The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q4 2019 Earnings Presentation
27 slides from The Travelers Companies's earnings presentation, Jan 23, 2020
Slide 1: Fourth Quarter 2019 Results
Fourth Quarter 2019 Results January 23, 2020
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 2019 Overview
Fourth Quarter 2019 Overview Travelers Reports Record Net and Core Income per Diluted Share in Fourth Quarter 2019 Fourth Quarter Net Income Per Diluted Share of $3.35, up 44%, and Return on Equity of 13.5% Fourth Quarter Core Income per Diluted Share of $3.32, up 56%, and Core Return on Equity of 1
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax, except for premiums) FOURTH QUARTER FULL YEAR 2019 2018 Change 2019 2018 Change Core income $ 867 $ 571 52 % $ 2,537 $ 2,430 4 % per diluted share $ 3.32 $ 2.13 56 % $ 9.60 $ 8.94 7 % Included the following items: Net favo
Slide 5: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) December 31, December 31, Capital 2019 2018 • At or above target levels for all rating agencies. Debt $ 6,558 $ 6,564 Common equity 1 23,697 23,007 • Repurchased 2.9 million shares during fourth quarter 2019 1 Total
Slide 6: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) TOTAL Fourth Quarter 2019 Commentary $547 $548 • Net investment income from the long-term fixed income $525 $524 $535 $528 $525 $513 $507 $496 portfolio benefited from an increase in average investments • Net investment income from the short
Slide 7: Components of Core Return on Equity
Components of Core Return on Equity 13.1% 15.5% 15.2% 13.3% 9.0% 10.7% 10.9% 9.3% 0.9% 8.4% 0.3% 8.0% 7.8% 7.8% 1.5% 7.4% 7.2% 7.2% 7.1% 1.5% 1.1% 0.9% 0.9% 8.1% 1.3% 6.1% 0.3% 0.3% 0.1% 0.2% 3.8% 6.9% 6.5% 6.2% 6.2% 6.4% 3.1% 5.7% 2.7% 1.8% 2005 through 2013 2014 2015 2016 2017 2018 2019 Full Year
Slide 8: Business Insurance Performance
Business Insurance Performance ($ in millions) FOURTH QUARTER FULL YEAR 2019 2018 Change 2019 2018 Change Segment income $ 448 $ 391 15 % $ 1,392 $ 1,638 (15) % Loss and loss adjustment ratio 67.3 % 68.7 % 70.3 % 67.8 % Underwriting expense ratio 30.2 30.7 30.6 31.3 Combined ratio 1 97.5 % 99.4 % 1.
Slide 9: Business Insurance Underlying Combined Ratio
Business Insurance Underlying Combined Ratio FOURTH QUARTER 2019 2018 Change Underlying combined ratio1 96.4 % 95.4 % (1.0) pts Change of (1.0) pts includes: Year-over-year impact of 4Q'18 "catch-up" on "old news" Re-estimation of 1Q'18 - 3Q'18 included in 4Q'18 commercial automobile loss adjustment
Slide 10: Business Insurance Underlying Combined Ratio
Business Insurance Underlying Combined Ratio FULL YEAR 2019 2018 Change Underlying combined ratio1 96.2 % 95.7 % (0.5) pts Change of (0.5) pts includes: 2019 adjustments to general liability (primary and excess) and commercial automobile loss estimates…...............................................
Slide 11: Domestic Business Insurance (Ex. National Accounts)
Domestic Business Insurance (Ex. National Accounts) ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 8% 6% 5.1% 4.4% 4% 3.6% 2.1% 2.2% 2% 1.6% 1.6% 1.5% - (2%) ($ in millions) 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 Retention 86% 85% 86
Slide 12: 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% 1.9% 2% 1.5% 1.1% 0.8% 0.7% 0.7% 0.6% 0.3% - (2%) ($ in millions) 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 Retention 83% 82% 82% 81% 8
Slide 13: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 8% 6% 5.0% 3.9% 4% 3.4% 2.3% 2% 1.8% 1.4% 1.4% 1.4% - (2%) ($ in millions) 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 Retention 88% 88% 87% 87% 87%
Slide 14: Business Insurance: Commercial Accounts
Business Insurance: Commercial Accounts Commercial Accounts: % of ACCOUNTS % OF RENEWAL RenewalBYAccounts RATE BAND by Rate Band 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 0% or Negative >0% to 5% Greater than 5% 4Q'17 4Q'18 4Q'19 We achieved meaningful rate increases while retention remained at hist
Slide 15: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) FOURTH QUARTER FULL YEAR 2019 2018 Change 2019 2018 Change Segment income $ 167 $ 220 (24) % $ 618 $ 793 (22) % Loss and loss adjustment ratio 42.4 % 27.9 % 42.2 % 31.5 % Underwriting expense ratio 36.2 36.9 37.3 37.5 Combined ratio 1 78.6 % 64.
Slide 16: Domestic Bond & Specialty Insurance
Domestic Bond & Specialty Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Management Liability 1 Retention 89% 90% 90% 89% 89% 90% 90% 89% Renewal premium change 2 3.8% 4.2% 3.7% 4.8% 3.7% 4.2% 5.0% 6.6% New business $50 $54 $56 $53 $54 $64 $67 $62 16 1 D
Slide 17: Personal Insurance Performance
Personal Insurance Performance ($ in millions) FOURTH QUARTER FULL YEAR 2019 2018 Change 2019 2018 Change Segment income $ 327 $ 32 922 % $ 824 $ 297 177 % Loss and loss adjustment ratio 62.8 % 76.8 % 68.0 % 74.1 % Underwriting expense ratio 25.7 25.8 26.2 26.5 Combined ratio 1 88.5 % 102.6 % 14.1 p
Slide 18: Domestic Personal Insurance Performance
Domestic Personal Insurance Performance FOURTH QUARTER FULL YEAR 2019 2018 Change 2019 2018 Change Agency Automobile 1 Loss and loss adjustment ratio 76.1 % 72.5 % 70.7 % 70.8 % Underwriting expense ratio 23.1 22.8 23.3 23.4 2 Combined ratio 99.2 % 95.3 % (3.9) pts 94.0 % 94.2 % 0.2 pts Net favorabl
Slide 19: Domestic Personal Insurance
Domestic Personal Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 Agency Automobile Retention 2 83% 83% 84% 84% 84% 84% 84% 84% 3 Renewal premium change 10.7% 9.6% 8.0% 6.7% 5.6% 5.0% 3.7% 2.9% Policies in force (in thousands) 2,519 2,517 2,518 2,518 2,
Slide 20: Total International Insurance
Total International Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 International Retention 84% 83% 83% 82% 80% 80% 78% 77% Renewal premium change 2 3.8% 2.6% 4.0% 5.9% 6.0% 5.8% 6.8% 9.0% New business $96 $123 $97 $105 $94 $89 $68 $71 20 1 Excludes sur
Slide 21: Appendix
Appendix 21
Slide 22: 2020 Catastrophe Reinsurance
2020 Catastrophe Reinsurance Effective January 1, 2020 Corporate Catastrophe Excess-of-Loss Reinsurance Treaty (Renewal) Covers the accumulation of certain property losses arising from one or multiple occurrences: 75% part ($1.5 billion of qualifying losses are covered by the treaty and 25% or $500
Slide 23: Travelers' 10-year History of Catastrophe Losses by Quarter
Travelers’ 10-year History of Catastrophe Losses1 by Quarter 60% 42.5% 40% 22.4% 17.3% 17.8% 20% 0% 1Q 2Q 3Q 4Q Percentage of calendar year CAT activity attributed to each quarter (10-year average) 2010 2011 2012 2013 2014 2015 2016 2017 2018 20192 Average Pts of Combined Ratio 9.0 3.4 3.1 1.8 2.6 2
Slide 24: Industry Commercial Auto Bodily Injury Loss Environment
Industry Commercial Auto Bodily Injury Loss Environment Average Paid Claim Cost for Commercial Auto Bodily Injury (ISO Calendar Year Data) Updated to include 1Q’19 $ 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 Industry Actual 2015-17 Fitted E
Slide 25: 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 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
The Travelers Companies — Q4 2019 Earnings Presentation on 6ix