The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q1 2013 Earnings Presentation
23 slides from The Travelers Companies's earnings presentation, Apr 23, 2013
Slide 1: The Travelers Companies, Inc. First Quarter 2013 Results
The Travelers Companies, Inc. First Quarter 2013 Results April 23, 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: First Quarter 2013 Overview
First Quarter 2013 Overview Net income per diluted share of $2.33, up 15% from prior year quarter Record quarterly operating income per diluted share of $2.31 Return on equity and operating return on equity of 14.1% and 15.8%, respectively • Net and operating income of $896 million and $887 million,
Slide 4: Total Return
Total Return1 20 Largest S&P Financial Companies2 & Other Selected Financial Companies 1 Year Total Return 3 Year Total Return 5 Year Total Return April 1, 2012 – March 31, 2013 April 1, 2010 – March 31, 2013 April 1, 2008 – March 31, 2013 52.6% Allstate 105.9% Simon Property Group 101.8% TRAVELERS
Slide 5: Risk-Adjusted Total Return
Risk-Adjusted Total Return1,2 20 Largest S&P Financial Companies3 & Other Selected Financial Companies 1 Year Risk-Adjusted Total Return 3 Year Risk-Adjusted Total Return 5 Year Risk-Adjusted Total Return April 1, 2012 – March 31, 2013 April 1, 2010 – March 31, 2013 April 1, 2008 – March 31, 2013 55
Slide 6: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax) First Quarter Fourth Quarter Full Year 2013 2012 Change Operating income $ 887 $ 801 11 % per diluted share $ 2.31 $ 2.01 15 % Included the following items: Net favorable prior year reserve development $ 154 $ 200 Catastro
Slide 7: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital March 31, December 31, 2013 2012 • At or above target levels for all rating agencies • Repurchased $300 million of common shares, and Debt $ 5,851 $ 6,350 Common equity 1 22,732 22,302 dividends were $176 mil
Slide 8: Net Investment Income
Net Investment Income ($ in millions, after-tax) Total First Quarter 2013 Commentary • Net investment income from the long-term fixed income $593 $589 $578 $583 $579 $556 $542 portfolio declined modestly from the prior year quarter due to lower reinvestment rates, as expected ` • Short-term portion
Slide 9: Components of Operating Return on Equity
Components of Operating Return on Equity 9.6% 17.9% 17.7% 12.4% 14.0% 12.5% 6.1% 11.0% 14.7% 15.8% 11.1% 11.0% 10.6% 1.4% 1.6% 1.4% 9.4% 9.7% 9.3% 0.8% 0.7% 8.1% 9.0% 0.5% 0.9% 0.9% 1.3% 8.6% 8.2% 0.9% 1.3% 0.4% 0.1% 0.9% 0.1% 1.0% 7.2% 6.8% 6.7% 5.8% 8.7% 8.9% 8.7% 8.3% 8.3% 8.3% 8.0% 8.1% 8.4% 7.6
Slide 10: Business Insurance Performance
Business Insurance Performance ($ in millions) First ThirdQuarter Quarter 2013 2012 Change Operating income $ 590 $ 612 (4) % Loss and loss adjustment ratio 57.7 % 57.8 % Underw riting expense ratio 31.7 31.8 GAAP combined ratio 1 89.4 % 89.6 % 0.2 pts Net favorable prior year reserve development 3.
Slide 11: Business Insurance (Ex. National Accounts)
Business Insurance (Ex. National Accounts) Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 12% ▲ Renewal Premium Change1 % ♦ Renewal Rate Change % 2 • Exposure/Other % 10% 8% 6% 4% 2% - (2%) 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 ($ in millions) Retention 79% 80% 81%
Slide 12: Business Insurance: Select Accounts
Business Insurance: Select Accounts Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 14% ▲ Renewal Premium Change1 % 12% ♦ Renewal Rate Change % 2 • Exposure/Other % 10% 8% 6% 4% 2% - (2%) 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 ($ in millions) Retention 75% 76% 77% 77%
Slide 13: Business Insurance: Commercial Accounts
Business Insurance: Commercial Accounts Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 14% ▲ Renewal Premium Change1 % 12% ♦ Renewal Rate Change % 2 • Exposure/Other % 10% 8% 6% 4% 2% - (2%) 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 ($ in millions) Retention 81% 82% 85%
Slide 14: Business Insurance: Other Business Insurance
Business Insurance: Other Business Insurance1 Illustrative Business Statistics Renewal Premium Change (RPC)2 Rate vs. Exposure/Other 12% ▲ Renewal Premium Change2 % ♦ Renewal Rate Change % 3 • Exposure/Other % 10% 8% 6% 4% 2% - (2%) 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 ($ in millions) Retention 79% 80% 8
Slide 15: Commercial Accounts: Renewal Pricing Results
Commercial Accounts: Renewal Pricing Results Retention Rate Renewal Rate Change1 1Q’13 • 1Q’13 1Q’12 1Q’12 100% 20% 90% 16% Renewal Rate Change1 Retention Rate 80% 12% 70% 8% 60% 4% 50% 0% < 60% 60% - 90% > 90% Long-Term Loss Ratio Bands2 – All Lines of Business 1 Represents the estimated change i
Slide 16: Financial, Professional & International Insurance
Financial, Professional & International Insurance Performance ($ in millions) First Quarter Third Quarter 2013 2012 Change Operating income $ 163 $ 149 9 % Loss and loss adjustment ratio 40.8 % 46.0 % Underw riting expense ratio 41.5 41.8 1 GAAP combined ratio 82.3 % 87.8 % 5.5 pts Net favorable pri
Slide 17: Financial, Professional & International Insurance
Financial, Professional & International Insurance ($ in millions) Illustrative Business Statistics 2012 2013 1Q 2Q 3Q 4Q 1Q Surety Gross written premium $202 $223 $219 $194 $195 Management Liability1 Retention 87% 86% 85% 85% 85% Renewal premium change 2 5.0% 4.9% 5.9% 5.7% 7.8% New business $44 $47
Slide 18: Personal Insurance
Personal Insurance Performance ($ in millions) First Quarter Third Quarter 2013 2012 Change Operating income $ 197 $ 108 82 % Loss and loss adjustment ratio 59.9 % 68.8 % Underw riting expense ratio 29.5 29.0 GAAP combined ratio 1 89.4 % 97.8 % 8.4 pts GAAP combined ratio excluding incremental 87.5
Slide 19: Personal Insurance
Personal Insurance Performance First Quarter 2013 2012 Change Agency Automobile 1 Loss and loss adjustment ratio 70.4 % 71.1 % Underw riting expense ratio 25.6 25.4 GAAP combined ratio2 96.0 % 96.5 % 0.5 pts Net favorable (unfavorable) prior year reserve development (0.6) 0.2 Catastrophes, net of re
Slide 20: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2012 2013 1Q 2Q 3Q 4Q 1Q Agency Automobile 1 Retention 2,3 82% 81% 80% 80% 81% Renewal premium change 3,4 5.7% 6.8% 9.2% 8.7% 8.8% PIF growth over prior year quarter (1%) (3%) (6%) (9%) (11%) New business $135 $107 $103 $85 $86 Agen
Slide 21: 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 22: 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 23: Additional Information
The Travelers Companies, Inc. Additional Information Additional Information 23
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