The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q4 2022 Earnings Presentation
27 slides from The Travelers Companies's earnings presentation, Jan 23, 2023
Slide 1: Fourth Quarter 2022 Results
FOURTH QUARTER 2022 RESULTS January 24, 2023
Slide 2: Long-Term Financial Strategy
L O N G - T E R M F I N A N C I A L S T R AT E G Y Generation of Balanced Meaningful top–tier earnings approach to and sustainable and capital rightsizing capital competitive substantially and growing book advantages in excess of value per share growth needs over time C R E AT E S H A R E H O L D E
Slide 3: Fourth Quarter 2022 Overview
FOURTH QUARTER 2022 OVERVIEW Travelers Reports Fourth Quarter 2022 Net Income per Diluted Share of $3.44 and Return on Equity of 15.8% Fourth Quarter 2022 Core Income per Diluted Share of $3.40 and Core Return on Equity of 12.3% Full Year Net Income of $2.842 billion and Return on Equity of 12.2% Fu
Slide 4: Consolidated Performance
C O N S O L I D AT E D P E R F O R M A N C E ($ in millions, except per share amounts, after-tax, except for premiums) FOURTH QUARTER FULL YEAR 2022 2021 Change 2022 2021 Change Core income $ 810 $ 1,289 (37) % $ 2,998 $ 3,522 (15) % per diluted share $ 3.40 $ 5.20 (35) % $ 12.42 $ 13.94 (11) % Incl
Slide 5: Very Strong Financial Position
V E RY S T R O N G F I N A N C I A L P O S I T I O N ($ and shares in millions, except per share amounts) December 31, December 31, 2022 2021 Capital Debt $ 7,292 $ 7,290 • Continued strong capitalization to support the Company’s business operations. Common equity 1 26,458 26,472 Total capital 1 $ 3
Slide 6: Net Investment Income
NET INVESTMENT INCOME ($ in millions, after-tax) TOTAL Fourth Quarter 2022 vs. Prior Year Quarter Commentary $682 $645 $635 $624 • Net investment income (NII) from the fixed income $590 $595 $542 $539 $505 $531 portfolio increased due to a higher average yield and growth in average invested assets •
Slide 7: Leading Core Return on Equity at Industry-Low Volatility
LEADING CORE RETURN ON EQUITY AT INDUSTRY-LOW VOLATILITY 13.1% 10.7% 10.9% 11.3% 13.7% 11.3% 8.8% 8.8% 1.0% 8.0% 7.8% 0.2% 1.5% 1.1% 6.9% 7.1% 3.3% 0.3% 0.3% 0.7% 1.2% 0.1% 0.2% 4.9% 4.3% 4.4% 4.2% 7.6% 3.1% 6.2% 2.7% 6.4% 6.1% 5.5% 5.7% 2005 through 2018 2019 2020 2021 2022 2017 Full Year Long-term
Slide 8: Business Insurance Performance
BUSINESS INSURANCE PERFORMANCE ($ in millions) FOURTH QUARTER FULL YEAR 2022 2021 Change 2022 2021 Change Segment income $ 725 $ 867 (16) % $ 2,531 $ 2,385 6 % Loss and loss adjustment expense ratio 60.4 % 56.9 % 62.8 % 65.0 % Underwriting expense ratio 29.1 30.1 29.7 30.7 Combined ratio 1 89.5 % 87
Slide 9: Domestic Business Insurance (ex. National Accounts)
D O M E S T I C B U S I N E S S I N S U R A N C E ( E X . N AT I O N A L A C C O U N T S ) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 12% 10% 7.7% 8% 6.8% 6.0% 6% 5.0% 4.5% 4% 4.9% 5.1% 4.5% 2% - ($ in millions) 1Q’21 2Q
Slide 10: Domestic Business Insurance: Select Accounts
DOMESTIC BUSINESS INSURANCE: SELECT ACCOUNTS I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 12% 10% 8% 6% 4.2% 4.1% 4.1% 4% 3.5% 3.2% 2.9% 3.1% 3.1% 2% - ($ in millions) 1Q’21 2Q’21 3Q’21 4Q’21 1Q’22 2Q’22 3Q’22 4Q’22 Retent
Slide 11: Domestic Business Insurance: Middle Market
DOMESTIC BUSINESS INSURANCE: MIDDLE MARKET I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 12% 10% 8.2% 8% 7.0% 5.9% 6% 4.9% 4.5% 4% 4.8% 4.6% 4.0% 2% - ($ in millions) 1Q’21 2Q’21 3Q’21 4Q’21 1Q’22 2Q’22 3Q’22 4Q’22 Retentio
Slide 12: Bond & Specialty Insurance Performance
B O N D & S P E C I A LT Y I N S U R A N C E P E R F O R M A N C E ($ in millions) FOURTH QUARTER FULL YEAR 2022 2021 Change 2022 2021 Change Segment income $ 221 $ 170 30 % $ 908 $ 668 36 % Loss and loss adjustment expense ratio 41.3 % 47.4 % 39.9 % 46.6 % Underwriting expense ratio 35.6 34.1 35.4
Slide 13: Domestic Bond & Specialty Insurance
D O M E S T I C B O N D & S P E C I A LT Y I N S U R A N C E ($ in millions) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S 2021 2022 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Management Liability 1 Retention 87% 86% 86% 86% 85% 88% 89% 90% Renewal premium change 2 11.4% 13.1% 13.7% 10.9% 12.1% 8.7% 8.9% 6.
Slide 14: Personal Insurance Performance
PERSONAL INSURANCE PERFORMANCE ($ in millions) FOURTH QUARTER FULL YEAR 2022 2021 Change 2022 2021 Change Segment income (loss) $ (61) $ 327 NM $ (140) $ 760 NM Loss and loss adjustment expense ratio 81.0 % 66.0 % 79.8 % 70.3 % Underwriting expense ratio 24.3 25.1 25.1 26.2 Combined ratio 1 105.3 %
Slide 15: Personal Insurance Performance
PERSONAL INSURANCE PERFORMANCE FOURTH QUARTER FULL YEAR 2022 2021 Change 2022 2021 Change Automobile Loss and loss adjustment ratio 89.3 % 80.9 % 84.2 % 70.5 % Underwriting expense ratio 22.1 23.2 22.8 24.1 1 Combined ratio 111.4 % 104.1 % (7.3) pts 107.0 % 94.6 % (12.4) pts Net favorable (unfavorab
Slide 16: Domestic Personal Insurance
DOMESTIC PERSONAL INSURANCE ($ in millions) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S 2021 2022 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Automobile Retention 1 85% 86% 86% 86% 85% 84% 84% 82% 2 Renewal premium change 0.5% 0.4% 0.5% 2.1% 4.2% 7.4% 8.2% 11.4% Policies in force (in thousands) 2,807 2,852
Slide 17: Domestic Personal Insurance: Renewal Premium Change
DOMESTIC PERSONAL INSURANCE R E N E WA L P R E M I U M C H A N G E 1 16% Automobile 16% Homeowners and Other 14% 14% 12% 12% 10% 10% 8% 8% 6% 6% 4% 4% 2% 2% - - 1Q'21 2Q'21 3Q'21 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 1Q'21 2Q'21 3Q'21 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 17 1 Represents the estimated change in ave
Slide 18: Total International Insurance
TO TA L I N T E R N AT I O N A L I N S U R A N C E ($ in millions) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S 2021 2022 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q International 1 Retention 81% 80% 81% 84% 82% 86% 81% 85% Renewal premium change 2 6.3% 8.2% 6.2% 9.9% 9.0% 7.7% 7.5% 6.8% New business $70 $9
Slide 19: Appendix
APPENDIX 19
Slide 20: Deliberate and Disciplined Execution
D E L I B E R AT E A N D D I S C I P L I N E D E X E C U T I O N Accelerating NWP Growth Consistently Strong Underlying Profitability3 Improving Expense Ratio $35.4B AVG = 31.7% 93.0% AVG = 91.5% 92.0% $22.4B 28.5% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012 2013 2014 2015 2016 2017
Slide 21: 2023 Catastrophe Reinsurance
2 0 2 3 C ATA S T R O P H E R E I N S U R A N C E Effective January 1, 2023 Corporate Catastrophe Excess-of-Loss Reinsurance Treaty (Renewal) Covers the accumulation of certain property losses arising from one or multiple occurrences: $2.0 billion of qualifying losses are covered by the treaty in ex
Slide 22: Travelers' 10-Year History of Catastrophe Losses by Quarter
T R AV E L E R S ’ 1 0 - Y E A R H I S TO RY O F C ATA S T R O P H E L O S S E S 1 B Y Q U A RT E R 60% 40.9% 40% 24.0% 21.3% 20% 13.8% 0% 1Q 2Q 3Q 4Q Percentage of calendar year CAT activity attributed to each quarter (10-year average) Over the past 10 years, the second quarter is on average the hi
Slide 23: Well-Defined and Consistent Investment Philosophy
WELL-DEFINED AND CONSISTENT INVESTMENT PHILOSOPHY Investment Income reliable contributor to results; $2.2 billion after -tax, full year 2022 ($ in millions as of December 31, 2022, unless otherwise noted) Total Investments Fixed Income Portfolio Rating % % Fixed Maturities by Rating2 Fixed Non-Fixed
Slide 24: Technology Investments
TECHNOLOGY INVESTMENTS • Meaningfully increased our overall technology spend over the last five years • Significantly reduced our expense ratio at the same Strategic Investments time through our strategic focus on optimizing productivity and efficiency Routine but Necessary • Improved the mix of our
Slide 25: Explanatory Note
E X P L A N ATO RY N O T E 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
Slide 26: 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 27: investor.travelers.com
investor.travelers.com 27
The Travelers Companies — Q4 2022 Earnings Presentation on 6ix