The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q3 2016 Earnings Presentation
23 slides from The Travelers Companies's earnings presentation, Oct 20, 2016
Slide 1: Third Quarter 2016 Results
Third Quarter 2016 Results October 20, 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: Third Quarter 2016 Overview
Third Quarter 2016 Overview Travelers Reports Third Quarter Net and Operating Income per Diluted Share of $2.45 and $2.40, Respectively Return on Equity and Operating Return on Equity of 11.6% and 12.5%, Respectively Net and operating income of $716 million and $701 million, respectively, declined
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts and after-tax, except for premiums) Third Quarter Year-to-Date 2016 2015 Change 2016 2015 Change Operating income $ 701 $ 918 (24) % $ 2,048 $ 2,551 (20) % per diluted share $ 2.40 $ 2.93 (18) % $ 6.92 $ 7.97 (13) % Included the follo
Slide 5: 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. September 30, December 31, 2016 2015 • Repurchased 4.8 million shares during the third quarter Debt $ 6,436 $ 6,344 2016 at a total cost of $562 million. C
Slide 6: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) Total Third Quarter 2016 Commentary • Net investment income from the long-term fixed income $554 portfolio declined modestly from the prior year quarter due to $503 $484 $476 $478 $472 lower reinvestment rates as expected $440 $439 $442 • Sh
Slide 7: Components of Operating Return on Equity
Components of Operating Return on Equity 14.1% 6.1% 11.0% 15.5% 15.5% 15.2% 14.9% 12.2% 9.4% 9.4% 0.7% 9.0% 1.3% 8.5% 1.3% 8.4% 0.4% 0.9% 0.1% 7.8% 1.2% 7.4% 7.5% 1.5% 7.1% 1.5% 7.4% 7.0% 1.0% 7.0% 0.7% 0.9% 0.7% 6.9% 0.1% 8.1% 7.3% 6.5% 6.2% 8.3% 6.5% 8.0% 5.2% 4.7% 1.6% 2005 (2.9%) through 2010 20
Slide 8: Business and International Insurance Performance
Business and International Insurance Performance ($ in millions) Third Quarter Year-to-Date 2016 2015 Change 2016 2015 Change Operating income $ 457 $ 546 (16) % $ 1,326 $ 1,604 (17) % Loss and loss adjustment ratio 63.0 % 59.6 % 63.2 % 60.5 % Underwriting expense ratio 33.1 32.6 33.0 32.4 Combined
Slide 9: Domestic Business Insurance (Ex. National Accounts)
Domestic Business Insurance (Ex. National Accounts) Illustrative Business Statistics 12% ▲ Renewal Premium Change1 % Renewal Rate Change2 % Renewal Rate Change2 ex. National Property % • 10% Exposure/Other % 8% 6% 4% 2% 1.1% 1.0% - 0.6% 0.3% 0.1% 0.3% -0.1% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16
Slide 10: Domestic Business Insurance: Select Accounts
Domestic Business Insurance: Select Accounts Illustrative Business Statistics 12% ▲ Renewal Premium Change1 % Renewal Rate Change2 % 10% • Exposure/Other % 8% 6% 4% 2.7% 2.5% 2% 2.4% 2.2% 1.3% 1.0% - 0.3% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 ($ in millions) Retention 81% 81% 81% 80% 82%
Slide 11: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market Illustrative Business Statistics 12% ▲ Renewal Premium Change1 % Renewal Rate Change2 % 10% • Exposure/Other % 8% 6% 4% 2% 1.4% 0.7% - 0.7% 0.6% 0.2% -0.2% -0.4% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 ($ in millions) Retention 87% 86% 86% 87% 88%
Slide 12: Domestic Business Insurance: Other Business Insurance
Domestic Business Insurance: Other Business Insurance1 Illustrative Business Statistics 12% ▲ Renewal Premium Change2 % Renewal Rate Change3 % Renewal Rate Change3 ex. National Property % 10% • Exposure/Other % 8% 6% 4% 2% - 0.3% -1.3% -0.2% -0.5% (2%) -1.1% -0.8% -1.0% 1Q'15 2Q'15 3Q'15 4Q'15 1Q'
Slide 13: International Insurance
International Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1 International Retention 85% 82% 81% 79% 83% 80% 82% Renewal premium change 2 (0.5%) (0.6%) (0.7%) (1.1%) (1.2%) (0.6%) 0.3% New business $58 $63 $59 $80 $78 $107 $86 1 Excludes the surety line o
Slide 14: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) Third Quarter Year-to-Date 2016 2015 Change 2016 2015 Change Operating income $ 146 $ 196 (26) % $ 492 $ 471 4 % Loss and loss adjustment ratio 32.3 % 20.6 % 26.4 % 31.3 % Underwriting expense ratio 37.8 36.5 37.6 37.5 Combined ratio 1 70.1 % 57
Slide 15: Bond & Specialty Insurance
Bond & Specialty Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1 Management Liability Retention 85% 86% 87% 84% 86% 87% 87% Renewal premium change 2 4.3% 3.7% 3.3% 2.4% 3.0% 3.7% 4.1% New business $38 $40 $45 $41 $46 $48 $50 1 Excludes the surety line of b
Slide 16: Personal Insurance Performance
Personal Insurance Performance ($ in millions) Third Quarter Year-to-Date 2016 2015 Change 2016 2015 Change Operating income $ 158 $ 241 (34) % $ 413 $ 667 (38) % Loss and loss adjustment ratio 65.5 % 56.5 % 66.6 % 58.0 % Underw riting expense ratio 27.4 28.6 27.5 28.6 Combined ratio 1 92.9 % 85.1 %
Slide 17: Personal Insurance Performance
Personal Insurance Performance Third Quarter Year-to-Date 2016 2015 Change 2016 2015 Change Agency Automobile 1 Loss and loss adjustment ratio 77.1 % 68.5 % 74.6 % 67.8 % Underw riting expense ratio 24.3 25.4 24.8 25.8 Combined ratio 2,3 101.4 % 93.9 % (7.5) pts 99.4 % 93.6 % (5.8) pts Net favorable
Slide 18: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q Agency Automobile 1 Retention 2 83% 84% 85% 85% 85% 85% 84% Renewal premium change 3 5.1% 4.7% 4.0% 4.4% 4.7% 4.6% 4.8% Policies in force (in thousands) 2,021 2,057 2,106 2,157 2,212 2,275 2,350 • Sequ
Slide 19: Illustration: Impact of Higher New Business on Loss Ratio
Illustration: Impact of Higher New Business on Loss Ratio Loss ratio for a cohort of business Steady state growth scenario: cohort improves with tenure loss ratios blend to target calendar year loss ratio Target Loss Ratio Cohort Cohort Loss Loss Ratio Ratios Returning to steady state growth results
Slide 20: Appendix
Appendix Additional Information Additional Information 20
Slide 21: 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 22: 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 23: The Travelers Companies, Inc.
The Travelers Companies, Inc. Additional Information Additional Information 23
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