The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — KPMG Insurance Industry Conference 2007
30 slides from The Travelers Companies's conference presentation, Sep 12, 2007
Slide 1: KPMG Insurance Industry Conference
Jay S. Benet Vice Chairman and Chief Financial Officer KPMG Insurance Industry Conference September 12, 2007
Slide 2: 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. Specifically, earnings
Slide 3: Travelers Today
Travelers Today ¾ Formed April 1, 2004 upon merger of Travelers Property Casualty Corp. and The St. Paul Companies, Inc. ¾ Fourth largest U.S. property casualty insurer based on direct written premiums ¾ Business in United States, United Kingdom, Republic of Ireland, and Canada ¾ Three business segm
Slide 4: Geographic Footprint
Geographic Footprint Travelers offers a broad mix of personal and business insurance products in the United States, while focusing almost exclusively on specialized business coverages in the remainder of its geographic footprint. Approximate Market Share ¾ United States 4.5% Over $20 billion of pr
Slide 5: Diversity of Customer and Product
Diversity of Customer and Product Personal Commercial Home & Other Multi-Peril 15% 14% Financial, Professional & Business Workers' International Insurance Insurance Comp 16% 52% 10% Personal Auto 17% Commercial Auto 10% Int'l & Other Personal 6% Insurance Commercial Fidelity & Property 32% Surety Ge
Slide 6: Travelers Market Shares
Travelers Market Shares Total Industry Commercial Personal State Farm 9.9 % AIG 11.3 % State Farm 19.1 % AIG 7.2 Travelers 6.1 Allstate 11.3 Allstate 5.7 Zurich 4.8 Farmers 5.5 Travelers 4.5 Liberty Mutual 4.6 Progressive 5.4 Berkshire Liberty Mutual 3.7 CNA 3.1 4.9 Hathaway Nationwide 3.3 Hartford
Slide 7: Strong Relationship with Independent Agents
Strong Relationship with Independent Agents Commercial Lines Agency Preference Survey Personal Lines Agency Preference Survey Travelers 64.9% Travelers 43.2% Hartford 43.2% Chubb 34.2% AIG 26.1% Progressive 33.3% CNA 25.2% Allstate 21.6% Chubb 25.2% Safeco 19.8% Liberty Mutual 22.5% MetLife 18.0% Zu
Slide 8: Fortune Ranking - Revenue
Fortune 100 Ranking - Revenue ($ in billions) 2006 Rank Company Revenues 77 Cisco Systems $ 28.5 79 American Express 27.1 82 Hartford Financial Services 26.5 85 Aetna 25.6 89 Travelers 25.1 92 General Dynamics 24.2 94 Coca-Cola 24.1 97 3M 22.9 100 Haliburton 22.6 Source: Fortune 500 Survey, April 30
Slide 9: Fortune Ranking – Net Income
Fortune 100 Ranking – Net Income ($ in billions) 2006 Rank Company Net Income 27 Home Depot $ 5.8 29 Cisco Systems 5.6 33 Coca-Cola 5.1 35 Allstate 5.0 37 Travelers 4.2 41 3M 3.9 44 American Express 3.7 49 Walt Disney 3.4 54 Hartford Financial Services 2.7 Source: Fortune 500 Survey, April 30, 2007
Slide 10: KPMG Request: “What’s on the Mind of a CFO”?
KPMG Request: “What’s on the Mind of a CFO”? ¾ Travelers and the capital markets Strong liquidity and capital position High quality investment portfolio Limited exposure to credit risk Minimal financing needs currently projected ¾ Profitability Underwriting discipline Expense management
Slide 11: Recent Wall Street Journal Articles
Recent Wall Street Journal Articles 10
Slide 12: Travelers Liquidity and Capital Position
Travelers Liquidity and Capital Position ($ in millions) June 30, 2007 Debt $ 6,733 Preferred equity 119 (1) Common equity 25,466 (1) Total capital $ 32,318 (1) Debt to total capital 20.8% (2) ex debt pre-funding 19.6% Statutory surplus $ 21,843 Holding company liquidity $ 2,274 (2) ex debt pre-fund
Slide 13: High Quality Investment Portfolio
High Quality Investment Portfolio Private Equities Mortgage Arbitrage Funds Loans Real Estate JV’s <0.5% Other Short–term 6% 6% Duration: 4.1 Average quality rating: AA1, AA+ Below investment grade: 2.6% After-tax yield: 4.2% Average Invested Assets: $73 billion Fixed Maturity 88% Travelerswell Trav
Slide 14: Negligible Exposure to Sub-Prime / Alt-A Mortgages
Negligible Exposure to Sub-Prime / Alt-A Mortgages ($ in millions) ¾ Sub-prime / Alt-A mortgages within fixed maturities portfolio: Market Value as of June 30, 2007 ABSs collateralized by sub prime mortgages $ 102 - Average credit rating of "AAA" - 95% from vintage years 2003 & prior CMO securities
Slide 15: Minimal Financing Needs Currently Projected Through 2012
Minimal Financing Needs Currently Projected Through 2012 ($ 1.5 in billions) ¾ Effective laddering of maturities: 1.2 $1.0 .9 $.8 $.6 .6 $.5 $.5 $.5 $.4 $.4 $.4 $.4 $.3 $.3 .3 $.2 $.1 $.1 <$.1 <$.1 $.5 <$.1 $.1 - 2007 2008 2009 2010 2011 2012 2013 2015 2016 2017 2026 2027 2033 2036 2037 2045 2046 20
Slide 16: Travelers Profitability
Travelers Profitability ($ in millions, except per share) $1,500 Operating Income $1,350 $1,193 $1,167 $1,011 $1,037 $1,078 $1,200 $959 $1,050 $900 $750 $600 $450 $300 $150 $0 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 2007 2006 Six Months Full Year Operating income $ 2,245 $ 4,200 (1) Operating income per
Slide 17: Disciplined Underwriting Driven by Extensive Analytics
Disciplined Underwriting Driven by Extensive Analytics ¾ Business dynamics Metrics ¾ Profitability ¾ Production Retention Views by: New business ¾ Region New and renewal pricing ¾ Office Submission volume ¾ Line of Business Quote ratios ¾ Account Size Close ratios ¾ Industry / Program ¾
Slide 18: Disciplined Underwriting Driven by Extensive Analytics
Disciplined Underwriting Driven by Extensive Analytics ¾ Product profitability analysis based upon risk adjusted capital Select CAG - Field First Party Oper. Comb. % Net Oper. Comb. % Net Oper. Comb. % Net Profit % Ratio Grow th Profit % Ratio Grow th Profit % Ratio Grow th Property-NWP 12 mos '05 $
Slide 19: Disciplined Underwriting Driven by Extensive Analytics
Disciplined Underwriting Driven by Extensive Analytics ¾ Controllable income statements Countrywide – CAG Field Controllable Income Statement Country-wide Income Statement Jane Smith – (xxx) xxx-xxxx Southwest Region Commercial Accounts – Controllable Income Statement Region Income Statement John Sm
Slide 20: Travelers Enterprise Risk Management
Travelers Enterprise Risk Management The mission of Travelers Enterprise Risk Management is to facilitate the assessment and mitigation of risks in accordance with the company’s goals and values. ¾ To enhance the coordination of risk management across all categories of risk throughout the company an
Slide 21: Enterprise Risk Management: Travelers Culture
Enterprise Risk Management: Travelers Culture Board of Directors Board of Directors Compensation Committee Nominating & Governance Committee Investment & Capital Risk Committee Markets Committee Audit Committee Insurance Risk Enterprise Risk Management Management Investment Legal/Regulatory Insuranc
Slide 22: Enterprise Risk Management: Travelers Risk Identification
Enterprise Risk Management: Travelers Risk Identification ¾ Identification and summarization of significant risks performed by: ERM operating management financial management external auditors Investment Financial Insurance ¾ Significant risks reviewed with Audit and Risk Committees of the Boar
Slide 23: Enterprise Risk Management: Travelers Processes
Enterprise Risk Management: Travelers Processes ¾ Risk Committees of the Board and senior management Underwriting and pricing Catastrophe modeling Impact of climate change Terrorism strategy Reinsurance Aggregation of risk Identification and assessment of new and evolving theories of l
Slide 24: Enterprise Risk Management: Travelers Processes
Enterprise Risk Management: Travelers Processes ¾ Risk Committees of the Board and senior management ¾ Investment and Capital Markets Committee of the Board Investment policies and performance Credit aggregation Asset/liability management Transaction authorization levels 23
Slide 25: Enterprise Risk Management: Travelers Processes
Enterprise Risk Management: Travelers Processes ¾ Risk Committees of the Board and senior management ¾ Investment and Capital Markets Committee of the Board ¾ Audit Committee of the Board Claim and claim adjustment expense reserves Major litigation Internal controls Compliance, including Sar
Slide 26: Enterprise Risk Management: Travelers Processes
Enterprise Risk Management: Travelers Processes ¾ Risk Committees of the Board and senior management ¾ Investment and Capital Markets Committee of the Board ¾ Audit Committee of the Board ¾ Governance and Compensation Committees of the Board 25
Slide 27: Enterprise Risk Management: Travelers Processes
Enterprise Risk Management: Travelers Processes ¾ Risk Committees of the Board and senior management ¾ Investment and Capital Markets Committee of the Board ¾ Audit Committee of the Board ¾ Governance and Compensation Committees of the Board ¾ Other Corporate Actuarial Group Chief Compliance Off
Slide 28: Travelers: A Preeminent Property Casualty Franchise
Travelers: A Preeminent Property Casualty Franchise ¾ Strong market presence ¾ Broad and diversified product portfolio ¾ Significant scale ¾ Leading distributor through independent agents ¾ Superior risk management ¾ Performance based culture ¾ Expenses – spend money like it’s your own 27
Slide 29: Disclosure
Disclosure For further information please see Travelers reports filed with the SEC pursuant to the Securities Exchange Act of 1934 which are available at the SEC’s website (www.sec.gov) Copies of this presentation are publicly available on the Travelers website (www.travelers.com) in the investo
Slide 30: End Slide
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