The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q3 2019 Earnings Presentation
24 slides from The Travelers Companies's earnings presentation, Oct 22, 2019
Slide 1: Third Quarter 2019 Results
Third Quarter 2019 Results October 22, 2019
Slide 2: Long-Term Financial Strategy
Long-Term Financial Strategy Generation of Balanced approach Meaningful and top tier earnings to rightsizing sustainable and capital capital and competitive substantially in growing book value advantages excess of growth per share over time needs CREATE SHAREHOLDER VALUE Objective: Mid-Teens Core RO
Slide 3: Third Quarter 2019 Overview
Third Quarter 2019 Overview Travelers Reports Third Quarter Net Income and Core Income per Diluted Share of $1.50 and $1.43, Respectively Third Quarter Return on Equity of 6.2% and Core Return on Equity of 6.5% • Third quarter net income of $396 million and core income of $378 million. • Increasingl
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax, except for premiums) THIRD QUARTER YEAR-TO-DATE 2019 2018 Change 2019 2018 Change Core income $ 378 $ 687 (45) % $ 1,670 $ 1,859 (10) % per diluted share $ 1.43 $ 2.54 (44) % $ 6.29 $ 6.81 (8) % Included the following item
Slide 5: High Quality Financial Position
High Quality Financial Position ($ and shares in millions, except per share amounts) September 30, December 31, Capital 2019 2018 • At or above target levels for all rating agencies. Debt $ 6,558 $ 6,564 1 23,253 23,007 • Repurchased 2.5 million shares during third quarter 2019 at Common equity Tota
Slide 6: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) TOTAL Third Quarter 2019 Commentary $547 $548 $525 $513 $507 $535 $528 • Net investment income from the long-term fixed income portfolio $468 $496 benefited from an increase in average investments • Net investment income from the short-term
Slide 7: Components of Core Return on Equity
Components of Core Return on Equity 13.1% 15.5% 15.2% 13.3% 9.0% 10.7% 10.9% 9.6% 9.3% 0.9% 8.4% 0.3% 8.0% 7.8% 8.0% 7.8% 1.5% 7.4% 7.1% 7.2% 7.2% 1.5% 1.5% 1.1% 0.9% 0.9% 8.1% 1.3% 0.4% 0.1% 6.1% 0.3% 0.3% 0.2% 3.8% 6.9% 6.5% 6.2% 6.2% 6.2% 2.9% 6.3% 5.7% 2.7% 1.8% 1.8% 2005 through 2013 2014 2015
Slide 8: Business Insurance Performance
Business Insurance Performance ($ in millions) THIRD QUARTER YEAR-TO-DATE 2019 2018 Change 2019 2018 Change Segment income $ 179 $ 410 (56) % $ 944 $ 1,247 (24) % Loss and loss adjustment ratio 76.6 % 69.6 % 71.3 % 67.4 % Underw riting expense ratio 30.4 31.0 30.8 31.6 1 Combined ratio 107.0 % 100.6
Slide 9: Business Insurance Underlying Combined Ratio
Business Insurance Underlying Combined Ratio THIRD QUARTER 2019 2018 Change Underlying combined ratio1 95.9 % 95.4 % (0.5) pts Change of (0.5) pts includes: Impact of 2019 property aggregate catastrophe XOL reinsurance treaty ~(1/2) pt Impact of 4Q'18 adjustment to commercial automobile loss estimat
Slide 10: Domestic Business Insurance (Ex. National Accounts)
Domestic Business Insurance (Ex. National Accounts) ILLUSTRATIVE BUSINESS STATISTICS 10% ▲ Renewal Premium Change1 % Renewal Rate Change2 % 8% • Exposure/Other % 6% 4.3% 4% 3.6% 2.3% 2.1% 2% 1.6% 1.7% 1.6% - (2%) 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 3Q’19 ($ in millions) Retention 86% 85% 86%
Slide 11: Domestic Business Insurance: Select Accounts
Domestic Business Insurance: Select Accounts ILLUSTRATIVE BUSINESS STATISTICS 10% ▲ Renewal Premium Change1 % Renewal Rate Change2 % 8% • Exposure/Other % 6% 4% 2% 1.4% 1.0% 0.8% 0.7% 0.7% 0.6% 0.3% - (2%) 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q’19 3Q'19 ($ in millions) Retention 83% 82% 82% 81% 83
Slide 12: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market ILLUSTRATIVE BUSINESS STATISTICS 10% ▲ Renewal Premium Change1 % Renewal Rate Change2 % 8% • Exposure/Other % 6% 4% 3.8% 3.4% 2.3% 2% 1.8% 1.4% 1.5% 1.5% - (2%) 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q’19 3Q'19 ($ in millions) Retention 88% 88% 87% 87% 87%
Slide 13: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) THIRD QUARTER YEAR-TO-DATE 2019 2018 Change 2019 2018 Change Segment income $ 139 $ 196 (29) % $ 451 $ 573 (21) % Loss and loss adjustment ratio 45.7 % 33.1 % 42.2 % 32.8 % Underw riting expense ratio 37.6 37.1 37.6 37.6 Combined ratio 1 83.3 %
Slide 14: Bond & Specialty Insurance Underlying Combined Ratio
Bond & Specialty Insurance Underlying Combined Ratio THIRD QUARTER 2019 2018 Change Underlying combined ratio1 83.6 % 78.3 % (5.3) pts Change of (5.3) pts includes: Impact of higher loss estimates established at January 1, 2019 ~(1 1/2) pts 3Q'19 adjustments to management liability loss estimates: R
Slide 15: Domestic Bond & Specialty Insurance
Domestic Bond & Specialty Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1 Management Liability Retention 89% 90% 90% 89% 89% 90% 90% Renewal premium change 2 3.8% 4.1% 3.7% 3.6% 3.5% 4.1% 4.8% New business $51 $54 $56 $53 $54 $64 $67 1 Domestic only, exclu
Slide 16: Personal Insurance Performance
Personal Insurance Performance ($ in millions) THIRD QUARTER YEAR-TO-DATE 2019 2018 Change 2019 2018 Change Segment income $ 131 $ 153 (14) % $ 497 $ 265 88 % Loss and loss adjustment ratio 71.8 % 71.2 % 69.8 % 73.2 % Underw riting expense ratio 26.2 26.0 26.4 26.7 1 Combined ratio 98.0 % 97.2 % (0.
Slide 17: Domestic Personal Insurance Performance
Domestic Personal Insurance Performance THIRD QUARTER YEAR-TO-DATE 2019 2018 Change 2019 2018 Change Agency Automobile 1 Loss and loss adjustment ratio 70.1 % 68.5 % 68.8 % 70.3 % Underw riting expense ratio 22.9 22.8 23.4 23.5 2 Combined ratio 93.0 % 91.3 % (1.7) pts 92.2 % 93.8 % 1.6 pts Net favor
Slide 18: Domestic Personal Insurance
Domestic Personal Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q Agency Automobile 1 Retention 2 83% 83% 84% 84% 84% 84% 84% Renewal premium change 3 10.7% 9.6% 8.0% 6.8% 5.6% 4.8% 3.6% Policies in force (in thousands) 2,519 2,517 2,518 2,518 2,516 2,517 2,
Slide 19: Total International Insurance
Total International Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q International 1 Retention 84% 83% 83% 80% 78% 79% 78% Renewal premium change 2 3.2% 2.2% 3.5% 5.3% 5.2% 6.6% 6.8% New business $96 $123 $98 $104 $95 $89 $62 1 Excludes surety and other produ
Slide 20: Appendix
Appendix Additional Information Additional Information 20
Slide 21: Industry Commercial Auto Bodily Injury Loss Environment
Industry Commercial Auto Bodily Injury Loss Environment Average Paid Claim Cost for Commercial Auto Bodily Injury (ISO Calendar Year Data) $ 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 Industry Actual 2015-17 Fitted Extension of 2015-17 Fitted Sour
Slide 22: 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 23: 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 24: investor.travelers.com
investor.travelers.com
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