The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q4 2015 Earnings Presentation
25 slides from The Travelers Companies's earnings presentation, Jan 21, 2016
Slide 1: Fourth Quarter 2015 Results
Fourth Quarter 2015 Results January 21, 2016 1
Slide 2: Long-Term Financial Strategy
Long-Term Financial Strategy Balanced Generation of approach to Meaningful and top tier earnings rightsizing capital sustainable and 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 3: Fourth Quarter 2015 Overview
Fourth Quarter 2015 Overview Travelers Reports Fourth Quarter Net and Operating Income per Diluted Share of $2.83 and $2.90, Respectively Fourth Quarter Return on Equity and Operating Return on Equity of 14.5% and 15.8%, Respectively Record Full Year Net and Operating Income per Diluted Share of $10
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, after-tax) Fourth Quarter Full Year Operating Operating Return Operating Operating Return Income on Equity Income on Equity 2014 $ 1,023 17.7% $ 3,641 15.5% Lower net investment income (73) (1.3) pts (311) (1.3) pts Higher (lower) net favorable prior year res
Slide 5: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax) Fourth Quarter Full Year 2015 2014 Change 2015 2014 Change Operating income $ 886 $ 1,023 (13) % $ 3,437 $ 3,641 (6) % per diluted share $ 2.90 $ 3.07 (6) % $ 10.87 $ 10.55 3 % Included the following items: Net favorable p
Slide 6: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital • At or above target levels for all rating agencies. December 31, December 31, 2015 2014 • Repurchased 8.8 million shares during the fourth quarter Debt $ 6,344 $ 6,349 2015 and 30.3 million shares year-to-da
Slide 7: Combined Net Investment Income – After-tax
Combined Net Investment Income – After-tax ($ in millions, after-tax) Total Fourth Quarter 2015 Commentary • Fixed income returns declined primarily due to lower reinvestment rates $582 and a modestly lower amount of fixed income investments that were $554 $553 $568 $513 $503 impacted by the Company
Slide 8: Components of Operating Return on Equity
Components of Operating Return on Equity 14.4% 12.5% 6.1% 11.0% 15.5% 15.5% 15.2% 9.5% 9.3% 9.4% 0.7% 9.0% 0.9% 1.3% 8.5% 8.4% 0.5% 0.9% 0.1% 7.8% 0.1% 1.2% 1.5% 7.4% 7.0% 7.1% 0.9% 8.3% 8.3% 8.0% 8.1% 7.3% 6.9% 6.5% 4.9% 3.2% 1.6% 2005 (2.9%) through 2009 2010 2011 2012 2013 2014 2015 Full Year Lon
Slide 9: Business and International Insurance Performance
Business and International Insurance Performance ($ in millions) Fourth Quarter Full Year 2015 2014 Change 2015 2014 Change Operating income $ 566 $ 630 (10) % $ 2,170 $ 2,347 (8) % Loss and loss adjustment ratio 57.0 % 57.4 % 59.6 % 61.6 % Underw riting expense ratio 32.6 32.4 32.5 31.5 Combined ra
Slide 10: Domestic Business Insurance (Ex. National Accounts)
Domestic Business Insurance (Ex. National Accounts) Illustrative Business Statistics 12% Renewal Premium Change1 % ♦ Renewal Rate Change2 % 10% Renewal Rate Change2 % ex. National Property • Exposure/Other % 8% 6% 4% 4.8% 3.6% 2% 2.8% 2.2% 1.3% 1.1% 0.9% 0.6% - (2%) 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'
Slide 11: Domestic Business Insurance: Select Accounts
Domestic Business Insurance: Select Accounts Illustrative Business Statistics 12% Renewal Premium Change1 % ♦ Renewal Rate Change2 % 10% • Exposure/Other % 8% 6% 4.9% 4.6% 4.0% 3.6% 4% 2.8% 2.6% 2.5% 2.9% 2% - (2%) 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 ($ in millions) Retention 79% 80% 80%
Slide 12: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market Illustrative Business Statistics 12% Renewal Premium Change1 % ♦ Renewal Rate Change2 % 10% • Exposure/Other % 8% 6% 5.2% 4% 3.7% 3.0% 2% 1.7% 0.9% 1.3% 1.0% 0.1% - (2%) 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 ($ in millions) Retention 83% 83% 85% 8
Slide 13: Domestic Business Insurance: Other Business Insurance
Domestic Business Insurance: Other Business Insurance1 Illustrative Business Statistics 12% Renewal Premium Change2 % ♦ Renewal Rate Change3 % 10% • Exposure/Other % 8% 6% 4% 3.8% 2% 1.8% 2.5% 1.4% - 0.5% -1.0% -0.9% -0.1% (2%) 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 ($ in millions) Retentio
Slide 14: International Insurance
International Insurance ($ in millions) Illustrative Business Statistics 2014 2015 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 International Retention 84% 82% 82% 82% 85% 83% 81% 79% Renewal premium change 2 1.7% 1.8% (0.6%) 0.9% 0.5% (0.5%) (1.3%) 0.4% New business $83 $89 $73 $68 $56 $63 $59 $80 1 Excludes the sure
Slide 15: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) Fourth Quarter Full Year 2015 2014 Change 2015 2014 Change Operating income $ 162 $ 216 (25) % $ 633 $ 727 (13) % Loss and loss adjustment ratio 27.6 % 11.1 % 30.4 % 22.8 % Underw riting expense ratio 37.5 38.6 37.5 38.0 1 Combined ratio 65.1 %
Slide 16: Bond & Specialty Insurance
Bond & Specialty Insurance ($ in millions) Illustrative Business Statistics 2014 2015 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 Management Liability Retention 84% 84% 83% 83% 85% 86% 87% 85% Renewal premium change 2 7.3% 4.2% 4.0% 5.0% 3.9% 3.2% 3.2% 2.7% New business $37 $37 $34 $36 $38 $40 $45 $42 1 Excludes the
Slide 17: Personal Insurance Performance
Personal Insurance Performance ($ in millions) Fourth Quarter Full Year 2015 2014 Change 2015 2014 Change Operating income $ 222 $ 242 (8) % $ 889 $ 824 8 % Loss and loss adjustment ratio 58.5 % 55.5 % 58.1 % 59.6 % Underw riting expense ratio 28.2 29.8 28.5 29.1 1 Combined ratio 86.7 % 85.3 % (1.4)
Slide 18: Personal Insurance Performance
Personal Insurance Performance Fourth Quarter Full Year 2015 2014 Change 2015 2014 Change Agency Automobile 1 Loss and loss adjustment ratio 73.0 % 71.7 % 69.1 % 71.0 % Underw riting expense ratio 25.1 26.2 25.6 26.2 Combined ratio 2 98.1 % 97.9 % (0.2) pts 94.7 % 97.2 % 2.5 pts Net favorable prior
Slide 19: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2014 2015 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Agency Automobile 1 Retention 2 80% 81% 82% 82% 83% 83% 84% 84% Renewal premium change 3 6.7% 6.8% 6.2% 5.6% 5.2% 4.8% 3.5% 3.5% Policies in force (in thousands) 1,985 1,981 1,990 2,000 2,021 2,057
Slide 20: Appendix
Appendix Additional Information Additional Information 20
Slide 21: 2016 Catastrophe Reinsurance
2016 Catastrophe Reinsurance Effective January 1, 2016 Corporate Catastrophe Excess-of-Loss Reinsurance Treaty Covers the accumulation of certain property losses arising from one or multiple occurrences: 75% ($1.5 billion) of qualifying losses covered by treaty and 25% ($500 million) of qualifying l
Slide 22: Investment Portfolio: Energy-Related Investments
Investment Portfolio: Energy-Related Investments ($ in millions) As of December 31, 2015 Average Credit Cost Rating4 Below investment grade bonds1 $ 162 Ba3 Publicly traded equity securities2 189 Private equities - energy focused3 330 Total $ 681 Percent of total investment portfolio 1.0% Note: Tabl
Slide 23: 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 24: 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 25: The Travelers Companies, Inc.
The Travelers Companies, Inc. Additional Information Additional Information 25
The Travelers Companies — Q4 2015 Earnings Presentation on 6ix