The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Investor Day (August 2015)
67 slides from The Travelers Companies's investor day presentation, Aug 13, 2015
Slide 1: 2015 Investor Day: A Deeper Dive into Data & Analytics
The Travelers Companies, Inc. 2015 Investor Day: A Deeper Dive into Data & Analytics August 13, Proprietary 2015 & Confidential 1
Slide 2: Agenda
Agenda Welcome Alan Schnitzer – Vice Chairman and CEO, BII Travelers Data, Analytics, and Science Advantage Doreen Spadorcia – Vice Chairman and CEO, PI and BSI Chronic Pain, Predictive Modeling, Geospatial Analysis, and Certified Locations Erik Roen – Vice President, Claim Business Intelligence and
Slide 3: Introduction
Introduction Alan Schnitzer, Vice Chairman and CEO, Business and International Insurance Proprietary & Confidential 3
Slide 4: 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 advantages excess of growth value per share needs over time CREATE SHAREHOLDER VALUE Objective: Mid‐Teens Operati
Slide 5: Data, Analytics & Science in the Business
Data, Analytics & Science in the Business Doreen Spadorcia, Vice Chairman and CEO, Personal Insurance and Bond & Specialty Insurance Proprietary & Confidential 5
Slide 6: Our Data & Analytics Conversations With You…
Our Data & Analytics Conversations With You… 2009 2010 2011 2014 Granular Business Metrics Interactive Real‐Time Dashboards Advanced Predictive Analytics Geospatial Capabilities Extended to Underwriters & Agents Extended to Front‐Line Connected to Automated Business Rules Connected to Business Intel
Slide 7: Since Then…
Since Then… INFORMATION TECHNOLOGY CONSUMER ADVANCEMENTS BEHAVIORS More, Different, Connected and Smart… Proprietary & Confidential 7
Slide 8: Relative Business Performance
Relative Business Performance Workers’ Compensation Property1 • Consistently outperform industry • Consistently outperform industry • Nearly $4 billion of net written • Nearly $7.5 billion of direct written premiums premiums • Market leader, with 8% market share • Top 5 company, with 5% market share
Slide 9: Leveraging Data, Analytics & Science
Leveraging Data, Analytics & Science More…and New Ways To Positively Impact Business Performance • Risk Selection Right Business • Risk Assessment at the Right Price • Pricing • Products & Services CYBER • Assignment Optimization Right Expertise • Evaluation / Estimation Accuracy at the Right Time •
Slide 10: Managing The Science…
Managing The Science… • 1,600+ Dedicated Business Intelligence Experts • ~200 Data Scientists Expertise • Robust Development Program • Academic Analytic Acumen Partnership TALENT Talent & • Enterprise BI&A Org Design • Embedded Business Unit BI&A Expertise Governance • Continuous Insight Loop Proces
Slide 11: Analytical Thinking: …and the Art
…and the Art • 30,000+ Travelers Employees Culture • Seeking Opportunities To Improve • Skills To Do It Analytical Thinking: CORE COMPETENCIES Identifies current or future problems or opportunities, analyzes, synthesizes and compares information to understand issues, identifies cause/effect relation
Slide 12: Bringing Them All Together
Bringing Them All Together TALENT INFRASTRUCTURE CAPABILITIES CULTURE Sustaining our Competitive Advantage Proprietary & Confidential 12
Slide 13: Data, Analytics & Science In Action
Data, Analytics & Science In Action Erik Roen – Pain Management Eric Nelson – Hail Dashboard Applications Jim Young – Risk Exposure & Opportunity Tom Kunkel – Cyber Products & Services Pat Gee & Henry Edinger – Claim U & National Catastrophe Center Marty Henry & John Machnicki – Risk Control & Foren
Slide 14: Predictive Modeling for Chronic Pain
Predictive Modeling for Chronic Pain Erik Roen, Vice President, Claim Business Intelligence & Analytics Proprietary & Confidential 14
Slide 15: Business Use Case – Chronic Pain Analysis
Business Use Case – Chronic Pain Analysis Data Analytics Talent Claim Capabilities Assignment Fraud Subrogation Resolution Frequency/Severity Attorney Quality Early Identification Medical of Chronic Pain Proprietary & Confidential 15
Slide 16: Analytic Value
Chronic Pain…Where we were • Impacts 116 million Americans • Chronic Pain prevents 20% of TRV claimants from returning to work in a timely fashion • Took 6‐9 months to identify Chronic Pain Analytic Value Why Did It Happen? What Happened? Diagnostic Descriptive Analytics Analytics (Historical) (Hist
Slide 17: Chronic Pain Opportunity
Chronic Pain Opportunity Science: Data & Analytics Art: Creating the Mind Shift Diaries sent for these Looking at claims claims differently Utilizing resources creatively Predictive Earlier course model corrections ‐ Out Claims likely to of the box approach and decompensate solutions All Claims into
Slide 18: Big Data: What are we talking about?
Big Data: What are we talking about? Science: Data & Analytics Structured Transaction Motor Vehicle History Records Claim Moody’s Attributes Comparative Business Reserve Levels Raters Processes External Internal Machine Human Clickstreams Social Media Public Records Generated Sourced Server Logs Tel
Slide 19: Need for Big Data in Chronic Pain
Need for Big Data in Chronic Pain Science: Data & Analytics Structured Treatment Variables Physician & Claimant Claimant Demographics Information Business Co‐Morbidities Geo‐Location Data Processes Claim & Policy Information External Internal Machine Human Claim Notes Social Media Generated Sourced
Slide 20: Evolution of Big Data Capabilities
Evolution of Big Data Capabilities Science: Data & Analytics Old Techniques: New Techniques: Linear Models Machine Learning What used to not be possible or take weeks, can now be accomplished in hours or minutes Proprietary & Confidential 20
Slide 21: Evolution of Prescriptive Analytics
Evolution of Prescriptive Analytics Art: Creating the Mind Shift Talent Healthcare Research Experience Group Health Actuary Healthcare Economist Biostatistician Medical Data Experts Advancements with Big Data based on more than technology; also requires talent to implement Proprietary & Confiden
Slide 22: Chronic Pain Evolution
Chronic Pain Evolution Old Model: New “Early Severity Predictor”: (Retrospective) (Prospective) What Should We Do? Prescriptive Prescriptive Prescriptive Analytics What Could Happen? Analytics Analytic Value Analytics Predictive (Pro-active) Predictive Predictive (Pro‐active) Why Did It Happen? Anal
Slide 23: Early Severity Predictor in Action: One Example
Early Severity Predictor in Action: One Example1 Claim Facts • Injured body part – low back • Initial diagnosis – low back strain • Initial treatment – injections, opioids, recommendation for spinal cord stimulator Prior “Flagging” Model New “Predictive” Model • Pain driver identified – no • Pain dr
Slide 24: Data & Analytics Across the Enterprise
Data & Analytics Across the Enterprise Re‐using capabilities across multiple areas. Medical Data Uses: • Fraud Models • Assignment Models • Bodily Injury Severity Models • Product & Pricing • Loss Analytics Analytic Techniques: • Pricing Models • Claim Models • Risk Management Proprietary & Confiden
Slide 25: Geospatial Analysis and Certified Locations
Geospatial Analysis and Certified Locations Eric Nelson, Senior Vice President CAT Underwriting Risk | Jim Young, Vice President BI Business Intelligence Proprietary & Confidential 25
Slide 26: Travelers Approach to Geospatial Location Analytics
Travelers Approach to Geospatial Location Analytics Enhance Travelers location intelligence, visualization and analytic capabilities by integrating our spatial and non‐spatial data with 3rd party geographic data/content. The ability to gain insight into geographic relationships and predict how they
Slide 27: What is Geospatial Analysis?
What is Geospatial Analysis? Geospatial analysis is an approach to applying statistical analysis and other informational techniques to data which has a geographical or geospatial aspect. Key Capabilities • Overlaying multiple geospatial layers to perform advanced analysis • Publishing and sharing ge
Slide 28: Geospatial Analytic Capability – What does it take to develop?
Geospatial Analytic Capability – What does it take to develop? 1. Foundational Data • Location level data quality improvement • Enterprise geocoding solutions & best practices 2. Governance and Approach • Alignment on an enterprise approach • Geospatial platform evaluation & selection • Implementati
Slide 29: Business Use Case – Hail Geospatial Analysis
Business Use Case – Hail Geospatial Analysis Utilize geospatial analysis to improve: Claim Efficiency • How do we most effectively deploy resources? • How can we triage the claim cause of loss and date of occurrence? Pricing & Underwriting • How do we adequately price the exposure? • How should we r
Slide 30: Claim: Hail Dashboard
USE CASE Claim: Hail Dashboard Proprietary & Confidential 30
Slide 31: Challenge: Increase in Weather (Hail) Volatility
Challenge: Increase in Weather (Hail) Volatility Radar Based Data – 1 Inch Hail Frequency Relativity With recent weather volatility, how do you develop efficient claim staffing models? 31
Slide 32: Application of the Hail Dashboard
Application of the Hail Dashboard Spatial visualizations of radar‐based hail models overlaid with policy and claim locations can improve our ability to: • Assess the impact of damaging hail events across multiple policies • Assist with appropriate staffing models by event • Provide a consistent and
Slide 33: Placeholder for Demo
aN TRAVELERS J Placeholder for Demo 33
Slide 34: Broader Application of Hail Dashboard – Pricing and Underwriting
Broader Application of Hail Dashboard – Pricing and Underwriting Example: Catastrophe Modeling for Hail Catastrophe Models – Business Application • Aggregation of Risk • Enterprise Risk Management – Capital Models • Reinsurance Purchase Decisioning • Input to Ratemaking • Input to Annual Financial P
Slide 35: Challenge: Model Comparisons of Hail Hazard
Challenge: Model Comparisons of Hail Hazard Vendor A ‐ Out‐Of‐Box Vendor B ‐ Out‐Of‐Box Dallas Example • How do you price the business? • How do you underwrite? • How do you evaluate loss event scenarios? 3rd party models output can vary significantly ‐ Dallas is a good example of a divergent opinio
Slide 36: The Advantage of Travelers Geospatial Capability
The Advantage of Travelers Geospatial Capability Advanced analytics and geospatial tools enable rapid and more sophisticated insights Hail Dashboard ‐ Radar Data NOAA / Storm Prediction Center 2009‐2015 1995‐2014 In geospatial environment, Travelers is able to integrate multiple 3rd party data sourc
Slide 37: TRV Relativity (Hail)
TRV Relativity (Hail) TRV Hazard Relativity Better understanding of risk = smarter pricing, smarter underwriting and better returns 37
Slide 38: Business Insurance: Certified Locations
USE CASE Business Insurance: Certified Locations Proprietary & Confidential 38
Slide 39: P&C Industry Challenge: Difficulty Understanding Risk at a Location Level
P&C Industry Challenge: Difficulty Understanding Risk at a Location Level Account • Historically, issued accounts had rd 3 Party Data Providers 1 no relation to other accounts at the same location Account • Data received from Brokers, Risk 2 Control, 3rd Party, Claims, etc. was siloed at the account
Slide 40: Location Data Business Problem
Location Data Business Problem Broker submitted addresses and data is inconsistent Address City State Construction Year Built 201 W 43rd Street New York NY Fire Resistive 1989 175 West 42nd New York NY Frame 1989 177 West 42nd Street New York NY Fire Resistive 2007 177 W 42nd Street New York NY Maso
Slide 41: Certified Locations Uniquely Identifies Locations
Certified Locations Uniquely Identifies Locations • With intelligent use of geospatial technology, Certified Locations determines the defined building area and the number of structures in the building area • Travelers currently has four U.S. and International patents pending related to the utilizati
Slide 42: Real Life Example
Real Life Example Individual and Aggregate Risk Control • 46 current accounts in one building across 4 business units • 30 accounts filed claims in a 7/18/07 event, totaling more than $4 million • Risk control reports done for only certain 370 Anyplace Ave, NY, NY addresses at building, not shared a
Slide 43: Target State - Data sharing enables single location view
Target State ‐ Data sharing enables single location view Structure Summary Structural Attributes Value Year Built 1929 Number of Floors 26 Total Area (sq. ft) Proprietary 289,000 Construction Class 6 ‐ Fire Resistive Fire Protection Sprinklered Business Attributes Nbr of Businesses Present 34 Nbr of
Slide 44: The Overall Opportunity for a Multi-line Carrier
The Overall Opportunity for a Multi‐line Carrier Shared Information Leveraged: • Risk Control reports National Property has the entire building • Loss/claim information • Hazards • Concentration & aggregation Condos – Personal Insurance • Environmental & structural attributes Applicable Business Pro
Slide 45: Placeholder for Demo
aN TRAVELERS J Placeholder for Demo 45
Slide 46: Travelers – Analytic Advantage
Travelers – Analytic Advantage Revenue Growth • New business prospecting • Identification of underpenetrated regions • More accurate coverage calculations and counseling to insureds • Retaining and growing existing customers Profitability • Better risk evaluation and underwriting decisions • More gr
Slide 47: Cyber
Cyber Tom Kunkel, Executive Vice President, President Bond & Specialty Insurance 47
Slide 48: What is Cyber Coverage?
aN TRAVELERS J What is Cyber Coverage? 48
Slide 49: What is Cyber Coverage? PII
What is Cyber Coverage? PII • Companies are legally obligated to protect certain information that they collect and store • Type of data compromised is often personally identifiable information (PII) of employees, customers and business partners • When that data gets compromised, the company may face
Slide 50: Additional Cyber Coverages Available…
Additional Cyber Coverages Available… Communications Claims for plagiarism / defamation on material disseminated via and Media Liability electronic means, e.g. email, website Covers claims brought against an Insured by governmental entities for Regulatory Defense the failure to protect personal info
Slide 51: Percentage of Claims by Cause of Loss
Percentage of Claims by Cause of Loss 3% 2% 3% Hacker ‐29% 4% Staff Mistake ‐ 13% 5% 29% Rogue Employee ‐ 11% Malware/Virus ‐ 11% 9% Lost/Stolen Laptop/Device ‐ 10% Paper Records ‐ 9% 10% Improper Data Collection ‐ 5% 13% Theft of Hardware ‐ 4% Theft of Money ‐ 3% 11% 11% Systems Glitch ‐ 2% Other ‐
Slide 52: How Big is the Cyber Insurance Market?
How Big is the Cyber Insurance Market? 52
Slide 53: Cyber Insurance | Overall Market Environment
Cyber Insurance | Overall Market Environment Cyber is a rapidly evolving insurance opportunity that is expected to be a growth market in the U.S. Drivers of Growth • Cyber attacks continue to rise – attacks were up another 23% in 20141 • Last year, 60% of all targeted attacks struck small and medium
Slide 54: Cyber Insurance Market Landscape
Cyber Insurance Market Landscape U.S. Industry Cyber Premium Growth ($,B) 2012 2013 2014 2019 (Projection) Source: The Betterley Report, D&P Analysis (2012, 2013, 2014) Rapid Growth – Rich Opportunity 54
Slide 55: Travelers Cyber Products
aN TRAVELERS J Travelers Cyber Products 55
Slide 56: Travelers Cyber Experience
Travelers Cyber Experience 2010 Travelers Cyber Experience… 2014 Expanded Cyber/Data Ranked #1 Breach Product – PC360 To All Industries 2006 1st Community Bank Cyber Product 2013 1986 2007 Small Business 1st Technology 1st Breach Cyber Product & E&O Product 1999 Remediation eRisk Hub Portal Expense
Slide 57: Travelers Cyber Governance and Expertise
Travelers Cyber Governance and Expertise • Enterprise Approach to Governance: ─ Enterprise Underwriting ─ Enterprise Product Engagement at all levels of company across ─ Claim business units and functional areas ─ Risk Control ─ Enterprise Risk Committee • Breadth and Depth of Expertise: ─ Product
Slide 58: Travelers Cyber Product Suite
Cyber First Travelers Cyber Product Suite Essentials CyberFirst CyberRisk CyberFirst CyberFirst Essentials Bond & Specialty Technology Select • Broad target market •Tailored to technology industry • Entry level product •Typical limit $1 million •Typical limit $1 million •Typical limit $25,000 • Spec
Slide 59: Cyber | Product Profile and Underwriting Control
Cyber | Product Profile and Underwriting Control Product Profile • All Travelers Cyber products are Claims‐Made • Defense expenses are included in the limit • Deductibles/Retentions used • Reinsurance used opportunistically Underwriting Controls • Underwriting requirements vary depending on product,
Slide 60: Cyber | Gross Written Premium Trend Line
Cyber | Gross Written Premium Trend Line $45 $40 $40 $35 $30 GWP in Millions $30 $25 $23 $20 $17 $15 $10 2011 2012 2013 2014 Cyber GWP (Consolidated) TRV Growing with Market Opportunity 60
Slide 61: Travelers Claim Service
aN TRAVELERS J Travelers Claim Service 61
Slide 62: Travelers Comprehensive & Rapid Cyber Breach Response
Travelers Comprehensive & Rapid Cyber Breach Response Breach Coach Consultation to Determine: Is a forensics investigation needed? Are breach notifications required? What is the potential for legal action, fines, penalties? What to do for next steps? Expert Claim Service Defense Cost
Slide 63: Cyber | Value Added Online Services
Cyber | Value Added Online Services 24/7 Availability of: Prevention Benefits Post‐Event Response Benefits Learning Center News Center Resources White Papers & Articles Security & Compliance News Calculators to Estimate Potential Losses Technical Bulletins Latest Data Breach News Too
Slide 64: Appendix
Appendix Additional Information Additional Information 64
Slide 65: 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 66: 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 67: The Travelers Companies, Inc.
The Travelers Companies, Inc. Additional Information Additional Information 67