The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q3 2020 Earnings Presentation
22 slides from The Travelers Companies's earnings presentation, Oct 20, 2020
Slide 1: Third Quarter 2020 Results
Third Quarter 2020 Results October 20, 2020
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: Third Quarter 2020 Overview
Third Quarter 2020 Overview Travelers Reports Third Quarter 2020 Net Income per Diluted Share of $3.23 and Core Income per Diluted Share of $3.12, Both Up Substantially from Prior Year Quarter Third Quarter Return on Equity of 12.1% and Core Return on Equity of 13.5% • Third quarter net income of $8
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts, after-tax, except for premiums) THIRD QUARTER YEAR-TO-DATE 2020 2019 Change 2020 2019 Change Core income $ 798 $ 378 111 % $ 1,424 $ 1,670 (15) % per diluted share $ 3.12 $ 1.43 118 % $ 5.56 $ 6.29 (12) % Included the following items
Slide 5: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital September 30, December 31, 2020 2019 • At or above target levels for all rating agencies. Debt $ 7,050 $ 6,558 • No share repurchases in 3Q 2020. 1 Common equity 24,037 23,697 • Dividends in the third quarter
Slide 6: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) TOTAL Third Quarter 2020 vs 2019 Commentary $566 • Net investment income (NII) from the long-term fixed income $524 $548 $528 $525 $519 $525 $496 portfolio decreased due to lower interest rates, partially offset by an increase in average inv
Slide 7: Components of Core Return on Equity
Components of Core Return on Equity 13.3% 15.2% 13.3% 9.0% 10.7% 10.9% 9.6% 8.1% 9.2% 0.9% 0.3% 8.0% 7.8% 7.8% 7.8% 7.4% 7.2% 7.2% 1.5% 1.1% 1.1% 0.9% 0.9% 1.3% 0.3% 0.4% 6.4% 6.1% 0.3% 0.1% 0.1% 0.2% 0.2% 4.1% 8.0% 6.5% 3.1% 6.2% 6.2% 2.7% 6.4% 6.3% 6.1% 5.7% 1.8% 1.8% 1.7% 0.0% 2005 through 2014 2
Slide 8: Business Insurance Performance
Business Insurance Performance ($ in millions) THIRD QUARTER YEAR-TO-DATE 2020 2019 Change 2020 2019 Change Segment income $ 365 $ 179 104 % $ 596 $ 944 (37) % Loss and loss adjustment ratio 71.8 % 76.6 % 72.8 % 71.3 % Underwriting expense ratio 30.5 30.4 31.0 30.8 1 Combined ratio 102.3 % 107.0 % 4
Slide 9: Domestic Business Insurance (Ex. National Accounts)
Domestic Business Insurance (Ex. National Accounts) ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change1 % Renewal Rate Change2 % 8.2% Exposure/Other % 8% 7.4% 6.0% 6% 4.2% 4.7% 4% 3.5% 2.1% 2% - (2%) (4%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 Retention 86% 85% 84% 84%
Slide 10: Domestic Business Insurance: Select Accounts
Domestic Business Insurance: Select Accounts ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change1 % Renewal Rate Change2 % Exposure/Other % 8% 6% 4% 2.9% 2.1% 2% 1.8% 1.7% 1.3% 0.5% 0.9% - (2%) (4%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 Retention 83% 82% 82% 82% 82% 83%
Slide 11: Domestic Business Insurance: Middle Market
Domestic Business Insurance: Middle Market ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change1 % Renewal Rate Change2 % 8.3% Exposure/Other % 7.9% 8% 6.4% 6% 4.6% 4% 3.3% 3.7% 2.1% 2% - (2%) (4%) ($ in millions) 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 Retention 87% 87% 86% 86% 86% 85% 8
Slide 12: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) THIRD QUARTER YEAR-TO-DATE 2020 2019 Change 2020 2019 Change Segment income $ 115 $ 139 (17) % $ 309 $ 451 (31) % Loss and loss adjustment ratio 54.0 % 45.7 % 53.6 % 42.2 % Underwriting expense ratio 35.3 37.6 36.1 37.6 Combined ratio 1 89.3 % 8
Slide 13: Domestic Bond & Specialty Insurance
Domestic Bond & Specialty Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 2Q 3Q Management Liability 1 Retention 89% 90% 90% 89% 89% 89% 90% Renewal premium change 2 4.3% 5.0% 5.8% 6.9% 7.4% 8.0% 8.1% New business $55 $65 $68 $62 $57 $51 $54 13 1 Domestic only, ex
Slide 14: Personal Insurance Performance
Personal Insurance Performance ($ in millions) THIRD QUARTER YEAR-TO-DATE 2020 2019 Change 2020 2019 Change Segment income $ 392 $ 131 199 % $ 738 $ 497 48 % Loss and loss adjustment ratio 60.0 % 71.8 % 64.5 % 69.8 % Underwriting expense ratio 26.4 26.2 27.2 26.4 Combined ratio 1 86.4 % 98.0 % 11.6
Slide 15: Domestic Personal Insurance Performance
Domestic Personal Insurance Performance THIRD QUARTER YEAR-TO-DATE 2020 2019 Change 2020 2019 Change Agency Automobile 1 Loss and loss adjustment ratio 56.4 % 70.1 % 60.0 % 68.8 % Underwriting expense ratio 23.4 22.9 24.8 23.4 2 Combined ratio 79.8 % 93.0 % 13.2 pts 84.8 % 92.2 % 7.4 pts Net favorab
Slide 16: Domestic Personal Insurance
Domestic Personal Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1 Agency Automobile Retention 2 84% 84% 84% 84% 85% 85% 84% 3 Renewal premium change 5.5% 4.8% 3.7% 3.1% 2.4% 1.7% 1.4% Policies in force (in thousands) 2,516 2,517 2,524 2,532 2,540 2,570 2,5
Slide 17: Total International Insurance
Total International Insurance ($ in millions) ILLUSTRATIVE BUSINESS STATISTICS 2019 2020 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1 International Retention 80% 80% 79% 77% 71% 79% 79% Renewal premium change 2 7.3% 5.7% 5.0% 6.0% 8.1% 7.6% 7.3% New business $96 $90 $71 $80 $72 $81 $65 17 1 Excludes surety and other prod
Slide 18: Appendix
Appendix 18
Slide 19: Asbestos Usage & Mesothelioma Mortality
ASBESTOS Asbestos Usage & Mesothelioma Mortality • Asbestos usage peaked in mid-to-late 1970s. • Annual deaths from Mesothelioma have decreased by 5.7% from 2010 to 2018, with a more pronounced decrease in younger groups. • The data are consistent with the Company's view that mortality associated wi
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 22
The Travelers Companies — Q3 2020 Earnings Presentation on 6ix