings and other matters arising in the normal
      course of business out of activities as an insurance company, a broker and
dealer in securities or otherwise. In the opinion of the Company's  
    management, the ultimate resolution of these legal proceedings would not
     be likely to have a material adverse effect on its results of operations,
financial condition or liquidity.                                   

13.   RELATED PARTY TRANSACTIONS                                                

   Certain administrative and data processing services are provided to the
Company by its property casualty affiliates. Investment advisory and
    management services are provided to the Company by other affiliates. The
Company provides various employee benefits coverages to employees of
      certain subsidiaries of TPC. The premiums for these coverages were charged
in accordance with cost allocation procedures based upon salaries or
  census. Charges for these services are shared by the companies on cost
    allocation methods based generally on estimated usage by department. The
      amounts due from affiliates included in other assets in 2001 and 2000 were
$88.2 million and $50.0 million, respectively. See Note 16.         

     The Company maintains a short-term investment pool in which its insurance
     affiliates participate. The position of each company participating in the
     pool is calculated and adjusted daily. At December 31, 2001 and 2000, the
   pool totaled approximately $5.6 billion and $4.4 billion, respectively.
     The Company's share of the pool amounted to $2.6 billion and $1.8 billion
      at December 31, 2001 and 2000, respectively, and is included in short-term
securities in the consolidated balance sheets.                      

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

    The Company markets deferred annuity products and life insurance through
  its affiliate, Salomon Smith Barney (SSB). Annuity deposits related to
     these products were $1.5 billion, $1.8 billion, and $1.3 billion in 2001,
2000 and 1999, respectively. Life premiums were $96.5 million, $77.0
million and $60.9 million in 2001, 2000 and 1999, respectively.     

  The Company also markets individual annuity and life insurance through
 CitiStreet Retirement Services LLC, a division of CitiStreet, a joint
   venture between Citigroup and State Street Bank. Deposits received from
   CitiStreet Retirement Services, LLC were $1.6 billion, $1.8 billion and
$1.6 billion in 2001, 2000 and 1999, respectively.                  

Primerica Financial Services, Inc. (Primerica), an affiliate, is a  
distributor of products for TLA. Primerica sold $901 million, $1.03 
    billion and $903 million of individual annuities in 2001, 2000 and 1999,
respectively.                                                       

The Company markets individual annuity products through an affiliate
Citibank, N.A. (Citibank). Deposits received from Citibank were $564
million and $392 million in 2001 and 2000, respectively, and were   
insignificant in 1999.                                              

      The Company sells structured settlement annuities to its property casualty
affiliates in connection with the settlement of certain policyholder
    obligations. Such premiums and deposits were $194 million, $191 million,
and $156 million for 2001, 2000 and 1999, respectively. Reserves and
    contractholder funds related to these annuities amounted to $825 million
and $811 million in 2001 and 2000, respectively.                    

At December 31, 2001 and 2000 the Company had outstanding loaned    
  securities to SSB for $413.5 million and $234.1 million, respectively.

Included in other invested assets is a $987 million investment in   
     Citigroup preferred stock at December 31, 2001 and 2000, carried at cost.
      Dividends received on this investment were $52.5 million in 2001, 2000 and
1999.                                                               

The Company had investments in an affiliated joint venture, Tishman 
      Speyer, in the amount of $310.9 million and $355.5 million at December 31,
   2001 and 2000, respectively. Income of $65.5 million, $67.0 million and
  $109.5 million was earned on these investments in 2001, 2000 and 1999,
respectively.                                                       

      The Company also had an investment in Greenwich Street Capital Partners I,
   an affiliated private equity investment, in the amount of $21.6 million
 and $74.2 million at December 31, 2001 and 2000, respectively. Income
   (loss) of $(41.6) million, $8.1 million and $9.9 million were earned on
this investment in 2001, 2000 and 1999, respectively.               

In the ordinary course of business, the Company purchases and sells 
securities through affiliated broker-dealers. These transactions are
conducted on an arm's length basis.                                 

      Primerica Life has entered into a General Agency Agreement with Primerica,
   that provides that Primerica will be Primerica Life's general agent for
marketing all insurance of Primerica Life. In consideration of such 
      services, Primerica Life agreed to pay Primerica marketing fees of no less
than $10 million based upon U.S. gross direct premiums received by  
      Primerica Life. In each of 2001, 2000, and 1999 the fees paid by Primerica
Life were $12.5 million.                                            

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

  The Company participates in a stock option plan sponsored by Citigroup
     that provides for the granting of stock options in Citigroup common stock
to officers and other employees. To further encourage employee stock
  ownership, Citigroup introduced the WealthBuilder stock option program
during 1997 and the Citigroup Ownership Program in 2001. Under this 
     program, all employees meeting established requirements have been granted
   Citigroup stock options. During 2000 and 2001, Citigroup introduced the
Citigroup 2000 Stock Purchase Plan and Citigroup 2001 Stock Purchase
     Program for new employees, which allowed eligible employees of Citigroup,
including the Company's employees, to enter into fixed subscription 
agreements to purchase shares at the market value on the date of the
      agreements. Enrolled employees are permitted to make one purchase prior to
    the expiration date. The Company's charge to income was insignificant in
2001, 2000 and 1999.                                                

The Company also participates in the Citigroup Capital Accumulation 
    Program. Participating officers and other employees receive a restricted
     stock award in the form of Citigroup common stock. These restricted stock
     awards generally vest after a three-year period and, except under limited
circumstances, the stock can not be sold or transferred during the  
      restricted period by the participant, who is required to render service to
    the Company during the restricted period. The Company's charge to income
was insignificant in 2001, 2000 and 1999.                           

  Unearned compensation expense associated with the Citigroup restricted
 common stock grants, which represents the market value of Citigroup's
   common stock at the date of grant, is included with other assets in the
      Consolidated Balance Sheet and is recognized as a charge to income ratably
     over the vesting period. The Company's charge to income was insignificant
during 2001, 2000 and 1999.                                         

   The Company applies Accounting Principles Board Opinion No. 25 (APB 25)
    and related interpretations in accounting for stock options. Since stock
    options under the Citigroup plans are issued at fair market value on the
     date of award, no compensation cost has been recognized for these awards.
FAS 123 provides an alternative to APB 25 whereby fair values may be
     ascribed to options using a valuation model and amortized to compensation
cost over the vesting period of the options.                        

      Had the Company applied FAS 123 in accounting for Citigroup stock options,
net income would have been the pro forma amounts indicated below:   

                                                                [Download Table]

--------------------------------------------------------------------------------
Year Ended December 31,                          2001         2000         1999 
($ in millions)                                                                 
--------------------------------------------------------------------------------
                                                                                
Net income, as reported                       $ 1,272      $ 1,103      $ 1,047 
FAS 123 pro forma adjustments, after tax          (15)         (19)         (16)
--------------------------------------------------------------------------------
Net income, pro forma                         $ 1,257      $ 1,084      $ 1,031 
--------------------------------------------------------------------------------

   The assumptions used in applying FAS 123 to account for Citigroup stock
options were as follows:                                            

                                                                [Download Table]

--------------------------------------------------------------------------------
Year Ended December 31,                              2001       2000       1999 
--------------------------------------------------------------------------------
                                                                                
Expected volatility of Citigroup Stock              38.31%      41.5%      44.1%
Risk-free interest rate                              4.42%      6.23%      5.29%
--------------------------------------------------------------------------------
Expected annual dividend per Citigroup share       $ 0.92      $0.78      $0.47 
--------------------------------------------------------------------------------
Expected annual forfeiture rate                         5%         5%         5%
--------------------------------------------------------------------------------

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (continued)

14.   RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES 

The following table reconciles net income to net cash provided by   
operating activities:                                               

                                                        [Enlarge/Download Table]

---------------------------------------------------------------------------------------------------
For The Year Ended December 31,                                     2001         2000         1999 
($ in millions)                                                                                    
---------------------------------------------------------------------------------------------------
                                                                                                   
Net Income from Continuing Operations                            $ 1,281      $ 1,103      $ 1,047 
      Adjustments to reconcile net income to net cash                                              
      provided by operating activities:                                                            
           Realized (gains) losses                                  (125)          77         (113)
           Deferred federal income taxes                             159           89          136 
           Amortization of deferred policy acquisition costs         379          347          315 
           Additions to deferred policy acquisition costs           (851)        (792)        (686)
           Investment income                                        (493)        (384)        (221)
           Premium balances                                            7           20          (13)
           Insurance reserves and accrued expenses                   686          559          411 
           Other                                                     237          221           99 
---------------------------------------------------------------------------------------------------
           Net cash provided by operations                       $ 1,280      $ 1,240      $   975 
---------------------------------------------------------------------------------------------------

15.   NON-CASH INVESTING AND FINANCING ACTIVITIES                               

Significant non-cash investing and financing activities include the 
acquisition of real estate through foreclosures of mortgage loans   
amounting to $205 million in 1999. Foreclosures in 2001 and 2000    
were insignificant.                                                 

16.   SUBSEQUENT EVENTS                                                         

On February 8, 2002, TPC filed a registration statement with the    
Securities and Exchange Commission in connection with the proposed  
    offering of a minority interest in TPC. Citigroup has announced its plan
     to make a tax-free distribution of a portion of its remaining interest in
     TPC by year-end 2002. Prior to the proposed offering, the Company will be
distributed to by TPC to TPC's immediate parent company, so that the
      Company will remain an indirect wholly owned subsidiary of Citigroup after
the offering. Therefore, all retirement and post retirement plans   
   previously provided to Company employees by TPC will be administered by
 Citigroup. Prior to the offering, TIC intends to sell its home office
  buildings in Hartford, Connecticut and a building in Norcross, Georgia
    housing TPC's information systems department to TPC for $68 million. The
      company will have the right to continue to use the names "Travelers Life &
Annuity," "The Travelers Insurance Company," "The Travelers Life and
    Annuity Company," and the related names in connection with the Company's
business. Currently, TIC and TLAC share services with the property  
casualty subsidiaries of TPC. These services, which include leasing 
 arrangements, facilities management, banking and financial functions,
     benefit coverages, data processing services, a short-term investment pool
and others, will be phased out over a brief period of time if the   
transaction is completed. If the distribution does not occur, these 
services will likely continue for the foreseeable future.           

     In connection with the proposed distribution described above, on February
   27, 2002, TPC exchanged the 50,793,450 shares of Citigroup common stock
   owned by it for 2,225 shares of Citigroup's 6.767% Cumulative Preferred
 Stock, Series YYY, par value $1.00 per share and liquidation value $1
   million per share. The exchange ratio was based on the closing price of
   Citigroup's common stock on the New York Stock Exchange on February 25,
    2002. Prior to the proposed TPC offering, TPC will contribute the Series
YYY Preferred Stock to the Company.                                 

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Item 9. Changes In and Disagreements with Accountants on Accounting and         
Financial Disclosure.                                                           

None.                                                                           

PART III

Item 10. Directors and Executive Officers of the Registrant.                    

Omitted pursuant to General Instruction I(2)(c) of Form 10-K.                   

Item 11. Executive Compensation.                                                

Omitted pursuant to General Instruction I(2)(c) of Form 10-K.                   

Item 12. Security Ownership of Certain Beneficial Owners and Management.        

Omitted pursuant to General Instruction I(2)(c) of Form 10-K.                   

Item 13. Certain Relationships and Related Transactions.                        

Omitted pursuant to General Instruction I(2)(c) of Form 10-K.                   

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 PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.      

(a) Documents filed:                                                            

(1) Financial Statements. See index on page 15 of this report.      
   (2) Financial Statement Schedules. See index on page 58 of this report.
(3) Exhibits. See Exhibit Index on page 56.                         

(b) Reports on Form 8-K:                                                        

None                                                                

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 EXHIBIT INDEX

                                                                [Download Table]

Exhibit No.    Description                                                  
-----------    -----------                                                  
                                                                            
         3.    Articles of Incorporation and By-Laws                        

               a.)   Charter of The Travelers Insurance Company (the        
                     "Company"), as effective October 19, 1994, incorporated
                     by reference to Exhibit 3.01 to the Company's Quarterly
                     Report on Form 10-Q for the fiscal quarter ended       
                     September 30, 1994 (File No. 33-33691) (the "Company's 
                     September 30, 1994 10-Q").                             

               b.)   By-laws of the Company, as effective October 20, 1994, 
                     incorporated by reference to Exhibit 3.02 to the       
                     Company's September 30, 1994 10-Q.                     

         10.   Lease for office space in Hartford, Connecticut dated as of  
               April 2, 1996, by and between the Company and The Travelers  
               Indemnity Company, incorporated by reference to Exhibit 10.14
               to the Annual Report on Form 10-K of Travelers Property      
               Casualty Corp. for the fiscal year ended December 31, 1996   
               (File No. 1-14328).                                          

         21.   Subsidiaries of the Registrant:                              

                     Omitted pursuant to General Instruction I(2)(b) of Form
                     10-K.                                                  

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SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange 
Act of 1934, the registrant has duly caused this report to be signed on its     
behalf by the undersigned, thereunto duly authorized, on the 15th day of March, 
2002.                                                                           

 THE TRAVELERS INSURANCE COMPANY
(Registrant)

By: /s/ Glenn D. Lammey                                             
----------------------------                                
Glenn D. Lammey                                             
Executive Vice President,                                   
Chief Financial Officer and Chief Accounting Officer        
  (Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the 
capacities indicated on the 15th day of March, 2002.                            

Signature                    Capacity                                           

/s/ George C. Kokulis        Director and Chief Executive Officer               
-------------------------    (Principal Executive Officer)                      
(George C. Kokulis)                                                             

/s/ Glenn D. Lammey          Director, Chief Financial Officer and Chief        
-------------------------    Accounting Officer (Principal Financial Officer and
(Glenn D. Lammey)            Principal Accounting Officer)                      

/s/ William R. Hogan         Director                                           
-------------------------                                                       
(William R. Hogan)                                                              

/s/ Marla Berman Lewitus     Director                                           
-------------------------                                                       
(Marla Berman Lewitus)                                                          

Supplemental Information to be Furnished With Reports Filed Pursuant to Section 
15(d) of the Act by Registrants Which Have Not Registered Securities pursuant to
Section 12 of the Act: NONE                                                     

No Annual Report to Security Holders covering the registrant's last fiscal year 
or proxy material with respect to any meeting of security holders has been sent,
or will be sent, to security holders.                                           

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 INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                                                        [Enlarge/Download Table]

                                                                                      Page 
                                                                                           
The Travelers Insurance Company and Subsidiaries                                           

      Independent Auditors' Report                                                       * 

      Consolidated Statements of Income                                                  * 

      Consolidated Balance Sheets                                                        * 

      Consolidated Statements of Changes In Retained Earnings and                          
           Accumulated Other Changes in Equity from Nonowner Sources                     * 
      Consolidated Statements of Cash Flows                                              * 
      Notes to Consolidated Financial Statements                                         * 

Independent Auditors' Report                                                            59 

Schedule I - Summary of Investments - Other than Investments in Related Parties 2001    60 

Schedule III - Supplementary Insurance Information 1999-2001                            61 

Schedule IV - Reinsurance 1999-2001                                                     62 

All other schedules are inapplicable for this filing                            

*     See index on page 15                                                      

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Independent Auditors' Report

The Board of Directors and Shareholder                                          
The Travelers Insurance Company:                                                

Under date of January 17, 2002, except as to Note 16, which is as of February   
27, 2002,  we reported on the consolidated balance sheets of The Travelers      
Insurance Company and subsidiaries as of December 31, 2001 and 2000, and the    
related consolidated statements of income, changes in retained earnings and     
accumulated other changes in equity from nonowner sources, and cash flows for   
each of the years in the three-year period ended December 31, 2001, which are   
included in this Form 10-K. In connection with our audits of the aforementioned 
consolidated financial statements, we also audited the related financial        
statement schedules as listed in the accompanying index. These financial        
statement schedules are the responsibility of the Company's management. Our     
responsibility is to express an opinion on these financial statement schedules  
based on our audits.                                                            

In our opinion, such financial statement schedules, when considered in relation 
to the basic financial statements taken as a whole, present fairly, in all      
material respects, the information set forth therein.                           

As discussed in Note 1 to the consolidated financial statements, the Company    
changed its method of accounting for derivative instruments and hedging         
activities and for securitized financial assets in 2001.                        

/s/ KPMG LLP                                                                    

Hartford, Connecticut                                                           
January 17, 2002, except as to                                                  
Note 16, which is as of February 27, 2002                               

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE I
SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
 December 31, 2001
 ($ in millions)

                                                        [Enlarge/Download Table]

--------------------------------------------------------------------------------------------------------
Type of Investment                                                                      Amount Shown in 
                                                                   Cost        Value   Balance Sheet (1)
--------------------------------------------------------------------------------------------------------
                                                                                                        
Fixed Maturities:                                                                                       
      Bonds:                                                                                            
           U.S. Government and government agencies and                                                  
           authorities                                            $ 5,485     $ 5,447        $ 5,447    
           States, municipalities and political subdivisions          108         111            111    
           Foreign governments                                        810         851            851    
           Public utilities                                         3,249       3,280          3,280    
           Convertible bonds and bonds with warrants attached         343         353            353    
           All other corporate bonds                               21,564      21,855         21,855    
--------------------------------------------------------------------------------------------------------
                Total Bonds                                        31,559      31,897         31,897    
      Redeemable preferred stocks                                     171         175            175    
--------------------------------------------------------------------------------------------------------
           Total Fixed Maturities                                  31,730      32,072         32,072    
--------------------------------------------------------------------------------------------------------
Equity Securities:                                                                                      
      Common Stocks:                                                                                    
           Banks, trust and insurance companies                         9          10             10    
           Industrial, miscellaneous and all other (2)                 30          34             34    
--------------------------------------------------------------------------------------------------------
                Total Common Stocks                                    39          44             44    
      Nonredeemable preferred stocks                                  375         371            371    
--------------------------------------------------------------------------------------------------------
           Total Equity Securities                                    414         415            415    
--------------------------------------------------------------------------------------------------------
Mortgage Loans                                                      1,995                      1,995    
Real Estate Held For Sale                                              55                         55    
Policy Loans                                                        1,208                      1,208    
Short-Term Securities                                               3,053                      3,053    
Other Investments (3)(4)(5)                                         3,077                      3,053    
--------------------------------------------------------------------------------------------------------
           Total Investments                                      $41,532                    $41,851    
========================================================================================================

(1)   Determined in accordance with methods described in Notes 1 and 4 of the   
Notes to Consolidated Financial Statements.                         

(2)   Excludes $57 million related party investment.                            

(3)   Excludes $987 million of Citigroup Inc. preferred stock. See Note 13 of   
Notes to Consolidated Financial Statements.                         

(4)   Also excludes $325 million fair value of investment in affiliated         
partnership interests.                                              

(5)   Includes derivatives marked to market and recorded at fair value in the   
balance sheet.                                                      

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE III
 SUPPLEMENTARY INSURANCE INFORMATION
 ($ in millions)

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------------------

                                                Future                                           
                                                policy                                           
                                                benefits,                                        
                                  Deferred      losses,       Other policy                       
                                  policy        claims and    claims and               Net       
                                  acquisition   loss          benefits      Premium    investment
                                  costs         expenses (1)  payable       revenue    income    
-------------------------------------------------------------------------------------------------
                                                                                                 
                        2001                                                                     
Travelers Life & Annuity          $1,672        $33,475       $368          $  957     $2,530    
Primerica Life                     1,789          3,044        144           1,145        301    
-------------------------------------------------------------------------------------------------
Total                             $3,461        $36,519       $512          $2,102     $2,831    
=================================================================================================

                        2000                                                                     
Travelers Life & Annuity          $1,291        $29,377       $321          $  860     $2,450    
Primerica Life                     1,698          2,856        140           1,106        280    
-------------------------------------------------------------------------------------------------
Total                             $2,989        $32,233       $461          $1,966     $2,730    
=================================================================================================

                        1999                                                                     
Travelers Life & Annuity          $1,081        $26,958       $280          $  656     $2,249    
Primerica Life                     1,607          2,734        158           1,072        257    
-------------------------------------------------------------------------------------------------
Total                             $2,688        $29,692       $438          $1,728     $2,506    
=================================================================================================


--------------------------------------------------------------------------------                 

                                               Amortization                                      
                                  Benefits,    of deferred                                       
                                  claims       policy        Other                               
                                  and          acquisition   operating  Premiums                 
                                  losses (2)   costs         expenses   written                  
--------------------------------------------------------------------------------                 
                                                                                                 
                        2001                                                                     
Travelers Life & Annuity          $2,534       $171          $154       $  955                   
Primerica Life                       507        208           217        1,157                   
--------------------------------------------------------------------------------                 
Total                             $3,041       $379          $371       $2,112                   
================================================================================                 

                        2000                                                                     
Travelers Life & Annuity          $2,294       $166          $233       $  859                   
Primerica Life                       496        181           230        1,115                   
--------------------------------------------------------------------------------                 
Total                             $2,790       $347          $463       $1,974                   
================================================================================                 

                        1999                                                                     
Travelers Life & Annuity          $1,954       $127          $322       $  666                   
Primerica Life                       488        188           197        1,080                   
--------------------------------------------------------------------------------                 
Total                             $2,442       $315          $519       $1,746                   
================================================================================                 

(1)   Includes contractholder funds.                                            
(2)   Includes interest credited to contractholders.                            

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THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES

 SCHEDULE IV
 REINSURANCE
 ($ in millions)

                                                        [Enlarge/Download Table]

----------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Percentage
                                                              Ceded to          Assumed                            of amount
                                              Gross             other          from other          Net              assumed 
                                              amount          companies        companies          amount             to net 
----------------------------------------------------------------------------------------------------------------------------
                                                                                                                            
                                                        2001                                                                
Life Insurance In Force                      $510,457          $285,696          $3,636          $228,397             1.6%  
Premiums:                                                                                                                   
      Life insurance                         $  2,378          $    352          $   --          $  2,026              --   
      Accident and health insurance               321               246               1                76              --   
      Property casualty                           180               180              --                --              --   
                                             --------          --------          ------          --------             ---   
           Total Premiums                    $  2,879          $    778          $    1          $  2,102              --   
                                             ========          ========          ======          ========             ===   

                                                        2000                                                                
Life Insurance In Force                      $480,958          $252,498          $3,692          $232,152             1.6%  
Premiums:                                                                                                                   
      Life insurance                         $  2,106          $    330          $   --          $  1,776              --   
      Accident and health insurance               322               132              --               190              --   
      Property casualty                           216               216              --                --              --   
                                             --------          --------          ------          --------             ---   
           Total Premiums                    $  2,644          $    678          $   --          $  1,966              --   
                                             ========          ========          ======          ========             ===   

                                                        1999                                                                
Life Insurance In Force                      $457,541          $222,522          $3,723          $238,742             1.6%  
Premiums:                                                                                                                   
      Life insurance                         $  1,768          $    313          $   --          $  1,455              --   
      Accident and health insurance               287                14              --               273              --   
      Property casualty                           193               193              --                --              --   
                                             --------          --------          ------          --------             ---   
           Total Premiums                    $  2,248          $    520          $   --          $  1,728              --   
                                             ========          ========          ======          ========             ===   

62

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		12/22/18		50
		4/1/06		6
		1/1/03		24
Filed on:		3/15/02
		2/28/02		1
		2/27/02		17		60
		2/25/02		54
		2/8/02		3		54
		2/4/02		3		22
		1/17/02		17		60
		1/1/02		24
For Period End:		12/31/01		1		61			13F-NT,  13F-NT/A
		6/30/01		24					10-Q,  13F-NT,  13F-NT/A
		3/31/01		23					10-Q,  13F-NT,  13F-NT/A
		1/1/01		22		45
		12/31/00		3		60			10-K,  13F-NT,  13F-NT/A
		12/15/00		23
		7/1/00		4		41
		12/31/99		16		46			10-K,  13F-NT,  13F-NT/A
		1/1/99		46
		12/31/96		57					10-K405
		4/2/96		57
		10/20/94		57
		10/19/94		57
		9/30/94		57
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