The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q4 2023 Earnings Presentation
27 slides from The Travelers Companies's earnings presentation, Jan 19, 2024
Slide 1: Fourth Quarter 2023 Results
FOURTH QUARTER 2023 RESULTS January 19, 2024
Slide 2: Long-Term Financial Strategy
L O N G - T E R M F I N A N C I A L S T R AT E G Y Generation of Balanced Meaningful top–tier earnings approach to and sustainable and capital rightsizing capital competitive substantially and growing book advantages in excess of value per share growth needs over time C R E AT E S H A R E H O L D E
Slide 3: Fourth Quarter 2023 Overview
FOURTH QUARTER 2023 OVERVIEW Travelers Reports Excellent Fourth Quarter 2023 Results Record Quarterly Net Income per Diluted Share of $6.99 and Return on Equity of 29.0% Record Quarterly Core Income per Diluted Share of $7.01 and Core Return on Equity of 24.0% Full Year Net Income of $2.991 billion
Slide 4: Consolidated Performance
C O N S O L I D AT E D P E R F O R M A N C E ($ in millions, except per share amounts, after-tax, except for premiums) FOURTH QUARTER FULL YEAR 2023 2022 Change 2023 2022 Change Core income $ 1,633 $ 810 NM $ 3,072 $ 2,998 2 % per diluted share $ 7.01 $ 3.40 NM $ 13.13 $ 12.42 6 % Included the follo
Slide 5: Very Strong Financial Position
V E RY S T R O N G F I N A N C I A L P O S I T I O N ($ and shares in millions, except per share amounts) December 31, December 31, 2023 2022 Capital Debt $ 8,031 $ 7,292 Common equity 1 28,050 26,458 • Continued strong capitalization to support the Company’s business operations. Total capital 1 $ 3
Slide 6: Net Investment Income
NET INVESTMENT INCOME ($ in millions, after-tax) TOTAL Fourth Quarter 2023 vs. Prior Year Quarter Commentary $609 $640 $645 • Net investment income (NII) from the long-term and $595 $557 $594 $542 $539 $505 $531 short-term fixed income portfolios increased due to a higher average yield and growth in
Slide 7: Leading Core Return on Equity at Industry-Low Volatility
LEADING CORE RETURN ON EQUITY AT INDUSTRY-LOW VOLATILITY 13.0% 10.9% 11.3% 13.7% 11.3% 11.5% 8.7% 8.8% 1.0% 7.8% 8.0% 0.2% 0.7% 1.1% 6.9% 7.1% 3.3% 0.7% 0.3% 0.7% 1.2% 0.1% 0.2% 4.9% 4.3% 4.4% 4.2% 7.5% 3.5% 6.4% 3.1% 6.6% 6.1% 5.7% 5.5% 2005 through 2019 2020 2021 2022 2023 2018 Full Year Long-term
Slide 8: Business Insurance Performance
BUSINESS INSURANCE PERFORMANCE ($ in millions) FOURTH QUARTER FULL YEAR 2023 2022 Change 2023 2022 Change Segment income $ 957 $ 725 32 % $ 2,583 $ 2,531 2 % Loss and loss adjustment expense ratio 57.7 % 60.4 % 65.3 % 62.8 % Underwriting expense ratio 28.8 29.1 29.4 29.7 Combined ratio 1 86.5 % 89.5
Slide 9: Domestic Business Insurance (ex. National Accounts)
D O M E S T I C B U S I N E S S I N S U R A N C E ( E X . N AT I O N A L A C C O U N T S ) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 12% 10% 7.8% 8% 7.1% 7.4% 6% 4% 4.8% 5.1% 4.4% 4.5% 4.7% 2% - ($ in millions) 1Q’22 2Q
Slide 10: Domestic Business Insurance: Select Accounts
DOMESTIC BUSINESS INSURANCE: SELECT ACCOUNTS I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 12% 10% 8% 6% 4.1% 4% 3.1% 3.3% 3.2% 2.9% 2.9% 2.9% 1.9% 2% - ($ in millions) 1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 2Q’23 3Q’23 4Q’23 Retent
Slide 11: Domestic Business Insurance: Middle Market
DOMESTIC BUSINESS INSURANCE: MIDDLE MARKET I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 12% 10% 8% 7.1% 6.7% 5.9% 6% 4.4% 4% 4.6% 4.6% 4.3% 4.0% 2% - ($ in millions) 1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 2Q’23 3Q’23 4Q’23 Retentio
Slide 12: Bond & Specialty Insurance Performance
B O N D & S P E C I A LT Y I N S U R A N C E P E R F O R M A N C E ($ in millions) FOURTH QUARTER FULL YEAR 2023 2022 Change 2023 2022 Change Segment income $ 240 $ 221 9 % $ 942 $ 908 4 % Loss and loss adjustment expense ratio 41.1 % 41.3 % 40.1 % 39.9 % Underwriting expense ratio 36.2 35.6 36.8 35
Slide 13: Domestic Bond & Specialty Insurance
D O M E S T I C B O N D & S P E C I A LT Y I N S U R A N C E ($ in millions) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Management Liability 1 Retention 85% 88% 89% 90% 89% 91% 91% 90% Renewal premium change 2 12.4% 9.9% 9.6% 6.6% 5.3% 3.6% 3.9% 2.1% N
Slide 14: Personal Insurance Performance
PERSONAL INSURANCE PERFORMANCE ($ in millions) FOURTH QUARTER FULL YEAR 2023 2022 Change 2023 2022 Change Segment income (loss) $ 520 $ (61) NM $ (128) $ (140) 9% Loss and loss adjustment expense ratio 63.4 % 81.0 % 80.4 % 79.8 % Underwriting expense ratio 23.4 24.3 24.4 25.1 Combined ratio 1 86.8 %
Slide 15: Personal Insurance Performance
PERSONAL INSURANCE PERFORMANCE FOURTH QUARTER FULL YEAR 2023 2022 Change 2023 2022 Change Automobile Loss and loss adjustment ratio 82.4 % 89.3 % 82.8 % 84.2 % Underwriting expense ratio 21.2 22.1 22.2 22.8 Combined ratio 1 103.6 % 111.4 % 7.8 pts 105.0 % 107.0 % 2.0 pts Net unfavorable prior year r
Slide 16: Domestic Personal Insurance
DOMESTIC PERSONAL INSURANCE ($ in millions) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Automobile Retention 1 85% 84% 84% 83% 82% 82% 82% 82% 2 Renewal premium change 4.1% 7.3% 9.5% 12.9% 15.6% 17.5% 18.2% 16.7% Policies in force (in thousands) 2,972 3
Slide 17: Total International Insurance
TO TA L I N T E R N AT I O N A L I N S U R A N C E ($ in millions) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q International 1 Retention 81% 85% 80% 84% 84% 85% 84% 84% Renewal premium change 2 10.3% 9.8% 9.8% 7.7% 7.6% 8.7% 6.2% 4.4% New business $83 $
Slide 18: Appendix
APPENDIX 18
Slide 19: Deliberate and Disciplined Execution
D E L I B E R AT E A N D D I S C I P L I N E D E X E C U T I O N Accelerating NWP Growth Consistently Strong Underlying Profitability3 Improving Expense Ratio $40.2B AVG = 31.7% 93.0% AVG = 91.4% 89.5% $22.4B 28.1% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2012 2013 2014 2015 2016
Slide 20: Balanced Approach to Capital Management
B A L A N C E D A P P R O A C H TO C A P I TA L M A N A G E M E N T Adjusted Book Value 1 Per Share Dividends Per Share $3.93 $1.01 $122.90 Cumulative Share Buybacks ( $ i n b i l l i o n s ) $50 $41.1 $36.21 $40 $30 $20 $10 $0 20 1 Excludes net unrealized investment gains (losses), net of tax, incl
Slide 21: Technology Investments
TECHNOLOGY INVESTMENTS $ • Meaningfully increased our overall technology spend over the last six years Strategic • Significantly reduced our expense ratio at the same Investments time through our strategic focus on optimizing Routine but productivity and efficiency Necessary • Improved the mix of ou
Slide 22: 2024 Catastrophe Reinsurance Effective 1/1/24
2 0 2 4 C ATA S T R O P H E R E I N S U R A N C E E F F E C T I V E 1 / 1 / 2 4 Corporate Catastrophe Excess-of-Loss Reinsurance Treaty (Renewal) Covers the accumulation of certain property losses arising from one or In addition to the Corporate Catastrophe Excess-of-Loss multiple occurrences. This
Slide 23: Travelers' 10-Year History of Catastrophe Losses by Quarter
T R AV E L E R S ’ 1 0 - Y E A R H I S TO RY O F C ATA S T R O P H E L O S S E S 1 B Y Q U A RT E R 60.0% 40.1% 40.0% 24.1% 22.4% 20.0% 13.4% 0.0% 1Q 2Q 3Q 4Q Percentage of calendar year CAT activity attributed to each quarter (10-year average) Over the past 10 years, the second quarter is on averag
Slide 24: Well-Defined and Consistent Investment Philosophy
WELL-DEFINED AND CONSISTENT INVESTMENT PHILOSOPHY ($ in millions, as of December 31, 2023, unless otherwise noted) Investment Income reliable contributor to results Total Investments Fixed Income Portfolio Rating % % Fixed Maturities by Rating2 Fixed Non-Fixed Corporates1 A2 $ 34,109 38% Aaa 47% Inc
Slide 25: Explanatory Note
E X P L A N ATO RY N O T E This presentation contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as
Slide 26: Disclosure
DISCLOSURE In this presentation, we may refer to some non-GAAP financial measures. For a reconciliation of these measures to the most comparable GAAP measures and a glossary of financial measures, we refer you to the press release and financial supplement that we have made available in connection wi
Slide 27: investor.travelers.com
investor.travelers.com 27
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