The Travelers Companies, Inc. · NYSE:TRV
The Travelers Companies — Q4 2016 Earnings Presentation
24 slides from The Travelers Companies's earnings presentation, Jan 24, 2017
Slide 1: Fourth Quarter 2016 Results
Fourth Quarter 2016 Results January 24, 2017 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 2016 Overview
Fourth Quarter 2016 Overview Travelers Reports Record Fourth Quarter Net Income and Operating Income per Diluted Share of $3.28 and $3.20, Respectively, Up 16% and 10% from Prior Year Quarter Fourth Quarter Net Income and Operating Income of $943 Million and $919 Million, Respectively, Up 9% and 4%
Slide 4: Consolidated Performance
Consolidated Performance ($ in millions, except per share amounts and after-tax, except for premiums) Fourth Quarter Full Year 2016 2015 Change 2016 2015 Change Operating income $ 919 $ 886 4 % $ 2,967 $ 3,437 (14) % per diluted share $ 3.20 $ 2.90 10 % $ 10.12 $ 10.87 (7) % Included the following i
Slide 5: Very Strong Financial Position
Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital December 31, December 31, • At or above target levels for all rating agencies. 2016 2015 • Repurchased 6.6 million shares during the fourth quarter Debt $ 6,437 $ 6,344 2016 at a total cost of $751 million. C
Slide 6: Combined Net Investment Income - After-tax
Combined Net Investment Income - After-tax ($ in millions) Total Fourth Quarter 2016 Commentary • Net investment income from the long-term fixed income portfolio declined modestly from the prior year quarter due to lower $478 $503 $484 reinvestment rates as expected $476 $462 $493 $440 $439 $442 $47
Slide 7: Components of Operating Return on Equity
Components of Operating Return on Equity 14.1% 6.1% 11.0% 15.5% 15.5% 15.2% 13.3% 9.4% 9.4% 0.7% 9.0% 1.3% 8.5% 1.3% 8.4% 0.4% 0.9% 0.1% 7.8% 1.2% 1.5% 7.4% 7.2% 7.0% 7.1% 1.5% 0.9% 0.9% 6.9% 0.1% 6.1% 8.1% 7.3% 6.5% 8.3% 8.0% 4.7% 6.2% 1.6% 2005 (2.9%) through 2010 2011 2012 2013 2014 2015 2016 Ful
Slide 8: Business and International Insurance Performance
Business and International Insurance Performance ($ in millions) Fourth Quarter Full Year 2016 2015 Change 2016 2015 Change Operating income $ 722 $ 566 28 % $ 2,048 $ 2,170 (6) % Loss and loss adjustment ratio 56.3 % 57.0 % 61.4 % 59.6 % Underwriting expense ratio 32.7 32.6 32.9 32.5 Combined ratio
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% 0.9% - 0.7% 0.7% 0.4% 0.2% 0.2% -0.1% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 ($ in millions) Retention 84% 8
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% 2.7% 2.5% 2% 2.4% 2.2% 0.5% 1.2% 0.9% - 0.4% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 ($ in millions) Retention 81% 81% 81% 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% 1.3% 0.8% 1.4% 0.9% - 0.4% 0.4% 0.0% -0.4% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 ($ in millions) Retention 86% 86% 86% 87
Slide 12: Domestic Business Insurance: Other Business Insurance
Domestic Business Insurance: Other Business Insurance1 Illustrative Business Statistics 10% ▲ Renewal Premium Change2 % Renewal Rate Change3 % Renewal Rate Change3 ex. National Property % 8% • Exposure/Other % 6% 4% 2% - 0.4% -1.3% -1.2% -0.2% -0.4% -0.6% -0.9% -0.9% (2%) 1Q'15 2Q'15 3Q'15 4Q'15 1
Slide 13: International Insurance
International Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 International Retention 85% 82% 81% 79% 83% 80% 82% 82% Renewal premium change 2 (0.5%) (0.6%) (0.6%) (1.2%) (1.6%) (0.7%) (0.6%) 2.1% New business $58 $63 $59 $80 $77 $108 $87 $91 1 Excludes
Slide 14: Bond & Specialty Insurance Performance
Bond & Specialty Insurance Performance ($ in millions) Fourth Quarter Full Year 2016 2015 Change 2016 2015 Change Operating income $ 161 $ 162 (1) % $ 653 $ 633 3 % Loss and loss adjustment ratio 27.8 % 27.6 % 26.8 % 30.4 % Underwriting expense ratio 37.9 37.5 37.6 37.5 1 Combined ratio 65.7 % 65.1
Slide 15: Bond & Specialty Insurance
Bond & Specialty Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 Management Liability Retention 85% 86% 87% 84% 86% 87% 87% 88% Renewal premium change 2 4.3% 3.7% 3.4% 2.9% 3.0% 3.5% 3.5% 2.3% New business $38 $40 $45 $42 $46 $48 $50 $41 1 Excludes the
Slide 16: Personal Insurance Performance
Personal Insurance Performance ($ in millions) Fourth Quarter Full Year 2016 2015 Change 2016 2015 Change Operating income $ 97 $ 222 (56) % $ 510 $ 889 (43) % Loss and loss adjustment ratio 71.4 % 58.5 % 67.8 % 58.1 % Underwriting expense ratio 26.8 28.2 27.3 28.5 1 Combined ratio 98.2 % 86.7 % (11
Slide 17: Personal Insurance Performance: Agency Automobile
Personal Insurance Performance: Agency Automobile1 Fourth Quarter Full Year 2016 2015 Change 2016 2015 Change 1 Agency Automobile Loss and loss adjustment ratio 92.8 % 73.0 % 79.4 % 69.1 % Underwriting expense ratio 23.9 25.1 24.6 25.6 Combined ratio 2 116.7 % 98.1 % (18.6) pts 104.0 % 94.7 % (9.3)
Slide 18: Personal Insurance Performance: Agency Homeowners & Other
Personal Insurance Performance: Agency Homeowners & Other1 Fourth Quarter Full Year 2016 2015 Change 2016 2015 Change 1 Agency Homeowners & Other Loss and loss adjustment ratio 47.2 % 43.8 % 55.1 % 47.2 % Underwriting expense ratio 28.9 28.8 28.8 28.6 Combined ratio 2 76.1 % 72.6 % (3.5) pts 83.9 %
Slide 19: Personal Insurance
Personal Insurance ($ in millions) Illustrative Business Statistics 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1 Agency Automobile Retention 2 83% 84% 85% 85% 86% 86% 86% 85% 3 4.8% Renewal premium change 5.1% 4.7% 4.0% 4.3% 4.7% 5.1% 4.9% Policies in force (in thousands) 2,021 2,057 2,106 2,157 2,212 2,275
Slide 20: Appendix
Appendix Additional Information Additional Information 20
Slide 21: 2017 Catastrophe Reinsurance
2017 Catastrophe Reinsurance Effective January 1, 2017 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: 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 23: 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 24: The Travelers Companies, Inc.
The Travelers Companies, Inc. Additional Information Additional Information 24
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