The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Keefe, Bruyette & Woods Insurance Conference 2010
31 slides from The Travelers Companies's conference presentation, Sep 8, 2010
Slide 1: Keefe, Bruyette & Woods Insurance Conference
Marc Schmittlein President & CEO – Select Accounts Keefe, Bruyette & Woods Insurance Conference September 8, 2010
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: Overview – Select Accounts Formula for Success – Travelers Express SM • Results –
• Overview – Select Accounts • Formula for Success – TravelersExpressSM • Results – TravelersExpressSM • On-going Initiatives • Q&A 2
Slide 4: Overview
Overview Travelers Full Year 2009 Net Written Premiums: $21.3 Billion Personal Insurance Homeowners $7.1 Billion & Other Select Automobile Accounts Business Insurance Commercial $10.9 Billion Bond & Financial Accounts Products Internat'l Industry-Focused Underwriting Nat'l Financial, Professional &
Slide 5: Overview - Select Accounts
Overview - Select Accounts Business Insurance Full Year 2009 Net Written Premiums: $10.9 Billion Select Accounts Homeowners & Other 2009 NWP: $2.8 Billion Select Accounts • Serves businesses with generally Automobile fewer than 50 employees • Average premium per policy: Commercial $3,400 Bond & Fina
Slide 6: Top U.S. Commercial Lines Insurers
Overview - Select Accounts ($ in billions) Top 75 U.S. Commercial Lines Insurers1 Company DWP Company DWP Company DWP 1 American International Group $ 19.4 26 Arch Capital Group Ltd. $ 1.7 51 PMI Group Inc. $ 0.8 2 Travelers Cos 14.5 27 Munich-American Holding Corp. 1.5 52 Accident Fund Group 0.8 3
Slide 7: Travelers Excels at Both Ends of the Small Commercial Market
Overview - Select Accounts Travelers Excels at Both “Ends” of the Small Commercial Market No – Touch Low – Touch Total (Express) (Plus) 2009 Net Written Premium $2.8 Billion $1.4 Billion $1.4 Billion % of Policies 77% 23% Average Premium $3,400 $2,200 $7,400 Per Policy • Express success driven by: –
Slide 8: Small Commercial – Why Invest?
Overview - Select Accounts Small Commercial – Why Invest? Travelers is the Market Leader With $2.8 Billion of Business… $67 Billion1 “In Appetite” …But With Significant Headroom 7 1Source: Market Stance: commercial multi-peril, commercial auto, workers’ compensation.
Slide 9: Solving for Inefficiencies in the Small Commercial Marketplace
Overview - Select Accounts Solving for Inefficiencies in the Small Commercial Marketplace Broadened Consistent Risk Ease of Use Underwriting Appetite Efficiency Delivering the Small Commercial Value Proposition 8
Slide 10: Overview – Select Accounts Formula for Success – Travelers Express SM • Results –
• Overview – Select Accounts • Formula for Success – TravelersExpressSM • Results – TravelersExpressSM • On-going Initiatives • Q&A 9
Slide 11: Formula for Success - TravelersExpress
Formula for Success - TravelersExpressSM Product and Pricing Sophistication Platform Class Breadth Line of Business Breadth Distribution AA ““simple” simple” formula, formula, but but all all five five components components are are needed needed and and working working effectively effectively 10
Slide 12: Product and Pricing Sophistication / Platform
Formula for Success - TravelersExpressSM Product and Pricing Sophistication / Platform Automated Automated Decline Decline Business BusinessRules Rules Agent Predictive 11% 11% Predictive Portal Product Product // Eligibility Eligibility Model Model Underwriting Underwriting// (Pricing) (Pricing) Co
Slide 13: Percentage of Available for Issue Flow
Formula for Success - TravelersExpressSM Product and Pricing Sophistication / Platform Percentage of Available for Issue Flow Available for Issue (AFI) = Automated bindable quote without underwriter intervention 100% 90% 86% 80% Workers 78% Compensation 77% 70% 60% 56% 50% CMP 40% 30% 20% 10% Auto 0
Slide 14: Class Breadth
Formula for Success - TravelersExpressSM Class Breadth Mix of New Business TravelersExpressSM Results Industry1 Pre-Launch Post-Launch (2006) (2009) All B.O.B.S Other 28% 30% All B.O.B.S. All B.O.B.S. Other 45% Other 70% 72% 55% 2006 – 2009 CAGR New business: B.O.B.S. = 9% / All Other = 34% Broadeni
Slide 15: Line of Business Breadth
Formula for Success - TravelersExpressSM Line of Business Breadth Mix of New Business TravelersExpressSM Results Industry1 Pre-Launch Post-Launch (2006) (2009) Auto Auto 11% 14% Auto 21% WC CMP 18% 48% WC CMP CMP 24% 62% WC 71% 31% 2006 – 2009 CAGR New business: CMP = 21% / WC = 22% / Auto = 29% Div
Slide 16: Distribution: Total Agents & New Agent Appointments
Formula for Success - TravelersExpressSM Distribution Total Agents & New Agent Appointments 7,900 New Agent Appointments Total Agents Additional 1,275 agents 4,800 appointed in 2010 thru end of June 2005 YE 2006 2007 2008 2009 % of New Business 3% 7% 16% 22% By New Appointments The TravelersExpressS
Slide 17: Distribution
Formula for Success - TravelersExpressSM Distribution • Systematic strategy of agency appointments – 7,900 agents appointed at year-end 2009 compared to 4,800 at year-end 2005 • Enhanced geographic diversification strategy Pre- Pre-2006 June 2010 Non- Non-East Coast Non- Non-East Coast Agents Agents
Slide 18: Overview – Select Accounts Formula for Success – Travelers Express SM • Results –
• Overview – Select Accounts • Formula for Success – TravelersExpressSM • Results – TravelersExpressSM • On-going Initiatives • Q&A 17
Slide 19: Average Monthly Quote Flow
Results - TravelersExpressSM Average Monthly Quote Flow : 29% A GR C 2006 2007 2008 2009 June 2010 YTD Strong Strong quote quote momentum momentum validates TravelersExpressSM validates TravelersExpress SM business business model model 18
Slide 20: Hit Ratio Percentage
Results - TravelersExpressSM Hit Ratio Percentage Decreas e of 8.3 p oints Stabilizing to a level reflecting maturation of model as all lines of business rolled in 2006 2007 2008 2009 June 2010 YTD Generating Generating more more opportunities, opportunities, while while continuing continuing to to
Slide 21: Policies in Force
Results - TravelersExpressSM Policies in Force R : 9% G CA +31% +32% 2006 2007 2008 2009 June 2010 YTD Policies Policies in in force force continue continue to to achieve achieve new new highs highs each each month month 20
Slide 22: Overview – Select Accounts Formula for Success – Travelers Express SM • Results –
• Overview – Select Accounts • Formula for Success – TravelersExpressSM • Results – TravelersExpressSM • On-going Initiatives • Q&A 21
Slide 23: On-going Initiatives: Significant Investment
On-going Initiatives Significant Investment Add New Agents Umbrella Express 2nd Gen Umbrella Automobile Express Workers’ Comp. Express Technology Segment CMP Express 2nd Gen CMP Platform 750 New Classes 2005 2006 2007 2008 2009 2010 2011 TravelersExpressSM Product Significant Significant investment
Slide 24: Advancing Product & Pricing Sophistication
On-going Initiatives Advancing Product & Pricing Sophistication Low-Touch Low- (Refer) Plus Touch Advantage Low- (Refer) Touch AFI: (Refer) Auto AFI: CMP Available Express CMP WC Portfolio for Issue CMP No-Touch WC UMB Issue Pre-Merger 2005-2009 2010-2012 Continually Continually drive drive efficien
Slide 25: Managing Results
On-going Initiatives Managing Results • Rolled out in 2010 • Interactive, real-time capability • Ability to drill down to granular level i.e. region, office, account • Ability to model impact of potential actions Powerful Powerful analytics analytics driving driving decision-making decision-making a
Slide 26: Agency Segmentation for a More Sophisticated View of Distribution
On-going Initiatives Agency Segmentation for a More Sophisticated View of Distribution • Voice of the agent – what is driving behavior and why? • Learning more about agents to help them optimize value within Travelers platform Main Street Generalist Engaged Committed “Mom & Pop” Commercial lines Ded
Slide 27: Redeploying Savings from Platform Efficiency into Sales & Distribution
On-going Initiatives Redeploying Savings from Platform Efficiency into Sales & Distribution Created New Role – Inside Sales Executive • Serve as an extension of the traditional regional sales teams • Handle agents that are Express-driven, a geographic challenge, and/or new appointments • Provide hig
Slide 28: Growing Market Share Profitably
Select Accounts Growing Market Share Profitably • Scale matters for success • Having a winning formula is critical • All elements need to be there and work together • Achieving strong results in a challenging environment • Long-term view of strategic investments • Well positioned for the future with
Slide 29: Overview – Select Accounts Formula for Success – Travelers Express SM • Results –
• Overview – Select Accounts • Formula for Success – TravelersExpressSM • Results – TravelersExpressSM • On-going Initiatives • Q&A 28
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
Slide 31: TRAVELERS J
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