The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Credit Suisse Insurance Conference 2007
33 slides from The Travelers Companies's conference presentation, Nov 15, 2007
Slide 1: Credit Suisse Insurance Conference
Brian MacLean Executive Vice President & Chief Operating Officer Credit Suisse Insurance Conference November 15, 2007
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: Consolidated Financial Highlights
Consolidated Financial Highlights ($ in millions, except per share amounts) 1Q 2Q 3Q YTD 3Q 2007 2007 2007 2007 Net income $ 1,086 $ 1,254 $ 1,198 $ 3,538 change from prior year 8% 29% 15% 17% per diluted share $ 1.56 $ 1.86 $ 1.81 $ 5.22 change from prior year 11% 37% 23% 23% Net written premium 1
Slide 4: Franchise Strengths
Franchise Strengths Product Breadth & Underwriting Specialization Talent & Ease of Doing Information Distribution Business Advantage Depth Claim Effectiveness 3
Slide 5: Diversity of Product and Customer
Diversity of Product and Customer $21.7 Billion Net Written Premiums 3Q’07 YTD Trailing 12 Months 3Q’07 Net Written Premium Growth Automobile 17% Homeowners & Other International 15% and Lloyd's 5% 5% 4% 5% 4% Bond & Financial Products 10% Select BI Other Accounts Business Financial, Personal Total1
Slide 6: Market Leadership
Market Leadership Total Industry Commercial Personal Company Share Company Share Company Share State Farm 9.9 % AIG 11.3 % State Farm 19.1 % AIG 7.2 Travelers 6.1 Allstate 11.3 Allstate 5.7 Zurich 4.8 Farmers 5.5 Travelers 4.5 Liberty Mutual 4.6 Progressive 5.4 Berkshire Liberty Mutual 3.7 CNA 3.1 4
Slide 7: Powerful Relationship with Independent Agents
Powerful Relationship with Independent Agents Average Share of Middle Market Agency Preference 2 Written Premium With Top 3 Carriers 1 ¾ Percentage of agents who responded that Travelers was one of the top 5 Average Share of companies they do business with: Agency’s Book CommercialLines Commercial L
Slide 8: Product Breadth & Underwriting Specialization
Product Breadth & Underwriting Specialization ¾ Our underwriting process is disciplined and fact-based Our data and business analytics drive risk selection and pricing ¾ Our breadth of capabilities and expertise are unmatched in the industry ¾ These capabilities allow us to find opportunities We
Slide 9: Meaningful Momentum in the Top Line
Meaningful Momentum in the Top Line Percentage Growth in Net Written Premiums 9% 6% 3% 0% 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 -3% -6% -9% Travelers Peer Group Travelers excludes run-off operations; 2Q07 and 3Q07 growth rates adjusted for the April 2007 sale of Mendota, the company
Slide 10: Strategic Initiatives
Strategic Initiatives ¾ TravelersExpress SM ¾ IndustryEdge SM ¾ National Scale & Local Focus 9
Slide 11: Select Accounts Overview
Select Accounts Overview SM SM Total TravelersExpress TravelersExpress Plus Trailing 12 month 3Q’07 Direct Written Premium $2.8 $1.3 $1.5 ($ in billions) Average $5,000 $3,000 $15,000 Account Size ¾ Flow business ¾ Average commission approximately $700 per account ¾ Business success driven by Brea
Slide 12: TravelersExpress Goals
SM TravelersExpress Goals ¾ Broaden market reach Industry segment Line of business ¾ Increase product sophistication Predictive modeling and multivariate analysis ¾ Increase ease of use Faster decisions Streamline process Significantly expand account rounding Expandedagent Expanded agent
Slide 13: TravelersExpress Broader Market Reach
SM TravelersExpress Broader Market Reach ¾ Historic concentrations Over 2/3rds of written premium in CMP1, Industry Line property & liability Worker’s Segment CMP Comp. Auto Other Over 2/3rds of this written premium in Business B.O.B.S 4 industry segments Office Historical Building “Sweet 2nd ¾
Slide 14: TravelersExpress Broader Market Reach
SM TravelersExpress Broader Market Reach Mix of New Business Pre-Launch Post-Launch Segment All Other All Other B.O.B.S1 B.O.B.S1 Achievingbroader Achieving broader reachininboth reach both segmentand segment andline line All Other All Other Line CMP2 CMP2 1 B.O.B.S: Business, Office, Building, Stor
Slide 15: TravelersExpress Ease of Use
SM TravelersExpress Ease of Use ¾ For small transaction size/small Percent of Select Policies Issued Via commission accounts, “ease” is Automated Underwriting a critical differentiation 100% ¾ Significantly improved speed and ease Initiated quick decline process 50% Breadth expansion (segment an
Slide 16: Select Accounts - TravelersExpress
Select Accounts - TravelersExpressSM ¾ Sales ¾ Sales are are being being driven driven by by increased increased flow flow ¾ Flow ¾ Flow is is being being driven driven by by increased increased ease ease of of use use Broader market reach Broader market reach Smoother process Smoother proce
Slide 17: Strategic Initiatives
Strategic Initiatives ¾ TravelersExpress SM ¾ IndustryEdge SM ¾ National Scale & Local Focus 16
Slide 18: Commercial Accounts Overview
Commercial Accounts Overview ¾ $2.7 billion gross written premiums trailing 12 months 3Q’07 ¾ Individually underwritten accounts – generally between $50,000 and $1 million in premium per account ¾ Broad industry expertise - ¾ National scale and local presence Travelers Locations 17
Slide 19: Commercial Accounts – New Business Strategy
Commercial Accounts – New Business Strategy Drivers of Drivers of new new business business success success ¾ New ¾ New products products ¾ New ¾ New distributors distributors ¾ More ¾ More products products sold sold to to current current customers customers ¾ More ¾ More underwriters underwriters
Slide 20: Commercial Accounts – New Business Strategy: Close Ratio
Commercial Accounts – New Business Strategy Close Ratio1 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Average 1Q06 – 3Q07 ...butwith ...but withcontinued continueddiscipline discipline 1 Close ratio equals the number of written accounts divided by the number of policies quoted 19
Slide 21: Products
Products ¾ Tailored risk management solutions for customers and agents Tailored products or coverage Industry specific risk control products/services Pre-qualified leads Packaged sales kits Joint advertising ¾ Effective tools for account executives Underwriting knowledge edge Pricing g
Slide 22: Developing Products for High Potential Industries
Developing Products for High Potential Industries Specialization Industry 1 Growth Electrical Equipment 2% Real Estate Owners and Managers Severe Products Educational Institutions Generalist Metals Book Mineral Products 30% Plastic and Rubber Goods Industry Edge Textiles 70% Retail Goods Wood Wholes
Slide 23: Products
Products ¾ New products Auto Dealers Printers Restaurants Publishers Hotels ¾ Upgrade of existing products Educational Institutions Auto Dealers ¾ New embedded coverages Global Solutions Ocean Cargo 22
Slide 24: Executing on the Strategy – New Products - Printers
Executing on the Strategy – New Products - Printers New Business Submissions New Business Premium X 2.6 X Up 6.9 Up Pre-Launch Post-Launch Pre-Launch Post-Launch fuelingour fueling ourgrowth growth 23
Slide 25: Disciplined Execution
Disciplined Execution ¾ Sources of growth Analysis completed on new business to determine prior carrier Negligible amount of new business is coming from non-admitted market ¾ Terms and conditions Standard policy form Underwriters have limited ability to change terms and conditions Terms &
Slide 26: Strategic Initiatives
Strategic Initiatives ¾ TravelersExpress SM ¾ IndustryEdge SM ¾ National Scale & Local Focus 25
Slide 27: Regional Presidents
Regional Presidents Implemented new field structure ¾ Created 14 Regional President positions ¾ More field authority Financial, Professional Business Personal & Insurance Insurance ¾ Stronger partnership with International Insurance business heads Regional President ¾ Responsibility and accountabili
Slide 28: National Scale and Local Focus
National Scale and Local Focus ¾ 14 regions led by senior field leaders National strength and local presence • Regions average approximately $1.5 billion NWP • Aligning specialization at point of sale • Experts in their marketplace 27
Slide 29: The Complete Package
Travelers Operating Model The Complete Package National Scale AND Local Focus Product Breadth AND Specialized Underwriting Expense Efficiency AND Business Investment Consistent AND Nimble Quantity of Data AND Targeted Data 28
Slide 30: Franchise Strengths
Franchise Strengths Product Breadth & Underwriting Specialization Talent & Ease of Doing Information Distribution Business Advantage Depth Claim Effectiveness Fostering culture of creating new opportunities 29
Slide 31: Financial Objective – Create Shareholder Value
Financial Objective – Create Shareholder Value ¾ Achieve mid-teens return on equity over time ¾ Responsibly grow market share over time ¾ Flexibility/capacity to absorb severe events, e.g., major catastrophes ¾ Maintain solid claims paying/financial strength ratings A.M. Best: A+ S&P, Moody’s an
Slide 32: 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) • Copies of this presentation are publicly available on the Travelers website (www.travelers.com) 31
Slide 33: Travelers
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