The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q4 2018 Earnings Presentation
22 slides from The Travelers Companies's earnings presentation, Jan 22, 2019
Slide 1: Fourth Quarter 2018 Results
Fourth Quarter 2018 Results Tuesday, January 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: Fourth Quarter 2018 Overview
Fourth Quarter 2018 Overview Travelers Reports Fourth Quarter 2018 Net Income per Diluted Share of $2.32, up 17%, and Return on Equity of 10.9% Fourth Quarter 2018 Core Income per Diluted Share of $2.13 and Core Return on Equity of 10.0% Full Year Net Income of $2.523 billion and Return on Equity of
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax, except for premiums) FOURTH QUARTER FULL YEAR 2018 2017 Change 2018 2017 Change Core income $ 571 $ 633 (10) % $ 2,430 $ 2,043 19 % per diluted share $ 2.13 $ 2.28 (7) % $ 8.94 $ 7.28 23 % Included the following items: Net
Slide 5: High Quality Financial Position
High Quality Financial Position ($ and shares in millions, except per share amounts) December 31, December 31, 2018 2017 Capital $ 6,564 $ 6,571 Debt • At or above target levels for all rating agencies. Common equity 1 23,007 22,619 Total capital 1 $ 29,571 $ 29,190 • Repurchased 1.4 million shares
Slide 6: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) TOTAL Fourth Quarter 2018 Commentary $547 $535 • Net investment income from the long-term fixed income portfolio $525 $513 $507 $468 $480 $468 $457 $467 benefited from the lower federal income tax rate, an increase in average investments and
Slide 7: Components of Core Return on Equity
Components of Core Return on Equity 12.8% 15.5% 15.5% 15.2% 13.3% 9.0% 10.7% 9.4% 0.8% 8.5% 8.4% 0.3% 7.8% 8.0% 1.2% 1.5% 7.4% 7.2% 7.0% 7.1% 7.2% 1.5% 0.9% 0.9% 8.3% 6.1% 1.3% 0.3% 0.1% 0.2% 3.4% 7.3% 6.9% 6.5% 6.2% 6.2% 5.7% 2.7% 1.8% 2005 through 2012 2013 2014 2015 2016 2017 2018 Full Year Long-
Slide 8: Business Insurance Performance
Business Insurance Performance ($ in millions) FOURTH QUARTER FULL YEAR 2018 2017 Change 2018 2017 Change Segment income $ 391 $ 637 (39) % $ 1,638 $ 1,613 2 % Loss and loss adjustment ratio 68.7 % 56.5 % 67.8 % 65.9 % Underwriting expense ratio 30.7 32.1 31.3 31.9 1 Combined ratio 99.4 % 88.6 % (10
Slide 9: 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% 2.1% 1.7% 1.7% 1.6% 2% 1.4% 0.5% 0.7% 0.3% - (2%) 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q18 4Q’18 ($ in millions) Retention 85% 85%
Slide 10: 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% 0.7% 0.9% 0.8% 0.7% 0.8% 0.8% 0.3% 0.3% - (2%) 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q’18 ($ in millions) Retention 84% 83% 83% 8
Slide 11: 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% 2% 1.9% 1.4% 1.6% 1.5% 1.5% - 0.7% 0.7% 0.2% (2%) 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q’18 ($ in millions) Retention 88% 88% 87% 87%
Slide 12: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) FOURTH QUARTER FULL YEAR 2018 2017 Change 2018 2017 Change Segment income $ 220 $ 112 96 % $ 793 $ 556 43 % Loss and loss adjustment ratio 27.9 % 44.6 % 31.5 % 38.6 % Underwriting expense ratio 36.9 39.1 37.5 38.8 Combined ratio 1 64.8 % 83.7 %
Slide 13: Domestic Bond & Specialty Insurance
Domestic Bond & Specialty Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2017 2018 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 Management Liability Retention 88% 88% 89% 87% 89% 90% 90% 89% Renewal premium change 2 4.3% 3.0% 3.9% 3.7% 3.4% 3.4% 3.1% 3.9% New business $45 $49 $50 $49 $50 $54 $56 $53 1 Dome
Slide 14: Personal Insurance Performance
Personal Insurance Performance ($ in millions) FOURTH QUARTER FULL YEAR 2018 2017 Change 2018 2017 Change Segment income (loss) $ 32 $ (50) 164 % $ 297 $ 128 132 % Loss and loss adjustment ratio 76.8 % 82.2 % 74.1 % 76.3 % Underwriting expense ratio 25.8 26.5 26.5 26.8 1 Combined ratio 102.6 % 108.7
Slide 15: Domestic Personal Insurance Performance
Domestic Personal Insurance Performance FOURTH QUARTER FULL YEAR 2018 2017 Change 2018 2017 Change 1 Agency Automobile Loss and loss adjustment ratio 72.5 % 79.4 % 70.8 % 80.6 % Underwriting expense ratio 22.8 23.6 23.4 23.6 2 Combined ratio 95.3 % 103.0 % 7.7 pts 94.2 % 104.2 % 10.0 pts Net favorab
Slide 16: Domestic Personal Insurance
Domestic Personal Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2017 2018 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Agency Automobile 1 Retention 2 86% 86% 84% 83% 83% 83% 84% 84% Renewal premium change 3 7.3% 8.8% 10.4% 11.5% 10.8% 9.6% 7.6% 6.3% Policies in force (in thousands) 2,482 2,514 2,528 2,529
Slide 17: Total International Insurance
Total International Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2017 2018 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 International Retention 84% 84% 82% 82% 84% 83% 83% 81% Renewal premium change 2 4.5% 2.1% 2.4% 2.8% 2.0% 1.1% 2.4% 5.3% New business $96 $91 $92 $102 $97 $122 $93 $91 1 Excludes the su
Slide 18: Appendix
Appendix Additional Information Additional Information 18
Slide 19: 2019 Catastrophe Reinsurance
2019 Catastrophe Reinsurance Effective January 1, 2019 Corporate Catastrophe Excess-of-Loss Reinsurance Treaty (Renewal) Covers the accumulation of certain property losses arising from one or multiple occurrences: 75% ($1.5 billion) of qualifying losses are covered by the treaty and 25% ($500 millio
Slide 20: 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 21: 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 22: investor.travelers.com
investor.travelers.com
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