The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Merrill Lynch Insurance Investor Conference 2009
26 slides from The Travelers Companies's conference presentation, Feb 25, 2009
Slide 1: Consistent Strategy, Consistent Goals a.k.a. Business as Usual
Consistent Strategy, Consistent Goals a.k.a. Business as Usual Jay Fishman Chairman & Chief Executive Officer The Travelers Companies, Inc. February 25, 2009
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: Long-term Financial Strategy
Long-term Financial Strategy Balanced Generation of approach to Meaningful and top tier earnings rightsizing sustainable and capital competitive substantially in capital and advantages excess of growth growing book needs value per share over time Create Shareholder Create Shareholder Value Value Obj
Slide 4: The Mission
The Mission Financial Company Employees Community 3
Slide 5: Consistent Strategy, Consistent Goals
Consistent Strategy, Consistent Goals ¾ “To be successful as risks evolve, companies must be ever-vigilant in monitoring the changes in the world in which we live – using both tried-and-true methods as well as new forms of analyses.” – 2005 Travelers Annual Report ¾ “Our goals as a company remain co
Slide 6: An Industry Leader, With Strong Operating Focus
An Industry Leader, With Strong Operating Focus OperatingReturn Operating Returnon onEquity Equity 9.6% 17.9% 17.7% 12.4% 12% ¾ Jan. 1, 2005 through Dec. 31, 10.6% 11.1% 11.0% 2008 average annual 10% 1.4% 1.4% 1.6% operating return on equity of 8.1% approximately 14.5% 8% 6% 6.8% 6.7% ¾ Very strong
Slide 7: Adjusted Book Value Growth
Adjusted Book Value Growth TRVAdjusted TRV AdjustedBook BookValue ValuePer Share11 PerShare YE’04––YE’08 YE’04 YE’08CAGR: CAGR:9.6% 9.6% ExcludingShare Excluding Repurchases22::10.4% ShareRepurchases 10.4% 45 $43.45 $43.34 $43.37 $42.36 $41.23 $40.20 40 $38.76 $37.26 $36.20 $35.10 35 $33.83 Y-o-Y Ch
Slide 8: Consistent High Quality Investment Portfolio
Consistent High Quality Investment Portfolio ($ in millions) December 31, 2005 2006 2007 2008 Taxable fixed maturities 41% 38% 35% 32% Tax-exempt fixed maturities 46% 49% 52% 55% Total fixed maturities 87% 87% 87% 87% Mortgage loans -% -% -% -% Short-term securities 7% 7% 7% 7% Total fixed income 94
Slide 9: Areas of Market Disruption
Areas of Market Disruption Travelers Status ¾ Subprime / Alt-A mortgage-backed Holdings of $206 million - negligible exposure securities ¾ Collateralized debt obligations None ¾ Collateralized loan obligations None ¾ Monoline insurer guarantee of municipal Municipal bond portfolio AA+ with or withou
Slide 10: Travelers Key Competitive Advantages
Travelers Key Competitive Advantages Unparalleled Product Breadth Industry Leading Significant Scale Customer Focus & Local Access Analytics Ease of Doing Business Consistent strategy Consistent strategy has has and and will will continue continue to to attract business attract business 9
Slide 11: Industry Leading Analytics
Industry Leading Analytics ¾ Product profitability analysis based upon risk adjusted capital Select CAG - Field First Party Oper. Comb. % Net Oper. Comb. % Net Oper. Comb. % Net Profit % Ratio Grow th Profit % Ratio Grow th Profit % Ratio Grow th Property-NWP 12 mos ‘08 '05 $xx $xx Dec YTD AccYr/ Gr
Slide 12: Unparalleled Product Breadth
Unparalleled Product Breadth $21.7Billion $21.7 BillionNet NetWritten WrittenPremium Premium ¾ Over the past few years, Travelers has FullYear Full Year2008 2008 developed a multitude of new products Homeow ners and Other including: Select Accounts Auto Benefits of product breadth Commerical ¾ Respo
Slide 13: Significant Scale & Local Access
Significant Scale & Local Access ¾ Scale Data Underwriting Advantage ¾ Ability to leverage across the organization Travelers Locations ¾ Field organization locally focused ¾ Building upon leading agency position Financial, • Recent industry survey1 reported 72% of commercial lines Business Professio
Slide 14: Ease of Doing Business
Ease of Doing Business ¾ Over the past few years, Travelers has continued to invest in technologies making it easier for agents and customers to do business ¾ For example: TravelersExpressSM, an enhanced quote-to-issue agency platform and multivariate price program in Select Accounts • Streamlined p
Slide 15: Customer Focus: Underwriting Specialization
Customer Focus: Underwriting Specialization ¾ Tailored risk management solutions for customers and agents • Tailored products or coverage to more than 20 different industry segments • Industry specific risk control products and services • Pre-qualified leads; packaged sales kits; joint advertising S
Slide 16: Customer Focus: Claim Example
Customer Focus: Claim Example ¾ Goal: manage claim costs and deliver effective service ¾ Initiated enterprise wide catastrophe response model • Significantly reduced reliance on external claim adjusters • Create scalable model allowing for consistent claim experience during multiple catastrophic eve
Slide 17: Continue to Execute on Competitive Advantages
Continue to Execute on Competitive Advantages Financial Goals ¾ Deliver a mid-teens operating return on equity over time • Average annual operating return on equity from Jan. 1, 2005 to Dec. 31, 2008 of approximately 14.5% ¾ Grow book value per share over time while rightsizing capital • Adjusted bo
Slide 18: Annex
TRAVELERS) Annex 17
Slide 19: Glossary of Financial Measures
Glossary of Financial Measures The following measures are used by the Company’s management to evaluate financial performance against historical results and establish targets on a consolidated basis. In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules b
Slide 20: Glossary of Financial Measures - Continued
Glossary of Financial Measures - Continued Book value per share is total common shareholders’ equity divided by the number of common shares outstanding. Adjusted book value per share is total common shareholders’ equity excluding the after-tax impact of net unrealized investment gains and losses (i.
Slide 21: Return on Equity Reconciliations
Return on Equity Reconciliations Twelve Months Ended December 31, ($ in millions; after-tax) 2008 2007 2006 2005 Fixed investment portfolio income $ 2,462 $ 2,518 $ 2,375 $ 2,127 Non-fixed investment portfolio income (loss) (163) 397 337 311 Net investment income 2,299 2,915 2,712 2,438 Holding comp
Slide 22: Book Value Per Share Reconciliations
Book Value Per Share Reconciliations ($ in millions, except per share amounts; after-tax) 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Book Value Reconciliation 2004 2005 2005 2005 2005 2006 2006 2006 2006 Adjusted common shareholders' equity $ 20,145 $ 20,275 $ 21,234 $ 21,776 $ 21,823 $ 22,751 $ 23,389 $ 24,200 $ 2
Slide 23: Earnings Per Share Reconciliations
Earnings Per Share Reconciliations ($ in millions, except per share amounts; after-tax) 2005 2006 2007 2008 Net income Operating income $ 2,026 $ 4,200 $ 4,500 $ 3,195 Net realized investment gains (losses) 35 8 101 (271) Income from continuing operations 2,061 4,208 4,601 2,924 Discontinued operati
Slide 24: Reconciliations of the Impact of Share Repurchases
Reconciliations of the Impact of Share Repurchases ($ in millions, except per share amounts) 2006 2007 2008 Book Value Reconciliation-Adjusted to Exclude the Impact of Share Repurchases Adjusted common shareholders' equity $ 24,553 $ 25,884 $ 25,374 Cumulative cost of share repurchases 1,121 4,068 6
Slide 25: 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 and related financial supplement are publicly available on the Travelers website
Slide 26: End Slide
a rN TRAVELERS |
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