The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q3 2014 Earnings Presentation
23 slides from The Travelers Companies's earnings presentation, Oct 21, 2014
Slide 1: Third Quarter 2014 Results
The Travelers Companies, Inc. Third Quarter 2014 Results October 21, 2014 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 2014 Overview
Third Quarter 2014 Overview Travelers Reports Net Income per Diluted Share of $2.69, Up 17% from Prior Year Quarter Operating Income per Diluted Share of $2.61, Up 11% from Prior Year Quarter Return on Equity and Operating Return on Equity of 14.5% and 15.2%, Respectively • Net income and operating
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax) Third Quarter Year-to-Date 2014 2013 Change 2014 2013 Change Operating income $ 893 $ 883 1 % $ 2,618 $ 2,586 1 % per diluted share $ 2.61 $ 2.35 11 % $ 7.50 $ 6.79 10 % Included the following items: Net favorable prior ye
Slide 5: Third Quarter Net Favorable Prior Year Reserve Development
Third Quarter Net Favorable Prior Year Reserve Development ($ in millions) Favorable/(unfavorable) Better than expected loss experience in recent accident years primarily related to general liability, $ 278 commercial property, contract surety and homeowners & other Benefit associated with workers'
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. September 30, December 31, 2014 2013 • Repurchased 8.1 million shares during the third quarter 2014 Debt $ 6,348 $ 6,346 and 26.1 million shares year-to-da
Slide 7: Net Investment Income
Net Investment Income ($ in millions, after-tax) Total Third 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 $531 year quarter due to lower reinvestment rates, as expected • Short-term
Slide 8: Components of Operating Return on Equity
Components of Operating Return on Equity 9.6% 17.9% 17.7% 12.4% 14.0% 12.5% 6.1% 11.0% 15.5% 15.1% 14.8% 11.1% 11.0% 10.6% 1.4% 1.6% 1.4% 9.4% 9.3% 0.8% 0.7% 8.1% 9.0% 0.5% 0.9% 8.5% 8.5% 8.6% 0.4% 8.2% 0.9% 1.3% 0.1% 0.1% 1.2% 1.1% 1.7% 7.0% 6.8% 6.7% 6.6% 6.2% 5.8% 8.7% 8.9% 8.7% 8.3% 8.3% 8.3% 8.
Slide 9: Business and International Insurance Performance
Business and International Insurance Performance ($ in millions) Third ThirdQuarter Quarter Year-to-Date Year-to-Date 2014 2013 Change 2014 2013 Change Operating income $ 552 $ 566 (2) % $ 1,717 $ 1,773 (3) % Loss and loss adjustment ratio 63.1 % 61.3 % 63.0 % 61.1 % Underw riting expense ratio 32.1
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% 7.6% 6.9% 6.7% 6% 5.6% 4.9% 3.9% 4% 3.3% 2% - (2%) 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 ($ in millions) Retention 80% 79% 7
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% 4.8% 4% 4.6% 3.9% 2% - (2%) 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 ($ in millions) Retention 77% 76% 75%
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% 8.9% 8% 7.6% 7.5% 6.0% 6% 5.6% 4% 3.8% 4.2% 2% - (2%) 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 ($ in millions) Retention 83% 82% 82% 83% 83
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% 5.4% 4.2% 4% 5.0% 3.5% 2% 2.7% 1.6% - (2%) 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 ($ in millions) Retention 78% 78
Slide 14: International Insurance
International Insurance ($ in millions) Illustrative Business Statistics 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1,3 International Retention 82% 81% 78% 82% 84% 81% 81% Renewal premium change 2 (0.7%) 2.9% 1.8% 1.7% 2.1% 2.8% 0.6% New business $48 $71 $51 $85 $82 $91 $70 1 Excludes the surety line of busines
Slide 15: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) Third Quarter Year-to-Date Third Quarter Year-to-Date 2014 2013 Change 2014 2013 Change Operating income $ 165 $ 120 38 % $ 511 $ 399 28 % Loss and loss adjustment ratio 28.7 % 40.8 % 26.7 % 38.1 % Underw riting expense ratio 38.2 38.6 37.9 38.6
Slide 16: Bond & Specialty Insurance
Bond & Specialty Insurance ($ in millions) Illustrative Business Statistics 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1 Management Liability Retention 85% 83% 85% 84% 85% 84% 84% Renewal premium change 2 7.9% 6.9% 7.0% 4.8% 7.0% 3.4% 4.6% New business $38 $37 $40 $39 $36 $36 $34 1 Excludes the surety line of b
Slide 17: Personal Insurance Performance
Personal Insurance Performance ($ in millions) Third Quarter Year-to-Date Third Quarter Year-to-Date 2014 2013 Change 2014 2013 Change Operating income $ 239 $ 262 (9) % $ 582 $ 601 (3) % Loss and loss adjustment ratio 56.0 % 54.5 % 60.9 % 59.8 % Underw riting expense ratio 30.1 30.2 28.9 29.7 Combi
Slide 18: Personal Insurance Performance
Personal Insurance Performance Third Quarter Year-to-Date 2014 2013 Change 2014 2013 Change Agency Automobile 1 Loss and loss adjustment ratio 70.1 % 71.5 % 70.8 % 71.1 % Underw riting expense ratio 26.6 26.4 26.2 26.1 Combined ratio2 96.7 % 97.9 % 1.2 pts 97.0 % 97.2 % 0.2 pts Net unfavorable prior
Slide 19: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2013 2014 1Q 2Q 3Q 4Q 1Q 2Q 3Q Agency Automobile 1 Retention 2 79% 80% 80% 80% 80% 82% 82% Renewal premium change 3 9.8% 9.2% 7.8% 7.5% 6.8% 6.4% 5.8% Policies in Force (in thousands) 2,191 2,123 2,058 2,010 1,985 1,981 1,990 • Sequ
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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