-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F9y1KxVApb/f/aJOlv4/ueKpzg/0aH4EnZ5S5+6TvZSYG9pSJTwA1y9Rc4xFRcrn nq+oeFwE4xojcsiyY2yjDw== 0000950112-96-001199.txt : 19960423 0000950112-96-001199.hdr.sgml : 19960423 ACCESSION NUMBER: 0000950112-96-001199 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960415 ITEM INFORMATION: Other events FILED AS OF DATE: 19960422 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRAVELERS GROUP INC CENTRAL INDEX KEY: 0000831001 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 521568099 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09924 FILM NUMBER: 96549225 BUSINESS ADDRESS: STREET 1: 388 GREENWICH ST STREET 2: LEGAL DEPT 20TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10013 BUSINESS PHONE: 2128168000 MAIL ADDRESS: STREET 1: 388 GREENWICH ST STREET 2: LEGAL DEPT 20TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10013 FORMER COMPANY: FORMER CONFORMED NAME: TRAVELERS INC DATE OF NAME CHANGE: 19940103 FORMER COMPANY: FORMER CONFORMED NAME: PRIMERICA CORP /NEW/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COMMERCIAL CREDIT GROUP INC DATE OF NAME CHANGE: 19890102 8-K 1 TRAVELERS GROUP INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) April 15, 1996 ------------------------ Travelers Group Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-9924 52-1568099 - -------------------------------------------------------------------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 388 Greenwich Street, New York, New York 10013 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 816-8000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) ITEM 5. OTHER EVENTS. - --------------------- RESULTS OF OPERATIONS Travelers Group Inc. (the "Company") had operating earnings for the quarter ended March 31, 1996 of $479.6 million, up 42% from $338.0 million in the 1995 period. Earnings per share from operations were a record $1.42 versus $1.01, up 41% on average common shares of 318.8 million and 315.5 million in the respective year periods. As previously announced in March, the Board of Directors approved a $600 million increase in authorization for the repurchase of the Company's common stock, which may be made from time to time, principally for employee benefit plans. Approximately 2.6 million shares were repurchased during the quarter. Net income for the 1996 quarter was $520.2 million, or $1.55 per share, which includes reported investment portfolio gains of $40.6 million, or $0.13 per share. This compares with net income of $340.0 million in the 1995 period, which included reported investment portfolio losses of $18 million, or $0.06 per share, and a gain of $20.0 million, or $0.06 per share, from the sale of The Travelers Insurance Company's group life insurance businesses to Metropolitan Life Insurance Company. Revenues were $4.515 billion, up 5% over $4.299 billion in the 1995 period. Revenues from ongoing businesses were up 15% for the quarter, when compared with the 1995 period, after deducting revenues from Transport Life Insurance Company ("Transport Life") which was spun off, from the The MetraHealth Companies, Inc. ("MetraHealth") investment which was sold, and from certain related runoff operations. INVESTMENT SERVICES ------------------- SMITH BARNEY OPERATING EARNINGS: $223.9 MILLION, UP 125% FROM $99.6 MILLION IN 1995 PERIOD Ongoing strength in the financial markets contributed to Smith Barney's third consecutive quarter of record earnings. The firm's return on equity reached 36.1%, more than double the prior year period's 17.0%. Pre-tax profit margins increased to 22.8% in the quarter, versus 14.6% in the prior year period. Total revenues, net of interest expense, reached a record level of $1.607 billion, with gross production in both the retail and institutional businesses hitting all-time highs. Commission revenues were up 35% to a record $605.0 million, compared with the prior year period, primarily as a result of strong activity in over-the-counter and listed securities, as well as mutual funds. Annualized retail gross production per Financial Consultant rose 38% to a record $364,000, versus $264,000 in the 1995 first quarter, with a sales force of approximately 10,500 Financial Consultants working from 458 domestic retail offices. Investment banking revenues increased 134% to a record $272.5 million compared to the prior year's quarter, reflecting strong volume in equity, high yield and corporate debt underwritings, as well as fee income from merger and acquisition activity. Principal trading revenues also reached record levels, with particular strength in over-the-counter equities and taxable fixed-income securities. Asset management fees rose 33% to a record $316.6 million. At March 31, 1996, Smith Barney also had a record level of assets under management of $102.2 billion, up 24% from a year ago. Net interest income of $95.1 million was slightly ahead of the comparable period last year. Total expenses, excluding interest, increased 20% over the 1995 first quarter as a result of higher production-related compensation expense. The firm continues to maintain its focus on controlling fixed expenses, and its ratio of non-compensation expenses to net revenues stood at 20.3% at the end of the first quarter. (Results for RCM Capital Management are included in the "Corporate and Other" segment until its previously announced sale to Dresdner Bank AG is approved by various regulatory agencies, and consummated.) CONSUMER FINANCE ---------------- CONSUMER FINANCE OPERATING EARNINGS: $55.9 MILLION, EQUAL TO 1995 PERIOD Year-to-year earnings were even for the Company's consumer finance business. A 5% higher level of receivables, as well as favorable insurance experience, were offset by higher loan losses and additions to loan loss reserves. At March 31, 1996, net receivables totaled a record $7.31 billion. The average yield on the portfolio, at 15.43%, was even with the 1995 first quarter. Net interest margin, at 8.75%, was up 10 basis points compared with the prior year's first quarter, due to lower funding costs. Delinquencies in excess of 60 days rose to 2.21% as of March 31, 1996, compared with 2.14% at year-end 1995, and with the historically low level of 1.83% at the end of the comparable 1995 period. The charge-off rate for the quarter was 2.87%, up from 2.58% in the 1995 fourth quarter. In part, these trends reflect the high level of personal bankruptcies throughout the credit industry. As a result of the higher losses, reserves as a percentage of net receivables were increased in the quarter to 2.88%, up from 2.66% at December 31, 1995. Commercial Credit Company's total number of offices at the end of the quarter stood at 858, which includes the addition of 10 offices from the March 31, 1996 acquisition of Hawaii-based Servco. During the quarter, nearly 20 existing retail offices were converted into $.M.A.R.T. Solution Centers -- devoted exclusively to servicing the company's growing business of underwriting real estate loans for Primerica Financial Services. The number of credit card accounts issued through Travelers Bank increased to a record level of more than 756,000 accounts. LIFE INSURANCE -------------- PRIMERICA FINANCIAL SERVICES OPERATING EARNINGS: $65.3 MILLION, UP 20% FROM $54.5 MILLION IN 1995 PERIOD Record operating earnings for PFS principally reflect continued strength in life insurance in force, as well as increased mutual fund sales and favorable mortality experience, compared to 1995. Life insurance in force reached a record $350.4 billion, up from $337.9 billion at March 31, 1995, and continued to reflect good policy persistency. New term life insurance sales were $12.3 billion in the quarter, down from the $13.4 billion produced in the strong prior year period. Sales of mutual funds at PFS in the quarter increased to $566.9 million (at net asset value), a 57% improvement over the prior year period's $361.7 million, reflecting strong customer demand in the U.S. and Canada. The company also continues to benefit from efforts to increase the number of independent representatives who are licensed by the N.A.S.D. to sell securities. Net receivables from second-mortgage ($.M.A.R.T.) loans and personal ($.A.F.E.) loans also continued to advance to $1.27 billion, up nearly 11% from $1.15 billion at the end of the 1995 first quarter. Both loan products are underwritten by Commercial Credit and distributed exclusively through the PFS sales force. The company's Secure property casualty insurance product --issued through Travelers Indemnity -- continues to experience healthy growth in applications and policies, and as of March 31, 1996, had been rolled out in 20 states. TRAVELERS LIFE AND ANNUITY OPERATING EARNINGS: $82.6 MILLION, UP 20% FROM $68.6 MILLION IN 1995 PERIOD Increased earnings at Travelers Life and Annuity were driven by strong investment portfolio performance, and a capital base which benefited from reinvestment of proceeds from the sale of MetraHealth in the 1995 fourth quarter. Earnings growth was offset somewhat by the loss of earnings from Transport Life, which was spun off to Travelers Group shareholders in September 1995. For deferred annuities, net written premiums and deposits were $487.7 million for the quarter, up 37% from $355.3 million in the prior year period, with total policyholder account balances and benefit reserves at $11.7 billion versus $9.9 billion in the previous year. Year-over-year sales in the quarter were up 155% for the successful Vintage variable annuity, distributed exclusively by Smith Barney Financial Consultants. This product now accounts for nearly 40% of all deferred annuity production at Travelers Life and Annuity. For individual life insurance, net written premiums and deposits were $74.5 million, up 26% over $59.3 million (excluding Transport Life) in the 1995 quarter, largely as a result of sales of the new single premium Vintage Life product. Life insurance in force was $49.2 billion at March 31, 1996, up from $48.5 billion (excluding Transport Life) a year ago. Net written premiums for the growing long term care insurance line reached $27.7 million, versus $18.6 million a year ago, largely as a result of a 68% increase in sales. PROPERTY CASUALTY INSURANCE --------------------------- COMMERCIAL LINES OPERATING EARNINGS: $72.7 MILLION, UP 6% FROM $68.5 MILLION IN 1995 PERIOD The earnings improvement in Commercial Lines was driven by significantly higher net investment income and better loss experience, partially offset by $6.0 million in catastrophe losses, after taxes and reinsurance, resulting from winter storm-related claims during the quarter. This compares with catastrophe losses of $0.8 million in the prior year period. In the National Accounts market, premiums and equivalents were $947.9 million, compared with $1.039 billion in the 1995 period, reflecting continued decline in the workers' compensation pool service business. This decline is due to the de-population of involuntary pools, as workers' compensation loss experience improves and insureds move to voluntary markets. Premiums and equivalents in the Commercial Accounts market were $213.0 million, down slightly from the prior year's quarter. In this highly competitive market, the company has continued to be more selective in renewal activity. Programs designed to leverage underwriting experience in specific industries have demonstrated continued growth. Select Accounts, which covers small businesses through independent agents, and Specialty Accounts, which includes products such as directors and officers' liability insurance, both experienced modest premium growth in the quarter. PERSONAL LINES OPERATING EARNINGS: $22.1 MILLION VERSUS $24.5 MILLION IN 1995 PERIOD A particularly high level of winter storm-related catastrophe losses -- $18.0 million, after taxes and reinsurance, compared with $1.6 million in the prior year period-- reduced year -over-year earnings for Personal Lines. Excluding those catastrophe losses, operating income improved $14.0 million versus the 1995 period, primarily reflecting favorable loss experience. Net written premiums in the quarter of $341.2 million represent a slight improvement over first quarter 1995 levels, after excluding the effect of a 1995 change in reinsurance coverage, reflecting growth in target markets, and partially offset by reductions due to catastrophe management strategies. CORPORATE AND OTHER ------------------- NET EXPENSES: ($42.9 MILLION VERSUS $33.6 MILLION) IN 1995 PERIOD Corporate expenses as a percentage of operating earnings were down. Lower staff expenses in 1996 versus 1995 were offset by a higher level of corporate borrowings. Results also reflect a $15 million contribution in the 1995 quarter from the MetraHealth companies. INVESTMENT PORTFOLIO -------------------- The Company's $40.2 billion investment portfolio consists primarily of fixed income investments with an average quality of A1. The effective duration of the fixed income portfolio, including short-term fixed income investments, is 4.6 years. The Company, which as of March 31, 1996 had assets of approximately $118 billion, is a diversified financial services company engaged in investment services, consumer finance and insurance services. Book value per share at quarter-end was $33.54. Excluding the effects of FAS 115, book value was $32.90 per share. The Company's Board of Directors has recommended shareholder approval, at its Annual Meeting on April 24th, of an increase in the Company's common share authorization to 1.5 billion shares. As previously announced, contingent upon that approval the Board has declared a 3-for-2 split in the Company's common stock, in the form of a 50% stock dividend, payable May 24, 1996 to shareholders of record on May 6, 1996. TRAVELERS GROUP - SUMMARY OF EARNINGS (In millions of dollars and shares, except per share amounts) For the quarter ended March 31, ------------------------ 1996 1995 ----------- ----------- Revenues $ 4,514.6 $ 4,298.9 =========== =========== After-tax income: Operating earnings $ 479.6 $ 338.0 Portfolio gains (losses) 40.6 (18.0) Gain on sale of subsidiary 0.0 20.0 ----------- ----------- Net income 520.2 340.0 ----------- ----------- Preferred dividends (1) (26.5) (20.9) ----------- ----------- Income applicable to common stock $ 493.7 $ 319.1 =========== =========== Earnings per share: Before portfolio gains (losses) and gain on sale of subsidiary $ 1.42 $ 1.01 Portfolio gains (losses) 0.13 (0.06) Gain on sale of subsidiary 0.00 0.06 ----------- ----------- Net income $ 1.55 $ 1.01 =========== =========== Total average common and equivalent shares 318.8 315.5 =========== =========== Common shares issued and outstanding at period end 318.3 319.7 =========== =========== (1) Includes a non-recurring dividend of $6.0 million relating to the redemption of approximately 411,000 shares of the Company's Series C Preferred Stock during the 1996 quarter. TRAVELERS GROUP - SEGMENT REVENUES (In millions of dollars) For the quarter ended March 31, --------------------- 1996 1995 ---------- ---------- REVENUES Investment Services - ------------------- Smith Barney $ 1,957.1 $ 1,524.2 ---------- ---------- Consumer Finance Services 348.2 324.0 - ------------------------- Life Insurance Services Primerica Financial Services 355.2 331.7 Travelers Life and Annuity 577.0 591.7 ---------- ---------- Total Life Insurance Services 932.2 923.4 ---------- ---------- Property and Casualty Insurance Services - ---------------------------------------- Commercial Lines 805.2 813.0 Personal Lines 373.1 359.6 ---------- ---------- Total P&C Insurance Services 1,178.3 1,172.6 ---------- ---------- Corporate and Other 98.8 354.7 - ------------------- ---------- ---------- Total Revenues $ 4,514.6 $ 4,298.9 ========== ========== TRAVELERS GROUP - SEGMENT OPERATING EARNINGS (In millions of dollars) For the quarter ended March 31, ------------------ 1996 1995 -------- -------- OPERATING EARNINGS Investment Services - ------------------- Smith Barney $ 223.9 $ 99.6 -------- -------- Consumer Finance Services 55.9 55.9 - ------------------------- -------- -------- Life Insurance Services - ----------------------- Primerica Financial Services 65.3 54.5 Travelers Life and Annuity 82.6 68.6 -------- -------- Total Life Insurance Services 147.9 123.1 -------- -------- Property and Casualty Insurance Services - ---------------------------------------- Commercial Lines 72.7 68.5 Personal Lines 22.1 24.5 -------- -------- Total P&C Insurance Services 94.8 93.0 -------- -------- Total business income 522.5 371.6 -------- -------- Corporate and Other (42.9) (33.6) - ------------------- -------- -------- Operating earnings $ 479.6 $ 338.0 ======== ======== INVESTMENT SERVICES -- Page 1 (In millions of dollars) As of, and for the quarter ended March 31, ----------------------- 1996 1995 ---------- ---------- SMITH BARNEY INC Revenues: Commissions $ 605.0 $ 448.0 Investment banking 272.5 116.3 Principal trading 282.9 282.4 Asset management fees 316.6 237.4 Other income 34.9 33.4 ---------- ---------- Total revenues before interest 1,511.9 1,117.5 ---------- ---------- Interest and dividends 445.2 406.7 Interest expense 350.1 314.8 ---------- ---------- Net interest revenue 95.1 91.9 ---------- ---------- Total revenues, net of interest expense 1,607.0 1,209.4 ---------- ---------- Expenses: Compensation and benefits 913.1 742.2 Occupancy, communications 138.6 146.3 Other expenses 188.2 144.6 ---------- ---------- Total expenses 1,239.9 1,033.1 ---------- ---------- Income before income taxes 367.1 176.3 Provision for income taxes (143.2) (76.7) ---------- ---------- After-tax earnings $ 223.9 $ 99.6 ========== ========== Total assets (in billions) $ 45.0 $ 41.6 Total equity (in billions) $ 2.5 $ 2.4 Total regulatory capital (in billions) (1) $ 3.2 $ 3.0 Return on equity 36.1% 17.0% Pre-tax profit margin 22.8% 14.6% Non-compensation expenses as a percent of net revenue 20.3% 24.0% (1) Represents total regulatory capital of broker/dealer subsidiary, Smith Barney Inc. INVESTMENT SERVICES -- Page 2 (In millions of dollars) As of, and for the quarter ended March 31, ------------------------ 1996 1995 ----------- ----------- SMITH BARNEY INC Retail Brokerage Number of registered Financial Consultants 10,527 10,994 Annualized retail gross production per FC (000) $ 364 $ 264 Domestic retail offices 458 481 Priced assets in client accounts (in billions) $ 433.2 $ 361.9 Asset Management Assets under fee-based management (in billions): Money market funds $ 39.2 $ 29.7 Mutual funds 32.3 28.0 Managed accounts 24.5 20.1 Assets managed by Financial Consultants 6.2 4.3 ----------- ----------- Total $ 102.2 $ 82.1 ========== =========== Externally managed assets (wrap accts.) $ 37.6 $ 28.4 Investment Banking Domestic underwriting (full credit to lead mgr.): Equity -- Volume $ 2,341.4 $ 415.0 -- Market share 10.4% 3.4% Debt -- Volume $ 7,808.7 $ 3,238.9 -- Market share 3.2% 2.4% Municipals -- Volume $ 4,460.8 $ 1,861.2 -- Market share 9.9% 5.1% Capital Markets/Research Number of institutional specialists 423 390 Number of stocks in which markets are made 1,654 1,634 Number of equity research analysts 150 141 % of S&P sectors covered by research 98% 96% CONSOLIDATED TRAVELERS GROUP ASSETS UNDER MANAGEMENT (in billions) - ------------------------------------- Smith Barney $ 102.2 $ 82.1 Travelers Life and Annuity (1) 21.6 19.8 ----------- ----------- Total assets managed for third parties (2) $ 123.8 $ 101.9 ========== =========== (1) Part of the Life Insurance Services segment. (2) Excludes assets under management at RCM Capital Management of $24.9 and $23.9 billion at March 31, 1996 and 1995, respectively. CONSUMER FINANCE SERVICES (In millions of dollars) As of, and for the quarter ended March 31, ----------------------------- 1996 1995 ------------- ------------- REVENUES $ 348.2 $ 324.0 OPERATING EARNINGS $ 55.9 $ 55.9 Net receivables Personal loans $ 3,011.3 $ 2,934.6 Real estate-secured loans 3,010.6 2,888.0 Credit cards 807.4 696.8 Sales finance and other 478.1 450.0 ------------- ------------- Consumer finance receivables, net of unearned finance charges 7,307.4 6,969.4 Accrued interest receivable 44.6 39.0 Allowance for credit losses (210.7) (184.2) ------------- ------------- Consumer finance receivables, net $ 7,141.3 $ 6,824.2 ============= ============= Number of offices 858 872 Number of credit card accounts 756,600 664,400 Average yield 15.43% 15.43% Average net interest margin 8.75% 8.65% Charge-off rate 2.87% 2.16% 60+ days past due as % of receivables 2.21% 1.83% Reserves as % of net receivables 2.88% 2.64% Finance insurance premiums earned $ 37.7 $ 31.8 LIFE INSURANCE SERVICES -- Page 1 (In millions of dollars) As of, and for the quarter ended March 31, ---------------------- 1996 1995 ---------- ---------- REVENUES $ 932.2 $ 923.4 OPERATING EARNINGS Primerica Financial Services $ 65.3 $ 54.5 Travelers Life and Annuity 82.6 68.6 ---------- ---------- Total $ 147.9 $ 123.1 ========== ========== Statutory Data Travelers Insurance Company : Statutory surplus & capital (1) $ 3,164.8 $ 2,442.9 Surplus to liabilities (1) 15.8% 12.1% (1) Current period data is preliminary. LIFE INSURANCE SERVICES -- Page 2 (In millions of dollars) As of, and for the quarter ended March 31, --------------------- 1996 1995 ---------- ---------- PRIMERICA FINANCIAL SERVICES REVENUES $ 355.2 $ 331.7 OPERATING EARNINGS $ 65.3 $ 54.5 Life insurance issued ($ bil., face amount) $ 12.3 $ 13.4 Life insurance in force ($ bil., face amount) $ 350.4 $ 337.9 Number of life policies issued (000) 60.2 67.8 Number of life policies in force (000) 2,119.8 2,084.8 Annualized issued premiums $ 48.3 $ 54.9 Direct premiums $ 293.1 $ 285.3 Earned premiums - PFS Individual term life $ 236.5 $ 230.9 Other 18.7 19.7 ---------- ---------- Total $ 255.2 $ 250.6 ========== ========== Mutual fund sales at NAV (1) $ 566.9 $ 361.7 $.M.A.R.T. LOANs outstanding (2) $ 1,082.3 $ 984.8 $.A.F.E. LOANs outstanding (2) $ 185.9 $ 162.4 (1) Includes $128.3 million and $80.8 million of mutual fund sales in Canada during the 1996 and 1995 quarters, respectively. (2) These loans are marketed by PFS; the receivables are reflected in the assets of Consumer Finance Services. LIFE INSURANCE SERVICES -- Page 3 (In millions of dollars) As of, and for the quarter ended March 31, ---------------------- 1996 1995 ----------- ---------- TRAVELERS LIFE AND ANNUITY REVENUES $ 577.0 $ 591.7 OPERATING EARNINGS $ 82.6 $ 68.6 Deferred annuities: - ------------------- Number of annuities in force (000): Fixed 399.5 393.9 Variable 222.8 175.5 ----------- ---------- Total 622.3 569.4 =========== ========== Number of annuities issued (000): Fixed 6.4 10.6 Variable 19.7 9.2 ----------- ---------- Total 26.1 19.8 =========== ========== Net written premiums & deposits $ 487.7 $ 355.3 Policyholder account balances & benefit reserves (1): Fixed $ 7,153.8 $ 6,949.4 Variable 4,574.2 2,907.2 ----------- ---------- Total $ 11,728.0 $ 9,856.6 =========== ========== Payout annuities: Net written premiums & deposits $ 16.9 $ 17.7 Policyholder account balances & benefit reserves $ 4,421.2 $ 4,474.6 GIC and other annuities (2): Net written premiums & deposits $ 446.5 $ 530.9 Policyholder account balances & benefit reserves (1),(3) $ 7,310.4 $ 8,559.8 (1) Includes general account, separate accounts and managed funds. (2) Includes $200 of deposits at March 31, 1995 related to the transfer in-house of old Travelers pension fund assets previously managed externally. (3) Includes $1,998.6 and $2,501.5 in guaranteed investment contracts at March 31, 1996 and 1995, respectively. LIFE INSURANCE SERVICES -- Page 4 (In millions of dollars) As of, and for the quarter ended March 31, ---------- ---------- 1996 1995 ---------- ---------- TRAVELERS LIFE AND ANNUITY Individual life insurance: - -------------------------- Life insurance in force ($ bil., face amt.): Term $ 28.8 $ 28.3 Permanent 20.4 20.7 ---------- ---------- Total (1) $ 49.2 $ 49.0 ========== ========== Number of life policies in force (000) (1) 558.0 600.3 Life insurance issued ($ bil., face amt.) $ 1.5 $ 1.5 Number of life policies issued (000) 6.4 6.7 Net written premiums and deposits (1) $ 74.5 $ 61.6 Policyholder account balances & benefit reserves (1) $ 2,101.2 $ 2,090.1 Long term care: - --------------- Number of policies in force (000) 58.9 40.6 Net written premiums $ 27.7 $ 18.6 Other individual accident and health: - ------------------------------------- Net written premiums (1) $ 11.9 $ 64.3 All businesses: - --------------- Net investment income (1) $ 413.1 $ 414.0 Interest credited to contractholders $ 209.2 $ 259.2 (1) On September 29, 1995, Travelers Group made a pro rata distribution to its stockholders of Transport Holdings Inc., which at the time of distribution, was the indirect owner of the business of Transport Life Insurance Company. Comparable (excluding Transport) individual life insurance amounts are as follows: face amount in force, $48.5; number of policies in force, 577.3; net written premiums and deposits, $59.3; and policyholder account balances and benefit reserves, $2,002.3. Comparable Other individual accident and health net written premiums for 1995 is $10.8. Comparable net investment income for 1995 is $400.9. PROPERTY & CASUALTY INSURANCE SERVICES -- Page 1 (In millions of dollars) As of, and for the quarter ended March 31, ------------------------ 1996 1995 ----------- ---------- TOTAL P&C INSURANCE REVENUES $ 1,178.3 $ 1,172.6 OPERATING EARNINGS Commercial $ 72.7 $ 68.5 Personal 22.1 24.5 ----------- ---------- Total $ 94.8 $ 93.0 =========== ========== STATUTORY TO GAAP RECONCILIATION Net written premiums $ 981.2 $ 960.9 ----------- ---------- Net earned premiums $ 844.4 $ 863.4 Losses and loss adjustment expenses 682.0 708.3 Other underwriting expenses 258.8 241.6 Dividends to policyholders 1.8 5.0 ----------- ---------- Total deductions 942.6 954.9 ----------- ---------- Statutory underwriting loss (98.2) (91.5) GAAP adjustments (58.6) (83.1) ----------- ---------- Adjusted underwriting loss (156.8) (174.6) Net investment income 197.9 179.2 Other income 79.0 114.0 ----------- ---------- Operating income before federal income taxes 120.1 118.6 Federal income taxes 25.3 25.6 ----------- ---------- Operating income $ 94.8 $ 93.0 =========== ========== Net investment income (after-tax) $ 146.6 $ 132.1 Effective tax rate on net investment income 25.9% 26.3% Combined ratio (1) - ------------------ Losses and loss adjustment expenses 80.8% 82.0% Other underwriting expenses 26.4% 25.1% ----------- ---------- Combined 107.2% 107.1% =========== ========== Travelers Indemnity Company: Statutory capital and surplus (2), (3) $ 2,568.7 $ 2,134.6 Premiums to surplus ratio (2), (3) 1.41:1 1.66:1 Total loss and loss adjustment expense reserves $ 10,121.1 $ 9,828.6 (1) Before policyholder dividends, which are immaterial. (2) Includes Travelers Indemnity Company and its subsidiaries. (3) Current period data is preliminary. PROPERTY & CASUALTY INSURANCE SERVICES -- Page 2 (In millions of dollars) As of, and for the quarter ended March 31, ----------------------- 1996 1995 ---------- ---------- COMMERCIAL LINES REVENUES $ 805.2 $ 813.0 OPERATING EARNINGS $ 72.7 $ 68.5 Net written premiums & equivalents by market: (1) - ------------------------------------------------- National Accounts Premiums $ 195.9 $ 166.9 Equivalents 752.0 872.2 ---------- ---------- Total 947.9 1,039.1 Commercial Accounts Premiums 201.6 206.7 Equivalents 11.4 12.0 ---------- ---------- Total 213.0 218.7 Select Accounts - Premiums 140.9 135.1 Specialty Accounts - Premiums 101.6 97.9 ---------- ---------- Total premiums and equivalents $ 1,403.4 $ 1,490.8 ========== ========== Net written premiums by product line: - ------------------------------------- Workers compensation $ 220.9 $ 200.3 Multi-peril 93.2 74.6 Automobile 97.4 94.9 Other liability 135.3 125.8 Property and other 93.2 111.0 ---------- ---------- Total 640.0 606.6 Equivalents (1) 763.4 884.2 ---------- ---------- Total premiums and equivalents $ 1,403.4 $ 1,490.8 ========== ========== Combined ratio (2): - ------------------- Losses and loss adjustment expenses 83.2% 86.5% Other underwriting expenses 25.3% 23.4% ---------- ---------- Combined 108.5% 109.9% ========== ========== Statutory Ratio Development: - ---------------------------- Earned premiums $ 518.3 $ 546.9 Losses and loss adjustment expenses $ 431.4 $ 472.8 Other underwriting expenses 161.7 142.1 ---------- ---------- Total deductions 593.1 614.9 ---------- ---------- Statutory underwriting gain/(loss)(2) $ (74.8) $ (68.0) Catastrophe losses (after-tax)(3) $ 6.0 $ 0.8 Net investment income (pre-tax) $ 158.0 $ 140.5 Effective tax rate on net investment income 25.6% 25.8% (1) Equivalents represent estimates of premiums that customers would have been charged under a fully insured arrangement and do not equal actual revenues. (2) Before policyholder dividends, which are immaterial. (3) Net of reinsurance. Effective April 1, 1995, the threshold of losses incurred to qualify a specific event as a catastrophe loss was increased. PROPERTY & CASUALTY INSURANCE SERVICES -- Page 3 (In millions of dollars) As of, and for the quarter ended March 31, ------------------- 1996 1995 -------- -------- PERSONAL LINES REVENUES $ 373.1 $ 359.6 OPERATING EARNINGS $ 22.1 $ 24.5 Net written premiums by product line: Personal auto $ 276.9 $ 271.9 Homeowners and other 64.3 82.4 -------- -------- Total written premiums 341.2 354.3 ======== ======== Number of policies (millions) 1.8 1.8 Combined ratio: Losses and loss adjustment expenses 76.8% 74.4% Other underwriting expenses 28.5% 28.1% -------- -------- Combined 105.3% 102.5% ======== ======== Statutory Ratio Development: Earned premiums $ 326.1 $ 316.5 Losses and loss adjustment expenses 250.6 235.5 Other underwriting expenses 97.1 99.5 -------- -------- Total deductions 347.7 335.0 -------- -------- Statutory underwriting gain/(loss) $ (21.6) $ (18.5) Catastrophe losses (after-tax)(1) $ 18.0 $ 1.6 Net investment income (pre-tax) $ 39.9 $ 38.7 Effective tax rate on net investment income 27.3% 28.2% (1) Net of reinsurance. Effective April 1, 1995, the threshold of losses incurred to qualify a specific event as a catastrophe loss was increased. SELECTED OTHER DATA (In millions of dollars)
At March 31, At December 31, 1996 1995 ------- ------- INVESTMENT PORTFOLIO (at carrying value) (1) Fixed-income investments Trading securities, at market $ 97.0 $ 0.0 Available for sale, at market: Mortgage-backed securities - principally obligations of U.S. Government agencies 5,561 6,085 U.S. Treasury securities and obligations of U.S. Government corporations and agencies 2,457 2,848 Corporates (including redeemable preferreds) 16,688 17,166 Obligations of states and political subdivisions 4,203 4,092 Debt securities issued by foreign governments 703 453 Held to maturity, at amortized cost 64 68 ------- ------- Total fixed income 29,773 30,712 Equity securities, at market 1,002 856 Mortgage loans and real estate held for sale 4,118 4,369 Policy loans 1,903 1,888 Short-term and other 3,407 3,140 ------- ------- Total invested assets $40,203 $40,965 ======= ======= After tax unrealized gains/(losses) on invested assets $ 204 $ 756 ======= ======= DETAIL OF MORTGAGE LOANS & REAL ESTATE Performing mortgages $ 3,594 $ 3,796 Performing real estate (2) 144 194 ------- ------- Total $ 3,738 $ 3,990 Yield 9.0% 8.6% Underperforming mortgages $ 136 $ 252 Underperforming real estate (2) 406 308 ------- ------- Total $ 542 $ 560 Yield 4.4% 1.0% Total (2) $ 4,280 $ 4,550 ======= ======= Yield 8.4% 7.5% ======= ======= Proceeds from sales during period $ 166 $ 995 ======= ======= (1) Represents Travelers Group's consolidated investments, which primarily support the company's insurance operations but also include corporate investments and investments managed on behalf of Consumer Finance Services. (2) Includes real estate joint ventures. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: April 22, 1996 TRAVELERS GROUP INC. By: /s/ William T. Bozarth ----------------------- William T. Bozarth Vice President
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