The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q1 2020 Earnings Presentation
26 slides from The Travelers Companies's earnings presentation, Apr 21, 2020
Slide 1: First Quarter 2020 Results
First Quarter 2020 Results April 21, 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: Our COVID-19 Relief Efforts – The Steps We're Taking
Our COVID-19 Relief Efforts – The Steps We’re Taking Customers, Agents and Brokers Communities Employees • Pledged $5 million to COVID-19 relief efforts to assist families, communities and small businesses across • Offering billing relief for all customers. North America, the United Kingdom and the
Slide 4: First Quarter 2020 Overview
First Quarter 2020 Overview Travelers Reports First Quarter 2020 Net Income per Diluted Share of $2.33 and Return on Equity of 9.4% First Quarter 2020 Core Income per Diluted Share of $2.62 and Core Return on Equity of 11.5% • First quarter net income of $600 million and core income of $676 million.
Slide 5: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax, except for premiums) FIRST QUARTER 2020 2019 Change Core income $ 676 $ 755 (10) % per diluted share $ 2.62 $ 2.83 (7) % Included the following items: Net favorable prior year reserve development $ 21 $ 41 Catastrophes, ne
Slide 6: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital March 31, December 31, 2020 2019 • At or above target levels for all rating agencies. Debt $ 6,559 $ 6,558 • Repurchased 3.8 million shares during first quarter 2020 at a total cost of $471 million. 1 Common
Slide 7: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) TOTAL First Quarter 2020 vs 2019 Commentary $524 $548 $528 $525 $519 $525 $496 • Net investment income (NII) from the long-term fixed income portfolio was comparable, as the increase in average investments was offset by lower interest rates
Slide 8: Investment Strategies Designed for Long-Term Success
Investment Strategies Designed for Long-Term Success (as of March 31, 2020) Commercial TOTAL INVESTMENTAccounts: PORTFOLIO = % of Renewal $76.7 Accounts BILLION: 94% by Rate OF INVESTMENTS Band IN FIXED INCOME Fixed Income by Category Fixed Maturities by Investment Rating (in millions) % Investment
Slide 9: Municipal Bond Portfolio of $31 Billion
Municipal Bond Portfolio of $31 Billion (as of March 31, 2020, $ in millions) State General Local General Total Fair Average Rating of State Obligation Obligation Revenue Value Travelers Holdings Texas $ 35 $ 2,904 $ 1,294 $ 4,233 AAA • High quality portfolio Washington 110 1,432 464 2,006 AAA/AA+ a
Slide 10: Fixed Maturity Portfolio of $67.9 Billion Includes Manageable Exposure to COVID-19 Risk Categories
Fixed Maturity Portfolio of $67.9 Billion Includes Manageable Exposure to COVID-19 Risk Categories $ 1,000 1.40% Auto & Related (A and above): Toyota, Honda, 1.38% (% of Fixed Maturity Portfolio) Daimler and BMW aggregate to $339 million of 900 $398 million. Fair Value at March 31, 2020 ($MM) 800 En
Slide 11: Non-Fixed Income Portfolio of $4.8 Billion Includes Manageable Exposure to COVID-19 Risk Categories
Non-Fixed Income Portfolio of $4.8 Billion Includes Manageable Exposure to COVID-19 Risk Categories (as of March 31, 2020) Other Investments 6% Private Equities: well diversified across 350+ separate funds and 3000+ portfolio companies. $299 million/400+ companies in energy funds. Retail, auto, leis
Slide 12: Components of Core Return on Equity
Components of Core Return on Equity 13.3% 15.2% 13.3% 9.0% 10.7% 10.9% 13.0% 11.5% 9.2% 0.9% 0.3% 8.0% 7.8% 7.8% 7.7% 7.4% 7.4% 7.2% 7.2% 1.5% 1.1% 0.7% 1.1% 0.9% 0.9% 0.3% 0.4% 1.3% 0.3% 0.3% 8.0% 0.1% 6.1% 0.2% 5.6% 4.1% 3.8% 6.5% 6.4% 3.1% 6.3% 6.3% 6.2% 6.2% 2.7% 5.7% 1.8% 0.0% 2005 through 2014
Slide 13: Business Insurance Performance
Business Insurance Performance ($ in millions) FIRST QUARTER 2020 2019 Change Segment income $ 289 $ 414 (30) % Loss and loss adjustment ratio 70.9 % 67.6 % Underwriting expense ratio 31.3 30.5 Combined ratio 1 102.2 % 98.1 % (4.1) pts Net favorable (unfavorable) prior year reserve development 0.1 (
Slide 14: 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% 6.2% 6% 5.0% 4.3% 4% 3.5% 2.1% 2% - (2%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 Retention 86% 85% 84% 84% 84% Renewal 5.3% 4.7% 6.4%
Slide 15: 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% 1.6% 2% 1.3% 0.6% 0.9% - (2%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 Retention 83% 82% 82% 81% 81% Renewal 5.1% 4.0% 5.5% 5.6% 5.
Slide 16: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 8% 6.6% 6% 5.0% 4% 3.8% 3.5% 2.1% 2% - (2%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 Retention 87% 87% 86% 86% 86% Renewal 5.1% 3.8% 5.2% 5.8% 7.5%
Slide 17: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) FIRST QUARTER 2020 2019 Change Segment income $ 122 $ 138 (12) % Loss and loss adjustment ratio 48.8 % 43.5 % Underwriting expense ratio 37.1 37.6 Combined ratio 1 85.9 % 81.1 % (4.8) pts Net favorable prior year reserve development - 0.5 Catast
Slide 18: Domestic Bond & Specialty Insurance
Domestic Bond & Specialty Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q Management Liability 1 Retention 89% 90% 90% 89% 89% Renewal premium change 2 4.2% 4.2% 4.9% 6.5% 7.5% New business $55 $64 $68 $61 $58 18 1 Domestic only, excludes surety and other products
Slide 19: Personal Insurance Performance
Personal Insurance Performance ($ in millions) FIRST QUARTER 2020 2019 Change Segment income $ 336 $ 278 21 % Loss and loss adjustment ratio 61.9 % 63.7 % Underwriting expense ratio 26.3 26.4 Combined ratio 1 88.2 % 90.1 % 1.9 pts Net favorable prior year reserve development 0.8 2.8 Catastrophes, ne
Slide 20: Domestic Personal Insurance Performance
Domestic Personal Insurance Performance FIRST QUARTER 2020 2019 Change Agency Automobile 1 Loss and loss adjustment ratio 65.9 % 66.0 % Underwriting expense ratio 23.5 23.4 Combined ratio 2 89.4 % 89.4 % - pts Net favorable prior year reserve development 0.4 3.4 Catastrophes, net of reinsurance (0.6
Slide 21: Domestic Personal Insurance
Domestic Personal Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 1 Agency Automobile Retention 2 84% 84% 84% 84% 84% 3 Renewal premium change 5.5% 4.9% 3.8% 2.9% 2.4% Policies in force (in thousands) 2,516 2,517 2,524 2,532 2,540 • Sequential quarter growth -% -%
Slide 22: Total International Insurance
Total International Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 1 International Retention 80% 80% 79% 77% 72% Renewal premium change 2 6.2% 4.6% 5.5% 7.1% 8.8% New business $94 $89 $69 $74 $67 22 1 Excludes surety and other products that are generally sold on
Slide 23: Appendix
Appendix 23
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
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