Minnesota | 001-10898 | 41-0518860 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
485 Lexington Avenue New York, New York | 10017 | |
(Address of principal executive offices) | (Zip Code) |
THE TRAVELERS COMPANIES, INC. | |||
Date: | January 22, 2019 | By | /s/ CHRISTINE K. KALLA |
Name: Christine K. Kalla | |||
Executive Vice President and General Counsel |
• | Fourth quarter net income of $621 million and core income of $571 million. |
• | Catastrophe losses of $610 million pre-tax increased from $499 million pre-tax in the prior year quarter. |
• | Fourth quarter consolidated combined ratio of 97.5%; underlying combined ratio of 91.1%. |
• | Fourth quarter net written premiums of $6.691 billion, up 4%; record full year net written premiums of $27.708 billion, up 6%; both periods reflect growth in all segments. |
• | Total capital returned to shareholders of $375 million in the quarter, including $170 million of share repurchases. |
• | Year-to-date total capital returned to shareholders of $2.139 billion, including $1.321 billion of share repurchases. |
• | Book value per share of $86.84, down 1% from year-end 2017, due to the impact of higher interest rates on net unrealized investment gains (losses). Adjusted book value per share of $87.27, up 5% from year-end 2017. |
• | Board of Directors declared quarterly dividend per share of $0.77. |
($ in millions, except for per share amounts, and after-tax, except for premiums and revenues) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
Net written premiums | $ | 6,691 | $ | 6,424 | 4 | % | $ | 27,708 | $ | 26,219 | 6 | % | |||||||||||
Total revenues | $ | 7,796 | $ | 7,451 | 5 | $ | 30,282 | $ | 28,902 | 5 | |||||||||||||
Net income | $ | 621 | $ | 551 | 13 | $ | 2,523 | $ | 2,056 | 23 | |||||||||||||
per diluted share | $ | 2.32 | $ | 1.98 | 17 | $ | 9.28 | $ | 7.33 | 27 | |||||||||||||
Core income | $ | 571 | $ | 633 | (10 | ) | $ | 2,430 | $ | 2,043 | 19 | ||||||||||||
per diluted share | $ | 2.13 | $ | 2.28 | (7 | ) | $ | 8.94 | $ | 7.28 | 23 | ||||||||||||
Diluted weighted average shares outstanding | 266.0 | 275.7 | (4 | ) | 269.8 | 278.6 | (3 | ) | |||||||||||||||
Combined ratio | 97.5 | % | 95.5 | % | 2.0 | pts | 96.9 | % | 97.9 | % | (1.0 | ) | pts | ||||||||||
Underlying combined ratio | 91.1 | % | 92.4 | % | (1.3 | ) | pts | 92.5 | % | 92.6 | % | (0.1 | ) | pts | |||||||||
Return on equity | 10.9 | % | 9.3 | % | 1.6 | pts | 11.0 | % | 8.7 | % | 2.3 | pts | |||||||||||
Core return on equity | 10.0 | % | 11.1 | % | (1.1 | ) | pts | 10.7 | % | 9.0 | % | 1.7 | pts |
As of | |||||||||||
December 31, 2018 | December 31, 2017 | Change | |||||||||
Book value per share | $ | 86.84 | $ | 87.46 | (1 | )% | |||||
Adjusted book value per share | 87.27 | 83.36 | 5 | % |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||||
($ in millions and pre-tax, unless noted otherwise) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||
Underwriting gain: | $ | 135 | $ | 266 | $ | (131 | ) | $ | 681 | $ | 404 | $ | 277 | ||||||||||||
Underwriting gain includes: | |||||||||||||||||||||||||
Net favorable prior year reserve development | 167 | 293 | (126 | ) | 517 | 592 | (75 | ) | |||||||||||||||||
Catastrophes, net of reinsurance | (610 | ) | (499 | ) | (111 | ) | (1,716 | ) | (1,949 | ) | 233 | ||||||||||||||
Net investment income | 630 | 601 | 29 | 2,474 | 2,397 | 77 | |||||||||||||||||||
Other income (expense), including interest expense | (79 | ) | (77 | ) | (2 | ) | (308 | ) | (287 | ) | (21 | ) | |||||||||||||
Core income before income taxes | 686 | 790 | (104 | ) | 2,847 | 2,514 | 333 | ||||||||||||||||||
Income tax expense | 115 | 157 | (42 | ) | 417 | 471 | (54 | ) | |||||||||||||||||
Core income | 571 | 633 | (62 | ) | 2,430 | 2,043 | 387 | ||||||||||||||||||
Net realized investment gains after income taxes | 50 | 47 | 3 | 93 | 142 | (49 | ) | ||||||||||||||||||
Impact of TCJA at enactment | — | (129 | ) | 129 | — | (129 | ) | 129 | |||||||||||||||||
Net income | $ | 621 | $ | 551 | $ | 70 | $ | 2,523 | $ | 2,056 | $ | 467 | |||||||||||||
Combined ratio | 97.5 | % | 95.5 | % | 2.0 | pts | 96.9 | % | 97.9 | % | (1.0 | ) | pts | ||||||||||||
Impact on combined ratio | |||||||||||||||||||||||||
Net favorable prior year reserve development | (2.4 | ) | pts | (4.4 | ) | pts | 2.0 | pts | (1.9 | ) | pts | (2.3 | ) | pts | 0.4 | pts | |||||||||
Catastrophes, net of reinsurance | 8.8 | pts | 7.5 | pts | 1.3 | pts | 6.3 | pts | 7.6 | pts | (1.3 | ) | pts | ||||||||||||
Underlying combined ratio | 91.1 | % | 92.4 | % | (1.3 | ) | pts | 92.5 | % | 92.6 | % | (0.1 | ) | pts | |||||||||||
Net written premiums | |||||||||||||||||||||||||
Business Insurance | $ | 3,533 | $ | 3,437 | 3 | % | $ | 14,956 | $ | 14,270 | 5 | % | |||||||||||||
Bond & Specialty Insurance | 657 | 606 | 8 | 2,528 | 2,359 | 7 | |||||||||||||||||||
Personal Insurance | 2,501 | 2,381 | 5 | 10,224 | 9,590 | 7 | |||||||||||||||||||
Total | $ | 6,691 | $ | 6,424 | 4 | % | $ | 27,708 | $ | 26,219 | 6 | % |
• | The combined ratio of 97.5% increased 2.0 points due to lower net favorable prior year reserve development (2.0 points) and higher catastrophe losses (1.3 points), partially offset by a lower underlying combined ratio (1.3 points). |
• | The underlying combined ratio of 91.1% decreased 1.3 points. See below for details by segment. |
• | Net favorable prior year reserve development occurred in all segments. Catastrophe losses included $453 million pre-tax ($358 million after-tax) from the wildfires in California and $158 million pre-tax ($125 million after-tax) from Hurricane Michael. |
• | The combined ratio of 96.9% improved 1.0 points due to lower catastrophe losses (1.3 points) and a slightly lower underlying combined ratio (0.1 points), partially offset by lower net favorable prior year reserve development (0.4 points). |
• | The underlying combined ratio of 92.5% decreased 0.1 points. See below for details by segment. |
• | Net favorable prior year reserve development occurred in all segments. Catastrophe losses included the fourth quarter events described above, as well as winter storms in the eastern U.S., Hurricane Florence, wind and hail storms in several regions of the U.S. and mudslides in California in the first three quarters of 2018. |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||||
($ in millions and pre-tax, unless noted otherwise) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||
Underwriting gain: | $ | 7 | $ | 399 | $ | (392 | ) | $ | 76 | $ | 251 | $ | (175 | ) | |||||||||||
Underwriting gain includes: | |||||||||||||||||||||||||
Net favorable prior year reserve development | 48 | 244 | (196 | ) | 142 | 439 | (297 | ) | |||||||||||||||||
Catastrophes, net of reinsurance | (197 | ) | (53 | ) | (144 | ) | (639 | ) | (858 | ) | 219 | ||||||||||||||
Net investment income | 465 | 449 | 16 | 1,833 | 1,786 | 47 | |||||||||||||||||||
Other income (expense) | (9 | ) | 2 | (11 | ) | (12 | ) | 24 | (36 | ) | |||||||||||||||
Segment income before income taxes | 463 | 850 | (387 | ) | 1,897 | 2,061 | (164 | ) | |||||||||||||||||
Income tax expense | 72 | 213 | (141 | ) | 259 | 448 | (189 | ) | |||||||||||||||||
Segment income | $ | 391 | $ | 637 | $ | (246 | ) | $ | 1,638 | $ | 1,613 | $ | 25 | ||||||||||||
Combined ratio | 99.4 | % | 88.6 | % | 10.8 | pts | 99.1 | % | 97.8 | % | 1.3 | pts | |||||||||||||
Impact on combined ratio | |||||||||||||||||||||||||
Net favorable prior year reserve development | (1.2 | ) | pts | (6.7 | ) | pts | 5.5 | pts | (1.0 | ) | pts | (3.1 | ) | pts | 2.1 | pts | |||||||||
Catastrophes, net of reinsurance | 5.2 | pts | 1.4 | pts | 3.8 | pts | 4.4 | pts | 6.0 | pts | (1.6 | ) | pts | ||||||||||||
Underlying combined ratio | 95.4 | % | 93.9 | % | 1.5 | pts | 95.7 | % | 94.9 | % | 0.8 | pts | |||||||||||||
Net written premiums by market | |||||||||||||||||||||||||
Domestic | |||||||||||||||||||||||||
Select Accounts | $ | 660 | $ | 661 | — | % | $ | 2,828 | $ | 2,800 | 1 | % | |||||||||||||
Middle Market | 1,935 | 1,863 | 4 | 8,214 | 7,756 | 6 | |||||||||||||||||||
National Accounts | 247 | 259 | (5 | ) | 1,025 | 1,010 | 1 | ||||||||||||||||||
National Property and Other | 422 | 381 | 11 | 1,805 | 1,691 | 7 | |||||||||||||||||||
Total Domestic | 3,264 | 3,164 | 3 | 13,872 | 13,257 | 5 | |||||||||||||||||||
International | 269 | 273 | (1 | ) | 1,084 | 1,013 | 7 | ||||||||||||||||||
Total | $ | 3,533 | $ | 3,437 | 3 | % | $ | 14,956 | $ | 14,270 | 5 | % |
• | The combined ratio of 99.4% increased 10.8 points due to lower net favorable prior year reserve development (5.5 points), higher catastrophe losses (3.8 points) and a higher underlying combined ratio (1.5 points). |
• | The underlying combined ratio of 95.4% increased 1.5 points, driven by the full year impact of higher loss estimates in the domestic commercial automobile line for bodily injury liability coverages, partially offset by a lower expense ratio. |
• | Net favorable prior year reserve development was primarily driven by better than expected loss experience in domestic workers' compensation for multiple accident years, partially offset by higher than expected loss experience in domestic commercial automobile for recent accident years and domestic general liability for multiple accident years. |
• | The combined ratio of 99.1% increased 1.3 points due to lower net favorable prior year reserve development (2.1 points) and a higher underlying combined ratio (0.8 points), partially offset by lower catastrophe losses (1.6 points). |
• | The underlying combined ratio of 95.7% increased 0.8 points, primarily driven by higher loss estimates in the domestic commercial automobile line for bodily injury liability coverages. |
• | Net favorable prior year reserve development was primarily driven by better than expected loss experience in domestic workers’ compensation for multiple accident years and commercial property for recent accident years, partially offset by higher than expected loss experience in domestic general liability for multiple accident years (including a $225 million increase to asbestos reserves and a $55 million increase to environmental reserves) and domestic commercial automobile for recent accident years. |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||
($ in millions and pre-tax, unless noted otherwise) | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
Underwriting gain: | $ | 214 | $ | 94 | $ | 120 | $ | 740 | $ | 512 | $ | 228 | ||||||||||||
Underwriting gain includes: | ||||||||||||||||||||||||
Net favorable prior year reserve development | 89 | 42 | 47 | 266 | 140 | 126 | ||||||||||||||||||
Catastrophes, net of reinsurance | (7 | ) | 2 | (9 | ) | (16 | ) | (6 | ) | (10 | ) | |||||||||||||
Net investment income | 61 | 54 | 7 | 233 | 228 | 5 | ||||||||||||||||||
Other income | 5 | 8 | (3 | ) | 18 | 24 | (6 | ) | ||||||||||||||||
Segment income before income taxes | 280 | 156 | 124 | 991 | 764 | 227 | ||||||||||||||||||
Income tax expense | 60 | 44 | 16 | 198 | 208 | (10 | ) | |||||||||||||||||
Segment income | $ | 220 | $ | 112 | $ | 108 | $ | 793 | $ | 556 | $ | 237 | ||||||||||||
Combined ratio | 64.8 | % | 83.7 | % | (18.9 | ) | pts | 69.0 | % | 77.4 | % | (8.4 | ) | pts | ||||||||||
Impact on combined ratio | ||||||||||||||||||||||||
Net favorable prior year reserve development | (14.4 | ) | pts | (7.2 | ) | pts | (7.2 | ) | pts | (11.0 | ) | pts | (6.1 | ) | pts | (4.9 | ) | pts | ||||||
Catastrophes, net of reinsurance | 1.1 | pts | (0.2 | ) | pts | 1.3 | pts | 0.6 | pts | 0.3 | pts | 0.3 | pts | |||||||||||
Underlying combined ratio | 78.1 | % | 91.1 | % | (13.0 | ) | pts | 79.4 | % | 83.2 | % | (3.8 | ) | pts | ||||||||||
Net written premiums | ||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||
Management Liability | $ | 366 | $ | 337 | 9 | % | $ | 1,455 | $ | 1,367 | 6 | % | ||||||||||||
Surety | 198 | 196 | 1 | 835 | 793 | 5 | ||||||||||||||||||
Total Domestic | 564 | 533 | 6 | 2,290 | 2,160 | 6 | ||||||||||||||||||
International | 93 | 73 | 27 | 238 | 199 | 20 | ||||||||||||||||||
Total | $ | 657 | $ | 606 | 8 | % | $ | 2,528 | $ | 2,359 | 7 | % |
• | The combined ratio of 64.8% improved 18.9 points due to a lower underlying combined ratio (13.0 points) and higher net favorable prior year reserve development (7.2 points), partially offset by higher catastrophe losses (1.3 points). |
• | The underlying combined ratio of 78.1% improved 13.0 points, primarily driven by a charge for a single international surety loss in the fourth quarter of 2017. |
• | Net favorable prior year reserve development resulted from better than expected loss experience in domestic general liability for management liability coverages for multiple accident years. |
• | The combined ratio of 69.0% improved 8.4 points due to higher net favorable prior year reserve development (4.9 points) and a lower underlying combined ratio (3.8 points), partially offset by higher catastrophe losses (0.3 points). |
• | The underlying combined ratio of 79.4% improved 3.8 points, primarily driven by a charge for a single international surety loss in 2017. |
• | Net favorable prior year reserve development resulted from better than expected loss experience in domestic general liability for management liability coverages for multiple accident years. |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||
($ in millions and pre-tax, unless noted otherwise) | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
Underwriting gain (loss): | $ | (86 | ) | $ | (227 | ) | $ | 141 | $ | (135 | ) | $ | (359 | ) | $ | 224 | ||||||||
Underwriting gain (loss) includes: | ||||||||||||||||||||||||
Net favorable prior year reserve development | 30 | 7 | 23 | 109 | 13 | 96 | ||||||||||||||||||
Catastrophes, net of reinsurance | (406 | ) | (448 | ) | 42 | (1,061 | ) | (1,085 | ) | 24 | ||||||||||||||
Net investment income | 104 | 98 | 6 | 408 | 383 | 25 | ||||||||||||||||||
Other income | 18 | 15 | 3 | 66 | 60 | 6 | ||||||||||||||||||
Segment income (loss) before income taxes | 36 | (114 | ) | 150 | 339 | 84 | 255 | |||||||||||||||||
Income tax expense (benefit) | 4 | (64 | ) | 68 | 42 | (44 | ) | 86 | ||||||||||||||||
Segment income (loss) | $ | 32 | $ | (50 | ) | $ | 82 | $ | 297 | $ | 128 | $ | 169 | |||||||||||
Combined ratio | 102.6 | % | 108.7 | % | (6.1 | ) | pts | 100.6 | % | 103.1 | % | (2.5 | ) | pts | ||||||||||
Impact on combined ratio | ||||||||||||||||||||||||
Net favorable prior year reserve development | (1.1 | ) | pts | (0.3 | ) | pts | (0.8 | ) | pts | (1.1 | ) | pts | (0.1 | ) | pts | (1.0 | ) | pts | ||||||
Catastrophes, net of reinsurance | 15.9 | pts | 18.6 | pts | (2.7 | ) | pts | 10.7 | pts | 11.7 | pts | (1.0 | ) | pts | ||||||||||
Underlying combined ratio | 87.8 | % | 90.4 | % | (2.6 | ) | pts | 91.0 | % | 91.5 | % | (0.5 | ) | pts | ||||||||||
Net written premiums | ||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||
Agency (1) | ||||||||||||||||||||||||
Automobile | $ | 1,226 | $ | 1,172 | 5 | % | $ | 4,972 | $ | 4,646 | 7 | % | ||||||||||||
Homeowners & Other | 1,011 | 955 | 6 | 4,148 | 3,933 | 5 | ||||||||||||||||||
Total Agency | 2,237 | 2,127 | 5 | 9,120 | 8,579 | 6 | ||||||||||||||||||
Direct to Consumer | 97 | 90 | 8 | 396 | 361 | 10 | ||||||||||||||||||
Total Domestic | 2,334 | 2,217 | 5 | 9,516 | 8,940 | 6 | ||||||||||||||||||
International | 167 | 164 | 2 | 708 | 650 | 9 | ||||||||||||||||||
Total | $ | 2,501 | $ | 2,381 | 5 | % | $ | 10,224 | $ | 9,590 | 7 | % |
• | The combined ratio of 102.6% improved 6.1 points due to lower catastrophe losses (2.7 points), a lower underlying combined ratio (2.6 points) and higher net favorable prior year reserve development (0.8 points). |
• | The underlying combined ratio of 87.8% improved 2.6 points, primarily driven by earned pricing that exceeded loss cost trends in Agency Automobile and a lower expense ratio, partially offset by higher non-weather related losses in Agency Homeowners & Other. |
• | Net favorable prior year reserve development primarily resulted from better than expected loss experience in Agency Automobile for recent accident years. |
• | The combined ratio of 100.6% improved 2.5 points due to higher net favorable prior year reserve development (1.0 points), lower catastrophe losses (1.0 points) and a lower underlying combined ratio (0.5 points). |
• | The underlying combined ratio of 91.0% improved 0.5 points, primarily driven by earned pricing that exceeded loss cost trends in Agency Automobile, partially offset by higher non-catastrophe weather-related losses and non-weather related losses in Agency Homeowners & Other. |
• | Net favorable prior year reserve development resulted from better than expected loss experience in Agency Automobile for recent accident years. |
• | the Company’s outlook and its future results of operations and financial condition (including, among other things, anticipated premium volume, premium rates, renewal premium changes, margins, net and core income, investment income and performance, loss costs, return on equity, core return on equity and expected current returns and combined ratios and underlying combined ratios); |
• | share repurchase plans; |
• | future pension plan contributions; |
• | the sufficiency of the Company’s asbestos and other reserves; |
• | the impact of emerging claims issues as well as other insurance and non-insurance litigation; |
• | the cost and availability of reinsurance coverage; |
• | catastrophe losses; |
• | the impact of investment (including changes in interest rates), economic (including inflation, recent changes in tax law, rapid changes in commodity prices and fluctuations in foreign currency exchange rates) and underwriting market conditions; |
• | strategic and operational initiatives to improve profitability and competitiveness; |
• | the Company’s competitive advantages; |
• | new product offerings; |
• | the impact of new or potential regulations imposed or to be imposed by the United States or other nations, including tariffs or other barriers to international trade; and |
• | the impact of the government shutdown. |
• | catastrophe losses could materially and adversely affect the Company’s results of operations, its financial position and/or liquidity, and could adversely impact the Company’s ratings, the Company’s ability to raise capital and the availability and cost of reinsurance; |
• | if actual claims exceed the Company’s claims and claim adjustment expense reserves, or if changes in the estimated level of claims and claim adjustment expense reserves are necessary, including as a result of, among other things, changes in the legal, regulatory and economic environments in which the Company operates, the Company’s financial results could be materially and adversely affected; |
• | during or following a period of financial market disruption or an economic downturn, the Company’s business could be materially and adversely affected; |
• | the Company’s investment portfolio is subject to credit risk and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses; |
• | the Company’s business could be harmed because of its potential exposure to asbestos and environmental claims and related litigation; |
• | the intense competition that the Company faces, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which it operates, could harm its ability to maintain or increase its business volumes and its profitability; |
• | disruptions to the Company’s relationships with its independent agents and brokers or the Company's inability to manage effectively a changing distribution landscape could adversely affect the Company; |
• | the Company is exposed to, and may face adverse developments involving, mass tort claims such as those relating to exposure to potentially harmful products or substances; |
• | the effects of emerging claim and coverage issues on the Company’s business are uncertain; |
• | the Company may not be able to collect all amounts due to it from reinsurers, reinsurance coverage may not be available to the Company in the future at commercially reasonable rates or at all and we are exposed to credit risk related to our structured settlements; |
• | the Company is also exposed to credit risk in certain of its insurance operations and with respect to certain guarantee or indemnification arrangements that we have with third parties; |
• | within the United States, the Company’s businesses are heavily regulated by the states in which it conducts business, including licensing, market conduct and financial supervision, and changes in regulation may reduce the Company’s profitability and limit its growth; |
• | a downgrade in the Company’s claims-paying and financial strength ratings could adversely impact the Company’s business volumes, adversely impact the Company’s ability to access the capital markets and increase the Company’s borrowing costs; |
• | the inability of the Company’s insurance subsidiaries to pay dividends to the Company’s holding company in sufficient amounts would harm the Company’s ability to meet its obligations, pay future shareholder dividends and/or make future share repurchases; |
• | the Company’s efforts to develop new products, expand in targeted markets or improve business processes and workflows may not be successful and may create enhanced risks; |
• | the Company may be adversely affected if its pricing and capital models provide materially different indications than actual results; |
• | the Company’s business success and profitability depend, in part, on effective information technology systems and on continuing to develop and implement improvements in technology, particularly as its business processes become more digital; |
• | if the Company experiences difficulties with technology, data and network security (including as a result of cyber attacks), outsourcing relationships or cloud-based technology, the Company’s ability to conduct its business could be negatively impacted; |
• | the Company is also subject to a number of additional risks associated with its business outside the United States, such as foreign currency exchange fluctuations (including with respect to the valuation of the Company’s foreign investments and interests in joint ventures) and restrictive regulations as well as the risks and uncertainties associated with the United Kingdom’s withdrawal from the European Union; |
• | regulatory changes outside of the United States, including in Canada, the United Kingdom, the Republic of Ireland and the European Union, could adversely impact the Company’s results of operations and limit its growth; |
• | loss of or significant restrictions on the use of particular types of underwriting criteria, such as credit scoring, or other data or methodologies, in the pricing and underwriting of the Company’s products could reduce the Company’s future profitability; |
• | acquisitions and integration of acquired businesses may result in operating difficulties and other unintended consequences; |
• | the Company could be adversely affected if its controls designed to ensure compliance with guidelines, policies and legal and regulatory standards are not effective; |
• | the Company’s businesses may be adversely affected if it is unable to hire and retain qualified employees; |
• | intellectual property is important to the Company’s business, and the Company may be unable to protect and enforce its own intellectual property or the Company may be subject to claims for infringing the intellectual property of others; |
• | changes in federal regulation could impose significant burdens on the Company and otherwise adversely impact the Company’s results; |
• | changes in U.S. tax laws or in the tax laws of other jurisdictions in which the Company operates could adversely impact the Company; and |
• | the Company’s share repurchase plans depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company’s desired ratings from independent rating agencies, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions and other factors. |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
($ in millions, after-tax) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 621 | $ | 551 | $ | 2,523 | $ | 2,056 | ||||||||
Less: Net realized investment gains | (50 | ) | (47 | ) | (93 | ) | (142 | ) | ||||||||
Impact of TCJA at enactment | — | 129 | — | 129 | ||||||||||||
Core income | $ | 571 | $ | 633 | $ | 2,430 | $ | 2,043 |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
($ in millions, pre-tax) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 746 | $ | 860 | $ | 2,961 | $ | 2,730 | ||||||||
Less: Net realized investment gains | (60 | ) | (70 | ) | (114 | ) | (216 | ) | ||||||||
Core income | $ | 686 | $ | 790 | $ | 2,847 | $ | 2,514 |
Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in millions, after-tax) | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 2,523 | $ | 2,056 | $ | 3,014 | $ | 3,439 | $ | 3,692 | $ | 3,673 | $ | 2,473 | $ | 1,426 | $ | 3,216 | $ | 3,622 | $ | 2,924 | $ | 4,601 | $ | 4,208 | $ | 1,622 | ||||||||||||||||||||||||||||
Less: Loss from discontinued operations | — | — | — | — | — | — | — | — | — | — | — | — | — | (439 | ) | |||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | 2,523 | 2,056 | 3,014 | 3,439 | 3,692 | 3,673 | 2,473 | 1,426 | 3,216 | 3,622 | 2,924 | 4,601 | 4,208 | 2,061 | ||||||||||||||||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses | (93 | ) | (142 | ) | (47 | ) | (2 | ) | (51 | ) | (106 | ) | (32 | ) | (36 | ) | (173 | ) | (22 | ) | 271 | (101 | ) | (8 | ) | (35 | ) | |||||||||||||||||||||||||||||
Impact of TCJA at enactment | — | 129 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Core income | 2,430 | 2,043 | 2,967 | 3,437 | 3,641 | 3,567 | 2,441 | 1,390 | 3,043 | 3,600 | 3,195 | 4,500 | 4,200 | 2,026 | ||||||||||||||||||||||||||||||||||||||||||
Less: Preferred dividends | — | — | — | — | — | — | — | 1 | 3 | 3 | 4 | 4 | 5 | 6 | ||||||||||||||||||||||||||||||||||||||||||
Core income, less preferred dividends | $ | 2,430 | $ | 2,043 | $ | 2,967 | $ | 3,437 | $ | 3,641 | $ | 3,567 | $ | 2,441 | $ | 1,389 | $ | 3,040 | $ | 3,597 | $ | 3,191 | $ | 4,496 | $ | 4,195 | $ | 2,020 |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Basic income per share | ||||||||||||||||
Net income | $ | 2.33 | $ | 2.00 | $ | 9.37 | $ | 7.39 | ||||||||
Adjustments: | ||||||||||||||||
Net realized investment gains, after-tax | (0.18 | ) | (0.17 | ) | (0.35 | ) | (0.51 | ) | ||||||||
Impact of TCJA at enactment | — | 0.47 | — | 0.47 | ||||||||||||
Core income | $ | 2.15 | $ | 2.30 | $ | 9.02 | $ | 7.35 | ||||||||
Diluted income per share | ||||||||||||||||
Net income | $ | 2.32 | $ | 1.98 | $ | 9.28 | $ | 7.33 | ||||||||
Adjustments: | ||||||||||||||||
Net realized investment gains, after-tax | (0.19 | ) | (0.17 | ) | (0.34 | ) | (0.51 | ) | ||||||||
Impact of TCJA at enactment | — | 0.47 | — | 0.46 | ||||||||||||
Core income | $ | 2.13 | $ | 2.28 | $ | 8.94 | $ | 7.28 |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
($ in millions, after-tax) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Business Insurance | $ | 391 | $ | 637 | $ | 1,638 | $ | 1,613 | ||||||||
Bond & Specialty Insurance | 220 | 112 | 793 | 556 | ||||||||||||
Personal Insurance | 32 | (50 | ) | 297 | 128 | |||||||||||
Total segment income | 643 | 699 | 2,728 | 2,297 | ||||||||||||
Interest Expense and Other | (72 | ) | (66 | ) | (298 | ) | (254 | ) | ||||||||
Total core income | $ | 571 | $ | 633 | $ | 2,430 | $ | 2,043 |
As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||||||||||
Shareholders’ equity | $ | 22,894 | $ | 23,731 | $ | 23,221 | $ | 23,598 | $ | 24,836 | $ | 24,796 | $ | 25,405 | $ | 24,477 | $ | 25,475 | $ | 27,415 | $ | 25,319 | $ | 26,616 | $ | 25,135 | $ | 22,303 | ||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net unrealized investment (gains) losses, net of tax, included in shareholders’ equity | 113 | (1,112 | ) | (730 | ) | (1,289 | ) | (1,966 | ) | (1,322 | ) | (3,103 | ) | (2,871 | ) | (1,859 | ) | (1,856 | ) | 146 | (620 | ) | (453 | ) | (327 | ) | ||||||||||||||||||||||||||||||
Net realized investment (gains) losses, net of tax | (93 | ) | (142 | ) | (47 | ) | (2 | ) | (51 | ) | (106 | ) | (32 | ) | (36 | ) | (173 | ) | (22 | ) | 271 | (101 | ) | (8 | ) | (35 | ) | |||||||||||||||||||||||||||||
Impact of TCJA at enactment | — | 287 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Preferred stock | — | — | — | — | — | — | — | — | (68 | ) | (79 | ) | (89 | ) | (112 | ) | (129 | ) | (153 | ) | ||||||||||||||||||||||||||||||||||||
Loss from discontinued operations | — | — | — | — | — | — | — | — | — | — | — | — | — | 439 | ||||||||||||||||||||||||||||||||||||||||||
Adjusted shareholders’ equity | $ | 22,914 | $ | 22,764 | $ | 22,444 | $ | 22,307 | $ | 22,819 | $ | 23,368 | $ | 22,270 | $ | 21,570 | $ | 23,375 | $ | 25,458 | $ | 25,647 | $ | 25,783 | $ | 24,545 | $ | 22,227 |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
($ in millions, after-tax) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Annualized net income | $ | 2,483 | $ | 2,202 | $ | 2,523 | $ | 2,056 | ||||||||
Average shareholders’ equity | 22,677 | 23,735 | 22,843 | 23,671 | ||||||||||||
Return on equity | 10.9 | % | 9.3 | % | 11.0 | % | 8.7 | % | ||||||||
Annualized core income | $ | 2,286 | $ | 2,530 | $ | 2,430 | $ | 2,043 | ||||||||
Adjusted average shareholders’ equity | 22,932 | 22,795 | 22,814 | 22,743 | ||||||||||||
Core return on equity | 10.0 | % | 11.1 | % | 10.7 | % | 9.0 | % |
Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||||||||||
Core income, less preferred dividends | $ | 2,430 | $ | 2,043 | $ | 2,967 | $ | 3,437 | $ | 3,641 | $ | 3,567 | $ | 2,441 | $ | 1,389 | $ | 3,040 | $ | 3,597 | $ | 3,191 | $ | 4,496 | $ | 4,195 | $ | 2,020 | ||||||||||||||||||||||||||||
Adjusted average shareholders’ equity | 22,814 | 22,743 | 22,386 | 22,681 | 23,447 | 23,004 | 22,158 | 22,806 | 24,285 | 25,777 | 25,668 | 25,350 | 23,381 | 21,118 | ||||||||||||||||||||||||||||||||||||||||||
Core return on equity | 10.7 | % | 9.0 | % | 13.3 | % | 15.2 | % | 15.5 | % | 15.5 | % | 11.0 | % | 6.1 | % | 12.5 | % | 14.0 | % | 12.4 | % | 17.7 | % | 17.9 | % | 9.6 | % | ||||||||||||||||||||||||||||
Average annual core return on equity for the period Jan. 1, 2005 through Dec. 31, 2018 | 13.0 | % |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
($ in millions, after-tax except as noted) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Pre-tax underwriting gain excluding the impact of catastrophes and net favorable prior year loss reserve development | $ | 578 | $ | 472 | $ | 1,880 | $ | 1,761 | ||||||||
Pre-tax impact of catastrophes | (610 | ) | (499 | ) | (1,716 | ) | (1,949 | ) | ||||||||
Pre-tax impact of net favorable prior year loss reserve development | 167 | 293 | 517 | 592 | ||||||||||||
Pre-tax underwriting gain | 135 | 266 | 681 | 404 | ||||||||||||
Income tax expense on underwriting results | 36 | 50 | 105 | 54 | ||||||||||||
Underwriting gain | 99 | 216 | 576 | 350 | ||||||||||||
Net investment income | 535 | 467 | 2,102 | 1,872 | ||||||||||||
Other income (expense), including interest expense | (63 | ) | (50 | ) | (248 | ) | (179 | ) | ||||||||
Core income | 571 | 633 | 2,430 | 2,043 | ||||||||||||
Net realized investment gains | 50 | 47 | 93 | 142 | ||||||||||||
Impact of TCJA at enactment | — | (129 | ) | — | (129 | ) | ||||||||||
Net income | $ | 621 | $ | 551 | $ | 2,523 | $ | 2,056 |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
($ in millions, pre-tax) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Loss and loss adjustment expense ratio | ||||||||||||||||
Claims and claim adjustment expenses | $ | 4,778 | $ | 4,342 | $ | 18,291 | $ | 17,467 | ||||||||
Less: | ||||||||||||||||
Policyholder dividends | 15 | 13 | 52 | 51 | ||||||||||||
Allocated fee income | 39 | 36 | 154 | 162 | ||||||||||||
Loss ratio numerator | $ | 4,724 | $ | 4,293 | $ | 18,085 | $ | 17,254 | ||||||||
Underwriting expense ratio | ||||||||||||||||
Amortization of deferred acquisition costs | $ | 1,122 | $ | 1,072 | $ | 4,381 | $ | 4,166 | ||||||||
General and administrative expenses (G&A) | 1,063 | 1,084 | 4,297 | 4,170 | ||||||||||||
Less: | ||||||||||||||||
Non-insurance G&A | 45 | 33 | 159 | 77 | ||||||||||||
Allocated fee income | 69 | 69 | 278 | 285 | ||||||||||||
Billing and policy fees and other | 24 | 21 | 93 | 88 | ||||||||||||
Expense ratio numerator | $ | 2,047 | $ | 2,033 | $ | 8,148 | $ | 7,886 | ||||||||
Earned premium | $ | 6,945 | $ | 6,626 | $ | 27,059 | $ | 25,683 | ||||||||
Combined ratio (1) | ||||||||||||||||
Loss and loss adjustment expense ratio | 68.0 | % | 64.8 | % | 66.8 | % | 67.2 | % | ||||||||
Underwriting expense ratio | 29.5 | % | 30.7 | % | 30.1 | % | 30.7 | % | ||||||||
Combined ratio | 97.5 | % | 95.5 | % | 96.9 | % | 97.9 | % |
As of | ||||||||
($ in millions, except per share amounts) | December 31, 2018 | December 31, 2017 | ||||||
Shareholders’ equity | $ | 22,894 | $ | 23,731 | ||||
Less: Net unrealized investment gains (losses), net of tax, included in shareholders’ equity | (113 | ) | 1,112 | |||||
Shareholders’ equity, excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity | 23,007 | 22,619 | ||||||
Less: | ||||||||
Goodwill | 3,937 | 3,951 | ||||||
Other intangible assets | 345 | 342 | ||||||
Impact of deferred tax on other intangible assets | (44 | ) | (44 | ) | ||||
Tangible shareholders’ equity | $ | 18,769 | $ | 18,370 | ||||
Common shares outstanding | 263.6 | 271.4 | ||||||
Book value per share | $ | 86.84 | $ | 87.46 | ||||
Adjusted book value per share | 87.27 | 83.36 | ||||||
Tangible book value per share | 71.20 | 67.70 |
As of | ||||||||
($ in millions) | December 31, 2018 | December 31, 2017 | ||||||
Debt | $ | 6,564 | $ | 6,571 | ||||
Shareholders’ equity | 22,894 | 23,731 | ||||||
Total capitalization | 29,458 | 30,302 | ||||||
Less: Net unrealized investment gains (losses), net of tax, included in shareholders’ equity | (113 | ) | 1,112 | |||||
Total capitalization excluding net unrealized gain (loss) on investments, net of tax, included in shareholders’ equity | $ | 29,571 | $ | 29,190 | ||||
Debt-to-capital ratio | 22.3 | % | 21.7 | % | ||||
Debt-to-capital ratio excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity | 22.2 | % | 22.5 | % |
Media: | Institutional Investors: |
Patrick Linehan | Abbe Goldstein |
917.778.6267 | 917.778.6825 |
Page Number | |
Consolidated Results | |
Financial Highlights | 1 |
Reconciliation to Net Income and Earnings Per Share | 2 |
Statement of Income | 3 |
Net Income by Major Component and Combined Ratio | 4 |
Core Income | 5 |
Selected Statistics - Property and Casualty Operations | 6 |
Written and Earned Premiums - Property and Casualty Operations | 7 |
Business Insurance | |
Segment Income | 8 |
Segment Income by Major Component and Combined Ratio | 9 |
Selected Statistics | 10 |
Net Written Premiums | 11 |
Bond & Specialty Insurance | |
Segment Income | 12 |
Segment Income by Major Component and Combined Ratio | 13 |
Selected Statistics | 14 |
Net Written Premiums | 15 |
Personal Insurance | |
Segment Income (Loss) | 16 |
Segment Income (Loss) by Major Component and Combined Ratio | 17 |
Selected Statistics | 18 |
Net Written Premiums | 19 |
Selected Statistics - Domestic Agency Automobile | 20 |
Selected Statistics - Domestic Agency Homeowners and Other | 21 |
Supplemental Detail | |
Interest Expense and Other | 22 |
Consolidated Balance Sheet | 23 |
Investment Portfolio | 24 |
Investment Portfolio - Fixed Maturities Data | 25 |
Investment Income | 26 |
Net Realized and Unrealized Investment Gains (Losses) included in Shareholders’ Equity | 27 |
Reinsurance Recoverables | 28 |
Net Reserves for Losses and Loss Adjustment Expense | 29 |
Asbestos and Environmental Reserves | 30 |
Capitalization | 31 |
Statutory Capital and Surplus to GAAP Shareholders’ Equity Reconciliation | 32 |
Statement of Cash Flows | 33 |
Statement of Cash Flows (continued) | 34 |
Glossary of Financial Measures and Description of Reportable Business Segments | 35-36 |
($ and shares in millions, except for per share data) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Net income | $ | 617 | $ | 595 | $ | 293 | $ | 551 | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 2,056 | $ | 2,523 | ||||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||||||||||||||
Basic | $ | 2.19 | $ | 2.13 | $ | 1.06 | $ | 2.00 | $ | 2.45 | $ | 1.93 | $ | 2.65 | $ | 2.33 | $ | 7.39 | $ | 9.37 | ||||||||||||||||||||
Diluted | $ | 2.17 | $ | 2.11 | $ | 1.05 | $ | 1.98 | $ | 2.42 | $ | 1.92 | $ | 2.62 | $ | 2.32 | $ | 7.33 | $ | 9.28 | ||||||||||||||||||||
Core income | $ | 614 | $ | 543 | $ | 253 | $ | 633 | $ | 678 | $ | 494 | $ | 687 | $ | 571 | $ | 2,043 | $ | 2,430 | ||||||||||||||||||||
Core income per share: | ||||||||||||||||||||||||||||||||||||||||
Basic | $ | 2.18 | $ | 1.94 | $ | 0.92 | $ | 2.30 | $ | 2.48 | $ | 1.83 | $ | 2.56 | $ | 2.15 | $ | 7.35 | $ | 9.02 | ||||||||||||||||||||
Diluted | $ | 2.16 | $ | 1.92 | $ | 0.91 | $ | 2.28 | $ | 2.46 | $ | 1.81 | $ | 2.54 | $ | 2.13 | $ | 7.28 | $ | 8.94 | ||||||||||||||||||||
Return on equity | 10.5 | % | 10.0 | % | 4.9 | % | 9.3 | % | 11.5 | % | 9.2 | % | 12.6 | % | 10.9 | % | 8.7 | % | 11.0 | % | ||||||||||||||||||||
Core return on equity | 10.8 | % | 9.5 | % | 4.5 | % | 11.1 | % | 11.9 | % | 8.7 | % | 12.0 | % | 10.0 | % | 9.0 | % | 10.7 | % | ||||||||||||||||||||
Total assets, at period end | $ | 101,246 | $ | 102,669 | $ | 104,311 | $ | 103,483 | $ | 103,676 | $ | 103,523 | $ | 104,390 | $ | 104,233 | $ | 103,483 | $ | 104,233 | ||||||||||||||||||||
Total equity, at period end | $ | 23,612 | $ | 23,858 | $ | 23,738 | $ | 23,731 | $ | 22,979 | $ | 22,623 | $ | 22,460 | $ | 22,894 | $ | 23,731 | $ | 22,894 | ||||||||||||||||||||
Book value per share, at period end | $ | 84.51 | $ | 86.46 | $ | 86.73 | $ | 87.46 | $ | 85.03 | $ | 84.51 | $ | 84.82 | $ | 86.84 | $ | 87.46 | $ | 86.84 | ||||||||||||||||||||
Less: Net unrealized investment gains (losses), net of tax | 2.95 | 3.75 | 3.67 | 4.10 | 0.49 | (0.42 | ) | (1.69 | ) | (0.43 | ) | 4.10 | (0.43 | ) | ||||||||||||||||||||||||||
Adjusted book value per share, at period end | $ | 81.56 | $ | 82.71 | $ | 83.06 | $ | 83.36 | $ | 84.54 | $ | 84.93 | $ | 86.51 | $ | 87.27 | $ | 83.36 | $ | 87.27 | ||||||||||||||||||||
Weighted average number of common shares outstanding (basic) | 279.7 | 277.5 | 274.1 | 272.8 | 271.0 | 268.7 | 266.1 | 263.9 | 276.0 | 267.4 | ||||||||||||||||||||||||||||||
Weighted average number of common shares outstanding and common stock equivalents (diluted) | 282.4 | 280.0 | 276.6 | 275.7 | 273.9 | 271.1 | 268.4 | 266.0 | 278.6 | 269.8 | ||||||||||||||||||||||||||||||
Common shares outstanding at period end | 279.4 | 275.9 | 273.7 | 271.4 | 270.2 | 267.7 | 264.8 | 263.6 | 271.4 | 263.6 | ||||||||||||||||||||||||||||||
Common stock dividends declared | $ | 190 | $ | 201 | $ | 200 | $ | 198 | $ | 197 | $ | 209 | $ | 207 | $ | 205 | $ | 789 | $ | 818 | ||||||||||||||||||||
Common stock repurchased: | ||||||||||||||||||||||||||||||||||||||||
Under Board of Directors authorization | ||||||||||||||||||||||||||||||||||||||||
Shares | 1.9 | 3.8 | 2.6 | 2.6 | 2.5 | 2.7 | 3.0 | 1.4 | 10.9 | 9.6 | ||||||||||||||||||||||||||||||
Cost | $ | 225 | $ | 475 | $ | 328 | $ | 350 | $ | 350 | $ | 350 | $ | 400 | $ | 170 | $ | 1,378 | $ | 1,270 | ||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||||||||
Shares | 0.5 | — | — | — | 0.3 | — | 0.1 | — | 0.5 | 0.4 | ||||||||||||||||||||||||||||||
Cost | $ | 61 | $ | — | $ | — | $ | 1 | $ | 51 | $ | — | $ | — | $ | — | $ | 62 | $ | 51 | ||||||||||||||||||||
($ and shares in millions, except earnings per share) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 617 | $ | 595 | $ | 293 | $ | 551 | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 2,056 | $ | 2,523 | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses, after-tax | (3 | ) | (52 | ) | (40 | ) | (47 | ) | 9 | (30 | ) | (22 | ) | (50 | ) | (142 | ) | (93 | ) | |||||||||||||||||||||
Impact of TCJA at enactment (1) | — | — | — | 129 | — | — | — | — | 129 | — | ||||||||||||||||||||||||||||||
Core income | $ | 614 | $ | 543 | $ | 253 | $ | 633 | $ | 678 | $ | 494 | $ | 687 | $ | 571 | $ | 2,043 | $ | 2,430 | ||||||||||||||||||||
Basic earnings per share | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 2.19 | $ | 2.13 | $ | 1.06 | $ | 2.00 | $ | 2.45 | $ | 1.93 | $ | 2.65 | $ | 2.33 | $ | 7.39 | $ | 9.37 | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses, after-tax | (0.01 | ) | (0.19 | ) | (0.14 | ) | (0.17 | ) | 0.03 | (0.10 | ) | (0.09 | ) | (0.18 | ) | (0.51 | ) | (0.35 | ) | |||||||||||||||||||||
Impact of TCJA at enactment (1) | — | — | — | 0.47 | — | — | — | — | 0.47 | — | ||||||||||||||||||||||||||||||
Core income | $ | 2.18 | $ | 1.94 | $ | 0.92 | $ | 2.30 | $ | 2.48 | $ | 1.83 | $ | 2.56 | $ | 2.15 | $ | 7.35 | $ | 9.02 | ||||||||||||||||||||
Diluted earnings per share | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 2.17 | $ | 2.11 | $ | 1.05 | $ | 1.98 | $ | 2.42 | $ | 1.92 | $ | 2.62 | $ | 2.32 | $ | 7.33 | $ | 9.28 | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses, after-tax | (0.01 | ) | (0.19 | ) | (0.14 | ) | (0.17 | ) | 0.04 | (0.11 | ) | (0.08 | ) | (0.19 | ) | (0.51 | ) | (0.34 | ) | |||||||||||||||||||||
Impact of TCJA at enactment (1) | — | — | — | 0.47 | — | — | — | — | 0.46 | — | ||||||||||||||||||||||||||||||
Core income | $ | 2.16 | $ | 1.92 | $ | 0.91 | $ | 2.28 | $ | 2.46 | $ | 1.81 | $ | 2.54 | $ | 2.13 | $ | 7.28 | $ | 8.94 | ||||||||||||||||||||
Basic and Diluted | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Net income, as reported | $ | 617 | $ | 595 | $ | 293 | $ | 551 | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 2,056 | $ | 2,523 | ||||||||||||||||||||
Participating share-based awards - allocated income | (4 | ) | (5 | ) | (2 | ) | (4 | ) | (5 | ) | (4 | ) | (5 | ) | (5 | ) | (15 | ) | (19 | ) | ||||||||||||||||||||
Net income available to common shareholders - basic and diluted | $ | 613 | $ | 590 | $ | 291 | $ | 547 | $ | 664 | $ | 520 | $ | 704 | $ | 616 | $ | 2,041 | $ | 2,504 | ||||||||||||||||||||
Common Shares | ||||||||||||||||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding | 279.7 | 277.5 | 274.1 | 272.8 | 271.0 | 268.7 | 266.1 | 263.9 | 276.0 | 267.4 | ||||||||||||||||||||||||||||||
Diluted | ||||||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding | 279.7 | 277.5 | 274.1 | 272.8 | 271.0 | 268.7 | 266.1 | 263.9 | 276.0 | 267.4 | ||||||||||||||||||||||||||||||
Weighted average effects of dilutive securities - stock options and performance shares | 2.7 | 2.5 | 2.5 | 2.9 | 2.9 | 2.4 | 2.3 | 2.1 | 2.6 | 2.4 | ||||||||||||||||||||||||||||||
Diluted weighted average shares outstanding | 282.4 | 280.0 | 276.6 | 275.7 | 273.9 | 271.1 | 268.4 | 266.0 | 278.6 | 269.8 | ||||||||||||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Premiums | $ | 6,183 | $ | 6,351 | $ | 6,523 | $ | 6,626 | $ | 6,537 | $ | 6,695 | $ | 6,882 | $ | 6,945 | $ | 25,683 | $ | 27,059 | ||||||||||||||||||||
Net investment income | 610 | 598 | 588 | 601 | 603 | 595 | 646 | 630 | 2,397 | 2,474 | ||||||||||||||||||||||||||||||
Fee income | 113 | 116 | 113 | 105 | 103 | 112 | 109 | 108 | 447 | 432 | ||||||||||||||||||||||||||||||
Net realized investment gains (losses) | 5 | 80 | 61 | 70 | (11 | ) | 36 | 29 | 60 | 216 | 114 | |||||||||||||||||||||||||||||
Other revenues | 31 | 39 | 40 | 49 | 54 | 39 | 57 | 53 | 159 | 203 | ||||||||||||||||||||||||||||||
Total revenues | 6,942 | 7,184 | 7,325 | 7,451 | 7,286 | 7,477 | 7,723 | 7,796 | 28,902 | 30,282 | ||||||||||||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||||||
Claims and claim adjustment expenses | 4,094 | 4,225 | 4,806 | 4,342 | 4,296 | 4,562 | 4,655 | 4,778 | 17,467 | 18,291 | ||||||||||||||||||||||||||||||
Amortization of deferred acquisition costs | 1,003 | 1,032 | 1,059 | 1,072 | 1,061 | 1,081 | 1,117 | 1,122 | 4,166 | 4,381 | ||||||||||||||||||||||||||||||
General and administrative expenses | 996 | 1,045 | 1,045 | 1,084 | 1,062 | 1,113 | 1,059 | 1,063 | 4,170 | 4,297 | ||||||||||||||||||||||||||||||
Interest expense | 89 | 92 | 95 | 93 | 89 | 90 | 86 | 87 | 369 | 352 | ||||||||||||||||||||||||||||||
Total claims and expenses | 6,182 | 6,394 | 7,005 | 6,591 | 6,508 | 6,846 | 6,917 | 7,050 | 26,172 | 27,321 | ||||||||||||||||||||||||||||||
Income before income taxes | 760 | 790 | 320 | 860 | 778 | 631 | 806 | 746 | 2,730 | 2,961 | ||||||||||||||||||||||||||||||
Income tax expense | 143 | 195 | 27 | 309 | 109 | 107 | 97 | 125 | 674 | 438 | ||||||||||||||||||||||||||||||
Net income | $ | 617 | $ | 595 | $ | 293 | $ | 551 | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 2,056 | $ | 2,523 | ||||||||||||||||||||
Other-than-temporary impairments (OTTI) | ||||||||||||||||||||||||||||||||||||||||
Total OTTI gains (losses) | $ | (1 | ) | $ | (5 | ) | $ | (5 | ) | $ | (2 | ) | $ | — | $ | (1 | ) | $ | — | $ | — | $ | (13 | ) | $ | (1 | ) | |||||||||||||
OTTI losses recognized in net realized investment gains (losses) | $ | (2 | ) | $ | (5 | ) | $ | (5 | ) | $ | (2 | ) | $ | — | $ | (1 | ) | $ | — | $ | — | $ | (14 | ) | $ | (1 | ) | |||||||||||||
OTTI gains (losses) recognized in other comprehensive income (loss) | $ | 1 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1 | $ | — | ||||||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||||||
Effective tax rate on net investment income | 21.3 | % | 21.9 | % | 22.1 | % | 22.4 | % | 14.9 | % | 14.8 | % | 15.4 | % | 15.0 | % | 21.9 | % | 15.0 | % | ||||||||||||||||||||
Net investment income (after-tax) | $ | 480 | $ | 468 | $ | 457 | $ | 467 | $ | 513 | $ | 507 | $ | 547 | $ | 535 | $ | 1,872 | $ | 2,102 | ||||||||||||||||||||
Catastrophes, net of reinsurance: | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 347 | $ | 403 | $ | 700 | $ | 499 | $ | 354 | $ | 488 | $ | 264 | $ | 610 | $ | 1,949 | $ | 1,716 | ||||||||||||||||||||
After-tax | $ | 226 | $ | 262 | $ | 455 | $ | 324 | $ | 280 | $ | 384 | $ | 209 | $ | 482 | $ | 1,267 | $ | 1,355 | ||||||||||||||||||||
Prior year reserve development - favorable: | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 81 | $ | 203 | $ | 15 | $ | 293 | $ | 150 | $ | 186 | $ | 14 | $ | 167 | $ | 592 | $ | 517 | ||||||||||||||||||||
After-tax | $ | 44 | $ | 132 | $ | 10 | $ | 192 | $ | 119 | $ | 148 | $ | 10 | $ | 132 | $ | 378 | $ | 409 | ||||||||||||||||||||
($ in millions, net of tax) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Underwriting gain (loss) | $ | 175 | $ | 112 | $ | (153 | ) | $ | 216 | $ | 222 | $ | 61 | $ | 194 | $ | 99 | $ | 350 | $ | 576 | |||||||||||||||||||
Net investment income | 480 | 468 | 457 | 467 | 513 | 507 | 547 | 535 | 1,872 | 2,102 | ||||||||||||||||||||||||||||||
Other income (expense), including interest expense | (41 | ) | (37 | ) | (51 | ) | (50 | ) | (57 | ) | (74 | ) | (54 | ) | (63 | ) | (179 | ) | (248 | ) | ||||||||||||||||||||
Core income | 614 | 543 | 253 | 633 | 678 | 494 | 687 | 571 | 2,043 | 2,430 | ||||||||||||||||||||||||||||||
Net realized investment gains (losses) | 3 | 52 | 40 | 47 | (9 | ) | 30 | 22 | 50 | 142 | 93 | |||||||||||||||||||||||||||||
Impact of TCJA at enactment (1) | — | — | — | (129 | ) | — | — | — | — | (129 | ) | — | ||||||||||||||||||||||||||||
Net income | $ | 617 | $ | 595 | $ | 293 | $ | 551 | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 2,056 | $ | 2,523 | ||||||||||||||||||||
Combined ratio (2) (3) | ||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 65.3 | % | 65.6 | % | 72.8 | % | 64.8 | % | 64.9 | % | 67.4 | % | 66.9 | % | 68.0 | % | 67.2 | % | 66.8 | % | ||||||||||||||||||||
Underwriting expense ratio | 30.7 | % | 31.1 | % | 30.4 | % | 30.7 | % | 30.6 | % | 30.7 | % | 29.7 | % | 29.5 | % | 30.7 | % | 30.1 | % | ||||||||||||||||||||
Combined ratio | 96.0 | % | 96.7 | % | 103.2 | % | 95.5 | % | 95.5 | % | 98.1 | % | 96.6 | % | 97.5 | % | 97.9 | % | 96.9 | % | ||||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||||||
Net favorable prior year reserve development | (1.3 | )% | (3.2 | )% | (0.3 | )% | (4.4 | )% | (2.3 | )% | (2.8 | )% | (0.2 | )% | (2.4 | )% | (2.3 | )% | (1.9 | )% | ||||||||||||||||||||
Catastrophes, net of reinsurance | 5.6 | % | 6.4 | % | 10.7 | % | 7.5 | % | 5.4 | % | 7.3 | % | 3.8 | % | 8.8 | % | 7.6 | % | 6.3 | % | ||||||||||||||||||||
Underlying combined ratio | 91.7 | % | 93.5 | % | 92.8 | % | 92.4 | % | 92.4 | % | 93.6 | % | 93.0 | % | 91.1 | % | 92.6 | % | 92.5 | % | ||||||||||||||||||||
($ in millions, net of tax) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Billing and policy fees and other | $ | 23 | $ | 22 | $ | 22 | $ | 21 | $ | 23 | $ | 22 | $ | 24 | $ | 24 | $ | 88 | $ | 93 | ||||||||||||||||||||
Fee income: | ||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expenses | $ | 42 | $ | 42 | $ | 42 | $ | 36 | $ | 37 | $ | 40 | $ | 38 | $ | 39 | $ | 162 | $ | 154 | ||||||||||||||||||||
Underwriting expenses | 71 | 74 | 71 | 69 | 66 | 72 | 71 | 69 | 285 | 278 | ||||||||||||||||||||||||||||||
Total fee income | $ | 113 | $ | 116 | $ | 113 | $ | 105 | $ | 103 | $ | 112 | $ | 109 | $ | 108 | $ | 447 | $ | 432 | ||||||||||||||||||||
Non-insurance general and administrative expenses | $ | 8 | $ | 8 | $ | 28 | $ | 33 | $ | 37 | $ | 39 | $ | 38 | $ | 45 | $ | 77 | $ | 159 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Premiums | $ | 6,183 | $ | 6,351 | $ | 6,523 | $ | 6,626 | $ | 6,537 | $ | 6,695 | $ | 6,882 | $ | 6,945 | $ | 25,683 | $ | 27,059 | ||||||||||||||||||||
Net investment income | 610 | 598 | 588 | 601 | 603 | 595 | 646 | 630 | 2,397 | 2,474 | ||||||||||||||||||||||||||||||
Fee income | 113 | 116 | 113 | 105 | 103 | 112 | 109 | 108 | 447 | 432 | ||||||||||||||||||||||||||||||
Other revenues | 31 | 39 | 40 | 49 | 54 | 39 | 57 | 53 | 159 | 203 | ||||||||||||||||||||||||||||||
Total revenues | 6,937 | 7,104 | 7,264 | 7,381 | 7,297 | 7,441 | 7,694 | 7,736 | 28,686 | 30,168 | ||||||||||||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||||||
Claims and claim adjustment expenses | 4,094 | 4,225 | 4,806 | 4,342 | 4,296 | 4,562 | 4,655 | 4,778 | 17,467 | 18,291 | ||||||||||||||||||||||||||||||
Amortization of deferred acquisition costs | 1,003 | 1,032 | 1,059 | 1,072 | 1,061 | 1,081 | 1,117 | 1,122 | 4,166 | 4,381 | ||||||||||||||||||||||||||||||
General and administrative expenses | 996 | 1,045 | 1,045 | 1,084 | 1,062 | 1,113 | 1,059 | 1,063 | 4,170 | 4,297 | ||||||||||||||||||||||||||||||
Interest expense | 89 | 92 | 95 | 93 | 89 | 90 | 86 | 87 | 369 | 352 | ||||||||||||||||||||||||||||||
Total claims and expenses | 6,182 | 6,394 | 7,005 | 6,591 | 6,508 | 6,846 | 6,917 | 7,050 | 26,172 | 27,321 | ||||||||||||||||||||||||||||||
Core income before income taxes | 755 | 710 | 259 | 790 | 789 | 595 | 777 | 686 | 2,514 | 2,847 | ||||||||||||||||||||||||||||||
Income tax expense | 141 | 167 | 6 | 157 | 111 | 101 | 90 | 115 | 471 | 417 | ||||||||||||||||||||||||||||||
Core income | $ | 614 | $ | 543 | $ | 253 | $ | 633 | $ | 678 | $ | 494 | $ | 687 | $ | 571 | $ | 2,043 | $ | 2,430 | ||||||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||||||
Effective tax rate on net investment income | 21.3 | % | 21.9 | % | 22.1 | % | 22.4 | % | 14.9 | % | 14.8 | % | 15.4 | % | 15.0 | % | 21.9 | % | 15.0 | % | ||||||||||||||||||||
Net investment income (after-tax) | $ | 480 | $ | 468 | $ | 457 | $ | 467 | $ | 513 | $ | 507 | $ | 547 | $ | 535 | $ | 1,872 | $ | 2,102 | ||||||||||||||||||||
Catastrophes, net of reinsurance: | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 347 | $ | 403 | $ | 700 | $ | 499 | $ | 354 | $ | 488 | $ | 264 | $ | 610 | $ | 1,949 | $ | 1,716 | ||||||||||||||||||||
After-tax | $ | 226 | $ | 262 | $ | 455 | $ | 324 | $ | 280 | $ | 384 | $ | 209 | $ | 482 | $ | 1,267 | $ | 1,355 | ||||||||||||||||||||
Prior year reserve development - favorable: | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 81 | $ | 203 | $ | 15 | $ | 293 | $ | 150 | $ | 186 | $ | 14 | $ | 167 | $ | 592 | $ | 517 | ||||||||||||||||||||
After-tax | $ | 44 | $ | 132 | $ | 10 | $ | 192 | $ | 119 | $ | 148 | $ | 10 | $ | 132 | $ | 378 | $ | 409 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 7,018 | $ | 6,927 | $ | 7,063 | $ | 6,640 | $ | 7,418 | $ | 7,429 | $ | 7,462 | $ | 6,943 | $ | 27,648 | $ | 29,252 | ||||||||||||||||||||
Net written premiums | $ | 6,495 | $ | 6,640 | $ | 6,660 | $ | 6,424 | $ | 6,824 | $ | 7,131 | $ | 7,062 | $ | 6,691 | $ | 26,219 | $ | 27,708 | ||||||||||||||||||||
Net earned premiums | $ | 6,183 | $ | 6,351 | $ | 6,523 | $ | 6,626 | $ | 6,537 | $ | 6,695 | $ | 6,882 | $ | 6,945 | $ | 25,683 | $ | 27,059 | ||||||||||||||||||||
Losses and loss adjustment expenses | 4,043 | 4,169 | 4,751 | 4,291 | 4,245 | 4,506 | 4,606 | 4,719 | 17,254 | 18,076 | ||||||||||||||||||||||||||||||
Underwriting expenses | 1,975 | 2,049 | 2,018 | 1,992 | 2,072 | 2,147 | 2,082 | 1,999 | 8,034 | 8,300 | ||||||||||||||||||||||||||||||
Statutory underwriting gain (loss) | 165 | 133 | (246 | ) | 343 | 220 | 42 | 194 | 227 | 395 | 683 | |||||||||||||||||||||||||||||
Policyholder dividends | 11 | 15 | 12 | 13 | 13 | 12 | 12 | 15 | 51 | 52 | ||||||||||||||||||||||||||||||
Statutory underwriting gain (loss) after policyholder dividends | $ | 154 | $ | 118 | $ | (258 | ) | $ | 330 | $ | 207 | $ | 30 | $ | 182 | $ | 212 | $ | 344 | $ | 631 | |||||||||||||||||||
Other statutory statistics | ||||||||||||||||||||||||||||||||||||||||
Reserves for losses and loss adjustment expenses | $ | 40,313 | $ | 40,630 | $ | 41,545 | $ | 41,454 | $ | 41,669 | $ | 41,861 | $ | 42,293 | $ | 42,409 | $ | 41,454 | $ | 42,409 | ||||||||||||||||||||
Increase (decrease) in reserves | $ | 409 | $ | 317 | $ | 915 | $ | (91 | ) | $ | 215 | $ | 192 | $ | 432 | $ | 116 | $ | 1,550 | $ | 955 | |||||||||||||||||||
Statutory capital and surplus | $ | 20,617 | $ | 20,607 | $ | 20,740 | $ | 20,448 | $ | 20,533 | $ | 20,371 | $ | 20,462 | $ | 20,774 | $ | 20,448 | $ | 20,774 | ||||||||||||||||||||
Net written premiums/surplus (1) | 1.23:1 | 1.24:1 | 1.25:1 | 1.28:1 | 1.29:1 | 1.33:1 | 1.34:1 | 1.33:1 | 1.28:1 | 1.33:1 | ||||||||||||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Written premiums | ||||||||||||||||||||||||||||||||||||||||
Gross | $ | 7,018 | $ | 6,927 | $ | 7,063 | $ | 6,640 | $ | 7,418 | $ | 7,429 | $ | 7,462 | $ | 6,943 | $ | 27,648 | $ | 29,252 | ||||||||||||||||||||
Ceded | (523 | ) | (287 | ) | (403 | ) | (216 | ) | (594 | ) | (298 | ) | (400 | ) | (252 | ) | (1,429 | ) | (1,544 | ) | ||||||||||||||||||||
Net | $ | 6,495 | $ | 6,640 | $ | 6,660 | $ | 6,424 | $ | 6,824 | $ | 7,131 | $ | 7,062 | $ | 6,691 | $ | 26,219 | $ | 27,708 | ||||||||||||||||||||
Earned premiums | ||||||||||||||||||||||||||||||||||||||||
Gross | $ | 6,550 | $ | 6,720 | $ | 6,906 | $ | 6,978 | $ | 6,903 | $ | 7,060 | $ | 7,266 | $ | 7,331 | $ | 27,154 | $ | 28,560 | ||||||||||||||||||||
Ceded | (367 | ) | (369 | ) | (383 | ) | (352 | ) | (366 | ) | (365 | ) | (384 | ) | (386 | ) | (1,471 | ) | (1,501 | ) | ||||||||||||||||||||
Net | $ | 6,183 | $ | 6,351 | $ | 6,523 | $ | 6,626 | $ | 6,537 | $ | 6,695 | $ | 6,882 | $ | 6,945 | $ | 25,683 | $ | 27,059 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Premiums | $ | 3,429 | $ | 3,504 | $ | 3,576 | $ | 3,637 | $ | 3,568 | $ | 3,641 | $ | 3,743 | $ | 3,770 | $ | 14,146 | $ | 14,722 | ||||||||||||||||||||
Net investment income | 453 | 447 | 437 | 449 | 446 | 440 | 482 | 465 | 1,786 | 1,833 | ||||||||||||||||||||||||||||||
Fee income | 109 | 112 | 108 | 101 | 99 | 107 | 103 | 103 | 430 | 412 | ||||||||||||||||||||||||||||||
Other revenues | 9 | 15 | 19 | 26 | 31 | 20 | 33 | 28 | 69 | 112 | ||||||||||||||||||||||||||||||
Total revenues | 4,000 | 4,078 | 4,140 | 4,213 | 4,144 | 4,208 | 4,361 | 4,366 | 16,431 | 17,079 | ||||||||||||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||||||
Claims and claim adjustment expenses | 2,265 | 2,306 | 2,847 | 2,103 | 2,392 | 2,484 | 2,653 | 2,642 | 9,521 | 10,171 | ||||||||||||||||||||||||||||||
Amortization of deferred acquisition costs | 554 | 567 | 579 | 586 | 580 | 588 | 610 | 610 | 2,286 | 2,388 | ||||||||||||||||||||||||||||||
General and administrative expenses | 610 | 636 | 643 | 674 | 650 | 674 | 648 | 651 | 2,563 | 2,623 | ||||||||||||||||||||||||||||||
Total claims and expenses | 3,429 | 3,509 | 4,069 | 3,363 | 3,622 | 3,746 | 3,911 | 3,903 | 14,370 | 15,182 | ||||||||||||||||||||||||||||||
Segment income before income taxes | 571 | 569 | 71 | 850 | 522 | 462 | 450 | 463 | 2,061 | 1,897 | ||||||||||||||||||||||||||||||
Income tax expense (benefit) | 129 | 140 | (34 | ) | 213 | 70 | 77 | 40 | 72 | 448 | 259 | |||||||||||||||||||||||||||||
Segment income | $ | 442 | $ | 429 | $ | 105 | $ | 637 | $ | 452 | $ | 385 | $ | 410 | $ | 391 | $ | 1,613 | $ | 1,638 | ||||||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||||||
Effective tax rate on net investment income | 22.0 | % | 22.2 | % | 22.4 | % | 22.7 | % | 14.7 | % | 14.7 | % | 15.3 | % | 14.9 | % | 22.3 | % | 14.9 | % | ||||||||||||||||||||
Net investment income (after-tax) | $ | 353 | $ | 348 | $ | 338 | $ | 348 | $ | 380 | $ | 376 | $ | 408 | $ | 395 | $ | 1,387 | $ | 1,559 | ||||||||||||||||||||
Catastrophes, net of reinsurance: | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 132 | $ | 184 | $ | 489 | $ | 53 | $ | 138 | $ | 168 | $ | 136 | $ | 197 | $ | 858 | $ | 639 | ||||||||||||||||||||
After-tax | $ | 86 | $ | 120 | $ | 318 | $ | 34 | $ | 110 | $ | 132 | $ | 107 | $ | 156 | $ | 558 | $ | 505 | ||||||||||||||||||||
Prior year reserve development - favorable (unfavorable): | ||||||||||||||||||||||||||||||||||||||||
Pre-tax (1) | $ | 61 | $ | 125 | $ | 9 | $ | 244 | $ | 66 | $ | 84 | $ | (56 | ) | $ | 48 | $ | 439 | $ | 142 | |||||||||||||||||||
After-tax (1) | $ | 30 | $ | 81 | $ | 6 | $ | 159 | $ | 52 | $ | 68 | $ | (45 | ) | $ | 38 | $ | 276 | $ | 113 | |||||||||||||||||||
($ in millions, net of tax) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Underwriting gain (loss) | $ | 83 | $ | 69 | $ | (233 | ) | $ | 288 | $ | 70 | $ | 19 | $ | 2 | $ | 3 | $ | 207 | $ | 94 | |||||||||||||||||||
Net investment income | 353 | 348 | 338 | 348 | 380 | 376 | 408 | 395 | 1,387 | 1,559 | ||||||||||||||||||||||||||||||
Other income (expense) | 6 | 12 | — | 1 | 2 | (10 | ) | — | (7 | ) | 19 | (15 | ) | |||||||||||||||||||||||||||
Segment income | $ | 442 | $ | 429 | $ | 105 | $ | 637 | $ | 452 | $ | 385 | $ | 410 | $ | 391 | $ | 1,613 | $ | 1,638 | ||||||||||||||||||||
Combined ratio (1) (2) | ||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 64.5 | % | 64.3 | % | 78.1 | % | 56.5 | % | 65.7 | % | 66.9 | % | 69.6 | % | 68.7 | % | 65.9 | % | 67.8 | % | ||||||||||||||||||||
Underwriting expense ratio | 31.9 | % | 32.2 | % | 31.7 | % | 32.1 | % | 31.8 | % | 31.9 | % | 31.0 | % | 30.7 | % | 31.9 | % | 31.3 | % | ||||||||||||||||||||
Combined ratio | 96.4 | % | 96.5 | % | 109.8 | % | 88.6 | % | 97.5 | % | 98.8 | % | 100.6 | % | 99.4 | % | 97.8 | % | 99.1 | % | ||||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||||||
Net (favorable) unfavorable prior year reserve development | (1.8 | )% | (3.6 | )% | (0.3 | )% | (6.7 | )% | (1.9 | )% | (2.3 | )% | 1.5 | % | (1.2 | )% | (3.1 | )% | (1.0 | )% | ||||||||||||||||||||
Catastrophes, net of reinsurance | 3.8 | % | 5.3 | % | 13.7 | % | 1.4 | % | 3.9 | % | 4.6 | % | 3.7 | % | 5.2 | % | 6.0 | % | 4.4 | % | ||||||||||||||||||||
Underlying combined ratio | 94.4 | % | 94.8 | % | 96.4 | % | 93.9 | % | 95.5 | % | 96.5 | % | 95.4 | % | 95.4 | % | 94.9 | % | 95.7 | % | ||||||||||||||||||||
($ in millions, net of tax) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Billing and policy fees and other | $ | 4 | $ | 4 | $ | 4 | $ | 4 | $ | 4 | $ | 4 | $ | 3 | $ | 4 | $ | 16 | $ | 15 | ||||||||||||||||||||
Fee income: | ||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expenses | $ | 42 | $ | 42 | $ | 42 | $ | 36 | $ | 37 | $ | 40 | $ | 38 | $ | 39 | $ | 162 | $ | 154 | ||||||||||||||||||||
Underwriting expenses | 67 | 70 | 66 | 65 | 62 | 67 | 65 | 64 | 268 | 258 | ||||||||||||||||||||||||||||||
Total fee income | $ | 109 | $ | 112 | $ | 108 | $ | 101 | $ | 99 | $ | 107 | $ | 103 | $ | 103 | $ | 430 | $ | 412 | ||||||||||||||||||||
Non-insurance general and administrative expenses | $ | — | $ | — | $ | 21 | $ | 24 | $ | 28 | $ | 30 | $ | 29 | $ | 37 | $ | 45 | $ | 124 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 4,271 | $ | 3,794 | $ | 3,787 | $ | 3,621 | $ | 4,471 | $ | 4,038 | $ | 3,992 | $ | 3,754 | $ | 15,473 | $ | 16,255 | ||||||||||||||||||||
Net written premiums | $ | 3,855 | $ | 3,544 | $ | 3,434 | $ | 3,437 | $ | 3,994 | $ | 3,781 | $ | 3,648 | $ | 3,533 | $ | 14,270 | $ | 14,956 | ||||||||||||||||||||
Net earned premiums | $ | 3,429 | $ | 3,504 | $ | 3,576 | $ | 3,637 | $ | 3,568 | $ | 3,641 | $ | 3,743 | $ | 3,770 | $ | 14,146 | $ | 14,722 | ||||||||||||||||||||
Losses and loss adjustment expenses | 2,215 | 2,254 | 2,795 | 2,053 | 2,344 | 2,429 | 2,606 | 2,586 | 9,317 | 9,965 | ||||||||||||||||||||||||||||||
Underwriting expenses | 1,169 | 1,153 | 1,106 | 1,126 | 1,213 | 1,196 | 1,144 | 1,107 | 4,554 | 4,660 | ||||||||||||||||||||||||||||||
Statutory underwriting gain (loss) | 45 | 97 | (325 | ) | 458 | 11 | 16 | (7 | ) | 77 | 275 | 97 | ||||||||||||||||||||||||||||
Policyholder dividends | 9 | 12 | 10 | 11 | 11 | 9 | 11 | 12 | 42 | 43 | ||||||||||||||||||||||||||||||
Statutory underwriting gain (loss) after policyholder dividends | $ | 36 | $ | 85 | $ | (335 | ) | $ | 447 | $ | — | $ | 7 | $ | (18 | ) | $ | 65 | $ | 233 | $ | 54 | ||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Net written premiums by market | ||||||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||
Select Accounts | $ | 755 | $ | 720 | $ | 664 | $ | 661 | $ | 773 | $ | 729 | $ | 666 | $ | 660 | $ | 2,800 | $ | 2,828 | ||||||||||||||||||||
Middle Market | 2,177 | 1,820 | 1,896 | 1,863 | 2,262 | 1,985 | 2,032 | 1,935 | 7,756 | 8,214 | ||||||||||||||||||||||||||||||
National Accounts | 288 | 219 | 244 | 259 | 309 | 231 | 238 | 247 | 1,010 | 1,025 | ||||||||||||||||||||||||||||||
National Property and Other | 386 | 496 | 428 | 381 | 380 | 518 | 485 | 422 | 1,691 | 1,805 | ||||||||||||||||||||||||||||||
Total Domestic | 3,606 | 3,255 | 3,232 | 3,164 | 3,724 | 3,463 | 3,421 | 3,264 | 13,257 | 13,872 | ||||||||||||||||||||||||||||||
International | 249 | 289 | 202 | 273 | 270 | 318 | 227 | 269 | 1,013 | 1,084 | ||||||||||||||||||||||||||||||
Total | $ | 3,855 | $ | 3,544 | $ | 3,434 | $ | 3,437 | $ | 3,994 | $ | 3,781 | $ | 3,648 | $ | 3,533 | $ | 14,270 | $ | 14,956 | ||||||||||||||||||||
Net written premiums by product line | ||||||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||
Workers’ compensation | $ | 1,207 | $ | 925 | $ | 918 | $ | 876 | $ | 1,190 | $ | 935 | $ | 887 | $ | 828 | $ | 3,926 | $ | 3,840 | ||||||||||||||||||||
Commercial automobile | 581 | 543 | 549 | 546 | 651 | 629 | 625 | 613 | 2,219 | 2,518 | ||||||||||||||||||||||||||||||
Commercial property | 402 | 506 | 441 | 423 | 391 | 536 | 492 | 448 | 1,772 | 1,867 | ||||||||||||||||||||||||||||||
General liability | 558 | 491 | 519 | 518 | 591 | 531 | 559 | 546 | 2,086 | 2,227 | ||||||||||||||||||||||||||||||
Commercial multi-peril | 855 | 788 | 787 | 798 | 896 | 831 | 840 | 823 | 3,228 | 3,390 | ||||||||||||||||||||||||||||||
Other | 3 | 2 | 18 | 3 | 5 | 1 | 18 | 6 | 26 | 30 | ||||||||||||||||||||||||||||||
Total Domestic | 3,606 | 3,255 | 3,232 | 3,164 | 3,724 | 3,463 | 3,421 | 3,264 | 13,257 | 13,872 | ||||||||||||||||||||||||||||||
International | 249 | 289 | 202 | 273 | 270 | 318 | 227 | 269 | 1,013 | 1,084 | ||||||||||||||||||||||||||||||
Total | $ | 3,855 | $ | 3,544 | $ | 3,434 | $ | 3,437 | $ | 3,994 | $ | 3,781 | $ | 3,648 | $ | 3,533 | $ | 14,270 | $ | 14,956 | ||||||||||||||||||||
National Accounts | ||||||||||||||||||||||||||||||||||||||||
Additions to claim volume under administration (1) | $ | 734 | $ | 529 | $ | 521 | $ | 581 | $ | 771 | $ | 522 | $ | 540 | $ | 574 | $ | 2,365 | $ | 2,407 | ||||||||||||||||||||
Written fees | $ | 104 | $ | 85 | $ | 83 | $ | 75 | $ | 103 | $ | 83 | $ | 81 | $ | 76 | $ | 347 | $ | 343 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Premiums | $ | 555 | $ | 575 | $ | 591 | $ | 586 | $ | 582 | $ | 601 | $ | 617 | $ | 620 | $ | 2,307 | $ | 2,420 | ||||||||||||||||||||
Net investment income | 61 | 56 | 57 | 54 | 58 | 57 | 57 | 61 | 228 | 233 | ||||||||||||||||||||||||||||||
Other revenues | 5 | 6 | 5 | 8 | 6 | 5 | 5 | 7 | 24 | 23 | ||||||||||||||||||||||||||||||
Total revenues | 621 | 637 | 653 | 648 | 646 | 663 | 679 | 688 | 2,559 | 2,676 | ||||||||||||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||||||
Claims and claim adjustment expenses | 227 | 174 | 236 | 262 | 216 | 175 | 205 | 176 | 899 | 772 | ||||||||||||||||||||||||||||||
Amortization of deferred acquisition costs | 103 | 108 | 111 | 110 | 107 | 113 | 117 | 117 | 432 | 454 | ||||||||||||||||||||||||||||||
General and administrative expenses | 113 | 116 | 115 | 120 | 115 | 116 | 113 | 115 | 464 | 459 | ||||||||||||||||||||||||||||||
Total claims and expenses | 443 | 398 | 462 | 492 | 438 | 404 | 435 | 408 | 1,795 | 1,685 | ||||||||||||||||||||||||||||||
Segment income before income taxes | 178 | 239 | 191 | 156 | 208 | 259 | 244 | 280 | 764 | 991 | ||||||||||||||||||||||||||||||
Income tax expense | 33 | 76 | 55 | 44 | 35 | 55 | 48 | 60 | 208 | 198 | ||||||||||||||||||||||||||||||
Segment income | $ | 145 | $ | 163 | $ | 136 | $ | 112 | $ | 173 | $ | 204 | $ | 196 | $ | 220 | $ | 556 | $ | 793 | ||||||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||||||
Effective tax rate on net investment income | 14.6 | % | 17.6 | % | 18.9 | % | 19.6 | % | 14.5 | % | 14.3 | % | 14.6 | % | 14.8 | % | 17.6 | % | 14.6 | % | ||||||||||||||||||||
Net investment income (after-tax) | $ | 52 | $ | 46 | $ | 47 | $ | 43 | $ | 50 | $ | 48 | $ | 49 | $ | 52 | $ | 188 | $ | 199 | ||||||||||||||||||||
Catastrophes, net of reinsurance: | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 1 | $ | 1 | $ | 6 | $ | (2 | ) | $ | — | $ | 5 | $ | 4 | $ | 7 | $ | 6 | $ | 16 | |||||||||||||||||||
After-tax | $ | — | $ | 1 | $ | 4 | $ | (1 | ) | $ | — | $ | 4 | $ | 3 | $ | 6 | $ | 4 | $ | 13 | |||||||||||||||||||
Prior year reserve development - favorable: | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 14 | $ | 78 | $ | 6 | $ | 42 | $ | 35 | $ | 89 | $ | 53 | $ | 89 | $ | 140 | $ | 266 | ||||||||||||||||||||
After-tax | $ | 10 | $ | 51 | $ | 4 | $ | 27 | $ | 28 | $ | 70 | $ | 42 | $ | 70 | $ | 92 | $ | 210 | ||||||||||||||||||||
($ in millions, net of tax) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Underwriting gain | $ | 89 | $ | 114 | $ | 85 | $ | 64 | $ | 119 | $ | 153 | $ | 143 | $ | 165 | $ | 352 | $ | 580 | ||||||||||||||||||||
Net investment income | 52 | 46 | 47 | 43 | 50 | 48 | 49 | 52 | 188 | 199 | ||||||||||||||||||||||||||||||
Other income | 4 | 3 | 4 | 5 | 4 | 3 | 4 | 3 | 16 | 14 | ||||||||||||||||||||||||||||||
Segment income | $ | 145 | $ | 163 | $ | 136 | $ | 112 | $ | 173 | $ | 204 | $ | 196 | $ | 220 | $ | 556 | $ | 793 | ||||||||||||||||||||
Combined ratio (1) | ||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 40.6 | % | 29.7 | % | 39.5 | % | 44.6 | % | 36.6 | % | 28.8 | % | 33.1 | % | 27.9 | % | 38.6 | % | 31.5 | % | ||||||||||||||||||||
Underwriting expense ratio | 38.8 | % | 39.0 | % | 38.2 | % | 39.1 | % | 38.1 | % | 37.7 | % | 37.1 | % | 36.9 | % | 38.8 | % | 37.5 | % | ||||||||||||||||||||
Combined ratio | 79.4 | % | 68.7 | % | 77.7 | % | 83.7 | % | 74.7 | % | 66.5 | % | 70.2 | % | 64.8 | % | 77.4 | % | 69.0 | % | ||||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||||||
Net favorable prior year reserve development | (2.6 | )% | (13.5 | )% | (0.9 | )% | (7.2 | )% | (6.0 | )% | (14.8 | )% | (8.7 | )% | (14.4 | )% | (6.1 | )% | (11.0 | )% | ||||||||||||||||||||
Catastrophes, net of reinsurance | 0.1 | % | 0.2 | % | 0.9 | % | (0.2 | )% | — | % | 0.8 | % | 0.6 | % | 1.1 | % | 0.3 | % | 0.6 | % | ||||||||||||||||||||
Underlying combined ratio | 81.9 | % | 82.0 | % | 77.7 | % | 91.1 | % | 80.7 | % | 80.5 | % | 78.3 | % | 78.1 | % | 83.2 | % | 79.4 | % | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Non-insurance general and administrative expenses | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2 | $ | 1 | $ | 2 | $ | — | $ | 5 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 601 | $ | 620 | $ | 632 | $ | 627 | $ | 638 | $ | 674 | $ | 673 | $ | 680 | $ | 2,480 | $ | 2,665 | ||||||||||||||||||||
Net written premiums | $ | 544 | $ | 598 | $ | 611 | $ | 606 | $ | 574 | $ | 653 | $ | 644 | $ | 657 | $ | 2,359 | $ | 2,528 | ||||||||||||||||||||
Net earned premiums | $ | 555 | $ | 575 | $ | 591 | $ | 586 | $ | 582 | $ | 601 | $ | 617 | $ | 620 | $ | 2,307 | $ | 2,420 | ||||||||||||||||||||
Losses and loss adjustment expenses | 226 | 170 | 233 | 261 | 213 | 173 | 204 | 173 | 890 | 763 | ||||||||||||||||||||||||||||||
Underwriting expenses | 219 | 228 | 231 | 226 | 232 | 234 | 232 | 231 | 904 | 929 | ||||||||||||||||||||||||||||||
Statutory underwriting gain | 110 | 177 | 127 | 99 | 137 | 194 | 181 | 216 | 513 | 728 | ||||||||||||||||||||||||||||||
Policyholder dividends | 2 | 3 | 2 | 2 | 2 | 3 | 1 | 3 | 9 | 9 | ||||||||||||||||||||||||||||||
Statutory underwriting gain after policyholder dividends | $ | 108 | $ | 174 | $ | 125 | $ | 97 | $ | 135 | $ | 191 | $ | 180 | $ | 213 | $ | 504 | $ | 719 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Net written premiums by market | ||||||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||
Management Liability | $ | 330 | $ | 341 | $ | 359 | $ | 337 | $ | 348 | $ | 362 | $ | 379 | $ | 366 | $ | 1,367 | $ | 1,455 | ||||||||||||||||||||
Surety | 174 | 211 | 212 | 196 | 185 | 235 | 217 | 198 | 793 | 835 | ||||||||||||||||||||||||||||||
Total Domestic | 504 | 552 | 571 | 533 | 533 | 597 | 596 | 564 | 2,160 | 2,290 | ||||||||||||||||||||||||||||||
International | 40 | 46 | 40 | 73 | 41 | 56 | 48 | 93 | 199 | 238 | ||||||||||||||||||||||||||||||
Total | $ | 544 | $ | 598 | $ | 611 | $ | 606 | $ | 574 | $ | 653 | $ | 644 | $ | 657 | $ | 2,359 | $ | 2,528 | ||||||||||||||||||||
Net written premiums by product line | ||||||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||
Fidelity & surety | $ | 225 | $ | 260 | $ | 264 | $ | 244 | $ | 241 | $ | 285 | $ | 273 | $ | 250 | $ | 993 | $ | 1,049 | ||||||||||||||||||||
General liability | 234 | 249 | 247 | 247 | 244 | 264 | 261 | 268 | 977 | 1,037 | ||||||||||||||||||||||||||||||
Other | 45 | 43 | 60 | 42 | 48 | 48 | 62 | 46 | 190 | 204 | ||||||||||||||||||||||||||||||
Total Domestic | 504 | 552 | 571 | 533 | 533 | 597 | 596 | 564 | 2,160 | 2,290 | ||||||||||||||||||||||||||||||
International | 40 | 46 | 40 | 73 | 41 | 56 | 48 | 93 | 199 | 238 | ||||||||||||||||||||||||||||||
Total | $ | 544 | $ | 598 | $ | 611 | $ | 606 | $ | 574 | $ | 653 | $ | 644 | $ | 657 | $ | 2,359 | $ | 2,528 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Premiums | $ | 2,199 | $ | 2,272 | $ | 2,356 | $ | 2,403 | $ | 2,387 | $ | 2,453 | $ | 2,522 | $ | 2,555 | $ | 9,230 | $ | 9,917 | ||||||||||||||||||||
Net investment income | 96 | 95 | 94 | 98 | 99 | 98 | 107 | 104 | 383 | 408 | ||||||||||||||||||||||||||||||
Fee income | 4 | 4 | 5 | 4 | 4 | 5 | 6 | 5 | 17 | 20 | ||||||||||||||||||||||||||||||
Other revenues | 16 | 15 | 14 | 15 | 17 | 14 | 17 | 18 | 60 | 66 | ||||||||||||||||||||||||||||||
Total revenues | 2,315 | 2,386 | 2,469 | 2,520 | 2,507 | 2,570 | 2,652 | 2,682 | 9,690 | 10,411 | ||||||||||||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||||||
Claims and claim adjustment expenses | 1,602 | 1,745 | 1,723 | 1,977 | 1,688 | 1,903 | 1,797 | 1,960 | 7,047 | 7,348 | ||||||||||||||||||||||||||||||
Amortization of deferred acquisition costs | 346 | 357 | 369 | 376 | 374 | 380 | 390 | 395 | 1,448 | 1,539 | ||||||||||||||||||||||||||||||
General and administrative expenses | 265 | 285 | 280 | 281 | 288 | 316 | 290 | 291 | 1,111 | 1,185 | ||||||||||||||||||||||||||||||
Total claims and expenses | 2,213 | 2,387 | 2,372 | 2,634 | 2,350 | 2,599 | 2,477 | 2,646 | 9,606 | 10,072 | ||||||||||||||||||||||||||||||
Segment income (loss) before income taxes | 102 | (1 | ) | 97 | (114 | ) | 157 | (29 | ) | 175 | 36 | 84 | 339 | |||||||||||||||||||||||||||
Income tax expense (benefit) | 13 | (13 | ) | 20 | (64 | ) | 28 | (12 | ) | 22 | 4 | (44 | ) | 42 | ||||||||||||||||||||||||||
Segment income (loss) | $ | 89 | $ | 12 | $ | 77 | $ | (50 | ) | $ | 129 | $ | (17 | ) | $ | 153 | $ | 32 | $ | 128 | $ | 297 | ||||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||||||
Effective tax rate on net investment income | 22.3 | % | 22.5 | % | 22.7 | % | 22.9 | % | 15.6 | % | 15.6 | % | 16.1 | % | 15.7 | % | 22.6 | % | 15.8 | % | ||||||||||||||||||||
Net investment income (after-tax) | $ | 75 | $ | 74 | $ | 72 | $ | 76 | $ | 83 | $ | 83 | $ | 90 | $ | 88 | $ | 297 | $ | 344 | ||||||||||||||||||||
Catastrophes, net of reinsurance: | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 214 | $ | 218 | $ | 205 | $ | 448 | $ | 216 | $ | 315 | $ | 124 | $ | 406 | $ | 1,085 | $ | 1,061 | ||||||||||||||||||||
After-tax | $ | 140 | $ | 141 | $ | 133 | $ | 291 | $ | 170 | $ | 248 | $ | 99 | $ | 320 | $ | 705 | $ | 837 | ||||||||||||||||||||
Prior year reserve development - favorable (unfavorable): | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 6 | $ | — | $ | — | $ | 7 | $ | 49 | $ | 13 | $ | 17 | $ | 30 | $ | 13 | $ | 109 | ||||||||||||||||||||
After-tax | $ | 4 | $ | — | $ | — | $ | 6 | $ | 39 | $ | 10 | $ | 13 | $ | 24 | $ | 10 | $ | 86 | ||||||||||||||||||||
($ in millions, net of tax) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Underwriting gain (loss) | $ | 3 | $ | (71 | ) | $ | (5 | ) | $ | (136 | ) | $ | 33 | $ | (111 | ) | $ | 49 | $ | (69 | ) | $ | (209 | ) | $ | (98 | ) | |||||||||||||
Net investment income | 75 | 74 | 72 | 76 | 83 | 83 | 90 | 88 | 297 | 344 | ||||||||||||||||||||||||||||||
Other income | 11 | 9 | 10 | 10 | 13 | 11 | 14 | 13 | 40 | 51 | ||||||||||||||||||||||||||||||
Segment income (loss) | $ | 89 | $ | 12 | $ | 77 | $ | (50 | ) | $ | 129 | $ | (17 | ) | $ | 153 | $ | 32 | $ | 128 | $ | 297 | ||||||||||||||||||
Combined ratio (1) | ||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 72.9 | % | 76.8 | % | 73.1 | % | 82.2 | % | 70.7 | % | 77.6 | % | 71.2 | % | 76.8 | % | 76.3 | % | 74.1 | % | ||||||||||||||||||||
Underwriting expense ratio | 26.7 | % | 27.3 | % | 26.6 | % | 26.5 | % | 26.8 | % | 27.3 | % | 26.0 | % | 25.8 | % | 26.8 | % | 26.5 | % | ||||||||||||||||||||
Combined ratio | 99.6 | % | 104.1 | % | 99.7 | % | 108.7 | % | 97.5 | % | 104.9 | % | 97.2 | % | 102.6 | % | 103.1 | % | 100.6 | % | ||||||||||||||||||||
Domestic Agency combined ratio | 99.0 | % | 103.5 | % | 98.7 | % | 108.7 | % | 96.5 | % | 103.6 | % | 95.4 | % | 101.9 | % | 102.6 | % | 99.4 | % | ||||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||||||
Net (favorable) unfavorable prior year reserve development | (0.3 | )% | — | % | — | % | (0.3 | )% | (2.0 | )% | (0.5 | )% | (0.6 | )% | (1.1 | )% | (0.1 | )% | (1.1 | )% | ||||||||||||||||||||
Catastrophes, net of reinsurance | 9.8 | % | 9.6 | % | 8.7 | % | 18.6 | % | 9.0 | % | 12.8 | % | 4.9 | % | 15.9 | % | 11.7 | % | 10.7 | % | ||||||||||||||||||||
Underlying combined ratio | 90.1 | % | 94.5 | % | 91.0 | % | 90.4 | % | 90.5 | % | 92.6 | % | 92.9 | % | 87.8 | % | 91.5 | % | 91.0 | % | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Billing and policy fees and other | $ | 19 | $ | 18 | $ | 18 | $ | 17 | $ | 19 | $ | 18 | $ | 21 | $ | 20 | $ | 72 | $ | 78 | ||||||||||||||||||||
Fee income | $ | 4 | $ | 4 | $ | 5 | $ | 4 | $ | 4 | $ | 5 | $ | 6 | $ | 5 | $ | 17 | $ | 20 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 2,146 | $ | 2,513 | $ | 2,644 | $ | 2,392 | $ | 2,309 | $ | 2,717 | $ | 2,797 | $ | 2,509 | $ | 9,695 | $ | 10,332 | ||||||||||||||||||||
Net written premiums | $ | 2,096 | $ | 2,498 | $ | 2,615 | $ | 2,381 | $ | 2,256 | $ | 2,697 | $ | 2,770 | $ | 2,501 | $ | 9,590 | $ | 10,224 | ||||||||||||||||||||
Net earned premiums | $ | 2,199 | $ | 2,272 | $ | 2,356 | $ | 2,403 | $ | 2,387 | $ | 2,453 | $ | 2,522 | $ | 2,555 | $ | 9,230 | $ | 9,917 | ||||||||||||||||||||
Losses and loss adjustment expenses | 1,602 | 1,745 | 1,723 | 1,977 | 1,688 | 1,904 | 1,796 | 1,960 | 7,047 | 7,348 | ||||||||||||||||||||||||||||||
Underwriting expenses | 587 | 668 | 681 | 640 | 627 | 717 | 706 | 661 | 2,576 | 2,711 | ||||||||||||||||||||||||||||||
Statutory underwriting gain (loss) | $ | 10 | $ | (141 | ) | $ | (48 | ) | $ | (214 | ) | $ | 72 | $ | (168 | ) | $ | 20 | $ | (66 | ) | $ | (393 | ) | $ | (142 | ) | |||||||||||||
Policies in force (in thousands) | ||||||||||||||||||||||||||||||||||||||||
Automobile | 2,929 | 2,962 | 2,979 | 2,983 | 2,976 | 2,981 | 2,986 | 2,983 | 2,983 | 2,983 | ||||||||||||||||||||||||||||||
Homeowners and Other | 4,639 | 4,702 | 4,773 | 4,826 | 4,879 | 4,961 | 5,037 | 5,087 | 4,826 | 5,087 | ||||||||||||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Net written premiums by market | ||||||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||
Agency | ||||||||||||||||||||||||||||||||||||||||
Automobile | $ | 1,087 | $ | 1,159 | $ | 1,228 | $ | 1,172 | $ | 1,183 | $ | 1,258 | $ | 1,305 | $ | 1,226 | $ | 4,646 | $ | 4,972 | ||||||||||||||||||||
Homeowners and Other | 794 | 1,077 | 1,107 | 955 | 832 | 1,137 | 1,168 | 1,011 | 3,933 | 4,148 | ||||||||||||||||||||||||||||||
Total Agency | 1,881 | 2,236 | 2,335 | 2,127 | 2,015 | 2,395 | 2,473 | 2,237 | 8,579 | 9,120 | ||||||||||||||||||||||||||||||
Direct-to-Consumer | 83 | 88 | 100 | 90 | 92 | 99 | 108 | 97 | 361 | 396 | ||||||||||||||||||||||||||||||
Total Domestic | 1,964 | 2,324 | 2,435 | 2,217 | 2,107 | 2,494 | 2,581 | 2,334 | 8,940 | 9,516 | ||||||||||||||||||||||||||||||
International | 132 | 174 | 180 | 164 | 149 | 203 | 189 | 167 | 650 | 708 | ||||||||||||||||||||||||||||||
Total | $ | 2,096 | $ | 2,498 | $ | 2,615 | $ | 2,381 | $ | 2,256 | $ | 2,697 | $ | 2,770 | $ | 2,501 | $ | 9,590 | $ | 10,224 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 1,094 | $ | 1,164 | $ | 1,234 | $ | 1,179 | $ | 1,192 | $ | 1,265 | $ | 1,310 | $ | 1,231 | $ | 4,671 | $ | 4,998 | ||||||||||||||||||||
Net written premiums | $ | 1,087 | $ | 1,159 | $ | 1,228 | $ | 1,172 | $ | 1,183 | $ | 1,258 | $ | 1,305 | $ | 1,226 | $ | 4,646 | $ | 4,972 | ||||||||||||||||||||
Net earned premiums | $ | 1,035 | $ | 1,083 | $ | 1,128 | $ | 1,158 | $ | 1,158 | $ | 1,192 | $ | 1,227 | $ | 1,242 | $ | 4,404 | $ | 4,819 | ||||||||||||||||||||
Losses and loss adjustment expenses | 800 | 890 | 936 | 920 | 823 | 851 | 840 | 900 | 3,546 | 3,414 | ||||||||||||||||||||||||||||||
Underwriting expenses | 260 | 278 | 279 | 281 | 285 | 299 | 297 | 288 | 1,098 | 1,169 | ||||||||||||||||||||||||||||||
Statutory underwriting gain (loss) | $ | (25 | ) | $ | (85 | ) | $ | (87 | ) | $ | (43 | ) | $ | 50 | $ | 42 | $ | 90 | $ | 54 | $ | (240 | ) | $ | 236 | |||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||||||
Combined ratio (2): | ||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 77.3 | % | 82.2 | % | 83.0 | % | 79.4 | % | 71.1 | % | 71.4 | % | 68.5 | % | 72.5 | % | 80.6 | % | 70.8 | % | ||||||||||||||||||||
Underwriting expense ratio | 23.8 | % | 24.2 | % | 23.0 | % | 23.6 | % | 23.7 | % | 24.0 | % | 22.8 | % | 22.8 | % | 23.6 | % | 23.4 | % | ||||||||||||||||||||
Combined ratio | 101.1 | % | 106.4 | % | 106.0 | % | 103.0 | % | 94.8 | % | 95.4 | % | 91.3 | % | 95.3 | % | 104.2 | % | 94.2 | % | ||||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||||||
Net (favorable) unfavorable prior year reserve development | — | % | — | % | — | % | — | % | (2.3 | )% | (2.8 | )% | (1.8 | )% | (1.9 | )% | — | % | (2.2 | )% | ||||||||||||||||||||
Catastrophes, net of reinsurance | 2.5 | % | 4.0 | % | 7.2 | % | (1.1 | )% | 0.8 | % | 2.7 | % | 0.5 | % | 0.3 | % | 3.2 | % | 1.1 | % | ||||||||||||||||||||
Underlying combined ratio | 98.6 | % | 102.4 | % | 98.8 | % | 104.1 | % | 96.3 | % | 95.5 | % | 92.6 | % | 96.9 | % | 101.0 | % | 95.3 | % | ||||||||||||||||||||
Catastrophe losses, net of reinsurance: | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 26 | $ | 43 | $ | 80 | $ | (12 | ) | $ | 10 | $ | 32 | $ | 6 | $ | 4 | $ | 137 | $ | 52 | |||||||||||||||||||
After-tax | $ | 17 | $ | 28 | $ | 52 | $ | (8 | ) | $ | 8 | $ | 25 | $ | 5 | $ | 3 | $ | 89 | $ | 41 | |||||||||||||||||||
Prior year reserve development - favorable (unfavorable): | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | — | $ | — | $ | — | $ | — | $ | 27 | $ | 34 | $ | 22 | $ | 24 | $ | — | $ | 107 | ||||||||||||||||||||
After-tax | $ | — | $ | — | $ | — | $ | — | $ | 21 | $ | 27 | $ | 18 | $ | 19 | $ | — | $ | 85 | ||||||||||||||||||||
Policies in force (in thousands) | 2,482 | 2,514 | 2,528 | 2,529 | 2,519 | 2,517 | 2,518 | 2,518 | ||||||||||||||||||||||||||||||||
Change from prior year quarter | 12.2 | % | 10.5 | % | 7.6 | % | 4.2 | % | 1.5 | % | 0.1 | % | (0.4 | )% | (0.4 | )% | ||||||||||||||||||||||||
Change from prior quarter | 2.2 | % | 1.3 | % | 0.6 | % | — | % | (0.4 | )% | (0.1 | )% | — | % | — | % | ||||||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Billing and policy fees and other | $ | 10 | $ | 10 | $ | 10 | $ | 9 | $ | 10 | $ | 10 | $ | 11 | $ | 11 | $ | 39 | $ | 42 | ||||||||||||||||||||
Fee income | $ | 2 | $ | 3 | $ | 2 | $ | 3 | $ | 3 | $ | 3 | $ | 3 | $ | 3 | $ | 10 | $ | 12 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 835 | $ | 1,085 | $ | 1,123 | $ | 957 | $ | 873 | $ | 1,148 | $ | 1,180 | $ | 1,012 | $ | 4,000 | $ | 4,213 | ||||||||||||||||||||
Net written premiums | $ | 794 | $ | 1,077 | $ | 1,107 | $ | 955 | $ | 832 | $ | 1,137 | $ | 1,168 | $ | 1,011 | $ | 3,933 | $ | 4,148 | ||||||||||||||||||||
Net earned premiums | $ | 934 | $ | 955 | $ | 976 | $ | 987 | $ | 972 | $ | 996 | $ | 1,025 | $ | 1,038 | $ | 3,852 | $ | 4,031 | ||||||||||||||||||||
Losses and loss adjustment expenses | 646 | 686 | 605 | 865 | 687 | 841 | 746 | 857 | 2,802 | 3,131 | ||||||||||||||||||||||||||||||
Underwriting expenses | 243 | 299 | 305 | 270 | 255 | 320 | 313 | 281 | 1,117 | 1,169 | ||||||||||||||||||||||||||||||
Statutory underwriting gain (loss) | $ | 45 | $ | (30 | ) | $ | 66 | $ | (148 | ) | $ | 30 | $ | (165 | ) | $ | (34 | ) | $ | (100 | ) | $ | (67 | ) | $ | (269 | ) | |||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||||||
Combined ratio (2): | ||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 69.1 | % | 71.9 | % | 62.1 | % | 87.6 | % | 70.7 | % | 84.4 | % | 72.8 | % | 82.6 | % | 72.7 | % | 77.7 | % | ||||||||||||||||||||
Underwriting expense ratio | 27.6 | % | 28.4 | % | 28.2 | % | 27.7 | % | 27.8 | % | 29.2 | % | 27.5 | % | 27.2 | % | 28.0 | % | 27.9 | % | ||||||||||||||||||||
Combined ratio | 96.7 | % | 100.3 | % | 90.3 | % | 115.3 | % | 98.5 | % | 113.6 | % | 100.3 | % | 109.8 | % | 100.7 | % | 105.6 | % | ||||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||||||
Net (favorable) unfavorable prior year reserve development | — | % | — | % | — | % | — | % | (2.4 | )% | 2.2 | % | 0.7 | % | (0.6 | )% | — | % | — | % | ||||||||||||||||||||
Catastrophes, net of reinsurance | 19.1 | % | 17.5 | % | 12.2 | % | 45.1 | % | 20.7 | % | 26.2 | % | 11.1 | % | 37.9 | % | 23.6 | % | 24.0 | % | ||||||||||||||||||||
Underlying combined ratio | 77.6 | % | 82.8 | % | 78.1 | % | 70.2 | % | 80.2 | % | 85.2 | % | 88.5 | % | 72.5 | % | 77.1 | % | 81.6 | % | ||||||||||||||||||||
Catastrophe losses, net of reinsurance: | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 178 | $ | 168 | $ | 119 | $ | 444 | $ | 201 | $ | 262 | $ | 114 | $ | 394 | $ | 909 | $ | 971 | ||||||||||||||||||||
After-tax | $ | 116 | $ | 109 | $ | 77 | $ | 289 | $ | 159 | $ | 207 | $ | 90 | $ | 311 | $ | 591 | $ | 767 | ||||||||||||||||||||
Prior year reserve development - favorable (unfavorable): | ||||||||||||||||||||||||||||||||||||||||
Pre-tax | $ | — | $ | — | $ | — | $ | — | $ | 24 | $ | (22 | ) | $ | (7 | ) | $ | 6 | $ | — | $ | 1 | ||||||||||||||||||
After-tax | $ | — | $ | — | $ | — | $ | — | $ | 19 | $ | (17 | ) | $ | (6 | ) | $ | 5 | $ | — | $ | 1 | ||||||||||||||||||
Policies in force (in thousands) | 4,222 | 4,283 | 4,352 | 4,402 | 4,453 | 4,530 | 4,601 | 4,652 | ||||||||||||||||||||||||||||||||
Change from prior year quarter | 3.8 | % | 4.0 | % | 5.0 | % | 5.5 | % | 5.5 | % | 5.8 | % | 5.7 | % | 5.7 | % | ||||||||||||||||||||||||
Change from prior quarter | 1.1 | % | 1.4 | % | 1.6 | % | 1.1 | % | 1.2 | % | 1.7 | % | 1.6 | % | 1.1% | |||||||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Billing and policy fees and other | $ | 7 | $ | 6 | $ | 6 | $ | 6 | $ | 6 | $ | 7 | $ | 7 | $ | 7 | $ | 25 | $ | 27 | ||||||||||||||||||||
Fee income | $ | 2 | $ | 2 | $ | 2 | $ | 1 | $ | 2 | $ | 2 | $ | 2 | $ | 2 | $ | 7 | $ | 8 | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Other revenues | $ | 1 | $ | 3 | $ | 2 | $ | — | $ | — | $ | — | $ | 2 | $ | — | $ | 6 | $ | 2 | ||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||||||
Interest expense | 89 | 92 | 95 | 93 | 89 | 90 | 86 | 87 | 369 | 352 | ||||||||||||||||||||||||||||||
General and administrative expenses | 8 | 8 | 7 | 9 | 9 | 7 | 8 | 6 | 32 | 30 | ||||||||||||||||||||||||||||||
Total claims and expenses | 97 | 100 | 102 | 102 | 98 | 97 | 94 | 93 | 401 | 382 | ||||||||||||||||||||||||||||||
Loss before income tax benefit | (96 | ) | (97 | ) | (100 | ) | (102 | ) | (98 | ) | (97 | ) | (92 | ) | (93 | ) | (395 | ) | (380 | ) | ||||||||||||||||||||
Income tax benefit | (34 | ) | (36 | ) | (35 | ) | (36 | ) | (22 | ) | (19 | ) | (20 | ) | (21 | ) | (141 | ) | (82 | ) | ||||||||||||||||||||
Loss | $ | (62 | ) | $ | (61 | ) | $ | (65 | ) | $ | (66 | ) | $ | (76 | ) | $ | (78 | ) | $ | (72 | ) | $ | (72 | ) | $ | (254 | ) | $ | (298 | ) | ||||||||||
($ in millions) | December 31, 2018 (1) | December 31, 2017 | ||||||
Assets | ||||||||
Fixed maturities, available for sale, at fair value (amortized cost $63,601 and $61,316) | $ | 63,464 | $ | 62,694 | ||||
Equity securities, at fair value (cost $382 and $440) | 368 | 453 | ||||||
Real estate investments | 904 | 932 | ||||||
Short-term securities | 3,985 | 4,895 | ||||||
Other investments | 3,557 | 3,528 | ||||||
Total investments | 72,278 | 72,502 | ||||||
Cash | 373 | 344 | ||||||
Investment income accrued | 624 | 606 | ||||||
Premiums receivable | 7,506 | 7,144 | ||||||
Reinsurance recoverables | 8,370 | 8,309 | ||||||
Ceded unearned premiums | 578 | 551 | ||||||
Deferred acquisition costs | 2,120 | 2,025 | ||||||
Deferred taxes | 445 | 70 | ||||||
Contractholder receivables | 4,785 | 4,775 | ||||||
Goodwill | 3,937 | 3,951 | ||||||
Other intangible assets | 345 | 342 | ||||||
Other assets | 2,872 | 2,864 | ||||||
Total assets | $ | 104,233 | $ | 103,483 | ||||
Liabilities | ||||||||
Claims and claim adjustment expense reserves | $ | 50,668 | $ | 49,650 | ||||
Unearned premium reserves | 13,555 | 12,915 | ||||||
Contractholder payables | 4,785 | 4,775 | ||||||
Payables for reinsurance premiums | 289 | 274 | ||||||
Debt | 6,564 | 6,571 | ||||||
Other liabilities | 5,478 | 5,567 | ||||||
Total liabilities | 81,339 | 79,752 | ||||||
Shareholders’ equity | ||||||||
Common stock (1,750.0 shares authorized; 263.7 and 271.5 shares issued, 263.6 and 271.4 shares outstanding) | 23,144 | 22,886 | ||||||
Retained earnings | 35,204 | 33,462 | ||||||
Accumulated other comprehensive loss | (1,859 | ) | (343 | ) | ||||
Treasury stock, at cost (510.9 and 500.9 shares) | (33,595 | ) | (32,274 | ) | ||||
Total shareholders’ equity | 22,894 | 23,731 | ||||||
Total liabilities and shareholders’ equity | $ | 104,233 | $ | 103,483 | ||||
(at carrying value, $ in millions) | December 31, 2018 | Pre-tax Book Yield (1) | December 31, 2017 | Pre-tax Book Yield (1) | ||||||||||
Investment portfolio | ||||||||||||||
Taxable fixed maturities (including redeemable preferred stock) | $ | 35,150 | 3.23 | % | $ | 32,089 | 3.09 | % | ||||||
Tax-exempt fixed maturities | 28,314 | 3.18 | % | 30,605 | 3.12 | % | ||||||||
Total fixed maturities | 63,464 | 3.21 | % | 62,694 | 3.10 | % | ||||||||
Non-redeemable preferred stocks | 52 | 4.86 | % | 114 | 5.34 | % | ||||||||
Public common stocks | 316 | 339 | ||||||||||||
Total equity securities | 368 | 453 | ||||||||||||
Real estate investments | 904 | 932 | ||||||||||||
Short-term securities | 3,985 | 2.54 | % | 4,895 | 1.39 | % | ||||||||
Private equities | 2,293 | 2,145 | ||||||||||||
Hedge funds | 222 | 303 | ||||||||||||
Real estate partnerships | 675 | 661 | ||||||||||||
Other investments | 367 | 419 | ||||||||||||
Total other investments | 3,557 | 3,528 | ||||||||||||
Total investments | $ | 72,278 | $ | 72,502 | ||||||||||
Net unrealized investment gains (losses), net of tax, included in accumulated other comprehensive loss | $ | (113 | ) | $ | 954 | |||||||||
Tax effect of TCJA (2) | — | 158 | ||||||||||||
Net unrealized investment gains (losses), net of tax, included in shareholders’ equity | $ | (113 | ) | $ | 1,112 | |||||||||
(at carrying value, $ in millions) | December 31, 2018 | December 31, 2017 | |||||||
Fixed maturities | |||||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | $ | 2,064 | $ | 2,076 | |||||
Obligations of states and political subdivisions: | |||||||||
Pre-refunded | 2,852 | 3,899 | |||||||
All other | 25,759 | 27,016 | |||||||
Total | 28,611 | 30,915 | |||||||
Debt securities issued by foreign governments | 1,257 | 1,509 | |||||||
Mortgage-backed securities - principally obligations of U.S. Government agencies | 2,573 | 2,410 | |||||||
Corporates (including redeemable preferreds) | 28,959 | 25,784 | |||||||
Total fixed maturities | $ | 63,464 | $ | 62,694 | |||||
December 31, 2018 | December 31, 2017 | |||||||||||||
Amount | % of Total | Amount | % of Total | |||||||||||
Quality Ratings | ||||||||||||||
Aaa | $ | 26,089 | 41.1 | % | $ | 26,682 | 42.6 | % | ||||||
Aa | 16,027 | 25.3 | 16,828 | 26.8 | ||||||||||
A | 10,539 | 16.6 | 9,786 | 15.6 | ||||||||||
Baa | 9,334 | 14.7 | 7,731 | 12.3 | ||||||||||
Total investment grade | 61,989 | 97.7 | 61,027 | 97.3 | ||||||||||
Ba | 912 | 1.4 | 990 | 1.6 | ||||||||||
B | 466 | 0.7 | 477 | 0.8 | ||||||||||
Caa and lower | 97 | 0.2 | 200 | 0.3 | ||||||||||
Total below investment grade | 1,475 | 2.3 | 1,667 | 2.7 | ||||||||||
Total fixed maturities | $ | 63,464 | 100.0 | % | $ | 62,694 | 100.0 | % | ||||||
Average weighted quality | Aa2, AA | Aa2, AA | ||||||||||||
Weighted average duration of fixed maturities and short-term securities, net of securities lending activities and net receivables and payables on investment sales and purchases | 4.5 | 4.0 | ||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Gross investment income | ||||||||||||||||||||||||||||||||||||||||
Fixed maturities | $ | 477 | $ | 471 | $ | 469 | $ | 478 | $ | 481 | $ | 489 | $ | 498 | $ | 512 | $ | 1,895 | $ | 1,980 | ||||||||||||||||||||
Short-term securities | 11 | 13 | 19 | 19 | 19 | 21 | 25 | 27 | 62 | 92 | ||||||||||||||||||||||||||||||
Other | 131 | 124 | 108 | 115 | 113 | 94 | 134 | 100 | 478 | 441 | ||||||||||||||||||||||||||||||
619 | 608 | 596 | 612 | 613 | 604 | 657 | 639 | 2,435 | 2,513 | |||||||||||||||||||||||||||||||
Investment expenses | 9 | 10 | 8 | 11 | 10 | 9 | 11 | 9 | 38 | 39 | ||||||||||||||||||||||||||||||
Net investment income, pre-tax | 610 | 598 | 588 | 601 | 603 | 595 | 646 | 630 | 2,397 | 2,474 | ||||||||||||||||||||||||||||||
Income taxes | 130 | 130 | 131 | 134 | 90 | 88 | 99 | 95 | 525 | 372 | ||||||||||||||||||||||||||||||
Net investment income, after-tax | $ | 480 | $ | 468 | $ | 457 | $ | 467 | $ | 513 | $ | 507 | $ | 547 | $ | 535 | $ | 1,872 | $ | 2,102 | ||||||||||||||||||||
Effective tax rate | 21.3 | % | 21.9 | % | 22.1 | % | 22.4 | % | 14.9 | % | 14.8 | % | 15.4% | 15.0% | 21.9 | % | 15.0% | |||||||||||||||||||||||
Average invested assets (1) | $70,865 | $71,385 | $72,363 | $72,781 | $72,524 | $72,618 | $73,059 | $73,758 | $71,867 | $73,031 | ||||||||||||||||||||||||||||||
Average yield pre-tax (1) | 3.4 | % | 3.4 | % | 3.2 | % | 3.3 | % | 3.3 | % | 3.3 | % | 3.5 | % | 3.4 | % | 3.3 | % | 3.4 | % | ||||||||||||||||||||
Average yield after-tax | 2.7 | % | 2.6 | % | 2.5 | % | 2.6 | % | 2.8 | % | 2.8 | % | 3.0 | % | 2.9 | % | 2.6 | % | 2.9 | % | ||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Net realized investment gains (losses) | ||||||||||||||||||||||||||||||||||||||||
Fixed maturities | $ | 4 | $ | 5 | $ | 9 | $ | (18 | ) | $ | — | $ | 12 | $ | 18 | $ | 2 | $ | — | $ | 32 | |||||||||||||||||||
Equity securities (1) | 5 | 79 | 54 | 89 | (14 | ) | 12 | 6 | (37 | ) | 227 | (33 | ) | |||||||||||||||||||||||||||
Other (2) | (4 | ) | (4 | ) | (2 | ) | (1 | ) | 3 | 12 | 5 | 95 | (11 | ) | 115 | |||||||||||||||||||||||||
Realized investment gains (losses) before tax | 5 | 80 | 61 | 70 | (11 | ) | 36 | 29 | 60 | 216 | 114 | |||||||||||||||||||||||||||||
Related taxes | 2 | 28 | 21 | 23 | (2 | ) | 6 | 7 | 10 | 74 | 21 | |||||||||||||||||||||||||||||
Net realized investment gains (losses) | $ | 3 | $ | 52 | $ | 40 | $ | 47 | $ | (9 | ) | $ | 30 | $ | 22 | $ | 50 | $ | 142 | $ | 93 | |||||||||||||||||||
Gross investment gains (2) | $ | 47 | $ | 122 | $ | 101 | $ | 131 | $ | 26 | $ | 63 | $ | 41 | $ | 105 | $ | 401 | $ | 235 | ||||||||||||||||||||
Gross investment losses before impairments (2) | (40 | ) | (37 | ) | (35 | ) | (59 | ) | (37 | ) | (26 | ) | (12 | ) | (45 | ) | (171 | ) | (120 | ) | ||||||||||||||||||||
Net investment gains (losses) before impairments | 7 | 85 | 66 | 72 | (11 | ) | 37 | 29 | 60 | 230 | 115 | |||||||||||||||||||||||||||||
Other-than-temporary impairment losses | (2 | ) | (5 | ) | (5 | ) | (2 | ) | — | (1 | ) | — | — | (14 | ) | (1 | ) | |||||||||||||||||||||||
Net realized investment gains (losses) before tax | 5 | 80 | 61 | 70 | (11 | ) | 36 | 29 | 60 | 216 | 114 | |||||||||||||||||||||||||||||
Related taxes | 2 | 28 | 21 | 23 | (2 | ) | 6 | 7 | 10 | 74 | 21 | |||||||||||||||||||||||||||||
Net realized investment gains (losses) | $ | 3 | $ | 52 | $ | 40 | $ | 47 | $ | (9 | ) | $ | 30 | $ | 22 | $ | 50 | $ | 142 | $ | 93 | |||||||||||||||||||
($ in millions) | March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | ||||||||||||||||||||||||||||||||
Net unrealized investment gains (losses), net of tax, included in shareholders’ equity, by asset type | ||||||||||||||||||||||||||||||||||||||||
Fixed maturities | $ | 999 | $ | 1,425 | $ | 1,430 | $ | 1,378 | $ | 173 | $ | (138 | ) | $ | (561 | ) | $ | (137 | ) | |||||||||||||||||||||
Equity securities & other | 256 | 160 | 115 | 36 | 2 | 3 | 1 | — | ||||||||||||||||||||||||||||||||
Unrealized investment gains (losses) before tax | 1,255 | 1,585 | 1,545 | 1,414 | 175 | (135 | ) | (560 | ) | (137 | ) | |||||||||||||||||||||||||||||
Related taxes (3) | 432 | 550 | 539 | 302 | 42 | (23 | ) | (113 | ) | (24 | ) | |||||||||||||||||||||||||||||
Balance, end of period | $ | 823 | $ | 1,035 | $ | 1,006 | $ | 1,112 | $ | 133 | $ | (112 | ) | $ | (447 | ) | $ | (113 | ) | |||||||||||||||||||||
(1) In accordance with new accounting guidance effective for the quarter ending March 31, 2018, changes in fair value of equity investments, except those accounted for under the equity method of accounting, are recognized in net income. | ||||||||||||||||||||||||||||||||||||||||
(2) Includes the following gross investment gains and gross investment losses related to U.S. Treasury futures, which are settled daily: | ||||||||||||||||||||||||||||||||||||||||
Gross investment Treasury future gains | $ | 31 | $ | 26 | $ | 30 | $ | 25 | $ | 25 | $ | 11 | $ | 7 | $ | — | $ | 112 | $ | 43 | ||||||||||||||||||||
Gross investment Treasury future losses | $ | 34 | $ | 31 | $ | 30 | $ | 21 | $ | 14 | $ | 8 | $ | 5 | $ | — | $ | 116 | $ | 27 |
($ in millions) | December 31, 2018 | December 31, 2017 | ||||||
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses | $ | 3,485 | $ | 3,303 | ||||
Allowance for uncollectible reinsurance | (110 | ) | (111 | ) | ||||
Net reinsurance recoverables (i) | 3,375 | 3,192 | ||||||
Mandatory pools and associations (ii) | 2,005 | 2,011 | ||||||
Structured settlements (iii) | 2,990 | 3,106 | ||||||
Total reinsurance recoverables | $ | 8,370 | $ | 8,309 | ||||
Reinsurer | A.M. Best Rating of Group's Predominant Reinsurer | December 31, 2018 | ||||
Swiss Re Group | A+ second highest of 16 ratings | $ | 473 | |||
Munich Re Group | A+ second highest of 16 ratings | 305 | ||||
Berkshire Hathaway | A++ highest of 16 ratings | 278 | ||||
Axa Group (1) | A+ second highest of 16 ratings | 188 | ||||
Sompo Japan Nipponkoa Group | A+ second highest of 16 ratings | 129 | ||||
Group | A.M. Best Rating of Group's Predominant Insurer | December 31, 2018 | ||||
Fidelity & Guaranty Life Group (2) | A- fourth highest of 16 ratings | $ | 809 | |||
Genworth Financial Group (3) | B+ sixth highest of 16 ratings | 356 | ||||
John Hancock Group | A+ second highest of 16 ratings | 273 | ||||
Brighthouse Financial, Inc. | A third highest of 16 ratings | 266 | ||||
Symetra Financial Corporation | A third highest of 16 ratings | 251 | ||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Statutory Reserves for Losses and Loss Adjustment Expenses | ||||||||||||||||||||||||||||||||||||||||
Business Insurance | ||||||||||||||||||||||||||||||||||||||||
Beginning of period | $ | 32,407 | $ | 32,621 | $ | 32,789 | $ | 33,501 | $ | 33,107 | $ | 33,292 | $ | 33,369 | $ | 33,773 | $ | 32,407 | $ | 33,107 | ||||||||||||||||||||
Incurred | 2,215 | 2,254 | 2,795 | 2,053 | 2,344 | 2,429 | 2,606 | 2,586 | 9,317 | 9,965 | ||||||||||||||||||||||||||||||
Paid | (2,019 | ) | (2,132 | ) | (2,132 | ) | (2,451 | ) | (2,163 | ) | (2,298 | ) | (2,207 | ) | (2,454 | ) | (8,734 | ) | (9,122 | ) | ||||||||||||||||||||
Foreign exchange and other | 18 | 46 | 49 | 4 | 4 | (54 | ) | 5 | (48 | ) | 117 | (93 | ) | |||||||||||||||||||||||||||
End of period | $ | 32,621 | $ | 32,789 | $ | 33,501 | $ | 33,107 | $ | 33,292 | $ | 33,369 | $ | 33,773 | $ | 33,857 | $ | 33,107 | $ | 33,857 | ||||||||||||||||||||
Bond & Specialty Insurance | ||||||||||||||||||||||||||||||||||||||||
Beginning of period | $ | 3,150 | $ | 3,132 | $ | 3,122 | $ | 3,144 | $ | 3,187 | $ | 3,207 | $ | 3,111 | $ | 3,057 | $ | 3,150 | $ | 3,187 | ||||||||||||||||||||
Incurred | 226 | 170 | 233 | 261 | 213 | 173 | 204 | 173 | 890 | 763 | ||||||||||||||||||||||||||||||
Paid | (249 | ) | (193 | ) | (224 | ) | (221 | ) | (201 | ) | (248 | ) | (258 | ) | (230 | ) | (887 | ) | (937 | ) | ||||||||||||||||||||
Foreign exchange and other | 5 | 13 | 13 | 3 | 8 | (21 | ) | — | (13 | ) | 34 | (26 | ) | |||||||||||||||||||||||||||
End of period | $ | 3,132 | $ | 3,122 | $ | 3,144 | $ | 3,187 | $ | 3,207 | $ | 3,111 | $ | 3,057 | $ | 2,987 | $ | 3,187 | $ | 2,987 | ||||||||||||||||||||
Personal Insurance | ||||||||||||||||||||||||||||||||||||||||
Beginning of period | $ | 4,347 | $ | 4,560 | $ | 4,719 | $ | 4,900 | $ | 5,160 | $ | 5,170 | $ | 5,381 | $ | 5,463 | $ | 4,347 | $ | 5,160 | ||||||||||||||||||||
Incurred | 1,602 | 1,745 | 1,723 | 1,977 | 1,688 | 1,904 | 1,796 | 1,960 | 7,047 | 7,348 | ||||||||||||||||||||||||||||||
Paid | (1,400 | ) | (1,609 | ) | (1,578 | ) | (1,711 | ) | (1,655 | ) | (1,676 | ) | (1,728 | ) | (1,815 | ) | (6,298 | ) | (6,874 | ) | ||||||||||||||||||||
Foreign exchange and other | 11 | 23 | 36 | (6 | ) | (23 | ) | (17 | ) | 14 | (43 | ) | 64 | (69 | ) | |||||||||||||||||||||||||
End of period | $ | 4,560 | $ | 4,719 | $ | 4,900 | $ | 5,160 | $ | 5,170 | $ | 5,381 | $ | 5,463 | $ | 5,565 | $ | 5,160 | $ | 5,565 | ||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||||||||||
Beginning of period | $ | 39,904 | $ | 40,313 | $ | 40,630 | $ | 41,545 | $ | 41,454 | $ | 41,669 | $ | 41,861 | $ | 42,293 | $ | 39,904 | $ | 41,454 | ||||||||||||||||||||
Incurred | 4,043 | 4,169 | 4,751 | 4,291 | 4,245 | 4,506 | 4,606 | 4,719 | 17,254 | 18,076 | ||||||||||||||||||||||||||||||
Paid | (3,668 | ) | (3,934 | ) | (3,934 | ) | (4,383 | ) | (4,019 | ) | (4,222 | ) | (4,193 | ) | (4,499 | ) | (15,919 | ) | (16,933 | ) | ||||||||||||||||||||
Foreign exchange and other | 34 | 82 | 98 | 1 | (11 | ) | (92 | ) | 19 | (104 | ) | 215 | (188 | ) | ||||||||||||||||||||||||||
End of period | $ | 40,313 | $ | 40,630 | $ | 41,545 | $ | 41,454 | $ | 41,669 | $ | 41,861 | $ | 42,293 | $ | 42,409 | $ | 41,454 | $ | 42,409 | ||||||||||||||||||||
Prior Year Reserve Development: Unfavorable (Favorable) | ||||||||||||||||||||||||||||||||||||||||
Business Insurance | ||||||||||||||||||||||||||||||||||||||||
Asbestos | $ | — | $ | — | $ | 225 | $ | — | $ | — | $ | — | $ | 225 | $ | — | $ | 225 | $ | 225 | ||||||||||||||||||||
Environmental | — | 65 | — | — | — | 55 | — | — | 65 | 55 | ||||||||||||||||||||||||||||||
All other | (61 | ) | (190 | ) | (234 | ) | (244 | ) | (66 | ) | (139 | ) | (169 | ) | (48 | ) | (729 | ) | (422 | ) | ||||||||||||||||||||
Total Business Insurance (1) | (61 | ) | (125 | ) | (9 | ) | (244 | ) | (66 | ) | (84 | ) | 56 | (48 | ) | (439 | ) | (142 | ) | |||||||||||||||||||||
Bond & Specialty Insurance | (14 | ) | (78 | ) | (6 | ) | (42 | ) | (35 | ) | (89 | ) | (53 | ) | (89 | ) | (140 | ) | (266 | ) | ||||||||||||||||||||
Personal Insurance | (6 | ) | — | — | (7 | ) | (49 | ) | (13 | ) | (17 | ) | (30 | ) | (13 | ) | (109 | ) | ||||||||||||||||||||||
Total | $ | (81 | ) | $ | (203 | ) | $ | (15 | ) | $ | (293 | ) | $ | (150 | ) | $ | (186 | ) | $ | (14 | ) | $ | (167 | ) | $ | (592 | ) | $ | (517 | ) | ||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Asbestos reserves | ||||||||||||||||||||||||||||||||||||||||
Beginning reserves: | ||||||||||||||||||||||||||||||||||||||||
Gross | $ | 1,512 | $ | 1,436 | $ | 1,347 | $ | 1,621 | $ | 1,538 | $ | 1,483 | $ | 1,408 | $ | 1,681 | $ | 1,512 | $ | 1,538 | ||||||||||||||||||||
Ceded | (186 | ) | (168 | ) | (159 | ) | (262 | ) | (257 | ) | (234 | ) | (225 | ) | (336 | ) | (186 | ) | (257 | ) | ||||||||||||||||||||
Net | 1,326 | 1,268 | 1,188 | 1,359 | 1,281 | 1,249 | 1,183 | 1,345 | 1,326 | 1,281 | ||||||||||||||||||||||||||||||
Incurred losses and loss expenses: | ||||||||||||||||||||||||||||||||||||||||
Gross | — | — | 340 | — | — | — | 343 | — | 340 | 343 | ||||||||||||||||||||||||||||||
Ceded | — | — | (115 | ) | — | — | — | (118 | ) | — | (115 | ) | (118 | ) | ||||||||||||||||||||||||||
Paid loss and loss expenses: | ||||||||||||||||||||||||||||||||||||||||
Gross | 76 | 90 | 66 | 83 | 56 | 74 | 70 | 73 | 315 | 273 | ||||||||||||||||||||||||||||||
Ceded | (18 | ) | (9 | ) | (12 | ) | (5 | ) | (23 | ) | (9 | ) | (7 | ) | (9 | ) | (44 | ) | (48 | ) | ||||||||||||||||||||
Foreign exchange and other: | ||||||||||||||||||||||||||||||||||||||||
Gross | — | 1 | — | — | 1 | (1 | ) | — | — | 1 | — | |||||||||||||||||||||||||||||
Ceded | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Ending reserves: | ||||||||||||||||||||||||||||||||||||||||
Gross | 1,436 | 1,347 | 1,621 | 1,538 | 1,483 | 1,408 | 1,681 | 1,608 | 1,538 | 1,608 | ||||||||||||||||||||||||||||||
Ceded | (168 | ) | (159 | ) | (262 | ) | (257 | ) | (234 | ) | (225 | ) | (336 | ) | (327 | ) | (257 | ) | (327 | ) | ||||||||||||||||||||
Net | $ | 1,268 | $ | 1,188 | $ | 1,359 | $ | 1,281 | $ | 1,249 | $ | 1,183 | $ | 1,345 | $ | 1,281 | $ | 1,281 | $ | 1,281 | ||||||||||||||||||||
Environmental reserves | ||||||||||||||||||||||||||||||||||||||||
Beginning reserves: | ||||||||||||||||||||||||||||||||||||||||
Gross | $ | 395 | $ | 379 | $ | 431 | $ | 408 | $ | 373 | $ | 356 | $ | 413 | $ | 397 | $ | 395 | $ | 373 | ||||||||||||||||||||
Ceded | (13 | ) | (13 | ) | (20 | ) | (20 | ) | (13 | ) | (9 | ) | (25 | ) | (25 | ) | (13 | ) | (13 | ) | ||||||||||||||||||||
Net | 382 | 366 | 411 | 388 | 360 | 347 | 388 | 372 | 382 | 360 | ||||||||||||||||||||||||||||||
Incurred losses and loss expenses: | ||||||||||||||||||||||||||||||||||||||||
Gross | — | 74 | — | — | — | 71 | — | — | 74 | 71 | ||||||||||||||||||||||||||||||
Ceded | — | (9 | ) | — | — | — | (16 | ) | — | — | (9 | ) | (16 | ) | ||||||||||||||||||||||||||
Paid loss and loss expenses: | ||||||||||||||||||||||||||||||||||||||||
Gross | 16 | 23 | 23 | 35 | 17 | 13 | 17 | 39 | 97 | 86 | ||||||||||||||||||||||||||||||
Ceded | — | (2 | ) | — | (7 | ) | (4 | ) | — | — | (2 | ) | (9 | ) | (6 | ) | ||||||||||||||||||||||||
Foreign exchange and other: | ||||||||||||||||||||||||||||||||||||||||
Gross | — | 1 | — | — | — | (1 | ) | 1 | — | 1 | — | |||||||||||||||||||||||||||||
Ceded | — | — | — | — | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||||||||||
Ending reserves: | ||||||||||||||||||||||||||||||||||||||||
Gross | 379 | 431 | 408 | 373 | 356 | 413 | 397 | 358 | 373 | 358 | ||||||||||||||||||||||||||||||
Ceded | (13 | ) | (20 | ) | (20 | ) | (13 | ) | (9 | ) | (25 | ) | (25 | ) | (24 | ) | (13 | ) | (24 | ) | ||||||||||||||||||||
Net | $ | 366 | $ | 411 | $ | 388 | $ | 360 | $ | 347 | $ | 388 | $ | 372 | $ | 334 | $ | 360 | $ | 334 | ||||||||||||||||||||
($ in millions) | December 31, 2018 | December 31, 2017 | ||||||
Debt | ||||||||
Short-term debt | ||||||||
Commercial paper | $ | 100 | $ | 100 | ||||
5.80% Senior notes due May 15, 2018 | — | 500 | ||||||
5.90% Senior notes due June 2, 2019 (1) | 500 | — | ||||||
Total short-term debt | 600 | 600 | ||||||
Long-term debt | ||||||||
5.90% Senior notes due June 2, 2019 (1) | — | 500 | ||||||
3.90% Senior notes due November 1, 2020 (1) | 500 | 500 | ||||||
7.75% Senior notes due April 15, 2026 | 200 | 200 | ||||||
7.625% Junior subordinated debentures due December 15, 2027 | 125 | 125 | ||||||
6.375% Senior notes due March 15, 2033 (1) | 500 | 500 | ||||||
6.75% Senior notes due June 20, 2036 (1) | 400 | 400 | ||||||
6.25% Senior notes due June 15, 2037 (1) | 800 | 800 | ||||||
5.35% Senior notes due November 1, 2040 (1) | 750 | 750 | ||||||
4.60% Senior notes due August 1, 2043 (1) | 500 | 500 | ||||||
4.30% Senior notes due August 25, 2045 (1) | 400 | 400 | ||||||
8.50% Junior subordinated debentures due December 15, 2045 | 56 | 56 | ||||||
3.75% Senior notes due May 15, 2046 (1) | 500 | 500 | ||||||
8.312% Junior subordinated debentures due July 1, 2046 | 73 | 73 | ||||||
4.00% Senior notes due May 30, 2047 (1) | 700 | 700 | ||||||
4.05% Senior notes due March 7, 2048 (1) | 500 | — | ||||||
Total long-term debt | 6,004 | 6,004 | ||||||
Unamortized fair value adjustment | 44 | 46 | ||||||
Unamortized debt issuance costs | (84 | ) | (79 | ) | ||||
5,964 | 5,971 | |||||||
Total debt | 6,564 | 6,571 | ||||||
Common equity (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity) | 23,007 | 22,619 | ||||||
Total capital (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity) | $ | 29,571 | $ | 29,190 | ||||
Total debt to capital (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity) | 22.2 | % | 22.5 | % | ||||
($ in millions) | December 31, 2018 (1) | December 31, 2017 | ||||||
Statutory capital and surplus | $ | 20,774 | $ | 20,448 | ||||
GAAP adjustments | ||||||||
Goodwill and intangible assets | 3,600 | 3,692 | ||||||
Investments | 252 | 1,783 | ||||||
Noninsurance companies | (4,234 | ) | (4,283 | ) | ||||
Deferred acquisition costs | 2,120 | 2,025 | ||||||
Deferred federal income tax | (561 | ) | (934 | ) | ||||
Current federal income tax | (22 | ) | (12 | ) | ||||
Reinsurance recoverables | 56 | 55 | ||||||
Furniture, equipment & software | 654 | 682 | ||||||
Agents balances | 202 | 186 | ||||||
Other | 53 | 89 | ||||||
Total GAAP adjustments | 2,120 | 3,283 | ||||||
GAAP shareholders’ equity | $ | 22,894 | $ | 23,731 | ||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 617 | $ | 595 | $ | 293 | $ | 551 | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 2,056 | $ | 2,523 | ||||||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses | (5 | ) | (80 | ) | (61 | ) | (70 | ) | 11 | (36 | ) | (29 | ) | (60 | ) | (216 | ) | (114 | ) | |||||||||||||||||||||
Depreciation and amortization | 211 | 198 | 202 | 202 | 212 | 199 | 198 | 194 | 813 | 803 | ||||||||||||||||||||||||||||||
Deferred federal income tax expense (benefit) | 151 | (45 | ) | (18 | ) | 249 | (56 | ) | (14 | ) | 27 | 30 | 337 | (13 | ) | |||||||||||||||||||||||||
Amortization of deferred acquisition costs | 1,003 | 1,032 | 1,059 | 1,072 | 1,061 | 1,081 | 1,117 | 1,122 | 4,166 | 4,381 | ||||||||||||||||||||||||||||||
Equity in income from other investments | (109 | ) | (101 | ) | (90 | ) | (97 | ) | (95 | ) | (74 | ) | (115 | ) | (81 | ) | (397 | ) | (365 | ) | ||||||||||||||||||||
Premiums receivable | (286 | ) | (323 | ) | 92 | 123 | (397 | ) | (263 | ) | 152 | 115 | (394 | ) | (393 | ) | ||||||||||||||||||||||||
Reinsurance recoverables | 94 | 63 | (176 | ) | 35 | 5 | 24 | (50 | ) | (79 | ) | 16 | (100 | ) | ||||||||||||||||||||||||||
Deferred acquisition costs | (1,065 | ) | (1,092 | ) | (1,080 | ) | (1,020 | ) | (1,124 | ) | (1,160 | ) | (1,141 | ) | (1,063 | ) | (4,257 | ) | (4,488 | ) | ||||||||||||||||||||
Claims and claim adjustment expense reserves | 334 | 164 | 1,063 | (101 | ) | 180 | 255 | 445 | 366 | 1,460 | 1,246 | |||||||||||||||||||||||||||||
Unearned premium reserves | 475 | 214 | 163 | (331 | ) | 518 | 361 | 216 | (385 | ) | 521 | 710 | ||||||||||||||||||||||||||||
Other (1) | (572 | ) | 281 | 284 | 50 | (430 | ) | 247 | 205 | 168 | 43 | 190 | ||||||||||||||||||||||||||||
Net cash provided by operating activities (1) | 848 | 906 | 1,731 | 663 | 554 | 1,144 | 1,734 | 948 | 4,148 | 4,380 | ||||||||||||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||||||||||
Proceeds from maturities of fixed maturities | 2,218 | 2,082 | 2,281 | 2,169 | 1,950 | 1,707 | 1,998 | 1,431 | 8,750 | 7,086 | ||||||||||||||||||||||||||||||
Proceeds from sales of investments: | ||||||||||||||||||||||||||||||||||||||||
Fixed maturities | 188 | 375 | 297 | 994 | 1,085 | 1,522 | 578 | 361 | 1,854 | 3,546 | ||||||||||||||||||||||||||||||
Equity securities | 21 | 179 | 140 | 425 | 26 | 66 | 35 | 51 | 765 | 178 | ||||||||||||||||||||||||||||||
Real estate investments | 11 | 9 | 3 | — | — | — | 8 | 66 | 23 | 74 | ||||||||||||||||||||||||||||||
Other investments (1) | 122 | 111 | 108 | 127 | 114 | 75 | 81 | 241 | 468 | 511 | ||||||||||||||||||||||||||||||
Purchases of investments: | ||||||||||||||||||||||||||||||||||||||||
Fixed maturities | (3,056 | ) | (2,617 | ) | (2,730 | ) | (3,847 | ) | (3,920 | ) | (4,032 | ) | (2,910 | ) | (2,664 | ) | (12,250 | ) | (13,526 | ) | ||||||||||||||||||||
Equity securities | (22 | ) | (144 | ) | (27 | ) | (266 | ) | (20 | ) | (40 | ) | (26 | ) | (31 | ) | (459 | ) | (117 | ) | ||||||||||||||||||||
Real estate investments | (16 | ) | (10 | ) | (14 | ) | (19 | ) | (33 | ) | (11 | ) | (13 | ) | (17 | ) | (59 | ) | (74 | ) | ||||||||||||||||||||
Other investments | (124 | ) | (135 | ) | (133 | ) | (149 | ) | (142 | ) | (133 | ) | (117 | ) | (145 | ) | (541 | ) | (537 | ) | ||||||||||||||||||||
Net sales (purchases) of short-term securities | 49 | (473 | ) | (566 | ) | 964 | 410 | 792 | (746 | ) | 452 | (26 | ) | 908 | ||||||||||||||||||||||||||
Securities transactions in course of settlement | 157 | 13 | (48 | ) | (169 | ) | 202 | 77 | (106 | ) | (229 | ) | (47 | ) | (56 | ) | ||||||||||||||||||||||||
Acquisitions, net of cash acquired | — | — | (439 | ) | — | — | — | (4 | ) | — | (439 | ) | (4 | ) | ||||||||||||||||||||||||||
Other | (63 | ) | (65 | ) | (58 | ) | (55 | ) | (53 | ) | (99 | ) | (80 | ) | (86 | ) | (241 | ) | (318 | ) | ||||||||||||||||||||
Net cash provided by (used in) investing activities (1) | (515 | ) | (675 | ) | (1,186 | ) | 174 | (381 | ) | (76 | ) | (1,302 | ) | (570 | ) | (2,202 | ) | (2,329 | ) | |||||||||||||||||||||
($ in millions) | 1Q2017 | 2Q2017 | 3Q2017 | 4Q2017 | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | YTD 4Q2017 | YTD 4Q2018 | ||||||||||||||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||||||||||
Treasury stock acquired - share repurchase authorization | (225 | ) | (475 | ) | (328 | ) | (350 | ) | (350 | ) | (350 | ) | (400 | ) | (170 | ) | (1,378 | ) | (1,270 | ) | ||||||||||||||||||||
Treasury stock acquired - net employee share-based compensation | (61 | ) | — | — | (1 | ) | (51 | ) | — | — | — | (62 | ) | (51 | ) | |||||||||||||||||||||||||
Dividends paid to shareholders | (190 | ) | (199 | ) | (200 | ) | (196 | ) | (197 | ) | (207 | ) | (207 | ) | (203 | ) | (785 | ) | (814 | ) | ||||||||||||||||||||
Payment of debt | — | (207 | ) | — | (450 | ) | (100 | ) | (500 | ) | — | — | (657 | ) | (600 | ) | ||||||||||||||||||||||||
Issuance of debt | — | 689 | — | 100 | 491 | — | 100 | — | 789 | 591 | ||||||||||||||||||||||||||||||
Issuance of common stock - employee share options | 83 | 35 | 30 | 25 | 85 | 13 | 19 | 15 | 173 | 132 | ||||||||||||||||||||||||||||||
Net cash used in financing activities | (393 | ) | (157 | ) | (498 | ) | (872 | ) | (122 | ) | (1,044 | ) | (488 | ) | (358 | ) | (1,920 | ) | (2,012 | ) | ||||||||||||||||||||
Effect of exchange rate changes on cash | 2 | 5 | 4 | — | 2 | (6 | ) | — | (6 | ) | 11 | (10 | ) | |||||||||||||||||||||||||||
Net increase (decrease) in cash | (58 | ) | 79 | 51 | (35 | ) | 53 | 18 | (56 | ) | 14 | 37 | 29 | |||||||||||||||||||||||||||
Cash at beginning of period | 307 | 249 | 328 | 379 | 344 | 397 | 415 | 359 | 307 | 344 | ||||||||||||||||||||||||||||||
Cash at end of period | $ | 249 | $ | 328 | $ | 379 | $ | 344 | $ | 397 | $ | 415 | $ | 359 | $ | 373 | $ | 344 | $ | 373 | ||||||||||||||||||||
Income taxes paid | $ | 2 | $ | 321 | $ | 144 | $ | 47 | $ | 56 | $ | 182 | $ | 6 | $ | 164 | $ | 514 | $ | 408 | ||||||||||||||||||||
Interest paid | $ | 43 | $ | 135 | $ | 39 | $ | 150 | $ | 39 | $ | 136 | $ | 50 | $ | 122 | $ | 367 | $ | 347 | ||||||||||||||||||||
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