The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q4 2020 Earnings Presentation
24 slides from The Travelers Companies's earnings presentation, Jan 21, 2021
Slide 1: Fourth Quarter 2020 Results
Fourth Quarter 2020 Results January 21, 2021
Slide 2: Long-Term Financial Strategy
Long-Term Financial Strategy Balanced Generation of approach to Meaningful and top tier earnings rightsizing sustainable and capital capital and competitive substantially in growing book advantages excess of growth value per share needs over time CREATE SHAREHOLDER VALUE Objective: Mid-Teens Core RO
Slide 3: Fourth Quarter 2020 Overview
Fourth Quarter 2020 Overview Travelers Reports Record Fourth Quarter 2020 Net Income per Diluted Share of $5.10 and Return on Equity of 18.4% Record Core Income per Diluted Share of $4.91 and Core Return on Equity of 20.5% Full Year Net Income of $2.697 billion, up 3%, and Return on Equity of 10.0%
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax, except for premiums) FOURTH QUARTER FULL YEAR 2020 2019 Change 2020 2019 Change Core income $ 1,262 $ 867 46 % $ 2,686 $ 2,537 6 % per diluted share $ 4.91 $ 3.32 48 % $ 10.48 $ 9.60 9 % Included the following items: Net f
Slide 5: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital December 31, December 31, 2020 2019 • At or above target levels for all rating agencies. Debt $ 6,550 $ 6,558 • Repurchased 1.4 million shares during fourth quarter 2020 for a total of $201 million; full year
Slide 6: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) TOTAL Fourth Quarter 2020 vs 2019 Commentary $566 $572 • Net investment income (NII) from the long-term fixed income $548 $528 $525 $519 $524 $496 portfolio decreased due to lower interest rates, partially $477 offset by an increase in avera
Slide 7: Components of Core Return on Equity
Components of Core Return on Equity 13.3% 15.2% 13.3% 9.0% 10.7% 10.9% 11.3% 9.2% 0.9% 0.3% 8.0% 7.8% 7.8% 7.4% 7.2% 7.2% 1.5% 1.1% 6.9% 0.9% 0.9% 1.3% 0.3% 0.7% 0.1% 6.1% 0.3% 0.1% 0.2% 4.4% 4.1% 8.0% 6.5% 3.1% 6.2% 6.2% 2.7% 6.4% 6.1% 5.7% 1.8% 0.0% 2005 through 2014 2015 2016 2017 2018 2019 2020
Slide 8: Business Insurance Performance
Business Insurance Performance ($ in millions) FOURTH QUARTER FULL YEAR 2020 2019 Change 2020 2019 Change Segment income $ 713 $ 448 59 % $ 1,309 $ 1,392 (6) % Loss and loss adjustment ratio 59.2 % 67.3 % 69.4 % 70.3 % Underwriting expense ratio 30.6 30.2 30.9 30.6 1 Combined ratio 89.8 % 97.5 % 7.7
Slide 9: Domestic Business Insurance (Ex. National Accounts)
Domestic Business Insurance (Ex. National Accounts) ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change1 % Renewal Rate Change2 % 8.4% Exposure/Other % 8.1% 8% 7.4% 6.0% 6% 4.2% 4% 4.7% 3.4% 2% 2.0% - (2%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 Retention 86% 85% 84
Slide 10: Domestic Business Insurance: Select Accounts
Domestic Business Insurance: Select Accounts ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 8% 6% 4.2% 4% 2.8% 2% 1.3% 1.9% 2.1% 0.9% 1.7% 0.6% - ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 Retention 83% 82% 82% 82% 82% 83
Slide 11: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change1 % 9.1% Renewal Rate Change2 % 8.0% 8.2% Exposure/Other % 8% 6.4% 6% 4% 4.6% 3.7% 3.3% 2% 2.0% - (2%) (4%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 Retention 87% 87% 86% 86
Slide 12: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) FOURTH QUARTER FULL YEAR 2020 2019 Change 2020 2019 Change Segment income $ 164 $ 167 (2) % $ 473 $ 618 (23) % Loss and loss adjustment ratio 45.7 % 42.4 % 51.5 % 42.2 % Underwriting expense ratio 35.2 36.2 35.9 37.3 Combined ratio 1 80.9 % 78.6
Slide 13: Domestic Bond & Specialty Insurance
Domestic Bond & Specialty Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Management Liability 1 Retention 89% 90% 90% 89% 89% 89% 90% 89% Renewal premium change 2 4.3% 5.2% 5.9% 7.7% 7.7% 8.0% 8.1% 10.9% New business $55 $65 $68 $62 $57 $51 $53 $49 13 1
Slide 14: Personal Insurance Performance
Personal Insurance Performance ($ in millions) FOURTH QUARTER FULL YEAR 2020 2019 Change 2020 2019 Change Segment income $ 457 $ 327 40 % $ 1,195 $ 824 45 % Loss and loss adjustment ratio 57.9 % 62.8 % 62.8 % 68.0 % Underwriting expense ratio 26.2 25.7 26.9 26.2 Combined ratio 1 84.1 % 88.5 % 4.4 pt
Slide 15: Domestic Personal Insurance Performance
Domestic Personal Insurance Performance FOURTH QUARTER FULL YEAR 2020 2019 Change 2020 2019 Change Agency Automobile 1 Loss and loss adjustment ratio 62.6 % 76.1 % 60.7 % 70.7 % Underwriting expense ratio 23.9 23.1 24.6 23.3 2 Combined ratio 86.5 % 99.2 % 12.7 pts 85.3 % 94.0 % 8.7 pts Net favorable
Slide 16: Domestic Personal Insurance
Domestic Personal Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 Agency Automobile Retention 2 84% 84% 84% 84% 84% 84% 84% 84% 3 Renewal premium change 5.5% 4.8% 3.7% 3.0% 2.3% 1.6% 1.4% 0.6% Policies in force (in thousands) 2,516 2,517 2,524 2,532 2,5
Slide 17: Total International Insurance
Total International Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 International Retention 80% 80% 79% 77% 71% 80% 79% 80% Renewal premium change 2 8.5% 6.1% 6.6% 7.3% 7.8% 7.0% 6.7% 9.7% New business $97 $91 $71 $79 $74 $84 $76 $76 17 1 Excludes suret
Slide 18: Deliberate and Disciplined Execution
Deliberate and Disciplined Execution Accelerating NWP Growth Stable Underlying Combined Ratio Improving Expense Ratio 96.7% $29.7B AVG = 31.9% AVG = 92.1% 90.7% $22.2B 29.9% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2
Slide 19: 2021 Catastrophe Reinsurance
2021 Catastrophe Reinsurance Effective January 1, 2021 Corporate Catastrophe Excess-of-Loss Reinsurance Treaty (Renewal) Covers the accumulation of certain property losses arising from one or multiple occurrences: 75% part of $2.0 billion ($1.5 billion of qualifying losses are covered by the treaty
Slide 20: Travelers' 10-year History of Catastrophe Losses by Quarter
Travelers’ 10-year History of Catastrophe Losses1 by Quarter 60% 43.8% 40% 20.3% 18.7% 17.2% 20% 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 average the highest catastrophe loss quarter for Trav
Slide 21: Appendix
Appendix 21
Slide 22: Explanatory Note
Explanatory Note 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 “may,” “w
Slide 23: 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 24: investor.travelers.com
investor.travelers.com 24
The Travelers Companies — Q4 2020 Earnings Presentation on 6ix