Bonds are held to maturity or considered "available for sale," meaning they're held at cost until maturity or adjusted to market prices off of the income statement. They're shielded from mark-to-market net income changes because the company isn't likely to sell them. That means the losses and gains on available-for-sale bonds impact shareholder equity but not net income, and held to maturity bonds a simply held at cost. This conservative investment structure makes Travelers more stable because short-term price swings are not passed along to the balance sheet as much, which would erode the equity. Travelers' obligations aren't tied to stock fluctuations that could make the company vulnerable to funding shortfalls. During the past two years, Hartford shares have dropped 71%, twice as much as the S&P 500 Index. Shares of Progressive and Allstate ( ALL) have lost14% and 43% respectively. Travelers stock is up 11%, buoyed by its security in the face of unstable markets. Citigroup ( C) spun off Travelers in 2002 because of fears over underwriting risks in the wake of the Sept. 11 terrorist attacks. Now Travelers serves as a shining example of prudence and strong management in an industry rife with poor risk decisions. -- Reported by David MacDougall in Boston.