The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q2 2012 Earnings Presentation
24 slides from The Travelers Companies's earnings presentation, Jul 19, 2012
Slide 1: The Travelers Companies, Inc. Second Quarter 2012 Results
The Travelers Companies, Inc. Second Quarter 2012 Results July 19, 2012 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: Second Quarter 2012 Overview
Second Quarter 2012 Overview • Net income of $499 million or $1.26 per diluted share after catastrophe losses of $357 million or $0.90 per diluted share • Operating income of $495 million or $1.26 per diluted share • Quarter reflected underlying underwriting margin improvement across all segments an
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax) Second Second Quarter Quarter Year- Year-to- to-Date Year-to-Date 2012 2011 Change 2012 2011 Change Operating income (loss) $ 495 $ (377) NM % $ 1,296 $ 449 189 % per diluted share $ 1.26 $ (0.91) NM % $ 3.27 $ 1.04 214 %
Slide 5: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) June 30, December 31, Capital 2012 2011 Debt $ 6,349 $ 6,605 • At or above target levels for all rating agencies Common equity 1 22,069 21,606 • Repurchased $350 million of common shares, and dividends Total capital
Slide 6: Net Investment Income
Net Investment Income ($ in millions, after-tax) Total Total Total • Net investment income from the long-term fixed income portfolio $617 $622 $606 $593 $589 $573 $561 $541 declined modestly from a year ago due to lower reinvestment rates • Short-term portion of fixed income portfolio continued to b
Slide 7: Components of Operating Return on Equity
Components of Operating Return on Equity 9.6% 17.9% 17.7% 12.4% 14.0% 12.5% 6.1% 3.9% 11.8% 11.1% 11.0% 10.6% 1.4% 1.4% 1.6% 9.7% 9.3% 9.4% 0.8% 0.7% 8.1% 9.0% 0.5% 0.9% 1.5% 8.2% 1.4% 0.4% 0.1% 0.9% 0.1% 0.1% 6.8% 6.7% 5.8% 8.7% 8.9% 8.7% 8.3% 8.3% 8.3% 8.0% 7.9% 8.2% 4.3% 3.2% 2.1% (0.6%) (0.1%) (
Slide 8: 2nd Quarter 2012 Catastrophe Losses
2nd Quarter 2012 Catastrophe Losses ($ in millions, pre-tax unless noted otherwise) Month CAT # Description Loss States Affected April 71 Hail, Tornadoes & Wind $ 51 TX April 72 Hail, Tornadoes & Wind 37 IA, KS, NE, OK April 74 Hail, Tornadoes & Wind 171 IL, IN, KY, MO, TX May 76 Hail, Wind & Rain 1
Slide 9: Business Insurance
Business Insurance Performance ($ in millions) Second Second Quarter Quarter Year- Year-to- to-Date Year-to-Date Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Operating income $ 362 $ 11 NM % $ 974 $ 615 58 % Loss and loss adjustment ratio 71.0 % 90.6 % 64.4 % 77.0 % Underwriting expe
Slide 10: 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 % 1Q’12: 1Q’12: 7.5% 7.5% ♦ Renewal Rate Change2 % 2Q’12: 2Q’12: 7.4% 8% • Exposure/Other % 7.4% 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'
Slide 11: Business Insurance: Select Accounts
Business Insurance: Select Accounts Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 12% ▲ Renewal Premium Change1 % ♦ Renewal Rate Change2 % • Exposure/Other % 10% 8% 6% 4% 2% - Components Components of of Select Select retention retention (2%) ----------------
Slide 12: Business Insurance: Commercial Accounts
Business Insurance: Commercial Accounts Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 10% ▲ Renewal Premium Change1 % ♦ Renewal Rate Change2 % 8% • Exposure/Other % 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 ($ in millions) Retention 88% 84% 86% 80%
Slide 13: 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 Change3 % 8% • Exposure/Other % 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 ($ in millions) Retention 83% 80% 83
Slide 14: Commercial Accounts: Renewal Pricing Results
Commercial Accounts: Renewal Pricing Results 2Q’12 Retention ♦ 2Q’12 Renewal Rate Change % 1 100% 20% 90% 16% Renewal Rate Change1 80% 12% Retention 70% 8% 60% 4% 50% 0% <60% 60% - 90% >90% Long-Term Loss Ratio Bands2 – All Lines of Business 1 Represents the estimated change in average premium on po
Slide 15: Financial, Professional & International Insurance
Financial, Professional & International Insurance Performance ($ in millions) Second Second Quarter Quarter Year- Year-to- to-Date Year-to-Date Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Operating income $ 182 $ 164 11 % $ 331 $ 284 17 % Loss and loss adjustment ratio 39.1 % 46.2 %
Slide 16: Financial, Professional & International Insurance
Financial, Professional & International Insurance ($ in millions) Illustrative Illustrative Business Business Statistics Statistics 2011 2012 1Q 2Q 3Q 4Q 1Q 2Q Surety Gross written premium $235 $235 $250 $209 $202 $223 2 Management Liability Retention 84% 85% 87% 86% 87% 86% Renewal premium change 1
Slide 17: Personal Insurance
Personal Insurance Performance ($ in millions) Second Second Quarter Quarter Year- Year-to- to-Date Year-to-Date Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Operating income (loss) $ 17 $ (471) NM % $ 125 $ (301) NM % Loss and loss adjustment ratio 75.4 % 115.6 % 72.1 % 89.8 % Under
Slide 18: Personal Insurance
Personal Insurance Performance Second Second Quarter Quarter Year- Year-to- to-Date Year-to-Date 2012 2011 Change 2012 2011 Change 1 Agency Automobile Loss and loss adjustment ratio 75.6 % 79.5 % 73.3 % 74.3 % Underwriting expense ratio 25.9 26.2 25.7 26.4 2 GAAP combined ratio 101.5 % 105.7 % 4.2 p
Slide 19: Personal Insurance
Personal Insurance ($ in millions) Illustrative Illustrative Business Business Statistics Statistics 2011 2012 1Q 2Q 3Q 4Q 1Q 2Q 1 Agency Automobile 2,3 Retention 83% 83% 83% 84% 83% 82% 3,4 Renewal premium change 3% 3% 4% 4% 4% 6% PIF growth over prior year quarter 2% 1% 1% -% (1%) (3%) New busines
Slide 20: Appendix
Appendix Additional Information Additional Information 20
Slide 21: 2012 - 2013 Catastrophe Reinsurance
2012 - 2013 Catastrophe Reinsurance • The following table summarizes the company’s coverage under its General Catastrophe Reinsurance Treaty, effective for the period July 1, 2012 through June 30, 2013, as well as certain other catastrophe-related coverages: Layer of Loss Reinsurance Coverage In-For
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 For further information, please see Travelers reports filed with the SEC pursuant to the Securities Exchange Act of 1934 which are available at the SEC’s website (www.sec.gov). Copies of this presentation and related financial supplement, and the accompanying webcast are publicly availabl
Slide 24: The Travelers Companies, Inc.
The Travelers Companies, Inc. Additional Information Additional Information 24
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