The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q4 2012 Earnings Presentation
21 slides from The Travelers Companies's earnings presentation, Jan 22, 2013
Slide 1: Fourth Quarter and Full Year 2012 Results
The Travelers Companies, Inc. Fourth Quarter and Full Year 2012 Results January 22, 2013 1
Slide 2: Long-Term Financial Strategy
Long-Term Financial Strategy Balanced Generation of Meaningful approach to top tier earnings and rightsizing capital and capital sustainable and substantially in competitive growing book excess of growth advantages value per share needs over time Create Shareholder Value Objective: Mid-Teens ROE Ove
Slide 3: Fourth Quarter and Full Year 2012 Overview
Fourth Quarter and Full Year 2012 Overview Fourth quarter net and operating income per diluted share of $0.78 and $0.72, respectively, compared to $1.51 and $1.48 in the prior year quarter • Net and operating income of $304 million and $278 million • Return on equity and operating return on equity o
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax) Fourth Quarter Full Year Fourth Quarter Full Year 2012 2011 Change 2012 2011 Change Operating income $ 278 $ 609 (54) % $ 2,441 $ 1,390 76 % per diluted share $ 0.72 $ 1.48 (51) % $ 6.21 $ 3.28 89 % Included the following
Slide 5: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) December 31, December 31, 2012 2011 Capital • At or above target levels for all rating agencies Debt $ 6,350 $ 6,605 Common equity 1 22,302 21,606 • Repurchased $1.450 billion of common shares, and 1 Total capital $
Slide 6: Net Investment Income
Net Investment Income ($ in millions, after-tax) Total Commentary 4Q 2012 $622 • Net investment income from the long-term fixed income $606 $593 $589 $578 $583 $579 portfolio declined modestly from the prior year quarter due to $561 $541 $556 lower reinvestment rates, as expected ` • Short-term port
Slide 7: Components of Operating Return on Equity
Components of Operating Return on Equity 9.6% 17.9% 17.7% 12.4% 14.0% 12.5% 6.1% 11.0% 11.1% 11.0% 10.6% 1.4% 1.6% 1.4% 9.4% 9.3% 0.8% 0.7% 8.1% 9.0% 0.5% 0.9% 0.9% 8.2% 0.9% 1.3% 0.4% 0.9% 0.1% 0.1% 6.8% 6.7% 5.8% 8.7% 8.9% 8.7% 8.3% 8.3% 8.3% 8.0% 8.1% 4.3% 3.2% 1.6% (0.6%) (0.1%) (0.6%) (1.0%) (2
Slide 8: Business Insurance
Business Insurance Performance ($ in millions) Fourth Quarter Full Year Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Operating income $ 326 $ 445 (27) % $ 1,843 $ 1,354 36 % Loss and loss adjustment ratio 72.2 % 64.1 % 65.9 % 73.1 % Underw riting expense ratio 31.3 31.7 31.5 31.6 GAA
Slide 9: Business Insurance (Ex. National Accounts)
Business Insurance (Ex. National Accounts) Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 10% Renewal Premium Change1 % Renewal Rate Change % 2 8% • Exposure/Other % 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 ($ in millions) Retention 84
Slide 10: Business Insurance: Select Accounts
Business Insurance: Select Accounts Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 12% Renewal Premium Change1 % 10% Renewal Rate Change % 2 • Exposure/Other % 8% 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 ($ in millions) Retention 81% 8
Slide 11: Business Insurance: Commercial Accounts
Business Insurance: Commercial Accounts Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 12% Renewal Premium Change1 % 10% Renewal Rate Change % 2 • Exposure/Other % 8% 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 ($ in millions) Retention 8
Slide 12: Business Insurance: Other Business Insurance
Business Insurance: Other Business Insurance1 Illustrative Business Statistics Renewal Premium Change (RPC)2 Rate vs. Exposure/Other 10% Renewal Premium Change2 % Renewal Rate Change % 3 8% • Exposure/Other % 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 ($ in millions) Retention
Slide 13: Financial, Professional & International Insurance
Financial, Professional & International Insurance Performance ($ in millions) Fourth Quarter Full Year Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Operating income $ 131 $ 152 (14) % $ 642 $ 647 (1) % Loss and loss adjustment ratio 46.6 % 47.3 % 42.8 % 46.4 % Underw riting expense r
Slide 14: Financial, Professional & International Insurance
Financial, Professional & International Insurance ($ in millions) Illustrative Business Statistics 2011 2012 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Surety Gross written premium $235 $235 $250 $209 $202 $223 $219 $194 Management Liability1 Retention 84% 85% 87% 85% 87% 86% 85% 85% Renewal premium change 2 -% 0.3% 0
Slide 15: Personal Insurance
Personal Insurance Performance ($ in millions) Fourth Quarter Full Year Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Operating income (loss) $ (114) $ 77 NM % $ 217 $ (332) NM % Loss and loss adjustment ratio 85.0 % 69.9 % 72.3 % 83.5 % Underw riting expense ratio 30.2 29.9 29.6 30.1
Slide 16: Personal Insurance: Agency Automobile
Personal Insurance: Agency Automobile1 Performance Fourth Quarter Full Year 2012 2011 Change 2012 2011 Change Loss and loss adjustment ratio 89.0 % 82.9 % 77.4 % 77.3 % Underw riting expense ratio 26.5 26.0 25.7 26.1 GAAP combined ratio2 115.5 % 108.9 % (6.6) pts 103.1 % 103.4 % 0.3 pts Net unfavora
Slide 17: Personal Insurance: Agency Homeowners & Other
Personal Insurance: Agency Homeowners & Other1 Performance Fourth Quarter Full Year 2012 2011 Change 2012 2011 Change Loss and loss adjustment ratio 81.4 % 57.4 % 67.2 % 89.1 % Underw riting expense ratio 29.5 29.3 29.2 29.3 GAAP combined ratio2 110.9 % 86.7 % (24.2) pts 96.4 % 118.4 % 22.0 pts Net
Slide 18: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2011 2012 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 Agency Automobile Retention 2,3 83% 83% 83% 83% 82% 81% 80% 81% Renewal premium change 3,4 2.9% 3.4% 3.8% 4.1% 5.8% 6.9% 8.3% 9.1% PIF growth over prior year quarter 2% 1% 1% -% (1%) (3%) (6%) (9%
Slide 19: Explanatory Note
Explanatory Note This presentation contains, and management may make, “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 “may,” “will,” “s
Slide 20: 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 21: Additional Information
The Travelers Companies, Inc. Additional Information Additional Information 21
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