The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q2 2020 Earnings Presentation
26 slides from The Travelers Companies's earnings presentation, Jul 23, 2020
Slide 1: Second Quarter 2020 Results
Second Quarter 2020 Results July 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: Second Quarter 2020 Overview
Second Quarter 2020 Overview Travelers Reports Second Quarter 2020 Net and Core Loss per Diluted Share of $0.16 and $0.20, Respectively Provides Estimate of PG&E Subrogation Recoveries of Approximately $400 Million Pre-Tax to be Recognized in Third Quarter of 2020 • Second quarter net loss of $40 mi
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax, except for premiums) SECOND QUARTER YEAR-TO-DATE 2020 2019 Change 2020 2019 Change Core income (loss) $ (50) $ 537 NM $ 626 $ 1,292 (52) % per diluted share $ (0.20) $ 2.02 NM $ 2.44 $ 4.85 (50) % Included the following it
Slide 5: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital June 30, December 31, 2020 2019 • At or above target levels for all rating agencies. Debt $ 7,049 $ 6,558 • No share repurchases in 2Q 2020. 1 Common equity 23,297 23,697 • Dividends in the second quarter wer
Slide 6: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) TOTAL Second Quarter 2020 vs 2019 Commentary $548 • Net investment income (NII) from the long-term fixed $525 $524 $528 $525 $519 $496 income portfolio decreased due to lower interest rates, partially offset by an increase in average investm
Slide 7: Components of Core Return on Equity
Components of Core Return on Equity 13.3% 15.2% 13.3% 9.0% 10.7% 10.9% 11.1% 5.3% 9.2% 0.9% 0.3% 8.0% 7.8% 7.8% 7.8% 7.4% 7.2% 7.2% 1.5% 1.1% 1.1% 0.9% 0.9% 1.3% 0.3% 0.4% 5.4% 0.1% 6.1% 0.3% 0.2% 0.2% 4.1% 8.0% 3.3% 6.5% 6.4% 3.1% 6.2% 6.2% 2.7% 6.3% 6.2% 5.7% 1.8% 0.0% -1.0% -0.1% 2005 through 201
Slide 8: Business Insurance Performance
Business Insurance Performance ($ in millions) SECOND QUARTER YEAR-TO-DATE 2020 2019 Change 2020 2019 Change Segment income (loss) $ (58) $ 351 NM $ 231 $ 765 (70) % Loss and loss adjustment ratio 75.8 % 69.6 % 73.3 % 68.6 % Underwriting expense ratio 31.3 31.5 31.3 31.0 Combined ratio 1 107.1 % 101
Slide 9: 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% 7.4% 6.1% 6% 4.8% 4.2% 4% 3.6% 2.1% 2% - (2%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 Retention 86% 85% 84% 84% 84% 83% Renewal
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% 2.1% 1.8% 2% 1.7% 1.4% 1.0% 0.6% - (2%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 Retention 83% 82% 82% 81% 81% 82% Renewal 5.3% 4.
Slide 11: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 7.9% 8% 6.5% 6% 4.8% 4% 3.5% 3.7% 2.1% 2% - (2%) (4%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 Retention 87% 87% 86% 86% 86% 86% Renewal 5.1%
Slide 12: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) SECOND QUARTER YEAR-TO-DATE 2020 2019 Change 2020 2019 Change Segment income $ 72 $ 174 (59) % $ 194 $ 312 (38) % Loss and loss adjustment ratio 57.8 % 37.4 % 53.4 % 40.3 % Underwriting expense ratio 36.0 37.5 36.5 37.6 Combined ratio 1 93.8 % 7
Slide 13: Domestic Bond & Specialty Insurance
Domestic Bond & Specialty Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 2Q Management Liability 1 Retention 89% 90% 90% 89% 89% 89% Renewal premium change 2 4.2% 5.0% 5.4% 6.5% 7.5% 7.8% New business $55 $65 $68 $61 $57 $52 13 1 Domestic only, excludes surety an
Slide 14: Personal Insurance Performance
Personal Insurance Performance ($ in millions) SECOND QUARTER YEAR-TO-DATE 2020 2019 Change 2020 2019 Change Segment income $ 10 $ 88 (89) % $ 346 $ 366 (5) % Loss and loss adjustment ratio 72.2 % 73.7 % 66.9 % 68.8 % Underwriting expense ratio 29.1 26.5 27.6 26.4 Combined ratio 1 101.3 % 100.2 % (1
Slide 15: Domestic Personal Insurance Performance
Domestic Personal Insurance Performance SECOND QUARTER YEAR-TO-DATE 2020 2019 Change 2020 2019 Change Agency Automobile 1 Loss and loss adjustment ratio 57.5 % 70.1 % 62.0 % 68.0 % Underwriting expense ratio 28.2 23.9 25.7 23.7 2 Combined ratio 85.7 % 94.0 % 8.3 pts 87.7 % 91.7 % 4.0 pts Net favorab
Slide 16: Domestic Personal Insurance
Domestic Personal Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 2Q 1 Agency Automobile Retention 2 84% 84% 84% 84% 85% 85% 3 Renewal premium change 5.5% 4.8% 3.8% 3.0% 2.2% 1.5% Policies in force (in thousands) 2,516 2,517 2,524 2,532 2,540 2,570 • Sequential qu
Slide 17: Total International Insurance
Total International Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 2Q 1 International Retention 80% 80% 79% 77% 71% 79% Renewal premium change 2 7.3% 4.6% 4.9% 5.9% 8.3% 6.9% New business $96 $90 $70 $80 $72 $76 17 1 Excludes surety and other products that are ge
Slide 18: Appendix
Appendix 18
Slide 19: 2020 Catastrophe Reinsurance
2020 Catastrophe Reinsurance Catastrophe Bonds – Long Point Re III Ltd. • $500 million aggregate principal was placed in May 2018 and the attachment point was again reset in May 2020 − The reinsurance agreement provides coverage to the Company through May 24, 2022 for certain property losses on spec
Slide 20: Investment Strategies Designed for Long-Term Success
Investment Strategies Designed for Long-Term Success (as of June 30, 2020) Commercial TOTAL INVESTMENTAccounts: PORTFOLIO = % of Renewal $80.6 Accounts BILLION: 94% by Rate OF INVESTMENTS Band IN FIXED INCOME Fixed Income by Category Fixed Maturities by Investment Rating (in millions) % Investment Q
Slide 21: Municipal Bond Portfolio of $32 Billion
Municipal Bond Portfolio of $32 Billion (as of June 30, 2020, $ in millions) State General Local General Average Rating of State Obligation Obligation Revenue Total Fair Value Travelers Holdings Texas $ 32 $ 3,014 $ 1,316 $ 4,362 AAA • High quality portfolio Washington 112 1,447 450 2,009 AAA/AA+ ac
Slide 22: Fixed Maturity Portfolio of $70.1 Billion
Fixed Maturity Portfolio of $70.1 Billion Includes Manageable Exposure to COVID-19 Risk Categories 1.38% 1.39% $ 1,000 Auto & Related (A and above): Toyota, Honda, (% of Fixed Maturity Portfolio) BMW and PACCAR aggregate to $302 million of 900 $318 million. Energy (A and above): Exxon, Shell, Total,
Slide 23: Non-Fixed Income Portfolio of $4.5 Billion
Non-Fixed Income Portfolio of $4.5 Billion Includes Manageable Exposure to COVID-19 Risk Categories (as of June 30, 2020) Other Investments 4% Private Equities: well diversified across 350+ separate funds and 3000+ portfolio companies. $222 million/400+ companies in energy funds. Real Estate Owned P
Slide 24: 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 25: 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 26: investor.travelers.com
investor.travelers.com 26
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