The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q3 2012 Earnings Presentation
21 slides from The Travelers Companies's earnings presentation, Oct 18, 2012
Slide 1: The Travelers Companies, Inc. Third Quarter 2012 Results
The Travelers Companies, Inc. Third Quarter 2012 Results October 18, 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: Third Quarter 2012 Overview
Third Quarter 2012 Overview Net income per diluted share of $2.21 and quarterly record operating income per diluted share of $2.22 Operating return on equity and return on equity of 15.5% and 13.6%, respectively • Operating and net income of $867 million and $864 million, respectively • Underlying u
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax) Third Quarter Year-to-Date Fourth Quarter Full Year 2012 2011 Change 2012 2011 Change Operating income $ 867 $ 332 161 % $ 2,163 $ 781 177 % per diluted share $ 2.22 $ 0.79 181 % $ 5.48 $ 1.82 201 % Included the following
Slide 5: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) September 30, December 31, 2012 2011 Capital • At or above target levels for all rating agencies Debt $ 6,350 $ 6,605 Common equity 1 22,590 21,606 • Repurchased $1.050 billion of common shares, and 1 Total capital $
Slide 6: Net Investment Income
Net Investment Income ($ in millions, after-tax) Total • Net investment income from the long-term fixed income $617 $622 $606 $593 $589 portfolio declined modestly from a year ago due to lower $573 $561 $578 $541 reinvestment rates ` • Short-term portion of fixed income portfolio continued to be imp
Slide 7: Components of Operating Return on Equity
Components of Operating Return on Equity 9.6% 17.9% 17.7% 12.4% 14.0% 12.5% 6.1% 4.5% 13.1% 11.1% 11.0% 10.6% 1.4% 1.6% 1.4% 9.6% 9.3% 9.1% 0.8% 0.7% 8.1% 9.0% 0.5% 0.9% 1.4% 0.4% 8.2% 0.1% 0.9% 1.1% 0.1% 0.1% 6.8% 6.7% 5.8% 8.7% 8.9% 8.7% 8.3% 8.3% 8.3% 8.0% 7.9% 8.2% 4.3% 3.5% 3.2% (0.6%) (0.1%) (
Slide 8: Business Insurance
Business Insurance Performance ($ in millions) Third Quarter Year-to-Date Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Operating income $ 543 $ 294 85 % $ 1,517 $ 909 67 % Loss and loss adjustment ratio 62.3 % 74.8 % 63.7 % 76.3 % Underw riting expense ratio 31.0 30.6 31.6 31.5 GAAP
Slide 9: 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 % Renewal Rate Change % 2 8% • Exposure/Other % 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 ($ in millions) Retention 84% 81%
Slide 10: Business Insurance: Select Accounts
Business Insurance: Select Accounts Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 12% Renewal Premium Change1 % 10% Renewal Rate Change % 2 • Exposure/Other % 8% 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 ($ in millions) Retention 81% 80% 79%
Slide 11: Business Insurance: Commercial Accounts
Business Insurance: Commercial Accounts Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 12% Renewal Premium Change1 % 10% Renewal Rate Change % 2 • Exposure/Other % 8% 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 ($ in millions) Retention 88% 84%
Slide 12: 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 Change % 3 8% • Exposure/Other % 6% 4% 2% - (2%) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 ($ in millions) Retention 83% 8
Slide 13: Commercial Accounts: Renewal Pricing Results
Commercial Accounts: Renewal Pricing Results Retention Rate Renewal Rate Change1 3Q’12 3Q’12 100% 2Q’12 • 2Q’12 20% 90% 16% Renewal Rate Change1 Retention Rate 80% 12% 70% 8% 60% 4% 50% 0% < 60% 60% - 90% > 90% Long-Term Loss Ratio Bands2 – All Lines of Business 1 Represents the estimated change i
Slide 14: Financial, Professional & International Insurance
Financial, Professional & International Insurance Performance ($ in millions) Third Quarter Year-to-Date Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Operating income $ 180 $ 211 (15) % $ 511 $ 495 3 % Loss and loss adjustment ratio 39.7 % 36.8 % 41.5 % 46.1 % Underw riting expense r
Slide 15: Financial, Professional & International Insurance
Financial, Professional & International Insurance ($ in millions) Illustrative Business Statistics 2011 2012 1Q 2Q 3Q 4Q 1Q 2Q 3Q Surety Gross written premium $235 $235 $250 $209 $202 $223 $219 Management Liability1 Retention 84% 85% 87% 85% 87% 86% 86% Renewal premium change 2 (0.1%) 0.2% 0.6% 0.9%
Slide 16: Personal Insurance
Personal Insurance Performance ($ in millions) Third Quarter Year-to-Date Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Operating income (loss) $ 206 $ (108) NM % $ 331 $ (409) NM % Loss and loss adjustment ratio 59.8 % 85.3 % 68.0 % 88.3 % Underw riting expense ratio 29.9 29.7 29.4 3
Slide 17: Personal Insurance
Personal Insurance Performance Third Quarter Year-to-Date 2012 2011 Change 2012 2011 Change Agency Automobile 1 Loss and loss adjustment ratio 74.1 % 77.5 % 73.6 % 75.4 % Underw riting expense ratio 25.3 25.8 25.5 26.2 GAAP combined ratio2 99.4 % 103.3 % 3.9 pts 99.1 % 101.6 % 2.5 pts Net favorable
Slide 18: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2011 2012 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1 Agency Automobile Retention 2,3 83% 83% 83% 83% 82% 81% 81% Renewal premium change 3,4 2.9% 3.4% 3.8% 4.2% 5.9% 5.4% 8.7% PIF growth over prior year quarter 2% 1% 1% -% (1%) (3%) (6%) New business $1
Slide 19: Explanatory Note
Explanatory Note This presentation contains, and management may make, “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,” “will,” “s
Slide 20: 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 21: Additional Information
The Travelers Companies, Inc. Additional Information Additional Information 21
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