The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q2 2013 Earnings Presentation
24 slides from The Travelers Companies's earnings presentation, Jul 23, 2013
Slide 1: Second Quarter 2013 Results
The Travelers Companies, Inc. Second Quarter 2013 Results July 23, 2013 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: 2nd Quarter 2013 Overview
2nd Quarter 2013 Overview Record net income per diluted share of $2.41, up 91% from prior year quarter Operating income per diluted share of $2.13, up 69% from prior year quarter Return on equity and operating return on equity of 14.6% and 14.2%, respectively • Net and operating income of $925 milli
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax) 2nd Quarter Year-to-Date Fourth Quarter Full Year 2013 2012 Change 2013 2012 Change Operating income $ 816 $ 495 65 % $ 1,703 $ 1,296 31 % per diluted share $ 2.13 $ 1.26 69 % $ 4.44 $ 3.27 36 % Included the following item
Slide 5: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital June 30, December 31, 2013 2012 • At or above target levels for all rating agencies • Repurchased $600 million of common shares, and dividends Debt $ 5,852 $ 6,350 Common equity 1 23,198 22,302 were $367 mill
Slide 6: Net Investment Income
Net Investment Income ($ in millions, after-tax) Total Second Quarter 2013 Commentary • Net investment income from the long-term fixed income $593 $589 $578 $583 $579 $556 $542 $551 portfolio declined modestly from the prior year quarter due to lower reinvestment rates, as expected ` • Short-term po
Slide 7: Components of Operating Return on Equity
Components of Operating Return on Equity 9.6% 17.9% 17.7% 12.4% 14.0% 12.5% 6.1% 11.0% 11.8% 15.0% 11.1% 11.0% 10.6% 1.4% 1.6% 1.4% 9.7% 9.3% 9.4% 0.8% 8.1% 9.0% 0.5% 0.7% 0.9% 0.9% 1.5% 8.7% 8.2% 0.9% 1.3% 0.4% 0.1% 0.9% 0.1% 1.1% 6.8% 6.7% 6.3% 5.8% 8.7% 8.9% 8.7% 8.3% 8.3% 8.3% 8.0% 8.1% 8.2% 7.6
Slide 8: Business Insurance
Business Insurance Performance ($ in millions) 2nd Quarter Year-to-Date Third Quarter Year-to-Date 2013 2012 Change 2013 2012 Change Operating income $ 579 $ 362 60 % $ 1,169 $ 974 20 % Loss and loss adjustment ratio 65.3 % 71.0 % 61.6 % 64.4 % Underw riting expense ratio 30.9 32.0 31.3 31.9 GAAP co
Slide 9: Business Insurance (Ex. National Accounts)
Business Insurance (Ex. National Accounts) Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 14% ▲ Renewal Premium Change1 % ♦ Renewal Rate Change % 2 12% • Exposure/Other % 10% 8% 6% 4% 2% - (2%) 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 ($ in millions) Retention 79
Slide 10: Business Insurance: Select Accounts
Business Insurance: Select Accounts Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 14% ▲ Renewal Premium Change1 % ♦ Renewal Rate Change % 2 12% • Exposure/Other % 10% 8% 6% 4% 2% - (2%) 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 ($ in millions) Retention 75% 75% 7
Slide 11: Business Insurance: Commercial Accounts
Business Insurance: Commercial Accounts Illustrative Business Statistics Renewal Premium Change (RPC)1 Rate vs. Exposure/Other 14% ▲ Renewal Premium Change1 % ♦ Renewal Rate Change % 2 12% • Exposure/Other % 10% 8% 6% 4% 2% - (2%) 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 ($ in millions) Retention 81% 8
Slide 12: Business Insurance: Other Business Insurance
Business Insurance: Other Business Insurance1 Illustrative Business Statistics Renewal Premium Change (RPC)2 Rate vs. Exposure/Other 14% ▲ Renewal Premium Change2 % ♦ Renewal Rate Change % 3 12% • Exposure/Other % 10% 8% 6% 4% 2% - (2%) 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 ($ in millions) Retention
Slide 13: Commercial Accounts: Renewal Pricing Results
Commercial Accounts: Renewal Pricing Results Retention Rate Renewal Rate Change1 2Q’13 • 2Q’13 2Q’12 2Q’12 100% 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) 2nd Quarter Year-to-Date Third Quarter Year-to-Date 2013 2012 Change 2013 2012 Change Operating income $ 154 $ 182 (15) % $ 317 $ 331 (4) % Loss and loss adjustment ratio 43.9 % 39.1 % 42.4 % 42.5 % Underw riting expense r
Slide 15: Financial, Professional & International Insurance
Financial, Professional & International Insurance ($ in millions) Illustrative Business Statistics 2012 2013 1Q 2Q 3Q 4Q 1Q 2Q Surety Gross written premium $202 $223 $219 $194 $195 $235 Management Liability1 Retention 87% 86% 85% 85% 85% 82% Renewal premium change 2 5.3% 5.9% 6.0% 5.7% 7.2% 6.5% New
Slide 16: Personal Insurance
Personal Insurance Performance ($ in millions) 2nd Quarter Year-to-Date Third Quarter Year-to-Date 2013 2012 Change 2013 2012 Change Operating income $ 142 $ 17 735 % $ 339 $ 125 171 % Loss and loss adjustment ratio 64.9 % 75.4 % 62.4 % 72.1 % Underw riting expense ratio 29.6 29.4 29.5 29.2 GAAP com
Slide 17: Personal Insurance
Personal Insurance Performance 2nd Quarter Year-to-Date 2013 2012 Change 2013 2012 Change Agency Automobile 1 Loss and loss adjustment ratio 71.6 % 75.6 % 71.0 % 73.3 % Underw riting expense ratio 26.2 25.9 25.9 25.7 2 GAAP combined ratio 97.8 % 101.5 % 3.7 pts 96.9 % 99.0 % 2.1 pts Net favorable (u
Slide 18: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2012 2013 1Q 2Q 3Q 4Q 1Q 2Q Agency Automobile 1 Retention 2,3 82% 81% 79% 79% 80% 80% Renewal premium change 3,4 5.7% 6.7% 9.2% 9.8% 8.8% 8.4% PIF growth over prior year quarter (1%) (3%) (6%) (9%) (11%) (12%) New business $135 $107
Slide 19: Appendix
Appendix Additional Information Additional Information 19
Slide 20: 2013 - 2014 Catastrophe Reinsurance
2013 - 2014 Catastrophe Reinsurance • The following table summarizes the company’s coverage under its General Catastrophe Reinsurance Treaty, effective for the period July 1, 2013 through June 30, 2014, as well as certain other catastrophe-related coverages: Layer of Loss Reinsurance Coverage In-For
Slide 21: Operating Return on Equity - Adjusted
Operating Return on Equity - Adjusted Year-to-Date 2013 Operating return on equity - reported 15.0% Less impact of: Net favorable prior year reserve development 2.4% Favorable tax and legal settlements 1.1% Operating return on equity - adjusted 11.5% 21
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
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