(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Exhibit No. | Description | |
99.1 | ||
99.2 | ||
101.1 | Pursuant to Rule 406 of Regulation S-T, the cover page to this Current Report on Form 8-K is formatted in Inline XBRL. | |
104.1 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101.1.) |
THE TRAVELERS COMPANIES, INC. | |||
Date: | October 22, 2019 | By | /s/ CHRISTINE K. KALLA |
Name: Christine K. Kalla | |||
Executive Vice President and General Counsel |
• | Third quarter net income of $396 million and core income of $378 million. |
• | Increasingly challenging tort environment impacted results. |
• | Consolidated combined ratio of 101.5%; underlying combined ratio of 94.1%. |
• | Record net written premiums of $7.569 billion, up 7%, reflecting growth in all segments. |
• | Renewal premium change in Business Insurance of 7.4% at highest level since 2014. |
• | Total capital returned to shareholders of $590 million, including $375 million of share repurchases. Year-to-date total capital returned to shareholders of $1.808 billion, including $1.172 billion of share repurchases. |
• | Book value per share of $99.21, up 14% from year-end 2018. Adjusted book value per share of $90.09, up 3% from year-end 2018. |
• | Board of Directors declared quarterly dividend per share of $0.82. |
($ in millions, except for per share amounts, and after-tax, except for premiums and revenues) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||
Net written premiums | $ | 7,569 | $ | 7,062 | 7 | % | $ | 22,076 | $ | 21,017 | 5 | % | |||||||||||
Total revenues | $ | 8,013 | $ | 7,723 | 4 | $ | 23,518 | $ | 22,486 | 5 | |||||||||||||
Net income | $ | 396 | $ | 709 | (44 | ) | $ | 1,749 | $ | 1,902 | (8 | ) | |||||||||||
per diluted share | $ | 1.50 | $ | 2.62 | (43 | ) | $ | 6.59 | $ | 6.97 | (5 | ) | |||||||||||
Core income | $ | 378 | $ | 687 | (45 | ) | $ | 1,670 | $ | 1,859 | (10 | ) | |||||||||||
per diluted share | $ | 1.43 | $ | 2.54 | (44 | ) | $ | 6.29 | $ | 6.81 | (8 | ) | |||||||||||
Diluted weighted average shares outstanding | 261.8 | 268.4 | (2 | ) | 263.4 | 271.1 | (3 | ) | |||||||||||||||
Combined ratio | 101.5 | % | 96.6 | % | 4.9 | pts | 97.9 | % | 96.8 | % | 1.1 | pts | |||||||||||
Underlying combined ratio | 94.1 | % | 93.0 | % | 1.1 | pts | 93.5 | % | 93.0 | % | 0.5 | pts | |||||||||||
Return on equity | 6.2 | % | 12.6 | % | (6.4 | ) | pts | 9.5 | % | 11.1 | % | (1.6 | ) | pts | |||||||||
Core return on equity | 6.5 | % | 12.0 | % | (5.5 | ) | pts | 9.6 | % | 10.9 | % | (1.3 | ) | pts |
As of | Change From | |||||||||||||||||
September 30, 2019 | December 31, 2018 | September 30, 2018 | December 31, 2018 | September 30, 2018 | ||||||||||||||
Book value per share | $ | 99.21 | $ | 86.84 | $ | 84.82 | 14 | % | 17 | % | ||||||||
Adjusted book value per share | 90.09 | 87.27 | 86.51 | 3 | % | 4 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
($ in millions and pre-tax, unless noted otherwise) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||||
Underwriting gain (loss): | $ | (149 | ) | $ | 198 | $ | (347 | ) | $ | 320 | $ | 546 | $ | (226 | ) | ||||||||||
Underwriting gain (loss) includes: | |||||||||||||||||||||||||
Net favorable (unfavorable) prior year reserve development | (294 | ) | 14 | (308 | ) | (120 | ) | 350 | (470 | ) | |||||||||||||||
Catastrophes, net of reinsurance | (241 | ) | (264 | ) | 23 | (801 | ) | (1,106 | ) | 305 | |||||||||||||||
Net investment income | 622 | 646 | (24 | ) | 1,852 | 1,844 | 8 | ||||||||||||||||||
Other income (expense), including interest expense | (64 | ) | (67 | ) | 3 | (209 | ) | (229 | ) | 20 | |||||||||||||||
Core income before income taxes | 409 | 777 | (368 | ) | 1,963 | 2,161 | (198 | ) | |||||||||||||||||
Income tax expense | 31 | 90 | (59 | ) | 293 | 302 | (9 | ) | |||||||||||||||||
Core income | 378 | 687 | (309 | ) | 1,670 | 1,859 | (189 | ) | |||||||||||||||||
Net realized investment gains after income taxes | 18 | 22 | (4 | ) | 79 | 43 | 36 | ||||||||||||||||||
Net income | $ | 396 | $ | 709 | $ | (313 | ) | $ | 1,749 | $ | 1,902 | $ | (153 | ) | |||||||||||
Combined ratio | 101.5 | % | 96.6 | % | 4.9 | pts | 97.9 | % | 96.8 | % | 1.1 | pts | |||||||||||||
Impact on combined ratio | |||||||||||||||||||||||||
Net (favorable) unfavorable prior year reserve development | 4.1 | pts | (0.2 | ) | pts | 4.3 | pts | 0.6 | pts | (1.7 | ) | pts | 2.3 | pts | |||||||||||
Catastrophes, net of reinsurance | 3.3 | pts | 3.8 | pts | (0.5 | ) | pts | 3.8 | pts | 5.5 | pts | (1.7 | ) | pts | |||||||||||
Underlying combined ratio | 94.1 | % | 93.0 | % | 1.1 | pts | 93.5 | % | 93.0 | % | 0.5 | pts | |||||||||||||
Net written premiums | |||||||||||||||||||||||||
Business Insurance | $ | 3,889 | $ | 3,648 | 7 | % | $ | 11,926 | $ | 11,423 | 4 | % | |||||||||||||
Bond & Specialty Insurance | 728 | 644 | 13 | 2,025 | 1,871 | 8 | |||||||||||||||||||
Personal Insurance | 2,952 | 2,770 | 7 | 8,125 | 7,723 | 5 | |||||||||||||||||||
Total | $ | 7,569 | $ | 7,062 | 7 | % | $ | 22,076 | $ | 21,017 | 5 | % |
• | The combined ratio of 101.5% increased 4.9 points due to net unfavorable prior year reserve development in the current quarter versus net favorable prior year reserve development in the prior year quarter (4.3 points) and a higher underlying combined ratio (1.1 points), partially offset by lower catastrophe losses (0.5 points). |
• | The underlying combined ratio of 94.1% increased 1.1 points. See below for further details by segment. |
• | Net unfavorable prior year reserve development in Business Insurance included a $220 million increase in asbestos reserves, compared with a $225 million increase in the prior year quarter. Net favorable prior year reserve development occurred in Personal Insurance and Bond & Specialty Insurance. See below for further details by segment. Catastrophe losses primarily resulted from wind and hail storms in several regions of the United States and Hurricane Dorian. |
• | The combined ratio of 97.9% increased 1.1 points due to net unfavorable prior year reserve development in the current period versus net favorable prior year reserve development in the prior year period (2.3 points) and a higher underlying combined ratio (0.5 points), partially offset by lower catastrophe losses (1.7 points). |
• | The underlying combined ratio of 93.5% increased 0.5 points. See below for further details by segment. |
• | Net unfavorable prior year reserve development occurred in Business Insurance. Net favorable prior year reserve development occurred in Personal Insurance and Bond & Specialty Insurance. See below for further details by segment. Catastrophe losses included the third quarter events described above, as well as winter storms and wind storms in several regions of the United States in the first half of 2019. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
($ in millions and pre-tax, unless noted otherwise) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||||
Underwriting gain (loss): | $ | (284 | ) | $ | (36 | ) | $ | (248 | ) | $ | (282 | ) | $ | 69 | $ | (351 | ) | ||||||||
Underwriting gain (loss) includes: | |||||||||||||||||||||||||
Net favorable (unfavorable) prior year reserve development | (316 | ) | (56 | ) | (260 | ) | (266 | ) | 94 | (360 | ) | ||||||||||||||
Catastrophes, net of reinsurance | (116 | ) | (136 | ) | 20 | (422 | ) | (442 | ) | 20 | |||||||||||||||
Net investment income | 457 | 482 | (25 | ) | 1,365 | 1,368 | (3 | ) | |||||||||||||||||
Other income (expense) | — | 4 | (4 | ) | (6 | ) | (3 | ) | (3 | ) | |||||||||||||||
Segment income before income taxes | 173 | 450 | (277 | ) | 1,077 | 1,434 | (357 | ) | |||||||||||||||||
Income tax expense (benefit) | (6 | ) | 40 | (46 | ) | 133 | 187 | (54 | ) | ||||||||||||||||
Segment income | $ | 179 | $ | 410 | $ | (231 | ) | $ | 944 | $ | 1,247 | $ | (303 | ) | |||||||||||
Combined ratio | 107.0 | % | 100.6 | % | 6.4 | pts | 102.1 | % | 99.0 | % | 3.1 | pts | |||||||||||||
Impact on combined ratio | |||||||||||||||||||||||||
Net (favorable) unfavorable prior year reserve development | 8.1 | pts | 1.5 | pts | 6.6 | pts | 2.3 | pts | (0.9 | ) | pts | 3.2 | pts | ||||||||||||
Catastrophes, net of reinsurance | 3.0 | pts | 3.7 | pts | (0.7 | ) | pts | 3.7 | pts | 4.1 | pts | (0.4 | ) | pts | |||||||||||
Underlying combined ratio | 95.9 | % | 95.4 | % | 0.5 | pts | 96.1 | % | 95.8 | % | 0.3 | pts | |||||||||||||
Net written premiums by market | |||||||||||||||||||||||||
Domestic | |||||||||||||||||||||||||
Select Accounts | $ | 695 | $ | 666 | 4 | % | $ | 2,236 | $ | 2,168 | 3 | % | |||||||||||||
Middle Market | 2,150 | 2,032 | 6 | 6,569 | 6,279 | 5 | |||||||||||||||||||
National Accounts | 273 | 238 | 15 | 800 | 778 | 3 | |||||||||||||||||||
National Property and Other | 553 | 485 | 14 | 1,528 | 1,383 | 10 | |||||||||||||||||||
Total Domestic | 3,671 | 3,421 | 7 | 11,133 | 10,608 | 5 | |||||||||||||||||||
International | 218 | 227 | (4 | ) | 793 | 815 | (3 | ) | |||||||||||||||||
Total | $ | 3,889 | $ | 3,648 | 7 | % | $ | 11,926 | $ | 11,423 | 4 | % |
• | The combined ratio of 107.0% increased 6.4 points due to higher net unfavorable prior year reserve development (6.6 points) and a higher underlying combined ratio (0.5 points), partially offset by lower catastrophe losses (0.7 points). |
• | The underlying combined ratio of 95.9% increased 0.5 points, primarily driven by the impacts in the quarter of (1) higher loss estimates in the commercial automobile product line and in the general liability product line for primary and excess coverages, including the re-estimation of losses incurred in the first six months of 2019, and (2) the new catastrophe reinsurance treaty, partially offset by (3) lower loss estimates in the workers' compensation product line, including the re-estimation of losses incurred in the first six months of 2019, and (4) a lower underwriting expense ratio. |
• | Net unfavorable prior year reserve development was primarily driven by (1) a $220 million increase to asbestos reserves, and higher than expected loss experience in the segment's domestic operations in (2) the general liability product line (excluding the increase to asbestos reserves) for primary and excess coverages for multiple accident years and (3) the commercial automobile product line for recent accident years, partially offset by (4) better than expected loss experience in the segment's domestic operations in the workers’ compensation product line for recent accident years. |
• | The combined ratio of 102.1% increased 3.1 points due to net unfavorable prior year reserve development in the current period versus net favorable prior year reserve development in the prior year period (3.2 points) and a higher underlying combined ratio (0.3 points), partially offset by lower catastrophe losses (0.4 points). |
• | The underlying combined ratio of 96.1% increased 0.3 points, primarily driven by the impacts of (1) higher loss estimates in the commercial automobile product line and in the general liability product line for primary and excess coverages, (2) the new catastrophe reinsurance treaty and (3) higher non-catastrophe weather-related losses, partially offset by (4) a lower level of domestic large losses, (5) lower loss estimates in the workers' compensation product line and (6) a lower underwriting expense ratio. |
• | Net unfavorable prior year reserve development was primarily driven by (1) higher than expected loss experience in the segment’s domestic operations in the general liability product line (excluding increases to asbestos and environmental reserves) for primary and excess coverages for multiple accident years, including the impact for accident years 2009 and prior of the enactment of legislation by a number of states which extended the statute of limitations for childhood sexual molestation claims, (2) the $220 million increase to asbestos reserves, (3) higher than expected loss experience in the segment's domestic operations in the commercial automobile product line for recent accident years, (4) a $68 million increase to environmental reserves and (5) higher than expected loss experience in the segment's domestic operations in the commercial |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
($ in millions and pre-tax, unless noted otherwise) | 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||
Underwriting gain: | $ | 104 | $ | 183 | $ | (79 | ) | $ | 373 | $ | 526 | $ | (153 | ) | ||||||||||
Underwriting gain includes: | ||||||||||||||||||||||||
Net favorable prior year reserve development | 3 | 53 | (50 | ) | 45 | 177 | (132 | ) | ||||||||||||||||
Catastrophes, net of reinsurance | (1 | ) | (4 | ) | 3 | (4 | ) | (9 | ) | 5 | ||||||||||||||
Net investment income | 59 | 57 | 2 | 173 | 172 | 1 | ||||||||||||||||||
Other income | 6 | 4 | 2 | 16 | 13 | 3 | ||||||||||||||||||
Segment income before income taxes | 169 | 244 | (75 | ) | 562 | 711 | (149 | ) | ||||||||||||||||
Income tax expense | 30 | 48 | (18 | ) | 111 | 138 | (27 | ) | ||||||||||||||||
Segment income | $ | 139 | $ | 196 | $ | (57 | ) | $ | 451 | $ | 573 | $ | (122 | ) | ||||||||||
Combined ratio | 83.3 | % | 70.2 | % | 13.1 | pts | 79.8 | % | 70.4 | % | 9.4 | pts | ||||||||||||
Impact on combined ratio | ||||||||||||||||||||||||
Net favorable prior year reserve development | (0.5 | ) | pts | (8.7 | ) | pts | 8.2 | pts | (2.3 | ) | pts | (9.9 | ) | pts | 7.6 | pts | ||||||||
Catastrophes, net of reinsurance | 0.2 | pts | 0.6 | pts | (0.4 | ) | pts | 0.2 | pts | 0.5 | pts | (0.3 | ) | pts | ||||||||||
Underlying combined ratio | 83.6 | % | 78.3 | % | 5.3 | pts | 81.9 | % | 79.8 | % | 2.1 | pts | ||||||||||||
Net written premiums | ||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||
Management Liability | $ | 424 | $ | 379 | 12 | % | $ | 1,194 | $ | 1,089 | 10 | % | ||||||||||||
Surety | 232 | 217 | 7 | 660 | 637 | 4 | ||||||||||||||||||
Total Domestic | 656 | 596 | 10 | 1,854 | 1,726 | 7 | ||||||||||||||||||
International | 72 | 48 | 50 | 171 | 145 | 18 | ||||||||||||||||||
Total | $ | 728 | $ | 644 | 13 | % | $ | 2,025 | $ | 1,871 | 8 | % |
• | The combined ratio of 83.3% increased 13.1 points due to lower net favorable prior year reserve development (8.2 points) and a higher underlying combined ratio (5.3 points), partially offset by lower catastrophe losses (0.4 points). |
• | The underlying combined ratio of 83.6% remained very strong. The increase of 5.3 points from the prior year quarter included a 2.7 point adjustment in the third quarter of 2019 for management liability coverages, 1.9 points of which related to the re-estimation of losses incurred in the first six months of 2019. The current quarter result compares to a particularly strong prior year quarter. |
• | Net favorable prior year reserve development was driven by better than expected loss experience in the domestic general liability product line for management liability coverages for multiple accident years. |
• | The combined ratio of 79.8% increased 9.4 points due to lower net favorable prior year reserve development (7.6 points) and a higher underlying combined ratio (2.1 points), partially offset by lower catastrophe losses (0.3 points). |
• | The underlying combined ratio of 81.9% remained very strong. |
• | Net favorable prior year reserve development was driven by better than expected loss experience in the domestic general liability product line for management liability coverages for multiple accident years. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
($ in millions and pre-tax, unless noted otherwise) | 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||
Underwriting gain (loss): | $ | 31 | $ | 51 | $ | (20 | ) | $ | 229 | $ | (49 | ) | $ | 278 | ||||||||||
Underwriting gain (loss) includes: | ||||||||||||||||||||||||
Net favorable prior year reserve development | 19 | 17 | 2 | 101 | 79 | 22 | ||||||||||||||||||
Catastrophes, net of reinsurance | (124 | ) | (124 | ) | — | (375 | ) | (655 | ) | 280 | ||||||||||||||
Net investment income | 106 | 107 | (1 | ) | 314 | 304 | 10 | |||||||||||||||||
Other income | 22 | 17 | 5 | 65 | 48 | 17 | ||||||||||||||||||
Segment income before income taxes | 159 | 175 | (16 | ) | 608 | 303 | 305 | |||||||||||||||||
Income tax expense | 28 | 22 | 6 | 111 | 38 | 73 | ||||||||||||||||||
Segment income | $ | 131 | $ | 153 | $ | (22 | ) | $ | 497 | $ | 265 | $ | 232 | |||||||||||
Combined ratio | 98.0 | % | 97.2 | % | 0.8 | pts | 96.2 | % | 99.9 | % | (3.7 | ) | pts | |||||||||||
Impact on combined ratio | ||||||||||||||||||||||||
Net favorable prior year reserve development | (0.7 | ) | pts | (0.6 | ) | pts | (0.1 | ) | pts | (1.3 | ) | pts | (1.1 | ) | pts | (0.2 | ) | pts | ||||||
Catastrophes, net of reinsurance | 4.7 | pts | 4.9 | pts | (0.2 | ) | pts | 4.9 | pts | 8.9 | pts | (4.0 | ) | pts | ||||||||||
Underlying combined ratio | 94.0 | % | 92.9 | % | 1.1 | pts | 92.6 | % | 92.1 | % | 0.5 | pts | ||||||||||||
Net written premiums | ||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||
Agency (1) | ||||||||||||||||||||||||
Automobile | $ | 1,347 | $ | 1,305 | 3 | % | $ | 3,871 | $ | 3,746 | 3 | % | ||||||||||||
Homeowners and Other | 1,300 | 1,168 | 11 | 3,395 | 3,137 | 8 | ||||||||||||||||||
Total Agency | 2,647 | 2,473 | 7 | 7,266 | 6,883 | 6 | ||||||||||||||||||
Direct to Consumer | 115 | 108 | 6 | 313 | 299 | 5 | ||||||||||||||||||
Total Domestic | 2,762 | 2,581 | 7 | 7,579 | 7,182 | 6 | ||||||||||||||||||
International | 190 | 189 | 1 | 546 | 541 | 1 | ||||||||||||||||||
Total | $ | 2,952 | $ | 2,770 | 7 | % | $ | 8,125 | $ | 7,723 | 5 | % |
• | The combined ratio of 98.0% increased 0.8 points due to a higher underlying combined ratio (1.1 points), partially offset by lower catastrophe losses (0.2 points) and higher net favorable prior year reserve development (0.1 points). |
• | The underlying combined ratio of 94.0% increased 1.1 points, primarily driven by the impacts of (1) higher non-catastrophe weather-related losses in Agency Homeowners and Other and (2) the new catastrophe reinsurance treaty, mostly impacting Agency Homeowners and Other, partially offset by (3) lower other loss activity. |
• | Net favorable prior year reserve development was driven by better than expected loss experience in domestic homeowners and other and automobile product lines for recent accident years. |
• | The combined ratio of 96.2% improved 3.7 points due to lower catastrophe losses (4.0 points) and higher net favorable prior year reserve development (0.2 points), partially offset by a higher underlying combined ratio (0.5 points). |
• | The underlying combined ratio of 92.6% increased 0.5 points, primarily driven by the impacts of (1) higher non-catastrophe weather-related losses in Agency Homeowners and Other and (2) the new catastrophe reinsurance treaty, mostly impacting Agency Homeowners and Other, partially offset by (3) earned pricing that exceeded loss cost trends in Agency Automobile and (4) lower other loss activity. |
• | Net favorable prior year reserve development was driven by better than expected loss experience in domestic automobile and homeowners and other product lines 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, underwriting margins and underlying underwriting 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 potential benefit associated with the Company's ability to recover on its subrogation claims; |
• | the cost and availability of reinsurance coverage; |
• | catastrophe losses; |
• | the impact of investment (including changes in interest rates), economic (including inflation, changes in tax law, 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 developments in the tort environment, including legislation enacted or to be enacted by states allowing victims of sexual abuse to file or proceed with claims that otherwise would have been time-barred. |
• | 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 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 where 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, changes in levels of written premiums, 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions, after-tax) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | 396 | $ | 709 | $ | 1,749 | $ | 1,902 | ||||||||
Less: Net realized investment gains | (18 | ) | (22 | ) | (79 | ) | (43 | ) | ||||||||
Core income | $ | 378 | $ | 687 | $ | 1,670 | $ | 1,859 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions, pre-tax) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | 432 | $ | 806 | $ | 2,064 | $ | 2,215 | ||||||||
Less: Net realized investment gains | (23 | ) | (29 | ) | (101 | ) | (54 | ) | ||||||||
Core income | $ | 409 | $ | 777 | $ | 1,963 | $ | 2,161 |
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 (1) | — | 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Basic income per share | ||||||||||||||||
Net income | $ | 1.52 | $ | 2.65 | $ | 6.65 | $ | 7.03 | ||||||||
Adjustments: | ||||||||||||||||
Net realized investment gains, after-tax | (0.07 | ) | (0.09 | ) | (0.30 | ) | (0.16 | ) | ||||||||
Core income | $ | 1.45 | $ | 2.56 | $ | 6.35 | $ | 6.87 | ||||||||
Diluted income per share | ||||||||||||||||
Net income | $ | 1.50 | $ | 2.62 | $ | 6.59 | $ | 6.97 | ||||||||
Adjustments: | ||||||||||||||||
Net realized investment gains, after-tax | (0.07 | ) | (0.08 | ) | (0.30 | ) | (0.16 | ) | ||||||||
Core income | $ | 1.43 | $ | 2.54 | $ | 6.29 | $ | 6.81 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions, after-tax) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Business Insurance | $ | 179 | $ | 410 | $ | 944 | $ | 1,247 | ||||||||
Bond & Specialty Insurance | 139 | 196 | 451 | 573 | ||||||||||||
Personal Insurance | 131 | 153 | 497 | 265 | ||||||||||||
Total segment income | 449 | 759 | 1,892 | 2,085 | ||||||||||||
Interest Expense and Other | (71 | ) | (72 | ) | (222 | ) | (226 | ) | ||||||||
Total core income | $ | 378 | $ | 687 | $ | 1,670 | $ | 1,859 |
As of September 30, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Shareholders’ equity | $ | 25,607 | $ | 22,460 | ||||
Adjustments: | ||||||||
Net unrealized investment (gains) losses, net of tax, included in shareholders’ equity | (2,354 | ) | 447 | |||||
Net realized investment gains, net of tax | (79 | ) | (43 | ) | ||||
Adjusted shareholders’ equity | $ | 23,174 | $ | 22,864 |
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 | $22,227 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions, after-tax) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Annualized net income | $ | 1,585 | $ | 2,838 | $ | 2,332 | $ | 2,536 | ||||||||
Average shareholders’ equity | 25,464 | 22,541 | 24,637 | 22,899 | ||||||||||||
Return on equity | 6.2 | % | 12.6 | % | 9.5 | % | 11.1 | % | ||||||||
Annualized core income | $ | 1,512 | $ | 2,746 | $ | 2,226 | $ | 2,478 | ||||||||
Adjusted average shareholders’ equity | 23,339 | 22,809 | 23,289 | 22,774 | ||||||||||||
Core return on equity | 6.5 | % | 12.0 | % | 9.6 | % | 10.9 | % |
Nine Months Ended September 30, | Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||
($ in millions) | 2019 | 2018 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Core income, less preferred dividends | $1,670 | $1,859 | $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 | $2,020 | ||||||||||||||||
Annualized core income | 2,226 | 2,478 | ||||||||||||||||||||||||||||||
Adjusted average shareholders’ equity | 23,289 | 22,774 | 22,814 | 22,743 | 22,386 | 22,681 | 23,447 | 23,004 | 22,158 | 22,806 | 24,285 | 25,777 | 25,668 | 25,350 | 23,381 | 21,118 | ||||||||||||||||
Core return on equity | 9.6% | 10.9% | 10.7% | 9.0% | 13.3% | 15.2% | 15.5% | 15.5% | 11.0% | 6.1% | 12.5% | 14.0% | 12.4% | 17.7% | 17.9% | 9.6% | ||||||||||||||||
Average annual core return on equity for the period Jan. 1, 2005 through September 30, 2019 | 12.8% |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions, after-tax except as noted) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Pre-tax underwriting gain excluding the impact of catastrophes and net prior year loss reserve development | $ | 386 | $ | 448 | $ | 1,241 | $ | 1,302 | ||||||||
Pre-tax impact of catastrophes | (241 | ) | (264 | ) | (801 | ) | (1,106 | ) | ||||||||
Pre-tax impact of net favorable (unfavorable) prior year loss reserve development | (294 | ) | 14 | (120 | ) | 350 | ||||||||||
Pre-tax underwriting gain (loss) | (149 | ) | 198 | 320 | 546 | |||||||||||
Income tax expense (benefit) on underwriting results | (48 | ) | 4 | 62 | 69 | |||||||||||
Underwriting gain (loss) | (101 | ) | 194 | 258 | 477 | |||||||||||
Net investment income | 528 | 547 | 1,572 | 1,567 | ||||||||||||
Other income (expense), including interest expense | (49 | ) | (54 | ) | (160 | ) | (185 | ) | ||||||||
Core income | 378 | 687 | 1,670 | 1,859 | ||||||||||||
Net realized investment gains | 18 | 22 | 79 | 43 | ||||||||||||
Net income | $ | 396 | $ | 709 | $ | 1,749 | $ | 1,902 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions, pre-tax) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Loss and loss adjustment expense ratio | ||||||||||||||||
Claims and claim adjustment expenses | $ | 5,230 | $ | 4,655 | $ | 14,493 | $ | 13,513 | ||||||||
Less: | ||||||||||||||||
Policyholder dividends | 15 | 12 | 37 | 37 | ||||||||||||
Allocated fee income | 47 | 38 | 132 | 115 | ||||||||||||
Loss ratio numerator | $ | 5,168 | $ | 4,605 | $ | 14,324 | $ | 13,361 | ||||||||
Underwriting expense ratio | ||||||||||||||||
Amortization of deferred acquisition costs | $ | 1,169 | $ | 1,117 | $ | 3,420 | $ | 3,259 | ||||||||
General and administrative expenses (G&A) | 1,098 | 1,059 | 3,280 | 3,234 | ||||||||||||
Less: | ||||||||||||||||
Non-insurance G&A | 48 | 38 | 145 | 114 | ||||||||||||
Allocated fee income | 74 | 71 | 214 | 209 | ||||||||||||
Billing and policy fees and other | 28 | 24 | 81 | 69 | ||||||||||||
Expense ratio numerator | $ | 2,117 | $ | 2,043 | $ | 6,260 | $ | 6,101 | ||||||||
Earned premium | $ | 7,179 | $ | 6,882 | $ | 21,022 | $ | 20,114 | ||||||||
Combined ratio (1) | ||||||||||||||||
Loss and loss adjustment expense ratio | 72.0 | % | 66.9 | % | 68.1 | % | 66.5 | % | ||||||||
Underwriting expense ratio | 29.5 | % | 29.7 | % | 29.8 | % | 30.3 | % | ||||||||
Combined ratio | 101.5 | % | 96.6 | % | 97.9 | % | 96.8 | % |
As of | ||||||||
($ in millions, except per share amounts) | September 30, 2019 | December 31, 2018 | ||||||
Shareholders’ equity | $ | 25,607 | $ | 22,894 | ||||
Less: Net unrealized investment gains (losses), net of tax, included in shareholders’ equity | 2,354 | (113 | ) | |||||
Shareholders’ equity, excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity | 23,253 | 23,007 | ||||||
Less: | ||||||||
Goodwill | 3,929 | 3,937 | ||||||
Other intangible assets | 329 | 345 | ||||||
Impact of deferred tax on other intangible assets | (44 | ) | (44 | ) | ||||
Tangible shareholders’ equity | $ | 19,039 | $ | 18,769 | ||||
Common shares outstanding | 258.1 | 263.6 | ||||||
Book value per share | $ | 99.21 | $ | 86.84 | ||||
Adjusted book value per share | 90.09 | 87.27 | ||||||
Tangible book value per share | 73.76 | 71.20 |
As of | |||||||||
($ in millions) | September 30, 2019 | December 31, 2018 | |||||||
Debt | $ | 6,558 | $ | 6,564 | |||||
Shareholders’ equity | 25,607 | 22,894 | |||||||
Total capitalization | 32,165 | 29,458 | |||||||
Less: Net unrealized investment gains (losses), net of tax, included in shareholders’ equity | 2,354 | (113 | ) | ||||||
Total capitalization excluding net unrealized gain (loss) on investments, net of tax, included in shareholders’ equity | $ | 29,811 | $ | 29,571 | |||||
Debt-to-capital ratio | 20.4 | % | 22.3 | % | |||||
Debt-to-capital ratio excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity | 22.0 | % | 22.2 | % |
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) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Net income | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 796 | $ | 557 | $ | 396 | $ | 1,902 | $ | 1,749 | ||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||||||||||
Basic | $ | 2.45 | $ | 1.93 | $ | 2.65 | $ | 2.33 | $ | 3.01 | $ | 2.11 | $ | 1.52 | $ | 7.03 | $ | 6.65 | ||||||||||||||||||
Diluted | $ | 2.42 | $ | 1.92 | $ | 2.62 | $ | 2.32 | $ | 2.99 | $ | 2.10 | $ | 1.50 | $ | 6.97 | $ | 6.59 | ||||||||||||||||||
Core income | $ | 678 | $ | 494 | $ | 687 | $ | 571 | $ | 755 | $ | 537 | $ | 378 | $ | 1,859 | $ | 1,670 | ||||||||||||||||||
Core income per share: | ||||||||||||||||||||||||||||||||||||
Basic | $ | 2.48 | $ | 1.83 | $ | 2.56 | $ | 2.15 | $ | 2.85 | $ | 2.04 | $ | 1.45 | $ | 6.87 | $ | 6.35 | ||||||||||||||||||
Diluted | $ | 2.46 | $ | 1.81 | $ | 2.54 | $ | 2.13 | $ | 2.83 | $ | 2.02 | $ | 1.43 | $ | 6.81 | $ | 6.29 | ||||||||||||||||||
Return on equity | 11.5 | % | 9.2 | % | 12.6 | % | 10.9 | % | 13.5 | % | 9.0 | % | 6.2 | % | 11.1 | % | 9.5 | % | ||||||||||||||||||
Core return on equity | 11.9 | % | 8.7 | % | 12.0 | % | 10.0 | % | 13.0 | % | 9.2 | % | 6.5 | % | 10.9 | % | 9.6 | % | ||||||||||||||||||
Total assets, at period end | $ | 103,676 | $ | 103,523 | $ | 104,390 | $ | 104,233 | $ | 107,246 | $ | 108,572 | $ | 110,241 | $ | 104,390 | $ | 110,241 | ||||||||||||||||||
Total equity, at period end | $ | 22,979 | $ | 22,623 | $ | 22,460 | $ | 22,894 | $ | 24,340 | $ | 25,321 | $ | 25,607 | $ | 22,460 | $ | 25,607 | ||||||||||||||||||
Book value per share, at period end | $ | 85.03 | $ | 84.51 | $ | 84.82 | $ | 86.84 | $ | 92.94 | $ | 97.26 | $ | 99.21 | $ | 84.82 | $ | 99.21 | ||||||||||||||||||
Less: Net unrealized investment gains (losses), net of tax | 0.49 | (0.42 | ) | (1.69 | ) | (0.43 | ) | 3.85 | 7.21 | 9.12 | (1.69 | ) | 9.12 | |||||||||||||||||||||||
Adjusted book value per share, at period end | $ | 84.54 | $ | 84.93 | $ | 86.51 | $ | 87.27 | $ | 89.09 | $ | 90.05 | $ | 90.09 | $ | 86.51 | $ | 90.09 | ||||||||||||||||||
Weighted average number of common shares outstanding (basic) | 271.0 | 268.7 | 266.1 | 263.9 | 262.9 | 261.3 | 259.2 | 268.6 | 261.1 | |||||||||||||||||||||||||||
Weighted average number of common shares outstanding and common stock equivalents (diluted) | 273.9 | 271.1 | 268.4 | 266.0 | 264.8 | 263.7 | 261.8 | 271.1 | 263.4 | |||||||||||||||||||||||||||
Common shares outstanding at period end | 270.2 | 267.7 | 264.8 | 263.6 | 261.9 | 260.3 | 258.1 | 264.8 | 258.1 | |||||||||||||||||||||||||||
Common stock dividends declared | $ | 197 | $ | 209 | $ | 207 | $ | 205 | $ | 204 | $ | 217 | $ | 215 | $ | 613 | $ | 636 | ||||||||||||||||||
Common stock repurchased: | ||||||||||||||||||||||||||||||||||||
Under Board of Directors authorization | ||||||||||||||||||||||||||||||||||||
Shares | 2.5 | 2.7 | 3.0 | 1.4 | 2.9 | 2.6 | 2.5 | 8.2 | 8.0 | |||||||||||||||||||||||||||
Cost | $ | 350 | $ | 350 | $ | 400 | $ | 170 | $ | 375 | $ | 375 | $ | 375 | $ | 1,100 | $ | 1,125 | ||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||||
Shares | 0.3 | — | 0.1 | — | 0.3 | — | — | 0.4 | 0.3 | |||||||||||||||||||||||||||
Cost | $ | 51 | $ | — | $ | — | $ | — | $ | 46 | $ | 1 | $ | — | $ | 51 | $ | 47 | ||||||||||||||||||
($ and shares in millions, except earnings per share) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||||||
Net income | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 796 | $ | 557 | $ | 396 | $ | 1,902 | $ | 1,749 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses, after-tax | 9 | (30 | ) | (22 | ) | (50 | ) | (41 | ) | (20 | ) | (18 | ) | (43 | ) | (79 | ) | |||||||||||||||||||
Core income | $ | 678 | $ | 494 | $ | 687 | $ | 571 | $ | 755 | $ | 537 | $ | 378 | $ | 1,859 | $ | 1,670 | ||||||||||||||||||
Basic earnings per share | ||||||||||||||||||||||||||||||||||||
Net income | $ | 2.45 | $ | 1.93 | $ | 2.65 | $ | 2.33 | $ | 3.01 | $ | 2.11 | $ | 1.52 | $ | 7.03 | $ | 6.65 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses, after-tax | 0.03 | (0.10 | ) | (0.09 | ) | (0.18 | ) | (0.16 | ) | (0.07 | ) | (0.07 | ) | (0.16 | ) | (0.30 | ) | |||||||||||||||||||
Core income | $ | 2.48 | $ | 1.83 | $ | 2.56 | $ | 2.15 | $ | 2.85 | $ | 2.04 | $ | 1.45 | $ | 6.87 | $ | 6.35 | ||||||||||||||||||
Diluted earnings per share | ||||||||||||||||||||||||||||||||||||
Net income | $ | 2.42 | $ | 1.92 | $ | 2.62 | $ | 2.32 | $ | 2.99 | $ | 2.10 | $ | 1.50 | $ | 6.97 | $ | 6.59 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses, after-tax | 0.04 | (0.11 | ) | (0.08 | ) | (0.19 | ) | (0.16 | ) | (0.08 | ) | (0.07 | ) | (0.16 | ) | (0.30 | ) | |||||||||||||||||||
Core income | $ | 2.46 | $ | 1.81 | $ | 2.54 | $ | 2.13 | $ | 2.83 | $ | 2.02 | $ | 1.43 | $ | 6.81 | $ | 6.29 | ||||||||||||||||||
Basic and Diluted | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Net income, as reported | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 796 | $ | 557 | $ | 396 | $ | 1,902 | $ | 1,749 | ||||||||||||||||||
Participating share-based awards - allocated income | (5 | ) | (4 | ) | (5 | ) | (5 | ) | (5 | ) | (4 | ) | (3 | ) | (14 | ) | (12 | ) | ||||||||||||||||||
Net income available to common shareholders - basic and diluted | $ | 664 | $ | 520 | $ | 704 | $ | 616 | $ | 791 | $ | 553 | $ | 393 | $ | 1,888 | $ | 1,737 | ||||||||||||||||||
Common Shares | ||||||||||||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding | 271.0 | 268.7 | 266.1 | 263.9 | 262.9 | 261.3 | 259.2 | 268.6 | 261.1 | |||||||||||||||||||||||||||
Diluted | ||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding | 271.0 | 268.7 | 266.1 | 263.9 | 262.9 | 261.3 | 259.2 | 268.6 | 261.1 | |||||||||||||||||||||||||||
Weighted average effects of dilutive securities - stock options and performance shares | 2.9 | 2.4 | 2.3 | 2.1 | 1.9 | 2.4 | 2.6 | 2.5 | 2.3 | |||||||||||||||||||||||||||
Diluted weighted average shares outstanding | 273.9 | 271.1 | 268.4 | 266.0 | 264.8 | 263.7 | 261.8 | 271.1 | 263.4 | |||||||||||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Premiums | $ | 6,537 | $ | 6,695 | $ | 6,882 | $ | 6,945 | $ | 6,855 | $ | 6,988 | $ | 7,179 | $ | 20,114 | $ | 21,022 | ||||||||||||||||||
Net investment income | 603 | 595 | 646 | 630 | 582 | 648 | 622 | 1,844 | 1,852 | |||||||||||||||||||||||||||
Fee income | 103 | 112 | 109 | 108 | 109 | 116 | 121 | 324 | 346 | |||||||||||||||||||||||||||
Net realized investment gains (losses) | (11 | ) | 36 | 29 | 60 | 53 | 25 | 23 | 54 | 101 | ||||||||||||||||||||||||||
Other revenues | 54 | 39 | 57 | 53 | 72 | 57 | 68 | 150 | 197 | |||||||||||||||||||||||||||
Total revenues | 7,286 | 7,477 | 7,723 | 7,796 | 7,671 | 7,834 | 8,013 | 22,486 | 23,518 | |||||||||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||
Claims and claim adjustment expenses | 4,296 | 4,562 | 4,655 | 4,778 | 4,442 | 4,821 | 5,230 | 13,513 | 14,493 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs | 1,061 | 1,081 | 1,117 | 1,122 | 1,117 | 1,134 | 1,169 | 3,259 | 3,420 | |||||||||||||||||||||||||||
General and administrative expenses | 1,062 | 1,113 | 1,059 | 1,063 | 1,057 | 1,125 | 1,098 | 3,234 | 3,280 | |||||||||||||||||||||||||||
Interest expense | 89 | 90 | 86 | 87 | 88 | 89 | 84 | 265 | 261 | |||||||||||||||||||||||||||
Total claims and expenses | 6,508 | 6,846 | 6,917 | 7,050 | 6,704 | 7,169 | 7,581 | 20,271 | 21,454 | |||||||||||||||||||||||||||
Income before income taxes | 778 | 631 | 806 | 746 | 967 | 665 | 432 | 2,215 | 2,064 | |||||||||||||||||||||||||||
Income tax expense | 109 | 107 | 97 | 125 | 171 | 108 | 36 | 313 | 315 | |||||||||||||||||||||||||||
Net income | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 796 | $ | 557 | $ | 396 | $ | 1,902 | $ | 1,749 | ||||||||||||||||||
Other-than-temporary impairments (OTTI) | ||||||||||||||||||||||||||||||||||||
Total OTTI gains (losses) | $ | — | $ | (1 | ) | $ | — | $ | — | $ | (1 | ) | $ | (1 | ) | $ | — | $ | (1 | ) | $ | (2 | ) | |||||||||||||
OTTI losses recognized in net realized investment gains (losses) | $ | — | $ | (1 | ) | $ | — | $ | — | $ | (1 | ) | $ | (1 | ) | $ | — | $ | (1 | ) | $ | (2 | ) | |||||||||||||
OTTI gains (losses) recognized in other comprehensive income (loss) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||
Effective tax rate on net investment income | 14.9 | % | 14.8 | % | 15.4 | % | 15.0 | % | 14.7 | % | 15.4 | % | 15.2 | % | 15.0 | % | 15.1 | % | ||||||||||||||||||
Net investment income (after-tax) | $ | 513 | $ | 507 | $ | 547 | $ | 535 | $ | 496 | $ | 548 | $ | 528 | $ | 1,567 | $ | 1,572 | ||||||||||||||||||
Catastrophes, net of reinsurance: | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 354 | $ | 488 | $ | 264 | $ | 610 | $ | 193 | $ | 367 | $ | 241 | $ | 1,106 | $ | 801 | ||||||||||||||||||
After-tax | $ | 280 | $ | 384 | $ | 209 | $ | 482 | $ | 152 | $ | 290 | $ | 190 | $ | 873 | $ | 632 | ||||||||||||||||||
Prior year reserve development - favorable (unfavorable): | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 150 | $ | 186 | $ | 14 | $ | 167 | $ | 51 | $ | 123 | $ | (294 | ) | $ | 350 | $ | (120 | ) | ||||||||||||||||
After-tax | $ | 119 | $ | 148 | $ | 10 | $ | 132 | $ | 41 | $ | 99 | $ | (232 | ) | $ | 277 | $ | (92 | ) | ||||||||||||||||
($ in millions, net of tax) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Underwriting gain (loss) | $ | 222 | $ | 61 | $ | 194 | $ | 99 | $ | 307 | $ | 52 | $ | (101 | ) | $ | 477 | $ | 258 | |||||||||||||||||
Net investment income | 513 | 507 | 547 | 535 | 496 | 548 | 528 | 1,567 | 1,572 | |||||||||||||||||||||||||||
Other income (expense), including interest expense | (57 | ) | (74 | ) | (54 | ) | (63 | ) | (48 | ) | (63 | ) | (49 | ) | (185 | ) | (160 | ) | ||||||||||||||||||
Core income | 678 | 494 | 687 | 571 | 755 | 537 | 378 | 1,859 | 1,670 | |||||||||||||||||||||||||||
Net realized investment gains (losses) | (9 | ) | 30 | 22 | 50 | 41 | 20 | 18 | 43 | 79 | ||||||||||||||||||||||||||
Net income | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 796 | $ | 557 | $ | 396 | $ | 1,902 | $ | 1,749 | ||||||||||||||||||
Combined ratio (1) (2) | ||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 64.9 | % | 67.4 | % | 66.9 | % | 68.0 | % | 64.0 | % | 68.2 | % | 72.0 | % | 66.5 | % | 68.1 | % | ||||||||||||||||||
Underwriting expense ratio | 30.6 | % | 30.7 | % | 29.7 | % | 29.5 | % | 29.7 | % | 30.2 | % | 29.5 | % | 30.3 | % | 29.8 | % | ||||||||||||||||||
Combined ratio | 95.5 | % | 98.1 | % | 96.6 | % | 97.5 | % | 93.7 | % | 98.4 | % | 101.5 | % | 96.8 | % | 97.9 | % | ||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||
Net (favorable) unfavorable prior year reserve development | (2.3 | )% | (2.8 | )% | (0.2 | )% | (2.4 | )% | (0.7 | )% | (1.8 | )% | 4.1 | % | (1.7 | )% | 0.6 | % | ||||||||||||||||||
Catastrophes, net of reinsurance | 5.4 | % | 7.3 | % | 3.8 | % | 8.8 | % | 2.8 | % | 5.3 | % | 3.3 | % | 5.5 | % | 3.8 | % | ||||||||||||||||||
Underlying combined ratio | 92.4 | % | 93.6 | % | 93.0 | % | 91.1 | % | 91.6 | % | 94.9 | % | 94.1 | % | 93.0 | % | 93.5 | % | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Billing and policy fees and other | $ | 23 | $ | 22 | $ | 24 | $ | 24 | $ | 27 | $ | 26 | $ | 28 | $ | 69 | $ | 81 | ||||||||||||||||||
Fee income: | ||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expenses | $ | 37 | $ | 40 | $ | 38 | $ | 39 | $ | 40 | $ | 45 | $ | 47 | $ | 115 | $ | 132 | ||||||||||||||||||
Underwriting expenses | 66 | 72 | 71 | 69 | 69 | 71 | 74 | 209 | 214 | |||||||||||||||||||||||||||
Total fee income | $ | 103 | $ | 112 | $ | 109 | $ | 108 | $ | 109 | $ | 116 | $ | 121 | $ | 324 | $ | 346 | ||||||||||||||||||
Non-insurance general and administrative expenses | $ | 37 | $ | 39 | $ | 38 | $ | 45 | $ | 47 | $ | 50 | $ | 48 | $ | 114 | $ | 145 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Premiums | $ | 6,537 | $ | 6,695 | $ | 6,882 | $ | 6,945 | $ | 6,855 | $ | 6,988 | $ | 7,179 | $ | 20,114 | $ | 21,022 | ||||||||||||||||||
Net investment income | 603 | 595 | 646 | 630 | 582 | 648 | 622 | 1,844 | 1,852 | |||||||||||||||||||||||||||
Fee income | 103 | 112 | 109 | 108 | 109 | 116 | 121 | 324 | 346 | |||||||||||||||||||||||||||
Other revenues | 54 | 39 | 57 | 53 | 72 | 57 | 68 | 150 | 197 | |||||||||||||||||||||||||||
Total revenues | 7,297 | 7,441 | 7,694 | 7,736 | 7,618 | 7,809 | 7,990 | 22,432 | 23,417 | |||||||||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||
Claims and claim adjustment expenses | 4,296 | 4,562 | 4,655 | 4,778 | 4,442 | 4,821 | 5,230 | 13,513 | 14,493 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs | 1,061 | 1,081 | 1,117 | 1,122 | 1,117 | 1,134 | 1,169 | 3,259 | 3,420 | |||||||||||||||||||||||||||
General and administrative expenses | 1,062 | 1,113 | 1,059 | 1,063 | 1,057 | 1,125 | 1,098 | 3,234 | 3,280 | |||||||||||||||||||||||||||
Interest expense | 89 | 90 | 86 | 87 | 88 | 89 | 84 | 265 | 261 | |||||||||||||||||||||||||||
Total claims and expenses | 6,508 | 6,846 | 6,917 | 7,050 | 6,704 | 7,169 | 7,581 | 20,271 | 21,454 | |||||||||||||||||||||||||||
Core income before income taxes | 789 | 595 | 777 | 686 | 914 | 640 | 409 | 2,161 | 1,963 | |||||||||||||||||||||||||||
Income tax expense | 111 | 101 | 90 | 115 | 159 | 103 | 31 | 302 | 293 | |||||||||||||||||||||||||||
Core income | $ | 678 | $ | 494 | $ | 687 | $ | 571 | $ | 755 | $ | 537 | $ | 378 | $ | 1,859 | $ | 1,670 | ||||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||
Effective tax rate on net investment income | 14.9 | % | 14.8 | % | 15.4 | % | 15.0 | % | 14.7 | % | 15.4 | % | 15.2 | % | 15.0 | % | 15.1 | % | ||||||||||||||||||
Net investment income (after-tax) | $ | 513 | $ | 507 | $ | 547 | $ | 535 | $ | 496 | $ | 548 | $ | 528 | $ | 1,567 | $ | 1,572 | ||||||||||||||||||
Catastrophes, net of reinsurance: | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 354 | $ | 488 | $ | 264 | $ | 610 | $ | 193 | $ | 367 | $ | 241 | $ | 1,106 | $ | 801 | ||||||||||||||||||
After-tax | $ | 280 | $ | 384 | $ | 209 | $ | 482 | $ | 152 | $ | 290 | $ | 190 | $ | 873 | $ | 632 | ||||||||||||||||||
Prior year reserve development - favorable (unfavorable): | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 150 | $ | 186 | $ | 14 | $ | 167 | $ | 51 | $ | 123 | $ | (294 | ) | $ | 350 | $ | (120 | ) | ||||||||||||||||
After-tax | $ | 119 | $ | 148 | $ | 10 | $ | 132 | $ | 41 | $ | 99 | $ | (232 | ) | $ | 277 | $ | (92 | ) | ||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 7,418 | $ | 7,429 | $ | 7,462 | $ | 6,943 | $ | 7,839 | $ | 7,824 | $ | 8,022 | $ | 22,309 | $ | 23,685 | ||||||||||||||||||
Net written premiums | $ | 6,824 | $ | 7,131 | $ | 7,062 | $ | 6,691 | $ | 7,057 | $ | 7,450 | $ | 7,569 | $ | 21,017 | $ | 22,076 | ||||||||||||||||||
Net earned premiums | $ | 6,537 | $ | 6,695 | $ | 6,882 | $ | 6,945 | $ | 6,855 | $ | 6,988 | $ | 7,179 | $ | 20,114 | $ | 21,022 | ||||||||||||||||||
Losses and loss adjustment expenses | 4,245 | 4,506 | 4,606 | 4,719 | 4,389 | 4,764 | 5,166 | 13,357 | 14,319 | |||||||||||||||||||||||||||
Underwriting expenses | 2,072 | 2,147 | 2,082 | 1,999 | 2,116 | 2,217 | 2,179 | 6,301 | 6,512 | |||||||||||||||||||||||||||
Statutory underwriting gain (loss) | 220 | 42 | 194 | 227 | 350 | 7 | (166 | ) | 456 | 191 | ||||||||||||||||||||||||||
Policyholder dividends | 13 | 12 | 12 | 15 | 13 | 9 | 15 | 37 | 37 | |||||||||||||||||||||||||||
Statutory underwriting gain (loss) after policyholder dividends | $ | 207 | $ | 30 | $ | 182 | $ | 212 | $ | 337 | $ | (2 | ) | $ | (181 | ) | $ | 419 | $ | 154 | ||||||||||||||||
Other statutory statistics | ||||||||||||||||||||||||||||||||||||
Reserves for losses and loss adjustment expenses | $ | 41,669 | $ | 41,861 | $ | 42,293 | $ | 42,409 | $ | 42,581 | $ | 42,979 | $ | 43,624 | $ | 42,293 | $ | 43,624 | ||||||||||||||||||
Increase in reserves | $ | 215 | $ | 192 | $ | 432 | $ | 116 | $ | 172 | $ | 398 | $ | 645 | $ | 839 | $ | 1,215 | ||||||||||||||||||
Statutory capital and surplus | $ | 20,533 | $ | 20,371 | $ | 20,462 | $ | 20,774 | $ | 21,074 | $ | 21,080 | $ | 20,780 | $ | 20,462 | $ | 20,780 | ||||||||||||||||||
Net written premiums/surplus (1) | 1.29:1 | 1.33:1 | 1.34:1 | 1.33:1 | 1.33:1 | 1.34:1 | 1.38:1 | 1.34:1 | 1.38:1 | |||||||||||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Written premiums | ||||||||||||||||||||||||||||||||||||
Gross | $ | 7,418 | $ | 7,429 | $ | 7,462 | $ | 6,943 | $ | 7,839 | $ | 7,824 | $ | 8,022 | $ | 22,309 | $ | 23,685 | ||||||||||||||||||
Ceded | (594 | ) | (298 | ) | (400 | ) | (252 | ) | (782 | ) | (374 | ) | (453 | ) | (1,292 | ) | (1,609 | ) | ||||||||||||||||||
Net | $ | 6,824 | $ | 7,131 | $ | 7,062 | $ | 6,691 | $ | 7,057 | $ | 7,450 | $ | 7,569 | $ | 21,017 | $ | 22,076 | ||||||||||||||||||
Earned premiums | ||||||||||||||||||||||||||||||||||||
Gross | $ | 6,903 | $ | 7,060 | $ | 7,266 | $ | 7,331 | $ | 7,282 | $ | 7,429 | $ | 7,636 | $ | 21,229 | $ | 22,347 | ||||||||||||||||||
Ceded | (366 | ) | (365 | ) | (384 | ) | (386 | ) | (427 | ) | (441 | ) | (457 | ) | (1,115 | ) | (1,325 | ) | ||||||||||||||||||
Net | $ | 6,537 | $ | 6,695 | $ | 6,882 | $ | 6,945 | $ | 6,855 | $ | 6,988 | $ | 7,179 | $ | 20,114 | $ | 21,022 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Premiums | $ | 3,568 | $ | 3,641 | $ | 3,743 | $ | 3,770 | $ | 3,742 | $ | 3,783 | $ | 3,882 | $ | 10,952 | $ | 11,407 | ||||||||||||||||||
Net investment income | 446 | 440 | 482 | 465 | 427 | 481 | 457 | 1,368 | 1,365 | |||||||||||||||||||||||||||
Fee income | 99 | 107 | 103 | 103 | 104 | 111 | 114 | 309 | 329 | |||||||||||||||||||||||||||
Other revenues | 31 | 20 | 33 | 28 | 43 | 30 | 39 | 84 | 112 | |||||||||||||||||||||||||||
Total revenues | 4,144 | 4,208 | 4,361 | 4,366 | 4,316 | 4,405 | 4,492 | 12,713 | 13,213 | |||||||||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||
Claims and claim adjustment expenses | 2,392 | 2,484 | 2,653 | 2,642 | 2,580 | 2,686 | 3,028 | 7,529 | 8,294 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs | 580 | 588 | 610 | 610 | 615 | 618 | 634 | 1,778 | 1,867 | |||||||||||||||||||||||||||
General and administrative expenses | 650 | 674 | 648 | 651 | 632 | 686 | 657 | 1,972 | 1,975 | |||||||||||||||||||||||||||
Total claims and expenses | 3,622 | 3,746 | 3,911 | 3,903 | 3,827 | 3,990 | 4,319 | 11,279 | 12,136 | |||||||||||||||||||||||||||
Segment income before income taxes | 522 | 462 | 450 | 463 | 489 | 415 | 173 | 1,434 | 1,077 | |||||||||||||||||||||||||||
Income tax expense (benefit) | 70 | 77 | 40 | 72 | 75 | 64 | (6 | ) | 187 | 133 | ||||||||||||||||||||||||||
Segment income | $ | 452 | $ | 385 | $ | 410 | $ | 391 | $ | 414 | $ | 351 | $ | 179 | $ | 1,247 | $ | 944 | ||||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||
Effective tax rate on net investment income | 14.7 | % | 14.7 | % | 15.3 | % | 14.9 | % | 14.6 | % | 15.3 | % | 15.1 | % | 14.9 | % | 15.0 | % | ||||||||||||||||||
Net investment income (after-tax) | $ | 380 | $ | 376 | $ | 408 | $ | 395 | $ | 365 | $ | 407 | $ | 389 | $ | 1,164 | $ | 1,161 | ||||||||||||||||||
Catastrophes, net of reinsurance: | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 138 | $ | 168 | $ | 136 | $ | 197 | $ | 95 | $ | 211 | $ | 116 | $ | 442 | $ | 422 | ||||||||||||||||||
After-tax | $ | 110 | $ | 132 | $ | 107 | $ | 156 | $ | 75 | $ | 167 | $ | 91 | $ | 349 | $ | 333 | ||||||||||||||||||
Prior year reserve development - favorable (unfavorable): | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 66 | $ | 84 | $ | (56 | ) | $ | 48 | $ | (21 | ) | $ | 71 | $ | (316 | ) | $ | 94 | $ | (266 | ) | ||||||||||||||
After-tax | $ | 52 | $ | 68 | $ | (45 | ) | $ | 38 | $ | (16 | ) | $ | 57 | $ | (249 | ) | $ | 75 | $ | (208 | ) | ||||||||||||||
($ in millions, net of tax) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Underwriting gain (loss) | $ | 70 | $ | 19 | $ | 2 | $ | 3 | $ | 44 | $ | (48 | ) | $ | (210 | ) | $ | 91 | $ | (214 | ) | |||||||||||||||
Net investment income | 380 | 376 | 408 | 395 | 365 | 407 | 389 | 1,164 | 1,161 | |||||||||||||||||||||||||||
Other income (expense) | 2 | (10 | ) | — | (7 | ) | 5 | (8 | ) | — | (8 | ) | (3 | ) | ||||||||||||||||||||||
Segment income | $ | 452 | $ | 385 | $ | 410 | $ | 391 | $ | 414 | $ | 351 | $ | 179 | $ | 1,247 | $ | 944 | ||||||||||||||||||
Combined ratio (1) (2) | ||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 65.7 | % | 66.9 | % | 69.6 | % | 68.7 | % | 67.6 | % | 69.6 | % | 76.6 | % | 67.4 | % | 71.3 | % | ||||||||||||||||||
Underwriting expense ratio | 31.8 | % | 31.9 | % | 31.0 | % | 30.7 | % | 30.5 | % | 31.5 | % | 30.4 | % | 31.6 | % | 30.8 | % | ||||||||||||||||||
Combined ratio | 97.5 | % | 98.8 | % | 100.6 | % | 99.4 | % | 98.1 | % | 101.1 | % | 107.0 | % | 99.0 | % | 102.1 | % | ||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||
Net (favorable) unfavorable prior year reserve development | (1.9 | )% | (2.3 | )% | 1.5 | % | (1.2 | )% | 0.6 | % | (1.9 | )% | 8.1 | % | (0.9 | )% | 2.3 | % | ||||||||||||||||||
Catastrophes, net of reinsurance | 3.9 | % | 4.6 | % | 3.7 | % | 5.2 | % | 2.5 | % | 5.6 | % | 3.0 | % | 4.1 | % | 3.7 | % | ||||||||||||||||||
Underlying combined ratio | 95.5 | % | 96.5 | % | 95.4 | % | 95.4 | % | 95.0 | % | 97.4 | % | 95.9 | % | 95.8 | % | 96.1 | % | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Billing and policy fees and other | $ | 4 | $ | 4 | $ | 3 | $ | 4 | $ | 4 | $ | 3 | $ | 5 | $ | 11 | $ | 12 | ||||||||||||||||||
Fee income: | ||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expenses | $ | 37 | $ | 40 | $ | 38 | $ | 39 | $ | 40 | $ | 45 | $ | 47 | $ | 115 | $ | 132 | ||||||||||||||||||
Underwriting expenses | 62 | 67 | 65 | 64 | 64 | 66 | 67 | 194 | 197 | |||||||||||||||||||||||||||
Total fee income | $ | 99 | $ | 107 | $ | 103 | $ | 103 | $ | 104 | $ | 111 | $ | 114 | $ | 309 | $ | 329 | ||||||||||||||||||
Non-insurance general and administrative expenses | $ | 28 | $ | 30 | $ | 29 | $ | 37 | $ | 38 | $ | 41 | $ | 39 | $ | 87 | $ | 118 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 4,471 | $ | 4,038 | $ | 3,992 | $ | 3,754 | $ | 4,730 | $ | 4,193 | $ | 4,271 | $ | 12,501 | $ | 13,194 | ||||||||||||||||||
Net written premiums | $ | 3,994 | $ | 3,781 | $ | 3,648 | $ | 3,533 | $ | 4,163 | $ | 3,874 | $ | 3,889 | $ | 11,423 | $ | 11,926 | ||||||||||||||||||
Net earned premiums | $ | 3,568 | $ | 3,641 | $ | 3,743 | $ | 3,770 | $ | 3,742 | $ | 3,783 | $ | 3,882 | $ | 10,952 | $ | 11,407 | ||||||||||||||||||
Losses and loss adjustment expenses | 2,344 | 2,429 | 2,606 | 2,586 | 2,529 | 2,631 | 2,969 | 7,379 | 8,129 | |||||||||||||||||||||||||||
Underwriting expenses | 1,213 | 1,196 | 1,144 | 1,107 | 1,226 | 1,226 | 1,164 | 3,553 | 3,616 | |||||||||||||||||||||||||||
Statutory underwriting gain (loss) | 11 | 16 | (7 | ) | 77 | (13 | ) | (74 | ) | (251 | ) | 20 | (338 | ) | ||||||||||||||||||||||
Policyholder dividends | 11 | 9 | 11 | 12 | 11 | 7 | 11 | 31 | 29 | |||||||||||||||||||||||||||
Statutory underwriting gain (loss) after policyholder dividends | $ | — | $ | 7 | $ | (18 | ) | $ | 65 | $ | (24 | ) | $ | (81 | ) | $ | (262 | ) | $ | (11 | ) | $ | (367 | ) | ||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Net written premiums by market | ||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||
Select Accounts | $ | 773 | $ | 729 | $ | 666 | $ | 660 | $ | 785 | $ | 756 | $ | 695 | $ | 2,168 | $ | 2,236 | ||||||||||||||||||
Middle Market | 2,262 | 1,985 | 2,032 | 1,935 | 2,410 | 2,009 | 2,150 | 6,279 | 6,569 | |||||||||||||||||||||||||||
National Accounts | 309 | 231 | 238 | 247 | 304 | 223 | 273 | 778 | 800 | |||||||||||||||||||||||||||
National Property and Other | 380 | 518 | 485 | 422 | 387 | 588 | 553 | 1,383 | 1,528 | |||||||||||||||||||||||||||
Total Domestic | 3,724 | 3,463 | 3,421 | 3,264 | 3,886 | 3,576 | 3,671 | 10,608 | 11,133 | |||||||||||||||||||||||||||
International | 270 | 318 | 227 | 269 | 277 | 298 | 218 | 815 | 793 | |||||||||||||||||||||||||||
Total | $ | 3,994 | $ | 3,781 | $ | 3,648 | $ | 3,533 | $ | 4,163 | $ | 3,874 | $ | 3,889 | $ | 11,423 | $ | 11,926 | ||||||||||||||||||
Net written premiums by product line | ||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||
Workers’ compensation | $ | 1,190 | $ | 935 | $ | 887 | $ | 828 | $ | 1,191 | $ | 893 | $ | 905 | $ | 3,012 | $ | 2,989 | ||||||||||||||||||
Commercial automobile | 651 | 629 | 625 | 613 | 719 | 677 | 674 | 1,905 | 2,070 | |||||||||||||||||||||||||||
Commercial property | 391 | 536 | 492 | 448 | 389 | 583 | 568 | 1,419 | 1,540 | |||||||||||||||||||||||||||
General liability | 591 | 531 | 559 | 546 | 678 | 548 | 611 | 1,681 | 1,837 | |||||||||||||||||||||||||||
Commercial multi-peril | 896 | 831 | 840 | 823 | 902 | 871 | 885 | 2,567 | 2,658 | |||||||||||||||||||||||||||
Other | 5 | 1 | 18 | 6 | 7 | 4 | 28 | 24 | 39 | |||||||||||||||||||||||||||
Total Domestic | 3,724 | 3,463 | 3,421 | 3,264 | 3,886 | 3,576 | 3,671 | 10,608 | 11,133 | |||||||||||||||||||||||||||
International | 270 | 318 | 227 | 269 | 277 | 298 | 218 | 815 | 793 | |||||||||||||||||||||||||||
Total | $ | 3,994 | $ | 3,781 | $ | 3,648 | $ | 3,533 | $ | 4,163 | $ | 3,874 | $ | 3,889 | $ | 11,423 | $ | 11,926 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Premiums | $ | 582 | $ | 601 | $ | 617 | $ | 620 | $ | 606 | $ | 632 | $ | 653 | $ | 1,800 | $ | 1,891 | ||||||||||||||||||
Net investment income | 58 | 57 | 57 | 61 | 56 | 58 | 59 | 172 | 173 | |||||||||||||||||||||||||||
Other revenues | 6 | 5 | 5 | 7 | 6 | 6 | 7 | 16 | 19 | |||||||||||||||||||||||||||
Total revenues | 646 | 663 | 679 | 688 | 668 | 696 | 719 | 1,988 | 2,083 | |||||||||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||
Claims and claim adjustment expenses | 216 | 175 | 205 | 176 | 266 | 238 | 303 | 596 | 807 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs | 107 | 113 | 117 | 117 | 112 | 118 | 123 | 337 | 353 | |||||||||||||||||||||||||||
General and administrative expenses | 115 | 116 | 113 | 115 | 117 | 120 | 124 | 344 | 361 | |||||||||||||||||||||||||||
Total claims and expenses | 438 | 404 | 435 | 408 | 495 | 476 | 550 | 1,277 | 1,521 | |||||||||||||||||||||||||||
Segment income before income taxes | 208 | 259 | 244 | 280 | 173 | 220 | 169 | 711 | 562 | |||||||||||||||||||||||||||
Income tax expense | 35 | 55 | 48 | 60 | 35 | 46 | 30 | 138 | 111 | |||||||||||||||||||||||||||
Segment income | $ | 173 | $ | 204 | $ | 196 | $ | 220 | $ | 138 | $ | 174 | $ | 139 | $ | 573 | $ | 451 | ||||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||
Effective tax rate on net investment income | 14.5 | % | 14.3 | % | 14.6 | % | 14.8 | % | 14.4 | % | 14.8 | % | 14.9 | % | 14.5 | % | 14.7 | % | ||||||||||||||||||
Net investment income (after-tax) | $ | 50 | $ | 48 | $ | 49 | $ | 52 | $ | 47 | $ | 50 | $ | 50 | $ | 147 | $ | 147 | ||||||||||||||||||
Catastrophes, net of reinsurance: | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | — | $ | 5 | $ | 4 | $ | 7 | $ | 3 | $ | — | $ | 1 | $ | 9 | $ | 4 | ||||||||||||||||||
After-tax | $ | — | $ | 4 | $ | 3 | $ | 6 | $ | 2 | $ | — | $ | 1 | $ | 7 | $ | 3 | ||||||||||||||||||
Prior year reserve development - favorable: | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 35 | $ | 89 | $ | 53 | $ | 89 | $ | 3 | $ | 39 | $ | 3 | $ | 177 | $ | 45 | ||||||||||||||||||
After-tax | $ | 28 | $ | 70 | $ | 42 | $ | 70 | $ | 2 | $ | 31 | $ | 2 | $ | 140 | $ | 35 | ||||||||||||||||||
($ in millions, net of tax) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Underwriting gain | $ | 119 | $ | 153 | $ | 143 | $ | 165 | $ | 86 | $ | 120 | $ | 85 | $ | 415 | $ | 291 | ||||||||||||||||||
Net investment income | 50 | 48 | 49 | 52 | 47 | 50 | 50 | 147 | 147 | |||||||||||||||||||||||||||
Other income | 4 | 3 | 4 | 3 | 5 | 4 | 4 | 11 | 13 | |||||||||||||||||||||||||||
Segment income | $ | 173 | $ | 204 | $ | 196 | $ | 220 | $ | 138 | $ | 174 | $ | 139 | $ | 573 | $ | 451 | ||||||||||||||||||
Combined ratio (1) | ||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 36.6 | % | 28.8 | % | 33.1 | % | 27.9 | % | 43.5 | % | 37.4 | % | 45.7 | % | 32.8 | % | 42.2 | % | ||||||||||||||||||
Underwriting expense ratio | 38.1 | % | 37.7 | % | 37.1 | % | 36.9 | % | 37.6 | % | 37.5 | % | 37.6 | % | 37.6 | % | 37.6 | % | ||||||||||||||||||
Combined ratio | 74.7 | % | 66.5 | % | 70.2 | % | 64.8 | % | 81.1 | % | 74.9 | % | 83.3 | % | 70.4 | % | 79.8 | % | ||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||
Net favorable prior year reserve development | (6.0 | )% | (14.8 | )% | (8.7 | )% | (14.4 | )% | (0.5 | )% | (6.2 | )% | (0.5 | )% | (9.9 | )% | (2.3 | )% | ||||||||||||||||||
Catastrophes, net of reinsurance | — | % | 0.8 | % | 0.6 | % | 1.1 | % | 0.5 | % | 0.1 | % | 0.2 | % | 0.5 | % | 0.2 | % | ||||||||||||||||||
Underlying combined ratio | 80.7 | % | 80.5 | % | 78.3 | % | 78.1 | % | 81.1 | % | 81.0 | % | 83.6 | % | 79.8 | % | 81.9 | % | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Non-insurance general and administrative expenses | $ | — | $ | 2 | $ | 1 | $ | 2 | $ | 1 | $ | 1 | $ | 1 | $ | 3 | $ | 3 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 638 | $ | 674 | $ | 673 | $ | 680 | $ | 662 | $ | 747 | $ | 770 | $ | 1,985 | $ | 2,179 | ||||||||||||||||||
Net written premiums | $ | 574 | $ | 653 | $ | 644 | $ | 657 | $ | 587 | $ | 710 | $ | 728 | $ | 1,871 | $ | 2,025 | ||||||||||||||||||
Net earned premiums | $ | 582 | $ | 601 | $ | 617 | $ | 620 | $ | 606 | $ | 632 | $ | 653 | $ | 1,800 | $ | 1,891 | ||||||||||||||||||
Losses and loss adjustment expenses | 213 | 173 | 204 | 173 | 264 | 236 | 298 | 590 | 798 | |||||||||||||||||||||||||||
Underwriting expenses | 232 | 234 | 232 | 231 | 233 | 251 | 261 | 698 | 745 | |||||||||||||||||||||||||||
Statutory underwriting gain | 137 | 194 | 181 | 216 | 109 | 145 | 94 | 512 | 348 | |||||||||||||||||||||||||||
Policyholder dividends | 2 | 3 | 1 | 3 | 2 | 2 | 4 | 6 | 8 | |||||||||||||||||||||||||||
Statutory underwriting gain after policyholder dividends | $ | 135 | $ | 191 | $ | 180 | $ | 213 | $ | 107 | $ | 143 | $ | 90 | $ | 506 | $ | 340 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Net written premiums by market | ||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||
Management Liability | $ | 348 | $ | 362 | $ | 379 | $ | 366 | $ | 367 | $ | 403 | $ | 424 | $ | 1,089 | $ | 1,194 | ||||||||||||||||||
Surety | 185 | 235 | 217 | 198 | 184 | 244 | 232 | 637 | 660 | |||||||||||||||||||||||||||
Total Domestic | 533 | 597 | 596 | 564 | 551 | 647 | 656 | 1,726 | 1,854 | |||||||||||||||||||||||||||
International | 41 | 56 | 48 | 93 | 36 | 63 | 72 | 145 | 171 | |||||||||||||||||||||||||||
Total | $ | 574 | $ | 653 | $ | 644 | $ | 657 | $ | 587 | $ | 710 | $ | 728 | $ | 1,871 | $ | 2,025 | ||||||||||||||||||
Net written premiums by product line | ||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||
Fidelity & surety | $ | 241 | $ | 285 | $ | 273 | $ | 250 | $ | 239 | $ | 298 | $ | 292 | $ | 799 | $ | 829 | ||||||||||||||||||
General liability | 244 | 264 | 261 | 268 | 262 | 292 | 293 | 769 | 847 | |||||||||||||||||||||||||||
Other | 48 | 48 | 62 | 46 | 50 | 57 | 71 | 158 | 178 | |||||||||||||||||||||||||||
Total Domestic | 533 | 597 | 596 | 564 | 551 | 647 | 656 | 1,726 | 1,854 | |||||||||||||||||||||||||||
International | 41 | 56 | 48 | 93 | 36 | 63 | 72 | 145 | 171 | |||||||||||||||||||||||||||
Total | $ | 574 | $ | 653 | $ | 644 | $ | 657 | $ | 587 | $ | 710 | $ | 728 | $ | 1,871 | $ | 2,025 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Premiums | $ | 2,387 | $ | 2,453 | $ | 2,522 | $ | 2,555 | $ | 2,507 | $ | 2,573 | $ | 2,644 | $ | 7,362 | $ | 7,724 | ||||||||||||||||||
Net investment income | 99 | 98 | 107 | 104 | 99 | 109 | 106 | 304 | 314 | |||||||||||||||||||||||||||
Fee income | 4 | 5 | 6 | 5 | 5 | 5 | 7 | 15 | 17 | |||||||||||||||||||||||||||
Other revenues | 17 | 14 | 17 | 18 | 22 | 21 | 22 | 48 | 65 | |||||||||||||||||||||||||||
Total revenues | 2,507 | 2,570 | 2,652 | 2,682 | 2,633 | 2,708 | 2,779 | 7,729 | 8,120 | |||||||||||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||
Claims and claim adjustment expenses | 1,688 | 1,903 | 1,797 | 1,960 | 1,596 | 1,897 | 1,899 | 5,388 | 5,392 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs | 374 | 380 | 390 | 395 | 390 | 398 | 412 | 1,144 | 1,200 | |||||||||||||||||||||||||||
General and administrative expenses | 288 | 316 | 290 | 291 | 300 | 311 | 309 | 894 | 920 | |||||||||||||||||||||||||||
Total claims and expenses | 2,350 | 2,599 | 2,477 | 2,646 | 2,286 | 2,606 | 2,620 | 7,426 | 7,512 | |||||||||||||||||||||||||||
Segment income (loss) before income taxes | 157 | (29 | ) | 175 | 36 | 347 | 102 | 159 | 303 | 608 | ||||||||||||||||||||||||||
Income tax expense (benefit) | 28 | (12 | ) | 22 | 4 | 69 | 14 | 28 | 38 | 111 | ||||||||||||||||||||||||||
Segment income (loss) | $ | 129 | $ | (17 | ) | $ | 153 | $ | 32 | $ | 278 | $ | 88 | $ | 131 | $ | 265 | $ | 497 | |||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||
Effective tax rate on net investment income | 15.6 | % | 15.6 | % | 16.1 | % | 15.7 | % | 15.4 | % | 16.1 | % | 15.8 | % | 15.8 | % | 15.8 | % | ||||||||||||||||||
Net investment income (after-tax) | $ | 83 | $ | 83 | $ | 90 | $ | 88 | $ | 84 | $ | 91 | $ | 89 | $ | 256 | $ | 264 | ||||||||||||||||||
Catastrophes, net of reinsurance: | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 216 | $ | 315 | $ | 124 | $ | 406 | $ | 95 | $ | 156 | $ | 124 | $ | 655 | $ | 375 | ||||||||||||||||||
After-tax | $ | 170 | $ | 248 | $ | 99 | $ | 320 | $ | 75 | $ | 123 | $ | 98 | $ | 517 | $ | 296 | ||||||||||||||||||
Prior year reserve development - favorable: | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 49 | $ | 13 | $ | 17 | $ | 30 | $ | 69 | $ | 13 | $ | 19 | $ | 79 | $ | 101 | ||||||||||||||||||
After-tax | $ | 39 | $ | 10 | $ | 13 | $ | 24 | $ | 55 | $ | 11 | $ | 15 | $ | 62 | $ | 81 | ||||||||||||||||||
($ in millions, net of tax) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Underwriting gain (loss) | $ | 33 | $ | (111 | ) | $ | 49 | $ | (69 | ) | $ | 177 | $ | (20 | ) | $ | 24 | $ | (29 | ) | $ | 181 | ||||||||||||||
Net investment income | 83 | 83 | 90 | 88 | 84 | 91 | 89 | 256 | 264 | |||||||||||||||||||||||||||
Other income | 13 | 11 | 14 | 13 | 17 | 17 | 18 | 38 | 52 | |||||||||||||||||||||||||||
Segment income (loss) | $ | 129 | $ | (17 | ) | $ | 153 | $ | 32 | $ | 278 | $ | 88 | $ | 131 | $ | 265 | $ | 497 | |||||||||||||||||
Combined ratio (1) | ||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 70.7 | % | 77.6 | % | 71.2 | % | 76.8 | % | 63.7 | % | 73.7 | % | 71.8 | % | 73.2 | % | 69.8 | % | ||||||||||||||||||
Underwriting expense ratio | 26.8 | % | 27.3 | % | 26.0 | % | 25.8 | % | 26.4 | % | 26.5 | % | 26.2 | % | 26.7 | % | 26.4 | % | ||||||||||||||||||
Combined ratio | 97.5 | % | 104.9 | % | 97.2 | % | 102.6 | % | 90.1 | % | 100.2 | % | 98.0 | % | 99.9 | % | 96.2 | % | ||||||||||||||||||
Domestic Agency combined ratio | 96.5 | % | 103.6 | % | 95.4 | % | 101.9 | % | 88.9 | % | 98.8 | % | 97.2 | % | 98.5 | % | 95.0 | % | ||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||
Net favorable prior year reserve development | (2.0 | )% | (0.5 | )% | (0.6 | )% | (1.1 | )% | (2.8 | )% | (0.5 | )% | (0.7 | )% | (1.1 | )% | (1.3 | )% | ||||||||||||||||||
Catastrophes, net of reinsurance | 9.0 | % | 12.8 | % | 4.9 | % | 15.9 | % | 3.8 | % | 6.1 | % | 4.7 | % | 8.9 | % | 4.9 | % | ||||||||||||||||||
Underlying combined ratio | 90.5 | % | 92.6 | % | 92.9 | % | 87.8 | % | 89.1 | % | 94.6 | % | 94.0 | % | 92.1 | % | 92.6 | % | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Billing and policy fees and other | $ | 19 | $ | 18 | $ | 21 | $ | 20 | $ | 23 | $ | 23 | $ | 23 | $ | 58 | $ | 69 | ||||||||||||||||||
Fee income | $ | 4 | $ | 5 | $ | 6 | $ | 5 | $ | 5 | $ | 5 | $ | 7 | $ | 15 | $ | 17 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 2,309 | $ | 2,717 | $ | 2,797 | $ | 2,509 | $ | 2,447 | $ | 2,884 | $ | 2,981 | $ | 7,823 | $ | 8,312 | ||||||||||||||||||
Net written premiums | $ | 2,256 | $ | 2,697 | $ | 2,770 | $ | 2,501 | $ | 2,307 | $ | 2,866 | $ | 2,952 | $ | 7,723 | $ | 8,125 | ||||||||||||||||||
Net earned premiums | $ | 2,387 | $ | 2,453 | $ | 2,522 | $ | 2,555 | $ | 2,507 | $ | 2,573 | $ | 2,644 | $ | 7,362 | $ | 7,724 | ||||||||||||||||||
Losses and loss adjustment expenses | 1,688 | 1,904 | 1,796 | 1,960 | 1,596 | 1,897 | 1,899 | 5,388 | 5,392 | |||||||||||||||||||||||||||
Underwriting expenses | 627 | 717 | 706 | 661 | 657 | 740 | 754 | 2,050 | 2,151 | |||||||||||||||||||||||||||
Statutory underwriting gain (loss) | $ | 72 | $ | (168 | ) | $ | 20 | $ | (66 | ) | $ | 254 | $ | (64 | ) | $ | (9 | ) | $ | (76 | ) | $ | 181 | |||||||||||||
Policies in force (in thousands) | ||||||||||||||||||||||||||||||||||||
Automobile | 2,976 | 2,981 | 2,986 | 2,983 | 2,981 | 2,980 | 2,979 | 2,986 | 2,979 | |||||||||||||||||||||||||||
Homeowners and Other | 4,879 | 4,961 | 5,037 | 5,087 | 5,163 | 5,263 | 5,361 | 5,037 | 5,361 | |||||||||||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Net written premiums by market | ||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||
Agency | ||||||||||||||||||||||||||||||||||||
Automobile | $ | 1,183 | $ | 1,258 | $ | 1,305 | $ | 1,226 | $ | 1,224 | $ | 1,300 | $ | 1,347 | $ | 3,746 | $ | 3,871 | ||||||||||||||||||
Homeowners and Other | 832 | 1,137 | 1,168 | 1,011 | 837 | 1,258 | 1,300 | 3,137 | 3,395 | |||||||||||||||||||||||||||
Total Agency | 2,015 | 2,395 | 2,473 | 2,237 | 2,061 | 2,558 | 2,647 | 6,883 | 7,266 | |||||||||||||||||||||||||||
Direct-to-Consumer | 92 | 99 | 108 | 97 | 95 | 103 | 115 | 299 | 313 | |||||||||||||||||||||||||||
Total Domestic | 2,107 | 2,494 | 2,581 | 2,334 | 2,156 | 2,661 | 2,762 | 7,182 | 7,579 | |||||||||||||||||||||||||||
International | 149 | 203 | 189 | 167 | 151 | 205 | 190 | 541 | 546 | |||||||||||||||||||||||||||
Total | $ | 2,256 | $ | 2,697 | $ | 2,770 | $ | 2,501 | $ | 2,307 | $ | 2,866 | $ | 2,952 | $ | 7,723 | $ | 8,125 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 1,192 | $ | 1,265 | $ | 1,310 | $ | 1,231 | $ | 1,240 | $ | 1,304 | $ | 1,352 | $ | 3,767 | $ | 3,896 | ||||||||||||||||||
Net written premiums | $ | 1,183 | $ | 1,258 | $ | 1,305 | $ | 1,226 | $ | 1,224 | $ | 1,300 | $ | 1,347 | $ | 3,746 | $ | 3,871 | ||||||||||||||||||
Net earned premiums | $ | 1,158 | $ | 1,192 | $ | 1,227 | $ | 1,242 | $ | 1,228 | $ | 1,249 | $ | 1,271 | $ | 3,577 | $ | 3,748 | ||||||||||||||||||
Losses and loss adjustment expenses | 823 | 851 | 840 | 900 | 810 | 876 | 891 | 2,514 | 2,577 | |||||||||||||||||||||||||||
Underwriting expenses | 285 | 299 | 297 | 288 | 296 | 312 | 310 | 881 | 918 | |||||||||||||||||||||||||||
Statutory underwriting gain | $ | 50 | $ | 42 | $ | 90 | $ | 54 | $ | 122 | $ | 61 | $ | 70 | $ | 182 | $ | 253 | ||||||||||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||
Combined ratio (2): | ||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 71.1 | % | 71.4 | % | 68.5 | % | 72.5 | % | 66.0 | % | 70.1 | % | 70.1 | % | 70.3 | % | 68.8 | % | ||||||||||||||||||
Underwriting expense ratio | 23.7 | % | 24.0 | % | 22.8 | % | 22.8 | % | 23.4 | % | 23.9 | % | 22.9 | % | 23.5 | % | 23.4 | % | ||||||||||||||||||
Combined ratio | 94.8 | % | 95.4 | % | 91.3 | % | 95.3 | % | 89.4 | % | 94.0 | % | 93.0 | % | 93.8 | % | 92.2 | % | ||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||
Net favorable prior year reserve development | (2.3 | )% | (2.8 | )% | (1.8 | )% | (1.9 | )% | (3.4 | )% | (1.1 | )% | (0.5 | )% | (2.3 | )% | (1.6 | )% | ||||||||||||||||||
Catastrophes, net of reinsurance | 0.8 | % | 2.7 | % | 0.5 | % | 0.3 | % | 0.7 | % | 1.3 | % | 0.8 | % | 1.3 | % | 1.0 | % | ||||||||||||||||||
Underlying combined ratio | 96.3 | % | 95.5 | % | 92.6 | % | 96.9 | % | 92.1 | % | 93.8 | % | 92.7 | % | 94.8 | % | 92.8 | % | ||||||||||||||||||
Catastrophe losses, net of reinsurance: | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 10 | $ | 32 | $ | 6 | $ | 4 | $ | 9 | $ | 16 | $ | 11 | $ | 48 | $ | 36 | ||||||||||||||||||
After-tax | $ | 8 | $ | 25 | $ | 5 | $ | 3 | $ | 7 | $ | 13 | $ | 8 | $ | 38 | $ | 28 | ||||||||||||||||||
Prior year reserve development - favorable: | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 27 | $ | 34 | $ | 22 | $ | 24 | $ | 42 | $ | 13 | $ | 5 | $ | 83 | $ | 60 | ||||||||||||||||||
After-tax | $ | 21 | $ | 27 | $ | 18 | $ | 19 | $ | 33 | $ | 10 | $ | 5 | $ | 66 | $ | 48 | ||||||||||||||||||
Policies in force (in thousands) | 2,519 | 2,517 | 2,518 | 2,518 | 2,516 | 2,517 | 2,524 | |||||||||||||||||||||||||||||
Change from prior year quarter | 1.5 | % | 0.1 | % | (0.4 | )% | (0.4 | )% | (0.1 | )% | — | % | 0.2 | % | ||||||||||||||||||||||
Change from prior quarter | (0.4 | )% | (0.1 | )% | — | % | — | % | (0.1 | )% | — | % | 0.3 | % | ||||||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Billing and policy fees and other | $ | 10 | $ | 10 | $ | 11 | $ | 11 | $ | 12 | $ | 12 | $ | 12 | $ | 31 | $ | 36 | ||||||||||||||||||
Fee income | $ | 3 | $ | 3 | $ | 3 | $ | 3 | $ | 3 | $ | 3 | $ | 4 | $ | 9 | $ | 10 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Statutory underwriting | ||||||||||||||||||||||||||||||||||||
Gross written premiums | $ | 873 | $ | 1,148 | $ | 1,180 | $ | 1,012 | $ | 954 | $ | 1,268 | $ | 1,316 | $ | 3,201 | $ | 3,538 | ||||||||||||||||||
Net written premiums | $ | 832 | $ | 1,137 | $ | 1,168 | $ | 1,011 | $ | 837 | $ | 1,258 | $ | 1,300 | $ | 3,137 | $ | 3,395 | ||||||||||||||||||
Net earned premiums | $ | 972 | $ | 996 | $ | 1,025 | $ | 1,038 | $ | 1,011 | $ | 1,050 | $ | 1,089 | $ | 2,993 | $ | 3,150 | ||||||||||||||||||
Losses and loss adjustment expenses | 687 | 841 | 746 | 857 | 604 | 801 | 801 | 2,274 | 2,206 | |||||||||||||||||||||||||||
Underwriting expenses | 255 | 320 | 313 | 281 | 277 | 335 | 349 | 888 | 961 | |||||||||||||||||||||||||||
Statutory underwriting gain (loss) | $ | 30 | $ | (165 | ) | $ | (34 | ) | $ | (100 | ) | $ | 130 | $ | (86 | ) | $ | (61 | ) | $ | (169 | ) | $ | (17 | ) | |||||||||||
Other statistics | ||||||||||||||||||||||||||||||||||||
Combined ratio (2): | ||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 70.7 | % | 84.4 | % | 72.8 | % | 82.6 | % | 59.8 | % | 76.3 | % | 73.6 | % | 76.0 | % | 70.0 | % | ||||||||||||||||||
Underwriting expense ratio | 27.8 | % | 29.2 | % | 27.5 | % | 27.2 | % | 28.4 | % | 28.2 | % | 28.4 | % | 28.2 | % | 28.4 | % | ||||||||||||||||||
Combined ratio | 98.5 | % | 113.6 | % | 100.3 | % | 109.8 | % | 88.2 | % | 104.5 | % | 102.0 | % | 104.2 | % | 98.4 | % | ||||||||||||||||||
Impact on combined ratio: | ||||||||||||||||||||||||||||||||||||
Net (favorable) unfavorable prior year reserve development | (2.4 | )% | 2.2 | % | 0.7 | % | (0.6 | )% | (2.4 | )% | (1.3 | )% | (1.4 | )% | 0.2 | % | (1.7 | )% | ||||||||||||||||||
Catastrophes, net of reinsurance | 20.7 | % | 26.2 | % | 11.1 | % | 37.9 | % | 8.0 | % | 12.9 | % | 9.9 | % | 19.3 | % | 10.3 | % | ||||||||||||||||||
Underlying combined ratio | 80.2 | % | 85.2 | % | 88.5 | % | 72.5 | % | 82.6 | % | 92.9 | % | 93.5 | % | 84.7 | % | 89.8 | % | ||||||||||||||||||
Catastrophe losses, net of reinsurance: | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 201 | $ | 262 | $ | 114 | $ | 394 | $ | 80 | $ | 136 | $ | 107 | $ | 577 | $ | 323 | ||||||||||||||||||
After-tax | $ | 159 | $ | 207 | $ | 90 | $ | 311 | $ | 63 | $ | 107 | $ | 85 | $ | 456 | $ | 255 | ||||||||||||||||||
Prior year reserve development - favorable (unfavorable): | ||||||||||||||||||||||||||||||||||||
Pre-tax | $ | 24 | $ | (22 | ) | $ | (7 | ) | $ | 6 | $ | 25 | $ | 13 | $ | 15 | $ | (5 | ) | $ | 53 | |||||||||||||||
After-tax | $ | 19 | $ | (17 | ) | $ | (6 | ) | $ | 5 | $ | 19 | $ | 11 | $ | 12 | $ | (4 | ) | $ | 42 | |||||||||||||||
Policies in force (in thousands) | 4,453 | 4,530 | 4,601 | 4,652 | 4,726 | 4,825 | 4,927 | |||||||||||||||||||||||||||||
Change from prior year quarter | 5.5 | % | 5.8 | % | 5.7 | % | 5.7 | % | 6.1 | % | 6.5 | % | 7.1 | % | ||||||||||||||||||||||
Change from prior quarter | 1.2 | % | 1.7 | % | 1.6 | % | 1.1% | 1.6 | % | 2.1 | % | 2.1 | % | |||||||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Billing and policy fees and other | $ | 6 | $ | 7 | $ | 7 | $ | 7 | $ | 8 | $ | 8 | $ | 8 | $ | 20 | $ | 24 | ||||||||||||||||||
Fee income | $ | 2 | $ | 2 | $ | 2 | $ | 2 | $ | 2 | $ | 2 | $ | 3 | $ | 6 | $ | 7 | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Other revenues | $ | — | $ | — | $ | 2 | $ | — | $ | 1 | $ | — | $ | — | $ | 2 | $ | 1 | ||||||||||||||||||
Claims and expenses | ||||||||||||||||||||||||||||||||||||
Interest expense | 89 | 90 | 86 | 87 | 88 | 89 | 84 | 265 | 261 | |||||||||||||||||||||||||||
General and administrative expenses | 9 | 7 | 8 | 6 | 8 | 8 | 8 | 24 | 24 | |||||||||||||||||||||||||||
Total claims and expenses | 98 | 97 | 94 | 93 | 96 | 97 | 92 | 289 | 285 | |||||||||||||||||||||||||||
Loss before income tax benefit | (98 | ) | (97 | ) | (92 | ) | (93 | ) | (95 | ) | (97 | ) | (92 | ) | (287 | ) | (284 | ) | ||||||||||||||||||
Income tax benefit | (22 | ) | (19 | ) | (20 | ) | (21 | ) | (20 | ) | (21 | ) | (21 | ) | (61 | ) | (62 | ) | ||||||||||||||||||
Loss | $ | (76 | ) | $ | (78 | ) | $ | (72 | ) | $ | (72 | ) | $ | (75 | ) | $ | (76 | ) | $ | (71 | ) | $ | (226 | ) | $ | (222 | ) | |||||||||
($ in millions) | September 30, 2019 | December 31, 2018 | ||||||
Assets | ||||||||
Fixed maturities, available for sale, at fair value (amortized cost $65,021 and $63,601) | $ | 68,011 | $ | 63,464 | ||||
Equity securities, at fair value (cost $375 and $382) | 412 | 368 | ||||||
Real estate investments | 963 | 904 | ||||||
Short-term securities | 4,597 | 3,985 | ||||||
Other investments | 3,437 | 3,557 | ||||||
Total investments | 77,420 | 72,278 | ||||||
Cash | 508 | 373 | ||||||
Investment income accrued | 575 | 624 | ||||||
Premiums receivable | 8,122 | 7,506 | ||||||
Reinsurance recoverables | 8,162 | 8,370 | ||||||
Ceded unearned premiums | 857 | 578 | ||||||
Deferred acquisition costs | 2,321 | 2,120 | ||||||
Deferred taxes | — | 445 | ||||||
Contractholder receivables | 4,802 | 4,785 | ||||||
Goodwill | 3,929 | 3,937 | ||||||
Other intangible assets | 329 | 345 | ||||||
Other assets | 3,216 | 2,872 | ||||||
Total assets | $ | 110,241 | $ | 104,233 | ||||
Liabilities | ||||||||
Claims and claim adjustment expense reserves | $ | 51,612 | $ | 50,668 | ||||
Unearned premium reserves | 14,912 | 13,555 | ||||||
Contractholder payables | 4,802 | 4,785 | ||||||
Payables for reinsurance premiums | 573 | 289 | ||||||
Deferred taxes | 188 | — | ||||||
Debt | 6,558 | 6,564 | ||||||
Other liabilities | 5,989 | 5,478 | ||||||
Total liabilities | 84,634 | 81,339 | ||||||
Shareholders’ equity | ||||||||
Common stock (1,750.0 shares authorized; 258.1 and 263.7 shares issued, 258.1 and 263.6 shares outstanding) | 23,432 | 23,144 | ||||||
Retained earnings | 36,317 | 35,204 | ||||||
Accumulated other comprehensive income (loss) | 625 | (1,859 | ) | |||||
Treasury stock, at cost (519.3 and 510.9 shares) | (34,767 | ) | (33,595 | ) | ||||
Total shareholders’ equity | 25,607 | 22,894 | ||||||
Total liabilities and shareholders’ equity | $ | 110,241 | $ | 104,233 | ||||
(at carrying value, $ in millions) | September 30, 2019 | Pre-tax Book Yield (1) | December 31, 2018 | Pre-tax Book Yield (1) | ||||||||||
Investment portfolio | ||||||||||||||
Taxable fixed maturities (including redeemable preferred stock) | $ | 38,346 | 3.21 | % | $ | 35,150 | 3.23 | % | ||||||
Tax-exempt fixed maturities | 29,665 | 3.14 | % | 28,314 | 3.18 | % | ||||||||
Total fixed maturities | 68,011 | 3.18 | % | 63,464 | 3.21 | % | ||||||||
Non-redeemable preferred stocks | 42 | 5.05 | % | 52 | 4.86 | % | ||||||||
Public common stocks | 370 | 316 | ||||||||||||
Total equity securities | 412 | 368 | ||||||||||||
Real estate investments | 963 | 904 | ||||||||||||
Short-term securities | 4,597 | 2.14 | % | 3,985 | 2.54 | % | ||||||||
Private equities | 2,268 | 2,293 | ||||||||||||
Hedge funds | 186 | 222 | ||||||||||||
Real estate partnerships | 653 | 675 | ||||||||||||
Other investments | 330 | 367 | ||||||||||||
Total other investments | 3,437 | 3,557 | ||||||||||||
Total investments | $ | 77,420 | $ | 72,278 | ||||||||||
Net unrealized investment gains (losses), net of tax, included in shareholders’ equity | $ | 2,354 | $ | (113 | ) | |||||||||
(at carrying value, $ in millions) | September 30, 2019 | December 31, 2018 | |||||||
Fixed maturities | |||||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies | $ | 2,020 | $ | 2,064 | |||||
Obligations of states and political subdivisions: | |||||||||
Pre-refunded | 2,063 | 2,852 | |||||||
All other | 27,853 | 25,759 | |||||||
Total | 29,916 | 28,611 | |||||||
Debt securities issued by foreign governments | 1,130 | 1,257 | |||||||
Mortgage-backed securities - principally obligations of U.S. Government agencies | 3,162 | 2,573 | |||||||
Corporates (including redeemable preferreds) | 31,783 | 28,959 | |||||||
Total fixed maturities | $ | 68,011 | $ | 63,464 | |||||
September 30, 2019 | December 31, 2018 | |||||||||||||
Amount | % of Total | Amount | % of Total | |||||||||||
Quality Ratings | ||||||||||||||
Aaa | $ | 28,878 | 42.5 | % | $ | 26,089 | 41.1 | % | ||||||
Aa | 15,875 | 23.3 | 16,027 | 25.3 | ||||||||||
A | 12,034 | 17.7 | 10,539 | 16.6 | ||||||||||
Baa | 9,712 | 14.3 | 9,334 | 14.7 | ||||||||||
Total investment grade | 66,499 | 97.8 | 61,989 | 97.7 | ||||||||||
Ba | 850 | 1.2 | 912 | 1.4 | ||||||||||
B | 542 | 0.8 | 466 | 0.7 | ||||||||||
Caa and lower | 120 | 0.2 | 97 | 0.2 | ||||||||||
Total below investment grade | 1,512 | 2.2 | 1,475 | 2.3 | ||||||||||
Total fixed maturities | $ | 68,011 | 100.0 | % | $ | 63,464 | 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 | 3.9 | 4.5 | ||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Gross investment income | ||||||||||||||||||||||||||||||||||||
Fixed maturities | $ | 481 | $ | 489 | $ | 498 | $ | 512 | $ | 511 | $ | 514 | $ | 520 | $ | 1,468 | $ | 1,545 | ||||||||||||||||||
Short-term securities | 19 | 21 | 25 | 27 | 28 | 27 | 26 | 65 | 81 | |||||||||||||||||||||||||||
Other | 113 | 94 | 134 | 100 | 53 | 118 | 85 | 341 | 256 | |||||||||||||||||||||||||||
613 | 604 | 657 | 639 | 592 | 659 | 631 | 1,874 | 1,882 | ||||||||||||||||||||||||||||
Investment expenses | 10 | 9 | 11 | 9 | 10 | 11 | 9 | 30 | 30 | |||||||||||||||||||||||||||
Net investment income, pre-tax | 603 | 595 | 646 | 630 | 582 | 648 | 622 | 1,844 | 1,852 | |||||||||||||||||||||||||||
Income taxes | 90 | 88 | 99 | 95 | 86 | 100 | 94 | 277 | 280 | |||||||||||||||||||||||||||
Net investment income, after-tax | $ | 513 | $ | 507 | $ | 547 | $ | 535 | $ | 496 | $ | 548 | $ | 528 | $ | 1,567 | $ | 1,572 | ||||||||||||||||||
Effective tax rate | 14.9 | % | 14.8 | % | 15.4% | 15.0% | 14.7 | % | 15.4 | % | 15.2 | % | 15.0% | 15.1 | % | |||||||||||||||||||||
Average invested assets (1) | $72,524 | $72,618 | $73,059 | $73,758 | $74,040 | $74,370 | $74,910 | $72,787 | $74,475 | |||||||||||||||||||||||||||
Average yield pre-tax (1) | 3.3 | % | 3.3 | % | 3.5 | % | 3.4 | % | 3.1 | % | 3.5 | % | 3.3 | % | 3.4 | % | 3.3 | % | ||||||||||||||||||
Average yield after-tax | 2.8 | % | 2.8 | % | 3.0 | % | 2.9 | % | 2.7 | % | 2.9 | % | 2.8 | % | 2.9 | % | 2.8 | % | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Net realized investment gains (losses) | ||||||||||||||||||||||||||||||||||||
Fixed maturities | $ | — | $ | 12 | $ | 18 | $ | 2 | $ | 16 | $ | 13 | $ | 14 | $ | 30 | $ | 43 | ||||||||||||||||||
Equity securities | (14 | ) | 12 | 6 | (37 | ) | 41 | 10 | 8 | 4 | 59 | |||||||||||||||||||||||||
Other (1) | 3 | 12 | 5 | 95 | (4 | ) | 2 | 1 | 20 | (1 | ) | |||||||||||||||||||||||||
Realized investment gains (losses) before tax | (11 | ) | 36 | 29 | 60 | 53 | 25 | 23 | 54 | 101 | ||||||||||||||||||||||||||
Related taxes | (2 | ) | 6 | 7 | 10 | 12 | 5 | 5 | 11 | 22 | ||||||||||||||||||||||||||
Net realized investment gains (losses) | $ | (9 | ) | $ | 30 | $ | 22 | $ | 50 | $ | 41 | $ | 20 | $ | 18 | $ | 43 | $ | 79 | |||||||||||||||||
Gross investment gains (1) | $ | 26 | $ | 63 | $ | 41 | $ | 105 | $ | 65 | $ | 31 | $ | 30 | $ | 130 | $ | 126 | ||||||||||||||||||
Gross investment losses before impairments (1) | (37 | ) | (26 | ) | (12 | ) | (45 | ) | (11 | ) | (5 | ) | (7 | ) | (75 | ) | (23 | ) | ||||||||||||||||||
Net investment gains (losses) before impairments | (11 | ) | 37 | 29 | 60 | 54 | 26 | 23 | 55 | 103 | ||||||||||||||||||||||||||
Other-than-temporary impairment losses | — | (1 | ) | — | — | (1 | ) | (1 | ) | — | (1 | ) | (2 | ) | ||||||||||||||||||||||
Net realized investment gains (losses) before tax | (11 | ) | 36 | 29 | 60 | 53 | 25 | 23 | 54 | 101 | ||||||||||||||||||||||||||
Related taxes | (2 | ) | 6 | 7 | 10 | 12 | 5 | 5 | 11 | 22 | ||||||||||||||||||||||||||
Net realized investment gains (losses) | $ | (9 | ) | $ | 30 | $ | 22 | $ | 50 | $ | 41 | $ | 20 | $ | 18 | $ | 43 | $ | 79 | |||||||||||||||||
($ in millions) | March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | |||||||||||||||||||||||||||||
Net unrealized investment gains (losses), net of tax, included in shareholders’ equity, by asset type | ||||||||||||||||||||||||||||||||||||
Fixed maturities | $ | 173 | $ | (138 | ) | $ | (561 | ) | $ | (137 | ) | $ | 1,284 | $ | 2,388 | $ | 2,990 | |||||||||||||||||||
Equity securities & other | 2 | 3 | 1 | — | — | 1 | 1 | |||||||||||||||||||||||||||||
Unrealized investment gains (losses) before tax | 175 | (135 | ) | (560 | ) | (137 | ) | 1,284 | 2,389 | 2,991 | ||||||||||||||||||||||||||
Related taxes | 42 | (23 | ) | (113 | ) | (24 | ) | 277 | 511 | 637 | ||||||||||||||||||||||||||
Balance, end of period | $ | 133 | $ | (112 | ) | $ | (447 | ) | $ | (113 | ) | $ | 1,007 | $ | 1,878 | $ | 2,354 | |||||||||||||||||||
(1) 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 | $ | 25 | $ | 11 | $ | 7 | $ | — | $ | 1 | $ | — | $ | — | $ | 43 | $ | 1 | ||||||||||||||||||
Gross investment Treasury future losses | $ | 14 | $ | 8 | $ | 5 | $ | — | $ | 1 | $ | — | $ | — | $ | 27 | $ | 1 |
($ in millions) | September 30, 2019 | December 31, 2018 | ||||||
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses | $ | 3,392 | $ | 3,485 | ||||
Allowance for uncollectible reinsurance | (94 | ) | (110 | ) | ||||
Net reinsurance recoverables (i) | 3,298 | 3,375 | ||||||
Mandatory pools and associations (ii) | 1,915 | 2,005 | ||||||
Structured settlements (iii) | 2,949 | 2,990 | ||||||
Total reinsurance recoverables | $ | 8,162 | $ | 8,370 | ||||
Reinsurer | A.M. Best Rating of Group's Predominant Reinsurer | September 30, 2019 | ||||
Swiss Re Group | A+ second highest of 16 ratings | $ | 442 | |||
Berkshire Hathaway | A++ highest of 16 ratings | 295 | ||||
Munich Re Group | A+ second highest of 16 ratings | 291 | ||||
Axa Group | A+ second highest of 16 ratings | 179 | ||||
Sompo Japan Nipponkoa Group | A+ second highest of 16 ratings | 126 | ||||
Group | A.M. Best Rating of Group's Predominant Insurer | September 30, 2019 | ||||
Fidelity & Guaranty Life Group | A- fourth highest of 16 ratings | $ | 782 | |||
Genworth Financial Group (1) | B seventh highest of 16 ratings | 340 | ||||
John Hancock Group | A+ second highest of 16 ratings | 266 | ||||
Brighthouse Financial, Inc. | A third highest of 16 ratings | 250 | ||||
Symetra Financial Corporation | A third highest of 16 ratings | 245 | ||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Statutory Reserves for Losses and Loss Adjustment Expenses | ||||||||||||||||||||||||||||||||||||
Business Insurance | ||||||||||||||||||||||||||||||||||||
Beginning of period | $ | 33,107 | $ | 33,292 | $ | 33,369 | $ | 33,773 | $ | 33,857 | $ | 34,086 | $ | 34,377 | $ | 33,107 | $ | 33,857 | ||||||||||||||||||
Incurred | 2,344 | 2,429 | 2,606 | 2,586 | 2,529 | 2,631 | 2,969 | 7,379 | 8,129 | |||||||||||||||||||||||||||
Paid | (2,163 | ) | (2,298 | ) | (2,207 | ) | (2,454 | ) | (2,320 | ) | (2,345 | ) | (2,354 | ) | (6,668 | ) | (7,019 | ) | ||||||||||||||||||
Foreign exchange and other | 4 | (54 | ) | 5 | (48 | ) | 20 | 5 | (29 | ) | (45 | ) | (4 | ) | ||||||||||||||||||||||
End of period | $ | 33,292 | $ | 33,369 | $ | 33,773 | $ | 33,857 | $ | 34,086 | $ | 34,377 | $ | 34,963 | $ | 33,773 | $ | 34,963 | ||||||||||||||||||
Bond & Specialty Insurance | ||||||||||||||||||||||||||||||||||||
Beginning of period | $ | 3,187 | $ | 3,207 | $ | 3,111 | $ | 3,057 | $ | 2,987 | $ | 3,068 | $ | 3,042 | $ | 3,187 | $ | 2,987 | ||||||||||||||||||
Incurred | 213 | 173 | 204 | 173 | 264 | 236 | 298 | 590 | 798 | |||||||||||||||||||||||||||
Paid | (201 | ) | (248 | ) | (258 | ) | (230 | ) | (189 | ) | (260 | ) | (256 | ) | (707 | ) | (705 | ) | ||||||||||||||||||
Foreign exchange and other | 8 | (21 | ) | — | (13 | ) | 6 | (2 | ) | (10 | ) | (13 | ) | (6 | ) | |||||||||||||||||||||
End of period | $ | 3,207 | $ | 3,111 | $ | 3,057 | $ | 2,987 | $ | 3,068 | $ | 3,042 | $ | 3,074 | $ | 3,057 | $ | 3,074 | ||||||||||||||||||
Personal Insurance | ||||||||||||||||||||||||||||||||||||
Beginning of period | $ | 5,160 | $ | 5,170 | $ | 5,381 | $ | 5,463 | $ | 5,565 | $ | 5,427 | $ | 5,560 | $ | 5,160 | $ | 5,565 | ||||||||||||||||||
Incurred | 1,688 | 1,904 | 1,796 | 1,960 | 1,596 | 1,897 | 1,899 | 5,388 | 5,392 | |||||||||||||||||||||||||||
Paid | (1,655 | ) | (1,676 | ) | (1,728 | ) | (1,815 | ) | (1,751 | ) | (1,781 | ) | (1,862 | ) | (5,059 | ) | (5,394 | ) | ||||||||||||||||||
Foreign exchange and other | (23 | ) | (17 | ) | 14 | (43 | ) | 17 | 17 | (10 | ) | (26 | ) | 24 | ||||||||||||||||||||||
End of period | $ | 5,170 | $ | 5,381 | $ | 5,463 | $ | 5,565 | $ | 5,427 | $ | 5,560 | $ | 5,587 | $ | 5,463 | $ | 5,587 | ||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||||||
Beginning of period | $ | 41,454 | $ | 41,669 | $ | 41,861 | $ | 42,293 | $ | 42,409 | $ | 42,581 | $ | 42,979 | $ | 41,454 | $ | 42,409 | ||||||||||||||||||
Incurred | 4,245 | 4,506 | 4,606 | 4,719 | 4,389 | 4,764 | 5,166 | 13,357 | 14,319 | |||||||||||||||||||||||||||
Paid | (4,019 | ) | (4,222 | ) | (4,193 | ) | (4,499 | ) | (4,260 | ) | (4,386 | ) | (4,472 | ) | (12,434 | ) | (13,118 | ) | ||||||||||||||||||
Foreign exchange and other | (11 | ) | (92 | ) | 19 | (104 | ) | 43 | 20 | (49 | ) | (84 | ) | 14 | ||||||||||||||||||||||
End of period | $ | 41,669 | $ | 41,861 | $ | 42,293 | $ | 42,409 | $ | 42,581 | $ | 42,979 | $ | 43,624 | $ | 42,293 | $ | 43,624 | ||||||||||||||||||
Prior Year Reserve Development: Unfavorable (Favorable) | ||||||||||||||||||||||||||||||||||||
Business Insurance | ||||||||||||||||||||||||||||||||||||
Asbestos | $ | — | $ | — | $ | 225 | $ | — | $ | — | $ | — | $ | 220 | $ | 225 | $ | 220 | ||||||||||||||||||
Environmental | — | 55 | — | — | — | 60 | 8 | 55 | 68 | |||||||||||||||||||||||||||
All other | (66 | ) | (139 | ) | (169 | ) | (48 | ) | 21 | (131 | ) | 88 | (374 | ) | (22 | ) | ||||||||||||||||||||
Total Business Insurance (1) | (66 | ) | (84 | ) | 56 | (48 | ) | 21 | (71 | ) | 316 | (94 | ) | 266 | ||||||||||||||||||||||
Bond & Specialty Insurance | (35 | ) | (89 | ) | (53 | ) | (89 | ) | (3 | ) | (39 | ) | (3 | ) | (177 | ) | (45 | ) | ||||||||||||||||||
Personal Insurance | (49 | ) | (13 | ) | (17 | ) | (30 | ) | (69 | ) | (13 | ) | (19 | ) | (79 | ) | (101 | ) | ||||||||||||||||||
Total | $ | (150 | ) | $ | (186 | ) | $ | (14 | ) | $ | (167 | ) | $ | (51 | ) | $ | (123 | ) | $ | 294 | $ | (350 | ) | $ | 120 | |||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Asbestos reserves | ||||||||||||||||||||||||||||||||||||
Beginning reserves: | ||||||||||||||||||||||||||||||||||||
Gross | $ | 1,538 | $ | 1,483 | $ | 1,408 | $ | 1,681 | $ | 1,608 | $ | 1,564 | $ | 1,474 | $ | 1,538 | $ | 1,608 | ||||||||||||||||||
Ceded | (257 | ) | (234 | ) | (225 | ) | (336 | ) | (327 | ) | (321 | ) | (295 | ) | (257 | ) | (327 | ) | ||||||||||||||||||
Net | 1,281 | 1,249 | 1,183 | 1,345 | 1,281 | 1,243 | 1,179 | 1,281 | 1,281 | |||||||||||||||||||||||||||
Incurred losses and loss expenses: | ||||||||||||||||||||||||||||||||||||
Gross | — | — | 343 | — | — | — | 268 | 343 | 268 | |||||||||||||||||||||||||||
Ceded | — | — | (118 | ) | — | — | — | (48 | ) | (118 | ) | (48 | ) | |||||||||||||||||||||||
Paid loss and loss expenses: | ||||||||||||||||||||||||||||||||||||
Gross | 56 | 74 | 70 | 73 | 44 | 90 | 57 | 200 | 191 | |||||||||||||||||||||||||||
Ceded | (23 | ) | (9 | ) | (7 | ) | (9 | ) | (6 | ) | (26 | ) | (9 | ) | (39 | ) | (41 | ) | ||||||||||||||||||
Foreign exchange and other: | ||||||||||||||||||||||||||||||||||||
Gross | 1 | (1 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Ceded | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Ending reserves: | ||||||||||||||||||||||||||||||||||||
Gross | 1,483 | 1,408 | 1,681 | 1,608 | 1,564 | 1,474 | 1,685 | 1,681 | 1,685 | |||||||||||||||||||||||||||
Ceded | (234 | ) | (225 | ) | (336 | ) | (327 | ) | (321 | ) | (295 | ) | (334 | ) | (336 | ) | (334 | ) | ||||||||||||||||||
Net | $ | 1,249 | $ | 1,183 | $ | 1,345 | $ | 1,281 | $ | 1,243 | $ | 1,179 | $ | 1,351 | $ | 1,345 | $ | 1,351 | ||||||||||||||||||
Environmental reserves | ||||||||||||||||||||||||||||||||||||
Beginning reserves: | ||||||||||||||||||||||||||||||||||||
Gross | $ | 373 | $ | 356 | $ | 413 | $ | 397 | $ | 358 | $ | 338 | $ | 388 | $ | 373 | $ | 358 | ||||||||||||||||||
Ceded | (13 | ) | (9 | ) | (25 | ) | (25 | ) | (24 | ) | (24 | ) | (29 | ) | (13 | ) | (24 | ) | ||||||||||||||||||
Net | 360 | 347 | 388 | 372 | 334 | 314 | 359 | 360 | 334 | |||||||||||||||||||||||||||
Incurred losses and loss expenses: | ||||||||||||||||||||||||||||||||||||
Gross | — | 71 | — | — | — | 67 | 8 | 71 | 75 | |||||||||||||||||||||||||||
Ceded | — | (16 | ) | — | — | — | (7 | ) | — | (16 | ) | (7 | ) | |||||||||||||||||||||||
Paid loss and loss expenses: | ||||||||||||||||||||||||||||||||||||
Gross | 17 | 13 | 17 | 39 | 20 | 16 | 22 | 47 | 58 | |||||||||||||||||||||||||||
Ceded | (4 | ) | — | — | (2 | ) | — | (1 | ) | — | (4 | ) | (1 | ) | ||||||||||||||||||||||
Foreign exchange and other: | ||||||||||||||||||||||||||||||||||||
Gross | — | (1 | ) | 1 | — | — | (1 | ) | — | — | (1 | ) | ||||||||||||||||||||||||
Ceded | — | — | — | (1 | ) | — | 1 | — | — | 1 | ||||||||||||||||||||||||||
Ending reserves: | ||||||||||||||||||||||||||||||||||||
Gross | 356 | 413 | 397 | 358 | 338 | 388 | 374 | 397 | 374 | |||||||||||||||||||||||||||
Ceded | (9 | ) | (25 | ) | (25 | ) | (24 | ) | (24 | ) | (29 | ) | (29 | ) | (25 | ) | (29 | ) | ||||||||||||||||||
Net | $ | 347 | $ | 388 | $ | 372 | $ | 334 | $ | 314 | $ | 359 | $ | 345 | $ | 372 | $ | 345 | ||||||||||||||||||
($ in millions) | September 30, 2019 | December 31, 2018 | ||||||
Debt | ||||||||
Short-term debt | ||||||||
Commercial paper | $ | 100 | $ | 100 | ||||
5.90% Senior notes due June 2, 2019 | — | 500 | ||||||
Total short-term debt | 100 | 600 | ||||||
Long-term debt | ||||||||
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 | 500 | ||||||
4.10% Senior notes due March 4, 2049 (1) | 500 | — | ||||||
Total long-term debt | 6,504 | 6,004 | ||||||
Unamortized fair value adjustment | 43 | 44 | ||||||
Unamortized debt issuance costs | (89 | ) | (84 | ) | ||||
6,458 | 5,964 | |||||||
Total debt | 6,558 | 6,564 | ||||||
Common equity (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity) | 23,253 | 23,007 | ||||||
Total capital (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity) | $ | 29,811 | $ | 29,571 | ||||
Total debt to capital (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity) | 22.0 | % | 22.2 | % | ||||
($ in millions) | September 30, 2019 (1) | December 31, 2018 | ||||||
Statutory capital and surplus | $ | 20,780 | $ | 20,774 | ||||
GAAP adjustments | ||||||||
Goodwill and intangible assets | 3,591 | 3,600 | ||||||
Investments | 3,285 | 252 | ||||||
Noninsurance companies | (4,133 | ) | (4,234 | ) | ||||
Deferred acquisition costs | 2,321 | 2,120 | ||||||
Deferred federal income tax | (1,190 | ) | (561 | ) | ||||
Current federal income tax | (23 | ) | (22 | ) | ||||
Reinsurance recoverables | 56 | 56 | ||||||
Furniture, equipment & software | 679 | 654 | ||||||
Agents balances | 232 | 202 | ||||||
Other | 9 | 53 | ||||||
Total GAAP adjustments | 4,827 | 2,120 | ||||||
GAAP shareholders’ equity | $ | 25,607 | $ | 22,894 | ||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||||||||||
Net income | $ | 669 | $ | 524 | $ | 709 | $ | 621 | $ | 796 | $ | 557 | $ | 396 | $ | 1,902 | $ | 1,749 | ||||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||||||||||||||||
Net realized investment (gains) losses | 11 | (36 | ) | (29 | ) | (60 | ) | (53 | ) | (25 | ) | (23 | ) | (54 | ) | (101 | ) | |||||||||||||||||||
Depreciation and amortization | 212 | 199 | 198 | 194 | 211 | 190 | 180 | 609 | 581 | |||||||||||||||||||||||||||
Deferred federal income tax expense (benefit) | (56 | ) | (14 | ) | 27 | 30 | 32 | (22 | ) | (20 | ) | (43 | ) | (10 | ) | |||||||||||||||||||||
Amortization of deferred acquisition costs | 1,061 | 1,081 | 1,117 | 1,122 | 1,117 | 1,134 | 1,169 | 3,259 | 3,420 | |||||||||||||||||||||||||||
Equity in income from other investments | (95 | ) | (74 | ) | (115 | ) | (81 | ) | (34 | ) | (98 | ) | (64 | ) | (284 | ) | (196 | ) | ||||||||||||||||||
Premiums receivable | (397 | ) | (263 | ) | 152 | 115 | (434 | ) | (345 | ) | 168 | (508 | ) | (611 | ) | |||||||||||||||||||||
Reinsurance recoverables | 5 | 24 | (50 | ) | (79 | ) | 98 | 53 | 61 | (21 | ) | 212 | ||||||||||||||||||||||||
Deferred acquisition costs | (1,124 | ) | (1,160 | ) | (1,141 | ) | (1,063 | ) | (1,185 | ) | (1,223 | ) | (1,211 | ) | (3,425 | ) | (3,619 | ) | ||||||||||||||||||
Claims and claim adjustment expense reserves | 180 | 255 | 445 | 366 | (2 | ) | 331 | 598 | 880 | 927 | ||||||||||||||||||||||||||
Unearned premium reserves | 518 | 361 | 216 | (385 | ) | 551 | 407 | 392 | 1,095 | 1,350 | ||||||||||||||||||||||||||
Other | (430 | ) | 247 | 205 | 168 | (458 | ) | 194 | 355 | 22 | 91 | |||||||||||||||||||||||||
Net cash provided by operating activities | 554 | 1,144 | 1,734 | 948 | 639 | 1,153 | 2,001 | 3,432 | 3,793 | |||||||||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||||||
Proceeds from maturities of fixed maturities | 1,950 | 1,707 | 1,998 | 1,431 | 1,556 | 1,482 | 1,857 | 5,655 | 4,895 | |||||||||||||||||||||||||||
Proceeds from sales of investments: | ||||||||||||||||||||||||||||||||||||
Fixed maturities | 1,085 | 1,522 | 578 | 361 | 769 | 726 | 306 | 3,185 | 1,801 | |||||||||||||||||||||||||||
Equity securities | 26 | 66 | 35 | 51 | 39 | 32 | 28 | 127 | 99 | |||||||||||||||||||||||||||
Real estate investments | — | — | 8 | 66 | — | — | — | 8 | — | |||||||||||||||||||||||||||
Other investments | 114 | 75 | 81 | 241 | 105 | 135 | 106 | 270 | 346 | |||||||||||||||||||||||||||
Purchases of investments: | ||||||||||||||||||||||||||||||||||||
Fixed maturities | (3,920 | ) | (4,032 | ) | (2,910 | ) | (2,664 | ) | (2,914 | ) | (2,794 | ) | (2,526 | ) | (10,862 | ) | (8,234 | ) | ||||||||||||||||||
Equity securities | (20 | ) | (40 | ) | (26 | ) | (31 | ) | (22 | ) | (19 | ) | (21 | ) | (86 | ) | (62 | ) | ||||||||||||||||||
Real estate investments | (33 | ) | (11 | ) | (13 | ) | (17 | ) | (77 | ) | (8 | ) | (10 | ) | (57 | ) | (95 | ) | ||||||||||||||||||
Other investments | (142 | ) | (133 | ) | (117 | ) | (145 | ) | (146 | ) | (116 | ) | (107 | ) | (392 | ) | (369 | ) | ||||||||||||||||||
Net sales (purchases) of short-term securities | 410 | 792 | (746 | ) | 452 | (109 | ) | 606 | (1,114 | ) | 456 | (617 | ) | |||||||||||||||||||||||
Securities transactions in course of settlement | 202 | 77 | (106 | ) | (229 | ) | 295 | (72 | ) | 209 | 173 | 432 | ||||||||||||||||||||||||
Acquisitions, net of cash acquired | — | — | (4 | ) | — | — | — | — | (4 | ) | — | |||||||||||||||||||||||||
Other | (53 | ) | (99 | ) | (80 | ) | (86 | ) | (82 | ) | (87 | ) | (74 | ) | (232 | ) | (243 | ) | ||||||||||||||||||
Net cash used in investing activities | (381 | ) | (76 | ) | (1,302 | ) | (570 | ) | (586 | ) | (115 | ) | (1,346 | ) | (1,759 | ) | (2,047 | ) | ||||||||||||||||||
($ in millions) | 1Q2018 | 2Q2018 | 3Q2018 | 4Q2018 | 1Q2019 | 2Q2019 | 3Q2019 | YTD 3Q2018 | YTD 3Q2019 | |||||||||||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||||||
Treasury stock acquired - share repurchase authorization | (350 | ) | (350 | ) | (400 | ) | (170 | ) | (375 | ) | (375 | ) | (375 | ) | (1,100 | ) | (1,125 | ) | ||||||||||||||||||
Treasury stock acquired - net employee share-based compensation | (51 | ) | — | — | — | (46 | ) | (1 | ) | — | (51 | ) | (47 | ) | ||||||||||||||||||||||
Dividends paid to shareholders | (197 | ) | (207 | ) | (207 | ) | (203 | ) | (205 | ) | (214 | ) | (214 | ) | (611 | ) | (633 | ) | ||||||||||||||||||
Payment of debt | (100 | ) | (500 | ) | — | — | — | (500 | ) | — | (600 | ) | (500 | ) | ||||||||||||||||||||||
Issuance of debt | 491 | — | 100 | — | 492 | — | — | 591 | 492 | |||||||||||||||||||||||||||
Issuance of common stock - employee share options | 85 | 13 | 19 | 15 | 63 | 111 | 32 | 117 | 206 | |||||||||||||||||||||||||||
Net cash used in financing activities | (122 | ) | (1,044 | ) | (488 | ) | (358 | ) | (71 | ) | (979 | ) | (557 | ) | (1,654 | ) | (1,607 | ) | ||||||||||||||||||
Effect of exchange rate changes on cash | 2 | (6 | ) | — | (6 | ) | 2 | — | (6 | ) | (4 | ) | (4 | ) | ||||||||||||||||||||||
Net increase (decrease) in cash | 53 | 18 | (56 | ) | 14 | (16 | ) | 59 | 92 | 15 | 135 | |||||||||||||||||||||||||
Cash at beginning of period | 344 | 397 | 415 | 359 | 373 | 357 | 416 | 344 | 373 | |||||||||||||||||||||||||||
Cash at end of period | $ | 397 | $ | 415 | $ | 359 | $ | 373 | $ | 357 | $ | 416 | $ | 508 | $ | 359 | $ | 508 | ||||||||||||||||||
Income taxes paid | $ | 56 | $ | 182 | $ | 6 | $ | 164 | $ | 5 | $ | 320 | $ | 42 | $ | 244 | $ | 367 | ||||||||||||||||||
Interest paid | $ | 39 | $ | 136 | $ | 50 | $ | 122 | $ | 50 | $ | 121 | $ | 60 | $ | 225 | $ | 231 | ||||||||||||||||||
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