The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q2 2023 Earnings Presentation
26 slides from The Travelers Companies's earnings presentation, Jul 20, 2023
Slide 1: Second Quarter 2023 Results
SECOND QUARTER 2023 RESULTS July 20, 2023
Slide 2: Long-Term Financial Strategy
L O N G - T E R M F I N A N C I A L S T R AT E G Y Generation of Balanced Meaningful top–tier earnings approach to and sustainable and capital rightsizing capital competitive substantially and growing book advantages in excess of value per share growth needs over time C R E AT E S H A R E H O L D E
Slide 3: Second Quarter 2023 Overview
SECOND QUARTER 2023 OVERVIEW Travelers Reports Second Quarter and Year-to-Date Results Second Quarter 2023 Net Loss per Diluted Share of $0.07 Second Quarter 2023 Core Income per Diluted Share of $0.06 • Second quarter net loss of $14 million and core income of $15 million. • Consolidated combined r
Slide 4: Consolidated Performance
C O N S O L I D AT E D P E R F O R M A N C E ($ in millions, except per share amounts, after-tax, except for premiums) SECOND QUARTER YEAR-TO-DATE 2023 2022 Change 2023 2022 Change Core income $ 15 $ 625 (98) % $ 985 $ 1,662 (41) % per diluted share $ 0.06 $ 2.57 (98) % $ 4.19 $ 6.81 (38) % Included
Slide 5: Very Strong Financial Position
V E RY S T R O N G F I N A N C I A L P O S I T I O N ($ and shares in millions, except per share amounts) June 30, December 31, 2023 2022 Capital Debt $ 8,031 $ 7,292 Common equity 1 26,431 26,458 • Continued strong capitalization to support the Company’s business operations. Total capital 1 $ 34,46
Slide 6: Net Investment Income
NET INVESTMENT INCOME ($ in millions, after-tax) TOTAL Second Quarter 2023 vs. Prior Year Quarter Commentary $635 • Net investment income (NII) from the long-term and $595 $557 $594 $542 $539 $505 $531 short-term fixed income portfolios increased due to a higher average yield and growth in average i
Slide 7: Leading Core Return on Equity at Industry-Low Volatility
LEADING CORE RETURN ON EQUITY AT INDUSTRY-LOW VOLATILITY 13.1% 10.7% 10.9% 11.3% 13.7% 11.3% 12.4% 7.4% 8.8% 8.8% 1.0% 8.0% 7.8% 7.6% 0.2% 7.4% 1.5% 1.1% 6.9% 3.3% 7.1% 0.7% 0.3% 0.3% 0.7% 1.2% 1.9% 0.6% 0.1% 0.1% 0.2% 4.9% 5.0% 4.3% 4.4% 4.2% 7.6% 6.2% 2.7% 6.4% 3.1% 6.1% 6.3% 5.5% 5.7% 5.4% -0.2%
Slide 8: Business Insurance Performance
BUSINESS INSURANCE PERFORMANCE ($ in millions) SECOND QUARTER YEAR-TO-DATE 2023 2022 Change 2023 2022 Change Segment income $ 402 $ 666 (40) % $ 1,158 $ 1,335 (13) % Loss and loss adjustment expense ratio 70.0 % 63.0 % 66.9 % 61.9 % Underwriting expense ratio 30.1 30.2 30.0 30.2 Combined ratio 1 100
Slide 9: Domestic Business Insurance (ex. National Accounts)
D O M E S T I C B U S I N E S S I N S U R A N C E ( E X . N AT I O N A L A C C O U N T S ) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S 12% Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 10% 8% 7.2% 6% 4% 4.8% 5.0% 4.7% 4.4% 4.5% 2% - ($ in millions) 1Q’22 2Q’22 3Q’22
Slide 10: Domestic Business Insurance: Select Accounts
DOMESTIC BUSINESS INSURANCE: SELECT ACCOUNTS I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 12% 10% 8% 6% 4% 2.9% 3.1% 3.2% 3.1% 2.9% 1.9% 2% - ($ in millions) 1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 2Q’23 Retention 83% 83% 83% 83% 84
Slide 11: Domestic Business Insurance: Middle Market
DOMESTIC BUSINESS INSURANCE: MIDDLE MARKET I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 12% 10% 8% 5.9% 6% 4.4% 4% 4.7% 4.4% 4.5% 4.0% 2% - ($ in millions) 1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 2Q’23 Retention 89% 88% 89% 90% 89%
Slide 12: Bond & Specialty Insurance Performance
B O N D & S P E C I A LT Y I N S U R A N C E P E R F O R M A N C E ($ in millions) SECOND QUARTER YEAR-TO-DATE 2023 2022 Change 2023 2022 Change Segment income $ 230 $ 228 1 % $ 437 $ 445 (2) % Loss and loss adjustment expense ratio 39.8 % 38.5 % 41.4 % 40.7 % Underwriting expense ratio 37.3 35.5 37
Slide 13: Domestic Bond & Specialty Insurance
D O M E S T I C B O N D & S P E C I A LT Y I N S U R A N C E ($ in millions) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q Management Liability 1 Retention 85% 88% 89% 90% 89% 91% Renewal premium change 2 12.4% 9.7% 9.3% 6.0% 5.2% 3.7% New business $55 $63 $61
Slide 14: Personal Insurance Performance
PERSONAL INSURANCE PERFORMANCE ($ in millions) SECOND QUARTER YEAR-TO-DATE 2023 2022 Change 2023 2022 Change Segment income (loss) $ (538) $ (193) NM $ (455) $ 32 NM Loss and loss adjustment expense ratio 97.4 % 85.4 % 87.1 % 77.6 % Underwriting expense ratio 24.6 25.8 24.9 25.8 Combined ratio 1 122
Slide 15: Personal Insurance Performance
PERSONAL INSURANCE PERFORMANCE SECOND QUARTER YEAR-TO-DATE 2023 2022 Change 2023 2022 Change Automobile Loss and loss adjustment ratio 86.0 % 80.9 % 83.9 % 78.4 % Underwriting expense ratio 22.4 23.4 22.7 23.5 1 Combined ratio 108.4 % 104.3 % (4.1) pts 106.6 % 101.9 % (4.7) pts Net unfavorable prior
Slide 16: Domestic Personal Insurance
DOMESTIC PERSONAL INSURANCE ($ in millions) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q Automobile Retention 1 85% 84% 84% 83% 81% 81% 2 Renewal premium change 4.1% 7.3% 9.6% 12.9% 14.0% 16.1% Policies in force (in thousands) 2,972 3,008 3,053 3,051 3,021 2,9
Slide 17: Domestic Personal Insurance: Renewal Premium Change
DOMESTIC PERSONAL INSURANCE R E N E WA L P R E M I U M C H A N G E 1 22% Automobile 22% Homeowners and Other 20% 20% 18% 18% 16% 16% 14% 14% 12% 12% 10% 10% 8% 8% 6% 6% 4% 4% 2% 2% - - 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 17 1 Represents the estimated change in ave
Slide 18: Total International Insurance
TO TA L I N T E R N AT I O N A L I N S U R A N C E ($ in millions) I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q International 1 Retention 81% 85% 80% 84% 84% 85% Renewal premium change 2 10.1% 9.4% 9.4% 7.5% 7.6% 7.7% New business $82 $80 $69 $85 $90 $90 1 Exc
Slide 19: Appendix
APPENDIX 19
Slide 20: 2023 Catastrophe Reinsurance
2 0 2 3 C ATA S T R O P H E R E I N S U R A N C E Catastrophe Bonds – Long Point Re IV Ltd. • $575 million aggregate principal was placed in May 2022 and the attachment point was reset in May 2023 − The reinsurance agreement provides single occurrence coverage to the Company through May 24, 2026 for
Slide 21: Well-Defined and Consistent Investment Philosophy
WELL-DEFINED AND CONSISTENT INVESTMENT PHILOSOPHY ($ in millions, as of June 30, 2023, unless otherwise noted) Investment Income reliable contributor to results Total Investments Fixed Income Portfolio Rating % % Fixed Maturities by Rating2 Fixed Non-Fixed Corporates1 A2 $ 32,429 42% Aaa 45% Income
Slide 22: Investment Portfolio — Commercial Real Estate
I N V E S T M E N T P O RT F O L I O — C O M M E R C I A L R E A L E S TAT E ($ in millions, as of June 30, 2023, unless otherwise noted) H i g h q u a l i t y, w e l l - d i v e r s i f i e d h o l d i n g s Total Investments % of Total Fixed Income Non-Fixed Income Fixed Income Rating1 • Average c
Slide 23: Technology Investments
TECHNOLOGY INVESTMENTS Technology Spend • Meaningfully increased our overall technology spend over the last five years • Significantly reduced our expense ratio at the same Strategic Investments time through our strategic focus on optimizing productivity and efficiency Routine but Necessary • Improv
Slide 24: Explanatory Note
E X P L A N ATO RY N O T E 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
Slide 25: 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 26: investor.travelers.com
investor.travelers.com 26
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