The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q4 2014 Earnings Presentation
25 slides from The Travelers Companies's earnings presentation, Jan 22, 2015
Slide 1: Fourth Quarter 2014 Results
The Travelers Companies, Inc. Fourth Quarter 2014 Results January 22, 2015 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: Fourth Quarter 2014 Overview
Fourth Quarter 2014 Overview Travelers Reports Record Fourth Quarter and Full Year Net and Operating Income per Diluted Share Quarterly Net and Operating Income per Diluted Share of $3.11 and $3.07, Both up 15% from Prior Year Quarter, Generated Return on Equity of 16.6% and Operating Return on Equi
Slide 4: Total Return
Total Return1 20 Largest S&P Financial Companies2 & Other Selected Financial Companies 1 Year Total Return 5 Year Total Return 10 Year Total Return January 1, 2014 – December 31, 2014 January 1, 2010 – December 31, 2014 January 1, 2005 – December 31, 2014 31% Allstate 196% Aetna 475% BlackRock 31% S
Slide 5: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax) Fourth Quarter Year-to-Date 2014 2013 Change 2014 2013 Change Operating income $ 1,023 $ 981 4 % $ 3,641 $ 3,567 2 % per diluted share $ 3.07 $ 2.68 15 % $ 10.55 $ 9.46 12 % Included the following items: Net favorable prio
Slide 6: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital December 31, December 31, • At or above target levels for all rating agencies. 2014 2013 • Repurchased 9.7 million shares during the fourth quarter 2014 Debt $ 6,349 $ 6,346 and 35.8 million shares year-to-da
Slide 7: Net Investment Income
Net Investment Income ($ in millions, after-tax) Total Fourth Quarter 2014 Commentary • Net investment income from the long-term fixed $579 $546 $542 $551 $562 $582 $553 $568 income portfolio declined modestly from the prior $531 $513 year quarter due to lower reinvestment rates and volume/mix • Sho
Slide 8: Components of Operating Return on Equity
Components of Operating Return on Equity 9.6% 17.9% 17.7% 12.4% 14.0% 12.5% 6.1% 11.0% 15.5% 15.5% 11.1% 11.0% 10.6% 1.4% 1.6% 1.4% 9.4% 9.3% 0.8% 0.7% 8.1% 9.0% 0.5% 0.9% 8.5% 8.4% 0.4% 8.2% 0.9% 1.3% 0.1% 0.1% 1.2% 1.5% 7.0% 7.1% 6.8% 6.7% 5.8% 8.7% 8.9% 8.7% 8.3% 8.3% 8.3% 8.0% 8.1% 7.3% 6.9% 4.3
Slide 9: Business and International Insurance Performance
Business and International Insurance Performance ($ in millions) Fourth Quarter Third Quarter Year-to-Date Year-to-Date 2014 2013 Change 2014 2013 Change Operating income $ 630 $ 631 - % $ 2,347 $ 2,404 (2) % Loss and loss adjustment ratio 57.4 % 59.9 % 61.6 % 60.8 % Underw riting expense ratio 32.4
Slide 10: Domestic Business Insurance (Ex. National Accounts)
Domestic Business Insurance (Ex. National Accounts) Illustrative Business Statistics 14% ▲ Renewal Premium Change1 % Renewal Rate Change2 % 12% • Exposure/Other % 10% 8% 7.5% 6.9% 6.9% 6% 5.6% 4.9% 3.8% 4% 3.1% 2% 2.4% - (2%) 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 ($ in millions) Retentio
Slide 11: Domestic Business Insurance: Select Accounts
Domestic Business Insurance: Select Accounts Illustrative Business Statistics 16% ▲ Renewal Premium Change1 % Renewal Rate Change2 % 14% • Exposure/Other % 12% 10% 8% 6.8% 6.5% 6.7% 6.1% 6% 4.9% 4% 4.6% 3.9% 3.6% 2% - (2%) 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 ($ in millions) Retention 7
Slide 12: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market Illustrative Business Statistics 14% ▲ Renewal Premium Change1 % Renewal Rate Change2 % 12% • Exposure/Other % 10% 8.8% 8% 7.6% 7.7% 6% 5.5% 5.9% 4% 4.2% 3.4% 2% 2.1% - (2%) 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 ($ in millions) Retention 83% 82%
Slide 13: Domestic Business Insurance: Other Business Insurance
Domestic Business Insurance: Other Business Insurance1 Illustrative Business Statistics 14% ▲ Renewal Premium Change2 % Renewal Rate Change3 % 12% • Exposure/Other % 10% 8% 6% 6.0% 4.3% 5.4% 5.2% 4% 3.4% 2.1% 2% 2.5% 1.6% - (2%) 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 ($ in millions) Reten
Slide 14: International Insurance
International Insurance ($ in millions) Illustrative Business Statistics 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1,2 International Retention 82% 81% 78% 83% 84% 81% 81% 82% Renewal premium change 3 0.3% 2.1% 1.7% 1.3% 1.7% 2.7% (0.1%) 2.6% New business $47 $72 $51 $85 $85 $92 $72 $68 1 Excludes the surety
Slide 15: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) Fourth Quarter Year-to-Date Third Quarter Year-to-Date 2014 2013 Change 2014 2013 Change Operating income $ 216 $ 174 24 % $ 727 $ 573 27 % Loss and loss adjustment ratio 11.1 % 25.0 % 22.8 % 34.7 % Underw riting expense ratio 38.6 38.7 38.0 38.
Slide 16: Bond & Specialty Insurance
Bond & Specialty Insurance ($ in millions) Illustrative Business Statistics 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 Management Liability Retention 84% 83% 85% 84% 85% 84% 83% 84% Renewal premium change 2 7.9% 6.9% 7.0% 5.4% 7.0% 3.1% 4.0% 5.0% New business $38 $37 $40 $39 $36 $36 $33 $36 1 Excludes the
Slide 17: Personal Insurance Performance
Personal Insurance Performance ($ in millions) Fourth Quarter Year-to-Date Third Quarter Year-to-Date 2014 2013 Change 2014 2013 Change Operating income $ 242 $ 237 2 % $ 824 $ 838 (2) % Loss and loss adjustment ratio 55.5 % 57.0 % 59.6 % 59.1 % Underw riting expense ratio 29.8 29.9 29.1 29.8 Combin
Slide 18: Personal Insurance Performance
Personal Insurance Performance Fourth Quarter Year-to-Date 2014 2013 Change 2014 2013 Change Agency Automobile 1 Loss and loss adjustment ratio 71.7 % 77.8 % 71.0 % 72.8 % Underw riting expense ratio 26.2 26.2 26.2 26.1 2 Combined ratio 97.9 % 104.0 % 6.1 pts 97.2 % 98.9 % 1.7 pts Net unfavorable pr
Slide 19: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 Agency Automobile 2 Retention 79% 80% 80% 80% 80% 81% 83% 83% 3 Renewal premium change 9.8% 9.2% 7.8% 7.4% 6.8% 6.9% 5.7% 5.0% Policies in Force (in thousands) 2,191 2,123 2,058 2,010 1,985 1,981
Slide 20: Appendix
Appendix Additional Information Additional Information 20
Slide 21: 2015 Catastrophe Reinsurance
2015 Catastrophe Reinsurance Prior to January 1, 2015 Effective January 1, 2015 General Catastrophe Reinsurance Treaty Corporate Catastrophe Excess-of-Loss Reinsurance Covers the accumulation of net property losses arising from Treaty one occurrence: 53.3% ($400 million) of loss covered by Covers th
Slide 22: Investment Portfolio: Energy-Related Investments
Investment Portfolio: Energy-Related Investments ($ in millions) As of December 31, 2014 Average Credit Cost Rating4 Below investment grade bonds 1 $ 224 Ba2 Publicly traded equity securities 2 216 Private equities - energy focused3 343 Total $ 783 Percent of total investment portfolio 1.1% Note: Ta
Slide 23: 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 24: 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 25: Additional Information
The Travelers Companies, Inc. Additional Information Additional Information 25
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