The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q2 2016 Earnings Presentation
24 slides from The Travelers Companies's earnings presentation, Jul 21, 2016
Slide 1: Second Quarter 2016 Results
Second Quarter 2016 Results July 21, 2016 1
Slide 2: Long-Term Financial Strategy
Long-Term Financial Strategy Balanced Generation of approach to Meaningful and top tier earnings rightsizing capital sustainable and capital and competitive substantially in growing book advantages excess of growth value per share needs over time CREATE SHAREHOLDER VALUE Objective: Mid-Teens Operati
Slide 3: Second Quarter 2016 Overview
Second Quarter 2016 Overview Travelers Reports Second Quarter Net and Operating Income per Diluted Share of $2.24 and $2.20, Respectively Return on Equity and Operating Return on Equity of 10.9% and 11.6%, Respectively • Net and operating income of $664 million and $649 million, respectively, declin
Slide 4: Analysis of 2Q 2016 Operating Results
Analysis of 2Q 2016 Operating Results Versus 2Q 2015 ($ in millions, after-tax) Operating Income 2Q 2015 Actual $ 806 Higher PCS event losses defined by TRV as: Catastrophe losses $ (79) Non-catastrophe weather-related losses1 (56) Lower fixed-income net investment income (21) Other, net (1) 2Q 2016
Slide 5: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts and after-tax, except for premiums) Second Quarter Year-to-Date 2016 2015 Change 2016 2015 Change Operating income $ 649 $ 806 (19) % $ 1,347 $ 1,633 (18) % per diluted share $ 2.20 $ 2.52 (13) % $ 4.52 $ 5.05 (10) % Included the foll
Slide 6: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital • At or above target levels for all rating agencies. June 30, December 31, 2016 2015 • Repurchased 4.9 million shares during the second quarter Debt $ 6,436 $ 6,344 2016 at a total cost of $550 million. 1 Com
Slide 7: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) Total Second Quarter 2016 Commentary: • Net investment income from the long-term fixed income $554 portfolio declined modestly from the prior year quarter $478 $503 $484 $476 $439 primarily due to lower reinvestment rates as expected $440 $4
Slide 8: Components of Operating Return on Equity
Components of Operating Return on Equity 14.1% 6.1% 11.0% 15.5% 15.5% 15.2% 14.3% 12.0% 9.4% 9.4% 0.7% 9.0% 1.3% 8.5% 1.3% 8.4% 0.4% 0.9% 0.1% 7.8% 1.2% 7.4% 7.5% 1.5% 7.1% 1.5% 6.8% 7.0% 1.0% 6.8% 0.7% 0.9% 0.5% 6.9% 0.1% 8.1% 7.3% 6.5% 6.2% 8.3% 6.5% 8.0% 5.2% 4.7% 1.6% 2005 (2.9%) through 2010 20
Slide 9: Business and International Insurance Performance
Business and International Insurance Performance ($ in millions) Second Quarter Year-to-Date 2016 2015 Change 2016 2015 Change Operating income $ 393 $ 543 (28) % $ 869 $ 1,058 (18) % Loss and loss adjustment ratio 64.2 % 60.6 % 63.3 % 60.9 % Underw riting expense ratio 33.3 32.6 32.9 32.4 Combined
Slide 10: Domestic Business Insurance (Ex. National Accounts)
Domestic Business Insurance (Ex. National Accounts) Illustrative Business Statistics 12% ▲ Renewal Premium Change1 % Renewal Rate Change2 % Renewal Rate Change2 % ex. National Property • 10% Exposure/Other % 8% 6% 4% 2% 1.2% 0.9% - 0.7% 0.4% 0.2% -0.1% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 ($ i
Slide 11: Domestic Business Insurance: Select Accounts
Domestic Business Insurance: Select Accounts Illustrative Business Statistics 12% ▲ Renewal Premium Change1 % Renewal Rate Change2 % 10% • Exposure/Other % 8% 6% 4% 2% 2.8% 2.6% 2.4% 2.3% 1.3% 0.9% - (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 ($ in millions) Retention 81% 81% 81% 80% 82% 82% Renewal
Slide 12: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market Illustrative Business Statistics 12% ▲ Renewal Premium Change1 % Renewal Rate Change2 % 10% • Exposure/Other % 8% 6% 4% 2% 0.8% 1.1% 0.8% - 0.5% 0.0% -0.5% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 ($ in millions) Retention 87% 86% 86% 87% 88% 87% Renewal
Slide 13: Domestic Business Insurance: Other Business Insurance
Domestic Business Insurance: Other Business Insurance1 Illustrative Business Statistics 12% ▲ Renewal Premium Change2 % Renewal Rate Change3 % 10% Renewal Rate Change3 % ex. National Property • Exposure/Other % 8% 6% 4% 2% 0.4% - -1.2% -1.1% -0.2% -0.7% -0.9% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'
Slide 14: International Insurance
International Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q 1 International Retention 85% 82% 81% 79% 83% 79% Renewal premium change 2 (0.1%) (0.5%) (0.5%) (1.1%) (1.0%) (0.1%) New business $58 $64 $59 $79 $75 $107 1 Excludes the surety line of business as su
Slide 15: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) Second Quarter Year-to-Date 2016 2015 Change 2016 2015 Change Operating income $ 202 $ 151 34 % $ 346 $ 275 26 % Loss and loss adjustment ratio 15.0 % 36.3 % 23.4 % 36.9 % Underw riting expense ratio 37.4 37.4 37.4 38.0 Combined ratio 1 52.4 % 7
Slide 16: Bond & Specialty Insurance
Bond & Specialty Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q 1 Management Liability Retention 85% 86% 87% 84% 86% 87% Renewal premium change 2 4.3% 3.6% 2.9% 2.3% 3.3% 4.0% New business $38 $41 $45 $41 $46 $48 1 Excludes the surety line of business as suret
Slide 17: Personal Insurance Performance
Personal Insurance Performance ($ in millions) Second Quarter Year-to-Date 2016 2015 Change 2016 2015 Change Operating income $ 116 $ 174 (33) % $ 255 $ 426 (40) % Loss and loss adjustment ratio 67.6 % 62.2 % 67.1 % 58.7 % Underw riting expense ratio 28.1 28.9 27.6 28.6 1 Combined ratio 95.7 % 91.1
Slide 18: Personal Insurance Performance
Personal Insurance Performance Second Quarter Year-to-Date 2016 2015 Change 2016 2015 Change Agency Automobile 1 Loss and loss adjustment ratio 75.9 % 70.4 % 73.2 % 67.4 % Underw riting expense ratio 25.4 26.1 25.1 26.0 Combined ratio 2 101.3 % 96.5 % (4.8) pts 98.3 % 93.4 % (4.9) pts Net favorable
Slide 19: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q Agency Automobile 1 Retention 2 83% 84% 85% 85% 85% 84% Renewal premium change 3 5.1% 4.7% 4.0% 4.3% 4.0% 4.3% Policies in force (in thousands) 2,021 2,057 2,106 2,157 2,212 2,275 • Sequential quarter gro
Slide 20: Appendix
Appendix Additional Information Additional Information 20
Slide 21: 2016 Catastrophe Reinsurance
2016 Catastrophe Reinsurance Catastrophe Bonds - Long Point Re III Ltd. • $300 million aggregate principal expired as scheduled May 2016 • $300 million aggregate principal remains in effect – will expire May 2018 ̵ The attachment point and maximum limit were reset as required annually to adjust the
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: The Travelers Companies, Inc.
The Travelers Companies, Inc. Additional Information Additional Information 24
The Travelers Companies — Q2 2016 Earnings Presentation on 6ix