The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Bank of America Merrill Lynch Insurance Conference 2011
30 slides from The Travelers Companies's conference presentation, Feb 15, 2011
Slide 1: Bank of America Merrill Lynch Insurance Conference
Brian W. MacLean President & Chief Operating Officer Bank of America Merrill Lynch Insurance Conference February 15, 2011
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. Words such as “may”, “w
Slide 3: Overview: Travelers Segments
Overview: Travelers Segments Travelers Full Year 2010 Net Written Premiums: $21.6 Billion Select National Accounts Accounts Commercial Accounts Homeowners & Other Personal Insurance Industry Focused Underwriting Business Insurance $7.5 Billion $10.9 Billion Target Risk Underwriting Personal Automobi
Slide 4: Focus of Today's Presentation
Focus of Today’s Presentation Individually Underwritten U.S. Commercial Businesses Select National Accounts Accounts Commercial Accounts Homeowners & Other Industry Focused Underwriting Target Risk Underwriting Personal Automobile Specialized Distribution Bond & Financial Products International Note
Slide 5: Superior Risk Assessment Enables Outperformance Versus Industry
Superior Risk Assessment Enables Outperformance Versus Industry Risk Assessment Underwriting Distribution Product Service Claim Sophistication Strength Quality Capabilities Effectiveness Technology Talent Data 4
Slide 6: Foundations for Success in the P&C Industry
Foundations for Success in the P&C Industry Technology 13,000 Claim Employees Talent Countrywide – CAG Field Controllable Income Statement Jane Smith – (xxx) xxx-xxxx Southwest Region CAG Field – Controllable Income Statement John Smith – (xxx) xxx-xxxx Los Angeles – Controllable Income Statement Ja
Slide 7: Key Capabilities for Success in the P&C Industry
Key Capabilities for Success in the P&C Industry Risk Assessment Underwriting Distribution Product Service Claim Sophistication Strength Quality Capabilities Effectiveness Technology Talent Data 6
Slide 8: Product Quality: Specialization
Product Quality: Specialization Travelers Full Year 2010 Net Written Premiums: $21.6 Billion • Over the past few years, Travelers has Select developed a multitude of new and enhanced Accounts National products such as: Accounts Homeowners Commercial and Other Accounts TravelersExpress SM Constructio
Slide 9: Product Quality: Manufacturing Process
Product Quality: Manufacturing Process Product Research Enterprise Design Develop File Implement Idea Collaboration • Agents • Industry • Other • Coverage • Draft Forms • Filing • Press Release Businesses Strategy • Field • Competitor • Rates • Legal Review • Articles/ • Enterprise • Pilot or C/W Ad
Slide 10: Product Quality: Specialization
Product Quality: Specialization • Suite of products and services providing tailored risk management solutions - Tailored coverage solutions - Packaged sales kits and joint advertising for agents - Pre-qualified leads Travelers Commercial Accounts: Examples of New and Enhanced Products 2008 & Prior 2
Slide 11: Product Quality: Breadth
Product Quality: Breadth Travelers Full Year 2010 Net Written Premiums: $21.6 Billion Select Accounts National Accounts Benefits of Product Breadth Homeowners and Other Commercial • Responds to agents / customers Accounts needs with an abundance of related products across markets Construction Techno
Slide 12: Distribution Strength: Leadership Position
Distribution Strength: Leadership Position An Agency’ Agency’s Average Share of Middle Market Written Premium With Their Top 3 Carriers1 Agency Preference Survey2 • Percentage of agents who responded that Travelers was one 80% of an of the top 5 companies they do agency’s business with: 80% book is
Slide 13: Underwriting Sophistication: Understanding the Risk
Underwriting Sophistication: Understanding the Risk Travelers Risk Selection Process and Underwriting Qualitative Controls • Pre-qualification - Underwriting guidance - Target prospects - Geographic / jurisdiction focus - Financial underwriting - Loss prevention and risk control • Collaboration - Au
Slide 14: Underwriting Sophistication: Industry Leading Analytics
Underwriting Sophistication: Industry Leading Analytics Predictive models Business metrics • Large scale of proprietary data • Granular views of profit, loss, production metrics • More robust management information + • Views include by: region, office, • Better pricing segmentation account, industry
Slide 15: Underwriting Sophistication: Ability to Execute Risk Based Pricing Strategy
Underwriting Sophistication: Ability to Execute Risk Based Pricing Strategy Full Year 2010 Renewal Rate by Band – Travelers Commercial Accounts1 8,000 6,000 Number of Accounts 4,000 2,000 0 < -10% -10% to -5% -5% to 0% 0% to 5% 5% to 10% >10% Combination of sophisticated pricing tools and experience
Slide 16: Services Capabilities: Industry Leading Risk Control
Services Capabilities: Industry Leading Risk Control • Travelers has over 700 specialists helping customers assess risk and mitigate loss experience • Approximately 75% of new accounts assessed prior to quote • 75,000 jobs completed annually; 110,000 safety recommendations made in 2010 • Data levera
Slide 17: Claim Effectiveness: Industry Leading Claim Management
Claim Effectiveness: Industry Leading Claim Management Outcomes Travelers Claim Services Contribution • Optimal payout • Resolution excellence compressing claim process (improve customer satisfaction, pay right amount and eliminate fraud) • Deepen customer • Speed, flexible delivery of claim service
Slide 18: Success in Key Capabilities Needed for Superior Risk Assessment
Success in Key Capabilities Needed for Superior Risk Assessment Travelers Commercial Accounts: 2008 New Business 0 bps Return on Allocated +50 bps Capital 0 +50 New Business 1st Renewal 2nd Renewal 2008 New Business 2.0% 1.6% Rate Change Remainder of Book 0.1% 0.1% 2008 New Business 84.2% 81.7% Rete
Slide 19: Example: Workers' Compensation
Example: Workers’ Compensation 18
Slide 20: Workers' Compensation Overview of Travelers
Workers’ Compensation Overview of Travelers Travelers Business Insurance Segment Market Share Percentage Full Year 2010 Net Written Premiums: $10.9 Billion Top 10 U.S. Workers’ Workers’ Compensation Carriers Rank Company 2009 2008 2007 2006 2005 Commercial Multi-Peril 1 Liberty Mutual 11.0% 11.6% 10
Slide 21: Workers' Compensation: Travelers Competitive Advantages
Workers’ Compensation Travelers Competitive Advantages • Broad view of the market - Ability to write small, middle market and national accounts successfully including the residual market • Risk selection advantage - Industry leading analytics and tools at the local level enhance underwriting and pri
Slide 22: Workers' Compensation: Travelers Integrated Claims Management
Workers’ Compensation Travelers Integrated Claims Management Claim Event Mandatory Medicare Reporting Experts 1-800 Nurse Assistance Medicare Set- Set-Aside Experts Claim Reporting 24/7 Compensability Investigation Early Intervention in Chronic Pain Preferred Provider Network Medical Case Management
Slide 23: Integrated Claims Management – Examples of Capabilities
Workers’ Compensation Travelers Integrated Claims Management – Examples of Capabilities Medical Case Management Employ over 500 nurses to actively manage all medical components of a workers’ compensation claim • Patented nurse triage process - Based on predictive modeling, nurses are assigned early
Slide 24: Integrated Claims Management – Examples of Capabilities (Cont.)
Workers’ Compensation Travelers Integrated Claims Management – Examples of Capabilities (Cont.) Pharmacy Management Program Extensive countrywide pharmacy network drives a 44% reduction in pharmacy costs • Partner with pharmacists - Analyze potential harmful drug interactions - Look for generic subs
Slide 25: Integrated Claims Management – Examples of Capabilities (Cont.)
Workers’ Compensation Travelers Integrated Claims Management – Examples of Capabilities (Cont.) Medical Bill Review Travelers receives medical bills for nearly $2.5 billion related to workers’ compensation per year • All bills are subject to a sophisticated automated and manual system of review - Sy
Slide 26: Workers' Compensation: Travelers Integrated Claims Management
Workers’ Compensation Travelers Integrated Claims Management Travelers Results • Frequency of lost time claims declined approximately 40% from 2002 to 2009 • Number of days out work per loss declined 3.5% in 2010 compared to 2009 • 67% of injured workers return to work within 30 days; 82% within 60
Slide 27: Risk Assessment
Risk Assessment Underwriting Distribution Product Service Claim Sophistication Strength Quality Capabilities Effectiveness Technology Talent Data 26
Slide 28: Superior Risk Assessment Enables Outperformance Versus Industry
Risk Assessment Underwriting Underwriting Distribution Distribution Product Product Service Claim Claim Sophistication Sophistication Strength Strength Quality Quality Capabilities Capabilities Effectiveness Effectiveness Technology Technology Talent Talent Data Data Superior risk assessment enables
Slide 29: End Slide
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Slide 30: 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). • This presentation should be read with accompanying discussion and Travelers SEC filings. • From time to time
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