The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q1 2016 Earnings Presentation
25 slides from The Travelers Companies's earnings presentation, Apr 21, 2016
Slide 1: First Quarter 2016 Results
First Quarter 2016 Results April 21, 2016 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: First Quarter 2016 Overview
First Quarter 2016 Overview Travelers Reports First Quarter Net and Operating Income of $2.30 and $2.33 per Diluted Share, Respectively, Including Catastrophe Losses of $0.69 per Diluted Share First Quarter Return on Equity and Operating Return on Equity of 11.6% and 12.5%, Respectively Board of Dir
Slide 4: Analysis of 1Q 2016 Operating Results
Analysis of 1Q 2016 Operating Results Versus Prior Year Quarter Versus Consensus Estimate ($ in millions, after-tax) First Quarter 1Q 2016 2016 2015 Change TRV Operating income per diluted share - as reported $ 2.33 TRV Operating income $ 698 $ 827 $ (129) Consensus estimate(1) $ 2.55 Included the f
Slide 5: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax) First Quarter 2016 2015 Change Operating income $ 698 $ 827 (16) % per diluted share $ 2.33 $ 2.53 (8) % Included the following items: Net favorable prior year reserve development $ 119 $ 158 Catastrophes, net of reinsuran
Slide 6: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital • At or above target levels for all rating agencies. March 31, December 31, 2016 2015 • Repurchased 5.6 million shares during the first quarter 2016 Debt $ 6,344 $ 6,344 at a total cost of $609 million. 1 Com
Slide 7: Combined Net Investment Income – After-tax
Combined Net Investment Income – After-tax ($ in millions) Total First Quarter 2016 Commentary • Net investment income from the long-term fixed income portfolio $554 declined modestly from the prior year quarter primarily due to $478 $503 $484 $476 lower reinvestment rates as expected $440 $439 • Sh
Slide 8: Components of Operating Return on Equity
Components of Operating Return on Equity 14.1% 6.1% 11.0% 15.5% 15.5% 15.2% 14.5% 12.5% 9.4% 9.4% 0.7% 9.0% 1.3% 8.5% 1.3% 8.4% 0.4% 0.9% 0.1% 7.8% 1.2% 7.4% 7.3% 1.5% 7.1% 1.5% 7.2% 7.0% 0.7% 6.8% 0.7% 0.9% 0.5% 6.9% 5.7% 8.1% 7.3% 6.5% 8.3% 8.0% 6.6% 6.3% 4.7% 1.6% 2005 (2.9%) through 2010 2011 20
Slide 9: Business and International Insurance Performance
Business and International Insurance Performance ($ in millions) First Quarter 2016 2015 Change Operating income $ 476 $ 515 (8) % Loss and loss adjustment ratio 62.4 % 61.2 % Underw riting expense ratio 32.4 32.1 Combined ratio 1 94.8 % 93.3 % (1.5) pts Net favorable prior year reserve development
Slide 10: Domestic Business Insurance (Ex. National Accounts)
Domestic Business Insurance (Ex. National Accounts) Illustrative Business Statistics 10% Renewal Premium Change1 % Renewal Rate Change2 % Renewal Rate Change2 % ex. National Property 8% • Exposure/Other % 6% 4% 2% 1.2% 1.0% - 0.8% 0.5% -0.1% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 ($ in millions) Reten
Slide 11: Domestic Business Insurance: Select Accounts
Domestic Business Insurance: Select Accounts Illustrative Business Statistics 10% Renewal Premium Change1 % Renewal Rate Change2 % 8% • Exposure/Other % 6% 4% 2.8% 2.6% 2.4% 2.3% 2% 1.3% - (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 ($ in millions) Retention 81% 81% 81% 80% 81% Renewal premium 7.4% 7.8% 7.
Slide 12: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market Illustrative Business Statistics 10% Renewal Premium Change1 % Renewal Rate Change2 % 8% • Exposure/Other % 6% 4% 2% 1.3% 0.8% 1.0% 0.0% - -0.4% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 ($ in millions) Retention 87% 86% 86% 87% 88% Renewal premium 3.1% 2.5% 2.6
Slide 13: Business Insurance: Middle Market Number of Accounts
Business Insurance: Middle Market Distribution of Renewing Accounts by Renewal Rate Change: First Quarter 2016 6,000 5,500 5,000 4,500 4,000 Number of Accounts 3,500 3,000 2,500 2,000 1,500 1,000 500 - < -5% -5% to <0% 0% to 5% 5% to 10% > 10% Renewal Rate Change 13
Slide 14: Domestic Business Insurance: Other Business Insurance
Domestic Business Insurance: Other Business Insurance1 Illustrative Business Statistics 10% Renewal Premium Change2 % Renewal Rate Change3 % 8% • Exposure/Other % 6% 4% 2% 0.0% - 0.5% -1.0% -0.7% -1.1% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 ($ in millions) Retention 80% 81% 81% 79% 82% Renewal premium
Slide 15: International Insurance
International Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 1 International Retention 85% 82% 81% 79% 82% Renewal premium change 2 -% (0.8%) (1.4%) (1.0%) (0.3%) New business $58 $63 $59 $82 $76 1 Excludes the surety line of business as surety products are gener
Slide 16: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) First Quarter 2016 2015 Change Operating income $ 144 $ 124 16 % Loss and loss adjustment ratio 31.9 % 37.6 % Underw riting expense ratio 37.4 38.5 1 Combined ratio 69.3 % 76.1 % 6.8 pts Net favorable prior year reserve development 11.9 6.9 Cata
Slide 17: Bond & Specialty Insurance
Bond & Specialty Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 1 Management Liability Retention 85% 86% 87% 84% 87% Renewal premium change 2 4.2% 3.2% 3.0% 2.5% 3.5% New business $38 $40 $45 $41 $46 1 Excludes the surety line of business as surety products are g
Slide 18: Personal Insurance Performance
Personal Insurance Performance ($ in millions) First Quarter 2016 2015 Change Operating income $ 139 $ 252 (45) % Loss and loss adjustment ratio 66.7 % 55.2 % Underw riting expense ratio 27.0 28.3 1 Combined ratio 93.7 % 83.5 % (10.2) pts Net favorable prior year reserve development 1.4 7.5 Catastro
Slide 19: Personal Insurance Performance
Personal Insurance Performance First Quarter 2016 2015 Change Agency Automobile 1 Loss and loss adjustment ratio 70.3 % 64.4 % Underw riting expense ratio 24.9 25.8 Combined ratio 2 95.2 % 90.2 % (5.0) pts Net favorable prior year reserve development 0.8 2.8 Catastrophes, net of reinsurance (2.0) -
Slide 20: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q Agency Automobile 1 Retention 2 83% 83% 84% 85% 84% Renewal premium change 3 5.1% 4.8% 3.9% 3.6% 3.8% Policies in force (in thousands) 2,021 2,057 2,106 2,157 2,212 • Sequential quarter growth 1% 2% 2% 2% 3%
Slide 21: Travelers Proprietary Hail Dashboard
Travelers Proprietary Hail Dashboard ISO PCS CAT 1621 • Dallas metro area directly impacted • Significant hail size Hail Diameter: 1”< 2” Hail Diameter: 2”< 3” Hail Diameter: 3”< 4” TRV Policies Hail data source from Verisk Insurance Solutions RespondTM, operated by Verisk Analytics. 21
Slide 22: Appendix
Appendix Additional Information Additional Information 22
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: The Travelers Companies, Inc.
The Travelers Companies, Inc. Additional Information Additional Information 25
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