The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q2 2021 Earnings Presentation
32 slides from The Travelers Companies's earnings presentation, August 2021
Slide 1: Introduction to Travelers 2Q 2021
Introduction to Travelers 2Q 2021
Slide 2: Long-Term Financial Strategy
Long-Term Financial Strategy Balanced Generation of approach to Meaningful and top tier earnings 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 Core RO
Slide 3: Enterprise Key Competitive Advantages
Enterprise Key Competitive Advantages Return focused company Product breadth and specialization – Leading U.S. commercial insurance writer in 2020 with a top 5 position in five major product lines1, including a #1 position in workers’ compensation, and commercial multi peril – Top 3 writer in person
Slide 4: Strong & Simple Balance Sheet
Strong & Simple Balance Sheet ($ in millions, except per share amounts) $103.88 $99.54 $92.76 $92.01 $87.27 $83.36 $80.44 $7,290 $6,550 $6,558 $7,049 $6,564 $6,571 $6,437 $25,917 $25,127 $23,697 $23,297 $23,007 $22,619 $22,491 2016 2017 2018 2019 2020 2020 2021 At December 31, At June 30, Common Sha
Slide 5: Travelers Business Segments
Travelers Business Segments 2020 Net Written Premiums: $29.7 Billion Personal Insurance $11.3B Business Insurance $15.4B Bond & Specialty Insurance $3.0B 5
Slide 6: Travelers Consolidated Overview
Travelers Consolidated Overview ($ in millions) Net Written Premiums Net Income Core Income $29,732 $29,151 $27,708 $26,219 $2,697 $2,622 $2,523 $2,686 $2,537 $2,430 $2,056 $2,043 $1,667 $15,640 $14,692 $1,578 $560 $626 2017 2018 2019 2020 2Q 20 2Q 21 2017 2018 2019 2020 2Q 20 2Q 21 YTD YTD YTD YTD
Slide 7: Components of Core Return on Equity
Components of Core Return on Equity 13.3% 15.2% 13.3% 9.0% 10.7% 10.9% 11.3% 5.3% 12.4% 9.2% 9.0% 0.9% 0.3% 7.8% 8.0% 7.8% 7.4% 7.2% 7.2% 3.4% 1.5% 1.1% 6.9% 0.9% 0.9% 5.4% 6.1% 1.3% 0.3% 0.7% 0.1% 0.3% 0.2% 0.1% 0.2% 4.4% 4.1% 8.0% 3.4% 6.5% 6.4% 3.1% 6.2% 6.2% 2.7% 6.1% 6.2% 5.7% 5.6% 1.8% 0.0% 0.
Slide 8: Generation of Top Tier Earnings
Generation of Top Tier Earnings 18.0% RETURN ON EQUITY vs. ESTIMATED COST OF EQUITY1 14.6% 14.6% 14.2% 13.5% 12.5% 10.9% 12.1% 11.6% 11.4% 9.7% 11.0% 9.4% 9.3% 10.5% 8.8% 9.1% 8.8% 10.0% 8.6% 8.6% 9.8% 8.4% 8.3% 8.5% 7.9% 8.7% 7.2% 7.3% 5.7% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 9: Balanced Approach to Rightsizing Capital
Balanced Approach to Rightsizing Capital Operating company capital Holding company maintained at Holding company Excess capital in liquidity Unneeded levels needed to leverage operating maintained in capital support current maintained at companies excess of amount returned business profile level con
Slide 10: Excess Capital Returned to Shareholders
Excess Capital Returned to Shareholders ($ in millions) TRV SHARE REPURCHASES & DIVIDENDS TRV NET INCOME $5,736 $4,068 $3,968 $3,692 $3,673 $3,651 $3,439 $3,234 $3,216 $3,195 $1,667 $3,014 $1,238 $2,697 $2,622 $2,523 $2,473 $2,396 $2,229 $2,205 $2,139 $2,056 $1,426 $1,536 2010 2011 2012 2013 2014 20
Slide 11: Growing Book Value Per Share
Growing Book Value Per Share BOOK VALUE PER SHARE $115.68 $116.86 $101.55 $87.46 $86.84 $83.05 $79.75 $77.08 $70.15 $67.31 $62.32 $58.47 $52.54 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2Q 21 ADJUSTED BOOK VALUE PER SHARE1 $103.88 $99.54 $92.76 $87.27 $83.36 $80.44 $75.39 $70.98 $6
Slide 12: Consistent Dividend Growth
Consistent Dividend Growth DIVIDEND PER SHARE $3.49 $3.37 $3.23 $3.03 $2.83 $2.62 $2.38 $2.15 $1.96 $1.79 $1.59 $1.41 $1.23 $1.19 $1.13 1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Travelers has paid cash dividends without interruption for 150 years; current dividend
Slide 13: Return Focused Company
Return Focused Company AVERAGE RETURN ON EQUITY: FY 2006 – 2Q 2021 12.3% 10.5% 9.0% 8.8% 7.5% 7.1% ` -6.3% Travelers S&P Property & S&P Diversified S&P S&P S&P S&P Multi-line Casualty Financials Life & Health Financials Banks Insurance Our focus has resulted in top tier returns in P&C industry and f
Slide 14: Sustainability
Sustainability Our long-term success depends not only on our business strategy and competitive advantages but also on keeping our promise to be there for our customers, communities and employees. For this reason, we take an integrated approach to sustained value creation. Because we believe it is im
Slide 15: Appendix
APPENDIX 15
Slide 16: Consistent High Quality Investment Portfolio
Consistent High Quality Investment Portfolio INVESTMENT STRATEGY ($ in millions) June 30, December 31, December 31, • On-going 2021 2020 2019 - Investment portfolio managed Total Investments $ 86,545 $ 84,423 $ 77,884 to support insurance Taxable fixed maturities 50% 48% 49% operations Tax-exempt fi
Slide 17: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) TOTAL Second Quarter 2021 vs 2020 Commentary $682 • Net investment income (NII) from the long-term fixed income $572 $590 portfolio decreased due to lower interest rates, partially $566 $524 $519 offset by an increase in average investments
Slide 18: Business Insurance
Business Insurance 2020 Net Written Premiums: $15.4 Billion BY MARKET BY PRODUCT LINE Domestic International • Predominantly small and International 7% 7% National middle market insurer Accounts • Leading writer in all five Commercial Workers’ 6% major product lines1 Property Compensation National •
Slide 19: Business Insurance
Business Insurance ($ in millions) Net Written Premiums Segment Income $15,629 $15,431 $14,956 $14,270 $1,638 $1,613 $1,392 $1,309 $8,105 $7,967 $960 $231 2017 2018 2019 2020 2Q 20 2Q 21 2017 2018 2019 2020 2Q 20 2Q 21 YTD YTD YTD YTD 2017 2018 2019 2020 2Q 20 YTD 2Q 21 YTD Underlying Combined Ratio
Slide 20: Bond & Specialty Insurance
Bond & Specialty Insurance 2020 Net Written Premiums: $3.0 Billion Management Liability • Diversified risk profile Surety • Strong presence in small • A leading writer of Surety and middle market in US1 • High-value client services • Balanced portfolio across contractor sizes and Surety industry seg
Slide 21: Bond & Specialty Insurance
Bond & Specialty Insurance ($ in millions) Net Written Premiums Segment Income $793 $2,951 $2,739 $2,528 $2,359 $618 $556 $473 $1,577 $1,397 $324 $194 2017 2018 2019 2020 2Q 20 2Q 21 2017 2018 2019 2020 2Q 20 2Q 21 YTD YTD YTD YTD 2017 2018 2019 2020 2Q 20 YTD 2Q 21 YTD 1 Underlying Combined Ratio 8
Slide 22: Personal Insurance
Personal Insurance 2020 Net Written Premiums: $11.3 Billion Personal Insurance • Premier company within independent agent channel • Full account solution provider with industry Automobile Homeowners & leading property results 47% Other and strong position in the 47% preferred market • Competing succ
Slide 23: Personal Insurance
Personal Insurance ($ in millions) Net Written Premiums Segment Income $1,195 $11,350 $10,783 $10,224 $9,590 $824 $5,958 $5,328 $435 $128 $346 $297 2017 2018 2019 2020 2Q 20 2Q 21 2017 2018 2019 2020 2Q 20 2Q 21 YTD YTD YTD YTD 2017 2018 2019 2020 2Q 20 YTD 2Q 21 YTD Underlying Combined Ratio1 91.5
Slide 24: Explanatory Note
Explanatory Note This presentation contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as “may,” “w
Slide 25: Disclosure
Disclosure In this presentation, we may refer to some non-GAAP financial measures. For a reconciliation of these measures to the most comparable GAAP measures, please see the pages that follow. For a glossary of selected insurance terms, we refer you to our most recent annual report on Form 10-K fil
Slide 26: Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures
Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures The following measures are used by the Company’s management to evaluate financial performance against historical results, to establish performance targets on a consolidated basis and for other reasons as discuss
Slide 27: Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures
Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures Reconciliation of Segment Income (Loss) to Total Core Income (Loss) Three Months Ended Six Months Ended June 30, June 30, ($ in millions, after-tax) 2021 2020 2021 2020 Business Insurance $ 643 $ (58) $ 960 $ 23
Slide 28: Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures
Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures RECONCILIATION OF SHAREHOLDERS’ EQUITY TO ADJUSTED SHAREHOLDERS’ EQUITY AND CALCULATION OF RETURN ON EQUITY AND CORE RETURN ON EQUITY Adjusted shareholders’ equity is shareholders’ equity excluding net unrealize
Slide 29: Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures
Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures Average annual core return on equity over a period is the ratio of: a) the sum of core income (loss) less preferred dividends for the periods presented to b) the sum of: 1) the sum of the adjusted average shareh
Slide 30: Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures
Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures A catastrophe is a severe loss designated a catastrophe by internationally recognized organizations that track and report on insured losses resulting from catastrophic events, such as Property Claim Services (PC
Slide 31: Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures
Glossary of Financial Measures and Reconciliations of GAAP Measures to Non-GAAP Measures RECONCILIATION OF BOOK VALUE PER SHARE AND SHAREHOLDERS’ EQUITY TO CERTAIN NON-GAAP MEASURES Book value per share is total common shareholders’ equity divided by the number of common shares outstanding. Adjusted
Slide 32: investor.travelers.com
investor.travelers.com 32
The Travelers Companies — Q2 2021 Earnings Presentation on 6ix